27 Mar Commission Meeting Minutes 3-9-2020
PORT COMMISSION OF THE PORT OF EDMONDS MINUTES OF REGULAR MEETING
March 9, 2020
Jim Orvis, President
Angela Harris, Vice President
David Preston, Secretary
Bruce Faires (excused)
Bob McChesney, Executive Director
Marla Kempf, Deputy Director
Tina Drennan, Finance Manager
Brittany Williams, Manager of Properties and Marketing
Bradford Cattle, Port Attorney (by phone)
CALL TO ORDER
President Orvis 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.
Item D (CG Engineering Boardwalk Assessment Contract No. 2020-337), Item E (CG Engineering Gangway Specifications Contract No. 2020-338) and Item F (Pacific Mobile Structures Mobile Office Trailer Change Order No. 1) were pulled from the Consent Agenda.
COMMISSIONER PRESTON MOVED THAT THE REMAINDER OF THE CONSENT AGENDA BE APPROVED TO INCLUDE THE FOLLOWING ITEMS:
A. APPROVAL OF AGENDA
B. APPROVAL OF FEBRUARY 24, 2020 MEETING MINUTES
C. APPROVAL OF PAYMENTS IN THE AMOUNT OF $205,599.77
COMMISSIONER JOHNSTON SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.
CG ENGINEERING BOARDWALK ASSESSMENT CONTRACT NO. 2020-337 (Item D on the Consent Agenda)
Mr. McChesney said the Boardwalk Conditions Survey is derived from the Public Access Plan. It was suggested that, at some point, the Port might put a different surface on the northern portion of the boardwalk. A condition survey on the entire structure is needed before the Commission can make any decisions going forward. At this time, the existing boardwalk’s loading capabilities are unknown. Staff has asked CG Engineering to conduct a condition survey and prepare a report that will guide future decisions related to boardwalk renovation.
CG ENGINEERING GANGWAY SPECIFICATIONS CONTRACT NO. 2020-338 (Item E on the Consent Agenda)
Mr. McChesney reviewed that the Port staff and Commission have had discussions over the past several months about replacing the gangway at the Travelift Dock. The current gangway is old and needs to be replaced. Puget Sound Express (PSE) has been using the ramp for the past few years, but its pitch is very severe during low tide. Not only is it hard for PSE passengers to use the ramp, it is also difficult for staff to service vessels that are using the Travelift. The project is more complicated because they want to make the ramp longer, which adds weight and raises some buoyancy and stability questions. Staff would like to hire CG Engineering to do the design so the project can be put out to bid. He cautioned against moving forward with the project without specifications.
COMMISSIONER JOHNSTON MOVED THAT THE COMMISSION APPROVE THE CG ENGINEERING BOARDWALK ASSESSMENT CONTRACT NO. 2020-337 (Item D on the Consent Agenda) and CG ENGINEERING GANGWAY SPECIFICATIONS CONTRACT NO. 2020-338 (Item E on the Consent Agenda) AS PRESENTED. COMMISSIONER HARRIS SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.
PACIFIC MOBILE STRUCTURES MOBILE OFFICE TRAILER CHANGE ORDER NO. 1 (Item F on the Consent Agenda)
Mr. McChesney reviewed that he briefed the Commission in February about the urgent need to replace the dilapidated and unsafe Dry Storage Mobile Office. The building is quite old and is showing a lot of wear and tear, and there is a significant rodent problem. There are no uniform specifications for a building of this type and every manufacturer makes them a bit different. Staff solicited quotes from a number of companies and received a bid on February 7th from Pacific Mobile Structures for $41,679.00 plus sales tax. The bid was presented to the Commission and the acquisition was approved. However, when staff attempted to engage the purchase, they were informed that the price that was quoted in February was no longer applicable. As a result of the Coronavirus crisis, many agencies are attempting to acquire the buildings for their quarantine efforts, and the price increased. Staff approached the company who submitted the second lowest quote and found their price had increased even more. Because the project can’t be bid out and the lead time is three months, he recommended the Commission accept the price change order from the original supplier, Pacific Mobile Structures, for $44,878.00 plus sales tax. The total price increase is $3,531.70.
