FC081021FINANCE COMMITTEE MEETING
August 10, 2021
Elected Officials Participating Virtually
Councilmember Vivian Olson
Councilmember Diane Buckshnis
CALL TO ORDER
Staff Participating Virtually
Dave Turley, Finance Director
Phil Williams, Public Works Director
Thom Sullivan, Facilities Manager
Scott Passey, City Clerk
Dave Rohde, GIS Analyst
The Edmonds City Council virtual online Finance Committee meeting was called to order at 6:00 p.m.
by Councilmember Buckshnis. At Mr. Turley's request, Item 3 was moved to Item 2.
2. COMMITTEE BUSINESS
1. June 2021 Quarterly Financial Report
Mr. Turley reviewed:
• What's happening in the Finance Department?
o We are in the process of checking references for both the Systems Support Technician are
hopeful that position will be filled soon.
o The candidate for the Deputy Administrative Services Director has signed a contingent
offer letter; start date is August 16'h
o The first six months have gone according to budget, nothing negative to report. Sales tax
and REET continue to come in well ahead of budget.
o We are busy collecting decision packages, revenue and expense projections, and other
information for Budget 2022.
Noteworthy things in the June report:
o REET is up $1,089,466 from this point in time last year
o Property Tax collections are up $494,505 from this point in time last year
o EMS Property Tax is up $215,369 from this point in time last year
o Sales Tax is up $1,035,290 from this point in time last year
o Liquor Excise Tax is up $25,216 from this point in time last year
o Plan Checking Fees are up $121,269 from this point in time last year
o Parks & Recreation program fees are up $178,675 from this point in time last year
o June of 2020 Engineering Overhead was not recorded until July of 2020 which is the main
reason for the large difference between years. June 2020 Engineering Overhead totaled
$185,092.59.
Sales Tax Update
o Year -to Date June 2021 sales tax revenues of $4,797,214 are $1,035,290 higher than the
year to date amounts through June 2020.
o Almost all areas are higher June 2021 compared to June 2020
Graph of Sales Tax Reported for Sales Made at "Food Services and Drinking Places by Month
(September 2018-May 2021)
o After a year of severe reductions due to COVID-19 restrictions, taxable sales reported for
City of Edmonds bars and restaurants have shown dramatic improvement in recent
months, with sales in March through May of 2021 exceeding sales in those months during
pre -pandemic 2019.
08/10/21 Finance Committee Minutes, Page 2
■ March - May 2021 higher than March - May 2019
Questions and discussion followed regarding lower accommodations sales tax in June 2021 than
June 2020, increase in sales tax due to streateries and Walkable Edmonds, separating bars and
restaurant sales tax from retail sales tax, funds that receive interest income, transfer of the
Homelessness Response Fund and Opioid Fund to the Human Services program, use of the Parks
Trust Fund, reinstating passport and naturalization services, increased overtime in Police and Public
Works, reimbursement for overtime received as a revenue and does not reduce the expense, and
concern quarterly financial reports are not presented to Council.
