16 Mar Commission Meeting Minutes 2-28-22
February 28, 2022 Port of Edmonds Minutes
David Preston, President
Steve Johnston, Vice President
Jim Orvis, Secretary
Bob McChesney, Executive Director
Brandon Baker, Director of Marina Operations
Tina Drennan, Manager of Finance and Accounting
Jordan Stephens, Port Attorney
Neil Tibbott, Edmonds City Council
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.
Item B (Approval of February 14, 2022 Minutes) was pulled from the Consent Agenda.
COMMISSIONER ORVIS MOVED THAT THE REMAINDER OF THE CONSENT AGENDA BE APPROVED TO INCLUDE THE FOLLOWING ITEMS:
A. APPROVAL OF AGENDA
C. APPROVAL OF PAYMENTS IN THE AMOUNT OF $243,086.24
D. HARBOR SQUARE BUILDING 4 HVAC REPLACEMENT CONTRACT
COMMISSIONER HARRIS SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.
APPROVAL OF FEBRUARY 14, 2022 MEETING MINUTES, AS SUBMITTED (Item B on the Consent
Commissioner Orvis requested a change to the February 14, 2022 meeting minutes on page 8, 4th bullet, Real Estate Excise Tax (REET) should be replaced with Watercraft Excise Tax.
COMMISSIONER ORVIS MOVED TO APPROVE THE FEBRUARY 14, 2022 MEETING MINUTES AS AMENDED. COMMISSIONER JOHNSTON SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.
There were no public comments.
PROJECT CONSULTANTS SUMMARY
Mr. McChesney reviewed that the Commission has been briefed and approved each of the capital projects. However, in anticipation of further discussion at the March 22nd Port Retreat, he wanted to review the various teams and consultants currently working on each of them. He commented that, from the beginning, it was difficult to exactly specify the scope of work or to know the full extent of the technical consultants required to bring the projects forward, as every project is different in scope and complexity. The report is intended to illustrate the layering effect of adding more consultants to the original team. For example, the Port didn’t know in advance that a Cultural Resources Analysis would be required to support the Joint Aquatic Resources Permit Application (JARPA) for the North Portwalk/Seawall Project. In addition, the Port didn’t have a complete understanding of the need to do a supplemental energy model for Leadership in Energy and Environmental Design (LEED) Certification for the new Administration/Maintenance Building or a flood plain elevation certificate for the new building. Other issues and conditions have also been addressed, such as a site Geotech analysis, surveys and State Environmental Policy Act (SEPA) support. All of these costs have added up to $1,126,365.72 in consulting fees to support projects that are currently underway. He reviewed the roster of consultants for each of the projects as follows:
• Consultant costs for the North Portwalk/Seawall Project add up to $630,323 for just the planning and permitting phase.
• Consultant costs for the Administration/Maintenance Building Project add up to $447,601. He briefly reviewed that the Port initially worked with Jackson Main Architecture to come up with a basic design for the exterior of a building and took it through the Shoreline Permit process, but the project never came to fruition. Later, when the Port started the North Portwalk/Seawall Project, it was determined that the best way to move forward was to demolish the administration building and repurpose the planned building for Port use. Because Jackson Main Architecture had designed the prior building, the Port contracted with the firm to update the design. He noted that Jackson Main Architecture would be at the Port Retreat to talk about the design, particularly issues related to LEED Certification. Commissioner Grant will also share research he has done on LEED Certification at the retreat.
• Consultant costs for the Harbor Square Building 1 Elevator Pit Repair are currently at about $5,000, but they don’t know what the final cost will be since the project requires that a certified elevator technician put together the scope of work, which must follow Department of Labor and Industries (L&I) Guidelines. He anticipates that the cost of the repair work will be more than $50,000.
• Consultant Costs for the Harbor Square Atrium Window Replacement (Buildings 1,3 and 4) are currently at $43,440.
Commissioner Grant recalled the extensive work done to repair Harbor Square Building 3 and asked if the other Harbor Square Buildings might have the same issues. Mr. McChesney responded that the other buildings are concrete tilt up, so they won’t have the same problem with water intrusion.
The Commissioners commented that it was helpful to see the list of consultant costs, and Commissioner Johnston observed that, typically, soft costs before construction, run 10% to 15% of the total cost of a project.
Commissioner Johnston said he recently had a discussion with Gary Haakenson, Capital Campaign Co-chair and Past Board President of the Waterfront Center, which achieved LEED Gold Certification. He indicated that the architects agreed to do all of the LEED permitting, reviews and checks pro bono, which saved them $60,000 to $70,000. Mr. McChesney noted that hasn’t been the Port’s experience. Commissioner Grant commented that it is important to quantify the outcome of anything you do. The Port wants to be environmentally safe and do the right thing, but they need to clearly understand the benefits and costs associated with certification. Mr. McChesney noted that this will be a topic of discussion at the Port Retreat.
