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Good Morning. This is a special board meeting. Today's date is Wednesday,
June 12th. The time is 8:15 A.M. And, it's a special meeting in
regards to our audit, and some other unfinished business, and I'd like to call that meeting to order.
Opening session, we have Mr. David Spara, of the Toski & Co., who is going to
present the audits, and also present to you, Wade...wherever...where do you want to take from here. Thank you,
at this point, it's appropriate, we'll turn in over to Mr. David Spara, from the top. David? Thank you very much.
Since I've already been named twice, I don't have to introduce myself, I guess. (laughter) But, what I will do is, I'll take this opportunity to
hand out some business cards. The reason being, is that if anybody has any questions that come up,
after this meeting is concluded, all my contact information is on here. Please feel free to
utilize it. And, that includes not only the board memebers, but also the staff.
And, I've got to make sure I've got one to give here to Fred. Thank you. Because I cannot run out, before I get there.
And, incredibly, I'm going to come a card short. No, here, thank you. I'm not? Perfect, I have the exact number of cards
that I need, then. And, we are all set. What you have before you are
5 separate reports. There are 2 reports to the board. The reason
there are 2, is because 1 is for the border station, and 1 is for the bridge and port authority.
You have 1 management letter, and we issue a single one because, the process and procedures that are in place,
are really, the same for both organizations, so, issuing a
separate management letter on the border station, and the port authority would be redundant. And, you also have
two financial statements. One, the bridge and the port, and the other on the
border station. And...(interrupts): Excuse me, let me interrupt, so that people can preface...what's happening
in this process. We met last evening for about two and a half hours. And, that was an
informal session. Actually, from wherever everyone's stands, was the Finance Committee, which...(unintelligible)...for myself.
So, this is...the discussion that we had, is also...be included with 2 and a half hours of
review, and questions, and comments. So, the formal part...is...there's a lot of other questions
been answered, that probably won't be covered in this meeting. But, I think... at least let the public know, that's exactly what
our process was, and what happened. Sorry about that, I could've said that first, but, go ahead, I'm sorry. Fine.
What I'm going to do is, I'm going to address the reports in essentially the same fashion I did last evening.
And, I'm going to direct your attention to the first report, which is the single page report. This is a national letter,
and there is a single management letter comment. This comment relates to...
an internal control finding that we had, with regard to the timeliness in the preparation of
bank reconciliations. We discussed this a little bit last evening. And, there were some staffing issues that occurred,
because of the lack of personal and manpower, or womanpower, as the case may be.
These were uncompleted for a period of time. They were caught up in a block near the end of the year.
The issue is not so much that they weren't done at all, as much as the timeliness with regards to that.
And, that is the extent of that, and I would assume that now there are sufficient...
personnel on board, to handle the administrative tasks, that that won't be a repeat finding until next year.
Next thing I'm going to direct your attention to, are the two small reports.
They are both labeled, "Reports to the Board". And, I'm going to address them together, because again,
a lot of the similarity...similar topics are covered under both of these
reports. Our profession has determined that it's critical that we
convey to boards of directors, and boards of governance, and people who are not the...
operating management of an organization, that we convey to them certain information. And, this document is the
formal...presentation of that information. And, it typically contains anywhere
from nine, to eleven points... of information that the professional
feels that we need to be sure that you understand, and that we
need to make sure that we have conveyed to you. And, I'm going to do them
both together, because the issues that they address are similar, the issues as related to the two entities are very...
very, very, very close. And, what it comes down to is...were there any significant audit
findings in the qualitative aspects of the accounting issues, with regards to the organization. What this really
talks about is, how you keep your records, and the accounting policies and procedures that you have, in place.
You are a public authority, and a not-for-profit that, because of the...
component unit nature of the border station, is now following governmental
accounting standards. Without getting into how
those standards are set, and whatnot, the purpose of this particular paragraph is to just state that
those are the standards that you are following, and identify any changes that took place. There were some significant changes
that did occur in the government accounting standards setting body, this past year. And, they're enumerated here.
They issued statement 62, 65, and 63, and several others that are not pertinent
to you. But, those three certainly did have an impact on you. Particularly
63, and 65, which changed not only the format of the presentation of your financial statements,
by removing the terminology of net assets. But, it also changed the
some of the content of them, because the...bond issuance costs that were
heretofore reported as an asset of the border station, and being amortized over the period
of the redemption of the bond issue. The GASB has determined that those are really
period expenses, and should not be capatalized and amortized. So, there was a write-off
on a part of the period adjustment, as a result of that particular financial statement. And, you'll see that in the financials, when I get to that point.
Second item here, is difficulty
that were encountered. And, quite frankly, there were none. And, I have digress, just up to the
paragraph immediately above that. It talks about certain sensitive disclosures. There are several.
One is estimates. Appreciations and estimate, I spent a great deal of time last evening discussing
the value of the capital assets that the authority, and the station manage.
But, the fact that book value does not necessarily represent economic value,
and the fact that your financial statements are governed by the reporting guidelines, let's say,
historical costs, and you depreciate them. Those are the ground rules by which we must play, that's how your financial statements are prepared.
There is a...a disclosure with regard to your pensioning,
your post-employment benefits, which can be more significant, and less significant, than other entities,
based on the number of employees that they happen to have. The authority does not have huge obligations
in that capacity, because you manage capital assets, with a very small cognitive workplace.
So, your pension obligation, while it's still a quarter of a million dollars, it's a far cry from
the tens of millions that I see at a lot of other public entities. You do have a little bit of
litigation floating around, and that is predominantly all contained within the port, and the bridge,
and, that is disclosed in the notes. And, because it's litigation. It is a sensitive
area. And...it's just brought to your attention, that area there.
Page 2 of these documents looks very similar also. It talks about corrected, and uncorrected misstatements.
There were some terminal entries that were disclosed, during the course of the audit. Some that we came up with, some that...
part of the staff came up with, and collectively, they have all been made. So, the financial statements as you
see them right now, are fully adjusted. There's nothing floating around, there's nothing that has not been
booked that which we are aware of, which they have told us that they are aware of. We're happy to report that
there were no disagreements with management. There were no..."gee, we don't want to implement the standards, we don't agree with this
journal entry", there was none of that. Everything was very...I don't want to say cordial, but it was very appropriate.
Management representations, there is always, an issue
in connection with any large engagement, what's referred to as a management representation letter. That is going to be provided
to Fred, and he, and the executive officer will go ahead and sign it, that can be returned to us.
It's basically, and I've seen it as long as eight to ten pages,
and as short as two. So, depending upon the entity, it's like an accordion. But, the...
it contains a series of representations, that informate that management that support the
representations that management to us. So, when we asked Fred for his general ledger, he gave us the real
general ledger, and not one that he has, sort of keeps on the side. And, the fact that we...
were provided the real board minutes, and that the finance statements...there is no fraud
of which management is aware. And, there's a whole "laundry list" of representations that I convey, so that
we can come in on a very short window, into an organization,
be given the information that we need to do our job. And...
rely upon that information, so that we don't have to spend the whole year out here, which makes it very cost prohibitive kind of
an activity. Management's consultations with other independent accountants, we aren't aware of any,
with regard to any of your organizations, and if it were, this would be the place where it would be disclosed. So, if you were to say, want to have
a second opinion as to...to know if this is an appropriate standard of implement, we think that...
have somebody come in an evaluate the collectability of receivables, or something like that, this is where
that would be discussed. And, any other audit findings, and issues, and the answer is really no.
There were none that...occurred. And, that really covers both of these reports.
How are we doing, so far?
What you are left with now, are...the 2 bad reports, unfortunately.
And, I want to press the border station first, because there are couple things that occurred here, that area unique this year,
and I'm going to kind of move them a little quikly. The very first thing you're going to notice, is that, on the cover it says,
the border station is a component unit of the Ogdensburg Bridge and Port Authority.
