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BUILDING FUTURESBUILDING FUTURES2013 YEAR IN 2013 YEAR IN RREVIEWEVIEW

Port San Antonio

907 Billy Mitchell Blvd.

San Antonio, Texas 78226-1802

(210) 228-1022

www.PortSanAntonio.us

At Port SAn Antonio, we

Are redeveloPing the

former Kelly Air force

BASe to itS higheSt And

BeSt uSe, creAting the

conditionS thAt mAintAin

And grow quAlity joBS.

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Our Customers

From the President & CEO

Building a Solid Foundation

A Strategic Industry Partner

• Aerospace

• Logistics

• National Defense/Government

Building a Dynamic Platform

• 36th Street: New Aerospace Opportunities at Kelly Field

• Quintana Road: Support for Logistics and Manufacturing

• Ongoing Alignment with City Supports Future Expansions

Focus on Our Customers

• A Commitment to Service Above-and-Beyond

• In-House Permitting Saves Customers’ Time and Money

• Global Business Standards

Building Workforce Talent

• Growing Opportunities

• Leading a Community Conversation

• Kelly Center: Spaces that Inspire and Prepare Tomorrow’s Workers

• Food on the Move

Building a Thriving Community

• A Growing Part of San Antonio

• A Personal Commitment

Building a Solid Business (Financial Statements)

Executive Leadership Team

Board of Directors

Table of ConTenTs2013 year in review

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A&D Tests, Inc.Aerospace Products SE, Inc.Ageiss, Inc.Alamo CollegesAtlantic AviationAVANCEB/E Aerospace, Inc.BCFSBergstrom Climate Control Systems, Inc.Black BoxBlackstoneThe Boeing CompanyBoeing Services CompanyBooz Allen HamiltonCDI Technology ServicesChromalloyCity of San Antonio Fire Department #12City of San Antonio - Metropolitan HealthCustom FabElite Production Services, LLCEncore Support Systems, L.P.Fiesta Warehousing & Distribution CompanyForward Air SolutionsGeneral DynamicsGeneral Services AdministrationGexpro ServicesGore Design Completions, Ltd.Greenbrier Rail ServicesHAAS Group International, Inc.Harris CorporationHEB CompanyInformation Innovators, Inc.Intertek USA, Inc.J. Sanchez ContractingKelly Aviation Center (A Lockheed Martin Corp. Affiliate)Myers Tire SupplyNew Breed Logistics, Inc.The OpTech GroupPratt & WhitneyReliable Staffing CorporationReusable Container SystemsRLI Logistics SolutionsSan Antonio Air Power Heritage FoundationSan Antonio Federal Credit UnionSan Antonio Police Dept. — Blue SantaSan Antonio Water SystemStandardAero San Antonio, Inc.

Texas Dept. of Public SafetyTriple-S Steel/Intsel SteelUnited States Air Force/Department of Defense

Air Force Space Command/24th Air Force (HQ) 688th Information Operations Wing 624th Operations Center 690th Network Support SquadronAir Force Materiel Command/Enterprise Sourcing Group 770th Business Support Squadron Small Business S.A. Operating LocationAir Force Personnel Center Directorate of Services 7 Manpower Requirements Flight Air Force Civil Engineer Center (HQ)Air Force Medical Operations Agency (HQ)Air Force Medical Support Agency (HQ)Air Force Public Affairs Agency (HQ)Personal Property Activity Headquarters (HQ) Joint Personal Property Shipping OfficeSecretary of the Air Force/General CounselAir Force Legal Operations Agency Judge Advocate General Environmental Law/Litigation Air Force District of Washington A7 Air Force Inspection Agency 502nd Air Base Wing 502nd Civil Engineer Squadron 502nd Force Support Squadron 502nd Operations Support Squadron 502nd Security Forces and Logistics Readiness Squad. 502nd Communications Squadron26th Aerial Port SquadronDefense Information System AgencyAir Force Materiel Command Cryptologic Systems Division433rd Air Lift Wing Aeromedical Staging Squadron 433rd Medical Squadron775th Expeditionary Aeromedical Evacuation Flight Operating LocationDefense Logistics Agency/Defense Energy Supply CenterAir Education and Training CommandAir Force Audit AgencyAir Force Office of Special Investigations

URS Kelly Distribution CenterWatco Companies, LLCThe Witte MuseumXerox

our CusTomers

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Dear Friends and Colleagues:

Port San Antonio is one of the region’s top economic generators, playing an increasing role in shaping the futures of enterprises and thousands of workers throughout the area.

More than 80 organizations and their 13,000 employees work here. They are centered in the aerospace, manufacturing, logistics and government/military industries and are growing thanks to the Port’s flexible logistics platform and expertise in delivering and maintaining highly specialized facilities.

The Port’s customer base adds over $4 billion to the region’s economic activity each year, with significant opportunities ahead.

Today, about 40 percent of the 1,900-acre property is developed, underscoring its tremendous potential. At full capacity, by adding new facilities and continuing to work strategically with our customers, the Port could support up to 35,000 good jobs.

To turn this vision into reality is a community-wide effort. Last year provided powerful examples of how the right business strategy backed with the right tactics can grow this dynamic engine and capture opportunities throughout the region and, as our customers increasingly demonstrate, around the world.

Among top milestones reached in 2013, the completion of the 36th Street extension into the heart of the property is a testament to strategic redevelopment. The $50-million road project, which constitutes a partnership between the Port and the City of San Antonio, members of Congress, the Texas Department of Transportation, CPS Energy, San Antonio Water System and the San Antonio-Bexar County Metropolitan Planning Organization (MPO), now opens 400 acres of new sites at Kelly Field.

This land, now accessible to aircraft, is essential for building new hangars and other facilities to accommodate expansions by the region’s aerospace industry. Upon full development, these sites alone could help generate 8,000 future jobs as aerospace and air logistics customers at the Port continue to grow new lines of business.

New business in 2013 included the arrival of logistics provider Forward Air Solutions at Kelly Field, which relocated to the Port and expanded its workforce as it serves retailers throughout South Texas. Also located at the north end of Kelly Field is Gore Design Completions, Ltd. Based at the Port since 2005, Gore set new industry records last year in the delivery of luxury interiors for wide-bodied aircraft, with plans to add Boeing 787 Dreamliners to its specialties starting in 2014.

Similarly, longtime customers Boeing and Lockheed Martin’s Kelly Aviation Center (KAC) continue to transition to commercial sector work and other projects. For Boeing, this has meant upgrading 787 Dreamliners and 747-8 air cargo freighters at its Port San Antonio facility since 2011 and, starting in 2014, it will become the support center for the U.S. government’s Executive Fleet, which includes Air Force One and other aircraft flown by members of the President’s cabinet.

And in November, Kelly Aviation Center announced its upcoming projects with United Arab Emirates-based Skyone Maintenance Services—one of the Middle East’s largest providers of services for commercial aircraft. Skyone will entrust engine maintenance to Kelly Aviation Center, representing an important new business line as the company adds commercial projects to its workload, which for 15 years has been principally focused on support of military aircraft.

from The PresidenT & Ceo

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Elsewhere at the Port, partnerships begun in recent years also continued to yield results.

New records were reached at East Kelly Railport, where track expansions completed by rail developer and operator Watco Companies in 2012 set the stage for a record-breaking 2013. Rail volume nearly doubled at East Kelly year-over-year, with brisk activity by logistics customers who support the region’s thriving retail, energy and construction industries.

And thanks to the Port’s recent completion of specialized office facilities for its Air Force customers, including spaces that house the 24th Air Force’s headquarters, the organization has solidified its strategic partnership with the military by helping it meet pressing needs for new facilities that conform to Department of Defense standards.

Five buildings, and over 700,000 square feet of secure offices, are now completed at the Port’s Air Force complex. On the horizon is development of up to one million square feet of new buildings to accommodate additional military agencies and the growing number of contractors relocating to the region.

The Port also continues working hand-in-hand with customers and area educators in providing access to talented workers and a flexible training platform that serves as a job pipeline and ensures existing workers are prepared to new tackle new projects.

It was the first full year of operations for Alamo Colleges’ Workforce Center of Excellence, established in 2012 at East Kelly Railport under an agreement between the Port and the community college district. Today it’s an important training platform for the region’s information technology, advanced manufacturing and energy industry workers. Nearby, the Alamo Aerospace Academy continued its work as a national example of innovative workforce development, reaching 350 graduates since its inauguration and serving as a vital partner that recruits and prepares the area’s young people for rewarding careers among the Port’s aerospace customers.

The Port also continued expanding its workforce housing throughout the year. With a proven residential market established, it is setting its sights on upcoming development that will add hundreds of new units and mixed-use amenities in a dynamic environment that is growing the Port’s reputation as a great place to work, learn, live and play.

Building Futures chronicles our work and embodies the spirit of who we are and what we do. We hope you enjoy reading about the past year’s accomplishments by our organization, customers and partners, and the exciting road ahead.

Sincerely,

Bruce E. Miller

President and CEO

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ToTal building invenTory: 12.9 million sq. fT.

285 buildings

1,783,027 Sq. Ft.14%

Other616,590 Sq. Ft.5%

Rail-served warehouse689,116 Sq. Ft.5%

Residential810,177 Sq. Ft.6%

Industrial Hangar1,432,968 Sq. Ft.11%

Industrial General 2,707,781 Sq. Ft.21%

Industrial Warehouse4,861,701 Sq. Ft.38%

Office/Flex

LeaseExpansions

LeaseRenewals

NewLeases

Units in Square Feet

FY09FY10

FY11FY12

FY13

6,329

133,182

22,197

899,016

100,202

49,032

103,212

35,010

131,456

827,263

326,579

320,311

1,067,598

483,988

78,698

leasing aCTiviTy

building a solid foundaTionPort San Antonio is one of South Texas’ largest and fastest growing economic engines. The 1,900-acre property is an ideal industrial platform: a site contained within a foreign-trade zone (FTZ #80-10) with direct rail, road and air connections and plenty of land to grow.

Its logistics offerings and almost 13 million square feet of existing facilities have attracted over 80 customers to date, centered in the aerospace, logistics, military/government and manufacturing sectors.

The employment base at the Port is 13,000 workers, which in turn generates more than $4 billion in regional economic activity each year.

