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2022-05-10 City Council - Full FIN Agenda-31661 N o Agenda Edmonds City Council FINANCE COMMITTEE - ZOOM VIRTUAL ONLINE MEETING EDMONDS CITY COUNCIL MEETINGS WEB PAGE, HTTP://EDMONDSWA.IQM2.COM/CITIZENS/DEFAULT.ASPX, EDMONDS, WA 98020 MAY 10, 2022, 5:30 PM COUNCIL COMMITTEE MEETINGS ARE WORK SESSIONS FOR THE COUNCIL AND CITY STAFF. COMMITTEE MEETING AGENDAS DO NOT INCLUDE AUDIENCE COMMENTS OR PUBLIC HEARINGS. THIS MEETING IS HELD VIRTUALLY USING THE ZOOM MEETING PLATFORM. TO VIEW OR LISTEN TO THE COMMITTEE MEETING, CLICK ON OR PASTE THE FOLLOWING LINK INTO A WEB BROWSER USING A COMPUTER OR SMART PHONE: HTTPS://ZOOM. US/J/95798484261 OR JOIN BY DIAL -UP PHONE: US: +1 253 215 8782 WEBINAR ID: 957 9848 4261 COMMITTEE MEMBERS: DIANE BUCKSHNIS (CHAIR), WILL CHEN, VIVIAN OLSON (EX-OFFICIO MEMBER) CALL TO ORDER COMMITTEE BUSINESS 1. Capital Maintenance Bond Project (20 min) 2. Biennial Budget Discussion (20 min) 3. Enterprise Resource Planning System (ERP) Replacement: Update Request (10 min) 4. Proposed Updates to Leak Adjustment Policy (20 min) 5. March 2022 Quarterly Financial Report (10 min) 6. Finance Committee Agenda Planning (15 min) 7. 2022 State Auditor Office (SAO) Audit Exit Follow Up (30 min) ADJOURN Edmonds City Council Agenda May 10, 2022 Page 1 2.1 City Council Agenda Item Meeting Date: 05/10/2022 Capital Maintenance Bond Project Staff Lead: City Council Department: City Council Preparer: Beckie Peterson Background/History On October 12, 2021 Council passed Ordinance 4235, issuing new bonds for capital projects and the backlog of building maintenance in the amount of $4.4 million. (Attachment 1, Attachment 2) On August 10, 2021, the McKinstry Facilities Assessment was presented to Council, providing facility condition and budget data for the repair and upkeep of facilities. (Attachment 3) Staff Recommendation Discussion and update from staff. Narrative Council requests an update and specifics on upcoming projects and timelines. Attachments: Ordinance 4235 Pages from 2021-10-12 City Council - Full Minutes-2926 McKinstry report Packet Pg. 2 2.1.a CITY OF EDMONDS, WASHINGTON ORDINANCE NO. 4235 AN ORDINANCE of the City of Edmonds, Washington, relating to contracting indebtedness; providing for the issuance, sale, and delivery of one or more series of limited tax general obligation improvement and refunding bonds for the purpose of providing the funds necessary: (1) to finance improvements to Civic Park and other capital projects, (2) to refund certain outstanding water and sewer revenue bonds of the City, (3) to refund certain outstanding limited tax general obligation bonds of the City, and (4) to pay the costs of issuance and sale of the bonds; fixing or setting parameters with respect to certain terms and covenants of the bonds; appointing the City's designated representative to approve the final terms of the sale of the bonds; authorizing the execution and delivery of an amendment to Interlocal Agreement for Development of the Edmonds Centre for the Arts; and providing for other related matters. Passed October 12, 2021 This document prepared by: Foster Garvey P. C. 1111 Third Avenue, Suite 3000 Seattle, Washington 98101 (206) 447-4400 FG:54375381.2 Packet Pg. 3 2.1.a TABLE OF CONTENTS* Page Section1. Definitions............................................................................................................... 1 Section 2. Findings and Determinations.................................................................................. 6 Section 3. Purpose and Authorization of Bonds...................................................................... 7 Section 4. Description of the Bonds; Appointment of Designated Representative ................. 8 Section 5. Registrar; Registration and Transfer of Bonds ....................................................... 8 Section 6. Form and Execution of Bonds................................................................................ 9 Section7. Payment of Bonds................................................................................................. 10 Section 8. Funds and Accounts; Deposit of Proceeds............................................................ 10 Section 9. Redemption Provisions and Purchase of Bonds ................................................... 11 Section 10. Failure To Pay Bonds............................................................................................ 12 Section 11. Security for the Bonds.......................................................................................... 12 Section 12. Tax Covenants; Designation of Tax -Exempt Bonds as "Qualified Tax - ExemptObligations."............................................................................................ 13 Section 13. Refunding or Defeasance of the Bonds................................................................ 13 Section 14. Refunding Plans.................................................................................................... 14 Section 15. Sale and Delivery of the Bonds............................................................................ 17 Section 16. Official Statement; Continuing Disclosure........................................................... 17 Section 17. Amendatory Ordinances....................................................................................... 18 Section 18. Amendment of County PFD Interlocal Agreement .............................................. 18 Section 19. General Authorization and Ratification................................................................ 18 Section20. Severability........................................................................................................... 19 Section 21. Effective Date of Ordinance................................................................................. 19 Q Exhibit A Parameters for Final Terms Exhibit B Form of Undertaking to Provide Continuing Disclosure Exhibit C Form of Second Amendment to County PFD Interlocal Agreement * The cover page, table of contents and section headings of this ordinance are for convenience of reference only, and shall not be used to resolve any question of interpretation of this ordinance. FG:54375381.2 Packet Pg. 4 2.1.a CITY OF EDMONDS, WASHINGTON ORDINANCE NO. 4235 AN ORDINANCE of the City of Edmonds, Washington, relating to contracting indebtedness; providing for the issuance, sale, and delivery of one or more series of limited tax general obligation improvement and refunding bonds for the purpose of providing the funds necessary: (1) to finance improvements to Civic Park and other capital projects, (2) to refund certain outstanding water and sewer revenue bonds of the City, (3) to refund certain outstanding limited tax general obligation bonds of the City, and (4) to pay the costs of issuance and sale of the bonds; fixing or setting parameters with respect to certain terms and covenants of the bonds; appointing the City's designated representative to approve the final terms of the sale of the bonds; authorizing the execution and delivery of an amendment to Interlocal Agreement for Development of the Edmonds Centre for the Arts; and providing for other related matters. THE CITY COUNCIL OF THE CITY OF EDMONDS, WASHINGTON, DO ORDAIN AS FOLLOWS: Section 1. Definitions. As used in this ordinance, the following capitalized terms shall have the following meanings: (a) "2011 Bond Ordinance " means Ordinance No. 3863, passed on December 6, 2011 (b) "2011 Bonds" means the City's Water and Sewer Improvement and Refunding Revenue Bonds, 2011, issued pursuant to the 2011 Bond Ordinance. (c) "2011 Redemption Date" means, unless otherwise specified in the Bond Purchase Contract, December 1, 2021. (d) "2011 Refunded Bonds" means the 2011 Refunding Candidates selected by the Designated Representative to be refunded with the proceeds of the 2011 Refunding Bonds. (e) -2011 Refunding Bond" means each Bond issued to carry out the 2011 Refunding Plan. (f) "2011 Refunding Candidates " means the 2011 Bonds stated to mature in the years 2022 through 2027, inclusive, 2029, and 2031. (g) "2011 Refunding Plan " means: (1) the deposit with the registrar for the 2011 Bonds (or, if so determined by the Designated Representative, with the Refunding Trustee) of proceeds of the 2011 Refunding Bonds (together with other money of the City, if so determined by the Designated Representative); FG:54375381.2 Packet Pg.J 2.1.a (2) the purchase by the Refunding Trustee of Acquired Obligations (if so determined by the Designated Representative) and the application of the principal of and interest on any such Acquired Obligations and any other such money of the City to the call, payment, and redemption of the 2011 Refunded Bonds on the 2011 Redemption Date at a price equal to the principal amount of the 2011 Refunded Bonds plus accrued interest; and (3) the payment of the costs of issuing the 2011 Refunding Bonds and the costs of carrying out the foregoing elements of the 2011 Refunding Plan. (h) "2012 Bond Ordinance" means Ordinance No. 3862, passed on December 6, 2011. (i) "2012 Bonds " means the City's Limited Tax General Obligation Refunding Bonds, 2012, issued pursuant to the 2012 Bond Ordinance. 0) "2012 Redemption Date" means December 1, 2022. (k) "2012 Refunded Bonds" means the 2012 Refunding Candidates selected by the Designated Representative to be refunded with the proceeds of the 2012 Refunding Bonds. (1) "2012 Refunding Bond" means each Bond issued to carry out the 2012 Refunding Plan. (m) "2012 Refunding Candidates " means the portions of the 2012 Bonds stated to mature on December 1 in the following principal amounts in the following years: Principal Year Amount 2021 $400,000 2022 430,000 2023 455,000 2024 480,000 2025 510,000 2026 310,000 (n) "2012 Refunding Plan " means: (1) the deposit with the Refunding Trustee of proceeds of the 2012 Refunding Bonds (together with other legally available funds, if so determined by the Designated Representative); (2) the purchase by the Refunding Trustee of Acquired Obligations; (3) the application of the principal of and interest on such Acquired Obligations and other such money of the City to the payment of principal of and interest on the 2012 Refunded Bonds when due up to and including the 2012 Redemption Date and the call, payment, and redemption of the then -outstanding 2 FG:54375381.2 Packet Pg. 6 2012 Refunded Bonds on the 2012 Redemption Date at a price equal to the principal amount of such 2012 Refunded Bonds plus accrued interest; and (3) the payment of the costs of issuing the 2012 Refunding Bonds and the costs of carrying out the foregoing elements of the 2012 Refunding Plan. (o) "Acquired Obligations " means the United States Treasury Certificates of Indebtedness, Notes, and Bonds —State and Local Government Series and other direct, noncallable obligations of the United States of America purchased to carry out the 2011 Refunding Plan (if so determined by the Designated Representative) and the 2012 Refunding Plan. (p) "Authorized Denomination " means $5,000 or any integral multiple thereof within a maturity of a Series. (q) "Beneficial Owner" means, with respect to a Bond, the owner of any beneficial interest in the Bond, and includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares (1) voting power that includes the power to vote, or to direct the voting of, the Bond, and/or (2) investment power that includes the power to dispose, or to direct the disposition of, the Bond. (r) "Bond" means each bond issued pursuant to and for the purposes provided in this ordinance. (s) "Bond Counsel" means the firm of Foster Garvey P.C., its successor, or any other attorney or firm of attorneys selected by the City with a nationally recognized standing as bond counsel in the field of municipal finance. (t) "Bond Fund" means the Limited Tax General Obligation Bond Fund, 2021, of the City created for the payment of the principal of and interest on the Bonds. (u) "Bond Purchase Contract" means an offer to purchase a Series, setting forth certain terms and conditions of the issuance, sale, and delivery of the Series, which offer is authorized to be accepted by the Designated Representative on behalf of the City, if consistent with this ordinance. In the case of a competitive sale, the official notice of sale, the Purchaser's bid, and the award by the City shall constitute the Bond Purchase Contract for purposes of this ordinance. (v) "Bond Register" means the books or records maintained by the Registrar for the purpose of identifying ownership of each Bond. (w) "City" means the City of Edmonds, Washington, a municipal corporation duly organized and existing under the laws of the State. (x) "City Council" means the legislative authority of the City, as duly and regularly constituted from time to time. (y) "Code" means the United States Internal Revenue Code of 1986, as amended, and applicable rules and regulations promulgated thereunder. FG:54375381.2 Packet Pg. 7 2.1.a (z) "County PFD" means the Snohomish County Public Facilities District. (aa) "County PFD Interlocal Agreement" means the Interlocal Agreement for Development of the Edmonds Centre for the Arts, dated November 4, 2002, by and among the City, the Edmonds PFD, the County PFD, and the County, and recorded under County recording number 200211060003, as amended by the First Amendment thereto, Addendum No. 1 thereto, Addendum No. 2 thereto, and Addendum No. 3 thereto, and as it may hereafter be amended in accordance with its terms. (bb) "DTC" means The Depository Trust Company, New York, New York, or its nominee. (cc) "Designated Representative" means the officer of the City appointed in Section 4 to serve as the City's designated representative in accordance with RCW 39.46.040. (dd) "Edmonds PFD" means the Edmonds Public Facilities District. (ee) "Final Terms" means the terms and conditions for the sale of a Series, including the amount, date or dates, denominations, interest rate or rates, payment dates, final maturity, redemption rights, price, and other terms or covenants, including minimum savings for refunding bonds (if the refunding bonds are issued for savings purposes). (ff) "Finance Director" means the Finance Director of the City or any other City official who succeeds the duties now delegated to that office, or the designee of such officer. (gg) "Fiscal Agent" means the fiscal agent of the State, as the same may be designated by the State from time to time. (hh) "Government Obligations " means direct obligations of, or obligations the payment of principal of and interest on which are unconditionally guaranteed by, the United States of America. (ii) "Intergovernmental Payments" means the amounts received by the City from the Edmonds PFD and the County PFD under the County PFD Interlocal Agreement. 0j) "Issue Date " means, with respect to a Bond, the date of initial issuance and delivery of the Bond to the Purchaser in exchange for the purchase price of the Bond. (kk) "Letter of Representations " means the Blanket Issuer Letter of Representations between the City and DTC, dated August 6, 1996, as it may be amended from time to time, and any successor or substitute letter relating to the operational procedures of the Securities Depository. (11) "MSRB" means the Municipal Securities Rulemaking Board. (mm) "Municipal Advisor" means Northwest Municipal Advisors of Bellevue, Washington, or any other municipal advisor then appointed and acting as municipal advisor to the City. 4 FG:54375381.2 Packet Pg. 8 2.1.a (nn) "Official Statement" means an offering document, disclosure document, private placement memorandum, or substantially similar disclosure document provided to purchasers and potential purchasers in connection with the initial offering of a Series in conformance with Rule 15c2-12 or other applicable regulations of the SEC. (oo) "Owner" means, with respect to a Bond and without distinction, the Registered Owner and the Beneficial Owner. (pp) "Project" means improvements to Civic Park and other capital projects, as deemed necessary and advisable by the City. Incidental costs incurred in connection with carrying out and accomplishing the Project, consistent with RCW 39.46.070, including costs of issuance and sale of the Project Bonds, may be included as costs of the Project. (qq) "Project Bond" means each Bond issued to finance the Project. (rr) "Project Fund" means the fund or account designated or created by the Finance Director for the purpose of carrying out the Project. (ss) "Purchaser" means, with respect to a Series, the financial institution or institutions selected by the Designated Representative to serve as purchaser in a private placement, underwriter or placement agent in a negotiated sale, or awarded as the successful bidder in a competitive sale of the Series. (tt) "Rating Agency " means any nationally recognized rating agency then maintaining a rating on the Bonds at the request of the City. v (uu) "Real Estate Excise Taxes" means the proceeds of the real estate excise taxes M imposed by the City under RCW 82.41.010. (vv) "Record Date" means the Registrar's close of business on the 15th day of the as U month preceding an interest payment date. With respect to redemption of a Bond prior to its =a maturity, "Record Date" means the Registrar's close of business on the date on which the Registrar o sends the notice of redemption in accordance with Section 9. E (ww) "Refunding Trust Agreement" means a refunding trust or escrow agreement between the City and the Refunding Trustee, dated the Issue Date, providing for the carrying out Q of the 2011 Refunding Plan (if so determined by the Designated Representative) and the 2012 Refunding Plan. (xx) "Refunding Trustee" means U.S. Bank National Association, serving as refunding trustee to carry out the 2011 Refunding Plan (if so determined by the Designated Representative) and the 2012 Refunding Plan. (yy) "Registered Owner" means, with respect to a Bond, the person in whose name the Bond is registered on the Bond Register. For so long as the City utilizes the book -entry only system for the Bonds under the Letter of Representations, "Registered Owner" means the Securities Depository. 5 FG:54375381.2 Packet Pg. 9 2.1.a (zz) "Registrar" means the Fiscal Agent, or any successor Registrar selected by the City. (aaa) "Rule I5c2-12 " means Rule 15c2-12 promulgated by the SEC under the Securities Exchange Act of 1934, as amended. (bbb) "SEC" means the United States Securities and Exchange Commission. (ccc) "Securities Depository" means DTC, any successor thereto, any substitute securities depository selected by the City that is qualified under applicable laws and regulations to provide the services proposed to be provided by it, or the nominee of any of the foregoing. (ddd) "Series " means a series of the Bonds issued pursuant to this ordinance. (eee) "State " means the State of Washington. (fff) "System of Registration " means the system of registration for the City's bonds and other obligations set forth in Ordinance No. 2451 of the City. (ggg) "Tax -Exempt" means, with respect to a Bond, that interest on the Bond is intended, as of the Issue Date, to be excluded from gross income for federal income tax purposes. (hhh) "Term Bond" means each Bond designated as a Term Bond and subject to mandatory redemption in the years and amounts set forth in the Bond Purchase Contract. (iii) "Undertaking" means the undertaking to provide continuing disclosure entered into pursuant to Section 16. Section 2. Findings and Determinations. The City takes note of the following facts and makes the following findings and determinations: (a) Authority for Project. The City is in need of certain improvements to Civic Park and other capital projects. The City Council therefore finds that it is in the best interests of the City to finance the Project. (b) Authority to Finance Project. Pursuant to applicable law, including chapters 35.37, 39.36, 39.44, 39.46, and 39.52 RCW, the City is authorized to issue general obligation bonds for the purpose of financing the Project. (c) Refunding of 2011 Refunded Bonds. The City Council finds that it is in the best interests of the City and its taxpayers to issue the 2011 Refunding Bonds to carry out the 2011 Refunding Plan if, in the determination of the Designated Representative, a savings will be effected by the difference between the principal and interest cost over the life of the 2011 Refunding Bonds and the principal and interest cost over the life of the 2011 Refunded Bonds but for such refunding, as set forth in Exhibit A. The City Council further finds that a 2011 Refunding Plan approved by the Designated Representative in accordance with this ordinance will discharge and satisfy the obligations, pledges, charges, trusts, covenants, and agreements of the City under the 2011 Bond Ordinance as to the 2011 Refunded Bonds, and the 2011 Refunded Bonds shall no longer be 6 FG:54375381.2 Packet Pg. 10 2.1.a deemed to be outstanding immediately upon the deposit of the money specified in the 2011 Refunding Plan with the registrar for the 2011 Bonds (or, if so determined by the Designated Representative, with the Refunding Trustee). (d) Authority to Carry Out 2011 Refunding Plan. Pursuant to applicable law, including chapters 35.37, 39.36, 39.44, 39.46, 39.52, and 39.53 RCW, the City is authorized to issue general obligation bonds for the purpose of carrying out the 2011 Refunding Plan. (e) Refunding of 2012 Refunded Bonds. The Edmonds PFD, as obligor on the 2012 Refunded Bonds, has requested that the City carry out the 2012 Refunding Plan to modify debt service requirements. The City Council finds that it is in the best interests of the City and its taxpayers and of the Edmonds PFD and its taxpayers to issue the 2012 Refunding Bonds to carry out the 2012 Refunding Plan to modify debt service requirements. The City Council further finds that a 2012 Refunding Plan approved by the Designated Representative in accordance with this ordinance will discharge and satisfy the obligations, pledges, charges, trusts, covenants, and agreements of the City under the 2012 Bond Ordinance as to the 2012 Refunded Bonds, and the 2012 Refunded Bonds shall no longer be deemed to be outstanding immediately upon the deposit of the money specified in the 2012 Refunding Plan with the Refunding Trustee. (f) Authority to Carry Out 2012 Refunding Plan. Pursuant to applicable law, including chapters 35.37, 39.36, 39.44, 39.46, 39.52, and 39.53 RCW, the City is authorized to issue general obligation bonds for the purpose of carrying out the 2012 Refunding Plan. (g) Debt Capacity. Based on the following facts, the principal amount of Bonds authorized to be issued pursuant to this ordinance is within the amount permitted to be issued by the City for general municipal purposes without a vote: (1) The assessed valuation of the taxable property within the City as ascertained by the last preceding assessment for City purposes for collection in the calendar year 2021 is $11,648,792,913. (2) As of December 31, 2020, the City had limited tax general obligation indebtedness outstanding (consisting of bonds, loans, and a nonexchange financial guarantee) in the principal amount of $9,741,038, which was incurred within the limit of up to 11/2% of the value of the taxable property within the City permitted for general municipal purposes without a vote ($174,731,893). (3) As of December 31, 2020, the City had no unlimited tax general obligation indebtedness outstanding. Section 3. Purpose and Authorization of Bonds. The City is authorized to borrow money on the credit of the City and issue negotiable limited tax general obligation improvement and refunding bonds evidencing indebtedness in one or more Series in aggregate principal amount not to exceed the amount set forth in Appendix A to provide funds necessary to finance the Project, carry out the 2011 Refunding Plan, and carry out the 2012 Refunding Plan. The proceeds of the Project Bonds shall be deposited as set forth in Section 8(b) and shall be used to carry out the Project, or a portion of the Project, in such order of time as the City determines is advisable and practicable. The proceeds of the 2011 Refunding Bonds shall be deposited as set forth in Section 14 7 FG:54375381.2 Packet Pg. 11 2.1.a and shall be used to carry out the 2011 Refunding Plan. The proceeds of the 2012 Refunding Bonds shall be deposited as set forth in Sections 14 and shall be used to carry out the 2012 Refunding Plan. Section 4. Description of the Bonds; Appointment of Designated Representative. The Finance Director, or the Assistant Finance Director in the absence of the Finance Director, is appointed as Designated Representative and is authorized and directed to conduct the sale of the Bonds in the manner and upon the terms deemed most advantageous to the City, and to approve the Final Terms of each Series, with such additional terms and covenants as the Designated Representative deems advisable, within the parameters set forth in Exhibit A, which is attached to this ordinance and incorporated by this reference. Section 5. Registrar; Registration and Transfer of Bonds. (a) Registration of Bonds. Each Bond shall be issued only in registered form as to both principal and interest and the ownership of each Bond shall be recorded on the Bond Register. (b) Registrar; Duties. The Fiscal Agent is appointed as initial Registrar. The Registrar shall keep, or cause to be kept, sufficient books for the registration and transfer of the Bonds, which shall be open to inspection by the City at all times. The Registrar is authorized, on behalf of the City, to authenticate and deliver Bonds transferred or exchanged in accordance with the provisions of the Bonds and this ordinance, to serve as the City's paying agent for the Bonds, and to carry out all of the Registrar's powers and duties under this ordinance and the System of Registration. The Registrar shall be responsible for its representations contained in the Registrar's Certificate of Authentication on each Bond. The Registrar may become an Owner with the same rights it would have if it were not the Registrar and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as members of, or in any other capacity with respect to, any committee formed to protect the rights of Owners. (c) Bond Register; Transfer and Exchange. The Bond Register shall contain the name and mailing address of each Registered Owner and the principal amount and number of each Bond held by each Registered Owner. A Bond surrendered to the Registrar may be exchanged for a Bond or Bonds in any Authorized Denomination of an equal aggregate principal amount and of the same Series, maturity, and interest rate. A Bond may be transferred only if endorsed in the manner provided thereon and surrendered to the Registrar. Any exchange or transfer shall be without cost to the Owner or transferee. The Registrar shall not be obligated to exchange any Bond or transfer registered ownership during the period between the applicable Record Date and the redemption date. (d) Securities Depository; Book -Entry Only Form. If a Bond is to be issued in book - entry form, DTC shall be appointed as initial Securities Depository and the Bond initially shall be registered in the name of Cede & Co., as the nominee of DTC. Each Bond registered in the name of the Securities Depository shall be held fully immobilized in book -entry only form by the Securities Depository in accordance with the provisions of the Letter of Representations. Registered ownership of any Bond registered in the name of the Securities Depository may not be transferred except: (i) to any successor Securities Depository; (ii) to any substitute Securities Depository appointed by the City; or (iii) to any person if the Bond is no longer to be held in book- 8 FG:54375381.2 Packet Pg. 12 2.1.a entry only form. Upon the resignation of the Securities Depository, or upon a termination of the services of the Securities Depository by the City, the City may appoint a substitute Securities Depository. If (i) the Securities Depository resigns and the City does not appoint a substitute Securities Depository, or (ii) the City terminates the services of the Securities Depository, the Bonds no longer shall be held in book -entry only form and the registered ownership of each Bond may be transferred to any person as provided in this ordinance. Neither the City nor the Registrar shall have any obligation to participants of any Securities Depository or the persons for whom they act as nominees regarding accuracy of any records maintained by the Securities Depository or its participants. Neither the City nor the Registrar shall be responsible for any notice that is permitted or required to be given to a Registered Owner of a Bond registered in the name of the Securities Depository except such notice as is required to be given by the Registrar to the Securities Depository. Section 6. Form and Execution of Bonds. (a) Form of Bonds; Signatures and Seal. Each Bond shall be prepared in a form consistent with the provisions of this ordinance and State law. Each Bond shall be signed by the Mayor and the City Clerk, either or both of whose signatures may be manual or in facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed or printed thereon. If any officer whose manual or facsimile signature appears on a Bond ceases to be an officer of the City authorized to sign bonds before the Bond bearing manual or facsimile signature of such officer is authenticated by the Registrar, or issued or delivered by the City, the Bond nevertheless may be authenticated, issued, and delivered and, when authenticated, issued, and delivered, shall be as binding on the City as though that person had continued to be an officer of the City authorized to sign bonds. Any Bond also may be signed on behalf of the City by any person who, on the actual date of signing of the Bond, is an officer of the City authorized to sign bonds, although such officer did not hold the required office on its Issue Date. (b) Required Statement on 2012 Refunding Bonds. Each 2012 Refunding Bond shall include on such Refunding 2012 Bond and in any Official Statement for the sale of any such 2012 Refunding Bond substantially the following statement, as required by Section CA of the County PFD Interlocal Agreement: The 2012 Refunding Bonds are obligations of the City, payable from payments transferred to the City by the Edmonds PFD, from certain real estate excise tax receipts, and from other money of the City legally available therefor. The 2012 Refunding Bonds are not obligations of the Edmonds PFD, the County or the County PFD. The Edmonds PFD, the County, and the County PFD are political subdivisions of the state of Washington separate from the City. All liabilities incurred by the City incurred in connection with the Edmonds PFD shall be satisfied exclusively from the assets, credit, and property of the City and no creditor or other person shall have any right of action against or recourse to the Edmonds PFD (except to the extent of required payments under the County PFD Interlocal Agreement), the County PFD, the County, 9 FG:54375381.2 Packet Pg. 13 2.1.a or any of their respective assets, credit or services on account of any debts, obligations, liabilities, or omissions of the City. The County PFD is a municipal corporation organized under RCW 36.100.010 and Amended Ordinance No. 01-041 of Snohomish County. Amended Ordinance No.01-041 expressly provides: "All liabilities incurred by the [County PFD] shall be satisfied exclusively from the assets, credit, and property of the [County PFD] and no creditor or other person shall have any right of action against or recourse to the County, its assets, credit, or services on account of any debts, obligations, liabilities, or omissions of the [County PFD]." (c) Authentication. Only a Bond bearing a Certificate of Authentication in substantially the following form, manually signed by the Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance: "Certificate of Authentication. This Bond is one of the fully registered City of Edmonds, Washington, Limited Tax General Obligation [Improvement and] [Refunding] Bonds, [Series and other designation], described in the Bond Ordinance." The authorized signing of a Certificate of Authentication shall be conclusive evidence that the Bond so authenticated has been duly executed, authenticated, and delivered and is entitled to the benefits of this ordinance. Section 7. Payment of Bonds. Principal of and interest on each Bond shall be payable in lawful money of the United States of America. Principal of and interest on each Bond registered in the name of the Securities Depository are payable in the manner set forth in the Letter of Representations. Interest on each Bond not registered in the name of the Securities Depository is payable by electronic transfer on the interest payment date, or by check or draft of the Registrar mailed on the interest payment date, to the Registered Owner at the address appearing on the Bond Register on the Record Date. The City is not required to make electronic transfers except pursuant to a request by a Registered Owner in writing received on or prior to the Record Date and at the sole expense of the Registered Owner. Principal of each Bond not registered in the name of the Securities Depository is payable upon presentation and surrender of the Bond by the Registered Owner to the Registrar. The Bonds are not subject to acceleration under any circumstances. Section 8. Funds and Accounts, Deposit of Proceeds. (a) Bond Fund. The Bond Fund is created as a special fund of the City for the purpose of paying principal of and interest on the Bonds. All amounts allocated to the payment of the principal of and interest on the Bonds shall be deposited in the Bond Fund as necessary for the timely payment of amounts due with respect to the Bonds. The principal of and interest on the Bonds shall be paid out of the Bond Fund. Until needed for that purpose, the City may invest money in the Bond Fund temporarily in any legal investment, and the investment earnings shall be retained in the Bond Fund and used for the purposes of the Bond Fund. (b) Project Fund. The Project Fund is authorized to be created as a fund of the City for the purpose of paying the costs of the Project. Proceeds received from the sale of the Project Bonds shall be deposited into the Project Fund and used to pay the costs of the Project, including costs of issuance and of the Project Bonds. If so provided in the Refunding Trust Agreement, 10 FG:54375381.2 Packet Pg. 14 2.1.a proceeds of the Project Bonds to be used to pay costs of issuance and sale of the Project Bonds may be deposited with the Refunding Trustee for that purpose. Until needed to pay such costs, the City may invest those proceeds temporarily in any legal investment, and the investment earnings shall be retained in the Project Fund and used for the purposes of the Project Fund, except that earnings subject to a federal tax or rebate requirement (if applicable) may be withdrawn from the Project Fund and used for those tax or rebate purposes. Section 9. Redemption Provisions and Purchase of Bonds. (a) Optional Redemption. The Bonds shall be subject to redemption at the option of the City on terms acceptable to the Designated Representative, as set forth in the Bond Purchase Contract, consistent with the parameters set forth in Exhibit A. (b) Mandatory Redemption. Each Bond that is designated as a Term Bond in the Bond Purchase Contract, consistent with the parameters set forth in Exhibit A and except as set forth below, shall be called for redemption at a price equal to the stated principal amount to be redeemed, plus accrued interest, on the dates and in the amounts as set forth in the Bond Purchase Contract. If a Term Bond is redeemed under the optional redemption provisions, defeased, or purchased by the City and surrendered for cancellation, the principal amount of the Term Bond so redeemed, defeased, or purchased (irrespective of its actual redemption or purchase price) shall be credited against one or more scheduled mandatory redemption installments for that Term Bond. The City shall determine the manner in which the credit is to be allocated and shall notify the Registrar in writing of its allocation prior to the earliest mandatory redemption date for that Term Bond for which notice of redemption has not already been given. (c) Selection of Bonds for Redemption; Partial Redemption. If fewer than all of the outstanding Bonds are to be redeemed at the option of the City, the City shall select the Series and maturities to be redeemed. If fewer than all of the outstanding Bonds of a maturity of a Series are to be redeemed, the Securities Depository shall select Bonds registered in the name of the Securities Depository to be redeemed in accordance with the Letter of Representations, and the Registrar shall select all other Bonds to be redeemed as specified by the Designated Representative in such manner as the City directs and as the Registrar shall determine. All or a portion of the principal amount of any Bond that is to be redeemed may be redeemed in any Authorized Denomination. If less than all of the outstanding principal amount of any Bond is redeemed, upon surrender of that Bond to the Registrar, there shall be issued to the Registered Owner, without charge, a new Bond (or Bonds, at the option of the Registered Owner) of the same Series, maturity, and interest rate in any Authorized Denomination in the aggregate principal amount to remain outstanding. (d) Notice of Redemption. Notice of redemption of each Bond registered in the name of the Securities Depository shall be given in accordance with the Letter of Representations. Notice of redemption of each other Bond, unless waived by the Registered Owner, shall be given by the Registrar not less than 20 nor more than 60 days prior to the date fixed for redemption by first- class mail, postage prepaid, to the Registered Owner at the address appearing on the Bond Register on the Record Date. The requirements of the preceding sentence shall be satisfied when notice has been mailed as so provided, whether or not it is actually received by an Owner. In addition, the redemption notice shall be mailed or sent electronically within the same period to the MSRB (if 11 FG:54375381.2 Packet Pg. 15 2.1.a required under the Undertaking), to each Rating Agency, and to such other persons and with such additional information as the Finance Director shall determine, but these additional mailings shall not be a condition precedent to the redemption of any Bond. (e) Rescission of Optional Redemption Notice. In the case of an optional redemption, the notice of redemption may state that the City retains the right to rescind the redemption notice and the redemption by giving a notice of rescission to the affected Registered Owners at any time on or prior to the scheduled optional redemption date. Any notice of optional redemption that is so rescinded shall be of no effect, and each Bond for which a notice of optional redemption has been rescinded shall remain outstanding. (f) Effect of Redemption. Interest on each Bond duly called for redemption shall cease to accrue on the date fixed for redemption, unless either the notice of optional redemption is rescinded as set forth in subsection (e) of this Section, or money sufficient to effect such redemption is not on deposit in the Bond Fund or in a trust account established to refund or defease the Bond. (g) Purchase of Bonds. The City reserves the right to purchase any or all of the Bonds offered to the City or in the open market at any time at any price acceptable to the City plus accrued interest to the date of purchase. Section 10. Failure To Pay Bonds. If the principal of any Bond is not paid when the Bond is properly presented at its maturity or date fixed for redemption, the City shall be obligated to pay interest on that Bond at the same rate provided in the Bond from and after its maturity or date fixed for redemption until that Bond, both principal and interest, is paid in full or until sufficient money for its payment in full is on deposit in the Bond Fund, or in a trust account established to refund or defease the Bond, and the Bond has been called for payment by giving notice of that call to the Registered Owner. Section 11. Security for the Bonds. (a) Pledge of Taxes. The Bonds constitute a general indebtedness of the City and are payable from tax revenues of the City and such other money as is lawfully available and pledged by the City for the payment of principal of and interest on the Bonds. For so long as any of the Bonds are outstanding, the City irrevocably pledges that it shall, in the manner provided by law within the constitutional and statutory limitations provided by law without the assent of the voters, include in its annual property tax levy amounts sufficient, together with other money that is lawfully available, to pay the principal of and interest on the Bonds as the same become due. The full faith, credit, and resources of the City are pledged irrevocably for the prompt payment of the principal of and interest on the Bonds, and such pledge shall be enforceable in mandamus against the City. (b) Payment of the 2011 Refunding Bonds. Without limiting the provisions of subsection (a) of this Section, the City intends that principal of and interest on the 2011 Refunding Bonds be paid from Net Revenue of the Water and Sewer Utility, as such terms are defined in and in accordance with, the ordinances of the City authorizing the issuance of its outstanding water and sewer revenue bonds, including Ordinance No. 4197, passed on October 13, 2020. 12 FG:54375381.2 Packet Pg. 16 (c) Additional Pledge to the 2012 Refunding Bonds. As required by the County PFD Interlocal Agreement, the City expressly pledges to the payment of the principal of and interest on the 2012 Refunding Bonds the following resources, in the following order: (1) the Intergovernmental Payments received by the City under the County PFD Interlocal Agreement as a result of the sales tax collected by the Edmonds PFD; (2) the Real Estate Excise Taxes; and (3) the Intergovernmental Payments received by the City under the County PFD Interlocal Agreement as a result of the sales tax collected by the County PFD. Section 12. Tax Covenants; Designation of Tax -Exempt Bonds as "Qualified Tax - Exempt Obligations." (a) Preservation of Tax Exemption for Interest on Tax -Exempt Bonds. The City will take all actions necessary to prevent interest on the Tax -Exempt Bonds from being included in gross income for federal income tax purposes, and it will neither take any action nor make or permit any use of proceeds of the Bonds or other funds of the City treated as proceeds of the Bonds that will cause interest on the Tax -Exempt Bonds to be included in gross income for federal income tax purposes. The City will, to the extent the arbitrage rebate requirements of section 148 of the Code are applicable to the Tax -Exempt Bonds, take all actions necessary to comply (or to be treated as having complied) with those requirements in connection with the Tax -Exempt Bonds. (b) Post -Issuance Compliance. The Finance Director is authorized and directed to review and update the City's written procedures to facilitate compliance by the City with the covenants in this Section and the applicable requirements of the Code that must be satisfied after the Issue Date to prevent interest on the Tax -Exempt Bonds from being included in gross income for federal tax purposes. (c) Designation of Tax -Exempt Bonds as "Qualified Tax -Exempt Obligations." A Series of Tax -Exempt Bonds may be designated as "qualified tax-exempt obligations" for the purposes of section 265(b)(3) of the Code, if the following conditions are met: (1) the Series does not constitute "private activity bonds" within the meaning of section 141 of the Code; (2) the reasonably anticipated amount of tax-exempt obligations (other than private activity bonds and other obligations not required to be included in such calculation) that the City and any entity subordinate to the City (including any entity that the City controls, that derives its authority to issue tax-exempt obligations from the City, or that issues tax-exempt obligations on behalf of the City) will issue during the calendar year in which the Series is issued will not exceed $10,000,000 (or such other amount that may on the Issue Date be in effect under the Code); and (3) the amount of tax-exempt obligations, including the Series, designated by the City as "qualified tax-exempt obligations" for the purposes of section 265(b)(3) of the Code during the calendar year in which the Series is issued does not exceed $10,000,000 (or such other amount that may on the Issue Date be in effect under the Code). Section 13. Refunding or Defeasance of the Bonds. The City may issue refunding bonds pursuant to State law or use money available from any other lawful source to carry out a 13 FG:54375381.2 Packet Pg. 17 2.1.a refunding or defeasance plan, which may include (a) paying when due the principal of and interest on any or all of the Bonds (the "defeased Bonds"); (b) redeeming the defeased Bonds prior to their maturity; and (c) paying the costs of the refunding or defeasance. If the City sets aside in a special trust fund or escrow account irrevocably pledged to that redemption or defeasance (the "trust account"), money and/or Government Obligations maturing at a time or times and bearing interest in amounts sufficient to redeem, refund, or defease the defeased Bonds in accordance with their terms, then all right and interest of the Owners of the defeased Bonds in the covenants of this ordinance and in the funds and accounts obligated to the payment of the defeased Bonds shall cease and become void. Thereafter, the Registered Owners of defeased Bonds shall have the right to receive payment of the principal of and interest on the defeased Bonds solely from the trust account and the defeased Bonds shall be deemed no longer outstanding. In that event, the City may apply money remaining in any fund or account (other than the trust account) established for the payment or redemption of the defeased Bonds to any lawful purpose. Unless otherwise specified by the City in a refunding or defeasance plan, notice of refunding or defeasance shall be given, and selection of Bonds for any partial refunding or defeasance shall be conducted, in the manner prescribed in this ordinance for the redemption of Bonds. Section 14. RefundingPlans. lans. (a) Appointment of Refunding Trustee. U.S. Bank National Association is appointed as Refunding Trustee. (b) Use of 2011 Refunding Bond Proceeds. The proceeds of the sale of the 2011 Refunding Bonds shall be deposited immediately upon the receipt thereof with the registrar for the 2011 Bonds (or, if so determined by the Designated Representative, with the Refunding Trustee) and used to discharge the obligations of the City relating to the 2011 Refunded Bonds under the 2011 Bond Ordinance by providing for the payment of the amounts required to be paid by the 2011 Refunding Plan. As determined by the Designated Representative, such obligations shall be discharged fully by either (i) the payment when due by the registrar for the 2011 Refunded Bonds of the amount required to be paid by the 2011 Refunding Plan or (ii) to the extent practicable, the Refunding Trustee's simultaneous purchase of Acquired Obligations, bearing such interest and maturing as to principal and interest in such amount and at such time so as to provide, together with a beginning cash balance, if necessary, for the payment of the amount required to be paid by the 2011 Refunding Plan. Any such Acquired Obligations shall be listed and more particularly described in an exhibit to be attached to the Refunding Trust Agreement, but are subject to substitution as set forth in subsection (d) of this Section. Any 2011 Refunding Bond proceeds or other such money deposited with the Refunding Trustee not needed to carry out the 2011 Refunding Plan shall be returned to the City as soon as practicable after the Issue Date and deposited in the Bond Fund to pay interest on the Bonds on the first interest payment date. (c) Use of 2012 Refunding Bond Proceeds. The proceeds of the sale of the 2012 Refunding Bonds shall be deposited immediately upon the receipt thereof with the Refunding Trustee and used to discharge the obligations of the City relating to the 2012 Refunded Bonds under the 2012 Bond Ordinance by providing for the payment of the amounts required to be paid by the 2012 Refunding Plan. To the extent practicable, such obligations shall be discharged fully 14 FG:54375381.2 Packet Pg. 18 2.1.a by the Refunding Trustee's simultaneous purchase of Acquired Obligations, bearing such interest and maturing as to principal and interest in such amounts and at such times so as to provide, together with a beginning cash balance, if necessary, for the payment of the amounts required to be paid by the 2012 Refunding Plan. Such Acquired Obligations shall be listed and more particularly described in an exhibit to be attached to the Refunding Trust Agreement, but are subject to substitution as set forth in subsection (d) of this Section. Any 2012 Refunding Bond proceeds or other such money deposited with the Refunding Trustee not needed to carry out the 2012 Refunding Plan shall be returned to the City as soon as practicable after the Issue Date and deposited in the Bond Fund to pay interest on the Bonds on the first interest payment date. (d) Substitution of Acquired Obligations. Prior to the purchase of any Acquired Obligations by the Refunding Trustee, the City reserves the right to substitute other direct, noncallable obligations of the United States of America ("Substitute Obligations") for any of the Acquired Obligations and to use any savings created thereby for any lawful City purpose if, (i) in the opinion of Bond Counsel, the interest on the Tax -Exempt Bonds, the 2011 Refunded Bonds, and the 2012 Refunded Bonds will remain excluded from gross income for federal income tax purposes under sections 103, 148, and 149(d) of the Code, and (ii) such substitution will not impair the timely payment of the amounts required to be paid by the Refunding Plan, as verified by a nationally recognized independent certified public accounting firm. After the purchase of the Acquired Obligations by the Refunding Trustee, the City reserves the right to substitute therefor cash or Substitute Obligations subject to the conditions that such cash or Substitute Obligations will be sufficient to carry out the 2011 Refunding Plan and the 2012 Refunding Plan, that such substitution will not cause the Tax -Exempt Bonds, the 2011 Bonds, or the 2012 Bonds to be arbitrage bonds within the meaning of section 148 of the Code and regulations thereunder in effect on the date of such substitution and applicable to obligations issued on the issue dates of the Bonds, the 2011 Bonds, and the 2012 Bonds, as applicable, and that the City obtain, at its expense: (i) a verification by a nationally recognized independent firm acceptable to the Refunding Trustee confirming that the payments of principal of and interest on the Substitute Obligations, if paid when due, and any other money held by the Refunding Trustee will be sufficient to carry out the 2011 Refunding Plan and the 2012 Refunding Plan; and (ii) an opinion of Bond Counsel that the disposition and substitution or purchase of such Substitute Obligations, under the statutes, rules, and regulations then in force and applicable to the Tax -Exempt Bonds, will not cause the interest on the Tax -Exempt Bonds, the 2011 Refunded Bonds, or the 2012 Refunded Bonds to be included in gross income for federal income tax purposes and that such disposition and substitution or purchase is in compliance with the statutes and regulations applicable to the Tax -Exempt Bonds. Any surplus money resulting from the sale, transfer, other disposition, or redemption of the Acquired Obligations and the substitutions therefor shall be released from the trust estate and transferred to the City to be used for any lawful City purpose. (e) Administration of Refunding Plan. The Refunding Trustee is authorized and directed to purchase the Acquired Obligations (or Substitute Obligations), if so directed by the Designated Representative, and to make the payments required to be made by the 2011 Refunding Plan (if so determined by the Designated Representative) and the 2012 Refunding Plan from the Acquired Obligations (or Substitute Obligations) and money deposited with the Refunding Trustee pursuant to this ordinance. All Acquired Obligations (or Substitute Obligations) and the money deposited with the Refunding Trustee and any income therefrom shall be held irrevocably, 15 FG:54375381.2 Packet Pg. 19 2.1.a invested, and applied in accordance with the provisions of the 2011 Bond Ordinance (if so determined by the Designated Representative) and the 2012 Bond Ordinance, this ordinance, chapter 39.53 RCW and other applicable statutes of the State, and the Refunding Trust Agreement. (f) Authorization for Refunding Trust Agreement. The Finance Director is authorized and directed to execute and deliver to the Refunding Trustee a Refunding Trust Agreement setting forth the duties, obligations, and responsibilities of the Refunding Trustee in connection with carrying out the 2011 Refunding Plan (if so determined by the Designated Representative) and the 2012 Refunding Plan. (g) Authorization for Replacement 2012 Bonds. The City may issue replacement 2012 Bonds in principal amounts reflecting the principal amount of the 2012 Refunded Bonds and the 2012 Bonds to remain outstanding. The replacement bonds shall be printed, executed, and authenticated as provided in the 2012 Bond Ordinance. (h) Calls for Redemption of Refunded Bonds. The City calls the 2011 Refunded Bonds for redemption on the 2011 Redemption Date. Such call for redemption shall be irrevocable after the delivery of the 2011 Refunding Bonds to the Purchaser. The City calls the 2012 Refunded Bonds stated to mature after the 2012 Redemption Date for redemption on the 2012 Redemption Date. Such call for redemption shall be irrevocable after the delivery of the 2012 Refunding Bonds to the Purchaser. The proper City officials are authorized and directed to give or cause to be given such notices as required, at the times and in the manner required by the 2011 Bond Ordinance to effect the redemption prior to their maturity of the 2011 Refunded Bonds and by the 2012 Bond Ordinance to effect the redemption prior to their maturity of the 2012 Refunded Bonds. (i) Findings with Respect to 2011 Refunding Plan. Prior to approving the sale of the 2011 Refunding Bonds, the Designated Representative shall make the following determinations in writing if in the judgment of the Designated Representative the following conditions are satisfied: (1) the savings that will be effected (as measured by the difference between the principal and interest cost over the life of the 2011 Refunding Bonds and the principal and interest cost over the life of the 2011 Refunded Bonds, but for such refunding) shall be equal to at least the percentage savings set forth in Exhibit A, and in making such determination, the Designated Representative shall give consideration to the fixed maturities of the 2011 Refunding Bonds and the 2011 Refunded Bonds, the costs of issuance of the 2011 Refunding Bonds, and the known earned income from the investment of the proceeds of the 2011 Refunding Bonds, if any, pending redemption of the 2011 Refunded Bonds; and (2) the 2011 Refunding Plan will provide sufficient funds to discharge and satisfy the obligations of the City under the 2011 Bond Ordinance, and in making such determination, the Designated Representative may rely upon a verification by a nationally recognized independent certified public accounting firm or a certification of the Municipal Advisor. 0) Finding with Respect to 2012 Refunding Plan. Prior to approving the sale of the 2012 Refunding Bonds, the Designated Representative shall determine in writing that the 2012 Refunding Plan will provide sufficient funds to discharge and satisfy the obligations of the City under the 2012 Bond Ordinance, and in making such determination, the Designated Representative may rely upon a verification by a nationally recognized independent certified public accounting firm. 16 FG:54375381.2 Packet Pg. 20 2.1.a Section 15. Sale and Delivery of the Bonds. (a) Manner of Sale of Bonds; Delivery of Bonds. The Designated Representative is authorized to sell each Series by private placement, negotiated sale, or competitive sale in accordance with a notice of sale consistent with this ordinance, based on the assessment of the Designated Representative of market conditions, in consultation with appropriate City officials and staff, Bond Counsel, the Municipal Advisor, and other advisors. In determining the method of sale of a Series and accepting the Final Terms, the Designated Representative shall take into account the factors that, in the judgment of the Designated Representative, may be expected to result in the lowest true interest cost to the City. (b) Procedure for Private Placement or Negotiated Sale. If the Designated Representative determines that a Series is to be sold by private placement or negotiated sale, the Designated Representative shall select one or more Purchasers with which to negotiate such sale. The Bond Purchase Contract for each Series shall set forth the Final Terms. The Designated Representative is authorized to execute the Bond Purchase Contract on behalf of the City, so long as the terms provided therein are consistent with the terms of this ordinance. (c) Procedure for Competitive Sale. If the Designated Representative determines that a Series is to be sold by competitive sale, the Designated Representative shall cause the preparation of an official notice of bond sale setting forth parameters for the Final Terms and any other bid parameters that the Designated Representative deems appropriate consistent with this ordinance. Bids for the purchase of each Series shall be received at the time or place and by the means as the Designated Representative directs. On the date and time established for the receipt of bids, the Designated Representative (or the designee of the Designated Representative) shall open bids and shall cause the bids to be mathematically verified. The Designated Representative is authorized to award, on behalf of the City, the winning bid and accept the winning bidder's offer to purchase the Series, with such adjustments to the aggregate principal amount and principal amount per maturity as the Designated Representative deems appropriate, consistent with the terms of this ordinance, and the official notice of sale, the Purchaser's bid, and the award by the City shall constitute the Bond Purchase Contract for purposes of this ordinance. The Designated Representative may reject any or all bids submitted and may waive any formality or irregularity in any bid or in the bidding process if the Designated Representative deems it to be in the City's best interest to do so. If all bids are rejected, the Series may be sold pursuant to negotiated sale or in any manner provided by law as the Designated Representative determines is in the best interest of the City, consistent with this ordinance. (d) Preparation, Execution, and Delivery of the Bonds. The Bonds will be prepared at City expense and will be delivered to the Purchaser in accordance with the Bond Purchase Contract, together with the approving legal opinion of Bond Counsel regarding the Bonds. Section 16. Official Statement; Continuing Disclosure. (a) Preliminary Official Statement Deemed Final. The Designated Representative shall review and, if acceptable to the Designated Representative, approve the preliminary Official Statement prepared in connection with the sale of each Series to the public or through a Purchaser as a placement agent. For the sole purpose of the Purchaser's compliance with paragraph (b)(1) of 17 FG:54375381.2 Packet Pg. 21 2.1.a Rule 15c2-12, the Designated Representative is authorized to deem that preliminary Official Statement final as of its date, except for the omission of information permitted to be omitted by Rule 15c2-12. The City approves the distribution to potential purchasers of the Bonds of a preliminary Official Statement that has been approved by the Designated Representative and if applicable, deemed final, in accordance with this subsection. (b) Approval of Final Official Statement. The City approves the preparation of a final Official Statement for each Series to be sold to the public or through a Purchaser as placement agent, in the form of the preliminary Official Statement that has been approved and, if applicable, deemed final in accordance with subsection (a) of this Section, with such modifications and amendments as the Designated Representative deems necessary or desirable, and further authorizes the Designated Representative to execute and deliver such final Official Statement to the Purchaser if required under Rule 15c2-12 or the Bond Purchase Contract. The City authorizes and approves the distribution to purchasers and potential purchasers of the Bonds of that final Official Statement. (c) Undertaking to Provide Continuing Disclosure. If necessary to meet the requirements of paragraph (b)(5) of Rule 15c2-12, as applicable to the Purchaser acting as a participating underwriter for a Series, the Designated Representative is authorized to execute a written undertaking to provide continuing disclosure for the benefit of holders of the Series in substantially the form attached as Exhibit B to this ordinance, which is incorporated herein by this reference. Section 17. Amendatory Ordinances. The City may supplement or amend this ordinance for any one or more of the following purposes without the consent of any Owners: (a) To add covenants and agreements that do not materially adversely affect the interests of Registered Owners, or to surrender any right or power reserved to or conferred upon the City; or (b) To cure any ambiguities, or to cure, correct, or supplement any defective provision contained in this ordinance in a manner that does not materially adversely affect the interest of the Registered Owners. Section 18. Amendment of County PFD Interlocal Agreement. The Mayor is authorized and directed, on the City's behalf, to execute and deliver an amendment to the County PFD Interlocal Agreement in substantially the form attached hereto as Exhibit C. Section 19. General Authorization and Ratification. The Designated Representative and other appropriate officers of the City are each individually authorized to take such actions and to execute such documents as in their judgment may be necessary or desirable to carry out the transactions contemplated in connection with this ordinance, and to do everything necessary for the prompt delivery of each Series to the Purchaser and for the proper application, use, and investment of the proceeds of the Bonds. All actions taken prior to the effective date of this ordinance in furtherance of the purposes described in this ordinance and not inconsistent with the terms of this ordinance are ratified and confirmed in all respects. 