I'd like to "Show you the Money", but we've already given it away!

By Ken Lundie

Top Three Priorities - Commissioner Ken Lundie

As a Commissioner, I am in favor of bringing High Speed Commuter Ferry Service to Oyster Point Marina/Park (OPM/P) in South San Francisco. The close proximity of many "Silicon Valley" type high-tech firms such as Genentec would make such a project desirable. The Commission has already voted to fund a feasibility study and to appropriate monies for the reconfiguration of the existing breakwater in preparation of such a project. I am a Charter Member of the Oyster Point Marina Water Transit Fact Finding Panel and have attended every Meeting. The Water Transit Authority has placed OPM/P on its "A" list primarily due to its "hub" location and because it has the necessary undeveloped land to provide for a passenger terminal and parking facilities. Building the accompanying infrastructure is what the Commission has been doing for some time and I will continue to support these efforts.

I am a proponent of ferryboat transportation in principle, but there are two areas of concern that need clarification. 1)The Harbor District does not own Oyster Point Marina but merely administers it under a Joint Powers Agreement (JPA) with the City of South San Francisco. This arrangement, unless renewed, will end in 2026. Since the property belongs to SSF, it is my contention that the costs associated with providing the capital improvements necessary to accomodate a large scale Commuter Ferry Transportation System should be borne solely, or at least in large measure, by the landlord (SSF), not the caretaker (SMCHD). As an example, the Harbor District recently "borrowed" $100,000 from SSF to make an improvement associated with the anticipated ferryboat service. I believe that instead of seeking a Loan, that we had to pay back, we should have requested a Grant; after all, the money was used to improve "their" property holdings. 2)Though several Ferry studies have been done involving potential ridership numbers and traffic flow patterns, the most important component in my view, has been entirely overlooked. What's in it for the Harbor District? What's our slice of the pie going to be? While the SMCHD is a socially responsible Public Agency, as it should be, and I'm sure wouldn't mind being a part of a project that would take a few hundred cars off Highway 101 during commute hours, we are by no means a "Non-Profit" Agency. To ask the SMCHD to foot the entire bill for a system that may or may not provide significant revenue to the District is something that we, as Commissioners, have to seriously consider before making a total commitment. The District, which is currently $17 million in debt, is not in a financial position to "Subsidise" one leg of a major water transportation system. First and foremost we have a fiduciary responsibility to the Taxpayers of San Mateo County.

Acquisition of the Princeton Boatyard

Many people see vessels being hauled out for repairs at the Boatyard in Princeton and naturally assume that the San Mateo County Harbor District (SMCHD) owns this Facility. The fact is, the Boatyard is privately owned and is leased to the Harbor District from year to year. The current lease, which was due to expire this November, contained a one year option clause allowing the Commission to extend the existing lease until Nov. 20, 2003. The Commission wisely voted to excerise this option, but after this period ends, no further extensions are possible under the current Lease Agreement; the property then reverts back to the owners. It is not known whether or not the owners would be receptive to negotiating a new Boatyard lease with the SMCHD. The likely scenario, is that this valuable parcel will undergo some sort of Commercial Development similar to what has recently sprung up along the waterfront.

Some years ago, this property was offered to the SMCHD but the Commission of that time opted (for financial reasons), not to purchase the land. Since then, the value of this Real Estate has increased substantially.

In my opinion, (and those of many others), it is absolutely imperative that the Harbor District permanently acquire this Facility to assure the long-range viability of Pillar Point Harbor. An ocean Port without a haul-out Facility to regularly service its fleet of Commercial and Recreational vessels, has no future. In addition to the normal boat maintenance, there are occasions when emergency situations arise. Without a Boatyard to address these issues, vessels taking on water and in imminent danger of sinking, would have to be "beached". Back in the 1500's, Sir Francis Drake might have "careened" the Golden Hind on a sand spit while his crew worked frantically between the tides to make emergency repairs on the Galleon, but in today's world, due to environmental concerns, this is not realistic.

If I am re-elected, one of my top priorities will be to commission a Real Estate Appraisal of the property so that the Board and District Staff can evaluate the financial feasibility of the acquision within the confines of the Annual Budget.

