15 Nov Commission Meeting Minutes 11-1-22
PORT COMMISSION OF THE PORT OF EDMONDS MINUTES OF SPECIAL MEETING
(In-Person and Via Zoom) November 1, 2022
David Preston, President
Steve Johnston, Vice President (remote)
Jim Orvis, Secretary
Angela Harris (excused)
Bob McChesney, Executive Director
Brandon Baker, Director of Marina Operations
Tina Drennan, Manager of Finance and Accounting
Brittany Williams, Manager of Properties and Economic Development
Jordan Stephens, Port Attorney
CALL TO ORDER
President Preston called the meeting to order at 7:00 p.m.
All those in attendance participated in the Pledge of Allegiance to the American Flag.
COMMISSIONER JOHNSTON MOVED THAT THE CONSENT AGENDA BE APPROVED TO INCLUDE THE FOLLOWING ITEMS:
A. APPROVAL OF AGENDA
B. APPROVAL OF OCTOBER 10, 2022 MEETING MINUTES, AS SUBMITTED
C. APPROVAL OF PAYMENTS IN THE AMOUNT OF $1,406,483.00
D. AUTHORIZATION FOR EXECUTIVE DIRECTOR TO WRITE OFF $1,388.88 AND SEND ACCOUNT TO COLLECTIONS
COMMISSIONER ORVIS SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.
There were no public comments.
Commissioner Preston welcomed Woodway Town Councilmember John Brock who was present in the audience.
PUBLIC HEARING – 2023 PRELIMINARY BUDGET
Port Attorney Stephens reviewed the rules and procedures for the public hearing, noting that it is best to take all public comments and close the public hearing before moving forward with Commission discussion and/or responses. Commissioner Preston opened the public hearing. No one present or participating online indicated a desire to speak, and no written comments were received. Commissioner Preston closed the public hearing.
Commissioner Preston reported that Mr. Baker and Ms. Williams made a great presentation to the Edmonds Yacht Club, and he only heard one comment about the rates going up 10%. They appear to be happy with the system in place.
Ms. Drennan reviewed the changes that were made to the budget following the October 10th meeting as follows:
• Note M9 was corrected to show 28,000 passengers.
• The election budget expense was increased from $8,000 to $25,000.
• The net income decreased by $17,000.
Ms. Drennan advised that she will be recommending the Commission approve the final budget at the November 14th meeting.
Commissioner Grant recalled that he sent out a proposal to add signage at the marina. He asked how it would be addressed in the budget if the Commission decides to move the project forward in 2023. Mr. McChesney explained that, because it isn’t possible to budget for everything in advance, the Commission can direct projects that aren’t in the budget to occur without modifying the budget. He summarized that the budget is a necessary guideline, but it isn’t a limiting instrument.
Commissioner Orvis agreed that one approach is to follow the budget without deviation unless there is an emergency, and another approach is to use the budget as a road map that shows where you intend to go given the knowledge you have at the time. If you deviate from it, it can show how far off you are and you may have to compensate elsewhere.
Commissioner Grant noted that any project that isn’t identified as part of the budget must be voted on and passed before it can be implemented. Mr. McChesney agreed that projects not identified in the budget must be approved by the Commission, but a budget amendment process is not required each time there is a deviation. The Commission has the authority to direct spending throughout the year.
AUTHORIZATION TO APPROVE EDMONDS YACHT CLUB (EYC) TO CONDUCT HOLIDAY ON THE DOCKS IN GUEST MOORAGE (DECEMBER 3, 2022 THROUGH JANUARY 2, 2023)
Mr. Baker advised that staff is seeking authorization from the Commission to waive the fees for the EYC to use Guest Moorage for the Holiday on the Docks program. In exchange, the EYC members who have moorage with the Port will turn their slips over to the Port for guest moorage use. He recommended the Commission authorize the annual EYC Holiday on the docks moorage exchange as explained.