LEASEHOLD TAX SUMMARY REPORT
Ms. Drennan explained that the leasehold excise tax is a tax paid by individuals or businesses who lease publicly-owned property. Real estate and personal property owned by a government entity is not subject to any property tax. When private parties use government property, they are provided with the same services as all other taxpayers, and the leasehold excise tax compensates governments for these services. She further explained that the leasehold excise tax rate is fixed at 12.84% of the rent paid for property. At the Port of Edmonds, it is charged on permanent moorage, guest moorage and workyard stays of more than 30 days, and rental property. Due to an Excise Tax Advisory issued by the Department of Revenue (DOR) in February 2011, dry storage is not subject to leasehold excise tax because tenants do not have dominion and control, which is required of rentals of real estate. Instead, the Port pays a warehousing business and occupation tax of 0.484% of gross receipts on dry storage revenue.
Ms. Drennan advised that leasehold excise taxes are collected from the tenants and the Port remits quarterly to the DOR. From January 1, 2017 to December 31, 2021, the Port collected and remitted leasehold excise taxes of between $735,226 and $831,806 each year for a total of almost $4 million. She shared that leasehold excise taxes are distributed between the state (54%), city (31%) and county (15%). The county’s portion is distributed to local governments, and the Port receives approximately $5,000 per year.
Port Attorney Jordan Stephens asked how often the leasehold excise tax rate has changed, and Ms. Drennan answered that it hasn’t changed in the 24 years she has been at the Port. However, she noted that the total amount of the taxes collected increases as rental rates increase.
CITY OF EDMONDS REPORT
Council Member Tibbott announced that the City Council approved acceptance of a grant from the State of Washington for $190,000 to do some runoff mitigation on SR-104. The intent is to filter the runoff from the highway before it goes into the marsh. He noted that the Port has been filtering runoff for quite some time, and now the City has received some funding from the state to do the same thing off the highway, which is a major source of pollution into the marsh. Council Member Tibbott also reported that the chain link fence that was blocking the water flow has been removed, and some invasive species have been removed, as well.
Council Member Tibbott reported that the City Council approved approximately $300,000 to install solar panels on the Public Safety Building. The cost will be paid off over a 20-year period, and the grid will provide about 20 to 30 years of electricity. He asked if the Port has considered opportunities for solar installations on Port facilities. Mr. McChesney said solar installation has been a recurring discussion at the Port, and the intent is to put solar panels on the new Administration/Maintenance Building. However, the Port has been hesitant to put solar panels on the marina roofs due to buoyancy and structural issues. Even though there is a lot of solar exposure, the roofs were not designed to carry the additional load.
Commissioner Preston asked if the City Council discussed the “cradle to grave” costs of the solar panels from getting the rare earth minerals and disposition of them once they are no longer good. Council Member Tibbott answered no, but agreed it is an important part of the sustainability of that particular resource. Starting small will provide the City with a better idea of what these implications are. Commissioner Preston commented that this issue will be part of the Port’s discussion at the Retreat.
EXECUTIVE DIRECTOR’S REPORT
Mr. McChesney reported that he participated in a great meeting and tour of the Port with Congressman Larsen on February 16th, which was arranged by Commissioner Grant. He expressed gratitude to the congressman for taking the time to visit the Port and discuss the North Portwalk/Seawall Project. The project is now on his radar, but there is much work to be done in terms of grant opportunities.
Mr. McChesney also reported he and Mr. Baker met with the franchise owner of the Freedom Boat Club. The boat club has operated out of the marina for three years, and they lease space from the Edmonds Yacht Club. They started with four slips, but they now have 16. They would like to locate three additional boats in the marina, but there aren’t any vacant spaces. At this time, there is no upper limit on the number of slips the boat club can lease. They have been a great company to work with, and they have done very well at the marina. He pointed out that the Port has traditionally had seasonal vacancies in the 30-foot-and-under categories. The Freedom Boat Club has been able to utilize these vacant slips, helping the Port maintain optimal occupancy year-round.
COMMISSIONER’S COMMENTS AND COMMITTEE REPORTS
Commissioner Johnston reported that he attended the last two Economic Alliance of Snohomish County (EASC) Coffee Chats. One was related to the County’s rebound from the pandemic and the reestablishment of near full capacity of hospital capabilities. Dr. Spitters told a bright story about moving forward, suggesting that the worst of the pandemic is over and they can start to get back to normal. At the other coffee chat, Snohomish County Public Utility District (PUD) talked about expanding solar power, recognizing that the area isn’t the greatest for solar power efficiency and other alternative types of power will have to be explored moving forward. They were very pleased to recognize that the state has a renewable resource in hydropower. They also announced that they were able to retain a full staff, which has enabled them to respond to emergencies in an effective manner.
