emergency needs and repairs, rather than focusing on renewal and the five-year financial forecast showed a difficult trend. this shows you the overall sources in the capital plan, which were just described. $956 million of overall sources, including repair of portfolio. 14% of that is our by the annual capital budget. -- our biennial capital budget. the average budget has been $8.3 million. but as this chart demonstrates, it has gone up and down, depending on prior year operating surplus. the five-year financial plan bank that we produce last year showed a 37% decline ever the five-year forecast time in capital resources because of a trend of expenditures essentially outpacing revenue. and this chart demonstrates both the historical spending and what the five-year last year showed we would be headed toward without some intervention. the policy objectives are obviously to stabilize and resources that we dedicate to capital, to constrain our operating budget, to require advance to decisions that reflect trade-offs between the operating capital needs and to reduce our credit risks. as you know, our rating agencies have continually pointed out our undefended capital obligations as a credit weakness. although we had a stable and strong rating. how much is enough? financial step and i spent some time talking about what our targets and goals should be. frankly, we just do not have enough to pay for what we can afford. if we were really setting a target to help us address renewal, every year we would be spending 50% of our operating revenues on the capital budget. and we do not see a near-term way to get to that level of investment, but that does not stop us from setting ago and a target and growing that goal over time. we landed at $20 million required of renewal of our substructures alone. that equates to 25% essentially of our operating revenues dedicated to capital. that 25% is a hard bowl to meet. so we started with the 20% target. a requirement that 20% of our operating revenues be dedicated to the capital budget or designated to our reserves which funds capital into the next year. that would be a requirement. then we would grow to the 25% goal over a five-year term. with this policy, this is the change in the trend. you see the prior year's allocations. the yellow line is what our prior year financial forecast showed. this demonstrates the 20% requirement being met. resources to capital growing 59% over that time. and you see stable and a continued upward trend in the capital sources. with that, i am available to answer any questions about the proposed policy. and we will be back at the next commission meeting for formal review and adoption. thank you. >> is there any public comment? commissioners? >> ok, i have a couple questions, comments. first, i want to say, based on the previous presentation, i guess to go on record to recognize that the $2 billion number, which there are definitional things that the lower it with requirements, is not something we should forget in terms of -- given that there's a lot of discussion in san francisco about with the port can develop and the assets that we do have, that there is a real need. development assets are different from the capital budget, which is to help maintain and preserve the existing port structures as they are today. it is not necessarily reflecting all the development assets that we possibly could have. but there is a true gap. as it was said, the number never goes down. we do not want to be known to the fact that there is a tremendous gap. i think the issue that you bring up in terms of trying to address this policy, let's understand a couple things with the policy. i agree that we want to designate more, but that also assumes that at the end of the day, once you get through the offering revenues to your bottom line surplus, you are still positive. because if you designate your operating revenues on the top line and you're not making it, your expenditures exceed your revenues, then we still have a problem in terms of if the cash is not there. in theory, yes, i think we 100% agreed that we should do that. the second one is that given the way we budget here is really on a cash basis, yet we do have financial statements to take into consideration that are generally accepted, government accounting standards. one of the things that i thought about this -- and i know it is problematic because the way we value as it's on our balance sheet, because historic levels and they are totally undervalued. what about in a normal world, you look at depreciation and how your assets are depreciating and whether your depreciation is a way -- because of normal accounting, is a way to replenish their capital needs -- i am not asking you to answer the question, because that might be tough to do right now. but think about it. because you have said a goal. that is a target. what we think about the approach of understanding with the number would be if we were using accounting. what would be the annual depreciation number, and how would that compared to the bill we are setting in this policy? so we have a sense of how other models work and an approach to address this issue going forward in terms of what we need and how we can think about the funding sources. and for the record again, as i understand it, when we have a development project, anything that comes on the capital budget that addresses that, that that is totally separate. this is maintenance and preservation of port