It is disclosed that way over in the bridge and the port. But, it was not disclosed that way over here. This is something that's typically a government
accounting standard issue, we had disclosed that. And, it is disclosed right at the front of the financial statement.
I'm going to direct your attention realy quickly, to the table of contents. This is where the changes
that are...impacting your finances that would start to occur, as a result of the government standards.
And, what you have here is, the first one you see, that statement of net position. And, quite frankly,
in the profession, we would catch that. I'm sure that most everybody at this table probably read right over that.
But, "net position" is the new buzz word, that replaces "net assets", which heretofore is what you reported on your
balance sheet. And, now is referred, or your statement of financial net position, now is referred to a statement of net positions
that have been assets. The following 2 pages, and I've kind of gotten
myself out of sequence here, and I'll say this in regard to this document, and this also applies to the other one.
This financial statement, cover to cover, this is the representations of management. That's why you have to get a debt
management representation letter. There are only a couple of pages inside this document, that are not management.
And, that's pages, 1, 2, and 3, which happens to have our stationary on it; our letter head.
And, that is our opinion. While the financial statements are the representations of management,
the opinion on those financial statements are ours. It's essentially, at the end of the day, the only thing that you pay us
for, and the only thing that we really provide. That's what gives you the independent look at your financials,
and say, yes, we rely upon Fred and staff, to produce these documents, and we have somebody else come in
and take a look at them, and give them the "sniff test", and in fact, they present fairly, the financial
position, and results of operation. And, at the end of the day, that's what you want to hear.
And, this new format is referred to as the clarity standards, and at the very top of page 2,
actually, it's the first heading on page 2, you'll see the word "opinion" underlined,
and, that is now what's referred to as an unmodified opinion. It used to be a clean opinion,
or an unqualified opinion. The new terminology is, it is now "unmodified". And, it is
the same opinion in both the bridge and the port, as it is here, in the border station. And, that is
an unmodified opinion, these financial statements do present fairly, without qualifications,
the position, and the results of operation for the years ended, 2013, and 2012, for both organizations.
They are presented in performance with generally accepted accounting principles
for governments. And, there's some discussion of, in the paragraph immediately below that, which talks about the standards
that have changed, with regard to those principles, between last year, and this year.
Why? Accountants live and die, by consistency. We like to at it, and have
our financial statements be able to be the same this year, as they were last year. And, it would be really great if the numbers didn't
change, but they really do, every single year. But, the principles by which we assemble them, are things that we
don't like to change. So, when we do change them, and we're only change them, because we're told to change them, we always make sure
that that's disclosed. And, that's the purpose of this particular paragraph. There are some other paragraphs in here, that talk about
some supplementary information, again it's the same between both entities. There's some supplementary information
including both of them, and each has a report. This identifies as, in accordance with the government
auditing standards. It's a report on internal control, or financial reporting and compliance. It's the
very back of both reports. It is a clean report also, it says that there were no
major issues, there were some entries. One thing that you'll notice is, this report does
look a little bit different than it has in the past, because it does have these headings. This is the impact of the clarity standards.
For whatever reason, the profession determined that there was some confusion
with regard to everybody's roles, and they thought that cleaning up this presentation would
facilitate that level of communication. So, this now clearly identifies what's management's responsibilities,
which is, you are responsible for the financial statements. It is the second paragraph in this report.
And, then it identifies in the big paragraph, at the bottom of page 1, what we're responsible for. And, that is
the application of generally accepted auditing standards, and the expression of anything in it.
A change in the border station report from last year, this year is the presentation
of what's referred to as management discussion and analysis. M, D, & A, is the way we refer to it in the profession,
is a required component of any government financial statement. It is not a requirement of
a statement prepared in the performance of financial accounting standards. They're not applicable to governments.
This basically is a comparative analysis of this year's operations, and last years, and includes a little bit of narrative.
Because this is conversion year, the one for the border station is a little bit on the more primitive side.
It was not expanded greatly. This is an item, that again,
the first word here is in managements. This is the place where you can...expound
on the economic events that have occurred, where the organization is going, what occurred doing the course
of the year, that made your results different from the previous year. So, if things were good, you can talk about it here, if things were bad, you can
talk about that here, too. Once you've off of this M,D, & A pages, you are basically
locked into the boiler plate presentation that, GASB dictates, higher financial statement
numbers are presented. And, what the contents of the notes are, which has got to be...they have to be unambiguous,
and basically, pretty bland and straight forward. And, it all must reflect boiler plate. So, M, D, & A
is the place where you can expand on your operation a little bit. I'm going to
go ahead, and kind of skip through it, even though it really highlights the rest of the report,
and, get to page 6, which is the statement of net position,
between the 2 years. And, what you'll see here is that, the predominant asset that
the border station controls, which is similar to what the bridge and port had. It is to be the
capital assets, which is the buildings, and improvements. And, right there, where it says net property and equipment,
5.7...I'm sorry, 5.9 million dollars of your total 6.2 million dollars of
assets, are assets that you can only go ahead and manage. You can't
buy groceries with them, you can't pay your bills with them. It's the facility with which you are charged with controlling.
And the facility which in this instance, that you rent, and therefore generate your operating income from.
You have a modest amount of cash, about $350,000. And, beyond that,
it's a little bit of cash, and a lot of buildings. The...border station
also has a bond issue, which is about 3.4 million dollars,
and you've got $605,000 of which is currently due, and will be paid sometime in the course
of the 2013-24 fiscal year. 2.7 is long-term.
If you flip to page 7, what you'll see is, this is the
operating statement, it has a longer name, I'm just going leave it at the operating statement. This is, what really occurred during these 2 fiscal years.
And, you can see that your rental income is relatively consistent, it's up $90,000, on a
1.1 million dollar base. Your operating expenses are essentially the same number, within a few thousand dollars of each other.
There was some discussion last evening as to, the appreciation was the same number.
And, it will be until assets are either...new assets are capitalized, or old assets become fully depreciated.
That third line up from the bottom, says changes in economic principle. That is
the item that we discussed earlier. That is the old bond issuance costs going away. That's that
$173,000 that's over on the right hand side. Those are being amortized over the life of that
bond. They are now fully written off, because that's the way the government accounting standards wants them
according to GASB 65. It's a one-time change,
since they're off the balance sheet, there's no future amortization associated with them. They have just been expensed.
Your statement of cash flows is on page 8.
It essentially shows you where the money came from; where the money went. Essentially,
because of the nature of the operation, you operate in almost a near cash mode, as it is. Receivables are not a really complete component.
Payables are not a complete component, other than your bond issues. One thing that is interesting,
that this does disclose however, is the redemption of the bond. And, you can see that in 2013, there was
$575,000, in the middle of the page there. It was actually paid off with the principle on the debt.
The notes that are on page 9,
and run through at least page 14, the (unintelligible) rights, that are due, and it is, that's a good thing.
The...these are significant pages because, when you read
a financial statement, and prepare the components with (unintelligible), you need to go ahead and, I know what's behind some of the numbers.
This tells you the principles by which they were assembled. The definitions behind what's contained within the different captions.
And, any time you read a finance statement, it's always very helpful to read the notes. If you should have any questions,
that would be the first place to go. It talks about your changes in accounting principles,
it talks about the composition of the assets. It talks about the fact that the border station, unlike the
bridge and port files in 990, because you are an "Inc.", and therefore, have
a tax reporting status. Page...12,
discusses your cash with fiscal agent, as a function of the bond and debt that you have. There is an obligation
to maintain some money with M&T bank, as part of the covenants there. It is a disclosure relative to the
composition of you fixed assets. And, very importantly, on pages 13, quite honestly,
it's probably the most significant page of the notes. And, that relates to, what's going on with your
bond debt. And, what's the status of your lease agreement. Which are the two biggest
drivers of your cash flow. Where are you spending your money, and where are you getting your money from.