18 FG:54375381.2 Packet Pg. 22 2.1.a Section 20. Severability. The provisions of this ordinance are declared to be separate and severable. If a court of competent jurisdiction, all appeals having been exhausted or all appeal periods having run, finds any provision of this ordinance to be invalid or unenforceable as to any person or circumstance, such offending provision shall, if feasible, be deemed to be modified to be within the limits of enforceability or validity. However, if the offending provision cannot be so modified, it shall be null and void with respect to the particular person or circumstance, and all other provisions of this ordinance in all other respects, and the offending provision with respect to all other persons and all other circumstances, shall remain valid and enforceable. Section 21. Effective Date of Ordinance. This ordinance shall take effect and be in force from and after its passage and five days following its publication as required by law and is not subject to referendum. PASSED by the City Council and APPROVED by the Mayor of the City of Washington, at an open public meeting thereof, this 12th day of October, 2021. Mayor, Mike Nelson AT _GU: �^ it Jerk, Sco P APPROVED AS FORM: c FOSTER GARVEY P.C. Bond Counsel 19 Packet Pg. 23 FG:54375381.2 2.1.a EXHIBIT A DESCRIPTION OF THE BONDS (a) Principal Amount. The Bonds may be issued in one or more Series. The Project Bonds shall not exceed the aggregate principal amount of $6,500,000. The 2011 Refunding Bonds shall not exceed the aggregate principal amount required to carry out the 2011 Refunding Plan. The 2012 Refunding Bonds shall not exceed the aggregate principal amount required to carry out the 2012 Refunding Plan. (b) Date or Dates. Each Bond shall be dated the Issue Date, which date may not be later than one year after the effective date of this ordinance. (c) Denominations, Name. The Bonds shall be issued in Authorized Denominations and shall be numbered separately in the manner and shall bear any name and additional designation as deemed necessary or appropriate by the Designated Representative. (d) Interest Rate. Each Bond shall bear interest at a fixed rate per annum (computed on the basis of a 360-day year consisting of twelve 30-day months) from the Issue Date or from the most recent date for which interest has been paid or duly provided for, whichever is later. One or more rates of interest may be fixed for the Bonds. No rate of interest for any Project Bond may exceed 5.25%, and the true interest cost to the City for the Project Bonds may not exceed 3.50%. (e) Payment Dates. Interest shall be payable semiannually on dates acceptable to the Designated Representative, commencing no later than one year after the Issue Date. Principal payments shall commence on a date acceptable to the Designated Representative and shall be payable annually thereafter at maturity or in mandatory redemption installments, on dates acceptable to the Designated Representative. A-1 FG:54375381.2 Packet Pg. 24 2.1.a (f) Final Maturity. The Project Bonds shall mature no later than the date that is 21 years after the Issue Date. The 2011 Refunding Bonds shall mature no later than six months after the final stated maturity of the 2011 Refunded Bonds. The 2012 Refunding Bonds shall mature no later than December 1, 2041. (g) Redemption Rights. The Designated Representative may approve in the Bond Purchase Contract provisions for the optional and mandatory redemption of Bonds, subject to the following: (1) Optional Redemption. Any Bond may be designated as being (A) subject to redemption at the option of the City prior to its maturity date on the dates and at the prices set forth in the Bond Purchase Contract; or (B) not subject to redemption prior to its maturity date. If a Tax -Exempt Bond is subject to optional redemption prior to its maturity, it must be subject to such redemption on one or more dates occurring not more than 10'/2 years after the Issue Date. (2) Mandatory Redemption. Any Bond may be designated as a Term Bond, subject to mandatory redemption prior to its maturity on the dates and in the amounts set forth in the Bond Purchase Contract. (h) Price. The purchase price for each Series may not be less than 95% or more than 140% of the stated principal amount of the Series. (i) Other Terms and Conditions. (1) No Series may be issued if it would cause the indebtedness of the City to exceed the City's legal debt capacity on the Issue Date. (2) The Designated Representative may determine whether it is in the City's best interest to provide for bond insurance or other credit enhancement, and may accept such additional terms, conditions, and covenants as the Designated Representative may determine are in the best interests of the City, consistent with this ordinance. (3) The Designated Representative may determine which, if any, of the Bonds are to be Tax -Exempt Bonds. A-2 FG:54375381.2 Packet Pg. 25 2.1.a (3) The Designated Representative may specify that the 2011 Redemption Date is other than December 1, 2021. (4) The 2011 Refunding Bonds shall produce a minimum net present value savings to the City and its taxpayers of at least 3.00% (as a percentage of the 2011 Refunded Bonds). Net present value savings means the aggregate difference between (i) annual debt service on the 2011 Refunded Bonds, less (ii) annual debt service on the 2011 Refunding Bonds (including expenses related to costs of issuance of the 2011 Refunding Bonds), discounted to the Issue Date using the yield on the 2011 Refunding Bonds as the discount rate, plus (iii) excess cash, if any, distributed to the City on the Issue Date allocable to the 2011 Refunding Bonds, and less (iv) the amount of additional money of the City contributed to the 2011 Refunding Plan, if any, on the Issue Date. A-3 FG:54375381.2 Packet Pg. 26 2.1.a EXHIBIT B Form of UNDERTAKING TO PROVIDE CONTINUING DISCLOSURE City of Edmonds, Washington Limited Tax General Obligation [Improvement and] [Refunding] Bonds, [Series] The City of Edmonds, Washington (the "City"), makes the following written Undertaking for the benefit of holders of the above -referenced bonds (the "Bonds"), for the sole purpose of assisting the Purchaser in meeting the requirements of paragraph (b)(5) of Rule 15c2-12, as applicable to a participating underwriter for the Bonds. Capitalized terms used but not defined below shall have the meanings given in Ordinance No. 4235 of the City (the "Bond Ordinance"). (a) Undertaking to Provide Annual Financial Information and Notice of Listed Events. The City undertakes to provide or cause to be provided, either directly or through a designated agent, to the MSRB, in an electronic format as prescribed by the MSRB, accompanied by identifying information as prescribed by the MSRB: (i) Annual financial information and operating data of the type included in the final official statement for the Bonds, as described in paragraph (b)(i) ("annual financial information"); (ii) Timely notice (not in excess of 10 business days after the occurrence of the event) of the occurrence of any of the following events with respect to the Bonds: (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notice of Proposed Issue (IRS Form 5701 — TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (7) modifications to rights of holders of the Bonds, if material; (8) bond calls (other than scheduled mandatory redemptions of Term Bonds), if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the City, as such "Bankruptcy Events" are defined in Rule 15c2-12 (13) the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (14) appointment of a successor or additional trustee or the change of name of a trustee, if material; (15) incurrence of a financial obligation of the City or obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City or obligated B-1 FG:54375381.2 Packet Pg. 27 2.1.a person, any of which affect security holders, if material; and (16) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of the financial obligation of the City or obligated person, any of which reflect financial difficulties. The term "financial obligation" means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term "financial obligation" shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with Rule 15c2-12. (iii) Timely notice of a failure by the City to provide the required annual financial information described in paragraph (b)(i) on or before the date specified in paragraph (b)(ii). (b) Type of Annual Financial Information Undertaken to be Provided. The annual financial information that the City undertakes to provide in paragraph (a): (i) Shall consist of (1) annual financial statements prepared (except as noted in the financial statements) in accordance with applicable generally accepted accounting principles applicable to local governmental units of the State such as the City, as such principles may be changed from time to time; (2) general obligation debt that has been authorized and the amount outstanding; (3) assessed valuation for that fiscal year; (4) assessed valuation for the fiscal year regular ad valorem property tax levy rate amount rate limitation and percentage of tax collected during the fiscal year; and (5) amount of general fund revenues from other major tax sources; (ii) Shall be provided not later than the last day of the ninth month after the end of each fiscal year of the City (currently, a fiscal year ending December 31), as such fiscal year may be changed as required or permitted by State law, commencing with the City's fiscal year ending December 31, 20_; and (iii) May be provided in a single or multiple documents, and may be incorporated by specific reference to documents available to the public on the Internet website of the MSRB or filed with the SEC. If not submitted as part of the annual financial information described in paragraph (b)(i), the City will provide or cause to be provided to the MSRB audited financial statements, when and if available. (c) Amendment of Undertaking. This Undertaking is subject to amendment after the primary offering of the Bonds without the consent of any holder of any Bond, or of any broker, dealer, municipal securities dealer, participating underwriter, Rating Agency, or the MSRB, under the circumstances and in the manner permitted by Rule 15c2-12. The City will give notice to the MSRB of the substance (or provide a copy) of any amendment to the Undertaking and a brief statement of the reasons for the amendment. If the amendment changes the type of annual financial information to be provided, the annual financial information containing the amended financial B-2 FG:54375381.2 Packet Pg. 28 2.1.a information will include a narrative explanation of the effect of that change on the type of information to be provided. (d) Beneficiaries. This Undertaking shall inure to the benefit of the City and the holder of each Bond, and shall not inure to the benefit of or create any rights in any other person. (e) Termination of Undertaking. The City's obligations under this Undertaking shall terminate upon the retirement or legal defeasance of all of the Bonds. In addition, the City's obligations under this Undertaking shall terminate if the provisions of Rule 15c2-12 that require the City to comply with this Undertaking become legally inapplicable in respect of the Bonds for any reason, as confirmed by an opinion of Bond Counsel delivered to the City, and the City provides timely notice of such termination to the MSRB. (f) Remedy for Failure to Comply with Undertaking. As soon as practicable after the City learns of any failure to comply with this Undertaking, the City will proceed with due diligence to cause such noncompliance to be corrected. No failure by the City or other obligated person to comply with this Undertaking shall constitute a default in respect of the Bonds. The sole remedy of any holder of a Bond shall be to take action to compel the City or other obligated person to comply with this Undertaking, including seeking an order of specific performance from an appropriate court. (g) Designation of Official Responsible to Administer Undertaking. The Finance Director or the designee of the Finance Director is the person authorized to take such further actions as may be necessary, appropriate, or convenient to carry out this Undertaking in accordance with Rule 15c2-12, including the following actions: (i) Preparing and filing the annual financial information undertaken to be provided; (ii) Determining whether any event specified in paragraph (a) has occurred, assessing its materiality, where necessary, with respect to the Bonds, and preparing and disseminating any required notice of its occurrence; (iii) Determining whether any person other than the City is an "obligated person" within the meaning of Rule 15c2-12 with respect to the Bonds, and obtaining from such person an undertaking to provide any annual financial information and notice of listed events for that person required under Rule 15c2-12; (iv) Selecting, engaging and compensating designated agents and consultants, including municipal advisors and legal counsel, to assist and advise the City in carrying out this Undertaking; and (v) Effecting any necessary amendment of this Undertaking. B-3 FG:54375381.2 Packet Pg. 29 2.1.a EXHIBIT C Form of SECOND AMENDMENT TO INTERLOCAL AGREEMENT FOR DEVELOPMENT OF THE EDMONDS CENTRE FOR THE ARTS C-1 FG:54375381.2 Packet Pg. 30 2.1.a SECOND AMENDMENT TO INTERLOCAL AGREEMENT FOR DEVELOPMENT OF THE EDMONDS CENTRE FOR THE ARTS This Second Amendment to Interlocal Agreement for Development of the Edmonds Centre for the Arts (this "Second Amendment") is made and entered into as of , 2021, among the City of Edmonds, a city duly organized and existing under and by virtue of the laws of the State of Washington (the "City"); the Snohomish County Public Facilities District, a municipal corporation duly organized and existing under the laws of the State of Washington (the "County PFD"); Snohomish County, a political subdivision of and duly organized and existing under the laws of the State of Washington and the Charter of Snohomish County (the "County"); and the Edmonds Public Facilities District, a municipal corporation duly organized and existing under and by virtue of the laws of the State of Washington, established by the City of Edmonds (the "City PFD"). RECITALS A. The City, County PFD, County, and City PFD (collectively the "Parties") entered into an Interlocal Agreement dated November 4, 2002, recorded with the Auditor of the County of Snohomish, State of Washington under recording number 200211060003 (the "Original Interlocal Agreement"), to provide for the development of a Regional Center as defined in RCW 35.57.020 known as the "Edmonds Centre for the Arts" (the "Regional Center"); and B. In 2005, the Parties entered into the First Amendment to Interlocal Agreement for Development of the Edmonds Centre For The Arts to extend the required operational date to March 31, 2007; and C. Subsequently, the Parties entered into Addendum No. 1, Addendum No. 2, and Addendum No. 3 to the Original Interlocal Agreement, as amended by the First Amendment thereto; and D. Pursuant to Chapter 164, Laws of 2017, the Legislature extended the time period for the Sales and Use Taxes imposed under RCW 82.14.390 from a maximum 25- year term to a maximum 40-year term; and E. The City issued limited tax general obligation bonds (the "2002 Bonds") to finance a portion of developing the Regional Center, payable in part from payments to be made by the City PFD under the Original Interlocal Agreement, and the City subsequently issued limited tax general obligation refunding bonds (the "2012 Bonds") to refund the then -outstanding 2002 Bonds; and F. The City PFD has requested that the City defease and refund the outstanding 2012 Bonds to modify the debt service requirements of the outstanding 2012 FG:54375383.2 Packet Pg. 31 2.1.a Bonds, and the City Council of the City has found that it is in the best interests of the City and its taxpayers to issue limited tax general obligation refunding bonds (the "Refunding Bonds") to be used, together with other available funds, to defease and refund the outstanding 2012 Bonds; and G. The Parties desire to amend the Original Interlocal Agreement, as heretofore amended (the "Interlocal Agreement"), by this Second Amendment to conform the intergovernmental payments to be made to the City by the City PFD to the debt service payable on the Refunding Bonds and any limited tax general obligation refunding bonds issued by the City in the future to refund the Refunding Bonds; NOW, THEREFORE, the Parties hereby agree as follows: AGREEMENT 1. Amendment of Section A of the Interlocal Agreement. Section A of the Interlocal Agreement is hereby amended to include the following definitions: Bond or bond means each limited tax general obligation bond or limited tax general obligation refunding bond issued by the City to finance the development of the Edmonds Centre for the Arts. Finance or finance means to finance or refinance. 2. Replacement of Exhibit B-3. Exhibit B-3 of the Interlocal Agreement is hereby deleted and replaced in its entirety by the following: The amount of the intergovernmental payments to be made to the City by the City PFD shall equal the debt service payable on the bonds outstanding from time to time, as set forth in a schedule provided by the City to the City PFD and acknowledged and agreed to in writing by the City PFD. 3. Second Amendment Supersedes Inconsistent Provisions; Ratification. This Second Amendment supersedes and controls any inconsistent provisions in the Interlocal Agreement. Except as otherwise amended as provided herein, the remaining terms of the Interlocal Agreement are hereby ratified and confirmed. This Second Amendment shall become effective upon execution by each Party and filing with the Snohomish County Auditor. Dated: , 2021. FG:54375383.2 2 Packet Pg. 32 2.1.a CERTIFICATION I, the undersigned, City Clerk of the City of Edmonds, Washington (the "City"), hereby certify as follows: 1. The attached copy of Ordinance No. 4235 (the "Ordinance") is a full, true and correct copy of an ordinance duly passed at a special meeting of the City Council of the City held at the regular meeting place thereof on October 12, 2021, as that ordinance appears on the minute book of the City. 2. At least 24 hours before the time of the special meeting, written notice specifying the time and place of the special meeting and the business to be transacted was provided as follows: a. Given to all members of the City Council by mail, fax, electronic mail or personal delivery. b. Prominently displayed at the main entrance of City Hall. C. Posted on the City's web site. 3. Written notice of the special meeting was given to each local radio or television station and to each newspaper of general circulation that has on file with the City a written request to be notified of special, adjourned, or continued meetings and to any others to which such notices are customarily given by the City. 4. A quorum of the members of the City Council was present throughout the meeting and a majority of the members voted in the proper manner for the passage of the Ordinance. 5. The Ordinance will be in full force and effect five days after publication in the City's official newspaper. Dated: October 12, 2021. CITY OF EDMONDS ASHINGTON City erk, Scott Passey FG:54375381.2 Packet Pg. 33 2.1.a Everett Daily Herald Affidavit of Publication State of Washington } County of Snohomish } ss Michael Gates being first duly sworn, upon oath deposes and says: that he/she is the legal representative of the Everett Daily Herald a daily newspaper. The said newspaper is a legal newspaper by order of the superior court in the county in which it is published and is now and has been for more than six months prior to the date of the first publication of the Notice hereinafter referred to, published in the English language continually as a daily newspaper in Snohomish County, Washington and is and always has been printed in whole or part in the Everett Daily Herald and is of general circulation in said County, and is a legal newspaper, in accordance with the Chapter 99 of the Laws of 1921, as amended by Chapter 213, Laws of 1941, and approved as a legal newspaper by order of the Superior Court of Snohomish County, State of Washington, by order dated June 16, 1941, and that the annexed is a true copy of EDH940550 ORDINANCE 4235 as it was published in the regular and entire issue of said paper and not as a supplement form thereof for a period of 1 issue(s), such publication commencing on 10/15/2021 and ending on 10/15/2021 and that said newspaper was regularly distributed to its subscribers during all of said period. The amount the fee for s h publication is $44.80. Subscribed and sworn bye me on this day of c��J19/ Notary Public in and for the State of Washington. City of Edmunds - LECALADS 114101416 SCOTr PASSEY Linda PhiifipS Nlobry PUNK StaL-Of1►ttashi 9bri MY App*tTW EOM OW2W, comr" on NVnbetr4417 Packet Pg. 34 Classified Proof 2.1.a ORDINANCE SUMMARY ofthe Clly of Edmunds, Washinglon On the 12 th day of October. 2021, t" City Council of the City of Edmonds, passed Iho folt*wmg Ordnance, the summary of said ordinance consisting of ulle Is provided as foliuWs: ORDINANCE NO, 4235 AN ORDINANCE-3YV— THE CITYOF EDMCINM WASHIbIGTPN, RELATING TO CONTRACTING INDEBTEDNESS; PROVIDING FOR THE ISSUANCE. SALE:, AND DELIVERY OF ONE OR MORE SERIES OF LIMITED TAX GENERAL OBLIGATION IMPROVEMENT AND REFUNDING BONDS FOR THE PURPOSE OF PROVIDING THE FUNDS NEGES$ARY: g)TO FINANCE IMPROVEMENTS TO CIVIC PARK ANb OTHER CAPITAL PROJECTS, (2JOI REFUND CERTAIN OUTSTANDING WATER AND SEWER REVENUE BONDS OF THE CITY. 13)TO REFUND CERTAIN OUTSTANDING LIMITED TAX GENERAL OBLIGATION BCR40S OF THE CITY, AND {d3 y0 PAY THE COSTS OF ISSUANCE AND SALE O T BONDS; FIXING OR SETTING PARAMETERS WITH RESPECT TO CERTAIN TERMS AND COVENANTS OF THE BONDS; APPOINTING THE CITY'S DESIGNATED REPRESENTATIVE TO APPROVE THE FINAL TERMS OF THE SALE OF THE BONDS; AUTHORIZING THE EXECUTION AND DELIVERY OF AN AMENDMENT TO 1NTLRLOCAL AGREEMENT FOR DEVELOPMENT OF THE EDMONDS CENTRE FOR THE ARTS; ANO PROVIDING FOR OTHER RELATED MATTERS. The full tett of this Ordinance will be sent tpon Bequest. DATED uses 12 M Dap of October, 2021 GTY CLERK. SCOTT PASSEY Pubiishod:Oatoner15,2021. EDH94ID550 Q Proofed by Phillips, Linda, 10/15/2021 01:16:30 p1n Page: 2 Packet Pg. 35 2.1.b candidates and who believe she is the right candidate for the position. She supported moving forward and getting some work done. Councilmember Buckshnis said she was also excited, but was tired of hearing that it was a political maneuver. Basically citizens are upset that an $8,000 moving expense was given to this director and it put Council in a precarious position. She will still support her confirmation but it would have been more advantageous had there been an opportunity to look at it completely. She anticipated Ms. McLaughlin would do a great job but it was not a political maneuver, she was just looking out for the City's coffers. The $167,524 is a good salary along with the leave and citizens upset are about it. Councilmember Fraley-Monillas said she did not get a chance to interview the candidate but had heard nothing but really good things about the person. The Council needs to move forward and frankly there are 42,000 people in Edmonds, not 25 and she would like know what the 42,000 think about the appointment of this gal, not what 25 people think. Councilmember Fraley-Monillas said she did not remember the candidate's name because she had not interviewed her but had heard nothing but great stuff about her. UPON ROLL CALL, MOTION CARRIED (6-1), COUNCILMEMBERS DISTELHORST, FRALEY-MONILLAS, BUCKSHNIS, OLSON, AND L. JOHNSON AND COUNCIL PRESIDENT PAINE VOTING YES; AND COUNCILMEMBER K. JOHNSON VOTING NO. Ms. McLaughlin commented it was a wonderful deliberation; she heard impassioned Councilmembers and that is something she likes to hear. The focal point the Council was discussing was residents wanting to participate which was a great problem to have. She looked forward to reaching out to those people and connecting with residents, developers, people in the community and City staff. She thanked the Mayor and Council for the opportunity and allowing her to stay in Edmonds, a place she has grown to love and that her family also loves. She looked forward to working with Mayor Nelson and Councilmembers on some challenging and probably controversial issues that they will get through together with honest deliberations. She looked forward to starting on November 16' 2. REQUEST TO APPROVE VACATION ACCRUAL FOR SAFETY & DISASTER COORDINATOR CANDIDATE HR Director Jessica Neill Hoyson explained there had been a selection process to fill the Safety & Disaster Coordinator position. The candidate has a long history and background in emergency management and safety. Given his years of experience, he has requested a vacation accrual level that reflects those years of experience. City policy provides that with the Mayor's approval, the request can come to Council for approval. This was recently approved for the Wastewater Treatment Plant Supervisor. The request is to place that candidate at 21 days of vacation per year. COUNCIL PRESIDENT PAINE MOVED, SECONDED BY COUNCILMEMBER DISTELHORST, TO APPROVE THE EXTENSION OF THE VACATION BENEFIT TO 21 DAYS PER YEAR. MOTION CARRIED UNANIMOUSLY. 3. FINAL BOND ORDINANCE Finance Director Dave Turley explained the purpose of this agenda item is formal approval of the bond ordinance. The bond ordinance was discussed in detail at last week's Council meeting. The refinance was approved by City Council on August 10'. There are three separate items in the ordinance, 1) refunding of $8.045 million in outstanding water and sewer revenue bonds, the City will save about $1.19 million net present value over the life of the bonds, 2) advance refunding and restructuring of $2.285 million in bonds on the Edmonds Center for the Arts' behalf to assist with their cashflow, and 3) issuing new bonds to complete construction of Civic Park in the amount of $1,634,447, and issue new bonds for capital projects Edmonds City Council Approved Minutes October 12, 2021 Page 7 Packet Pg. 36 2.1.b and the backlog of building maintenance in the amount of $4.4 million This is accomplished via adoption of a 33 page ordinance that is contained in the Council packet. He recommended a motion to approve the bond ordinance as contained in the Council packet. COUNCILMEMBER FRALEY-MONILLAS MOVED, SECONDED BY COUNCILMEMBER BUCKSHNIS, TO APPROVE THE BOND ORDINANCE AS INDICATED IN THE PACKET. MOTION CARRIED UNANIMOUSLY. 4. COMPLAINT AGAINST A PUBLIC OFFICER Mayor Nelson commented in light of what he anticipated would be strong feelings, he wanted to ensure as chair that everyone had an opportunity to share what they needed to share regarding this, he requested Councilmembers refrain from interrupting so that everyone had an opportunity to speak. He wanted to ensure everyone had ample opportunity to express whatever they wanted to express regarding this. Councilmember Olson said as the requester for the censure vote, she would begin by answering the question of why now? The simple answer was her attempts that started several weeks ago were unsuccessful. She was sure there would be accusations that this was politically motivated and she wanted to be on the record as saying it would not have mattered when this happened, she would have had the same response to it as she thought the Council should. COUNCILMEMBER OLSON MOVED, SECONDED BY COUNCILMEMBER K. JOHNSON, TO TAKE A CENSURE VOTE ON COMPLAINT NUMBER 1. Councilmember Olson read complaint number 1: On the August 24, 2021 Zoom Council meeting, Councilmember Adrienne Fraley-Monillas was drinking wine and appeared to be drunk, therefore, violating the code of conduct section 6 as follows (emphasis added): Councilmembers should seek to continually improve the quality of public service and ensure public confidence and the integrity of local government and its effective transparent and equitable operations. Councilmembers have a public stage and privileged platform. Central to these principles is that civility and decorum shall apply to all Councilmember conduct in relation to City business. The Councilmember was reminded of the code of conduct for this and was asked to make a public apology. The Councilmember's unwillingness to self - enforce the code of conduct is required in section 6.4 of the code as further basis for the complaint. Councilmember Olson indicated a description was given of why it was perceived that the Councilmember was intoxicated but she did not need to read that. Councilmember L. Johnson said during the August 24t' meeting she too was concerned with seeing Councilmember Fraley-Monillas' behavior. She felt embarrassed and angry given what she witnessed on the screen. However, after learning of the health crisis that she was experiencing, including the extent of the pain she was in, her feeling turned to concern, both for her health and for the fact that Councilmembers feel they need to attend meetings even when they are experiencing health crises. This was where she believed there was an opportunity to make a change through an understanding that in the event of a health crisis, Councilmembers should prioritize their health above attending a meeting. Councilmember L. Johnson explained her request was not solely based on the August 24' health crisis experienced by Councilmember Fraley-Monillas, but also the... Councilmember Olson raised a point of order, stating medical concerns did not apply to whether or not this code of conduct violation for drinking alcohol on camera was relevant. Mayor Nelson ruled point not taken, saying he found it relevant and would offer wide latitude regarding what was relevant, referencing past conduct and all kinds of things in Councilmembers' past arguments. Edmonds City Council Approved Minutes October 12, 2021 Page 8 Packet Pg. 37 2.1.c City Council Agenda Item Meeting Date: 08/10/2021 City of Edmonds Facility Condition Assessment update by Mckinstry Staff Lead: Phil Williams Department: Public Works & Utilities Preparer: Royce Napolitino Background/History In 2017 the City of Edmonds commissioned Mckinstry to perform a two year Facility Condition Assessment report to supplement the previous FCA report performed by Cardno LLC in 2011 and 2012. Those findings were presented to Parks & Public Works and Finance Committees on 07-09-19 and to the full Council on 07-16-19. Staff Recommendation Forward the Facility Condition Assessment Update to City Council's Full Agenda. Narrative Facility Condition Assessments, or FCAs, provide facility condition and budget data for the repair and upkeep of facilities. An original assessment was performed by Cardno, with the FCA report delivered in 2011-12. In 2017, McKinstry furthered this work to accurately assess the condition of the City's building portfolio. Mckinstry completed their work to expand or update the previously gathered information and include Mechanical, Electrical and Plumbing systems to the scope of the report. This work included the introduction of a Facility Condition Index. The Facility Condition Index (FCI) score was determined by the Backlog of Maintenance and Repair methodology. This scoring model focuses on the correction of deficient building systems and those at or near end of useful life functionality. The Backlog of Maintenance and Repair method helps identify building system and budget requirements to focus capital renewal funds on functionality, condition and the ability of the facility to meet the current and future needs of the City. McKinstry's presentation includes: the current and 5-year FCI calculations; takeaways from the 2018 survey and 2019 budgeting response; a recap of projects; operating recommendations; additional capital projects; and funding opportunities. Attachments: McKinstry Facilities Assessment_08-10-21 Packet Pg. 38 2.1.c 11(c acili ►fry Q.- or r U� a��ramy ,amonas AQQOQQMO Packet Pg. 39 1 2.1.c • Introduction • History • Findings Following 2018 • Additional Council Funding • Alleviate Costs of Deferred Maintenance • Needs • Funding Opportunities Packet Pg. 40 2.1.c gA_Cab 2018 Facility Condition Assessment Study • Boys and Girls Club • Cemetery Building • City Hall • Civic Center Grandstand • Fishing Pier • Fire Station #16 • Fire Station #17 • Fire Station #20 • Frances Anderson Center • Historic Log Cabin • Historical Museum • Meadowdale Club House • Old Public Works • Parks Maintenance Building • Public Safety • Public Works 0&M • Senior Center • Wade James Theater • Yost Pool House • waterfront Lenter(replaces Sr. Center)(South County Sr. Services) • Edmonds Center for Arts (Edmonds Fac Dist) —280,000 SF Packet Pg. 41 0 L. IL 0 m CU r- U L 0 ch Y E a 2.1.c Current Facility Condition Index 5-Year Facility Condition Index KiScore �A Boys and Girls Club 0.08 Cemetery Building 0.04 City Hall 0.15 Fishing Pier 0.13 Frances Anderson Center 0.15 FS 16 0.04 FS 17 0.11 FS 20 0.04 Historic Log Cabin 0.12 Historical Museum 0.04 Library and Plaza Room 0.15 Meadowdale Club House 0.06 Old Public Works 0.07 Parks Maint. Building 0.16 Public Safety building 0.06 Public Works O&M Center 0.23 Wade James Theater 0.08 Yost Pool House 0.10 Score Boys and Girls Club 0.16 Cemetery Building 0.16 City Hall 0.21 Fishing Pier 0.23 Frances Anderson Center 0.20 FS 16 0.13 FS 17 0.29 FS 20 0.20 Historic Log Cabin 0.27 Historical Museum 0.16 Library and Plaza Room 0.34 Meadowdale Club House 0.10 Old Public Works 0.11 Parks Maint. Building 0.25 Public Safety building 0.18 Public Works O&M Center 0.30 Wade James Theater 0.19 Yost Pool House 0.22 gp-(t;11n Packet Pg. 42 2.1.c . 5 N-1 . O N-1 _ , 5 f1 1.OM 0.5M O.OM 0 0 • Measures represented by different colors • Costs required average close to $800k/year • First few years are higher due to under-funding/deferred maintenance $1.2 SO.8 �0.8 $0.8 $0.7 : ---171 Ln S1.1 50.6 SO.6 $0.5 50SOA ][I-:] ,4 5O.1 0 d3 O ,- 4 r aD 0 a 0 m 0 0 0 .Q U L 0 L L ch Y aD E 0 Q Packet Pg. 43 2.1.c Chip away at additional deferred maintenance year over year until $2M backlog is complete. 3.OM $2.9 I $800k annual investment is still needed to maintain facilities infrastructure independently of deferred 2.5M I maintenance. 2-.OM CU > 1.5M 1-OM O.SM O.OM I $2.0 F- Deferred Maintenance I I I $008 a 0 a a o SU.D $0.5 o a 0% Baseline Budget Needed $0.1 Z N r 7 - Packet Pg. 44 2.1.c Key Takeaways from 2018 • Facility budgets should be S800K instead of S300K • Deferred maintenance from under -funding levels was around $11M • Recommended IFMA facilities staffing levels for 250K-500K square feet is 9 FTE instead of 4 FTE (does not include custodial) gA_Cab AW Packet Pg. 45 0 L. IL 0 m CU M 2 .Q U 0 L L Y v c a� E t v r Q 2.1.c 0 2019 Budgetary Response • Council upped funding to $700K per year • Council authorized S1M funding for a project that was -$1.5M (additional funds were provided by outside grants) Packet Pg. 46 2.1.c • Operating Recommendations 1. Invest in update to Facility Condition Assessment to prioritize needs 2. Uptick funding levels for operating levels to $1M (industry inflation averaged 7% YOY) 3. Right -size facilities staffing, or at least support transition of knowledge capital (2 retirements next year). • Staffing also feeling impact of COVID-19 • Ideally, add: ➢ 1 more building maintenance operator ➢ 1 facilities maintenance worker ➢ 1 more custodian Packet Pg. 47 2.1.c Capital and Deferred Maintenance Needs 1. Studies Needed • City Hall has major infrastructure needs Goal: Evaluate options to determine best value to Edmonds • Frances Anderson Community Center Building Systems @ end of life & insufficient for programming needs ($3-51VI project) Context: 100 year old facility that's use has evolved, but systems have not been updated. Goal: Divest from fossil fuels to electrify facility and add air conditioning for programming needs 2. Electrification infrastructure required for City Fleet and Public EV's Goal: 10-11 new EV charging stations for public and City -owned fleet 3. Public Safety Building chiller plant replacement Context: Systems 25 years old and were compromised from original installation conditions Packet Pg. 48 2.1.c *W L 0 L L _ Y v r- _ a� E t v Bond a issuance rY make sens Packet Pg. 49 2.1.c Additional Facilities Projects Needing Attention 1. Public works yard ($330K) 2. City Hall Electrical ($1.7M) 3. Anderson Center ($1.5) • Windows & Restroom TI • 6 storm drains that come into a collector, it backs up • Drinking fountains 4. Library building Masonry needs restoration because of water infiltration ($2-3M) r a� 0 L. IL 0 m a� U _ CU _ _ U L 0 L ch _ Y v E 0 Q Packet Pg. 50 2.2 City Council Agenda Item Meeting Date: 05/10/2022 Biennial Budget Discussion Staff Lead: Dave Turley Department: Administrative Services Preparer: Dave Turley Background/History The city of Edmonds is currently on an annual budget. There has been discussion about moving to a biennial budget. Operating under a biennial budget is much more efficient, freeing up literally hundreds of hours in every odd -numbered year of both Administration and Council time. A biennial budget schedule would allow more time for Council to study comprehensive plans, especially the CIP/CFP. Operating under a biennial budget allows for as much Council oversight and monitoring as does an annual budget. Council still has the same opportunities to make adjustments or course corrections as they do under an annual budget. Because Council still has as much opportunity for financial monitoring, there is no advantage to having an annual budget even when you consider factors such as inflation, market uncertainty, or future capital projects Staff Recommendation Staff is in favor of moving to a biennial budget, and the recommendation is to discuss moving forward to a biennial budget, and then place it on the May 17 agenda for discussion by full Council. Attachments: 1. Biennial Budget Presentation 2. Biennial Budget Proposal_May 2022 3. Biennial Budget Ordinance Draft 4. Biennial Budget Process —Kirkland Packet Pg. 51 Moving Forward to a Biennial Budget May 10, 2022 In Packet Pg. 52 Noteworthy discussion points: • Operating under a Biennial Budget instead of an Annual Budget frees up hundreds of hours in every odd -numbered year — e.g., 2023, 2025, 2027, etc. • The term for an appointed councilmember ends when the election is certified — last year this was November 23. This would always happen in an odd year (e.g., 2021) . Because under a biennial budget the new budget is passed in even years, the conflict of seating a new councilmember in the middle of budget deliberations would never happen. • A biennial budget schedule allows more time during the first 18 months of the biennium to monitor and evaluate the city's financial performance and condition. • A biennial budget schedule would allow time in the odd years to undertake major changes, like implementing "Budgeting by Priorities" for example. I Packet Pg. 53 Noteworthy discussion points (continued): • A biennial budget would have no impact on planning and budgeting for large capital projects (e.g., Civic Field, Highway 99 Revitalization). Planning for large projects like these already involve multiple years, and a biennial would actually be more in line with planning for multi -year projects. For context, many of our neighbors are already on biennial budgets, including Lynnwood, Bothell, Mountlake T Shoreline, Marysville, Kirkland, Kenmore, Mill Creek, Arlington, Snohomish, and Stanwood, and is considered a Practice" among finance professionals. For additional information, I have included a copy of biennial budget process used by the City of Kirkland in tonight's council packet. To move to a Biennial Budget for the upcoming biennium, RCW requires that Council pass an Ordinance before June 301 2022. Earlier would be better for planning and preparation purposes. I have included a draft copy of this Ordinance in tonight's council packet. Noteworthy discussion points (continued): • 1 have included some sample schedules in your packet to give you a concrete idea of what the new schedules would look like. • 1 also included a copy of the Biennial Budget Process that Kirkland has on their city website, for reference. Thank you. CO m Packet Pg. 56 City of Edmonds Budget Process 2.2.b May, 2022 Moving Forward to a Biennial Budget Summary: If the City of Edmonds chooses to move to a biennial budget for the 2023-2024 biennium, it must do so by ordinance, and this ordinance must be passed by June 30, 2022. Preparing a biennial budget instead of an annual budget has the potential to free up hundreds of hours in every odd -numbered year, by both the Administration and Council. This is time that will become available to do other value-added activities, including doing a "deep dive" into the CIP/CFP Plan and other comprehensive plans, monitoring financial activity and performance, analyzing the City's financial condition, and working on long range planning. In order to achieve these significant time savings, the City would need to change some current practices. If process changes are not made, the advantages of preparing a biennial budget will be lost. Significant Advantages Compared to our Existing Process There are several very significant advantages to having a biennial budget instead of an annual budget 1. At the end of 2021 there was a disagreement over which council members should have the opportunity to vote on and ultimately approve the upcoming budget. This happened because the Council member in Position 2 was appointed rather than elected, and since he did not win re-election, the person who won the election for that seat took office on November 23. Some people felt that the outgoing council member should be able to vote on the budget, while others felt that the incoming council member should be able to vote on the budget. This disagreement caused a significant amount of controversy and discord among the remaining council members, and resulted in the new Council spending a significant amount of time in early 2022 to review and make amendments to the adopted budget. Because all elections occur in odd numbered years, which is the middle of the biennium, if Edmonds adopts a biennial budget this situation will never occur again. We will never have to face the question of whether an outgoing appointed Council member should vote on the upcoming budget, or the incoming newly elected should vote on the upcoming budget. 2. Council members have stated that it has been several years since Council was able to do a thorough analysis of the Capital Improvement Plan/Capital Facilities Plan. A biennial budget schedule would create substantial extra time during the first year of the biennium (July 2023 to December 2023) to perform a thorough analysis and evaluation of the CIP/CFP. It would also allow for more time to work on other big projects, like City Code updates, and other comprehensive City plans. 3. Having a biennial budget allows significantly more time, mostly in the first 18 months of the biennium (January 2023 to June 2024), to monitor and evaluate overall financial performance, analyze financial conditions, and evaluate stakeholder satisfaction. Page 1 of 5 Packet Pg. 57 2.2.b City of Edmonds Budget Process May, 2022 4. Done correctly, a biennial budget would actually be more accurate than the annual budgets we now produce. As one example, Departments with large projects will sometimes put their entire project budget into one year, even though it is a multi -year project. In the past this has caused our annual expenditure budget to be overstated by several million dollars. Under a biennial budget, Departments would not have the need to front -load their expenditure budgets in this manner. Also, no "carryforward amendment" would be needed in the even years. 5. Finally, I surveyed 8 Finance Directors of our neighboring cities who operate under biennial budgets, and every one of them said that they prefer a biennial budget over an annual budget. I specifically asked each of them "even given the pandemic which we have been experiencing and current inflation, would you still recommend that we move to a biennial budget for the 2023- 2024 biennium?" and every one of them said that we should still move to a biennial budget, in their opinion. Budget Preparation Schedule State law requires that the first year of a biennial budget be an odd -numbered year. Accordingly, the preparation of the biennial budget occurs during an even numbered year, beginning early in the year and continuing throughout the end of the year. The following are key steps that the City would take during the even years to prepare a biennial budget (dates are approximates). 1. The City Council holds a budget review meeting early in the year and receives a status report on the current budget and an updated six -year financial forecast, with an emphasis on the coming biennium. In addition, the Mayor requests input from the City Council about budget priorities and overall direction. 2. On July 1, the Finance Director makes the official "budget call" to all department directors requesting expenditure and revenue estimates be made for the remainder of the current year and for the coming two years. 3. The Finance Department completes all general purpose revenue estimates, (which mostly consist of taxes, state shared revenues and entitlements, and intergovernmental service 00 revenues), by July 15. At the same time, the Finance Department receives and reviews all departmental revenue estimates. All departmental expenditure estimates for the current year a�i and all decision package requests for the coming biennium are received and reviewed by the m Finance Department by July 22. The Finance Director and Mayor meet with each Department to N review their budget requests. The Finance Department has all Decision Packages reviewed and posted on SharePoint by August 9. E ca 4. In late August, the Finance Director and Mayor meet with each Department Director to review a their budget requests. By the end of August the Finance Director updates the Strategic Forecast. In years when funding is limited, affected departments may also be required to submit expenditure reductions. In early September a Salary Ordinance is brought to the City Council, which establishes pay rates for all wage groups for the coming year. By September 10 the Mayor completes their Decision Package review. The Finance Department makes final adjustments to the six -year Strategic Forecast if needed. Page 2 of 5 Packet Pg. 58 2.2.b City of Edmonds Budget Process May, 2022 6. In late September the Mayor and Finance Director complete their decision package review and finalize the preliminary budget proposal, which includes approved decision packages and reductions (if any) by the end of September. No later than the first Monday in October, the Mayor delivers the budget message and the Proposed Budget to Council. 7. The Proposed Budget is then filed with the City Clerk, distributed to the City Council and the departments, and made available to the public. 8. The City Council meets in October and November for a series of budget study sessions to review the Mayor's Proposed Budget and to determine what changes they may wish to make. 9. The City Council meets in October and November to hold a public hearing to gather input on proposed revenue sources, and two more public hearings to gather input on the preliminary budget as well as on changes made by the City Council during their budget deliberations. 10. In November the City Council adopts the final property tax levy for the coming year and the final budget for the coming biennium by ordinance. 11. The Finance Department publishes the final budget document by mid -December, distributes the document to the City Council and the departments, and makes copies available to the public. Budget Amendment Processes There are two types of adjustments related to an adopted budget: 1) transfers between line items or between departments within the same fund; and 2) changes to an individual fund's total appropriation. The former is handled administratively when needed with the approval of the Mayor and Finance Director, per RCW 35.33.121. The latter can take place at various times during the biennium and requires Council approval by ordinance. The first opportunity to adjust a fund's total appropriation occurs in February or March of the first year of the biennium. This is when funding for projects and other significant purchases that were not completed during the prior biennium are "carried over" to the new biennium. The second opportunity takes place during the mid -biennial budget review which occurs in December of the first year of the biennium. This adjustment primarily relates to the following: 1. Outside agency and new decision package funding requests for the second year of the biennium. N E 2. Unanticipated needs or events, or changes to revenue sources. This includes updating General Fund revenues to reflect the new property and sales tax estimates for the second year of the a biennium. The final opportunity to adjust a fund's total appropriation occurs at the end of the biennium in December. This is the last time that adjustments for unanticipated needs, events, and revenue sources can be recognized and approved. Also, this is when the General Fund's total appropriation is adjusted, if necessary, to provide the budgetary authority to transfer cash to other funds in order to replenish or build-up reserves and to fund one-time decision packages for the coming biennium. In addition to the three adjustment processes described above, other adjustments may still occur during the biennium when an emergency appropriation is necessary. This may occur when unexpected revenues are received Page 3 of 5 Packet Pg. 59 2.2.b City of Edmonds Budget Process May, 2022 or expenses incurred, such as the unanticipated receipt of ARPA funds in 2021 and 2022. Another example would be if the lack of an emergency ordinance will cause expenditures to exceed appropriations in a fund. The process for increasing a fund's total appropriation is as follows: 1. Requests for budget adjustments are submitted in writing to the Finance Director. 2. If approved, requests are consolidated in an ordinance and presented to the City Council. 3. If the City Council agrees with the request, Council then approves adjustments to a fund's total appropriation for the biennium by a simple majority of the members present. Per RCW, if the proposal is to reduce the total appropriation to a fund, the vote must be approved by a majority of the full Council plus one. 4. Approved adjustments are incorporated into the existing biennial budget resulting in an amended appropriation for the biennium. This is what our new Budget Amendment schedule would look like. Instead of making 10 budget amend- ments in 2 years, we would only be required to make 3 amendments in 2 years (barring unforeseen circumstances, in which case an amendment can still be brought by staff or by council at any time): Current Schedule New Schedule Carryforward Amendment March 15 March 15 1st Quarter Amendment April 15 2nd Quarter Amendment July 15 3rd Quarter Amendment October 15 4th Quarter Amendment December 7 Mid -biennium Amendment December 7 Carryforward Amendment February 15 1st Quarter Amendment April 15 2nd Quarter Amendment July 15 3rd Quarter Amendment October 15 4th Quarter Amendment December 7 End of biennium Amendment December 7 N C How much time would we save by changing to a biennial schedule? °' E Obviously, a lot of work goes into preparing the annual budget. As a rough estimate, the total time it takes to each year to prepare an annual budget and budget amendments is over 3,000 hours. However, a during the first year of a biennium, most of that time would become available for other things. We would still need around 300 hours during the first year of each biennium to update salary and position information, and to prepare the carryforward amendment in March and the mid -biennial amendment in December. This frees up over 2,500 hours that could be spent on other value-added activities. In every odd -numbered year the Finance Department would have over 1,000 hours of time available to accomplish other work. Anyone throughout the City who participates in budget process, including Councilmembers, would find themselves with significant additional time available to them in every odd - numbered year. Page 4 of 5 Packet Pg. 60 City of Edmonds Budget Process 2.2.b May, 2022 Suggested Budget Preparation Schedule This is the City-wide schedule, and does not include many items specific to what the Finance Department does behind the scenes. More meetings could be scheduled with the City Council to discuss feedback from the Public, Council priorities, strategic planning, etc. Date (Examples) I Description January 31 Distribute Budget Schedule to Staff and Council Finance Director February 15 Council Budget Retreat; approval of schedule City Council July 1 Budget Call for revenue and expenditure estimates Finance Director July 15 General Fund Revenue projections complete Finance Department July 15 Other Fund Revenue projections complete All Departments July 22 All Decision Packages due All August 1 Initial Strategic Forecast placed on SharePoint Finance Department August 9 Narratives and Cap. Project info on SharePoint All Departments August 9 DP's reviewed and posted to SharePoint Finance August 9 Position Budgeting on SharePoint for review Finance August 9 Org charts on SharePoint for review Finance August 23 Position budgeting review complete All Departments August 15-31 Decision Package Reviews with Directors Mayor, Finance Director September 1 DP approvals/rejections finalized Mayor, Finance Director September 7 Updated Strategic Forecast on SharePoint Finance Department September 8 Salary Ordinance brought to Finance Committee Finance Department September 30 Mayor delivers Proposed Budget to Council Mayor October -November Budget Study Sessions City Council, Directors Mid -November Property Tax Levy Ordinance City Council Mid -November Public Hearings on the Budget City Council Late November Adoption of Budget Ordinance City Council New Budget Amendment Schedule for 2023-2024 Biennium Date Description Week 2 of February 2023 Carryover Amendment Week 1 of November 2023 Property Tax Public Hearing Week 2 of November 2023 Adoption of Property Tax Ordinance for Year 2 Week 1 of December 2023 Mid -Biennium Amendment Week 1 of December 2024 Final Budget Amendment Page 5 of 5 .r Q Packet Pg. 61 2.2.c ORDINANCE NO. XXXX AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF EDMONDS, WASHINGTON, REPEALING ORDINANCE 3793 WHICH REESTABLISHED A CALENDAR YEAR BUDGET; AND ESTABLISHING A BIENNIAL BUDGET PROCESS EFFECTIVE JANUARY 1, 2023. WHEREAS, by Chapter 35A.34, RCW, the state legislature has provided that the legislative body of any code city may by ordinance elect to have a two-year fiscal biennial budget in lieu of the annual budget which is otherwise provided for; and WHEREAS, Chapter 35A.34.040, RCW provides that such ordinance must be enacted at least six -months prior to commencement of the fiscal biennium; and WHEREAS, the City of Edmonds previously repealed adoption of the biennial budget process through Ordinance No. 3793 and has produced an annual budget since 2011; and WHEREAS, the City of Edmonds finds it in the best interest of the city to reestablish a fiscal biennial budget process to be effective January 1, 2023; NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF EDMONDS, WASHINGTON, DOES HEREBY ORDAIN AS FOLLOWS: Section 1. Ordinance 3793 Repealed. Ordinance 3793, which reestablished a calendar year budget, is hereby repealed in its entirety. Section 2. Establishment of a Biennium Budget. Pursuant to Chapter 35A.34.040, RCW, the m City Council hereby establishes a biennial budget for the City of Edmonds, beginning with the biennium which begins January 1, 2023. The 2023-2024 Biennial Budget and all subsequent a budgets shall be prepared, considered and adopted under the provisions of this ordinance and 0° Chapter 35A.34, RCW that is hereby adopted by reference. c d Section 3. Mid -Biennial Review and Modification. Pursuant to Chapter 35A.34.130, RCW, the City Council hereby provides for a mid -biennial review and modification of the biennial budget. cc No sooner than eight (8) months after the start of the first year of the fiscal biennium, nor later than Q conclusion of the first year of the fiscal biennium, the Mayor shall prepare the proposed budget modification and shall provide for publication of notice of hearings consistent with publication of notices for adoption of other city ordinances. Such proposed modifications shall be sent to City Council members and shall be a public record and available to the public. Public hearings on the proposed budget modification shall be heard prior to the adoption of the ordinance modifying the biennial budget. At least seven days before said hearings, the Mayor shall distribute the proposed budget modification to members of the city council, with copies available to the public at City Hall. Packet Pg. 62 2.2.c Section 4. Implementation. The Mayor is hereby authorized to implement such administrative procedures as may be necessary to carry out the directives of this ordinance. Section 5. Severability. The provisions of this ordinance are declared separate and severable. The invalidity of any clause, sentence, paragraph, subdivision, section, or portion of this ordinance or the invalidity of the application thereof to any person or circumstance, shall not affect the validity of the remainder of the ordinance, or the validity of the remainder of the ordinance, or the validity of its application to other persons or circumstances. Section 6. Ratification. Any act consistent with the authority and prior to the effective date of this ordinance is hereby ratified and affirmed. Section 7. Corrections. Upon the approval of the city attorney, the city clerk is authorized to make any necessary technical corrections to this ordinance including, but not limited to, the correction of scrivener's/clerical errors, references, ordinance numbering, section/subsection numbers, and any reference thereto. Section 8. Effective Date. This ordinance, being an exercise of a power specifically delegated to the City legislative body, is not subject to referendum, and shall take effect five (5) days after passage and publication of an approved summary thereof consisting of the title. APPROVED: MAYOR, MIKE NELSON m ATTEST/AUTHENTICATE c d m cri c CITY CLERK, SCOTT PASSEY E z APPROVED AS TO FORM: Q OFFICE OF THE CITY ATTORNEY: CITY ATTORNEY, JEFFREY TARADAY FILED WITH THE CITY CLERK: PASSED BY THE CITY COUNCIL: PUBLISHED: EFFECTIVE DATE: ORDINANCE NO. Packet Pg. 63 2.2.c SUMMARY OF ORDINANCE NO. of the City of Edmonds, Washington On the _ day of , 2022, the City Council of the City of Edmonds, passed Ordinance No. A summary of the content of said ordinance, consisting of the title, provides as follows: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF EDMONDS, WASHINGTON, REPEALING ORDINANCE 3793 WHICH REESTABLISHED A CALENDAR YEAR BUDGET; AND ESTABLISHING A BIENNIAL BUDGET PROCESS EFFECTIVE JANUARY 1, 2023. The full text of this Ordinance will be mailed upon request. DATED this _ day of _, 2022 CITY CLERK, SCOTT PASSEY Packet Pg. 64 2.2.d Budget Process - City of Kirkland The Biennial Budget Process https://www.kirklandwa.gov/Government/Departments/Finance-and-Administration/Budget- Information Kirkland follows a biennial budget process. State law requires that the first year of a biennial budget be an odd numbered year. Accordingly, the preparation of the biennial budget occurs during an even numbered year, beginning in June and continuing through the end of the year. The following are key steps that the City takes to prepare its budget. (See the next page for a diagram of this process.) 1. The City Council holds its mid -year budget review meeting in June and receives a status report on the current biennial budget and an updated six -year financial forecast, with an emphasis on the coming biennium. In addition, the City Manager requests input from the City Council about budget priorities and overall direction. 2. In July, the Finance & Administration (F&A) Director makes the official "budget call" to all department directors requesting expenditure and revenue estimates for the current year and the coming two years. 3. The F&A Department prepares all general purpose revenue estimates, which mostly consist of taxes, state shared revenues and entitlements, and intergovernmental service revenues, during the first half of August. In addition, the F&A Department receives and reviews all departmental revenue estimates during the same time period. All departmental expenditure estimates for the current year and "basic budget" requests for the coming biennium, which represent the estimated cost of maintaining the current service level, are received and reviewed by the F&A Department during the second half of August. 4. In late August, the F&A Director, City Manager and Deputy City Manager meet with each department to review their basic budget requests. 5. In early September, departments submit additional funding requests (called "service packages") for new positions, equipment, and projects which are over and above their basic budgets. The F&A Department reviews all service package requests by mid -September. In years when funding is limited, departments may also be asked to submit proposed expenditure reductions. 