assets. >> thank you for the questions. i would like to defer the second question for when we return on march 14. i would like to talk to our accounting staff and fiscal officer about how do think about depreciation in terms of this policy. >> in comparison to see if we are hitting the target. i know it is problematic because of the fact that it is totally understated. that is how accounting policies work. >> i will come back to you. on the first question, we are assuming operating surplus. we are assuming that we will come to you with a budget that has net revenues, that is balanced. the policy will force trade-offs conditions. if labor costs grow beyond what our revenues are growing, the policy will require us to look good budget reductions, to right size revenues to expenses. you have seen in our current proposal, we have met this target of 20% -- well, close. i think it is 19.8% in the budget year and almost 21% in year two. so we propose to continue bringing budgets that are balanced, essentially. and believe that this target is reasonable. it is a stretch, but it is something we should achieve given the gap and given the extraordinary gap in our resources to fund renewal and to repair and maintain these assets. we feel that it is a good goal and something that we can achieve. >> right. obviously, i guess we would underscore the fact that we're always trying to figure how to increase operating revenues. >> that is right. and the port does have the ability, things like our annual projects and other expenses, to flex depending on our revenue picture. we have some operating expenses that are more discretionary than others. >> any other comments? thank you. i know you have worked very hard on this. it is the right direction in terms of trying to figure out how we continue to think about the gap. there are different factors at play. we have to keep them all in mind as we go forward. >> ok. >> item 10a, informational presentation on proposed san francisco bay conservation and development commission special area plan amendment for pier 27 cruise terminal and any wharf project and 34th america's cup project. -- and northeast wharf project and 34th america's cup project. >> good afternoon, president woo ho, members to the i am with the planning and development division. it is actually opprobrious the bread is here kind of pulling the strings behind the presentation. -- that brad is here, pulling the strings. [laughter] i have a briefing on the substantial amount of work that has been under way before and since the city was selected as the host city for the america's cup. vis-a-vis the work that we have to do with bcdc to align these projects with the bcdc san francisco water for a special area plan, which is a prerequisite to being able to get bcdc major permits issued for those projects to be able to move forward. as you can see, the staff report gives a briefing of both the proposed special area plan eminence for the cruise terminal and northeast wharf project at 27, as well as for the america's cup. with the changes and the scope of the america's cup project, i think that we're going to differ on spending too much time talking about that today. we will be coming back and providing a briefing as to what, if any, changes take place on the america's cup-related special area plan amendments. i am going to try and sort of walk you through this as best i can without the promise here. it is a little bit complicated, because there is a long history of bcdc and the poor working in an integrated way. on planning and orchestrating improvements along the waterfront, ever since the waterfront plan was being developed. when the waterfront land use plan was being developed in the late 1990's, we started working with bcdc at that time to work on updating bcdc's policies. the current special area plan, which most of it was approved in 2000 by both this commission as well as the bcdc commission, have been the basis for us to be able to do the development projects that we have enjoyed in the last 10 years. prior to this special area plan, there were much different bcdc policies and rules that effectively precluded our ability to take on any of the kinds of projects that are contemplated now. so the goals of the special area plan as they are on the books today, which are embraced in our own waterfront plan, are the joint objectives of identifying areas where you can remove deteriorating peers, and that would speak to one of the primary mandates that removed themselves from the day, in so doing restoring open water areas which approves the ecology of san francisco dbay. and planning in a comprehensive mode, public access and public open space plan that allows you to walk along and continue along the waterfront and provide that the maximum feasible public access, which is the other primary mandate of bcdc. from the ports perspective, that is looked at as part of our ability to then it -- we were able to get amendments to the bcdc's policies to allow for the preservation of historic pires and buildings and to broaden the range of revenue uses and commercial uses and recreational uses the would create the excitement along the waterfront that was saw in the waterfront plan and also generate revenues and be able to develop funding resources to be able to support that whole agenda. prior to those policies adopted in 2000, there was this idea of the replacement policy that was the primary impediment for being able to move forward on