14 May Commission Special Meeting Minutes 4-27-20
PORT COMMISSION OF THE PORT OF EDMONDS MINUTES OF SPECIAL MEETING
(Via Zoom) April 27, 2020
Jim Orvis, President
Angela Harris, Vice President
David Preston, Secretary
Bob McChesney, Executive Director
Marla Kempf, Deputy Director
Tina Drennan, Finance Manager
Renae Ebel, Administrative Assistant
Brittany Williams, Manager of Properties and Marketing
Bradford Cattle, Port Attorney
CALL TO ORDER
President Orvis called the meeting to order at 3:30 p.m.
PLEDGE OF ALLEGIANCE
All those in attendance participated in the Pledge of Allegiance to the American Flag.
COMMISSIONER FAIRES MOVED THAT THE CONSENT AGENDA BE APPROVED TO INCLUDE THE FOLLOWING ITEMS:
A. APPROVAL OF AGENDA
B. APPROVAL OF APRIL 13, 2020 SPECIAL MEETING MINUTES
C. APPROVAL OF PAYMENTS IN THE AMOUNT OF $202,597.41
D. RESOLUTION NO. 20-03 DECLARING LOCAL EMERGENCY AND DELEGATION OF AUTHORITY
COMMISSIONER JOHNSTON SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.
Mr. McChesney read a written comment from Darrol Haug, dated April 13, 2020, into the record as follows:
“I was disappointed that you did not have a retreat this year. I was going to offer some ideas on how a taxpayer may have some ideas to encourage Port thinking “Outside the Docks.” I had contacted Bob and he was working to schedule a session with the Commission President and myself when our whole planet turned upside down.
Time, however, have changed and so have our needs as a community. Much of our downtown sector is owned by families or small companies. My guess is while some landlords may try to be helpful with rent reduction, some businesses will go out of business. Current owners will see it is very difficult to get a new renter and may be willing to sell. Some of these have been in the family for years and the owners can no longer look at the value in the same way. What may have cost $25,000 40 years ago and appreciated to $400,000, may not be worth $300,000. But it still has a tax bill for $400,000 due soon. If they cannot find a tenant but still have ongoing taxes, utilities and other payments due, they may be willing to sell for $200,000 and make a $125,0000 profit. So, what may have been a perceived value of $400,000 in February now may be available for $200,000. These numbers are all made up, but you get the idea.
With all the above in mind, this may be a buying opportunity for someone. Buy all of 5th Avenue south of Main and Dayton on either side and one would have enough property to build a whole new block, following all the existing code and still make a profit. A “nasty developer” could do that OR the Port could save us all and buy it and agree to “preserve” it. The market will come back, and profit could be made. Think of the PR the Port could make, if we bought, preserved and saved EDMONDS!
Firdale Village is a great example of what may be a “ripe” opportunity. It’s been said the matriarch of the family was willing to sell the entire property but was simply asking more than what was a fair market price. With the fire at Firdale Village, she may now be willing to sell the whole show up there! I can imagine the City absolutely falling all over themselves to help whoever may get that property. It would be nice to see the City and the Port work cooperatively on a project. No marsh up in Firdale.
When the Port was formed, it was really a defensive strategy to prevent Everett from building a marina. The Port is the only government entity that has the license to use your powers to help drive the economic engine. The time may be near for the Port to get off the docks, cross over the tracks, and help Edmonds retain its small-town character.”
Darrol Haug, Edmonds, added that the Port is in charge of an economic engine that the City of Edmonds doesn’t have. It would be nice for the Port to sort out opportunities to help the City at this time.
