BOARD OF PORT COMMISSIONERS
REGULAR MEETING
WEDNESDAY – June 13, 2007
MINUTES
I. CALL TO ORDER
8:00 A.M.: Chairman Castle, presiding
Commissioners Present: Larry R. Aikins; 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 Economic Development, Steven Wright; Manager of Operations, Donald K. Snaman; Assistant Operations Manager, 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 23, 2007 was made by Commissioner Aikins and Seconded by Commissioner Garcia. Commissioner Dodge abstained. The motion passed by a unanimous voice vote of all Commissioners present at the May 23rd meeting.
III. CLAIMS
Commissioner Dodge commented on a payment made to AT&T for pay phones and asked if the Port received rebates from AT&T for these phones. Ms. Hampton answered, “No”. The Port provides two pay phones for public use in the event of an emergency. Dodge asked if the phones could be set up to service 911 calls only. Ms. Hampton said that she would look into that to see if it would lower the cost.
Chairman Castle commented on a payment for insurance premium and asked if staff had obtained bids from other brokers and insurance companies. Ms. Hampton explained that the broker presented staff with several alternatives regarding insurance companies and staff selected the one that best fit each coverage. Ms. Hampton also negotiated a reduction to the broker’s fee amounting to $6,700. Castle asked if the broker had disclosed their commission income and Ms. Hampton replied that they had.
Commissioner Dodge inquired as to why multiple PERS payments for the months of November, December, January and February were being issued all at the same time. Ms. Hampton explained that multiple checks had been previously issued, voided, and then reissued on one check. Asked why the Port was behind in making those payments, Giari explained that last year the City made a change in their contract with PERS. Port staff has worked with a consultant to investigate alternatives. While gathering information, payments were held back for the maximum time allowed before accruing penalties. As a result of this investigation, a report will be sent to the Board members.
Commissioner Garcia asked for an explanation of a payment made to Encore Catering. Giari explained that the payment was for a deposit of one-half of the catering fee for a reception to be held in July in conjunction with the Port’s 70th Anniversary Celebration.
A Motion to Approve Claims was made by Commissioner Dodge and it was seconded by Commissioner Garcia. The motion passed by a unanimous roll call vote of all Commissioners.
IV. ORDINANCE
ORDINANCE APPROPRIATING ANTICIPATED REVENUES AND OTHER GENERAL FUNDS OF THE PORT OF REDWOOD CITY FOR THE FISCAL YEAR JULY 1, 2007-JUNE 30, 2008. 1ST READING – INTRODUCTION
Ms. Hampton presented the FY08 Budget in a series of Power Point slides, beginning with an overview. She began with tonnage, budgeted at over 1.5 million tons, and noted that cement volume is declining. Operating Revenue is slightly over $5.9m, of which the maritime segment of the Port’s business contributes 74% or almost $4.4m. Total Operating Expense is $3.4m, and is comprised of Operations ($2.1m) and Administration ($1.3m).
Ms. Hampton reviewed the composition of Operating Expense. Chairman Castle inquired what the Infrastructure line item of the Operations segment of Operating Expense represents. Ms. Hampton explained that it includes expenses related to the operation and maintenance of sewer systems, electrical systems, roadways, etc. which are the backbone of the Port’s revenue generating facilities. Vice Chairman Miller inquired if the wharves are included in Infrastructure. Ms. Hampton replied that expenses related to wharves are included in the line item entitled Maritime expense.
Ms. Hampton resumed her presentation with detail and assumptions pertaining to Non-Operating Income and Expense. Interest Income $604k, Interest Expense $535k, Department of Boating & Waterways grant proceeds $140k (part of $1,080,400 grant), estimated cost of demolition of the 475 Seaport Blvd. building $200k. The net of these items is a positive $9k.
Ms. Hampton continued the presentation with Net Income Before Subvention $2.5m; Subvention $356k; Net Income After Subvention $2.2m. She then presented the detail of the $3.1m capital budget and the cash flow statement. She explained that cash flow is expected to be negative due to the high level of capital expenditures, and that the $475k negative cash flow is expected to be funded from cash reserves rather than borrowing. She commented that the Port has been accumulating its cash reserves in anticipation of the capital projects planned for FY08 and beyond.
Ms. Hampton next presented a comparison of the FY08 Budget to the FY07 Forecast, highlighting and explaining differences in revenues and expenses. This was followed by a series of graphs which illustrated tonnage, operating revenue, operating expense, operating income, non-operating income and subvention over a five year span incorporating Fiscal Year 2004, 2005 and 2006 actual results, and the FY07 Forecast and FY08 Budget. She discussed the trend patterns of each graph, and the volatility of the non-operating revenue/(expense) component.
Chairman Castle expressed his appreciation to Ms. Hampton, Port staff and Commission Finance Committee members Aikins and Dodge for their hard work in preparing the budget. He commented that subvention is a dividend to taxpayers which the Port pays to the City. He also commended staff for its management of expenses. Commissioner Aikins commented that there is a phenomenal amount of detail and analysis that goes into preparation of the budget, including interviews with Port customers regarding their tonnage projections. He thanked staff and complimented Ms. Hampton for the professional work product.
