making. it's not easy to make it as clear as you did so thank you. it's much appreciated. i agree. the numbers are a little west daunting than they have been in the past good so the glass is half-full. i also appreciate the efforts to look at the alternative sources and figuring out ways and i know that's been something that the staff across the board have been really focused on and it obviously shows. i think there's a number of opportunities look forward to thinking of other ways we can try to put a further dent in these numbers by looking at other partners an option. but thank you very much. >> first of all i like to apologize about my phone going off. i'm sorry about that but when i was looking at you in the audience i thought you were someone's daughter. you look so young. really, you just look so huge i could not believe it. i was like what is she going doing going up there. i thought you are megan's daughter or something. you look so young. really, you do. excellent work.

i've never seen you but you present borough please come back and was excellent work. i looked down at ambassador kounalakis- >> on the say it's a sign of getting older when the staff looks younger and younger. >>[laughing] >> that's all. terrific >> i think does a backwards compliment. with such a tremendous presentation. >>[laughing] >> great work. thank you. >> >> item 14 b informational presentation on port fiscal year 2010-2022 five-year financial plan. >> good afternoon commissioners. director sadlowski-garza i megan was

port finance and procurement manager i will say she's not my daughter but am very proud to have her on her staff >>[laughing] >> good shot, making >> today i'm here to follow up on the capital plan the five-year financial plan. i we back in january. requesting final approval of this plan. today i walk through city outlook, talk with the details of what was assumed in the port plan to talk about some strategies to consider moving forward. so first of all the city is required by charter to prepare a five-year financial plan on every odd fiscal year. so this year the city is preparing to release the citywide plan. it is actually tomorrow. i'm going to avoid going into details about of that plan before the mayor releases an official press release, but there were specific details a guided departments on their

preparation of individual plans. some of them really are starting with the assumption that the economy continues to be strong but it's tempered from the prior plan which we were really seeing enormous revenue growth as a city and echoes for the port as well. another piece is that employee benefits a really major driver of expense citywide that recent actuarial data shows employees are just living longer. so departments really have to start putting away higher rates of contributions to employee pensions. that's a rate of growth of 20% approximate per year. so just and additionally for health possible for current employees and retired employees, we are looking at 9% and 7% annual inflation. then other personnel costs just as a city

that they're coming in higher than they were in the prior financial plan should previously the consumer price index was up and leave around 2.75 pretty well below 3% both of lee speaking and other averaging out about 3%. the financial overview at five the city financial assumptions for the city's financial out in the base case as and moderate revenue growth. there are port specific details that we applied with regard to leases and growth in specific business areas but i ended up applying the citywide assumption for personnel and nonpersonal cost. but then separately i looked at ain high case scenario would be finally get an economic downturn. a very long growth period so in economic downturn

is somewhat expected in the near future and then i assumed that would've hit our revenue projection particularly in the high case i try to assume really just the best case. as you can see from the graph based on high cases there's really very stronger we can feel good about assuming those cases but in the event of an economic downturn we see some pretty sharp drops and deficits. so this graph depicts the base case. the top of the chart effects are expenditures in blue, light blue shows projected surpluses. red and gold indicates our revenues. so this is actually a balanced budget. it is saying that articles were new initiatives on port revenue streams are actually really hoping was that light blue operating surpluses and those surpluses, we also could wait to capital each year. so having that money

additional surpluses is really important for having the base case achieve an average $70 million capital budget. but i really have to highlight the third year of the revenue in the plan achieve 125 million. that's both operating revenues and south beach harbor that is a strategic goal for the port to achieve 125 million in revenues and i want to emphasize upfront that not only is it great that were projecting to achieve that goal so soon but it's critical given the rate of growth on our expense. if it had not been for these new revenue streams we would actually be seeing some shortfalls even in the base case. so this helps depict

where our revenue growth is coming from. on the left you can see a chart that shows base case growth. if we cannot bring any new facilities such as pier 31 online which is projected to generate more than $1 million once it is leased and filled and operating, we are base case growth would be much smaller. these new initiatives on the right really highlight kind of the diversity of our income stream and these are the things that are really boosting our outlook. you can see we have everything from-and growth in--to bring in the back lands on board in the southern waterfront we are projecting up to $4 million by the fifth year of the financial plan coming from the back lands. new pier leases and interim parking. so this is really the northern waterfront historic facility is bringing them online. this is the peers 19 all the way to 31. we have a good deal of new lease revenue projected coming from that area. of the revenue

growth, the uses of those funds are shown here to say that-or the growth in our uses, and really how we are using our money,. you can see the personnel salaries and benefits really are capturing a great deal of that expenditure growth. nonpersonal and work orders is a smaller slice it is really just driven primarily by cpi. just regular inflation. but the designation of capital is important to recognize. that this is really links to our o revenue growth based on ou capital policy where we've committed to spending 25% of our operating revenues on capital. either spinning it out right in our capital budget or putting it away through this designation. this this funding identified in this pie chart is really showing how much we need to spend in the five-year window in order to meet that

capital policy. so in those i just want to show that expenses would greatly exceed revenues in most years of the plan. expenses are shown here in blue. revenue are in red. in the event of an economic downturn or percentage rents are most vulnerable and we could potentially not initiate we seen in our northern waterfront facilities. what is not really shown in this graphic is this assumes our commitment to achieving our capital policy. so we would actually still sustainably strong capital budget of over $15 million on average but that is because based on capital policy we would be committed to putting away at least 25% of operating reserves even if that means making cuts on the operating side. on the high side, you can see that if we assumed savings on the labor and