6. In mid -September, the City Manager meets with each department to review their basic budget and service package requests. In addition, the City holds a public hearing in mid - September to gather citizen input on proposed revenue sources for the coming biennium. Packet Pg. 65 2.2.d 7. The City Manager finalizes the preliminary budget proposal, which includes recommended service packages and reductions (if any), by the end of September. In early October, the City Manager and F&A Director brief the Council Finance Committee on the preliminary budget proposal. 8. In October, the F&A Department prepares and prints the preliminary budget document for the coming biennium. By November 1st, the preliminary budget document is filed with the City Clerk, distributed to the City Council and the departments, and made available to the public. 9. The City Council meets in November for a series of budget study sessions to review the City Manager's proposed budget and to determine if there are any changes they wish to make 10. The City holds a public hearing in mid -November to gather citizen input on the preliminary budget as well as on any changes made by the City Council during their budget deliberations. 11. In December, the City Council adopts the final property tax levy for the coming year and the final budget for the coming biennium each by ordinance via a simple majority of the members present. The appropriation approved by the City Council is at the individual fund level. 12. The F&A Department publishes the final budget document during the first quarter of the following year, distributes the document to the City Council and the departments, and makes copies available to the public. Budget Adjustment Process There are two types of adjustments related to the adopted budget: 1) transfers between line items or between departments within the same fund; and 2) changes to an individual fund's total appropriation. The former is handled administratively when needed with the approval of the F&A Director. The latter can take place at various times during the biennium and requires Council approval by ordinance. The first opportunity to adjust a fund's total appropriation generally occurs in March of the first year of the biennium. Typically, this is when funding for projects and other significant purchases that were not completed during the prior biennium is "carried over" to the new biennium. The second opportunity takes place during the mid -biennial budget review which culminates in December of the first year of the biennium. This adjustment primarily relates to the following: 1) outside agency and new service package funding requests for the second year of the biennium; 2) any unanticipated needs, events, or revenue sources. The final opportunity to adjust a fund's total appropriation occurs at the end of the biennium in December. This is the last time that adjustments for unanticipated needs, events, and revenue sources can be recognized and approved. Also, this is when the General Fund's total appropriation is adjusted, if necessary, to provide the budgetary authority to transfer excess net resources to other funds in order to replenish or build-up reserves and to fund one-time service packages in the coming Packet Pg. 66 2.2.d biennium. In addition to the three adjustment processes described above, other adjustments may occur during the biennium as needed. The process for changing a fund's total appropriation is as follows: 1. Requests for budget adjustments are submitted in writing to the F&A Director. 2. If approved, requests are consolidated in an ordinance and presented to the City Council at a regular meeting at one of the three times noted above. 3. The City Council approves adjustments to a fund's total appropriation for the biennium by a simple majority of the members present. 4. Approved adjustments are incorporated into the existing biennial budget resulting in a revised appropriation for the current biennium. Packet Pg. 67 2.3 City Council Agenda Item Meeting Date: 05/10/2022 Enterprise Resource Planning System (ERP) Replacement: Update Request Staff Lead: City Council Department: City Council Preparer: Beckie Peterson Background/History On February 1, 2022 Council approved the execution of an agreement to replace the City's ERP system. (Minutes attached) Staff Recommendation Megan Menkveld to provide a synopsis and content to update the council. Narrative Council requests an update on ERP Software Replacement implementation and ERP consultant/project manager. Attachments: Pages from 2022-02-01 City Council - Full Minutes-3013 ERP System Options Packet Pg. 68 2.3.a suggests additional open space/conservation acquisitions to fulfill that gap and would rely on an acquisition strategy to more appropriately define and refine where those targets might be. Councilmember Paine pointed out that goal anticipated doubling the open space through the end of the PROS Plan period. Councilmember L. Johnson commented in the interest of time, she thanked staff and the consultant for the presentation, it was very thorough and there was a lot to take in. She planned to watch the presentation again and was certain she would have questions. She appreciated the presentation, especially the part about increasing open space and specific kinds of park accessibility. Councilmember Chen applaud applauded the tremendous efforts to develop a complete package with tags, pictures, etc. to layout a six -year plan. The presentation referred to Parks' outreach to the non-English speaking population. He asked the participation rate with those efforts, whether people came out or nobody showed up. Mr. Duh answered the response to the community survey from non-English participations was light, but they recognized engaging the community in multiple languages was a process over time and it takes relationship building. Ms. Feser said this is the first time in the history of the City there has been a concerted effort to reach out to under -represented populations in the planning process. It was felt parks was one of the easier topics to talk about instead of police efforts or utilities. Development Services Director Susan McLaughlin has contacted her to discuss Parks' efforts to reach out to these populations related to her efforts on Highway 99 planning, to reinforce Parks' relationships and hopefully expand on them. Having a table at the Uptown market and providing materials in various languages is an indication to those populations that the City is sincere and wants to build relationships. They have created some relationships in the Korean community; Councilmember Chen helped introduce her to those individuals and those relationships, which did not exist prior to this planning process, will continue in the future. Councilmember Chen encouraged staff to continue that effort, commenting he will be happy to help make more connections in the future. Councilmember Chen referred to page 23 in the presentation about bike lane connectivity, suggesting consideration be given to having bike lanes in certain confined areas like within parks. That is a new concept that he encouraged Parks to explore in addition to connectivity. For example, it would be great to have a bike trail in Yost Park that could create miles of exercise pathways. He asked if that would be something worth exploring. Mr. Duh answered absolutely. The notion of pathways within parks is part of this plan. Ms. Feser said there has been interest from the public about mountain bike trails inside parks; they are happening organically which demonstrates a need and desire for them. Creating those in a more appropriate way is important and she saw that as a planning effort moving forward. COUNCIL PRESIDENT OLSON MOVED, SECONDED BY COUNCILMEMBER BUCKSHNIS, TO EXTEND TO 10:30. MOTION CARRIED UNANIMOUSLY. 2. ENTERPRISE RESOURCE PLANNING SYSTEM (ERP) REPLACEMENT: ACTION ITEMS Deputy Administrative Services Director Megan Menkveld reviewed: • ERP — product selection in process; no recommendation yet o General Ledger o Payroll o HRIS o Utility Billing • OpenGov Budget Suite — separate product not ERP, that is an add -on to any ERP o Reporting o Planning o Budgeting Edmonds City Council Approved Minutes February 1, 2022 Page 25 Packet Pg. 69 2.3.a o Transparency Reporting o Eden ■ Requires training ■ Formatting is only preset ■ Staff downloads data to create offline reports and calculations o Crystal Reports ■ Requires training ■ Formatting is customizable ■ Report queues ■ Calculations can happen within the report, rather than Excel o OpenGov ■ Looks like Amazon.com menu ■ User friendly ■ Accessible and transparent ■ Drillable ■ Staff s recommendation • Action Items 1. Authorize the mayor to execute an agreement for implementation of OpenGov's Budget Suite for a fixed -fee five-year SaaS contract of $67,822 per year and a $55,500 one-time implementation fee for a five-year total of $394,610 using ARPA funds. 2. Waive RFP purchasing requirements for ERP replacement. LGeneral HRIS Waiver of RFP's Ledger Payroll (Employee Utility Billing Self-service) ERP Planning & Implementation (12 months+) Council Approval for OpenGov Budget Module Planning, Implementation &Training Budget Suite January M0r[h May July "ptamher ❑aCember February April June August November 2023 • Action 1: ARPA ARPA: American Rescue Plan Act Coronavirus State and Local Fiscal Recovery Funds: A subset of ARPA o 2 CFR Part 35 111. Eligible Uses I A. Public Health and Economic Impacts ■ Purpose is to "authorize the use of payments from the Fiscal Recovery Funds to respond to the public health emergency with respect to COVID 19... ■ Must be in response to the disease itself... • Action Item 2: Wave RFP requirement for ERP Replacement o Uniform exemptions to competitive bidding requirements (39.04.280 RCW) 1. Purchases that are clearly and legitimately limited to a single source of supply (Sole Source Vendor): 2. Purchases involving special facilities or market conditions (auction) 3. Surplus Property (surplus property from another government 4. Purchases in the event of an emergency 5. Interlocal Agreements (State standard contracts) 6. Competitive Negotiations Competitive negotiation can be used as an alternative to the competitive bidding procedures for the acquisition of electronic data processing and telecommunications systems; energy saving or energy related equipment or services; or Edmonds City Council Approved Minutes February 1, 2022 Page 26 Packet Pg. 70 2.3.a when it is determined in writing that the use of competitive bidding is neither practical nor advantageous to the City. With regard to using ARPA funds for the budget suite, City Attorney Jeff Taraday said they considered this recommendation and the rules regarding how ARPA funds can be used. He quoted from what he felt was the most applicable part of the rule, State and Local Fiscal Recovery (SLFR) funds may be used to address administrative needs of recipient governments that were caused or exacerbated by the pandemic... such as technology infrastructure to adapt government operations to the pandemic, e.g. video conferencing software, improvements to case management systems, or data sharing resources. When he considers the language in the rule and hears Ms. Menkveld talk about how this will allow the City's Finance employees to work more effectively from home, many of whom are working from home due to the pandemic, it seems to be an appropriate use of those funds if the council wants to spend them that way. Council President Olson asked if it was also Mr. Taraday's opinion that the council had the authority to wave the RFP purchasing requirements. Mr. Taraday said the reason was not related to the reason cited by staff; he did not analyze 39.04.280 because that applies where there is a competitive bidding requirement. This is a software service contract; services are a different category of acquisition and there is no state competitive bidding requirement to bid service contracts. The only question is, there is a City policy that says service contracts over $100,000 should have focused public solicitation. Elsewhere in the policy it states (page 15 of the City's purchasing policy), on a case -by -case basis, the city council may waive any requirement contained in the City's purchasing policies and procedures as long as the result complies with applicable State laws. As is no State law that requires competitive bidding or RFP process for a service contract, it is up to the council whether they want to take advantage of the waiver that the policy contemplates. COUNCIL PRESIDENT OLSON MOVED, SECONDED BY COUNCILMEMBER L. JOHNSON, TO AUTHORIZE THE MAYOR TO EXECUTE AN AGREEMENT FOR IMPLEMENTATION OF OPENGOV'S BUDGET SUITE FOR A FOR FIXED FIVE YEAR SAAS CONTRACT OF $67,822 PER YEAR AND A $55,000 ONE TIME IMPLEMENTATION FEE FOR A FIVE YEAR TOTAL OF $394,610 USING ARPA FUNDS AND WAIVE THE CITY COUNCIL REQUIREMENT FOR FOCUSED PUBLIC SOLICITATION.. Mr. Taraday said he recommend a couple small edits to the contract: delete Section 7.2 of the contract in its entirety and replace Section 7.3 with the following language: "City may terminate this agreement for any reason upon [to be determined number] days written notice." As written, it is a five year contract with basically no clear termination. He did not recommend signing a five-year contract for services because if the services are not being performed well, the City wants to be able to terminate the services. For example, if the City gets two years into the contract and OpenGov is not as great as everyone thought, staff will want to get out of it. It was not clear under the existing language that that could be easily accomplished. He was hopeful the vendor would be agreeable to his proposed changes. Ms. Menkveld said she talked to the vendor and they are totally open to negotiating that. She suggesting amending her recommendation to allow the mayor to negotiate and execute Sections 7.2 and 7.3. Council President Olson said she has experience as a government contracting officer and acknowledged the waiver of solicitation was an uncomfortable concept for a lot of people who are cautious with spending. In previous discussions, staff provided examples of cities who went through the solicitation process and selected OpenGov as a result. That was very reassuring to her and she felt it prudent to go forward with the waiver. COUNCILMEMBER PAINE MOVED, SECONDED BY COUNCIL PRESIDENT OLSON, TO AMEND TO ACCEPT MS. MENKVELD'S SUGGESTED AMENDMENT, ALLOWING THE Edmonds City Council Approved Minutes February 1, 2022 Page 27 Packet Pg. 71 2.3.a MAYOR TO NEGOTIATE SECTIONS 7.2 AND 7.3 OF THE CONTRACT FOR OPENGOV. AMENDMENT CARRIED UNANIMOUSLY. UPON ROLL CALL, MAIN MOTION AS AMENDED CARRIED (6-0-1), COUNCILMEMBERS CHEN, TIBBOTT, BUCKSHNIS, PAINE, AND L. JOHNSON AND COUNCIL PRESIDENT OLSON VOTING YES; COUNCILMEMBER K. JOHNSON ABSTAINING. Mayor Nelson observed the time was 10:28 and asked if the council wished to extend. Council President Olson pointed out there are still council and mayor comments as well as an update on hybrid meetings which the council had committed to voting on this month. The council either needs to vote to change the date for that item or discuss it tonight. COUNCILMEMBER CHEN MOVED, SECONDED BY COUNCIL PRESIDENT OLSON, TO EXTEND 15 MINUTES TO 10:45 P.M. Council President Olson was hopeful the staff that was present to discuss virtual meetings could do so in the shortest amount of time possible. Councilmember L. Johnson preferred to move the discussion on hybrid meetings to an upcoming meeting as it is late and it is an important topic. Therefore she will vote no on the motion. UPON ROLL CALL, MOTION FAILED FOR LACK OF A SUPERMAJORITY (4-3), COUNCILMEMBERS CHEN, TIBBOTT, AND BUCKSHNIS AND COUNCIL PRESIDENT OLSON VOTING YES; COUNCILMEMBERS K. JOHNSON, PAINE AND L. JOHNSON VOTING NO. 3. HYBRID MEETINGS UPDATE AND VOTE TO EXTEND VIRTUAL MEETINGS 9. MAYOR'S COMMENTS 10. COUNCIL COMMENTS 11. ADJOURN With no further business, the council meeting was adjourned at 10:30 p.m. Edmonds City Council Approved Minutes February 1, 2022 Page 28 Packet Pg. 72 M IN D 2.3.b Enterprise Resource Planning System: Options 1. Only OpenGov (12 to 15 months) .7 her ERP OpenGov .• • Budget Suite (5 months) • ERP (x months) OpenGov Budget Suite Option • Sole Source • Attaches to any ERP system N O f+ 0 E � fit 2.4 City Council Agenda Item Meeting Date: 05/10/2022 Proposed Updates to Leak Adjustment Policy Staff Lead: Dave Turley Department: Administrative Services Preparer: Dave Turley Background/History The City has a leak adjustment policy that has not been reviewed or updated for about nine years. Questions have recently been brought by several Councilmembers about whether the current policy is adequate. We would like to review the current policy and implement any policy changes that Council would like to impose. Staff Recommendation Staff asks that Finance Committee review and provide recommendations on how to proceed. Attachments: Policy Update - Leak Adjustments Packet Pg. 74 Proposed Updates to Leak Adjustment Policy May 10, 2022 [ F.O v Packet Pg. 75 What is a Leak Adjustment? Occasionally a water customer will discover that their plumbing has a leak. This will cause higher water usage and a higher water bill. If caught quickly, the additional cost may only be a few hundred dollars more than normal. Sometimes a leak may be large and go undetected for several weeks, causing the loss of large amounts of water and increases to the customer's water bill of several thousand dollars. The City could just charge the full amount, but we have tried to provide a way to mitigate this unexpected cost. Current State: Under the current policy the customer has to show that they took reasonable steps to fix the leak as soon as it was discovered. Subject to meeting certain requirements, the City will do the following: • Compute what their average bill has been and charge them that, then • Forgive up to $1,000 of the excess, then • Take the remainder and bill that amount to them at wholesale, then • Add a 15% administration fee to the wholesale amount. 0 p F. yrJ +4 J. Packet Pg. 76 Question 1. Should we forgive $1,000 of the bill, and do we need to add back the 15% administration fee? (Proposal #1 would be to remove the forgiveness of $1,000 and remove the 15% administration fee add back) Question 2. Why are we reducing their bill at all? (Proposal #2 would be to offer no leak adjustment) Question 3. Does council have an alternative proposal? Also, we will allow the customer to put the remaining amount on a payment plan. Under the old policy we would let them pay the balance off over 3 months at 12% interest. We are proposing to update this to allow them to pay it over 6 months at 0% interest. ,s Q f Packet Pg. 77 What do the different proposals look like? Let's say a current customer usually consumes 14 units and pays $59 per invoice, but after having a large leak they consumed 1,726 units and their bill with tax came to $8,030. Our wholesale rate is $1.50 per unit, our retail rate is $4.23 per unit. Our computations would be: Proposed Policy Proposal #2 - No Current Policy #1 Adjustment Average Units Billed (14 Units) at retail Excess Units (1,726 - 14) at wholesale Subtotal - revised bill computation Add 15% Admin Fee on the Excess Units Subtotal Forgive $1,000 Subtotal Add 10 tax Total IDue (Revised Bill to Customer) Original Bill (Including Tax) Revised Bill Amount Reduced due to policy 59 59 2,568 2,568 2,627 2,627 385 - 3,012 2,627 (1,000) - 2,012 2,627 201 263 2,214 2,890 8,030 8,030 2,214 2,890 5,816 5,140 7,300 7,300 7,300 730 8,030 8,030 8,030 E 0 3 a J 0 N N r R a as 0 0M 0 a c E 0 a 0 as J N r M a 0 a r c m E M ED40 �O w w Q Packet Pg. 78 2.5 City Council Agenda Item Meeting Date: 05/10/2022 March 2022 Quarterly Financial Report Staff Lead: Dave Turley Department: Administrative Services Preparer: Sarah Mager Background/History N/A Staff Recommendation Review and move to full council on consent. Narrative March 2022 Quarterly Financial Report Attachments: March 2022 Quarterly Financial Report Jan -March 2022 P&L Packet Pg. 79 I 2.5.a I OF EDP � d lac. 1 $9v CITY OF EDMONDS QUARTERLY BUDGETARY FINANCIAL REPORT MARCH 2O22 Packet Pg. 80 1 INVESTMENT PORTFOLIO SUMMARY I 2.5.a I Agency/ Investment Issuer Type FFCB Bonds Energy Northwest Bonds Energy Northwest Bonds Mason & Kitsap Cnty WA Bonds Grant Cnty WA Bonds Grant Cnty WA Bonds Seattle WA Muni Bonds FHLMC Bonds FHLB Bonds First Financial - ECA CD Kent WA Bonds FNMA Bonds Spokane County WA Bonds First Financial - Waterfront Center CD TOTAL SECURITIES Washington State Local Gov't Investment Pool Snohomish County Local Gov't Investment Pool TOTAL PORTFOLIO City of Edmonds Investment Portfolio Detail As of March 31, 2022 Years Purchase to Par Price 1,998,548 1,466,077 260,748 948,084 1,517,955 576,332 2,224,500 988,678 1,996,590 2,803,516 286,648 992,693 207,260 1,575,000 0.21 0.25 0.25 0.67 0.76 0.76 0.84 1.05 1.52 1.63 1.67 2.26 2.67 5.59 Value 2,000,000 1,345,000 250,000 855,000 1,500,000 520,000 2,000,000 1,000,000 2,000,000 2,803,516 250,000 1,000,000 200,000 1,575,000 Market Value 2,004,054 1,358,531 251,425 875,443 1,499,625 533,785 2,058,600 985,185 1,952,512 2,803,516 263,083 986,044 197,380 1,575,000 Maturity Date 06/14/22 07/01 /22 07/01 /22 12/01 /22 01 /01 /23 01 /01 /23 02/01 /23 04/20/23 10/05/23 11 /15/23 12/01 /23 07/02/24 12/01 /24 11 /01 /27 Coupon Rate 1.88% 5.00% 2.95% 5.00% 1.54% 5.00% 5.00% 0.38% 0.22% 2.08% 5.00% 1.75% 2.10% 0.25% 17,842,627 1.44 17,298,516 17,344,183 13,362,530 13,362,530 Demand 0.22% 42,585,060 42,585,060 Demand 0.99% $ 73,246,106 $ 73,291,773 Kent WA, Issuer Diversification Seattle WA 1% N Muni, 12% Mason & Kitsap Cnty— Fi rst WA 5% Financial - Grant Cnty CD, 25% Spokane WA, 12% I County FHLB, 12% WA, 1% FFCB, Energy 112% Northwest, FHLMC, 6% 9% FNMA, 6 . Cash and Investment Balances Checki ng, (in $ Millions) _$2.3 , 3% Bonds, State LGIP, CD's, $4.4, $12.9, 17% $13.4, 18% 6% County LGIP, 1` M Packet Pg. 81 1 I 2.5.a I INVESTMENT PORTFOLIO SUMMARY Annual Interest Income $1,400, 000 $1,236,875 $1,200, 000 $1,000,000 $882556 947 931 $950,684 $800,000 $635,781 $600,000 $400,000 $258,837 $200,000 2017 2018 201 !200 1021 YTD 2022 2 Packet Pg. 82 I 2.5.a I GENERAL FUND SUMMARY 10,000, 000 9,000,000 8,000,000 7,000, 000 6,000,000 5,000,000 4,000,000 3,000, 000 2,000, 000 1,000, 000 April General Fund Revenues and Expenses (Rolling 24 months) General Fund Revenues General Fund Expenses IF July October January April July October January General Fund Tax Revenue (2016 through 2021) Sales Tax Property Tax EMS Tax Other Taxes 12,000, 000 10,000, 000 8,000, 000 6,000,000 4,000, 000 2,000,000 2016 2017 2018 2019 2020 2021 General Fund Tax Revenue (2022 YTD) 3,000, 000 2 666 259 2,500,000 2 164 800 2,000,000 1,500,000 1,000,000 500,000 $144,014 Sales Tax Property Tax EMS Tax Other Taxes 2 3 I Packet Pg. 83 July October January April July October January General Fund Tax Revenue (2016 through 2021) Sales Tax Property Tax EMS Tax Other Taxes 12,000, 000 10,000, 000 8,000, 000 6,000,000 4,000, 000 2,000,000 2016 2017 2018 2019 2020 2021 General Fund Tax Revenue (2022 YTD) 3,000, 000 2 666 259 2,500,000 2 164 800 2,000,000 1,500,000 1,000,000 500,000 $144,014 Sales Tax Property Tax EMS Tax Other Taxes 2 3 I Packet Pg. 83 I 2.5.a I City of Edmonds, WA Monthly Revenue Summary -General Fund 2022 General Fund Cumulative Monthly YTD Variance Budget Forecast Budget Forecast Actuals % January $ 2,486,429 $ 2,486,429 $ 2,291,020 -7.86% February 4,917,170 2,430,740 4,711,093 -4.19% March 7,380,020 2,462,851 7,394,990 0.20% April 10,516,012 3,135,992 May 19,357,334 8,841,322 June 21,935,611 2,578,276 July 24,465,539 2,529,929 August 27,084,819 2,619,280 September 29,465,113 2,380,294 October 33,512,944 4,047,830 November 42,090,496 8,577,552 December 44,640,708 2,550,212 City of Edmonds, WA Monthly Revenue Summary -Real Estate Excise Tax 2022 Real Estate Excise Tax 1 & 2 Cumulative Monthly Budget Forecast Budget Forecast YTD Actuals Variance % January $ 381,097 $ 381,097 $ 377,895 -0.84% February 611,562 230,465 620,392 1.44% March 952,142 340,580 793,926 -16.62% April 1,227,434 275,291 May 1,586,772 359,339 June 1,961,879 375,106 July 2,368,248 406,370 August 2,810,074 441,826 September 3,256,638 446,564 October 3,660,486 403,848 November 4,056,561 396,075 December 4,400,000 343,439 *The monthly budget forecast columns are based on a five-year average. O Q N la U C fC C LL i N R 7 CY N N O N t C) L M 2 4 Packet Pg. 84 SALES TAX SUMMARY I 2.5.a I Health & Personal Care, $74,403 Construction Trade, $381,496 Accormnodation, $9,163 Clothing and Accessories,$93,384 Conmmnications, $64,476 Wholesale Trade, $93,277 12,000,000 10,000, 000 8,000,000 6,000,000 4,000,000 2,000,000 0 Sales Tax Analysis By Category Current Period: March 2022 Year -to -Date Total $2,666,259 Automotive R air ep , Amusement & $55,691 Recreation, $17,716 Business Services, $311,926 Gasoline, $8,034 Retail Food Stores, $86,832 Misc Retail, $507,843 Others, $41,564 Manufacturing, $31,531 Eating & Drinlang, $271,236 Annual Sales Tax Revenue Lm-- — — 7.395.114 $8,406,296 $8,452,715 $8,317,046 $10,302,518 $2,666,259 2016 2017 2018 2019% 2020 2021 YTD 2022 0 a a� 76 U c c� c ii 21 a� 0 0 C� N N O N M 2 5 I Packet Pg. 85 I 2.5.a I City of Edmonds, WA Monthly Revenue Summary -Sales and Use Tax 2022 Sales and Use Tax Cumulative Monthly Budget Forecast Budget Forecast YTD Actuals Variance January $ 763,651 $ 763,651 $ 857,872 12.34% February 1,704,609 940,958 1,853,000 8.71% March 2,420,254 715,646 2,666,259 10.16% April 3,074,639 654,384 May 3,893,081 818,442 June 4,672,507 779,426 July 5,523,403 850,896 August 6,439,084 915,680 September 7,293,649 854,565 October 8,203,996 910,347 November 9,139,425 935,429 December 10,000,000 860,575 City of Edmonds, WA Monthly Revenue Summary -Gas Utility Tax 2022 Gas Utility Tax Cumulative Monthly Budget Forecast Budget Forecast YTD Actuals Variance January $ 79,399 $ 79,399 $ 96,596 21.66% February 164,205 84,806 96,596 -41.17% March 246,125 81,920 305,138 23.98% April 313,860 67,734 May 367,416 53,556 June 402,173 34,757 July 429,975 27,802 August 452,332 22,357 September 472,668 20,335 October 496,035 23,367 November 534,998 38,963 December 595,000 60,002 Gas Utility Tax 700,000 600,000 500,000 - 400,000 300,000 200,000 100,000 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Current Year Budget Prior Year *The monthly budget forecast columns are based on a five-year average. O sZ N la U C fC C LL i N R 7 CY N N O N t 0 L M 2 6 Packet Pg. 86 I 2.5.a I City of Edmonds, WA Monthly Revenue Summary -Telephone Utility Tax 2022 Telephone Utility Tax Cumulative Monthly YTD Variance Budget Forecast Budget Forecast Actuals January $ 53,352 $ 53,352 $ 43,844-17.82% February 96,981 43,629 66,255-31.68% March 143,255 46,275 130,244 -9.08% April 192,397 49,142 May 232,481 40,084 June 277,770 45,288 July 321,046 43,277 August 362,710 41,663 September 400,099 37,389 October 445,363 45,264 November 482,039 36,676 December 523,000 40,961 Electric Utility Tax Telephone Utility Tax 600,000 500,000 400,000 300,000 200,000 100,000 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Current Year Budget -*-- Prior Year City of Edmonds, WA Monthly Revenue Summary -Electric Utility Tax 2022 Cumulative Monthly YTD Variance Budget Forecast Budget Forecast Actuals January $ 148,905 $ 148,905 $ 183,023 22.91% February 312,488 163,583 377,116 20.68% March 449,608 137,121 534,798 18.95% April 602,286 152,678 May 723,393 121,107 June 824,492 101,099 July 920,639 96,147 August 1,015,921 95,282 September 1,108,535 92,614 October 1,199,070 90,535 November 1,299,972 100,902 December 1,410,000 110,028 Electric Utility Tax 1,zsuu,uuu 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC -*-- Current Year Budget � Prior Year *The monthly budget forecast columns are based on a five-year average. :' O Q N la U C fC C LL i N R 7 CY N N O N t U L M 2 Packet Pg. 87 I 2.5.a I City of Edmonds, WA Monthly Revenue Summary -Meter Water Sales 2022 Meter Water Sales Cumulative Monthly Budget Forecast Budget Forecast YTD Actuals Variance January $ 809,979 $ 809,979 $ 827,704 2.19% February 1,383,405 573,426 1,383,308 -0.01% March 2,213,219 829,814 2,127,271 -3.88% April 2,744,029 530,810 May 3,542,697 798,668 June 4,167,857 625,160 July 5,138,308 970,451 August 5,986,736 848,427 September 7,133,311 1,146,575 October 7,954,825 821,514 November 8,891,706 936,881 December 9,464,783 573,077 City of Edmonds, WA Monthly Revenue Summary -Storm Water Sales 2022 Storm Water Sales Cumulative Monthly Budget Forecast Budget Forecast YTD Actuals Variance January $ 426,464 $ 426,464 $ 417,730 -2.05% February 1,352,938 926,475 1,322,856 -2.22% March 1,779,789 426,851 1,740,623 18.95% April 2,159,443 379,654 May 2,586,880 427,437 June 2,966,444 379,564 July 3,385,868 419,425 August 4,311,526 925,657 September 4,738,766 427,240 October 5,118,192 379,426 November 5,545,860 427,668 December 5,911,497 365,637 Storm Water Sales 6,000,000 5,500,000 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Current Year Budget - Prior Year *The monthly budget forecast columns are based on a five-year average. O Q N Ia U C fC C LL i N R 7 CY N N O N t U L M 2 Packet Pg. 88 I 2.5.a I City of Edmonds, WA Monthly Revenue Summary-Unmeter Sewer Sales 2022 Unmeter Sewer Sales Cumulative Monthly Budget Forecast Budget Forecast YTD Actuals Variance January $ 863,521 $ 863,521 $ 877,046 1.57% February 1,571,494 707,973 1,604,010 2.07% March 2,435,565 864,071 2,451,231 0.64% April 3,143,499 707,934 May 4,009,811 866,312 June 4,719,932 710,121 July 5,593,564 873,631 August 6,307,925 714,362 September 7,215,145 907,220 October 7,936,868 721,723 November 8,819,637 882,769 December 9,528,089 708,452 W k'M *The monthly budget forecast columns are based on a five-year average. 9 Packet Pg. 89 City of Edmonds, WA Monthly Expenditure Report -General Fund 2022 General Fund Cumulative Monthly YTD Variance Budget Forecast Budget Forecast Actuals January $ 5,037,517 $ 5,037,517 $ 4,601,625 -8.65% February 8,698,448 3,660,931 8,134,057 -6.49% March 12,684,996 3,986,548 11,966,023 -5.67% April 16,175,500 3,490,504 May 19,877,618 3,702,118 June 24,471,701 4,594,083 July 28,365,788 3,894,088 August 32,050,601 3,684,813 September 35,945,309 3,894,708 October 40,212,016 4,266,707 November 44,691,350 4,479,334 December 49,371,535 4,680,185 Non -Departmental General Fund 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 5,000,000 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC --*--Current Year Budget —Prior Year City of Edmonds, WA Monthly Expenditure Report -Non -Departmental 2022 Cumulative Monthly YTD Variance Budget Forecast Budget Forecast Actuals January $ 2,235,029 $ 2,235,029 $ 2,099,939 -6.04% February 3,157,194 922,165 2,938,380 -6.93% March 4,332,218 1,175,025 4,088,791 -5.62% April 5,048,922 716,703 May 5,936,975 888,054 June 7,580,854 1,643,878 July 8,529,581 948,727 August 9,310,253 780,673 September 10,214,848 904,595 October 11,354,650 1,139,802 November 12,623,189 1,268,539 December 13,877,484 1,254,295 Non -Departmental 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC --"— Current Year Budget 0-- Prior Year *The monthly budget forecast columns are based on a five-year average. O sZ N la U C fC C LL i N R 7 CY N N O N t U L M 2 10 Packet Pg. 90 I 2.5.a I City of Edmonds, WA Monthly Expenditure Report -City Council 2022 City Council Cumulative Monthly YTD Variance Budget Forecast Budget Forecast Actuals January $ 33,985 $ 33,985 $ 23,687-30.30% February 71,308 37,323 43,670-38.76% March 112,128 40,821 71,408-36.32% April 150,174 38,046 May 199,408 49,234 June 253,207 53,799 July 291,886 38,679 August 345,215 53,328 September 382,380 37,165 October 414,981 32,601 November 455,321 40,340 December 497,900 42,579 City of Edmonds, WA Monthly Expenditure Report -Office of Mayor 2022 Office of Mayor Cumulative Monthly Budget Forecast Budget Forecast YTD Actuals Variance January $ 36,522 $ 36,522 $ 28,255 -22.63% February 74,639 38,117 59,226 -20.65% March 111,240 36,600 89,568 -19.48% April 148,486 37,247 May 185,158 36,671 June 221,111 35,953 July 257,901 36,789 August 295,030 37,129 September 331,738 36,709 October 367,805 36,067 November 405,747 37,941 December 443,913 38,166 Office of Mayor 500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC --"-CurrentYeaz Budget --*-PriorYeaz *The monthly budget forecast columns are based on a five-year average. O Q N 76 U C fC C LL i N R 7 CY N N O N t 0 L M 2 11 Packet Pg. 91 I 2.5.a I City of Edmonds, WA Monthly Expenditure Report -Human Resources 2022 Human Resources Cumulative Monthly Budget Forecast Budget Forecast YTD Actuals Variance January $ 77,402 $ 77,402 $ 59,932 -22.57% February 141,639 64,236 135,524 -4.32% March 202,815 61,176 203,581 0.38% April 266,756 63,941 May 331,195 64,439 June 405,872 74,678 July 464,145 58,273 August 524,126 59,981 September 590,408 66,282 October 654,662 64,254 November 726,800 72,138 December 824,831 98,031 City of Edmonds, WA Monthly Expenditure Report -Municipal Court 2022 Municipal Court Cumulative Monthly Budget Forecast Budget Forecast YTD Actuals Variance January $ 104,268 $ 104,268 $ 91,643 -12.11% February 213,906 109,638 187,919 -12.15% March 322,490 108,584 284,025 -11.93% April 431,592 109,102 May 548,505 116,913 June 654,584 106,079 July 763,667 109,084 August 884,110 120,443 September 995,910 111,800 October 1,110,987 115,077 November 1,227,059 116,072 December 1,368,755 141,696 Municipal Court 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC --"-CurrentYeaz Budget -m-PriorYear *The monthly budget forecast columns are based on a five-year average. O Q N R U C fC C LL i N R 7 CY N N O N t 0 L M 2 12 Packet Pg. 92 I 2.5.a I City of Edmonds, WA Monthly Expenditure Report -Community Services/Economic Development 2022 Community Services/Economic Development Cumulative Monthly YTD Variance Budget Forecast Budget Forecast Actuals January $ 49,857 $ 49,857 $ 33,127-33.56% February 103,113 53,256 72,230-29.95% March 155,568 52,455 122,479-21.27% April 205,451 49,882 May 260,752 55,301 June 315,986 55,234 July 373,132 57,147 August 434,777 61,645 September 492,000 57,223 October 552,240 60,239 November 622,590 70,351 December 719,388 96,798 *The monthly budget forecast columns are based on a five-year average. 13 Packet Pg. 93 I 2.5.a I City of Edmonds, WA Monthly Expenditure Report -Technology Rental Fund 2022 Technology Rental Fund Cumulative Monthly YTD Variance Budget Forecast Budget Forecast Actuals January $ 176,962 $ 176,962 $ 216,858 22.55% February 334,966 158,004 287,295-14.23% March 484,397 149,431 502,978 3.84% April 566,805 82,408 May 674,037 107,232 June 784,541 110,504 July 877,847 93,306 August 989,174 111,327 September 1,106,217 117,044 October 1,245,373 139,155 November 1,341,722 96,350 December 1,539,022 197,300 Administrative Services Technology Rental Fund 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC -0-- Current Yeaz Budget -d Prior Year City of Edmonds, WA Monthly Expenditure Report -Administrative Services 2022 Cumulative Monthly YTD Variance Budget Forecast Budget Forecast Actuals January $ 225,174 $ 225,174 $ 217,022 -3.62% February 377,256 152,082 380,532 0.87% March 531,363 154,106 547,460 3.03% April 687,851 156,488 May 845,341 157,490 June 1,057,978 212,637 July 1,239,765 181,786 August 1,394,692 154,927 September 1,554,018 159,326 October 1,720,684 166,666 November 1,876,703 156,018 December 2,034,511 157,808 Administrative Services 1,800,000 1,600,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC -0-- Current Yeaz Budget - Prior Year *The monthly budget forecast columns are based on a five-year average. :' O sZ N la U C fC C LL i N R 7 CY N N O N t 0 L M 2 14 Packet Pg. 94 I 2.5.a I City of Edmonds, WA Monthly Expenditure Report -City Attorney 2022 City Attorney Cumulative Monthly YTD Variance Budget Forecast Budget Forecast Actuals January $ 80,982 $ 80,982 $ 77,656 -4.11% February 161,963 80,982 155,234 -4.16% March 242,945 80,982 233,065 -4.07% April 323,927 80,982 May 404,908 80,982 June 485,890 80,982 July 566,871 80,982 August 647,853 80,982 September 728,835 80,982 October 809,816 80,982 November 890,798 80,982 December 971,780 80,982 Police City of Edmonds, WA Monthly Expenditure Report -Police 2022 Cumulative Monthly YTD Variance Budget Forecast Budget Forecast Actuals January $ 1,045,238 $ 1,045,238 $ 973,358 -6.88% February 2,105,968 1,060,730 1,945,020 -7.64% March 3,177,596 1,071,629 3,008,075 -5.33% April 4,236,492 1,058,896 May 5,296,298 1,059,805 June 6,428,932 1,132,634 July 7,551,012 1,122,080 August 8,579,704 1,028,692 September 9,657,485 1,077,782 October 10,845,669 1,188,184 November 12,168,634 1,322,964 December 13,375,470 1,206,836 Police 8,000,000 6,000,000 4,000,000 2,000,000 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC --"— Current Yeaz Budget �Prior Year *The monthly budget forecast columns are based on a five-year average. O sZ N la U C fC C LL i N R 7 CY N N O N t 0 L M 2 15 Packet Pg. 95 I 2.5.a I City of Edmonds, WA Monthly Expenditure Report -Development Services 2022 Development Services Cumulative Monthly YTD Variance Budget Forecast Budget Forecast Actuals January $ 272,173 $ 272,173 $ 309,139 13.58% February 567,186 295,012 661,303 16.59% March 860,247 293,062 909,669 5.75% April 1,174,618 314,370 May 1,488,050 313,432 June 1,792,716 304,666 July 2,114,310 321,593 August 2,423,605 309,295 September 2,733,462 309,857 October 3,039,102 305,640 November 3,402,002 362,901 December 3,791,859 389,857 City of Edmonds, WA Monthly Expenditure Report -Parks & Recreation 2022 Parks & Recreation Cumulative Monthly YTD Variance Budget Forecast Budget Forecast Actuals January $ 355,005 $ 355,005 $ 319,222-10.08% February 741,630 386,626 651,988-12.09% March 1,126,533 384,902 1,040,803 -7.61% April 1,522,026 395,493 May 1,924,429 402,403 June 2,349,557 425,128 July 2,810,826 461,269 August 3,318,701 507,875 September 3,838,405 519,704 October 4,255,109 416,704 November 4,650,272 395,163 December 5,081,735 431,463 Parks & Recreation 5,500,000 4,000,000 1,500,000 500,000 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC -0-- Current Yeaz Budget - Prior Year *The monthly budget forecast columns are based on a five-year average. O sZ N R U C fC C LL i N R 7 CY N N O N t U L M 2 16 Packet Pg. 96 I 2.5.a I City of Edmonds, WA Monthly Expenditure Report -Public Works Administration 2022 Public Works Administration Cumulative Monthly YTD Variance Budget Forecast Budget Forecast Actuals January $ 49,466 $ 49,466 $ 22,716-54.08% February 100,066 50,600 46,637-53.39% March 150,167 50,100 71,242-52.56% April 201,867 51,701 May 252,421 50,554 June 303,852 51,431 July 355,684 51,832 August 405,471 49,786 September 455,172 49,701 October 504,185 49,013 November 567,424 63,239 December 614,113 46,689 Facilities Maintenance Public Works Administration 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Current Year Budget � Prior Year City of Edmonds, WA Monthly Expenditure Report -Facilities Maintenance 2022 Cumulative Monthly YTD Variance Budget Forecast Budget Forecast Actuals January $ 147,178 $ 147,178 $ 109,202-25.80% February 306,257 159,079 369,398 20.62% March 485,440 179,182 562,089 15.79% April 646,968 161,528 May 809,892 162,925 June 942,838 132,946 July 1,105,857 163,019 August 1,298,546 192,690 September 1,524,621 226,074 October 1,782,450 257,829 November 1,988,047 205,597 December 2,298,775 310,728 Facilities Maintenance 500,000 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC -0-- Current Yeaz Budget -0-- Prior Year *The monthly budget forecast columns are based on a five-year average. O sZ N la U C fC C LL i N R 7 CY N N O N t 0 L M 2 17 Packet Pg. 97 I 2.5.a I City of Edmonds, WA Monthly Expenditure Report -Engineering 2022 Engineering Cumulative Monthly Budget Forecast Budget Forecast YrD Actuals Variance January $ 225,595 $ 225,595 $ 226,829 0.55% February 452,988 227,392 457,182 0.93% March 684,071 231,083 685,977 0.28% April 917,956 233,885 May 1,175,026 257,070 June 1,412,521 237,495 July 1,660,688 248,167 August 1,900,016 239,329 September 2,131,816 231,799 October 2,366,570 234,755 November 2,602,612 236,042 December 2,845,336 242,724 *The monthly budget forecast columns are based on a five-year average. 18 Packet Pg. 98 I 2.5.a I Page 1 of 1 C TTY O F IDMO NDS REVINUES BY FUND - SUMMARY Fund 2022 Amended 3/31/2021 3/31/2022 Amount No. Title Budget Revenues Revenues Remaining %Received 001 GENERAL FUND $ 44,640,708 $ 7,050,949 $ 7,394,990 $ 37,245,718 170 009 LEOFF-MEDICAL INS. RESERVE 225,000 - - 225,000 00 016 BUILDING MAINTENANCE FUND - - 15,259 (15,259) 04 018 EDMONDS HOMELESSNESS RESPONSE FUND 200,000 - - 200,000 04 104 DRUG ENFORCEMENT FUND 167,210 551 578 166,632 00 Ill STREET FUND 1,751,930 334,430 321,969 1,429,961 180 112 COMBINED STREET CONST/IMPROVE 1 13,684,871 537,842 1,084,583 12,600,288 84 d 117 MUNICIPAL ARTSACQUIS. FUND 216,701 7,521 77,198 139,503 360 118 MEMORIAL STREET TREE - 150 - - 04 t� 120 HOTEL/MOTEL TAX REVENUE FUND 84,410 10,579 19,965 64,445 240 C 121 EMPLOYEE PARKING PERMIT FUND 26,540 8,137 8,246 18,294 310 li 122 YOUTH SCHOLARSHIP FUND 1,550 102 110 1,440 74 i N 123 TOURISM PROMOTIONAL FUND/ARTS 29,590 3,949 7,199 22,391 240 125 REAL ESTATE EXCISE TAX 2 2,271,020 630,895 428,334 1,842,686 190 CY 126 REAL ESTATE EXCISE TAX 1 2,261,030 628,639 423,383 1,837,647 190 N 127 GIFT S CAT ALOG FUND 82,750 35,216 65,930 16,820 800 N 130 CEMETERY MAINTENANCE/IMPROVEMT 182,430 45,191 51,737 130,693 280 V 136 PARKSTRUST FUND 4,330 1,235 1,294 3,036 L 300 M 137 CEMETERY MAINTENANCE TRUST FD 43,520 12,939 14,031 29,489 320 138 SISTER CITY COMMISSION 10,290 77 119 10,171 10 O 0. 140 BUSINESS IMPROVEMENT DISTRICT 79,349 36,305 37,412 41,937 470 � 141 AFFORDABLE AND SUPPORTIVE HOUSINGFUND 65,000 20,307 23,034 41,966 350 .D 142 EDMONDS RESCUE PLAN FUND 4,856,549 - - 4,856,549 04 C 143 TREE FUND 215,330 - 157 215,173 04 E 231 2012 LT GO DEBT SERVICE FUND 611,370 - - 611,370 00 >, 332 PARKS CAPITAL CONSTRUCTION FUND 2 3,822,685 239,273 808,208 3,014,477 210 4) 411 COMBINED UTILITY OPERATION - 250 46,790 (46,790) 04 421 WATER UTILITY FUND 11,018,136 2,508,558 2,553,715 8,464,421 230 422 STORM UTILITY FUND 3 7,877,897 2,272,486 1,984,530 5,893,367 250 423 SEWER/WWTP UTILITY FUND 4 24,820,083 5,539,148 5,144,772 19,675,311 210 424 BOND RESERVE FUND 1,988,700 3 3 1,988,697 04 511 EQUIPMENT RENTAL FUND 1,925,920 355,678 463,683 1,462,237 240 512 TECHNOLOGY RENTAL FUND 1,153,570 305,397 291,812 861,758 250 $ 124,318,469 $ 20,585,807 $ 21,269,040 $103,049,429 170 Differences due to Grant reimbursement received in 2022 for 2021, as well as a large Traffic Impact fee in March 2022. 2 Differences due to Grant reimbursement received in 2022 for 2021, as well as a large Park Impact fee in March 2022. r 2022 Utility Rate Increases are 4.5%for Water, 5%for Sewer, and 9.5%for Storm Drain. 4 Difference is primarily due to WWTP partner billings in January 2021. 19 Packet Pg. 99 I 2.5.a I Page 1 of 1 C ITY OF EDMO NDS EXPENDITURES BY FUND - SUMMARY Fund 2022 Amended 3/31/2021 3/31/2022 Amount No. Title Budget Expenditures Expenditures Remaining '%Spent 001 GENERAL FUND $ 49,371,535 $ 11,022,804 $ 11,966,023 $ 37,405,512 240 009 LEOFF-MEDICAL INS. RESERVE 260,490 104,456 88,086 172,404 340 014 HISTORIC PRESERVATION GIFT FUND 5,900 - 5,900 00, 016 BUILDING MAINTENANCE FUND 980,000 16,522 963,478 20, 018 EDMONDS HOMELESSNESS RESPONSE FUND 200,000 - 200,000 00 104 DRUG ENFORCEMENT FUND 45,800 - 45,800 0/ III STREET FUND 2,254,676 600,399 612,607 1,642,069 270, Q 112 COMBINED STREET CONST/IMPROVE 12,868,796 65,351 412,691 12,456,105 d 30, 117 MUNICIPAL ARTSACQUIS. FUND 195,380 9,336 12,908 182,472 70, t� 120 HOTEL/MOTEL TAX REVENUE FUND 100,900 10,144 8,555 92,345 80 _ R C 121 EMPLOYEE PARKING PERMIT FUND 26,880 - - 26,880 04 jL 122 YOUTH SCHOLARSHIP FUND 3,000 - 3,000 00, i 123 TOURISM PROMOTIONAL FUND/ARTS 28,200 - - 28,200 a� 00 R 125 REAL ESTATE EXCISE TAX 2 4,589,688 26,799 423,951 4,165,737 9° CY 126 REAL ESTATE EXCISE TAX 1 2,483,667 149,742 133,238 2,350,429 50, N 127 GIFTS CATALOG FUND 78,400 8,980 2,462 75,938 30, N 130 CEMETERY MAINTENANCE/IMPROVEMT 220,561 45,001 45,724 174,837 210 V L 136 PARKS TRUST FUND 50,000 - - 50,000 00 M 137 CEMETERY MAINTENANCE TRUST FUND 25,000 - 25,000 00, 138 SISTER CITY COMMISSION 11,900 - - 11,900 00, 0 0. 140 BUSINESS IMPROVEMENT DISTRICT 87,680 8,828 11,101 76,579 130 142 EDMONDS RESCUE PLAN FUND 5,977,492 - 232,175 5,745,317 40/ !C 143 TREE FUND 214,800 - 214,800 00 r 231 2012 LT GO DEBT SERVICE FUND 611,370 - 611,370 00, LL 332 PARKS CAPITAL CONSTRUCTION FUND 7,614,418 67,492 1,630,281 5,984,137 210 >% 421 WATER UTILITY FUND 11,475,894 1,134,754 1,422,285 10,053,609 120 422 STORM UTILITY FUND 9,681,440 877,509 1,143,115 8,538,325 120 423 SEWER/WWTP UTILITY FUND 29,512,501 2,127,934 3,720,393 25,792,108 130, 424 BOND RESERVE FUND 1,988,710 - - 1,988,710 00, 511 EQUIPMENT RENTAL FUND 1,942,460 279,099 346,163 1,596,297 180 512 TECHNOLOGY RENTAL FUND 1,539,022 350,229 502,978 1,036,044 330 617 FIREMEN'S PENSION FUND - 25,838 - - 00, S 144,446,560 $ 16,914,695 $ 22,731,259 $121,715,301 160, 20 Packet Pg. 100 I 2.5.a I Page 1 of 3 Title TAXES: 1 REAL PERSONAL / PROPERTY TAX 2 EMS PROPERTY TAX 3 VOTED PROPERTY TAX 4 LOCAL RETAIL SALESIUSE TAX 5 5 NATURAL GAS USE TAX 6 1/10 SALES TAX LOCAL CRIM JUST 7 ELECTRIC UTILITY TAX 8 GAS UTILITY TAX 9 SOLID WASTE UTILITY TAX 10 WATERUTILITY TAX 11 SEWER UTILITY TAX 12 ST ORMWAT ER UT ILIT Y T AX 13 T.V. CABLE UTILITY TAX 14 TELEPHONE UTILITY TAX 15 PULLTABSTAX 16 AMUSEMENT GAMES 17 LEASEHOLD EXCISE TAX LICENSES AND PERMITS: 18 FIRE PERMITS -SPECIAL USE 19 POLICE - FINGERPRINTING 20 VENDING MACHINE/CONCESSION 21 FRANCHISE AGREEMENT -COMCAST 22 FRANCHISE FEE-EDUCATION/GOVERNMENT 23 FRANCHISE AGREEMENT-ZIPLY FIBER 24 OLYMPIC VIEW WATER DISTRICT FRANCHISE 25 GENERAL BUSINESS LICENSE 26 DEV SERV PERMIT SURCHARGE 27 RIGHT OF WAY FRANCHISE FEE 28 BUILDING STRUCTURE PERMITS 29 ANIMAL LICENSES 30 STREET AND CURB PERMIT 31 OT R NON -BUS LIC/PERMIT S INTERGOVERNMENTAL: 32 DOJ 15-0404-0-1-754 - BULLET PROOF VEST 33 HIGH VISIBILITY ENFORCEMENT 34 CORONAVIRUS RELIEF FUND 2 35 DOC FAC ROOFING 36 STATE GRANTS- BUDGET ONLY 37 PUD PRIVILEDGE TAX 38 CJ - POPULATION 39 TRIAL COURT IMPROVEMENT 40 CRIMINAL JUSTICE -SPECIAL PROGRAMS 41 MARIJUANA EXCISE TAX DISTRIBUTION 42 DUI - CITIES 43 LIQUOR EXCISE TAX 44 LIQUOR BOARD PROFITS 45 FIRST RESPONDERS FLEX FUND 46 DISCOVERY PROGRAMS TECHNOLOGY ACQ. 47 VERDANT INTERLOCAL GRANTS C ITY O F IDMO NDS REVENUES - GENERAL FUND 2022 Amended 3/31/2021 Budget Revenues 3/31/2022 Amount Revenues Remaining %Received $ 11,127,000 $ 156,809 $ 362,542 $ 10,764,458 30/ 4,278,000 61,297 144,014 4,133,986 30/ 500 1 27 473 501 10,000,000 2,350,659 2,666,259 7,333,741 270/ 7,600 1,803 4,804 2,796 630/ 870,000 223,665 249,575 620,425 290/ 1,410,000 537,433 534,798 875,202 380r 595,000 269,171 305,138 289,862 5101 284,000 90,594 94,158 189,842 330r 953,000 220,042 212,668 740,332 220i 894,600 229,266 160,357 734,244 180/ 471,900 158,676 174,064 297,836 370i 792,000 195,056 203,217 588,783 260/ 523,000 140,907 130,244 392,756 250r 55,200 23,251 18,591 36,609 340/ 350 143 - 350 00/ 306,000 75,813 77,158 228,842 250r 32,568,150 4,734,587 5,337,614 27,230,536 160, 250 300 50 200 200/ 700 - 20 680 30r 40,000 8,951 14,725 25,275 370/ 702,700 170,449 179,444 523,256 260/ 41,000 9,639 9,105 31,895 220i 100,600 15,635 12,550 88,050 120/ 384,000 82,609 84,298 299,702 220r 250,000 62,275 64,396 185,604 260/ 63,000 23,410 24,775 38,225 399 30,000 14,440 30,173 (173) 1010/ 650,600 140,920 222,875 427,725 340/ 24,000 5,114 7,135 16,865 300/ 55,000 17,915 12,958 42,042 240/ 20,000 3,497 3,754 16,246 190r 2,361,850 555,153 666,258 1,695,592 280, 9,000 2,671 5,237 3,763 580/ 11,100 908 718 10,382 60/ - 3,947 - - 00/ - 379,270 - - 00/ 273,000 - - 273,000 00/ 210,500 - - 210,500 00/ 13,070 3,379 3,571 9,499 270/ 16,740 4,035 5,388 11,352 320/ 45,600 12,061 12,693 32,907 280/ 60,000 17,895 24,665 35,335 410/ 4,500 1,667 1,793 2,707 400/ 261,500 68,016 72,230 189,270 280r 343,200 83,909 83,190 260,010 240/ 1,000 - - 1,000 00/ 550 - - 550 00/ - 30,000 - - 00/ 1,249,760 607,758 209,486 1,040,274 170/ O O. lY i0 C R C iL A L d R 3 CY N N O N t c� M 2 5 2022 Local Retail Sales/Use Tax revenues are $315,600 higher than 2021 revenues. Please also see pagespages 5 & 6. 21 1 Packet Pg. 101 1 2.5.a Page 2 of 3 C ITY O F IDMO NDS REVENUES - GENERAL FUND 2022 Amended 3/31/2021 3/31/2022 Amount Title Budget Revenues Revenues Remaining %Received CHARGES FOR GOODS AND SERVICES: 1 RECORD/LEGAL INSTRUMENTS 2 ATM SURCHARGE FEES 3 CREDIT CARD FEES 4 COURT RECORD SERVICES 5 D/M COURT REC SER 6 DRE REIMBURSEABLE 7 WARRANT PREPARATION FEE 8 IT TIME PAY FEE 9 MUNIC.-DIST. COURT CURR EXPEN 10 SALE MAPS & BOOKS 11 CLERKS TIME FOR SALE OF PARKING PERMITS 12 BID SUPPLIES REIMBURSEMENT 13 PHOTOCOPIES 14 POLICE DISCLOSURE REQUESTS 15 ENGINEERING FEES AND CHARGES 16 ELECTION CANDIDATE FILINGFEES 17 CUSTODIAL SERVICES (SNO-ISLE) 18 PASSPORTS AND NATURALIZATION FEES 19 POLICE SERVICES SPECIAL EVENTS 20 CAMPUS SAFETY-EDM. SCH. DIST. 21 WOODWAY-LAW PROTECTION 22 MISCELLANEOUS POLICE SERVICES 23 FIRE DISTRICT #1 STATION BILLINGS 24 LEGAL SERVICES 25 ADULT PROBATION SERVICE CHARGE 26 BOOKING FEES 27 FIRE CONSTRUCTION INSPECTION FEES 28 EMERGENCY SERVICE FEES 29 EMS TRANSPORT USER FEE 30 FLEX FUEL PAYMENTSFROMSI'ATIONS 31 ANIMAL CONTROL SHELTER 32 ZONING/SUBDIVISION FEE 33 PLAN CHECKING FEES 34 FIRE PLAN CHECK FEES 35 PLANNING 1% INSPECTION FEE 36 S.E.P.A. REVIEW 37 CRITICAL AREA STUDY 38 GYM AND WEIGHTROOM FEES 39 PROGRAM FEES 40 TAXABLE RECREATION ACTIVITIES 41 HOLIDAY MARKET REGISTRATION FEES 42 WINTERMARKET FEES 43 BIRD FEST REGISTRATION FEES 44 INTERFUND REIMBURSEMENT -CONTRACT SVCS $ 3,000 $ 1,147 $ 1,897 $ 1,103 630r 600 24 44 557 70/ 11,000 1,521 441 10,559 40r 150 - 1 149 10/ 300 - - 300 00/ - 168 - - 00/ 4,000 - - 4,000 00/ 1,000 164 49 951 501 50 60 37 13 730r 100 - - 100 00/ 25,000 - - 25,000 00/ 600 - - 600 00/ 1,000 92 51 949 501 5,000 - - 5,000 00/ 180,000 66,687 82,228 97,772 460/ 1,400 - 2,885 (1,485) 2060/ 85,000 17,070 24,410 60,590 290/ 10,000 - 1,400 8,600 140/ 30,000 - - 30,000 00/ 14,000 - - 14,000 00/ 210,970 51,206 52,742 158,228 250/ - - 13 (13) 00/ 57,000 14,616 15,373 41,627 270/ 1,050 39 126 924 120/ 38,000 8,404 4,560 33,440 120/ 3,000 181 103 2,897 30/ 10,000 4,885 7,963 2,037 800r 3,500 932 177 3,323 501 1,007,500 201,222 238,403 769,097 240i 2,500 520 1,164 1,336 470/ 100 - - 100 00/ 65,600 19,323 24,928 40,673 380/ 425,000 174,718 57,962 367,038 140/ 4,000 2,606 4,234 (234) 1060/ 500 - 110 390 220/ 3,000 740 2,220 780 740/ 14,000 2,750 5,370 8,630 380/ 13,000 - 231 12,769 20r 1,011,580 57,824 174,034 837,546 170/ 1,300 - - 1,300 00/ 5,000 185 - 5,000 00/ - - 6,880 (6,880) 00/ 1,000 - - 1,000 00/ 4,011,558 303,576 294,624 3,716,934 70i 7,261,358 930,658 1,004,658 6,256,700 140, O O. d iC C O C LL a� R 3 CY N N O N t L 9 22 Packet Pg. 102 2.5.a Page 3 of 3 C ITY O F EDMO NDS REVENUES - GENERAL FUND 2022 Amended 3/31/2021 3/31/2022 Amount Title Budget Revenues Revenues Remaining %Received FINES AND PENALTIES: 1 PROOF OF VEHICLE INS PENALTY 2 TRAFFIC INFRACTION PENALTIES 3 NC TRAFFIC INFRACTION 4 CRT COST FEE CODE LEG ASSESSMENT (LGA) 5 NON -TRAFFIC INFRACTION PENALTIES 6 OTHER INFRACTIONS'04 7 PARKING INFRACTION PENALTIES 8 PARK/INDDISZONE 9 DWI PENALTIES 10 DUI - DP ACCT 11 CRIM CNV FEE DUI 12 DUI - DP FEE 13 CRIMINAL TRAFFIC MISDEMEANOR 8/03 14 CRIMINAL CONVICTION FEE CT 15 CRIM CONV FEE CT 16 OTHER NON-T RAF MISDEMEANOR PEN 17 OTHER NON TRAFFIC MISD. 8/03 18 COURT DV PENALTY ASSESSMENT 19 CRIMINAL CONVICTION FEE CN 20 CRIM CONV FEE CN 21 PUBLIC DEFENSE RECOUPMENT 22 BANK CHARGE FOR CONV. DEFENDANT 23 COURT COST RECOUPMENT 24 BUS. LICENSE PERMIT PENALTY 25 MISC FINES AND PENALTIES NIIS C ELLANEO US : 26 INVESTMENT INTEREST 27 INTEREST ON COUNTY TAXES 28 INTEREST - COURT COLLECTIONS 29 SPACE/FACILITIESRENTALS 30 BRACKET ROOM RENTAL 31 LEASES LONG TERM 32 DONATION/CONTRIBUTION 33 PARKSDONATIONS 34 BIRD FEST CONTRIBUTIONS 35 POLICE CONTRIBUTIONS FROM PRIV SOURCES 36 SALE OF JUNK/SALVAGE 37 SALES OF UNCLAIM PROPERTY 38 CONFISCATED AND FORFEITED PROPERTY 39 OTHER JUDGEMENT/SETTLEMENT 40 POLICE JUDGMENTS✓RESTITUTION 41 CASHIERS OVERAGES✓SHORTAGES 42 OTHER MISC REVENUES 43 SMALL OVERPAYMENT 44 NSF FEES - PARKS & REC 45 NSF FEES - MUNICIPAL COURT 46 NSF FEES - POLICE 47 US BANK REBATE TRANSFERS -IN: 48 TRANSFER FROM FUND 127 TOTAL GENERAL FUND REVENUE $ 2,000 $ 907 $ 469 $ 1,531 230/ 230,000 53,193 15,805 214,195 70/ 18,000 2,184 1,180 16,820 70/ 10,000 4,287 963 9,037 100/ 1,000 203 - 1,000 00/ 1,500 688 218 1,282 150/ 100,000 15,262 4,135 95,865 40/ 2,000 250 72 1,928 40/ 7,000 2,027 990 6,010 140/ 300 16 26 274 90/ 100 38 9 91 90/ 1,500 563 505 995 340/ 25,000 3,355 2,971 22,029 120/ 2,000 398 475 1,525 240/ 700 16 34 666 50/ 100 12 - 100 00/ 10,000 307 636 9,364 60/ 800 15 12 788 20/ 1,000 9 81 919 80/ 200 7 - 200 00/ 8,000 649 933 7,067 120/ 14,000 2,535 790 13,210 60/ 3,000 620 49 2,951 20/ 10,100 - - 10,100 00/ 150 - - 150 00/ 448,450 87,542 30,353 418,097 70/ 270,390 69,052 74,203 196,187 270/ 13,340 2,191 1,132 12,208 80/ 10,180 1,971 1,875 8,305 180/ 153,000 1,987 11,244 141,756 70/ 2,100 - - 2,100 00/ 205,000 48,371 51,562 153,438 250/ 2,500 - 76 2,424 30/ 3,500 - 2,300 1,200 660/ 1,500 350 - 1,500 00/ 5,000 - 249 4,751 501 300 - - 300 00/ 3,800 2,392 996 2,804 260/ 2,000 - - 2,000 00/ 2,000 102 - 2,000 00/ 200 20 20 180 100/ - 2 14 (14) 00/ 41,180 3,767 773 40,407 20/ 100 21 20 80 200/ 100 30 - 100 00/ 150 - - 150 00/ - 30 - - 00/ 8,500 4,966 2,158 6,342 250/ 724,840 135,251 146,621 578,219 200, 26,300 - - 26,300 00/ 26,300 - - 265300 00/ $ 44,640,708 $ 7,050,949 $ 7,394,990 $ 37,245,718 170/ 23 Packet Pg. 103 I 2.5.a I Page 1 of 6 CITY OF EDMO NDS EXPENDITURES BY FUND - DETAIL 2022 Amended 3/31/2021 3/31/2022 Amount Title Budget Expenditures Expenditures Remaining %Spent GENERAL FUND EXPENDITURES (001) 1 SALARIES AND WAGES $ 19,196,413 $ 4,228,263 $ 4,326,088 $ 14,870,325 230 2 OVERTIME 594,080 133,856 302,420 291,660 514 3 HOLIDAY BUY BACK 294,001 1,951 8,212 285,789 M 4 BENEFITS 6,820,049 1,594,208 1,616,010 5,204,039 244 5 UNIFORMS 119,151 19,640 13,344 105,807 114 6 PENSION AND DISABILITY PAYMENTS 70,944 - 11,825 59,119 174 7 SUPPLIES 481,165 109,833 80,236 400,929 174 8 SMALL EQUIPMENT 204,019 60,119 29,359 174,660 144 9 PROFESSIONAL SERVICES 15,274,828 3,529,801 3,958,794 11,316,034 264 10 COMMUNICATIONS 171,235 41,100 30,315 140,920 1M 11 TRAVEL 81,155 517 4,397 76,758 54 12 EXCISE TAXES 16,500 5,627 7,774 8,726 470 13 RENTAL/LEASE 2,091,693 382,348 510,493 1,581,200 244 14INSURANCE 375,539 405,121 503,160 (127,621) 1344 15 UTILITIES 529,462 140,132 157,296 372,166 3M 16 REPAIRS & MAINTENANCE 364,850 168,969 179,938 184,912 494 17 MISCELLANEOUS 652,023 151,319 176,364 475,659 274 18 INTERGOVERNMENTAL PAYMENTS 50,000 50,000 50,000 - 10M 19 INTERFUND SUBSIDIES 1,385,000 - - 1,385,000 M 20 MACHINERY/EQUIPMENT - - - - 04 21 CONSTRUCTION PROJECTS 270,180 - - 270,180 04 22 GENERAL OBLIGATION BOND PRINCIPAL 55,170 - - 55,170 04 23 INTEREST ON LONG-TERM EXTERNAL DEBT 4,790 - - 4,790 M 24 DEBT ISSUE COSTS 268,788 - - 268,788 04 25 OTHER INTEREST & DEBT SERVICE COSTS 500 - - 500 04 49,371,535 11,022,804 11,966,023 37,405,512 244 LEO FF-MEDIC AL INS. RESERVE (009) 26 BENEFITS $ - $ 67,631 $ 59,723 $ (59,723) 04 27 PENSION AND DISABILITY PAYMENTS 252,990 36,825 21,363 231,627 84 28 PROFESSIONAL SERVICES 7,000 - 7,000 - 1004 29 MISCELLANEOUS 500 - - 500 04 260,490 S 104,456 88,086 172,404 344 HISTORIC PRESERVATION GIFT FUND (014) 30 SUPPLIES $ 100 $ $ - $ 100 04 31 PROFESSIONAL SERVICES 200 200 04 32 MISCELLANEOUS 5,600 5,600 04 5,900 - 5,900 04 BUILDING MAINTENANCE FUND (016) 33 PROFESSIONAL SERVICES $ 115,000 $ $ 450 $ 114,550 04 34 REPAIR & MAINTENANCE 665,000 - 16,072 648,928 24 35 MACHINERY/EQUIPMENT 90,000 - - 90,000 04 36 CONSTRUCTION PROJECTS 110,000 - - 110,000 04 980,000 - 16,522 963,478 24 EDMONDS HOMELESSNESS RESPONSEFUND (018) 37 PROFESSIONAL SERVICES $ 200,000 $ - $ - $ 200,000 04 200,000 - - 200,000 04 DRUG ENFO RC EMENT FUND (104) 38 PROFESSIONAL SERVICES $ 45,000 $ - $ - $ 45,000 04 39 REPAIR/MAINT 800 - - 800 04 45,800 - 45,800 04 2 24 Packet Pg. 104 I 2.5.a I Page 2 of 6 CITY OF EDMO NDS EXPENDITURES BY FUND - DETAIL 2022 Amended 3/31/2021 3/31/2022 Amount Title Budget Expenditures Expenditures Remaining %Spent STREETFUND (111) 1 SALARIES AND WAGES $ 749,110 $ 185,871 $ 175,741 $ 573,369 2M 2 OVERTIME 38,400 13,854 8,784 29,616 2M 3 BENEFITS 347,919 91,562 86,684 261,235 259 4 UNIFORMS 6,000 4,156 3,107 2,893 529 5 SUPPLIES 263,000 15,469 15,428 247,572 69 6 SMALL EQUIPMENT 20,000 - 587 19,413 39 7 PROFESSIONAL SERVICES 23,210 4,276 4,457 18,753 199 8 COMMUNICATIONS 4,500 1,725 1,284 3,216 299 9 TRAVEL 1,000 - - 1,000 09 10 RENTAL/LEASE 290,150 61,397 72,120 218,030 259 11 INSURANCE 123,007 148,533 184,111 (61,104) 15W 12 UTILITIES 273,730 57,041 45,731 227,999 179 13 REPAIRS & MAINTENANCE 72,000 9,065 4,212 67,788 69 14 MISCELLANEOUS 8,000 7,450 10,360 (2,360) 1309 15 MACHINERY/EQUIPMENT 30,000 - - 30,000 W 16 GENERAL OBLIGATION BOND PRINCIPAL 4,270 - - 4,270 09 17 INTEREST 380 - - 380 09 $ 2,254,676 $ 600,399 $ 612,607 $ 1,642,069 279 COMBINED STREETCONST/IMPROVE(112) 18 PROFESSIONAL SERVICES $ 3,159,560 $ 65,351 $ 109,042 $ 3,050,518 M 19 REPAIR&MAINTENANCE 1,508,270 - 122 1,508,148 09 20 INTERFUND SUBSIDIES 108,975 - - 108,975 09 21 LAND - - 32,660 (32,660) 09 22 CONSTRUCTION PROJECTS 8,018,521 - 270,868 7,747,653 M 23 INTERGOVERNMENTAL LOANS 72,220 - - 72,220 09 24 INTEREST 1,250 - - 1,250 09 $ 12,868,796 $ 65,351 $ 412,691 $ 12,456,105 M MUNICIPAL ARTS ACQUIS. FUND (117) 25 SUPPLIES $ 4,700 $ 217 $ $ 4,700 09 26 SMALL EQUIPMENT 1,700 - 1,700 09 27 PROFESSIONAL SERVICES 180,000 8,507 11,883 168,117 79 28 TRAVEL 80 - - 80 09 29 RENTAL/LEASE 2,000 2,000 09 30 REPAIRS & MAINTENANCE 300 - - 300 09 31 MISCELLANEOUS 6,600 612 1,025 5,575 169 $ 195,380 $ 9,336 $ 12,908 $ 182,472 79 HO TEL/MO TEL TAX REVENUE FUND (120) 32 PROFESSIONAL SERVICES $ 95,900 $ 10,144 $ 8,555 $ 87,345 99 33 MISCELLANEOUS 1,000 - - 1,000 09 34 INTERFUND SUBSIDIES 4,000 - - 4,000 09 $ 100,900 $ 10,144 $ 8,555 $ 92,345 M EMPLO YEE PARKING PERMIT FUND (121) 35 SUPPLIES $ 1,790 $ - $ - $ 1,790 09 36 PROFESSIONAL SERVICES 25,090 - - 25,090 09 $ 26,880 $ - $ - $ 26,880 09 YOUTH SCHOLARSHIP FUND (122) 37 MISCELLANEOUS $ 3,000 $ $ - $ 3,000 09 $ 3,000 $ $ $ 3,000 09 TOURISM PROMOTIONAL FUND/ARTS (123 ) 38 PROFESSIONAL SERVICES $ 28,200 $ $ - $ 28,200 09 $ 28,200 $ - $ - $ 28,200 09 O O. iC C R C LL A L d R 7 CY N N O N t v tL0 2 25 Packet Pg. 105 I 2.5.a I Page 3 of 6 CITY OF EDMO NDS EXPENDITURES BY FUND - DETAIL 2022 Amended 3/31/2021 3/31/2022 Amount Title Budget Expenditures Expenditures Remaining %Spent REAL ESTATE EXC ISE TAX 2 (125) 1 SUPPLIES $ 21,000 $ 12,215 $ 7,222 $ 13,778 340 2 PROFESSIONAL SERVICES 469,320 9,514 59,372 409,948 139 3 REPAIRS&MAINTENANCE 668,258 5,070 56,168 612,090 M 4 INTERFUND SUBSIDIES 2,534 - - 2,534 00 5 CONSTRUCTION PROJECTS 3,428,576 - 301,189 3,127,387 99 $ 4,589,688 $ 26,799 $ 423,951 $ 4,165,737 94 REAL ESTATE EXCISE TAXI (126) 6 PROFESSIONAL SERVICES 7 REPAIRS & MAINTENANCE 8 INTERFUND SUBSIDIES 9 CONSTRUCTION PROJECTS 10 GENERAL OBLIGATION BONDS 11 INTEREST GWIS CATALOG FUND (127) 12 SUPPLIES 13 PROFESSIONAL SERVICES 14 MISCELLANEOUS 15 INTERFUND SUBSIDIES CEVIEIIItYMAINTENANCF/I PR0VEMENT(130) 16 SALARIES AND WAGES 17 OVERTIME 18 BENEFIT S 19 UNIFORMS 20 SUPPLIES 21 SUPPLIES PURCHASED FOR INVENTORY/RESALE 22 PROFESSIONAL SERVICES 23 COMMUNICATIONS 24 TRAVEL 25 RENTAL/LEASE 26 UTILITIES 27 REPAIRS & MAINTENANCE 28 MISCELLANEOUS PARKS TRUSTFUND (136) 29 PROFESSIONAL SERVICES CEMETERY MAINTENANCE TRUST FUND (137) 30 SMALL EQUIPMENT SISTER CITY COMMISSION (138) 31 SUPPLIES 32 TRAVEL 33 MISCELLANEOUS BUSINESS IMPROVEMENT DISTRICT FUND (140) 34 SUPPLIES 35 PROFESSIONAL SERVICES 36 MISCELLANEOUS EDMONDS RESCUEPLAN FUND (142) 37 PROFESSIONAL SERVICES TREE FUND (143) 38 SUPPLIES 39 PROFESSIONAL SERVICES 40 LAND 2012 LTGO DEBT SERVIC FUND (231) 41 GENERAL OBLIGATION BOND 42 INTEREST $ 673,827 $ 52,341 $ 22,499 $ 651,328 M 878,353 14,138 13,266 865,087 2° 144,970 - - 144,970 00 526,057 83,264 97,473 428,584 190 149,820 - - 149,820 04 110,640 - - 110,640 00 $ 2,483,667 $ 149,742 $ 133,238 $ 2,350,429 54 $ 45,000 $ 8,980 $ 2,462 $ 42,538 59 6,500 - - 6,500 04 600 - - 600 04 26,300 - - 26,300 0° $ 78,400 $ 8,980 $ 2,462 $ 75,938 T $ 119,837 $ 20,978 $ 21,898 $ 97,939 180 3,500 120 210 3,290 64 41,069 9,434 9,412 31,658 2M 1,000 - - 1,000 00 7,000 - 45 6,955 14 20,000 5,616 5,253 14,747 260 4,200 800 800 3,400 190 1,700 421 428 1,272 254 500 - - 500 04 11,690 4,163 2,923 8,767 250 5,565 902 888 4,677 164 500 - - 500 M 4,000 2,567 3,868 132 970 $ 220,561 $ 45,001 $ 45,724 $ 174,837 21° $ 50,000 $ - $ - $ 50,000 04 $ 50,000 $ - $ - $ 50,000 M $ 25,000 $ - $ - $ 25,000 0° $ 25,000 $ - $ - $ 25,000 0° $ 1,500 $ - $ - $ 1,500 M 4,500 - - 4,500 M 5,900 - - 5,900 04 $ 11,900 $ - $ - $ 11,900 09 $ 4,050 $ 273 $ 94 $ 3,956 24 77,535 8,203 10,835 66,700 140 6,095 352 172 5,923 M 87,680 8,828 11,101 76,579 IM $ 5,977,492 $ - $ 232,175 $ 5,745,317 44 5,977,492 - 232,175 5,745,317 4° $ 1,000 $ - $ - $ 1,000 04 14,800 - - 14,800 04 199,000 - - 199,000 09 214,800 - - 214,800 04 $ 550,000 $ - $ - $ 550,000 00 61,370 - - 61,370 M $ 611,370 $ - $ - $ 611,370 0° O O. d is C O C LL A L d R 3 CY N N 0 N t v W 2 26 Packet Pg. 106 I 2.5.a I Page 4 of 6 CITY OF EDMO NDS EXPENDITURES BY FUND - DETAIL 2022 Amended 3/31/2021 3/31/2022 Amount Title Budget Expenditures Expenditures Remaining %Spent PARKS CONSTRUCTION FUND (332) 1 PROFESSIONAL SERVICES $ 95,832 $ 718 $ 91,809 $ 4,023 969 2 INTERFUND SUBSIDIES 63,000 - 62,656 344 999 3 CONSTRUCTION PROJECTS 7,357,188 66,774 1,475,816 5,881,372 209 4 DEBT ISSUE COSTS 98,398 - - 98,398 09 $ 7,614,418 $ 67,492 $ 1,630,281 $ 5,984,137 210 WATER FUND (421) 5 SALARIES AND WAGES 6 OVERTIME 7 BENEFIT S 8 UNIFORMS 9 SUPPLIES 10 WATER PURCHASED FOR RESALE 11 SUPPLIES PURCHASED FOR INVENTORY/RESALE 12 SMALL EQUIPMENT 13 PROFESSIONAL SERVICES 14 COMMUNICATIONS 15 TRAVEL 16 EXCISE TAXES 17 RENTAL/LEASE 18 INSURANCE 19 UTILITIES 20 REPAIRS & MAINTENANCE 21 MISCELLANEOUS 22 INTERFUND SUBSIDIES 23 MACHINERY/EQUIPMENT 24 CONSTRUCTION PROJECTS 25 GENERAL OBLIGATION BONDS 26 REVENUE BONDS 27 INTERGOVERNMENTAL LOANS 28 INTEREST STORM FUND (422) 29 SALARIES AND WAGES 30 OVERTIME 31 BENEFIT S 32 UNIFORMS 33 SUPPLIES 34 SMALL EQUIPMENT 35 PROFESSIONAL SERVICES 36 COMMUNICATIONS 37 TRAVEL 38 EXCISE TAXES 39 RENTALILEASE 40INSURANCE 41 UTILITES 42 REPAIR & MAINTENANCE 43 MISCELLANEOUS 44 INTERFUND SUBSIDIES 45 CONSTRUCTION PROJECTS 46 GENERAL OBLIGATION BONDS 47 REVENUE BONDS 48 INTERGOVERNMENTAL LOANS 49 INTEREST $ 842,096 $ 168,392 $ 190,522 $ 651,574 239 24,000 5,237 4,561 19,439 199 330,100 71,004 79,936 250,164 249 4,000 2,016 1,221 2,779 310 150,000 18,501 44,060 105,940 299 2,170,000 123,474 262,019 1,907,982 129 170,000 56,175 57,613 112,387 349 11,000 2,327 670 10,330 69 2,237,439 156,098 127,633 2,109,806 69 30,000 6,927 6,709 23,291 220 200 - - 200 09 1,649,700 326,269 318,512 1,331,188 190 152,590 30,980 37,987 114,603 259 107,265 98,196 122,359 (15,094) 1149 35,000 8,854 8,339 26,661 249 176,130 11,030 11,535 164,595 79 123,600 49,272 61,398 62,202 509 645,370 - - 645,370 09 10,000 - - 10,000 09 1,998,334 - 87,212 1,911,122 49 2,870 - - 2,870 09 399,780 - - 399,780 09 25,840 - - 25,840 09 180,580 - - 180,580 09 $ 11,475,894 $ 1,134,754 $ 1,422,285 $ 10,053,609 129 $ 734,284 $ 180,867 $ 196,131 $ 538,153 279 26,000 11,826 7,110 18,890 279 294,767 79,457 80,379 214,388 279 6,500 2,463 4,640 1,860 719 46,000 16,156 19,986 26,014 4M 4,000 304 587 3,413 159 3,481,263 172,800 199,607 3,281,656 69 3,200 1,516 1,091 2,109 349 4,300 - - 4,300 M 470,100 183,707 201,489 268,611 439 267,150 66,330 66,250 200,900 259 144,126 66,228 82,335 61,791 579 10,500 4,497 4,748 5,752 459 67,130 10,963 11,040 56,090 169 232,300 80,395 73,657 158,643 329 297,787 - - 297,787 09 3,137,333 - 194,065 2,943,268 69 104,540 - - 104,540 09 195,390 - - 195,390 M 53,590 - - 53,590 09 101,180 - - 101,180 M $ 9,681,440 $ 877,509 $ 1,143,115 $ 8,538,325 129 O O. d is C O C iL A d R 7 CY N N O N t v c`o 2 27 Packet Pg. 107 I 2.5.a I Page 5 of 6 CITY OF EDMO NDS EXPENDPTURES BY FUND - DETAIL 2022 Amended 3/31/2021 3/31/2022 Amount Title Budget Expenditures Expenditures Remaining %Spent SEWER FUND (423) 1 SALARIES AND WAGES $ 2,090,461 $ 448,654 $ 467,317 $ 1,623,144 229 2 OVERTIME 95,000 30,002 44,128 50,872 469 3 BENEFITS 847,408 191,235 184,029 663,379 229 4 UNIFORMS 9,500 6,054 4,794 4,706 509 5 SUPPLIES 421,000 118,144 67,115 353,885 169 6 FUEL CONSUMED 60,000 23,413 - 60,000 09 7 SUPPLIES PURCHASED FOR INV OR RESALE 4,000 - - 4,000 09 8 SMALL EQUIPMENT 35,000 12,163 89,777 (54,777) 2579 9 PROFESSIONAL SERVICES 2,315,884 376,542 511,460 1,804,424 229 10 COMMUNICATIONS 43,000 10,467 10,851 32,149 259 11 TRAVEL 5,000 - - 5,000 09 12 EXCISE TAXES 978,000 278,989 217,029 760,971 229 13 RENTALILEASE 317,410 107,477 81,329 236,081 269 14INSURANCE 185,052 162,851 203,936 (18,884) 1109 15 UTILITIES 1,532,060 200,021 364,051 1,168,009 249 16 REPAIR & MAINTENANCE 790,630 42,222 317,205 473,425 409 17 MISCELLANEOUS 126,350 27,611 44,414 81,936 359 18 INTERFUND SUBSIDIES 6,388,519 - - 6,388,519 09 19 CONSTRUCTION PROJECTS 12,520,297 70,424 1,092,673 11,427,624 99 20 GENERAL OBLIGATION BONDS 126,500 - - 126,500 09 21 REVENUE BONDS 89,840 - - 89,840 09 22 INTERGOVERNMENTAL LOANS 174,610 15,047 15,397 159,213 99 23 INTEREST 356,980 2,986 2,786 354,194 19 24 DEBT ISSUE COSTS - 1,380 - - 09 25 OTHER INTEREST & DEBT SERVICE COST S - 2,252 2,102 (2,102) 09 $ 29,512,501 $ 2,127,934 $ 3,720,393 $ 25,792,108 1M BOND RESERVEFUND (424) 26 REVENUE BONDS $ 810,010 $ $ $ 810,010 09 27 INTEREST 1,178,700 1,178,700 09 $ 1,988,710 $ $ $ 1,988,710 09 O N R U C ca C LL i N R 7 CI N N O N t 0 L M 9 28 Packet Pg. 108 I 2.5.a I Page 6 of 6 CITY OF EDMO NDS EXPENDITURES BY FUND - DETAIL 2022 Amended 3/31/2021 3/31/2022 Amount Title Budget Expenditures Expenditures Remaining %Spent EQUIPMENT RENTAL FUND (511) 1 SALARIES AND WAGES $ 275,712 $ 68,567 $ 73,548 $ 202,164 270 2 OVERTIME 2,000 1,573 222 1,778 ii4 3 BENEFITS 112,077 28,958 29,018 83,059 26° 4 UNIFORMS 1,500 636 689 811 46° 5 SUPPLIES 120,000 14,917 45,415 74,585 384 6 FUEL CONSUMED 1,000 - - 1,000 0° 7 SUPPLIES PURCHASED FOR INVENTORY/RESALE 268,000 49,302 112,225 155,775 42° 8 SMALL EQUIPMENT 58,000 5,154 1,950 56,050 39 9 PROFESSIONAL SERVICES 46,750 356 349 46,401 1° 10 COMMUNICATIONS 3,000 573 516 2,484 17 11 TRAVEL 1,000 - - 1,000 04 12 RENTAL/LEASE 11,160 3,101 2,526 8,634 2M 13 INSURANCE 41,261 39,334 51,903 (10,642) 1264 14 UTILITIES 14,000 5,932 5,850 8,150 424 15 REPAIRS & MAINTENANCE 60,000 8,288 9,606 50,394 164 16 MISCELLANEOUS 12,000 1,787 1,441 10,559 12° 17 MACHINERY/EQUIPMENT 915,000 50,620 10,903 904,097 14 $ 1,942,460 $ 279,099 $ 346,163 $ 1,596,297 18° TECHNOLOGY RENTAL FUND (512) 18 SALARIES AND WAGES $ 442,074 $ 85,721 $ 66,179 $ 375,895 154 19 OVERTIME 2,000 707 - 2,000 04 20 BENEFITS 159,538 26,589 26,961 132,577 174 21 SUPPLIES 5,000 1,605 2,075 2,925 414 22 SMALL EQUIPMENT 357,900 8,894 15,261 342,639 44 23 PROFESSIONAL SERVICES 61,860 5,723 3,349 58,511 5° 24 COMMUNICATIONS 58,770 12,829 12,087 46,683 21° 25 TRAVEL 1,500 - - 1,500 04 26 RENTAL/LEASE 7,460 1,100 1,115 6,345 154 27 REPAIRS & MAINT ENANCE 381,920 206,816 375,901 6,019 9M 28 MISCELLANEOUS 5,000 246 50 4,950 19 29 MACHINERY/EQUIPMENT 56,000 - - 56,000 09 $ 1,539,022 $ 350,229 $ 502,978 $ 1,036,044 330 FIREMAN'S PENSION FUND (617) 30 BENEFITS $ - $ 10,457 $ - $ - 09 31 PENSION AND DISABILITY PAYMENTS 15,381 - 09 $ - $ 25,838 $ - $ - 09 TOTAL EXPENDITURE ALL FUNDS $ 144,446,560 $ 16,914,695 $ 22,731,259 $ 121,715,301 165 O CL d is C C LL A N R 3 CY N N 0 N t c� L 2 29 Packet Pg. 109 2.5.a Page 1 of 1 C ITY O F IDMO NDS EXPENDITURES - GENERAL FUND - BY DEPARTMENT IN SUMMARY 2022 Amended 3/31/2021 3/31/2022 Amount Title Budget Expenditures Expenditures Remaining %Spent CITY COUNCIL OFFICE OF MAYOR HUMAN RESOURCES MUNICIPAL COURT CITY CLERK ADMINISTRATIVE SERVICES CITY ATTORNEY NON -DEPARTMENTAL POLICE SERVICES SATELLITE OFFICE COMMUNITY SERVICES✓ECONOMIC DEV DEVELOPMENT SERVICES HUMAN SERVICES PROGRAM PARKS & RECREATION PUBLIC WORKS FACILITIES MAINTENANCE $ 497,900 $ 83,267 $ 71,408 $ 426,492 14% 443,913 83,532 89,568 354,345 20% 824,831 187,141 203,581 621,250 25% 1,368,755 275,717 284,025 1,084,731 21% - 209,183 - - 0%' O 2,034,511 314,260 547,460 1,487,051 27% lL' 971,780 212,467 233,065 738,715 24% 13,877,484 3,679,050 4,088,791 9,788,693 29% O 13,375,470 2,871,535 3,008,075 10,367,395 22% .