BOARD OF PORT COMMISSIONERS
REGULAR MEETING
WEDNESDAY – September 27, 2006
MINUTES
I. CALL TO ORDER
8:00 A.M. Chairman Castle, presiding
Commissioners Present: Commissioner Larry R. Aikins; Commissioner Ralph A. Garcia, Jr.; Secretary Richard A. Dodge; Vice Chairman Lewis D. Miller; and, Chairman John J. Castle
Commissioners Absent: None
Staff Present: Executive Director Michael J. Giari; Special Counsel to Port, Francois X. Sorba; Director of Finance & Administration, Cynthia D. Hampton; Manager of Operations, Donald K. Snaman; Manager of Economic Development, Steven Wright; Assistant Manager of Operations, Eric Napralla; Staff Accountant, Evelyn Lim; Executive Assistant, Rita Artist
Commissioner Miller led the Pledge of Allegiance.
II. APPROVAL OF MINUTES
A Motion to Approve Minutes of Regular Meeting of September 13, 2006 was made by Commissioner Aikins and was seconded by Commissioner Miller. The motion passed by a unanimous voice vote of all Commissioners with one abstention by Commissioner Dodge.
III. CLAIMS
A Motion to Approve Claims was made by Commissioner Garcia and it was seconded by Commissioner Dodge. The motion passed by a unanimous voice vote of all Commissioners.
At this time, Chairman Castle moved to Item V-A – RESOLUTION APPROVING SUBLEASE AGREEMENT (PORTSIDE II DEVELOPMENT) – (ASSOCIATED LEARNING & LANGUAGE SPECIALISTS, INC.) saying he would return to Item IV-A later in the meeting.
IV. REPORT/PRESENTATION
A. PRESENTATION OF ANNUAL AUDIT AND FINANCIAL STATEMENTS by Caporicci & Larson
Click here to view the presentation for this item.
Nasi Raissian, Partner, Caporicci & Larson CPAs, stated that the audit of the Port of Redwood City for the year ended June 30, 2006 has been completed; there were no disagreements with the Port’s management, no material weakness in internal controls, and no audit adjustments.
Ahmed Badawi, Senior Manager, Caporicci & Larson CPAs, summarized the audit procedures that were followed and reported that Caporicci & Larson issued an unqualified opinion on the Fiscal Year 2006 financial statements, which is the best opinion possible. He stated that there are no recommendations to management to report for FY06, and reported that the Port has implemented the prior year recommendation to adopt a fraud policy and procedure.
Mr. Badawi briefly reviewed the year’s results, and pointed out that cash balances increased by approximately $1.9 million from Fiscal Year 2005 to Fiscal Year 2006. He reiterated that the Port has capitalized the costs incurred for the remediation of the Liquid Bulk Terminal as construction in progress, and that the fair value of the asset is unknown at this time. Once the clean up is completed, the fair value of the asset will be determined and the book value of the asset will be adjusted accordingly. Most likely the value of the asset is overstated and will need to be written down.
Commission Miller asked if the distribution of the Port’s cash among various banks was problematic. Mr. Badawi explained that the auditors made a comment in the notes to the financial statements regarding a concentration of deposits in one bank, however, the auditors do not think this is a problem but made comment because it is not in accordance with the Port’s investment policy, which follows the City of Redwood City’s investment policy, which does not fit the Port very well.
Commissioner Aikins inquired about the timing of the $4.2 million environmental liability. Ms. Raissian explained that $2.6 million represents the estimated cost of the final cleanup expected to occur during Fiscal Year 2007; $1.6 million represents the estimated post closure monitoring costs after the clean up has been completed. It the clean up is not completed in FY07, the liability will be re-evaluated at the end of the fiscal year and a new estimated amount would be carried forward.
Commissioner Aikins asked Ms. Hampton if the clean up costs are being expensed. She replied that the clean up costs are being capitalized, however, the interest expense on the 1999 Bonds is no longer being capitalized.
