11 Jun Commission Meeting Minutes 5-28-19
PORT COMMISSION OF THE PORT OF EDMONDS MINUTES OF SPECIAL MEETING
May 28, 2019
Steve Johnston, President
Jim Orvis, Vice President
Angela Harris, Secretary
Bob McChesney, Executive Director
Marla Kempf, Deputy Director
Tina Drennan, Finance Manager
Bradford Cattle, Port Attorney
Karin Noyes, Recorder
CALL TO ORDER
President Johnson 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 (Bird Fest Advertisement) was removed from the Consent Agenda.
COMMISSIONER FAIRES MOVED THAT THE REMAINDER OF THE CONSENT AGENDA BE APPROVED TO INCLUDE THE FOLLOWING ITEMS:
A. APPROVAL OF AGENDA
B. APPROVAL OF MAY 13, 2019 MEETING MINUTES
C. APPROVAL OF PAYMENTS IN THE AMOUNT OF $559,363.99
E. APPROVAL OF BIO HAZARD CLEANUP
COMMISSIONER PRESTON SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.
There were no public comments.
HARBOR SQUARE HVAC REPLACEMENT CONTRACT NO. 2019-309, ACCEPT AS COMPLETE
Mr. McChesney reviewed that the Commission was previously briefed on maintenance issues at Harbor Square. Since that time, a ducted furnace heating unit serving Building 5 failed and was replaced in April. Staff obtained a bid from MRSC roster member, D.K. Systems, Inc. for $13,416, which was under the threshold for competitive bidding. Staff worked with the contractor to minimize the disruption to tenants during installation, and the work was substantially completed on April 30th. He recommended the Commission approve the contract with D.K. Systems, Inc. in the amount of $13,416 plus sales tax for the 170 W. Dayton Building 5 HVAC Unit Replacement Contract #2019-309 as complete.
Mr. McChesney reminded the Commission that the Port also has another contract with D.K Systems, Inc. to replace an additional 12 HVAC units in 2019. The equipment has been ordered, but he does not have any progress to report at this time.
COMMISSIONER FAIRES MOVED THAT THE COMMISSION ACCEPT THE CONTRACT WITH D.K. SYSTEMS, INC. IN THE AMOUNT OF $13,416 PLUS SALES TAX FOR THE 170 W DAYTON BUILDING 5 HVAC UNIT REPLACEMENT CONTRACT #2019-309 AS COMPLETE. COMMISSIONER ORVIS SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.
AWARD OF CONTRACT FOR PORT LAUNCHERS UNIT PRICE REPAIR AND MAINTENANCE
Mr. McChesney briefly described the challenges getting qualified vendors to work on the Port’s launcher equipment. Previously, the Port entered into an on-call contract for repairs, but the contract expired in 2016 and the State Auditor took exception to the Port use of on-call contracts. However, recent legislation offers some relief by allowing ports to enter into unit-price contracts. He reported that staff recently went through the bid process for inspecting and repairing the launchers (Dry Storage hydraulic launchers and public launchers) and one bid was received from Everett Engineering, Inc. The contract is unit-price based, with work to be conducted per request of the Maintenance Manager or Executive Director and billed at the accepted unit price. Estimated annual quantities were used to calculate a value for award based on the low bid. However, due to the unpredictable nature of this work, only estimates for annual work are available. Actual repair costs will be based on the bid unit prices.
Mr. McChesney recommended the Commission authorize him to enter into a contract with Everett Engineering, Inc. for the unit prices for the Port Launcher Unit Price Repair and Maintenance Contract #2019-317. He explained that the contract would be for three years, with a potential one-year renewal option. From staff’s point of view, the Port will benefit from having a company available to do repairs when needed. He reported that, just this past weekend, the public launcher started having issues and they haven’t yet been able to isolate the problem. The Maintenance Manager suspects that the problem stems from a control box that is not properly ventilated. They need the ability to contact a service company on an on-call basis to help diagnose and remedy these situations.
Commissioner Faires asked if the unit price would be fixed for the duration of the contract, and Mr. McChesney answered that it would increase each year based on the Consumer Price Index. The cost is based on prevailing wages and the type of trade.
Commissioner Orvis voiced real concern about the reliability of the south launcher. Mr. McChesney agreed and said staff’s intent is to consult with Everett Engineering to address the problems holistically. One option is to completely rebuild the launcher so it is more reliable. He recalled that the equipment was designed by an outside contractor and was engineered poorly. The apparatus was designed for interior work, which is a fundamental flaw. He explained that there are only a limited number of companies that make this equipment. He said staff intends to index all of the repairs done thus far and then work with Everett Engineering to figure out what the issues are and how they can be fixed.