Susan Paine, Edmonds City Council Member, advised that the City of Edmonds is operating in accordance with the Open Public Meetings Act (OPMA) restrictions developed by the State Attorney General because of the lack of public access. As per the restrictions, the City Council can only conduct business that is routine and necessary and/or COVID 19 related. The restrictions were put in place because of the lack of public access to meetings. She asked if the Port is subject to the same restrictions. Gerry O’Keefe, Washington Public Port Association (WPPA), responded that WPPA’s legal counsel has advised that the type of meeting the Port Commission is conducting now is typical for a port district, and he believes it is in compliance with the provisions of the OPMA as per recent guidance from the Attorney General’s Office. Port Commissions are quite constrained in terms of the decisions that are made, and most have delegated a great deal of authority to their executive directors to act during the pandemic.
ADMINISTRATION BUILDING HEATING UNIT 2020 CONTRACT NO. 2020-342
Mr. McChesney reported that the coil in the split-system heating and HVAC unit that serves the Administration Building is leaking and the unit has failed. It is 24 years old, uses the old unfriendly R22 refrigerant, is no longer serviceable for repairs and needs urgent replacement. The contractor is a Municipal Research Services Center (MRSC) roster member and the amount is under the competitive bidding requirement for public works (under $40,000). Work will begin and most likely be completed in May 2020. He recommended the Commission authorize him to enter into a contract with DK Systems, Inc. in the amount of $9,433.98 plus tax for the base bid for the Administration Building split-system and HVAC unit replacement.
COMMISSIONER HARRIS MOVED THAT THE COMMISSION AUTHORIZE THE EXECUTIVE DIRECTOR TO ENTER INTO A CONTACT WITH D.K. SYSTEMS, INC. IN THE AMOUNT OF $9,433.98 FOR THE BASE BID FOR THE ADMINISTRATION BUILDING HEATING UNIT, CONTRACT 2020-342. COMMISSIONER PRESTON SECONDED THE MOTION.
Commissioner Orvis clarified that the total cost of the project would be $9,433.98 plus sales tax of $981.14 for a total cost of $10,415.12.
THE MOTION CARRIED UNANIMOUSLY.
1ST QUARTER 2020 PORT OPERATIONS REPORT – Link
Ms. Kempf presented the 1st Quarter 2020 Port Operations Report, specifically noting the following:
• Public Launch. Round trips decreased by 29% (78 boats) and one-way increased by 69% (66 boats) from 1st quarter 2019. The reason for the one-way increase is because the Port started tracking Jacobsen’s Marine moves as all one-way from an activity standpoint. There wasn’t a huge increase in business.
• Fuel Prices. Based upon five price checks during 1st Quarter, the Port of Edmonds averaged about $3.67 for unleaded and $2.80 for diesel as compared to surrounding facilities which were at $3.78 and $2.93 respectively. The total gallons sold decreased by about 11,000, mainly in the diesel category, which is likely due to the closure of whale watching during March.
• Guest Moorage. The number of boats in 1st quarter 2020 decreased by 19% compared to 1st quarter 2019 or 40 fewer boats. The number of nights also decreased by 29% or 60 fewer nights stayed.
• Preventative Maintenance. Staff did a variety of preventative maintenance projects throughout the marina during 1st quarter. Approximately 2,011 hours were spent by operations staff completing these projects.
• Boatyard and Travelift. Travelift roundtrips were down 28%, sling-times with pressure wash were up by 59% (10 boats) and sling-times with no pressure was down 6% (2 boats) compared to 1st quarter 2019. There were 43 roundtrip haul-outs during the “March-on-In” promotion in March 2019, and that dropped to 20 in March of 2020 due to COVID 19 closures. The Port shut down operations at the end of the day on March 27th, and many people canceled before that time because they didn’t want to get stuck in the boatyard. Sling-times and drop-ins still occurred until the end of the day March 27th. The tenants who decided to cancel were put on a list and made eligible for the 50% off when the Port returns to full operations.
• Environmental Updates. The Port does a lot of good environmental things, but the amount of time staff spends doing paperwork to ensure compliance isn’t as visible.
• Water Samples were taken in January 2020. Zinc passed with 75ug/l and copper passed with 16 ug/l. Both were under the outlined benchmark for boatyards.
