31 Aug Commission Meeting Minutes 8-9-21
PORT COMMISSION OF THE PORT OF EDMONDS MINUTES OF REGULAR MEETING
(Via Zoom) August 9, 2021
Angela Harris, President
David Preston, Vice President
Steve Johnston, Secretary
Bob McChesney, Executive Director
Brandon Baker, Marina Manager
Tina Drennan, Finance Manager
Brittany Williams, Manager of Properties and Marketing
Bradford Cattle, Port Attorney
Vivian Olson, Edmonds City Council
CALL TO ORDER
President Harris called the meeting to order at 7:00 p.m.
PLEDGE OF ALLEGIANCE
All those in attendance participated in the Pledge of Allegiance to the American Flag.
COMMISSIONER ORVIS MOVED THAT THE CONSENT AGENDA BE APPROVED TO INCLUDE THE FOLLOWING ITEMS:
A. APPROVAL OF AGENDA
B. APPROVAL OF JULY 26, 2021 MEETING MINUTES, AS AMENDED
C. APPROVAL OF PAYMENTS IN THE AMOUNT OF $552,104.37
D. REAFFIRMING RESOLUTION NO. 21-02, DESIGNATING AND RENAMING THE PUBLIC PLAZA TO THE “MARY LOU BLOCK PLAZA”
E. APPROVAL OF RESOLUTION NO. 21-03, TERMINATING RESOLUTION NO. 20-03 AND THE EMERGENCY AUTHORITY AND POWERS GRANTED THEREIN
COMMISSIONER FAIRES SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.
Jay Grant, Edmonds, thanked Mr. McChesney for his courtesy last week.
2ND QUARTER PORT OPERATIONS REPORT
Mr. Baker presented the 2nd Quarter Port Operations Report, specifically noting the following:
• Industry Context. In a 2020 BOATUS Survey, 52% of respondents said they plan to use their boats more in 2021 than they did in 2020, and 30% of them said it was more difficult to find dockage in 2020 than in years prior. This trend indicates that more people want to go boating, but they are having a harder time finding both transient and leased spaces. Commissioner Faires asked about demand for moorage at the Port of Edmonds. Mr. McChesney answered that the turnover rate has been low, and the waitlist is growing, which indicates a higher demand for moorage space. Mr. Baker added that the number of new slips is not increasing at the same pace as the number of boats.
• Operational Updates. In June, Dry Storage extended weekend hours from 7:00 a.m. to 7:00 p.m. on Fridays, Saturdays and Sundays, and V Dock reopened for Dry Storage overflow moorage. In April, staff completed the N Dock anode project to repair the cathodic protection system on the mid-marina break wall. In June, Mascott Equipment completed the annual line tightening and pressure test for the Fuel Dock, and the Port passed in all categories with no citations or repairs needed. The Department of Ecology (DOE) conducted a 3-year inspection of the Fuel Dock, and the Port received a letter of non-compliance for two items. The minor signage issue has been resolved, and Mascott Equipment will be on site to resolve the overflow float issue tomorrow. The DOE has graciously granted an extension to the timeline, as it is difficult to get the work done as quickly as they would like.
• The Operations Team implemented new daily walk-through procedures to improve the accuracy of the marina management software. A new on-line tracking system was added to the Dry Storage website to help tenants budget and limit their moves and to save staff time. Data is updated on Tuesdays and Fridays. Commissioner Orvis asked if the Port’s new program that limits tenants to 21 moves is working, and Mr. Baker answered affirmatively. Commissioner Faires asked if there have been any complaints relative to the change. Mr. Baker answered that there were a lot of comments in 2020, but staff has done a good job of explaining the program and tenants have become accustomed to it.
• In-Water Moorage. There were 17 in-water moorage terminations in the 2nd Quarter, and 17 space were assigned. The turnover ratio decreased from 3.92% in 2020 to 2.5% in 2021. At this same time last year, there were 223 people on the waitlist for in-water moorage, and this year there are 279 applications on file. Commissioner Faires asked how many of the applicants on the waitlist are ready to accept a slip when it comes available. Mr. Baker said a lot depends on timing, and people are allowed to turn down a slip three times before being removed from the list. As people realize there are fewer total slips available, they are seeing fewer terminations in seasonal moorage.
• Guest Moorage. The number of guest boats increased by 26% or 164 boats, and the total number of nights increased by 61% or 462 nights. There were 86 reservations made during the 2nd Quarter of 2021 compared to 52 in 2020, which equates to a 65% increase.