COMMISSIONER HARRIS MOVED THAT THE COMMISSION AUTHORIZE THE EXECUTIVE DIRECTOR TO ENTER INTO A CONTRACT WITH EVERETT ENGINEERING, INC. FOR INSPECTING, MAINTAINING AND REPAIRING THE PORT LAUNCHERS AT BID UNIT PRICES (CONTRACT #2019-309). COMMISSIONER ORVIS SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.
BIRD FEST ADVERTISEMENT (Item D on the Consent Agenda)
Commissioner Preston suggested that the Port’s contribution to Bird Fest should be increased from $500 to $2,000. He noted that the Edmonds Yacht Club is planning to provide more boats to help make the event more robust. Mr. McChesney explained that sponsorships are a delicate matter from the State Auditor’s point of view. The Port’s $500 contribution is more than just token and seems to be adequate. Commissioner Faires pointed out that the Port’s contribution has remained at the $500 level for about 10 years, and he is not opposed to increasing the amount to $1,000 based on inflation. Commissioner Orvis felt that the State Auditor’s concerns would not apply in this situation because the contribution falls under tourism and economic development. He said he would support increasing the Port’s contribution if there is a need, but he doesn’t know enough about the organization and its needs to make this decision now. He asked if the Chamber of Commerce and other groups have increased their contributions.
Mr. McChesney advised that the City of Edmonds, the primary sponsor of the event, has requested a $500 contribution from the Port, and that is what is identified in the 2019 Operating Budget. If the Commission is inclined to increase the amount, perhaps it would be better to make that decision as part of the 2020 Operating Budget.
Commissioner Preston suggested that, if the Port were to increase its contribution, perhaps the money could be earmarked specifically for promoting the event in an effort to get more people down to the waterfront. Most of the Commissioners indicated they would be opposed to placing specific requirements on how the money is spent, but Commissioner Harris pointed out that the current proposal would support marketing and promotional efforts.
COMMISSIONER FAIRES MOVED THAT THE COMMISSION APPROVE THE PUGET SOUND BIRD FEST ADVERTISING STIPEND OF $500. COMMISSIONER ORVIS SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.
1ST QUARTER 2019 FINANCIAL STATEMENTS
Ms. Drennan presented the 1st Quarter Financial Statements, noting that revenues and expenses are trending upwards. Net income had been trending upwards, but is a little down in 2019. Actual revenues exceeded the budgeted revenues by about $17,000 and actual expenses were about $160,000 less than budget. Gross profit for the 3-month period ending March 31st was $1,880,000, which was about $3,000 greater than budget. Net income for the same period was $505,000. Highlights include:
• Miscellaneous revenue was almost $35,000, which is about $13,000 greater than budget.
• Permanent Moorage revenues was $875,237, which is $31,263 or 3.45% less than budget.
• Dry Storage revenue was $139,458 which is $10,542 or about 7% less than budget
• Financial occupancy for Permanent Moorage was 94% and the budgeted amount of was 97%.
• Financial occupancy for Dry Storage was 79% and the budgeted amount was 85%.
• Nothing to note on Rental Properties.
Ms. Drennan advised that operating expenses before depreciation for the 3-month period were $1,207,000, which is $92,000 or 7% less than budget. Highlights include:
• Professional fees were about $29,000 or almost $40,000 less than budget.
• Repair and maintenance expenses were about $117,000 or approximately $21,000 greater than budget.
• Salaries and wage expenses were about $508,000 or approximately $24,000 less than budget due to timing differences.
• Supplies were about $82,000 or approximately $31,000 less than budget.
• Utilities were about $126,000 or approximately $19,000 greater than budget.
• Depreciation was about $345,000 or approximately $58,000 less than budget.
• Interest income was about $84,000 or approximately $31,000 greater than budget.
Net income for the 3-month period was $505,000, which is approximately $203,000 greater than budget.
Ms. Drennan reported that Marina revenues and expenses are trending upwards, and net income is generally trending upwards, as well. Actual operating revenues were $1,278,769 or approximately $32,000 less than budget and operating expenses before depreciation and overhead were about $648,000 or approximately $40,000 less than budget. Net income was about $195,000 or approximately $134,000 greater than budget.
Ms. Drennan further reported that rental property revenues are trending upwards and expenses do not appear to have a trend at this time. Net income is generally trending upwards, with a slight dip in 2019. Revenues were about the same as budget and expenses were greater. Actual operating revenues were about $683,000 or $3,000 greater than budget and operating expenses before depreciation and overhead were about $197,000 or approximately $34,000 greater than budget. Although operating revenues and expenses both exceed budget, net income is greater than budget due to less than budgeted overhead costs.