Mr. McChesney recalled that, in the past, logistics have been difficult because some of the EYC boats are not resident boats and the Port doesn’t have the ability to release their space. Mr. Baker explained that the EYC and Port staff have agreed that at least 70% of the boats participating in the program must be current Port tenants. He said staff has already met with the two organizers, and most of the concern has been resolved through early and constant communication and planning. He said they are expecting 12 or 13 vessels this year. Commissioner Johnston noted that it is a great program that the community really enjoys.
COMMISSIONER JOHNSTON MOVED THAT THE COMMISSION AUTHORIZE STAFF TO APPROVE EDMONDS YACHT CLUB TO CONDUCT HOLIDAY ON THE DOCKS IN GUEST MOORAGE STARTING DECEMBER 3, 2022 THROUGH JANUARY 2, 2023. COMMISSIONER GRANT SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.
Ms. Williams announced that the Port will be doing a holiday event on December 15th, and she would provide more details at an upcoming meeting. She plans to advertise the event via social media and on the holiday mailer. Woodway Town Councilmember John Brock suggested that the event could be advertised in their newsletter, as well. Ms. Williams pointed out that Woodway residents will receive the Port’s holiday mailer, too.
HARBOR SQUARE 3RD QUARTER REPORT
Ms. Williams reviewed the Harbor Square 3rd Quarter Report, highlighting the following:
• Gross projected revenue was up 8.58% or roughly $43,000 over the same period in 2021.
• The occupancy rate at the end of Quarter 3 was 91.92%, which is 1.59% greater than the occupancy rate of 90.33% in Quarter 3 of 2021.
• There were no leases ending in Quarter 3, but one new lease began in Building 1.
• There were four lease extensions, all for a one-year period.
• One tenant expanded space by 230 square feet.
• Major projects for the quarter included the elevator pit repair in Building 1, irrigation repairs, pressure washing throughout the complex, repainting the Building 1 lobby, asphalt repairs and Americans with Disabilities Act (ADA) ramp replacements throughout the complex, and parking lot striping.
• There were no incidents to report in Quarter 3.
MARINA OPERATIONS 3RD QUARTER REPORT
Mr. Baker presented the 3rd Quarter Marina Operations Report, highlighting the following:
• In the 3rd Quarter, there were 26 terminations in Water Moorage and 23 spaces were assigned. The turnover ratio was 3.92% in 2022, which is slightly lower than the 4.2% turnover ratio in 2021. The waitlist also increased, ending Quarter 3 with 343 total applications on file compared to 320 at the same time in 2021.
• In Guest Moorage, the total number of boats decreased by 17% (413 boats), and the total number of nights decreased by 16% (680 nights) during Quarter 3. There were 44 reservations during the 3rd Quarter of 2022 compared to 54 in the same quarter of 2021. Increased fuel costs contributed to the reduced activity, and it was the first year following the pandemic where people had many more travel options. In addition, this was the first year there were clear guidelines for getting back into Canada following the pandemic.
• Document compliance is always more difficult during 3rd Quarter. At the end of the quarter compliance was at 84% for insurance and 47% for registration. He noted that Washington State registrations always turn over on June 30th. Commissioner Grant asked how staff pursues insurance compliance. Mr. Baker said it starts with two rounds of emails to tenants, followed by two phone calls. These are followed by letters of increasing demand. In addition, parking passes are withheld until both registration and insurance is up-to-date. It was discussed that registration is a state requirement for all boats in the water, and people from the Department of Licensing have walked the docks and written citations to people who don’t have current registrations. Mr. Baker noted that failure to provide registration violates the moorage agreement, and the Port would have grounds to cancel the lease. He commented that registration and insurance compliance is an ongoing battle in every marina.
• Dry Storage had a 98.1% occupancy at the end of Quarter 3, which is 2.3% higher than in 2021. There are currently 59 trailers being stored at the facility compared to 51 in 2021. Total boat handling moves by the forklift decreased by 2.3% compared to the same period in 2021, and launch activity was down .5% compared to 2021. The reservation system continued to increase in 2022, which can be attributed to the appointment policy. In 2021, there were hours at the end of the day that did not require a reservation, but it resulted in end-of-day rush. To address this problem, one minor change was made in 2022 to require reservations during all operating hours.
