BOARD OF PORT COMMISSIONERS
REGULAR MEETING
WEDNESDAY – April 22, 2009
MINUTES
I. CALL TO ORDER
8:00 A.M.: Chairman Dodge, presiding
Commissioners Present: Larry R. Aikins; Lorianna Kastrop; Secretary Richard Claire; Vice Chairman Ralph Garcia, Jr.; and, Chairman Richard Dodge
Commissioners Absent: None
Staff Present: Special Counsel to Port, Francois X. Sorba; Director of Finance & Administration, Cynthia D. Hampton; Manager of Operations, Donald K. Snaman; Assistant Manager of Operations, Eric Napralla; Accounting Clerk, Linda Hawkins; and, Executive Assistant, Rita F. Artist
At 8:55 A.M. Commissioner Claire left the meeting due to a previous engagement.
Commissioner Garcia led the Pledge of Allegiance.
II. APPROVAL OF MINUTES
A Motion to Approve Minutes of Regular Meeting of April 8, 2008 was made by Commissioner Aikins and Seconded by Commissioner Kastrop. The motion passed by a unanimous voice vote of all Commissioners.
III. CLAIMS
A Motion to Approve Claims was made by Commissioner Garcia and it was seconded by Commissioner Aikins. The motion passed by a unanimous voice vote of all Commissioners.
IV. ORDINANCE
A. ORDINANCE OF THE BOARD OF PORT COMMISSIONERS OF THE CITY OF REDWOOD CITY APPROVING AND AUTHORIZING EXECUTION OF FOURTH AMENDMENT TO LEASE AGREEMENT WITH PABCO BUILDING PRODUCTS, LLC – 1. 2nd Reading/Public Hearing
Commissioner Aikins moved to Open the Public Hearing. Commissioner Garcia seconded the Motion and it passed by a unanimous voice vote of all Commissioners. Chairman Dodge invited comments from the public. There were no comments made and Commissioner Aikins moved to Close the Public Hearing. Commissioner Kastrop seconded the motion and it passed by a unanimous voice vote of all Commissioners.
Cynthia Hampton, Director of Finance & Administration, commented that the Ordinance was introduced at the Regular Meeting of the Board of Port Commissioners on April 8, 2009. The Ordinance and Notice of Public Hearing was published in the Redwood City Tribune on Friday, April 10th, and since its introduction no substantive changes have been made.
A Motion to Adopt the Ordinance and Waive the Reading Thereof was made by Commissioner Garcia. It was seconded by Commissioner Kastrop. The motion passed by a unanimous roll call vote of all Commissioners.
V. RESOLUTIONS
A. RESOLUTION APPROVING AND AUTHORIZING EXECUTION OF PRIVATE ROAD CROSSING MASTER AGREEMENT (UNION PACIFIC RAILROAD COMPANY)
Don Snaman, Manager of Operations, presented the staff report on this item explaining that Union Pacific Railroad Company has undertaken a $2 million track improvement project for the main rail spur from Highway 101 parallel to Seaport Boulevard and the Frontage Road, ending at the entrance to the Cemex Cement Terminal. Road crossings at four public streets, Seaport Court, Beeger Road, Herkner Road, and Hinman Road plus four private entrances, one at the former LBT site, two at Seaport Refining & Environmental, and one at SimsMetal will be impacted by this project. Snaman gave a brief description of the improvements to be made commenting that UP has offered to partner with the Port for the improvements to the eight crossings and provide the labor at no charge to the Port with the provision that the Port reimburse UP for the cost of materials for concrete panel crossings.
Snaman explained that the original private road crossing agreements were entered into between Southern Pacific and the current tenant at that time, i.e. Texaco, Union Oil. This proposed Private Road Crossing Master Agreement terminates those prior agreements.
Snaman concluded by saying that the Port and UP have negotiated the Master Agreement to the satisfaction of both parties. Port staff is recommending approval of the Private Road Crossing Master Agreement and authorizing the Executive Director to execute the agreement. Approval by the Port Commission will also authorize payment in the amount of $266,408 for the cost of materials for the eight road crossings described in the agreement.
Chairman Dodge asked the Port Attorney if the proposed improvements by UP require permits/approval by the Port Commission and Attorney Sorba replied, “Yes.” Dodge asked if this item should have been acted on prior to UP getting approval from the Port for the track renovations that UP is already doing. Sorba explained that assuming that the work UP is doing now requires a permit from the Port Commission, if the Master Agreement is approved today, in essence we are saying, “Yes, UP can go ahead with the work they are doing.”