So, page 13, quite frankly, is a very significant page in this document.
Page 6 just discusses some of the related party transactions that occur between the port...between the border station and the
bridge and the port. And, that's all required disclosure. Then, for your last
2 pages, 15, and 16, are the...report for
GAGAS. This discusses internal control of financial reporting. And, it does not
identify any significant deficiencies, which is a good thank. There, he talks about, a little bit about compliance,
and other matters. So, with regard to grant administration, compliance with laws, contracts stuff of that nature.
We are not expressing an opinion that, but anything that we looked at, did not disclose any
violations with regard to that. The profession should provide what's called negative assurance there,
this is how we express that today. Everything we looked at, was not in violation of those items. And, then it
talks about the purpose of this report. And, that gets us to the end of the border station.
The question I have, and it's kind of like a whole picture of management fees.
And, how we show management fees, and like...or how do you come up with the management fees?
For the airport, versus here at the border station, or whatever. And, I don't know how that works.
The percentages of what your time is? Maybe Fred, or Wade can explain
it to me, that part of it. You're asking about the wage allocation between the...(interrupts): Yes. Yeah. I mean, expenses, or
fees, or things that we come up with? I mean, how do I know, that we spent...(interrupts): I think they're two different things,
Sam. Yeah, I know that. There is, with the border station, a management fee, that is
a standard amount that we...it's the same all the time. Right.
The other part of the question is, how do we allocate our costs? We make an estimate as to the amount of time
that each of the management staff spends,
at each...activity. So, you know, maybe,
Wade, there's 5% airport, 20%...
...port, 20% at the industrial
park, and the rest at the bridge. So, that's an estimate that's made, and then we allocate
Is that a constant thing? We look at it each and every year. It changes. (cross talk - unintelligible) Okay, so you're
assessing that type of those numbers that way. Right. You see the output of that process, in the...
it's in one of the budget schedules that we look at, whenever we do the budget report. Okay. Now, it brings me to the question, for David,
you said, maybe I misunderstood this, this border station is now blended into our whole overall picture.
Correct. Well, how does that work with the management, I know the management fees, in how we
categorize our expenses. How do we do that? Do we do that
differently? The border station itself, does have a
and as disclosed on...page 7,
there is a $329,000 management
fee expense, here. That management fee expense that's reported here in the border station, is really not
so much a cost allocation model, as much as it is a...contractual
obligation, as a result of the borrowing, and the lease agreement that the border station has,
with regard to the debt, and the operating lease that it runs under. And, the terms of that lease,
or the terms of those agreements dictate, that whatever the...
you have rental income of 1.1 million, 1.2 million dollars. And, the vast majority that's
associated with a specific lease. And, the terms of the lease and the bond
agreement are such that it states that, the difference between that rental income from that lease,
and the cost of carrying the debt, or servicing the debt, which is both principle, and interest, is
payable to the bridge and port authority, in the form of a management fee. And, what that really
essentially saying is, the excess cash flow, that the lease generates, is pushed over into the
bridge and the port, to provide cash flow, for the bridge and port authority operations. And, there is a schedule on...
page...the last note, on the debt-related party transaction, under item
number 6, where it actually discusses the, the computation of how that management
fee is calculated. And, it shows the annual lease payment,
and the annual bond payment, which is inclusive both of principle and interest. And, that's how the management fee, and the
border station's calculated. And, this fee expense over here, is fee income,
over on the bridge. Wow! (chuckles)
Now...that being
said, can we get this report next year, in the same format?
You'll look at separate still, the Border Station, and still have it's own identity? Correct. Okay, so it's
still look at the Ogdensburg, and it's a blend of...The Border Station is a separate legal entity that was formed
and I can't remember the year off the top of my head, it's in the notes here. It's really not that important for this question here,
but, it's a separate legal entity, that was formed to handle a specific activity, on behalf of the bridge authority.
And, as such, it services only the bridge, it is governed by the...
this body here. And, it's managed by this administrative staff there.
So, it is what...it satisfies the criteria of what's defined in the government accounting standards to be a component unit.
And, when we take a look at the bridge financial statement here...
the Border Station is...it's a (cough - unintelligible) component, it's pushed right into the numbers.
It's transparent. It's part and parcel of this entity, but it is it's own legal entity, so it has it's
own separate financial statement. Okay. A lot of that came because of the bonding. Yes.
That's the issue of the bonding. (cross talk - unintelligible) Once that's all satisfied, eventually the Border Station can become
part of the bridge and port authority. It won't be a separate unit at that time. Well, the entity itself,
would need to be...there was a separate corporation of this bond, called the Ogdensburg Bridge Station, Inc.
And, even once that is paid off, that entity
continues to exist, unless by operation of law, in the formation agreements, it would be dissolved...
and then, what would happen is, those assets would go up into the bridge, and the port. Right.
It would become a bridge and port authority asset, at that time. But, that's...that's down the road. That's 2018,
when the debt's paid off, before that can possibly occur. The one thing I wanted to bring up, and what Sam was talking about, and what you folks
were talking about over there, is your time, and your charge. I thought you heard...
you say you do it on a yearly basis. (Yes.) But, there has to be a monthly log, on what it comes to
at the end of the year, right? We don't do it to the exact...it's not an exact science.
If my time is 10% airport, it could be 8, it could be 12, it could be...
we attend, because it is an estimate. It seems like the supporting evidence would be the reports that you give us
each month, anyway. Where, Wade says, "I did this", and you say, "I did", and John, and so forth.
That's the supporting evidence for...and it wouldn't be exact. But, it would be...give you some reason why
you said 8, or 12, or whatever. Right. And, each month, or each pay period...
...our time, our pay...is charged
to a certain...to a certain unit. So, I don't know, and I can't remember. But, John
may be charged to the port. Wade may be charged to the bridge. And, at the end, we true that up with those percentages.
At the end of the year. We don't...do it every two weeks, we don't...
but with your percentage, and your percentage, and divide my wages 4 ways, we put all of mine
I think, in the bridge. And, maybe all Steve's in the port.
And then, we true it up at the end of the year. My question, again,
was, you have supporting documents to that? Yes, absolutely. I mean, you just don't come up with a number at the end of the year, right? No, no.
That's all I'm saying. And, plus, we look ahead to, like the year we had the bridge project, we knew that it would take more time to do the bridge project.
So, the percent of allocation changed during that year. And, some of that was reimbursable.
Yes. So...you know...well, okay. You understand what I'm saying? Yes. Absolutely.
The only question I have [in] regards to...Border Station...
the assets, or cash flow...in that account, can that be used anywhere else? Or, is that just totally
just...specifically to be used for the Border Station. Let's say I've got a half a million dollars,
I made a half a million dollars...I'm just using a fictitious number here. Can I use that cash anywhere else...
at the port authority? Or, does it have to be just used for the Border Station?
I don't know if I asked the question correctly. Yeah. I know what you're saying.
I mean, I've got a half a million dollars, and say I've got this account over here, can I...(cough - unintelligible) I need some money for the airport. Can I...can I go into that
fund? The Border Station is kind of the...does not
offer you the out. Okay, and the reason I say this [is] because, the Border Station cash flow
is essentially 100% locked up, and...it gets...
well, it gets its cash flow from the lease it has. And then, by contract, what it does, it can only pay
the debt, which takes about 75 cents on the dollar, right now, of what the total cash flow is that it generates.
And then, be contract, or by the agreements, that residual cash flow was transferred over
to the organization that operates it, which happens to be the bridge. Okay...what the bridge then
does, now the bridge is the cash. Now the bridge has that cash. Okay, how the bridge manages it's
cash, is really the question that you're driving at. And, as we talk about the
bridge financial statements, what you're going to, what this is going to disclose is,
under one of the notes, I forget the note numbers near the end here, talks about the fact that, cumulative to date, there has been
roughly 10 million dollars and change, of cash flow that the bridge has generated, that has been
pushed over, and provided to the port, for all of the court activities. And, whether we call it the airport,
or whether we call it the terminal, or whether call it the industrial park, it's been pushed over into that pot,
and used by the port, to meet its contractual obligations.
