BOARD OF PORT COMMISSIONERS
REGULAR MEETING
WEDNESDAY – September 23, 2009
MINUTES
I. CALL TO ORDER
8:00 A.M.: Chairman Garcia, presiding
Commissioners Present: Commissioner Larry R. Aikins; Secretary Lorianna Kastrop; Vice Chairman Richard S. Claire; and, Chairman, Ralph A. Garcia, Jr.
Commissioners Absent: Commissioner 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 Operations, Donald K. Snaman; Assistant Manager of Operations, Eric Napralla; Accounting Clerk, Linda Hawkins; Administrative Assistant, Margaret Astesano; and, Executive Assistant, Rita F. Artist
Commissioner Aikins led the Pledge of Allegiance.
II. APPROVAL OF MINUTES
A Motion to Approve Minutes of Regular Meeting of September 9, 2009 was made by Commissioner Aikins and Seconded by Commissioner Kastrop. The motion passed by a unanimous voice vote of all Commissioners present. Commissioner Dodge was absent.
III. CLAIMS
Commissioner Kastrop commented that Redwood Debris Service supplied a debris box to the Port. SRDC, Inc., a Port tenant, also has a debris box service and she suggested that we patronize our tenant for that service in the future. Vice Chairman Claire commented that the Port should use the company that provides the lowest price.
A Motion to Approve Claims was made by Commissioner Kastrop and it was seconded by Commissioner Claire. The motion passed by a unanimous voice vote of all Commissioners present. Commissioner Dodge was absent.
IV. RESOLUTION
A. RESOLUTION APPROVING SECOND AMENDMENT TO SUBLEASE AGREEMENT – (Portside Investors – Phase I Lease Agreement) – (ROBELO ASSOCIATES, INC.)
A Motion to Adopt was made by Commissioner Aikins. It was seconded by Commissioner Claire. The motion passed by a unanimous voice vote of Commissioners Aikins, Claire, and Garcia. Commissioner Kastrop abstained. Commissioner Dodge was absent.
B. RESOLUTION APPROVING SUBLEASE AGREEMENT – (Portside Investors – Phase I Lease Agreement) – (ORLENE CHARTIAN, CPA)
Commissioner Kastrop commented that the last name “Chartian” was misspelled and requested that a correction be made to read “Chartain”. Staff agreed to request a correction to the sublease from the offices of Portside Investors.
A Motion to Approve Claims was made by Commissioner Claire and it was seconded by Commissioner Aikins. The motion passed by a unanimous voice vote of all Commissioners present. Commissioner Dodge was absent.
V. PRESENTATION/REPORT
A. PRESENTATION OF ANNUAL AUDITED FINANCIAL STATEMENTS by Ahmed Badawi, CPA, Partner, Caporicci & Larson
Mr. Badawi identified the Port’s responsibilities, Caporicci & Larson’s responsibilities and summarized the audit procedures employed. He reported that C&L issued an unqualified opinion for the Fiscal Year 2009 financial statements, which is the best opinion possible. Badawi stated that the financial statements prepared by the Port are fairly presented in all material respects, disclosures are properly reflected, significant accounting policies have been consistently applied, and management’s estimates are reasonable. He said there were no disagreements with management, no material weaknesses in internal accounting controls, no indications of fraudulent or inappropriate activity and no recommendations to management.
Mr. Badawi reported that the expense coverage ratio at June 30, 2009 was 327.81%, which indicates that the Port has enough unrestricted assets, if converted to cash, to cover expenses for over three years if it were necessary. The GFOA (Government Finance Officers Association) standard is three to four months, so by that measure the Port is in a healthy financial position. He also pointed out that the ratio had dropped significantly from FY2008 as a result of the LBT.
Mr. Badawi briefly recapped the history of the Liquid Bulk Terminal (LBT) and stated that the costs associated with clean up of the facility and subsequent removal of the tanks and remediation of the soil and ground water in the amount of $19,924,068 was written off in FY2009. The write off was a direct charge against net assets (retained earnings) and was classified as an extraordinary item. He also noted that an estimate of $100,000 had been accrued at June 30, 2009, for post-closure analytical testing and related regulatory oversight of the facility. He noted that the Port is in compliance with the requirements of GASB 49, Accounting and Financial Reporting for Pollution Remediation Obligations.
While reassuring the Commissioners that the Port is not currently at risk, Badawi discussed two areas over which the Port does not have control and therefore could be at risk in future. The first is pension cost – while the Cal PERS contribution rates have declined slightly over the past couple of years, in Badawi’s opinion there will likely be an increase in rates beginning with the 2010-2011 fiscal year. The second area is OPEB (other post-employment retirement benefits). The Port is required to implement GASB 45 in FY2010, and if there are other post-employment benefit liabilities, they will need to be recognized. At present it is uncertain whether current employees are entitled to any post-employment retirement benefits other than pension, and Port staff is in the process of researching this.
Commissioner Aikins commented that again there were no recommendations to management, and commended Ms. Hampton. Badawi replied that the internal controls appropriate to the Port are in place and therefore no recommendations were necessary. Commissioner Claire also noted that there were no recommendations and thanked Ms. Hampton for a job well done.
Chairman Garcia thanked Mr. Badawi for his report.
Chairman Garcia asked if settlement proceeds had been netted out of the $19.9 million cost written off. Executive Director Giari responded that settlement proceeds were recorded separately and did not reduce the $19.9 million total. Garcia asked for a rough estimate of settlement proceeds; Giari responded that they were approximately $4 million. Commissioner Claire inquired whether legal fees had been charged against expense or capitalized. Giari replied that some legal fees were capitalized and were part of the $19.9 million.
VI. PUBLIC COMMENT:
None
VII. MATTERS OF BOARD INTEREST:
None
VIII. EXECUTIVE DIRECTOR'S REPORT:
Executive Director Giari reported that a Rededication Ceremony and Ribbon-Cutting for the public boat launching ramp facility will take place on October 14 at 10:30 a.m. Mayor Foust is expected to attend, as well as representatives from the CA Department of Boating & Waterways, and Assembly Member Ira Ruskin’s office. Invitations have been sent to the Sequoia Yacht Club and other interested members of the boating community. An announcement of this ceremony is on the front page of the electronic version of the Port’s newsletter, Currents.
IX. ADJOURNMENT
At 8:29a.m. Chairman Garcia requested that the Commission adjourn to its next regularly scheduled Meeting of October 14, 2009. A Motion to Adjourn was made by Commissioner Kastrop and it was seconded by Commissioner Aikins. The motion passed by a unanimous voice vote of all Commissioners present. Commissioner Dodge was absent.
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