26 Oct Commission Meeting Minutes 10/11/21
PORT COMMISSION OF THE PORT OF EDMONDS MINUTES OF REGULAR MEETING
(Via Zoom) October 11, 2021
David Preston, Vice President
Steve Johnston, Secretary
Angela Harris, President- Excused
Bob McChesney, Executive Director
Brandon Baker, Marina Manager
Tina Drennan, Finance Manager
Brittany Williams, Manager of Properties and Marketing
Vivian Olson, Edmonds City Council
Bradford Cattle, Port Attorney
CALL TO ORDER
Vice President Preston called the meeting to order at 7:00 p.m.
PLEDGE OF ALLEGIANCE
All those in attendance participated in the Pledge of Allegiance to the American Flag.
COMMISSIONER ORVIS MOVED THAT THE CONSENT AGENDA BE APPROVED TO INCLUDE THE FOLLOWING ITEMS:
A. APPROVAL OF AGENDA
B. APPROVAL OF SEPTEMBER 27, 2021 MEETING MINUTES, AS SUBMITTED.
C. APPROVAL OF PAYMENTS FOR SEPTEMBER 27, 2021 IN THE AMOUNT OF $275,597.68 AND OCTOBER 11, 2021 IN THE AMOUNT OF $264,861.32
D. AUTHORIZATION TO APPROVE EDMONDS YACHT CLUB TO CONDUCT HOLIDAY ON THE DOCK IN GUEST MOORAGE FROM DECEMBER 4, 2021 THROUGH JANUARY 2, 2022.
COMMISSIONER JOHNSTON SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.
The following public comments were entered into the record.
• Bill Wynn, September 29, 2021 — We just saw that dry storage has reduced the advertised hours pretty significantly, and we were wondering if any credits or accommodations are being made to customers for loss of use. Dry Storage customers are receiving reduced service compared to what was promised. Any chance the Port will reduce the September rate, allowing more overnight stays or crediting peoples’ accounts with more moves to make up for the loss of peak season service hours?
• Charles Malmgren, October 8, 2021 – I am a sport fisherman and have used Dry Storage for over a decade. The changes imposed on Dry Storage have forced me to re-evaluate my year-round tenancy. Two recent changes plainly expressed the Port’s disregard for sport fishermen. The week before the Edmonds Coho Derby, the 6:00 am launching was discontinued. This week, before the Everett Coho Derby, the 7:00 am launching was discontinued and changed to 8:00 am to 4:00 pm for the first time in memory.
Over the last few years, numerous other fishermen unfriendly policies have been put in place. The 2015 insurance change mandated that policies list the Port as an “additional insured.” This forced many sportsmen to cancel good, economical policies without reason. Neither “additional insured” or $500K are required at Shilshole or Everett. These are requirements landlords apply to contractors, not tenants.
In 2017, the Port of Edmonds eliminated all overnight mooring on A and B Docks. Signs were printed and erected and announcements were distributed. These changes brought so many complaints that a special meeting was held even though staff maintained they were “well received.” These changes were only partly walked back.
In 2019, the Port of Edmonds limited launches to 7 per month. At $75/launch, it was proved effective at eliminating many fishing trips. I know of no one who thinks this policy is beneficial, though staff asserts it is “accepted.” No such limit is in force at Everett.
In 2021, the Port of Edmonds limited pre-launches to one per week, shortened hours, limited dock space, imposed a highly-restrictive appointment system and added overnight charges. Providing the opportunity to have an early start for a $35 fee is not exactly a sport fishermen friendly gesture.
With the upcoming $5.6 million Administration Building and the Portwalk and Seawall Projects impacting the bottom line, I wonder what will be next.
Mr. McChesney explained that the reduced Dry Storage hours was not purposely initiated. There wasn’t enough manpower to provide the earlier launch. The Port is currently recruiting to replace employees who have left, but it is very difficult in the current job market. He apologized and emphasized that the reduction in hours is temporary. The intent is to be back in full service as soon as possible.
Commissioner Faires noted that there have been a lot of changes to Dry Storage in recent years. He suggested it would be appropriate for the Commission and staff to review the entire system in 2022, make appropriate adjustments, and establish a baseline for going forward so that changes are not necessary every year.
Commissioner Johnston asked for a progress report on staff’s efforts to hire additional employees. Mr. Baker reported that the Port has hired one new employee who starts tomorrow, and they interviewed another promising applicant today. To reduce impacts associated with turnover and absences, they have also decided to add another staff member who is certified on the forklift in Dry Storage.
Commissioner Faires asked about the Port’s starting wages, and Mr. Baker answered that the Port’s wage for a forklift operator is $23.13, and it takes about 9 months to become certified. The starting wage for staff not operating machinery is about $20.00. The starting wage for seasonal workers is lower. Commissioner Orvis pointed out that there is a shortage of applicants for most jobs, and the Port is impacted, as well.