And...as we discussed last evening, from an operational standpoint,
there is cash flow, once you look at the net of the financial statement, because of the significance
of depreciation. The expense is really...expense associated with this depreciation really kind of skews this.
Okay? Because, you've managed a hundred million dollars of capital assets, from the port.
And, your depreciation is a big number. The upside to that is, you don't have to write a check for that.
The only person's due to write any check for that, is essentially the Border Station. There's some minor cash flow
that comes out of the bridge and the port, for servicing some New York State debt. But, that's only a couple hundred
thousand dollars, compared to about three quarters of a million for the Border Station. Thanks for that.
Which was an excellent segue, by the way, to the
last document that we have to discuss here, which is the bridge and port authority. And, I did this
presentation in a sequence on purpose, because, this is kind of building, and a lot of what I discussed in the Border Station actually flows through, so can kind of
skip over some things now. Under the Table of Contents for the bridge and the port, what you're going to see is, there are some
additional items here, that are not pertinent to the Border Station. Those include...the schedule
one, and two, which identifies bridge and port activities. Plus, some required supplementary information for the other post-employment
benefits. Since there's no employees in the Border Station, there's no ERS obligation, there's no post-employment benefit
obligations. All your people costs is contained in the bridge and port. The very last item on this table of contents also is
pertinent only to the authority. And, that is the independent accountant's report, relative to compliance on the investment
program. Why? Because you are a public authority, and you're subject the public authority laws.
The Ogdensburg Bridge Border Station is not a public authority, so it's not pertinent to them.
The opinion on the next pages, the same clarity standards apply, it has the same opinion.
We did, however, change the name, because the name is different here, so now we're talking about the bridge and the port authority. But, the opinion is the same.
And, that's still an unmodified opinion, under the new clarity standards, and it does discuss the fact that this is
in conformance with the accounting principles in the United States of America.
There are (unintelligible) out there now, which we aren't even going to go there. The other disclosures are identical, we've got the
disclosure with regards to the GASB, we've got the required supplementary information, the other reports are applicable here. The very last
paragraph here, talks about the top of page 3, addresses the fact that we issued that investment report.
M, D, and A, for the bridge and the port, is contained on pages 4 to 11.
Or, 4 to 10, I'm sorry. It's far more robust than the M, D, and A
associated with the...Border Station.
That's because there's a lot more going on here, in the bridge and the port, than there is
in the Border Station. You've got about 75 million dollar's worth of assets that you're managing. And, there's a little narrative in here,
which discusses each of the profit centers. The port, the railroad, the airport,
the commerce park. Page 7 is the thing that I particularly care for, that I like to see...
in the M, D, and A, which is the outlook. Can I interrupt you for just a quick second? Certainly. Based on..
the new treatment of the Border Station, should we also have a separate one here regarding strictly Border Station?
Would that be under the port? The Border Station is been historically rolled in here. Okay. So, just leave it under the port? We certainly
could go ahead and stick it in here. Okay. And, again, this is one of the things that's nice
about M, D, and A, or management, discussion, analysis, is that it is unaudited. You can essentially say whatever you like
in here. And, the only thing that we do at the M, D, and A, is to make sure that the numbers tie, and that there's nothing that's factually inaccurate.
Like...the cost of living went down 45% last year. (chuckles) We would attach that. (laughter)
But, we do check it for factual accuracy. But, beyond that, you are basically
entitled to wordsmith to your heart's content. So, if you'd like to talk about that, absolutely.
What I like is the...and, as I started to say, is on page 7, talks about the outlook.
This is where a board can put its best foot forward, to say the good things that is accomplishing.
This is a great PR tool, and if you want, go ahead put something like that in your finance statement, this is the place
to stick it in. As I said last evening...this is management, discussion, and analysis.
You people are way more familiar with your operation than your external auditors could ever possibly to be.
So, it's really best when management prepares this, because you know your operation so well.
And, where it is, where it's going, and how adaptable it is. The rest of this is comparative
financial information, and again, I'm going to talk about it here, only because...this way I'm going to
skip some of the stuff when I get to the financial statements. I'm on page 8, that talks about your
assets. And, not surprisingly, as I said before, you have very limited current assets.
Currents assets are your cash and receivables. What you manage is a significant capital asset. And, that's that 70 million dollar
capital asset, which is the bridge, and the buildings, and the port, and everything else that you have over here, and the airport. Your liabilities
again, are not significant. You have a total of 24 million dollars, and...
1.5 million is current. That 1.5 million is a little bit of debt to the State of New York.
And, this is also, because of the...because the Border Station is a component
of this entity, the current portion of the Border Station debt is also reflected there.
So, all of that $600,000 worth of bond principles that's due in 2013-14, is included in that
1.5 million dollars. Okay? I think the question I asked last night was...
the asset value of the bridge and all those type of things...
where do you get that number? I mean, the replacement value, the value of it,
economically for the area...that number is really probably...I guess the best way to put it,
if we have to pay that for 66 million, what is the value of that bridge? How do you really come up with that calculated number...
that that's what it's worth? And, maybe you can explain that a little different, how you came about it?
I would explain it by directing your attention to page 9. (laughter) Because, page 9 states it
very succinctly. And, if you look right there in the middle of the page, under capital assets, it says: original cost.
Cost is the basis under which assets are valued in financial statements prepared according to governmental
accounting standards. There are financial statements that can be prepared in other phases of accounting. If you were in
liquidation mode. And, there are, as we discussed last evening, there are alternate mechanisms to value
virtually any capital asset. You can take a look at its alternative uses, it's best use,
it's discounted cash flows. There's a whole laundry list of mechanisms that you can use to value a fixed asset.
And, because of the variety of them, and the need to be
able to produce a financial statement for your entity, and another entity, and evaluate them
on some sort of concurring basis, they said we need to come with a single method for typical
financial statements to present them. And, that basis was cost. It is not necessarily any
indication as to market value. Nor, does it represent itself to the representative
of market values. It's really, this is what you spent for it, and... the use of estimates
in preparing a financial statement is an integral part of it. And, the fact that you buy an asset, whether it's a
bridge, or a car, that asset only has what's referred to as a "useful life", and whether it's
50, or 100 years, or 3 to 5 years, that's dependent upon the nature of the asset. And, even at that,
it's merely an estimate. You put a lot of miles on your car, and you're going to burn it up in 3 years,
If you happen to leave parked in your garage most days, it'll last you 10 to 15. But, you're still going to write it off over some (unintelligible) period
it's probably going to be by. Okay? So, it is cost.
Page 9 talks about...and I'm going to direct your attention to the top
table on page 5, where we talked about your...the change in the net position,
of the entity for the year. And, while the change for the year was $180,000, which is about the fourth, or fifth number down,
on the 2013 column. I want to direct your attention again, over to the 2012 column, 2 lines down from there
where it discloses again, that $173,000. As we talked about before, the bridge is,
the Border Station is rolled into these financial statements. That number is going to look exactly like the number that's over in the Border Station.
Because, it is the number from the Border Station. That entity is just rolled into these financial statements. And, that was the
only change that occurred, by the way. There was no bond issuance cost, or debt issuance cost contained
in the bridge or the port. It was only contained in the Border Station. You did take in $180,000, or realize
$180,000 within net profit, or change in net position to a positive last year. And, that drove you up
to about 49, just a little over 49...almost 49 and a half million dollars, just short of that.
The long-term debt is disclosed at the bottom. I'm going to skip over the capital assets, because I just did discuss those.
