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FC080922FINANCE COMMITTEE MEETING August 9, 2022 Committee Members Present Councilmember Diane Buckshnis (Chair) Councilmember Will Chen Council President Vivian Olson (ex-officio) Other Elected Officials Present Councilmember Susan Paine CALL TO ORDER Staff Present Dave Turley, Administrative Services Director Michelle Bennett, Police Chief Ange Feser, Parks, Rec., Cultural Arts & Human Serv. Dir. Thom Sullivan, Facilities Manager Jeff Taraday, City Attorney Scott Passey, City Clerk Guests Daniel Johnson, Waterfront Center Chris Wolfe, Waterfront Center Andrew Williamson, McKinstry The Edmonds City Council virtual online Finance Committee meeting was called to order at 5:30 p.m. by Councilmember Buckshnis. 2. COMMITTEE BUSINESS 1. Clean Building Act Investment Grade Audit - Frances Anderson Center (FAC) Mr. Sullivan explained this is a proposal to finance an investment grade audit of the FAC to be compliant with the Clean Building Act and also explore upgrading deficient equipment on the list of deferred maintenance. The Clean Building Act focuses on divestment from fossil fuels in existing buildings over 50,000 square feet by 2028. He highlighted projects done at the FAC in recent years including LED lighting retrofit, double -pane windows, roof replacement and roof installation. Upcoming opportunities include replacing the gas boilers with an all -electric, full building HVAC system. He commented on heating and AC issues with a masonry building. Ms. Feser attested to the issues in the building in winter and summer, particularly not having AC with the human services division, Montessori and preschool programs in south facing rooms with large windows that get very warm. In addition, without HVAC, there is no ability to filter air which was very important during COVID. Andrew Williamson, McKinstry, described the Clean Building Act which requires compliance as well as documenting compliance or face potential penalties. The proposed audit will assist with documenting compliance with the Clean Building Act as well as design options for the building to guarantee performance and outcomes of new systems. Questions and discussion followed regarding the audit exploring what the building can handle, size of the existing boiler, availability of space in the building for mechanical systems, use of bond funds for the audit and then exploring how to fund implementation which could possibly include state and federal funds, the estimated capital investment, order of magnitude budgeting six weeks into the audit, and cost control for implementation. Committee recommendation: Consent Agenda. 08/09/22 Finance Committee Minutes, Page 2 2. Waterfront Center Loan Update Chris Wolfe, Daniel Johnson Chris Wolfe, Waterfront Center, explained the center has a loan from First Federal NW (FFNW) bank secured with a CD by the City. COVID delayed construction of the project as well as slowed fundraising. Opening of the center was delayed from mid-2020 to January 2021. Loan payments were originally scheduled to begin December 1, 2020; FFNW agreed to interest only payments through February 1, 2022. Fundraising increased in 2021, raising $1,160,377 which allowed the center to make a principle only payment of $425,000 on December 22, 2021. Regular interest and principle payments began in February 2022 in addition to 6 more principle only payments totaling $880,000. As of August 1, 2022, the $2M balance on the loan has been reduced to $572,016. With remaining payments scheduled in 2022, the loan amount will be under $500,000 by year end which allows the bank to release $1.5M of the CD guarantee. He displayed a graph of the FFNW loan illustrating scheduled and actual payments/balance. The loan is recast each January which will drop the payment to approximately $7500/month or $150,000/year; the center has reserves of $150,000. Daniel Johnson, Waterfront Center, described the plan to raise the remaining funds via small and large gifts. He described a gift of $250,000 that came from an unanticipated donor, pledges, a private loan that was converted to a gift, requests to existing major donors, requests submitted to a local tribe and foundations, board donations, solar champions whose donations help underwrite the cost of solar, continued community campaign, and other methods of soliciting donations. He was confident the remaining funds will be raised and thanked the City for believing in them and lending the collateral that was key to financing. Discussion followed regarding appreciation for paying down the loan, benefits the center provides the community, and appreciation for the center's work. Committee recommendation: Update. 