SEA JAZZ 2021
Ms. Williams reviewed that Sea Jazz was created in the summer of 2012, with the debut performance happening at the Port’s Public Plaza on July 1, 2012. Sea Jazz provides the opportunity for local young musicians to perform in a public setting. Performances take place throughout the summer months, with the goal of providing public enjoyment in a safe, beautiful and accessible environment. Due to COVID-19, Sea Jazz went on a hiatus during the summer of 2020, but the program was brought back in full swing and with some exciting changes for the summer of 2021. This year, an array of musical groups took part, providing regular performances, including jazz jam sessions, throughout July, August and September.
Ms. Williams reminded the Commission that the Port took on the role as the primary sponsor by providing the venue, event promotion, and program oversite. Anthony’s Restaurants was the other program sponsor, generously providing each performer with a voucher for a complimentary meal and beverage. On behalf of the Port, she thanked Anthony’s Restaurants for their ongoing commitment to Sea Jazz.
Ms. Williams reported that Sea Jazz 2021 was a huge success thanks to the tireless work by Edmonds resident, Pete Bennett. Mr. Bennett acted as program coordinator for Sea Jazz and spent hours managing weekly lineups, coordinating musicians, promoting performances, mentoring student musicians and organizing all performance logistics. His vision to introduce Friday night “Deep Sea Jazz Jam Sessions” gave talented musicians from the region the opportunity to get together and play for hours, all while putting on an incredible show for audience members. On behalf of the Port, she thanked Mr. Bennett for his dedication and enthusiasm.
Ms. Williams also voiced thanks to the gifted musicians and band directors who made each performance special. Specifically, she thanked Jake Bergevin and the Edmonds Woodway High School Band, Natalie Song and the Mountlake Terrace Jazz Combos, Gary Gibson and Steel Magic Northwest, local guitarist Castro Lido, and all of the talented musicians who came to and/or led the Friday night jam sessions. She thanked them all for sharing their time and talents with the community.
Ms. Williams advised that, in recognition and appreciation of the hard work put forth by Mr. Bennett, the Port notified him of our offer to pay him a stipend for his service as the program coordinator. Rather than receive the stipend himself, Mr. Bennett generously asked that it be donated to the Edmonds-Woodway Music Boosters where the funds can be used to further grow the music program there.
Ms. Williams displayed the poster that was used to advertise the Sea Jazz events. In addition to the high-school groups, the 2021 program included special performances by local professionals. Rather than having just jazz combos, they also hosted a big band from Woodway-Edmonds High School. In addition, they added the Friday night jam sessions, which were very popular. The performers particularly enjoyed the new permanent outdoor structure that provided weather protection. She shared some photographs from the 2021 Sea Jazz events.
Ms. Williams summarized that outdoor summer music at the marina provides public enjoyment in a space that is safe and accessible to all. Sea Jazz contributes to the waterfront being a vibrant and active centerpiece for the Edmonds-Woodway community. She recommended the Commission authorize the Executive Director to provide a stipend in the amount of $1,500.00 to Edmonds-Woodway Music Boosters in recognition of the work provided by Pete Bennett as the Sea Jazz Coordinator for the 2021 summer program.
Commissioner Faires said it is also important to acknowledge the support from Anthony’s Restaurant for providing meals and non-alcoholic beverages to every single performer. Ms. Williams said Anthony’s provided 150 meal vouchers at the start of summer.
Pete Bennett, Sea Jazz Coordinator, thanked the Port staff and Commission, as well as Anthony’s Restaurants, for supporting the 2021 program. It was a great year because there was no where else for the musicians to play due to the pandemic. In addition to professional musicians, he was able to get a number of college students to perform at the Friday night jam events, and the crowd received a huge bonus. He thanked Jake Bergevin, Edmonds-Woodway Music Director, for bringing the big bands for the Wednesday night events. He commented that the youth who participated are fantastic and really enjoy the opportunity to perform. While the 2021 program was fantastic, he said he is already thinking about how to make the program even better in 2022.
Commissioner Preston said he attended a Friday night event and the lights under the awning look wonderful. He noted that Mr. Bennett spoke previously about adding an audio hookup to make the event available to performers with different setups. Mr. Bennett agreed that a built-in audio system could be a benefit.
COMMISSIONER ORVIS MOVED THAT THE COMMISSION AUTHORIZE THE EXECUTIVE DIRECTOR TO PROVIDE A STIPEND IN THE AMOUNT OF $1,500.00 TO EDMONDS-WOODWAY MUSIC BOOSTERS IN RECOGNITION OF THE WORK PROVIDED BY PETER BENNETT AS THE SEA JAZZ COORDINATOR FOR THE 2021 PROGRAM. COMMISSIONER FAIRES SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.
2022 PRELIMINARY BUDGET
Ms. Drennan advised that the Commissioners reviewed and discussed the budget baseline conditions, property tax levy and economic development and tourism expenses budget at the August 30th meeting. The draft 2022 Budget includes the Marina Budget, Rental Property Budget, Overhead Budget, Capital Budget and Projected Cash Flow Schedule. Staff has also reviewed moorage rates, dry storage rates and marina operations fees and recommended appropriate rate adjustments. The Finance Committee met on September 29th to discuss the 2022 preliminary budgets, and their recommended changes were incorporated.
