• The Board of Supervisors appropriates Marina Yacht Harbor funds for annual facilities maintenance projects, but the Recreation and Park Department does not fully allocate these funds to these projects. Rather, the Department re-allocates funds appropriated for annual facilities maintenance projects to capital improvement projects, which are multi-year or continuing projects.
  
  
• Also, the Recreation and Park Department does not return unexpended funds appropriated for and allocated to annual facilities maintenance projects to the Marina Yacht Harbor Fund balance at the end of the fiscal year, but rather, carries forward these unexpended funds into the next fiscal year, which is inconsistent with the City's budgeting practices.
  
  
• The Department's practices result in both understatement and overstatement of the Marina Yacht Harbor's annual facilities maintenance budget in a fiscal year, removing budgetary controls that require the Department to contain spending within the fiscal year's budget.
  
  
• In FY 2006-2007, the Recreation and Park Department began budgeting the Marina Yacht Harbor capital improvement projects separately from facilities maintenance projects, but has continued to include capital improvement projects in the Annual Appropriation Ordinance as annual rather than continuing projects. However, the Department carries forward unexpended annual capital project funds into the next fiscal year. The Department needs to define which projects are annual projects and which projects are continuing projects to ensure accurate budgeting.
  
  
• The Department needs to review inactive projects and project balances to identify unexpended funds that can be re-allocated to active projects or returned to fund balance.

Capital Improvement and Facilities Maintenance Project Funding

The Marina Yacht Harbor funds its facilities maintenance and capital improvement projects from the Marina Yacht Harbor Fund. Facilities maintenance projects include routine annual maintenance of the Marina Yacht Harbor's facilities. Capital improvement projects include environmental studies and renovations to the Marina Yacht Harbor facilities that continue from year to year. Dredging and sand mining can be included in annual facilities maintenance projects or in continuing capital improvement projects.

Facilities Maintenance Project Appropriations

From FY 2002-2003 through FY 2006-2007, the Board of Supervisors appropriated Marina Yacht Harbor funds for facilities maintenance projects, but the Recreation and Park Department did not fully allocate these funds to these projects, as shown in Table 4.1. Facilities maintenance projects are annual projects, and unexpended funds at the end of the fiscal year are to be returned to the fund balance.

However, from FY 2002-2003 through FY 2006-2007, the Department transferred funds appropriated for annual facilities maintenance projects to capital improvement projects, which are multi-year or continuing projects.

Table 4.1
Funds Appropriated for and Allocated to Marina Yacht Harbor Facilities Maintenance Projects
FY 2002-2003 through FY 2006-2007

Source: Annual Appropriation Ordinance and FAMIS

Also, in FY 2002-2003 through FY 2006-2007, the Recreation and Park Department did not return unexpended funds appropriated for and allocated to facilities maintenance projects to the fund balance. Rather, the Department carried forward these unexpended funds into the next fiscal year. Table 4.2 shows the actual facilities maintenance allocation, expenditures, and unexpended balance in FY 2002-2003 through FY 2006-2007.

Table 4.2
Actual Marina Yacht Harbor Facilities Maintenance Projects Allocation and Expenditures
FY 2002-2003 through FY 2006-2007

Source: Annual Appropriation Ordinance and FAMIS

• In 2002-2003, the Recreation and Park Department transferred $350,000, appropriated for but not allocated to facilities maintenance projects, to the Department of Public Works for Marina Yacht Harbor renovation projects.
  
  
• In FY 2003-2004, the Recreation and Park Department transferred $280,135 to the Department of Public Works for Marina Yacht Harbor environmental studies and $14,000 to Marina Yacht Harbor sand mining, totaling $294,135. Of the $294,135, $271,431 were FY 2003-2004 funds appropriated for but not allocated to facilities maintenance projects and $22,704 were unexpended FY 2002-2003 funds allocated to facilities maintenance projects.
  
  
• In FY 2004-2005, the Recreation and Park Department transferred $203,000 to the Department of Public Works for Marina Yacht Harbor environmental studies. Of this $203,000, $143,000 were FY 2004-2005 funds appropriated for but not allocated to facilities maintenance projects and $60,000 were unexpended FY 2003-2004 funds allocated to facilities maintenance projects.
  
  
• In FY 2005-2006, the Recreation and Park Department transferred $18,650 appropriated for but not allocated to facilities maintenance projects to the Department of Public Works for Marina Yacht Harbor environmental studies. In June 2006, the Recreation and Park Department used $60,000 in unexpended FY 2004-2005 funds allocated to facilities maintenance projects to pay for the deficit in FY 2005-2006 facilities maintenance projects.
  
  
• In FY 2006-2007, the Recreation and Park Department used $22,626 in unexpended FY 2005-2006 funds allocated to facilities maintenance projects to pay for the deficit for FY 2006-2007 facilities maintenance projects.