And again, most of your debt is tied up with the advances to the State of New York,
at 3.3 million dollars in bond. It is all the Border Station, and as I said, about 600,000 is due next year.
That debt, by the way, runs out in 2018, it will just be a little bit later. Page 10, is the
page that Fred probably doesn't care for, because that means if anybody has any questions, they're just going to go ahead and write him a letter, and ask him, and he'd have to respond to that.
(chuckles) Once you get past that point, it is the "nuts and bolts" of the
financial statement, and that's pages 11 to 16. These are your statements of net position, your statement of
changes in net position, and your statements of cash flows. This presents... separately, and rolled up, both the
bridge, and the port. The information here is not as summarized as it was in the M, D, and A. So, if you have any specific
items that you're looking at, this is the place to take a look at it. You can see the interfund loan, on page 11,
that ten and an half million dollars, that you receive on a part of the bridge. The likelihood is that they are not
going to collect that. And, it's a payable on a part of the port, and the likelihood is that they're never going to
cut a check for it, either. I just want to talk about that for just a minute. Certainly. To make sure that we have a proper understanding of this.
Since the beginning of time, this is the amount of money that the bridge has...subsidized to port. Correct.
...I've got to modify it just a little bit. And, the reason I have to modify it, is because
there is a note that discusses that, at the end of the financial statements, which we aren't going to get to right away, but we'll touch on it very, very briefly.
later on. And, what it says, is that...while that is the amount of the debt that's been quantified between
the two entities, not all the costs associated with the port, have necessarily been reported
to the port; allocated to the port. So, the likelihood is that number is understated.
How much it's been understated, I couldn't tell you. I couldn't tell you if it's
$500,000, or another 10 million dollars. All I can tell you is that, because the forms that allocated certain
expenses, which are shared between the two entities, and as we discussed earlier, it's an estimated model that's used for the allocation.
It could be high, it could be low. But, since it's basically "the left pocket, and the right pocket", it really does not make a significant
difference, other than the fact that you do report them separately. Okay?
Page 12, talks about what you owe. And there are a couple items
on here, that are kind of important, maybe more or less. Obviously, the debt is all disclosed here, in detail. Particularly the
long-term stuff. But, the post-employment benefit obligations, which I do like to talk about at most of these presentations,
it's roughly $250,000. It's right in the middle of the page, third item down, under the non-current liabilities.
That represents the estimate that has been recorded on the books, of the health insurance commitment that the
authority has made to its employees, to provide them health insurance, once they are retired.
That's how much you've picked up so far, as a liability. There was a provision that you could amortize that
liability onto your books over a period of time, and at this point you've picked up a quarter of a million dollars.
There's something just slightly in excess of $900.000 as the total estimate that's out there.
Let me ask the question, now...when you say the...
it is in this report... where the amount of money that...the port is making?
Or, is the bridge subsidized in the port? Or, is the port subsidized in the bridge? How do you come up with those numbers?
How do we come up with the numbers?...I'm going to have to ask you
flip to the next page, because the next pages are statement of changes. That's your income statement, or your operating statement.
And, this shows where the money came from, and where the money went, okay? From a profit, and loss standpoint.
And, when you flip to page 13, what you will see, is that...the bridge had roughly
3.9 million dollars of income. Two and a half million dollars in the form of tolls, and another 1.5 million
dollars in the form of rent. That income stream was directly attributable to assets, because
you are an asset-driven entity. That income stream is directly attributable to assets that the bridge
maintains, and is responsible for. The port, on the flip side, has its own capital-
related facilities that it manages. And, it generated rental income on those, and it generated a significant amount
of money in port operating fees. And, the port operating fees, if you take a look over on that line, to the far side,
you'll see that in 2012, it was only a little over a half a million dollars. Last year, those port operating fees were almost 2.3 million dollars.
A tremendous amount of it related to those wind turbines, although that's dated 2008, but is was related to
the wind turbine farm... moving of those capital assets.
Correspondingly, now this is kind of where it gets down to the question that has been bounced here. Once you get down to the operating expenses,
then it becomes, the subjectivity for parts then. The revenue stream is pretty clear. Because, the revenue
is derived from assets that those entities manage. Once you're into the expense stream, your expense stream consists of basically...
two types of items. One are charges, that are directly chargeable to the
activity, based on the fact that (i.e.) "this pencil" is specifically used in
the bridge fund. That dirt is specifically used at the industrial park. That fuel is
specifically used at the airport. But, once you get down to your people costs, and certain other costs,
those are allocated. And, then it comes down to...the model by which those costs are distributed between the
two profit centers. And, for purposes of this presentation, on this specific page, there are only two entities that are involved.
We have the bridge, and we have the port. And, within the port, it doesn't make a difference if it's at the airport, industrial park, or whatever.
You've got the bridge, and all of the port together. Now, there's a schedule in the back, that talks about the port by the different centers.
But, at the end of the day, it's still part of, either the bridge, or the port.
And, as long as the distributions there makes some sense, then these numbers
make some sense. And, as the note discloses, and it is in the back of the statements,
and I'm not going to have you flipping around, because I hate when people do that, but as the note does disclose, that allocation,
because it is subjective, and because the port has not been able to fulfill its
cash flow obligation, has had to lean on the bridge to support its cash flow, the model is
probably historically not been such, as to all of the costs to the port. Because, if you move all the
costs to the port, the only thing that's going to happen is the bridge is going to have move more money to the port, to cover those costs.
So, you could tweak that model, but it's not going to necessarily change the
outcome between...that's basically, it will have zero impact, on the bridge, and the port authority.
It would only have an impact on the distribution of those costs in between. Your 2013 total column, is going to look exactly
the same, once you add the two entities, regardless of where you buried that number. And, when you take
a look at the 2013 column, and the aggregate. That's the total pot of assets that you are both receiving...
and, what you are doing to spend those assets. And, you can see right now, the biggest expense...three big expense items,
you have your people costs, which is personal services, and fringe benefits. And, you have your depreciation.
Which is not a cash item. And, that depreciation expense specifically follows the assets that each of these entities
And...and important one, quite frankly, those people costs,
you have that...the "lion's share" of that was the pickup between 2013,
and 2012, was really the costs associated with the stevedores, associated with the wind farm, which is currently the port fund
activity anyhow. The rest is the...the administrative cost, which is subject to the allocation. But those longshoremen costs
was all built into a contract that we had. Correct. And, that's why the revenue stream, which is also included here, is also attributable
to the port fund. My question's backing up a little bit on...just for a minute, because I want to follow this.
Because I've been very interested in this, and other organizations. It looks like...like you said,
there's 10 million dollars, and, say that the port, we've subsidized it, or loaned it money,
or grant money, whatever. You say it may never come due, either way. But, if the port was to
take off, in the next 5 years, and start making a tremendous amount of revenue, then I think that...
that revenue, some of it should be paid back to the entity that made them viable, to stay in there, to pay back
that debt. How does that work? Well, the...(interrupts): Because everybody thinks grant money is free.
I just want to make sure we get this clear. The...let's go down
the path that you're taking us here, for a second. Right now, there exists a 10 million dollar obligation, and it is an
obligation, that is sustainable, and supportable, on the part of the port authority, owed to the bridge.
The port authority, the port fund, starts to generate a lot of income.
and it doesn't make a difference from where. Whether it's the airport, the industrial park, doesn't matter, any one of its functions. That does not
make the 10 million dollars go away. What that does, is that gives the port fund the ability to repay some of that 10 million dollars
back to the bridge. So...that...fund will have cash,
which has...historically been, 10 million dollars in the direction of going from the bridge to the port,
can in fact, come back the other way. There's nothing that's saying that it has to. That's entirely up to
the board to say, gee, we've got all this money in the port fund now, maybe it's time to expand the port
fund facilities. And, instead of repaying the 10 million dollars back to the bridge fund, there is a decision made
that you're going to acquire more facilities to do whatever.