• Travelift round trips increased by 10% compared to 2021, sling time with pressure wash increased by 35%, sling time with no pressure wash increased by 11%, stall usage increased by 10% and pressure wash treatments decreased by 19%.
• At the Fuel Dock, total gallons pumped decreased by 4% compared to 2021. At the end of the quarter, unleaded fuel was $2.17 higher than in 2021, and diesel was $1.46 higher. Compared to other marinas, the Port’s fuel prices were about $.23 below average for unleaded and $.17 below average for diesel. The Port uses a set margin for fuel pricing. Commissioner Johnston asked if there were any wide swings in fuel costs over the last quarter, and Ms. Drennan answered that prices have fluctuated dramatically. The Port fuel prices are based on the rack price plus the mark up, and this policy has worked well for the past few years. Commissioner Preston asked how often the fuel is delivered, and Mr. Baker answered that, during the summer, the Port places at least two orders per week. However, there are significantly fewer deliveries throughout the fall and winter months.
• Round trips at the Public Launch increased by 2% from 2021, and one-way launches decreased by 1%.
• Staff made it through another busy season. The maintenance team did a great job keeping all of the equipment running, and there were a lot of great customer service reports from visitors, long-term tenants, etc.
Commissioner Grant asked how many live-aboard tenants moor at the Port, and Mr. Baker said there are currently 13 and the Port allows a total of 15. Out of the 13 that have the privilege, approximately 8 are full-time live-aboard tenants. The others keep the privilege for future planning.
Commissioner Preston suggested it would be helpful to have pictures of the current staff since there have been some changes. Mr. Baker said they normally provide that information at the beginning of the season, but it didn’t get done this time because he was on paternity leave. Commissioner Preston asked that he provide pictures of the current staff for the Commission’s information.
3RD QUARTER FINANCIAL REPORT
Ms. Drennan presented the 3rd Quarter 2022 Financial Statements, noting that revenues generally trended up from $7.5 million in 2018 to $9.5 million in 2022, but $560,000 of the increase is due to the increase in fuel prices. Expenses ranged from $5.4 million to $6.4 million. As inflation dramatically increased from the same time last year, the graph at the top of Page 2 shows the Port’s revenues and net income adjusted by the Consumer Price Index (CPI), using 2018 as the base period. Adjusted for CPI, revenue averaged $7.6 million, and expenses averaged $5.4 million. CPI increased by about 20% from August 2018 to August 2022. Net income generally trended up, ranging from $2 million to $3 million. Adjusted for CPI, net income ranged from $1.9 million to $2.5 million.
Ms. Drennan advised that, actual to budget, revenues were $1.2 million greater than budget and expenses were $383,000 less than budget. Gross profit for the 9-month period was $7.2 million, which is $512,000 greater than budget. Net income for the same period was $3 million. She highlighted the following items:
Marina Operations Revenue Actual to Budget
• Net fuel Sales revenue was $296,000, or $126,000 greater than budget.
• Net Guest Moorage revenue was $211,000, which is about $37,000 or 21% greater than budget.
• Permanent Moorage revenue was $3,161,000, which is $71,000 or 2% greater than budget.
• Dry Storage revenue was $689,000, which is about $82,000 or 14% greater than budget.
• Parking revenue was $121,000, which is $47,000 or 63% greater than budget. (This includes commuter parking, Puget Sound Express parking, and truck and trailer parking).
• Travelift revenue was $144,000, which is $20,000 greater than budget.
• Workyard revenue was $132,000, which is $32,000 or 32% greater than budget.
• Financial occupancy for Permanent Moorage during the first three quarters of 2022 was 100%, and 98% was budgeted. Financial occupancy for Dry Storage was 98% and 87% was budgeted. This is the highest occupancy since 2008. She anticipates that financial occupancy will drop some in the 4th Quarter, as some tenants are able to take their boats home.
Rental Properties Revenue Actual to Budget
• Total Rental Property revenue to date was $2,120,000, which is $110,000 or 5% greater than budget.