Commissioner Claire asked if the City of Redwood City needs to have their Engineering Department review the crossing upgrades and give their approval also. Sorba commented that the Public Works Department and the Engineering Department have been contacted. The City Attorney has also been contacted and provided with all the documents. Commissioner Claire followed up on Dodge’s comment and asked Sorba if the Port by approving this agreement would, defacto, be approving the permit. Sorba answered, “Yes.”
Commissioner Dodge expressed his concern that UP intends to raise the track 1-2 feet, which would mean the grade of the paving at the crossings would have to be raised at a major cost to the Port. Don Snaman commented that this has been a concern of staff also. UP has been requested to give us the finished height but they have not provided us with that information as yet.
Commissioner Aikins asked if there was a significant extra cost for the paving work that will have to be done beyond the $266,408. Snaman responded that there would be an additional cost. Aikins then asked Ms. Hampton if the Port had any reserves for that. Ms. Hampton explained that it was not one of the line items in the capital budget but there are funds available which would come out of reserves.
Chairman Dodge asked for confirmation on the cost to the Port being $266,408 plus the cost of engineering, plus the cost of any paving work the Port has to do on both sides of the track at the crossings. Snaman explained that the paving contract would be a separate item that would be brought before the Board. Dodge also commented that UP could terminate the agreement at any time with a 30-day notice, in which case the Port would have to remove the improvements and bring it back to its original state. Snaman said this would apply to the private crossings, not the public streets, and that UP has the right to do this today.
Dodge asked Attorney Sorba to comment on the right of prescriptive easement in this case. Sorba explained that prescriptive easement cannot be used against a city or county but said he would have to research whether or not it could be used against UP. Sorba added that by his recollection, under PUC rules, prescriptive easements cannot be used against a railroad company. Dodge questioned why it was in the agreement if UP had the right to begin with. Sorba answered that under the PUC, UP has the right to cancel any private crossings. If it is a public crossing, then UP has to apply and be granted that right from the PUC to extinguish any public crossing. As to why this is in the agreement, UP wants to make sure that the location and all of the various documents that date back to approximately 1930 are incorporated into this master agreement.
Commissioner Garcia asked what would be the downside to the Port by postponing action on this item until UP tells us exactly how high they are going to raise the tracks. Snaman commented that the risk is that the crossings at SimsMetal and the former LBT site would become a 100% cost to the Port. The two crossings into Seaport Refining & Environmental could be eliminated.
Commissioner Aikins inquired as to who has the maintenance responsibility around the track at the crossings now. Snaman said UP is supposed to maintain it from 2-feet outside the track to the middle of the track.
Commissioner Claire commented that regardless of how high UP raises the track, the Port still has to have access across that line. Because the line serves some of our tenants, it was Claire’s opinion that it would be in the benefit of the Port to go ahead with this master agreement and that in the long run, fixing that main rail line is a benefit to the Port.
Commissioner Kastrop commented that she was pleased that UP is improving the tracks and the Port is improving the crossings and that it will be at a little less cost than we would have had to expend if the Port had to maintain it. Kastrop expressed her opinion that she hoped that the Port will be able to accomplish a better communications relationship with UP in the future.
Commissioner Garcia inquired as to how traffic would be impacted during construction of the 8-crossings. Snaman said UP would close only one-half of the crossing at Herkner Road at a time. At Seaport Court, the whole crossing may be done at one time and traffic would be diverted through Beeger Road. UP prefers to close the crossings for 48-hours but will work with the tenants to keep access open.
Chairman Dodge asked Snaman if he had researched what it would cost the Port to put in asphalt crossings and maintain those over a period of time versus the cost of concrete. Snaman said that he has approximate estimates on concrete crossings versus asphalt crossings. The cost for labor and materials for a concrete crossing is approximately $750 per foot and less for an asphalt crossing. Snaman thinks that the Port is getting a good deal from UP. The crossings will be much safer and we will not have the problems that we have today.
A Motion to Approve was made by Commissioner Claire. The Motion was seconded by Commissioner Kastrop and the motion was passed by a unanimous roll call vote of all Commissioners.