Although 97 percent of the Port’s leasable space is occupied—hangars, warehouses, workshops, offices and residential facilities— there is ample room to grow. Only about 40 percent of the Port’s available land is developed. There are approximately 1,000 acres for the construction of new buildings that support the growth of target industries. Once fully developed, the real estate platform at the Port could directly support the creation of up to 35,000 jobs. Full build-out of Port property represents an estimated $2.5 to 3 billion in future development opportunities.

At the northern end of Kelly Field (SKF), the Port’s industrial airport featuring the region’s longest runway, almost 400 acres of additional land became available in 2013 to support the expansion of the region’s vibrant aerospace industry. This acreage is ideally suited for the construction of new hangars, air logistics terminals and other facilities.

Port San Antonio is the region’s largest commercial and industrial real estate

leasing and management firm, supporting an array of customers centered in

the aerospace, manufacturing/logistics and government/military sectors.

todAy, ABout 40 Percent of the

1,900-Acre ProPerty iS develoPed,

underScoring tremendouS

PotentiAl AheAd.

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ST. PHILIP’S COLLEGESOUTHWEST CAMPUSBILLY MITCHELL BLVD

GENERAL HUDNELL DR.

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AL

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EN D

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36TH ST.

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KELLY FIELDAVAILABLE

AEROSPACESITES

KELLY CENTERAVAILABLE

MIXED-USE DEVELOPMENTSITES

ENGINE TEST CELLFACILITIES

EAST KELLY RAILPORTAVAILABLE RAIL-SERVED

LOGISTICS/ MANUFACTURING SITES

LINDBERGH PARKAVAILABLESECURED

OFFICE SITES

SW MILITARY DR.

a dynamiC PlaTform for growTh

There are approximately 1,000 acres available at the Port for the development of additional built-to-suit facilities.

East Kelly Railport offers 150 acres of additional land whose highest and best use is the development of rail-served warehouses, logistics and manufacturing facilities with direct access to Union Pacific Railroad and BNSF Railway trains.

Lindbergh Park, which spans 45 acres on the Port’s northeast side, is where future secure office facilities will be built to accommodate the significant growth in military agencies, professional personnel and contractors relocating to the region, and which already account for half the workers at the Port.

In the heart of the property, approximately 400 acres that comprise Kelly Center serve as the framework for high-density mixed-use development. As it evolves, Port San Antonio is focused on serving as a strategic partner to its customers by helping attract and train their workforce through innovative educational and residential facilities and corresponding amenities within this part of the property.

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a sTraTegiC indusTry ParTneraerosPaCeSupport of aircraft, including maintenance, repair and overhaul (MRO) services, is among the region’s most important industries. Industrial aviation has a $5.4-billion annual economic impact on the region and directly employs over 13,000 area workers, according to a 2011 study by the San Antonio Chamber of Commerce.

Much of that activity takes place at Port San Antonio, where nearly 4,000 workers are employed by 14 aerospace-related firms, with important growth opportunities ahead.

Fifteen years ago, when the first private firms occupied facilities at Kelly Field, they focused exclusively on MRO services for military aircraft. While support for the U.S. Air Force remains a primary activity among several aerospace operations at Kelly Field, there is increased diversification in commercial and other

projects, with strong projections ahead as U.S. airlines return to profitability, and as the worldwide demand for passenger and cargo air transportation services increases.

there Are Strong

ProjectionS AheAd

AS demAnd for Air

trAnSPortAtion

ServiceS increASeS

worldwide.

Starting in 2014, Gore will begin to build luxury cabins for two Boeing 787 Dreamliners—the most advanced passenger aircraft in the world. Shown here is an

artist’s concept of the new interiors. Photo courtesy Gore Design Completions.

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continued

Gore Design Completions, Ltd. (GDC), which began operations at the Port in 2005, exemplifies how Kelly Field’s industrial platform, combined with a talented workforce and ongoing strategic support from Port San Antonio, provide the foundation that is driving the aerospace industry’s regional growth as it serves a global clientele.

During its time at the Port, GDC has become renowned for its specialty of outfitting large aircraft with remarkable luxury interiors. Thanks to strong demand from a clientele that includes world leaders and other VIPs, GDC has grown its local workforce from 100 employees in 2005 to almost 500 today. Its headquarter operations at Kelly Field total over 300,000 square feet, including a 231,000-square-foot custom-built hangar, that can accommodate multiple wide-body aircraft simultaneously, and nearby workshop spaces.

GDC’s products can be best described as flying works of art, finely crafted thanks to the expertise of an array of designers, engineers, cabinet makers, electricians, upholsterers and other specialists who conceive and build each interior over the course of several months. In addition to meeting exacting Federal Aviation Administration (FAA) requirements, no aesthetic detail is overlooked. GDC has set industry standards in design by using only the highest quality materials when building fine cabinets, seats, tables, bedroom suites and fully outfitted bathrooms. Even the in-flight china and flatware are custom-crafted to reflect each client’s taste and needs.

Gore Design Completions, Ltd. has been headquartered at Port San Antonio since 2005. In that time, it has become a world leader in modifications to luxury

aircraft on behalf of a clientele of world leaders and other VIPs.

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This pursuit of excellence has enabled GDC and its workforce to reach new milestones. In 2013, the company worked on four interiors over the course of the year: three wide-bodied jets and a narrow body.

Momentum will continue in 2014, when GDC plans to begin work on two Boeing 787 Dreamliner custom interiors on behalf of foreign heads of state. The Dreamliner is among the most advanced passenger aircraft in the world—combining innovative design and construction that are transforming the experience of flying. In the hands of GDC’s experts, the Dreamliners— among the first in the world to be outfitted with VIP interiors—will reach new levels of connectivity, security and comfort for their passengers.

Furthermore, as it continues to grow its business, GDC officials announced in 2013 that they expect to grow their local workforce as the new Dreamliner and other projects are underway.

Since itS ArrivAl At

Port SAn Antonio in

2005, gdc hAS grown

from 100 to AlmoSt

500 worKerS todAy.

“gore is uniquely positioned to continue growing as a leader specializing in the highest quality modifications to the most advanced viP aircraft in the world. a talented workforce and strong support from the Port and the overall san antonio community give us a strong foundation to reach new levels of success in an exciting industry with a strong future ahead.”

mohammed alzeergeneral Partnergore design Completions, ltd.

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An icon of aerospace, The Boeing Company has a long history at Port San Antonio and important opportunities ahead.

For 15 years, the company has operated one of the world’s largest military aircraft MRO facilities at Kelly Field. In 1998 it

began its work in support of U.S. Air Force workhorses like the C-17 Globemaster III and KC-135 Stratotanker. In a specialized complex that features one of the largest freestanding hangars in the world, spanning almost one million square feet, Boeing’s operations at Port San Antonio carry the distinction of being among only a handful of MRO sites worldwide that can tackle both military and commercial projects.

The company maintains 22 wide-body hangar positions at the site and can handle maintenance of 40 Air Force airlift and tanker aircraft simultaneously.

As a result of more than $100 million in improvements to its facilities over the years and the solid reputation of its local employees, Boeing has been adding new projects at its Port San Antonio site.

continued

At Kelly Field, Boeing operates a unique site that is able to handle maintenance, repair and overhaul of both military and commercial aircraft.

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Starting in 2011, Boeing’s San Antonio facility began to perform change incorporation and refurbishment for 787 Dreamliners and 747-8 air cargo freighters before delivery.

Throughout 2013, the company accepted and delivered 61 C-17s back to its operators—a record for the site. On the commercial side, Boeing San Antonio executed the successful return to flight plan for United Airlines’ six 787s, installing all new battery packages ahead of schedule. The facility also completed an 787-8F freighter change incorporation during the course of the year.

The global 787 program also reached an important milestone last year as the 1,000th order was placed for the highly advanced aircraft. Innovative design and new features enhancing comfort have won high praise from thousands of passengers since the aircraft went into production. And an airframe built with lighter composite materials, combined with advances in engine technology, make the 787 significantly more fuel efficient than similarly sized aircraft, spurring demand from over 60 customers worldwide and opening doors to future work at Kelly Field in the years ahead.

Furthermore, Boeing’s facility continued to prepare for important new government sector work. Starting in 2014, Boeing San Antonio will support the U.S. Executive Fleet.

To prepare for the new work, the Port’s permitting and construction departments worked closely with their Boeing counterparts throughout the year as the company expanded and conducted significant technical and security upgrades to an existing hangar that will house Executive Fleet aircraft undergoing maintenance.

Among aircraft supported by Boeing’s facility at Kelly Field are the 787

Dreamliner and 747-8 cargo freighter, which undergo upgrades at the site

before delivery to airlines and air transportation firms worldwide.

(Photo by Kentaro IEMOTO.)

“boeing san antonio is providing world-class maintenance, overhaul, and repair services for both defense and commercial customers from around the world, including the u.s. air force and airlines. The 1,600-employee team here is performing in

an innovative way that gives these customers the confidence to bring even more work to boeing san antonio in the future.” Kevin devinesite executiveboeing san antonio

Boeing’S gloBAl

787 dreAmliner

ProgrAm reAched

1,000 orderS in 2013.

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continued

Similarly, longstanding Port aerospace customer Kelly Aviation Center (KAC), a Lockheed Martin affiliate and joint venture with Rolls-Royce, continued to focus on growing and diversifying its business lines. The company is among the first arrivals at Kelly Field, where it operates one of the nation’s premier aircraft engine MRO facilities.

Like many of the Port’s aerospace customers, KAC began its work at Kelly Field by focusing exclusively on military MRO, in the process earning the U.S. Air Force’s highest performance rating. To date, the company has serviced more than 2,500 engines that power a broad spectrum of military platforms, including the C-5, C-130, P-3 and U-2. The site also specializes in serving F110 engines built by General Electric, which power F-15 and F-16 warfighters.

Additionally, KAC is growing its work in the commercial sector. Lines targeted by the company include the CFM56, which powers the Boeing 737s—the most popular passenger aircraft in the world. KAC also serves the popular CF6-80 line, which is used by both military and commercial aircraft, including the C-5M and Boeing 747 and 767.

Kelly Aviation Center has built a global reputation as a leader in maintenance of both military and commercial aircraft engines.

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As a result of this expertise, KAC will serve as the engine support specialist on behalf of Skyone Maintenance Services starting in 2014. Based in the United Arab Emirates, Skyone provides aircraft maintenance and material support for a wide range of commercial aircraft, including the Boeing 737, A320 and Boeing 747.

KAC’s platform at Kelly Field consists of almost one million square feet of space, which includes one of the largest aircraft engine test cell facilities in the world.

