2026-10-09 - Fish Pier Authority Finance Subcommittee

Brendan, you're good to go. All right, thank you so much. So this is a meeting of the Portland Fish Pier Authority Finance Subcommittee. My name is Brendan O'Connell and I'm the chair of the

subcommittee and also a Fish Pier Authority board member and I'm also the city's Finance Director. You guys want to continue with introductions? Sure, I'll start Brendan. My name is Kayla Gonzalez and

I'm in the Housing and Economic Development Department and I will pass it off to Robert. Hello, I'm Robert Van Meter, the General Manager of the Portland Fish Exchange. And I'm John Arnold. I'm a

member of the board. Hi, this is Tracy Pierce, also a member of the Pier Authority Board. There we go. Kayla, Diane says it shows she's in the meeting. Do you see her anywhere? Do you think she might

be the 731-0416 number? I have an attendee in the meeting. I can allow them to speak. I just, I was trying to look up the number right now. Her number is 844-3045. No. Maybe she's just watching it?

She's in her car driving, so it'd be on her phone. That seems dangerous. Can you let her know that she may have joined the Google Meet instead, possibly? The Google Meet instead of the webinar period.

I will re-send her the panelist link. And Meredith said she is 1406 number. Oh, great. Okay. All right. So, yeah, Kayla, if you can allow the 1406 number to speak, that would be great because I would

really like to get Meredith's input as well as we go through some of these items. But we have four items on the agenda today, and I think many of them will actually blend together because, you know, I

think we'll be talking about one, and then we will kind of dig into some of the others. I would like to actually start with some historical information on the Fish Exchange fund balance, and in your

backup packet, geez, it's a long packet, I'll probably just share my screen so everyone can see it. But there is something that I titled Fish Pier, Fish Pier Authority fund balances by fiscal year. So

I'm just going to briefly share that now and talk through it because I think this is kind of the basis for the organization's fiscal health, kind of a good starting point. So this shows the

essentially total fund balance for the Fish Pier Authority over the last four years. It was easy for me to go back four years, but to go back even farther, it's a little more difficult as we get into

multiple accounting systems. But basically, we were at $3 million of unrestricted surplus back at 63023 and about $7.7 million of total fund balance, but I would really only consider that $3 million

to be our cash reserves. The other portion of the fund balance is what's called investment in capital assets. And investment in capital assets is essentially all the physical assets of the exchange

net debt service. So it's not really spendable in a pinch. If we had unexpected one-time capital expenses or had a loss in any given fiscal year, the unrestricted surplus number is really what we're

working with. And we had actually risen to a high of about $4.1 million at the end of the 2025 fiscal year at 63025, but then we did use a significant amount of dollars for that $900,000 capital

project that I think was somewhat unexpected. And in general, the board has focused on single year budgets, both for the authority and then for the exchange and getting those through our annual budget

process. And last year we talked a little bit about trying to develop a longer term financial plan. And we've started to take nibbles at the edges of doing a little bit longer term budgeting,

especially when it's come to these larger service peer replacement projects that we've talked about. Service peer one and three have a total current estimated cost of $3.2 million. And it's been

probably a year and a half since we've been talking about those now so we know that cost is not getting any lower. I spoke to Phil about any other short or medium term capital projects that he saw on

the horizon. And he mentioned $150,000 for a node replacements, essentially an underwater piece of equipment that prevents rusting for the underwater portions of the peer. He says that every, you

know, five to 10 years they do various paving projects on the on the pier, which could run up to $100,000. And then we always have ongoing pile jackets and other peer and piling related work at the

authority that would be in a longer term capital plan. So this, you know, this unrestricted surplus kind of leads us into a conversation of longer term budgeting and what are our operating results for

the authority overall, including the exchange going to actually look like over the next few years. What are some of the key pieces of each budget and areas in the budget that we can actually

influence. So I'll just pause there and ask if anyone has any questions about the definition of fund balance. All right. And now I actually see that Diane is in the call as well. So she has joined us.