� LL 166,576 - 21,922 144,654 13% >+ L 719,388 130,319 122,479 596,909 17% R 3,791,859 690,769 909,669 2,882,190 24% CY 459,109 - 25,870 433,239 6% N 5,081,735 971,861 1,040,803 4,040,932 20% 0 N t 3,459,449 784,963 757,219 2,702,230 22% 2,298,775 528,741 562,089 1,736,686 24% 2 $ 49,371,535 $ 11,022,804 $ 11,966,023 $ 37,405,512 24% r_ O CITY OF EDMO NDS EXPENDITURES - UTILITY- BY FUND IN SUMMARY Title 2022 Amended Budget 3/31/2021 Expenditures 3/31/2022 Expenditures Amount Remaining %Spent WATER UTILITYFUND $ 11,475,894 $ 1,134,754 $ 1,422,285 $ 10,053,609 12% STORM UTILITY FUND 9,681,440 877,509 1,143,115 8,538,325 12% SEWER/WWTP UTILITY FUND 29,512,501 2,127,934 3,720,393 25,792,108 13% BOND RESERVE FUND 1,988,710 - - 1,988,710 0% $ 52,658,545 $ 4,140,196 $ 6,285,793 $ 46,372,752 12% 30 Packet Pg. 110 I 2.5.a I Page 1 of 2 C ITY O F EDMO NDS EXPENDITURES - GENERAL FUND - BY DEPARTMENT IN DETAIL 2022 Amended 3/31/2021 3/31/2022 Amount Title Budget Expenditures Expenditures Remaining %Spent CITY COUNCIL SALARIES AND WAGES BENEFIT S SUPPLIES SERVICES O FFIC E O F MAYO R SALARIES AND WAGES BENEFIT S SUPPLIES SERVICES HUMAN RESOURCES SALARIES AND WAGES BENEFIT S SUPPLIES SERVICES MUNICIPAL C O URT SALARIES AND WAGES BENEFIT S SUPPLIES SERVICES CITY CLERK SALARIES AND WAGES BENEFIT S SUPPLIES SERVICES $ 204,132 $ 50,038 $ 42,890 $ 161,242 21% 121,868 26,196 23,106 98,762 19% 2,000 1,494 236 1,764 12% 169,900 5,538 5,176 164,724 3% $ 497,900 $ 83,267 $ 71,408 $ 426,492 14% $ 232,296 $ 57,374 $ 61,694 $ 170,602 27% 81,787 21,124 21,658 60,129 26% ^+ 1,500 124 1,440 60 96% 0 128,330 4,910 4,777 123,553 4% 0. $ 443,913 $ 83,532 $ 89,568 $ 354,345 20% W R $ 398,299 $ 99,382 $ 116,150 $ 282,149 29% C 142,526 41,117 41,649 100,877 29% 13,600 781 246 13,354 2% 'y 270,406 45,861 45,536 224,870 17% $ 824,831 $ 187,141 $ 203,581 $ 621,250 25% $ 910,606 $ 179,281 $ 192,338 $ 718,268 21% 7 217,654 55,827 54,922 162,732 25% U' 11,600 1,427 2,507 9,093 22% N 228,895 39,182 34,258 194,637 15% N $ 1,368,755 $ 275,717 $ 284,025 $ 1,084,731 21% c� $ - $ 99,613 $ - $ 0% M - 40,838 - 0% v 0 - 403 - 0% O - 68,328 - 0% Q- $ - $ 209,183 $ - $ - 0% ADMINIS TRATIVE S ERVIC ES SALARIES AND WAGES $ 1,301,073 $ 185,435 $ 331,842 $ 969,231 26% BENEFITS 413,858 61,588 110,163 303,695 27% SUPPLIES 13,000 1,476 2,729 10,271 21% SERVICES 306,580 65,761 102,725 203,855 34% $ 2,034,511 $ 314,260 $ 547,460 $ 1,487,051 27% CITY ATPO RNEY SERVICES $ 971,780 $ 212,467 $ 233,065 $ 738,715 24% $ 971,780 $ 212,467 $ 233,065 $ 738,715 24% NON -DEPARTMENTAL SALARIES AND WAGES $ 101,750 $ - $ - $ 101,750 0% BENEFIT S 145,504 14,707 18,865 126,639 13% SUPPLIES 5,000 29 - 5,000 0% SERVICES 11,860,982 3,614,314 4,019,926 7,841,056 34% INTERFUND SUBSIDIES 1,435,000 50,000 50,000 1,385,000 3% DEBT SERVICE - PRINCIPAL 55,170 - - 55,170 0% DEBT SERVICE - INTEREST 274,078 274,078 0% $ 13,877,484 $ 3,679,050 $ 4,088,791 $ 9,788,693 29% PO LIC E SERVIC ES SALARIES AND WAGES $ 8,723,512 $ 1,885,128 $ 2,001,754 $ 6,721,758 23% BENEFITS 2,994,876 673,000 692,447 2,302,429 23% SUPPLIES 281,569 101,429 28,690 252,879 10% SERVICES 1,375,513 211,978 285,184 1,090,329 21% $ 13,375,470 $ 2,871,535 $ 3,008,075 $ 10,367,395 22% SATELLITE O FFIC E SALARIES AND WAGES $ 25,000 $ - $ - $ 25,000 0% BENEFIT S 5,000 - 5,000 0% SUPPLIES 12,000 10,980 1,020 92% SERVICES 124,576 10,941 113,635 9% $ 166,576 $ $ 21,922 $ 144,654 13% 31 Packet Pg. 111 Page 2 of 2 C ITY O F EDMO NDS EXPENDITURES - GENERAL FUND - BY DEPARTMENT IN DETAIL 2022 Amended 3/31/2021 3/31/2022 Amount Title Budget Expenditures Expenditures Remaining %Spent COMMUNITY SERVICES/ECON DEV. SALARIES AND WAGES $ 365,627 $ 81,474 $ 50,441 $ 315,186 14% BENEFITS 111,361 22,889 16,285 95,076 15% SUPPLIES 4,075 47 184 3,891 5% SERVICES 238,325 25,908 55,568 182,757 23% $ 719,388 $ 130,319 $ 122,479 $ 596,909 17% DEVELO PMEVT S ERVIC ES /PLANNING SALARIES AND WAGES $ 1,978,832 $ 435,823 $ 542,158 $ 1,436,674 27% BENEFITS 681,706 159,746 183,402 498,304 27% SUPPLIES 19,400 1,199 1,366 18,034 7% SERVICES 1,111,921 94,001 182,744 929,177 16% MACHINERY/EQUIPMENT 0% $ 3,791,859 $ 690,769 $ 909,669 $ 2,882,190 24% HUMAN SERVICES PROGRAM SALARIES AND WAGES $ 101,496 $ - $ 14,413 $ 87,083 14% BENEFITS 29,113 - 2,888 26,225 10% SUPPLIES 15,000 - 59 14,942 0% SERVICES 313,500 - 8,510 304,990 3% 459,109 25,870 433,239 6% PARKS & REC REATIO N SALARIES AND WAGES $ 2,627,863 $ 572,503 $ 571,618 $ 2,056,245 22% BENEFITS 865,945 207,893 202,033 663,912 23% SUPPLIES 166,640 24,689 41,287 125,353 25% SERVICES 1,421,287 166,777 225,866 1,195,421 16% $ 5,081,735 $ 971,861 $ 1,040,803 $ 4,040,932 20% PUBLIC WORKS ADMINISTRATION SALARIES AND WAGES $ 387,424 $ 74,845 $ 33,162 $ 354,262 9% BENEFITS 126,689 26,223 16,076 110,613 13% SUPPLIES 9,600 221 1,211 8,389 13% SERVICES 90,400 22,175 20,793 69,607 23% $ 614,113 $ 123,465 $ 71,242 S 542,871 12% FACILITIFS MAINTENANCE SALARIES AND WAGES 860,456 205,470 216,781 643,675 25% BENEFITS 369,679 85,571 84,651 285,028 23% SUPPLIES 128,000 35,839 18,660 109,340 15% SERVICES 670,460 201,861 241,997 428,463 36% MACHINERY/EQUIPMENT 270,180 - - 270,180 0% $ 2,298,775 $ 528,741 $ 562,089 $ 1,736,686 24% ENGINEERING SALARIES AND WAGES $ 1,866,128 $ 437,702 $ 461,480 $ 1,404,648 25% BENEFITS 702,578 177,129 173,033 529,545 25% SUPPLIES 2,200 795 - 2,200 0% SERVICES 274,430 45,872 51,464 222,966 19% $ 2,845,336 $ 661,498 $ 685,977 $ 2,159,359 24% TOTAL GENERAL FUND EXPENDITURES $ 49,371,535 $ 11,022,804 $ 11,966,023 $ 37,405,512 24% O O. d iC C O C LL i N R 7 CY N N O N t 0 L 9 32 Packet Pg. 112 2.5.a GENERAL FUND OVERVIEW BALANCES CHANGE IN FUND BALANCES GENERAL FUND ---- ACTUAL ---- ---- ACTUAL ---- & SUBFUNDS 3/31 /2022 3/31 /2022 Q1 YTD Fund Balance Cash Balance 001-General Fund ' $ 11,360,317 $ 3,845,555 $ (4,571,033) $ (4,571,033 009-Leoff-Medical Ins. Reserve 167,132 167,132 (88,086) (88,086 0 011-Risk Management Reserve Fund 25,000 25,000 - - 012-ContingencyReserve Fund 1,782,150 1,782,150 - - 014-Historic Preservation Gift Fund 16,422 16,421 - - U c 016-Building Maintenance 4,398,737 4,398,737 (1,263) (1,263 c_ 017 - Marsh Restoration & Preservation 848,617 848,616 - - u_ 21 Total General Fund & Subfunds $ 18,598,374 $ 11,083,612 $ (4,660,382) $ (4,660,382 a� 1` CY *$8,067,160 of the fund balance in Fund 001 added to the $1,782,150 balance in Fund 012, represent the required N 20% operating reserve. N There are no interfund loans outstanding at this time. 1` 0 Q. m GOVERNMENTAL FUNDS OVERVIEW LL 21 L L BALANCES CHANGE IN FUND BALANCES CY GOVERNMENTAL ---- ACTUAL ---- ---- ACTUAL ---- c FUNDS 3/31 /2022 3/31 /2022 Q1 — YTD N t Fund Balance Cash Balance 2- General Fund & Subfunds $ 18,598,374 $ 11,083,612 $ (4,660,382) $ (4,660,382 c Special Revenue 19,048,587 17,763,440 669,865 669,865 E Capital Projects 3,291,790 3,541,957 (822,073) (822,073 u 0 Total Governmental Funds $ 40,938,751 $ 32,389,008 1 $ (4,812,590) $ (4,812,590 r Q *Please note that these revenues and expenses occur within annual cycles. This Interim Report is not adjusted for accruals or those annual cycles. 33 Packet Pg. 113 2.5.a SPECIAL REVENUE FUNDS OVERVIEW BALANCES CHANGE IN FUND BALANCES GOVERNMENTAL ---- ACTUAL ---- ---- ACTUAL ---- SPECIAL REVENUE 3/31/2022 3/31/2022 Q1 YTD Fund Balance Cash Balance 104 - Drug Enforcement Fund $ 75,753 $ 76,253 $ 578 $ 578 111 - Street Fund 660,527 521,942 (290,638) (290,638 112 - Combined Street Const/Improve 2,910,339 2,020,380 671,892 671,892 Q. 117 - Municipal Arts Acquis. Fund 713,169 716,631 64,290 64,290 W 120 - Hotel/Motel Tax Revenue Fund 82,524 69,286 11,410 11,410 6 121 - Employee Parking Permit Fund 84,770 85,164 8,246 8,246 122 - Youth Scholarship Fund 14,369 14,442 110 110 123 -Tourism Promotional Fund/Arts 103,170 99,104 7,199 7,199 u_ 125 - Real Estate Tax2 4,057,799 3,982,914 4,384 4,384 21 126 - Real Estate Excise Tax 1 * 3,603,484 3,432,398 290,145 290,145 r 127 - Gifts Catalog Fund 364,993 366,576 63,468 63,468 130 - Cemetery Maintenance/Improvement 272,218 273,627 6,013 6,013 CY 136 - Parks Trust Fund 169,884 170,751 1,294 1,294 c 137- Cemetery Maintenance Trust Fund 1,121,106 1,126,803 14,031 14,031 138- Sister City Comm ission 15,599 15,679 119 119 L 140 -Business Improvement Disrict 55,442 55,442 26,311 26,311 141 -Affordable and Supportive Housing I'd 182,448 175,055 23,034 23,034 142 - Edmonds Rescue Plan Fund 4,540,205 4,540,205 (232,175) V_ (232,175 143 -Tree Fund 20,789 20,789 157 157 m Total Special Revenue $ 19,048,587 $ 17,763,440 $ 669,865 $ 669,865 *$200,000 of the fund balance in Fund 126 has been reserved for Marsh Restoration Funding, as well as $500,000 for 'u the purchase of Open Space. ii ENTERPRISE FUNDS OVERVIEW L 1= CU N N O BALANCES CHANGE IN FUND BALANCES t ---- ACTUAL ---- ---- ACTUAL ---- ENTERPRISE FUNDS 3/31/2022 3/31/2022 Q1 YTD Fund Balance Cash Balance c m E 421 -Water Utility Fund $ 29,858,598 $ 7,626,106 $ 1,131,430 $ 1,131,430 U 422 -Storm Utility Fund " 16,488,793 6,446,043 841,415 841,415 Q 423 - Sewer/WWTP Utility Fund 61,776,908 17,162,548 1,424,379 1,424,379 424 - Bond Reserve Fund 843,964 843,964 3 3 411 -Combined Utility Operation 46,790 92,550 46,790 46,790 Total Enterprise Funds $ 109,015,052 $ 32,171,212 $ 3,444,017 $ 3,444,017 *$250,000 of the Storm Utility Fund Balance has been reserved for Marsh Restoration Funding. *Please note that these revenues and expenses occur within annual cycles. This Interim Report is not adjusted for accruals or those annual cycles. 34 Packet Pg. 114 2.5.a SUMMARY OVERVIEW BALANCES CHANGE IN FUND BALANCES ---- ACTUAL ---- ---- ACTUAL ---- CITY-WIDE 3/31/2022 3/31/2022 Q1 YTD Fund Balance Cash Balance Governmental Funds $ 40,938,751 $ 32,389,008 $ (4,812,590) $ (4,812,590 Enterprise Funds 109,015,052 32,171,212 3,444,017 3,444,017 0 Internal Services Fund 10,193,906 5,768,972 (93,646) (93,646 0. Total City-wide Total $ 160,147,709 $ 70,329,192 $ (1,462,219) $ (1,462,219 U c c� c ii 21 a� INTERNAL SERVICE FUNDS OVERVIEW N N O N L V L C� G BALANCES CHANGE IN FUND BALANCES o INTERNAL SERVICE ---- ACTUAL ---- ---- ACTUAL ---- 0. FUNDS 3/31/2022 3/31/2022 Q1 YTD Fund Balance Cash Balance c 511 - Equipment Rental Fund $ 9,326,031 $ 5,074,155 $ 117,520 $ 117,520 u_ 21 512 -Technology Rental Fund 867,875 694,817 (211,166) (211,166 Total Internal Service Funds $ 10,193,906 $ 5,768,972 $ (93,646) $ (93,646 CY N O N L V L C� G d E t V Q *Please note that these revenues and expenses occur within annual cycles. This Interim Report is not adjusted for accruals or those annual cycles. 35 Packet Pg. 115 2.5.b GENERAL FUND CHANGES IN FUND BALANCE 2021 2022 2017 2018 2019 2020 2021 (Jan -March) (Jan -March) Beginning Fund Balance 9,841,719 10,273,342 11,233,279 15,552,188 13,868,744 13,868,744 15,931,353 Revenue Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Investment earnings Miscellaneous Operating Revenues Nononeratine Revenues Transfers in Debt proceeds Sale of capital assets Insurance recoveries Total Revenue Expenditures General government Public safety Transportation Economic environment Mental and physical health Culture and recreation Debt service Capital outlay Operating Expenditures Nononeratine Expenditures Transfers out Debt refunding Total Expenditures Prior Period Adjustments Change in position 29,572,203 30,755,578 30,846,665 30,738,452 32,979,704 4,734,587 5,337,614 2,506,800 2,401,855 2,299,972 2,276,861 2,453,186 555,153 666,258 890,572 1,014,434 1,008,432 1,633,633 1,608,646 607,758 209,486 5,463,913 5,810,961 6,419,836 5,412,044 5,913,557 930,658 1,004,658 459,929 616,783 496,093 287,693 272,302 87,542 30,353 154,737 273,228 573,806 265,627 122,241 73,213 77,209 471,675 931,495 587,882 322,816 310,902 62,038 69,412 39,519,829 41,804,334 42,232,686 40,937,126 43,660,538 7,050,949 7,394,990 26,300 75,884 4,793,650 1,535,800 425,164 - 7,143 5,273 - - - - 15,570 - 16,977 - - - 39,553,272 41,901,061 47,026,336 42,489,903 44,085,702 7,050,949 7,394,990 9,714,867 10,288,694 11,565,563 12,514,526 11,850,838 3,311,792 3,492,861 22,228,871 22,585,212 23,036,185 23,759,212 22,765,260 6,259,160 6,803,024 3,600 4,779 5,012 5,012 2,088 1,253 - 1,551,152 1,460,763 1,562,702 1,675,334 1,991,624 425,657 576,185 126,791 178,859 164,888 147,957 84,642 3,053 3,122 3,959,731 4,331,806 4,158,397 3,732,644 4,341,658 1,021,889 1,090,831 198,361 197,694 197,967 296,624 60,228 - - 90,573 93,105 110,935 835,048 268,885 - - 37,873,946 39,140,912 40,801,649 42,966,358 41,365,223 1,247,703 1,800,212 1,905,778 1,206,990 657,870 11,022,804 11,966,023 39,121,649 40,941,124 42,707,427 44,173,348 42,023,093 11,022,804 11,966,023 431,623 959,937 4,318,909 (1,683,445) 2,062,609 (3,971,855) (4,571,033) Ending Fund Balance 10,273,342 11,233,279 15,552,188 13,868,744 15,931,353 9,896,889 11,360,321 ON O a� c ca c ii , L L 3 CY N N O N t V L C� G J 06 d N N O N L V L C� G i d i Q R:\Finance Committee\2022\Jan-March 2022 P&L 5/4/2022 Packet Pg. 116 2.6 City Council Agenda Item Meeting Date: 05/10/2022 Finance Committee Agenda Planning Staff Lead: City Council Department: City Council Preparer: Beckie Peterson Background/History Staff Recommendation Discuss and schedule items for future Finance committee agendas. Narrative Council has oversight responsibilities on a number of topics, and would like to review/prioritize updates and discussions for future Finance Committee agenda meetings. These topics include: 1. Fund Balance Policy 2. Utility Rate Issue 3. City Public Safety Complex relocation review Packet Pg. 117 2.7 City Council Agenda Item Meeting Date: 05/10/2022 2022 State Auditor Office (SAO) Audit Exit Follow Up Staff Lead: City Council Department: City Council Preparer: Beckie Peterson Background/History On March 29, 2022 during a Special Meeting, the Office of the Washington State Auditor presented to Council the Financial Statements and Federal Single Audit Report City of Edmonds For the period January 1, 2020 through December 31, 2020. (Attachment 1) As identified by the Auditor, there were a number of findings; a summary of uncorrected misstatements (Attachment 2, page 3) and a report of identified deficiencies of the city's internal control over major programs of federal awards (Attachment 1, pages 6-11) Staff Recommendation Council requests an update about the City's planned next steps in response to the auditor's findings. Narrative A number of findings require oversight by Council, including utility billing, cash reconciliation and federal grant compliance. Attachments: 1. EDmondspublished22audit 2. City of Edmonds Exit Packet - March 29, 2022 Packet Pg. 118 2.7.a Financial Statements and Federal Single Audit Report City of Edmonds For the period January 1, 2020 through December 31, 2020 Published March 31, 2022❑ .❑ Find out what's new at SAO Report No. 1030259 by scanning this code with ❑ your smartphone's camera r a+ Q Packet Pg. 119 2.7.a Office of the Washington State Auditor Pat McCarthy March 31, 2022 Mayor and City Council City of Edmonds Edmonds, Washington Report on Financial Statements and Federal Single Audit Please find attached our report on the City of Edmonds financial statements and compliance with federal laws and regulations. We are issuing this report in order to provide information on the City's financial condition. Sincerely, Pat McCarthy, State Auditor Olympia, WA Americans with Disabilities In accordance with the Americans with Disabilities Act, we will make this document available in alternative formats. For more information, please contact our Office at (564) 999-0950, TDD Relay at (800) 833-6388, or email our webmaster at webmasterksao.wa.gov. Insurance Building, P.O. Box 40021 • Olympia, Washington 98504-0021 • (564) 999-0950 • Pat. McCarthy@sao.wa.gov Packet Pg. 120 2.7.a Schedule of Findings and Questioned Costs................................................................................... 4 Schedule of Federal Award Findings and Questioned Costs.......................................................... 6 Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with GovernmentAuditing Standards................................................................................................... 12 Independent Auditor's Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance in Accordance With the Uniform Guidance ......................... 14 Independent Auditor's Report on the Financial Statements.......................................................... 17 FinancialSection........................................................................................................................... 20 Corrective Action Plan for Findings Reported Under Uniform Guidance..................................100 About the State Auditor's Office..................................................................................................101 a 3 0 0 LL 3 Q cc N N N t N 7 Q. N C O E a W r-� C N E t c� R r Q Office of the Washington State Auditor sao.wa.gov Page 3 Packet Pg. 121 2.7.a City of Edmonds January 1, 2020 through December 31, 2020 SECTION I — SUMMARY OF AUDITOR'S RESULTS The results of our audit of the City of Edmonds are summarized below in accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Financial Statements We issued an unmodified opinion on the fair presentation of the financial statements of the governmental activities, the business -type activities, each major fund and the aggregate discretely presented component units and remaining fund information in accordance with accounting principles generally accepted in the United States of America (GAAP). Internal Control over Financial Reporting: • Significant Deficiencies: We reported no deficiencies in the design or operation of internal control over financial reporting that we consider to be significant deficiencies. • Material Weaknesses: We identified no deficiencies that we consider to be material weaknesses. We noted no instances of noncompliance that were material to the financial statements of the City. c as Federal Awards Internal Control over Major Programs: Q • Significant Deficiencies: We reported no deficiencies in the design or operation of internal control over major federal programs that we consider to be significant deficiencies. • Material Weaknesses: We identified deficiencies that we consider to be material weaknesses. We issued an adverse opinion on the City's compliance with requirements applicable to its major federal program. We reported findings that are required to be disclosed in accordance with 2 CFR 200.516(a). Office of the Washington State Auditor sao.wa.gov Page 4 Packet Pg. 122 2.7.a Identification of Major Federal Programs The following program was selected as a major program in our audit of compliance in accordance with the Uniform Guidance. CFDA No. Program or Cluster Title 21.019 COVID-19 — Coronavirus Relief Fund The dollar threshold used to distinguish between Type A and Type B programs, as prescribed by the Uniform Guidance, was $750,000. The City did not qualify as a low -risk auditee under the Uniform Guidance. SECTION II — FINANCIAL STATEMENT FINDINGS None reported. SECTION III — FEDERAL AWARD FINDINGS AND QUESTIONED COSTS See Finding 2020-001. Office of the Washington State Auditor sao.wa.gov Page 5 Packet Pg. 123 2.7.a City of Edmonds January 1, 2020 through December 31, 2020 2020-001 The City's internal controls were inadequate for ensuring compliance with federal requirements for allowable activities and costs and subrecipient monitoring CFDA Number and Title: Federal Grantor Name: Federal Award/Contract Number: Pass -through Entity Name: Pass -through Award/Contract Number: Questioned Cost Amount: Background 21.019 — COVID-19 — Coronavirus Relief Fund U.S. Department of the Treasury N/A Washington State Department of Commerce, Snohomish County, and Economic Alliance Snohomish County 20-6541 C-167 $871,500 The purpose of the Coronavirus Relief Fund (CRF) program is to provide payments to state, territorial, tribal and certain eligible local governments to cover necessary expenditures incurred because of the COVID-19 pandemic. During fiscal year 2020, the City spent $2,123,907 in program funds to cover additional costs the City incurred during the pandemic, including teleworking equipment, personal protective equipment, and payroll. Additionally, the City spent $1,345,500 of these funds to establish a program that provided direct assistance payments to local businesses financially affected by COVID-19. The program funds also included $456,344 passed through to four subrecipients to fulfil components of the program's objectives. The portion of program funds the City passed through to the subrecipients provided emergency assistance to households financially affected by COVID-19. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include Office of the Washington State Auditor sao.wa.gov Page 6 Packet Pg. 124 understanding program requirements and monitoring the effectiveness of established controls. Activities Allowed/Allowable Costs For the CRF program, the costs that recipients submit for federal reimbursement must have been necessary for responding to the COVID-19 pandemic and not previously included in budgets prior to March 27, 2020. All costs recipients charge to the CRF program must comply with program requirements and be supported by proper documentation demonstrating costs are specifically related to COVID-19 activities. Subrecipient Monitoring Whenever the City passes on federal funding to subrecipients, federal regulations require the City to clearly identify the subaward contract as a federal award and include all applicable program requirements. Further, the City must monitor its subrecipients to ensure they comply with the terms and conditions of the federal award. To determine the appropriate level of monitoring, the City must evaluate each subrecipient's risk of noncompliance with federal requirements. For this award, monitoring would include verifying the subrecipients only provided assistance to participants who met eligibility requirements and claimed reimbursement for allowable costs. Description of Condition a Activities Allowed/Allowable Costs ° E 0 The City established four eligibility criteria for local businesses to receive w assistance payments, but it did not have a process for verifying that businesses met all of these criteria. For one of the criteria, City employees relied on each business' application and self -attestation without verifying the information was accurate to ensure businesses were eligible to receive assistance payments. Q Subrecipient Monitoring The City contracted with four local nonprofit organizations to administer housing assistance programs and distribute food to food -insecure individuals and households in Edmonds. The City did not include all required elements in the subawards and did not perform risk assessments or monitor each subrecipient for compliance with program requirements, as federal regulations require. We consider these deficiencies in internal controls to be material weaknesses, which led to material noncompliance. These issues were not reported as a finding in the prior audit. Office of the Washington State Auditor sao.wa.gov Page 7 Packet Pg. 125 2.7.a Cause of Condition Many businesses and people experienced sudden financial hardship due to the COVID-19 pandemic. In an effort to help preserve its local economy, the City acted quickly by providing assistance payments to businesses and passing funds to nonprofit organizations it had worked with in the past for other programs. However, the CRF program was a new type of federal funding for the City, and it had not previously used federal funds to provide direct assistance payments to local businesses or passed funding through to subrecipients. As such, City employees lacked adequate experience and needed training to know they should have independently verified each business met all eligibility criteria before awarding assistance. Further, City employees were not aware of all federal requirements involved when passing funding through to subrecipients. Effect of Condition and Questioned Costs Activities Allowed/Allowable Costs Without obtaining documentation from business grant applicants to verify they met all eligibility criteria, the City cannot ensure business relief grant costs were allowable. During the audit, we gave the City the opportunity to obtain documentation from businesses to support their eligibility. In January 2022, the City hired a contractor to request and review supporting documentation from the 172 businesses that received CRF funds. We reviewed the information the contractor obtained and found the following: • Eight businesses did not respond to the City's request for financial w information or, after some communication, did not provide financial information. These businesses received a total of $62,000. • Twenty-nine businesses did not meet the City's eligibility criteria, based on the information they provided. These businesses received a total of $235,500. An additional 74 businesses that received a total of $574,000 in direct business grants provided tax returns, quarterly reports, profit and loss statements or other financial information that showed a loss in revenues for the respective period. However, based on the information provided, we could not confirm a year -over -year business/revenue loss of at least 30 percent in April or May 2020, which the City's eligibility criteria required. We also could not confirm the expenditures the City charged to the program were allowable for these businesses. As such, we are questioning these costs. Office of the Washington State Auditor sao.wa.gov Page 8 Packet Pg. 126 2.7.a Subrecipient Monitoring The City did not include all required information in the four subrecipient contracts, such as the subrecipient's unique entity identifier, federal award date, name of federal awarding agency, pass -through entity, contact information for awarding official of the pass -through entity, and the program's CFDA number and name. Without this information, the subrecipient is at an increased risk of not knowing the award comes from a federal program. This also increases the risk the subrecipient would not know it needs to comply with specific program requirements, which could potentially lead to spending funds for unallowable purposes. Further, without performing risk assessments and adequately monitoring subrecipients, the City cannot ensure it is performing the proper level of monitoring and that subrecipients are complying with program requirements. Because the City did not perform risk assessments and monitor the four subrecipients, we gave the City the opportunity to perform monitoring during the audit and verify if subrecipients complied with the terms and conditions of the subaward. In early 2022, the City hired a contractor to perform risk assessments and review three of the subrecipients to verify they only provided assistance to eligible participants and complied with program requirements. The City found the subrecipients did not have adequate support demonstrating participant eligibility. As a result, we are considering the costs the City passed through to subrecipients, totaling $456,344, to be unsupported payments. Recommendation We recommend the City: • Provide adequate training to staff responsible for administering federal programs • Dedicate the necessary time and resources to staying updated on program guidance and ensuring compliance with all program requirements • Verify that beneficiaries of public funds meet all of the City's eligibility criteria before awarding funds • Include all required elements in subaward agreements, assess subrecipients' risk, and monitor them accordingly to verify they are complying with the terms and conditions of the award and only providing funds to eligible participants Office of the Washington State Auditor sao.wa.gov Page 9 Packet Pg. 127 2.7.a City's Response The City of Edmonds appreciates the opportunity to respond to the Washington State Auditor's Office's (SAO) conclusions. The City is committed to establishing and following effective internal controls for administering federal grants and for compliance with federal uniform guidance for grant administration, and to monitor any transactions with subrecipients to ensure compliance with federal requirements. During 2020 the City endeavored to distribute Coronavirus Relief Funds as expeditiously as possible into the community where support was most needed due to the devastating impact on residents and businesses because of the COVID-19 pandemic. We worked very hard to distribute these funds quickly and efficiently, which we believe had a very significant, positive impact on our community. In our attempts to get the grant money into the community as quickly as possible, the City relied in part upon business's self -certification of our eligibility requirements under penalty of perjury. After distributing the CARES funds we became aware that some of the businesses to whom grants had been awarded did not meet the eligibility requirements. When we learned this we performed our own internal audit to determine the number of businesses that were not eligible. After reviewing our audit results, the SAO determined that 29 businesses who did not meet our grant requirements nevertheless submitted applications and received grants totaling $235,500. Another 8 businesses have not responded to our requests for documentation; those businesses received grants totaling $62, 000. The City is exploring various remedies that may be available and appropriate, including but not limited to civil suits and criminal prosecution, to recover this $297,500 in grant funds or otherwise hold wrongdoers accountable for their actions. The remaining questioned costs of $574, 000 are from 74 businesses who were able to supply documentation of losses that they incurred on an annual basis, but were unable to supply information specific to April or May of 2020. Because these businesses were able to show proof of COVID-related income losses, we are not intending to pursue legal action in these cases at this time. The City acted in good faith to quickly deliver aid and assistance to our residents, following the guidance and direction available at the time from the Department of Treasury and the Department of Commerce. Overall, City staff administered this highly complex and time sensitive program in a professional manner while dealing with emergency circumstances. We acknowledge that this does not relieve the City of the necessity to ensure that assistance payments are distributed only to those who meet our eligibility requirements. The City will also provide training to ensure that subrecipients are evaluated and monitored sufficiently to ensure eligibility and to reduce any risk of Office of the Washington State Auditor sao.wa.gov Page 10 Packet Pg. 128 noncompliance. We are planning to add additional staff to provide better monitoring of the distribution of future grants funds, and we will provide staff with the time, resources, and training necessary to avoid these errors from occurring again. Auditor's Remarks We appreciate the City's commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for pass -through entities, establishes subrecipient monitoring and management requirements for pass through entities. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 42 U.S. Code of Federal Regulations (CFR) Part 801, Coronavirus Relief Fund establishes allowable costs of the program. 2 CFR Part 200, Subpart E, cost principles do not apply to the Coronavirus Relief Fund. Therefore, auditors refer to guidance and FAQs from the U.S. Department of the Treasury and the pass -through agency, the Washington State Department of Commerce, as the criteria when testing the allowability of costs under the Fund. Guidance and FAQs from both the U.S. Department of the Treasury and the Washington State Department of Commerce can be found at: https://www.commerce.wa.gov/serving- communities/local-government/covid-resiliency-grants/. These documents speak to the grantors' expectation that local governments obtain documentation that supports how businesses met eligibility criteria. Office of the Washington State Auditor sao.wa.gov Page 11 Packet Pg. 129 2.7.a Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards City of Edmonds January 1, 2020 through December 31, 2020 Mayor and City Council City of Edmonds Edmonds, Washington We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business -type activities, each major fund and the aggregate discretely presented component units and remaining fund information of the City of Edmonds, as of and for the year ended December 31, 2020, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated June 30, 2021. As discussed in Note 2 to the financial statements, during the year ended December 31, 2020, the City implemented Governmental Accounting Standards Board Statement No. 84, Fiduciary Activities and Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. c As discussed in Note 17 to the 2020 financial statements, the full extent of the COVID-19 E pandemic's direct or indirect financial impact on the City is unknown. INTERNAL CONTROL OVER FINANCIAL REPORTING In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, Office of the Washington State Auditor sao.wa.gov Page 12 Packet Pg. 130 2.7.a or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. COMPLIANCE AND OTHER MATTERS As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of the City's compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. However, this report is a matter of public record and its distribution is not limited. It also serves to disseminate information to the public as a reporting tool to help citizens assess government operations. � 0 Pat McCarthy, State Auditor Olympia, WA June 30, 2021 Office of the Washington State Auditor sao.wa.gov Page 13 Packet Pg. 131 2.7.a Report on Compliance for Each Major Federal Program and Report on Internal Control over Compliance in Accordance with the Uniform Guidance City of Edmonds January 1, 2020 through December 31, 2020 Mayor and City Council City of Edmonds Edmonds, Washington REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM We have audited the compliance of the City of Edmonds, with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Compliance Supplement that could have a direct and material effect on each of the City's major federal programs for the year ended December 31, 2020. The City's major federal programs are identified in the accompanying Schedule of Findings and Questioned Costs. Management's Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of the City's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. Office of the Washington State Auditor sao.wa.gov Page 14 Packet Pg. 132 2.7.a We believe that our audit provides a reasonable basis for our adverse opinion on compliance for each major federal program. Our audit does not provide a legal determination on the City's compliance. Basis for Adverse Opinion on 21.019 - Coronavirus Relief Fund As described in Finding 2020-01 in the accompanying Schedule of Federal Award Findings and Questioned Costs, the City did not comply with requirements regarding 21.019 - Coronavirus Relief Fund for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Subrecipient Monitoring. Compliance with such requirements is necessary, in our opinion, for the City to comply with the requirements applicable to that program. Adverse Opinion on 21.019 - Coronavirus Relief Fund In our opinion, because of the significance of the matter described in the Basis for Adverse Opinion paragraph, the City did not comply, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on 21.019 — Coronavirus Relief Fund for the year ended December 31, 2020. City's Response to Findings The City's response to the noncompliance findings identified in our audit is described in the accompanying Schedule of Federal Award Findings and Questioned Costs. The City's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. REPORT ON INTERNAL CONTROL OVER COMPLIANCE Management of the City is responsible for establishing and maintaining effective internal control E over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance Q with the types of requirements that could have a direct and material effect on each major federal program in order to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of Office of the Washington State Auditor sao.wa.gov Page 15 Packet Pg. 133 compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. We identified certain deficiencies in internal control over compliance, as described in the accompanying Schedule of Federal Award Findings and Questioned Costs as Finding 2020-001 that we consider to be a material weakness. City's Response to Findings The City's response to the internal control over compliance findings identified in our audit is described in the accompanying Schedule of Federal Award Findings and Questioned Costs. The City's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. Purpose of this Report E 0 The purpose of this report on internal control over compliance is solely to describe the scope of w our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other E purpose. However, this report is a matter of public record and its distribution is not limited. It also serves to disseminate information to the public as a reporting tool to help citizens assess Q government operations. Pat McCarthy, State Auditor Olympia, WA March 29, 2022 Office of the Washington State Auditor sao.wa.gov Page 16 Packet Pg. 134 2.7.a Report on the Financial Statements City of Edmonds January 1, 2020 through December 31, 2020 Mayor and City Council City of Edmonds Edmonds, Washington REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund and the aggregate discretely presented component units and remaining fund information of the City of Edmonds, as of and for the year ended December 31, 2020, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed on page 20. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing Office of the Washington State Auditor sao.wa.gov Page 17 Packet Pg. 135 2.7.a an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund and the aggregate discretely presented component units and remaining fund information of the City of Edmonds, as of December 31, 2020, and the respective changes in financial position and, where applicable, cash flows thereof, and the budgetary comparison for the General fund, for the year then ended in accordance with accounting principles generally accepted in the United States of America. Matters of Emphasis As discussed in Note 2 to the financial statements, in 2020, the City adopted new accounting guidance, Governmental Accounting Standards Board Statement No. 84, Fiduciary Activities and Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. Our opinion is not modified with respect to this matter. As discussed in Note 17 to the 2020 financial statements, the full extent of the COVID-19 E pandemic's direct or indirect financial impact on the City is unknown. Our opinion is not modified w with respect to this matter. c as E Other Matters Required Supplementary Information Q Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and required supplementary information listed on page 20 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and Office of the Washington State Auditor sao.wa.gov Page 18 Packet Pg. 136 2.7.a other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements as a whole. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).This schedule is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated June 30, 2021 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Pat McCarthy, State Auditor Olympia, WA June 30, 2021 Office of the Washington State Auditor sao.wa.gov Page 19 Packet Pg. 137 2.7.a ■ City of Edmonds January 1, 2020 through December 31, 2020 REQUIRED SUPPLEMENTARY INFORMATION Management's Discussion and Analysis — 2020 BASIC FINANCIAL STATEMENTS Statement of Net Position — 2020 Statement of Activities — 2020 Balance Sheet — Governmental Funds — 2020 Reconciliation of the Balance Sheet to the Statement of Net Position — Governmental Funds — 2020 Statement of Revenues, Expenditures and Changes in Fund Balances — Governmental Funds — 2020 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Government Funds to the Statement of Activities — 2020 Statement of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual — General Fund — 2020 Statement of Net Position — Proprietary Funds — 2020 Statement of Revenues, Expenses and Changes in Net Position — Proprietary Funds — 2020 Statement of Cash Flows — Proprietary Funds — 2020 Statement of Fiduciary Net Position — 2020 Statement of Changes in Fiduciary Net Position — 2020 Notes to the Financial Statements — 2020 REQUIRED SUPPLEMENTARY INFORMATION Firemen's Pension Fund Other Post -Employment Benefits — Schedule of Changes in Total OPEB Liability and Related Ratios — 2020 Firemen's Pension Fund — Schedule of Changes in the City's Net Pension Liability and Related Ratios — 2020 Firemen's Pension Fund — Schedule of City Contributions — 2020 Schedules of Proportionate Share of the Net Pension Liability — PERS 1, PERS 2/3, LEOFF 1, LEOFF 2 — 2020 Schedule of Employer Contributions — PERS 1, PERS 2/3, LEOFF 1, LEOFF 2 — 2020 Office of the Washington State Auditor sao.wa.gov Page 20 Packet Pg. 138 2.7.a SUPPLEMENTARY AND OTHER INFORMATION Schedule of Expenditures of Federal Awards — 2020 Notes to the Schedule of Expenditures of Federal Awards — 2020 a 3 0 0 U. Q N N N t N 7 Q. N C O E W r-� C N E t 0 R r Q Office of the Washington State Auditor sao.wa.gov Page 21 Packet Pg. 139 2.7.a MANAGEMENT'S DISCUSSION AND ANALYSIS The Management's Discussion and Analysis section of this provides an overview of the City's financial activities for the year ended December 31, 2020. The purpose is to highlight significant financial issues, major financial activities and resulting changes in the financial position and economic factors affecting the City. The reader is encouraged to consider the information presented here in conjunction with the information furnished in the Letter of Transmittal, the City's financial statements and the accompanying notes following the financial information. Financial Highlights • The regional, national and global economies were impacted significantly in 2020 by the pandemic brought on by the COVID-19 virus. While some industries were devastated — travel/tourism and in - person entertainment such as concerts and sporting events, for example — the City's revenue performance remained surprisingly strong in 2020. In the General Fund Taxes, Licenses and Permits, and Charges for Services decreased by only $1,139,116 compared to 2019, a 3.0% decrease, and assessed property values in the City increased by 7.7 percent over 2019. The assets and deferred outflows of resources of the City of Edmonds exceeded its liabilities and deferred inflows at fiscal year-end by $198.3 million (net position), an increase of $12.2 million over a 2019. Of this amount, $144.6 million is a net investment in capital assets. The unrestricted net position 3 totals $34.2 million and may be used to meet the city's ongoing obligations to citizens and creditors. In o addition, the restricted net position totals $19.5 million and is earmarked for debt service, capital projects o and special revenue funds. r • The City's total net position improved by $12.2 million in 2020. Governmental activities increased =a a by $2.7 million and business -type activities increased by $9.5 million, mostly the result of a bond issuance in late 2020. • Governmental funds reported a combined ending fund balance of $34.5 million; a $1.6 million cN.i reduction from the prior year. Of this amount, $14.4 million is unassigned and available to fund ongoing activities. The committed fund balance category totals $3.1 million and the assigned fund balance category totals $2 million. The 2020 unassigned fund balance equals 25.9% of 2020 general fund expenditures. a U) Overview of the Financial Statements c This discussion and analysis is intended to serve as an introduction to the City of Edmonds basic financial E statements. The basic financial statements are comprised of three components: 1) government -wide financial o w statements, 2) fund financial statements, and 3) notes to the financial statements. Other supplementary r information contained in the report is intended to furnish additional detail to support the basic financial statements. a� E Using this Annual Financial Report This annual report consists of a series of financial statements and notes to those statements. These a statements are organized so the reader can understand the City of Edmonds as a financial whole or as an entire operating entity. The statements then proceed to provide an increasingly detailed look at specific financial conditions. Government -wide Financial Statements The government -wide financial statements are designed to provide readers with a broad overview of the city's financial position in a manner like that of the private -sector business. These statements are reported on the full accrual basis of accounting. Under the full accrual basis, certain revenues and expenses are reported that will not affect the cash flows until future periods. The focus of the Statement of Net Position is designed to be similar to bottom -line results for the City and its governmental and business -type activities. This statement presents all of the City's assets, deferred outflows of resources, liabilities, and deferred inflows of resources, with the residual reported as net position. Over time, increases or decreases in net position may be one indicator of improvement or deterioration in the City's overall financial health. The Statement of Activities presents both the gross and net cost of various functions, including both Page 22 Packet Pg. 140 2.7.a governmental and business -type activities, which are supported by the City's general tax and other revenues. This is intended to summarize and simplify the reader's analysis of the cost of various governmental services and/or subsidy to various business -type activities. The revenue generated by the specific functions (charges for services, grants, and contributions) is compared to the expenses for those functions to show how much each function either supports itself or relies on taxes and other general funding sources for support. All activity on this statement is reported on the accrual basis of accounting, requiring that revenues are reported when they are earned and expenses are reported when they are incurred, regardless of when cash is received or disbursed. Governmental activities of the City include general government (executive, finance, legal, human resources, and court), public safety, utilities and environment, transportation, economic environment, mental and physical health, and culture and recreation. The City's business -type activities include water, sewer, and storm utilities. Governmental activities are primarily supported by taxes, charges for services, and grants while business -type activities are self-supporting through user fees and charges. The City also includes as a discretely presented component unit the Edmonds Public Facilities District (PFD), a performing arts center in Edmonds, and the PFD's blended component unit, the Edmonds Center for the Arts, a non-profit established to collect donations and manage the operations for the PFD. Although legally a separate, the PFD is important because the City provides financial support and oversight responsibilities 3 connected to the activities of the board. o Fund Financial Statements 0 ILL The annual financial report includes fund financial statements in addition to the government -wide statements. While the government -wide statements present the City's finances based on the type of activity, Q general government versus business -type, the fund financial statements are presented by fund type, such +. as the general fund, special revenue funds, and proprietary funds. A fund is a fiscal and accounting entity with a self -balancing set of accounts used to account for specific activities or meet certain objectives. Funds N are often set up in accordance with special regulations, restrictions or limitations. The City of Edmonds, like other state and local governments, uses fund accounting to ensure and show compliance with finance - related legal requirements. The City presents three categories of funds: governmental funds, proprietary N funds, and fiduciary funds. Governmental funds account for essentially the same functions reported as governmental activities in the a -a government -wide financial statements. Most of the City's basic services are reported in the governmental c funds. These statements, however, focus on cash and other assets that can readily be converted to E available resources, as well as any balances remaining at year-end. Such information is useful in determining w which financial resources are available in the near future to finance City programs. r Readers may better understand the long-term impact of the government's near -term financing decisions by c comparing the information presented for the governmental funds with similar information presented for governmental activities in the government -wide financial statements. The Governmental Funds' Balance Sheet and the Governmental Funds' Statement of Revenues, Expenditures, and Changes in Fund Balances a provide a reconciliation to facilitate the comparison. Information for the major governmental funds is presented separately in the Governmental Fund Balance Sheet and in the Governmental Fund's Statement of Revenues, Expenditures, and Changes in Fund Balances; information for the non -major funds is presented in the aggregate. The City's main operating fund is the General Fund. However, the City maintains many accounts and seven sub -funds within the General Fund. The remaining governmental funds are combined into a single column labeled non -major governmental funds. Individual fund data for each of the non -major governmental funds can be found in combining statements later in the report. The City maintains control over its operating funds through the adoption of an annual budget. Budgets are adopted at the fund level and accordance with state law. A budgetary comparison is presented for the General Fund as part of the basic financial statements. The basic governmental fund financial statements can be found after the government -wide statements of this report. Proprietary funds account for services for which the City charges outside customers and other City Page 23 Packet Pg. 141 2.7.a departments. Proprietary funds provide the same information as shown in the government -wide financial statements, since both use the accrual basis of accounting. Proprietary funds report the same functions presented as business -type activities in the government -wide financial statements. The City has two types of proprietary funds: enterprise funds and internal service funds. Enterprise funds are used to account for goods and services provided to citizens. Internal service funds are used to account for goods and services provided to City departments. The enterprise fund statements provide information for the City's water, sewer, and storm water utilities. The City uses internal service funds to account for its fleet of vehicles and its technology equipment. Because these internal services largely benefit governmental rather than business -type functions, they have been included within the governmental activities in the government -wide financial statements. The basic proprietary fund financial statements can be found following the governmental fund statements of this report. Fiduciary funds account for assets held by the City in a trustee capacity or as an agent for individuals or other entities. Fiduciary funds are not included in the government -wide financial statements because their assets are not available to support City programs. The City's fiduciary activities are reported in a separate Statement of Fiduciary Net Position and a Statement of Changes in Fiduciary Net Position as part of the basic financial statements. The basic fiduciary fund financial statements can be found following the proprietary fund statements of this report. Notes to the Financial Statements The notes to the financial statements are an integral part of the financial statements. They provide additional disclosures essential to a full understanding of the information provided in the government -wide and fund financial statements. The notes to the financial statements immediately follow the basic financial statements in this report. