Port Commission Meeting Minutes

 

BOARD OF PORT COMMISSIONERS

REGULAR MEETING

WEDNESDAY –January 27, 2010

 

MINUTES

I.          CALL TO ORDER

8:00 A.M.: Chairman Garcia, presiding

Commissioners Present: Commissioner Richard Dodge; Commissioner Larry Aikins; Secretary Lorianna Kastrop; and, Chairman Ralph Garcia, Jr.

Commissioners Absent: Vice Chairman Richard Claire

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 Development & Compliance, 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

Approval of the Minutes of Regular Meeting of November 25, 2009 was continued to the next Port Commission Meeting due to a lack of quorum of commissioners who attended the November 25th meeting.

A Motion to Approve Minutes of Regular Meeting of December 9, 2010 was made by Commissioner Dodge and Seconded by Commissioner Kastrop. The motion passed by a unanimous voice vote of all Commissioners present.

Following Item VIII. EXECUTIVE DIRECTOR’S REPORT, and at the suggestion of Attorney Sorba, Chairman Garcia returned to Approval of Minutes.  

Attorney Sorba explained that a typographical error on today’s agenda listed approval of minutes of regular meeting of December 9, 2009, which should have been approval of minutes of regular meeting of December 23, 2009.

A Motion to Rescind Above Action and to Approve Minutes of Regular Meeting of December 23, 2010 was made by Commissioner Kastrop. The Motion was seconded by Commissioner Dodge. The motion passed by a unanimous voice vote of Commissioners present at the December 23rd meeting. Commissioner Aikins abstained. Commissioner Claire was absent.

III.  CLAIMS

A Motion to Approve Claims was made by Commissioner Aikins and it was seconded by Commissioner Dodge.  The motion passed by a unanimous voice vote of all Commissioners present. Commissioner Claire was absent.

IV.  MOTION

A. MOTION TO APPROVE AGREEMENT FOR SECURITY/EMERGENCY MANAGEMENT CONSULTATION AND TRAINING AND AUTHORIZING EXECUTION THEREOF – (AANKO TECHNOLOGIES, INC.)

Executive Director Giari explained that this is a contract with Aanko Technologies, Inc. to provide services related to port security and emergency preparedness. Aanko has provided the Port with professional security and emergency management consulting services since 2003.

Eric Napralla, Manager of Development & Compliance, gave a brief summary of the scope of work under this new contract. Task 1, Grants: Aanko assists with obtaining state and federal grants. Task 2, Training: There is a significant amount of training courses for Port staff in preparation for the Golden Guardian 2010 statewide exercise to be held in May. Task 3, Drill/Exercise: This will complete the preparation work for the Golden Guardian exercise in May and also prepare for the exercise that will take place in 2011. Task 4, Plan Maintenance: this task provides an update of the Port’s Facility Security Plan, which is our Coast Guard approved plan. Task 5, Misc. Additional Support.

Commissioner Kastrop commented on an article about the Support Anti-terrorism by Fostering Effective Technologies Act of 2002 (SAFETY Act) and said that if we use products and services that are in compliance with that SAFETY Act, it will provide some shielding for any tort claims. She suggested that staff research whether or not installations at the Port are in compliance with this Act. Kastrop provided a copy of the article to staff.

Commissioner Dodge commented that Aanko has done a very good job for the Port. He also suggested that staff perform a comparison of rates of other security and emergency response consulting companies and Aanko.

Commissioner Aikins asked if the funds for the Port’s security grants are readily available. Napralla explained that the Port has received notification of the award to cover this agreement through grant funds. We are still waiting on approval for a portion of the grant to apply to this agreement through a federal port security grant. At this time, the majority of the contract is covered and we anticipate receiving federal authorization for the remaining portion within 30-60 days.

A Motion to Approve was made by Commissioner Dodge and was seconded by Commissioner Aikins. The motion passed by a unanimous voice vote of all Commissioners present. Commissioner Claire was absent.

V. REPORT/PRESENTATION

The order of the presentations was changed and the Presentation by Cynthia Hampton, Director of Finance & Administration was given first.

A. Mid Year Financial Results (December 31, 2009 Comparative Results)

Ms. Hampton presented the Mid Year Financial Results for Fiscal Year to Date December 31, 2009. She reviewed Tonnage in comparison to budget and last year, commenting that the commodity types shipped through the Port have remained fairly static for quite some time, however, there has been a considerable shift in the volume of each commodity. She continued with Total Operating Revenue and its components, followed by Maritime Operating Revenue by Commodity.

Ms. Hampton moved on to Total Operating Expense, noting that both the Admin and Operations Operating Expense segments were under budget; noteworthy variances were reviewed. She proceeded to Operating Income and Non-Operating Income/(Expense), and explained that Fiscal Year to Date Actual Non-Operating Income/(Expense) was a negative $190,000 as compared to a budgeted negative $169,000. Ms. Hampton explained that the $21,000 variance is due primarily to lower than anticipated interest income on investments. While the budget assumed a very conservative interest earnings rate of 1%, even that rate was too optimistic.

Ms. Hampton moved on to Subvention and Commissioner Dodge inquired about the amount accrued because it was not equal to 6% of Operating Revenue. He commented that his calculation resulted in an amount $8,265 higher than the amount reported. Ms. Hampton replied that the amount reported was based on an accrual which is periodically adjusted; at present the amount accrued is equal to budget. She commented that at the end of the fiscal year, as always, the amount accrued and paid to the City of Redwood City, will total exactly 6% of actual Operating Revenue.

Commissioner Dodge said that the amount accrued and reported throughout the fiscal year should be exactly 6% of Operating Revenue. Ms. Hampton responded that she would do so in future.

