BOARD OF PORT COMMISSIONERS
REGULAR MEETING
WEDNESDAY – May 23, 2007
MINUTES
I. CALL TO ORDER
8:00 A.M.: Chairman Castle, presiding
Commissioners Present: Larry R. Aikins; Ralph A. Garcia, Jr.; Vice Chairman, Lewis D. Miller; and, Chairman John J. Castle
Commissioners Absent: Secretary Richard A. Dodge
Staff Present: Executive Director Michael J. Giari; Special Counsel to Port, Francois X. Sorba; Director of Finance & Administration, Cynthia D. Hampton; Manager of Economic Development, Steven Wright; Manager of Operations, Donald K. Snaman; Assistant Manager of Operations, Eric Napralla, Executive Assistant, Rita F. Artist
Commissioner Garcia led the Pledge of Allegiance.
II. APPROVAL OF MINUTES
A Motion to Approve Minutes of Regular Meeting of May 9, 2007 was made by Commissioner Miller and Seconded by Commissioner Aikins. The motion passed by a unanimous voice vote of all Commissioners present. Commissioner Dodge was absent.
III. CLAIMS
A Motion to Approve Claims was made by Commissioner Garcia and it was seconded by Commissioner Miller. The motion passed by a unanimous voice vote of all Commissioners present. Commissioner Dodge was absent.
IV. ORDINANCE
A. ORDINANCE OF THE BOARD OF PORT COMMISSIONERS OF THE CITY OF REDWOOD CITY APPROVING AND AUTHORIZING EXECUTION OF LEASE AGREEMENT WITH HANSON AGGREGATES – 1ST Reading – Introduction
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Executive Director Giari explained the leased history of .523 acres near Wharf 2 and the construction of storage silos and a truck load out system by Kaiser Cement. Hanson purchased the facility and assumed the lease from Kaiser in 1987. Hanson has not utilized the silos for maritime shipments of cement since the late 1980’s. The silos were subleased, currently to Griffin Soils, for the storage and distribution of kiln dust. The material is moved in and out of the silos by truck. There is no maritime activity. Hanson’s lease expired September 30, 2006 and they have expressed a desire to continue to lease the premises. The Port desires to have the facility used for maritime cargo. One of the constraints to using the facility for maritime cargo is that the 10,000 ton capacity of the silos is too small for the amount of cargo carried in the current size of bulk ships. Hanson is continuing to evaluate the feasibility of marine cargo uses.
The term of the proposed new lease agreement would be three years. No less than six months prior to the end of the three year term, Hanson would submit a business plan for maritime use of the silos to the Port. If the Port approves the business plan, Hanson could exercise its option to extend the term of the lease an additional five years. Giari explained that under the new lease agreement, the minimum guaranteed wharfage/facility services charges would be eliminated since there is no cargo being moved across the docks; and, the rent would be increased to $13,000 for the first year, with annual agreed upon increases for the second and third years. In addition, there is a basic security fee of $150 per month. At the termination of the lease, Hanson is required to remove all structures and improvements from the leased premises. At least one year prior to the expiration of the initial three year term, Hanson is to provide a $400,000 performance bond to fulfill its obligation to satisfactorily remove all structures and improvements.
Commissioner Aikins asked if Hanson’s business plan would cover anticipated wharfage/facility service charges after the three year term had passed. Giari explained that the Port would be able to assign an appropriate wharfage/facility usage charge based upon the commodity and the volume of business that Hanson anticipates doing at this facility, as would be described in their business plan.
Aikins asked about the payment terms under the extended lease term, assuming there is one. If the rent will be at fair market value at that time and the maritime business plan includes payment of wharfage/facilities services charges, then would the fair market value for the facility take those charges into account? Giari responded, “Yes” and explained that the maritime revenues to be generated would be part of the market valuation of the facility. Aikins next asked if, hypothetically, the rent at the end of the original three year term is $14,000/month and the fair market rental value for the extended term would include maritime charges, then should the rent by itself be substantially lower. Giari answered that is the way it generally would be evaluated but there may be other factors to consider as well.
Commissioner Miller asked if the $400,000 performance bond would pay for any clean up that the Port may have to make, including the removal of the silos. Giari explained that Hanson is responsible under the terms of the lease to remove all structures and improvements. If they don’t remove the improvements, the Port could then use the proceeds from the bond to remove the silos. Special Counsel to Port, Francois X. Sorba, explained that the tenant is not limited by the amount of the bond, but, in this case, the surety is limited to $400,000. Chairman Castle said the language of the performance bond should be expanded to include the complete removal of all structures and improvements, and any clean up of the site including any contamination, regardless of the limit. In addition to the bond, the Port would want a list of all structures and improvements.
A Motion to Approve the Introduction of the Ordinance with the condition that the language of the performance bond should be expanded to include the complete removal of all structures and improvements, and any clean up of the site including any contamination, regardless of the limit, and a list of all structures and improvements currently on the property be given to the Port was made by Commissioner Miller. The motion was seconded by Commissioner Aikins and it was passed by a unanimous roll call vote of all Commissioners present. Commissioner Dodge was absent.