Furthermore, as one of the region’s leading workforce development supporters, KAC graduated its eighth class of employees under its innovative apprenticeship program in 2013. The rigorous 18-month curriculum includes 3,000 hours of on-the-job training and more than 200 hours of in-class instruction.

The program builds upon two years of college-level dual credit training and internships that many KAC workers receive as high school students at the nearby Alamo Aerospace Academy prior to becoming company employees (read more in Building Workforce Talent, on page 46).

The program is the only one of its kind registered by the U.S. Department of Labor and allows young workers to be promoted to level one aircraft engine mechanics—a critical step in advancing their futures in the region’s growing aerospace sector, and providing KAC with a dynamic, flexible workforce able to continue tackling a growing array of projects.

“aerospace has an exciting future ahead. as we continue our support of military customers, KaC’s platform at Port san antonio gives us the flexibility to grow in the commercial sector as well. our upcoming work on behalf of skyone strengthens KaC’s global position as a leading center of aerospace excellence.”

amy gowderPresident and general managerKelly aviation Center

The 2013 graduates from KAC’s in-house apprenticeship program, which provides important training as young workers

become level one aircraft engine mechanics, are joined by KAC and Port leadership on graduation day.

continued

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At the Port, Kelly

AviAtion center And itS

PArtnerS hAve AcceSS

to highly SPeciAlized

fAcilitieS to teSt

AircrAft engineS thAt

undergo mAintenAnce,

rePAir And overhAul.

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Also based at Kelly Aviation Center, partner StandardAero continued to grow its reputation as the premier maintenance center for the T56 engine, which powers the military’s C-130 Hercules and P-3 Orion aircraft. The company’s operation at Kelly Field was first established in 1999, and today spans 300,000 square feet of space, making it the largest T56 MRO facility in the world.

In addition to being the exclusive depot for T56 engines used by U.S. Air Force aircraft, StandardAero has also built a strong reputation among foreign military customers. The San Antonio operation extends its T56 expertise to armed forces worldwide, which account for about 20 percent of its workload. Foreign customers represent an important growth opportunity, given that more than 2,000 C-130s were built since the 1950s and many still serve as the backbone of military air logistics operations worldwide.

StandardAero’s facility at Kelly Aviation Center is the exclusive depot for the maintenance of T56

engines on behalf of the U.S. Air Force as well as several foreign military forces.

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“The solid track record of service and efficiency built by our san antonio operation over the course of almost 15 years, combined with the strong aerospace platform at Kelly field and the region’s talented workforce, provide us the flexibility and strategic support to pursue new military and commercial aerospace opportunities worldwide.”

Terry hastmanvice President and general managergovernment and militarystandardaero

The T56 line of engines supported by

StandardAero power the Hercules C-130—

one of the most popular military air cargo

aircraft in the world, with over 2,000

produced.

StandardAero’s local workforce has also made its mark on aerospace innovation. Among its employees at the Port facility is a team of engineers whose specialty is the development of patented tools and processes that ensure that each refurbished engine operates with maximum efficiency and longevity in service. As a result, engines serviced by StandardAero routinely exceed efficiency requirements established by the company’s military customers and the original engine manufacturer.

Thanks to high production standards grounded in StandardAero’s long history supporting the T56 program, the San Antonio operation has received top ratings twelve times following annual reviews by the U.S. Government’s Contractor Performance Assessment Reporting System since its arrival at Kelly Field.

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The growth in the aerospace industry’s momentum in the region is further supported by additional marquee names at Kelly Field.

Chromalloy, a world leader in turbine engine services and among the early arrivals at Kelly Field, occupies almost 300,000 square feet of facilities at the Port. The company is a business unit of the Sequa Corporation, a portfolio company of the Carlyle Group. It is the world’s largest independent supplier of technologically advanced repairs, coatings, and FAA-approved replacement parts for turbine airfoils and other critical engine components for commercial airlines, the military and industrial turbine engine applications.

With a presence in 17 countries, Chromalloy partners with original equipment manufacturers, commercial airlines, the military and power companies to deliver innovative solutions that reduce manufacturing and operating expenses, and extend the life of gas turbine engines. The company has developed several special repairs benefiting customers by extending the service life of engine components. Customers

Similarly, Pratt & Whitney supports military engine repair work. Since 1998, P&W has occupied more than 100,000 square feet of facility space at Kelly Field performing overhaul and repairs of F100 engines, which power F-15 and F-16 military fighter jets.

Among the engines maintained by Chromalloy’s team at Port San Antonio is the F108, which power KC-135 aircraft. Also known as the Stratotanker, the iconic KC-135 supports critical missions by refueling other military aircraft in flight.

worldwide include many of the major airline overhaul shops, the U.S. military and several land-based turbine industrial operators.

At Port San Antonio, the firm’s operations support military, commercial airlines and industrial gas turbine customers.

In 2013, Chromalloy’s work at its Port San Antonio location included the addition of new maintenance and repair work for F108 engines, which power the U.S. Air Force’s KC-135 tanker.

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Starting in 2013, the control tower at Kelly Field, which is operated by Port neighbor Joint Base San Antonio-Lackland, is open 24 hours a day year-round.

Elsewhere at Kelly Field, a complex of four former Air Force hangars totaling approximately 50,000 square feet became available in 2013 to provide new opportunities for Port customers.

The first to lease a 10,000-square-foot hangar was Atlantic Aviation, the Port’s fixed-base operator since 2000, which had previously occupied a temporary building next to the runway. The Port worked alongside Atlantic to outfit the building with a new interior, including office space and a pilot’s lounge.

Atlantic has long supported Boeing and GDC by offering fueling and de-fueling services. It also serves military aircraft on behalf of the Port’s neighbor, Joint Base San Antonio - Lackland. The new facility allows Atlantic to lease hangar space for small aircraft and support their needs as well.

In addition, private, charter and cargo airplanes regularly turn to Atlantic’s Port San Antonio location. Along with the new hangar space and passenger amenities, Atlantic features ample ramp space to accommodate special cargo projects, 24-hour access thanks to around-the clock control tower operations begun in 2013, on-site U.S. customs and the Port’s quick connections to area highways — placing downtown and other regional centers of commerce only minutes away.

“we are proud of our new facilities and additional space at Port san antonio to continue serving our customers. with the uncongested runway at Kelly field, 24-hour tower access and quick highway connections to downtown and other regional centers of commerce, this is a great location to grow our business.”

dwight randolphgeneral manageratlantic aviation

New hangar space allowed fixed-base operator Atlantic Aviation to expand its operations at Kelly Field in 2013. The company supports Port customers Boeing and GDC, as well as cargo and U.S. Air Force aircraft.

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24/7 towero P e r a T i o n s

Starting in 2013, the control tower at Kelly Field, which is operated by Port neighbor Joint Base San Antonio- Lackland, began service 24 hours a day year-round.

“The state of Texas takes pride in providing a great place to do business, and Port san antonio shares in this can-do attitude. for fifteen years, the Port has worked hard with its customers and partners to build a center of aerospace excellence. as global demand for air transportation increases in the years ahead, our state, thanks to efforts like those at the Port, is perfectly positioned to be a strategic partner to one of the world’s most dynamic industries.”

José menendezTexas state representative - district 124

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Another customer for whom the new hangar space at Kelly Field was essential in 2013 is San Antonio-based Knight Aerospace Products, Inc. In the summer, the company signed a temporary lease for one of the 10,000-square-foot hangars and 35,000 square feet of ramp space.

The company used the site to outfit a brand new Lockheed Martin C-130J aircraft with two interior kits built at Knight’s nearby facility just two miles from the hangar. The innovative cabin interiors developed by the company allow the quick transformation of aircraft from cargo to passenger use

At Kelly Field, technicians loaded the custom-built compartments into the cargo area, secured them to the aircraft’s rail restraint system, and conducted necessary testing as a final step in the two-year manufacturing process.

These latest deliveries were custom built for one of Knight’s VIP customers. The first is a kit with rows of seats, also known as palletized seating or roll-on/roll off kits, similar to the configuration of a commercial airliner. It also features a lavatory, galley, and luggage area. The second unit is a fully enclosed luxury cabin complete with a galley, aeromedical bed, and two lavatories.

“The Port has given us excellent support and facilities which increased the efficiency of our operations. Thanks to the nearby space at Kelly field and the responsiveness of the Port’s team, we were able to quickly conduct the testing to finalize a multi-million dollar order. we look forward to a continued partnership with the Port as our business grows.”

rick Knightvice PresidentKnight aerospace Products, inc.

Special palletized units built by Knight Aerospace Products allow for the quick conversion of cargo aircraft

to passenger use—both as a regular airline configuration and a fully enclosed luxury cabin.

Easily accessible ramp space at the Port allowed

Knight to load its custom-built cabin onto a

C-130J for delivery to a VIP customer.

Three generations of the Knight family have grown the San Antonio-based

company into an aerospace enterprise serving an international clientele. From

left to right, Michael, Rick and Alfred Knight.

continued

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BILLY MITCHELL BLVD GENERAL HUDNELL

GEN

ERA

L M

CMU

LLEN

36TH ST.

EAST KELLYRAILPORT

FUTURE EXTENSIONTO IH-35

90

151

TO COMMENCE IN 2014

To prepare for future aerospace industry growth, the Port, its customers and local stakeholders celebrated an important milestone in 2013—the completion of roadwork extending 36th Street within Port property.

The road realignment project broke ground in 2010 and is overseen by the City of San Antonio in partnership with CPS Energy, the San Antonio-Bexar County Metropolitan Planning Organization (MPO) and San Antonio Water System (SAWS).

Last year, phases that extend the new thoroughfare into the heart of Port San Antonio were completed. The new road will enable the closure of a smaller road next to Kelly Field and open new land—nearly 400 acres with runway access—for the development of additional aerospace sites.

In time, and upon full development, future hangars and workshops on the northern end of Kelly Field could support more than 8,000 additional industry jobs (read more in Building a Dynamic Platform, on page 38).

“Port of san antonio is an excellent example of collaborative efforts among public and private partners for the benefit of our community. as our city grows, the Port will continue to work hard to attract jobs in the ultra-competitive aerospace industry while continuing to fuel the growth and success of our city.”

rey saldañamember, san antonio City Council - district 4

400with runwAy AcceSSAcreS

24

25

logisTiCsThe San Antonio region is one of the country’s fastest-growing locales, where the efficient transportation of goods and supplies is at the foundation of growing retail, manufacturing and energy industries.