Before continuing with the presentation, Ms. Hampton pointed out that there are both income and expense accruals reflected in the financial results being presented. She reported $944,000 Net Income after Subvention, 42% better than budget.

Ms. Hampton next presented a chart depicting the results to be achieved in the second half of the fiscal year in order to meet budget goals.

Commissioner Aikins asked Ms. Hampton to refresh his memory about the composition of last year’s $303,000 Non-Operating Income/(Expense). Ms. Hampton replied that the majority of the Non-Operating Income was a result of the Port obtaining the Gibson bond funds from DTSC.

B. Certified Quarterly Investment Report (Quarter Ended December 31, 2009)

Ms. Hampton reported that as of December 31, 2009, cash and investments totaled $18.4 million; $17.5 million unrestricted and $905,000 restricted. The majority of restricted cash is the debt service reserve, required by the Bond Indenture in the event of a debt service default. The $174,000 remainder of restricted funds is the mitigation fund established by the Port and Pacific Shores.

Ms. Hampton commented that interest rates are dismal. The bulk of the Port’s investments are in LAIF, which earned a return of 6/10ths of 1% for the quarter ended 12/31/09. However, there is a local bank actively lending funds which wants deposits; the CDs on deposit there currently bear a rate of 1.70%, which is better in this market.

Commissioner Aikins asked if LAIF returns had not been traditionally higher than CD rates. Ms. Hampton replied in the affirmative and commented that LAIF is experiencing the same financial challenges that other institutional investors are facing.

Commissioner Kastrop inquired if, in better economic times, the bond reserve fund would be earning interest. Ms. Hampton responded that historically the bond reserve fund has earned interest and would expect it would do so again when the economy improves and returns go up. Kastrop also noted that the Port’s CDs are fairly short term and inquired as to why the CDs were not invested for a longer term at a higher rate. Ms. Hampton explained that the investment policy restricts the term to one year or less and that she evaluates the differences between the rates and the terms each time a certificate matures.

REPORT/PRESENTATION: by Donald Snaman, Manager of Operations

Mid-Year Tonnage and Vessel Report – (July 1, 2009-December 31, 2009)

Manager of Operations, Donald Snaman, reported that just under 200,000 metric tons crossed the wharves in the past quarter. Nine ships and four barges called on the Port during that time period.

Total Tonnage for the first half of FY10 was 420,000 metric tons with scrap metal and sand and aggregates as the biggest contributors. This was 243,000 metric tons less than the same period in FY09, however, it is 30,000 metric tons ahead of budget.

Snaman commented that scrap metal and sand and aggregates are very strong and we expect that to continue. There have been no imports of cement for the last year and a half and we do not expect to have any for the next 12-18 months. There was a delivery of gypsum during the second quarter but that material was used in cement manufacturing and not for wallboard production. Gypsum imports are not expected for the rest of FY10 because the Pabco Gypsum wallboard plant in Newark will be shutting down within the next three months. It is our understanding that the plant will reopen when the market picks up again.

Twenty-eight vessels called at the Port during the first half of FY10 compared to thirty-one vessels during the same period of FY09. Snaman commented that tonnage is a bit lower because of lighter loads, about 20,000-30,000 metric tons each, for the sand and aggregate vessels due to the channel depth. The Corps of Engineers recently completed dredging of the channel and the last sand and aggregate ship that visited the Port was able to bring in a more significant amount of material, over 40,000 metric tons.

Commissioner Aikins inquired about where the sand is coming from and Snaman replied that the sand and aggregates are from Vancouver Island, B.C. He explained that cement is being brought in by rail to the plant here at the Port from the Cemex plant in Victorville.

Chairman Garcia asked what the sand and aggregates are being used for. Executive Director Giari explained that the redi-mix consumers in northern California have become reliant on imported aggregate material. However, until the demand for cement exceeds the domestic supply, we will not see any imports here in Redwood City.

VI. PUBLIC COMMENT:

None

VII.   MATTERS OF BOARD INTEREST

Commissioner Kastrop commented on her recent attendance at the Association of Pacific Port’s Mid Year Conference in Hawaii. Kastrop found the presentations made at the Conference to be interesting and has already received a follow up addressing some of her questions about the U.S. Army Corps of Engineers Regional Sediment Management Plan.

VIII.  EXECUTIVE DIRECTOR'S REPORT

As a follow up to Kastrop’s comments on the APP Conference, Executive Director Giari said that there were excellent speakers on subject matters relevant to what we are doing at the Port of Redwood City. In addition to the Corps of Engineers speaker that Kastrop mentioned, there also were speakers from the Hawaiian ports.  Due to the decrease in the volumes through their ports, Hawaiian ports are using proposed tariff increases, which had been planned to rebuild their infrastructure, for operating expenses.

Giari commented that the U.S. Coast Guard Captain of the Port for Honolulu and the Pacific also talked about Maritime Domaine Awareness and emphasized the importance of the Americas Waterway Watch program.  A presentation was recently given to the Port Commission on the Americas Waterway Watch program by the Coast Guard Auxiliary.

At this time, Special Counsel to Port, Attorney Sorba, explained that a typographical error on today’s agenda listed approval of minutes of regular meeting of December 9, 2009, instead of approval of minutes of regular meeting of December 23, 2009. He suggested that the Board rescind today’s approval of the December 9 minutes, which had been previously approved, and vote on approval of the December 23rd minutes. Chairman Garcia complied and returned to Item II. MINUTES.

IX.  ADJOURNMENT

At 8:45 a.m. Chairman Garcia requested that the Commission adjourn to its next regularly scheduled Meeting of February 10, 2010.  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 Claire was absent.