Commissioner Preston pointed out that, at the bottom of the quote submitted in February by Pacific Mobile Structures, there is a statement that it is good for 30 days. Mr. McChesney agreed but the company withdrew the quote and will no longer honor that price. The Port has no legal way to make them honor the quote because it wasn’t a bid or contract.
Commissioner Harris asked if the transportation costs would be significantly reduced. Mr. McChesney said the company did work with the Port to reduce the transportation costs, but the actual cost of the structure and delivery remains as per the change order.
Commissioner Preston asked if the company is experiencing a shortage of supply or if they simply see an opportunity to jack the price up 10% based on increased demand. Mr. McChesney said suspects the cost increased is based on demand.
Commissioner Johnston asked how much more the quote from the second company was, and Mr. McChesney said it was approximately $3,500. Commissioner Orvis asked if the bid from Pacific Mobile Structures was a firm bid, and Mr. McChesney answered that it was of today, but they should act quickly.
COMMISSIONER JOHNSTON MOVED THAT THE COMMISSION AUTHORIZE THE PACIFIC MOBILE STRUCTURES MOBILE OFFICE TRAILER CHANGE ORDER NO. 1 FOR A TOTAL INCREASE OF $3,531.70 TO EXPEDITE MANUFACTURING AND DELIVERY OF THE OFFICE STRUCTURE. COMMISSIONER HARRIS SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.
Edmonds City Council Member Paine announced that a Sound Transit Representative will meet with the City Council on March 20th to talk about parking impacts at the Edmonds station, as well as how the area will be impacted during construction of the light rail through Lynnwood. She invited the Commissioners to attend the meeting. Mr. McChesney asked if the City anticipates a surge of riders on the Sounder Train as a result of closures associated with light rail construction. Commissioner Orvis said he learned at a recent Economic Alliance of Snohomish County (EASC) meeting that some pretty spectacular changes are going to happen in Lynnwood. He suggested that the City Council ask the Sound Transit Representative to talk about these changes, too. It is anticipated that the Lynnwood station will be the busiest in the light rail network. Council Member Paine said Snohomish County taxpayers have given over $1 billion to the light rail project, which is just now crossing over into the county. Commissioner Orvis said he also learned from a Community Transit Representative that there will be additional bus service to the stations.
INTRODUCTION OF STAFF IN ATTENDANCE
Ms. Kempf introduced the staff members who were present, explaining that they were invited to the meeting to learn more about how business is conducted at the Port. She introduced Jon Tuley, Moorage Utility Worker; Anders Kvarnberg, Utility Worker; Joe Seppa, Staff III and Travelift Operator; Rick Riippa, Utility Worker; and Toradj Khosroabadi, Dry Storage Lead. The Commissioners welcomed them and thanked them for their service.
CORONAVIRUS (COVID-19) UPDATE
Mr. McChesney advised that he had invited Shawn Frederick, Chief Administrative Officer at the Snohomish County Public Health District, to brief the staff and Commission on the latest developments of the Coronavirus. Port staff is concerned about creating a contingency plan, as the Port is obligated to provide a safe, clean and healthy work environment for its employees and customers. There is so much information in the media that it is difficult to know what is really going on in terms of the virus’s spread and severity and what to do. Unfortunately, Mr. Frederick was called away for a conference call with the governor and won’t be available. However, that doesn’t diminish the importance for everyone to be aware of the situation and care for their own personal health and that of their family. He doesn’t anticipate closing the Port, but some employees may end up missing work and they might have to operate with a limited staff.
Commissioner Johnston asked if the Port has been influenced by the virus yet, such as lower usage. Mr. McChesney said he hasn’t seen that, and the Port was busy all day. Port staff is dispersed throughout the marina rather than being clustered into a single, large office area. However, employees are exposed to customers, and there isn’t a definitive, one-size-fits-all strategy for dealing with the situation. Commissioner Johnston asked if there have been any impacts to Harbor Square businesses. Ms. Williams answered that activity appears to be down a bit, and some businesses are allowing their employees to work from home. Activity is down at the Harbor Square Athletic Club.
Commissioner Harris asked if the Port has established hand sanitizing stations throughout the marina. Mr. McChesney answered that they have been distributing hand sanitizer and sanitizing wipes, and employees and customers are encouraged to use them frequently, along with hand washing.