Commissioner Aikins asked Ms. Raissian if a write down were to occur whether it would be recorded above or below the bottom line. She responded that it would be reflected below the bottom line as an extraordinary or special item, and would not impact the Port’s operating expenses.
Commissioner Dodge asked Ms. Hampton how the Port’s subvention to the City would be affected if a write down were to occur. Ms. Hampton said that it should have no effect on supplemental subvention because we neutralize the impact of the LBT, except for the capital expenditures that are now being funded from the Port’s funds. Ms. Hampton stated that it will have no effect whatsoever on base subvention.
Chairman Castle thanked Ms. Raissian and Mr. Badawi for their report and commented that they gave a very nice presentation.
Chairman Castle now moved to Item VII – PUBLIC COMMENT.
V. RESOLUTION
A. RESOLUTION APPROVING SUBLEASE AGREEMENT – (Portside II Development) – (Associated Learning & Language Specialists, Inc.)
Executive Director Giari explained that this sublease agreement for Portside II is with a new tenant, Associated Learning & Language Specialists (ALLS), Inc. They are currently located on Twin Dolphin Drive in Redwood Shores and are expanding to a new facility in the Portside II building. ALLS provides learning, therapy, and counseling services to children and adults with special learning needs. Individual tutoring is also provided in reading, writing, and math for 1st to 8th graders. Classes may be conducted in the Portside II office space. Class size will be limited to no more than 10 students. Port staff is recommending that the sublease be approved with the condition of providing the Port with the proper proof of insurance and including the Port and the City in the indemnification provisions of the sublease.
Commissioner Aikins asked why the term of the sublease was for 18 months. Jeff Clark, representing Clark Family Partnership, explained that ALLS is a non-profit organization that wanted to set the dates of the lease to coincide with the receipt of their funding.
Chairman Castle asked if ALLS has agreed to provide the insurance documents required by the Port and amend their lease to include the Port and the City in its indemnification clause. Clark said that the tenant would be compliant with all of the Port’s requirements.
A Motion to Approve was made by Commissioner Dodge and it was seconded by Commissioner Miller. The motion passed by a unanimous roll call vote of all Commissioners.
RESOLUTION
B. RESOLUTION IN SUPPORT OF CALIFORNIA BALLOT PROPOSITIONS 1A AND 1B
Executive Director Giari stated that the California Association of Port Authorities worked closely with the Port of Redwood City and other California ports to ensure that proposed transportation infrastructure bond legislation in California contained provisions that would assist ports in improving goods movement, air quality, and port safety/security. These efforts resulted in the passage of SB1266, which in turn resulted in Proposition 1B, which is on the State wide ballot in November 2006.
Giari explained that the resolution included in the Commissioners’ documents for this meeting would be amended to include Proposition 1A. Proposition 1A would ensure that the existing State sales taxes on gasoline would go to fund vital transportation improvements. Proposition 1A and 1B are part of the Rebuild California Plan, Propositions 1A through 1E, that provide state funding over the next 10 years to sustain the State’s population growth and economy. They have been endorsed by a wide variety of public agencies, community organizations and businesses including the Redwood City Chamber of Commerce. The Redwood City City Council approved endorsement of Propositions 1A-1E at their meeting on September 25, 2006.
Chairman Castle requested that copies of this resolution be sent to the Redwood City Council Members, State Assemblyman Ira Ruskin, State Senator Joe Simitian, State Senator Don Perata, and Californians to Improve Traffic Now.
A Motion to Approve was made by Commissioner Dodge and it was seconded by Commissioner Miller. The motion passed by a unanimous roll call vote of all Commissioners.
VI. MOTION
A. MOTION APPROVING AND AUTHORIZING THIRD AMENDMENT TO AGREEMENT FOR SECURITY PATROL SERVICES – (COMMAND SECURITY, INC.)
Click here to view the staff agenda sheet and documents for this item.
