tv [untitled] October 11, 2011 12:00pm-12:30pm PDT
the capital investment we are asking to make in the concrete pier the department spends approximately $62,000 a year on carpentry work at the west marin appeared most of not all of the carpentry work was spent on repairs to the canucks. the cost of concrete box amortized over the estimated life span of the dock is approximately 25% less than the cost of the timber. collectively, we anticipate cost savings to the city in an amount of 1.5 million or $2 million. rpd approached the st. francis yacht club regarding the use of the lump-sum funds. st. francis yacht club agreed to such usage. department and the yacht club directed a letter of understanding that the club will agree using a lump-sum balance. it also states that the club and city are interested in having seawall repair project agreed to in 2007 performed as soon as possible.
the city also confirmed that it falls within the scope of the city's general responsibility as it protects. the city would like to include this as part of the scope of the current harbor renovation project. estimate for the project is a maximum of $550,000, including construction design, engineering, and permitting costs. a final estimate will be submitted for approval of a sea wall repair change order to the city put the contract harbor renovation project. the first source of funding for the sea wall repair project is $1.9 billion construction contingency, which is what we started at. which can be accessed at the available completion of the project. secondary source of funding following the depletion of the contingency fund would be the st. francis yacht club, to
provide the funds necessary for the sea wall of care in exchange for monthly rent credits. this funding fallback is necessary as they require a source of funds for the sea wall repair change order to the renovation project beyond the project contingency fund. the lou stipulates that the department and the st. francis yacht club had a brother to cancel the project if the budget exceeds expectations. currently, the balance of the lump-sum funds is one. -- $211,000 is allocated. the remainder available for the country change order and any costs associated with the project is $936,731. the amount necessary for concrete box is approximately $711,000, leaving a remainder of $225,000 to be allocated for seawall a pair, said the proposed rent credits to the gaap club will not exceed $325,000 if we capped the project at $550,000.
the amortization schedule to repay the loan has been recalculated to reflect the rejection in expended rental income for the years 2012, 2018. it has been concluded that the rent credits will not impair the department's ability to meet state requirements for loan repayments. the department will be able to maintain the cash flow projections due to the influx of funds from their new revenue- generating initiatives, increase revenue from existing operations, and reallocated funds. funds were not initially calif work -- accounted for in the amortization schedule. these funds include food carts, which will generate at least $18,000 annually. a new operator at the marina
green kiosk, and permit fees generated in the marina allocated to loan repayments. we expect that these revenue sources will total at least $50,000 annually for $350,000 over seven years, exceeding the amount, which is the rent credit schedule, exceeding the amount of the maximum rent credit. i would like to note likedbw has occurred -- note that dpw has approved the new schedule, and you have that before you now. the lou is pending approval by the board of supervisors. the lease, the states -- these are the -- changes required are because of the following. the least stipulates that the tenant wishes to perform eligible of improvements to the arena, the tenant can currently receive an offset. process anticipates that the tenant will be responsible for the work but does not described a process for work that is paid for by the tenant but performed by the city. the lease also stipulates that
the city only has the obligation to perform dredging. but as the owner of the marina, the city performs a variety of other maintenance repair and improvement projects. so the least neither clearly allows the parties to be included or clearly prohibits such inclusion. the city and the tenant presently desire to amend the least to say the following -- to the following -- "we would like to modify the provisions to allow the city or the city's contractors, rather than the tenant, to perform and credit work to be paid for by the tenant, subject to future offsets in accordance with the process and subject to the terms and conditions set forth in the amended section, and two, provide that the work eligible for consideration by the tenant and department general manager includes works performed by or behalf of the city to end at -- repair, maintain, or improve the arena, other than work which is the tenant's responsibility.
i would also like to bring to your attention that i am consulting with our city attorney, we have made the following changes to the lease. we would like to add the following provision under section 3i on page 3. it credits receiving $50,000 will require recreation and park department commission approval, and we would also request modification of the following provision on page four. such rent credits shall be made for a time commencing upon the first month following the transfer of the funds to the city or the commitment to the contractor, estimated to be june 1, 2012. this would change the sentence from having the rent credits commencing at the completion of the project. i also want to know that dp -- note that dpw has approved the amendment with the following changes, the first on page one, the very bottom.
