Overview of the Statutes and Restrictions Governing the Marina Yacht Harbor Fund

The Marina Yacht Harbor (Harbor) is a recreational facility granted to the City by the State of California in trust in 1935 and 1963. It is operated by the Recreation and Park Department under trust provisions and San Francisco Charter restrictions.

The trust provisions hold that the lands must be used for aquatic, recreational, boulevard, park and playground purposes. It further holds that "& restrictions on the public trust lands also apply to revenues generated from the lands& . [T]he City may only use the revenues for services, purposes and improvement on or related to the granted lands." The San Francisco Charter states that "& revenues from the Harbor are generated by a recreational facility and must be devoted to recreational uses (Sections 3.550, 3.552, and 6.200).

Hence, to remain in compliance with the trust provisions and the San Francisco Charter, the City established the Marina Yacht Harbor Fund (Fund), a special revenue fund that allows the City to monitor the monies received and special purposes for which they are held. The Recreation and Park Department administers the Fund.

The Marina Yacht Harbor's Revenues and Expenditures

The Marina Yacht Harbor's revenues and expenditures stem from its operating activities for the boat marina, yacht club and other facilities, and the Marina Green. Operating revenues pay for operating expenses as well as facilities maintenance and capital repairs to the existing facilities. Several divisions within the Recreation and Park Department have responsibility for the Marina Yacht Harbor's revenues, including collection, resulting in fragmented oversight, tracking and reporting of revenues. The Marina Yacht Harbor also does not have full responsibility for expenditures. The Recreation and Park Department's Structural Maintenance Division is responsible for facilities maintenance expenditures through work orders with the Marina Yacht Harbor and the Capital Division is responsible for capital repairs.

The Marina Yacht Harbor's Revenues

The Marina Yacht Harbor's revenues, or sources, are made up of (a) berthing and mooring fees for permanent and temporary slip rentals as well as other miscellaneous charges such as key deposits, (b) concession revenues from leases and other concessions, (c) permit fees for private use of the Marina Yacht Harbor's grounds and facilities, and (d) interest earnings on the fund balance, as shown in Figure 1.

Figure 1
Revenues, Fiscal Year 2006-2007

Source: Recreation and Park Department, MYH Fund Balance FY 2006-2007

Berthing and Mooring Fees

The Marina Yacht Harbor is responsible for invoicing, collecting, and tracking berthing and mooring fees, which comprise nearly 80 percent of the Marina Yacht Harbor's operating revenues. From FY 2001-2002 through FY 2006-2007, berthing and mooring fee revenues have increased by 5.9 percent per year on average, as shown in Table 1 below. In FY 2005-2006 and FY 2006-2007, berthing and mooring fee revenues have increased due to rate increases for temporary and permanent slip rentals, approved by the Board of Supervisors (File 05-0602).

Concessions

The Recreation and Park Department's Property Management Division is responsible for managing and collecting the Marina Yacht Harbor's concession revenues from lease agreements with the Saint Francis Yacht Club, Golden Gate Yacht Club and the small concession stand on the Marina Green. From FY 2001-2002 through FY 2006-2007, concession revenues have averaged 10 percent of operating sources.

Permit Fees

Permit fees comprise approximately 3 percent of total revenues. The Recreation and Park Department's Permits and Reservations Unit, which is located in Pioneer Log Cabin in Golden Gate Park, is responsible for collecting permit fees for special events, picnics, volley ball court reservations, film locations, parking and other for private uses on the Marina Greens or Harbor. Prior to FY 2005-2006, these revenues were included in mooring and berthing receipts but are currently reported a separate subcategory.

Interest Earnings

The Controller allocates the Marina Yacht Harbor Fund's share of the County Investment Pool's interest earnings, based on the Fund's average monthly balances. As these earnings are not managed by the Department, they are not included in the scope of this audit.

The Marina Yacht Harbor's Expenditures

The Marina Yacht Harbor's expenditures include (a) labor expenditures for salaries and fringe benefits for Marina employees; (b) non-labor expenditures for overhead, debt service, and other operating expenditures; and (c) facilities maintenance and capital repair projects.

Figure 2
Expenditures, Fiscal Year 2006-2007

Source: Recreation and Park Department, MYH Fund Balance FY 06-07

Non-labor uses include a multitude of operating expenses, including: overhead charges, non-personal services, materials and supplies, capital outlays, debt service payments, and services of other departments.

Facilities maintenance and capital repair projects consist of routine annual maintenance of the Marina Yacht Harbor's facilities, including dredging, and larger capital repair and renovation projects. In addition, renegotiated terms of the St. Francis Yacht Club lease agreement effective June 1, 2006, included $1.2 million for the Marina Yacht Facilities Renewal Project. This $1.2 million for the Marina Yacht Facilities Renewal Project were included in the FY 2007-2008 Marina Yacht Harbor budget.