• The annual Fixed Facility Household Hazardous Waste Small Quantity Generator Report was filed in February.
• The 2019 Community Right-to-Know Tier 2 Reports were submitted to the Department of Ecology in January 2020.
• The Port has been identified as a Class 4 Marina and Small Fueling Facility and is required to submit a semi-annual Oil Transfer Report identifying total volumes transferred. The last report was submitted during the 1st quarter.
• The Oyster Shell in the trench drain and vault was removed and replaced at the beginning of March. A fresh layer was added in the trench the last week of March.
• The Water Moorage Turnover Ratio was down from 4.83% in 1st quarter 2019 to 2.11% in 1st quarter 2020. There were 53 assignments during 1st quarter 2020 compared to 62 in 2019.
• The Dry Storage Turnover Ratio was 3.43% compared to 1.72% in 1st quarter 2019. There were 11 assignments during 1st quarter compared to 14 during the same time period in 2019. Occupancy on the last day of the quarter was at 84%, or 2% higher than at the end of 1st quarter 2019.
• The end of 1st quarter 2019 showed 94% insurance compliance compared to 77% in 2020. Registration compliance was 89% in 2019 compared to 81% in 2020.
• Staff completed a variety of training and certifications. All applicable staff went through an 8-hour annual HazMat refresher that was customized to the Port’s facility and included Marine 4 Fueling, Boatyard Stormwater Pollution Prevention Plan, Spill Response and Water/Power Shut-Off Locations. A Dry Storage utility worker was certified on the forklift during 1st quarter.
• There were less than 20 slips available for moorage on the walk-in availability list that was available at the Seattle International Boat Show. This year, the list was automated so the office and boat show staff were both looking at the same live list. A total of 41 water moorage and 12 dry storage slips were assigned in conjunction with the boat show promotion, and 24 waitlist applications were completed.
Commissioner Preston asked if all of the boats that are put on the Travelift are washed down. Ms. Kempf answered that only the boats that are moved to the boatyard have to be pressure washed. Sometimes boats are brought out of the water for minor work, such as changing the zinc, and pressure washing is not required in these instances.
1ST QUARTER 2020 HARBOR SQUARE REPORT – Link
Ms. Williams presented the 1st Quarter Harbor Square Report, specifically noting the following:
• At the end of 1st quarter 2020, the occupancy rate was 94.9%, which is down 3.32% from the occupancy rate of 1st quarter 2019. This is due to Hart Crowser leaving the large space in Building 1.
• The gross projected revenue was also impacted by Hart Crowser leaving and was down about .36% or roughly $2,000 compared to the same period in 2019.
• The Hart Crowser lease was the only lease that expired in Quarter 1, and there were three new leases. Two were for month-to-month leases in Building 2 and Hart Crowser signed a new 3-year lease for warehouse space.
• There were six lease extensions in Quarter 1, one notable extension was a tenant in Building 2 who extended for 7 years.
• There were no tenant improvements in Quarter 1.
• The focus has been on monitoring the work being done at Building 3. Some landscape maintenance was done in preparation for this project, and some minor restroom improvements were done in Building 5.
• The Stay at Home order that went into effect in March impacted Harbor Square. The buildings are open and remain assessible for tenants, and a handful are considered essential businesses and remain active.
• The Commission recently approved the Rent Deferral Program, which was made available to all tenants who met certain criteria. A sample deferral agreement was shared for the Commission’s information. Participants in the program include two business moorage tenants, two west-side commercial tenants, and 14 Harbor Square commercial tenants. Those who utilize the Rent Deferral Program may make their regular payments instead.
Commissioner Orvis asked how the Rent Deferral Program has been received by tenants. Ms. Williams responded that the program was well received, and she has received a lot of kind words from people who were appreciative of the Commission’s quick approval of the program. While some tenants have not had to take advantage of the program, many have indicated they like knowing it is available, if necessary. Some commented that they wished the Port could cover rent, but most were really happy with the program.