B. RESOLUTION AUTHORIZING APPLICATION FOR FUNDING FROM FISCAL YEAR 2008 CALIFORNIA PORT AND MARITIME SECURITY GRANT PROGRAM AND AUTHORIZING THE EXECUTION OF A GRANT AGREEMENT AND ANY AMENDMENTS THERETO WITH THE STATE OF CALIFORNIA FOR THE PURPOSES OF THIS GRANT.
Eric Napralla, Assistant Manager of Operation, presented the staff report on this item explaining that The Highway Safety, Traffic Reduction, Air Quality, and Port Security Bond Act of 2006 (Proposition 1B) authorizes the issuance of approximately $20 billion in general obligation bonds for specified purposes, including grants for port security projects. In December 2008, Napralla attended a port peer review and approval meeting in Sacramento conducted jointly by the Governor’s Office of Homeland Security and the Governor’s California Maritime Security Council. All projects that were submitted for funding were reviewed, adjusted and either approved or disapproved.
Napralla described the seven projects that the Port applied for and the awarded dollar amounts as: 1. Lighting Improvements –$1,700,000; 2. Waterside Staging/Response Center –$450,000; 3. Port Security Enhancement (TWIC matching funds) –$273,196; 4. Redwood City Police Vessel Security Equipment –$36,000; 5. Closed Circuit Television –$1,300,000; 6. Security/Emergency Response Plan Development, Training, Drills, and Exercises –$50,000; and, 7. Port Security Equipment (Federal round 9 Matching Funds) ($117,795): Placeholder for 25% match requirement if awarded. Total amount for the projects is $3,927,000.00
In April 2009, the Port received a Notification of Project Eligibility from the California Emergency Management Agency. The intent of this correspondence is to notify grant recipients of approved projects and to proceed with the preliminary administration required to obtain authorization for reimbursement. The State’s financial situation is yet to be resolved and, therefore, the Port cannot begin to spend this money until we receive further notice. However, California has requested we proceed with certain administrative submittals to position ourselves so we can begin projects immediately when authorization is granted.
Commissioner Aikins commented on the spectacular job that Napralla and Snaman have done on these grant submittals.
A Motion to Approve was made by Commissioner Kastrop. The Motion was seconded by Commissioner Claire and was passed by a unanimous roll call vote of all Commissioners.
VI. MOTIONS
A. MOTION APPROVING THE INITIAL STUDY AND AUTHORIZING EXECUTION OF NOTICE OF PREPARATION FOR AN ENVIRONMENTAL IMPACT REPORT FOR WHARVES 1&2 AND WAREHOUSE 1 AND APPROVING THE PAYMENTS OF EXPENDITURES, FEES AND COSTS IN CONNECTION THEREOF (WHARVES 1 AND 2 REDEVELOPMENT PROJECT)
Don Snaman, Manager of Operations, presented the staff report on this item explaining that the Port is planning to renovate and improve Wharves 1&2 and the adjacent upland area. In 2006 the Port conducted a Marine Terminal Plan study which assessed operational needs and evaluated marine terminal plan alternatives for the renovation of this facility.
The recommended alternative design for a new pile supported concrete wharf would meet the need of future growth in dry bulk cargo and provide flexibility to accommodate cargo diversification.
The Project would be conducted in two phases. Phase 1: demolition and reconstruction of Wharves 1&2, demolition of Warehouse No. 1, installation of new utilities and related shoreline improvements. Phase 2: upgrade and realignment of the hopper/conveyor system for aggregate shipping, handling and storage in the 7.5 acre area adjacent to Wharves 1&2. The Port is the sponsor and lead agency for Phase 1 which would be conducted in coordination with the current tenant, Cemex Aggregates.
The Port Commission approved in 2008 an agreement with Environmental Science Associates (ESA) to conduct the environmental analysis required under the California Environmental Quality Act (CEQA). An Initial Study and Environmental Checklist were prepared and the Initial Study found that the project may result in “potentially significant impacts” on a number of environmental factors and that an environmental impact report (EIR) is required. The EIR will evaluate the potential impacts, including an increase in traffic resulting from increased cargo capacity, and recommend mitigation measures.
The Port Commission is considering a Motion to approve the Initial Study for this Project and to issue the Notice of Preparation of the EIR. There is a 30 day review and comment period for the Initial Study and the scope of the environmental review which will conclude on May 29, 2009. ESA will then prepare the administrative draft EIR for review by the Port. The draft EIR will be published and distributed for public comment in 6 to 7 months.