That's a board decision to follow through on that. Or, you could move it back to the bridge fund, and there's 10 million dollars to go ahead
and do part of your 60 million dollar paint job. Yeah, there you go! (laughter) That's what I wanted to hear.
But, that's just cash flow. I understand that. Okay. Thank you very much. Okay.
Speaking of cash flow, that is the next statement that we're going to get to.
That's on pages 15, and 16. And, this...again, much like the Border Station,
even though you manage a significant cash asset, a significant capital asset, the operating statement
outside of the depreciation is, very much a cash-type basis activity.
You don't carry huge receivables, and the debt that you do carry is generally fixed asset... a capital debt.
And, that is disclosed pretty...disclosed quite adequately, frankly, on page 15. And, you can see
the principle that was redeemed in 2013, was a total of $691,000
right smack in the middle page and column, in the 2013 column. And, about $300,000
of interest. You put into service about three and a half million dollars of capital assets, that's where your
cash flow went. While you generated 1.6 million dollars of operating cash flow between
these 2 entities, the bridge and the port, that showed up in cash flow provided by operating activities.
That's what did you take in, less what you pay out to your employees for operations.
You took in 1.6, you paid 3.6 out, in the form of
capital expenses. And, you did take in some...
there's some grant money that's included here, but, not significant.
Actually, it's down there, it's 1.7 million dollars. So, about half, of what you outlaid in capital assets,
was actually funded via grants.
Page 16, is a schedule that accountants put together.
Just so they can feel good about themselves, I think. The notes here are quite extensive.
And, I'm not going to go through them in a detailed fashion, because we do not want to have this
20 minute meeting...or presentation, be a 2 hour presentation, although it's a little longer than
I care for, right now. (chuckles) You have...your notes are on pages
17 to page 34, they are copious; they are detailed.
They talk about your accounting standards, and items that are in your fixed assets, and your cash assets. I'm going to touch on
two, or three of them, that's all. And, if you have any questions, I'd be glad to answer them, but, for my purposes, I just want to hit
on a few. Pages 24, and 25 are important.
They disclose the capital assets that are specifically identifiable to both the bridge,
and to the port. And, they show that you have roughly 100 million dollars,
just in excess of that, of capital assets that you happen to manage.
page 26 talks about, a little bit about the donated, that's historical stuff. But, it talks about your
construction in process, and there's a half a million dollars there. Some at the airport, some at the marine terminal.
The bottom of page 26, strikes at the heart
of the question that you had asked. And, that's this interfund loan, that's for 10 million bucks. And, what it really says,
that last sentence says, the actual amount of this interfund account has been under-stated, since not all overhead
and indirect costs incurred by the bridge fund, have been allocated to the port fund. That's over the course of
years. That's not just 2013. That's since the date of formation.
Page 9, talks about the line of credit that you have in place, and the long-term
debt that you have. Most of your long-term debt is with the State of New York, which right now, is a friendly lender. You also have a little bit of debt
outstanding on the...Border Station, which is about 3.9 million dollars.
The page...that note goes on, because the debt to New York State has got a wide variety of amendments to it.
I'm not going to get into them here, they have lots of nuances to them.
We're going to get over to page 11...I'm sorry, page 30, which is note number 11. And, it talks about
your pension plan. Wow! We jumped back fast! (laughter) Yeah, I try not to go backwards...(interrupts) You sound like me, Walter! (laughter) Yeah!
(laughter) I want to keep us moving in the same direction as the document here. This talks about your pension plan.
It's New York State Retirement System. And, what I'm going to direct your attention to, is actually on page 31, it's the first table.
And, just take a look at the change in the cash flow, that has been required to fund your pension
costs. 2 years ago, it was $163,000, now it's over a quarter of a million dollars. That's
a hundred thousand dollar pickup, in the last 2 years. While that's a crushing increase,
and it shows that you're not a very labor-intensive, at least not through the employees retirement system...funded workforce.
This is killing school districts, counties, cities, counties, towns, villages. If you're a big labor force,
an employer in an ERS system, this number's causing all kinds of grief. Your post-employment
benefits, other than pensions, this is what we affectionately refer to as full pen. (?) And, at the very bottom of page
31, talks about your $930,000 total obligation. That is...
right now, what the actuaries think your total exposure is, for those health insurance benefits for your retirees,
and your current workforce, once they retire. Because you were provided the opportunity to gradually write this on to
your books, right in the middle of the table on page 32, it talks about the $252,000
that you currently put up there. Roughly, a little bit less than a third, about 25%.
It goes on, to the bottom there, to talk about your operating leases, this is really the Border Station, the lease.
And, note 14, is contingent liabilities. This is all kinds of litigation that's disclosed
here, and...the authority...has got a little bit of it going on,
not a huge amount, but it has a number of cases, and, they are disclosed here. The larger ones
are disclosed, and the rest are kind of just...this is not an all-inclusive, these are just the ones that are large, and significant
enough to be specifically identified. And, I would assume that all of you are somewhat familiar the litigation
that is...currently before the board.
After that, we have a couple of schedules. The first one is just a presentation of the total columns of the operating statement,
therefore, I am not going to go ahead and go through that. Actually, the one at the front, actually has a little bit more detail.
Because, it discloses both the bridge, and the port, this is consolidated. Schedule 2 discusses...
the composition of just the port fund. And, if you go through that, these are - this is where your question is
really structured. This starts getting into some of that allocation item. How much time
was spent in each of the individual areas, is it appropriate, is it over-stated? It's really an estimate.
At the end of the day, this is all pushed over into the port fund, and...whether it should belong to the airport,
or the railroad, or the marine terminal, there are some records to support that distribution. Albeit, some of them
subjective. But, there are records to support that distribution.
And, at the end of the day, what this does disclose, is that in 2013,
on page 37, the 2013 column, you can see that the...
the total of the port generated a loss of some $282,000.
The marine terminal, which is really the product of the...
the windmill...stuff coming in, actually generated a very substantial profit last year. Which offsets some of the losses
of the other entities. But, in the aggregate, you're still down, 300 grand.
Page 38, is a required disclosure. It shows, how much of your old debt
obligation you have funded, the answer is none. You are not (unintelligible) there. You couldn't fund it if you wanted to, because there's no provision
in state law for you to do that. And, that brings me to the last 2 documents in here, which are ours.
One is the reported form for the GAGAS. Which, again, shows no issues with
regard to findings as far as your financial reporting is concerned. And, the last 2 pages of the report here, complies with
the investment guidelines that are put forth by a public authorities law. And, again, it shows no issues there.
I would say this,
I'm not sure what questions would have to be, but, I think as far as, I know we came...
the format came in a different way this year, because of...GASB, and how those things...
that came up. But, I'd like to recommend for next year, we do this the same way. Because it seems to me that...
you know...we focused on this audit...and all those type of things....how this year analytically
played itself out. So, sometimes we have these meetings, we come in for 20 minutes, and we've got other business items
and we're here for a long period of time. Not to say we're not focused on this, and take it serious, but it seems to me that
it's a main drive of what we did for the year, in sales type of things, and what we're doing
and how things are...our staff is working, and all those type of things. But, I appreciate the way you have taken your time,
it's like, instead of taking 20 minutes, and hour and a half, two and a half hours last night. We always see these numbers
in a way that you present them, in a different way, to understand exactly what was happening. So,
I recommend that we would do this same format again, next year. I don't know what it is to your cost, and time...
but, I much appreciate the way you did this. If anybody else have any comments or questions, go ahead. I just think
my personal point was... I want to say it the right way, but I enjoyed this session in a different way, to understand a lot of different things.
And, the type of things that...had the time to do the things, and questions that... are relevant to us, so we can do a better job of what we do.
I would say the same thing. And, I particularly enjoy the fact that,
I came today, and I, kind of understood what I thought I understood last night. So, that meeting was so
important. I'm not ready to take the test yet, Dave...(laughter)...but, I do understand many of the things.