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning pensions and other post -employment benefits. Additional information can be found in Note 10 — Pension Plans and Note 11 — Other Post -Employment Benefits. Government -wide Financial Analysis This section provides analysis of the government -wide financial statements including long-term and short- term information about the City's financial condition. The following two tables address the financial results of the City as a whole. The first table is a condensed version of the 2020 government -wide statement of net position with a comparison to 2019: Condensed Statement of Net Position Governmental Activities Business -type Activities Total 2020 2019 2020 2019 2020 2019 Current and other assets $ 54,428,570 $ 56,272,471 $40,144,165 $31,928,197 $ 94,572,735 $ 88,200,668 Capital assets, net 78,793,002 75,296,662 113,972,003 98,151,383 192,765,005 173,448,045 Total assets 133,221,572 131,569,133 154,116,168 130,079,580 287,337,740 261,648,713 Deferred outflows of resources 2,689,090 2,186,285 436,657 434,888 3,125,747 2,621,173 Deferred outflows of resources 2,689,090 2,186,285 436,657 434,888 3,125,747 2,621,173 Total assets and deferred outflows of resources 135,910,662 133,755,418 154,552,825 130,514,468 290,463,487 264,269,886 Current liabilities 6,320,709 4,603,696 6,960,202 4,109,558 13,280,911 8,713,254 Noncurrent liabilities 21,227,359 21,361,446 54,672,191 42,663,261 75,899,550 64,024,707 Total liabilities 27,548,068 25,965,142 61,632,393 46,772,819 89,180,461 72,737,961 Deferred inflows of resources 2,537,375 4,715,190 387,703 668,932 2,925,078 5,384,122 Deferred inflows of resources 2,537,375 4,715,190 387,703 668,932 2,925,078 5,384,122 Total liabilities and deferred inflows of 30,085,443 30,680,332 62,020,096 47,441,751 92,105,539 78,122,083 NET POSITION Net investment in capital assets 76,233,673 72,350,862 68,391,695 54,539,364 144,625,368 126,890,226 Restricted 16,255,342 20,538,591 3,296,724 2,983,688 19,552,066 23,522,279 Unrestricted 13,336,204 10,185,633 20,844,310 25,549,665 34,180,514 35,735,298 Total net position $105,825,219 $103,075,086 $92,532,729 $83,072,717 $198,357,948 $186,147,803 a 3 0 0 ILL r =a 0 Q �a 0 N N a� to 0 a to c 0 E 0 w r c a� 1= t V a+ Q Page 24 Packet Pg. 142 2.7.a Analysis of Net Position Total net position (assets and deferred outflows, minus liabilities and deferred inflows) of the primary government was $198.3 million at December 31, 2020 an improvement of $12.2 million or 6.5% compared to December 31, 2019. Governmental activities increased their net position by $2.7 million and business -type activities increased their net position by $9.5 million. The largest component of the City's net position, $144.6 million, or 72.9%, is its investment in capital assets. These capital assets, such as streets, parks, trails, and vehicles and equipment related to police and public works, are used to provide services to the citizens. As a result, these assets are not for sale, and are therefore not available to fund current and future City obligations. Approximately $19.5 million of the primary government's total net position is restricted for debt service payments, transportation improvements, and other purposes, a decrease of $4.0 million compared to 2019. The primary government's December 31, 2020 unrestricted net position totals $34.2 million, a decrease of $1.5 million compared to 2019. The December 31, 2020 governmental activities unrestricted net position of $13.4 million may be used to meet ongoing obligations to citizens and creditors. There are no restrictions, commitments, or other limitations that significantly affect the availability of these resources for future use. Restricted governmental fund net position is $16.2 million and is restricted for purposes such as debt service, public safety, transportation, culture and recreation, and other purposes. Unrestricted net position of the City's business -type activities totals $20.8 million, representing the portion of unrestricted net position that may only be spent on activities related to one of the City's utilities (water, sewer, and storm water). Examples of utility activities include maintenance of water/sewer mains, pump and lift stations, storm drain flushing, water meter reading, and the wastewater treatment plant. Changes in Net Position The change in net position represents the increase or decrease in City net position resulting from its various activities. The following table is a condensed version of the City's changes in net position and compares 2020 results with 2019. This table shows program revenues, their respective expenses and the overall changes in net position for both governmental -type and business -type activities: a 3 0 0 U_ r =a Q �a N N N M U) a U) c 0 E 0 w r C N E t V a+ a+ Q Page 25 Packet Pg. 143 2.7.a Changes in Net Position Governmental Activities Business -type Activities Total 2020 2019 2020 2019 2020 2019 REVENUES Program revenues: Charges for services $ 12,634,784 $ 13,372,648 $27,280,123 $25,983,491 $ 39,914,907 $ 39,356,139 Operating grants and contributions 2,619,351 633,296 25,297 34,198 2,644,648 667,494 Capital grants and contributions 2,158,357 1,796,082 5,511,256 1,457,600 7,669,613 3,253,682 General revenues: Property taxes 14,599,185 14,386,149 - - 14,599,185 14,386,149 Sales taxes 9,397,119 9,477,813 9,397,119 9,477,813 Interfund utility taxes 2,359,529 2,450,254 2,359,529 2,450,254 Utility taxes 4,133,662 4,242,835 4,133,662 4,242,835 Excise taxes 6,248,492 5,690,723 6,248,492 5,690,723 Interest and investment earnings 691,210 1,468,251 165,842 363,547 857,052 1,831,798 Miscellaneous 552,738 274,840 3,544 - 556,282 274,840 Gains on disposition of assets 273,183 23,386 - - 273,183 23,386 Total revenues 55,667,610 53,816,277 32,986,062 27,838,836 88,653,672 81,655,113 EXPENSES Governmental activities: General government 16,103,089 13,458,742 16,103,089 13,458,742 Public safety 25,261,314 26,060,416 25,261,314 26,060,416 Utilities and environment 229,528 201,958 229,528 201,958 Transportation 4,885,398 7,185,216 4,885,398 7,185,216 Economic environment 1,461,200 1,640,845 1,461,200 1,640,845 Mental and physical health 147,957 166,750 147,957 166,750 Culture and recreation 4,682,914 5,405,494 4,682,914 5,405,494 Interest on long-term debt 146,808 48,910 146,808 48,910 Business -Type activities: Sewer Fund - - 10,930,526 12,068,583 10,930,526 12,068,583 Storm Fund 5,021,779 4,374,384 5,021,779 4,374,384 Water Fund 7,573,014 8,164,665 7,573,014 8,164,665 Total expenses 52,918,208 54,168,331 23,525,319 24,607,632 76,443,527 78,775,963 Excess (deficiency) before transfers 2,749,402 (352,054) 9,460,743 3,231,204 12,210,145 2,879,150 Transfers 731 11,984 (731) (11,984) - - Increase (decrease)in net position 2,750,133 (340,070) 9,460,012 3,219,220 12,210,145 2,879,150 Net position - beginning 103,075,086 103,415,154 83,072,717 79,853,497 186,147,803 183,268,651 Net position - ending $105,825,219 $103,075,084 $92,532,729 $83,072,717 $198,357,948 $186,147,801 Analysis of the Changes in Net Position Net position of the primary government increased by $12.2 million, mostly due to the sale of $13.9 million of Climate Bonds in the Sewer Fund. Total government -wide revenues of the primary government increased by $7.0 million or 8.5% and total expenses decreased by $2.3 million or 3.0% over the prior year. These changes are discussed in more detail below. Governmental Activities: The table above shows the net position for Governmental activities increased by $2.7 million. This increase is the result of an increase in total revenues combined with a reduction of total expenses in 2020. Governmental activity expenditures decreased by $1.3 million or 2.3% and Governmental activity revenues increased by $1.8 million, or 3.4% from 2019 levels. The expenditure decrease is due to severe pandemic -related cutbacks, primarily in public safety, transportation, and cultural services expenditures in the City. The decreased spending was matched with an increase to general revenues. The increase in revenues is from over $2 million in Federal CARES funds appropriations and other related funds received from Snohomish County, which the City used to provide assistance to local individuals, businesses, and other organizations. Below are additional significant changes to revenues for 2020: r Q Page 26 Packet Pg. 144 2.7.a • As a result of record low interest rates, Interest and Investment Earnings decreased by $777,756, or 47.02%. • Property tax revenue increased $248,154, or 1.7%. • Sales tax collections decreased by $72,347, or 0.8%. • Excise taxes increased by $561,016 or 9.9%. The next chart summarizes the government activity revenue by source, while the second one reflects the specific programs' revenues and related expenses for the various activities of the City. Gaps between specific programs' revenues and their related expenditures are funded through general tax revenues. Revenues by Source - Governmental Activities Capital grants and Interest and contributions Investment Operating grants 3.88% earnings and contributions I 1.24% 4.70% Charges for Service 22.70% Excise taxes 11.22% Gains on disposition of assets Utility taxes, - 0.49% 7.43% ' Interfund utility-/ taxes 4.24% FProperty taxes 26.23% Sales taxes i 16.88% Miscellaneous 0.99% a 0 L° r =a Q �a N N a� t T) a W c 0 E w r c a� E ca Q Page 27 Packet Pg. 145 2.7.a Expenses and Program Revenues - Governmental Activities $1,828,406 I I I I Culture and recreation $4,682,914 I Mental and physical $157,393 I health $147,957 I $3,217,476 I Economic environment I $1,461,200 $1,818,388 Transportation 1II $4,885,398 IIII IIIIII $125 I IIII Utilities and environment $229 528 I I I I I I I I I I I I $3,749,544 I Public safety 1 I General government $6,641,160 I $16,103,089 1 $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 ■ Program Revenues Expenses Business -type Activities: $25,261,314 I I I I I I $25,000,000 $30,000,000 Business -type activities net position increased by $9.5 million, or 11.4%. A key component of this increase includes a sale of $13.9 million of Climate Bonds. The majority of net position in the City's enterprise funds relate to capital asset infrastructure, such as water and sewer mains, storm water infrastructure, and the wastewater treatment plant. As such, most of the net position is not available to support the ongoing expenses of the funds. The following chart depicts major sources of revenue for business -type activities: Expenses and Program Revenues - Business -Type Activities I I I I I I I I I I I I I I I I I I $10,223,8471 I I I Water I I I $1,573,014 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I $6,005,318 I I I I I Storm I I I I I $5,021,779 I I I I I I I I I I I i i I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I $16,587,51'11 Sewer 1 $10,93,526 I I I I I I I I I I I I I I I $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 ■ Program Revenues Expenses Q 3 O O LL r 7 Q �a N N N t a U) a O E 0 w r C N E t V Q Page 28 Packet Pg. 146 2.7.a Financial Analysis of the City's Funds As noted earlier, the City of Edmonds uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. Governmental funds The purpose of the City's governmental funds is to report on near -term revenues/financial resources and expenditures. This information helps determine the City's financial requirements in the near future. Specifically, fund balance is a good indicator of the City's financial resources. As of December 31, 2020, the City's governmental funds had combined fund balances of $34.5 million, a decrease of $1.6 million or 4.5% from 2019. Approximately 41.8% or $14.4 million of this amount constitutes unassigned General Fund balance, which is available for spending at the City Council's discretion, and $2 million is assigned for future development of Civic Park. The 2020 unassigned fund balance equals 33.3% of 2020 General Fund expenditures, indicating that the City is in a strong financial position. The remainder of the fund balance is restricted to indicate that it is not available for new spending because it has already been committed for debt service payments, public safety, transportation, recreation and other purposes. The General Fund, Fund 001, is the primary operating fund of the City. Primarily due to the effects of the COVID-19 pandemic, the 2020 fund balance experienced a decrease of $1.6 million or 8.5% from 2019. The following chart shows the relative fund balances for governmental funds: Governmental Funds - Fund Balance Special revenue funds 38.52% General fund 61.48% MWIPPIF Special revenue funds ■ General fund Proprietary funds The City of Edmonds' proprietary funds provide the same type of information found in the government -wide statements, but in more detail. Unrestricted net position of the combined utility funds at the end of the year amounted to $20.8 million, a $4.7 million decrease over 2019. The change in total net position for the three funds was a $9.5 million increase. General Fund Budgetary Highlights The City of Edmonds produces an annual budget document to fulfill the Community's vision for where City resources should be directed. The budget reflects the City Council's goals of maintaining long-term financial health and stability in the City's General Fund and reserves, while continuing the delivery of high -quality services to citizens. The original 2020 General Fund expenditure budget of $ 48.7 million was amended to include additional appropriations of $1.1 million, the majority of which was for building maintenance projects. A comparison of the actual performance of the General Fund on a budgetary basis to the final budget indicates that total budgeted revenues (excluding transfers) exceeded actual revenues by $1.6 million. This was primarily due to Q Page 29 Packet Pg. 147 2.7.a decreases in sales tax, development services, and cultural services revenues, largely as a result of the pandemic. Total actual expenditures were $3.4 million or 7.2% under budget, excluding transfers, in the General Fund. The under expenditures are mainly from reduced salaries and benefits due to a hiring freeze, a reduction in professional services and consultants, and reduced spending on large maintenance projects, mostly a result of the pandemic. Capital Asset and Debt Administration Capital Assets The City of Edmonds' investment in capital assets for governmental and business -type activities as of December 31, 2020 amounts to $144.6 million (net of accumulated depreciation), an increase of $17.7 million from 2019. This investment in capital assets includes land and construction in progress, which are not subject to depreciation. Other capital assets, including buildings, improvements other than buildings, infrastructure, machinery and equipment, and intangible assets, are subject to depreciation. Governmental type capital assets (net of depreciation) totaled $78.8 million in 2020, an increase of $3.5 million from 2020. Business -type capital assets (net of depreciation) totaled $114.0 million, an increase of $15.8 million from 2019. In addition to the effects depreciation, these changes are the result of capitalizing construction in progress, and acquisition of machinery and equipment. More information on the City's Capital Assets can be found in Note 9 - Capital Assets and Depreciation. A summary of the City's capital assets, net of accumulated depreciation, follows Governmental Activities As of 12/31/20 As of 12/31/19 Business -Type Activities As of 12/31/20 As of 12/31/19 Total As of 12/31/20 As of 12/31/19 (in thousands) Land $ 17,688 $ 17,688 $ 1,257 $ 1,257 $ 18,945 $ 18,945 Building 7,283 7,296 15,460 16,140 22,743 23,436 Improvements other than buildings 14,232 15,020 78,439 72,432 92,672 87,452 Infrastructure 26,640 27,786 26,640 27,786 Machinery and Equipment 5,113 5,131 492 537 5,604 5,668 Intangible Assets 0 0 29 31 29 31 Construction in Progress 7,836 2,376 18,295 7,755 26,132 10,131 Total $ 78,793 $ 75,297 $ 113,972 $ 98,152 $ 192,765 $ 173,449 Long-term Debt At the end of the current fiscal year, the City had total bonded debt outstanding of $61,492,987. Of this amount, $7,759,103 is general obligation bonds for governmental activities, $1,478,884 is general obligation bonds for business -type activities and $52,255,000 is revenue bonds for business -type activities for the City - operated utilities. The City currently maintains a rating of AA with Standard & Poor's and Aa3 with Moody's. The following schedule summarizes the City's long-term debt. For additional detailed information on long- term debt activity please see Notes 12 and 13. Governmental Activities Business -Type Activities Total As of 12/31/20 As of 12/31/19 As of 12/31/20 As of 12/31/19 As of 12/31/20 As of 12/31/19 General Obligation Debt $ 7,759,103 $ 8,595,125 $ 1,478,884 $ 1,738,359 $ 9,237,987 $ 10,333,484 Revenue Bonds - - 52,255,000 39,770,000 52,255,000 39,770,000 Notes from Direct Borrowing 318,283 390,484 1,576,283 1,556,398 1,894,566 1,946,882 Total $ 8,077,386 $ 8,985,609 $ 55,310,167 $ 43,064,757 $ 63,387,553 $ 52,050,366 r Q Page 30 Packet Pg. 148 2.7.a Economic Factors and Next Year's Budgets Principal factors influencing the City's 2021 budget include continued improvement in sales tax and excise tax revenues stemming from the improving retail sales, sales of real estate, and construction activity in the City, and slow growth in the overall economy. The 2021 budget was adopted in December 2020 by the City Council. Our budget reflects the City Council's goals, maintains long-term financial health and stability of our General Fund and reserves, and despite the uncertainty around the economic effects of the pandemic, continues the delivery of high -quality services for our community. The 2021 budget includes these priorities: • $500,000 to begin implementation of a new Human Services Program • $50,000 to enhance our arts & culture through the Edmonds Center for the Arts • $50,000 for Equity Diversity training for all staff and board and commission members • $2.2 million for pedestrian safety improvements • $500,000 to start a new Open Space fund that will grow every year • $6.03 million for construction of Civic Park • $22.2 million for the Wastewater Carbon Recover Project • $900,000 for Daylighting of Willow Creek • $100,000 for a new Greenhouse • $875,000 for Highway 99 Revitalization • $2.6 million for the City's pavement overlay program Requests for Information The City's financial statements are designed to provide users with a general overview of the City's finances as well as to demonstrate the City's accountability to its citizens, investors, creditors, and other customers. If you have a question about this report, please contact the Finance Director, 121 Fifth Avenue North, Edmonds, Washington, WA 98020. a+ Q Page 31 Packet Pg. 149 2.7.a City of Edmonds Statement of Net Position December 31, 2020 Primary Government component Unit Governmental Business -type Edmonds Public Facilites Activities Activities Total District ASSETS Current assets: Cash & equity in pooled investments $ 19,046,314 $ 12,133,991 $ 31,180,305 $ 101,256 Investments 10,894,660 8,321,570 19,216,230 - Taxes receivable 383,437 - 383,437 - Customer accounts 634,325 3,946,665 4,580,990 40,157 Court receivable 384,265 - 384,265 - Other receivable - - - 127,702 Interest on investments 324,317 151,255 475,572 - Due from other governments 4,195,707 3,245,586 7,441,293 165,039 Due from component unit 400,000 - 400,000 - Inventory of materials & supplies 53,158 148,899 202,057 5,270 Prepayments 59,523 Total current assets 36,316,183 27,947,966 64,264,149 498,947 Noncurrent assets: Restricted cash and cash equivalents 8,288,515 12,196,199 20,484,714 138,071 Due from component unit - long-term 3,400,552 - 3,400,552 - Restricted net pension asset 4,656,343 4,656,343 Investment in joint venture 1,766,977 - 1,766,977 - Depreciable capital assets (net) 53,268,149 94,419,813 147,687,962 6,845,623 Non Depreciable capital assets 25,524,853 19,552,190 45,077,043 3,607,031 Total noncurrent assets 96,905,389 126,168,202 223,073,591 10,590,725 Total assets 133,221,572 154,116,168 287,337,740 11,089,672 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources - Debt refunding 7,410 63,655 71,065 - Deferred outflows of resources - Pension 2,681,680 373,002 3,054,682 - Deferred outflows of resources - PFD - - - 143,489 Total deferred outflows of resources 2,689,090 436,657 3,125,747 143,489 Total assets and deferred outflows of resources 135,910,662 154,552,825 290,463,487 11,233,161 LIABILITIES Current liabilities: Accounts payable 2,334,643 3,117,700 5,452,343 162,261 Accrued wages 1,254,719 223,511 1,478,230 39,889 Internal balances (231,144) 231,144 - - Due to other governmental units - 307,896 307,896 - Othercurrentliabilities 206,158 582,697 788,855 - Accrued bond interest payable 17,206 155,892 173,098 4,635 Deposits payable - 6,148 6,148 28,255 Due within one year 2,739,127 2,335,214 5,074,341 703,509 Unearned Revenue - - - 468,131 Total current liabilities 6,320,709 6,960,202 13,280,911 1,406,690 Noncurrent liabilities: Pension liabilities 4,558,174 936,895 5,495,069 390,704 Total other post employment liability 8,365,221 - 8,365,221 - Due in more than one year 8,303,964 53,735,296 62,039,260 5,714,363 Total noncurrent liabilities 21,227,359 54,672,191 75,899,550 6,105,067 Total liabilities 27,548,068 61,632,393 89,180,461 7,511,747 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources - Debt refunding 103,485 18,244 121,729 - Deferred inflows of resources - Pension 2,433,890 369,459 2,803,349 - Deferred inflows of resources - PFD 108,664 Total deferred inflows of resources 2,537,375 387,703 2,925,078 108,664 Total liabilites and deferred inflows of resources 30,085,443 62,020,096 92,105,539 7,620,411 NET POSITION Net investment in capital assets 76,233,673 68,391,695 144,625,368 4,101,920 Restricted for: Customer Deposits - 6,148 6,148 - Debt Service - 3,290,576 3,290,576 985,585 Public Safety 74,303 - 74,303 - Transportation 3,220,074 - 3,220,074 - Economic Environment 86,073 - 86,073 - Social Services 78,441 - 78,441 - Culture and Recreation 8,129,745 - 8,129,745 - Other 10,363 - 10,363 - Pensions 4,656,343 - 4,656,343 - Unrestricted 13,336,204 20,844,310 34,180,514 (1,474,755) Total net position $ 105,825,219 $ 92,532,729 $ 198,357,948 $ 3,612,750 The notes to financial statements are an integral part of this statement V_ r Q Page 32 Packet Pg. 150 2.7.a City of Edmonds Statement of Activities For the Year Ended December 31, 2020 Page 1 of 2 Program Revenues Operating Grants and Capital Grants and Functions/Programs Expenses Charges for Services Contributions Contributions Primary government: Governmental activities: General government $ 16,103,089 $ 6,559,215 $ 81,945 $ Public safety 25,261,314 3,120,543 249,731 379,270 Utilities and environment 229,528 - 125 - Transportation 4,885,398 925,912 137,663 754,813 Economic environment 1,461,200 1,189,731 2,027,745 - Mental and physical health 147,957 157,393 - - Culture and recreation 4,682,914 681,990 122,142 1,024,274 Interest on long-term debt 146,808 - - - Total governmental activities 52,918,208 12,634,784 2,619,351 2,158,357 Business -type activities: Sewer Utility Storm Utility Water Utility Total business -type activities Total primary government Component Unit Edmonds Public Facilities District Total component unit 10,930,526 11,855,940 17,884 4,713,687 5,021,779 5,453,276 1,958 550,084 7,573,014 9,970,907 5,455 247,485 23,525,319 27,280,123 25,297 5,511,256 $ 76,443,527 $ 39,914,907 $ 2,644,648 $ 7,669,613 2,501,386 1,689,533 898,873 130,806 $ 2,501,386 $ 1,689,533 $ 898,873 $ 130,806 General revenues Property taxes Sales taxes Interfund utility taxes Utility tax Excise Taxes Interest and investment earnings Miscellaneous Gains on disposition of assets Transfers Total General revenues and Transfers Change in net position Net position - beginning Net position - ending The notes to financial statements are an integral part of this statement. V_ Q Page 33 Packet Pg. 151 2.7.a Page 2 of 2 Net (Expense) Revenue and Changes in Net Position Primary Government Component Unit Governmental Business -type Edmonds Public Activities Activities Total Facilities District $ (9,461,929) (21,511,770) (229,403) (3,067,010) 1,756,276 9,436 (2,854,508) (146,808) (35,505,716) $ (9,461,929) (21,511,770) (229,403) (3,067,010) 1,756,276 9,436 (2,854,508) (146,808) (35,505,716) 5,656,985 5,656,985 983,539 983,539 2,650,833 2,650,833 9,291,357 9,291,357 (35,505,716) 9,291,357 (26,214,359) 14,599,185 14,599,185 9,397,119 9,397,119 2,359,529 2,359,529 4,133,662 4,133,662 6,248,492 - 6,248,492 691,210 165,842 857,052 552,738 3,544 556,282 273,183 - 273,183 731 (731) - 38,255,849 168,655 38,424,504 2,750,133 9,460,012 12,210,145 103,075,086 83,072,717 186,147,803 $ 105,825,219 $ 92,532,729 $ 198,357,948 217,826 217,826 600 11 611 218,437 3,394,313 $ 3,612,750 r Q Page 34 Packet Pg. 152 2.7.a ASSETS Cash and cash equivalents Investments Property taxes receivable Customer accounts Interest on investments Court Receivable Interfund receivable Due from other governments Due from component unit Restricted cash and investments Total assets LIABILITIES Accounts payable Wages and benefits payable Interfund payables Other current liabilities Unearned revenues Total liabilities DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources - property taxes Deferred inflows of resources - court receivable Total deferred inflow of resources Total liabilities and deferred inflows of resources FUND BALANCES (DEFICITS) Restricted Committed Assigned Unassigned Total fund balances (deficits) Total liabilities and fund balances (deficits) City of Edmonds Balance Sheet Governmental Funds December 31, 2020 Total Governmental General Fund Total Nonmajor Funds Funds $ 6,849,705 $ 8,833,297 $ 15,683,002 4,250,041 4,473,178 8,723,219 383,437 - 383,437 633,328 - 633,328 203,438 81,422 284,860 384,265 - 384,265 448,144 - 448,144 2,517,462 1,675,187 4,192,649 3,800,552 - 3,800,552 4,803,516 3,484,999 8,288,515 $ 24,273,888 $ 18,548,083 $ 42,821,971 $ 1,197,681 $ 1,062,071 $ 2,259,752 1,156,165 58,617 1,214,782 - 217,000 217,000 139,475 66,682 206,157 3,816,828 - 3,816,828 6,310,149 1,404,370 7,714,519 197,668 - 197,668 333,948 333,948 531,616 - 531,616 6,841,765 1,404,370 8,246,135 1,016,642 2,000,000 14,415,481 17,432,123 15, 084, 001 15, 084, 001 2,059,712 3,076,354 - 2,000,000 14,415,481 17,143,713 34,575,836 $ 24,273,888 $ 18,548,083 $ 42,821,971 The notes to financial statements are an integral part of this statement. Q Page 35 Packet Pg. 153 2.7.a CITY OF EDMONDS, WASHINGTON RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET POSITION GOVERNMENTAL FUNDS DECEMBER 31, 2020 Total governmental fund balances as reported on this statement $ 34,575,836 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and therefore not reported i n the funds. These assets consist of: Land $ 17,688,372 Construction in progress 7,836,481 Subtotal: Non -depreciable capital assets 25,524,853 Investment injointventure 1,766,977 Buildings 24,917,754 Improvements other than buildings 24,441,805 Infrastructure 65,186,618 Machinery and equipment -general government 10,562,344 Less: Accumulated depreciation (71,840,372) Subtotal: Depreciable capital assets 53,268,149 80,559,979 Other long-term assets are not available to pay for current -period expenditures and therefore a re deferred i n the funds. Net Pension Asset 4,656,343 Deferred outflow of resources - bond refunding 7,410 Deferred outflow of resources - pension ($66,465 attributable to internal service funds) 2,681,680 Deferred inflow of resources - property tax 197,668 Deferred inflow of resources - court receivable 333.948 7,877,049 1 nterna I servi ce funds a re used by ma nagement to cha rge the cost of equi pment maintenance to individual funds. The assets and liabilities of these internal service funds are included in governmental activities in the statement of net position. Capital assets of $4,746,702 are included in the capital asset adjustment above. The compensated absence liability and the pension amounts are included in the appropriate categories with a note. 5,516,594 Some liabilities are not due and payable in the current period and therefore are not reported in the funds. General obligation bonds (8,045,000) Compensated absences ($131,856 attributable to internal service funds) (2,495,038) Public works trust fund loans (318,283) Nonexchange Financial Guarantee (184,770) Subtotal: Long-term debt payable (11,043,091) Accrued interest payable (17,206) Total pension liabilities ($189,624 attributableto internal service funds) (4,558,174) Total other post employment benefit liability (8,365,221) Deferred inflow of resources -bond refunding (103,485) Deferred inflow of resources - pension ($53,868 attributable to internal servicefunds) (2,433,890) Unearned revenues reported in the BalanceSheet- Governmental Funds are not reported in the government -wide Statement of Net Position (Note 1) 3,816,828 (22,704,239) Net position of government activities as reported on the statement of net position $ 105,825,219 The notes to the financial statements are an integral part of this statement T_ Q Page 36 Packet Pg. 154 2.7.a City of Edmonds Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended December 31, 2020 REVENUES Taxes Licenses and permits Intergovernmental Charges for services Fines and forteitures Investment earnings Contributions Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Utilities and environment Transportation Economic environment Mental and physical health Culture and recreation Debt service: Principal Interest Capital outlay: General government Transportation Culture and recreation Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Insurance Recoveries Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances - beginning Fund balances - ending Total Nonmajor Total Governmental General Fund Funds Funds $ 30,738,452 $ 4,532,144 $ 35,270,596 2,276,861 94,932 2,371,793 1,633,633 4,425,431 6,059,064 5,412,044 1,573,972 6,986,016 287,693 - 287,693 265,629 252,705 518,334 125 - 125 322,816 689,584 1,012,400 40,937,253 11,568,768 52,506,021 12, 879, 778 1,775,500 14, 655, 278 23,759,212 30,332 23,789,544 - 180,098 180,098 5,012 3,380,404 3,385,416 1,675,334 68,152 1,743,486 147,957 - 147,957 3,732,644 492,697 4,225,341 163,840 744,383 908,223 132,784 100,588 233,372 825,995 - 825,995 N - 857,396 857,396 9,053 4,602,811 4,611,864 p 43,331,609 12,232,361 55,563,970 Q (2,394,356) (663,593) (3,057,949) LU 16,977 - 16,977 N 1,535,800 945,198 2,480,998 (776,990) (203,277) (980,267) c� 775,787 741,921 1,517,708 Q (1,618,569) 78,328 (1,540,241) 19,050,692 17,065,385 36,116,077 $ 17,432,123 $ 17,143,713 $ 34,575,836 The notes to financial statements are an integral part of this statement. Page 37 Packet Pg. 155 2.7.a CITY OF EDMONDS, WASHINGTON RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENT FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2020 Net change in fund balances perthe Statement of Revenues, Expenditures and Changes in Fund Balance $ (1,540,241) Amount reported as change in net position in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated ove r thei r esti mated useful lives and reported as depreciation expense. This is the amount bywhich capital outlay is exceeded by depreciation and amortization in the current period. Capital outlays $ 6,362,362 Current year depreciation (2,905,604) Adjustment in investment in jointventure 59,800 3,516,558 Revenues in the Statement of Activities thatdo not provide current financial resources are not reported as revenues in the funds: Deferred inflows of resources - propertytaxes (30,059) PFD Debt Service (426,233) PFD Nonexchange Financial Guarantee 184,768 Other unearned revenue (17,704) LEOFF 2 Pensions 221,305 Court receivable (20,256) (88,179) Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. Repayment of long-term debt is an expenditure in the governmental funds, yet the repayment reduces long-term liabilities in the statement of net position. This is the amount bywhich repayments exceeded proceeds. Amortization of Bond Refunding 23,220 Long-term debt repayments 908,223 931,443 Internal service funds are used by management to charge the costs of equipment rental to individual funds. The net revenue (expense) of this internal service fund is reported with governmental activities. (848,645) Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. Accrued Interest Expense 2,175 Loss on Sale of Assets 58,135 Interest Expense forthe PFD 60,592 Total pension obligation 994,934 Accrued compensating absence expense (336,638) 779,197 Change in net position on the Statement of Activities $ 2,750,133 The notes to the financial statements are an integral partofthis statement. Q Page 38 Packet Pg. 156 2.7.a City of Edmonds GENERALFUND Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended December 31, 2020 REVENUES Taxes Licenses and permits Intergovernmental Charges for services Fines and forteitures Investment earnings Miscellaneous Total revenues EXPENDITURES C u rre nt: General government Public safety Transportation Economic environment Mental and physical health Culture and recreation Total current Debt service: Principal Interest Total debt service Capital outlay: General government Public safety Culture and recreation Total capital outlay Total expenditures Budgeted Amounts Variance with Original Final Actual Final Budget $31,180,588 $31,180,588 $ 30,738,452 $ (442,136) 2,260,730 2,260,730 2,276,861 16,131 947,060 1,196,697 1,633,633 436,936 6,418,500 6,418,500 5,412,044 (1,006,456) 542,940 542,940 287,693 (255,247) 560,740 560,740 265,629 (295,111) 414,450 416,112 322,941 (93,171) 42,325,008 42,576,307 40,937,253 (1,639,054) 12,531,117 13,258,328 12,879,778 378,550 24,878,421 25,130,563 23,759,212 1,371,351 5,000 5,000 5,012 (12) 1,946,846 1,954,673 1,675,334 279,339 159,985 241,002 147,957 93,045 4,606,451 4,739,555 3,732,644 1,006,911 44,127,820 45,329,121 42,199,937 3,129,184 168,850 168,850 163,840 5,010 137,750 137,750 132,784 4,966 306,600 306,600 296,624 9,976 1,025,000 1,025,000 825,995 199,005 23,120 23,120 - 23,120 - 9,053 9,053 - 1,048,120 1,057,173 835,048 222,125 45,482,540 46,692,894 43,331,609 3,361,285 Excess (deficiency) of revenues over expenditures (3,157,532) (4,116,587) (2,394,356) 1,722,231 OTHER FINANCING SOURCES (USES) Insurance Recoveries - - 16,977 16,977 Transfers in 1,978,200 1,978,200 1,535,800 (442,400) Transfers out (3,256,870) (3,266,993) (776,990) 2,490,003 Total other financing source (uses) (1,278,670) (1,288,793) 775,787 2,064,580 Net change in fund balances (4,436,202) (5,405,380) (1,618,569) 3,786,811 Fund balances - beginning 16,941,743 19,050,691 19,050,692 1 Fund balances - ending $12,505,541 $13,645,311 $ 17,432,123 $ 3,786,812 The notes to the financial statements are an integral part of this statement. r Q Page 39 Packet Pg. 157 2.7.a City of Edmonds Statement of Net Position Proprietary Funds December 31, 2020 Governmental Activities 421/422/423 Combined Utility Internal Service Funds Funds ASSETS Current assets: Cash and cash equivalents $ 12,133,991 $ 3,363,313 Investments 8,321,570 2,171,444 Customer accounts 3,946,665 997 Interest on investments 151,255 39,458 Due from other governments 3,245,586 3,058 Inventory 148,899 53,158 Tota I current assets 27,947,966 5,631,428 Noncurrent assets: Restricted cash and investment 12,196,199 - Land 1,257,107 - Property, plant and equipment (net) 94,390,901 4,671,836 Construction in progress 18,295,083 74,866 Intangible assets (net) 28,912 - Total noncurrent assets 126,168,202 4,746,702 Total assets 154,116,168 10,378,130 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources -refunding 63,655 - Deferred outflows of resources - pension 373,002 66,465 Total deferred outflows of resources 436,657 66,465 Total assets and deferred outflows of resources 154,552,825 10,444,595 LIABILITIES Current liabilities: Accounts payable 3,117,700 74,892 Wages and benefits payable 223,511 39,937 Interfund payables 231,144 - Due to other governmental units 307,896 Other current liabilities 588,845 Interest payable 155,892 Compensated absences - current 343,218 Loans payable - current 253,302 Revenue bonds payable -current 1,475,475 G.O. bonds payable - current 263,219 - Total current liabilities 6,960,202 114,829 Noncurrent liabilities: Compensated absences - long-term 68,932 131,856 Pension liabilities 936,895 189,624 Loans payable -long-term 1,322,981 - Revenue bonds payable - long-term 51,127,718 G.O. bonds payable - long-term 1,215,665 - Total noncurrent liabilities 54,672,191 321,480 Total liabilities 61,632,393 436,309 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources - refunding 18,244 - Deferred inflow of resources - pension 369,459 53,868 Total deferred inflows of resources 387,703 53,868 Total liabilities and deferred inflows of resources 62,020,096 490,177 NET POSITION Net investment in capital assets 68,391,695 4,671,836 Restricted for: Customer Deposits 6,148 - Debt Service 3,290,576 - Unrestricted 20,844,310 5,282,582 Total net position $ 92,532,729 $ 9,954,418 The notes to financial statements are an integral part of this statement. r Q Page 40 Packet Pg. 158 2.7.a City of Edmonds Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds For the Year Ended December 31, 2020 OPERATING REVENUES Charges for services Other operating revenue Total operating revenues OPERATING EXPENSES Personnel services Operations and maintenance Professional services Insurance Depreciation Total operating expenses Operating income (loss) NONOPERATING REVENUES (EXPENSES) Intergovernmental Investment earnings Judgments and settlements Gain (loss) on sale of capital assets Interest expense Total nonoperating revenues (expenses) Income (loss) before contributions and transfers Operations and maintenance Professional Services Capital grants and contributions Transfers Out Change in net position Total net position - beginning Total net position - ending Business -type Governmental Activities Activities 421/422/423 Combined Utility Internal Service Funds Funds $ 27,072,814 $ 2,694,759 210,853 14 27,283,667 2,694,773 4,595,477 726,177 10,979,846 915,644 956,140 75,442 344,984 43,001 4,029,768 642,948 20,906,215 2,403,212 6,377,452 291,561 25,297 72,546 165,842 163,509 - 61,566 (821,659) 64,798 (1,739,008) - (2,369,528) 362,419 4,007,924 653,980 (3,175) (2,625) (55,262) - 5,511,256 - (731) (1,500,000) 9,460,012 (848,645) 83,072,717 10, 803, 063 $ 92,532,729 $ 9,954,418 The notes to financial statements are an integral part of this statement. Page 41 Packet Pg. 159 2.7.a City of Edmonds Statement of Cash Flows Proprietary Funds Forthe Year Ended December 31, 2020 CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers Payments to employees Payments to suppliers Net cash provided (used) by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Grant income Proceeds of refunding debt Net cash provided (used) by noncapital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Gain from the sale of capital assets Judgments and settlements Acquisition and construction of capital assests Professional Services Capital grants and contributions Operations and maintenance Principal payments on debt Interest payments on debt Transfers to other funds Net cash provided (used) by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES Investment income Purchase of investments Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Balances - beginning of year Balances - end of the year The notes to financial statements are an integral part of this statement. Business -type Governmental Artiviti— Artivitiac 411/41Z/413 Combined Utility Internal Service Flinn, Funric $ 24,057,207 $ 2,691,188 (4,867,377) (769,180) (9,490,710) (981,729) 9,699,120 940,279 25,297 13,875,000 13,900,297 122,464 61,566 (20,680,034) (682,060) (55,262) - 5,511,256 72,546 (3,175) (2,625) (1,822,173) (1,708,074) (731) (1,500,000) (18,758,193) (1,928,109) 151,140 159,485 4,756,025 938,709 4,907,165 1,098,194 9,748,389 110,365 14_1;R1 _Rn1 3.757_g4R ,l. L4,SSV, lyU .; 3,3b3,313 T_ Q Page 42 Packet Pg. 160 2.7.a City of Edmonds Statement of Cash Flows Proprietary Funds For the Year Ended December 31, 2020 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating Income Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation Changes in assets and liabilities: Customer Receivables Accounts Payable - Supplier Payroll Liabilities Net cash provided (used) by operating activities The notes to financial statements are an integral part of this statement. Business -type Governmental Activities Activities 421/422/423 Combined Utility Internal Service Funds Funds $ 6,377,452 $ 291,561 4,029,768 642,948 Q (3,226,460) (3,585) 3 O 2,790,260 52,358 (271,900) (43,003) LL $ 9,699,120 $ 940,279 3 Q 'a 3 t4 N N N t N 7 Q N C O E a W r C N t V ft< a+ a+ Q Page 43 Packet Pg. 161 2.7.a City of Edmonds Statement of Fiduciary Net Position December 31, 2020 ASSETS Cash and cash equivalents Total assets LIABILITIES Accrued expenses Total liabilities NET POSITION Net position restricted for pensions Net position restricted for custodial funds Total net position Firemen's Swat Custodial Pension Fund Fund $141,787 $31,565 141,787 31,565 6,672 6,672 - 135,115 - - 31,565 $ 135,115 $ 31,565 The notes to financial statements are an integral part of this statement. Page 44 Packet Pg. 162 2.7.a City of Edmonds Statement of Changes in Fiduciary Net Position For the Year Ended December 31, 2020 ADDITIONS Contributions: Employer contributions State shared revenue -distribution of fire insurance premiums Total contributions Intergovernmental Investment earnings Miscellaneous Total additions DEDUCTIONS Benefits paid to retirees Administrative expenses Swat Supplies Total deductions Change in net position Net Position -- beginning of the year Net Position -- end of the year Firemen's Swat Custodial Pension Fund Fund $ 15,000 $ - 51,491 - 66,491 - 355,644 3,897 - - 1,056 70,388 356,700 80,998 - 1,007 - - 358,322 82,005 358,322 (11,617) (1,622) 146,732 33,187 $ 135,115 $ 31,565 The notes to financial statements are an integral part of this statement. Q Page 45 Packet Pg. 163 2.7.a CITY OF EDMONDS NOTES TO THE FINANCIAL STATEMENTS NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City of Edmonds have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The significant accounting policies are described below. A. Reporting Entity The City of Edmonds was incorporated in 1890 and operates under the laws of the state of Washington applicable to cities. Edmonds operates with a Council/Mayor form of government. Both the Mayor and Council are elected to four-year terms. The City provides a full range of general government services including public safety; streets; parks and recreation; planning and zoning; permits and inspection; general administration; and water, sewer, storm water and wastewater treatment utilities. a o As required by Generally Accepted Accounting Principles the financial statements present the City of Edmonds, the primary government, and its component unit. The component unit discussed below is included in the City's reporting entity because of the significance of their operational and financial io r relationships with the City. Q Discretely Presented Component Unit }, On April 24, 2001 the Edmonds City Council formed the Edmonds Public Facilities District (PFD) via Ordinance 3358, under the authority provided by RCW 35.57. The purpose of the PFD is to N construct and operate a regional arts center in the City of Edmonds, defined by RCW 35.57 as a conference, convention or special events center, along with related parking. A five -member board governs the PFD and is appointed to four-year terms by the Edmonds City Council. The PFD has N authority under state law to issue debt, levy certain taxes, and enter into contracts. In 2002 the City issued Limited Tax General Obligation Bonds in the amount of $7,015,000 for the a acquisition, renovation and remodeling of a Performing Arts Center. The City transferred the E proceeds of this issuance to the PFD. The City refinanced these bonds in 2012. These bonds are E a debt of the City and not the PFD; however, the PFD is obligated by inter -local agreement to pay w the entire amount of the PFD's portion of the debt service over the life of the bonds. r For more information on the Edmonds Public Facility District see Note 12, Long -Term Debt. c Separate financial statements can be obtained from the Edmonds Center for the Arts, c/o Joe Mclalwain, 410 Fourth Avenue N., Edmonds, WA 98020. c�a Q Joint Ventures The City of Edmonds participates in two separate joint ventures: Snohomish County 911 The City of Edmonds and other Police and Fire entities jointly operate Snohomish County 911. Snohomish County 911, a cash basis, special purpose district, was created under the Interlocal Cooperation Act, as codified in RCW 39.34. This established the statutory authority necessary for Snohomish County, cities, towns, fire districts, police districts and other service districts to enter into a contract and agreement to jointly establish, maintain and operate a support communications center. Control of Snohomish County 911 is with a 16 member Board of Directors which is specified in the Interlocal Agreement. Snohomish County 911 takes 911 calls and performs emergency dispatch services for local governmental agencies including police, fire, and medical aid. In the event of the dissolution of Snohomish County 911, any money in the possession of Page 46 Packet Pg. 164 2.7.a Snohomish County 911 or the Board of Directors after payment of all costs, expenses and charges validly incurred shall be returned to the parties to this agreement and shall be apportioned between Principals based on the ratio that the average of each Principals' contributions to the operating budget over the preceding five years bears to the total of all then remaining Principals' User Fees paid during the five year period. Before deducting the payment of all costs, expenses, and charges validly incurred, the City of Edmonds share was $1,766,977 on December 31, 2020. Snohomish County 911's 2020 operating budget was $24,575,191, operating revenues received were $24,285,981, and total operating expenditures were $23,917,807. Complete financial statements for Snohomish County 911 can be obtained from their administrative office at 1121 SE Everett Mall Way, Suite 200, Everett, WA 98208. The Alliance for Housing Affordability (AHA) In September 2013, the City of Edmonds joined the cities of Everett, Granite Falls, Lake Stevens, Lynnwood, Marysville, Mill Creek, Mountlake Terrace, Mukilteo, and Snohomish, the Town of Woodway, and Snohomish County to establish the Alliance for Housing Affordability (AHA). The agreement was amended in May, 2014 to add the City of Arlington and in June, 2014 to add the City of Stanwood. The purpose of AHA is to cooperatively formulate affordable housing goals and policies and to foster efforts to provide affordable housing by providing expertise and information to member jurisdictions. Operating funding is provided by member cities. AHA is governed by a Joint Board composed of an elected official from each member. The Joint Board is responsible for review and approval of all budgetary, financial, policy, and contractual matters. The Board is assisted by an administrative staff housed at the Housing Authority for Snohomish County (HASCO). Fiscal agent duties were transferred to HASCO during fiscal year 2018. The values included in the table below were audited and updated by the new fiscal agent and may be different than what was reported in previous years. Each member city is responsible for contributing operating revenues as determined from the AHA annual budget. Contributions from the member cities are based on each member's population. A grant from the Gates Foundation provided $50,000 to assist with the first two years of organizational start-up. The City of Edmonds equity share to date is: AHA's Total Edmonds Share Fiscal Year Fiscal Year Edmonds Share as % of Total Ending 6/30 Budget of Budget AHA Budget 2015 $ 93,063 $ 2,457 2.6% 2016 $ 43,652 $ 2,381 5.5% 2017 $ 97,934 $ 3,518 3.6% 2018 $ 102,586 $ 3,841 3.7% 2019 $ 107,391 $ 4,120 3.8% 2020 $ 112,408 $ 4,344 3.9% 2021 $ 117,673 $ 4,368 3.7% Members withdrawing from the agreement relinquish all rights to any reserve funds, equipment, or material purchased. Upon dissolution, the agreement provides for distribution of net assets among the members based on the percentage of the total annual contributions during the period of the Agreement paid by each member. Budget monitoring information can be obtained from Pam Frost, Director of Finance, HASCO, 12711 41" Ave W, Everett WA 982014 (or email: pfrost@hasco.org) or from Chris Collier, Program Manager, Alliance for Housing Affordability, 12711 41" Ave W, Everett WA 98204. Q Page 47 Packet Pg. 165 2.7.a B. Basis of Presentation — Government -Wide and Fund Financial Statements The government -wide financial statements (i.e. the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component unit. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from a legally separate component unit for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Our policy is to allocate indirect costs to a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Internally dedicated resources are reported as general revenues rather than program revenues. Taxes and other items not properly included among program revenues are reported as general revenues. The effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions are charges between the government's water and sewer function and other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government -wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. The City reports one major governmental fund, the General Fund. The General Fund is the City's operating fund. It accounts for all financial resources of the general government, except those required or elected to be accounted for in another fund. The City also reports one major enterprise fund. The Combined Utility Fund accounts for all maintenance, construction, and debt service requirements associated with the City's water, sewer, and stormwater systems. The City has two Internal Service Funds. The Equipment Rental Fund accounts for the cost of maintaining the City's vehicle fleet. The Technology Rental Fund accounts for the cost of Information Technology equipment repair and replacement. The City has two Fiduciary Funds. The Firemen's Pension Fund is used to account for payment of administrative costs and benefits for retired firefighters who were employed prior to March 1, 1970. The North Sound Metro Special Weapons and Tactics Team (SWAT) is a Custodial Fund that accounts for the administration and bookkeeping for a regional SWAT team. The City signed an interlocal agreement with surrounding cities in 2013 to form a SWAT team, and the City of Edmonds Police Department was designated as the host Police Department and is responsible for the holding of funds. C. Measurement Focus, Basis of Accounting Government -Wide and Governmental Funds The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, similar to the proprietary and fiduciary fund statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenue Q Page 48 Packet Pg. 166 2.7.a in the year in which they are levied. Grants and similar items are recognized as revenue as soon as eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers most revenues to be available if they are collected within 30 days of the end of the current fiscal period. The City considers property taxes, sales taxes, natural gas taxes and Hotel/Motel excise taxes as available if they are collected within 60 days after year end. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. All other revenue items are considered to be measurable and available only when cash is received. Proprietary Funds The proprietary fund statements are reported using the economic resources measurement focus a and full -accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred regardless of the timing of the cash flows. o 0 Proprietary funds distinguish operating revenues and expenses from non -operating items. r Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal Q operating revenues of the City's Combined Utility Funds are charges to customers for sales and +. service. The City also recognizes as operating revenue the portion of utility connection fees intended to recover the cost of connecting new customers to the water and sewer systems. N Operating expenses for enterprise funds include operating and maintenance costs, employee salaries and benefits, contracted services, insurance, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non -operating revenues and N expenses. a D. Budgetary Information E 0 Scope of Budget w Annual appropriated budgets are adopted for general fund and special revenue funds on the r modified accrual basis of accounting. Budgets for debt service and capital projects funds are adopted at the level of the individual debt issue or project and for fiscal periods that correspond to the lives of debt issues or projects. Budgets for the General Fund and Special Revenue Funds are adopted at the Fund level. Purely as a management tool, budgets are broken out by department, c�a activity and expense types. a Appropriations for the General and Special Revenue funds lapse at year-end, except for appropriations for capital outlays, which are carried forward from year to year until fully expended or the purpose of the appropriation has been accomplished or abandoned. Amending the Budget The Mayor is authorized to transfer budgeted amounts between departments or between object classes within any department; however, any revisions that alter the total expenditures of a fund, or that affect the number of authorized employee positions, salary ranges, hours, or other conditions of employment must be approved by the City Council. When the Council determines that it is in the best interest of the City to increase or decrease the appropriation for a particular fund or department, it may do so by ordinance approved by one more than the majority after holding a public hearing. Page 49 Packet Pg. 167 2.7.a The budget amounts shown in the financial statements are the final authorized amounts as revised during the year. The financial statements contain the original and final budget information. The original budget is the first complete appropriated budget. The final budget is the original budget adjusted by supplemental appropriations and other legally authorized changes applicable for the fiscal year. E. Assets, Liabilities, Fund Balance, Net Position Cash and Cash Equivalents It is the City's policy to invest all temporary cash surpluses. The City considers all highly liquid assets, including investments in the Washington State Local Government Investment Pool, the Snohomish County Investment Pool, and short-term investments with a maturity of three months or less when purchased to be cash equivalents. This amount is classified on the balance sheet as cash and cash equivalents in various funds. The interest on these investments is prorated to the various funds. For purposes of the statement of cash flows, the City considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. For a more information on investments, see Note 3, Deposits and Investments. 3 0 Receivables o Taxes receivable consist of property taxes and related interest and penalties (See Note 4, Property r Taxes). Accrued interest receivable consists of amounts earned on investments, notes, and `a contracts at the end of the year. Q Customer accounts receivable consist of amounts owed by private individuals and organizations for goods and services including amounts owed for which billings have not been prepared. Notes N and contracts receivable consist of amounts owed on open account from private individuals or organizations for goods and services rendered. Receivables are shown net of allowances for uncollectible accounts. N Amounts Due To/From Other Funds and Governments, Interfund Loans and Advances Receivable Q- Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either interfund loans receivable/payable or advances to/from other funds. All other outstanding balances between funds are reported as due to/from other E E funds. Any residual balances outstanding between the governmental activities and business -type w activities are reported in the government -wide financial statements as internal balances. A separate r schedule of interfund loans receivable and payable is furnished in Note 7, Interfund Activity. a� Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. a InvPntnrips Inventories are assets that are held for internal consumption or resale. The combined utility fund inventories are expensed as consumed, using the first -in, first -out valuation method, which approximates market. Internal service fund inventories are expensed when purchased. A physical inventory is taken at year-end. No inventory is maintained in Governmental Funds; however, the Internal Service fund inventories are included in the "Governmental Activities" on the Statement of Net Position. Restricted Assets These accounts contain resources for construction and debt service in enterprise funds. Specific debt service reserve requirements are described in Note 13, Long -Term Debt and certain cash and investments have been classified as restricted assets on the Statement of Net Position in accordance with utility bond resolutions, state law, or for other purposes. When both restricted and Page 50 Packet Pg. 168 2.7.a unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. Capital Assets Capital assets, which include property, plant, and equipment and infrastructure assets (e.g., roads, bridges, sidewalks and similar items) are reported in the applicable governmental or business -type columns in the government -wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost that meets or exceeds $5,000, and an estimated useful life in excess of one year. Infrastructure assets are capitalized when their cost meets or exceeds $50,000, and repairs or replacements to components of the Wastewater Treatment Plant are capitalized when their cost meets or exceeds $100,000. Costs for additions or improvements to capital assets are capitalized when they increase an asset's value, capacity, or materially extends its useful life. The costs for normal maintenance and repairs are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Land, permanent artwork, and construction in progress are not depreciated. Buildings, equipment, non -building improvements and intangible assets are depreciated using the a straight-line method using varying estimated service lives for individual assets and asset classifications, depending on particular characteristics of an asset and factors surrounding its o anticipated use. See Note 9 for additional information regarding capital assets. io r The average service lives used to calculate depreciation for specific categories of assets are summarized below: Q Asset Type Est. Service Life (Years) Buildings 30-50 N Improvements other than Buildings 20-40 Furniture and fixtures 5-10 Cars 5-10 N Vans, Trucks, Trailers 5-20 Data Processing Equipment 3-10 Q- Infrastructure 20-100 Sidewalks 30 0 Machinery and Equipment 5-20 E 0 Intangible Assets 20-30 w Deferred Outflows/Inflows of Resources °' In addition to assets, the Statement of Net Position will sometimes report a separate section for t deferred outflows of resources. This represents a consumption of net position that applies to future periods and will not be recognized as an outflow of resources (as either an expense or expenditure) a until that period. The City has two items that qualify for reporting in this category: 1) deferred gains on refunding and 2) pensions. Deferred gains on refunding reported in the statement of net position results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. The second item is related to pensions and affects both assets and liabilities. The City's fiscal year ends on December 31, while the State's fiscal year ends on June 30. This causes the recognition periods for pension contributions to not match, resulting in the recognition of Deferred Outflows and Deferred Inflows to account for the City's pension contributions. In addition to liabilities, the Statement of Net Position and the Governmental Fund Balance Sheet will sometimes report a separate section for deferred inflows of resources. This represents an acquisition of net position that applies to future periods and will not be recognized as an inflow of resources (revenue) until that period. The City has four items that qualify for reporting in this category: 1) unavailable property taxes recorded as receivables, 2) unavailable court fees recorded Page 51 Packet Pg. 169 2.7.a as a receivable, 3) deferred losses on refunding, and 4) pensions and other post -employment obligations, as explained above. Compensated Absences Compensated absences are absences for which employees will be paid, such as vacation and sick leave, and holiday earned by police employees, according to the terms of union contracts or per RCW. Also included is compensatory time earned in lieu of overtime. All such compensated absences are accrued when incurred in the government -wide, proprietary, and fiduciary fund financial statements, and are payable upon termination, retirement or death. Compensated absences including payroll taxes are reported as a current liability on the balance sheet. Actual balances are accrued for all types of compensated absences except sick leave, the liability for which is estimated using the termination method provided by GASB Statement No. 16. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net a position of all state sponsored pension plans and additions to/deductions from those plans' fiduciary o net position have been determined on the same basis as they are reported by the Washington State Department of Retirement Systems. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit io r terms. Investments are reported at fair value. Q Other Accrued Liabilities +. Employees earn vacation pay based on their years of service, and may carry over accruals of up to two years' accumulated leave from one year to the next. Unused vacation leave at time of N termination, retirement or death is considered vested and payable to the employee. Unused sick leave is paid out upon termination, retirement or death based on a percentage of the employee's accumulated sick leave, in accordance with the terms of their union contract, or in accordance with T Edmonds City Code Chapter 2.35. Unearned Revenues a This account includes amounts recognized as receivables but not revenues in governmental funds because the revenue recognition criteria have not been met. E w Fund Balance Classification r The difference between fund Assets and Deferred Outflows of Resources, minus its Liabilities and Deferred Inflows of Resources, is referred to as Net Position on the government -wide, proprietary, and fiduciary fund statements, and as Fund Balance on the governmental fund statements. The fund balance amounts for governmental funds are classified in accordance with GASB Statement c�a No. 54, and are reported as non -spendable, restricted, committed, assigned, or unassigned. a • Non -spendable fund balance represents amounts that are either not in a spendable form (e.g. inventories or prepaid balances) or are legally or contractually required to remain intact. • Restricted fund balances include amounts that have constraints placed upon their use by constitution, external resource providers, or through enabling legislation. • Committed fund balances include amounts that are limited by resolution of the City Council. A resolution must be taken to impose limitations on the use of these resources, and another resolution is required to modify or eliminate those limitations. • Assigned fund balances include amounts that are intended by the Mayor or department Directors for an intended use, but are neither restricted nor committed. This type of Page 52 Packet Pg. 170 2.7.a limitation can be imposed by the highest levels of decision making within the City, but little or no formal action is required to modify or eliminate those limitations. Unassigned fund balance is the residual amount of the general fund not included in the four categories described above. Also, any deficit fund balances within the other governmental fund types are reported as unassigned. When both restricted and unrestricted fund balances are available for use, the City considers restricted fund balance to have been spent first. When committed, assigned, or unassigned fund balance amounts are available for use, the City considers committed fund balance to be spent first, assigned fund balance second, and unassigned fund balance last. F. Revenues, Expenditures and Expenses The modified accrual basis of accounting is followed in all governmental funds of the City. Under the modified accrual basis of accounting: a Charges for services, interest on investments, and rents generally are considered measurable and available when earned in governmental funds. Taxes and federal or state entitlements or shared o revenues that have been collected but not remitted by an intermediary collection agency to the City �° are considered measurable and available. Grants are considered measurable and available to the r extent that expenditures have been incurred. Other intergovernmental revenues are considered measurable and available when earned. Interfund revenues for goods and services are considered a measurable and available when earned. Proceeds from the disposal of capital assets are recognized as other financing sources. Revenues from taxpayer -assessed taxes (e.g. sales tax), net of estimated refunds, are recognized when measurable and available to finance expenditures N of the current period. All other revenues are either not measurable or considered not available until collected. Expenditures are generally recognized when incurred, except for principal and interest on general long-term debt, which are reported as expenditures when paid, and compensated T) absences, which are reported as expenditures when liquidated from expendable available financial resources. Q- c The accrual basis of accounting is followed in all proprietary and fiduciary funds. Under the accrual E basis of accounting: o w Revenues are recognized when earned and expenses are recognized when incurred. Contributions r of capital in proprietary fund financial statements arise from internal and external contributions of capital assets or from grants or outside contributions of resources restricted to capital acquisition and construction. Transfers between government and business -type activities on the government - wide statement of activities are reported as general revenues. Transfers between funds reported c�a in the governmental activities column are eliminated, as are transfers between funds reported in a the business -type activities column. G. Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. Page 53 Packet Pg. 171 2.7.a NOTE 2 — ACCOUNTING AND REPORTING CHANGES Reporting Changes — Effective for fiscal year 2020 reporting, the City adopted the following new standards issued by the Governmental Accounting Standards Board (GASB): GASB Statement No. 84, Fiduciary Activities — improves financial reporting by establishing criteria for identifying fiduciary activities that meet the criteria of whether a government controls the assets of the fiduciary activity and the beneficiaries with whom a fiduciary relationship exists. This Statement describes four fiduciary funds that should be reported, if applicable as 1) pension (and other employee benefit) trust fund, 2) investment trust funds, 3) private -purpose trust funds, and 4) custodial funds. The City reports two fiduciary funds. (See Fiduciary Fund Statements) Any applicable provisions of this Statement have been adopted and incorporated into these financial statements. GASB Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements — improves financial reporting by providing users of financial statements with essential information, including unused lines of credit, assets pledged as collateral for debt, and terms specified in debt agreements related to significant events of default with finance -related consequences, significant termination events with finance -related consequences, and significant subjective acceleration clauses. This Statement also requires that existing and additional information be provided for direct borrowings and direct placements of debt separately from other debt. Any applicable provisions of this Statement have been adopted and incorporated into these financial statements. GASB Statement No. 90, Majority Equity Interests — improves financial reporting by improving the consistency and comparability of reporting a government's majority equity interest in a legally separate organization, and to improving the relevance of financial statement information for certain component units. Any applicable provisions of this Statement have been adopted and incorporated into these financial statements. GASB Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance — provides temporary relief to governments in light of the COVID-19 pandemic. This Statement postponed the effective dates of certain provisions in Statements and Implementation Guides that first became effective for periods beginning after June 15, 2018, and later. The City recognized this Statement for fiscal year 2020 reporting. This Statement has no impact on the financial statements or notes in this report, it only affects the required implementation date of other GASB Statements. NOTE 3 — DEPOSITS AND INVESTMENTS Investments are presented in the financial statements at fair value based on quoted market prices. The City's position in the State and County Local Government Investment Pools is the same as the value of the pool shares. Pool investments are reported as Cash and Cash Equivalents. Interest earned on the pooled investments is allocated to individual funds based on that fund's cash balance at the end of each month. The City holds most investments to maturity. Interest earnings are recognized in the period in which they become available and measurable. Cash and equity in pooled investments are comprised of both government -type and business -type activities. The balances are comprised of the following: Q Page 54 Packet Pg. 172 2.7.a December 31, 2020 Deposits with US Bank $ 5,453,258 Petty Cash/Change Funds 4,500 Local Government Investment Pool 21,444,678 Snohomish County Investment Pool 20,132,419 Certificates of Deposit 7,803,516 Federal Agency Securities 16,216,230 $ 71,054,601 Interest rate risk. Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. As a means of limiting its exposure to fair value losses arising from rising interest rates, the City's investment policy manages the exposure to declines in fair values by limiting the average of maturity of its portfolio to no more than three and one half years, unless an investment is matched to an anticipated future cash flow. Information about the sensitivity of the fair values of the City's investments to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity: Remaininq Maturity in Months Fair Twelve Months Twelve Months Two Years to Three Years Credit Value or Less to Two Years Three Years to Seven Years Rating Federal Agency Securities $ 16,216,230 $ 4,682,513 $ 6,787,925 $ 4,480,610 $ 265,183 Aaa/AA+ Certificates of Deposit 7,803,516 3,000,000 - 2,803,516 2,000,000 Not Rated Local Government Investment Pool 21,444,678 21,444,678 - - Not Rated Snohomish County Investment Pool 20,132,419 20,132,419 - - - Not Rated $ 65,596,843 $ 49,259,610 $ 6,787,925 $ 7,284,126 $ 2,265,183 Credit risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The City's investment policy limits the instruments in which the City may invest. The City is empowered to invest in the following types of securities: • U.S. Government obligations, U.S. Government agency obligations, and U.S. govern- ment instrumentality obligations, which have a liquid market with a readily determinable market value; • U.S. Treasury securities maturing in less than ten years; • Fully insured or collateralized certificates of deposit, and other evidences of deposit, at qualified financial institutions that are approved by the Washington Public Deposit Protection Commission; • Banker's Acceptances, and commercial paper rated in the highest tier by a nationally recognized rating agency; • Investment grade obligations of state and local governments and public authorities located within the State of Washington; and • Local government investment pools, either state administered or through joint powers statutes and other intergovernmental agreement legislation. The Washington State Local Government Investment Pool (LGIP), created by the Washington State Legislature in 1986, is managed and operated solely by the Office of the State Treasurer. The State Finance Committee administers the statute that created the pool and adopts appropriate rules. The State Treasurer established the LGIP Advisory Committee to provide advice on the pool's operation. The advisory committee includes 12 members selected from the active pool participants. Eight members are appointed by the participant associations, and four are appointed by the State Treasurer. Q Page 55 Packet Pg. 173 2.7.a The LGIP is considered extremely low risk and is recorded as a cash equivalent. The pool is unrated by financial rating agencies. Investments are reported at their amortized cost basis to pool participants, which approximates fair value. The LGIP transacts with its participants at a stable net asset value per share of $1.00, the same method used for reporting. The Snohomish County Investment Pool (SCIP) is not registered with the SEC. Investments are reported at fair value to the participants. It includes participating funds from the County's primary government and funds from the districts where the County Treasurer serves as ex-officio Treasurer. There are no involuntary participants in the SCIP. All participants have notified the Treasurer of their desire to participate in the SCIP. The portion of the pool belonging to outside districts is reported in an Investment Trust Fund. SCIP investments are those allowed by County Investment Policy and include savings accounts, CD's and securities. Pool participant shares are based on the dollars that they have invested in SCIP. The income is distributed based on interest rates on investments, amortization of premiums and discounts, and realized gains and losses for the month. Pool oversight comes from the Snohomish County Finance Committee (SCFC). The SCFC consists a 3 of the County Treasurer, County Executive and Chairperson of the County Council. SCFC approves 2 investment policies for SCIP. i° Fair value of securities is based on the market value reports provided by the County's custodial r agent. The market values are uploaded into the County investment software monthly from the a custodial agent. The fair value of each participant's investment is determined by calculating the ratio of total investments by pool participants divided into the total fair value of the SCIP underlying assets. Each pool participant can determine their fair value by taking their investment in SCIP N multiplied by this ratio. a� Custodial Credit Risk - Deposits. Custodial Credit Risk for Deposits is the risk that in the event of a T) bank failure, the City may not be able to recover deposits or collateral securities that are in the possession of an outside party. All City deposits are insured by Federal Depository Insurance (FDIC) up to $250,000. All deposits not covered by FDIC insurance are covered by the Washington Public Deposit Protection Commission (WPDPC). The WPDPC constitutes a multiple financial institution collateral arrangement that provides for additional assessments against members of the p pool on a pro rata basis up to a maximum of 10 percent of each institution's public deposits. The w WPDPC may make pro-rata assessments to members of the WPDPC pool in the event the pool's r collateral should be insufficient to cover a loss. c a� E Custodial Credit Risk — Investments. Custodial Credit Risk for Investments is the risk that in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. All City securities a are held for safekeeping by U.S. Bank, as the City's agent, in the City's name. Concentration of Credit Risk. Concentration of Credit Risk is the risk of loss attributed to the magnitude of an investment in a single issuer. The City diversifies its investments by security type and institution. The investment policy requires that no more than 50 percent of the City's portfolio, at the time of purchase, shall be in any single financial institution, with the exception of investments in the LGIP, the SCIP, or U.S. Treasury or Agency securities. The City measures and reports investments at fair value using the valuation input hierarchy established by Generally Accepted Accounting Principles. Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction. The guidance requires three levels of fair value measurement based on the respective inputs. Page 56 Packet Pg. 174 2.7.a Level 1: Prices quoted in active markets for identical securities. Level 2: Quoted market prices for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other than quoted prices that are not observable. Level 3: Unobservable inputs for an asset or liability. U.S. Agency securities and municipal bonds classified in Level 2 are valued using quoted prices for similar securities and interest rates. The level of fair value measurement is based on the lowest level of significant input for the security type in its entirety. There are no Level 1 or Level 3 security classifications to report. The following table presents recurring fair value measurements as of December 31, 2020: Fair Value Measurement Quoted Prices Significant Active Markets Other Significant for Identical Observable Unobservable Investment Type Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Total Federal Agency Securities $ $ 16,216,230 $ - $ 16,216,230 Snohomish Co. Investment Pool 20,132,419 - 20,132,419 WA State LGIP 21,444,678 - 21,444,678 Certificate of Deposit 7,803,516 - 7,803,516 Total $ $ 65,596,843 $ - $ 65,596,843 The following table identifies the types of investments, concentration of investments in any one issuer, and maturities of the City's investment portfolio at December 31, 2020: Maturities Less Than 1 %of Total Investment Type Fair Value Year 1 to 7 Years Portfolio Federal Agency Securities $ 16,216,230 $ 4,682,513 $ 11,533,717 24.72% Snohomish County Pool 20,132,419 20,132,419 - 30.69% Certificates of Deposit 7,803,516 3,000,000 4,803,516 11.90% Subtotal 44,152,165 27,814,932 16,337,233 67.31% WA State LGIP ' 21,444,678 21,444,678 - 32.69% Total $ 65,596,843 $ 49,259,610 $ 16,337,233 100.00% Percentage of Total Portfolio 75.09% 24.91% 100.00% Discretely Presented Component Unit: Cash and equity in pooled investments of the Edmonds Public Facilities District are comprised of governmental type activities only. The balances as of December 31, 2020 are as follows: Component Unit December 31, 2020 Cash and Cash Equivalents $ 101,256 Restricted Cash and Cash Equivalents 138,071 $ 239,327 Page 57 Packet Pg. 175 2.7.a The following tables present information regarding the components of Cash and Cash Equivalents as of December 31, 2020: Financial Statements Governmental Business -type Total Fiduciary Activities Activities Primary Govt. Funds Total Cash and Cash Equivalents $ 19,046,314 $ 12,133,991 $ 31,180,305 $ 173,352 $ 31,353,657 Restricted Cash and Cash Equivalents 8,288,515 12,196,199 20,484,714 - 20,484,714 Investments 10,894,660 8,321,570 19,216,230 - 19,216,230 $ 38,229,489 $ 32,651,760 $ 70,881,249 $ 173,352 $ 71,054,601 Restricted Cash and Cash Equivalents Governmental Business -type Activities Activities Total Deposit to Bond Reserve Account $ - $ 3,290,576 $ 3,290,576 First Financial CD -Waterfront Center 2,000,000 - 2,000,000 First Financial CD - PFD Collateral 2,803,516 2,803,516 Unspent Construction Debt Proceeds 3,484,999 8,905,623 12,390,622 $ 8,288,515 $ 12,196,199 $ 20,484,714 Q D 3 NOTE 4 — PROPERTY TAXES o 0 u_ The Snohomish County Treasurer acts as an agent to collect property taxes levied in the County for all taxing authorities. Q Property tax is recorded as a receivable and revenue when levied. Property tax collected in advance of the fiscal year to which it applies is recorded as deferred inflow and recognized as revenue in the period to which it applies. No allowance for uncollectible tax is established because N delinquent taxes are considered fully collectible. Prior year tax levies were recorded using the same principle, and delinquent taxes are evaluated annually. N The City may levy up to $3.10 per $1,000 of assessed valuation for general governmental services. This rate is limited by the Washington State Constitution and RCW 84.55.010. 0- to c The City's regular levy for 2020 was $0.95632303622 per $1,000 on an assessed valuation of 0 E $11,011,221,440 for a total regular levy of $10,530,285. City of Edmonds voters have approved o one special levy, for Emergency Medical Services (EMS). The City's EMS Levy for 2020 was w $0.37349634392 per $1,000 on an assessed valuation of $11,011,221,440 for a total EMS levy of $4,112,651. a� E Property Tax Calendar Q January 1 Tax is levied and become an enforceable lien against properties February 14 Tax bills are mailed. April 30 First of two equal installment payments is due. Assessed value of property established for next year's levy at 100 May 31 percent of market value. October 31 Second installment is due. Page 58 Packet Pg. 176 2.7.a NOTE 5 — RECEIVABLES AND PAYABLES Receivables at December 31, 2020 are as follows Customer Accounts Taxes Due From Other Governments Due from Component Units Total Governmental Activities General Fund $ 633,328 $ 383,437 $ 2,517,462 $ 3,800,552 $ 7,334,778 Other Governmental Funds - - 1,675,187 1,675,187 Internal Service 997 - 3,058 4,055 Total Governmental Activities $ 634,325 $ 383,437 $ 4,195,706 $ 3,800,552 $ 9,014,020 Business -type Activities Combined Utility Fund $ 3,946,665 $ - $ 3,245,586 $ $ 7,192,251 Total Business -type Activities $ 3,946,665 $ - $ 3,245,586 $ $ 7,192,251 Payables at December 31, 2020 are as follows: a Salaries and Accounts Due to Other Other Current Benefits Payable Governments Liabilities Total Governmental Activities General Fund $ 1,156,165 $ 1,197,681 $ $ 139,475 $2,493,321 O ILL Other Governmental Funds 58,617 1,062,071 66,682 1,187,370 �+ Internal Service 39,937 74,892 - 114,829 7 Total Governmental Activities $ 1,254,719 $ 2,334,643 $ $ 206,158 $3,795,520 Q Business -type Activities �= Combined Utility Fund $ 223,511 $ 3,117,700 $ 307,896 $ 588,845 $4,237,952 Total Business -type Activities $ 223,511 $ 3,117,700 $ 307,896 $ 588,845 $4,237,952 N N N t NOTE 6 — DEFERRED INFLOWS AND OUTFLOWS OF RESOURCES T) Deferred Outflows of Resources at December 31, 2020, are as follows: c Deferred Outflows of Resources - Government -wide Governmental Business -Type G Statement of Net Position Activities Activities p w Difference between the reacquisition price and the r net carrying amount of old debt in current c refundings when the reacquistion price is greater. $ 7,410 $ 63,655 t GASB 68 Pension Deferred Outflow 2,681,680 373,002 Total $ 2,689,090 $ 436,657 Q Page 59 Packet Pg. 177 2.7.a Deferred Inflows of Resources at December 31. 2020 are as follows: Deferred Inflows of Resources - Government -wide Governmental Business -Type Statement of Net Position Activities Activities Difference between the reacquisition price and the net carrying amount of old debt in current refundings when the reacquistion price is less. $ 103,485 $ 18,244 GASB 68 Pension Deferred Inflow 2,433,890 369,459 $ 2,537,375 $ 387,703 Deferred Inflows of Resources - Governmental Enterprise Funds Balance Sheet General Fund Funds The portion of property taxes not received within 60 days of 2020 $ 197,668 $ The portion of court receivables not recei\(ed within 60 days of 2020 333,948 Total $ 531,616 $ - NOTE 7 — INTERFUND ACTIVITY There were two interfund balances as of December 31, 2020. The first was for a utility tax payable to the General Fund in the amount of $231,144. The second was for an interfund loan between the Contingency Reserve Fund and the Edmonds CARES Fund in the amount of $217,000. The Edmonds CARES Fund made grant eligible payments and is waiting for grant reimbursement from Snohomish County. Interfund transfers are the flow of assets without a reciprocal return of assets, goods or services. The City uses transfers to move revenues from the fund that statute or budget requires to collect w them to the fund that statute or budget requires to expend them. Routine transfers include r contributions to the pension funds, transfers for debt service requirements, transfers from unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds, transfers for the 1 % percent for the arts program, and transfers when the City closes out activity in a fund. Significant transfers in 2020 include a $1.5 million transfer from the Equipment Rental Fund to the General Fund. Q Interfund activity for the year is as follows: Transfers Out Other Transfers In General Governmental Enterprise Total General Fund $ 1,535,800 $ - $ 776,991 $ $ 776,991 Other Governmental 945,199 35,800 167,477 203,277 Enterprise - - 731 731 Internal Service - 1,500,000 - 1,500,000 Total $ 2,480,999 $ 1,535,800 $ 945,199 $ - $ 2,480,999 Page 60 Packet Pg. 178 2.7.a NOTE 8 — RESTRICTED, COMMITTED AND ASSIGNED COMPONENTS The government -wide statement of net position reports $16,186,900 for Governmental Activities and $3,296,724 for Business -Type Activities as restricted components of net position. The fund statements report $3,076,353 as committed and $2,000,000 as assigned components of fund balance. Governmental Activities Restricted for: Per RCW, proceeds from seizures are limited to law enforcement activities exclusively $ Restricted per RCW related to state fuel taxes, transportation benefit fees, impact fees and grant agreements Restricted per RCW related to REET revenue and lodging tax restrictions, private donors, and grant agreements Per RCW, proceeds are limited to paying the cost of tourism promotion and the Edmonds Business Improvement District Per RCW, 60% of the proceeds are limited to the construction of affordable housing, construction of mental and behavioral health - related facilities and facilities where housing related programs are provided. The remaining proceeds must be used for the operation, delivery or evaluation of mental and behavioral health treatment programs and services or housing -related services Restricted by grant agreements and private donations limited to a specific purpose Restricted for Net Pension Assets Total Restricted Components of Net Position 74,303 3,220,074 8,129, 745 86,073 78,441 10,363 4,656,343 $ 16,255,342 Business -Type Activities Restricted for: Customer deposits $ 6,148 Debt service restrictions 3,290,576 Total Restricted Components of Net Position $ 3,296,724 Governmental Activities Committed for: Committed for the cost of operating and restoring the Edmonds Marsh $ 864,616 Committed to provide moneys with which to alleviate the problem of homelessness in Edmonds and the surrounding area 123,581 Committed to provide moneys with which to alleviate the problem of opioid addiction in Edmonds and the surrounding area 28,445 Committed for the acquisition or advancement of visual and performing arts within the City 682,727 Committed for the administration of the employee permit parking program solely and exclusively 81,998 Committed for special projects, special events, capital improvements and other nonrecurring needs of cemetery 205,127 Committed to be expended solely for the purpose of maintaining the cemetery 1,089,860 Total Committed Components of Fund Balance $ 3,076,353 Governmental Activities Assigned for: Assigned for Civic Park 2,000,000 Total Assigned Components of Fund Balance $ 2,000,000 Q Page 61 Packet Pg. 179 2.7.a NOTE 9 — CAPITAL ASSETS AND DEPRECIATION Capital asset activity for the year ended December 31, 2020 is as follows: Schedule of Capital Asset Activity Balance Balance 1/1/2020 Increases Decreases 12/31/2020 Governmental Activities Capital assets, not being depreciated: Land Construction in progress Total capital assets not being depreciated: Capital assets, being depreciated: Building Improvements other than buildings Infrastructure Machinery and equipment Total capital assets being depreciated: Less accumulated depreciation for: Buildings Improvements other than buildings Infrastructure Machinery and equipment Total accumulated depreciation: Total capital assets being depreciated, net: Governmental activities capital assets, net: Business -type Activities Capital assets not being depreciated: Land Construction in progress Total capital assets, not being depreciated: Capital assets being depreciated: Building Improvements other than buildings Machinery and equipment Intangible assets Total capital assets being depreciated: Less accumulated depreciation for: $ 17, 688, 372 $ - $ - $ 17, 688, 372 2,375,529 5,740,141 (279,189) 7,836,481 20,063,901 5,740,141 (279,189) 25,524,853 24,427,468 490,286 - 24,917,754 24,630,915 - (189,111) 24,441,804 64,873,168 313,450 - 65,186,618 10,443,849 765,394 (646,898) 10,562,344 124, 375, 399 1,569,130 (836, 009) 125,108, 520 (17,131,319) (503,556) - (17,634,875) (9,565,537) (833,159) 189,110 (10,209,586) (37,059,986) (1,486,381) - (38,546,367) (5,313,320) (725,456) 589,232 (5,449,543) (69, 070,161) (3,548,552) 778,342 (71, 840, 371) 55,305,238 (1,979,422) (57,667) 53,268,149 $ 75,369,139 $ 3,760,719 $ (336,855) $ 78,793,002 Balance Balance 1/1/2020 Increases Decreases 12/31/2020 $ 1,257,107 $ - $ - $ 1,257,107 7,755,141 14,851,137 (4,311,195) 18,295,083 9,012,248 14,851,137 (4,311,195) 19,552,190 35,489,768 - (51,040) 35,438,728 106,302,842 10,115,555 (1,557,937) 114,860,460 1,056,690 5,023 1,061,712 1,296,697 - 1,296,697 144,145, 996 10,120, 578 (1,608,977) 152, 657, 597 Buildings (19,349,640) (680,296) 51,039 (19,978,897) Improvements other than buildings (33,871,180) (3,286,106) 736,278 (36,421,008) Machinery and equipment (508,598) (61,498) - (570,096) Intangible assets (1,265,916) (1,868) - (1,267,784) Total accumulated depreciation: (54,995,334) (4,029,768) 787,317 (58,237,785) Total capital assets being depreciated, net: 89,150,663 6,090,810 (821,660) 94,419,813 Business activities capital assets, net: $ 98,162,911 $ 20,941,947 $ (5,132,855) $ 113,972,003 Q Page 62 Packet Pg. 180 2.7.a The difference between the 2019 Ending Balance and the 2020 Beginning Balance for capital assets in the Governmental Activities is due to two misstatements identified during the 2019 audit that were not corrected during the 2019 audit. The city deleted roads that were still in use and expensed playground equipment that should have been capitalized. The difference for the Business -type Activities is due to two assets identified by the engineering department that were not originally added to the capital asset list. The items were listed on the small and attractive list but met the capital asset threshold. Depreciation Expense by Function Governmental Activities: General government $ 468,951 Public safety 305,018 Culture and recreation 707,519 Transportation 1,419,541 Physical Environment 4,575 Internal service 642,948 Total depreciation expense - Governmental Activities $ 3,548,552 Business -Type Activities: Stormwater $ 661,015 Water 1,124, 800 Sewer 873,978 Wastewater Treatment 1,369,976 Total depreciation expense - Business Type Activities $ 4,029,768 NOTE 10 — PENSION PLANS The following table represents the aggregate pension amounts for all plans as of and for the year ended December 31, 2020: State Sponsored Plans Single Employer Plan Total Pension Liabilities $ 4,987,572 $ 507,497 $ 5,495,069 Pension Assets $ 4,656,343 $ - $ 4,656,343 Deferred Outflows of Resources $ 3,053,817 $ 865 $ 3,054,682 Deferred Inflows of Resources $ 2,803,349 $ - $ 2,803,349 Pension Expense/Expenditures $ 370,468 $ 13,534 $ 384,002 State Sponsored Pension Plans Substantially all of the City's full-time and qualifying part-time employees participate in one of the following statewide retirement systems administered by the Washington State Department of Retirement Systems (DRS), under cost -sharing, multiple -employer public employee defined benefit and defined contribution retirement plans. The state Legislature establishes, and amends, laws pertaining to the creation and administration of all public retirement systems. Q Page 63 Packet Pg. 181 2.7.a The DRS, a department within the primary government of the State of Washington, issues a publicly available Comprehensive Annual Financial Report that includes financial statements and required supplementary information for each plan. The DRS Report may be obtained by writing to Department of Retirement Systems, Communications Unit, P.O. Box 48380, Olympia, WA 98540, or it may be downloaded from the DRS website at www.drs.wa.gov. Public Employees Retirement System (PERS) PERS members include elected officials; state employees; employees of the Supreme, Appeals and Superior Courts; employees of the legislature; employees of district and municipal courts; employees of local governments; and higher education employees not participating in higher education retirement programs. PERS is comprised of three separate pension plans for membership purposes. PERS plans 1 and 2 are defined benefit plans, and PERS 3 is a defined benefit plan with a defined contribution component. PERS Plan 1 — provides retirement, disability and death benefits. Retirement benefits are determined as 2% of the member's average final compensation (AFC) times the member's years of service. The AFC is the average of the member's 24 highest consecutive service months. Members are eligible for retirement from active status at any age with at least 30 years of service, at age 55 with at least 25 years of service, or at age 60 with at least five years of service. Members retiring from active status prior to the age of 65 may receive actuarially reduced benefits. Retirement benefits are actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non -duty disability payments, an optional cost of living adjustment, and a one-time duty -related death benefit, if found eligible by the Department of Labor and Industries. PERS 1 members were vested after the completion of five years of eligible service. The plan was closed to new entrants on September 30, 1977. Contributions — The PERS Plan 1 member contribution rate is established by State statute at 6%. The employer contribution rate is developed by the Office of the State Actuary and includes an administrative expense component that is currently set at 0.18%. Each biennium, the state Pension Funding Council adopts Plan 1 employer contribution rates. The PERS Plan 1 required contribution rates (expressed as a percentage of covered payroll) for 2020 were as follows: PERS Plan 1 Actual Contribution Rates Employer Employee 2020 January through August PERS Plan 1 7.92% 6.00% PERS Plan 1 UAAL 4.76% Administrative Fee 0.18% Total 12.86% 6.00% September through December PERS Plan 1 7.92% 6.00% PERS Plan 1 UAAL 4.87% Administrative Fee 0.18% Total 12.97% 6.00% The City's actual contributions to the plan were $719,557 for the year ended December 31, 2020. PERS Plan 213 — provides retirement, disability and death benefits. Retirement benefits are determined as 2% of the member's average final compensation (AFC) times the member's years of service for Plan 2 and 1 % of AFC for Plan 3. The AFC is the average of the member's 60 highest - paid consecutive service months. There is no cap on years of service credit. Members are eligible for retirement with a full benefit at age 65 with at least five years of service credit. Retirement before Q Page 64 Packet Pg. 182 2.7.a age 65 is considered an early retirement. PERS Plan 2/3 members who have at least 20 years of service credit and are 55 years of age or older, are eligible for early retirement with a benefit that is reduced by a factor that varies according to age for each year before age 65. PERS Plan 2/3 members who have 30 or more years of service credit and are at least 55 years old can retire under one of two provisions: • With a benefit that is reduced by 3% for each year before age 65; or • With a benefit that has a smaller (or no) reduction (depending on age) that imposes stricter return -to -work rules. PERS Plan 2/3 members hired on or after May 1, 2013 have the option to retire early by accepting a reduction of 5% for each year of retirement before age 65. This option is available only to those who are age 55 or older and have at least 30 years of service credit. PERS Plan 2/3 retirement benefits are also actuarially reduced to reflect the choice of a survivor benefit. Other PERS Plan 2/3 benefits include duty and non -duty disability payments, a cost -of -living allowance based on the CPI capped at 3% annually, and a one-time duty related death benefit, if found eligible by the Department of Labor and Industries. PERS 2 members are vested after completing five years of eligible service. Plan 3 members are vested in the defined benefit portion of their plan after ten years of service; or after five years of service if 12 months of that service are earned after age 44. PERS Plan 3 — defined contribution benefits are totally dependent on employee contributions and investment earnings on those contributions. PERS Plan 3 members choose their contribution rate upon joining membership and have a chance to change rates upon changing employers. Plan 3 required defined contribution rates are set at a minimum of 5% and escalate to 15% with a choice of six options. Employers do not contribute to the defined contribution benefits. PERS Plan 3 members are immediately vested in the defined contribution portion of their plan. Contributions — The PERS Plan 2/3 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. The Plan 2/3 employer rates include a component to address the PERS Plan 1 unfunded actuarially accrued liability (UAAL) and an administrative expense that is currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 2 employer and employee contribution rates and Plan 3 contribution rates. The PERS Plan 2/3 required contribution rates (expressed as a percentage of covered payroll) for 2020 were as follows: PERS Plan 2/3 Actual Contribution Rates Employer 2/3 Employee 2 Employee 3 2020 January through August PERS Plan 2/3 7.92% 7.90% Varies PERS Plan 1 UAAL 4.76% Administrative Fee 0.18% Total 12.86% 7.90% Varies September through December PERS Plan 2/3 7.92% 7.90% Varies PERS Plan 1 UAAL 4.87% Administrative Fee 0.18% Total 12.97% 7.90% Varies The City's actual contributions to the plan were $1,128,159 for the year ended December 31, 2020. Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) LEOFF membership includes all full-time, fully compensated, local law enforcement commissioned officers, firefighters, and as of July 24, 2005, emergency medical technicians. LEOFF is comprised of two separate defined benefit plans. a 3 0 0 U_ r =a Q �a N N N T) a U) c 0 E 0 w r C N E t ca Q Page 65 Packet Pg. 183 2.7.a LEOFF Plan 1 provides retirement, disability and death benefits. Retirement benefits are determined per years of service calculated as a percent of final average salary (FAS) as follows: • 20+ years of service — 2.0% of FAS • 10 — 19 years of service — 1.5% of FAS • 5 — 9 years of service — 1 % of FAS The FAS is the basic monthly salary received at the time of retirement, provided a member has held the same position or rank for 12 months preceding the date of retirement. Otherwise, it is the average of the highest consecutive 24 months' salary within the last 10 years of service. Members are eligible for retirement with 5 years of service at the age of 50. Other benefits include duty and non -duty disability payments, a cost -of living adjustment (COLA), and a one-time duty -related death benefit, if found eligible by the Department of Labor and Industries. LEOFF 1 members were vested after the completion of 5 years of eligible service. The plan was closed to new entrants on September 30, 1977. Contributions — Starting on July 1, 2000 LEOFF Plan 1 employers and employees contribute zero percent, as long as the plan remains fully funded. The LEOFF Plan I had no required employer or employee contributions for fiscal year 2020. Employers paid only the administrative expense of 0.18% of covered payroll. LEOFF Plan 2 — provides retirement, disability and death benefits. Retirement benefits are determined as 2% of the final average salary (FAS) per year of service (the FAS is based on the highest consecutive 60 months). Members are eligible for retirement with a full benefit at age 53, with at least 5 years of service credit. Members who retire prior to the age of 53 receive reduced benefits. If the member has at least 20 years of service and is age 50, the reduction is 3% for each year prior to age 53. Otherwise, the benefits are actuarially reduced for each year prior to age 53. LEOFF 2 retirement benefits are also actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non -duty disability payments, a cost -of -living allowance based on the CPI, capped at 3% annually and a one-time duty -related death benefit, if found eligible by the Department of Labor and Industries. LEOFF 2 members are vested after the completion of 5 years of eligible service. Contributions — The LEOFF Plan 2 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2. The employer rate included an administrative expense component set at 0.18%. Plan 2 employers and employees are required to pay at the level adopted by the LEOFF Plan 2 Retirement Board. Effective July 1, 2017, when a LEOFF employer charges a fee or recovers costs for services rendered by a LEOFF 2 member to a non-LEOFF employer, the LEOFF employer must cover both the employer and State contributions on the LEOFF 2 basic salary earned for those services. The state contribution rate (expressed as a percentage of covered payroll) was 3.44% in 2020. The LEOFF Plan 2 required contribution rates (expressed as a percentage of covered payroll) for 2020 were as follows: LEOFF Plan 2 Actual Contribution Rates Employer Employee 2020 January through December LEOFF Plan 2 5.15% 8.59% Administrative Fee 0.18% Total 5.33% 8.59% Q Page 66 Packet Pg. 184 2.7.a The City's actual contributions to the plan were $360,086 for the year ended December 31, 2020. The Legislature, by means of a special funding arrangement, appropriates money from the state General Fund to supplement the current service liability and fund the prior service costs of Plan 2 in accordance with the recommendations of the Pension Funding Council and the LEOFF Plan 2 Retirement Board. This special funding situation is not mandated by the state constitution and could be changed by statute. For the state fiscal year ending June 30, 2020 the state contributed $76,297,643 to LEOFF Plan 2. The amount recognized by the City as its proportionate share of this amount is $221,306. Actuarial Assumptions The total pension liability (TPL) for each of the DRS plans was determined using the most recent actuarial valuation completed in 2020, with a valuation date of June 30, 2019. The actuarial assumptions used in the valuation were based on the results of the Office of the State Actuary's (OSA) 2013-2018 Experience Study and the 2019 Economic Experience Study. Additional assumptions for subsequent events and law changes are current as of the 2019 actuarial a valuation report. The TPL was calculated as of the valuation date and rolled forward to the measurement date of June 30, 2020. Plan liabilities were rolled forward from June 30, 2019, to 0 June 30, 2020, reflecting each plan's normal cost (using the entry -age cost method), assumed io interest and actual benefit payments. r =a • Inflation: 2.75% total economic inflation; 3.50% salary inflation Q • Salary increases: In addition to the base 3.50% salary inflation assumption, salaries are also expected to grow by promotions and longevity. • Investment rate of return: 7.4% N N Mortality rates were developed using the Society of Actuaries' Pub. H-2020 mortality rates, which t vary by member status, as the base table. The OSA applied age offsets for each system, as T) appropriate, to better tailor the mortality rates to the demographics of each plan. OSA applied the long-term MP-2017 generational improvement scale, also developed by the Society Actuaries, to �- project mortality rates for every year after the 2010 base table. Mortality rates are applied on a generational basis; meaning, each member is assumed to receive additional mortality o improvements in each future year throughout his or her lifetime. p w There were changes in methods and assumptions since the last valuation. r c W E • OSA updated its demographic assumptions based on the results of its latest demographic experience study. See OSA's 2013-2018 Demographic Experience Study at Ieg.wa.gov/osa a • OSA updated the Early Retirement Factors and Joint -and -Survivor factors used in its model to match the ones implemented by DRS on October 1, 2020. These factors are used to value benefits for members who elect to retire early and for survivors of members that die prior to retirement. • The valuation includes liabilities and assets for Plan 3 members purchasing Total Allocation Portfolio annuities when determining contribution rates and funded status. • OSA simplified its modeling of medical premium reimbursements for survivors of duty -related deaths in LEOFF 2. Page 67 Packet Pg. 185 2.7.a • OSA changed its method of updating certain data items that change annually, including the public safety duty -related death lump sum and Washington state average wage. OSA set these values at 2018 and will project them into the future using assumptions until the next Demographic Experience Study in 2025. See leg.wa.gov/osa for more information on this method change. Discount Rate The discount rate used to measure the total pension liability for all DRS plans was 7.4%. To determine that rate, an asset sufficiency test was completed to test whether each pension plan's fiduciary net position was sufficient to make all projected future benefit payments for current plan members. Based on OSA's assumptions, the pension plans' fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return of 7.4 percent was used to determine the total liability. Long -Term Expected Rate of Return The long-term expected rate of return on the DRS pension plan investments of 7.4% was determined using a building -block -method. In selecting this assumption, the Office of the State Actuary (OSA) reviewed the historical experience data, considered the historical conditions that produced past annual investment returns, and considered capital market assumptions and simulated expected investment returns provided by the Washington State Investment Board (WSIB). The WSIB uses the capital market assumptions and their target asset allocation to simulate future investment returns at various future times. Estimated Rates of Return by Asset Class Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of June 30, 2020, are summarized in the table below. The inflation component used to create the table is 2.2% and represents the WSIB's most recent long-term estimate of broad economic inflation. Asset Class Target Allocation Percent Long - Term Expected Real Rate of Return Arithmetic Fixed Income 20.00% 2.20% Tangible Assets 7.00% 5.10% Real Estate 18.00% 5.80% Global Equity 32.00% 6.30% Private Equity 23.00% 9.30% Total 100.00% Sensitivity of the NPL The table below presents the City's proportionate share of the net pension liability (asset) calculated using the discount rate of 7.4%, as well as what the City's proportionate share of the net pension liability (asset) would be if it were calculated using a discount rate that is 1-percentage point lower (6.4%) or 1-percentage point higher (8.4%) than the current rate. Q Page 68 Packet Pg. 186 2.7.a 2020 1% Decrease (6.4%) Current Discount Rate (7.4%) 1% Increase (8.4%) PERS 1 $ 4,323,056 $ 3,451,385 $ 2,691,199 PERS 2/3 $ 9,558,504 $ 1,536,177 $ 5,070,214 LEOFF 1 $ 852,457 $ 1,047,310 $ 1,215,891 LEOFF 2 $ 71,448 $ 3,609,032 $ 6,505,608 Pension Plan Fiduciary Net Position Detailed information about the State's pension plans' fiduciary net position is available in the separately issued DRS financial report. Pension Liabilities (Assets) At December 31, 2020, the City reported a total pension liability of $4,987,562 and a total pension asset of ($4,656,342) for its proportionate share of the net pension liabilities as follows (measured as of June 30, 2020): 2020 Liability (Asset) PERS 1 $ 3,451,385 PERS 2/3 $ 1,536,177 Total $ 4,987,562 LEOFF 1 $ 1,047,310 LEOFF 2 $ 3,609,032 Total $ 4,656,342 The amount of the asset reported above for LEOFF Plans 1 and 2 reflects a reduction for State pension support provided to the City. The amount recognized by the City as its proportionate share of the net pension asset, the related State support, and the total portion of the net pension asset that was associated with the City were as follows: LEOFF 1 (Asset) LEOFF 2 (Asset) Employer's Proportionate Share $ 1,047,310 $ 3,609,032 State's Proportionate Share of the Net Pension Asset Associated with the Employer $ 7,083,982 $ 2,307,703 Total $ 8,131,292 $ 5,916,735 The City's proportionate share of the collective net pension assets, deferred outflows, liabilities, and deferred inflows was as follows: Proportionate Share 6/30/2019 Proportionate Share 6/30/2020 Change in Proportion PERS 1 0.097960% 0.097758% -0.000202% PERS 2/3 0.119772% 0.120113% 0.000341% LEOFF 1 0.053590% 0.055457% 0.001867% LEOFF 2 0.192032% 1 0.176926% 1 -0.015106% Q Page 69 Packet Pg. 187 2.7.a Employer contribution transmittals received and processed by the DRS for the fiscal year ended June 30 are used as the basis for determining each employer's proportionate share of the collective pension amounts reported by the DRS in the Schedules of Employer and Nonemployer Allocations for all plans except LEOFF 1. LEOFF Plan 1 allocation percentages are based on the total historical employer contributions to LEOFF 1 from 1971 through 2000 and the retirement benefit payments in fiscal year 2020. Historical data was obtained from a 2011 study by the Office of the State Actuary (OSA). In fiscal year 2019, the state of Washington contributed 87.12% of LEOFF 1 employer contributions and all other employers contributed the remaining 12.88% of employer contributions. LEOFF 1 is fully funded and no further employer contributions have been required since June 2000. If the plan becomes underfunded, funding of the remaining liability will require new legislation. The allocation method the plan chose reflects the projected long-term contribution effort based on historical data. In fiscal year 2020, the state of Washington contributed 39% of LEOFF 2 employer contributions pursuant to RCW 41.26.725 and all other employers contributed the remaining 61 % of employer contributions. The collective net pension liability (asset) was measured as of June 30, 2020, and the actuarial valuation date on which the total pension liability (asset) is based was as of June 30, 2019, with update procedures used to roll forward the total pension liability to the measurement date. Pension Expense For the year ended December 31, 2020, the City recognized pension expense as follows: 2020 PERS 1 $ 159,072 PERS 2/3 $ 139,854 LEOFF 1 $ 86,904 LEOFF 2 $ 158,449 Total $ 370,471 a+ Q Page 70 Packet Pg. 188 2.7.a Deferred Outflows of Resources and Deferred Inflows of Resources At December 31, 2020 the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of PERS 1 Resources Resources Differences Between Expected and Actual Experience $ - $ Net Difference Between Projected and Actual Investment Earnings on Pension Plan Investments $ - $ 19,216 Changes of Assumptions $ - $ - Changes in Proportion and Differences Between Contributions and Proportionate Share of Contributions $ - $ - Contributions Subsequent to the Measurement Date $ 360,233 $ - Total PERS 1 $ 360,233 $ 19,216 Deferred Deferred Outflows of Inflows of PERS 2/3 Resources Resources Differences Between Expected and Actual Experience $ 549,929 $ 192,520 Net Difference Between Projected and Actual Investment Earnings on Pension Plan Investments $ - $ 78,016 Changes of Assumptions $ 21,879 $ 1,049,342 Changes in Proportion and Differences Between Contributions and Proportionate Share of Contributions $ 465,371 $ 560,922 Contributions Subsequent to the Measurement Date $ 560,626 $ - Total PERS 2/3 $ 1,597,805 $ 1,880,800 a 3 0 0 a_ a N N a� 3 Q c 0 E 0 w r c a� E a Page 71 Packet Pg. 189 2.7.a Deferred Deferred Outflows of Inflows of LEOFF 1 Resources Resources Differences Between Expected and Actual Experience $ - $ Net Difference Between Projected and Actual Investment Earnings on Pension Plan Investments $ - $ 10,955 Changes of Assumptions $ - $ - Changes in Proportion and Differences Between Contributions and Proportionate Share of Contributions $ - $ - Contributions Subsequent to the Measurement Date $ - $ - Total LEOFF 1 $ - $ 10,955 Deferred Deferred Outflows of Inflows of LEOFF 2 Resources Resources Differences Between Expected and Actual Experience $ 499,369 $ 64,009 Net Difference Between Projected and Actual Investment Earnings on Pension Plan Investments $ - $ 40,226 Changes of Assumptions $ 5,228 $ 558,838 Changes in Proportion and Differences Between Contributions and Proportionate Share of Contributions $ 398,351 $ 229,305 Contributions Subsequent to the Measurement Date $ 192,831 $ - Total LEOFF 2 $ 1,095,779 $ 892,378 Deferred Deferred Outflows of Inflows of All Plans Resources Resources Differences Between Expected and Actual Experience $ 1,049,298 $ 256,529 Net Difference Between Projected and Actual Investment Earnings on Pension Plan Investments $ - $ 148,413 Changes of Assumptions $ 27,107 $ 1,608,180 Changes in Proportion and Differences Between Contributions and Proportionate Share of Contributions $ 863,722 $ 790,227 Contributions Subsequent to the Measurement Date $ 1,113,690 $ - Total All Plans $ 3,053,817 $ 2,803,349 Page 72 Packet Pg. 190 2.7.a Deferred outflows of resources related to pensions resulting from the City's contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the following year. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ending December 31, PERS 1 PERS 213 2021 $ 87,203 $ 656,079 2022 $ 2,743 $ 171,024 2023 $ 26,608 $ 8,645 2024 $ 44,122 $ 72,347 2025 $ - $ 34,808 Thereafter $ - $ 62,693 Total $ 19,216 $ 843,612 LEOFF 1 LEOFF 2 2021 $ 39,105 $ 250,783 2022 $ 2,039 $ 18,885 2023 $ 11,117 $ 70,239 2024 $ 19,072 $ 137,576 2025 $ - $ 7,434 Thereafter $ - $ 79,858 Total $ 10,955 $ 10,571 Firemen's Pension Fund Plan Description The Law Enforcement Officers' and Firefighters' (LEOFF) pension system was established by the State of Washington on March 1, 1970. The City retained the responsibility for all benefits payable to members (or to their survivors) who retired prior to that date. In addition, the City retained the responsibility for a portion of the benefits payable to members who were active on that date. As a result, the City of Edmonds is the administrator of the Firemen's Pension Plan which is shown as a Trust Fund in the City's financial reports. Separate financial statements are not issued. This system is a closed, single -employer, defined benefit pension system. City firefighters who served before March 1, 1970 are participants of this pension fund. Benefits are established in accordance with RCW 41.18 and RCW 41.20. Employees Covered by Benefit Terms During 2020 there were a total of 4 retirees covered under this system who are receiving pension benefits; of these 4 retirees, 3 are also receiving medical benefits from this fund. There were no active employees covered under this plan, and there were no inactive employees entitled to but not yet receiving benefits. The pension plan is closed to new entrants. Funding Policy and Contributions Under State law, the Firemen's Pension Fund is provided an allocation of 25% of all money received by the State from taxes on fire insurance premiums. The General Fund may provide additional funding through transfers to help fund benefits and administrative costs as necessary. Active pension plan members are not required to contribute to the plan. a 3 0 0 e_ =a Q �a N N N t N a U) c 0 E 0 w r C a� E ca Q Page 73 Packet Pg. 191 2.7.a The financial activity of the Firemen's Pension Fund is presented in the Statement of Fiduciary Net Position and the Statement of Changes in Fiduciary Net Position. No separate stand-alone financial report is issued for the Firemen's Pension Fund. Although the City administers the pension plan, it is partially funded by a percentage of the tax on fire insurance premiums. The state contributes 25% of taxes on fire insurance premiums to this plan and is considered a non -employer contributing entity. The amount of contributions received for the year ended December 31, 2020 was $51,491. Milliman, Inc., actuaries and consultants, provided the Firemen's Pension Fund Actuarial Valuation for the year ended December 31, 2020. The Net Pension Liability was measured as of December 31, 2020, and the total pension liability used to calculate the net pension liability was determined by the actuarial valuation as of January 1, 2020. The Firemen's Pension Fund did not hold any investments. The net pension liability has been recorded as a noncurrent liability on the City's Government -wide Statement of Net Position. Significant actuarial assumptions used in the valuation include: Actuarial Cost Method Entry Age Actuarial Asset Method Market Value Assumptions: Investment Return Assumption Discount Rate)* 2.00% Increases 3.00% —Salary Inflation related to Consumer Price Index 2.25% Salary Increase Timing Jul 1 LEOFF Increase Timing April 1 RP-2000 Mortality Table (combined healthy) with generational projection using 100% of Projection Scale BB, with Mortality — Service -retired members and ages set back one year for males and spouses set forward one year for females. RP-2000 Mortality Table (combined healthy) with generational projection using 100% of Projection Scale BB, with Mortality — Disabled members ages set forward two years. *Discount rate is based on The Bond Buyer General Obligation 20-bond municipal index for bonds that mature in 20 years. There were changes in methods and assumptions since the last actuarial valuation January 1, 2020). • Decreased the investment rate of return from 2.75% to 2.00%. Q Page 74 Packet Pg. 192 2.7.a Chanaes in the Net Pension Liabil Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability Balances at December 31, 2019 $ 642,577 $ 146,733 $ 495,844 Changes for the Year: Service Cost - - - Interest 16,828 - 16,828 Changes in Benefits Provided - - - Changes in Actuarial Assumptions or Inputs 29,948 - 29,948 Differences Between Expected and Actual Experience - - - Contributions - Employer - Net Investment Income 3,897 (3,897) Contributions from state fire insurance premium tax 51,491 (51,491) Benefit Payments and Withdrawals (61,740) (61,740) - Medical Payments from Fund (19,258) 19,258 Administrative Expenses (1,007) 1,007 Other - - - Balances at December 31, 2020 $ 627,613 $ 120,116 $ 507,497 Net Plan Fiduciary Net Position Total Pension Liability Pension Plans Fiduciary Net Position Net Pension Liability Plan Fiduciary Net Position as a % of the Total Pension Liability 2020 2019 $ 627,613 $ 642,577 120,116 146,733 $ 507,497 $ 495,844 19.14% 22.84% SensitivitV of Net Pension LiabilitV The following table presents the City's proportionate share of the net pension liability calculated using the discount rate of 2.00%, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage point higher than the current rate. 1% Decrease Current Rate 2% 1% Increase Net Pension Liability $ 551,761 $ 507,497 $ 468,128 Q Page 75 Packet Pg. 193 2.7.a Pension Expense For the year ended December 31, 2020 the City recognized pension expense related to the Firemen's pension plan as follows: Service Cost $ - Interest Cost 16,828 Expected Investment Earnings (3,618) Administrative Expense 1,007 Medical Payments 19,258 Contributions from state fire insurance premium tax (51,491) Amortization of Deferred Inflows and Outflows 31,550 Changes in Benefits Provided - $ 13,534 Deferred Outflows of Resources and Deferred Inflows of Resources At December 31, 2020 the City reported deferred outflows of resources and deferred inflows of resources related to the Firemen's pension plan from the following sources: Differences Between Expected and Actual Experience Net Difference Between Projected and Actual Investment Earnings on Pension Plan Investments Changes of Assumptions Total Deferred Deferred Outflows of Inflows of Resources Resources (865) - $ (865) $ - Deferred Outflows of resources related to the Firemen's Pension Plan and Deferred Inflows of Resources related to the Firemen's Pension Plan will be recognized in pension expense as follows: Year Endina December 31 2021 2022 2023 2024 2025 Thereafter Total $ (738) (123) (59) 55 $ (865) Municipal Employees Benefits Trust (MEBT) By majority vote, City employees approved the City's withdrawal from the Social Security System pursuant to 2 U.S.C.A., Sec. 418 (g) effective July 1, 1977. City employees who customarily work 1,000 or more hours per year and who otherwise would be eligible for Social Security coverage and benefits are required to participate. Both the City and participants are required to contribute an r a Page 76 Packet Pg. 194 2.7.a amount equal to the current Federal Insurance Contributions Act (FICA) tax rate. The City's contribution for fiscal year 2020 was $1,246,189 which represents its full liability. For the year ending December 31, 2020 the City's covered payroll was $21,910,021. No significant benefit changes occurred in 2020. The plan is administered by a Plan Committee consisting of two members appointed by the Mayor and five members elected by the employees who contribute to the plan. Members appointed by the Mayor serve at the pleasure of the Mayor; elected members serve a two-year term and may be re-elected for an additional two-year term. Plan assets are not City property, but are maintained in trust at American Stock Transfer and Trust Company. Plan assets, therefore, are not included in these financial statements. The City may amend the provisions of the plan, provided that no such amendment shall enlarge the duties or the liabilities of the plan trustee without its consent. The City has the right at any time to reduce, suspend, or completely discontinue its contributions to the plan. Actuarial determinations are not required because 1) long-term disability insurance and a survivor income insurance are provided through Cigna Group Insurance, and 2) each participant shall, at their normal retirement, instruct the Trustee to (a) acquire a non -forfeitable, non- o transferable annuity contract, (b) pay their retirement benefit from their account (no City or io participant contributions are to be added to the account after retirement), or (c) pay a single cash r sum. When a participant terminates, the Trustee shall be instructed to pay the full amount of the participant's contributions plus the vested portion credited to their account. Q �a NOTE 11 — OTHER POST EMPLOYMENT BENEFITS (OPEB) N N The following table represents the aggregate OPEB amounts for all plans subject to the requirements of GASB 75 for the year ended December 31: N 2020 OPEB Liabilities $ (8,365,221) c Deferred Outflows of Resources - o E Deferred Inflows of Resources - o OPEB Expense 843,038 w r C N In addition to providing pension benefits described under "Fireman's Pension," the City provides other post -employment health care benefits. Firefighters hired between March 1, 1970 and September 30, 1977 are members of the LEOFF 1 pension system and are also eligible for a a supplemental retirement benefit plus health benefits under the City plan. General Information about the OPEB Plan Plan Description This system is a closed, single -employer, defined benefit OPEB plan. Benefits Provided The City pays the medical insurance premiums and any additional medical expenses not covered by insurance, including long-term care. These benefits were paid from the LEOFF 1 Retiree Medical Reserve Fund. In accordance with RCW 41.26.150, all employees who become eligible after age 50 or become disabled while employed with at least 5 years of service in the LEOFF 1 system are eligible. Page 77 Packet Pg. 195 2.7.a Employees Covered by Benefit Terms At December 31, 2020 the following employees were covered by the benefit terms: 2020 Inactive Employees or Beneficiaries Currently Receiving Benefit Payments 22 Inactive Employees Entitled to But Not Yet Receiving Benefit Payments - Active Employees - Funding Policy The plan is funded on a pay-as-you-go basis and there are no assets accumulating in a qualifying trust. Contributions Under authorization of the Disability Board, the City pays the medical insurance premiums and any additional medical expenses not covered by insurance, including long-term care. The retiree does not contribute towards the cost of their medical care. Total OPEB Liability The City's total OPEB liability was measured as of December 31, 2020 and was determined using an actuarial valuation as of December 31, 2018. The actuarial measurement was based on the following methods and assumptions: -Methodology: Actuarial Cost Method Entry Age Actuarial Asset Method Market Value Assumptions: Investment Return Assumption Discount Rate) * 2.00% Increases 3.00% -Salary Cost of Living Adjustments 2.50% Inflation 2.50% Mortality RP-2014 Static Projection to 2024 with Scale MP-2014 Medical Trend Rate 5.25% grading down to 5.00% in 2020 Long -Term Care Trend Rate 5.00% *Discount rate is based on The Bond Buyer General Obligation 20-bond municipal index for bonds that mature in 20 years. There were changes in methods and assumptions since the last actuarial valuation (December 31, 2018). • Decreased the investment rate of return from 2.75% to 2.00%. a 3 0 0 a_ r a �a N N t T) 3 a c 0 E a w r c a� E R Q Page 78 Packet Pg. 196 2.7.a Changes in the total OPEB Liability: Balance - January 1 Service Cost Interest Changes in Actuarial Assumptions Differences Between Expected and Actual Experieni Benefit Payments and Withdrawals Other Total 2020 $ 7,877,232 211,775 631,263 (355,049) $ 8,365,221 Sensitivitv of the Total OPEB Liabilitv to Chanaes in the Healthcare Cost Trend Rate and Discount Rate The following presents the total OPEB liability of the City calculated using a discount rate and healthcare trend rates that are 1 percentage point higher and 1 percentage point lower than the current discount rate and health care cost trend rates: 1% Decrease Current Rate 2% 1% Increase Discount Rate $ 9,332,226 $ 8,365,221 $ 7,539,272 Current Rate 5.25% Grading Down to 5% in 1% Decrease 2020 1% Increase Discount Rate $ 7,375,412 $ 8,365,221 $ 9,515,675 OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB The City recognized OPEB expense for the year ended December 31 as follows: Service Cost Interest Cost Amortization of Deferred Inflows and Outflows Total 2020 211,775 631,263 $ 843,038 Q Page 79 Packet Pg. 197 2.7.a NOTE 12 — LONG-TERM DEBT The City of Edmonds issues general obligation and revenue bonds to finance the acquisition and construction of major capital facilities and capital programs. General obligation bonds have been issued in the past for both general government and business type activities and are being repaid from the applicable resources. Governmental Activities long-term debt is paid from property and sales tax revenues. Revenue bonds are repaid out of the revenues generated by the related utility. In November of 2020, the City issued Water and Sewer Revenue Bonds (Certified Climate Bonds) in the amount of $13,875,000 for the Carbon Recovery