Commissioner Claire asked, “If we rebuild Wharves 1&2, will that significantly increase our ability to handle more tonnage?” Snaman responded that it could and because of that, the increase in truck traffic will be evaluated.
Chairman Dodge asked for confirmation that the Board was being asked to approve the Initial Study and the Notice of Preparation. Snaman replied, “Yes.”
A Motion to Approve was made by Commissioner Garcia. The Motion was seconded by Commissioner Claire and was passed by a unanimous voice vote of all Commissioners.
At this time, Commissioner Claire left the meeting due to a previous engagement.
VII. REPORT/PRESENTATION:
By Cynthia Hampton, Director of Finance & Administration
A. QUARTERLY FINANCIAL RESULTS – (March 31, 2009 Comparative Results)
B. CERTIFIED QUARTERLY INVESTMENT REPORT – (For Quarter Ended March 31, 2009)
Ms. Hampton presented the fiscal year to date March 31, 2009 unaudited financial statements and reports. Her presentation included a review of the components of tonnage, operating revenue, operating expense, operating income, non-operating income/(expense), subvention, and net income after subvention. Actual fiscal year to date 03/31/09 results were compared with budget and last year, and noteworthy items were explained in greater detail.
Commissioner Kastrop inquired if the Port is seeing a loss of marina tenants. Ms. Hampton replied that the current vacancy factor is approximately in the 10% range. She commented that the recreational boating segment of the Port’s business continues to generate a modest profit, although it isn’t considered a profit center but rather a waterfront recreation asset for the community.
Ms. Hampton concluded the financial results presentation then provided an update of the LBT environmental remediation expense vs capitalization issue. As was planned and previously discussed, Ms. Hampton contacted the Government Accounting Standards Board (GASB) to request an interpretation of GASB rules and guidelines as they apply to the specific facts and circumstances in the Port’s particular case. GASB responded that the accepted accounting treatment is to expense, rather than capitalize, the costs associated with the clean up. However, it was noted that during GASB’s development of the standards some members of the Board favored capitalization instead.
Ms. Hampton reported that the Port is carrying approximately $20 million in work in progress on its balance sheet related to the clean up of the LBT. It will be written off and classified as an extraordinary item; assets will be reduced by $20 million and equity will be reduced by $20 million. There will be no impact on FY09 net income.
Commissioner Aikins asked if would be reflected on the books on June 30, 2009. Ms. Hampton replied in the affirmative.
Commissioner Kastrop asked if the reduction in equity will impact the Port’s bond rating. Ms. Hampton replied that she did not think it would.
Ms. Hampton moved on to the Quarterly Investment Report. The total amount of cash and investments at March 31st was $17.6 million. Of that amount, $16.3 million (93%) was Unrestricted and $1.3 million (7%) was Restricted. She commented that interest rates and return on investments are very low.
Chairman Dodge thanked Ms. Hampton for her report.
VIII. PUBLIC COMMENT:
NONE
IX. MATTERS OF BOARD INTEREST:
Chairman Dodge handed out brochures on America’s Marine Highway Program and a map showing the current estimated annual daily truck traffic in the U.S. and Dodge specifically directed attention to the grid locked traffic on the corridor between Los Angeles and San Francisco.
Commissioner Garcia commented that he has noticed the schedules for City Council and Planning Commission meetings are listed in local newspapers and suggested that Port Commission meetings likewise be advertised in an attempt to spark some interest in the public.
Commissioner Kastrop commented that she recently attended the Redwood City/San Mateo County Progress Seminar and although, the news regarding the state of the economy was not cheerful, she found the break out sessions to be of interest. Kastrop participated in the discussions regarding high speed rail which is connected through our rail spur to the transportation system at the Port. She commented that people are still thinking in single mode terms, i.e. cars or trains or boats; but, not inter-modally. The subject of the ferry system came up along with the fact that rail hubs should connect with ferries and Kastrop commented that she was happy to have an opportunity to talk about inter-modal transportation with people at the seminar.
X. EXECUTIVE DIRECTOR'S REPORT:
NONE
XI. ADJOURNMENT
At 9:20 a.m. Chairman Dodge requested that the Commission adjourn to its next regularly scheduled Meeting of May 13, 2009. A Motion to Adjourn was made by Commissioner Kastrop and it was seconded by Commissioner Garcia. The motion passed by a unanimous voice vote of all Commissioners.
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