San Mateo County Harbor District finalizes municipal service review amid financial concerns

The San Mateo County Local Agency Formation Commission (LAFCo) convened on March 19, 2025, to discuss the final municipal service review (MSR) for the San Mateo County Harbor District. This meeting marked a significant step in evaluating the district's operational and financial health, following a draft review presented in January.

The final report highlighted notable improvements in the Harbor District's financial transparency and budgeting practices since the last review in 2015. However, it also revealed ongoing challenges, particularly the district's heavy reliance on property tax revenue, which now accounts for approximately 70% of its total revenue. While the district has sufficient funds to cover its current operational costs, it faces a daunting capital improvement plan with an estimated $80 million in projects, of which only 15% is currently funded. This raises concerns about the district's ability to finance future projects without exploring additional funding sources, such as grants and loans.

The MSR also addressed governance issues, noting that the district's sphere of influence remains at zero for dissolution. Although there are potential cost savings and efficiency gains if a successor agency were to take over some operations, no immediate actions are planned to change the district's governance structure. Recommendations from the MSR encourage the Harbor District to update its strategic and master plans to better align with its capital improvement needs and to explore new revenue opportunities.

Public commentary during the meeting included concerns from local stakeholders. Gerson Kelly, manager of the San Mateo County Airports, expressed the county's opposition to any proposal for the Harbor District to take over operations at the San Carlos and Half Moon Bay Airports, emphasizing the county's successful management of these facilities. Additionally, public comments raised issues regarding deferred maintenance and the district's management practices, with some community members questioning the district's financial decisions, particularly its investment in properties without clear plans for their use.

In conclusion, the LAFCo meeting underscored the Harbor District's progress in financial management while also highlighting significant challenges ahead. The commission's recommendations aim to guide the district in enhancing its operational revenue and addressing its capital improvement needs. As the Harbor District moves forward, the community will be watching closely to see how it navigates these complex issues and whether it can effectively implement the recommendations from the MSR.