Project at the wastewater treatment plant. The City of Edmonds is liable for seven Public Works Trust Fund Loans; three of the direct borrowing notes are general obligation and four notes from direct borrowing are businesses -type. The notes from direct borrowing are considered obligations of both the general government and the utility and are being repaid from the applicable resources. The City is liable for a direct borrowing note awarded by the Washington State Department of Ecology for the Wastewater Treatment Plant Electrical Improvements Project and a Snohomish County Public Works Assistance Fund direct borrowing note to finance the construction of a Stormwater Pump Station. The City is in compliance with all Washington State debt limitation statutes and bond indenture agreements. The City also has an outstanding line of credit with Snohomish County in the amount $136,250. General obliaation bonds currentiv outstandina are as follows Maturity Interest Original Principal Balance Issue Name Date Rates Amount Installment 12/31/2020 Governmental Debt: 2012 LTGO Refunding Bonds 12/1/2031 2.00% $ 9,004,043 $ 643,802 $ 3,862,981 2016 Chase Bank Loan 12/1/2026 1.67% 838,526 82,220 521,122 2019 LTGO Bond - Civic Park 12/1/2039 5.00% 3,485,000 110,000 3,375,000 Total Governmental GO Bonds 13,327,569 836,022 7,759,103 Business -type Debt: 2012 LTGO Refunding Bonds 12/1/2031 2.00% 320,957 31,198 32,019 2016 Chase Bank Loan 12/1/2026 1.67% 2,328,116 228,277 1,446,864 Total Business- type GO Bonds 2,649,073 259,475 1,478,883 Total General Obligation Bonds $15,976,642 $1,095,497 $ 9,237,986 Revenue bonds currently outstanding are as follows: Maturity Interest Original Principal Balance Issue Name Date Rates Amount Installment 12/31/2020 Business- type Debt: 2011 Water/Sew er Bonds 12/1/2031 4.00% $13,720,000 $ 635,000 $ 8,705,000 2013 Water/Sewer Bonds 12/1/2038 5.00% 15,010,000 205,000 13,730,000 2015 Water/Sewer Bonds 12/1/2040 4.00% 18,740,000 550,000 15,945,000 2020 Water/Sewer Bonds 12/1/2045 2.00% 13,875,000 - 13,875,000 Total Revenue Bonds $ 61,345,000 $1,390,000 $ 52,255,000 Q Page 80 Packet Pg. 198 2.7.a Notes from Direct Borrowing currently outstanding are as follows: Maturity Interest Original Principal Balance Issue Name Date Rates Amount Installment 12/31/2020 Governmental Debt: P W Trust Fund Loan - Street Construction 6/30/2022 0.50% $ 340,000 $ 18,143 $ 36,287 P W Trust Fund Loan - Street Construction 6/30/2024 0.50% 400,000 21,176 84,706 P W Trust Fund Loan - Street Construction 5/24/2026 0.50% 624,750 32,882 197,290 Total Governmental Notes from Direct Borrowings 1,364,750 72,201 318,282 Business -type Debt: P W Trust Fund Loan - Trt. Rant/Sew er Improv P W Trust Fund Loan - Water Improvements P W Trust Fund Loan - Storm Improvements P W Trust Fund Loan - Sewer Improvements Department of Ecology 6/30/2022 0.50% 1,347,250 71,325 142,650 6/30/2024 6/30/2024 6/30/2025 10/31 /2033 Snohomish County Loan 7/1/2037 Total Business- type Notes from Direct Borrowings 0.50% 408,000 25,839 103,356 0.50% 605,625 32,063 128,250 0.50% 1,216,902 72,295 361,476 2.30% 638,540 29,580 453,314 1.50% 408,750 21,513 387,237 4,625,067 252,615 1,576,283 Total Notes from Direct Borrowings $ 5,989,817 $ 324,816 $ 1,894,565 Nonexchange Financial Guarantees currently outstanding are as follows: Maturity Interest Original Principal Balance Issue Name Date Rates Amount Installment 12/31/2020 Governmental Debt Edmonds Public Facilities District 12/1/2025 0.700% $ 1,312,868 $ 184,769 $ 184,770 Total Nonexchange Financial Guarantee $ 1,312,868 $ 184,769 $ 184,770 Nonexchange Financial Guarantee - In 2008, the City of Edmonds guaranteed the 17-year, $4 million general obligation bond issuance of the Edmonds Public Facilities District (PFD), a legally separate district within the City, in accordance with the authority provided by the Washington State Legislature and codified in RCW Chapters 35.57 and 39.46. The City guaranteed repayment of these bonds through a Contingent Loan Agreement (CLA) with the PFD, and has advanced funds to them to assist with debt service on these bonds. In 2018 the PFD refinanced these bonds by issuing a 10-year Note to First Financial Northwest Bank (FFNB) in the amount of $2,803,516. At the same time the City purchased an interest bearing Certificate of Deposit in the same amount, to be held by FFNB as collateral. Each time the PFD makes a principal payment on the loan, the City has the option to reduce the balance of the Certificate of Deposit by the amount of the principal payment. In the event that the PFD is unable to make a payment, the CLA requires that the City will loan the PFD enough for them to be able to make the required payment. Between 2008 and December 31, 2020, the City has loaned the PFD a total of $1,206,191. These advances are shown in the City's Statement of Net Position as a Due from Component Unit. Because of the debt restructuring undertaken with FFNB and the extension of a dedicated sales tax stream that will support future debt payments, the City believes that the likelihood that the City will be required to make additional loans to the PFD has significantly diminished. In recognition of this the City has reduced the estimated nonexchange financial guarantee liability in half for 2020, and if events continue as forecast during 2021, it is likely that by December 31, 2021 the City will eliminate this liability completely. In addition, the City expects to recover the entire balance of all past loans made under the CLA. The liability recognized for nonexchange financial guarantees by the City for 2020 is as follows: Q Page 81 Packet Pg. 199 2.7.a Balance Balance 12/31/2019 Increases Decreases 12/31/2020 $ 369,539 $ - $ 184,769 $ 184,770 Debt Limit — RCW 39.36.020 provides cities with three segments of debt capacity, each equal to 2.5% of the city's assessed valuation, for a combined total of 7.5%. Allowable uses of these segments are as follows: Segment 1 — General Governmental Purposes The City can incur debt up to one and one-half percent (1.5%) of its assessed valuation solely with a vote of the legislative body (often referred to as "councilmanic" debt). To use the remaining one percent (1.0%), a 60 percent vote in favor of the issue by at least 40 percent of the number of voters who voted in the last general election is required. Segment 2 — City -Owned Water and Sewer Purposes The City can incur debt up to an additional two and one-half percent (2.5%) for water and sewer purposes with a 60 percent vote in favor of the issue by at least 40 percent of the number of voters who voted in the last general election. Segment 3 — Acquiring and Developing Open Space, Parks Facilities, and Capital Facilities Associated with Economic Development The City can incur debt up to an additional two and one-half percent (2.5%) for acquiring and developing open space, parks facilities, and capital facilities associated with economic development purposes with a 60 percent vote in favor of the issue by at least 40 percent of the number of voters who voted in the last general election. Debt Limit Capacity Water & Sewer Park & Capital Governmental Purposes Purposes Facilities Without Vote (Councilmanic) With Vote With Vote With Vote Item 1.5% 2.5% 2.5% 2.5% Legal Limits $ 165,168,322 $ 110,112,214 $ 275,280,536 $ 275,280,536 Net outstanding indebtedness (13,954,961) - - - Margin Available $ 151,213,361 $ 110,112,214 $ 275,280,536 $ 275,280,536 Defeased Debt — In prior years, the City has defeased the 2007 general obligation bond and several revenue bond issues by creating separate irrevocable trust funds. New debt has been issued and the proceeds used to purchase U.S. Government securities that were placed in the trust funds. These investments and fixed earnings from the investments are sufficient to fully service the defeased debt until the debt is called or matures. For financial reporting purposes, the debt is considered defeased and therefore removed from City financial statements. Debt Service to Maturity — The requirements to amortize the long-term debt as of December 31, 2020 are presented below. Debt service for the LTGO bonds and governmental loans are met by the General Fund and certain special revenue funds, and reimbursements from proprietary funds Q Page 82 Packet Pg. 200 2.7.a of the City with the exception of the 2012 LTGO refunding bonds. The Public Facilities District (PFD) is obligated by inter -local agreement to pay the entire amount of the PFD's portion of the 2012 debt service over the life of the bonds. (See Note 1). Debt service for the revenue bonds is paid by the Utility Fund. In prior years the City has typically used the General Fund to liquidate long- term liabilities other than debt. At December 31, 2020 the City had $3,290,576 in the Enterprise funds available for debt service. Following is a table which reflects debt service to maturity for Governmental Activities and Business - Type Activities. GOVERNMENTAL ACTIVITIES BUSINESS TYPE ACTIVITIES Year Principal Interest Total Principal Interest Total 2021 953,455 206,476 1,159, 931 1,961,521 1,890,489 3,852,010 2022 831,443 178,385 1,009,828 1,982,898 1,817,347 3,800,245 2023 850,509 159,367 1,009,876 2024 886,280 141,003 1,027,283 2025 901,976 121,386 1,023,362 2026-2030 1,703,723 370,094 2,073,817 2031-2035 1,070,000 181,456 1,251,456 2036-2040 880,000 55,875 935,875 2041-2045 - - - 1,978,426 1,755,091 3,733,517 2,036,304 1,691,922 3,728,227 3 2,044,354 1,625,682 3,670,036 0 9,832,621 7,133, 970 16, 966, 591 11,434,501 5,184,879 16,619,380 i0 r 12, 299, 539 2,604,440 14, 903, 979 11,740,000 801,456 12,541,456 Q $ 8,077,386 $ 1,414,043 $ 9,491,428 $ 55, 310,165 $ 24, 505, 277 $ 79, 815, 442 0 N N Terms specified in debt agreements related to significant (1) events of default with finance -related N consequences, (2) termination events with finance -related consequences, and (3) subjective acceleration clauses. 0 a U) If the principal of any Bond is not paid when the Bond is properly presented at its maturity date or c date fixed for redemption, the City will be obligated to pay interest on the Bond at the same rate E provided in the Bond from and after its maturity or date fixed for redemption until the Bond, both o principal and interest, is paid in full or until sufficient money for its payment in full is on deposit in w r the Bond Fund or in a trust account established to refund or defease the Bond, and the Bond has been called for payment by giving notice of that call to the Registered Owner. E If Snohomish County finds that the City has failed to comply with the terms of the loan agreement, the County can declare the City in default and terminate the Agreement in whole. The City has 5 days from written notice to remedy said default. In the event the City fails to remedy the default, a the County shall issue the City of Edmonds written notice of termination and declare the principle amount owing and interest due at the time to be immediately due and payable. The Washington State Public Works Trust Fund loans will assess a daily penalty beginning on the 31 st day past the due date. The penalty will be assessed on the entire payment amount. The penalty will be 12% per annum calculated on a 360-day year for the delinquent amount. The Washington State Department of Ecology loan will assess a late charge of one percent per month on the past due amount starting on the date the debt becomes past due and until it is paid in full. If the Department of Ecology initiates a termination event or a loan default event occurs, the Department of Ecology may at its sole discretion demand that the City repay the outstanding balance of the loan amount and all accrued interest. In the event of a default, the Department may declare the principal of and interest on the loan immediately due and payable. Page 83 Packet Pg. 201 2.7.a Arbitrage — The Federal Tax Reform Act of 1986 requires tax-exempt debt issuers to pay investment income received at yields that exceed the issuer's borrowing rates to the United States Treasury. The liability is recorded at present value and payable every five years or 60 days after defeasance of the debt. At December 31, 2020, the City of Edmonds had no arbitrage liability. Revenue Bond Debt Service Coverage — The required debt service coverage for the utility revenue bonds is 1.25. Please refer to Schedule 15 in the Statistical Section. NOTE 13 — CHANGES IN LONG-TERM LIABILITIES During the year ended December 31, 2020, the following changes occurred in long-term liabilities: Governmental activities Bonds payable: General obligation bonds Less: For issuance premiums Total bonds payable: Pension liabilities Total OPEB liability Beginning Ending Balance Balance Due Within 1/1/2020 Additions Reductions 12/31/2020 One Year $ 8,595,125 $ - $ (836, 022) $ 7,759,103 $ 881,253 300,944 - 8,896,069 - 4, 510,105 48,069 7,877,232 487,989 (15,047) 285,897 (851,069) 8,045,000 - 4,558,174 8,365,221 15,047 896,300 Compensated absences 2,136,462 2,660,388 (2,301,812) 2,495,038 1,770,626 Governmental loans 390,484 - (72,201) 318,283 72,201 Nonexchange Financial Guarantee 369,539 - (184,769) 184,770 - Governmental activity long-term liabilities $ 24,179,891 $ 3,196,446 $ (3,409,851) $ 23,966,486 $ 2,739,127 Business -type activities Bonds Payable: General obligation bonds 1,738,359 $ - $ (259,475) $ 1,478,884 $ 263,219 Revenue bonds 39,770,000 13,875,000 (1,390,000) 52,255,000 1,445,000 Less: For issuance premiums 547,260 - (36,959) 510,301 36,959 For issuance discount - (162,108) - (162,108) (6,484) Total bonds payable: 42,055,619 13,712,892 (1,686,434) 54,082,077 1,738,694 Pension liabilities 916,052 21,884 (1,041) 936,895 - Compensated absences 414,416 443,919 (446,185) 412,150 343,218 Business -type loans 1,556,398 272,500 (252,615) 1,576,283 253,302 Business -type activity long-term liabilities $ 44,942,485 $ 14,451,195 $ (2,386,275) $ 57,007,405 $ 2,335,214 Internal service funds predominately serve the governmental funds. Accordingly, the December 31, 2020 long-term liabilities for the fund are included as part of the above totals for governmental activities. At year-end internal service fund balances include $131,856 for compensated absences and $189,624 for the total pension obligation. The General Fund is typically used in prior years to liquidate long-term liabilities other than debt. Q Page 84 Packet Pg. 202 2.7.a NOTE 14 — CONTINGENCIES AND LITIGATIONS Other Contingencies — The City has recorded in its financial statement all material liabilities, including an estimate for situations which are not yet resolved but where, based on available information, management believes that it is probable that the City will have to make payment. In the opinion of management, the City's insurance policies are adequate to pay all known or pending claims. Grants — The City participates in a number of federal- and state -assisted programs. These grants are subject to audit by the grantors or their representatives. Such audits could result in requests for reimbursement to grantor agencies for expenditures disallowed under the terms of the grants. City management believes that any such disallowances, if any, will be immaterial. NOTE 15 — RISK MANAGEMENT Property and Liability Insurance — The City of Edmonds is exposed to various risks of loss from torts; thefts of damage or destruction of assets; business interruption; errors and omissions; injuries to employees; and natural disasters. The City and its employees contribute to the State of Washington's Department of Labor and Industries for Workers' Compensation. There were no settlements in excess of coverage in any of the prior three years. The City of Edmonds is a member of the Washington Cities Insurance Authority (WCIA). Utilizing Chapter 48.62 RCW and Chapter 39.34 RCW, nine cities originally formed the WCIA on January 1, 1981. The WCIA was created for the purpose of providing a pooling mechanism for jointly purchasing insurance, jointly self -insuring, and jointly contracting for risk management services. WCIA has a total of 162 members. New members initially contract for a three-year term, and thereafter automatically renew on an annual basis. A one-year withdrawal notice is required before membership can be terminated. Termination does not relieve a former member from its unresolved loss history incurred during membership. Liability coverage is written on an occurrence basis, without deductibles. Coverage includes general, automobile, police, errors or omissions, stop gap, employment practices and employee benefits liability. Limits are $4 million per occurrence in the self -insured layer, and $21 million in limits above the self -insured layer is provided by reinsurance. Total limits are $25 million per occurrence subject to aggregates and sublimits. The Board of Directors determines the limits and terms of coverage annually. Insurance coverage for property, automobile physical damage, fidelity, inland marine, and boiler and machinery coverage are purchased on a group basis. Various deductibles apply by type of coverage. Property coverage is self -funded from the members' deductible to $750,000, for all perils other than flood and earthquake, and insured above that to $400 million per occurrence subject to aggregates and sublimits. Automobile physical damage coverage is self -funded from the members' deductible to $250,000 and insured above that to $100 million per occurrence subject to aggregates and sublimits. In-house services include risk management consultation, loss control field services, and claims and litigation administration. WCIA contracts for certain claims investigations, consultants for personnel and land use issues, insurance brokerage, actuarial, and lobbyist services. WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as determined by an outside, independent actuary. The assessment covers loss, loss adjustment, reinsurance and other administrative expenses. As outlined in the interlocal, WCIA retains the right to additionally assess the membership for any funding shortfall. The City currently a 3 0 0 U_ r =a 0 Q �a 0 N N a� T) 0 a U) c 0 E 0 w r c a� E ca Q Page 85 Packet Pg. 203 2.7.a has no such assessments due to WCIA. The City incurred no settlements in excess of coverage in any of the past three years. An investment committee, using investment brokers, produces additional revenue by investment of WCIA's assets in financial instruments which comply with all State guidelines. A Board of Directors governs WCIA, which is comprised of one designated representative from each member. The Board elects an Executive Committee and appoints a Treasurer to provide general policy direction for the organization. The WCIA Executive Director reports to the Executive Committee and is responsible for conducting the daily operations of WCIA. Employee Benefit Trust Health Care Program — The City of Edmonds is a member of the Association of Washington Cities Employee Benefit Trust Health Care Program (AWC Trust HCP). Chapter 48.62 RCW provides that two or more local government entities may, by Interlocal agreement under Chapter 39.34 RCW, form together or join a pool or organization for the joint purchasing of insurance, and/or joint self-insurance, to the same extent that they may individually purchase insurance, or self -insure. An agreement to form a pooling arrangement was made pursuant to the provisions of Chapter 39.34 RCW, the Interlocal Cooperation Act. The AWC Trust HCP was formed on January 1, 2014 when participating cities, towns, and non -city entities of the AWC Employee Benefit Trust in the State of Washington joined together by signing an Interlocal Governmental Agreement to jointly self -insure certain health benefit plans and programs for participating employees, their covered dependents and other beneficiaries through a designated account within the Trust. As of December 31, 2020, 262 cities, towns, or non -city entities participate in the AWC Trust HCP. The AWC Trust HCP allows members to establish a program of joint insurance and provides health and welfare services to all participating members. In April 2020, The Board of Trustees adopted a large employer policy, requiring newly enrolling groups with 600 or more employees to submit medical claims without regard to individual member experience. The pool is actuarially rated each year with the assumption of projected claims run -out for all current members. The AWC Trust HCP includes medical, dental and vision insurance through the following carriers: Kaiser Foundation Health Plan of Washington, Kaiser Foundation Health Plan of Washington Options, Inc., Regence BlueShield, Asuris Northwest Health, Delta Dental of Washington, and Vision Service Plan. Eligible members are cities and towns within the state of Washington. Non -City Entities (public agency, public corporation, intergovernmental agency, or political subdivision within the state of Washington) are eligible to apply for coverage into the AWC Trust HCP, submitting application to the Board of Trustees for review as required in the Trust Agreement. Participating employers pay monthly premiums to the AWC Trust HCP. The AWC Trust HCP is responsible for payment of all covered claims. In 2020, the AWC Trust HCP purchased stop loss insurance for Regence/Asuris plans at an individual stop loss (ISL) of $1.5 million through Commencement Bay Risk Management, and Kaiser ISL at $1 million with Companion Life through ASG Risk Management. The aggregate policy is for 200% of expected medical claims. Participating employers contract to remain in the AWC Trust HCP for a minimum of three years. Participating employers with over 250 employees must provide written notice of termination of all coverage a minimum of 12 months in advance of the termination date, and participating employers with under 250 employees must provide written notice of termination of all coverage a minimum of 6 months in advance of termination date. When all coverage is being terminated, termination will only occur on December 31. Participating employers terminating a group or line of coverage must notify the AWC Trust HCP a minimum of 60 days prior to termination. A participating employer's termination will not obligate that member to past debts, or further contributions to the AWC Trust HCP. Similarly, the terminating member forfeits all rights and interest to the AWC Trust HCP Account. Q Page 86 Packet Pg. 204 2.7.a The operations of the Health Care Program are managed by the Board of Trustees or its delegates. The Board of Trustees is comprised of four regionally elected officials from Trust member cities or towns, the Employee Benefit Advisory Committee Chair and Vice Chair, and two appointed individuals from the AWC Board of Directors, who are from Trust member cities or towns. The Trustees or its appointed delegates review and analyze Health Care Program related matters and make operational decisions regarding premium contributions, reserves, plan options and benefits in compliance with Chapter 48.62 RCW. The Board of Trustees has decision authority consistent with the Trust Agreement, Health Care Program policies, Chapter 48.62 RCW and Chapter 200- 110-WAC. The accounting records of the AWC Trust HCP are maintained in accordance with methods prescribed by the State Auditor's office under the authority of Chapter 43.09 RCW. The AWC Trust HCP also follows applicable accounting standards established by the Governmental Accounting Standards Board. In 2018, the retiree medical plan subsidy was eliminated, and is noted as such in the report for the fiscal year ending December 31, 2018. Year-end financial reporting is done on an accrual basis and submitted to the Office of the State Auditor as required by Chapter 200-110 WAC. The audit report for the AWC Trust HCP is available from the Washington State Auditor's a office. 3 0 0 a_ r =a Q a+ Q Page 87 Packet Pg. 205 2.7.a NOTE 16 - COMMITMENTS The City has several capital improvement projects in progress. As of December 31, 2020, the City's outstanding material contractual obligations, which include construction and engineering contracts, are summarized below: Contract Name Expenditures to Date Remaining Commitment Waterfront Redevelopment 743,739 612,624 Edmonds Fishing Pier Rehab 447,139 23,087 84th Ave Overlay 1,122,347 19,477 Ph 10 Waterline & Swedish Hospital Water System 1,805,828 259,343 2020 Overlay Program 80,607 48,208 Five Corners Recoating Project 530,458 15,657 Dayton Street Stormwater Pump Station 1,793,751 163,219 Dayton St. Utility Replacement (3rd to 9th) 6,659,412 597,274 2019 Storm Maintenance Project 117,071 28,694 Phase 7 Sanitary Sewer Replacement Project 2,419,902 56,654 Citywide Crossing Enhancements 347,676 1,288,858 Citywide Bicycle Improvements 73,584 235,937 238th St. Island & Downtown Ramps 630,750 (363,014) Citywide CIPP Sewer Rehab Project Phase 2 630,751 94,469 Phase 2 & 3 Storm Utility Replacement 132,352 378,734 Phase 8 Sewerline Replacement Program 255,888 116,024 Phase 11 Waterline Replacement Project 329,633 74,067 Yost & Sewer Reservoir Assessment 4,691 92,177 2021 Overlay Program 21,158 22,615 Hwy 99 Gateway Revitalization 658,150 835,615 Students Saving Salmon 2,935 7,065 76th Ave & 220th St. Intersection Improvements 49,909 33 Grant Writing for Willow Creek Daylighting Project 4,563 15,875 Swedish Hospital Water System Replacement 428,584 31,249 2020 Guardrail Installation Project 14,138 510 Edmonds Marsh Feasibility Study - Willow Creek Daylightin, 509,689 24,636 2018 Lorian Woods Slope Study 48,461 8,439 Lift Station #1 Basin & Flow Study 228,877 39,804 Lake Ballinger Sewer Trunk Main Study 68,794 226,354 2017 CIPP Sewer Repairs 77,524 7,476 WWTP Outfall Pipe Modifications 50,358 39,642 On -Call Wastewater Engineering Services 6,758 18,242 2020 Capital Projects CM, Engineering & Inspection Service 117,551 180,049 Ballinger Regional Facility 289,015 35,854 175th St. SW Slope 3,060 3,790 Edmonds Public Works Apron Repair 21,755 3,245 Waterfront Redeviopment 3,786,800 1,167,451 Civic Center Complex 1,084,602 3,741,738 Edmonds Fishing Pier Rehab 89,375 54,425 $ 25,687,633 $ 10,205,596 NOTE 17 - SUBSEQUENT EVENTS In early 2020 a deadly new virus, COVID-19, was identified in the Continental United States. This virus grew into a global pandemic, affecting virtually every aspect of life in the City of Edmonds, in the nation, and in the world. The effects of the pandemic continue into 2021. Although the City has escaped the majority of the economic fallout from the pandemic, at the time of publication of this document the pandemic continues, and the impacts it will have in 2021 and beyond are unknown to us at this time. CL 3 0 0 u_ r :a 3 Q 0 N N 0 t N 0 0_ U) c 0 E W r c 0 E t ca Q Page 88 Packet Pg. 206 CITY OF EDMONDS: 2020 Comprehensive Annual Financial Report REQUIRED SUPPLEMENTARY INFORMATION 2.7.a FIREMEN'S PENSION FUND OTHER POST -EMPLOYMENT BENEFITS SCHEDULE OF CHANGES IN THE TOTAL OPEB LIABILITY AND RELATED RATIOS LAST 10 FISCAL YEARS* Total OPEB Liability Service Cost Interest Changes in Actuarial Assumptions Differences Between Expected and Actual Experience Benefit Payments and Withdrawals Net Change in Total OPEB Liability Total OPEB Liability - Beginning Total OPEB Liability - Ending Covered Payroll 2020 2019 2018 211,775 272,551 225,578 631,263 961,775 9,075 - - (578,428) (355,049) (338,445) (388,253) 487,989 895,881 (732,028) 7,877,232 6,981,351 7,713,379 $ 8,365,221 $ 7,877,232 $ 6,981,351 Total OPEB Liability as a %of Covered Payroll N/A N/A N/A Notes to Schedule: No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB 75. Until a full 10-year trend is compiled, only information for those years available is presented. 0: 3 O 0 u- r :a 3 Q N N N t N 7 Q N C O E W r C N E t V a+ a+ Q Page 89 Packet Pg. 207 2.7.a CITY OF EDMONDS: 2020 Comprehensive Annual Financial Report REQUIRED SUPPLEMENTARY INFORMATION FIREMEN'S PENSION FUND SCHEDULE OF CHANGES IN THE CITY'S NET PENSION LIABILITY AND RELATED RATIOS LAST 10 FISCAL YEARS* 2020 2019 2018 2017 2016 2015 2014 Total Pension Liability Service Cost $ - $ - $ - $ - $ - $ - $ Interest 16,828 26,547 19,147 23,528 15,991 16,365 30,016 Changes in Benefits Provided - - - - 188,817 - - Differences Between Expected and Actual Experience - 67,664 96,849 - 17,054 (256,011) Changes in Actuarial Assumptions 29,948 (55,159) (4,985) 37,919 (13,330) (31,502) Benefit Payments and Withdrawals 61,740 119,116 53,203 48,062 27,936 26,175 (24,481) Net Change in Total Pension Liability (14,964) (80,064) 57,808 13,385 180,596 (9,810) (281,978) Total Pension Liability - Beginning 642,577 722,641 664,833 651,448 470,852 480,662 762,640 Total Pension Liability -Ending $627,613 $642,577 $722,641 $664,833 $651,448 $470,852 $ 480,662 Fiduciary Net Position Contributions - Employer $ - $ 15,000 $ 39,297 $ 46,613 $ 47,449 $ 38,775 $ 21,581 Contributions from State Fire Insurance Premium Tax 51,491 48,232 - - - - - Net Investment Income 3,897 6,605 5,662 4,455 2,296 1,629 662 Benefit Payments and Withdrawals (61,740) (119,116) (53,203) (48,062) (27,936) (26,175) (24,481) Medical payments from fund (19,258) (20,417) - - Administrative Expenses (1,007) (1,269) (538) (1,222) (214) - Other 96 Change in Fiduciary Net Position (26,617) (70,965) (8,782) 1,784 21,595 14,325 (2,238) Fiduciary Net Position - Beginning 146,733 217,698 226,480 224,696 203,101 188,776 191,014 Fiduciary Net Position - Ending $120,116 $146,733 $217,698 $226,480 $224,696 $203,101 $ 188,776 Net Pension Liability $507,497 $495,844 $504,943 $438,353 $426,752 $267,751 $ 291,886 Fiduciary Net Position as a % of the Total Pension Liability 19.1% 22.8% Covered Payroll N/A N/A Net Pension Liability as a %of Covered Payroll N/A N/A Information is presented onlyforthose years forwhich information is available 30.1 % 34.1 % 34.5% 43.1 % 39.3% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Q Page 90 Packet Pg. 208 CITY OF EDMONDS: 2020 Comprehensive Annual Financial Report REQUIRED SUPPLEMENTARY INFORMATION 2.7.a FIREMEN'S PENSION FUND SCHEDULE OF CITY CONTRIBUTIONS LAST 10 FISCAL YEARS Annual Money Contributions Weighted Rate Actuarially Contribution Employer's as a Percent of Return Determined Actual Deficiency Covered of Covered Net of Investment Year Contribution Contribution (Excess) Payroll Payroll Expense 2020 $ 82,874 $ 32,233 $ 50,641 $ N/A 2.88 % 2019 82,874 42,815 40,059 - N/A 3.75 2018 43,194 39,297 3,897 - N/A 2.58 2017 43,194 46,613 (3,419) - N/A 1.99 2016 25,353 47,449 (22,096) - N/A 1.08 2015 25,353 38,775 (13,422) - N/A 0.83 2014 44,223 21,581 22,642 - N/A 0.35 2013 44,223 (3,576) 47,799 - N/A 0.17 2012 38,602 42,004 (3,402) - N/A 0.14 2011 38,602 (6,229) 44,831 - N/A 0.16 * Information is presented onlyfor those years forwhich information is available. a+ Q Page 91 Packet Pg. 209 CITY OF EDMONDS: 2020 Comprehensive Annual Financial Report REQUIRED SUPPLEMENTARY INFORMATION 2.7.a SCHEDULES OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY JUNE 30 (MEASUREMENT DATE) LAST 10 FISCAL YEARS* (SEE INDEPENDENT AUDITOR'S REPORT) PERS 1 Employer's Net Pension Plan Fiduciary Employer's Proportionate Liability (Asset) Net Position as Proportion of Share of the Employer's as a Percentage a Percentage the Net Pension Net Pension Covered of Covered of the Total Year Liability (Asset) Liability (Asset) Payroll Payroll Pension Liability 2020 0.097758% $ 3,451,385 $ 14, 373, 946 24. 01 % 68. 64% 2019 0.097960% 3,766,920 13, 393, 923 28.12% 67.12% 2018 0.090868% 4,058,195 12,701,466 31.95% 63.22% 2017 0.109876% 5,213,702 13,404,013 38.90% 61.24% 2016 0.101894% 5,472,188 14,068,530 38.90% 57.03% 2015 0.101786% 5,324,534 13,688,460 38.90% 59.10% Notes to Schedule: *Information is presented only for those years for which information is available. PERS 2/3 Employer's Net Pension Plan Fiduciary Employer's Proportionate Liability (Asset) Net Position as Proportion of Share of the Employer's as a Percentage a Percentage the Net Pension Net Pension Covered of Covered of the Total Year Liability (Asset) Liability (Asset) Payroll Payroll Pension Liability 2020 0.120113% $ 1,536,177 $ 14, 092,149 10.90% 97.22% 2019 0.119772% 1,163, 393 13,101, 081 8.88% 97.77% 2018 0.109886% 1,876,206 12,370,371 15.17% 95.77% 2017 0.133191% 4,627,751 13,053,673 35.45% 90.97% 2016 0.121658% 6,125,384 12,502,808 48.99% 85.82% 2015 0.121602% 4,344,909 11, 627, 811 37.37% 89.20% Notes to Schedule: *Information is presented only for those years for which information is available. Page 92 Packet Pg. 210 CITY OF EDMONDS: 2020 Comprehensive Annual Financial Report REQUIRED SUPPLEMENTARY INFORMATION 2.7.a Year SCHEDULES OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY JUNE 30 (MEASUREMENT DATE) LAST 10 FISCAL YEARS* (SEE INDEPENDENT AUDITOR'S REPORT) LEOFF 1 State's Proportionate Share of the Employer's Net Pension Employer's Proportionate Liability (Asset) Proportion of Share of the Associated the Net Pension Net Pension With The Liability (Asset) Liability (Asset) Employer Employer's Covered Total Payroll 2020 0.055457% $ (1,047,310) $ (7,083,982) $ (8,131,292) $ - 2019 0.053590% (1,059,266) (7,164,848) (8,224,114) - 2018 0.053132% (964,613) (6,524,615) (7,489,228) - 2017 0.055859% (847,504) (5,732,485) (6,579,989) - 2016 0.055141% (568,110) (5,363,896) (5,932,006) - 2015 0.054022% (651,084) (5,125,471) (5,776,555) - Net Pension Plan Fiduciary Liability (Asset) Net Position as as a Percentage a Percentage of Covered of the Total Payroll Pension Liability 2020 0.00% 146.88% 2019 0.00% 148.78% 2018 0.00% 144.42% 2017 0.00% 135.96% 2016 0.00% 123.74% 2015 0.00% 127.36% Notes to Schedule: *Information is presented only for those years for which information is available. a 3 0 0 U- r =a 0 Q �a 0 N N N t T) 0 a W c 0 E w r c a� E t ca Q Page 93 Packet Pg. 211 CITY OF EDMONDS: 2020 Comprehensive Annual Financial Report REQUIRED SUPPLEMENTARY INFORMATION 2.7.a Year SCHEDULES OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY JUNE 30 (MEASUREMENT DATE) LAST 10 FISCAL YEARS* (SEE INDEPENDENT AUDITOR'S REPORT) Employer's Proportion of the Net Pension Liability (Asset) LEOFF 2 Employer's Proportionate Share of the Net Pension Liability (Asset) State's Proportionate Share of the Net Pension Liability (Asset) Associated With The Employer Employer's Covered Total Payroll 2020 0.176926% $ (3,609,032) $ (2,307,703) $ (5,916,735) $ 6,654,735 2019 0.192032% (4,448,792) (2,913,363) (7,362,155) 6,764,235 2018 0.180721% (3,669,030) (797,902) (4,466,932) 6,513,429 2017 0.201856% (2,801,107) (545,988) (3,347,095) 3,524,363 2016 0.184178% (1,071,235) (229, 538) (1,300,773) 3,059,830 2015 0.183336% (1,884,327) (409,091) (2,293,418) 2,861,034 Net Pension Liability (Asset) as a Percentage of Covered Payroll Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 2020 -54.23% 115.83% 2019 -65.77% 119.43% 2018 -56.33% 118.50% 2017 -79.48% 113.36% 2016 -35.01 % 106.04% 2015 -65.86% 111.67% Notes to Schedule: *Information is presented only for those years for which information is available. r Q Page 94 Packet Pg. 212 2.7.a CITY OF EDMONDS: 2020 Comprehensive Annual Financial Report REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF EMPLOYER CONTRIBUTIONS DECEMBER 31 (EMPLOYER REPORTING DATE) LAST 10 FISCAL YEARS* PERS 1 Contributions in Relation to the Contributions Statutorily Statutorily Contribution Employer's as a Percent Required Required Deficiency Covered of Covered Year Contribution Contribution (Excess) Payroll Payroll 2020 2019 2018 2017 2016 2015 E3 Notes to Schedule: 719,557 710,800 676,511 639,839 620,544 583,605 (719, 557) $ - $ 14, 529, 989 4.95% (710, 800) - 13, 939, 730 5.10% (676, 511) - 12, 882, 202 5.25% (639, 839) - 12, 597, 735 5.08% (620,544) - 12,099,373 5.13% (583, 605) - 11, 674,157 5.00% * Information is presented only for those years for which information is available. Year 2020 2019 2018 2017 2016 2015 Statutorily Required Contribution $ 1,128,159 1,054,573 942,080 842,249 743,678 710,849 Notes to Schedule: PERS 2/3 Contributions in Relation to the Statutorily Contribution Required Deficiency Contribution (Excess) $ (1,128,159) $ - (1,054,573) - (942,080) - (842, 249) - (743, 678) - (710, 849) - Employer's Covered Pavroll $ 14, 244, 396 13, 663, 708 12, 560,116 12, 270, 542 11, 845, 981 11, 203, 929 * Information is presented only for those years for which information is available. Contributions as a Percent of Covered Pavroll 7.92% 7.72% 7.50% 6.86% 6.28% 6.34% a 3 0 0 LL r =a Q �a N N N t T) a U) c 0 E a LU r c a� E t ca Q Page 95 Packet Pg. 213 CITY OF EDMONDS: 2020 Comprehensive Annual Financial Report REQUIRED SUPPLEMENTARY INFORMATION 2.7.a SCHEDULE OF EMPLOYER CONTRIBUTIONS DECEMBER 31 (EMPLOYER REPORTING DATE) LAST 10 FISCAL YEARS* LEOFF 1 Contributions in Relation to the Contributions Statutorily Statutorily Contribution Employer's as a Percent Required Required Deficiency Covered of Covered Year Contribution Contribution (Excess) Payroll Payroll 2020 $ - $ - $ - $ - 0.00% 2019 - - - - 0.00% 2018 - - - - 0.00% 2017 - - - - 0.00% 2016 - - - - 0.00% 2015 Notes to Schedule: * Information is presented only for those years for which information is available. LEOFF 2 Contributions in Relation to the Contributions Statutorily Statutorily Contribution Employer's as a Percent Required Required Deficiency Covered of Covered Year Contribution Contribution (Excess) Payroll Payroll 2020 $ 360,086 $ (360,086) $ - $ 6,991,945 5.15% 2019 354,709 (354,709) - 6,769,231 5.24% 2018 180,384 (180,384) - 6,552,661 2.75% 2017 176,008 (176,008) - 6,142,987 2.87% 2016 154,521 (154,521) - 3,059,830 5.05% 2015 144,483 (144,483) - 2,861,034 5.05% Notes to Schedule: * Information is presented only for those years for which information is available a 3 0 0 LL r =a Q �a N N W T) a U) c 0 E 0 w r c W E ca Q Page 96 Packet Pg. 214 § 2 5 c U) \ 2 w ■o 04 J64 �— n 2 � 2U-k § ° S [ $ g Lu 0'D2 �w CL x % LU 2 © 2 � ¢ o �LL u m e 2 z ) § $ o: 2�2 @ g a 2 2 p \ q % o o s C R e k / / co � e / /- j5 & o U. � � r » CD » w f }M 4 Cd 0) / LL / / � — 0 U- Q ) o \� k c r \ � \04 «E \ / § $ 2 �z \ /� /� u / 0 C _ K z \ o \3 ƒ3 \ m 7 L. v k 2 \ \ \\ z k§\ E m �z \ \ \ \ \ w k E E m k % 2 \ 2 \ 2 2 \ \ E o _\ =0 E E E k E \ 2 ƒ� §c §_ §= x o m a 2 0- E2 E/ E/ \$ 2 2 2 CL ° m &/ %) Co Co » LL 5C: 5\ v 2§ _§ c§ 7= a II +0 3o ee m3 S § » » 0 O � \ » j0 } } E ( #= . 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N a� Cd O z b Cn y ..., rn 0 0 p 4� �.' N O u + rr,J� N p v 4-� ctl Eny G W yo ///FV-��`� n O p a� qtl Cd Ill iii _ 0 N M w w w O O O z z z Page 99 Packet Pg. 217 2.7.a x CITY OF EDMONDS CITY HALL 121 Sr AVENUE NORTH - EDMONDS, WA 98020 Aic. , ? `' 425.771.0240 + FAX 425.771.0265 CORRECTIVE ACTION PLAN FOR FINDINGS REPORTED UNDER UNIFORM GUIDANCE City of Edmonds January 1, 2020 through December 31, 2020 This schedule presents the corrective action planned by the City for findings reported in this report in accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Finding ref number: Finding caption: 2020-001 The City's internal controls were inadequate for ensuring compliance with federal requirements for allowable activities and costs and subrecipient monitoring activities. Name, address, and telephone of City contact person: Dave Turley 121 5th Avenue N. Edmonds, WA 98020 (425) 275-4688 Corrective action the auditee plans to take in response to the finding: The City will ensure that the distribution of any support payments to individuals and businesses will comply with stated eligibility requirements, and that required reporting from recipients will be obtained. Anticipated date to complete the corrective action: We have already begun implementing this corrective action and plan for it to be in place for 2021 reporting requirements. Q Office of the Washington State Auditor sao.wa.gov Page100 Packet Pg. 218 2.7.a The State Auditor's Office is established in the Washington State Constitution and is part of the executive branch of state government. The State Auditor is elected by the people of Washington and serves four-year terms. We work with state agencies, local governments and the public to achieve our vision of increasing trust in government by helping governments work better and deliver higher value. In fulfilling our mission to provide citizens with independent and transparent examinations of how state and local governments use public funds, we hold ourselves to those same standards by continually improving our audit quality and operational efficiency, and by developing highly engaged and committed employees. As an agency, the State Auditor's Office has the independence necessary to objectively perform audits, attestation engagements and investigations. Our work is designed to comply with professional standards as well as to satisfy the requirements of federal, state and local laws. The Office also has an extensive quality control program and undergoes regular external peer review to ensure our work meets the highest possible standards of accuracy, objectivity and clarity. Our audits look at financial information and compliance with federal, state and local laws for all local governments, including schools, and all state agencies, including institutions of higher education. In addition, we conduct performance audits and cybersecurity audits of state agencies and local governments, as well as state whistleblower, fraud and citizen hotline investigations. The results of our work are available to everyone through the more than 2,000 reports we publish each year on our website, www.sao.wa.gov. Additionally, we share regular news and other information via an email subscription service and social media channels. We take our role as partners in accountability seriously. The Office provides training and technical assistance to governments both directly and through partnerships with other governmental support organizations. Stay connected at sao.wa.gov • Find your audit team • Request public records • Search BARS manuals (GAAP and cash), and find reporting templates • Learn about our training workshops and on -demand videos • Discover which governments serve enter an address on our map • Explore public financial data with the Financial Intelligence Tool Other ways to stay in touch • Main telephone: (564) 999-0950 • Toll -free Citizen Hotline: (866) 902-3900 • Email: webmasterksao.wa. gov a 0 0 U. �a 0 Q 0 N N a) N a c 0 E 0 w c as E Q Office of the Washington State Auditor sao.wa.gov Page101 Packet Pg. 219 2.7.b Exit Conference: City of Edmonds The Office of the Washington State Auditor's vision is increased trust in government. Our mission is to provide citizens with independent and transparent examinations of how state and local governments use public funds, and develop strategies that make government more efficient and effective. a The purpose of this meeting is to share the results of your audit and our draft reporting. We value and appreciate c your participation. c U_ Audit Reports a We will publish the following reports for the period January 1, 2020 through December 31, 2020: N N • Financial statement and federal grant compliance audits — see draft report. N • Annual Comprehensive Financial Report opinion letter — see letter. N • Accountability audit — see draft report. 2 Recommendations not included in the Audit Reports Exit Items We have provided exit recommendations for management's consideration. Exit items address control deficiencies or non-compliance with laws or regulation that have an insignificant or immaterial effect on the entity, or errors with an immaterial effect on the financial statements. Exit items are not referenced in the audit report. Communications required by audit standards In relation to our financial statement audit report, we would like to bring to your attention: • Uncorrected misstatements in the audited financial statements are summarized on the attached schedule. We agree with management's representation that these misstatements are immaterial to the fair presentation of the financial statements. • There were no material misstatements in the financial statements corrected by management during the audit. Finalizing Your Audit Report Publication Audit reports are published on our website and distributed via e-mail in an electronic .pdf file. We also offer a subscription service that allows you to be notified by email when audit reports are released or posted to our website. You can sign up for this convenient service at: https://portal.sao.wa.gov/SAOPortal. Management Representation Letter We have included a copy of representations requested of management. Packet Pg. 220 2.7.b Audit Cost At the entrance conference, we estimated the cost of the audit to be $86,000 plus estimated charges of $10,000 for travel costs, mileage, and other expenses. During the audit, we performed additional, unforeseen, work over the City's federal program expenditures and we followed up on a loss reported to our Office. We are pleased to report that because of savings due to working remotely, we anticipate total audit costs to approximate $95,000. Your Next Scheduled Audit Your next audit is scheduled to be conducted in May 2022 and will cover the following general areas: • Accountability for Public Resources • Financial Statement including Annual Comprehensive Financial Report Opinion Letter • Federal Programs The estimated cost for the next audit based on current rates is $90,000 plus travel expenses of approximately 3 $10,000. This preliminary estimate is provided as a budgeting tool and not a guarantee of final cost. 2 0 U_ Working Together to Improve Government Audit Survey a When your report is released you will receive an audit survey from us. We value your opinions on our audit o services and hope you provide feedback. Local Government Support Team This team provides support services to local governments through technical assistance, comparative statistics, training, and tools to help prevent and detect a loss of public funds. Our website and client portal offers many resources, including a client Help Desk that answers auditing and accounting questions. Additionally this team assists with the online filing of your financial statements. The Center for Government Innovation The Center for Government Innovation of the Office of the Washington State Auditor is designed to offer services specifically to help you help the residents you serve at no additional cost to your government. What does this mean? We provide expert advice in areas like Lean, peer -to -peer networking and culture -building to help local governments find ways to be more efficient, effective and transparent. The Center can help you by providing assistance in financial management, cybersecurity and more. Check out our best practices and other resources that help local governments act on accounting standard changes, comply with regulations, and respond to recommendations in your audit. The Center understands that time is your most precious commodity as a public servant, and we are here to help you do more with the limited hours you have. If you are interested in learning how we can help you maximize your effect in government, call us at (564) 999-0818 or email us at Centerksao.wa.gov. Questions? Please contact us with any questions about information in this document or related audit reports. Kelly Collins, CPA, Director of Local Audit, (564) 999-0807, Kelly.Collins(a)sao.wa.gov Tina Watkins, CPA, Assistant Director of Local Audit, (360) 260-6411 Tina.Watkins(u,sao.wa.gov Kristina Baylor, Program Manager, (425) 951-0290, Kristina.Baylor(a,sao.wa.gov Kirk Gadbois, Assistant Audit Manager, (425) 951-0912, Kirk. Gadbois(a,sao.wa.gov Maggie Wallis, CPA, Audit Lead, (425) 948- 6738, Magdalene.Wallis(a,sao.wa.gov Packet Pg. 221 2.7.b Attachment: Summary of Uncorrected Misstatements Description Statement / Schedule Opinion Unit OPEB: The "total OPEB liability" should be allocated between current and non -current liabilities in the financial statements. Since there is no Governmental trust fund to make the benefit payments, the employer is making the Statement of Net Position Activities payments. So the amounts expected to be due within one year are current liabilities. The current portion is an estimate typically done by the actuary. Note 2, Accounting and Reporting Changes, page 46: The disclosure Notes to the Financial of new statements should be limited to the statements that have a financial Statements N/A impact on the govermnent. Note 13, Changes in Long -Term Liabilities, page 76: We would expect Notes to the Financial N/A that the "Total OPEB Liability" would include a current portion. Statements Note 12 - Long-term Debt (GASB 88): The Chase Bank Loan is considered a direct borrowing and should be reported under the direct borrowings table instead of with the General Obligation Bonds. Notes to the Financial We reviewed the City's debt service requirements table and noted it does Statements N/A not separately report debt service requirements for direct placements/borrowings as required per GASB 88. Depreciation Expense: We recalculated business type activities Statement of Net Position depreciation expense and determined it was correctly calculated and - Proprietary Funds reported for all assets except asset 8847. We noted this asset's FY20 Statement of Revenues, 421/422/423 depreciation of $36,770 was not on the depreciation schedule. Debra Expenses, and Changes in Combined Sharp, Accountant, will have Eden research the cause as there is nothing Net Position - Proprietary Utility Funds in the setting that should be preventing this asset from running Funds depreciation. Depreciation expense understated by $36,789, accumulated depreciation Statement of Net Position Business Type understated by $36,789 causing overall reported asset, net to be overstated Statement of Activities Activities b $36,789. Statement of Net Position Utility Billing: The City is charging certain sewer customers $5.21 bi- - Proprietary Funds monthly./423 The City's ordinance for those customers states the rate to be Y Statement of Revenues, Combined Combined $5.21 per month or $10.42 bi-monthly. Charges for services is understated Expenses, and Changes in Utility Funds by approximately $20,105. Net Position - Proprietary As this is an estimate, no correction should be made unless the City Funds Statement of Net Position Business Type decides to determine the exact amount of misstatement. Statement of Activities Activities Cash & Investments: The City's cash and investment reconciliation did Statement of Net Position Governmental not include the Court's year end bank cash balance of $104,958 or any Activities related reconciling items as the Court did not complete their 12/31/20 Balance Sheet General Fund reconciliation and submit to the City's Finance Department. Transfers: The City transferred $1.5 million from the internal service General Fund funds to the general fund. We noted the $1.5 million came from: Statement of Revenues, Aggregate • General Fund (Fund 001) - $1,124,991 (comprised of $996,686 Expenditures and Changes Remaining general fund and 128,305 park maintenance fund) in Fund Balances - Funds • Street Fund (Fund 111) - $20,385 Governmental Funds • Combined Utility Funds (Funds 421/422/423) - $334,624 • Fleet (Fund 511) - $20,000 Statement of Revenues, 421/422/423 The amounts attributable to the street fund, combined utility funds, and Expenses, and Changes in Combined fleet fund should be refunded back to those funds, not the general fund. Net Position - Proprietary Utility Funds We determined transfers -in for the general fund, per the withdrawals on Funds the B-fund spreadsheet, is overstated by $375,009. a 0 0 a_ �a Q N N 0 N 0i N z L 0 M Q Packet Pg. 222 2.7.b Financial Statements and Federal Single 3 Audit Report LL City of Edmonds For the period January 1, 2020 through December 31, 2020 Published March 31, 2022❑ .❑ Find out what's new at SAO Report No. 1030259 by scanning this code with ❑ your smartphone's camera a Packet Pg. 223 2.7.b Office of the Washington State Auditor Pat McCarthy March 31, 2022 Mayor and City Council City of Edmonds 3 Edmonds, Washington 2 0 U- Report on Financial Statements and Federal Single Audit a Please find attached our report on the City of Edmonds financial statements and compliance with federal laws and regulations. We are issuing this report in order to provide information on the City's financial condition. Sincerely, Pat McCarthy, State Auditor Olympia, WA Americans with Disabilities In accordance with the Americans with Disabilities Act, we will make this document available in alternative formats. For more information, please contact our Office at (564) 999-0950, TDD Relay at (800) 833-6388, or email our webmaster at webmasterksao.wa.gov. Insurance Building, P.O. Box 40021 • Olympia, Washington 98504-0021 • (564) 999-0950 • Pat. McCarthy@sao.wa.gov Packet Pg. 224 2.7.b Schedule of Findings and Questioned Costs................................................................................... 4 Schedule of Federal Award Findings and Questioned Costs.......................................................... 6 Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with GovernmentAuditing Standards................................................................................................... 13 Independent Auditor's Report on Compliance for Each Major Federal Program and Report on a Internal Control Over Compliance in Accordance With the Uniform Guidance ......................... 15 3 0 Independent Auditor's Report on the Financial Statements.......................................................... 18 U° Financial Section........................................................................................................................... 21 ' a Corrective Action Plan for Findings Reported Under Uniform Guidance..................................101 About the State Auditor's Office..................................................................................................102 Office of the Washington State Auditor sao.wa.gov Packet Pg. 225 2.7.b City of Edmonds January 1, 2020 through December 31, 2020 SECTION I — SUMMARY OF AUDITOR'S RESULTS The results of our audit of the City of Edmonds are summarized below in accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost a Principles, and Audit Requirements for Federal Awards (Uniform Guidance). 3 E %r Financial Statements We issued an unmodified opinion on the fair presentation of the financial statements of the a governmental activities, the business -type activities, each major fund and the aggregate discretely cm presented component units and remaining fund information in accordance with accounting N of principles generally accepted in the United States of America (GAAP).cm Internal Control over Financial Reporting: • Significant Deficiencies: We reported no deficiencies in the design or operation of internal control over financial reporting that we consider to be significant deficiencies. • Material Weaknesses: We identified no deficiencies that we consider to be material weaknesses. We noted no instances of noncompliance that were material to the financial statements of the City. Federal Awards Internal Control over Major Programs: • Significant Deficiencies: We reported no deficiencies in the design or operation of internal control over major federal programs that we consider to be significant deficiencies. • Material Weaknesses: We identified deficiencies that we consider to be material weaknesses. We issued an adverse opinion on the City's compliance with requirements applicable to its major federal program. We reported findings that are required to be disclosed in accordance with 2 CFR 200.516(a). Office of the Washington State Auditor sao.wa.gov Packet Pg. 226 2.7.b Identification of Major Federal Programs The following program was selected as a major program in our audit of compliance in accordance with the Uniform Guidance. CFDA No. Program or Cluster Title 21.019 COVID-19 — Coronavirus Relief Fund The dollar threshold used to distinguish between Type A and Type B programs, as prescribed by the Uniform Guidance, was $750,000. a The City did not qualify as a low -risk auditee under the Uniform Guidance. 3 0 0 SECTION II — FINANCIAL STATEMENT FINDINGS None reported. a SECTION III — FEDERAL AWARD FINDINGS AND QUESTIONED COSTS See Finding 2020-001. Office of the Washington State Auditor sao.wa.gov Packet Pg. 227 2.7.b City of Edmonds January 1, 2020 through December 31, 2020 2020-001 The City's internal controls were inadequate for ensuring compliance with federal requirements for allowable activities and costs and subrecipient monitoring CFDA Number and Title: Federal Grantor Name: Federal Award/Contract Number: Pass -through Entity Name: Pass -through Award/Contract Number: Questioned Cost Amount: Background 21.019 — COVID-19 — Coronavirus Relief Fund U.S. Department of the Treasury N/A Washington State Department of Commerce, Snohomish County, and Economic Alliance Snohomish County 20-6541 C-167 $871,500 The purpose of the Coronavirus Relief Fund (CRF) program is to provide payments to state, territorial, tribal and certain eligible local governments to cover necessary expenditures incurred because of the COVID-19 pandemic. During fiscal year 2020, the City spent $2,123,907 in program funds to cover additional costs the City incurred during the pandemic, including teleworking equipment, personal protective equipment, and payroll. Additionally, the City spent $1,345,500 of these funds to establish a program that provided direct assistance payments to local businesses financially affected by COVID-19. The program funds also included $456,344 passed through to four subrecipients to fulfil components of the program's objectives. The portion of program funds the City passed through to the subrecipients provided emergency assistance to households financially affected by COVID-19. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include 0. 3 0 0 U_ a Office of the Washington State Auditor sao.wa.gov Packet Pg. 228 understanding program requirements and monitoring the effectiveness of established controls. Activities Allowed/Allowable Costs For the CRF program, the costs that recipients submit for federal reimbursement must have been necessary for responding to the COVID-19 pandemic and not previously included in budgets prior to March 27, 2020. All costs recipients charge to the CRF program must comply with program requirements and be supported by proper documentation demonstrating costs are specifically related to COVID-19 activities. a 3 Subrecipient Monitoring 2 0 Whenever the City passes on federal funding to subrecipients, federal regulations require the City to clearly identify the subaward contract as a federal award and a include all applicable program requirements. Further, the City must monitor its N subrecipients to ensure they comply with the terms and conditions of the federal N award. To determine the appropriate level of monitoring, the City must evaluate c; N each subrecipient's risk of noncompliance with federal requirements. For this award, monitoring would include verifying the subrecipients only provided M assistance to participants who met eligibility requirements and claimed reimbursement for allowable costs. Y Description of Condition Activities Allowed/Allowable Costs The City established four eligibility criteria for local businesses to receive assistance payments, but it did not have a process for verifying that businesses met all of these criteria. For one of the criteria, City employees relied on each business' application and self -attestation without verifying the information was accurate to ensure businesses were eligible to receive assistance payments. Subrecipient Monitoring The City contracted with four local nonprofit organizations to administer housing assistance programs and distribute food to food -insecure individuals and households in Edmonds. The City did not include all required elements in the subawards and did not perform risk assessments or monitor each subrecipient for compliance with program requirements, as federal regulations require. We consider these deficiencies in internal controls to be material weaknesses, which led to material noncompliance. These issues were not reported as a finding in the prior audit. Office of the Washington State Auditor sao.wa.gov Packet Pg. 229 2.7.b Cause of Condition Many businesses and people experienced sudden financial hardship due to the COVID-19 pandemic. In an effort to help preserve its local economy, the City acted quickly by providing assistance payments to businesses and passing funds to nonprofit organizations it had worked with in the past for other programs. However, the CRF program was a new type of federal funding for the City, and it had not previously used federal funds to provide direct assistance payments to local businesses or passed funding through to subrecipients. As such, City employees lacked adequate experience and needed training to know0. they should have independently verified each business met all eligibility criteria o before awarding assistance. Further, City employees were not aware of all federal U° requirements involved when passing funding through to subrecipients. a Effect of Condition and Questioned Costs o N Activities Allowed/Allowable Costs N Without obtaining documentation from business grant applicants to verify they met 2 M all eligibility criteria, the City cannot ensure business relief grant costs were allowable. During the audit, we gave the City the opportunity to obtain Y documentation from businesses to support their eligibility. In January 2022, the M City hired a contractor to request and review supporting documentation from the a x 172 businesses that received CRF funds. We reviewed the information the w contractor obtained and found the following: • Eight businesses did not respond to the City's request for financial information or, after some communication, did not provide financial information. These businesses received a total of $62,000. • Twenty-nine businesses did not meet the City's eligibility criteria, based on the information they provided. These businesses received a total of $235,500. An additional 74 businesses that received a total of $574,000 in direct business grants provided tax returns, quarterly reports, profit and loss statements or other financial information that showed a loss in revenues for the respective period. However, based on the information provided, we could not confirm a year -over -year business/revenue loss of at least 30 percent in April or May 2020, which the City's eligibility criteria required. We also could not confirm the expenditures the City charged to the program were allowable for these businesses. As such, we are questioning these costs. Office of the Washington State Auditor sao.wa.gov Packet Pg. 230 2.7.b Subrecipient Monitoring The City did not include all required information in the four subrecipient contracts, such as the subrecipient's unique entity identifier, federal award date, name of federal awarding agency, pass -through entity, contact information for awarding official of the pass -through entity, and the program's CFDA number and name. Without this information, the subrecipient is at an increased risk of not knowing the award comes from a federal program. This also increases the risk the subrecipient would not know it needs to comply with specific program requirements, which could potentially lead to spending funds for unallowable purposes. Further, without performing risk assessments and adequately monitoring c subrecipients, the City cannot ensure it is performing the proper level of monitoring c U_ and that subrecipients are complying with program requirements. Because the City did not perform risk assessments and monitor the four subrecipients, we gave the a City the opportunity to perform monitoring during the audit and verify if N subrecipients complied with the terms and conditions of the subaward. In early N 2022, the City hired a contractor to perform risk assessments and review three of N the subrecipients to verify they only provided assistance to eligible participants and complied with program requirements. The City found the subrecipients did not have adequate support demonstrating participant eligibility. As a result, we are considering the costs the City passed through to subrecipients, totaling $456,344, to be unsupported payments. Recommendation We recommend the City: • Provide adequate training to staff responsible for administering federal programs • Dedicate the necessary time and resources to staying updated on program guidance and ensuring compliance with all program requirements • Verify that beneficiaries of public funds meet all of the City's eligibility criteria before awarding funds • Include all required elements in subaward agreements, assess subrecipients' risk, and monitor them accordingly to verify they are complying with the terms and conditions of the award and only providing funds to eligible participants Office of the Washington State Auditor sao.wa.gov Packet Pg. 231 City's Response The City of Edmonds appreciates the opportunity to respond to the Washington State Auditor's Office's (SAO) conclusions. The City is committed to establishing and following effective internal controls for administering federal grants and for compliance with federal uniform guidance for grant administration, and to monitor any transactions with subrecipients to ensure compliance with federal requirements. During 2020 the City endeavored to distribute Coronavirus Relief Funds as a expeditiously as possible into the community where support was most needed due to the 3 devastating impact on residents and businesses because of the COVID-19 pandemic. 