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ThepurposeofmypresentationistogivetheCommissionanunderstandingofthe

DistrictscurrentfinancialpositionandhowtheDistrictsfinancialconditionisexpectedto
changeoverthenexttwoyears.ThiswillprovidetheCommissionwiththetoolsitneeds
todecidehowtoallocatetheDistrictsresourcestoaddresscompetingpriorities.Toaid
membersoftheaudience,IdliketostartoffwithanbriefoverviewoftheDistrictsbudget
processfollowedbyanoverviewoftheDistrictsfinances.
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Budgetsarekeyfinancialinstrumentstopreventoverspending.Governmentsarerequired
toinstitutecertainaccounting controls suchasintegratingboththebudget&purchase
ordersintotheiraccountingsystems.Budgetsnotonlyreflectoperatingrevenuesand
expensesbutnonoperatingrevenuesandexpensesaswell.Governmentsmusttakeinto
accountcostsassociatedwithmaintainingandrepairinglongtermassetsintheirbudgeting
process.
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The Districtreceivesfundingfromavarietyofsources.OperatingRevenuesarethe
chargesaddressedinourratesandfeesscheduleandcontracts(leases).Additionally,
grants,liketheStateAbandonedWatercraftAbatementfundsthatfacilitateoperations
arecapturedasoperatingrevenues.TheDistrictalsoreceivesnearlyathirdofits
revenuesfrompropertytaxes.ItalsoreceivesfundsfromRedevelopmentAgency
DissolutionsandEducationalRevenueAugmentationfunds.Thesefundsarenot
guaranteedliketaxrevenuesandthereforenotaccountedforinthebudget.Recent
examples of reimbursements include funding from the City of SSF to help with our costs examplesofreimbursementsincludefundingfromtheCityofSSFtohelpwithourcosts
ofdockreplacement.Insomeyears,revenuesfromthesesourcesaregreaterthan
necessarytomeetalltheDistrictsoperatingneeds.Intheseyears,theexcessrevenues
aresetintoreservesforperiodwhentheDistrictwillbeinvestingininfrastructureor
whenadisasteroccurs.Thesereservesalsoprovideasourceofmonies inleanyears.
Othersourcesoffundingincludeinterestincomefromthereserves.
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PropertytaxesaregiventotheDistrictbecauseourmissionandobjectivesarebroader
thansimplyoperatingaharborandmarina.Weprovidealloftheservicesshowninthis
slideinadditiontotheservicesthatothergeneralmarinaswouldprovide.Thetax
revenueswereceiveallowustooffertheseservices.
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TheDistrictisin astrongfinancialcondition.TheDistricthasputpracticesinplacethat
limittheDistrictsTerminationLiabilityexposure.However,agingfacilitiesare
necessitatinggreaterexpensestomaintainthoseassets.TheDistrictmustdipintothe
reservestofundtheseprojects.Grants,whenavailable,arenotsufficienttocover
thesecosts.
The District has been offering several public outreach events such as the Annual Boat TheDistricthasbeenofferingseveralpublicoutreacheventssuchastheAnnualBoat
LightingeventatPPH,TenantAppreciationeventsatbothfacilities,KiteFlyingeventat
OPMandanEasterEggHuntatOPM.Suchexposurecouldleadtoimprovedtenancy
rates.WithinthenextseveralyearsitisalsoanticipatedthattheDistrictwillreceive
onetimerevenuesrelatedtothedispositionofthesurplusparcelreferredtoasthe
postofficelot.
TheDistricthopestobegintocompletethepurchase ofabuildingonAlhambrainEl
Granada.Thiscouldresultinareductioninrentalexpensesofapproximately$94,000
annuallyaswell asadditionalrevenues.
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Thisslidereflectsourcurrentdebtserviceschedulewithonesmallmodification.The
Districthassetasiderestrictedreservesthat,withinterest,amounttoapproximately
$1.7million.Thesereservesactascollateralforthedebtandareonlyrestricteduntil
theprincipalonthedebtisretired.Weintendtousethesefundstomaketwo
paymentsinoneyearinlate2018.Thegraphhasbeenmodifiedfromthedebtservice
scheduleinordertoreflectourintendeduseofthereservefunds.Thisiswhythereis
asteeperdeclineinthelastyearshowingamorerapidrepaymentoftheprincipalat
that time thattime.
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Whilecapitalassetsarepaidforandthenshownasexpensesinlateryears,liabilitiesare
expensedrightawayandpaidforinfutureyears.OnemajorliabilityfortheDistrictisthe
Terminationliability.Whatisit?Itisavailableforanyemployeehiredbefore2009.To
becomevestedforthisbenefit,theemployeemustworkfortheDistrictatleast12years.
Thebenefitishalfayearofhealthinsurancepaidforeveryearworked.Example:Employee
leavesafter12years,theDistrictpays6yearsworthofhealthinsuranceforthatemployee
andcovereddependents.Iftheyworked20years,theywouldreceive10yearsworthof
health insurance Currently there are 10 employees eligible but not yet vested 10 healthinsurance.Currentlythereare10employeeseligiblebutnotyetvested,10
employeeswhohavevested,7employeeswhowerehiredafter2009andareineligibleand
5employeeswhoarecurrentlyreceivingthebenefit.
ThestructureoftheDistrictsmedicalbenefitforemployeesisuniqueanditlimitsthe
Districtsliabilityforsuchcosts.The assumptionsarethattherewillbenodepartures
through2021.Ifsomeoneretiresbeforethenthatwoulddecreasetheliability; assuming
allemployeeswillhavebenefitscoveringtheemployeeandonedependentatthetimeof
departure,anduponreachingage65.Itisabigpossibilityexpenses will lastforalongtime.