A Motion to Approve Introduction and Waive the Reading Thereof was made by Commissioner Dodge. It was seconded by Commissioner Garcia. The motion passed by a unanimous roll call vote of all Commissioners.
ORDINANCE
B. ORDINANCE OF THE BOARD OF PORT COMMISSIONERS OF THE CITY OF REDWOOD CITY APPROVING AND AUTHORIZING EXECUTION OF LEASE AGREEMENT WITH HANSON AGGREGATES – 2ND READING – PUBLIC HEARING
A Motion to Open the Public Hearing was made by Commissioner Miller. The motion was seconded by Commissioner Dodge and was passed by a unanimous voice vote of all Commissioners.
Executive Director Giari explained that this lease is not ready for final consideration today due to ongoing discussions regarding performance bonding, and due to the unavailability of the principal Hanson negotiator.
Commissioner Dodge inquired about the $400,000 Performance Bond and how the amount was determined. Giari responded that it was a rough estimate for demolition costs of the cement silos. Dodge asked if the estimate included provision for removal of any contaminated soil, etc. that might be found. Giari responded, “No”, but Hanson is required to conduct an environmental assessment during the first year of the lease. Dodge questioned that the $400,000 figure would cover clean up costs if the environmental assessment uncovered contamination. Special Counsel to Port, Francois X. Sorba, explained that now would be the appropriate time to put language into the lease which would allow the Port to increase the bond if necessary.
Commissioner Garcia asked how it would be handled if contamination was found that Hanson could prove was there before they took over the site. Attorney Sorba explained that it would fall back on the Port and the tenant that was responsible for contaminating the site.
Chairman Castle commented that staff and Hanson has roughly estimated the cost of the Performance Bond to be $400,000 and stated that the bond should be written with an open ended amount. Sorba replied that it would be difficult to find any bonding company that would agree to that.
In regards to pollution liability insurance, Castle also suggested that Hanson be responsible for pollution caused by Hanson in the event that the Port discovers the pollution after Hanson has vacated the site.
No action was taken on this item and Chairman Castle stated that it would be held over to a future regular meeting of the Port Commission.
ORDINANCE
C. ORDINANCE OF THE BOARD OF PORT COMMISSIONERS OF THE CITY OF REDWOOD CITY APPROVING AND AUTHORIZING EXECUTION OF LEASE AGREEMENT WITH BASIC CHEMICAL SOLUTIONS, LLC – 1ST READING – INTRODUCTION
Click here to view the staff agenda sheet and documents for this item
Executive Director Giari explained that Basic Chemical Solutions (BCS) has been a tenant at the Port for 11-12 years. During that time they have grown their business substantially and are now short of office space. BCS offered to rent two offices at the end of the Port Administration Building. BCS has elected to lease the property in order to amortize the costs of improvements they want to make to the offices. The lease calls for a one-year term with two one-year options on the part of BCS. Rent would be at $1.35 per sq. ft. during the first year. The rate is deemed to be within market range considering location and condition.
Giari explained there would be several changes made to the lease between introduction today and final action at the next meeting. The start date of the lease will be changed from May 1 to June 1, 2007 in addition to a few other minor changes.
Commissioner Dodge inquired as to why the lease is being brought before the Board for approval after the start of the term of the lease. Giari explained that the lease does not take effect until it is approved by the Port Commission; and, if it is approved, it would be retroactive to June 1st.
Commissioner Aikins asked what the rental rate was for the previous tenant. Giari responded that it was less than $1.35 per sq. ft. and that he would provide the exact amount to Aikins after the meeting.
Chairman Castle commented that BCS was moving their Information Technology department to these two offices and asked if they would make any changes to the H.V.A.C. system. Giari replied, “No.”
A Motion to Approve Introduction and Waive the Reading Thereof was made by Commissioner Dodge. It was seconded by Commissioner Miller. The motion passed by a unanimous roll call vote of all Commissioners.
V. RESOLUTION
A. RESOLUTION AUTHORIZING SPECIAL EVENT WITHIN CERTAIN AREA OF THE PORT OF REDWOOD CITY – (PENINSULA CELEBRATION ASSOCIATION)
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Executive Director Giari explained that PCA has requested a permit for a fireworks’ display to be held at the Port on the 4th of July. PCA is proposing to conduct the fireworks’ display in a similar manner to the ones that have been held at the Port over the past six years.
Commissioner Dodge asked why the Public Fishing Pier would be closed. Robert Slusser, representing PCA, explained that the fishing pier is also the entrance to a private marina. In order to keep people from loitering on the pier, overcrowding the pier and to protect the marina boat owners, PCA has requested to close the pier to the public during the fireworks’ event.
A Motion to Adopt was made by Commissioner Aikins. It was seconded by Commissioner Miller. The motion passed by a unanimous roll call vote of all Commissioners.
RESOLUTION
B. RESOLUTION APPROVING REQUEST FOR CHANGE ORDER FOR THE FORMER LBT DEMOLITION AND SITE REMEDIATION PROJECT AT THE PORT OF REDWOOD CITY AND AUTHORIZING PAYMENT THEREOF (RCO 1)
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Executive Director Giari explained that this item involves a contract with URS Corporation who is performing engineering oversight services in conjunction with the LBT cleanup contract awarded to Cleveland Wrecking Company. We have asked URS to provide additional services.
