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FC041222FINANCE COMMITTEE MEETING April 12, 2022 Elected Officials Participating Virtually Staff Participating Virtually Councilmember Diane Buckshnis (Chair) Dave Turley, Administrative Services Director Councilmember Will Chen Doug Merriman, Interim Comm. Serv./Econ Dev Dir. Council President Vivian Olson (ex-officio) Angie Feser, Parks, Rec., Cultural Arts & Human Serv. Dir. Megan Menkveld, Deputy Admin. Serv. Dir. Shannon Burley, Deputy Parks, Rec., Cultural Arts & Human Serv. Dir. Thom Sullivan, Facilities Manager Jeff Taraday, City Attorney Scott Passey, City Clerk CALL TO ORDER The Edmonds City Council virtual online Finance Committee meeting was called to order at 6:00 p.m. by Councilmember Buckshnis. 2. COMMITTEE BUSINESS 1. Report from the Edmonds Public Facilities District ECA Executive Director Joe Mclalwain introduced: Ray Liaw, EPFD Board VP; David Brewster, EPFD Board President; Lori Maegher, ECA Director of Finance and Operations; Rick Canning, ECA Board Secretary/Treasurer and past finance committee chair; and Matt Cox, ECA Board Member and current finance committee chair. Ms. Maegher advised the fiscal year (FY) 2021 draft audited financial reports have been submitted to the State Auditor's Office (SAO) in preparation for the financial and accountability audits. She provided highlights from the financial reports such as assets increased over 2020 by approximately $1.3 million due in part to receipt of the Shuttered Venue Operating Grant (SVOG) from the Small Business Association as well as other state and local ARPA funds, total revenue up $1 million for the same reasons, decreased expenses due to full reopening delayed until Sept 2021 (reduced payroll and presenting costs), increase in sales tax revenue, and bond refinancing in November 2021 that avoided a bond payment. She summarized ending cash was $1.4 million so the ECA has a more stable financial future going into 2022 and will be able to repay its loans and make debt service payments. Mr. Mclalwain reviewed amendment #2 to the 4-party interlocal agreement (ILA) to reflect the November 2021 bond sale by the City on the EPFD's behalf to extend the bonds to 2041 and acknowledge the revenue stream continuing to 2041, and other minor housekeeping amendments. The amendment was drafted by Mark Greenough, the City's bond attorney, and reviewed by the EPFD's attorney. Discussion followed regarding a memorandum written by the City's former Finance Director Shawn Hunstock to clarify the loan from the City to PFD, an exhibit outlining EPFD payments and payment schedule, and delaying approval on the consent agenda to allow Councilmember Chen time to review the financials. Mr. Mclalwain invited Councilmember Chen to contact him with any questions. 04/12/22 Finance Committee Minutes, Page 2 Mr. Mclalwain reviewed the three components of the EPFD's long term debt: 1) 2018 bank loan with FFNWB which the City guaranteed by purchasing a CD, 2) 2021 refinancing to extend debt to 2041 and reduce annual payments, and 3) EPFD's outstanding loan to the City. The packet includes a graph of non -operating revenue and expenses illustrating estimated annual intergovernmental revenue (direct sales tax rebate the EPFD receives from the state and distribution from Snohomish County PFD), debt service (2018 bank loan and 2021 bonds), and City of Edmonds loan repayment plan ($1.066M outstanding). He reviewed a proposed repayment schedule for the City loan ($100,000 in 2022, $150,000 in 2023, and $200,000 each year until paid in full in 2028). The purpose of non - operating net revenue is to invest in maintenance, repairs and capital needs of building. He described the difference between operating and non -operating revenue, relaying the City's continued annual support is used for operating. Questions and discussion followed regarding estimated cost of repairs and maintenance, plans to update the 2017 McKinstry facility condition assessment, cost of deferred building envelope repairs, whether any retrofit will be required, plans to assess the outer walls and roof, and portions of the roof that have been redone. Ms. Meagher reviewed draft FY Feb 2022 financials, advising rentals are down due to cancellation of Russian and Ukrainian shows, payroll is tracking well, and overall the first quarter is doing well. Mr. Mclalwain advised ticket sales are at approximately 75% which is similar to the 2018/2019 and 2019/2020 (before closure) seasons. Questions and discussion continued regarding estimated loss due to COVID ($2.25 million in revenue), funds received from the SVOG, and the number of paid employees (34). Mr. Mclalwain thanked the City for their support. Action: ILA Amendment on 4/26/22 Consent Agenda 2. 