Commissioner Preston asked how many total tenants are at Harbor Square, and Ms. Williams answered about 53. She said 2 of the 14 Harbor Square tenants who signed the agreement indicated they would likely be okay, but wanted to sign up just in case.
1ST QUARTER 2020 FINANCIAL STATEMENTS – Link
Ms. Drennan presented the 1st Quarter 2020 Financial Statements, noting that revenues are trending upwards and expenses have ranged between $1.4 million and $1.7 million. Net income is generally trending upwards. Revenues were $21,000 less than budget, and expenses were $186,000 less than budget. Gross profit for the 3-month period was $1.9 million, which was $35,000 less than budget. Net income for the same period was $625,000. Highlights include:
Marina Operations Revenue Actual to Budget
• Net Fuel Sales were about $4,000, compared to a budget of $26,000. The price of oil has dropped, and the Port is stuck holding more expensive fuel. Depending on how things reopen and how fast people go to buying fuel again, the Port might have more expensive fuel in the tanks for a while.
• Miscellaneous revenue was $11,710 or about $12,000 less than budget.
• Permanent Moorage revenues were $920,405, or about $19,000 or 2% less than budget.
• Dry Storage revenue was $131,556 or about $30,000 less than budget.
• Financial occupancy for permanent moorage was 95%, and 97% was budgeted for the year. Financial occupancy for dry storage was 72% and 89% was budgeted for the year. Dry Storage was down because the Port charged tenants at the pay-per-move rate on their April statements and it was recorded in the accounting system in March.
Rental Properties Revenue Actual to Budget
• Total Rental Property was $691,553, which is a positive variance of about $2,000.
Operating expenses before depreciation for the 3-month period were about $1,099,000 which was approximately $177,000 or 14% less than budget.
Operating Expenses Actual to Budget
• Professional services were $15,437 or about $12,000 less than budget.
• Repair and Maintenance expenses were $57,753 or about $45,000 less than budget.
• Salaries and wages were $497,890 or about $46,000 less than budget.
• Supplies were $56,363 or about $37,000 less than budget.
• Depreciation and amortization was $354,297 or about $30,000 less than budget.
• The gain on fixed assets was $15,065. The gain was on the sale of the Dry Storage Forklift. The book value was $15,000 less than what it was sold for.
• Interest income was $73,098, or about $16,000 greater than budget. However, rates have dropped and bonds are getting called fairly regularly now, so this won’t likely continue.
Marina Actual to Budget
• Revenues are trending upwards and expenses have ranged between $800,000 and $1.2 million. Net income ranged between $187,000 and $289,000.
• Operating revenues were about $38,000 below budget and expenses were $165,000 below budget.
• Operating revenues were approximately $1.3 million, or about $53,000 below budget.
• Operating expenses before depreciation and overhead were about $593,000 or about $118,000 less than budget.
• Net income was about $288,000 or about $127,000 greater than budget.
Rental Property Actual to Budget
• Operating revenues have ranged between $660,000 and $738,000. Total revenues are down in 2020 because in previous years the property tax income was designated to Harbor Square bond payments and was therefore included in the total revenue number and the property tax income is now attributed to public amenities instead.
• Operating expenses before depreciation and overhead have ranged between $355,000 and $450,000, and net income has ranged between $185,000 and 346,000.
• Actual to budget revenues were about $2,000 greater than budget and expenses are $36,000 below budget.
• Operating revenues are $691,000, and operating expenses before depreciation and overhead were $149,000 or approximately $5,000 less than budget.
• Net income was about $337,000 or about $38,000 greater than budget.
