concrete and exposed eroded rebar under the slab deck and concrete beam. the reinforced concrete is definitely compromised. the south and north apron are currently restricted to light passenger vehicles and no vehicles are allowed on the east apron. the estimated repair is $2 million and the repairs will insure unrestricted use of these aprons. a portion of the east, sought and north aprons are expected to be repaired as part of the future water transportation authority terminal expansion project. the aprons serve adjacent agriculture building. this photo is a close up of the slab deterioration under the agriculture building. again, the slab rebar is missing in various locations due to corrosion. just a brief primer on concrete damage at the port. the salt from the bay attacks the rebar bond in the concrete.

the rebar oxidizes and the product is rust. the rust then pushes against the concrete cover and spauls the concrete, leaving exposed, damaged rusted rebar. retear of the deteriorated substructure under the agriculture building will be considered for prioritization in the near future. next this is a photo under pier 29, right next to our new cruise terminal. the photo shows deteriorated concrete beams. inspection reveals substantial deteer rake of the deck did go, beams, girders and slab. the bulk head repair project will have an estimated cost of about $2 million, an additional 9 million will be needed to repair the rest of the substructure. the bulk head substructure will be considered for funding in fiscal year 2016-17. my last example is pier 54.

the photo is what someone would see on a boat approaching from the northwest. the photo on the right shows an example of deteriorated concrete beam framing into a pile under pier 54. pier 54 has many damaged beams. as present no funding source has been identified for the repair. estimated cost to perform the repairs is $21 million and this includes both structure, gravity repairs and seismic strengthening. in conclusion, the facility assessment program provides valuable information related to structural condition to port facilities. we have over one billion of unfunded projects listed in the commission report. this concludes my presentation. >> thank you.

public comment? seeing none public comment is closed. commissioners? commissioner woo ho. >> thank you for your report and i think you've convinced us with the photos in terms of some of the conditions but i guess i'm looking for a little bit of a bigger landscape picture. i did hear you say that a billion dollars of all these various yellow and red tagged facilities are not funded and i'm trying to correlate since we are also, i'm going through the capital plan a few items later. in some cases you do indicate if there's funding next year or if it's in the capital plan and i guess, just getting the big picture, is to understand all of the billion dollars that you say that are not funded are they not even included in the capital plan so we can correlate -- and i understand you just say prioritization for the capital plan but i think there's one other category that i would

like to see in this kind of report going forward and i understand the public safety issue, which obviously beef -- we have to be aware of and is paramount but i guess in terms of prioritizing, obviously with piers which have some revenue generating purpose and others are for others if it's the apron or the public access side. so we need to understand and differentiate those that are prioritized not beyond public safety but more which ones are supporting the revenue-generating piers versus the public access or the apron so we can understand how to differ shait what's important because it's very clear we are not able to do everything. then among the red-tagged ones, i guess red tag meaning it's very unsafe to be on those piers, which ones have we finally made the decision we are just going to abandon and do something? i think it's somewhat discussed but not

clearly finalized, it says we are not planning to do anything route now but when are we going to come to a conclusion about those red-tagged piers and having a joint decision, not just from engineering but obviously both finance and i guess the overall sort of business side what we're going to do and the ultimate disposition of these? so i think this is the first step in a funnel that keeps going toward a decision process for the port correlate to go a capital plan what are we planning to do long-term and i think it would be helpful if we could connect the dots a little bit more between the dots to help us understand at the commission level understand where we are headed overall. does that make sense? and at this point i guess not all of the things that are identified here so far are on the capital plans. okay. so some are and some are not. so somehow we need to figure out what to do, then. >> you mean funded. >> well, i think you have

things in the capital plan that are not funded as well. that's right. >> but all of these --. >> i'm not sure everything on here is on the capital plan in terms of needs, but some of them are. so i'm trying to correlate between what the capital plan says and what this says and how we connect between the two different reports. >> right. >> and how do we categorize these in the future so we have a better plan of understanding besides prioritizing public safety. >> what we do at the staff level, not that we're trying to demonstrate with all of these items, but all of what is in winnie's report is in the capital plan as an identified need, it's not all funded. she has given you a chart that shows you which ones are funded. >> well that's slightly different from what she answered me earlier. >> no what monique said was right. >> so everything on the yellow and your tag is in the capital plan.

