DATE: January 19, 2021
SUBJECT:
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PRESENTATION AND UPDATE ON THE DISTRICT’S BLUE ECONOMY INCUBATOR INCLUDING THE SECOND EDITION OF THE BLUE ECONOMY INCUBATOR HIGHLIGHTS REPORT
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EXECUTIVE SUMMARY:
This presentation will give an update on the District’s Blue Economy Incubator (BEI), specifically on recently approved and deployed projects and introduce the second edition of the BEI Highlights Report.
In 2016, the District established its BEI Program to assist in the creation, development, and scaling of new blue economy business ventures in and around San Diego Bay. Through its BEI, the District is seeking innovative aquaculture and blue technology proposals to address District environmental challenges and inform future blue economy opportunities. The BEI is acting as a launch pad for sustainable aquaculture and District-related blue technology ventures by removing barriers to entrepreneurs and providing key assets and support services focused on pilot project facilitation. BEI proposals are reviewed following a four-step cross-departmental due diligence process culminating in a staff recommendation to the Board of Port Commissioners (Board). The review and selection process balance each proposal’s potential social and environmental benefit, alignment with the District’s core mission and Public Trust obligation, as well as potential financial return on investment.
The vision for the BEI is to build a Blue Economy Portfolio (Portfolio) of new businesses and partnerships that deliver multiple social, environmental, and economic co-benefits to the District and the region. To date, the District has committed $1.6 million and approved the launch of nine (9) pilot projects including shellfish nursery operations, a drive-in Boatwash, a smart marina application, a marine debris removal vessel, seaweed aquaculture, bio-enhancing shoreline armoring alternative, a new approach to soil remediation in marine environments, and a real-time field-testing sensor device for stormwater monitoring. These pilot projects complement several environmental initiatives and, in several instances, support regulatory requirements and programs already underway at the District. The current Portfolio supports a variety of initiatives from sea-level rise adaptation, to copper remediation, marine debris removal management, stormwater monitoring, and evaluating seaweed and shellfish aquaculture as a tool for bioremediation and restoration.
As the state-legislated trustee of tidelands and submerged waters in and around San Diego Bay, developing sustainable domestic aquaculture and supporting District-related blue technology assists in fulfilling the District’s public trust responsibility to promote fisheries and commerce, as well as aligning with its mission to enhance and protect the environment. The second edition of the BEI Highlights Report outlines the Portfolio performance based on measurable environmental, social, and financial benefits delivered by the Portfolio companies, from pilot project to commercial success.
RECOMMENDATION:
Recommendation
Receive an update on the District’s Blue Economy Incubator and the second edition of the Blue Economy Highlights Report.
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FISCAL IMPACT:
The Board action has no fiscal impact on the District.
Compass Strategic Goals:
Advancing the Blue Economy directly aligns with the District’s core mission and with the Public Trust Doctrine and Port Act for the promotion of commerce, navigation, fisheries, recreation and environmental stewardship. This agenda item supports the following Strategic Goal(s).
• A Port with a healthy and sustainable bay and its environment.
• A Port with a comprehensive vision for Port land and water uses integrated to regional plans.
• A Port that is a safe place to visit, work and play.
• A financially sustainable Port that drives job creation and regional economic vitality.
DISCUSSION:
Aquaculture & Blue Technology Program/Blue Economy Incubator
In 2015, the District established its Aquaculture & Blue Technology Program (AQ&BT), recognizing the growth opportunities of the blue economy sector and its strategic position within one of the world’s leading blue technology clusters. The AQ&BT program has been conducting planning and pre-development work to support and inform aquaculture and blue technology opportunities in and around San Diego Bay. The planning work includes using marine spatial planning tools to conduct a constraints and opportunities analysis for aquaculture with a focus on shellfish and seaweed; a land-based infrastructure feasibility analysis to identify locations to support aquaculture businesses on land; as well as baseline research related to aquaculture development.
In 2016, the District established a Blue Economy Incubator (BEI) and strategic investment fund to assist in the creation, development, and scaling of new business ventures focusing on aquaculture and blue technology. Through the BEI, the District is exploring new blue economy opportunities as a way to further support its core mission, diversify its portfolio of business lines, and strengthen its collective economic impact.
The BEI was launched on May 9, 2016, inviting early stage and market-ready ventures that align with the incubator objectives to submit business and pilot project proposals. BEI proposals are reviewed following a four-step cross-departmental due diligence process culminating in a staff recommendation to the Board (Attachment A). The selection process balances each proposal’s potential social and environmental benefit, alignment with the District’s core mission and Public Trust obligation, as well as the potential financial return on investment. All companies that apply to the BEI are vetted through the formal four-step competitive review process and selected proposals are required to undergo California Environmental Quality Act review, coastal review, and obtain all necessary permits.
To date, the BEI has received over 150 inquiries and 45 proposals have been officially submitted. Of these, the Board has approved nine (9) Blue Economy Agreements with early-stage companies to launch pilot projects with a total commitment of $1.6 million:
• June 20, 2017, by Resolution No. 2017-085, four agreements to initiate pilot projects for shellfish aquaculture nursery operations, copper remediation applications, a drive-in Boatwash technology, and a smart marina software application.