Operating Expenses Actual to Budget
• Operating expenses before depreciation for the 9-month period were about $3.8 million, which is approximately $256,000 or 6% less than budget.
• Employee Benefits were $540,000 or about $30,000 less than budget.
• Offices Expenses were $64,000 or $31,000 less than budget
• Payroll Taxes were $212,000 or $22,000 less than budget.
• Repair and Maintenance expenses were $257,000 or $32,000 less than budget.
• Salaries and wages were $1,754,000, which is $56,000 less than budget.
• Supplies were $207,000 or $37,000 less than budget.
Non-Operating Expenses Actual to Budget
• Change in Fair Value of Investments was about $13,000, which was not budgeted.
• Interest Income was $201,000 or $88,000 greater than budget.
• Property Tax revenue was $464,000, or about $9,500 greater than budget.
• Net Income after depreciation for the 9 months ending September 30th was $3 million, which is $849,000 greater than budget.
Marina Actual to Budget
• Revenues in 2018 through 2022 ranged between $5 million and $6.6 million and expenses ranged between $3.6 million and $4.5 million, with the highs in 2022.
• Net income trended upward from $1.1 million in 2021 to $2.1 million in 2022.
• Operating revenues were $1,062,000 greater than budget and expenses were $328,000 less than budget.
• Operating revenues were $6.6 million, which is $1,060,000 greater than budget.
• Operating expenses before depreciation and overhead were about $2,157,000 or $168,000 less than budget.
• Net income was about $2,081,000 or $733,000 greater than budget. Any net income goes back into the Capital Reserve to replace marina equipment and other major marina infrastructure.
Rental Property Actual to Budget
• Rental property revenues ranged from about $2 million to $2.1 million and expenses ranged from $1 million to $1.2 million.
• Net income ranged from $874,000 to $930,000.
• Revenues were $110,000 greater than budget, and expenses were $36,000 greater than budget.
• Operating revenues were approximately $2.1 million or about $110,000 greater than budget.
• Operating expenses before depreciation and overhead were $588,000 or about $46,000 greater than budget.
• Net income was $930,000 or $145,000 greater than budget.
• As of September 30th, the Port had 20 long-term investments.
• A $500,000 US Treasury STRIP that matured on July 15th was matched with a US Treasury note that matured on May 15th. Those were added together to make a new $1 million investment. The $500,000 Fannie Mae Bond that matured on September 6th was matched with a US Treasury note that matured on October 15th to make another $1 million investment.
• The Capital Replacement Reserve is a little greater than $19 million
• The Environmental Reserve is almost $1.1 million.
• The Public Amenities Reserve is about $363,000.
• As bonds are being called or maturing in 2022, the Port is continuing to invest using the laddering method, with each investment at $1 million.
• The Port received a grant award of $30,000 from the Washington State Archives Local Records Grant Program to purchase, install, and implement a DocLink records management system. The project was accepted as complete in July of 2022. The Port paid a total of $39,357 for the software and installation, and received reimbursements of $30,000 from the State of Washington on October 3rd.
EXECUTIVE DIRECTOR’S REPORT
Mr. McChesney reported that the J Dock repairs have been completed. Over 20 additional through-rods were installed to stiffen the connection between the finger pier J Dock and the main dock. He anticipates that maintenance will be required every year in this location due to activity with Puget Sound Express.
Mr. McChesney announced that Valley Electric will be starting the electrical project on N Dock on November 7th, but they are still waiting for the ground fault circuit interrupter (GFCI) parts that are still about a month out. He anticipates that the N Dock extension will be out of commission for some time, and it will be interesting at the end of the year to know the impact to revenue.
Mr. McChesney advised that the junction boxes on B through H Docks were examined, and they are still waiting for parts to do the necessary repairs. He anticipates this will be a work-in-progress for a number of months. Commissioner Preston requested a rough estimate of the cost of this project.
Mr. McChesney reported that the slab for the new Administration/Maintenance Building was poured on October 31st, and the footings are done. Starting next week, steel will be on site.