Ms. Drennan advised that this is the first time the draft 2022 Budget has been presented to the Commission and public, and the documents have been available on the Port’s website since October 1st. After the workshop, the Commission may accept public comments about the budget. A public hearing is scheduled for October 25th, and the updated budget packets will be available on the Port’s website no later than the Friday prior to that meeting. The final budget is scheduled for approval on November 8th and must be submitted to Snohomish County by November 30th.
Ms. Drennan reviewed the draft 2022 Budget, highlighting the following:
Introductory Section (Pages 3-8)
• Page 3 explains what the Port of Edmonds is and outlines the budget process. The budget is a plan that identifies resources for operations and capital projects, communicates the sources of revenue and costs of services, and allows the Commission and staff to review and prioritize repairs, improvements and other projects. The Cash Flow Model was implemented in 2012 as a method of determining Moorage and Dry Storage rates and planning for future large capital expenditures. The Cash Flow Model estimates future cash and investments based on projected revenue and expenses and known major capital improvements. The Cash Flow Model is the basis for the 2022 budget. At their April 8, 2013 meeting the Commission recommended a Moorage and Dry Storage rate increase of Consumer Price Index (CPI) plus 1%. At their August 11, 2021 meeting, the Finance Committee reaffirmed that recommendation. CPI for the year ending June 30, 2021 is 5.5%. The CPI number used for Port revenue increases and staff wage increases is CPI for All Urban Consumes, All Items in the Seattle-Tacoma-Bellevue Area.
• The 2022 Budget Schedule is outlined on Page 4.
• The graphs on Page 5 illustrate the total sources of revenues and expenses by cost center. The majority of the revenue comes from the Marina, followed by Rental Properties and then Property Taxes. Other sources include interest income. The Marina is the largest cost center, followed by Overhead and then Rental Properties. Overhead includes any item that cannot specifically be allocated to a single cost center.
• Pages 6 and 7 describe the various elements of the budget, and Page 8 provides the budget summary for 2022. It identifies Total Operating Revenues of about $9.9 million, Total Operating Expenses of about $8 million, and Property Taxes and other Non-Operating Revenues of about $751,000. Net Income is about $2.7 million.
Marina Operating Budget and Notes (Pages 9 through 16)
• The Marina Operating Budget includes Permanent Water Moorage, Dry Storage, electricity for the moorage, Environmental Cost Center, Fuel and Oil, Guest Moorage, Boatyard and Launcher.
• For the Environmental Fee (Note M2), staff is proposing an increase of CPI +1%. This fee hasn’t been increased for at least six years, and the costs continue to increase.
• Commissioner Preston referred to Note M4 and asked why staff is projecting a decrease in fuel sales. Ms. Drennan responded that she has tried a number of approaches for projecting fuel sales, and still hasn’t got close. The current proposal is based on an average of previous years.
• In previous years, $50,000 was allocated to the Launcher (Note M5) from Property Tax Revenue. Staff is proposing that this be reduced in 2022 to $25,000. The remaining $25,000 will be allocated to the Public Access Plan improvements.
• Staff is proposing an increase to the Guest Moorage Rate (Note M7). As proposed, the summer rate would be $1.70/foot and the winter rate would be $1.55/foot. This seasonal rate structure matches that of the market.
Commissioner Preston asked for more information about the Guest Moorage. Ms. Drennan responded that, typically, Guest Moorage is cyclical, with a high year followed by a low year, but the pandemic has made it more difficult to project revenue.
• Permanent Moorage (Note M8) is presented as a rate increase of CPI+1%, with a 2% vacancy. The increase will result in a $250,000 increase over 2021 projected revenue and an increase of $15 to $70 per slip per month.
Commissioner Preston referred to the Port’s current policy of increasing moorage rates by CPI+1% and asked if the same policy would apply if CPI were to increase by 12%. Commissioner Orvis recalled that the Port got in trouble years ago because of the decision to not raise moorage rates as the CPI increased. They eventually had to implement a significant rate increase in order for the revenue to be commensurate with the costs associated with the service. At that time, the Commission made the conscious decision to follow CPI, and surveys have shown that the Port’s rates are in line with other marinas in the area. He expressed his belief that the current policy, which is based on CPI, has worked well for several years. While he agreed that the policy could be more controversial if inflation increased to 12%, the Port can’t not increase revenues as the costs increase. He further recalled that the Commission made the decision years ago to not use taxpayer dollars to subsidize the marina tenants. In order to keep ahead of the game, moorage rates must increase based on inflation.
Commissioner Faires added that, if CPI were to reach a high rate, two factors would apply. First, the Port has the benefit of visibility into the future. The Cash Flow Model indicates and guides with regard to where to set rates based on what will be needed in the future. The policy of CPI+1% recognizes and accounts for most of the costs the Port actually experiences. Commissioner Orvis observed that the policy of CPI+1% was implemented even when CPI was near zero, and the rate increases were very low. Ms. Drennan pointed out that, based on the annual rate survey, the Port’s rates are consistently higher than Cap Sante, Everett, and LaConner and typically lower or equal to Elliott Bay and Shilshole. She reviewed that the Port raised moorage rates by 1.9% in 2021, Cap Sante raised their rates by 3% to 6%, Elliott Bay 2% to 6% and Everett 2% to 3.55%. LaConner’s rates increased from 2.3% to 7%, but the smaller slips had the higher increase, which is unusual. From what she has been hearing, many marinas will be raising rates in 2022 similar to what staff is currently proposing.