In the last decade, the area added nearly 500,000 people. The metropolitan population now numbers over 2.2 million. In addition to being an important consumer market, strong demand for logistics services is driven by growing manufacturing and maintenance operations like those at Port San Antonio and, as was in clear evidence in 2013, unprecedented energy sector opportunities arising from the nearby Eagle Ford Shale play.

At Port San Antonio, companies find the perfect logistics and manufacturing platform: a complex that includes 1,000 acres for new built-to-suit industrial facilities and direct access by air, rail and truck—all contained within a foreign-trade zone (FTZ #80-10).

With aerospace as Port San Antonio’s cornerstone industry, the site has been home to logistics firms for several years that specialize in supporting aircraft maintenance and repair operations. URS Corporation and New Breed Logistics, which

occupy large warehouse facilities, are the key providers of storage and distribution of aircraft parts.

Customers at Kelly Field are also supported by fixed-base operator Atlantic Aviation. Based at the Port since 2000, Atlantic serves array of aircraft, including private jets, military fighters, large helicopters and even Boeing 747 freighters with fueling and de-fueling services and over 40,000 square feet of ramp space for staging cargo projects (see page 21).

26

SAn Antonio iS Among the

10-fASteSt growing citieS

in the nAtion.

-forBeS mAgAzine

27

Logistics activity at Kelly Field saw a big boost in 2013 with the arrival of Forward Air Solutions. As part of a regional relocation and expansion, the company occupied an 89,600-square-foot distribution facility alongside the runway.

The Tennessee-based firm, a subsidiary of Forward Air Corporation, is a leading national provider of pool distribution services. The company specializes in the consolidation and delivery of goods through a logistics process that replenishes inventory at retail outlets in major metropolitan areas and small communities. The firm operates one of the largest and most efficient networks of its kind in the country, reaching stores in 35 states through a fleet of over 800 owner-operated trucks in the Forward Air network.

The facility at Port San Antonio, which can be accessed by both trucks and cargo aircraft, allows Forward Air Solutions to store and consolidate consumer products that it then distributes as needed by its customers, which include several large retailers throughout the region.

Before conveyor belts, racks and other equipment could be installed in the vacant building, Forward Air required a finish-out that included installation of extensive lighting, ventilation systems and construction of a 3,200-square-foot office space within the distribution center. Port San Antonio’s in-house construction team managed the project on behalf of Forward Air, completing it within a tight 45-day timeline that allowed the company to begin operations in the fall, ahead of the busy holiday shopping season.

S O L U T I O N S

Within a matter of weeks, Port San Antonio oversaw the finish-out of the 89,600-square-foot interior of a logistics facility at Kelly Field to support a regional expansion by Forward Air Solutions—a national provider of pool distribution centers that support the retail industry.

28

From its new location at the Port, Forward Air

Solutions will replenish inventory at shopping

malls throughout the region.

29

The northern portion of the property also continued to serve as an important regional distribution platform for Triple-S Steel—one of the Port’s original logistics customers. The Houston-based company had its warehouse, showroom and distribution center custom-built at Port San Antonio in 2003. The 120,000-square-foot building allows Triple-S to serve area

construction firms and other industrial customers. The facility, whose award winning design was developed by San Antonio’s renown Lake | Flato Architects, includes fluid overhead cranes that swiftly move inventory inside the vast space and efficiently load it onto awaiting trucks.

Elsewhere at the Port, the 350-acre East Kelly Railport—the only site in San Antonio directly accessible to Union Pacific Railroad and BNSF Railway Unit Trains—continued its momentum in supporting energy, manufacturing, construction, retail, railcar repair and other industries.

The OpTech Group, which has been based at the Port since 2006, provides business process outsourcing services, third party logistics services and staffing services to public and private sector clients. OpTech also offers turnkey project management expertise for clients in the energy, technology, retail and government sectors.

At its 58,000-square-foot facility at East Kelly Railport, the company specializes in providing an array of business solutions, including warehousing, fulfillment, light manufacturing and refurbishment of electronic products. The facility is the only active public foreign-trade zone (FTZ #80-10) in San Antonio, which provides important versatility to clients importing or exporting products that need to be assembled, kitted, transformed or simply stored in a duty free status close to clients. The FTZ has unique advantages that can make businesses more flexible and save money while accessing foreign markets (see sidebar).

Triple-S Steel’s warehouse and distribution/retail center at Port San Antonio.

30

foreign-Trade Zone suPPorTs inTernaTional CommerCePort San Antonio is covered by a general purpose foreign-trade zone designation, FTZ #80-10.

Businesses that import and export goods can access the FTZ benefits at Port San Antonio on a long term or as-needed basis by contacting the Optech Group (www.otcorp.com), whose 58,000-square-foot warehouse at East Kelly Railport includes the region’s only active foreign-trade zone site.

FTZ advantages include:

• Duty Deferral - Normally, import duties are paid when goods arrive to the U.S. from abroad. However, if the goods are imported and warehoused in an FTZ, duty payments are due only once the goods leave the FTZ and enter the U.S. market. Postponing duties provides a cash-flow advantage to importers/exporters.

• Duty Elimination - Import duties can be avoided altogether if goods that enter the FTZ are stored, sorted, tested, assembled, configured, repackaged and otherwise handled within the FTZ and are then exported without ever entering the U.S. marketplace. Products from international suppliers can be merged in one place to conduct quality assurance, final configuration and packaging before shipping finished products domestically or abroad without having to pay duties for products in transit to other countries or until goods are shipped to their final U.S. destination.

• Duty Reduction – Import duties on components are often higher than those charged for finished products entering the U.S. market. Because duties are not charged while imported components remain in the FTZ, products can be assembled or manufactured inside the FTZ before leaving the zone as finished goods. The finished goods entering the U.S. market will generally be charged a lower duty than their individual components.

• Waste Duty Elimination – Sometimes a portion of imported materials brought into the FTZ for assembly or manufacturing becomes scrap. Duties are not levied on these waste products.

31

Another customer located at East Kelly, Bergstrom Climate Control Systems, completed its first full year

of operation at the Railport. The Illinois-based firm is a leader in the design and manufacturing of cab climate systems for heavy duty commercial trucks, off-highway machines and specialty vehicles.

Bergstrom and partner Pyramid Plastics occupy 105,000 square feet of rail- and truck-served warehouse space at the Railport. The company chose Port San Antonio as the site for its expansion in large part because of the facility’s strategic location and the region’s strong workforce. This is especially important as Bergstrom supplies Navistar, one of its principal customers, at manufacturing centers both domestically and in northern Mexico. The Port’s central location and quick road connections reduce transportation costs for the company and increase the efficiency with which it delivers its products—up to 2,000 units per week.

Bergstrom Climate Control Systems completed its first year at East Kelly

Railport in 2013. A great workforce and strategic location allow the company

to assemble thousands of units each week at the Port and deliver them to

truck manufacturers in the U.S. and Mexico.

“Port san antonio is a dynamic economic engine to our community. many industries, including aerospace, manufacturing, energy, and retail are thriving thanks to the Port’s unique platform. i am delighted to see Port san antonio help businesses and their workers boost not only san antonio’s economy, but also the global economy.”

Joaquin CastroCongressman, district 20 - TX

32

Cargo activity reached record levels at the Railport, with a near doubling in volume over the course of the year. In FY2012 5,159 railcars were served at the site, compared with 9,693 served in FY2013.

Among the customers who specialize in rail transportation is Fiesta Warehousing & Distribution. The company operates a modern cross-docking warehouse, where it receives railcars of consumer and break bulk goods on one side of the facility and warehouses and sorts them before being distributed regionally by trucks. A Port customer since 2008, Fiesta has expanded over the years and now occupies over 300,000 square feet of warehouse space as a result of strong demand from retailers and other businesses.

It was also a good year for Railport customer The Greenbrier Companies, which conducts repair and overhaul of railcars used throughout North America. The company has maintained its site at Port San Antonio since 1997.

In recent years Greenbrier has seen steady growth at its East Kelly Railport location, following the increased reliance several industries have on rail transportation as the U.S. economy continues to gain momentum and high fuel prices increasingly move manufacturers and other businesses to greater use of the much more economical rail transportation, especially over long distances.

WAREHOUSING&

DISTRIBUTIONC O M P A N Y

An Afflilate of Brokers Logistics, Ltd.

33

The increase in rail capacity at East Kelly Railport has been led by Watco Companies. Starting in 2012, the Kansas-based firm, a leading operator of short rail lines across the country, doubled track at East Kelly from four to eight miles, including a spur completed in 2013 that allows the handling of unit trains (approximately 100 railcars at a time with the same type of cargo). These additions have grown the Railport’s capacity four-fold— from 5,000 railcars a year before expansion to a current limit of up to 20,000 railcars a year.

Furthermore, in 2012 Watco launched the San Antonio Central Railroad, whose engine brings railcars from Union Pacific Railroad and BNSF Railway trains outside the Railport and delivers them directly to customers’ facilities within the site.

In addition to seeing brisk activity in 2013, there are still 150 acres of land for new built-to-suit facilities at East Kelly, including logistics and manufacturing options with direct rail access.

“The growth that we’ve seen at east Kelly railport following our first year of operations has been tremendous. it underscores the site’s strategic location to capture significant opportunities in the region as the energy sector and other key area industries continue to increase their reliance on the efficiency or rail.”

rick webbCeo, watco Companies

Since 2012, Watco has expanded tracks at the

Railport from four to eight miles. In 2013, this

included the addition of a track that can handle

a unit train—about 100 railcars dedicated to a

single commodity.

34

The bulk of East Kelly Railport’s activity in 2013 was once again due to the strong demand for the services of transloader and logistics experts, RLI Logistics Solutions.

Based at East Kelly Railport since 2007, RLI specializes in the transfer of bulk and volume cargos from railcars onto trucks and vice-versa. The inbound goods and materials are then distributed regionally.

In addition to serving the construction, military and other industries, the company has experienced significant growth in its transloading services for proppant materials, pipe and equipment serving thousands of oil and natural gas well sites across the nearby Eagle Ford Shale play.

The company has been steadily growing to take advantage of new opportunities in the energy sector. From its original 11-acre site it has added 18 more acres at the Railport, including over 200,000 square feet of warehouse space between two facilities at the Port.