Should the Harbor Commission fail to acquire the Princeton Boatyard, the Commercial Fishing Industry, which relies primarily on an aging fleet of wooden hulled vessels, is effectively doomed. Spud Point Marina'a Boatyard in Bodega Bay has recently closed and the land is being offered for sale. The closest remaining haul-out facilities are located in Moss Landing or in San Francisco Bay. To reach the "Yards" in SF, it is necessary to cross a treacherous stretch of ocean known as the "Potato Patch" and some of the older boats could not safely make this yearly journey and would likely perish in the attempt.

When the Commercial Fishing Boats cease to be operational, no seafood would be landed at Pillar Point Harbor. Without product, the Wholesale Fish Buyers at the end of Johnson Pier, would go belly-up. When they go under, the local residents and visitors will stop coming to the Harbor. There is nothing unique about fiberglass hulled power and sailing vessels for they can be seen at any "Marina Del Rey". People come for the ambiance of a "Working" Harbor and to purchase freshly caught fish directly off the Boats. When tourism falls off, the Bars and Restaurants that rely heavily on their business, will suffer. Loss of the Princeton Boatyard, through a domino effect, would likely signal the end of Pillar Point Harbor as we know it and have a devastating and long-lasting effect on the local economy. You've probably heard of the old cliche' "Will the last one to leave, please turn out the lights?". As a strong advocate for Commercial Fishing, I will never allow this to happen "on my watch".

The Hilton Hotel Lease Fiasco

The proposed Hilton Hotel, which should have come as a welcome addition to Oyster Point Marina/Park, has turned into a fiasco of epic proportions. When the Ground Lease was first signed by all Parties approx. 5 years ago, it was a good deal for the City of South San Francisco and a reasonably good arrangement for the San Mateo County Harbor District. SSF, as the Landowner, was to receive revenue from the Property Taxes and the Transient Occupancy Tax (TOT). The SMCHD's main revenue was to be derived from a fixed percentage of the room rents (5%) along with smaller amounts from the sale of food and liquor.

The long anticipated Oyster Point Hilton was to be the Flagship at OPM/P and the "Cash Cow" that would provide a substantial new source of revenue to the District. All was proceeding as planned until the Developer sent the Harbor District's newly hired General Manager a "memo" requesting a reduction in the percentage room rent from the previously agreed upon 5% down to 3%. It should be noted at this point, that the GM was hired because the District was experiencing financial difficulties and the consensus of the Board was that he had the requsite skills to reverse the trend. For some inexplicable reason, the GM recommended changing one line in the 62 page Agreement incorporating this rate reduction into the Master Lease. The "Stepford" Commission, as I call it, blindly followed the GM's recommendation (as they usually do) and approved the change without understanding the ramifications of their action. To accomplish this, it was necessary to first change the SMCHD's Rates and Fees Schedule which designated the percentage room rent fee at 5%. Shortly thereafter, when I was elected to the Board, I had an Actuary run the numbers to see how much potential revenue had been lost due to this "minor" lease change. Over the 75 year life of the Hilton Lease, it is estimated that the Harbor District will loose between $28 and $37 million. $28 million is based on a 75% occupancy rate and $37 million on 100% occupancy. The actual figure is likely to fall somewhere in-between but the amount is nevertheless staggering. Unless, or until, this lease is re-negotiated back to its original terms, the Harbor District stands to lose approx. $500,000 annually for the next 75 years. For a Public Agency, that is mired in debt until the year 2018, an error of such magnitude is incomprehensible.

It is noteworthy that the Commission has never publically acknowledged that a mistake was made even though they later voted to change the Rates and Fees Schedule back to the original 5%. Unfortunately, they neglected to make it retro-active, thus leaving the Hilton Hotel as the only recipient of this General Manager engineered "Sweetheart Deal". Furthermore, the Board has had no fewer than 6 separate opportunities to revisit this issue and correct it but has failed each time to do so. Because it was this Commissioner who uncovered the costly mistake that they made and because my presence on the Commission is not universally appreciated, the Lease has not, and most likely will not, be revisited. Commissioner pride appears to be the only obstacle in the way of the District reclaiming its lost millions. As I said before, I would dearly like to "Show you the Money" but as you can see, we've already given it away!