Ms. Drennan reviewed the investing summary, noting that as of March 31st, the Port had 28 long-term investments. To compensate for business tenant rent deferrals and other potential COVID 19 unexpected expenses, staff is maintaining a cash balance of $4 million instead of $3 million. The details of the Port’s bond maturity and bond purchases was attached to the Staff Report. The Opus Bank Certificate of Deposit was closed out in January and the funds were used to purchase bonds. The Capital Replacement Reserve is currently $13,110,119, the Environmental Reserve is currently $1,041,541, and the Public Amenities Reserve is currently $40,901. The Port has zero remaining in outstanding debt.
Ms. Drennan pointed out that the interest rate on bonds has dropped significantly. The Port has a number of non-callable bonds in its portfolio, but some of the callable ones will be called as the current interest rate is less than their coupon rate.
EXECUTIVE DIRECTOR’S REPORT
Mr. McChesney reviewed the Port’s current plan for a soft opening starting next week. He noted that the Port’s plan tracks well with the Governor opening up fishing and state-owned boat ramps. He summarized that, effective May 1st limited services for tenants will be available.
• Dry Storage will be open from 7:30 a.m. to 2:00 p.m., with the last move at 1:45 p.m. Launches will be by appointment only.
• The Fuel Dock will be open for fuel card use only (Dock and Pay).
• The Public Launcher will be available by appointment only for tenants in good standing. The hours of availability will be 7:30 a.m. to 1:45 p.m.
• The Travelift operation was previously open on Mondays from 8:00 a.m. to noon to service commercial tenants, and the operations will be expanded to include Wednesdays from 8:00 a.m. to noon for commercial drop-ins.
• The Moorage and Marina Office will remain closed, but more staff will be on board.
Mr. McChesney said he believes it is time for the Port to begin reconnecting with customers and exercising the facilities. May 1st will be a soft opening, and they will stand by week-by-week depending on how COVID 19 plays out and the guidance they get from the Governor’s office.
Mr. McChesney advised that staff is working on a Financial Impact Analysis, and expect to report to the Commission at the next meeting the anticipated impacts of COVID 19 on the Port’s financial picture.
Mr. McChesney reported that work on Harbor Square Building 3 continues, and the additional framing should be completed this week. Generally speaking, staff is happy with the work the contractor is performing.
Mr. McChesney requested guidance from the Commission as to a time for the May 11th meeting. He explained that they need to schedule a public hearing to formally ratify the Public Access Plan so it can be sent to the Washington Conservation and Recreation Office (RCO). This must be done in order for the Port to be eligible for potential future grant funding. The Commissioners indicated they would all be available for the meeting to take place between 1:00 and 3:00 p.m.
COMMISSIONER’S COMMENTS AND COMMITTEE REPORTS
Commissioner Preston said he was glad to hear that the Port will start to open up on May 1st. Ports, marinas, and boat repair and fuel sales are essential. He had conversations with Commissioners from other ports, and just about all of them indicated that some level of service (fuel, launch, etc.) has been available. With the weather getting warmer and demand going up, it is likely that customers will request more availability. He pointed out that Governor Inslee recently announced that some State Parks and some fishing would be opening on May 4th. He encouraged the Port to do more if it can be done in a safe manner.
Commissioner Preston said some people in the community are talking about how great it would be to close some of the streets in downtown Edmonds on weekend evenings to allow restaurants to safely put tables out in the streets for their customers. He suggested that the Port could consider a similar opportunity and open the plaza for Anthony’s customers to eat outside.
Commissioner Preston said he would participate in a Washington Public Port Association (WPPA) conference call meeting regarding marinas on April 28th. In addition, he has been listening in on some of the Downtown Edmonds Merchants Association conference call meetings to hear what the downtown businesses are doing.
Commissioner Harris said she would also participate in the WPPA conference call meeting on April 28th. She also asked that staff convene a conference call meeting for the Environmental Committee in a few weeks.
Commissioner Faires commented that he was pleased with the Port of Edmonds’ response at the Seattle Boat Show. He said he would like the Port to remain a local phenomenon and not a regional phenomenon.