• Document Compliance. Insurance and registration compliance were both at 94%, which is a 5-year high. He commended the Marina Operations Team for their good work collecting and entering the documents into the Port’s system in a timely fashion.
• Dry Storage. Dry Storage during the 2nd Quarter of 2021 was at 91.1% occupancy compared to 92.4% in 2020. Trailer Storage occupancy is at 98%.
• Launchers. Launch activity was up 136% from last year, and reservations for the call-ahead service were up 56%. The radiator on the Taylor Forklift was replaced, and lugs and tire work were completed, as well. In addition, pump repairs were completed on the A Launcher. Commissioner Faires asked if the repairs were emergency or planned, and Mr. Baker answered that the radiator was not planned, but not an emergency, either. The pump repairs were part of an ongoing preventative maintenance program to take care of issues ahead of time. However, he noted there were issues with both launchers this past weekend, and the A Launcher is still down. The B Launcher is functional now. The Maintenance Team worked over the weekend to resolve the issues, and the Dry Storage Team did a great job of managing the situation. Commissioner Orvis asked if there is potential that the launchers will need to be rebuilt from scratch, and Mr. McChesney answered that, currently, the A Launcher manifold is cracked and will likely be welded, and the B Launcher has a failing pump. He recalled that the launchers were overhauled about 10 years ago and staff has tried to be more aggressive on daily maintenance, but the equipment is 30 years old and on the downside of the maintenance curve.
The Commissioners discussed that perhaps it is time to do a major renovation of at least one of the launchers over the winter. Mr. McChesney responded that, at this time, staff plans to keep fixing the equipment as various elements fail, but he agreed to study the idea further and report back. However, he cautioned that replacing or rebuilding the launchers from scratch would be a costly proposition.
Round trips on the Public Launch increased by 67% over the same time period in 2020, and one-way launches increased by 70%.
• Boatyard and Travelift. Travelift round trips increased by 53% and Workyard stall usage was up 107%. Sling time with pressure wash increased by 47% and sling time with no pressure wash decreased by 12%. Pressure wash treatments were also down, which is likely a product of low rainfall.
• Fuel Dock. Total gallons of fuel sold at the Fuel Dock increased by 101% over 2020. Gasoline increased by 39% and diesel fuel increased by 239%. The Port’s prices for both diesel and unleaded fuel were slightly above the area average. Commissioner Faires asked if a parallel could be drawn between the increase in diesel fuel sold and Puget Sound Express’s increased activity, and Mr. Baker answered affirmatively. He said they are offering three trips per day now.
• Events. The SeaJazz events returned to the Port in June with good musicians and good crowds. The United States Coast Guard Auxiliary hosted Safe Boating events on May 21st and May 23rd.
Mr. Baker finished his report by commending staff for doing a great job meeting the increased demand on marina services.
Commissioner Faires asked Mr. Baker if there are any areas of concern. Mr. Baker responded that there is concern about the cumbersome Guest Moorage reservation system, particularly as demand continues to increase. Staff has made strides to improve the system, but it is still labor intensive to book in a single boat. To address this problem, they need to either speed up the process or make more staff available to process the requests. Commissioner Faires asked if staff anticipates that demand for service will continue to be strong in 2022, and Mr. Baker answered affirmatively. However, he noted that fuel prices and fishing availability will play a role. Commissioner Orvis added that demand could change if Canada were to open up its waters to boats from the United States.
Commissioner Preston asked if there is an app the Port could use for reservations. Mr. Baker answered that the Port has an online request process, and part of it is automated. However, it still requires staff to confirm and process the information and accept the payment. Commissioner Preston asked if Northwest Marine Trade could create a marina app for reservations. Ms. Williams said there are third-party apps available, and the Port has had some conversations with these companies. However, given the versatility the Port needs with its small Guest Moorage, they decided not to sign up.
Commissioner Johnston asked how staff is holding up with the increased demand that has been placed on them. Mr. Baker answered that there is some burnout. They have lost a few people and will likely lose a few more as the seasonal workers start heading back to school. It is anticipated that August and September will be busy months, which means they will need to hire more staff or reduce hours and services. They received a great response for the last job opening that was posted. One of the biggest needs is Travelift operators, and it is tougher to find people who are qualified to operate this specialized machinery.
2ND QUARTER HARBOR SQUARE REPORT
Ms. Williams presented the 2nd Quarter Harbor Square Report, specifically sharing the following:
• Accounting. Gross projected revenue was down 3.76% or roughly $19,000 over the same period in 2020.