if you look on your lease amendment, it is on the -- it is attached to the letter. at the very bottom of the first page, letter e, it says the city is interested in including certain sea wall repair work in the harbor renovation project, but the whrf funds will not be sufficient for the performance of additional work. that was changed from loan proceeds to funds. it is just a clarification. they also added a sentence right after that said no dpw funds are available for this work. the other change they ask us to make to the least and then is on page four.
it is 5i. it says first, through any harbor renovation project contingency reserve, that at the clause, "which have been funded by the city." those of the changes that have asked, consulting with the attorney, these are just clarifying changes. i should have mentioned in the current -- the beginning of my presentation that the commission operations committee had approved this lease amendment lou pending approval by dpw back in june. it has just taken us a little while to connect. now, the operations committee recommended that the full commission approved and make a recommendation that the board of supervisors approved the lease agreement. if a recommendation for approval of the lease agreement is made by the commission -- excuse me, the lease amendment is made, supervisor mark farrell will
introduce a resolution to the board of supervisors. a resolution will be met heard by the government audit and oversight committee, and if recommended for approval, the resolution will be heard by the full board of supervisors. lastly, i would like to note that organizations in support of this initiative include the st. francis yacht club, the golden gate yacht club, the marine harbor association, the marina renovation working group, and supervisor mark farrell. >> let's have public comment. well, we have commissioners that want to ask questions. commissioner lee. commissioner lee: i just had a quick question. looking at the revenue projection, we had talked about that. were those funds dedicated for some other source prior to this or it was always the intention -- because i know we have talked about revenue-generating ideas
and so forth. were those funds already dedicated to other purposes, or was it specifically dedicated to this from the beginning? >> the general strategy is to serve the department is a general fund to keep our parks and programs operating, but the revenue generated at the marina must stay at the marina, so this is a source that is available as a contingency, and it was really getting -- the purpose of going through the analysis was to make sure that the conservative we felt comfortable with the approach. >> to make clear, these funds that were going to be generated in the marina had to stay in the marina. they were not allocated for some other source? >> correct. >> the last time i heard this was a while ago. there are a few issues that still resonate with me. i appreciate getting the letter from the department of boating
and water works, stating that they approve the amendment as revised. that is great. that was a concern we had. but the one thing that just sticks for me, and i do not know that anybody can give us the assurance, is that if there are shortfalls, despite all these new sources of revenue, how can we guarantee that does not fall on the backs of the tenants? i really struggled with the possibility that these costs could somehow be passed through. >> in putting together the cash flow analysis for the project, which, of course, we have shared with boating and waterways and then with you and the board, i have tried to make as conservative projections as i possibly can, both for revenue and for expenditures and after
completion in the project. i have done what i can to be as realistic and conservative as i possibly can. in some ways, this is all a leap of faith for all of us, and it is towards a great end. we are finally going to be able to renovate at least the western portion of the harbor and have a fantastic facility that the boaters will be thrilled to have. collectively, we are, with our best judgment, closing our eyes and doing what we can to move forward into the future. there are things obviously that are unknown, but i have done what i could to be as conservative as possible. >> i get that, and i appreciate that this is a leap for all of us, but i do not think there is a way we could definitively go
back to the leaseholders in the yacht harbor. i just want to put out there that there are problems, then we come back and use that as a solution. i will not support it. it is just -- we cannot keep going back to these folks. i appreciate that they are the beneficiary of these improvements, but before i could possibly support something that i think we would have to exhaust any other possible source of revenue. i just want to make sure we are putting that out there. >> it is a totally valid point. i want to validate this a little bit. the goal of us doing this is actually to save cost to the marina, to save maintenance costs, and to increase the useful life of the docks, which is all designed to create the most efficient and affordable marina we can.