enhanced revenues from doing even better on our initiative that we could see even better outlook and all those projected surpluses are assumed in the capital plan to go into our capital program. so finally figured out how we are going to make investments moving ahead but i really want to touch upon both the debt versus paid go because that is something that came up when the stock right you the debt policy and also talk about our capital include and plan. first of all debt versus paid-go we have a debt capacity of approximate 120 million but staff advised that we do not believe that we could actually absorb that additional debt service in our operating budget. as you can see from the base low and high cases,

because particularly because of the capital policy you're making a commitment to have the pay go program and we don't have the additional money in our ongoing projections to really be able to take on over $9 million of additional debt service per year. but looking at the base case, we found we could reasonably increase our debt service by up to $2 million per year which would generate approximately 24,000,000 in of debt proceeds we could commit to our capital program. but it's really important to think about those trade-offs particularly this associate with a low case that if we took on that additional that we would just run that much closer to running into an operating deficit and won the best ways staff believes to protect ourselves from that is really just making sure that if we did pursue a debt issuance that we were committing those

funds to programs or projects that would generate enough revenue to offset the additional cost. really looking at the return on investment over the life of that project. finally for the capital improvement plan the idea here is to really lay out the five-year plan of projects. the detailed not only phases of projects and help us understand what the potential revenue streams were risks to current revenue streams are with pacific facilities but thinking about we are opportunities for going after grants, public-private partnerships other external dollars that could really just enhance the work that we do and build a robust capital plan. with that somehow be to answer some questions. >> thank you, megan. is there any public comment on 14 bravo? any people at? seeing none, public comment is closed. mr. katz >> again very clear. it so

hard to predict how the economy is going to do. so we had a lot of surprises of late. is there anything you think we should be paying particular attention to or be prepared for? i guess alternate back to you that you have not included in the report? >> i think that i really did try to capture all elements of both revenues and expenditures. i think the been able to rely upon the city's financial plan assumptions while i put this together really adds a nice level of comfort on the expenditure side. i had no idea that her pension costs would be so high at this point. so the comptroller's office really serves as a wonderful guiding post for all of this but i think as a result is really the revenue side where we really need to keep in night and not

only try to meet our goals in terms of completing projects and generating revenues that are projected here but actively trying to find new projects that can help defend our revenue base. but that is all creates a cycle that we then need to have the capital dollars in place to make that investment. so i think if anything it's really just trying to stick to the goals laid out here in tubes of timing when we bring facilities online. >> thank you >> commissioner kounalakis >> again to the thank and well-prepared summary and it's also just very good to see there is the capacity for work at if necessary to know that buffer is there. so great job, great presentation and

generally pretty heartening to see the profiles the financial profile of both port. thank you. >> thank you, megan. this is very easy to read about being for the high case. >>[laughing] most of our properties leased out and making money for us. did you say you want to reach 125 night in three or five years? >> three that's where the judge and we will hit >> would you think will be in five years? b was in five years, let me look at my table good i think it was 100-133 million approximately >> wonderful. that's great. >> i remember back when commissioner woo ho was hoping to win 100. >> it wasn't that long ago >> megan, once again great work. very meticulous but this is very very great news and really thank you for this

report. thank you so much. >> one question i did not ask it just occurred to me at work looking at best and worst case scenario. in terms of increasing our debt and maybe this is something we can do but given that the cost of that is lower now that's likely going to increase is there a scenario where we can lock in anything the current lower rate week with that make sense? >> we can talk something about to our financial advisors about. i mean, yes. interest rates are projected to grow but i think that pending delete identifying projects that would just capture the return on investment really short order

we would want to particularly lay out the capital improvement plan and try to strategize and hone in on those projects that would really get us the farthest in terms of issuing debt as opposed to using our own paid go program. >> right. thank you. >> >> thank you mdm. clerk next item >> item new business >> colleagues, anything on the forward calendar because commissioner katz has a special point of privilege. she would like to speak a couple minutes about the ghost ship warehouse. anything on the forward calendar commissioner emanuel commissioner katz? >> other than nothing i think then we mentioned about the meeting >> i did record a request that the legislative team comeback quarterly and we've already had been planning for updates but you specifically asked for a status report on where the initiative is listed today and we will be happy to provide that next quarter. >> thank you commissioner katz >> i apologize over here during our moment of silence

for the victims of the ghost ship tragedy in oakland and on a macro level when i first heard about it it was certainly tragic and we all know somebody wonderful artists and dynamic young people and then unfortunately a few days later i realized it had hit a little close to home with a family friend perished in the fire. another bright young man that had so much i had of him and his embodiment of the kind of wonderful young people that were lost in the tragedy. again i hate to say it there but for the grace of whatever, we could be there and i know many years ago we took lot of flak when we shut pier 38 down rather quickly but it struck me that we acted appropriately as soon as we learned of all the

extension cords and poor electrical systems there. it just shows how it really could happen anyplace, anywhere and we all have to be vigilant in taking care of those that are more vulnerable in terms of needing to find and expensive place to live and other think i think it's incumbent upon all of us to recognize the opportunities that we had to take care of those that are more vulnerable. but again my heart goes out to all the families and friends of those that perished in this fire. >> i would like to adjourn the meeting in memory of the 36 lives lost in the tragic opened fire on december 2 2016. >> so moved >> second. >> all those in favor say, aye. >>[chorus of ayes] opposed?

to staff report, directed to the public, merry christmas. happy 2017. thank you. >>[gavel] >>[adjournment] >> >> >> ready. >> this is actually the first time i've con that all right. sorry to break it all up we're going to get started the regular meeting of the board of education of the san francisco unified school district for tuesday, december 13, 2016, is now called to order roll call. >> thank you, mm