From: John Ullom

Subject: The best evidence yet that the San Mateo County Harbor District will be broke and screwed by 2018

Date: May 25, 2014 6:41:04 AM

To: Mark Noack

Cc: Robert Bernardo <rbernardo@smharbor.com>, pparravano@smharbor.com, jtucker@smharbor.com, Sabrina Brennan <sbrennan@smharbor.com>, wholsinger@smharbor.com, Dave Pine <dpine@smcgov.org>, cgroom@smcgov.org, dhorsley@smcgov.org, wslocum@smcgov.org, ATissier@smcgov.org, council@ssf.net, citycouncil@dalycity.org, Peter Grenell <pgrenell@smharbor.com>, M. Harris <mharris@smharbor.com>, nihartm@ci.pacifica.ca.us, ErvinK@ci.pacifica.ca.us, digres@ci.pacifica.ca.us, LenStonePacifica@gmail.com, O'Neillm@ci.pacifica.ca.us, jgee@redwoodcity.org, rfoust@redwoodcity.org, aaguirre@redwoodcity.org, ibain@redwoodcity.org, dhoward@redwoodcity.org, bpierce@redwoodcity.org, jseybert@redwoodcity.org, rross@cityofsanmateo.org, mfreschet@cityofsanmateo.org, jgoethals@cityofsanmateo.org, dlim@cityofsanmateo.org, jmatthews@cityofsanmateo.org, cbronitsky@fostercity.org, akiesel@fostercity.org, sokamoto@fostercity.org, hperez@fostercity.org, gpollard@fostercity.org, RDMueller@menlopark.org, ccarlton@menlopark.org, racline@menlopark.org, kkeith@menlopark.org, piohtaki@menlopark.org, mbrownrigg@burlingame.org, tnagel@burlingame.org, jdeal@burlingame.org, akeighran@burlingame.org, rortiz@burlingame.org, CityCouncil@belmont.gov, jruane-web@sanbruno.ca.gov, ioconnell-web@sanbruno.ca.gov, kibarra-web@sanbruno.ca.gov, rmedina-web@sanbruno.ca.gov, msalazar-web@sanbruno.ca.gov

Hi Mark,

I hope you are enjoying this fine weekend.

Here is the TOTAL reserves projection from the Districts 2014-2015 budget presentation:

April 16, 2014 Harbor District FY 14/15 budget meeting slide — April 16, 2014 Harbor District FY 14/15 budget meeting slide

Notice that by 2016, they project only 6.5 million, (at most) in TOTAL RESERVES. But that 6. 5 million needs two adjustments.

1) Subtract 1.8 million that they are spending on the building in El Granada.

2) Subtract 1.7 million for the DBW loan collateral. This is the only restricted fund that they admit is restricted.

I come up with only 3 million dollars in TOTAL available reserves by 2016.

That means by 2016, the SMCHD plans to spend all of its Emergency Reserves, all of its Capital Projects Reserves, all of its Customer Deposits, and have only 3 million left which is supposed to be reserved for the payment of post termination benefit liabilities, that the district expects it will accrue. I am unclear how the Unions and Employees at the SMCHD will feel about the plan to raid their post employment benefits when there is no plan to pay them back.

Here is a link to a four minute video clip where Peter Grenell describes his plan to finance operations out of formerly restricted reserves: https://www.youtube.com/v/UVHmCREdsgA?version=3&start=4171&end=4400&autoplay=1

So that leaves the district pretty much out of money by the end of the 2016-2017 budget cycle. The district will be broke and in debt to its employees for the 3 million dollars plus any increase in liability that occurs between then and now. Here is the chart that Debra Galarza used to show the projected increase in liability the district expects to incur.

Notice that by 2018, when the district projects it will run out of money, it will have a liability of at least 3.8 million dollars and will have spent most if not all of its reserves.

Here is the slide that the Fiscal Director presented to the Board of Directors that makes it abundantly clear what the problems are:

The middle reason is babble but the other two are undeniable facts. The facilities at the harbor are getting old and showing the signs of years of deferred maintenance due to more than a decade of structural budget deficits. The district has historically, since at least 2004, spent 20% to 30% more than it takes in.

There is no denying the above data. It comes directly from the SMCHD Budget Presentation that can be found on the SMCHD website: http://www.smharbor.com/harbordistrict/FY_14_15_budg_workshop.pdf

I can not explain to you why Peter Grenell, Robert Bernardo, and Jim Tucker deny there is a problem with the fiscal situation at the SMCHD. No organization can sustain a budget deficit of over 20% forever. The District's own Fiscal Director has done her level best to make it clear to the Commissioners yet except for Commissioner Brennan, they either do not get it or choose not to.

As you can see from their own charts, it does not matter how they define or redefine what they mean by restricted reserves. Even if they spend every last dime, they still can't make it past 2018.

Do what you will with this information.

Enjoy your weekend!

John Charles Ullom

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