>> i understand these folks have been with a sub-par marissa for a long time. we have raised the rent. we still have not had the benefit, and i just cannot go there unless that is the last resort. even then, i do not know how to do it. >> should we get public comment? >> good morning. i sent you a letter about the questions i had concerning the proposed changes to the yacht club lease and the department put the obligations regarding the project. we met on tuesday with staff involved with the project to respond to my questions and help clarify many issues. as a result, i can give you some really good news. the cumulative fund balance of the west harbor count is not
pledged to the department of boating and waterways. funds are available to use in the west harbor as necessary. this means that the repair of the sea wall is not dependent upon modifying the lease with the yacht club, as you were originally told. it is now clear that $2.7 million cumulative surplus is not required by the state as collateral to repay the $24 million loan. therefore, this money can be used to balance out the cost of the sea wall repairs be on the remaining project. the money is available now without any claims on a. best of all, the commission does not need to change the rent credit terms of the lease or go to the board of supervisors to fund the project. you do not need to give away your authority to the tenants and general manager for approving major capital projects in the marina as proposed. you still have the power to keep
the approval of all yacht harbor city projects transparent and in the view of the public as such decisions should be. i have advised the city capital planning committee of these proposed changes to the lease and told them of my concern, of leaving their committee out of the loop for approval of major city projects. i will follow up with them about these procedures if indeed you intend to change the lease. this is an end run around the public process. i am putting you on notice. you should be very happy that you can get the sea wall you so choose and save for all the repairs you want and it is doable with an existing funds. i support the project under those circumstances. also, i would like to point out there are discrepancies between the terms for repayment between the letter of understanding and what is in the lease. i can talk to staff later if you want to get into that, but i suggest you not go in that
direction. thank you. >> i am one of the few remaining members of the senior boaters support network. most of them have given up. they have become ill or they are dead. i am still here saying back i am very heartened to hear that commissioner lee is supporting endorsing the fact that this will still be a public marina for san francisco residents. i am a 40-year san francisco resident. my sister and i have had this boat for a long time. right now, i am paying $1,000 a month in berth fees, and i am not even using it because it's so letting the harbor use it to votes around. i'm trying to get an assignment
to assure that i will keep it so i could get another or completely overhaul my book, but -- overhaul my boat, but in the meantime, i am hemorrhaging financially. the san francisco yacht club is not. if, like the previous person mentioned, there are ways to get this money without already affecting the cap of the lease -- it was a wonderful lease. they got a very good lease, and now, you are making it better for money you do not really need in a budget crunch time. if you can get the money elsewhere, please stand up and do it. we residents and berth holders are hurting. we are hurting from indecisiveness, and we would like to get our lease assignments so we can move on with our lives and keep our boats. we cannot stand up to the st. francis yacht club. we stand not -- we cannot stand up to the america's cup.
we just love the day and want to stay. please consider this. thank you. >> is there anyone else who would like to make public comment on this item? seeing none, public comment is closed. >> can you respond to nancy's comments? >> after nancy came in and met with us on tuesday, i guess, i did plugged into my cash flow analysis and assumption of taking $325,000, basically appropriating $325,000 out of fund balance, and it has a significantly negative effect on our debt coverage ratio. while the fund balance is not
pledged when i plug the number into my spreadsheet, i go from having a debt coverage ratio of over 100% to one of about 50%, which is not acceptable coverage ratio. those are the numbers that i ended up with. commissioner lee: can you talk about the debt ratio, what is acceptable -- are you talking about what is acceptable by the dbw? >> yes. commissioner lee: while you could find it, you would mean the unacceptable debt ratio, which would trigger what? what with the ramifications be of having a negative debt ratio? >> we pledge to boating and waterways that we would meet a
certain ratio. if we fall below that, then we are not in compliance with our agreement. i will say that it is only in a single fiscal year, right? there is a single hit, and then we come back up, but in that particular year, we do not meet the coverage ratio. >> would that mean that the loan would then be -- there would be a higher interest rate? what happens? >> if we are in violation of the terms of our loan agreement with the state, the technically, they are not -- they can withdraw the loan. commissioner lee: we would be putting our loan at risk? >> potentially, yes. commissioner lee: so it is not a simple -- as simple as borrowing -- or as spending the funds because we could lose the loan. >> correct.