Mr. McChesney advised that Anthony’s Restaurant did some cosmetic repairs to the south side of their building. The catwalk was removed and replaced with a band strip. Commissioner Preston asked if an awning would be installed in this location, and Mr. McChesney responded that the intent is to install a permanent awning in early 2023. The picnic area in front of the restaurant will also be revamped in 2023.
COMMISSIONER’S COMMENTS AND COMMITTEE REPORTS
Commissioner Johnston reported that he attended the Washington Public Port Association (WPPA) Small Ports Seminar in Leavenworth, along with Commissioners Preston and Grant. It was generally a very good program on a number of topics:
• How ports can partner to create tourism opportunities.
• Succession planning at your port. The focus was on growing from within. This isn’t always possible, and they didn’t spend enough time talking about other options for succession planning.
• A presentation from the State Auditor’s Office titled “Partners in Good Government.” One key thing from that was the opportunities to piggyback or have ports join together to buy goods and services.
• Creative recruiting and retaining staff. The focus was on how to find and engage top talent. The Port of Edmonds has a great staff and a good retention record, but other ports aren’t so fortunate. They talked about incentives such as tuition assistance and ways to train good talent grown from within.
• Delegation of authority. The discussion focused on ways that ports can adopt or improve an existing delegation of authority. The Commission has adopted and amended the Port’s delegation of authority so the Port is in good shape in this regard.
• Regional transportation planning.
• Ports, Governments and Management Guidebook. This guide was put together by Maul Foster Alongi, and specifically Jim Darling, and has met with a lot of positive response. He brought back a few copies and left them with staff.
Commissioner Johnston noted that the next WPPA meeting will be the winter meeting in early December in Tacoma, and he plans to attend. He said he also had the opportunity to participate with Annie Crawley’s dive at the marina, as did other Commissioners and staff. It is a great program that is well received. He said he plans to also attend the Economic Alliance of Snohomish County (EASC) Coffee Chat on the Sound Transit (ST3) light rail extension project.
Commissioner Orvis reported that he attended the EASC Coffee Chat on building stronger business through diversity, equity and inclusion. He came away concerned because he still doesn’t know what that means. The presenters talked about how it is more than minority hiring, it is fairness. They also talked about leverage ability, and all of them concluded that we need a common understanding of what that means. One sponsor commented that equity means that people need to be able to work their own way, taking advantage of their cultural differences. He was bothered by a presenter’s off comment that we need to get over worrying about profitability and mission. Another said we have to get over our white-supremacist culture of achievement and accountability. The burden for implementing these policies falls on middle management, but there are no clear definitions, directions or ways to measure success. While they may know what they want to have happen, no one has been able to articulate it in a way that is acceptable.
Commissioner Grant asked if Commissioner Orvis attended the WPPA legislative session, and Commissioner Orvis answered affirmatively. He referred to information he provided to each of the Commissioners and highlighted the following:
• The state’s energy strategy currently forecasts insufficient supply for electricity to meet demand created by electrification.
• Based on an initial study, both Governor Inslee and Senator Murray are on record saying that the requirements of compensation must be met before dams can be taken down, and the transportation budget includes $10 million to do an additional study.
Commissioner Grant asked if ports had any priorities during the past legislative session, and Commissioner Orvis advised there will be another meeting at the end of November and Commissioners will receive a briefing. He added that Chris Herman, WPPA Deputy Director, is doing a good job.
Commissioner Grant reported that he also attended the WPPA Small Ports Conference, and Commissioner Johnston gave an excellent overview. He said he enjoyed the cooperative purchasing aspect, but he was taken aback. He pointed out that the General Services Administration (GSA) has at least two Federal Supply Schedules that all of the states can use so they don’t have to go out and get bids. It would really help ports if the WPPA could provide this information. He said he mentioned that to the interim director at the meeting, and he is hoping they will take it up.
Commissioner Grant advised that he spoke at the Edmonds Civic Roundtable on the Waterfront Study, providing a light history of Edmonds and how the ports have been used over the years. About 79 people participated.