The next thing I really want to talk about is, you know, since we will be focusing more on hopefully multi year operating results, talking a little bit about what information that we would want to see

in terms of future financial projections. And Heather mentioned to me earlier this week that she had actually in a prior year asked Robert to prepare a budget to actual for a prior fiscal year. So I

was just going to talk through some of the budget actual information that we already have and talk about, you know, what more we might want to see in the future as we're trying to do longer term

budgeting. So this is the FY 25 budget actual we're still actually our city controller just closed the city's books yesterday. And I'm sure that Robert you're still going through closing your books at

the exchange for the end of 630 26 I know you're probably not very yet and ready to go through FY 26 budget actual so I used FY 25 budget actual data here. And this summarizes your monthly reports

Robert, and it's just the end the annual fiscal totals. So it looks like back in 2025 we came up about $239,000 short in total on the revenue side, we had operating expenses, about 62,000 higher than

budget and total expenses only about 9000 factoring in that operating expense for total operating results of a total loss at the exchange or about $320,000 or about 250 K above what we budgeted. And I

think we've been generally in this range between 100 to 300 of loss in each of the last couple fiscal years at the exchange, the authority generally tends to generate a profit, and in the absence of

any large capital expenses, the organization as a whole generates a profit. But when we start to layer in capital expenses and in particular any significant capital expenses. Now that's where we need

to worry a little more about what does the plan for a five year period actually look like when you factor in the full amount of the capital expenses can be afford to actually pay capital expenses with

reserves or should we actually be authorizing or having the council authorize bonds for some of these larger projects so that we can pay the cost over the actual useful life of the underlying asset.

So I think that's where layering on some more detailed financial projections for a larger timeframe would be good. I also don't specifically remember going through this budget actual at any prior

meetings but Robert maybe you can talk to me about whether we already did that. I don't recall if we've ever gone through budget to actual but I just sent you Diane just got me the budget to actual

for 26, then I just emailed to you. I apologize. Yeah, I apologize for not having no worries. I didn't expect that you would be done this early, just because of when the timing of when we close the

city's books that you would be done so early but I think it probably makes sense for us to post that to the backup all put together a nicer formatted summary of it all. And then the members of the

board can look at it and we can send you questions for discussion at our next finance subcommittee meeting I think that probably makes sense. Okay, so you plan to have these meetings more often moving

forward. Oh, I don't think I'm going to do monthly, but I think that probably makes sense heading into the budget season to buy monthly so we can aim for another meeting and very early December, and

then getting together to hopefully pass a budget out of this committee in, you know, January or February, and then we'll have the full discussion at the at the regular board. Okay, and you're talking

about longer term budgets. So, are you talking about having the exchange go from a one year budget to like a three year or a five year no no no no we would still do up and pass a one year budget, but

like best fiscal practices you would do projections look at your history of your expenses for example and say all right well we know that labor expenses have risen at an average of 4.5% in each of the

last x number of years. And so you try and actually, you know, not necessarily during the same timeframe as you're doing as you're passing the annual operating budget but you work together to put

something together for a longer frame period of time. Also talk to Phil about when do we expect some of these capital project expenses to hit the budget, or hit the authority, they likely wouldn't hit

the annual operating budget right away, and then do the same thing with, you know, we know revenues are the most difficult thing to project, but we could start doing something looking at the average

catch over the last five years 10 years and doing a best guess of where things might go, year over year, and then determining what level of financial support or range of levels of financial support

could might be required from the authority, and what money would be leftover to put towards capital expenses without having us go negative in terms of overall reserves. Okay, and it can be much higher

level than what you didn't the work you put into an annual operating budget really would be kind of looking at maybe three years of history, and then doing that trend, just based on a straight line

basis, and bill and David, the city's controller Bill Nidalny and David, our senior accountant who's been out to the exchange would be happy to help with this as we work on it, but it's something that

I would like to just make sure that the rest of the subcommittee is interested in doing this, and then kind of mention it at the goal setting if it's something that the board is interested in doing as

well. Okay, any comments from the other board members on, you know, the idea of a more longer term budgeting exercise projections, I would say. Hi Brendan this is Meredith. Sorry guys I've got kind of

limited reception because I'm in the mountains. I do think that's a really good plan I think would help kind of like coalesce the board around a longer term view and help us think about how some of

these bigger, you know, kind of urgent needs fit into the overall picture and what we might have to delay and, you know, relation to that. So I also know we have got some infrastructure projects kind

of out there, looking for grants so I assume that'll be part of that discussion as well. Absolutely. Hey Brendan this is Tracy, I also agree, I think, making projections out makes sense, you know,

that's, you know, we know what the equipment is we know what the buildings are so we should be able to, you know, with the help of the city staff, look at what short term long term needs are. One

question I did have specific and this is probably way too specific for this meeting but what about like paving the parking lots or roads, how does that impact the budget or does it. Yeah, that's

actually a really good question. I had talked to Phil earlier in the week about other potential capital projects, and he did mention paving as one that is essentially outside of the operating budget