Action: Presentation to full Council with graphs
3. City of Edmonds Facility Condition Assessment update by McKinstry
Mr. Williams introduced Facilities Manager Thom Sullivan, and Andrew Williamson, Project Manager,
McKinstry. Mr. Williams reviewed:
• Introduction and History
0 2018 Facility Condition Assessment Study
o City Buildings
■ Boys & Girls Club ■ Meadowdale Club House
■ Cemetery Building ■ Old Public Works
■ City Hall ■ Parks Maintenance Building
■ Civic Center Grandstand* ■ Public Safety
■ Fishing Pier ■ Public Works O&M
■ Fire Station #16 ■ Senior Center*
■ Fire Station #17 ■ Wade James Theater
■ Fire Station #20 ■ Yost Pool House
■ Frances Anderson Center ■ Waterfront Center (South County Senior Serv.)**
■ Historic Log Cabin ■ Edmonds Center for Arts (EPFD)
■ Historic Museum -280,000 square feet total
*demolished since 2018 FCA
**not City owned but of interest to the City
• History of Facilities Capital Renewal Investments
o Only two major City building are less than 30 years old (average is 52 yo)
o Historic investment
■ 2021 - $710,000
■ 2020 - $1,500,000
■ 2019 - $700,000
■ 2018 - $250,000
■ 2017 - $300,000
■ 2016 - $100,000
■ 2015 - $100,000
■ 2014 to early 1990s - only $56k was budgeted each year
o This early pattern set the stage for significantly increasing the total of deferred capital
maintenance funding needed
• Current and 5-year Facility condition Index (lower number = better)
Building
FCI Score
5-year FCI
Score
Boys & Girls Club
0.08
0.16
Cemetery Building
0.04
0.16
City Hall
0.15
0.21
Fishing Pier
0.13
0.23
Frances Anderson Center
0.15
0.20
08/10/21 Finance Committee Minutes, Page 3
Fire Station #16
0.04
0.13
Fire Station #17
0.11
0.29
Fire Station #20
0.04
0.20
Historic Log Cabin
0.12
0.27
Historic Museum
0.04
0.16
Library and Plaza Room
0.15
0.34
Meadowdale Club House
0.06
0.10
Old Public Works
0.07
0.11
Parks Maintenance Building
0.16
0.25
Public Safety Building
0.06
0.18
Public Works O&M
0.23
0.30
Wade James Theater
0.08
0.19
Yost Pool House
0.10
0.22
o Bottomline: As buildings age their FCA score goes down slower with adequate preventive
maintenance and timely sub -system replacements, otherwise it goes down faster.
Mr. Sullivan reviewed definitions:
• Maintenance
o Preventative Maintenance - Routine maintenance items to preserve expected asset life or
prevent system failure/downtime. (floor care, air and water filter changes, equipment
lubrication, routine inspection, and manufacturer prescribed maintenance to maintain
warranty, etc.)
o Operational Maintenance - Daily maintenance to maintain business operational needs
(routine cleaning and sanitizing, ADA access readiness, roof cleaning and leak repair,
security and lock maintenance, building controls programing and light duty repair of
Plumbing Mechanical and Electrical systems, and life safety systems).
• Capital Investment
o Deferred Capital Maintenance - Maintenance and repair to building systems that are at or
past industry expected life. These maintenance items are typically larger in scope and
often require vendor support. Mechanical equipment replacement, Electrical panel
replacement, plumbing fixture or equipment replacement (water heaters, pumps, life safety
system repairs, etc.
o Capital Renewal/Replacement - Replacement of larger building systems that have failed,
are requiring frequent vendor support or no longer meet the business needs of the City.
Elevator modernizations, Roof replacements, exterior envelope waterproofing and painting,
complete system replacements or upgrades (i.e. replacing as a package; electrical panels,
wiring, receptacles and lighting), complete fire alarm systems including panels, alarm
devices, strobe lights and monitoring network). Re -plumbing of an entire building's
water/sewer infrastructure, including piping. bathroom and kitchen fixtures, sprinklers, etc.
Mr. Williamson reviewed:
• Graph of 16-year facilities capital needs
o Different types of work are represented by different colors (plumbing, electrical, HVAC,
roofing, windows, etc.)
o Costs required for preventive maintenance average close to $800k/year (2018 dollars)
o First few years are higher due to under-funded/deferred maintenance and capital renewal
■ Year 1 $2.9M
■ Year 2 $2.OM
■ Year 3 $2.1 M
■ Year 4 $0.8M
■ Year 5 $0.8M
■ Year 6 $1.2M
■ Year 7 $0.7M
08/10/21 Finance Committee Minutes, Page 4
■ Year 8 $0.8M
■ Year 9 $0.6M
■ Year 10 $0.6M
■ Year 11 $0.5M
■ Year 12 $1.1 M
■ Year 13 $0.4M
■ Year 14 $0.1 M
■ Year 15 $0.4M
■ Year 16 $1.8M
Necessary Investments from FCA
o Chip away at additional deferred maintenance year over year until $4.5M backlog is
complete.
o $800k annual investment (2018 dollars) still needed to maintain facilities infrastructure
independently of deferred capital maintenance.
o If borrow for capital maintenance, still need $800k annual investment
o Bottomline: Minimum need is $4.5M to address the backlog.