>> it is clear to me reading the background of this that it is practical and pragmatic for the overall project. the crux of the discussions around if the contingency fund is not there, that we would go to other revenue sources which are potentially there to pay the debt service. so there is a spectrum of ways to look at this. the conservative way is we have no guarantees. the liberal way is we are going to have lots of cash coming in from these potential revenue sources, and some -- somewhere in the middle probably lies reality. i think it would be the responsible thing to do to move forward, and so i would support it because i think it makes, in the bigger picture, more sense
to do this. i think, given the potential of these revenue sources that we are talking about, that there is no reason to believe they will not be there, marina green will not become less popular in future years. it is going to become more popular. i think the more we upgrade the surfaces -- the services we offer there, the more potential there is for revenue, so with that, i would endorse this and look for a motion. commissioner lee: i will make the motion, but i want to preface it by saying that if what is at risk is the loan, i find that that is too big a risk to take, given the work that we have to do in time for fall for all of the events we have planned. i do feel, though, and i am is sympathetic to the owners who
are concerned, as they should be, about the potential revenue projections falling soared and then -- falling short and then having to bear the brunt of any increases to fulfil the financial reality. i am think -- but with that said, i think this is an important project. a lot of work has gone into it. i think we should support it, so i would like to make a motion. >> it has been moved and seconded. all those in favor? opposed? hearing none, it is unanimous. thank you. >> we are now on item 9, the acquisitions policy.
>> good morning, commissioners. the item before you is discussion and possible action to approve the revised acquisition policy for the acquisition of real property with funds set aside for that purpose under san francisco charter section 16.107, the recreation and parks and open space fund and from other sources. the item is presented before the capital committee. i am also going to do a presentation for the full commission today. over the last year, working with the parks and open space advisory committee, reviewing some possible acquisitions, it became clear that the current acquisition policies, though it had excellent goals, was a very difficult document to use and
rather complicated in its methodology and became confusing for the public and sometimes staff to use. one of the members actually mentioned that she felt bad for staffed and members to have to try to do some of the scoring was very complicated. so what we tried to do was make a policy that is much easier for staff and public to use. just to overview, acquisitions can be done in a few different ways -- purchase combination, jurisdictional transfer property. sometimes, jurisdictional transfer of property can be lower cost. sometimes, there are costs involved. we have a variety of funding sources.
sometimes, there are development impact fees. sometimes we are able to find grants that pay for acquisitions, and sometimes, there are other funding sources. all acquisitions are reviewed by the commission, and the board of supervisors ultimately is the body that approves an acquisition. said the acquisition fund set aside is an annual property-tax of 2.5% for each $100 of assessed valuation. the proposition approved by the voters also states that not less than 5% of monies, of that set aside will be designated to the acquisition of real property. at this time, the total acquisition fund set aside
balance is estimated to be approximately $9.3 million in this fiscal year. this is not a presentation asking to use any of that money. this is a presentation to review the revised policy. i have included in the package, though i will not go into extensive detail, information that i also provided a couple of months ago for the capital committee, which was kind of reviewing the overview of things the city planning department is discussing through neighborhood plans and future open spaces city-wide to give some context to the acquisitions that proceed over time and are being discussed by various planning organizations and bodies in the city. the current policy was approved by the commission in 2006. again, we have been working with members to try to make it
easier to use, and the new policy has got all the same general principles of the last policy, but distilled and a bit clearer. the outreach we went through, we have over 14 meetings with members, and i should just mention that some of those meetings are focused also on reviewing and cleaning up the roster, so it was not just a policy. we also got to review the roster, and they had reviewed and that the roster. we had a few different documents that have -- we reconcile all that. some of the rosters have either already been acquired or had other histories. we worked a really long time on that. i will acknowledge the work of nancy on our group, who helped us review and understand a lot of the history and analysis of some of those properties.