“in 2010, we processed approximately 500 railcars at our Port facility. in 2014, we are prepared to support over 10,000 railcars: a twenty-fold increase. east Kelly provides us a strategic, flexible facility from which to service the energy sector and other rail-centric opportunities in supporting key markets.” loy garciaPresidentrli logistics solutions

RLI, which supports regional industries at East Kelly Railport, specializes in transferring large cargo from railcars onto trucks. It has experienced significant

demand for the transload of drilling equipment and frac sand headed for oil and gas wells throughout the Eagle Ford Shale.

4,000

6,000

7,000

8,000

9,000

10,000

11,000

5,000

2,000

1,000

3,000

0

2,1412,764

1,468

2,594

4,5565,167

9,693

FY07 FY08 FY09 FY10 FY11 FY12 FY13

RA

ILC

AR

S P

ER

YE

AR

easT Kelly railPorT rail volume fy07-fy13

35

naTional defense / governmenTProviding a platform for key national defense operations is an important part of Port San Antonio’s work.

Approximately half of the 13,000 workers at the Port are Air Force personnel—mostly professionals, including cyber security specialists, architects, engineers, and attorneys—who work for a growing number of agency headquarters at the Port. Furthermore, as additional missions relocate to the region, Port San Antonio has emerged as a leader in helping the Air Force meet pressing needs for highly specialized facilities.

The Port’s work as a strategic real estate partner to the Air Force began in 2005, when the Department of Defense (DoD) announced numerous base closures and realignments worldwide. As a result, several missions have been consolidating to San Antonio in recent years, and the Port has developed a specialty in delivering facilities that meet rigorous Anti-Terrorism Force Protection (ATFP) construction standards established by the DoD, whose regulations require that all military personnel, both uniformed and civilian, work in secured facilities.

Among the features of ATFP facilities are a fenced perimeter set back from public roadways, reinforced construction that prevents structure collapse, secured gates and entries, and redundant telecommunications and power generation systems.

“san antonio is proud of its heritage as military City, u.s.a., and we are very pleased that our forces in the region have a great future ahead thanks to Port san antonio. Thanks to the innovative facilities provided by the Port, important operations like the 24th air force have state-of-the art facilities to tackle the military challenges of the 21st century.”

leticia van de PutteTexas state senator - district 26Chair - Committee of veteran affairs and military installations

A five-building complex houses most Air Force

personnel at Port San Antonio. The 70-acre site has

been instrumental in the consolidation of military

headquarters to the region.

Kelly Center

171

Billy Mitchell Blvd. General Hudnell Dr.

36th St.

S. Gen McM

ullen

Lackland AnnexCantonment area

Lindbergh Park OfficeDevelopment Site

36

As a first step in its support of the Air Force, in 2008 the Port began upgrading a large five-building complex on the eastern part of the property where several Air Force agencies are now consolidated, including six headquarters that relocated to the Port from Washington, D.C. The Port has managed over $60 million in modifications to existing buildings, including the 460,000-square-foot Building 171, which anchors four adjacent facilities within the 70-acre secured site.

Work by the Port and its consultants during the five-year period to build the highly specialized complex included review of design, permitting, approvals of submittals, work progress reports and ensuring compliance with DoD, City of San Antonio and Port construction requirements.

Today, the complex is the nerve center of several Air Force operations and serves as the national headquarters for the Air Force Medical Operations Agency (AFMOA), the Air Force Medical Services Agency (AFMSA), the Air Force Civil Engineer Center (AFCEC) and the Air Force Public Affairs Agency (AFPAA), among other entities.

Furthermore, in the spring of 2013 the 24th Air Force formally inaugurated its new headquarters in Building 171. The 24th Air Force is the Air Force component of the U.S. Cyber Command and is the final occupant of the secure office space.

The 24th Air Force establishes, operates, maintains and defends military networks to ensure warfighters can maintain the information advantage as U.S. forces undertake operations around the world. Almost 1,000 of the personnel at the Port work for the 24th Air Force.

As a next step in support for the Air Force’s regional growth, the Port’s master plan identifies Lindbergh Park, comprising 45 acres adjacent to the newly established complex, as an ideal site for the development of new force protected facilities and parking. The Port is working to identify prospective investment partners to assist in the development of the project, which can house both military operations and the growing number of government contractors in the region.

The addition of the military agencies has already attracted firms such as Booz Allen Hamilton, Information Innovators and INDUS

The 24th Air Force, also known as the Cyber Command, is among the military

headquarters now based at the Port.

Corporation to Port San Antonio—companies that provide information technology and strategic consulting services. The development of Lindbergh Park will enable similar contractors to be close to their military and government customers.

Furthering the Port’s ability to provide facilities for the region’s expanding military operations, a 2011 state law enables the organization to extend its services beyond its footprint. As a result, in 2012 the Port began taking steps to support the growth of neighboring Joint Base San Antonio-Lackland, home to several operations, including the Air Force’s 37th Training Wing, which provides basic training for all new recruits and specialized training to current service members worldwide.

Both the Port and JBSA-Lackland are exploring options that will be of mutual benefit to Air Force operations and Port development. Any additional growth at JBSA-Lackland would be a further boon to the regional economy given the military’s deep historic roots in San Antonio. According to a report issued by the City of San Antonio, the military’s economic local impact on the region is $27.7 billion annually, and an expanded presence at JBSA-Lackland would help create additional direct and indirect jobs in a variety of business sectors.

37

building a dynamiC PlaTformTo ensure the success of industries at Port San Antonio, and to support the development of nearly 1,000 available acres for future built-to-suit facilities, the organization works closely with community stakeholders to build the necessary infrastructure to develop the 1,900-acre property to its highest and best uses.

Several key road projects, which represent over $60 million in combined investments, continue to move forward and reached important milestones in 2013.

The completion of the 36th Street extension to Billy Mitchell Boulevard opens approximately 400 acres to the west for building new

aerospace facilities with direct runway access.

BILLY MITCHELL BLVDGENERAL HUDNELL DR

36TH ST.

EAST KELLYRAILPORT

GENE

RAL

MCM

ULL

EN D

R

90

151

FUTURE EXTENSIONTO IH-35

SITESFOR NEW AEROSPACE

DEVELOPMENT

PHASE IIIACOMPLETED 2013

PHASE IIIBTO COMMENCE 2014

PHASE ICOMPLETED 2006

PHASE IICOMPLETED 2013

38

36Th sTreeT: new aerosPaCe oPPorTuniTies aT Kelly field

“strategic investments in Port san antonio help grow important industries, particularly the aerospace sector. The hard work that’s gone into making this infrastructure a reality will help businesses and generations of workers build strong futures here for years to come.”

Julián Castromayor of san antonio36th street inauguration Ceremony

In the summer, the City of San Antonio completed construction of a 1.7-mile stretch of 36th Street from Highway 90 into the heart of Port property.

In addition to improving connections between the Port and area highways, the new road plays a central role in supporting expansion of the region’s aerospace industry. The extension allows for the future closure of a smaller north-south street at the Port—Frank Luke Road—that runs parallel to Kelly Field. As a result, nearly 400 acres between Kelly Field and the new 36th Street extension within the Port are available for the development of new facilities with airfield access.

The project entails a longstanding collaboration between the Port, the City of San Antonio, CPS Energy, San Antonio Water System (SAWS), the San Antonio-Bexar County Metropolitan Planning Organization (MPO), the Texas Department of Transportation (TxDOT), members of Congress and the U.S. Federal Highway Administration.

The first phase was completed in 2005 when TxDOT improved the intersection of Highway 90 and 36th Street. The project’s main component—the extension of the road into the heart of the Port—broke ground in 2010. The phases completed in 2013 include $8.6 million in support from Port San Antonio, which provided design services and transferred the corresponding land to the City; $9.4 million in combined city funding through the 2007 municipal bond and certificates of obligation; and the MPO, which provided $15 million through the 2009 American

Reinvestment and Recovery Act (ARRA), allowing the work to commence the following year.

The City’s Capital Improvements Management Services (CIMS) department oversaw construction, in collaboration with Port engineers. CPS Energy and SAWS respectively moved electric and water infrastructure to conform to the new road, including the relocation of a substation so that overhead power lines will not interfere with the movement of aircraft.

Construction will continue beyond Billy Mitchell Boulevard in 2014 thanks to $6 million in new funding obtained through the City of San Antonio’s 2012 municipal bond program, a $1.7-million TxDOT grant and $3.7 million in additional planning and design support from the Port, including the transfer of corresponding land to the City. This will

The 36th Street extension project is the largest infrastructure improvement at the Port to date. Shown here

is a newly-completed portion of the road that extends 1.7 miles from highway 90 into the heart of the

Port—growing the site’s connections to the surrounding region.

continued

39

“The inauguration of 36th street is a great milestone for the Port and our community. after years of hard work, the finished road is an asset that will bring new jobs and looks great for the surrounding neighborhood.

it is a powerful reminder of the important opportunities being created at the Port for new business and for thousands of workers.”

Tricia herreraPresident, Thompson neighborhood association

extend the road by almost another mile until it intersects with General Hudnell Drive close to existing hangars, workshops and office buildings where the majority of people who presently commute to Port San Antonio now work.

It also provides redundant access that improves related logistics activity by creating an industrial five-lane divided highway loop connecting with Highway 90 and General Hudnell Drive (see diagram).

When completed, the full 36th Street extension from Highway 90 to General Hudnell Drive will represent a total investment of almost $50 million, making it the single-largest road infrastructure investment at Port San Antonio to date.

In the future, as envisaged in the City’s Major Thoroughfares Plan, the road can be further extended beyond Port San Antonio’s footprint and reach Interstate Highway 35 to the south as funding becomes available.

The evolution of 36th Street is creating an emerging trade corridor approved by the Texas Department of Transportation that will connect the fast-growing northwest part of Bexar County via Highway 151 with economic engines to the south, including Port San Antonio, Toyota and Texas A&M University-San Antonio.

An upcoming extension of 36th Street to General Hudnell Drive, in

combination with Highway 90 to the north, creates an industrial five-lane

highway loop accommodating logistics growth at the Port.

GENERAL HUDNELL

GEN

ERA

L M

CMU

LLEN36TH ST.

EAST KELLYRAILPORT

FUTURE EXTENSIONTO IH-35

BILLY MITCHELL BLVD

90

151

40

Upcoming upgrades to the intersection of Quintana Road outside East Kelly

Railport will improve driver and pedestrian safety as both the Railport and

neighboring St. Philip’s College continue to grow.

Qui

ntan

a Rd

.Cu

pple

s Rd.