Commissioner Preston asked if any water moorage tenants have self-quarantined in their vessel, and Mr. McChesney answered not that he is aware of.
DRY STORAGE OPERATIONS SUMMARY
Mr. McChesney reviewed that, at the last Commission meeting, Dry Storage tenants voiced concern about the changes that were recently implemented. Staff took these concerns under advisement and will meet with the customers on March 10th. The purpose of this discussion is to share some of the ideas that will be discussed at the meeting.
Ms. Kempf summarized that the comments that were made at the last meeting, which included:
• The rules are ever-changing and there needs to be more consistency.
• There was a desire to have overnight use of B Dock.
• Why is the Port taking the ability to pre-launch (night before) away?
• Some tenants like to leave before Dry Storage operations open.
• How did the Port arrive at the 21-move limit and $25 charge?
• Could moves be averaged throughout the year?
• Can the port revert to allowing boats to be left in the water overnight?
• What is driving the change?
• Does the Port have a long-term comprehensive plan for the marina as a whole?
• Boats left overnight in the water and not gone by 7 am are supposed to be charged a guest moorage fee for that night. There are boats that are left unused for days in a row.
• The Port should enforce the rules.
• There was concern about losing the ability to keep boats in the water.
• A tenant received a ticket because he didn’t understand the new rules.
• There should be a set fee for moving boats in and out of the water instead of a charge on each touch.
Ms. Kempf provided two spreadsheets to show Dry Storage investments and income for the past 10 years. She reviewed the revenues and expenses over the 10-year timeframe and summarized that revenues from Dry Storage have increased by an average of 1.43% for the past 10 years, whereas operating expense have increased by an average of 2.6%. She noted that the bottom line for Dry Storage didn’t turn positive until 2014. She said a quick review of the numbers show that if you take the operating results and subtract just the bond payments over the past ten years, the Port is $1.6 million in the hole on the Dry Storage operations. She advised that the Port has continued its commitment to quality, service, value and convenience by investments to maintain and improve the racks, the minuteman launchers, the dock return, the pre-launch areas and the forklifts.
Ms. Kempf briefly explained that the Port was able to reach a better bottom line for Dry Storage Operations because:
• The State removed the 12.84% excise tax requirement on publicly-owned dry storage facilities in 2011.
• The Port created the Utility Worker positions, which allowed utility workers to have a home base for about 80% of the time. The workers spend the rest of their time in other departments working on various projects. This allows staff to charge their time to a different department so it doesn’t all go against the Dry Storage bottom line. During slower times of year, it isn’t necessary to have a full team in the Dry Storage area.
• The east lot was closed in 2012. There were about 45 boats on stands in the east lot. It was expensive to run the forklift down Admiral Way and the operators had to be out of the Dry Storage facility for long periods of time. Production went down and there was significant wear and tear on the forklifts.
• The Port implemented a variable rate structure in 2012, which established peak and non-peak season rates. The theory was that the majority of the moves happened during peak season.
• The Port revised the dock protocols in 2018, which she anticipated would result in more forklift moves. However, 2019 had the least amount of forklift moves over the last five years.
• The Port remeasured boats and moved them to appropriate size categories. Dry storage empties out during the non-peak season but fills up during the peak season. Sometimes customers request space towards the end of the peak season, and the Port tries to accommodate them even if the boat isn’t in the right size category. Sometimes boats were not relocated to the right-size space during the off season.
Ms. Kempf announced that the 5-year annual occupancy average in Dry Storage is about 92.5%, which is very good. Occupancy is lowest in the 21’11” category (Rows A and B) where the non-peak season vacancy is about 32%. In 2018, the Port created a pay-per-move option for this size range for boats that are going to be inactive. The idea was to encourage tenants who typically trailer their boats during the off season to stay in the facility throughout the winter. If they were inactive, the rate was $130 per month, including a free move in and out. They also offered half-price sling and wash for tenants who were moving from water to dry storage. At that time, the rate per move was $25. Only a few customers signed up for the pay-per-move option, and vacancy in Rows A and B is still around 32% during non-peak times.