2022 April Budget Amendment Mr. Turley reviewed 10 amendment requests If approved budget amendment would increase forecast revenues by $119,645 and increase budgeted expenditures $2,660,410 • Amendments: 1. Provide an additional $1,569,015 to account for the increase to the annual contract with South County Fire, as approved recently by council 2. Provide an additional $167,295 to account for the increase to the annual assessment from WCIA, the city's insurance provider. Actual updated assessment received in December was higher than the amount projected by WCIA in summer 2021 and included in the 2022 budget. 3. Provide $100,000 for a contracted project manager to provide ARPA grant management as well as audit management with the State Auditor's Office. 4. Provide $60,000 for a contract project management to manage the upcoming ERP implementation 5. Provide approximately $60,000 (6 months) for temporary contracted staffing to assist administrative services in managing an unexpected high workload level (originally proposed as $28,800 for 3 months) 6. Provide $5,000 for additional time and materials due to expansion of Sound Salmon Solutions program. 7. Deleted: Provide $8,000 for additional consultant work on the PROS Plan as recently approved by council. 8. Prove the contracted amount of $48,800 for the Salmon Safe Certification Project 04/12/22 Finance Committee Minutes, Page 3 9. Remove budget authority from the new Fund 016 and place it in the building maintenance division of the General Fund. These funds are for operational building maintenance issues or equipment replacement needed to maintain continuity of business. This was originally included in the 016 fund but is more appropriate in the General Fund. This request adds no additional budget authority. 10. Remove budget authority in the building maintenance division of the General Fund. These funds are to maintain annual service agreements and regulatory -required compliance services. 11. Add $119,645 of additional revenue for a Washington Department of Commerce solar plant grant, as well as $230,000 of expenditure authority related to the project, for a net budget increase of $110,355 Questions and discussion followed regarding what WCIA covers, coverage for WWTP flooding, whether the ARPA grant manager could be a term limited employee, staff's preference for a contracted ARPA grant manager this year for expediency, rationale for a contract position to assist with selection of the ERP, OpenGov budget module versus an ERP system, and projects budgeted in Fund 016. Action: 4/26/22 Consent Agenda 3. ARPA Funding Status Mr. Merriman explained this agenda item is related to possible reallocation of ARPA funding categories and language edits to the City's ordinance to facilitate support programs. He reviewed: Total ARPA Funds - $11,893,099 City Household Business Nonprofit Job Green Expenditures Support Support Support Retraining Infrastructure 6.3% 39.4% 9.5% 4.2% 5.0% 40.1 % Spent by $212,015 $506,380 $244,369 $420,500 $199,999 $0 4/12/22 Commitments $488,084 $1,050,000 $562,007 $420,500 $600,000 $0 @ 4/12/22 Funds allocated to $750,000 $4,150,000 $1,125,000 $500,000 $600,000 $4,768,099* category * Edmonds Marsh: $750,000 Perrinville Creek: $3,500,000 Green Streets: $60,000/ $400,000 Household Support Subcategories - $4,150,000 Housing Repair Support 24.0% Utility Bill Support 3.6% Household General Support 72.4% Spent by 4/12/22 $0 $5,443 $500,938 Commitments @ 4/12/22 $0 $50,000 $1,000,000 Funds allocated to category $1,000,000 $150,000 $3,000,000 Business Support Subcategories - $1,125,000 Small Business Support 55.6% Tourism Support 26.6% General Business Support 17.8% Spent by 4/12/22 $184,161 $49,096 $11,112 Commitments @ 4/12/22 $501,661 $49,119 $11,227 Funds allocated to category $625,000 $300,000 $200,000 Mr. Merriman displayed suggested changes to Ordinance No. 4237. Questions and discussion followed regarding whether staff anticipated there would be $1 million in requests from the housing repair support, who would administer a housing repair program, applicants' confusion with housing repair versus utility bill support, compliance with federal rules regarding use of ARPA funds, amount of housing repair grants, a suggestion to partner with NW Neighbors Network, adding funds to nonprofit 04/12/22 Finance Committee Minutes, Page 4 support, potentially funding the ERP system with ARPA funds, concern the City has not distributed funds, US Department of Treasury Final Rule for State and Local Fiscal Recovery Funds Program that clarifies who qualifies for federal programs, amending the ordinance prior to amending the allocation amounts, other cities that haven't distributed funds yet, and a May 19t" Snohomish County Cities meeting that will include discussion regarding distribution of ARPA funds. Action: Full council 4. February 2022 Monthly Financial Report Councilmember Buckshnis requested Mr. Turley email her in response to her questions about the monthly report. Action: Consent Agenda 5. Federal Grant Audit Exit Conference Follow-up This item was not discussed. 3. ADJOURN The meeting was adjourned at 7:30 p.m.