Gen. Hudnell Dr.

New Laredo Hwy

Dunton St.

East Kelly Railport

New drainage todetention pond

Fay Ave.

Taym

an S

t.St. Philip’sCollegeSW Campus

Upcoming road improvements

quinTana road: suPPorT for logisTiCs and manufaCTuring

Another important road infrastructure project supporting redevelopment and customers’ existing operations is scheduled to break ground in the months ahead—significant improvements to the intersection of Quintana Road at Dunton Avenue, which is the main access point for commercial traffic into East Kelly Railport.

The project will be made possible thanks to $6.2 million awarded by the MPO under its 2013-16 Transportation Improvement Program (TIP). Port San Antonio will contribute $1.6 million in design services and other pre-construction needs, for a total project cost of $7.8 million.

The road improvements include a realignment of Quintana Road over several blocks outside the Railport and the construction of integral drainage infrastructure. The new features are essential as the Railport continues to grow. Between FY2012 and FY2013, rail volume doubled at the Railport, generating a proportional increase in truck traffic entering and exiting the site, particularly trucks hauling drilling sand to wells on the nearby Eagle Ford Shale (read more in A Strategic Industry Partner on page 10).

The improved intersection will also benefit residents of the surrounding neighborhood, thanks to a drainage channel and water detention pond that will alleviate flooding during heavy rains. Additionally, students and faculty at adjacent St. Philip’s College Southwest Campus will have better road access to their growing school. In 2011 Port San Antonio sold 30 acres of land for the expansion of the school alongside Quintana Road—more than doubling the footprint of the school.

As it did with the 36th Street project, the City’s CIMS department will once again lead the road reconstruction work on Quintana Road. Shortly after the MPO award was announced, the Port began its planning efforts. Partners include the Quintana Community Neighborhood Association, City of San Antonio, VIA Metropolitan Transit and Alamo Colleges. The intersection upgrades will commence in late 2014, with expected completion the following year.

ongoing alignmenT wiTh CiTy suPPorTs fuTure eXPansionsAligning the former military complex—which for decades was closed off from the public and operated under different building and infrastructure standards than the surrounding community—is a key part of redevelopment and growing commercial business activity.

As a vast property within an urban setting and growing connections to the surrounding community, new development projects now occur in a uniform manner so that buildings, infrastructure, signage, landscaping and other features meet or exceed San Antonio’s construction and aesthetic standards. To do so, Port San Antonio works very closely with City and County departments to address major planning, engineering and code compliance issues.

41

foCus on our CusTomersa CommiTmenT To serviCe above-and-beyondPort San Antonio serves its diverse customer base by offering highly specialized facilities and strategic support to meet their needs. To ensure a productive environment in which customers can operate and grow their enterprises, the Port delivers an array of services through a comprehensive team approach.

The Port’s staff includes real estate professionals who ensure that customers have the right facilities delivered in a timely manner when they first arrive, and who support expansions as customers’ enterprises continue to grow. Furthermore, an in-house property management group oversees smooth day-to-day operations of facilities, and relies on the support of personnel who maintain millions of square feet of buildings

and hundreds of acres of land within region’s single-largest commercial development.

Port management likewise provides ongoing strategic support so that customers in aerospace, logistics and manufacturing industries have at their disposal an efficient logistics platform, access to a well-qualified workforce and strong relationships with key stakeholders, including public officials and the region’s business community.

Among key projects handed by the Port’s real estate team in 2013 were extensive interior finish-outs to accommodate the relocation of Atlantic Aviation into a new hangar at Kelly Field (page 21) and the arrival of Forward Air into a nearby 89,600-square-foot logistics distribution center (page 28).

Furthermore, in April the 24th Air Force formally inaugurated its new headquarters comprising 51,000-square-feet within Building 171. Also known as the Cyber Command, the 24th Air Force is the final occupant of secure office space within the 460,000-square-foot building, whose $60 million in upgrades

Port San Antonio’s customers are supported by an in-house team with

expertise in construction, property management, facility maintenance,

landscaping and professional services.

42

the Port’S in-houSe StAff

fulfilled 9,000 worK

orderS from cuStomerS

in fy2013, covering A wide

rAnge of mAintenAnce And

conStruction ServiceS.

the Port managed since 2008 and represents the single-largest real estate development project at the Port to date (see pages 36-37).

Work by the Port and its consultants during the five-year period to build the highly specialized facility for the Cyber Command and other Air Force agency headquarters included review of design, permitting, approvals of submittals, developing progress reports and ensuring compliance with Department of Defense, City of San Antonio and Port construction requirements.

At East Kelly Railport, with ongoing growth in truck activity, the Port finalized upgrades on Tayman Road by resurfacing the northern section of the street with shock-absorbing materials. The $800,000 endeavor improves safety and comfort for drivers, and allows for expansion of activities by logistics and manufacturing customers located in the northern section of the Railport, including RLI Logistics, Fiesta Warehousing & Distribution, New Breed Logistics, The OpTech Group and Bergstrom Climate Control Systems, which increasingly depend on truck transportation as their businesses grow (see page 30).

Additional support was provided by the Port’s Asset Management team—a group of individuals that includes property managers, maintenance personnel, a landscaping crew, carpenters, electricians, plumbers and HVAC technicians. This team fulfilled 9,000 work orders requested by Port customers in FY2013.

Furthermore, the organization’s landscaping crew has consistently received high praise from Port customers, neighbors and visitors. With hundreds of acres of open land and thousands of mature trees and bushes, the hard work by the team and its innovative uses of xeriscaping and water conservation techniques are a reflection of the pride the organization takes in showcasing the property as a vibrant part of San Antonio’s growth.

The Port has also gone above and beyond supporting a tidy environment for the surrounding areas. Thanks to agreements with the City, the Port maintains extensive roadside grass acreage well outside its borders, including along General McMullen Drive for half a mile north of the property and all city-owned areas for almost two miles between Highway 90 and the Port’s northeast entrance on General Hudnell Drive—helping ensure that people’s first impression of the Port is formed even before they arrive.

Work by the landscape team has won high praise from customers and visitors

to the large property. The Port also helps maintain public roadsides well

outside its boundaries.

43

in-house PermiTTing saves CusTomers’ Time and money Port San Antonio has a special ability to provide critical and timely assistance to customers through its in-house plan review, inspection, permitting and certificate of occupancy process conforming to the City’s unified development codes. The City granted the Port this ability in 2007 and renewed it in 2012 for another five-year period.

With millions of square feet of former Air Force buildings which lacked city-issued certificates when they were conveyed to the Port, and almost two million square feet of new facilities built at the site over the last decade, the City recognizes the importance of providing the Port a thorough and swift permitting process so customers can occupy their leased spaces quickly.

The Port issued 87 permits in FY2013 for projects valued at $31.4 million–covering new construction, remodels, certificates of occupancy and miscellaneous activities. Since the Port first began handling permits in-house, it has processed over 690 applications valued at more than $173 million.

The already quick turnaround time for permits has been continuously improving, and in FY2013 the average time between application submission and the issuance of permits was only five business days—well below the 30 business days the process is projected to take.

Certificates of Occupancy$0.7M

Misc.$23.5M

New construction$71.2M

Interior finish out$78M

value of PorT-issued PermiTs by TyPe, fy07-fy13

Since 2007, in-house permitting by

Port San Antonio has processed

applications for more than $173

million in construction projects. An

average turnaround time of only

five business days saves customers

money and allows them to quickly

occupy their new facilities.

ToTal: $173 million

AverAge ProceSSing

time for A Permit

through Port SAn

Antonio iS only five

BuSineSS dAyS.

44

global business sTandards In 2013 the Port concluded its third year as an enterprise whose processes are certified by the International Organization for Standardization, also known as ISO. Following an independent audit in August, it was re-certified for another three-year term.

A fundamental part of the organization’s commitment to customer service, the Port’s ISO 9001:2008 certification reflects a dedication to following best business practices as it grows. ISO certification assures customers, investors and other partners that the Port follows internationally-recognized, standardized and independently monitored business practices.

Each Port employee has specific responsibilities under ISO, and the organization maintains a system to closely monitor and continually improve processes.

Corresponding procedures exist for key areas, including real estate development and management, leasing and sales, marketing, business development, and airport and railport management.

As part of the Quality Management process, Port customers are surveyed by an independent firm at the conclusion of jobs great and small. For FY2013, the customer satisfaction rate under the ISO program was 95 percent.

127

ISO9001:2008

As an added measure of quality

customer service, the Port has been

an ISO-accredited organization

since 2010. Its business processes

follow international best practices

standards and are independently

monitored.

45

building worKforCe TalenTgrowing oPPorTuniTies In addition to providing specialized facilities within a dynamic logistics platform, the Port’s strategic support to its customers places a strong emphasis on promoting a well-prepared workforce in the region.

In particular, the success of the aerospace, information technology and advanced manufacturing industries at the Port depends on access to talented workers with solid backgrounds in science, technology, engineering, architecture and math. The urgency for a strong educational and training platform is especially evident in the aerospace sector, where waves of retirements across the U.S. are outpacing industry’s ability to fill those jobs.

Accordingly, the Port has longstanding ties with area educators, public officials and other stakeholders to build and promote initiatives that meet pressing workforce needs—turning the national shortfall into an opportunity for growth in the region.

St. Philip’s College—part of the Alamo Colleges and one of the area’s oldest institutions of higher education—has been an essential partner in this effort. The school’s Southwest Campus is located at the Port’s East Kelly Railport, where Alamo Colleges’ Workforce Center of Excellence has also been based since 2012.

Together, the Southwest Campus and the Workforce Center of Excellence are the region’s principal training centers for aerospace technology, advanced manufacturing, and customized just-in-time training programs that support aerospace, manufacturing, construction and the growing energy sector.

The Southwest Campus is also home to one of the country’s most innovative workforce development programs—the Alamo Academies.

Established in 2001, the Academies have prepared more than 850 young women and men to find rewarding careers in the region’s fastest-growing fields and is regarded as a national model for helping U.S. industries develop well-prepared workers.

The Alamo Academies is a nationally-renowned workforce development

program that provides college-level training to area youth and prepares them

for careers in aerospace, information technology, advanced manufacturing

and healthcare.

46

By working closely with Port San Antonio and its customers, the Academies engage school districts to identify talented high school juniors and seniors who undergo a dual credit two-year program comprised of over 30 hours of free college education through four academies.

