TITLE
Recommendation to: 1) receive and file Harbor Department Transfer Analysis Report; 2) request Board of Harbor Commissioners to approve the annual transfer to the Tidelands Operating Fund for the total amount of $12,423,706 based on the Fiscal Year 2009 Audited Financial Statements; 3) request Board of Harbor Commissioners to approve the annual transfer on October 1, 2010 based on 80 percent of the Harbor's unaudited change in net assets as of September 30, 2010, with the remaining 20 percent to be transferred upon issuance of the Harbor's Fiscal Year 2010 Audited Financial Statements; and 4) consider the elimination of the previous year's transfer from the base upon which the current year's transfer is calculated.
DISCUSSION
In response to a Special City Council Session regarding concerns over the future stability of the City's Tidelands Operating Fund (TOF), our Office conducted an analysis of the Harbor Department's annual transfer to the TOF.
We did not perform an audit of the Harbor Department's financial statements. The City's external auditor performs the financial audit annually. The purpose of our analysis was to provide clarity regarding the revenues and expenses used to determine change in net assets on which the annual transfer is based, and to identify alternative solutions to meet the lawful obligations of the Tidelands Operating Fund without an amendment to the City Charter.
Based upon the results of our analysis, we noted the following:
1) The Harbor currently deducts the previous year's transfer amount to arrive at the base for calculating the current year's transfer.
2) Because the transfer is based on the audited financial statements, there is a one-year lag between the end of a fiscal year and the time the related transfer is made.
3) Rather than receive the full transfer at the beginning of the fiscal year, the City has requested the payments be made quarterly, resulting in a loss of interest earnings to the TOF.
4) Because of the ...
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