because the projects are significant enough in cost that it's not something that you put into the operating budget and he estimates that the next time they need to do paving work is probably going to

cost in the area of $100,000. It could likely be approved, you know, separate on a standalone basis by the board, but bid as part of a larger paving package that the city does so we could get a better

price and they would just come in and do it when they're doing work in the area. But he did say that that is likely going to be an expense in the area of 100 K, just to us. That was just like rough

ballpark estimate in the next few years. So, thank you. And I know you would send a couple of questions we're going to address, try to address both of them today but one of them was around like when

are we going to review budget to actual information so I think this is a snippet of what that would look that budget actual info would look like and so we'll do something around. Robert, is it in a

similar form to what I have here where, you know, I could easily summarize the budget to actual for the full year and show the over under, and people could formulate questions. Yes. Yeah, so we'll

distribute something like this to the full subcommittee, and then I'll compile questions and get them to Robert so that he'll be ready with answers at our next meeting and Robert, you and I can talk

about what's a reasonable timeframe for, you know, having that next meeting but I think early December is probably pretty good. Okay, I'd like to add my support to this as well, along with Tracy and

Mary makes a lot of sense. All right. Other thing that I added into the backup so one of Tracy your other questions was around the audit of the fish exchange and whether we had any financial

statements or audit results to share. So, as of 630 24 the two entities were merged together so our final standalone Portland fish exchange audit was completed for that 14 month period, ending, I

think it was April 30 actually 2024. And I did add to the, the, the package of backup materials, all the prior audits that we had from 2122 23 and 24. And I also added governance letters and

compliance letters. And those are noteworthy because they talk about any audit findings that the auditors had, unfortunately now. But fortunately and unfortunately, unfortunately, now the audit, the

audit is just done as part of the city's overall audit so they're not really looking at the fish pier or the fish exchange in any level of detail, just because of materiality. The city is probably a

$600 million entity. And we're talking about only 2 million of that so they're not looking very closely at the controls or the transactions at the authority or the exchange. The good thing is that now

we're saving 10 to 15,000 in audit fee, but I did also like that extra set of eyes that we had with the auditors kind of looking at everything. And in their final audit letter, they had a couple of

findings at the exchange that I know we had to talk a little bit about. One was a lack of segregation of duties. So they basically said that employees who had access to the GL also had custody of the

bank accounts, and there were some mitigating controls but they didn't feel like they were strong enough. So, you know, the exchange at that time responded to that comment. And we have at the city

side tried to help a little bit where we can in terms of that and we. I know my staff earlier this summer staff from the accounts payable office went down and sat with Robert's team to kind of go

through the monthly cash reconciliation process and assist with that a little bit so there's an extra set of eyes. I think some of the month end reconciliation had been out of balance and our staff

member helped develop a new process with a new spreadsheet to make sure that everything's reconciled and according to our senior account that's been corrected and he has access to review things going

forward. Robert or Diane, I don't know if you have anything to add on that one, but it certainly gave me a little bit of additional comfort in terms of doing the reconciliations on a monthly basis

going forward. I spoke with Diane about this and she said she's been sending reports monthly and that she has not heard anything back from the city. So we made the assumption that no news is good news

and everything must be improved. Yeah, that's what that's what they said so that they I think they said that they didn't see any out of balance months since their visit earlier this summer. So that is

good news. From what I understand your accounting system doesn't carry forward the bank balance at the beginning of the year to start at zero so that's it started out from a place where it was off at

the beginning of the year and then that out of balance amount got a little bit higher over the course of the year but then it was fixed and it seems like it's fixed now so we'll definitely keep an eye

on that. And that leads into one of your requests, Robert. I know we've talked now that the exchange and the authority is the same entity. When will the exchange be able to just simply access

authority cash as needed in like a separate division within the same entity transfer process as opposed to having to use your letter of credit. So now I think in my opinion, if we can see that there's

no discrepancies between book and bank balance for a few more months, I think we'd be able to close down the letter of credit, but I do want to talk about this a little more at the retreat and just,

you know, talk about the interest expense we're incurring and get everyone else's opinion on that as well. So in your mind, if we do go to the cash reserve where the city would, you know, basically

replace the $250,000 line of credit, you would want to close the line of credit and just have the sole cash reserve. I wouldn't say close the line of credit, but we wouldn't need to be drawn on it. So

correct. I agree. I think we want to keep that as well. You know, I think in a similar way that you'd go to your bank and say, hey, we need $26,000 this month to pay you. It would just be an internal

request and those funds would be transferred over. So I talked through this a little bit with the city's controller bill and he thinks that's doable, but he agreed with me that we just want to make

sure that we're able to balance the cash on the books with the cash in the bank statements for a few more months. And then as long as that's going well, seems like we could be comfortable going ahead

and basically giving the exchange access to the same resources that the authority has in terms of the bank balance. Yeah, I mean, and just to be clear, I mean, we've been making north of $1,000

interest payments for the past six months, you know, so that's what we're looking to to negate here. So that's that's great that things have improved and that this is something that can be discussed.