3. Employee Expense Reimbursement Policy Councilmember Buckshnis suggested the expense reimbursement policy cover both city employees and council. Mr. Turley pointed out there are different approval process for employees and councilmembers. Mr. Taraday agreed there are different approval procedures, but the policies and rules should work for the council regardless of who the council president is and regardless of politics; the approval process should be predicably useable in all situations. Questions and discussion followed regarding whether pre -approval should be required, past practice of the council president approving council expenses, importance of having a policy regarding council expense reimbursement, having council expenses approved on the consent agenda, whether council president approval should be required for training, allocating funds for training for each councilmember in the budget, council reimbursement not being an issue in the past, the council president's approval of vouchers, other cities that utilize a preloaded small limit debit card, ensuring transparency regarding reimbursements, taking politics out of it by deeming expenses approved on consent (via a council reimbursement ledger) and requiring six councilmembers to disapprove an expense, expectation that the council president works with the council, state auditor's review of expense reimbursements, non -City sponsored training, support for the addition of retirement recognition, amount of food and beverage reimbursements in 2021, functions that include food/beverage, and reimbursement of previous year expenses. The committee agreed to the following: • One expense reimbursement policy for employee and council. o Approval policy for council is, 1) preapproval by council president, or 2) approval via the consent agenda. 08/09/22 Finance Committee Minutes, Page 3 o Add to council rules and procedure, if an expense reimbursement is pulled from consent, it requires six councilmember to reject (Mr. Taraday will draft the language). Add to policy regarding giving an iPad with no value to a retiree, "IT will scan hard drive and remove any City proprietary documents." Add under documentation: "Employee seeking reimbursement is responsible for ensuring the same invoice or receipt is not submitted for reimbursement more than once" Committee recommendation: Circulate policy to directors and bring back to finance committee. 4. Monthly Financial Report Mr. Turley reviewed: • Noteworthy Items: o REET revenues are down a total of $(384,591) from this time last year, but still right on budget. o The difference for Fund 422 is primarily due a grant reimbursement in January of 2021. o Fund 112 - The large Traffic Impact Fee that was received in March of 2022 was for $133,582. o Fund 332 — The large Park Impact Fee that was received in March of 2022 was for $288,260. o Sales Tax is up $604,919 from this time last year. o Gas Utility Tax is up $71,348 from this point in time last year; this is not due to a timing difference, but likely due to the unusually cold and rainy first half of 2022. o Plan Checking Fees are down $(87,441) from this point in time last year, while Building Structure Permits are up $54,450 from this point in time last year. The overall outlook for Development Services remains favorable. o Parks & Recreation Program Fees are up $104,638 from this point in time last year. o Interfund Reimbursement — Contract Services — January through June of 2022 Engineering Overhead has not yet been recorded; January through June of 2021 was a total of $1,090,344. o As expected, total Interest Earnings for all funds are down a total of $(81,544) from this time last year; Fund 001 interest is down $(34,699). • General Fund Spending for 6 months ended June 30 - $2.5 million under budget • Sales Tax Revenues for 6 months ended June 30 - $605,000 ahead of last year, and $730,000 ahead of budget • Sales Tax Revenues for 12 months ended June 30, by Category Sates Tax Anah As SF Category CwTevt Period: Juue 2022 Year to -Date Total 55,402.133 Health& Autw tn-e Rep a<r, BaiamsenvtS. nst CaructivnTrade. 3836,i88 P--d SI15.476 %N914 C 2. raum & C so1Re535.526 5138,686 .4ccoannodation. R� ,jpq W,935 Rervl Food Smms. Cluthmg a¢d ncressones,E167,4W F0139 Aumanlrte, CO�1°"dS30°' hSist penal $1,313.689 S1334X SN&911 R'hoksak Trade. S179_66 .. OLb-5107.983 ` Manu&cturmg, SW.811 Fatmg d. Drm[mg _ f561.555 • Real Estate Excise Tax Revenues for 6 months ended June 30 - Under budget by $16,000 (99.16% of budget) 08/09/22 Finance Committee Minutes, Page 4 • Preliminary results are in for last year: General Fund's ending fund balance at 12/31/2021 is $15.9 million Ending Fund Balance - General Fund sse,000,00 srs,a�mo nz oomo s=e, ooPoo Sa.aooaao Se.aoo ao Questions and discussion following regarding the increase in HR expenditures, decrease in public works administration, unexpended funds that become part of the beginning fund balance, decrease in traffic and parking infraction penalties, other techniques that could be deployed to address traffic enforcement, two traffic unit positions that have been filled, vacancies in the police department, recent posting of a parking enforcement position, study being done regarding school zone cameras, requirement to have a commissioned officer review and issue school zone and red light camera citations and whether that could be outsourced, giving consideration to redlight cameras, and potential locations for school zone cameras. Committee recommendation: Consent Agenda A brief discussion followed regarding agenda items for the September meeting: BID update, audit update, and leak adjustment policy. 3. ADJOURN The meeting was adjourned at 7:18 p.m.