11 May Commission Meeting Minutes 4-25-22
PORT COMMISSION OF THE PORT OF EDMONDS MINUTES OF REGULAR MEETING
(Via Zoom) April 25, 2022
COMMISSIONERS PRESENT
David Preston, President
Steve Johnston, Vice President
Jim Orvis, Secretary
Jay Grant
Angela Harris
STAFF PRESENT
Bob McChesney, Executive Director
Brandon Baker, Director of Marina Operations
Tina Drennan, Manager of Finance and Accounting
OTHERS PRESENT
Jordan Stephens, Port Attorney
CALL TO ORDER
President Preston called the meeting to order at 7:00 p.m.
FLAG SALUTE
All those in attendance participated in the Pledge of Allegiance to the American Flag.
CONSENT AGENDA
COMMISSIONER GRANT MOVED THAT THE CONSENT AGENDA BE APPROVED TO INCLUDE THE FOLLOWING ITEMS:
A. APPROVAL OF AGENDA
B. APPROVAL OF APRIL 11, 2022 MEETING MINUTES, AS AMENDED
C. APPROVAL OF PAYMENTS IN THE AMOUNT OF $400,760.12
COMMISSIONER ORVIS SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.
PUBLIC COMMENTS
There were no public comments.
1ST QUARTER 2022 PORT OPERATIONS REPORT
Mr. Baker presented the 1st Quarter 2022 Port Operations Report, highlighting the following:
• Staffing. All full-time marina operations and security staff positions have been filled, and they have started the seasonal hiring process.
• Travelift Schedule. The Travelift is now operating 6 days per week, Monday through Saturday. However, they can only do a limited number of boats on Mondays and Tuesdays, as the operator is at only 70% of certification. The expanded schedule has helped get boats out of the yard and new boats in.
• Project Hours. The operations team devoted their project hours to cleaning dock roofs and gutters and pressure washing the docks and south promenade. Project hours were down this year in lieu of extra training in preparation for the season.
• Boating Projections. Dockwa recently published an article, reporting that reservations this boating season are 40% greater than last year despite fuel prices. The National Marine Manufacturer’s Association announced that 2021 ended with a 19.6% increase in boats, engines and trailers. In January 2022, they are already showing a 6.1% increase over the same period in 2021.
• Water Moorage. There were 13 terminations and 20 assignments. The turnover ratio was just under 2%, which is a 5-year low. The waitlist has climbed to 355 members versus 251 in the same quarter of 2021. They implemented a new off-season lease program, where they use a set amount of dock space in Guest Moorage for short-term leasable moorage. They had three boats in the program from October through April, allowing them to increase revenue in the down months when the space isn’t being fully utilized.
Commissioner Grant asked if someone who purchases a boat that is in a leased slip could retain the slip. Mr. Baker answered that that there is a grandfather clause that allows the moorage to be transferred with the sale of the boat if the previously owner had the slip before 1986. Ms. Drennan added that a tenant could also sublease a slip for up to six months, giving the buyer a chance to get moorage at the Port.
• Guest Moorage. The total number of guest boats increased by 34% (66 boats), and the total number of nights increased by 18% (63 nights) during the 1st Quarter. The number of reservations also increased by 32%.
• Document Compliance. At the end of 1st Quarter, insurance compliance was at 87% and registration compliance was at 81%.
• Dry Storage. Dry Storage had an 83.5% occupancy rate compared to 80% in the 1st Quarter of 2021. Trailer occupancy was at 104% for the quarter. There are 51 designated spaces, which are designed and measured for standard-size trailers, but they were able to place some smaller trailers in some creative nooks. Launch activity was up 66% from the same period last year, and staff did 1,021 total boat moves (32% increase). Wash down area use was up 29%, and call ahead service usage was up 38.4%.
• Boatyard and Travelift. The Boatyard and Travelift numbers were significantly higher in 2021 due to a backlog of maintenance caused by the pandemic. The 2022 numbers are lower, but are a little higher than the 2018 through 2020 numbers.
• Fuel Dock. The number of gallons of gasoline pumped increased by 2%, and the number of gallons of diesel was just about the same as 2021. Total gallons sold was 370 more than in 2021. The price per gallon for unleaded fuel increased by $1.83 over the same period in 2021, and diesel increased by $2.57 per gallon. Pricing surveys continue to show that the Port’s fuel prices are competitive with other marinas in the area.