>> yes, but some of it is not funded. >> i understand that. >> right. >> so i think elaine will explain when she comes up, but the capital plan identifies the universe of everything we know as a need. the report that winnie is giving you helps us to understand the trajectory of our green to yellow yellow to reds and hopefully not have surprises where we have to close down a pier unexpectedly so that we're forecasting that these things are changing. the annual capital plan has a plan of finance which has two sources of funds that come from the port , the port revenues, operating revenues and the report debt proceeds. then the annual or biannual operating capital budget helps us to spend our money as opposed to the other sources of money, say grants, developer financing,

tenant financing, et cetera. so i understand your request, commissioner, to try to draw a line better between how those reports integrate, but i want to assure you that as we go through making our recommendations to you what to finance with the port's funds, winnie's report is a key part of that. >> the beginning of the funnel. very important. >> you said it very well. i just wanted to confirm that. >> the only other thing i wanted to say is that as you look at these things, particularly the red tagged ones, if we can understand which ones are critical because this particular pier is in support of revenue so it's a priority matter in addition to public safety, which is obviously very important too. i'm not denigrating that at all. so we can understand how you prioritize a little bit you may do that internally but we at the commission don't have

vision into your process which informs us how we can help you in terms of your feedback. >> it's a little bit awkward, but in terms of winnie's report, it doesn't change that quickly so we give you a report every year, but we're reminding you and the public and ourselves, for that matter, the state of disrepair for some of our most critical assets. i would say winnie's report is a summary of our most critical assets. >> thank you, winnie, for such a wonderful report. it's great to hear there are no new red tagged facilities. have any changed --. >> the glass is half full. >> have any changed from green to yellow since the last report? >> or the other way, yellow to

green. >> hello, commissioners, i'm joe roget, structural engineer for the port. we have had some successes. the most recent one i can think of is the pier 50 valet, which we put two 2-vehicle lanes in and a bike lane. >> joe, winnie's report did show the pier 19 south valet, the south apron, that one change we still have the north apron to do, the pier 50 valet which you just mentioned. >> wharf 7j is a work in progress. >> are these from yellow to green, or green to --. >> yellow to green. i don't believe we've gone from green to yellow anywhere. >> green to yellow, not

significantly, just in minor areas. >> that's good news too. >> then pier 31, which is a very big one, as you may recall you helped us to decide to spend bond funds on that one so that one is in progress and by the time we report to you next time it should hopefully go to green. >> thank you. >> kind of work that into the report, though, i think that's a good way to look at it going forward. >> commissioner adams. >> i want to thank you for the report. i really appreciate that you prioritized and made some decisions because sometimes you just got to make a decision which ones to go after. i was going to ask you a little bit about climate change and sea levels, how that's going to affect some of the piers and also i didn't see pier 30-32 on here. i know not all the piers are on here so can you say a little bit about it?

>> in the exhibit? it should be under exhibit no. 2. >> load limit, no plan. >> no plans, okay. >> you see it? >> yeah. >> okay. >> can you tell me a little bit how sea level rise may make some of these projects mature faster than other ones and how to look at it and maybe try to get it done? >> i think regarding climate action i think when we have sea level rise, the water will rise up, obviously, and concrete will corrode faster, possibly and also the inspection windows might be a little bit smaller. anything to add? >> i just mied add to that, winnie, that the work window

will also close up tighter with sea level rise. it just presents more of a challenge for us and maybe gives us incentive to repair these structures more quickly. >> or get our scuba diving certificates renewed.

>> right. thank you. i think commissioner adams' question does highlight some of the concerns that we have and as you alluded to, the window to even do the inspebses gets smaller and smaller as sea levels rise, the opportunity to check on our wharfs and piers does become more difficult and problematic so i'm not sure how we address that per se but i think it does put in all of our minds a need to expedite some of the inspections and work that all of you are doing, so thank you. winnie, thank you for your report, it was very clear and appreciate having it. commissioner brandon, i think you are right, it would be helpful to know where we have gone in a positive direction as well as some of the other stuff. thank you very much. commissioner adams. >> commissioner woo ho made reference, i want to say i really appreciate that pier 35 because i know that's going to be used as an overflow for cruise ships and that brings in revenue and they can work cargo there and i appreciate that. i see the army corps of engineers for a $6 million loan. do you also work with maritime administration? i was just back there in dc lobbying and i met with chip, would any of this fall under the grants that they are giving out, daly, i just wanted to know. >> daly dunham with the projects group. the assistance to small shipyards comes out of murad but we as a city entity

are not he will swribl to apply. what we have done in the past is supply grant writing assistance to staff at vae that they can use to repair their facilities. one other note on pier 35 and the army corps of engineers, funding source, it's an authorized use of funds through our world of 2007 but we have yet to get it appropriated. i would hesitate to consider it an awarded grant but it is something we definitely have our eye on. >> income item. >> item 12a, informational presentation on fiscal year 15-16 to 2019-20, 5 year financial plan. >> good afternoon, commissioners, elaine forbes, i'm the deputy director of finance and administration and today staff is going to present