• Passenger Fees (Note M9) were estimated at 30,000 passengers at $1.60.
• Dry Storage Revenue (Note M10) is presented as a rate increase of CPI+1%, with a 13% vacancy. This equates to a $49,000 increase over 2021 Projected Revenue and an average increase of $15 per space per month.
• Parking Revenue (Note M11) is based on 2021 estimated revenue. Prior to 2021, the Port gave tenants one parking permit, and they had to pay for the additional permit. Starting in 2021, tenants now receive two parking permits at no additional cost.
• Commissioner Preston referred to Note M16 and asked if 3% is the best rate the Port could get for Credit Card Fees. Ms. Drennan explained what is included in this fee, which ends up being an average of 3%.
• Education and Training (Note M24) includes Hazardous Waste Operations and Emergency Response (HAZWOPER) training and First Aid training. There was no HAZWOPER training in 2020 or 2021 due to the pandemic. The proposed 2022 budget assumes that all employees with need to complete First Aid and HAZWOPER 8-hour training. In addition, an estimated 13 staff will need to complete the HAZWOPER 24-hour training.
• Employee Benefits (Note M25) include a reduction in the mandatory Public Employee Retirement System (PERS) contribution from 12.97% in 2021 to 10.25% in 2022. Medical insurance premiums will increase by approximately 3.8%. There are also some changes in medical premiums due to staff changes and dependent coverage status.
• Insurance (Note M27) runs from September to August, and the Port experienced a 15% increase effective September 2021. The budget is based on that number, plus 15% for the last 4 months of 2022.
• The Marketing Budget (Note M29) includes $8,000 for the Seattle Boat Show. Commissioner Preston said he appreciates the additional funding in the Marketing budget.
• Payroll Taxes (Note M32) increased by 18% between 2020 and 2021. The 2022 budget sets the Labor and Industry (L&I) and unemployment rates at the 2021 level.
• The Repair and Maintenance Budget (Note M35) includes upgrades to the electrical feeders between the esplanade and the docks, as well as electrical tap feeder upgrades to the power pedestals on the docks. These items are contingent, as they don’t yet know which ones will need to be replaced and/or repaired.
• Salaries and Wages (Note M36) includes a CPI increase of 5.5% and merit increases per policy. Salaries and Wages have been allocated as follows: Marina (63%), Rental Properties (9%), Overhead (27%) and Capital Projects (1%). They are also proposing to add two positions in 2022: Marina Operations Entry Level Utility Worker and a part-time Security Officer. The current Security Supervisor will be working a 32-hour work week as opposed to 40, and the additional person is needed to fill in for vacation, sick and holiday pay. Mr. McChesney advised that the Port has been down two operations positions for the past 12 years, and they’ve made it work. However, the current level of turnover has resulted in reliability problems.
Commissioner Preston asked about the 18% increase in Payroll Taxes, and Ms. Drennan said it is due to increases in L&I and unemployment taxes.
• Supplies (Note M37) includes rehabilitating the launcher motor and overriding the variable frequency drive. This will result in a spare motor being available.
• Utilities (Note M38) were budgeted with a 5% increase from 2021. This includes electricity, garbage and recycling, gas, water, sewer, phone and internet.
• The Property Tax Carry to the public launch (Note M42) was reduced from the typical $50,000 to $25,000, with the additional $25,000 going to the Public Access Plan Program.
• Overhead (Note M43) is allocated to the marina at 66%. The other 34% is allocated to Rental Properties.
Rental Properties (Pages 17 through 21)
• 2020 was the first year of implementing Governmental Accounting Standards Board (GASB) Statement 87, which requires the Port to treat leases as if they are a financing tool. They must be recorded partially as lease revenue and partially as interest revenue (Note P1). The total for 2021 is projected to be about $2,627,000 and the total for 2022 is projected to be $2,670,000.
• Common Area Maintenance (CAM) charges (Note P2) apply to triple net tenants, which means they pay rent plus additional utilities. This budget is based on the current year, but an adjustment will be made in 2022, as needed. In addition, some tenants share a meter, and the Port bills back these additional utility costs on a monthly basis.
• The West Side Lease Revenue (Note P3) is also budgeted per GASB 87, with a portion as lease revenue and a portion as interest revenue. Anthony’s is the only tenant paying minimum rent plus percentage rent. The Port received their last report in August, and they didn’t exceed their minimum. For 2022, she assumed the Port would get 40% of their highest percentage rent. Jacobsen Marine’s lease increases by 2.5% annually. The Landing has a CPI adjustment every five years, and the next rate adjustment will occur in August of 2024. The Edmonds Yacht Club has land leases for both the building and parking area. They get a CPI or fair market value adjustment every five years also, and the Port has been doing an annual CPI increase since 2015.
• The Harbor Square Repair and Maintenance budget (Note P22) includes $50,000 for road and parking lot improvements. In addition, the Environmental Committee has proposed some additional environmental activities to prevent contaminants from entering the storm drains at a cost of $6,000. Ms. Williams advised that this is a placeholder, as the Port intends to go out to bid for the sweeping contract in November.