• Public Launch. Round-trip launches increased by 38% over 2021, and one-way launches decreased by 9%.
Commissioner Preston asked if there are any projects or concerns that need to be addressed in the near future, and Mr. Baker answered no. However, he noted that there is a lot of new staff that will need to be trained before the busy season.
Commissioner Johnston requested more information about the January zinc and copper samples that exceeded the benchmark. Mr. Baker said the exceedance were not significant. Some changes were made following a walk-through with Joe Kalmar from Landau Associates. Another sample was recently collected and the numbers should be available later in the week. Staff will continue to keep a close on the situation. Mr. Kalmar didn’t seem overly concerned with the test results, recognizing that it will be very difficult to meet the benchmarks every sampling period.
Commissioner Orvis asked if there have been any updates on the timing of the new boatyard permit, and Mr. Baker said it is still on schedule for June of this year. He has heard rumors that they may be going to a site-specific benchmark.
Commissioner Grant asked what issues typically come up as the busy season approaches. Mr. Baker said parking becomes a greater issue, and pedestrian traffic increases substantially. The Port operates a large, sophisticated crane system, and it is difficult to handle pedestrian traffic in this work zone. This year, the Port plans to add a third person to assist with both pedestrian and boat traffic while the launcher is operating.
Commissioner Grant noted that the monitor in the weather center doesn’t appear to be operational, and Mr. Baker agreed to check on it.
Commissioner Grant reported that, on a recent visit to the marina, there were three kids on skateboards, and some older people who were using the Portwalk were quite upset. Commissioner Grant said the skateboarders left after he pointed out the signs that prohibit skateboards on the walkway. Mr. McChesney agreed it is a problem, and staff has been asked to call out violators in a polite way.
Commissioner Grant pointed out that the sign on the breakwater near Marina Beach Park is falling down.
1ST QUARTER 2022 FINANCIAL STATEMENTS
Ms. Drennan presented the 1st Quarter 2022 Financial Statements, noting that revenues generally trended up from $2 million in 2018 to $2.4 million in 2022 and expenses ranged from $1.5 million to $1.7 million. As inflation dramatically increased from the same time last year, the graph at the top of Page 2 shows the Port’s revenues and net income adjusted by the Consumer Price Index (CPI), using 2018 as the base period. CPI increased by about 15.6% from February of 2018 to February of 2022. Adjusting for CPI, revenues were between $2 million and $2.1 million and expenses ranged between $1.4 million and $1.6 million. In real numbers, net income generally trended up, ranging from $505,000 to $802,000. Adjusted for CPI, net income ranged from $491,000 to $693,000.
Commissioner Grant asked at what point inflation will impact the Port’s Cost Flow Model. Mr. McChesney said inflation could significantly impact the Port, particularly when it comes to moorage rates, which are calibrated to increase by CPI plus 1%. For several years, CPI was 1.5% to 2%, so there wasn’t a lot of push back on moorage rate increases. However, this past year, CPI was 5.5% and the moorage rate increase was substantially greater. Mr. McChesney commented that this will be a point of discussion when the budget process starts again in August.
Ms. Drennan advised that, actual to budget, revenues were $79,000 greater than budget and expenses were $182,000 less than budget. Gross profit for the 3-month period was $2.1 million, which is $50,000 greater than budget. Net income for the same period was $802,000. She highlighted the following items:
Marina Operations Revenue Actual to Budget
• Net Guest Moorage revenue was $33,271, which was $24,000 or 270% greater than budget.
• Permanent Moorage revenue was $1,045,000, or $15,000 greater than budget.
• Dry Storage revenue was $163,164, which was $11,000 or 6% less than budget.
• Parking revenue was $14,229, or $10,500 (43%) less than budget. Commuter parking spaces are now full and there is a waitlist.
• Financial occupancy for Permanent Moorage was 99% for the quarter, and 98% was budgeted for the year. Financial occupancy for Dry Storage was 84% for the quarter and 87% was budgeted for the year.
Rental Properties Revenue Actual to Budget
• Total Rental Property revenue to date was $686,000, $19,000 or 3% greater than budget.