Commissioner Harris said she also attended an EASC Coffee Chat. In addition, she attended a commissioner’s chat sponsored by the Port of Everett, which offered an opportunity for casual discussion amongst the participants following a short presentation. She suggested that the Port could use a similar format as their large projects move forward. Mr. McChesney suggested the Port could conduct an open house after the new Administration/Maintenance Building is finished.
Commissioner Harris reported that the Washington Public Port Association (WPPA) is working on its membership portal and website, and she volunteered to be part of the team that is working on the project. She expressed her belief that there is a lot of opportunity to share templates, ideas, etc.
Commissioner Orvis reported that he attended the EASC Coffee Chat where the Snohomish County PUD presented. Not only is the state fortunate to have hydroelectricity, but they also have nuclear power, which is now being included in discussions about clean energy. The PUD has a high customer-satisfaction rate, and the presentation was very professional.
Commissioner Orvis said he also attended an EASC Coffee Chat regarding the impacts and elements of economic development. From the discussion, it was apparent that no one knows exactly what economic development means. The term is tossed around, but no two people have the same definition.
Commissioner Orvis shared the following items from the February 25th Legislative Report:
• Both the House and Senate have proposed Operating Supplemental Capital and Transportation Budgets, which have been fast tracked to pass. They are currently in committee.
• The State has received a lot of money from the Federal Government, and the economy did a lot better than anticipated.
• The House’s proposed Supplemental Capital Budget allocates $2.5 million to the core Community Economic Revitalization Board (CERB), $25 million to broadband and $7.5 million to manufacturing. The Senate’s budget proposal doesn’t include any funding for core CERB.
• Broadband is a big deal. A number of legislators are following this issue, and it will be interesting to see what results. There is legislation to create a digital equity planning grant program.
• There are concerns about the proposed gas tax that is included in the transportation package, Move Ahead Washington. Alaska has already introduced a bill to impose a tax on crude coming to Washington, and Oregon is looking at things that may hold up funding for the Interstate 5 bridge.
• The WPPA is concerned that Move Ahead Washington was negotiated by the chairs of the respective house and senate committees, with little regard to anything outside the three counties (Snohomish, King and Pierce). The equity of the grant funding is questionable. Ports receive little state funding for their projects or projects they are interested in.
• Climate issues are big this year, as well.
• Twenty-five percent of the Watercraft Excise Tax will go to derelict vessel removal.
• A net ecological gain bill is moving forward and could affect water and shoreline permits. A committee is being formed to figure out how to evaluate ecological gain. Mr. McChesney asked if this would be folded into the Environmental Impact Statement or the State Environmental Policy Act. Commissioner Johnston answered affirmatively and said the history of past measures of this type has been total confusion and large project stoppages because it is very hard to define and quantify the various impacts. Mr. McChesney observed that every agency has its own method and criteria for determining ecological function and gain, and the requirements can become unwieldy.
Commissioner Orvis said he also participated in the visit from Congressman Larsen. He was impressed that the Congressman appeared to listen and take away something rather than being there to preach. He felt the visit went very well.
Commissioner Grant commented that the visit from Congressman Larsen went well. While the Port isn’t within his district at the moment, it will be under the new redistricting. He is on the legislative committee that oversees infrastructure, and that is one of the reasons he was invited. He listened and subsequently contacted Congresswoman Jayapal’s staff so that the Port could quickly submit an application for potential Water Resource Development Act (WRDA) grant funding. He said he has also initiated outreach to Senator Cantwell. He noted that other ports are having similar challenges when it comes to permitting. Senator Cantwell chairs the Commerce Committee where all of the port information goes.
Commissioner Grant said he watches the virtual Edmonds City Council meetings each week. At their March 1st meeting, they intend to pass an ordinance adopting the final budget, which includes the marine scuba diving unit. At their February 22nd meeting, the South Sound Fire District announced that the average response time was 8.5 minutes, and 8 minutes is considered best practice. It was noted that one area where there isn’t a station is down by the Port of Edmonds.
Mr. McChesney noted that Commissioner Grant previously requested that the Port Retreat include a discussion about the regulatory regime and permitting. Commissioner Grant suggested they consider the challenges that the Port of Edmonds and others have experienced. It might be good to quantify the bureaucracy and identify specific concerns to communicate to Senator Cantwell. Commissioner Harris asked if the WPPA has done any of this work, and Mr. McChesney answered that a consortium of ports in the WPPA have banded together to make an appeal. He agreed to learn more about this group’s efforts and report back.
Commissioner Preston said he also attended some of the EASC Coffee Chats. He noted that the next Commission meeting is March 14th, after the State’s indoor mask mandate has been lifted. The Port Retreat will be March 22nd from 9 a.m. to 2 p.m.
The Commission meeting was adjourned at 8:05 p.m.
Port Commission Secretary