V. RESOLUTION
A. RESOLUTION APPROVING STANDARD SUBLEASE AGREEMENT – (Portside Investors – Phase I Lease Agreement) – (IGROUP NETWORK, INC.)
A Motion to Adopt was made by Commissioner Aikins. It was seconded by Commissioner Garcia. The motion passed by a unanimous voice vote of all Commissioners present. Commissioner Dodge was absent.
VI. MOTION
A. MOTION APPROVING AND AUTHORIZING EXECUTION OF MARINA MANAGEMENT CONTRACT – (SPINNAKER ENTERPRISES, INC.)
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Executive Director Giari stated that Spinnaker Sailing has provided management services for the Port of Redwood City Marina in a professional and satisfactory manner for the past three years. Services are provided on a seven day per week basis at the Harbormaster’s office, which is located in the Spinnaker Sailing Center office at the Marina. The proposed agreement with Spinnaker is for a period of two years from May 1, 2007 through April 30, 2009. The fee for management services would be $3,850 per month, which is an increase of $150 per month over the current fee. The scope of services to be provided by Spinnaker under this agreement is shown in Exhibit A and includes a monthly operations report to be made to the Port’s Manager of Operations. Approval of this agreement is recommended by staff.
Commissioner Miller asked if there have been any recent problems with “live-a-boards” at the marina. Rich Ferrari, president of Spinnaker Enterprises, Inc., responded that although people sometimes think of their boats as an alternative housing situation, he does not believe it is an issue today. The marina has had long term tenants who either moved out of the area or sold their boats and there no longer is the problem that existed about 10 years ago with people living on board their boats. Ferrari commented that Westpoint Marina plans to have 60-75 slips available for live-a-boards once their marina is open and operational. Chairman Castle inquired about Spinnaker’s newsletter to marina tenants. Ferrari explained that Spinnaker, in conjunction with the Port, sends out a yearly reminder to marina tenants to follow basic rules such as removing their bar-b-ques and dinghies from the docks.
A Motion to Approve was made by Commissioner Miller. It was seconded by Commissioner Aikins. The motion passed by a unanimous roll call vote of all Commissioners present. Commissioner Dodge was absent.
VII. PUBLIC COMMENT
NONE
VIII. MATTERS OF BOARD INTEREST
Commissioner Aikins reported that on Monday, May 21, the City Council appointed two Port commissioners, each to serve a five-year term beginning on August 1st. Congratulations are in order to Commissioner Garcia, who was reappointed. At this time in the meeting, congratulations were extended by members of the Board and staff.
Commissioner Castle was not reappointed. Aikins commented that Castle has spent over 40 years as a volunteer in so many capacities in various organizations and causes that time does not permit listing them all here. Aikins stated that the experience and expertise that Castle brings to the Port, along with his tireless work over the past 20 years, will be sorely missed. Beyond that, Castle’s relationship with our federal congressional delegations has had a huge impact on the Port’s ability to secure millions of federal dollars in funding for the Port. With that relationship leaving us, we would be wise to start spending time with our Washington, D.C. representatives in an attempt to overcome what will be a major setback for the Port and the City of Redwood City.
Chairman Castle responded that he will miss working with fellow commissioners and staff. Looking back over the past 20 years, Castle said the accomplishment of going from what we had then, which was a small port looking for the big ticket item, and changing that direction to work for that which is beneficial for the Port, is due in no small part to the efforts of the Port Commissioners. Castle stated that the Port of Redwood City is recognized by The U.S. Department of Transportation Maritime Administration (MARAD) and by port peers as being the No. 1 small port on the west coast. Castle hopes that the expertise of the new Port commissioner will help to continue that in the future.
IX. EXECUTIVE DIRECTOR'S REPORT
Executive Director Giari reported that the Port has received a port security grant from the U.S. Department of Homeland Security in the amount of $181,000 due largely to the efforts of Eric Napralla, who was ably assisted by Don Snaman and the Port’s security consultant, Steve Longoria. The grant will be used primarily for physical improvements to the Port’s security detection system and emergency operation’s system. There is a 25% share required by the Port in order to receive the grant. Commissioner Aikins asked if any of the grant funds would be used to cover security costs that the Port has previously incurred and Giari responded, “No.”
In response to an inquiry from Commissioner Miller about the Water Resource Development Act’s (WRDA) impact on channel dredging, Giari explained that legislation spearheaded by Senator Boxer and her committee was approved by the Senate. Steve Wright further explained that a joint House/Senate committee will further work out the details of WRDA; however, there is some concern that annual dredging of Redwood City channel may be lost during this process.
X. ADJOURNMENT
At 8:40 a.m. Chairman Castle requested that the Commission adjourn to its next regularly scheduled Meeting of June 13, 2007
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