Operating Expenses Actual to Budget
• Operating expenses before depreciation for the 3-month period were $1.2 million, which was $195,000 or 14% less than budget.
• Employee Benefits were $172,000, which is $18,000 or 10% less than budget. This is primarily a timing situation.
• Payroll Taxes were $62,000 or $16,000 less than budget, again because of a timing issue.
• Repair and Maintenance expenses were $75,000 or 21% less than budget.
• Salaries and wages were $526,000 or $77,000 less than budget.
• Supplies were $61,000 or $20,000 less than budget.
Net Income
• Net income for the 3 months ending March 31st was $802,000, which was $261,000 greater than budget.
Marina Actual to Budget
• Revenues and expenses generally trended upward to a high of $1.5 million in 2022 and expenses ranged between $1 million and $1.1 million.
• Net income is trending upwards to $500,000 in 2022.
• Revenues were $53,000 greater than budget and expenses were $156,000 less than budget.
• Operating revenues were $1.5 million, or $52,000 greater than budget.
• Operating expenses before depreciation and overhead were $649,000, or $131,500 less than budget.
• Net income was $492,000 or $209,000 greater than budget.
Rental Property Actual to Budget
• Rental property revenues ranged from $650,000 to $700,000 and expenses ranged from $350,000 to $425,000. In 2018 and 2019, property tax revenue subsidized the Harbor Square Property. This subsidy was removed so that the numbers better represent what is actually happening. Net income ranged from $265,000 to $337,000
• Actual to budget revenues were $19,000 greater than budget and expenses were $33,000 less than budget.
• Operating revenues were $686,000 or $18,000 greater than budget, and operating expenses before depreciation and overhead were $171,000 or $10,000 less than budget.
• Net income was $311,000 or $52,000 greater than budget.
Investing Summary
• As of March 31st, the Port had 21 long-term investments. Two bonds matured during the 1st Quarter, one in January and one in March. They were each $500,000 and were combined and reinvested in a new $1 million bond for $940,000 that matures in 2026.
• Cash and investments increased by $3.3 million in 2021. After calculating the other reserves, $3.1 million was added to the Capital Replacement Reserve in the 1st quarter of 2022. The Capital Replacement Reserve is currently at $19 million.
• The Environmental Remediation Reserve is $1.1 million and the Public Amenities Reserve is $168,000.
• As bonds are being called or maturing, the Port will continue to invest them using the laddering method.
2021 ANNUAL REPORT
Ms. Drennan recalled that the preliminary 2021 Annual Report was previously presented to the Commission on February 14th. As required by the Washington State Auditor, the final annual report is being presented in the Budgeting, Accounting and Reporting (BARS) format. She explained that while the Statement of Net Position shows the same information as the Balance Sheet that was presented at the February 14th meeting, it is being presented a little differently. The Statement of Revenues, Expenses and Changes in Fund Net Position shows the same data as the Income Statement that was presented at the February 14th meeting, but it is less detailed. There were no major changes to the financial statement numbers, but minor changes were made to reflect 2021 invoices that came in after February 14th. These changes reduced net income by $3,899.
Ms. Drennan advised that the 2021 Statement of Cash Flows (Page 13), which wasn’t presented at the February 14th meeting, shows the sources and uses of cash in 2021. She highlighted the following:
• Operating activities provided net cash of $3.4 million. She noted that it is important that organizations regularly produce positive cash flow from operations, as this is the daily activity of the organization.
• Noncapital financing activities provided net cash of $381,000. These activities include proceeds from property tax income, operating grants and election expenses.
• Capital and related financing activities used net cash of just under $1 million. Cash flows include purchases and construction of capital assets and interest paid on leased assets, which are the leased copy machines that are now subject to Government Accounting Standards Board (GASB) Statement No. 87.
• Investing activities provided net cash of $2.8 million. Cash flows from investing activities include the maturity and purchases of long-term investments and interest from the Port’s investments.
• Total cash increased by $5.6 million in 2021, as the Port retained the funds as bonds matured or were called to fund the new Administration/Maintenance Building.
• Total cash and investments increased by $3.3 million. As per the Cash Flow Model, excess funds over and above the other reserves have been moved into the Capital Replacement Reserve to pay for future capital projects.