To address cyber security, Commissioner Grant reported that he has worked with the Attorney General’s Office, WA Tech, Seattle and Tacoma who have agreed to work with the ports on putting something together. They are in the process of setting that up. In addition, he sits on the national Federal Emergency Management Agency (FEMA) Task Force, and they recently sent out a national draft on cyber-security incidents that is quite good. He can provide the information to our IT Department. Cyber and Infrastructure Security Agency (CISA) (Part of DHS) is doing a lot of work helping with cyber security. A number of grants are in the pipeline, and the committee is working to put together tools as the effort gets going.
Commissioner Grant said he has attended most of the Edmonds City Council meetings. He shared the following highlights:
• Mayor Nelson has proposed a budget that includes about $3.2 million more than they are bringing in. The intent is to use some of the current surplus. While revenues are currently higher than normal, they are adding a lot of hard dollars that could be problematic if revenues go down. He voiced concern that they are trying to spend based on what they are making this year, which isn’t normally the best approach for government entities.
• The Edmonds Downtown (ED) Alliance gave their mandatory annual report. They have about 400 members. While they have received some complaints, about 97% of all the members are current on their dues. Commissioner Preston noted that some service business owners have voiced opposition to having to pay the tax when there is no benefit to their business. It is clear that some adjustments are needed, but the ED doesn’t currently have the wherewithal to do that. Commissioner Grant agreed and noted that they tax based on square footage. He said the average tax is $265, with the largest businesses paying $600 each year.
• The new Public Works Director provided a very long and detailed operational and budget report. They are trying to purchase another dump truck for snow removal.
Commissioner Grant reported that he, Mr. Baker and Ms. Williams provided a tour of the Port to 27 people. Questions were raised about the proposed rate increase, and he explained how the Port came up with the numbers and pointed out the Port’s anticipated long-term expenditures. Overall, people enjoyed the tour and staff did a great job.
Commissioner Preston commented that Annie Crawley’s dive was great, as usual. He said it is amazing to watch how she interacts with the youth and parents, and safety is always a top concern. She leads by example. He said he invited her to provide a brief report to the Commission before the end of the year.
Commissioner Preston reported on his attendance at the Edmonds Yacht Club’s (EYC) general membership meeting on October 25th, where Mr. Baker and Ms. Williams gave a presentation on Port activities and projects. Questions were raised there, as well, about the proposed rate increase, and staff did a great job of explaining the Port’s policy. He suggested it would be helpful for staff to provide periodic updates as the North Portwalk and Seawall Project moves forward.
Commissioner Preston said he hosted a panel with three businesses at an Economic Alliance of Snohomish County (EASC) event, which was a lot of fun. At one of the clinics, a number of public entities were getting coaching and teaching from contractors. Each one of the speakers stressed the importance of a business’s culture when it comes to retention and recruiting. There was a vendor present who has worked with ports on records retention, digitizing paper files in an orderly fashion. He said he could contact them for more information. Mr. McChesney said the Port has gone in a different direction with an archiving program they purchased last year with grant funding. They are doing the same thing, but incrementally using their own resources. Ms. Drennan said the first step has been to organize the files, which are a mess.
Commissioner Preston noted that the Port’s monthly mailers asks tenants to refrain from cleaning fish or crabs on the docks, yet he sees people doing just that. He asked if there is an enforcement mechanism in place to address the problem. Mr. Baker responded that the current policy doesn’t adequately address enforcement, and he anticipates it will be rewritten by next spring.
Commissioner Preston noted that the monthly mailer also reminds boaters that the marina is a “no wake zone.” As a courtesy to other boaters, people are asked to abide by the speed limit and travel slowly in the marina. He asked if there is any enforcement of this rule. Mr. Baker said there are standard issues that come up every spring and winter and Port staff does its best to enforce the rules. Mr. McChesney observed that it is difficult for staff to get into enforcement mode because it conflicts with the customer service culture of the marina.
Commissioner Grant said he would like Ryan Crowther, the new president and CEO of the Edmonds Chamber of Commerce, to provide an update to the Commission. He would also like an update from South County Fire District 1.
The Commission meeting was adjourned at 8:01 p.m.
Port Commission Secretary