to you an array of financial documents, the 5 year financial plan --. >> did we want to combine all 3 items and call them all out. >> yes, please. >> 13b, request approval of the port's 10 year capital plan for fiscal year 20-25, 13c, request approval of the port's 7 additional capital projects and accompanying supplemental appropriation for fiscal year 2015-16 capital budget. >> thank you. so as i was saying, staff will present the 5 year financial plan, the 10 year capital plan and a request for the capital project supplemental for 7 projects for next fiscal year 15-16. and these items are all linked together as with the prior item looking at this state of our facility, especially those in the poorest condition. the 5 year financial plan builds off of historical trends and assumptions for the future of the entire port enterprise

and it forecasts where we are headed. the plan predicts the operating and capital projects. the base case shows what is most likely based on what we know about the economy, our revenues and leasing initiatives that will build revenue and what we know about our expense growth. the low case explores key drivers that would affect a financial decline for the port enterprise so that the port commission knows what to plan and watch for specifically in the case of an economic slowdown, or to guard against in the case of slow performance in lease initiative. the high case is an improved condition so we can strive for those outcomes. the capital plan is the port's strategy and shows how well we are doing addressing our capital backlog and renewal needs. this presentation allows for the port commission and public input because the 10 year capital plan focuses on our investment strategy over

the next 10 years it is our strategic planning document and reflects our values and priorities. the capital budget request is a staff recommendation to the port commission on how to spend one-time revenues for capital investment which improves our financial outlook in the 5 year plan, looks like the high case, and supports our capital investment strat sci that's enumerated in the 10 year capital plan. next year is year 2 of our 6 budget so this recommendation to augment our capital budget would be through supplemental appropriation. and just to respond to some of the questions from the last presentation and guiding into this one, all the at-risk facilities are in our capital plan and are there as part of the need. there's page 12 of the capital plan discusses the at risk facilities so that's all included here and when we go through scoring to figure out how to best invest our

dollars, we look both at the revenue generation of the facility, safety concerns, meeting our mission and also project readiness and timing. so for one example, pier 29, which winnie described serious substructure problems, while it scored well, the timing was not such that we felt it was ready for appropriation for a budget for next year , but we would be looking at it for the following year. so what will come through in these items is a lot of notable accomplishments and some really really clear opportunities. so your policies related to our operating reserve, also our coverage of our internal policy of two times debt service coverage have really constrained operating expenses. and while it doesn't always feel good to have operating expenses constrained, it helps us a lot of opportunity for more capital investment. your port commission policy related to the capital reserve

policy to set aside revenues for capital investment is growing this critical source of investment. our port capital dollars have been a very, very small source of the overall capital 10 year plan of spending. tes a small source. it's grown, it's now up to 18 percent of the total identified sources, but it's the source we can totally and fully direct to our needs. it also represents 30 percent of sources for capital repair to meet those really really critical needs. so the careful management of holding down our operating expenses, combined with growing and allowing us to utilize more of our funds for capital investment is growing this really really critical source of revenue. and the capital plan has guided over $220 million of investments since 2006, which is extraordinary and that doesn't include the private side. on the opportunities side, we will reach our hundred million revenue goal next year and that was a stated

commission goal and we're going to hit it so we're very pleased to report that. in the base scenario for the port, we meet our operating policy, we meet our base policy and this was a better picture than we painted in forecast. importantly, the high case shows some recommended capital investment and it improves the capital outlook. the port commission has a decision to make regarding what to do with the one-time revenue that we have primarily the lion's share of which was brought in from the pg&e prepayment of rent you approved, 15.3 million. the question for you is whether we should put it aside and save it for a rainy day in a revenue stablization reserve fund, which we would utilize to pay debt service, or whether we should invest it in capital.

the revenue stablization fund concept is really to protect the bond holders in the event of a major swing in revenues that we wouldn't predict today or a major change in operating expenses. we are recommending that you spend the funds on capital now for two reasons. one, our own financial position is very strong. we are projecting coverage of between 5 times and 6.27 times in our forecast so we don't think a revenue stablization fund is required at this time, and you're going to see there's a lot of positive impacts from making the capital investment now. financial impacts. so despite the really significant accomplishments and opportunities, the fundamental problem that we've been facing persists. the port has an extraordinary large gap between what we need to spend every wreer for capital and what we