Underthescenarioassumedforthisgraph,iftheyoungestemployeethatiseligibletobe
vestedforthebenefitstayswiththeDistrictandleavesatage60,thelastTermination
benefitpaymentwouldbemadein2055.Ofcourseitiscompletelypossiblethat
employeesmayleavetheDistrictpriortovesting,maynotlivelongenoughtouseallof
their benefits, or may leave before reaching age 60. theirbenefits,ormayleavebeforereachingage60.
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AlthoughtheDistrictisinagoodplacefinancially,theDistrictdoesrelyontax
revenues.TheDistricthasbeenfortunatetobereceivingexcessERAFfundsand
RedevelopmentAgencyDissolution overthepastthreeyears,butsuchadditional
revenues(whichhaveexceeded$1.5millionin Redevelopment Agency(RDA)and
$2.4million forEducationalRevenueAugmentationFunds(ERAF) annuallythepast
threeyears)arenotaguaranteeanditwouldnotbefiscallyprudenttocounton
thesefunds.
WithERAF, RDA,andgrantrevenuethisDistricthasbeenabletogrowitscash
reserves.TheDistrictisapproachingaperiodwhereitwillneedtobeginseveral
facilitymaintenanceprojectstoaddresstheDistrictsagingfacilities.The priorities
usedtodeterminewhichprojectstobeacceptedare:1)isitlegallyrequired?2)isit
relatedtohealth&safetyissues?and3)doesitgeneraterevenue? AstheDistrict
completessuchprojects,thecashreservewilldrop.TheDistrictwillobviouslylook
forgrantstohelpfundthistypeofexpenseandtheDistricthasenjoyedafinancial
partnershipwiththeCityofSouthSanFrancisco,wheretheCityhascontributedto
thecostsofmajorcapitaloutlayprojectsatOPM.
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TheDistrictsrevenueremainsrelativelyflat astherehavebeennorealadditionsto
operatingrevenue.Wehaverenegotiatedleases,increasedberthingratesandare
purchasingabuildingforrevenueandrentexpensecostsavingswhichiswhyFY1415and
1516showaslightincrease.Operatingexpensesrunabout$2.5millionoverrevenues.
Theseexpensesarefundedbytaxes.Depreciationrunsabout$1.5millionandisimportant
becauseitrepresentstheusedupportionoftheassetandindicateswhatexpensethe
Districtwillhavetoincurinthefutureinordertobringtheassetsbacktofullyoperating
status status.
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Mostrecently(FiscalYears1213, 1314,1415),capitalexpenseshaverisenbecause
maintenancehadbeendeferredfortoolongandtheseitemsbecamesomewhaturgent.
Atleast4oftheseneededexpensesdonotdirectlygeneraterevenue.(RestroomsWest
Basin;WestTrailRepairs;NorthHMBShorelineImprovementandSewerSystem
Replacement).
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Isthisneeded?
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The CityofSouthSanFranciscoreimbursedtheDistrictfortheDockrepairsintheamount
of$2millionthisFiscalYear.Dredgingisanexpensiveoperationalcostandneedstobe
redoneeveryseveralyearstosecureourrevenues.Therestroomswereremodeled,
electricmetersreplaced,andlaunchrampredone.TheGuestDockandDock11were
rebuilt(theguestdockwithagrantanddock11withaCityreimbursement).Nonew
majorcapitalprojectsareproposedforOPMinFY1415.
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ThisgraphshowstheincreaseincapitalexpendituresFY1213thruFY1415.
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ThisgraphwillcomparetheDistrictsrevenuestoitsexpenses.Iwanttoshowyouwhatwe
anticipatewewillreceiveintotalsforrevenues.Asyoucansee,operatingrevenuesmake
upabouthalfoftotalrevenues.Propertytaxesmakeuptheotherhalf.Itwaspreviously
mentionedthattheDistrictmayormaynotcontinuetoreceiveERAFrefundsinfuture
years.TherevenuesshowninthisgraphhavenoERAFrefundsbuiltin.Whatisbuiltinis
anassumptionofcontinued2%growthtothepropertytaxbase,whichisthemaxallowed
underProp13providedtherearenoownershiptransfers,andagrowthtothepropertytax
base to account for continued sale of older homes Under Prop 13 when a home sells it basetoaccountforcontinuedsaleofolderhomes.UnderProp13,whenahomesells,it
maybereassessedtomarketrates.
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Slide 28
MSOffice1
, 2/9/2012
ThisgraphshowsyouthehistoricalamountofcashthattheDistricthascarriedinrecent
yearsaswellastheexpectedchangethrough2016.Theredlineistheprojectedshift
whilethebluelinesshowsthehistoricinformation.
CurrentlytheamountofavailablecashissignificantwhichisastrengthfortheDistrict;
however,theamountofavailablecashisexpectedtodropoverthenextcoupleofyears.
Althoughadropincashisnotsomethingtocelebrate,this does demonstratethatthe
Districts cash does undulate (to move with a wavelike motion; display a smooth risingand District scashdoesundulate(tomovewithawavelikemotion;displayasmoothrising and
fallingalternationofmovement),sosuchadropisnotunusualwhentheDistrictis
investinginrepairsanddevelopmentofitsfacilities.
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ThissliderepresentsholdingbackoncapitalexpendituresandfactorsinanticipatedERAF
andRDAfunds.IndoingsothiswouldallowtheDistrict$2millionmoreincashreserves
in2016.
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