waterfront improvements, also known as the 50% rule. if you can imagine having a pier that is, say, 100,000 square feet that sticks out on the water, supported by piled construction, the 50% rule was the earlier tool that bcdc was imposing to try to balance the fill removal and public access objectives of their mandate with the port's development responsibilities by effectively requiring the removal of half of that pier, 50,000 square feet of the 100,000 square foot pier, that would have to be the removed physically to create open water or to be dedicated to public access or some combination of public access and phil removal. with the remainder of that pier, the uses would be constrained to adjust water-oriented uses, which do not allow for the mix of activities that were called for under the waterfront plan. there were a number of proposals that failed under those rules. pierre 39 was really, i think, the only project that was a bird -- able to take those rules and put them into a real project. bcdc recognize that there was another way we had to work at to develop water for an improvement and a revitalization. this map is a little bit difficult to see. basically, what we did in the special area plan that is on the books now is a look at the waterfront from china basin of three fisherman's wharf and really identified where are those best places for public open space to be located. are there places where fill could be removed that enabled those open spaces and open water areas to be created? in taking that approach, there was a recognition that that was a better system than trying to achieve the fill removal at a public access on a case by case basis under the 50% rule. ultimately, the special area plant set up this system of the blue areas are the open water basins, and we have heard a lot about that in the context of the america's cup plan amendments. the green areas, the grand street wharf at the southern end, and the northeast wharf, which we're trying to develop as part of the cruise terminal project here, that are required under the plan. the northernmost that fisherman's wharf is a planning study goal, because that was always an objective, but we were never able to get all of the pieces put into place to create a formal policy. so it was always recognized as something that we needed to come back to. the proposed special area plan policy, as detailed in the staff report, -- actually -- i skip a sly, but what i wanted to focus on west pier 27 and 29, because that is the genesis -- oh, here we are. doing strange things for me. for pier 27 and 29, the cruise terminal in the northeast wharf proposal, this map is from the existing special area plan shows the footprint of the northeast wharf, as it is called out in the plane b. within a gray area, that was identified as a place where, with that plaza and then with the proposed removal of the eastern end of -- i am sorry. i do not know why this is not functioning. in any case, the eastern end of pier 23, the removal of that is also an existing requirement of the special area plan. the plaza and the pier removal in combination, we are creating this northeast wharf, northeast open water basin that was called out in the special area plan. with the cruise terminal and northeast wharf project currently, the creation of that as a maritime terminal. and pulling up large cruise ships along pier 27 a brain creates the viewa obstruction thepron creates of view obstructions and operational obstructions to the enjoyment of the northeast wharf plaza from a bcdc special area plan perspective. at the time that the special area plan was approved, we were contemplating a mixed use recreation project. so the plaza designed and the recreation use is seen as being complementary. here, we're having to develop and design a cruise terminal and operations to share certain spaces that were presumed to be future public access areas. in addition, because of the structural service that our engineering department now carries out for piers, since the special area plan was approved and the condition of pier 23 was learned to be much better condition than what had been previously understood, we are now proposing that we keep all of pier 23. and with that and the use of 27 as the cruise terminal, it has promulgated the need for us to be looking for alternate open water basins to replace the northeast water basin here, because of the accommodations for these other uses. in that context, here is just an image to demonstrate how the outline of a ship comes into that open water basin, that pier 27 apron would have to be closed for the cruise operations, and that takes away some of the public benefit from the plaza. in that context, we worked with bcdc's staff even before the host city agreement was approved to do some outreach with the community stakeholders to start getting some input about where open water basin locations might be desirable, to try to look at what people's sentiments were about saving pier 23 versus trying to find fill removal. we outlined that in a staff report last year for the commission's review. the upshot of that is that we're going to be starting the public process to come up with all of the special area plan amendments for the pier 27 project when the city was awarded the host agreement, the host city agreement for the america's cup. as a result, we were not able to carry out all that work, and we focused on how we integrate the improvements for the cruise terminal with