• January 9, 2018, by Resolution No. 2017-0628, one agreement to initiate a pilot project to demonstrate a custom-made vessel and skimming technology to remove marine debris in San Diego Bay.
• July 17, 2018, by Resolution No. 2018-0304, one agreement for a pilot project to demonstrate the feasibility of seaweed aquaculture in San Diego Bay.
• June 18, 2019, by resolution No. 2019-0116, one agreement for a pilot project to demonstrate in-situ technology to extract contaminants from marine sediment.
• July 24, 2019, by resolution 2019-0228, one agreement for a pilot project to demonstrate a bio-enhancing concrete solution for marine infrastructure.
• December 8, 2020, by resolution 2020-0391, one agreement for a pilot project to develop a portable five-in-one sensor device which will provide real-time testing capabilities for metals to assist with stormwater sampling and analysis.
Blue Economy Incubator Highlights Report
The vision for the BEI is to build a Portfolio of new businesses and partnerships that deliver multiple social, environmental, and economic co-benefits to the District and the region. The second BEI Impact Report outlines the Portfolio performance based on measurable environmental, social, and financial benefits delivered by the Portfolio companies, from pilot project to commercial success.
Through the BEI, to date, the District has committed $1.6 million in funding, provided use of District-owned property, assistance with obtaining all necessary regulatory and operational permits (i.e. Environmental Review, Coastal, Army Corps of Engineers and Regional Water Quality Control Board), coordinated the installation of pilot projects, and assisted with community and media relations. In exchange for funding and in-kind support provided to launch pilot projects, the District receives a royalty position from the business’ operations and/or technology. For example, if the technology being piloted is adopted in ports, harbors, and other locations, the District has an opportunity to share in the business’ success and the District’s share of revenue can be reinvested into new innovative projects. Through pilot project facilitation, the BEI is also creating synergies with and is informing other environmental programs from sea-level rise adaptation, to copper remediation, marine debris removal management, stormwater monitoring, and evaluating shellfish and seaweed aquaculture as a tool for bioremediation and restoration.
The second edition of the BEI Highlights Report (Attachment B) provides updated Portfolio information including a Scorecard developed for each of the Portfolio companies based on Key Performance Indicators (KPIs) established for the approved pilot projects. The KPIs are the metrics used by the District to track the progress and performance of each of the BEI Portfolio companies. The KPIs are tracked using data submitted quarterly by the BEI companies.
General Counsel’s Comments:
The Office of the General Counsel has reviewed and approved this agenda, as presented, as to form and legality.
Environmental Review:
This informational presentation and update to the Board on the Blue Economy Incubator and the second edition of the Blue Economy Incubator Highlights Report does not constitute an “approval” or a “project” under the definitions set forth in California Environmental Quality Act (CEQA) Guidelines Sections § 15352 and 15378 because no direct or indirect changes to the physical environment would occur. CEQA requires that the District adequately assess the environmental impacts of projects and reasonably foreseeable activities that may result from projects prior to the approval of the same. Any project developed as a result of Board’s direction that requires the District or the Board’s approval, including without limitation District proposed legislation or a request for funding will be analyzed in accordance with CEQA prior to such approval. CEQA review may result in the District, in its sole and absolute discretion, requiring implementation of mitigation measures, adopting an alternative, including without limitation, a “no project alternative” or adopting a Statement of Overriding Consideration, if required. The current Board item in no way limits the exercise of this discretion. Therefore, no further CEQA review is required.
In addition, this Board item complies with Section 87 of the Port Act, which allows for the establishment, improvement, and conduct of a harbor, and for the construction, reconstruction, repair, maintenance, and operations of wharves, docks, piers, slips, quays, and all other works, buildings, facilities, utilities, structures, and appliances incidental, necessary, or convenient, for the promotion and accommodation of commerce and navigation. The Port Act was enacted by the California Legislature and is consistent with the Public Trust Doctrine. Consequently, the proposed project is consistent with the Public Trust Doctrine.
Finally, this Board item does not allow for “development,” as defined in Section 30106 of the California Coastal Act, or “new development,” pursuant to Section 1.a. of the District’s Coastal Development Permit (CDP) Regulations because it will not result in, without limitation, a physical change, change in use or increase the intensity of uses. Therefore, issuance of a Coastal Development Permit or exclusion is not required. However, the District’s projects require processing under the District’s CDP Regulations. If a project is formulated as a result of Board’s direction, the Board will consider approval of the project and any improvements associated after the appropriate documentation under District’s CDP Regulations has been completed and authorized by the Board, if necessary. The Board’s direction in no way limits the exercise of the District’s discretion under the District’s CDP Regulations.
Equal Opportunity Program:
Not applicable.
PREPARED BY:
Paula Sylvia
Program Director, Aquaculture & Blue Technology
Attachment A: Blue Economy Incubator Application Instructions
Attachment B: Second Edition of the Blue Economy Incubator Highlights Report