Commissioner Orvis asked who pays to pump out the catch basins on Port property, and Ms. Drennan answered that the Port pays for this service as needed. Mr. McChesney reviewed that two pilot studies were done at Dry Storage to test the efficacy of oyster shells in catch basins. The first study was encouraging, but some analytical questions needed to be resolved. The second study indicated that the oyster shells work well if they are cleaned and/or replaced frequently, but source control is even more important. Rather than replacing the oyster shells every year, the Port will sweep the area four times a year to keep grit, heavy metals and oils out of the catch basins. Ms. Drennan clarified that the contaminants come from cars (brake dust, etc.) and not from any particular Port activity.
To clarify for Commissioner Preston, Ms. Drennan explained that the HVAC budget covers the cost of maintenance. The contractor changes the filters on a quarterly basis and addresses incidental situations. Commissioner Johnston asked about the oldest HVAC systems at Harbor Square. Ms. Drennan answered that the oldest systems are from 2006, but the bulk of the systems have been replaced in the last five or six years. Commissioner Johnston asked if the newer systems are lasting longer, and Mr. McChesney answered the lifespan of the newer systems is actually much shorter. The current expected life of the new systems is 15 years. Ms. Drennan said the Port’s policy is to repair the systems if it is economical to do so. Commissioner Faires summarized that none of the units currently need to be replaced in 2022, but there could be a surprise. Ms. Drennan noted that there are about 84 HVAC systems at Harbor Square.
• The Supply Budget (Note P24) includes restroom updates in Harbor Square Building 5.
• The Overhead Allocation (Note P31) for Harbor Square is budgeted at 34%.
Overhead Budget (Pages 22 through 27)
• The State Audit for 2020-2021 will occur in 2022 (Note O5). The Port is on a 2-year cycle.
Commissioner Faires pointed out that the State Audit is an expense that a private marina would not incur. He asked why it isn’t shown as an expense that is paid with tax revenue. Ms. Drennan noted that the audit has never been expensed as anything other than overhead. The auditors look at everything (rental properties, marina, contracts, Commission meetings). Trying to divide it all out would be too confusing. Commissioner Orvis recalled that the Commission previously agreed to highlight the expenses that were incurred because the Port is a public entity. For example, the documentation for public records is an expense that a private entity would not have. However, this year, the Port Commission agreed to allocate the majority of the tax revenue towards public amenities associated with the Portwalk.
• Commissioner Education (Note O9) was budgeted at a new high because there will be at least one new Commissioner. It is likely they will want to attend more educational opportunities.
• There will be no Port Elections in 2022 (Note O10). However, it is important to keep in mind that the cost of the primary in 2021 was $15,000. They expect that the general election will cost $8,000, which means the 2021 budget will run over.
• The Communications Budget (Note O14) includes two mailings to Port District and Edmonds Residents in 2022.
• The Marketing Budget (Note O20) will include funding for Family Day, as well as the holiday event at the marina.
• Office Expenses (Note O23) will include new IT security tools. They will also start implementing apps and programs that will provide some additional in-house automation.
• One of the major purchases (Note O29) will be the awning for the south side of Marina Operations. The budget is for the required materials, and the work will be done in house. The intent is to match the awning that was built at the Public Plaza for Sea Jazz. The current canvas awnings are made of canvas and are very difficult to clean.
• Interest Income (Note O33) is budgeted based on anticipated interest per-the-bond schedules. Currently, interest rates are down. In addition, the Port will be spending about $6 million on the new Administration/Maintenance Building, which will reduce the amount of money available to earn interest on.
• As currently proposed, Property Tax Revenue (Note O36) will be allocated as follows: $140,000 for Commissioner Costs, $10,000 for public records requests, training and tools, and $425,000 for the North Seawall and Portwalk Project. On Friday, she learned that the Port’s maximum tax levy can be about $606,000. As opposed to doing $600,000 and then banking $6,000, she proposed that they collect the full amount allowed. The additional $6,000 would be allocated to the North Seawall and Portwalk Project.
Combined Operating Budget (Pages 28 through 29).
• Combining the Marina Budget, Rental Properties and Overhead Budget gives a net income $2,666,000. Some of the numbers may be adjusted slightly before the next meeting.
Proposed 2022 Budget Compared to 2021 Projected and the Previous Four Years (Pages 30 and 31)
• The net income in 2017 was almost $2 million, about $2.6 million in 2018, about $3.1 million in 2019 and about $2.8 million in 2020. They are looking at about $2.9 million in 2021 and about $2.7 million in 2022.
Revenue and Expense Trends (Page 32)
• The graph shows that revenue and expense trends mirror each other. The nominal costs due to COVID-19 were about $282,000 in 2020 and about $16,000 in 2021.
Commissioner Faires noted that both of these numbers are well below the worst-case projections. He felt it was prudent, on the Port’s part, to have done the worst-case scenario budget to identify the potential impacts of the pandemic.
Capital Budget (Page 33)
• The Capital Budget shows the 2021 Budget, 2021 Actual/Anticipated, and the 2022 through 2026 budgets. The 2023 through 2026 budgets are placeholders intended to identify projects coming up in the future.