Motivated students learn from seasoned industry professionals and engage in hands-on training. This foundation is reinforced through paid summer internships with industry partners at Port San Antonio and elsewhere in the region—providing an unparalleled real world learning experience that ensures graduates’ success in their chosen fields.

Academies graduates are college-proven and career-ready by the time they finish high school. For employers, the program is an essential partner in growing their workforce—a key consideration when companies decide to locate and grow at the Port.

To further support the region’s workforce, the Port and Alamo Colleges have developed an innovative solution that both addresses expansion needs for the St. Philip’s Southwest Campus and creates a long-term effort to train future workers.

Under a 2011 agreement, the Port sold the college district a 40,000-square-foot building and 30 acres of surrounding land at East Kelly Railport. The property, located directly south of St. Philip’s Southwest Campus, sets the stage for the school’s future expansion as its enrollment surpasses 2,000 students.

The building is now the new home for Alamo Colleges’ Workforce Center for Excellence and also serves as the administrative headquarters for the Alamo Academies.

The Alamo Aerospace Academy is an important and proven pipeline that firms at the Port rely upon to identify new workers. The program has graduated over

350 area students to date.

over 850 StudentS hAve

grAduAted the AlAmo AcAdemieS

Since 2001, PrePAring for good

cAreerS in AeroSPAce, AdvAnced

mAnufActuring, informAtion

technology And heAlthcAre.

continued

47

The facility also features a computer laboratory for the Information Technology and Security Academy and offers additional spaces for Alamo Colleges’ conferencing and training. Meeting rooms and computer labs are also available for public and private sector businesses and other organizations to conduct conferences and training, which in 2013 included specialized programs to train workers at oil and gas well sites across the Eagle Ford Shale.

In payment for the properties, Alamo Colleges has the option to provide the equivalent of $5.1 million in workforce development programs to current and future aerospace industry workers at Port San Antonio. The college district receives credit for each graduate it places with aerospace firms at the Port as well as for the development of customized training for incumbent workers among those employers. The purchase agreement also provides incentives that reduce the debt based on grants Alamo Colleges secures that are specifically applied to workforce training programs for the Port’s aerospace customers.

The real estate deal creates a win-win for the Port, its customers and present and future generations. In particular, it exemplifies the innovative strategies by the Port and partners to support industry’s priorities to attract, educate and retain the best talent possible.

Dunton Street

Harmon Street

Norton Street

Street

St. Philip’sCollegeSouthwestCampus

Qui

ntan

a Rd

.

Tayman

WORKFORCE CENTER OF EXCELLENCE - ALAMO COLLEGES

EAST KELLY RAILPORT

EXPANSION SITES(APPROX. 30 ACRES/40,000 SQ. FT. BUILDING)

ST. PHILIP’S COLLEGE EXPANSIONAT PORT SAN ANTONIO - EAST KELLY RAILPORT

A 40,000-square-foot building that Port San Antonio sold to the community college district in 2011 is now

Alamo Colleges Workforce Center of Excellence, housing Academies’ and just-in-time training programs

supporting the area’s information technology, manufacturing and energy industries.

48

30 acres surrounding the Workforce Center of Excellence provide plenty of

room for future expansions of the St. Philip’s College Southwest Campus,

which is the region’s principal training center for aerospace, advanced

manufacturing and diesel mechanics.

Dunton Street

Harmon Street

Norton Street

Street

St. Philip’sCollegeSouthwestCampus

Qui

ntan

a Rd

.

Tayman

WORKFORCE CENTER OF EXCELLENCE - ALAMO COLLEGES

EAST KELLY RAILPORT

EXPANSION SITES(APPROX. 30 ACRES/40,000 SQ. FT. BUILDING)

ST. PHILIP’S COLLEGE EXPANSIONAT PORT SAN ANTONIO - EAST KELLY RAILPORT

“access to a strong workforce is a top consideration when industries decide where to locate and expand. The winning strategy created by alamo Colleges in partnership with Port san antonio and industry partners is truly a national model. it has a proven track record helping industries at the Port and the region identify and nurture talented workers, and it can easily adapt to industry’s evolving business needs in an increasingly competitive world.”

david marquez bexar County director of economic development

leading a CommuniTy ConversaTionAccess to talented, well trained workers is a top priority for advanced technology employers when deciding where to locate and expand their businesses.

To strengthen the region’s efforts in workforce development, in 2013 Port San Antonio hosted a roundtable forum among industry partners, educators and public officials to address community-wide collaboration in workforce development and innovation.

The event brought together community leaders to share best practices in advanced manufacturing training and to discuss joint strategies to ensure that present and future generations have the guidance and resources necessary, at every level of their education, to prepare for rewarding careers that are growing among the Port’s customers and other advanced industries in the region.

Watch the discussion and download the forum’s program at www.portsanantonio.us/workforce

49

Kelly CenTer: sPaCes ThaT insPire and PrePare Tomorrow’s worKersIn addition to supporting programs that prepare workers for careers among its customers, Port San Antonio is in a unique position in the community to create an environment that helps inspire, attract and train present and future generations of workers.

Kelly Center, which spans approximately 400 acres in the heart of the property, is the platform for such growth. In addition to the St. Philip’s College Southwest Campus, Kelly Center envisages the development of innovative facilities built to high sustainability standards among existing historic properties. The spaces will serve to capture the community’s imagination, channel its ambitions and help people connect with educational and career opportunities among the Port’s customers.

As it advances this vision, the Port is emerging as a regional leader in sustainable construction, with two LEED-certified buildings completed since 2009, including the Port’s own headquarters (LEED Gold certification for commercial interiors) and an 89,500-square-foot facility dating to the 1940’s which in 2010 was transformed into modern new offices for customer Xerox (LEED Silver certification).

Many workers at the Port have found quality housing at the Billy Mitchell Village Apartments, which

offer spacious 2-, 3- and 4-bedroom units.

Kelly Center spans 400 acres in the heart of Port San Antonio where an

environment that helps inspire, attract and train present and future

generation of workers is being created.

Kelly Center

171

Gene

ral M

cMul

len

U.S. HWY 90

Billy Mitchell Blvd. General Hudnell Dr.

36th St.

LAREDO & MEXICO

McALLEN& MEXICO

410

35

37

281

151

90

35

281

DOWNTOWNDOWNTOWN

S. Gen McM

ullen

Lindbergh Park Office Site

Lack

land annex

Cantonment a

rea

PORT SAN ANTONIO

Kelly Center

171

Billy Mitchell Blvd. General Hudnell Dr.36th St.

S. Gen McM

ullen

Lackland AnnexCantonment area

Lindbergh Park OfficeDevelopment Site

St. Philip’s CollegeSW Campus

50

Kelly Center also provides strategic support to Port customers by offering a growing supply of attractive and comfortable residences for the growing workforce.

By the end of 2013, the Port had upgraded and leased over 70 residences within Kelly Center, including 14 spacious duplex-style homes. Known as the England Units, the distinctive examples of 1940’s Art Moderne style have been upgraded and leased to the public since 2004.

The northern end of Kelly Center encompasses the Billy Mitchell Village Apartment complex. These townhome units began as military housing and were transferred to Port management in 2009. By the end of 2013, the Port had upgraded and leased 58 of the two-, three- and four-bedroom apartments at market rates, supported by an in-house team of managers and maintenance personnel.

Over half of the residents work for employers at the Port. By early 2014, thanks to ongoing demand, an additional 17 units will be upgraded and available for lease.

With a well-established residential customer base, the Port has reached a demand threshold that can support the development of more housing and new retail opportunities. Within Kelly Center and just across from Billy Mitchell Village are 21 acres that include an eight-unit historic townhome complex—Chennault Circle.

The Port is developing plans and identifying investment partners to grow Chennault Circle into a multifamily townhome residential complex of up to 300 new units. Plans also foresee retail spaces in a high-density environment that incorporates the existing historic properties and supports both new resident and non-resident workers at the Port. To create a thriving setting for its residents, plans for Chennault Circle also contemplate the addition of a pedestrian walkway and bicycle lanes that connect mixed uses.

With strong demand for housing, upcoming plans for Kelly Center include

adding approximately 300 new units in a mixed-use environment that

incorporates existing historic townhomes at Chennault Circle. Plans for the

new development also include adding retail options.

New property development at the Port follows best practices in sustainability.

The Port is already home to two LEED-certified office buildings, including an

89,500 square-foot space created for Xerox to house business service support

operations.continued

51

With plans for additional housing and retail underway, Kelly Center’s alignment with workforce growth also foresees the creation of additional spaces to train future workers. At the heart of this vision is the creation of the Kelly Science and Innovation Commons, where existing historic properties and new mixed-use development built to the highest sustainability standards will serve to publically showcase new and emerging technologies by focusing on, and adapting to, workforce needs among the Port’s customers.

As it evolves, Kelly Center is a vision that integrates learning and living to enhance Port San Antonio’s plans. Growing workforce development training while providing an increased supply of attractive residential options and supporting retail will contribute to defining a destination and sense of place that expands the reach of Port San Antonio as a community asset and employment center for years to come.

food on The moveAs part of Kelly Center’s growth, and in order to provide greater lunchtime options for workers and residents, in the spring the Port launched a new food truck court, in partnership with the San Antonio Food Truck Association (SAFTA). Several times a week, trucks serve lunch from a wide number of selections, including seafood, burgers, Mexican, Mediterranean, pizza, barbecue, salads and dessert options.

The trucks are stationed outside a former bank building located at the Port’s main entrance, at the intersection of General Hudnell Drive and Billy Mitchell Boulevard.

The building is open to the public and serves as a visitor information center with tables for diners and an information desk with maps and other materials for food truck patrons and visitors to the Port.

Each week’s food truck schedule, along with a map of area restaurants, is available at www.portsanantonio.us/food

“Port san antonio is a great neighbor that is always looking to the future. by creating spaces that support today’s workers and serve to inspire and train future generations, it is developing a modern integrated environment—a great place to work, live, learn and play.”

andy CastilloPresident, quintana Community neighborhood association

52

building a Thriving CommuniTy a growing ParT of san anTonioSince the Port began redeveloping the former Air Force base, fences have come down and much of the property is now open to the surrounding community. Tens of thousands of visitors over the years have enjoyed the site’s rich history and the Port’s commitment to help bring people together.

During the city-wide Fiesta celebrations, the Port has earned a reputation as one of the best places to enjoy a day of family festivities tailor-made for the youngest San Antonians—Fiesta de los Niños. Now in its eighth year, the event is hosted every April and provides fun on the grounds of the Port’s historic properties, with carnival rides, live music and food serving as the main sources of entertainment.