After adjusting for the facilities maintenance project deficit, the Marina Yacht Harbor had an unexpended facilities maintenance project balance of $5,289 as of June 30, 2007, according to FAMIS. The FY 2007-2008 facilities maintenance project budget included the new appropriation of 415,600 plus the FY 2006-2007 unexpended balance of $5,289.

Budgeting and Tracking Facilities Maintenance and Capital Project Funds

The Recreation and Park Department needs to clearly define the Marina Yacht Harbor's facilities maintenance projects, which are part of the annual operating budget, and capital improvement projects, which are part of the continuing capital budget. Prior to FY 2006-2007, the Department budgeted all Marina Yacht Harbor project funds as annual facilities maintenance projects, although, as discussed above, the Department transferred facilities maintenance project funds to capital improvement projects.

Also, the Recreation and Park Department needs to define which projects are annual projects and which projects are continuing projects. In FY 2006-2007, the Recreation and Park Department began budgeting the Marina Yacht Harbor capital improvement projects separately from facilities maintenance projects, but has continued to include capital improvement projects in the Annual Appropriation Ordinance as annual rather than continuing projects.

In the FY 2006-2007 Annual Appropriation Ordinance, the Department included $135,984 for Marina Yacht Harbor renovation projects (Project Code CRPYRP). According to the City's financial system, FAMIS, the Department spent $125,386 of the $135,984 appropriation for Marina Yacht Harbor renovation projects, resulting in a $10,598 unexpended balance as follows.

In FY 2007-2008, the Recreation and Park Department requested an additional $135,984 for Marina Yacht Harbor renovation projects. Additionally, the Department carried forward the $10,598 unexpended balance, resulting in total FY 2007-2008 allocation to Marina Yacht Harbor renovation projects of $146,582.

The Recreation and Park Department should either include these renovation projects in the Annual Appropriation Ordinance as continuing projects or return the unexpended renovation project balance to the Marina Yacht Harbor Fund at the end of the fiscal year.

Closing Out Unexpended Project Balances

The Recreation and Park Department has not consistently tracked inactive Marina Yacht Harbor capital projects, and closed-out unexpended balances.

• One dredging project (Project Code CRP530-01) had an unexpended balance of $13,872 and no expenditures from FY 2002-2003 through FY 2006-2007. According to FAMIS this amount of $13,872 was finally spent on project permits in FY 2007-2008.
  
  Project Code CRP530, of which the dredging project noted above is a subproject, was discontinued in FY 2001-2002 and replaced with Project Code CRPYHD for dredging and sand mining projects. However, according of FAMIS, as of February 2008, Project Code CRP530 continues to have an unexpended balance of $25,782.
  
  
• One dredging project (Project Code CRPYDH-01) had an unexpended balance of $120,839 and no expenditures from FY 2002-2003 through FY 2004-2005. According to FAMIS, this amount of $120,839 was finally spent on dredging projects in FY 2005-2006.

The Department needs to review inactive projects and project balances to identify unexpended funds that can be re-allocated to active projects or returned to fund balance.

Conclusion

The State Department of Boating and Waterways has approved a $16.5 million loan to the Recreation and Park Department for renovation of the Marina Yacht Harbor's West Harbor. Prior to embarking on a major capital renovation project of the Marina Yacht Harbor, the Recreation and Park Department needs to develop facilities maintenance and capital project budgeting procedures that clearly define the Marina Yacht Harbor's facilities maintenance projects, which are part of the annual operating budget, and capital improvement projects, which are part of the continuing capital budget.

The Department should also define annual and continuing capital projects. Unexpended facilities maintenance and other annual project funds should be returned to the Marina Yacht Harbor Fund balance each year for re-appropriation. The Department should also review inactive Marina Yacht Harbor projects, and re-allocate any unexpended balances to active projects, if appropriate, or return the unexpended balance to the Marina Yacht Harbor Fund balance.

Recommendations

The Recreation and Park Department General Manager should:

4.1 Develop facilities maintenance and capital project budgeting procedures that define the Marina Yacht Harbor's facilities maintenance projects and capital improvement projects.

4.2 Develop capital project budgeting procedures that define annual and continuing capital projects.

4.3 Return unexpended annual facilities maintenance and annual capital project balances to the Marina Yacht Harbor Fund at the end of the fiscal year.

4.4 Review inactive Marina Yacht Harbor projects, and re-allocate any unexpended balances to active projects, if appropriate, or return the unexpended balance to the Marina Yacht Harbor Fund balance.

Costs and Benefits

These recommendations should be implemented within the Department's usual budgeting practices. Implementation of these recommendations would improve information on the available funds for facilities maintenance and capital improvement projects each fiscal year.