All right. So next on the official agenda, we talked about the financials. We talked about prior audit information. We didn't really talk about the catch lot analysis. So that was something that

Heather and I had talked about as really part of the multi-year budgeting, but seeing if we could get a longer history of the catch and whether that would at all inform our longer term budgeting or

give us insight into where we should potentially focus more of the authority and the exchange's efforts. You sent along, I think it's about a year. Yeah, but I can give you three years. I mean, we did

one point eight the year I started one point nine last year. And then we're excuse me, I think the first year we were one between one point eight one point nine second year one point nine. And this

year, I mean, we have a two million budget that we're looking to hopefully do the same route one point nine to two million. So I mean, that's kind of an average average between one point eight and two

million pounds landed is where we've been. This report shows weight consigned. So that so that shows, you know, basically one point eight million weight sold one one million six hundred twenty two

thousand. That records product that was sold the first time through the auction whenever something is scratched and sold after auction. It doesn't show up in that weight sold total. So that's where

you see the differences there. What was the recent fee change designed to mitigate the loss of revenue on things that are not sold at auction where we take the scratch fee you're talking about. Yeah,

the scratch fee only the scratch fee will be applied when a product is gone through twice. So it's been on the first time if the if the boat rep doesn't like the price, they'll put it through again.

If it's scratched again, that's when they'll pick up the phone and call the buyer that was bidding on it. And they come to a mutual agreement on a price. At that point, the scratch fee is deducted

from them. So the scratch fee only is applied when the fish is taken completely outside of the auction, not purchased by a seat holder and sold outside of the auction. Basically, it's just to recoup

the fees, you know, and I know you understand that. Yep. Okay, great. If you can provide that three year history, I think that would be helpful. But it sounds like it's not not going to show any

significant fluctuations in just those three years. Now, do you want me I can do three years in one report or I can do three single years. I think three years in one report. Well, why don't you send

that one and I'll look, you know, sometimes it's difficult when there's so many columns on one report. So I try to put it in more digestible format for the board. Tracy has her hand up. I think in

addition to the historical landings, we probably need to think about what are the types of things that could change landings going forward. So if a vessel leaves the port of Portland and goes to

Gloucester or if, you know, the science reduces the allowable catch. So I, I don't, I'm guessing there's more factors that could impact that but making a list is the start and then how to, you know,

impose that change in the projections and budgets. I'll respond to that Tracy I think, you know, I'd be curious to see the historical trends for that reason to see what the trend is. That'll give us

insight into, you know, where we've been where we're heading. And then as far as like, you know, as all of these 101 factors that could certainly play a role in, you know, the next year the next five

years next 10 years of the exchange. I think we'll be talking about that those types of things and the projections at the retreat at the facilitator retreat that we've got coming up. Later this fall

because to your point like we want to be able to be more resilient. And so I do think that's like a bigger conversation just not just the finances, you know, but the bigger picture around the

exchange. I agree. I was just thinking if we could gather those inputs, whatever that is, hopefully it's not 100 but maybe Robert could put together the list of, you know, things that will contribute

to a change in the projections. We have comments on the catch. Robert in your mind are there any other things that we should be focusing on on the exchange side in terms of revenues, besides just the

catch that might be worthy of discussion or multi year trending. I think you and I talked about, you know, I mean the catches is paramount I mean we're, we're constantly introducing you know new

revenue streams you know trying to build things up. We were very talked in yesterday's meeting about, you know, more boats hopefully coming on board, and you know when we have more boats coming

obviously. I mean break even would be 3 million pounds. Right now our average landing is 2 million, you know, so the goal is to bring in more boats, land more fish. But in the interim, like the salmon

we've introduced to the auctions been doing quite well. We went from one pound a week to four pallets a week and next week we're going to six. We're starting to get traction so it's just, and then

