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The Port of Oakland took on massive debt for an expansion that some say went bust. Is the same mistake possible?

The Port of Oakland took on massive debt for an expansion that some say went bust. Is the same mistake possible?

At the Oakland Airport this week, a group of dignitaries gathered in front of a crowd to lavish praise on the Port of Oakland, which manages not only the city’s waterfront but also the airport, for its role as an economic engine for the region.

The port’s executive director boasted of “good union jobs.” San Leandro Mayor Juan Gonzales touted his city’s proximity to the airport as an “absolutely a benefit.” Oakland Mayor Sheng Thao said the port represents the “values of Oakland.”

It was a feel-good moment Monday for a city that has struggled to retain major corporations and sports teams — a testament to an enduring, mutually beneficial partnership — and came on the heels of a report commissioned by the port showing it had generated nearly 100,000 jobs for the region, along with close to a billion dollars in state and local taxes.

But some community members say the port has not always earned praised for its fiscal foresight — in fact, quite the opposite.

In the late 1990s, the port launched a billion-dollar capital expansion plan called Vision 2000 to build a new, modern port for the 21st century. According to Brian Beveridge, co-director of the eco-activism group West Oakland Environmental Indicators Project, it borrowed millions of dollars, built a new rail yard, bought new cranes and upgraded its wharves in preparation for a new era of growth.

But the expected growth never came. Instead, container activity plateaued between 2006 and 2023. According to a 2015 article in the Urbanist, the Port of Oakland borrowed more than $1.4 billion and had a debt service payment of more than $100 million annually, nearly a third of its operating budget. In 2020, the port refinanced $544 million of debt.

“For more than a decade that debt hung over the port like the Sword of Damocles,” Beveridge said. “They were constantly paying money to restructure their debt because it just didn’t pay off.”

Now, as port officials plan a major expansion at the Oakland airport, Beveridge and Miss Margaret Gordon, who served as a port commissioner between 2012 and 2017, say the port may be making the same mistake at the airport that they made with their shipping terminals two decades earlier — investing in dramatic expansions and ending up with a stranded asset.

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Port of Oakland officials dispute the notion that the investment was a mistake. Robert Bernardo, the port’s communications director, said Vision 2000 was “transformational” and that many of the jobs and revenue gains noted in Monday’s economic impact report were made possible by that investment.

Like the port expansion, Bernardo sees the Oakland airport expansion as necessary to remain competitive and continue to supply jobs to the region in the coming decades.

“Whether or not we develop or build a new terminal, the passenger growth will continue at Oakland International Airport,” Bernardo said. “We have to be a responsible agency and make sure we are able to handle that growth.”

The number of people traveling through the Oakland airport jumped from approximately 8 million to 11 million between 2021 and 2022. The port projects that number will grow to 24 million visitors per year by 2038.

In July, Oakland Airport officials published a draft environmental report outlining their plans for what they described as a long overdue effort to reimagine the airport for anticipated demand. The plan includes the construction of an 830,000-square-foot terminal building, upgrades to existing facilities and the addition of 16 gates.

Pelicans and gulls swim near the Oakland International Airport on Thursday, Sept. 15, 2023, in Oakland, Calif. (Aric Crabb/Bay Area News Group) 

Port officials have stressed that the plan is a “modernization” rather than an expansion. The plans will not expand the airport’s existing footprint but rather improve capacity the airport already has by adding facilities for customers. Although critics of the plan may say the projected visitor numbers are overly optimistic, Bernardo said the port was confident in the investment — just as they remain confident in the money they invested twenty years ago.

“Like many public agencies, the Port of Oakland borrows to proceed with major projects,” Bernardo said.

But at least for those like Gordon, who has dealt with the port for decades, the port is not the partner it claims to be.

“All of its been overstated for years,” Gordon said. “The port is a polluter.”

Just recently, the port decided to allow the construction of a sand and gravel plant that community groups and the state attorney general have warned would worsen pollution in West Oakland. Environmental groups are currently opposing expansion plans at the airport on the basis of climate change concerns, and air and noise pollution. West Oakland Environmental Indicators Project struggled for years to move trucks out of West Oakland and address diesel emissions to which the port’s industry has contributed.

Gordon and Beveridge say that while the Port of Oakland may trumpet its achievements and economic impact, the jobs report ignores the fact that, for decades, one of the biggest ports in the country has been putting its own neighborhood at risk. In their view, investing more money in an airport does little to help disenfranchised communities that bear the brunt of the impact.

“They come out with a study every couple years saying, look how swell we are, we hire all these people” Beveridge said. “That’s not spilling over into West Oakland. All we get is more trucks.”

A seagull soars in the sky as a container ship named “President Kennedy” is loaded at the Port of Oakland in Oakland, Calif., on Monday, Sept. 18, 2023. (Jose Carlos Fajardo/Bay Area News Group)