[Bboa-members] RE: Finance Sub committee meeting

[Ray Schmahl]

Keith, thanks for the report. There is still way more that I don't
understand than what I do understand. Can you tell me the political
pecking order? I know that I pay berth fees to the City of Berkeley and
property taxes for my boat and my slip to Alameda County and license
tags to the State of California. All tolled about $3,000.00 per year.

 

>From there I get a bit lost. As I suspect most bureaucracies and
politicians hope will happen.

The Marina seems to be a combination Marina and Park. Are there other
sources of revenues that support the park portion besides the berth fees
and other taxes?

Where do the finance decisions finally get made?

Who is accountable for the Marina Operations?

 

I'm in the construction business as a business owner. My company (in
Colorado) primarily builds concrete structures, bridges, water storage
tanks, treatment plants and building foundations. I moved to the east
Bay area to help get the new Bay Bridge underway and worked for that
Joint Venture for 2.5 years. I know something about construction,
concrete and the contracting process. If I can help in those areas I'd
be glad to.

 

Ray Schmahl

 

P.S. there are a lot of modern improvements to basic concrete making it
stronger and more durable but unfortunately I don't know of any
"cheaper" improvements. There are repair procedures for concrete and
maintenance work that can be done prior to deterioration to extend the
life of an already long life product. I would not advise hiring a
consultant. A reliable contractor, experienced in the specific
construction desired, can provide reasonable cost estimates of the
various materials available, complete in place. 

 

________________________________

From: Keith Samse [mailto:keith at sailenchantress.com] 
Sent: Thursday, February 23, 2006 12:21 PM
To: Ray Schmahl; 'Tom & Lori Jeremiason'; 'Bob Griffiths'
Cc: bboa-members at berkeleyboa.org; 'Zach Nobel'
Subject: Finance Sub committee meeting

 

Hi All,

 

I attended the finance sub committee meeting on Wed night, but had to
leave after an hour & 45 minutes.  It lasted another 30 minutes or so.

 

I found the meeting to be very open and mostly non political.  The
committee members seemed genuinely interested in reducing costs - in
fact, the entire time I was there they only mentioned increasing fees
twice.  The sub-committee chair (Brad Smith) was more than accommodating
in taking questions from the public (only 4 were there - I was the only
BBOA member (I think) until Tom Jeremiason came a little later).  

 

The agenda ran around a bit, but it generally revolved around the
replacement of docks, possible materials to be used, the rearrangement
of docks, and the multi-year fiscal projections.  While several good
ideas surfaced, and the energy was clearly focused on minimizing costs,
I felt there was a bit of wheel-spinning happening.  The committee is
trying to develop a recommendation to the waterfront commission on "what
to do".  However, like most municipalities - and, unfortunately most sub
committees formed largely by volunteers - I didn't feel that the real
expertise was present to say what would be the best material to use to
provide the best long-term cost/performance/longevity picture.  Wood,
concrete and aluminum were discussed.  An idea was raised to make the
RFP (request for proposal) to include design...in other words, have the
potential contractors "educate" the city on what was the best long term
solution.  I really felt this was a good idea.  Waterfront commission
manager Cliff (didn't get last name) said the city generally didn't do
that.  However, I feel it might be a good idea because of the quantity
of "new-age" building material being developed today.  It might be a
mistake for the city to spec "concrete docks" for example, when there
might be a new material out there that would ultimately save the city
(and berthers) money.

 

This was the wheel-spinning part.  I've been City Finance Officer for 3
cities over the past 16 years - and I fully understand that sometimes
city staff doesn't have all the best answers.  In this case, I feel that
the sub-committee cannot make a qualified recommendation to the
waterfront commission unless some serious homework is done, or they get
a consultant to do the homework for them.

 

In the budget that was available as a handout, I had a couple questions.
It showed a multi-year timeline with beginning fund balances for each
year, added in projected revenues, subtracted out projected
expenditures, and came up with a resulting ending fund balance - which
was used as the following year's beginning balance.  Makes sense.
However on this "budget forecast" it listed debt principal payments as
reductions to the fund balance each year.  Debt interest payments are
indeed expenses and reduce the fund balance as diagrammed above.
However, when the debt principal is paid down or reduced (remember that
debt is a liability, not an expense), there is a reduction in
liabilities.  The cash that is given to reduce the debt principal is an
asset - so assets are reduced the same amount as the liabilities.  Net
effect on the fund balance is zero.  I asked Cliff about this when I ran
into him in the parking lot after the meeting but didn't have time to
fully discuss.  Anyway, the effect of presenting a budget forecast which
includes debt principal payments is to overstate expenditures, and show
a "loss" that is higher than actual.  I didn't feel that this was being
used to intentionally overstate the grimness of the picture - I think it
was a mistake in the spreadsheet.  However, it represents several
hundred thousand dollars - and should be made clear.  

 

A bigger issue for me concerned replacement versus repair of the docks.
A question was asked if the 88 docks that need to be replaced were in
their condition due to neglect.  The answer was "no".  Another question
was "are you proposing to replace all the docks or repair some?".  The
answer was that repairs aren't worth it - they last only a couple years.
The combination of those two answers really concerns me.  To replace a
dock costs (numbers quoted last night) $7,500 each.  I have cracks in my
concrete finger at my dock (L-Dock) that could easily be repaired -
which would prevent further deteriorization.  I figure cost of labor &
materials would be less than $300.  Do the math.  I don't think it is
fiscally responsible to claim that "repairs don't last, it is a waste to
do them - it is better to replace them".  If a repair lasts 3 or 4 years
at $300, and a replacement that lasts 40 years costs $7,500 it is
cheaper to do the repair.  This only makes sense.  Yes, it is "cleaner"
to get brand new docks, but I felt the discussion on the decision to
replace versus repair - which lasted about 2 minutes - was not looked at
nearly closely enough.

 

Effective communication is the ultimate path to positive conclusion.  I
felt strongly that every person there was interested in communicating
with each other - and, more importantly - with the public that was
represented there.  To simply rattle off that "we won't stand for raised
fees!!" is not the solution.  A better solution is to get involved with
these public meetings and ask good questions, and participate in the
information sharing.  Last night a woman present suggested that the city
talk to someone she knows that has new information on new cheaper,
stronger concrete.  Boom - suggestion was taken and it will happen.
I'll meet with Cliff and look into not only the debt principal issue,
but also the issue of what the city is charging the Marina for its
overhead expenses.  All cities do this - because the State continues to
reduce money given to cities.  So the city councils (and finance
officers - yep, I've been guilty) do everything in their power to
protect the general fund.  All cities charge the enterprise funds
(water, sewer, marina, etc) fees to cover what they claim are "related
and reasonable" costs incurred.  That will be interesting to be on the
other side of the fence this time.

 

Anyway - let's keep moving forward.  Emails about apathy do nothing.
And when Tom and Lori bring us together again, hopefully energy won't go
into the topic of apathy.  Rather, we can continue with an energy that
can make a difference.  

 

Longwindedly yours,

 

Keith Samse

 

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