Port, Industries Reach Accord on Rental Policy

It took nearly a year, but the San Diego Unified Port District and the Port Tenants Assn. have ended an often-bitter disagreement on how the port should set rents for its industrial tenants.

The agreement approved at the port’s Feb. 18 meeting “will help keep jobs in San Diego,” said Ron McElliott, chairman of the Port Tenants Assn., which represents more than 100 port tenants.

“It will help businesses within the port district to survive during these hard economic times . . . and give us a basis for moving forward (with rent policies) that are more realistic,” McElliott said.

Tenants began to demand a review of port rental policies nearly a year ago after the port proposed dramatic increases in some of its leases. The port agreed to modify two key sections of its rent policy, McElliott said.

Port tenants, including Rohr Inc., General Dynamics and Solar Turbines, have been pushing the port to modify a policy that allowed the port to renegotiate leases every five years.

That policy made it “very difficult” for port tenants to raise capital because “you never knew what your lease costs were going to be,” McElliott said. “If you were three years into a five-year lease, you couldn’t say what your rent costs were going to be.”

The port agreed to extend leases to “a minimum of 10 years,” McElliott said. “That makes a big difference when you’re borrowing money because you’ve got a (long-term) fixed rental” cost, McElliott said.

The port also agreed to consolidate its different lease categories into two broad classifications. That change should produce rents that will “help the larger tenants, the Solars and Rohrs, to be more competitive with other companies around the world,” McElliott said.