• The proposed 2022 Capital Budget identifies $70,000 for Accounts Payable Authorization Software, Document Management Software and Microsoft SQL. The Port received a $30,000 grant to help fund this project. She briefly explained what the project entails and how it will be implemented going forward.
• The proposed 2022 Capital Budget includes $60,000 to replace the CAT Forklift with an electric one.
Commissioner Orvis asked if the new electric forklift would be kept under cover, and Mr. McChesney answered that staff anticipates purchasing the new forklift after the Administration/Maintenance Building has been completed, and there will be space to store it inside.
• The proposed 2022 Capital Budget identifies a tentative budget of $7 million for the new Administration/Maintenance Building. In addition, $250,000 has been budgeted for furniture, fixtures and shop setup for the new building.
• They are proposing a vehicle replacement for 2022 at a cost of $38,000. This may occur in late 2022 or early 2023, depending on whether the Port decides to go electric or not. They don’t currently have the infrastructure for electric vehicles, but it will be installed as part of the new Administration/Maintenance Building.
• The North Seawall and Portwalk Reconstruction Project will still be in the engineering and permitting phase, and about $200,000 has been budgeted in 2022 to continue that process.
• Funding for I Dock lighting (of $25,000) has been identified in the 2022 budget.
Projected Cash Flow Schedule (Page 34)
• The projection is that 2021 will end with approximately $24 million in cash and investments, an increase of approximately $2.8 million in cash. In 2022, there will be a large expenditure for the new building, which means cash will drop by about $3.4 million overall. Cash will increase again in 2023 by about $3 million, but will decrease again in 2024 and 2025 when the North Breakwater and Portwalk Reconstruction Project is done.
Commissioner Faires voiced concern that when it comes to justifying the budgeting process and explaining it at a top level to anyone of the three constituent elements (marina, rental property and public amenities), public amenities gets the short shrift. They are looking at a major investment in the North Marina Breakwater and Portwalk, which will result in a significant public amenity, and he would like to see a top-level accounting, year-by-year, of how funding is allocated to each of the three elements. This would help people understand that tenants are not paying for the public amenities and taxpayers are not subsidizing the marina. Ms. Drennan responded that before a separate accounting schedule can be created, the Commission will need to have a discussion about how the North Marina Breakwater and Portwalk Reconstruction Project will be funded. She can provide options, but the Commissioners will need to make the final decision as to what portions of the project will designated as public amenities.
Commissioner Orvis expressed his belief that the tenants should be responsible for a portion of the funding for the Portwalk. It enhances the marina and makes it attractive. While the public will benefit, the Portwalk and Seawall are inherently part of the marina. He voiced concern that Commissioner Faires’ request could quickly degenerate into an artificial construct. Commissioner Faires agreed that it would be artificial in the sense that it isn’t really an accounting problem. It is a decision problem, and the Commission needs to have a discussion relative to how to apportion these costs. Commissioner Johnston said he believes it would be easy for the Port to defend the funding allocations. The Port’s charter is to provide public access. Even though it does not create a revenue stream, the portwalk is a great benefit to the boaters, as well as the taxpayers.
Ms. Williams suggested that a future public mailer could provide a breakdown of how the property tax revenue is allocated. The Commissioners agreed that this would help the taxpayers understand exactly how the public funds are used.
Proposed Moorage and Dry Storage Rates (Pages 36 through 39)
• It is important to remember that the Dry Storage Rates are now seasonal.
Marina Operations Fees (Pages 40 through 43)
• Staff completed a comparison study of the Port’s Boatyard and Travelift rates and discovered they were low compared to the market. While the proposed increases appear large, they are not nearly as large as they could be based on market. All of the Travelift rates were increased, and the Boatyard rates will increase by CPI.
• The environmental fees were increased on a tiered-basis depending on boat size.
• Labor fees were increased, as they are associated with the cost of staffing.
• Guest Moorage and Loan-a-Slip rates were increased by CPI.
• Rather than having to periodically raise the Launcher rates to a greater degree, staff is recommending that the rates be increased every year based on CPI. The proposed rates are budgeted CPI to the nearest dollar with sales tax to avoid having to deal with a lot of change when people pay with cash.
• The fees for a number of other services were also increased by CPI or CPI+1%, including engine haul/equipment move, workboat, dewatering pump out and labor.
Fuel Markup (Page 44)
• The fuel markup per gallon will be increased from $.86 to $.92, which is CPI+1%. There are additional costs associated with calibrating the pumps, and a new router was needed for the Point of Sales Program. There are also some increased costs for Department of Ecology mandates.
Rate Survey for Local Boatyards (Pages 45 through 47)
• These numbers were used as the basis for the proposed increases to Marine Operation fees.
Employee Pay Scale (Page 48)
• This page outlines the new Employee Pay Scale, incorporating a 5.5% increase. As proposed, the entry-level pay for seasonal staff would increase to $16 per hour, and the maximum pay would be $17 per hour.
Economic Development and Tourism Expense (Page 49)
• Economic Development and Tourism Expenses were allocated per the Commission’s discussion at a previous meeting.
