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District’s current financial position and how the District’s financial condition is expected to
change over the next two years. This will provide the Commission with the tools it needs
to decide how to allocate the District’s resources to address competing priorities. To aid
members of the audience, I’d like to start off with an brief overview of the District’s budget
process followed by an overview of the District’s finances.
Budgets are key financial instruments to prevent overspending. Governments are required
to institute certain accounting controls‐ such as integrating both the budget & purchase
orders into their accounting systems. Budgets not only reflect operating revenues and
expenses but non‐operating revenues and expenses as well. Governments must take into
account costs associated with maintaining and repairing long‐term assets in their budgeting
The District receives funding from a variety of sources. Operating Revenues are the
charges addressed in our rates and fees schedule and contracts (leases). Additionally,
grants, like the State Abandoned Watercraft Abatement funds that facilitate operations
are captured as operating revenues. The District also receives nearly a third of its
revenues from property taxes. It also receives funds from Redevelopment Agency
Dissolutions and Educational Revenue Augmentation funds. These funds are not
guaranteed like tax revenues and therefore not accounted for in the budget. Recent
examples of reimbursements include funding from the City of SSF to help with our costs examples of reimbursements include funding from the City of SSF to help with our costs
of dock replacement. In some years, revenues from these sources are greater than
necessary to meet all the Districts operating needs. In these years, the excess revenues
are set into reserves for period when the District will be investing in infrastructure or
when a disaster occurs. These reserves also provide a source of monies in lean years.
Other sources of funding include interest income from the reserves.
Property taxes are given to the District because our mission and objectives are broader
than simply operating a harbor and marina. We provide all of the services shown in this
slide in addition to the services that other general marinas would provide. The tax
revenues we receive allow us to offer these services.
The District is in a strong financial condition. The District has put practices in place that
limit the District’s Termination Liability exposure. However, aging facilities are
necessitating greater expenses to maintain those assets. The District must dip into the
reserves to fund these projects. Grants, when available, are not sufficient to cover
The District has been offering several public outreach events such as the Annual Boat The District has been offering several public outreach events such as the Annual Boat
Lighting event at PPH, Tenant Appreciation events at both facilities, Kite Flying event at
OPM and an Easter Egg Hunt at OPM. Such exposure could lead to improved tenancy
rates . Within the next several years it is also anticipated that the District will receive
one time revenues related to the disposition of the surplus parcel referred to as the
“post office lot”.
The District hopes to begin to complete the purchase of a building on Alhambra in El
Granada. This could result in a reduction in rental expenses of approximately $94,000
annually as well as additional revenues.
This slide reflects our current debt service schedule with one small modification. The
District has set aside restricted reserves that, with interest, amount to approximately
$1.7 million. These reserves act as collateral for the debt and are only restricted until
the principal on the debt is retired. We intend to use these funds to make two
payments in one year in late 2018. The graph has been modified from the debt service
schedule in order to reflect our intended use of the reserve funds. This is why there is
a steeper decline in the last year showing a more rapid repayment of the principal at
that time that time.
While capital assets are paid for and then shown as expenses in later years, liabilities are
expensed right away and paid for in future years. One major liability for the District is the
Termination liability. What is it? It is available for any employee hired before 2009. To
become vested for this benefit, the employee must work for the District at least 12 years.
The benefit is half a year of health insurance paid for ever year worked. Example: Employee
leaves after 12 years, the District pays 6 years worth of health insurance for that employee
and covered dependents. If they worked 20 years, they would receive 10 years worth of
health insurance Currently there are 10 employees eligible but not yet vested 10 health insurance. Currently there are 10 employees eligible but not yet vested, 10
employees who have vested, 7 employees who were hired after 2009 and are ineligible and
5 employees who are currently receiving the benefit.
The structure of the District’s medical benefit for employees is unique and it limits the
District’s liability for such costs. The assumptions are that there will be no departures
through 2021. If someone retires before then that would decrease the liability; assuming
all employees will have benefits covering the employee and one dependent at the time of
departure, and upon reaching age 65. It is a big possibility expenses will last for a long time.