Don Snaman commented that the URS contract was originally based on a 26-week schedule for Cleveland Wrecking to complete the excavation and chemical analysis as described in the DTSC approved workplans. The excavation proved to be more than anticipated and additional work was required, resulting in extra manpower and oversight by URS. Because of the larger excavation, more samples have been taken and there have been significant cost increases.
Commissioner Miller commented that he has been monitoring the work progress with Snaman and Miller deems this to be a reasonable request for a change order by URS. Giari added that this is the estimated amount to complete professional services by URS through June 29, 2007.
A Motion to Adopt was made by Commissioner Aikins. It was seconded by Commissioner Garcia. The motion passed by a unanimous roll call vote of all Commissioners.
At this time, Chairman Castle appointed a liaison to the City Council consisting of Commissioners Aikins and Dodge. As their first task, Castle asked them to fully explain the Port budget process and the FY08 budget to the Council members.
VI. ELECTION OF OFFICERS
Chairman Castle opened the election of officers. Commissioner Garcia requested that this item be tabled until the first Port Commission meeting in August 2007 when the new Port Commissioner assumes office. Attorney Sorba explained that if a motion is introduced, the Board may either hold the election or move to hold over the election to a future Port Commission meeting.
Commissioner Dodge made a motion to elect Lew Miller as Chairman. Commissioner Aikins seconded the motion and it was passed by a unanimous roll call vote of all Commissioners. At this time, Commissioner Castle handed the gavel to Chairman Miller, who assumed the role as chairman.
Commissioner Aikins made a motion to elect Dick Dodge as Vice Chairman. Commissioner Castle seconded the motion and it was passed by a unanimous roll call vote of all Commissioners.
Commissioner Dodge made a motion to elect Larry Aikins as Secretary. Commissioner Dodge seconded the motion and it was passed by a unanimous roll call vote of all Commissioners.
VII. PUBLIC COMMENT
Robert Hoffman, Maxwell Lane, Redwood City, thanked the Port Commission for the consideration given to him for the many crusades he has brought before them over the years. Hoffman also welcomed aboard new Port Commissioner Claire. Hoffman stated that at the request of Diane Howard, Chairman of the Pride and Beautification Committee, the Aqua Terra Project has been reactivated. In the past, the Aqua Terra Committee was responsible for removing 133 vessels from the waters of Redwood City. Since completing the Aqua Terra Project, a number of vessels have appeared in Steinberger Creek and Westpoint Slough. Hoffman said they are in the process of applying for funds from the state for removal of these vessels and will contact the Port Commission for its support in the future.
VIII. MATTERS OF BOARD INTEREST
None
IX. EXECUTIVE DIRECTOR'S REPORT
Executive Director Giari explained that Chairman Miller has been participating in meetings with the contractors and we are nearing the end of construction at the LBT. The excavations that were necessary in order to remove the soil, groundwater, and some of the underground piping were more extensive than in the original contract and plans. The work was managed and completed very well by URS Corp. and Cleveland Wrecking Co. and did not slow the project by much. The final grading of the site is underway now.
More information and the final numbers will be provided to the Board members after the June 29 project completion date. There have been increases in the volumes of both the material that was excavated and hauled away, as well as the fill material that was brought in. In the original contract these items were on a per unit basis and those costs have increased as the volumes have increased.
Giari commented that this has been a tough project but Don Snaman has done a great job of managing it with the help of URS. Snaman said that although the excavation was wider and deeper than anticipated, we were able to minimize the hazardous waste that was shipped off site. The oil that came out of the ground was slightly contaminated with PCB’s and a small amount had to be disposed at a different facility resulting in a total increase in cost of about $10,000. Snaman reported that extra digging on some shallow pipelines needs to be done since some of the contamination is in the fill surrounding the pipelines.
Commissioner Dodge inquired about contamination on the north side of the old Petrox tank, asking what the Port’s options would be if it could be identified as belonging to Texaco. Special Counsel to Port, Francois X. Sorba, explained that at this point all options are open but if there is a decision regarding Texaco, the Commission should discuss it in Closed Session.
Dodge asked when the Port could expect to receive a final sign off from DTSC and move forward with the site. Mike Velzy, URS Corporation, explained that URS is required to submit a completion report within 30 days of completing field activities. The contractor is scheduled to be off the site by the end of June but a few monitoring wells need to be installed in July. After the monitoring wells are installed, the completion report is due to DTSC. Their review time can vary from several weeks to a couple of months.
Giari explained that staff has been talking to Eagle Rock Aggregates about starting their geotechnical investigation of the site on June 30.
X. ADJOURNMENT
At 9:16 a.m. Chairman Miller requested that the Commission adjourn to its next regularly scheduled Meeting of June 27, 2007
A Motion to Adjourn was made by Commissioner Castle and it was seconded by Commissioner Dodge. The motion passed by a unanimous voice vote of all Commissioners.
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