And, although I don't want to steal anything from you, Sam, I think...for me to go to that meeting,
last night, and say the skill sets that Don Hooper brings to this board, in order to
...you know, as you saw the interactions between he and Dave, it's just amazing.
And, it helped us a lot, I think. His explanations, and Dave's explanations. So, I agree, I think
the process should be similar, in the same...as the meeting does set forth for us.
Let me ask the question...how hard would it be,
to get your written notes, like you've got them in here, prior to the full board meeting?
Because, there's a lot in here, that we didn't...that we haven't had the time to read, or look at, or anything else,
and then we're put in this room to...I don't have a problem with the way you're doing this.
I might go back here and read this, and you know, I don't like to have to call somebody to understand something. To me,
I like the way the format is here, but I'd like to be able to ask questions, when you're sitting there. Because, I'd want everybody to hear it.
You know, I like the mix, I like to have the...the discussion we had here was very good. I think you're one of the
finest people that we've had do this. For 28 minutes, it's well worth it. To me, as a board member
making policy here. Because I'm the guy that makes the policy. And, I want to make sure that your thing,
I understand it. So, you know, I've got to read all through this, which I will. If I have any questions, I'll call you.
The...timing, on the...I don't want to say the release of the
documents, because technically, they aren't released, this is still a draft, you typically try and get these out to the boards, so that the board has in
fact, had the chance to digest them prior to it. We were still receiving information as late as...
Fred probably knows better than I know, I want to say as late as Friday, for sure. Maybe even a little bit later than that. To go ahead and acutally
tweak these numbers, and get everything put together. And, what the underlying issues were
behind the timing, it's...a different situation altogether. But, the timing right now, has actually been brought forward
on one. You are subject to the authorities law, and you have a 90-day, after the end of the year filing requirement
to get this put up on the PARIS site. You have historically not made that, you wouldn't be able to make that this year.
If I get my rep letter, and this thing is accepted by the board, this thing will come back to you with a date, and signatures, and you can do your thing with it.
And, you will not be on the state's "hate list", for being late with your PARIS filings.
The...but typically, we do try and get these reports out to the board, and we try and coordinate that with the internal personnel
that we deal with. And... hopefully, next year we can work on the timing
a little bit better, so that you get what you need, to make this meeting; so that you can consider being in a more informed state,
as opposed to just being on the receiving end of a dissertation. Right. I think one thing that would help too, is if we separate
the...Audit Committee, time-wise, from the Board Meeting. So, that way, we could have some time
in between. Yeah. That way, it would allow the document to get to...out there
to the rest of the board members. One other thing that does too, is that also provides a little bit of time for dialogue amongst yourselves.
It gives a chance for the board members to read through this, and "play 20 questions" with the
Audit Committee...and say what this really means. So, it gives you a chance that you'll be more informed in the use of this document.
Well, one of the things about it, being informed, and reading it, and trying to discuss it, and stuff, is because I know with the ethic rules out there, and procedures.
Somebody would say, "well, how did you miss it? It was right in your report. It was on page such and such." That's all I'm saying.
So, you're right, we're heading in the right direction, next year, maybe we'll be there. Thank you, Mr. Chairman, I don't have anything else. We need a motion
to accept this report, I'd be proud to make it. Can I make a comment? Yes, sir. In answer to
Fred, we were "behind the 8 ball", as was noted in this. I just want to comment
here, we were behind...(interrupts): On the monthly?...(continues): On that, yeah, but we were behind on everything, not just the
bank reconciliation. We got...we will be in place, and I thank you for...
for helping me, and getting Karen on board, that will make all the difference in the world. Yeah, we could
have...put any date we wanted to on those entries...(unintelligible)...nobody made sure that we...
have the date on them that they were done, and they were signed on the date that they were done, knowing that, that was...
you know, that they should've been done when they came in. We wanted to make certain that...
the information that the auditors had was, not only accurate, but the timing on those was correct.
Because, you know, when you do something with a computer, and everything else, you could put any date on it that you want to put on it.
So, I thank you for...the help. We will get this right,
we will...we'll get this more timely, and we will get these done. But, between being a little behind, and moving it up a month,
it was extremely challenging. And...I'm...
thankful to Toski for their hard work, and getting this for us today. Thank you. I think one of the things that...
that you have a real appreciation for, is when you go through here, and all the numbers, and accounting, and where you configure it.
And...you put these numbers in place, in the right place, in the right way, you're going to have a real appreciation of work that people
have to do, in information type of reports. And, obviously, Dave, for your concise information, and the way
that you looked at this whole report, is much appreciated. Because, it's...we want to do it right. And, that's what
we would always have to do. Any other comments? I want to thank Dave. The last comment that I do want to make...
I would take out of last night's meeting, if there's a question, he's available, and wants to be called.
Because, it makes his job easier for the next report. So, that was quite an important message.
Excellent. I think it's one of our best reports, in the way it's been presented, for a long, long time.
Do we need to make any formal action to accept this report yet? Well, it's not in its final form, it needs to be in its
final form, at that point. (cross talk - unintelligible) We'll let them come back, and we just accept the report as presented at this point in time.
Is that right, though? Isn't that the purpose of the bench, that we accept this, and then it becomes?
Usually, yes. Because, if we've...especially, if we have issued the report
by our signature, and it's dated, it's out there. And, once it's out there, it's out there. Usually, what happens is,
it's accepted in a draft form, and virtually any public authority that I have worked with,
accepts that in draft. And, that is the date that you will see on the document, that will be the date that we'll include in the
client representation letter. And, all we do at that point in time, is turn it around, we pump out a pdf,
so that you can go ahead and start your filing process, and follow that up with hard copies, so that you can go ahead and give people paper, if they
want paper instead. So, we need to move this process. At this point in time, that would be...an official, the only thing we lack
at this point in time, is that I do have to get the management rep letter over to Fred. And, you print it on your stationary,
and sign it. Okay. I made the motion to accept the report. Yes. I'll second. As presented here today.
As presented here today. Do we have a second. I second. Second, any further comments, Doug, do you have any? No? Karen, any
comments? It's definitely different to be on this side. (laughter) I'm used to being on
Dave's side, so it's given me a different perspective. Excellent. Well, I'm glad you got to attend the meeting, to get you on board,
we'll start this process, and...you know, make everything work a little bit better. So, I appreciate it all the way around.
No one further comments, all in favor, signify by saying aye? Aye. Aye? Yeah. I made the motion, I would hope
it would be aye! You might've changed! (laughter) I didn't falter! You might've made me get it on the floor! (laughter) And, change your mind!
Okay. Thank you. Thank you very much, Dave. Thank you, much appreciated.
(closing incidental conversation)
I hope I see you next year. (incidental conversation - laughter) Have a safe trip.
(incidental conversation)
(incidental conversation)
(incidental conversation)
(incidental conversation)
Ready to go? Yeah.
Okay, we're still in session. Everybody, we're still in session, we're still on camera.
Let's take a 5 minute recess. I make a motion to recess for 5 minutes. Steve, yes? Doug? Second? Yes. All in favor say aye? Aye.
Let the record show, it's 9:40, we just
took a 5 minute recess, and we're reconvening after our audit report. We have some unfinished business.
Wade, do you want to take us through that, please? Sure. On page 2 of the special agenda,
there is approval of a lease supplement, with ara Shoes, at the rates, terms, and conditions you see before you.
Particularly of note, item 4, is the shoe company will provide proof of appropriate insurance to the authority.
...
Can you explain to me why there's a zero increase here?
The zero increase in the first year, is part of the negotiations to extend this to a multi-year contract.
What was it before? Year to year? Do you know the history on that, John?