• Occupancy and Leases. The occupancy rate at the end of 2nd Quarter 2021 was 90.33%, which is 1.31% less than in 2020 but slightly greater that 1st Quarter 2021. She is happy with the 90% occupancy rate, as she had anticipated and prepared for it to be a bit lower. There is serious interest in a few of the vacant spaces, and she expects the occupancy rate will further improve. Two leases ended in 2nd Quarter, and both spaces were immediately turned over. There were also three new leases and three lease extensions. One lease extension was a major tenant in Building 4 that extended for 5 years.
• Projects. Major projects included irrigation repairs, parking lot maintenance, and Building 1 restroom repairs to address a substantial water leak.
• Incidents. There were no incidences to report.
Commissioner Orvis inquired about the vacant spaces, and Ms. Williams answered that she is currently focusing on two large spaces (Buildings 1 and 4), and she believes she has found a tenant for one. There are three small spaces available, as well.
2ND QUARTER FINANCIAL STATEMENTS REPORT
Ms. Drennan presented the 2nd Quarter 2021 Financial Statements, providing a graph showing 2nd quarter revenues and expenses for the past five years for the periods ending June 30th. She noted that revenues and expenses are generally trending upwards, with a slight drop in 2020 due to the pandemic. She advised that net income is generally trending upwards, as well. Revenues were $229,000 greater than budget, and expenses were $342,000 less than budget. Commissioner Orvis explained that the budget is projected evenly across the 12 months of the year, but activity is seasonal. This results in discrepancies between projected and actual revenues and expenses, but they tend to catch up by the end of the year. Ms. Drennan advised that gross profit for the 6-month period was $4.2 million, which was $153,000 greater than budget. Net income for the same period was $1.6 million. She highlighted the following items:
Marina Operations Revenue Actual to Budget
• Net Fuel Sales were about $120,000, which was about 108% or $62,000 greater than budget.
• Net Guest Moorage revenue was approximately $76,000, which was about 39,000 or 105% greater than budget.
• Permanent Moorage revenues were about $1,939,000. The budget was $1,897,500, and the variance is about $41,000 or 2%.
• Dry Storage revenue was $362,000. The budget was $360,000, and the variance was about $2,000 or 1%.
• Parking revenue was $31,000 and the budget was $49,500, which is about $18,000 or 37% less than budget.
• Travelift revenue was $88,000, which was about $25,000 or 39% greater than budget.
• Workyard revenue was $85,000, which was about $33,000 or 62% greater than budget.
• Financial occupancy for permanent moorage was 98%, and 96% was budgeted for the year. An occupancy of 98% is effectively full, as there is always a bit of time between when one tenant leaves and another occupies the space. Financial occupancy for dry storage was 88% and 88% was budgeted for the year.
Commissioner Faires recalled that, in 2020, the Commission asked staff to estimate what the economic impact of the pandemic would be. He said he admires the effort that staff put into fulfilling this request.
Rental Properties Revenue Actual to Budget
• Total Rental Property revenue was $1,304,000 or about $55,000 or 4% less than budget.
Operating Expenses Actual to Budget
• Operating expenses before depreciation for the 6-month period were about $2.2 million, which was approximately $340,000 or 13% less than budget.
• Education expenses were about $1,500, which was about $10,000 less than budget primarily because they haven’t been able to travel to educational events due to the pandemic.
• Employee benefits were $358,000. The budget was $377,000, which is a positive variance of about $20,000 or 5%. Some of the variance is based on employee changes.
• Repair and Maintenance expenses were $119,000, which is about $70,000 or 37% greater than budget.
• Salaries and wages were $980,000. The budget was about $1,111,000, which equates to a positive variance of $131,000 or 12%. A portion of the variance is due to the three positions that haven’t yet been filled. When they get to year end, the actual expense is usually close to budget.
• Supplies were about $111,000. The budget was $168,500, resulting in a positive variance of $57,000 or 34%.
• Net income for the 6 months ending June 30, 2021was $1.6 million, which was about $572,000 greater than budget.
Marina Actual to Budget
• Revenues and expenses are generally trending upward, with a slight drop in 2020 due to the pandemic.
• Net income is trending upwards.
• Operating revenues were about $311,000 greater than budget and expenses were $234,000 less than budget.
• Operating revenues were approximately $3,267,000, or about $286,000 or 10% greater than budget.
• Operating expenses before depreciation and overhead were about $1,249,000 or about $180,000 or 13% less than budget.
• Net income was about $1,028,000 or about $545,000 or 113%greater than budget.
