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Port adopts updated five-year financial forecast and 10-year capital plan; shortfall remains near $1.4 billion
Summary
The Port Commission reviewed an updated five-year financial forecast and approved a revised 10-year capital plan. Staff projected revenue growth to $85.9 million over five years but also forecast operating deficits in years three through five and a capital-need shortfall of just under $1.4 billion; the commission voted to approve the capital plan.
The Port of San Francisco Commission reviewed an updated five-year financial forecast and a revised 10-year capital plan and approved the capital plan following staff presentations and commissioner questions.
Elaine Forbes, Deputy Director of Administration and Finance, presented a five-year forecast (FY 2012-13 through FY 2016-17) prepared consistent with Proposition A. Forbes said the forecast shows revenues rising from about $68.9 million to $85.9 million over five years (roughly 5% annual growth), with principal drivers including increased commercial and industrial rents (+$8.7 million), expanded parking/meter revenues (+$4.4 million) and increased cruise-related revenues (+$1.3 million). The forecast also assumes development-related revenues tied to projects such as the Lot 351 project if approved.
Forbes warned the port will face operating budget deficits in years three through five of the forecast absent further adjustments and that capital resources are constrained. The port's capital policy adopted earlier requires allocating 20% of operating revenue to capital (with a 25% target); Forbes said the revised budget will likely not meet the policy in years one and two but should in years three through five, yielding an average capital budget of about $9.6 million over five years.
Forbes identified strengths (diverse revenue base, ability to invest for events such as the America's Cup) as well as risks: reliance on some one-time sources, development risks associated with projects such as Seawall Lot 351, and limited discretionary resources for capital repair and replacement. She said staff will finalize the budget submission and return in July with the final proposed budget.
Daley Dunham of the Special Projects Group presented the revised 10-year capital plan (FY 2013—to—2022). Dunham said the plan's needs side remains unchanged at $2.21 billion but that sources were revised, including a $142 million reduction in development project funding after the America's Cup Event Authority was removed as a source, and a net shortfall now just under $1.4 billion. He explained a federal funding change of $7.5 million, part of which ($6.3 million) was reassigned to the cruise terminal financing package.
After discussion and questions about revenue assumptions (including lease expirations, vacancy assumptions and the treatment of bond proceeds), the commission moved, seconded and approved the 10-year capital plan by voice vote; the staff will continue to coordinate with the Board of Supervisors on the final budget documents.
Other business during the meeting included approval of routine minutes and consent calendar items, an executive-session disclosure of a litigation settlement (City and County of San Francisco v. Fascination Consumer Enterprises) and a request for an upcoming Pier 38 update. The meeting adjourned following a final voice vote.