I think the last time, it was...2 years. It might've been 4, with a 2 year out,
they had an option to get out after 2 years. But they didn't, they stayed. What is the reason for
a zero increase? To keep them there. (chuckles) It's a retention effort...
the board was looking to...move the operation to West Virginia. He was under a lot of pressure,
to...there's an employee down there, the state's been trying to recruit them. It's less expensive transportation
costs from there, to the west coast operations. So, their...
opinion really hasn't changed a lot, because I see they've got a lot of termination clauses in this agreement.
So, there really isn't anything...you know, bonding beyond 60 days
if they want to pay tomorrow, they leave, and this agreement leaves. No, no. They're obligated to 3 years.
The last time, they were obligated for 2 years. So, we have a solid contract through 3 years.
And...they didn't leave, during the last contract period.
I don't think I have any more questions.
Well, I kind of, I agree for myself...in percentage of our percentage
has been... I don't know, we have consumer price index, and what those expenses can be, or not be, those things
we can't predict. We've seen the price of oils, in a mess with that, over years. But, in regards to
having a...at least a 3 year, and a possible 5 year, I think that's...
tells us that they are committed to what they want to do, and be here with us, and I think that...should be noted, John, that that's
a good thing, in my guess, I think it's a good thing. And, obviously for reporting, and
in financial planning type of things...if we have empty space, it adds up to zero.
When you've got people in space, that adds up to the numbers that you're going to come up with. So, in keeping that space...
occupied, it's...over a long term, I think it's...I thank them for doing business with us.
And, I thank you, John, for at least negotiating that type of length of contract. I'd like to see more of those,
for myself, personally. Long-term investments in the area, and knowing they're going to stay here and work with us, I think that should be
noted also. Do we have a motion?
I'll move it. Doug. Second? I'll second. Further comments, discussions? I'll just...
point out that, the annual contract between sixty-one, and sixty-eight thousand dollars a year,
if they stay for all 5 years, it's $323,000 for the authority. They have 7 employees.
And, they also paid an additional $45,000 in rent, and utilities, over the course of the last year, in extra space that they rented.
Good contract. I know, Mr. Carter, I'll finish the comment part...is a very well
taken point, why the zero, it's a very good question. Why you offer somebody...rates...
when our costs went up? But, somewhere along the reward factor is, the fact that, we had somebody that's going to
stay at least 3 to 5 years, and...that's what you've got. I guess they call that negotiations. Okay.
No further comments? Call the roll? Well, not a roll, it's just All those in favor, signify by saying aye? Aye.
Agenda item A2, on page 4, is approval of a lease supplement with FedEx
Trading Networks. This is for a supplemental lease agreement with FedEx Trade Networks, at the rates, terms, and conditions
you see before you. This is for a 2 year agreement, with a 2 year renewal option. Of particular note,
are other conditions of the lease that you see bulleted there. Steve, the second bullet, the following improvement
will be made by the authority, at its sole cost? Do you have a number on what that is? All those items?
Yes. Steve gave it to me, and I have here, $1,180. Thank you. How much?
$1,180. Thank you. I've got a question here, on the negotiations,
and those type of things. I'll just say, I'm a client, and I'll just use some easy numbers here.
And, I come in, and I say, I need 1000 square foot. He's over there. Over here, this person
needs 10,000 square foot. Is the price, and the way you negotiate...I'm going to get a better
square foot deal, for 10,000 square foot, versus the 1000 square foot? Or, is it just subject to
what type of building is... that it has, or what...you know, the makeup of that particular building?
With all things being equal, all things being equal. Yeah, I would say it would be a lesser...a lesser...
(interrupts): He's going to take more space, he'll get a better square footage deal. (continues): Yeah. Okay. I just wondered.
Okay.
Just on this contract, it's...forty-one to forty-three thousand dollars a year, plus utilities, over...
a 4 year term. They do have an out after 2 years. Two 1-year renewal periods, if they
stay for the 4 years, it's $170,000. They improvements are $1,180,
or, .014% of our income. There's 10 full-time employees that work there. I'm sure there's a ton of truck traffic,
but, they don't have a card, so we can't determine. But...I would say the majority of trucks are for
FedEx trucks, that's Strader-Ferris or FedEx. In terms of what we rejected, they wanted
2 years, with no rate increase. They wanted $6,778 in brokers fees,
we told them no. They wanted carpet, tiles, and paint throughout, as selected by FedEx, we told them no.
They wanted new carpet tiles in the front office of the warehouse customer service area, we told them no. And, then they had some legal language, that...
...dealt with... disclosing things publicly, which we told them no on.
Going through the negotiations, FedEx was here with 10 top executives, from throughout
the Northeast, and toward...building #11, and also toward building #7, I guess it is, the privately-owned
one, they went through that building. There was a concern that they could...relocate their operations over into the other building.
And, overall, their general approach was that... having annual
increases at some point, you price yourself out of the market. And, that the market doesn't support
it, but we did get some increases. And, happy to have it retained at the time, those jobs staying here.
Do you see the increase, or decrease in our business with FedEx, due to the new location that they're building
in Watertown? Which is triple the size that they are in Watertown now. One is ground, and one is...there are 2 different
operations. And, they're trying to...so it shouldn't impact this operation here. Do we have both
here? No, we're just the...I'm not sure what it's all...(interrupts): Do we have ground here? I don't think so. No.
Just freight? Yeah. And, they have hired 1 employee to work in the Ottawa area,
to try and increase the business here. With the idea of growing, and expanding, but, that hasn't happened yet.
What can we do to help them with that process? Well, we've tried, we've made...
quite a few overtures to them, even with less expensive space, in 2, or 3 different buildings.
And, that's when those 10 executives came up, and...the buildings weren't ideal for what they wanted.
And, I don't think the business case was there, that's the issue. We're definitely helping them with...not increasing the rent,
that's definitely helped. Well, I'm not sure with the...the competitive rate in...
Ottawa, per square foot. We'll never know that. Well, I'm not sure about that.
I don't know. I mean, that's what you are. You are in competition with other markets, that have those type of buildings.
But, we are who we are. I mean, if you want to be here, because of our location, and bridge...
that's why they're here. When the negotiations take place for these...the whole management, I assume
because you kept saying we...that that means that the management team was apprised of these
decisions, and were well aware of what the negotiations were, and in agreement with it. Yeah.
That's what I thought. You know, somewhat an edge in perspective, I have a...
estimate of what our costs are going to do, based on what our CSEA contract is, and...what we
expect inflation to be, what it has been, what we expect to be, and so on. And, our costs are going up, a little over 3%,
each year, as we can see forward. So, when I see these zeros, you know, I wrinkle up my
nose, but looking at them also, of, if that...if the zero was in the column of amount per square foot,
because there was no one there, that's a significant...much more significant than
not getting quite enough, to cover those cost increases. So...based
on that, and the tough negotiations... I support that.
And, I did as well, to speak to the process standpoint, prior to anything coming here to the board, it has to have 4 management signatures on it.
Thank you. Just so you that you know my position...is...in my opinion, these are...
no different than a negotiations with CSEA, or anything else. And,
that, when the management team can say to me, "we feel very confident that we've looked at this, and this is
the best contract we could provide", then you have my support.
I think it's been duly discussed, and on the record,
why the numbers are where they are, in the ring of things, so let's make a motion to get it by. Okay. I'll make that motion.
Second. Second? All in favor signify by saying aye? Aye. We also have
other such matters, any other discussions, reports, anything you want to update us on, gentlemen? Procedurally,
for a Special Board Meeting, there are no other such matters, so there's nothing to update. I make a motion to close the Special Board Meeting.
I would like to point out that I have updated the bridge traffic. I don't think we can do that here. Well, it was before, I just wanted you to...
see it. Yeah. Thank you. Okay. So, we have a motion to adjourn, from Mr. Carter. Second. Second.
All those in favor, signify by saying aye? Aye. Shut 'er off, Patty! All right.