The Fund Balance has ranged from approximately $1.35 million to $1.75 million at fiscal year's end.

Table 1
Sources and Uses of the Marina Yacht Harbor Fund
FY 2001-2002 through FY 2006-2007

Source: Recreation and Park Department

Follow up on Controller's Audit Recommendations

While this audit is focused on the management of the Marina Yacht Harbor Fund, and not on the management of the Harbor itself, a summary of the 2000 Controller's Performance Audit of the Harbor has been provided below:

Harbor Renovation

The Controller recommended that the Harbor (a) adopt an updated version of the 1989 master plan to execute a comprehensive redevelopment of the harbor; and (b) apply to the California Department of Boating and Waterways to obtain funds to redevelop the Harbor. According to the Recreation and Park Department, the master plan update and Department of Boating and Waterways loan application have been completed.

The Board of Supervisors approved the Environmental Impact Report in February 2007 (Motion No. 07-40). The City is currently negotiating over the final terms of the Department of Boating and Waterways loan for the West Harbor renovation. According to the Recreation and Park Department, the outstanding issues are (a) the State's request that East Harbor revenues be pledged for West Harbor renovations; and (b) the need to purchase project insurance per the City Risk Manager.

The City is also conducting a contamination study of the East Harbor jointly funded by Pacific Gas and Electricity and the City. Once the study is complete, the City will either negotiate a settlement with Pacific Gas and Electricity or litigate regarding responsibility for clean up costs of hazardous materials contaminating the East Harbor.

Revision of the Harbor's Rules to Improve Harbor Operations and Increase Harbor Revenues

The Controller recommended several changes to Harbor rules and practices, including:

(a) Re-evaluating the existing practice that allows automatic berth transfers following the sale of a boat. The Marina Yacht Harbor has implemented this recommendation by requiring written notice of a berth transfer with the Harbormaster's approval.

(b) Revising the Harbor rules to require that berth sublets and sublet revenues be managed by the Harbor. The Marina Yacht Harbor has not implemented this recommendation, and consequently, neither manages berth sublets nor receives revenue from sublets.

(c) Applying for a permit from the San Francisco Bay Conservation and Development Commission to allow live-aboard boats at the Harbor in its current state. The Marina Yacht Harbor has not yet implemented this recommendation.

(d) Enforcing the rule that requires tenants to use their boats regularly. According to the Harbormaster, this rule has not been consistently enforced. Harbor management could enforce this controller's recommendation by implementing an electronic key card system, standard at most Marinas, through which management could analyze boat usage. Infrequent usage or nonexistent usage would indicate nonoperational boats. Additionally, Management could analyze boat usage in conjunction with balances past due to identify derelict boats or identify berthers living aboard boats without paying a live-aboard fee.

Increase Harbor Revenues and Decrease Costs at the Harbor to Help Pay for its Renovation.

The Controller recommended several changes to the Marina Yacht Harbor's policies to increase revenues and decrease costs, providing more available funds to pay for Harbor renovation projects, including:

(a) Increasing average berth rental rates by up to 51 percent after harbor renovation. In July 2005, the Board of Supervisors approved annual increases to berth rental and other fees (File 05-0602) in FY 2005-2006 through FY 2009-2010.

(b) Using City security guards to patrol the harbor on night shifts rather than marina assistant managers to reduce salary costs. The Marina Yacht Harbor has eliminated a midnight to 8:00 a.m. assistant manager shift that was determined to be cost-ineffective and has an informal agreement with the Park Patrol to patrol the park every two to three hours.

(c) Establishing procedures to ensure that the Department promptly deposits with its commercial bank all cash collections from the Harbor to avoid loss of interest earnings. Although the Marina Yacht Harbor has implemented cash reconciliation and daily cash receipts procedures, these procedures do not detail procedures for the promptness of cash deposits.

(d) Negotiating rent increases with the St. Francis Yacht Club comparable to the rent paid by the Golden Gate Yacht Club. The Board of Supervisors approved a new lease agreement between the Recreation and Park Department and the St. Francis Yacht Club in November 2006 (File 06-1351) setting base rent at $200,134 annually and a one-time lump sum payment of $1.2 million.

Improvement of the Harbor's Management Controls

The Controller recommended that the Harbor develop a mission statement, goals, objectives, and performance measures for the Harbor, but the Marina Yacht Harbor has not yet done this. The Controller also recommended that the Harbor develop a policies and procedures manual to aid staff in performing their duties and assist management in evaluating whether staff is performing their duties adequately. Although the Marina Yacht Harbor has implemented some policies and procedures for specific tasks such as equipment checks, there is no comprehensive set of policies. Recently, management has begun to assess staff performance by taking into account a (1) log of completed work with time schedules; and (2) pending tasks. According to the Marina Yacht Harbor management, the primary goal from gathering this information is to be able to assign resources more effectively.