Rental Property Actual to Budget
• Operating revenues trended up to 2018, with a high of $1.5 million, and dropping to $1.3 million in 2021. Expenses don’t appear to have a trend. However, 2017 through 2019 revenues are a bit misleading because rental properties were subsidized with property taxes during those years. If the subsidy were removed, revenues would have been about $1.2 million in 2017, $1.4 million in 2018 and $1.4 million in 2019.
• Net income trended upwards to $707,000 in 2019, dropping to $582,000 in 2021. Without the property tax subsidy, the net income would have been $380,000 in 2017, $607,000 in 2018, and $621,000 in 2019.
• Actual to budget revenues were about $55,000 less than budget and expenses were $82,000 less than budget.
• Operating revenues were $1,304,000 or $55,000 (4%) less than budget, and operating expenses before depreciation and overhead were $293,000 or $27,000 (8%) less than budget.
• Net income was $581,000 or $27,000 (5%) greater than budget.
Ms. Drennan reviewed the investing summary, noting that as of June 30th, the Port had 23 long-term investments. The details of the Port’s bond maturity and calls were attached to the Staff Report. One bond matured in the 2nd Quarter, and the Port did not repurchase as they are retaining funds in an interest-bearing account to fund the Administration/Maintenance Building and North Portwalk and Seawall Projects. On June 30th, the Capital Replacement Reserve was $15,785,000, the Environmental Reserve was $1,059,000, and the Public Amenities Reserve was $80,000.
PROJECT REPORT: NORTH PORTWALK AND SEAWALL RECONSTRUCTION
Ms. Williams presented an update on the North Portwalk and Seawall Reconstruction Project, and the Commission and staff discussed the following:
• Landau Associates is currently applying for a Section 10 JARPA (Joint Aquatic Resources Permit Application) Permit because they don’t think the water-quality requirements of the 404 or 401 permits are applicable to the project. They will find out which permit will be required during the Army Corps of Engineers’ review.
• In response to the Corps’ request for verification of the tideline, Landau Associates prepared documentation that was reviewed and approved by Port staff prior to it being submitted to the Corps. The Corps has confirmed that they have all the documentation needed for review.
• The project schedule originally indicated that the State Environmental Policy Act (SEPA) review application would be submitted before the 60% design submittals had been completed. However, Landau Associates later indicated that 60% design submittals are needed to submit for SEPA. Landau Associates will also need the 60% drawings for the Shoreline Substantial Development Permit submittal to the City of Edmonds. They have prepared a Critical Area Checklist that Port staff reviewed and signed off on last week. Originally, the National Marine Fisheries Service indicated they wanted the Port to submit documentation in a certain order, but they have agreed that Landau Associates could submit the Determination of Non-Significance (DNS) prior to the permit application and it could be reviewed again at a later date. The Port will be the SEPA lead agency. Once the checklist is done, the Commission will be asked to authorize a DNS.
• The City of Edmonds notified the Port that a biological study will need to be submitted with the Substantial Development Permit application, and Landau Associates is currently working on that study. Commissioner Orvis asked how complicated the study would be, and Commissioner Johnston said it will likely be a biological assessment that is based on the conditions of the Endangered Species Act.
• The Corps’ review will start after the Port’s internal review of the 60% design submittals and they are presented to the Corp in September. Ms. Williams advised that the Substantial Development Permit from the City of Edmonds is moving on a separate track from the JARPA permit. The worry is that the City will quickly review and issue its permit, which will have a fixed shelf life that could expire before the JARPA permit is issued. They are doing their best to make sure the two processes move forward in parallel. Commissioner Johnston noted that the Port would likely have the ability to extend the Substantial Development Permit timeline.
• The 60% design submittals are due from all of the consultants on August 10th, and Port staff will meet with all of them on Friday. CG Engineering will then combine the submittals into one package for formal presentation to the Port next week. It will take a few weeks for the Port staff to review the documents and provide feedback.
• Currently, the project is still on schedule, and the minor changes did not have an impact on the timeline.
• Once staff has reviewed the 60% submittals, the Commission would like them to be presented at a Commission meeting. Up to two Commissioners could also attend the staff’s review of the 60% submittals on August 13th at 10:00 a.m.
Ms. Williams reported that the SeaJazz Program is going great this summer, and the “Events” page on the Port’s website provides the most up-to-date schedule. This year, they are also putting out A-frame signs in the plaza the day of the event, and the signs provide a QR code that take people directly to the “Events” page.
Ms. Williams advised that information was recently added to the Port’s Facebook Page regarding the recent dedication of the Mary Lou Block Plaza. It was fun to read through the comments and messages about her.