Manager of Operations, Donald Snaman, explained that security services for the Port have been provided by Command Security, Inc. (CSI) since November 2002. In September 2004 and again in November 2005, the Port Commission approved amendments to the agreement with Command Security. At today’s meeting, Command Security is requesting the Port increase the compensation rate to $24.88 per hour (a three percent increase over the current rate) and increase the monthly vehicle fee to $1,075.00 per month. Command Security has agreed to lower the amount that the Port compensates CSI for training security guards from $1,000 per year to $750 per year. This amendment also contains revision of the language in Paragraph 7, Hold Harmless, of the September 2004 Agreement; it clarifies CSI’s responsibility for any USCG violations due to negligence of job performance.
Commissioner Dodge asked Port Counsel if the Port could continue to amend the original contract indefinitely. Attorney Sorba replied that the Port is within its legal rights to do so. Executive Director Giari explained that the original contract had been put out to bid in 2002 and was awarded to CSI. Port staff has investigated putting the security contract out to bid again but would like to renew this contract with CSI for another year in order to give staff time to prepare bidding information and solicit proposals.
Commissioner Miller asked if a determination of a violation was made by the Coast Guard, who would be responsible. Snaman replied that if the violation was caused by negligence of the security guards, Command Security would reimburse the Port for the cost of the fine.
A Motion to Approve was made by Commissioner Aikins and it was seconded by Commissioner Miller. The motion passed by a unanimous roll call vote of all Commissioners.
At this time, Chairman Castle returned to Item IV-A, PRESENTATION OF ANNUAL AUDIT AND FINANCIAL STATEMENTS by Caporicci & Larson
VII. PUBLIC COMMENT
None
VIII. MATTERS OF BOARD INTEREST
None
IX. EXECUTIVE DIRECTOR'S REPORT
Executive Director Giari reported on the Annual Convention of the American Association of Port Authorities (AAPA), which was attended by Commissioner Dodge and Giari September 10-13, 2006 in New Orleans. The Port received an award of merit for the History of the Port publication that was submitted in AAPA’s Communications Awards category.
Giari stated that the convention presented an opportunity to discuss recent events in Washington, D.C. During the convention, the Senate passed the latest version of the Port Security bill, which was a topic of discussion at the conference. A number of other sessions on topics such as “Tackline 21st Century Challenges through Strategic Leadership” and “Effective Communications Strategies – Garnering Support from the Public & Policymakers” were relevant and of interest to the broad number of ports in attendance, including us.
Commissioner Dodge added that many topics centered on the affects of Hurricane Katrina and recovery from natural disasters. Dodge commented that the damage in New Orleans is still visible and widespread and that the effects will be felt for a long time to come. Dodge suggested that any opportunities that the Port and individuals have to assist the people in those communities should be taken.
Chairman Castle asked Giari to report on the opening event of the new downtown Redwood City. Giari explained that on October 15th the City is celebrating the revitalization of downtown Redwood City with an all day festival: “Redwood City: Our Town - Downtown”. The festival will take place on portions of Broadway, Theater Way, and on the new Courthouse Plaza in front of the San Mateo County History Museum. In conjunction with San Mateo County Historical Association’s celebration of the 150th Sesquicentennial Anniversary of the County, and the City’s Downtown Redwood City celebration, the Port will have a display on Courthouse Plaza that will feature the history of the Port of Redwood City. We plan to show old photographs of the Port and distribute our award winning brochure on the history of the Port.
Chairman Castle encouraged the Commissioners and staff to take part in this event and to visit the Port’s exhibit.
X. ADJOURNMENT
At 8:50 a.m. Chairman Castle requested that the Commission adjourn to its next regularly scheduled Meeting of October 11, 2006.
A Motion to Adjourn was made by Commissioner Garcia. It was seconded by Commissioner Miller and passed by a unanimous voice vote of all Commissioners.
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