Financial mismanagement, public reproach and a lack of professional decorum among elected officials are the reasons the San Mateo County Civil Grand Jury recommended in a report released Wednesday the San Mateo County Harbor District be dissolved.
The civil grand jury report “What is the price of dysfunction?” alleges the special district, which operates on a $10 million budget and collects about half of its revenue from countywide property taxes, is mismanaged and its duties would be better served by the county and its Board of Supervisors.
Some district officials adamantly disagree with the jury’s findings they said were more sensationalist than factual and failed to mention some of the district’s significant responsibilities and accomplishments. Reaction from members of the Board of Commissioners varied, with some steadfast the district is doing fine and another saying three current commissioners should be voted out in the November election.
The district has a checkered history and has faced prior civil grand jury investigations and recommendations it be dissolved, said Dave Pine, president of the Board of Supervisors.
“I think it’s important to bring public attention to the fact that the Harbor District is dysfunctional at this time and something needs to change. I am certainly intrigued with the idea of dissolving the district,” Pine said. “While we’re well aware that the Harbor District is very much struggling today, it’s had a history of difficulties. … Which again, makes me think that it’ll be difficult for the district to right itself. If this were the first time we’d ever heard of these problems, I would have a different reaction.”
The district, established by the Board of Supervisors in 1933, owns and operates Pillar Point Harbor north of Half Moon Bay and has a joint powers agreement with the city of South San Francisco to run Oyster Point Marina. The district also collects revenue from commercial activities such as slip fees, fish buying fees and rent from its retail properties at Pillar Point Harbor.
The district came under scrutiny after a stack of uncashed rent checks surfaced, commissioners slinging insults in public forums, video recordings of meetings abruptly canceled and restarted and commercial fishing industry representatives claims they’re misrepresented.
“I’m cautiously optimistic that something good is going to come out of this,” said fisherman Geoff Bettencourt, vice president of the Half Moon Bay Seafood Marketing Association. “However, I have a lot of concerns that there’s been reports like this before and the district has managed to get away from answering to it.”
‘Room for improvement’
But the district is already working to improve through starting its strategic business plan on Thursday night and the five commissioners have been meeting with a facilitator, said Harbor District General Manager Peter Grenell.
“There’s always room for improvement and to that extent that strategic business plan process will enable us to make big strides in improving various things that will be very responsive to some of the concerns that some people may have just now. But our concern, bottom line with the grand jury report, it doesn’t provide an accurate picture of the harbor district,” Grenell said.
Grenell and commissioners Will Holsinger, Robert Bernardo and Pietro Parravano noted several issues weren’t given fair notation in the report and painted the district in an unfair light. The district is on its way to paying off a $20 million loan to the Division of Boating and Waterways early and neither the city of South San Francisco nor the division were requested to respond.
“I’m going to be focused on communication. … The people who lose out are the general public because they’re not going to understand the value of their public harbors and the important work that the harbor does,” Bernardo said.
The district oversees a variety of infrastructure and services from breakwater construction to an RV park. The jury recommends passing off some of its responsibilities such as turning over maintenance of the West Trail near Mavericks to the county Parks Department.
The district also sponsors and funds the dredging of Surfer’s Beach south of the harbor, which the report recommends the city of Half Moon Bay take over.
Grenell said at the time the district began these two operations, no other agency was willing to do so.
“The Harbor District over the years has been playing and continues to play a special if not unique role in that part of the coast,” Grenell said.
The Local Agency Formation Commission will consider conducting a municipal service review later in the year, said LAFCo Executive Director Martha Poyatos. The Board of Supervisors, any city, district or a majority of the voters can apply to have the district dissolved, Poyatos said. However, there would need to be willing successor agencies to take over the district’s roles, Poyatos said.
The district, the Board of Supervisors, LAFCo and Half Moon Bay have 90 days to respond to the grand jury report.
The report states the varied responsibilities of the district require the attention of more than part-time elected officials and, at minimum, the commissioners should acquire specialty training and learn to govern collegially.
At the release of the report, Nicole David and Tom Mattusch announced their candidacies for three Harbor Commission seats up for grab in November and Commissioner Sabrina Brennan said the surefire way for a better district is a new board. The three incumbents on the ballot are Bernardo, Holsinger and Jim Tucker.
“The fastest or quickest way to bring about change would be to elect new harbor commissioners in the November elections and obviously that means not supporting the incumbents,” Brennan said.
Holsinger said the dysfunction ties back to Brennan but that the board isn’t unique in having members who don’t get along.
“It’s sad to see the grand jury saying that because there is misbehavior by commissioners or differences in getting along that there’s reason to justify the dissolution, it shouldn’t follow. There’s good sound reasons why the district was formed.”
Parravano said the district needs to take the report seriously and move forward with any recommendations the district’s hired facilitator will make.
“I think we need to put the disagreements and the personalities aside and address the recommendations,” Parravano said. “We can do it, we just have to be working together.”
The grand jury investigation revealed that, over the last five fiscal years, the district’s operating expenses exceeded its revenue from fees or services by $18 million and is therefore dependent on property tax income.
Last year, district salaries and benefits made up 103 percent of its operating revenue and the structural deficit has led to an annual depletion of reserves, according to the report.
Grenell, Holsinger and Bernardo said the repayment of the loan wasn’t included in the report and has been an achievement during tough economic times. Holsinger noted the district has more than $40 million in assets and $11.5 million identified as reserves allocated for different purposes.
Supervisor Don Horsley said, although the district may have reserves, it needs a sustainable financial plan.
“The thing that appears to be missing is that they have some unfunded long-term liabilities both with pensions and with health care and their financial picture in their audit reports is inadequate without those unfunded liabilities,” Horsley said.
Brennan said she was particularly interested in the recommendations regarding the budget and the need for transparency by clarifying how tax money is being spent.
Because the district also supports a commercial fishing industry, the report recommends the district clearly separate what expenditures benefit private enterprises.
Bettencourt said he was taken aback by the notion of public money being spent on a private industry. He added the district has done little in the way of improving infrastructure just to the benefit of the commercial fishermen.
Pine said it’s important the public is aware of the district’s status and regardless if it’s dissolved, Harbor District staff and officials need to shape up.
“They need to do whatever they can to put all the bad history behind them and try to conduct the day-to-day duties of the Harbor District as professionally and competently as possible,” Pine said. “But that’s easier said than done.”
To review the civil grand jury’s report visit www.sanmateocourt.org/grandjury.
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