0 c We worked very hard to distribute these funds quickly and efficiently, which we believe had a very significant, positive impact on our community. a In our attempts to get the grant money into the community as quickly as possible, the City relied in part upon business's self -certification ofour eligibility requirements under penalty of perjury. After distributing the CARES funds we became aware that some of the businesses to whom grants had been awarded did not meet the eligibility requirements. When we learned this we performed our own internal audit to determine the number of businesses that were not eligible. After reviewing our audit results, the SAO determined that 29 businesses who did not meet our grant requirements nevertheless submitted applications and received grants totaling $235,500. Another 8 businesses have not responded to our requests for documentation; those businesses received grants totaling $62, 000. The City is exploring various remedies that may be available and appropriate, including but not limited to civil suits and criminal prosecution, to recover this $297, 500 in grant funds or otherwise hold wrongdoers accountable for their actions. The remaining questioned costs of $574, 000 are from 74 businesses who were able to supply documentation of losses that they incurred on an annual basis, but were unable to supply information specific to April or May of 2020. Because these businesses were able to show proof of COVID-related income losses, we are not intending to pursue legal action in these cases at this time. The City acted in good faith to quickly deliver aid and assistance to our residents, following the guidance and direction available at the time from the Department of Treasury and the Department of Commerce. Overall, City staff administered this highly complex and time sensitive program in a professional manner while dealing with emergency circumstances. We acknowledge that this does not relieve the City of the Office of the Washington State Auditor sao.wa.gov Packet Pg. 232 necessity to ensure that assistance payments are distributed only to those who meet our eligibility requirements. The City will also provide training to ensure that subrecipients are evaluated and monitored sufficiently to ensure eligibility and to reduce any risk of noncompliance. We are planning to add additional staff to provide better monitoring of the distribution offuture grants funds, and we will provide staff with the time, resources, and training necessary to avoid these errors from occurring again. Auditor's Remarks We appreciate the City's commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken c during the next regular audit. c U_ Applicable Laws and Regulations a Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for pass -through entities, establishes subrecipient monitoring and management requirements for pass through entities. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 42 U.S. Code of Federal Regulations (CFR) Part 801, Coronavirus Relief Fund establishes allowable costs of the program. 2 CFR Part 200, Subpart E, cost principles do not apply to the Coronavirus Relief Fund. Therefore, auditors refer to guidance and FAQs from the U.S. Department of the Treasury and the pass -through agency, the Washington State Department of Commerce, as the criteria when testing the allowability of costs under the Fund. Guidance and FAQs from both the U.S. Department of the Treasury and the Washington State Department of Commerce can be found at: https://www.commerce.wa.gov/serving- communities/local-government/covid-resiliency-grants/. These documents speak to the Office of the Washington State Auditor sao.wa.gov Packet Pg. 233 2.7.b grantors' expectation that local governments obtain documentation that supports how businesses met eligibility criteria. Office of the Washington State Auditor sao.wa.gov Packet Pg. 234 2.7.b Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards City of Edmonds January 1, 2020 through December 31, 2020 Mayor and City Council c City of Edmonds 0 Edmonds, Washington We have audited, in accordance with auditing standards generally accepted in the United States of a N America and the standards applicable to financial audits contained in Government Auditing c Standards, issued by the Comptroller General of the United States, the financial statements of the cr governmental activities, the business -type activities, each major fund and the aggregate discretely cm presented component units and remaining fund information of the City of Edmonds, as of and for M the year ended December 31, 2020, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated June 30, 2021. a. As discussed in Note 2 to the financial statements, during the year ended December 31, 2020, the City implemented Governmental Accounting Standards Board Statement No. 84, Fiduciary Activities and Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. As discussed in Note 17 to the 2020 financial statements, the full extent of the COVID-19 pandemic's direct or indirect financial impact on the City is unknown. INTERNAL CONTROL OVER FINANCIAL REPORTING In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, Office of the Washington State Auditor sao.wa.gov Packet Pg. 235 2.7.b or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did a not identify any deficiencies in internal control that we consider to be material weaknesses. 3 However, material weaknesses may exist that have not been identified. 00 U- COMPLIANCE AND OTHER MATTERS a' As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of the City's compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. However, this report is a matter of public record and its distribution is not limited. It also serves to disseminate information to the public as a reporting tool to help citizens assess government operations. � 0 Pat McCarthy, State Auditor Olympia, WA June 30, 2021 Office of the Washington State Auditor sao.wa.gov Packet Pg. 236 2.7.b Report on Compliance for Each Major Federal Program and Report on Internal Control over Compliance in Accordance with the Uniform Guidance City of Edmonds January 1, 2020 through December 31, 2020 Mayor and City Council a City of Edmonds c Edmonds, Washington c U- REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM a We have audited the compliance of the City of Edmonds, with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Compliance Supplement that could have a direct and material effect on each of the City's major federal programs for the year ended December 31, 2020. The City's major federal programs are identified in the accompanying Schedule of Findings and Questioned Costs. Management's Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of the City's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. Office of the Washington State Auditor sao.wa.gov Packet Pg. 237 2.7.b We believe that our audit provides a reasonable basis for our adverse opinion on compliance for each major federal program. Our audit does not provide a legal determination on the City's compliance. Basis for Adverse Opinion on 21.019 - Coronavirus Relief Fund As described in Finding 2020-01 in the accompanying Schedule of Federal Award Findings and Questioned Costs, the City did not comply with requirements regarding 21.019 - Coronavirus Relief Fund for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Subrecipient Monitoring. Compliance with such requirements is necessary, in our opinion, for the City to comply with the requirements applicable to that program. c 0 U- Adverse Opinion on 21.019 - Coronavirus Relief Fund In our opinion, because of the significance of the matter described in the Basis for Adverse Opinion a N paragraph, the City did not comply, in all material respects, with the types of compliance c requirements referred to above that could have a direct and material effect on 21.019 — Coronavirus 0 Relief Fund for the year ended December 31, 2020. cm City's Response to Findings The City's response to the noncompliance findings identified in our audit is described in the accompanying Schedule of Federal Award Findings and Questioned Costs. The City's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. REPORT ON INTERNAL CONTROL OVER COMPLIANCE Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program in order to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of Office of the Washington State Auditor sao.wa.gov Packet Pg. 238 compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the a first paragraph of this section and was not designed to identify all deficiencies in internal control 3 over compliance that might be material weaknesses or significant deficiencies and therefore, c 0 material weaknesses or significant deficiencies may exist that were not identified. We identified certain deficiencies in internal control over compliance, as described in the accompanying a Schedule of Federal Award Findings and Questioned Costs as Finding 2020-001 that we consider N to be a material weakness. c City's Response to Findings The City's response to the internal control over compliance findings identified in our audit is described in the accompanying Schedule of Federal Award Findings and Questioned Costs. The City's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. Purpose of this Report The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. However, this report is a matter of public record and its distribution is not limited. It also serves to disseminate information to the public as a reporting tool to help citizens assess government operations. Pat McCarthy, State Auditor Olympia, WA March 29, 2022 Office of the Washington State Auditor sao.wa.gov Packet Pg. 239 2.7.b Report on the Financial Statements City of Edmonds January 1, 2020 through December 31, 2020 Mayor and City Council City of Edmonds a Edmonds, Washington 3 0 REPORT ON THE FINANCIAL STATEMENTS U° We have audited the accompanying financial statements of the governmental activities, the a business -type activities, each major fund and the aggregate discretely presented component units N and remaining fund information of the City of Edmonds, as of and for the year ended N December 31, 2020, and the related notes to the financial statements, which collectively comprise cm the City's basic financial statements as listed on page 20. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing Office of the Washington State Auditor sao.wa.gov Packet Pg. 240 2.7.b an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, 3 the respective financial position of the governmental activities, the business -type activities, each 2 major fund and the aggregate discretely presented component units and remaining fund Ui information of the City of Edmonds, as of December 31, 2020, and the respective changes in financial position and, where applicable, cash flows thereof, and the budgetary comparison for the a General fund, for the year then ended in accordance with accounting principles generally accepted cm in the United States of America. N Matters of Emphasis As discussed in Note 2 to the financial statements, in 2020, the City adopted new accounting guidance, Governmental Accounting Standards Board Statement No. 84, Fiduciary Activities and Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. Our opinion is not modified with respect to this matter. As discussed in Note 17 to the 2020 financial statements, the full extent of the COVID-19 pandemic's direct or indirect financial impact on the City is unknown. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and required supplementary information listed on page 20 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and Office of the Washington State Auditor sao.wa.gov Packet Pg. 241 2.7.b other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements as a whole. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative a Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform 3 Guidance).This schedule is not a required part of the basic financial statements. Such information c is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has a been subjected to the auditing procedures applied in the audit of the basic financial statements and N certain additional procedures, including comparing and reconciling such information directly to N the underlying accounting and other records used to prepare the basic financial statements or to c; N the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the M information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Y OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated June 30, 2021 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Pat McCarthy, State Auditor Olympia, WA June 30, 2021 Office of the Washington State Auditor sao.wa.gov Packet Pg. 242 2.7.b ■ City of Edmonds January 1, 2020 through December 31, 2020 REQUIRED SUPPLEMENTARY INFORMATION Management's Discussion and Analysis — 2020 a BASIC FINANCIAL STATEMENTS 3 0 Statement of Net Position — 2020 U° Statement of Activities — 2020 0 Balance Sheet — Governmental Funds — 2020 a Reconciliation of the Balance Sheet to the Statement of Net Position — Governmental N Funds — 2020 Statement of Revenues, Expenditures and Changes in Fund Balances — Governmental Funds — 2020 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Government Funds to the Statement of Activities — 2020 Statement of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual — General Fund — 2020 Statement of Net Position — Proprietary Funds — 2020 Statement of Revenues, Expenses and Changes in Net Position — Proprietary Funds — 2020 Statement of Cash Flows — Proprietary Funds — 2020 Statement of Fiduciary Net Position — 2020 Statement of Changes in Fiduciary Net Position — 2020 Notes to the Financial Statements — 2020 REQUIRED SUPPLEMENTARY INFORMATION Firemen's Pension Fund Other Post -Employment Benefits — Schedule of Changes in Total OPEB Liability and Related Ratios — 2020 Firemen's Pension Fund — Schedule of Changes in the City's Net Pension Liability and Related Ratios — 2020 Firemen's Pension Fund — Schedule of City Contributions — 2020 Schedules of Proportionate Share of the Net Pension Liability — PERS 1, PERS 2/3, LEOFF 1, LEOFF 2 — 2020 Schedule of Employer Contributions — PERS 1, PERS 2/3, LEOFF 1, LEOFF 2 — 2020 Office of the Washington State Auditor sao.wa.gov Packet Pg. 243 2.7.b SUPPLEMENTARY AND OTHER INFORMATION Schedule of Expenditures of Federal Awards — 2020 Notes to the Schedule of Expenditures of Federal Awards — 2020 Office of the Washington State Auditor sao.wa.gov Packet Pg. 244 2.7.b x CITY OF EDMONDS CITY HALL 121 Sr AVENUE NORTH - EDMONDS, WA 98020 Aic. , ? `' 425.771.0240 + FAX 425.771.0265 CORRECTIVE ACTION PLAN FOR FINDINGS REPORTED UNDER UNIFORM GUIDANCE City of Edmonds January 1, 2020 through December 31, 2020 c 0 U- This schedule presents the corrective action planned by the City for findings reported in this report in accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform a Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards cm (Uniform Guidance). N Finding ref number: Finding caption: 2020-001 The City's internal controls were inadequate for ensuring compliance with federal requirements for allowable activities and costs and subrecipient monitoring activities. Name, address, and telephone of City contact person: Dave Turley 121 5th Avenue N. Edmonds, WA 98020 (425) 275-4688 Corrective action the auditee plans to take in response to the finding: The City will ensure that the distribution of any support payments to individuals and businesses will comply with stated eligibility requirements, and that required reporting from recipients will be obtained. Anticipated date to complete the corrective action: We have already begun implementing this corrective action and plan for it to be in place for 2021 reporting requirements. Office of the Washington State Auditor sao.wa.gov Packet Pg. 245 2.7.b The State Auditor's Office is established in the Washington State Constitution and is part of the executive branch of state government. The State Auditor is elected by the people of Washington and serves four-year terms. We work with state agencies, local governments and the public to achieve our vision of increasing trust in government by helping governments work better and deliver higher value. In fulfilling our mission to provide citizens with independent and transparent examinations of how state and local governments use public funds, we hold ourselves to those same standards by continually improving our audit quality and operational efficiency, and by developing highly engaged and committed employees. As an agency, the State Auditor's Office has the independence necessary to objectively perform audits, attestation engagements and investigations. Our work is designed to comply with professional standards as well as to satisfy the requirements of federal, state and local laws. The Office also has an extensive quality control program and undergoes regular external peer review to ensure our work meets the highest possible standards of accuracy, objectivity and clarity. Our audits look at financial information and compliance with federal, state and local laws for all local governments, including schools, and all state agencies, including institutions of higher education. In addition, we conduct performance audits and cybersecurity audits of state agencies and local governments, as well as state whistleblower, fraud and citizen hotline investigations. The results of our work are available to everyone through the more than 2,000 reports we publish each year on our website, www.sao.wa.gov. Additionally, we share regular news and other information via an email subscription service and social media channels. We take our role as partners in accountability seriously. The Office provides training and technical assistance to governments both directly and through partnerships with other governmental support organizations. Stay connected at sao.wa.gov • Find your audit team • Request public records • Search BARS manuals (GAAP and cash), and find reporting templates • Learn about our training workshops and on -demand videos • Discover which governments serve enter an address on our map • Explore public financial data with the Financial Intelligence Tool Other ways to stay in touch • Main telephone: (564) 999-0950 • Toll -free Citizen Hotline: (866) 902-3900 • Email: webmasterksao.wa. gov a 3 0 0 U_ a Office of the Washington State Auditor sao.wa.gov Packet Pg. 246 2.7.b Office of the Washington State Auditor Pat McCarthy June 30, 2021 Mayor and City Council City of Edmonds 0- Edmonds, Washington c 0 Report on Financial Statements U- Please find attached our report on the City of Edmonds's financial statements. a We are issuing this report for inclusion in the City's comprehensive annual financial report package, which will be issued by the City under the City's own cover. This report is in addition to our regular financial statement audit report, which will be available on our website and includes the City's basic financial statements. Sincerely, Pat McCarthy, State Auditor Olympia, WA Americans with Disabilities In accordance with the Americans with Disabilities Act, we will make this document available in alternative formats. For more information, please contact our Office at (564) 999-0950, TDD Relay at (800) 833-6388, or email our webmaster at webmasterksao.wa.g. Insurance Building, P.O. Box 40021 • Olympia, Washington 98504-0021 • (564) 999-0950 • Pat. McCarthy@sao.wa.gov Packet Pg. 247 2.7.b Office of the Washington State Auditor Pat McCarthy Mayor and City Council City of Edmonds Edmonds, Washington REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of the governmental activities, the business - type activities, the aggregate discretely presented component units, each major fund and the aggregate remaining fund information of the City of Edmonds, as of and for the year ended December 31, 2020, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating Packet Pg. 248 2.7.b the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund and the aggregate remaining fund information of 3 the City of Edmonds, as of December 31, 2020, and the respective changes in financial position and, 2 where applicable, cash flows thereof, and the budgetary comparison for the General Fund for the year U° then ended in accordance with accounting principles generally accepted in the United States of America. a Matters of Emphasis As discussed in Note 2 to the financial statements, in 2020, the City adopted new accounting guidance, Governmental Accounting Standards Board Statement No. 84, Fiduciary Activities and Statement No. 88 Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. Our opinion is not modified with respect to this matter. As discussed in Note 17 to the 2020 financial statements, the full extent of the COVID-19 pandemic's direct or indirect impact on the City is unknown. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and required supplementary information listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Packet Pg. 249 2.7.b Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements as a whole. The combining and individual fund financial statements and schedules are presented for the purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. This information has been subjected to auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial a statements or to the financial statements themselves, and other additional procedures in accordance with 3 auditing standards generally accepted in the United States of America. In our opinion, the information 2 6 is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. U- The Introductory and Statistical Sections are presented for purposes of additional analysis and are not a 4- required part of the basic financial statements of the City. Such information has not been subjected to N the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not N express an opinion or provide any assurance on it. N OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we will also issue our report dated June 30, 2021, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. That report will be issued under separate cover in the City's Single Audit Report. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Sincerely, Pat McCarthy, State Auditor Olympia, WA June 30, 2021 Packet Pg. 250 2.7.b Accountability Audit Report �- 3 0 0 LL t City of Edmonds _ For the period January 1, 2020 through December 31, 2020 Published March 31, 2022Find out what's new at SAO by scanning this code with Report No. 1030264 ❑ your smartphone's camera Packet Pg. 251 2.7.b Office of the Washington State Auditor Pat McCarthy March 31, 2022 Mayor and City Council a City of Edmonds 3 Edmonds, Washington 2 0 U- Report on Accountability a Thank you for the opportunity to work with you to promote accountability, integrity and openness N in government. The Office of the Washington State Auditor takes seriously our role of providing N state and local governments with assurance and accountability as the independent auditor of public N accounts. In this way, we strive to help government work better, cost less, deliver higher value and earn greater public trust. s Independent audits provide essential accountability and transparency for City operations. This information is valuable to management, the governing body and public stakeholders when assessing the government's stewardship of public resources. Attached is our independent audit report on the City's compliance with applicable requirements and safeguarding of public resources for the areas we examined. We appreciate the opportunity to work with your staff and value your cooperation during the audit. Sincerely, Pat McCarthy, State Auditor Olympia, WA Americans with Disabilities In accordance with the Americans with Disabilities Act, we will make this document available in alternative formats. For more information, please contact our Office at (564) 999-0950, TDD Relay at (800) 833-6388, or email our webmaster at webmaster(a),sao.wa.go Insurance Building, P.O. Box 40021 • Olympia, Washington 98504-0021 • (564) 999-0950 • Pat. McCarthy@sao.wa.gov Packet Pg. 252 2.7.b AuditResults................................................................................................................................... 4 RelatedReports............................................................................................................................... 5 Informationabout the City.............................................................................................................. 6 About the State Auditor's Office..................................................................................................... 7 Office of the Washington State Auditor sao.wa.gov Page 3 Packet Pg. 253 2.7.b Results in brief This report describes the overall results and conclusions for the areas we examined. In those selected areas, City operations complied, in all material respects, with applicable state laws, regulations, and its own policies, and provided adequate controls over the safeguarding of public resources. In keeping with general auditing practices, we do not examine every transaction, activity, policy, internal control, or area. As a result, no information is provided on the areas that were not examined. About the audit This report contains the results of our independent accountability audit of the City of Edmonds from January 1, 2020 through December 31, 2020. Management is responsible for ensuring compliance and adequate safeguarding of public resources from fraud, loss or abuse. This includes the design, implementation and maintenance of internal controls relevant to these objectives. This audit was conducted under the authority of RCW 43.09.260, which requires the Office of the Washington State Auditor to examine the financial affairs of all local governments. Our audit involved obtaining evidence about the City's use of public resources, compliance with state laws and regulations and its own policies and procedures, and internal controls over such matters. The procedures performed were based on our assessment of risks in the areas we examined. Based on our risk assessment for the year ended December 31, 2020, the areas examined were those representing the highest risk of fraud, loss, abuse, or noncompliance. We examined the following areas during this audit period: • Accounts receivable — utility billing, adjustments and collections • Payroll — leave balances and accruals and end of employment payments • Court financial activities — evaluated design of controls for bank reconciliation process • Compliance with rental agreement contract terms including rent waivers during the COVID-19 pandemic • Financial condition — reviewing for indications of financial distress • Open public meetings — compliance with minutes, meetings and executive session requirements a 3 0 0 LL a Office of the Washington State Auditor sao.wa.gov Page 4 Packet Pg. 254 2.7.b Financial Our opinion on the City's financial statements and compliance with federal grant program requirements is provided in a separate report, which includes the City's financial statements. That report is available on our website, http://portal.sao.wa. og v/ReportSearch. Federal grant programs We evaluated internal controls and tested compliance with the federal program requirements, as applicable, for the City's major federal program, which is listed in the Schedule of Findings and Questioned Costs section of the separate financial statement and single audit report. That report includes a federal finding regarding relief grants awarded to local businesses and inadequate monitoring of subrecipients reported. That report is available on our website, http://portal.sao.wa. og v/ReportSearch. 3 0 0 LL a Office of the Washington State Auditor sao.wa.gov Page 5 Packet Pg. 255 2.7.b The City of Edmonds, incorporated in 1890, is the third largest city in Snohomish County with an estimated population of 42,470 citizens. Located 15 miles north of Seattle, the City encompasses approximately nine square -miles in Snohomish County. The City provides services including: administration, police, municipal court, streets, parks and recreation, facilities, cultural arts, cemetery, planning and community development, water, wastewater collection and treatment plant management services, and sewer utility. An elected, seven -member Council governs the City with a separately elected Mayor. The Council appoints management to oversee the City's daily operations as well as its 240 employees. For fiscal year 2020, the City had expenditures of approximately $75.6 million. Primary revenue sources for the City include taxes, grants, charges for services, and fines and forfeitures. Contact information related to this report Address: City of Edmonds 121 5th Avenue N. Edmonds, WA 98020 Contact: Dave Turley, Administrative Services Director Telephone: (425) 275-4688 Website: www.edmondswa.gov Information current as of report publish date. Audit history You can find current and past http://portal.sao.wa.gov/ReportSearch. audit reports for the City of Edmonds at Office of the Washington State Auditor sao.wa.gov Page 6 Packet Pg. 256 2.7.b The State Auditor's Office is established in the Washington State Constitution and is part of the executive branch of state government. The State Auditor is elected by the people of Washington and serves four-year terms. We work with state agencies, local governments and the public to achieve our vision of increasing trust in government by helping governments work better and deliver higher value. In fulfilling our mission to provide citizens with independent and transparent examinations of how state and local governments use public funds, we hold ourselves to those same standards by continually improving our audit quality and operational efficiency, and by developing highly engaged and committed employees. As an agency, the State Auditor's Office has the independence necessary to objectively perform audits, attestation engagements and investigations. Our work is designed to comply with professional standards as well as to satisfy the requirements of federal, state and local laws. The Office also has an extensive quality control program and undergoes regular external peer review to ensure our work meets the highest possible standards of accuracy, objectivity and clarity. Our audits look at financial information and compliance with federal, state and local laws for all local governments, including schools, and all state agencies, including institutions of higher education. In addition, we conduct performance audits and cybersecurity audits of state agencies and local governments, as well as state whistleblower, fraud and citizen hotline investigations. The results of our work are available to everyone through the more than 2,000 reports we publish each year on our website, www.sao.wa.gov. Additionally, we share regular news and other information via an email subscription service and social media channels. We take our role as partners in accountability seriously. The Office provides training and technical assistance to governments both directly and through partnerships with other governmental support organizations. Stay connected at sao.wa.gov • Find your audit team • Request public records • Search BARS manuals (GAAP and cash), and find reporting templates • Learn about our training workshops and on -demand videos • Discover which governments serve you enter an address on our map • Explore public financial data with the Financial Intelligence Tool Other ways to stay in touch • Main telephone: (564) 999-0950 • Toll -free Citizen Hotline: (866) 902-3900 • Email: webmaster(d), sao.wa. goy a 3 0 0 U_ a Office of the Washington State Auditor sao.wa.gov Page 7 Packet Pg. 257 2.7.b ^` CITY OF EDMONDS CITY HALL 121 5" AVENUE NORTH - EDMONDS. WA 98020 /VC. 1 425.771.0240 • FAX 425.771.0265 June 30, 2021 Washington State Auditor's Office 15129 Main Street, Suite C 102 Mill Creek, WA 98012 Q. 3 0 To the Office of the Washington State Auditor: ,0 We are providing this letter in connection with your audit of City of Edmonds for the period from a January 1, 2020 through December 31, 2020. Representations are in relation to matters existing during or subsequent to the audit period up to the date of this letter. o Certain representations in this letter are described as being limited to matters that are significant or material. Information is considered significant or material if it is probable that it would change or influence the judgment of a reasonable person. We confirm, to the best of our knowledge and belief, having made appropriate inquires to be able to provide our representations, the following representations made to you during your audit. If we subsequently discover information that would change our representations related to this period, we will notify you in a timely manner. General Representations: We have provided you with unrestricted access to people you wished to speak with and made available requested and relevant information of which we are aware, including: a. Financial records and related data. b. Minutes of the meetings of the governing body or summaries of actions of recent meetings for which minutes have not yet been prepared. c. Other internal or external audits, examinations, investigations or studies that might concern the objectives of the audit and the corrective action taken to address significant findings and recommendations. d. Communications from regulatory agencies, government representatives or others concerning possible material noncompliance, deficiencies in internal control or other matters that might concern the objectives of the audit. e. Related parry relationships and transactions. f. Results of our internal assessment of business risks and risks related to financial reporting, compliance and fraud. Packet Pg. 258 2.7.b 2. We acknowledge our responsibility for compliance with requirements related to confidentiality of certain information, and have notified you whenever records or data containing information subject to any confidentiality requirements were made available. 3. We acknowledge our responsibility for compliance with applicable laws, regulations, contracts and grant agreements. 4. We have identified and disclosed all laws, regulations, contracts and grant agreements that could have a direct and material effect on the determination of financial statement amounts, including legal and contractual provisions for reporting specific activities in separate funds. 5. We have complied with all material aspects of laws, regulations, contracts and grant �. agreements. c 6. We acknowledge our responsibility for establishing and maintaining effective internal U° controls over compliance with applicable laws and regulations and safeguarding of public resources, including controls to prevent and detect fraud. a 7. We have established adequate procedures and controls to provide reasonable assurance of safeguarding public resources and compliance with applicable laws and regulations. 8. Except as reported to you in accordance with RCW 43.09.185, we have no knowledge of any loss of public funds or assets or other illegal activity, or any allegations of fraud or suspected fraud involving management or employees. 9. In accordance with RCW 43.09.200, all transactions have been properly recorded in the financial records, notwithstanding immaterial uncorrected items as outlined in the Aggregation of Misstatements. Additional representations related to the financial statements: 10. We acknowledge our responsibility for fair presentation of financial statements and believe financial statements are fairly presented in conformity with generally accepted accounting principles in the United States of America. 11. We acknowledge our responsibility for establishing and maintaining effective internal control over financial reporting. 12. The financial statements include financial information of the primary government and all component units, fiduciary and other activity required by generally accepted accounting principles to be included in the financial reporting entity. 13. The financial statements properly classify all funds and activities. 14. All funds that meet the quantitative criteria in GASB requirements or are otherwise particularly important to financial statement users, are presented as major funds. 15. Capital assets, including infrastructure and intangible assets, are properly capitalized, reported and depreciated as applicable. Packet Pg. 259 2.7.b 16. We have no plans or intentions that may materially affect the reported value or classification of assets, liabilities or net position. 17. Revenues are appropriately classified by fund and account. 18. Expenses have been appropriately classified by fund and account, and allocations have been made on a reasonable basis. 19. Net position components (net investment in capital assets, restricted and unrestricted) and fund balance components (nonspendable, restricted, committed, assigned and unassigned) are properly classified and, as applicable, approved. Q. 20. Significant assumptions we used in making accounting estimates are reasonable. c 0 U_ 21. The following have been properly classified, reported and disclosed in the financial statements, as applicable: a a. Interfund, internal, and intra-entity activity and balances. N b. Related -party transactions, including sales, purchases, loans, transfers, leasing arrangements, and guarantees, and amounts receivable from or payable to related parties. c. Joint ventures and other related organizations. d. Guarantees under which the government is contingently liable. e. All events occurring subsequent to the fiscal year end through the date of this letter that would require adjustment to, or disclosure in, the financial statements. f. Effects of all known actual or possible litigation, claims, assessments, violations of laws, regulations, contracts or grant agreements, and other loss contingencies. 22. We have accurately disclosed to you all known actual or possible pending or threatened litigation, claims or assessments whose effects should be considered when preparing the financial statements. We have also accurately disclosed to you the nature and extent of our consultation with outside attorneys concerning litigation, claims and assessments. 23. We acknowledge our responsibility for reporting supplementary information such as the Schedule of Expenditures of Federal Awards and Combining and Individual Fund Financial Statements and Schedules in accordance with applicable requirements and believe supplementary information is fairly presented, in both form and content in accordance with those requirements. 24. We have disclosed to you all significant changes to the methods of measurement and presentation of supplementary information, reasons for any changes and all significant assumptions or interpretations underlying the measurement or presentation. Packet Pg. 260 2.7.b 25. We acknowledge our responsibility for the supplementary information required by generally accepted accounting principles in the United States (RSI) and believe RSI is measured and presented within prescribed guidelines. 26. We have disclosed to you all significant changes in the methods of measurement and presentation of RSI, reasons for any changes and all significant assumptions or interpretations underlying the measurement or presentation of the RSI. 27. We believe the effects of uncorrected financial statement misstatements summarized in the schedule of uncorrected items provided to us by the auditor are not material, both individually and in the aggregate, to each applicable opinion unit. 28. We acknowledge our responsibility not to publish any document containing the audit report with any change in the financial statements, supplementary and other information referenced in the auditor's report. We will contact the auditor if we have any needs for publishing the audit report with different content included. 29. We adequately considered the qualifications of Milliman, Inc. and agree with conclusions regarding the Firefighter's Pension and other post -employment benefits liability, which are reflected in financial statement amounts and disclosures. We provided Milliman, Inc. with accurate and complete information in response to requests and did not give or cause any instructions to be given to Milliman, Inc. with respect to the values or amounts derived in an attempt to bias their work, and we are not otherwise aware of any matters that have had an impact on the independence or objectivity of Milliman, Inc. 30. We acknowledge our responsibility for presenting Annual Comprehensive Financial Report combining statements and supplemental schedules in accordance with generally accepted accounting principles in the United States. We believe that combining statements and supplemental schedules are fairly presented, including both form and content, in accordance with those principles. We have disclosed to you all significant changes to the methods of measurement and presentation of combining statements and supplemental schedules, reasons for any changes and all significant assumptions or interpretations underlying the measurement or presentation of the combining statements and supplemental schedules. Mike Nelson Dave Turley Mayor Administrative Servic s Director Packet Pg. 261 2.7.b CITY OF EDMONDS C4TY HALL 121 r AVENUE NORTH • EDMONDS, WA 98020 ��VC, g•Yfl 425.771.0240 • FAX 425.771.0265 March 29, 2022 Washington State Auditor's Office 15129 Main Street, Suite C 102 Mill Creek, WA 98012 3 0 To the Office of the Washington State Auditor: o U- We are providing this letter in connection with your audit of the City of Edmonds for the period from January 1, 2020 through December 31, 2020. Representations are in relation to matters a existing during or subsequent to the audit period up to the date of this letter. C 4 N Certain representations in this letter are described as being limited to matters that are significant or material. Information is considered significant or material if it is probable that it would change or influence the judgment of a reasonable person. We confirm, to the best of our knowledge and belief, having made appropriate inquires to be able to provide our representations, the following representations made to you during your audit. If we subsequently discover information that would change our representations related to this period, we will notify you in a timely manner. General Representations: We have provided you with unrestricted access to people you wished to speak with and made available requested and relevant information of which we are aware, including: a. Financial records and related data. b. Minutes of the meetings of the governing body or summaries of actions of recent meetings for which minutes have not yet been prepared. c. Other internal or external audits, examinations, investigations or studies that might concern the objectives of the audit and the corrective action taken to address significant findings and recommendations. d. Communications from regulatory agencies, government representatives or others concerning possible material noncompliance, deficiencies in internal control or other matters that might concern the objectives of the audit. e. Related party relationships and transactions. f. Results of our internal assessment of business risks and risks related to financial reporting, compliance and fraud. 2. We acknowledge our responsibility for compliance with requirements related to confidentiality of certain information, and have notified you whenever records or data containing information subject to any confidentiality requirements were made available. 3. We acknowledge our responsibility for compliance with applicable laws, regulations, contracts and grant agreements. Packet Pg. 262 2.7.b 4. We have identified and disclosed all laws, regulations, contracts and grant agreements that could have a direct and material effect on the determination of financial statement amounts, including legal and contractual provisions for reporting specific activities in separate funds. 5. We have complied with all material aspects of laws, regulations, contracts and grant agreements. 6. We acknowledge our responsibility for establishing and maintaining effective internal controls over compliance with applicable laws and regulations and safeguarding of public resources, including controls to prevent and detect fraud. 7. We have established adequate procedures and controls to provide reasonable assurance of safeguarding public resources and compliance with applicable laws and regulations. 8. We have no knowledge of any loss of public funds or assets or other illegal activity, or any allegations of fraud or suspected fraud involving management or employees. 9. In accordance with RCW 43.09.200, all transactions have been properly recorded in the financial records, notwithstanding immaterial uncorrected items referenced below. 10. We are responsible for taking corrective action on audit findings and have developed a corrective action plan. Additional representations related to the financial statements: 11. We acknowledge our responsibility for fair presentation of financial statements and believe financial statements are fairly presented in conformity with generally accepted accounting principles in the United States of America. 12. We acknowledge our responsibility for establishing and maintaining effective internal control over financial reporting. 13. The financial statements include financial information of the primary government and all component units, fiduciary and other activity required by generally accepted accounting principles to be included in the financial reporting entity. 14. The financial statements properly classify all funds and activities. 15. All funds that meet the quantitative criteria in GASB requirements or are otherwise particularly important to financial statement users, are presented as major funds. 16. Capital assets, including infrastructure and intangible assets, are properly capitalized, reported and depreciated as applicable. 17. We have no plans or intentions that may materially affect the reported value or classification of assets, liabilities or net position. 18. Revenues are appropriately classified by fund and account. 19. Expenses have been appropriately classified by fund and account, and allocations have been made on a reasonable basis. 20. Net position components (net investment in capital assets, restricted and unrestricted) and fund balance components (nonspendable, restricted, committed, assigned and unassigned) are properly classified and, as applicable, approved. Packet Pg. 263 2.7.b 21. Significant assumptions we used in making accounting estimates are reasonable. 22. The following have been properly classified, reported and disclosed in the financial statements, as applicable: a. Interfund, internal, and intra-entity activity and balances. b. Related -party transactions, including sales, purchases, loans, transfers, leasing arrangements, and guarantees, and amounts receivable from or payable to related parties. c. Joint ventures and other related organizations. d. Guarantees under which the government is contingently liable. e. All events occurring subsequent to the fiscal year end through the date of this letter that would require adjustment to, or disclosure in, the financial statements. f. Effects of all known actual or possible litigation, claims, assessments, violations of a laws, regulations, contracts or grant agreements, and other loss contingencies. M 3 23. We have accurately disclosed to you all known actual or possible pending or threatened 0 0 litigation, claims or assessments whose effects should be considered when preparing the financial statements. We have also accurately disclosed to you the nature and extent of our a consultation with outside attorneys concerning litigation, claims and assessments. �- 24. We acknowledge our responsibility for reporting supplementary information (the Schedule N N N of Expenditures of Federal Awards) in accordance with applicable requirements and N believe supplementary information is fairly presented, in both form and content in L accordance with those requirements. M M 25. We have disclosed to you all significant changes to the methods of measurement and presentation of supplementary information, reasons for any changes and all significant assumptions or interpretations underlying the measurement or presentation. a. 26. We acknowledge our responsibility for the supplementary information required by generally accepted accounting principles in the United States (RSI) and believe RSI is measured and presented within prescribed guidelines. 27. We have disclosed to you all significant changes in the methods of measurement and presentation of RSI, reasons for any changes and all significant assumptions or interpretations underlying the measurement or presentation of the RSI. 28. We believe the effects of uncorrected financial statement misstatements summarized below are not material, both individually and in the aggregate, to each applicable opinion unit. Description Statement / Schedule Opinion Unit OPEB: The "total OPEB liability" should be allocated between current and non -current liabilities in the financial statements. Since there is no trust fund to make the benefit payments, the Statement of Net Governmental employer is making the payments. So the amounts expected to Position Activities be due within one year are current liabilities. The current portion is an estimate typicially done by the actuary. Note 2, Accounting and Reporting Changes, page 46: The Notes to the Financial disclosure of new statements should be limited to the Statements N/A statements that have a financial impact on the government. Note 13, Changes in Long -Term Liabilities, page 76: We Notes to the Financial would expect that the "Total OPEB Liability" would include a Statements N/A current portion. Packet Pg. 264 2.7.b Note 12 - Lona-term Debt (GASS 88): The Chase Bank Loan is considered a direct borrowing and should be reported under the direct borrowings table instead of with the General Obligation Bonds. Notes to the Financial N/A Statements We reviewed the City's debt service requirements table and noted it does not separately report debt service requirements for direct placements/borrowings as required per GASB 88. Depreciation Ex ep nse: We recalculated business type Statement of Net activities depreciation expense and determined it was correctly Position - Proprietary calculated and reported for all assets except asset 8847. We Funds 421/422/423 noted this asset's FY20 depreciation of $36,770 was not on the Statement of Revenues, Combined depreciation schedule. Debra Sharp, Accountant, will have Expenses, and Changes Utility Funds Eden research the cause as there is nothing in the setting that in Net Position - should be preventing this asset from running depreciation. Proprietary Funds Statement of Net Business Depreciation expense understated by $36,789, accumulated depreciation understated by $36,789 causing overall reported Position Type asset, net to be overstated b $36,789. Statement of Activities Activities Statement of Net Position - Proprietary Utility Billing The City is charging certain sewer customers Funds 421/422/423 $5.21 bi-monthly. The City's ordinance for those customers Statement of Revenues, Combined states the rate to be $5.21 per month or $10.42 bi-monthly. Expenses, and Changes Utility Funds Charges for services is understated by approximately $20,105. in Net Position - As this is an estimate, no correction should be made unless the Pro rieta Funds Statement of Net Business City decides to determine the exact amount of misstatement. Position Type Statement of Activities Activities Cash & Investments: The City's cash and investment Statement of Net Governmental reconciliation did not include the Court's year end bank cash Position Activities balance of $104,958 or any related reconciling items as the Court department did not complete their 12/31/20 Balance Sheet General Fund reconciliation and submit to the City's Finance department. Transfers: The City transferred $1.5 million from the internal General Fund Aggregate service funds to the general fund. We noted the $1.5 million Statement of Revenues, came from: • General Fund (Fund 001) - $1,124,991 (comprised of Expenditures and Remaining g Funds 996,686 general fund and 128,305 park maintenance fund) Changes in Fund Balances - Street Fund (Fund 111) - $20,385 Governmental Funds • Combined Utility Funds (Funds 421/422/423) - $334,624 • Fleet (Fund 511) - $20,000 Statement of Revenues, 421/422/423 The amounts attributable to the street fund, combined utility Expenses, and Changes Combined Combi C funds, and fleet fund should be refunded back to those funds, in Net Position - Utility Funds not the general fund. We determined transfers -in for the general Proprietary Funds fund, per the withdrawals on the B-fund spreadsheet, is overstated by $375 009. 29. We acknowledge our responsibility not to publish any document containing the audit report with any change in the financial statements, supplementary and other information referenced in the auditor's report. We will contact the auditor if we have any needs for publishing the audit report with different content included. Additional representations related to expenditures under federal grant programs: 30. We acknowledge our responsibility for complying, and have complied, with the requirements of 2 CFR § 200 Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards. Packet Pg. 265 2.7.b 31. With regards to your audit of federal grant programs, we have made available all relevant and requested information of which we are aware, including: a. All federal awards and related grant agreements (including amendments, if any), contracts with pass -through entities, service organizations and vendors, and correspondence. b. All communications from federal awarding agencies, vendors, service organizations or pass -through entities concerning possible noncompliance. c. All information regarding corrective actions taken and management decisions or follow-up work performed by federal or pass -through agencies on any findings reported in the past. d. All documentation related to the compliance requirements, including information related to federal program financial reports and claims for advances and reimbursements. �- e. Interpretations or other support for any situations where compliance with requirements 3 might be questionable or unclear. 2 0 U_ 32. Except as reported by the audit, we have identified and complied with all direct and material compliance requirements of federal awards. a 33. Management is responsible for establishing effective internal control and has, except as reported by the audit, maintained sufficient control over federal programs to provide reasonable assurance that awards are managed in compliance with laws, regulations, contracts or grant agreements that could have a material effect on each of our federal awards. 34. Federal program financial reports and claims for advances and reimbursements are supported by the accounting records from which the basic financial statements have been prepared, and are prepared on a basis consistent with the Schedule of Expenditures of Federal Awards. 35. Copies of federal program reports provided to you are true copies of the reports submitted, or electronically transmitted, to federal agencies or pass -through agencies, as applicable. 36. We are responsible for, and will accurately prepare, the auditee section of the Data Collection Form as required by the Uniform Guidance. Additional representations related to federal grants passed through to subreci ients: 37. We have advised our subrecipients of requirements imposed on them by Federal laws, regulations, contracts or grant agreements as well as any supplemental requirements we impose as a condition of receiving Federal awards. 38. We have monitored the activities of our subrecipients as necessary to ensure that Federal awards are used for authorized purposes in compliance with laws, regulations, contracts or grant agreements. 39. We have determined that subrecipients expending $750,000 or more in Federal awards during the subrecipient's fiscal year have met the audit requirements of 2 CFR § 200.501 for that fiscal year. Packet Pg. 266 2.7.b 40. When applicable, we have issued a management decision on audit findings within six months after receipt of the subrecipient's audit report and ensured that the subrecipient has taken appropriate and timely corrective action 41. We have considered the results of our subrecipients' audits and made any necessary adjustments to our own accounting records. l Mike Nelson Dave Turley Packet Pg. 267 Pat McCarthy New Audit Status Tool: What you need to know The Office of the Washington State Auditor has created a tool for following the status of audit findings and corrective actions. This tool is called Tracker. Local governments will follow the same basic process for responding to audit findings, butTracker will make information about findings and corrective action status easily accessible in a single location. The goals for this tool are to improve the usability of information regarding the status of audit issues and to give governments a way to quickly share their plans for resolving those issues. Benefits of Tracker Using Tracker, your government can: • Get up to speed more quickly when turnover occurs. Employees who are new or in new positions will have one stop access to prior audit issues and corrective actions, rather than having to search multiple websites and contact their auditors. This also will help ease transitions with new leaders. • Be clear about its current audit status. • Better and more quickly prepare for upcoming audits. • More easily identify and resolve issues before the audit is conducted or the audit report published. • Enter a status update at the time of the change. It is easier to note details about a change when they are top of mind instead of waiting for months to capture that information ahead of the next audit. • Show quickly that it resolved an issue - and get the credit for that expedient resolution. This could be useful for governments trying to manage perceptions regarding their stewardship of public funds. "Our vision is to increase trust in government, and Tracker does that by meeting the public's increasing expectation o government transparenc Pat McCarthy State Auditor February 2079 Packet Pg. 268 Increased transparency The Tracker tool will take information that is already available and improve the usability. 3 0 0 Update at your convenience �a We think you will find that using Tracker to check and update your audit status at your a convenience improves efficiency, accuracy, preparation and staff transitions. The N designated representative or representatives for your government can update N submitted information. ,.. Timeline Our plan is for the Tracker system for local governments to begin operating in March, and to become publicly accessible by the end of 2019. Questions? If you have questions or concerns, please feel free to contact your local audit team. 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