Commissioner Faires said he previously mentioned to Mr. McChesney that the Port should take a look at how the COVID 19 epidemic is impacting the Port’s budget and do some re-budgeting scenarios. He was informed that staff is already in the process of doing this work. This emphasizes his confidence in staff.
Commissioner Faires reminded the Commission that its first and foremost effort needs to be the economic vitality of the Port District. He said he endorses the concept behind Mr. Haug’s letter, and he would be excited if the Port could find common goals with the City staff and City Council amongst economic endeavors. It is important to continue to look at what the Port can do to engage in and promote economic well-being within the Port District. That being said, he cautioned against doing activities within the Port district that would compete with private enterprise. The Port’s 1st priority must be retaining earnings so they can replace the physical assets at the marina.
Commissioner Johnston said he was also pleased to hear about the Port’s plans to reopen the marina on an incremental basis. It is important for the Port to take advantage of opportunities as they arise to adjust the schedule moving forward.
Commissioner Johnston asked how many tenants use fuel cards. Ms. Kempf answered that about 60% of the Port’s tenants use fuel cards. Commissioner Johnston said he would entertain opening up the fuel dock situation further, especially since they have a lot of fuel on hand. He said he supports the Port’s plan for reopening the marina, and he congratulated staff for holding steady during this rough time.
Commissioner Johnston referred to Commissioner Faires’ earlier comment about not competing with the private sector. He noted that the Port does a lot of the same things as the private sector, and he wants to look for opportunities to expand the Port’s ability to provide a better service to the community in these endeavors. He recalled that the Commission has had discussions about looking for economic development opportunities outside of the marina boundaries, and he hopes they will continue to do so.
Commissioner Orvis recalled that the Port has looked for economic development opportunities in the community, but they also have to remain aware of the constraints placed on ports from a legal standpoint, as well as community constraints when it comes to things the Port might pursue. Pursuing these opportunities, as suggested in Mr. Haug’s letter, would require a tremendous change in direction for the community.
Commissioner Orvis said he appreciates that the WPPA is actively assisting ports in the State by providing helpful information and input.
Commissioner Orvis requested that the Commission hold an executive session prior to the May 11th meeting for an employee evaluation.
Mr. McChesney clarified that Governor Inslee announced that all state-owned boat ramps can open on May 5th, but the fish opening pertains to lake fishing only. Salmon fishing will not be opened, but may be opened later in May. Commissioner Preston said his understanding was that salmon fishing would be opening, but not in all areas.
Commissioner Orvis asked the Port Attorney to provide guidance on whether or not a public hearing on May 11th via Zoom would be permissible given the current restrictions associated with the Open Public Meetings Act (OPMA). Mr. McChesney explained that the Commission approved the Public Access Plan several months ago, but not in a way that satisfies the Washington Recreation and Conservation Office (RCO) requirements. The RCO has extended the deadline for submitting an approved Public Access Plan that would potentially qualify for grant funding to June 1st. This public hearing on May 11th would be a formality, but necessary in order to qualify for future RCO funding.
Mr. Cattle said he believes the Port can hold a legitimate public hearing if it can develop a meeting platform that is available to the public for participation. He agreed to research the issue and work with the Executive Director. The timing constraint associated with the Port’s RCO application creates a distinct issue on an important Port matter. If the meeting goes forward as planned, access to the public will need to be clearly apparent, and the public will need to have clear direction on how they can participate.
Gerry O’Keefe, WPPA, said he was glad to hear that two of the Commissioners would be participating in the conference call meeting on April 28th where a good conversation is lined up to discuss hard issues. His impression from the Governor’s most recent news conference was there will be a lot of discretion at the local level, and a diversity of opinions will be expressed during the conference call meeting. The WPPA staff is very busy, which reflects on the huge amount of questions that people have. There is no road map or clear plan at this time. He encouraged the Commissioners to contact WPPA representatives for answers to their questions.
The Commission meeting was adjourned at 4:35 p.m.
David Preston, Port Commission Secretary