Ms. Kempf reported that in 2018, Port staff analyzed moves for five months (May, June, July, August and September). They found an average of 76% of the spaces in Dry Storage had recorded moves. 7 spaces had more than 20 moves in May, 5 in June, 30 in July, 15 in August and 23 in September. During the 5 months, 26 tenants had over 21 moves one month and one tenant had over 21 moves all five months. Also during the 5 months, 32 tenants requested between 22 and 26 moves per month, and 3 tenants requested more than 40 moves per month. She summarized that 28 tenants moved more than 21 times in July. About 43 tenants (19%) would be affected annually by the per-move charges: 18 seasonal and 25 long-term. There are currently 24 tenants from the original data set that are still at Dry Storage.
Commissioner Preston pointed out that the numbers are associated with the old situation when moving in and out of the water required four touches. Ms. Kempf said the numbers are based on the old policy of unlimited moves. Commissioner Preston observed that moving boats from the rack to the water without going to the loading area would save 25% of the moves. Ms. Kempf agreed that is possible in some situations. Commissioner Preston commented that eliminating the extra move would allow the operators to get boats in the water quicker, too.
Ms. Kempf explained how the Port arrived at the 21-move policy and $25 for each additional move. The unlimited move policy has not been financially viable, and they need to stop the losses. Raising rates by the Consumer Price Index (CPI) plus 1% has not and will not recover the losses or provide enough funding for future expenditures. About 19% of the Dry Storage customers during the database timeframe moved their boats over 21 times, which means that 81% didn’t. It makes sense to charge more to those who are receiving a higher level of service, and the $25 per move was already part of the Port’s rate structure.
Recognizing that change is always difficult, Ms. Kempf said the Port added some perks to help people in the 24-26 move range to not have to pay so much more during the peak months. For example, operators can use the center washdown rack to allow boat owners to put boat plugs in. No move would be charged for placing a boat on the washdown for plug placement only. In addition, the Port offers tenant rewards for fuel purchases. In previous years, the tenant reward has been one free night of guest moorage or one free round trip on the public launch with the purchase of 75 gallons of fuel. As a result of the new policy, the Port will also offer one free forklift move with the purchase of 50 gallons of fuel, to be applied after 21 moves have been reached for the month. The program details are available on the Port’s website. Commissioner Preston suggested that the forms that are needed to obtain the reward be made available at the Marine Services Office. Commissioner Johnston asked if any tenants have utilized the promotions, and Ms. Kempf answered that no tenants have reached 21 moves per month in 2020. She said the highest number of moves typically occur in July, August and September during the fishing season. She summarized that, if a tenant fishes a lot (27 to 28 moves per month), it may cost an additional $150 to $175 per month to be next to the best fishing ground in Puget Sound.
Ms. Kempf reviewed the 2020 Dock Usage Guidelines. During times of low volume (November through April), the A Dock Pre-Launch Area is reserved for call ahead during business hours. Tenants can call ahead to have their boats launched the day before, but guest moorage charges will apply to boats on the dock after 7am. Overnight moorage is allowed on a portion of B Dock at no charge. However, if a boat is inactive for three or more days, operators may remove it from the water. Electrical charges apply if a boat is using power. A portion of B Dock is also reserved for boats that return after hours and for same-day launches. Boats that come in after hours are removed from the water and returned the rack the next morning. During times of high volume (May through October), the Port may enforce 45-minute time limits on the wash down. The A Dock Pre-Launch Area is reserved for call ahead during business hours. All of B Dock is reserved for boats returning during business hours. These boats will be removed from the water that same day, and no overnight moorage will be allowed for boats returning during business hours. Tenants who return during business hours but want their boats to stay in the water overnight can use V Dock or Guest Moorage for a fee. Tenants who return after business hours can moor their boats at either A or B Dock, and their boats will be removed from the water when Dry Storage opens the next morning. During high volume times, the operators have a good handle on which boats are still out in the water, and they could choose to use the westernmost part of A Dock to expand the call ahead area.
Commissioner Harris suggested that staff should also provide some indication of the Port’s long-term plan for Dry Storage. Commissioner Johnston said the tenants might also raise concerns about why the changes are needed given the rising profitability of the facility over the past several years. There are good answers to this concern, and staff should be prepared to respond.
