Read the Financials yourself. In December, the District lost another 316,000 dollars. The total for the year is 1,312,000 dollars. This is an annualized rate of over 2.5 million dollars and is greater than the contribution projected by Water’s Edge. This is with a favorable sub-acute ruling on AB97 which represented a “win” of over 1.5 million dollars vs. budget. Other lowlights:
1. (p. 14, Balance sheet) Current liabilities exceed current assets by over half a million dollars. This is a violation of the Bank of Alameda loan covenants. The Bank has a 750,000 emergency line of credit outstanding, is the prospective financing for the wound care center, and is the source of working capital for the Water’s Edge transition. It’s quite possible the Bank will continue to loan money with no guarantee other than the taxing power of the District. After all, that is pretty strong.
The problem is that if the Bank won’t impose some kind of fiscal discipline, Management won’t own up to the disaster, and the Board refuses to do anything, then the taxpayers are on the hook for it.
2. (p. 14, Balance sheet) Net assets are 7,441,716 which is another violation of the Bank of Alameda loan covenants. This understates the case. If you look, you can see that construction in progress is 3,388,457 which is relatively worthless at this point. The off-balance sheet liabilities are also not represented and my best guess is that they are about 5,000,000 mainly consisting of the Bank of America lease, the Marina Village lease, Stebbins (and others) severance pay, fines payable to the state (50,000). This does not include the multi-million dollar Water’s Edge liability which does not kick in until the State approves the license transfer. In other words, any reasonable financial analysis suggests that the effective equity of the District is negative unless you add in “future parcel tax revenue” as an asset.
3.(p 2, Highlights) This may be a mistake, but it states that AP days are 150. That suggests that some vendors can expect to wait six months to be paid? I don’t think that can be right. The ratios page (p.18) states “average pay period” is 74.3 which seems more reasonable. (I’m not sure because I may be confusing terms here. I generally assume “days payable outstanding”, “average pay period”, and “AP days” are calculated the same, but I cannot be sure that I have that right in this context since “AP days” is less familiar as a term to me and I may be getting its definition wrong.)
4. (p 18, Ratios) The whole page is ugly including the previously mentioned current ratio at 0.97, but the ones that jump out are all the negatives – EBITA = minus 2.70%, EBIDAP = minus 12.83%, operating margin = minus 4.15%, and Return on Fund Balance = minus 17.62% .
To me, it is interesting that there is so little interest in an enterprise that costs the people of Alameda over 6 million dollars per year (this is the combination of taxes plus equity losses since the District was formed), and continues to lose money despite reassurances by management and the Board majority that a turnaround is always at hand. I don’t know what it will take for people to notice. Call someone a liar and you get excoriated by their allies; events prove that indeed they were lying (or grossly incompetent) and nobody notices.