EXECUTIVE DIRECTOR’S REPORT
Mr. McChesney reported that he, Mr. Baker and Commissioner Grant did a site visit with Marielle Trumbauer from U.S. Congresswoman Jayapal’s office. They were able to share details about the North Portwalk and Seawall Project, and she agreed to track the Port’s application for a Water Resources Development Act (WRDA) Grant. There is no progress to report at this time.
Mr. McChesney reported that he attended a function at K&L Gates where U.S. Representative Rick Larsen gave a presentation about the Infrastructure Investment and Jobs Act, which was well attended. He specifically asked if the North Portwalk and Seawall Project would fit in their funding category and was advised that it might be questionable. It is likely the project will be more reliant on the WRDA Grant Program, and Commissioner Grant is working together with U.S. Representatives Larsen and Jayapal on that.
Mr. McChesney announced that the Port has received the plan set and bid specifications for the new Administration/Maintenance Building. The documents are currently under review and should be completed by May 6th. On April 22nd, the Building Official advised that all City Departments have signed off on the building permit except for engineering. The initial review was done by a staff engineer, but by the time the Port responded to the initial questions and comments, that person had left the City. The secondary review was done by a third-party consultant. He reviewed that the original strategy anticipated that the bid specifications and plans would converge with the building permit, and then the project could go out for bid. However, the Port won’t actually get the building permit until after the general contractor is awarded the contract. Initially, they will receive a notice of readiness. The Port plans to move forward with the bid process while waiting for the notice of readiness from the City. The final engineering review should be completed well before the bids are opened. The goal is to have the project before the Commission for final approval by June 24th, with construction starting by July 1st. He said it is imperative that the project stay on schedule due to the amount of sight work that needs to be done, in particular the ram aggregate and other soil improvements.
Commissioner Grant asked if the consultant has provided any additional information about the small margin between Silver and Gold Leadership in Energy and Environmental Design (LEED) Certification. Mr. McChesney responded that the architect is still waiting for completion of the Supplemental Energy Model, which must be reviewed by the Green Building Association. While this will be important information, it won’t hold up the project schedule at this point. Once the information is available, it will be presented to the Commission for further discussion and a final decision on LEED Certification.
Mr. McChesney reported that he and Mr. Baker met with the Sea Jazz promoters last week, and they have another good program lined up for every other Friday and every Wednesday evening throughout the summer. He looks forward to working again with Pete Bennett, who has been integral to the success of the program over the last few years. He noted that incremental improvements are made to the program each year, and the new awning that was put up by the Port’s maintenance staff has been a tremendous benefit.
COMMISSIONER’S COMMENTS AND COMMITTEE REPORTS
Commissioner Johnston reported that he attended the Economic Alliance of Snohomish County (EASC) Coffee Chat with U.S. Representatives DelBene and Larsen regarding the Infrastructure Investment and Jobs Act. He also announced that he would attend the Washington Public Port Association (WPPA) Spring Meeting on May 4th through 6th at the Skamania Lodge, including the special presentation on organizational effectiveness.
Commissioner Harris reported that she attended the Edmonds Economic Development Commission (EDC) meeting, where they discussed taking a handful of ideas to their appointed City Councilmembers for feedback. At the next meeting, they will decide which ones to move forward for implementation. Commissioner Preston asked how many of the EDC’s ideas have been implemented so far. Commissioner Harris said she has raised that question, but hasn’t received a response yet. Commissioner Orvis asked if the EDC’s ideas extend beyond the bowl area, and Commissioner Harris answered affirmatively. She said she would provide more information about the ideas currently being considered, as well as a history of the ideas that have already been implemented, at the next meeting.
Commissioner Harris advised that she has agreed to help the WPPA with their agenda for the July meeting. She also noted that the Port information that is provided at the library (agendas, etc.) isn’t current. Ms. Drennan said this information is posted by the port staff, but people often take the documents because they are left out in the open.
Commissioner Orvis reported that he also attended the EASC Coffee Chat with U.S. Representatives DelBene and Larsen regarding the Infrastructure Investment and Jobs Act. He was disappointed that the questions they were asked weren’t really answered. However, those in attendance were reminded that the money goes through agencies, and you have to make sure you follow the right procedures. He advised that the agencies are starting to go out for requests. Commissioner Grant added that the representative from U.S. Representative Jayapal’s office provided a lot information and advised that separate websites would be created for several of the different grants.