Property Taxes (Pages 51 through 57)
• The Commission reviewed this information at previous meetings, and there have been no changes since the last discussion.
Ms. Drennan concluded her presentation by stating that a public hearing on the Preliminary 2022 Operating Budget is scheduled for October 25th. As per law, the hearing has been advertised on the Port’s website, the City of Edmonds channel, My Edmonds News and the Everett Herald. Notices have also been posted in all of the Port’s offices.
PROJECT REPORT: NEW ADMINISTRATION AND MAINTENANCE BUILDING
Mr. McChesney provided a status report on the new Administration/Maintenance Building, announcing that building permit applications were submitted on October 8th. The City has about a week to review the submittal. If the application is deemed complete, the City will issue a Notice of Completeness at that time. The hope is that the building permits will be issued in early 2022 so the project can go out to bid. While the building permit application is being reviewed, the Port will continue to prepare the necessary construction documents and put together the final specifications. They still haven’t made a final determination as to whether Leadership in Energy and Environmental Design (LEED) Gold certification will be achievable. Staff will continue to work with Salmon Safe to develop a scope of work to make sure the project complies with all of their requirements. Mr. McChesney summarized that the project is currently on schedule, and the City has not identified any problems to date. They have a good team of consultants working on the project. The goal would be to get the permits, put the project out to bid, and be ready to start construction in March 2022.
PROJECT REPORT: NORTH PORTWALK AND SEAWALL RECONSTRUCTION
Ms. Williams provided a brief overview of the North Portwalk and Seawall Reconstruction Project, noting that all of the consultants have submitted their 60% designs for review. Staff had a recent meeting with Makers to review the plans and discuss the following:
• Lighting. They discussed the pros and cons of post lighting versus bollards to provide lighting on the edge of the Portwalk into the parking lot. Makers will provide some design options utilizing both options.
• Gates. The original idea was to do swinging gates, but the design later changed to sliders. They are now back to proposing swinging gates, as the design fits better with the preferred closure mechanism and key card entry system. Swinging gates also work better with how the American’s with Disabilities Act (ADA) ramps are situated. Commissioner Faires asked if the gates in the South Marina would also be changed to provide a key card entry, and Mr. McChesney answered that they will use the North Portwalk and Seawall Reconstruction Project as a way to launch the new system, and then the intent is to phase in the rest of the gates.
• Materials. They discussed different materials and design ideas for the railing.
• North Plaza. They discussed the North Plaza purpose and how they want to incorporate art into the Portwalk.
• Entry to the Portwalk. They talked a little bit about the space behind Arnies, which will be the entry to the Portwalk.
Ms. Williams summarized that Makers will continue to work on concepts and will present some updated renderings based on the direction provided by staff. Staff will present the updated renderings to the Commission for review in November or December.
Ms. Williams reported that the 60% design comments were presented back to the consultants, and the permit submittals are now in the final stages. Because the Port Administration Building demolition was added to the project, the scope of work with Landau Associates was expanded to include a historical property assessment. The State Environmental Policy Act (SEPA) Checklist has been completed, and copies are available to the Commission for review. Landau Associates and CG Engineering are working on final design details to complete the Joint Aquatic Resources Permit Application (JARPA) and the biological evaluation. The Port is in the final stages of reviewing the Shoreline Master Program (SMP) Consistency Evaluational Technical Memorandum, which is the last step before submitting the Substantial Development Permit application.
Commissioner Orvis asked if there has been any progress on efforts to get the federal permitting agencies to work together. Commissioner Johnston reported that it was a topic of conversation at the Washington Public Port Association (WPPA) Environmental Seminar. James Thompson and Jerry O’Keefe, from the WPPA, would like to meet with the Port staff to discuss what is happening along those lines. Mr. McChesney agreed to contact them to arrange a time to meet. Commissioner Johnston advised that there are currently 12 to 15 port projects in the pipeline that are more aged than the Port’s project, and there is a lot of mounting frustration. The WPPA has hired an extra facilitator at the agency level, and they may hire another if enough ports are interested. This could help expedite the process. Commissioner Orvis expressed frustration that, at this time, no permits are being issued simply because two federal bureaucracies (Department of Ecology and National Marine Fisheries) won’t work together. The pressure mounts daily, as the delays could result in some catastrophic failures. Commissioner Johnston advised that the WPPA has contacted most of the State’s federal and Washington State Representatives in an effort to get help. Mr. McChesney recalled that, from the National Marine Fisheries’ (NMFs) point of view, the issue is how to calculate mitigation, and they have been trying to develop a one-size-fits-all model that fails in reality because the projects are all completely different.
CLEAN UP DIVE
Ms. Williams provided some photographs from the recent cleanup dive on M, N, half of P and Q Docks that was performed by Annie Crawley and her young scuba diving team. There were about 25 divers, and a lot of shore support, as well. They collected three dumpsters full of trash. A story of the event was featured in My Edmonds News, and a photo will be published in the next newsletter as a reminder for everyone to be careful what debris goes off the docks or off the boats. She concluded that the dive was successful and the Port looks forward to two more dives in 2022.