having, you know, tenants, subtenants, more cross docking more bait storage. I'm trying to basically do everything I can in lieu of bringing in more boats to add you know more revenue to the exchange,

you know, so I think we covered everything Brendan, Heather, did you happen to have anything else in terms of thoughts on revenues that are non exchange revenues. I tried to dig into some of the other

authority revenues but nothing jumped out at me. Yeah. I think that really is our most like flexible tool right now is the exchange, everyone else is, you know, pretty set in their terms. I guess

they're the one other fluctuating factor is that empty lot towards the front of the property that is adjacent to commercial street that's currently being utilized by construction. That could be

something of interest in the future but, you know, won't even be on the table to discuss until like late spring because of the construction work, but that could present another opportunity for revenue

to the fish peer authority. And then, I think you know that that big picture is exactly what we want to get at at the retreat you know we want to talk about operations and efficiency but also, you

know, what is the future, and what else could we possibly leverage with the property with the exchange to bring in more interest and whatnot so that's a bit of a bigger conversation. All right. So,

next meeting date. I know. Let's see, who did not make it today. Rob, I know Rob had had some concerns about the time of the meeting of the actual full, full board. So, why don't Kayla you and I will

go ahead and do a survey and we'll try and find a time that works for literally all of the board for our next meeting so there's less of us so it should be easier to find the time that will work for

everybody. Now hopefully it'll make Rob happy. I will send that or December right. Well, I mean I'm pretty indifferent obviously not Thanksgiving week but I think if it's ends up being late November

or the first week of December or the second week of December that's all probably still fine as long as it's well in advance of the setting of the budget for next year. And while we're talking about

budgets Brendan, am I going to do the same thing that I've done the past three years where I will put a budget together with Diane and present it to the city. Okay, there was some talk when the merger

happened at that point change so that's why I'm, that's, you know, it's, that's the same process that departments go through so you are the essentially the city now. Yeah, so departments will present

the budget to me the bed their department budgets to me, I'll review them for essentially reasonableness I'm not immediately rejecting anything unless it's outlandish, and then those budgets make

their way up through the appropriate levels of review, like city manager and then in our case it will be the finance subcommittee and the board so yeah the initial steps are still the same development

of the budget and sending it to finance. Okay, you need to let me know what outlandish is and I'll try and keep it under that. The five percent increase to the property taxpayers is outlandish in my

opinion, but well we can talk through it. There's always unique challenges for every single department's budget. Absolutely. Okay, thank you. All right, any other business to discuss as it relates to

the finances. All right, well thank you all for making time on a Friday afternoon Kayla thank you so much for being instrumental in helping us plan this project. Crazy. I didn't see it. Thanks, John.

And I took it back down because I am sure this seems petty but one thing that I did notice in the prior budgets, is that there was like a percentage being applied to the revenue. There was, you know,

the 2 million pounds let's say and every month had a percentage applied, and I believe that same percentage was being applied to the expenses, which was probably less accurate, whereas those should

have just been divided by 12, as opposed to apply that percentage of each monthly revenue. I don't know, Diane if that's familiar to you or Robert or Brendan, but I just thought that that could be

maybe revisited. The percentages on the budget represent the catch for the month. So if I have a month landing 50, the budget of 50,000 pounds and I have a month with 250,000 pounds, that's where you

get the difference of percentages that shows the revenue because we're going to bring in a lot more revenue on a 250,000 pound month than we would on a 50,000. Those are the percentages. But what I

was saying is that same percentage seemed to be my recollection applied to the expenses as well whereas the expenses are really just a total divided by 12, your expenses don't change based on the

catch. I don't believe. Okay, we can certainly look at that. Thank you. Cool. Any others. All right, well thank you all and look forward to chatting again I just forwarded out that FY 26 budget actual

for your review and any questions so please pass them along. Brendan I'm pretty sure I sent you 27. I thought I had 26 so you will have 27 which is basically July through September, and then I'm going

to find 26 and send that to you. So my apologies on the mix up on that. Oh, no worries. If you can just send it to everybody who's on today's call whenever it's ready and then it's ready I just have

to find it. Okay, all right. Sounds great so think he'll drive to take a motion to adjourn. If we would say yes, she's not here so I move we sure. All right, second it. And I'll just do a john. I'll

take the roll call john. Yes. All right, Brendan. Yes, Tracy. Yes. And Meredith. Yes, thanks guys. Sorry for. It's okay. All right, thanks everyone. Thanks for the meeting. And then thank you. All

right, bye.