Commissioner Grant reported that he has attended a number of City Council meetings, and the committee meetings are particularly interesting. He said he requested feedback from Councilmember Buckshnis about a City expenditure of $38,000 for Salmon Safe Certification, and she thought it wasn’t worth the money. He said he met with the new Assistant Police Chief regarding the new marine unit, and he agreed to provide more information about policies and procedures. He isn’t sure the current boat will work, and they will likely want to keep equipment at the waterfront in their own locker.
Commissioner Grant advised that he recently learned of a draft Edmonds Waterfront Issues Study on how to make the waterfront better, which will be presented to the Edmonds Planning Board in May. It includes a lot of detail, and he prepared a 5-page synopsis of things he thought were important to the Port. The study suggests that the Edmonds Crossing ferry terminal relocation be removed from the plan. Mr. McChesney pointed out that the City plans to remove this project from its Comprehensive Plan as part of the next update. Commissioner Grant said other ideas mentioned in the study include a third boat, a second set of tracks to the east and marsh restorations. He said the study calls out four particular areas of importance: create a new vision for the waterfront, recognize and support the ferry terminal’s current location, prioritize the Edmonds Marsh and Willow Creek restoration, and plan for improved emergency management for the waterfront. He voiced concern that, in some instances, the study appears to paint the Port in a negative light. For example:
• The study talks about Harbor Square in a negative way, emphasizing that the Port’s 2012 plan is a dead issue. While that may be true for now, the way it is characterized is not in the Port’s best interest.
• The study talks about the environmentally sensitive Edmonds Marsh and Willow Creek and seems to place much of the blame for stormwater pollution on the State and Port. Perhaps the Port needs to do a better job of educating the public about what it is doing from an environmental standpoint.
• The Port could suggest that the City conduct a shadow analysis. The study talks about how other communities have done well with hotels on their waterfront and Edmonds should consider doing the same. The study suggests there are ways to identify the best location for development.
Mr. McChesney agreed to read Commissioner Grant’s 5-page synopsis and respond on the Port’s behalf as appropriate and necessary.
Commissioner Grant recalled that he has been researching the fishing pier parking lot. He recently spoke to the City’s new Parks, Recreation and Cultural Services Director. She made a presentation at a recent Edmonds Civic Roundtable, where she announced that 15 music events are planned for Hazel Miller Park this summer. She also noted that the joint City/Port parking lot is out of compliance with the Americans with Disabilities Act (ADA). The City is making ADA improvements, but it doesn’t include new paving.
Commissioner Grant reviewed that the City has been working on a $5.6 million plan for Marina Beach, but the City Council recently decided to give up the $1 million grant that it received for the project. Instead, they plan to spend the money on Highway 99. He also noted that because the Esperance area is encircled by the City of Edmonds, state law allows the City annex it without a vote of the people. However, problems arise because the area has been developed based on Snohomish County codes rather than City of Edmonds codes.
Commissioner Grant announced that he would attend the WPPA Spring Meeting on May 4th through 6th, and particularly the special communications meeting. Commissioner Preston added that he would attend the meeting as well, and possibly the communications meeting.
Commissioner Preston said the Edmonds Arts Festival recently put out a request for sponsors. He asked if the Port will be participating. Mr. McChesney reviewed that, in the past, the Port has rented a public information booth but determined that wasn’t cost effective or time efficient in 2020 and 2021. Instead, the Port will support the 2022 event, most likely in the form of purchasing advertising as opposed to sponsorship.
Commissioner Grant asked if the Port still has a Sea Scout Program, and Mr. McChesney answered that it is now defunct and the vessels and equipment locker have been removed. It would have to be restarted from scratch, with a new charter.
Commissioner Preston announced that he would attend the Edmonds Yacht Club meeting on April 26th. Mr. McChesney noted that staff had to reschedule its presentation to the club regarding the North Portwalk and Seawall Project due to staff illness. Commissioner Preston said he would also attend the annual meeting of the EASC on April 27th.
ADJOURNMENT
The Commission meeting was adjourned at 8:32 p.m.
Respectfully submitted,
Jim Orvis, Port Commission Secretary