Commissioner Orvis recalled that a tenant asked about the Port’s long-range plan for the marina, and Dry Storage, in particular. Staff should be prepared to share that the long-range plan is for the Port to be self-sustaining, without having to increase taxes in order to do maintenance and replacement. Looking towards the future, the anticipated cost increases as the marina ages require that they put away reserves, and that is what they are trying to do now. The long-range plan is that each accounting section is self-sustaining so that one group doesn’t have to subsidize another. The goal is to set money aside for future maintenance and/or replacement of facilities. Ms. Kempf said she has communicated with the tenant who requested information about the Port’s long-range plan, and she shared a link to the Port’s website where that plan is located.
HARBOR SQUARE BUILDING 3 UPDATE
Mr. McChesney reviewed that, in mid-2019, the Port enlisted the services of CG Engineering and BEE Consulting to develop a plan for addressing structural concerns at Harbor Square Building 3. After a tenant reported some unusual cracking in their space, staff removed some of the siding and found some glulam beams in a serious state of rot. On January 14th, the Commission awarded the Harbor Square 3 Structure and Exterior Improvements Contract 2019-328 to AM Exteriors, LLC, in the amount of $697,295.50 plus sales tax for the base bid. The project entails replacing select structural components, beams and posts; replacing building siding; installing energy-efficient windows and painting the exterior. Before this work can be done, they have to strip off the stucco to expose all of the underlayment to find the extent of the problem. He reported that maintenance staff started preparing the site on February 18, cutting back trees, etc. On February 24th, the contractor set up the job site. They are still expecting project completion by June 25th.
Ms. Williams reported that demolition work started on March 2nd, and it is anticipated that it will take about three weeks to remove the siding on all facades to expose the conditions. They started with the east façade where the issue was originally discovered and some temporary shoring was added. She shared a series of pictures to illustrate the work areas and the rot damage that has been found thus far.
Commissioner Johnston asked if the conditions that have been found thus far are included in the original estimate. Mr. McChesney explained that, because the extent of the damage was unknown, the original contract includes unit pricing for additional repairs. He anticipates the cost will go up based on what has been found to date.
Ms. Williams concluded that demolition should be finished in about nine days, and then the consultants will evaluate the situation and make further recommendations for repairs. So far, there haven’t been any major issues with tenants, and the staff and contractor have met and will continue to meet with the tenants to come up with workable plans. Staff will continue to meet weekly with the contractor, as well.
Mr. McChesney expressed his opinion that the project is going as well as could be expected, but he acknowledged that chipping away the stucco is noisy and messy. Ms. Williams has done an excellent job coaching the tenants through the process.
Commissioner Harris asked if the Port has offered relocation to any of the tenants in Building 3. Ms. Williams said tenants have been offered quiet work space in the conference room and elsewhere, as needed.
Mr. McChesney said dust is also a concern, and staff has had discussions with the contractor about the need to do a better job to contain the dust, which is very granular and gritty. Commissioner Johnston asked how the Port is addressing the potential of mold exposure. Mr. McChesney said that, at this time, the contractor hasn’t found anything in the damage that could be identified as mold contamination, but he acknowledged that mold may be found as the demolition work continues. In that case, the Port would have to hire a mold inspector. Commissioner Johnston asked if the contractor is familiar with mold issues, and Mr. McChesney said the contractor would likely be able to recognize mold issues if they come up.
EXECUTIVE DIRECTOR’S REPORT
Mr. McChesney reported that he, Ms. Kempf and Mr. Menard met with representatives from the Snohomish County Public Utility District (PUD) regarding their pre-planning work to upgrade electrical service along the waterfront. Currently, there is only one electrical circuit along the entire waterfront, and the PUD is concerned that an outage would shut everything down. They are in the initial stages of planning to add a loop circuit, and staff wanted to engage a discussion with them about the opportunity to upgrade the Port’s electrical service as part of the plan. He recalled that the Port has a limited capacity for 50-amp service in the marina and cannot currently meet the demand.