Ms. Drennan reviewed the investing summary, which included the following highlights:
• The Port has 16 long-term investments, and the next bond matures in June 2019.
• One bond matured in February 2019. The Port held the bond for 36 months with a yield of 1.30%. Interest on liquid funds rose from 0.41% in April 2016 to 2.25% in March 2019.
• The Port purchased a non-callable $500,000, 60-month bond in February with a 2.50% coupon.
• The Port earned interest of $83,882 in the first quarter of 2019, which is 78% greater than the same period in 2018.
• The Capital Replacement Reserve is currently at about $11 million, with part of the reserve in cash reserves and part invested long term.
• The Port has $1,142,992 remaining in outstanding depth, and all of it is due within one year.
• Staff is working on investing another $1 million long term.
Commissioner Johnston requested more information about why maintenance and repair and utility expenses have increased significantly. Does staff see any red flags coming up with regard to performance? Ms. Drennan said not yet, but as discussed previously, repair and maintenance costs will continue to rise as the Port’s facilities age. In addition, she pointed out that the fire alarm system replacement at Harbor Square was budgeted in 2018 but was not completed and expensed until 2019. There was a question about whether or not the fire alarm system could be capitalized, and Ms. Drennan explained why this would be difficult to do. She also reminded them of the State Auditor’s comment that the Port was a bit over-aggressive and she had to make some corrections.
EXECUTIVE DIRECTOR’S REPORT
Mr. McChesney reported that he attended the Edmonds Economic Development Commission meeting in Commissioner Faires’ place. Council Member Tibbott presented a breakdown of where all the City’s revenues come from.
Mr. McChesney reminded the Commissioners of Family Day at the Port on June 1st from 11:00 a.m. to 3:00 p.m. Ms. Kempf advised that the event will include:
• Free tours of the Classic Yachts
• A table with tubs of sea life for observation provided by Dr. Mandy Schivell from the University of Washington
• Demonstrations by the Coast Guard Auxiliary
• A fish print project at a kids table
• Food trucks
• A clean up dive in the area of B, C and D Docks provided by Annie Crawley and her team.
• Free boat rides sponsored by the Freedom Boat Club
• The City of Edmonds’ Beach Rangers
• Sea Jazz
Ms. Kempf reported that the event has received a lot of interest, and Port staff are anticipating a good event. The event has been advertised in My Edmonds News, on the Port’s website, Facebook, posters throughout the community, and a reader board at the entrance to the Port.
Mr. McChesney advised that the Port will have a booth at the Edmonds Arts Festival again this year. The intent is to use it as a platform for expanding the public access survey to solicit feedback from a different demographic than just people who are using the boardwalk.
Mr. McChesney reminded the Commissioners that they typically cancel their 1st regular meeting in July and the 2nd regular meeting in July is usually for accounts payable only. This will require Commission approval at their next
COMMISSIONER’S COMMENTS AND COMMITTEE REPORTS
Commissioner Harris said she plans to attend Family Day at the Port.
Commissioner Johnston reported that he attended the Washington Public Port Association (WPPA) Spring Meeting in Spokane on May 15th through 17th, and he was surprised to learn that his name was included on the program as a presenter to provide an update on the Orca Recovery Task Force. There was a good discussion and it was good to reach out to other ports for feedback on a variety of issues. The legislature acted on a number of the task force’s recommendations including protection for orcas against boats coming too close and too fast, stronger regulations for hydraulic project approvals, registration criteria and training for whale watching businesses, and regulations for vessels transporting oil through sensitive areas. The overall consensus was that the task force was successful. The idea of breaching the lower Snake River dams is gaining traction, and the task force has been asked to assess the effects of climate change on salmon recovery and orcas and how the footprint might be exacerbated by breaching the dams. He explained that breaching the dams will result in a loss of irrigation capabilities and inexpensive clean power. In addition, taking away the ability to barge agricultural products through the rivers will result in significantly more trains and trucks, which create pollution. It was reported that $1 billion has gone into fish passage at the dams, which has been on the rise for years with a 98% survival rate. This survival rate is comparable to open river conditions. The State has allocated $750,000 to study what will happen if the dams are removed, which is reflective of the studies being conducted at the Federal level. He wishes the money could have been used for other things that would have better results such as culvert replacement or firing up fish hatcheries.
Commissioner Johnston said that culverts were discussed at the WPPA Spring meeting. It was discussed that the State’s current budget cycle allocates $100 million for culvert replacement, which is dramatically underfunded given that replacing all of the culverts under State-controlled roads will cost about $4 billion over the next 9 years. It will cost about $14 billion to replace the culverts on all streams within the State.