Under the scenario assumed for this graph, if the youngest employee that is eligible to be
vested for the benefit stays with the District and leaves at age 60, the last Termination
benefit payment would be made in 2055. Of course it is completely possible that
employees may leave the District prior to vesting, may not live long enough to use all of
their benefits, or may leave before reaching age 60. their benefits, or may leave before reaching age 60.
Although the District is in a good place financially, the District does rely on tax
revenues. The District has been fortunate to be receiving excess ERAF funds and
Redevelopment Agency Dissolution over the past three years, but such additional
revenues (which have exceeded $1.5 million in “Redevelopment Agency” (RDA) and
$2.4 million for “Educational Revenue Augmentation Funds” (ERAF) annually the past
three years) are not a guarantee and it would not be fiscally prudent to count on
With ERAF, RDA, and grant revenue this District has been able to grow its cash
reserves. The District is approaching a period where it will need to begin several
facility maintenance projects to address the District’s aging facilities. The priorities
used to determine which projects to be accepted are: 1) is it legally required? 2) is it
related to health & safety issues? and 3) does it generate revenue? As the District
completes such projects, the cash reserve will drop. The District will obviously look
for grants to help fund this type of expense and the District has enjoyed a financial
partnership with the City of South San Francisco, where the City has contributed to
the costs of major capital outlay projects at OPM.
The District’s revenue remains relatively flat as there have been no real additions to
operating revenue. We have renegotiated leases, increased berthing rates and are
purchasing a building for revenue and rent expense cost savings which is why FY 14‐15 and
15‐16 show a slight increase. Operating expenses run about $2.5 million over revenues.
These expenses are funded by taxes. Depreciation runs about $1.5 million and is important
because it represents the used up portion of the asset and indicates what expense the
District will have to incur in the future in order to bring the assets back to fully operating
Most recently (Fiscal Years 12‐13, 13‐14, 14‐15), capital expenses have risen because
maintenance had been deferred for too long and these items became somewhat urgent.
At least 4 of these needed expenses do not directly generate revenue. (Restrooms‐West
Basin; West Trail Repairs; North HMB Shoreline Improvement and Sewer System
Is this needed?
The City of South San Francisco reimbursed the District for the Dock repairs in the amount
of $2 million this Fiscal Year. Dredging is an expensive operational cost and needs to be
redone every several years to secure our revenues. The restrooms were remodeled,
electric meters replaced, and launch ramp redone. The Guest Dock and Dock 11 were
rebuilt (the guest dock with a grant and dock 11 with a City reimbursement). No new
major capital projects are proposed for OPM in FY 14‐15.
This graph shows the increase in capital expenditures FY 12‐13 thru FY 14‐15.
This graph will compare the District’s revenues to its expenses. I want to show you what we
anticipate we will receive in totals for revenues. As you can see, operating revenues make
up about half of total revenues. Property taxes make up the other half. It was previously
mentioned that the District may or may not continue to receive ERAF refunds in future
years. The revenues shown in this graph have no ERAF refunds built in. What is built in is
an assumption of continued 2% growth to the property tax base, which is the max allowed
under Prop 13 provided there are no ownership transfers, and a growth to the property tax
base to account for continued sale of older homes Under Prop 13 when a home sells it base to account for continued sale of older homes. Under Prop 13, when a home sells, it
may be reassessed to market rates.
This graph shows you the historical amount of cash that the District has carried in recent
years as well as the expected change through 2016. The red line is the projected shift
while the blue lines shows the historic information.
Currently the amount of available cash is significant which is a strength for the District;
however, the amount of available cash is expected to drop over the next couple of years.
Although a drop in cash is not something to celebrate, this does demonstrate that the
District’s cash does undulate (to move with a wavelike motion; display a smooth rising‐and‐ District s cash does undulate (to move with a wavelike motion; display a smooth rising and
falling alternation of movement), so such a drop is not unusual when the District is
investing in repairs and development of its facilities.
This slide represents holding back on capital expenditures and factors in anticipated ERAF
and RDA funds. In doing so this would allow the District $2 million more in cash reserves
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