Mr. McChesney said he and Commissioners Johnston and Harris continue to work with the Edmonds Interfaith Climate Action Committee regarding the potential of solar energy at the Port of Edmonds. While most people conceptually agree that solar is a good idea, it doesn’t work everywhere and the business case for it is rather tenuous. They will meet with the group again on March 11th.
Mr. McChesney advised that staff met with representatives from Puget Sound Express (PSE), and they seem to be very enthusiastic about moving forward with the upcoming season.
COMMISSIONER’S COMMENTS AND COMMITTEE REPORTS
Commissioner Harris announced that she would attend the Edmonds Interfaith Climate Action Committee meeting on March 11th. Mr. McChesney noted that it will be a dial-in meeting. Commissioner Johnston said he would try to join the meeting, as well.
Commissioner Preston reported that he attended the Economic Alliance of Snohomish County’s Forecast meeting, where Dr. Bill Conerly, Conerly Consulting, made some bold statements about there being slow growth but no recession. A lot of people are afraid that robots will take away jobs, but he said there is such a shortage of workers that the robots will fill jobs that are needed but can’t be filled. He emphasized that panic decisions are not good ones, and the coronavirus won’t be a big deal. He said housing is a problem, not so much affordable housing, but the overall supply. At the meeting, it was reported that the North Line Village in Lynnwood is going to be redeveloped into more than 1,300 apartments and a variety of commercial and service uses within close proximity to the new light rail station.
Commissioner Preston said he also met with Dave Kaufer and Carolyn Davis from the Rotary Club of Edmonds to discuss Octoberfest 2.0, including last years successes and the changes that have been made. They may provide a brief update at the next Commission meeting.
Commissioner Preston announced that he would attend the Economic Alliance of Snohomish County’s update on March 18th.
Commissioner Orvis reported that he also attended the Economic Alliance of Snohomish County’s economic forecast, which was extraordinarily well done. There were four terrific speakers, including:
• Edward Alden from Western Washington University who commented that Brexit will wreak economic havoc in Europe, and tariffs and immigration rules will have significant implications for the global economy, including the United States. He said the big changes associated with the new United States Mexico Canada Agreement will be primarily seen in Mexico in labor relations, working conditions, and environmental issues. He pointed out that China committed with President Trump to bring $200 billion worth of trade to the United States to reduce the deficit, but their economy has slowed. He further pointed out that the tech war with China is now starting to resemble the Cold War. The tech war precedes the Trump Administration and has a great deal to do with congress as opposed to the executive.
• Lynnwood Mayor Nicola Smith advised that they are expecting upwards of 20,000 passengers a day to start at the new Lynnwood light rail station. They are planning on a bus every 30 seconds during rush hour. The Swift bus will go down to the 185th Street Station in Shoreline and cover more of Highway 99, and Sound Transit’s Director has indicated a link bus will go from the Edmonds Station to Aurora Avenue and then 236th Street by 2024. She advised that the new development in Lynnwood, which was mentioned earlier by Commissioner Preston, will have 1,300 apartments and a separate building for office/business uses. The former Sears store at Alderwood Mall will become a mixed-use commercial/residential development, and it is anticipated that Alderwood Mall will eventually become predominantly service-oriented businesses as opposed to big box stores.
• Dr. Bill Conerly, Conerly Consulting, advised that they should expect slow but continued growth. He reported that slow growth in the United States is not being driven by available jobs; its being driven by available people. The problem is not just about getting people educated; the population of the United States grew at the lowest level in 100 years in 2019. One indication of slow growth is people are starting to save money, which bodes good for the economy, particularly if there is a recession. If there is a recession, he anticipates a low-dip recession because growth is already slow and people are saving money. He reported that Snohomish County is growing at 1.6% because housing is less costly and there are plenty of jobs.
Commissioner Orvis announced that Patrick Pierce, President and CEO of the Economic Alliance of Snohomish County, leaves on April 4th. The Alliance plans to appoint an interim director and start a search for a new director.
Commissioner Orvis briefly shared the Washington Public Port Association synopsis of the last legislative session. Transportation is really a problem, and the legislature hasn’t been able to address repercussions associated with Initiative 976. Governor Inslee will not get his clean fuel legislation approved.
The Commission meeting was adjourned at 8:17 p.m.
Respectfully submitted, David Preston, Port Commission Secretary