In 2013, thousands of kids and their families participated in the event, which has grown to include a classic car show, parade and its own “royal court”—six children from local elementary schools who are named duke, duchess, prince, princess, queen and king of the event based on their successful fundraising efforts on behalf of their respective schools.

For information about the upcoming event visit www.FiestaDeLosNinos.com

Fiesta de los Niños has become an iconic event in the heart of Port San

Antonio. Each spring, thousands of visitors arrive to participate in a day

of family fun, including carnival rides, a parade, food vendors and live

entertainment.

Kids also participate in a medal design contest. The 2013 winner was Alyssa

Avila, a fourth grader from Athens Elementary School, whose Fiesta de los

Niños medal concept was chosen from among more than 400 entries.Now in its eighth year, Fiesta de los Niños features its own royal court, chosen

from among students at elementary schools close to the Port.

53

Also in the spring, Port San Antonio was the site for the annual five kilometer run/walk organized by City Council District 4 with support from the San Antonio Sports Foundation. In its third year, the event attracted its biggest crowd yet, with more than 1,000 participants.

As a growing community asset, the Port hosts an annual run/walk

sponsored by San Antonio’s City Council District 4. In 2013, more than 1,000

people participated. a Personal CommiTmenT Driven by a mission that helps people throughout the community build their futures, Port employees are also personally committed to make a personal difference in the lives of others.

Among many volunteering efforts, several Port colleagues are personally engaged with Communities in Schools—volunteering to mentor several students from John Jay High School throughout their four-year secondary school career.

Since 2009 a dozen Port employees have been paired with students from the high school, who in 2013 began their senior year. Students and Port volunteers hold regular meetings to check-in on students’ academic progress and conduct field trips to a variety of locales, such as the Port’s aerospace companies and the Alamo Academies. These opportunities have allowed students to open their eyes to a world of educational and career paths before them after high school graduation.

54

“The Port is a true community asset. in addition to being a central part of our region’s economy, it is a living part of our region—a place where families can find jobs and also come together in celebration. in every sense, the team at the Port has opened the doors of opportunity to the entire community.”

shirley gonzalessan antonio City Council member - district 5

Charitable giving also continued to be an important tradition among Port San Antonio employees.

The organization’s 2013 United Way campaign brought in over $23,500 in donations from the Port team that are distributed to charities throughout the community.

To date, Port San Antonio employees have helped transform an untold number of lives in the community, personally giving over $148,000 to the United Way through direct donations and payroll deductions since 2006.

Port employees also reached a new milestone in generosity for San Antonio’s United Arts Fund, which supports nonprofit arts groups including museums and performers throughout the community. The Port team gave over $6,900 to the Arts Fund last year, and has contributed over $28,200 since 2009.

5,000

$10,000

$15,000

$20,000

$25,000

2006 2007 2008 2009 2010 2011 2012 2013

uniTed way giving by PorT emPloyees

55

revenue fy1998-fy2016

Other Revenue

Grants

Lease Revenue

1999 2000 20011997 1998 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016(Forecast) (Forecast)(Forecast)

$40M

$50M

$30M

20M$

10M$

building a solid businessfinanCial sTaTemenTThough created by government, Port San Antonio runs like a business. The organization has no taxing authority and is operationally self-sustaining. The Port earns its income from facilities and land it leases and services it provides, including construction and property management. Profits are reinvested to grow the property. The Port’s business model therefore includes meeting the obligations of the transactions it negotiates without the recourse of tax revenue.

This sustainable approach has served as a national model for the redevelopment of other former military properties, and, for over a decade, the organization has shown robust profits. The financial stability the Port enjoys has enabled the organization to “normalize” the property—conduct considerable deferred capital improvements to the former military installation to bring the property and its facilities into compliance with local, state and federal standards that support further redevelopment and enable Port customers to undertake their respective activities.

When the Port first assumed control of the property in 1996, conversion costs—those associated with transforming former military facilities and land to commercial uses and developing the necessary infrastructure to support customer growth— were approximately $300 million. Over the years, through a combination of the Port’s own investment, loans secured by the authority, a customer charge in lieu of taxes and public

funding for infrastructure, remaining conversion costs at the beginning of FY2013 were $160 million. These were further reduced to $145 million by fiscal year’s end.

The bulk of the Port’s $42.8 million in revenue in FY 2013 included continued growth in leasing income totaling $30 million for the year. The other major source of revenue, $11.8 million, was derived from managed projects and maintenance services provided to Port customers.

The Port continues to access grant funding to help finance infrastructure projects. During FY2011 the U.S. Highway Administration provided a $1.7 million grant to support construction of upcoming phases of the 36th Street project at Port San Antonio—connecting Billy Mitchell Boulevard and General Hudnell Drive. The initial design efforts were begun in FY2012/2013 and construction should begin in FY2014.

Port San Antonio and its customers have also been impacted by diminished Air Force spending as a result of military draw-downs worldwide and federal budget reductions. Consequently, certain Port customers have seen a slowdown in the repair and maintenance work they receive from the Air Force, and are focused on growing commercial projects. To maintain its profitability, continue redevelopment activity and ensure quality customer service during this time of transition, the Port realigned its FY2014 budget and underwent a reorganization. Seventeen positions were reduced, primarily in management staffing, and certain functions were consolidated and realigned to reduce costs and streamline support for customers.

Port San Antonio has been operationally self-sustaining and profitable for over a decade. Profits earned from real estate and other activities are re-invested for

further redevelopment of the property.

56

Condensed Statement of Net Assets (in thousands) Condensed Statement of Revenues, Expenses and Changes in Net Assets

Condensed Statement of Cash Flows (in thousands)

Operating Revenues (in thousands)

9/30/2013 9/30/2012 (Unaudited)

9/30/2013 9/30/2012 (Unaudited)

Year Ended Year Ended

9/30/2013 9/30/2012(Unaudited)

Year Ended Year Ended

9/30/2013 9/30/2012

(Unaudited)

$26,272

2,661

11,587

529

400

$41,449

$27,274

2,884

11,856

335

489

$42,838

Assets:

Current Assets

Capital Assets Net of Accum Depreciation

Other Noncurrent Assets

Total Assets

Liabilities:

Current Liabilities

Noncurrent Liabilities

Total Liabilities

Net Assets:

Invested in Capital Assets

Net of Related Debt

Restricted

Unrestricted

Total Net Assets

Total Liabilities and Net Assets

Operating Revenues (see detail below)

Operating Expenses

Operating Income (Loss)

Non-operating Revenues and

(Expenses), Net

Increase in Net Assets Before Capital

Distribution

Capital Distributions

Increase (Decrease) in Net Assets

Net Assets, Beginning of Year

Net Assets, End of Year

Operating Activities

Noncapital Financing Activities

Capital and Related Financing Activities

Net Increase (Decrease) in Cash

Cash, Beginning of Year

Cash, End of Year

22,178

183,165

9,619

214,962

15,012

62,099

77,111

117,479

3,704

16,668

137,851

$214,962

$23,319

187,675

8,649

$220,643

$18,829

665,853

$84,682

$117,893

2,915

15,153

$135,961

$220,643

$41,449

37,029

4,420

(2,482)

1,939

0

1,939

134,023

$135,962

$42,838

37,206

5,631

(3,743)

1,889

0

1,889

135,962

$137,851

$13,382

(510)

(10,416)

2,456

14,024

$16,480

$14,568

123

(12,928)

1,763

16,481

$18,244 Lease Rentals

Operating Expense Reimbursements

Maintenance & Technical Services Revenue

Port Fees & Charges

Other Operating Revenue

Total Operating Revenue

Summary Statements for the Fiscal Years Ended September 30, 2012 and 2013.

summary sTaTemenTs for The fisCal year ending sePTember 30, 2013 (unaudiTed)In FY2013 (ending September 30, 2013), Port San Antonio’s net assets increased by $1.89 million. This increase was due primarily to normal operations. Normal operating revenue increased by $1.4 million, while operating expenses only increased by $177,000, which resulted in the majority of the increase in net assets. The increase in revenue was the result of increased rental revenue and operating expense reimbursements due to a combination of new leases and annual price increases on existing leases. Managed projects and maintenance services revenues/ex-penses remained stable, although the mix saw increased project activity while demand for maintenance services was reduced. Overhead expenses increased by $132,500 due to higher personnel costs. Net operating income increased by $1.2 million in FY2013 compared to FY2012.

Cash and cash equivalents increased by $1.76 million due to continued prepayment of projects by the Air Force. All projects requested by the Air Force are now prepaid and it is not necessary for the Port to fund the initial costs.The Port Authority invested $4.97 and $2.6 million in capital projects in FY2013 and FY2012, respectively. In FY2013 this included over $1.2 million in tenant improvements, $900,000 in infrastructure projects and $1.9 million in commercial tenant building repairs and maintenance. In addition, the Port included over $900,000 in upgrades to Port facilities and properties.

57

Bruce E. Miller President & CEO

Mark Cashman Vice President & Chief Development Officer

Adrienne Cox Vice President of Asset Management

Rick Crider General Manager, Kelly Field

Dan Ferris, CPA Senior Vice President/Chief Financial Officer

Ramon Flores Senior Vice President, Real Estate Brokerage, Aquisitions & Sales

Robert Peche Vice President of Economic Development

Germán Rico General Manager, East Kelly Railport

Ruth E. Santiago Vice President, Human Resources

Caroline Diaz Senior Executive Assistant to the President & CEO and Secretary to the Board of Directors

eXeCuTive leadershiP Team

58

Victor Landa

Appointed by District 6

Wayne Alexander

Appointed by District 9

Alex Nava

Chairman

Appointed by Mayor

Dan F. Weingart

Vice Chairman

Appointed by District 8

Douglas B. Vair

Appointed by District 5

(Served until Sept. 2013)

Bruce E. Miller

President and CEO

Victoria M. Garcia

Appointed by District 4

Andrew Anguiano

Appointed by District 3

board of direCTors

Edward J. Moore

Appointed by District 2

Cy Hutchinson

Appointed by District 8

(Served until Nov. 2013)

Chris Alderete

Secretary/Treasurer

Appointed by District 7

Rolando Bono

Appointed by District 1

Glenn MacTaggart

Appointed by District 10

Juan Solis

Appointed by District 5

59

(Photo by Kentaro IEMOTO.)

60

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