can spend and the port's balance sheet alone cannot address the backlog. the chart that you are seeing here shows the difference between what we're projecting to spend in capital, the blue line, and what we would need to meet our annual renewal costs, so you see about a $30 million gap between those numbers. and when daly discusses the capital plan you will see we have a 1.13 billion dollars of unfunded need at the end of the 10 year period. so the picture is improving and we're addressing the problem, but the fundamentals stand. so how will we address this very very large gap? we are advancing internal strategies. we funded the port's pile driving crew which -- and they are making good headway on our backlog. we are looking at smaller scale investments for nearer term revenue such as pier 31 we are proposing pier 23 and we have a very exciting

proposal for the back lands. these are projects that return investment earlier and develop near term cash. some of the larger development projects take a longer time before the revenue is ready to come to the port enterprise. and we're also fine tuning our expertise in obtaining entitlements regulatory approval and basically in delivering capital projects quite well. and we continue, of course, to look for external sources of funds and this is really where you see the sea change in addressing our need and pier 70 is one of the greatest examples. so we will continue the strategy of public private partnerships and are also looking for a regional city-wide strategy to address our seawall and deal with the significant challenges that sea level rise will bring. and of course we will continue to look for voter approval in the form of go bonds in terms of our parks and open space network.

so i will turn it over to megan wallace who is our budget manager, and daly dunham, but i would like to thank lawrence brown and he managed the capital review this year. 25 projects came in and we are submitting 7 to you for approval. we had an internal review work who did a lot of work on these projects and finally i want to thank brad benson, not only for guiding the development of the capital plan but for negotiating the pg&e settlement which is generating the big one-time source of funds that we're recommending for investment today. with that, i'll turn it over to megan . >> good afternoon, i'm megan wallace from port finance.

in 2009 voters approved a charter amendment that required the city to begin a two-year budget process that had an alternating 5 year financial plan update on alternating years. the goal of such planning is to shift the focus from short term budgeting and problem solving to a longer view of financial planning. this allows city staff to develop thoughtful solutions for problems and maximize the potential upside and opportunities that we face in our budget. this is the third official 5 year financial plan that the city has developed and the fourth report and presentation that port staff have prepared. in the following presentation i'm going to give a brief update on the city's 5 year financial plan and give you, go into more depth on the port's 5 year financial outlook. to begin, the city is looking at a deficit over the upcoming 5 years over $400 million.

this is despite a strong economic climate where since 2010 the city of san francisco is actually the second-fastest growing economy of a large county in the country, and added more than 70,000 jobs to our local economy. in this climate we're actually the city is projecting a $567 million increase in their general fund sources over the upcoming 5 years, but that's being offset by close to a billion dollar increase in expenditures, large portions of which are from labor costs including salaries and pension costs, and just the general cost of city-wide services. the mayor is proposing a plan that's really a combination of controlling expenses and identifying new tax and fees and other sources that can help offset and cover the growing costs.

and while this may seem like a large deficit, it's not such a big burden relative to what we've seen in recent history when the mayor came into office just the annual deficit was over $300 million, and this is over the 5 year window. but it's important to note that some of the key assumptions in the city-wide plan. one of them being that the economy is going to continue to be strong and while the mayor has recognized that growth is being curbed things like commercial space is reaching capacity, they are just not seeing such employment growth, there is still an assumption the economy is going to continue to do well. and additionally the assumption is that current labor agreements will stay generally where they are with some percentage increase, but after fiscal year 16-17 the city will be negotiating new agreements and we'll have to see what comes of those.

but an important factor in looking at the economy is that the city's benfitting from 5 years of expansion and historically we haven't had more than 6 years of growth in a row. so it is definitely a large footnote in the city's plan that we may be reaching the end of that economic growth that we should have our eyes out for what would happen, especially in the event of an economic downturn. that's particularly why we include a low case in the port's financial planning. so the port's financial plan includes 3 scenarios. we have the base case, that looks at likely outcomes so looking at current revenue growth, current leasing assumptions so i spoke a lot with port real estate and we talked about facilities that are currently vacant and being prepared for being leased, as well as development projects that have been through port commission review such as pier 70 and pier 38 that we believed were moving forward and

advanced enough that we could consider them in the outlook. the low case takes a darker turn and considers what would happen if we did face an economic downturn and reduced our revenue, our percentage rates, down to fiscal year 10-11 levels and considered that leasing would go at a slower rate and since piers 19 and 23 are two key areas that we're looking to lease, what would happen if we delayed the timing of filling those spaces. then the high case goes into more detail of considering projects that are still on your horizon for final approval as well as capital spending so the last item on this ayen today item for the capital supplemental will actually bring more revenue and will add to the high case scenario. but as elaine pointed