CITY OF EDMONDS REPORT
City Council Member Olson announced that the City Council will be having a meeting to discuss potential replacement bonds for the wastewater treatment plant, as well as the extra money that is needed to develop Civic Park. She also announced that the public hearing on the Outdoor Dining Ordinance was continued, so there will be another opportunity for the public to weigh in. No decisions have been made yet.
EXECUTIVE DIRECTOR’S REPORT
Mr. McChesney reported that the geotechnical analysis for the new Administration/Maintenance Building identified a patch of unstable material about 10 feet below grade, and the foundation had to be redesigned to compensate. One solution is piling, which would be costly. Another alternative is rammed aggregate where they drill a series of deep holes and back fill them with a material that solidifies the subgrade enough to support the foundation. A third alternative is to build a husky foundation with footings on a thick slab and a lot of steel. While the third alternative would be the least costly, it was anticipated that the building would experience about three inches of settlement over a period of 10 to 15 years. Port staff recommended the rammed aggregate alternative as the most cost-effective solution. At this time, he doesn’t know how much this alternative would raise the cost of construction.
Mr. McChesney also reported that placing the HVAC units on the roof of the new Administration/Maintenance Building is not possible because they would extend two feet above the City’s maximum height limit. Because the units required for Leadership in Energy and Environmental Design (LEED) Certification are large and they don’t want them to be located inside the building, it was decided to sacrifice the 700 square foot area in the northeast corner that was previously identified as potential rental space. With the updated design, the roof in this corner would be lowered to create a pad for the mechanical equipment. Commissioner Faires asked if the document storage space could be relocated to the northeast corner, too, and Mr. McChesney answered no. Commissioner Orvis observed that the community supports efficient heating and air conditioning systems, but they can’t fit within the current building height constraints. Mr. McChesney cautioned against making this broad generalization, as it depends on the situation. The City does allow solar panels to extend above the height limit, but the provision doesn’t apply to mechanical equipment. Commissioner Faires concluded that the change will result in the loss of 700 square feet of potentially rentable space.
Mr. McChesney concluded that, although the changes delayed the project’s schedule by 4 to 5 weeks, there was 2 months of slack built into the timeline. Even if they had received the building permits in October, it wouldn’t be a good time to bid the job out. They are still on schedule to bid the job out in January or February, with site work to start in late February or early March.
Commissioner Orvis said he recently read that there is a bill floating around at the Federal level that would prohibit solar panels that are manufactured in China. Requiring solar panels that are made in the United States will increase the cost, but the amendment includes incentives that will compensate. He suggested this is something the architect needs to keep in mind. Mr. McChesney pointed out that, if the infrastructure bill is passed, there may be some money available for the project. Part of the current energy modeling will involve finding available grants and incentives. Solar is still very much a part of the program, but they haven’t gotten far enough along to have the design or specifications.
Mr. McChesney announced that the Americans with Disabilities Act (ADA) inspection is scheduled for August 12th at 10 a.m. The inspection is important to ensure that the Port is in compliance with all of the requirements. It is likely the inspection will recommend some different paint schemes on the ground.
COMMISSIONER’S COMMENTS AND COMMITTEE REPORTS
Commissioner Faires announced that he would attend the Edmonds Economic Development Commission meeting on August 18th.
Commissioners Orvis and Johnston announced that they would attend the Finance Committee meeting on August 11th at 1:30 p.m.
Commissioner Johnston reported that he sat in on the Washington Public Port Association’s presentation on electric vehicles. He learned that the Washington State Department of Transportation (WSDOT) will have $9 million in grant money coming out fairly fast, and the Port needs to be ready to apply for potential opportunities. He also learned that Level 2 charging units cost roughly $10,000, and the more expensive DC fast-charging units cost roughly $100,000 each. It was suggested that most ports would be interested in the units that cost $10,000 each as opposed to the fast-charging units. They did not rule out ports and other governmental entities going together for grants, but they weren’t sure exactly how it would work. It was reported that the electrical equipment used by ports is getting better and more affordable, and they now have forklifts that are rated at 70,000 pounds, along with more reasonably-priced electric trucks.
Commissioner Johnston said he also attended the Economic Alliance of Snohomish County (EASC) presentation on “Bouncing Back from Covid in Washington State.” The biggest takeaway was the severe impacts on the tourism industry, which is still 70,000 jobs short as many people are leaving in search for other opportunities. Hotel business in the state was down 60%, with most of that being in the urban areas due to lack of business travel. The hotel businesses in the rural areas did a little better.
The Commission meeting was adjourned at 8:21 p.m.
Steve Johnston, Port Commission Secretary