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Wednesday, April 27, 2005 | San Diego has been visited by a goose that is laying golden eggs in an unexpected amount. But like all such geese, this one, too, is in danger of being “killed.”
I speak of our region’s growing cruise ship success. The Port of San Diego welcomes over 190 cruise ships throughout the year at the B Street Cruise Ship Terminal. Each cruise ship that spends a day in San Diego is estimated to contribute $2 million to our regional economy. Just a few years ago, cruise visits were few and far between. Since then, the cruise business has blossomed, and San Diego has been discovered as one of the more exciting ports of call since few ports are so close to a major downtown.
From the bridge of arriving ships, passengers can see a vibrant urban center, and they can easily find transportation that allows them to explore the area. Shopping, dining, historic sites such as Old Town and the world famous San Diego Zoo are just minutes away.
The fast increase in the number of cruise ships has caused some problems.
Our port facilities were built to handle a far lower volume of arriving ships. Today, when two or more ships are in port, the quality of service and the quality of experience for the travelers deteriorates. Too often, passengers boarding or leaving a cruise in San Diego are required to go through security checks and other boarding procedures while standing in the direct sun light without the normal facilities for refreshments and other comforts that cruise ship lines expect and receive in other ports.
The cruise ship lines have made a point of telling us that we must bring our facilities up to industry standards or risk the loss of their business, and the close to $1 billion of economic benefit this opportunity can grow to within a few years.
To improve the facilities costs a lot of money, not as much as a new stadium, but still a sizable amount. The Unified Port of San Diego, although long considered the region’s “Cash Cow,” does not have the cash to do this on its own – even if it attempted to do these through the sale of bonds. The repayment of those bonds would come from port revenues, which then would not be available for the many other needs and responsibilities the port has to the rest of the tidelands.
The port’s take from the cruise business is surprisingly little. Berthing and passenger fees amount to perhaps $2 million a year. It is the balance of the region that receives the majority of the economic benefits, and thus it is the region that needs to assist in the development of the modern facilities. No one is going to want to pay for something they perceive they are getting for free so raising revenues in the region will take education.
The solution is regional revenues and regional management of the facility. It seems logical that the internal ports of entry within our region should be under similar management. The security requirements for air freight and maritime cargo are similar and the requirements to service air travelers and cruise passengers are also similar. The maritime operation of the port and the airport should be rejoined. The cost savings would be material, and the logic of having both under a board that is appointed from throughout the region is sensible.
The funding could come from regional sources such as an increase in countywide hotel occupancy taxes. If these were raised to the national average level for only five years, it would be sufficient to service a very short-term bond of sufficient amount to bring our port’s cruise ship terminal up to a standard we could all be proud and that would protect this valuable billion-dollar economic, regional opportunity.
Let’s continue the flow of golden eggs by making the commitment to a regional approach to a regional opportunity.
Peter Q. Davis is the former chairman, president and CEO of Bank of Commerce, which was acquired by U.S. Bank; the former chairman of the Centre City Development Corp.; and the former chairman of the San Diego Unified Port District.