Commissioner Johnston reported that he presented the State of the Port Address to the Edmonds Chamber of Commerce on May 22nd. Commissioner Preston was available to help answer questions, and the presentation was well received. He also reported that he attended the Economic Alliance of Snohomish County (EASC) annual meeting and award luncheon on May 23rd where he learned about all of the great things happening in Snohomish County. Lastly, he reported that he attended the Memorial Day Ceremony at the Edmonds Cemetery to honor veterans and prisoners of war.
Commissioner Johnston announced that he would attend Family Day at the Port, as well an Orca Recovery Task Force meeting on June 3rd.
Commissioner Orvis advised that he would attend the EASC’s summer cruise on July 11th as a Board Member. He said he would also attend the WPPA Commissioner’s Seminar on July 22nd through 24th and the annual EASC Summer Networking event on August 13th.
Commissioner Orvis reported on his attendance at the WPPA Spring Meeting where there was some discussion about how much it would cost to replace the tugboats that transport agricultural products up and down the river if the dams are breached. He noted that the boats do not burn much fuel going down river and they typically unload and go back upriver empty. He noted that about 10% of all wheat exports go through that the Columbia River. If the dams are breached, then alternative methods of transportation (trains and trucks) will be needed. He hopes that people who support breaching the dams understand that more transportation infrastructure will be needed and that the trains and trucks will result in significantly more pollution. Commissioner Johnston said the issue has devolved into an east/west situation. Commissioner Orvis said it appears that politicians on the west side of the state don’t really care about how breaching the dams might impact the east side of the state, and they have enough votes to get what they want.
Commissioner Orvis reported that, while at the WPPA Spring Meeting, he attended a legal seminar where the homeless situation was brought up and they were told to “stand by.” He also learned that elected officials in the State of Washington cannot recuse themselves from voting on controversial issues. While they can choose not to vote for a variety of stated reasons, they cannot simply recuse themselves. Mr. Cattle clarified that elected officials can only abstain from a vote for very limited reasons, which must be stated at the time.
Commissioner Orvis said he attended a session where breaching the Snake River Dams was a topic of discussion. It was pointed out that four Environmental Impact Statements (EIS) have been done in recent years and each of the dams have shown improvement. He suggested that Governor Inslee’s $750,000 study was designed because he wants it to show that the dams need to be removed. It was also discussed that all projects that require underwater permits will have to be done with a consultant, including small projects that would never have been considered before. He suggested that staff look into this requirement further.
Commissioner Orvis said he learned at the WPPA meeting that some marinas are requiring boaters in guest moorage to provide proof of insurance when they check in. Mr. McChesney responded that the requirement is commendable, but impractical to implement. Commissioner Orvis said the State no longer notifies boaters when their registrations are due, and many do not know they can get a rebate on their fuel. Ms. Kempf said both of these issues have been addressed in newsletters.
Commissioner Orvis reported that in 2018, all of the Recreation and Conservation Office projects were funded in 2018. He referred the Commissioners to his written legislative report and highlighted the following:
• The affirmative action initiative was turned down by the legislature.
• The State’s budget increased by 17.5%. Although revenues were up, the legislature added more taxes. However, those related to carbon and carbon fuel were voted down.
• The initiative to establish rules for the Department of Ecology (DOE) for State Environmental Policy Act (SEPA) review didn’t go anywhere. Therefore, the DOE can continue to do what ever they want because there are no rules.
Commissioner Orvis advised that he would attend Family Day at the Port.
Commissioner Preston reported that the Port of Allyn has had issues with Enduris paying for claims. He suggested that staff look into this matter.
Commissioner Preston said he attended the WPPA Spring meeting, too, where the Gonzaga Athletic Director provide a great talk about “getting things done.” The new dean of the Washington State University Medical School also made a presentation on some new technology that is pretty incredible.
Commissioner Preston reported on his attendance at a recent EASC meeting where the Paine Field Airport was reported to be a success. He said he would attend two Sea Scout meetings on May 29th and also attend the Edmonds Arts Festival and the WPPA Commissioners Seminar.
Commissioner Faires reported on his attendance at the WPPA Spring meeting, too. He particularly enjoyed the session that discussed what ports can and cannot do from a legal perspective. As reported, ports can now include residential units in mixed-use developments. They can also fund surveys and investigations within the port district related to tourism and economic development activities and contract with non-profit organizations for education of the workforce within the district.
Commissioner Faires said he would attend Family Day at the Port, as well.
Commissioner Preston announced that the Ports of Chelan and Douglas will have their first meeting on May 29th to discuss creating a joint Port with six commissioners.
The Commission meeting was adjourned at 8:10 p.m.
Respectfully submitted, Angela Harris Port Commission Secretary