CITY OF EDMONDS REPORT
Council Member Olson announced that the City’s proposed 2022 Budget is available online. She also advised that at their October 12th meeting, the City Council will be asked to approve a final bond ordinance for the wastewater treatment and other facility management. Staff will update the Council on changes needed to prepare an offer for the Safety and Disaster Coordinator candidate, who is very qualified. There will also be a confirmation vote on a special meeting agenda for the Development Services Director candidate, who is being put forth for confirmation. They will discuss potential staff changes in the event that some of the Council Members will change on November 2nd.
EXECUTIVE DIRECTOR’S REPORT
Mr. McChesney reported that he attended the City’s virtual open house regarding an interim update to the Waterfront Comprehensive Plan. Some of the elements in the plan have become obsolete, such as the Edmonds Crossing Project and projects related to Edmonds Marsh restoration and Willow Creek. The more extensive Comprehensive Plan update will not likely occur until 2024. The Port’s North Portwalk and Seawall Restoration Project has been included as part of the interim update.
COMMISSIONER’S COMMENTS AND COMMITTEE REPORTS
Commissioner Johnston reported that he attended the Washington Public Port Association (WPPA) Environmental Seminar in September where several topics of interest to the Port were covered:
• At the “Sustainable Infrastructure” session he heard how industries in Europe, particularly Denmark, have been successful getting together in consortiums to use the waste products of one industry as input products to another. They are all working together to reduce waste in the outstream. He noted that the agricultural industry in Eastern Washington has been doing this for years. They are always thinking of ways to use everything, which is a great concept. Ted Sturdevant, former Director of Ecology, is running a private program to look into opportunities for sustainable infrastructure.
• They heard from the new Director of the Department of Ecology’s Model Toxic Control Act (MTCA) Program who is very enthusiastic. The program is well staffed and financed at this time.
• Several ports made presentations on what they are doing for stormwater management and treatment, and he was proud to learn that the Port is on the leading edge of these efforts.
• Several ports made presentations on current projects. Some of the highlights were the cleanup effort at the Port of Everett, stormwater technology using oyster shells, etc.
• The “Environmental Justice” presentation by the Port of Vancouver was particularly interesting. In 2017, they were doing a major cleanup of an industrial area that was across the fence from a residential community when they suddenly realized they weren’t getting enough input from the people who lived next door. They used a series of ice cream socials to gather people and solicit input.
• There was some discussion about off-shore wind development, and there are some major lease areas off the coasts of Washington, Oregon and California where giant wind turbines will be installed. There are concerns about whale and fish migration, as well as bird flights. A small pilot project has already been done on the east coast, and people involved in that project presented. It’s the way of the future, but it will create some interesting issues off the coast.
Commissioner Johnston reported that he attended a Finance Committee on September 29th where the Preliminary 2022 Budget was the topic of discussion. On October 5th, he attended the Economic Alliance of Snohomish County (EASC) Coffee Chat on urban vitality in the four communities of South Snohomish County (Edmonds, Mountlake Terrace, Everett and Lynnwood). They mostly talked about the different characters of the four cities and where they are going in the future. A lot of the new development is transit-oriented. The biggest take away is that Snohomish County is slowly tilting away from Seattle as far as its emphasis, and more attention is being paid to Paine Field, Everett, South County, etc.
Commissioner Johnston announced that he would attend the WPPA’s Small Ports Conference from October 20th to October 22nd in Leavenworth.
Commissioner Orvis said he also attended the September 29th Finance Committee meeting, where the Preliminary 2022 Budget that was presented to the Commissioners earlier in the meeting was discussed. He commented that Ms. Drennan did a great job preparing the documentation. He recommended that people read the annual report to learn more about the Port.
Commissioner Faires reported that he attended the Edmonds Economic Development Commission (EDC) meeting on September 15th, and the discussion primarily focused on priorities. While seven or eight items were identified as high-priority, it is likely that only two or three of them can be accomplished in the next year. The meeting dealt with a process to identify and organize around the true high-priority items (those that will make a difference and are relatively near term). The discussion will continue on October 20th. The new priority list will be presented in a report to the City Council and will require some action by the group.
Mr. Baker reported on his attendance at the Northwest Marine Trade Association (NMTA) meeting, noting that he had a lot of discussions with industry people about rates and he believes the Port’s proposed new rates are right on track. He received some admiration for the Port’s model of increasing rates by CPI+1% from marinas that are struggling with how to communicate and frame necessary rate increases. Labor and hiring was a major topic in side conversations, as every marina seems to be in the same boat. Paul Sorenson’s presentation was very similar to previous years. He reported there were about 400 new boat registrations in the State, which is lower than many had anticipated. The marina survey indicates that other marinas are seeing the same trends as the Port of Edmonds, longer waiting lists, less turnover and higher guest moorage.
Commissioner Preston reported that he attended an Edmonds Yacht Club event on October 8th and spoke with Fleet Captain Larry Carpenter about the Holiday on the Docks event. Recognizing that the Argosy Christmas Ship isn’t coming this year, they are hoping that their event will be a bigger and better show.
Commissioner Preston announced that he would also attend the WPPA Small Ports Seminar.
The Commission meeting was adjourned at 9:10 p.m.
Port Commission Secretary