the improvements for the america's cup, and some of these other questions about where the replacement open water basement -- base and should be located have been proposed as amendments to the special area plan in the form of different planning studies. one would be -- i am sorry, the second one is speaking to this open water basin study that the port and bcdc would run through to try and define what the candidate sites are the should be considered. in the context of that work, we also would be committing to tearing out and -- carrying out an assessment of a historic resources within the embarcadero historic district. so many of these resources are historic. the idea of removing them to meet fill removal and open water basin requirements, we have some competing public objectives there. so we want to work with the committee on that. with respect to fisherman's wharf, because it always has been an objective to try and improve open water basin and public water improvements in that area, which we were not able to accomplish back in 2000, we would be taking on a study to revisit that. in that context, if we were able to successfully reached an agreement about how to make improvements at the fisherman's wharf, the port would be seeking the listing of this 50% rule, which still applies to that area. as you saw in the previous presentation on the capital plan, because most of those facilities are under long-term lease, with those tenants responsible for seismic and other major upgrades, the lifting of that 50% rule is a very important issue for us to try and resolve before we get into a situation where somebody has got improvements that they need to do that are constrained against bcdc rules. with respect to the area around pier 27, 29 immediately and in the geographic area, because we cannot meet all of the public access objectives that were conceived of in the special area plan, we're looking at how do we read craft that public access with the cruise terminal program on the site? and that is provided clearly in the creation of the northeast were plaza -- northeast wharf plaza, which we are proposing to deliver at an accelerated schedule. right now, the special area planned requires the plaza to be delivered in 15 to 20 years. in our proposal, we're going to seek funding under the 2012 general obligation bond issue for parks. if we're not successful at that, we would have 11 years in which to complete the plaza. that is trying to accelerate an existing special area plan objective on the box now. on the rest of the site, we're looking at pier aprons on 27 to 29, looking a public access at the tip of 27 and 29, and developing a shared use between the maritime functions for the cruise terminal operations and maritime burthening and when those maritime needs are not in place at 27, to then open up the 27 active and -- tip and apron for public access to the still falls short from what we were looking for originally in the special area plan. we were looking at offsite public access improvements between pier 19 and 23 and at pier 29.5. for pier 19, you recall under the america's cup proposal, we were looking at having the number apron of pier 23 and the south apron of pier 19 improved as part of america's cup. for the cruise terminal, we're looking to complement that by having the cruise terminal then deliver the south side of pier 23 and the north side of pier 19. that would enable the aprons on 19 and 23 to be improved. in addition, for pier 27 and 29, the connector building between pier 19 and 23 is a non historic structure. there is an opportunity to create major views in public access to the bay. that is included as part of the proposal, too. the improvement of 19 and 23, the removal or modification of 19.5 are part and parcel of our thinking about -- run that transferred of development in the funding strategy that has been discussed. if we were able to accomplish those planning process these that i just described in the previous slide and be able to identify an alternative open water basin location by 2015, we would be able to effectively replace the removal requirement there is a kin time when all of this needs to take place. visually this is what we're talking about, 1923 and 19.5 connector. those are the public access areas off site, as well as on pier 29 and a half side. similarly, we are looking to have public access through the public connector building as part of the offsite. on pier 27-29, the public access improvements i just described are depicted here as well. with regard to funding strategy, we recognized on top of everything else going on that that is a key concern, so the staff report lays it out in more details, but either through these funding tools that exist or have been created since 2000 or we hope to be able to create in the terms of tdr right, we have a more robust range of tools available to us than we did back in 2000. those obligations constituted $30 million worth of improvements. we're looking at $20 million in new improvements that are associated with the amendments that are proposed at this time with an acceleration of the delivery of northeast work plaza. so while we do not have it all in hand, we have tried our best to integrate the costs associated with these kinds of improvements that enable the port to be able to bring
Related Keywords
San Francisco Bay , California , United States , Embarcadero , China Basin , San Francisco , America , ,
comparemela.com © 2020. All Rights Reserved.