Findings Summary
o Key takeaways from 2018
■ Facility budgets should be $800k instead of $300k. Done but with inflation this is
approximately $1 M today
■ Deferred maintenance from under -funding levels is now approximately $11 M*
■ Recommended IFMA facilities staffing levels for $250k-500k square feet is 9 FTE
instead of 4 FTE (does not include custodial)
*Now includes large system replacements, expansion in functionality, capacity, etc. These
are unrelated to either preventive and routine maintenance or capital renewal
Questions and discussion followed regarding whether the FCI score can be equated to the dollar
amount required, the FCI score of the Boys & Girls Club building, how the backlog increased from $2
million to $4.5 million, preference to have this presentation made to full Council, presenting this
information at the special Council meeting later tonight, and whether funds will be available from the
new federal infrastructure bill. The committee requested staff provide the updated PowerPoint slides.
(This presentation was cut short to allow time for the PFD Financial presentation.)
Action: Presentation to full Council either tonight or at future meeting.
2. PFD Financial Presentation
The following were present representing the PFD: Joe. Mclalwain, Executive Director; Ray Liaw, PFD
Board Vice President; Matthew Cox, ECA Board Member/Finance Committee Co -Chair; David
Brewster, PFD Board President; and Rick Canning, ECA Board Member/Finance Committee Co -
Chair. Mr. Mclalwain provided the following highlights:
• Audited Financial Statements 2020
o Clean audit, no findings
o Through expense controls (reductions in payroll and operating costs), managed to keep
our operating loss (before depreciation) to $33,703.
o Despite the challenges presented by the pandemic and the resulting closure, the District's
net position increased by $218,437 or 6.44%.
• Finance Report through June 2021
o We are showing positive net revenue from operations through the first half of 2021 (+$6k).
o No ticket revenue reported through June. The Summer Series of events began in July, so
event revenue and related expenses will be reflected in the July financials.
08/10/21 Finance Committee Minutes, Page 5
o Contributions from individuals and foundations continue to help us through this time. We
have also received a series of grants specifically for COVID Relief from private foundations
and government agencies in recent months which has helped boost our revenue in the
contributions line.
o We have continued to tightly control expenses as we also try to prepare for a full reopening
in September.
o Revenue from the State Sales Tax Rebate has remained steady, with a slight increase
year -over -year.
Significant Events, Looking Ahead
o The District's total loss in gross revenue from operations over the last 16 months has been
estimated to be as much as $2.2 million. We have worked to offset this loss, in part, by
reducing payroll and operating costs, and event expenditures for cancelled or postponed
events.
o To help mitigate this loss, the District has applied for or requested support from our
Federal, State, County, and Local governments.
o Recently, the District received a federal support from the Shuttered Venue Operators'
Grant (SVOG) program through the Small Business Administration in the amount of
$710,500. The dollars for this program came from the CARES Act passed in December of
2020. Funds from this grant may be used for payroll expenses, programming, marketing,
and general operations. Our staff and Board leadership are in the process of determining
how best to invest these funds in the coming year.
o We are awaiting notification from Snohomish County for a request we made in partnership
with the two other Public Facilities Districts in the County — Angel of the Winds Arena and
Lynnwood Convention Center — for a portion of the ARPA funds the County will be
allocating in the coming year. If approved, the District may receive up to $500,000 in
additional support from this source.
o Finally, we are eager to work with the City on the refinancing of our 2012 Bonds. If we are
able to refinance these bonds prior to December 1st of this year, and extend this debt out
to 2041, we will secure our State Sales Tax Rebate for that same time period and put the
District in a position to repay its debt to the City sooner than originally projected.
Questions and discussion followed regarding funds received from the SVOG via CARES funds,
refinancing 2012 bond with taxable bonds, support for refinancing the 2012 bonds, whether the PFD
intended to add money to the refinancing for the 4th Avenue Corridor, using sales tax rebate revenue
to partner with the City on projects, the City refinancing the PFD's existing bonds and PFD's
responsibility for debt service payments, ability to allocate the PFD's portion of the bond refinancing
costs, and the benefit to the City of the PFD repaying the contingent loan.
Action: Finance Committee recommends the City refinance the PFD's bonds. Further discussion at
tonight's special Council meeting. Put PFD's financial information on Consent Agenda.
Discussion continued regarding the Facility Condition Assessment update by McKinstry and amount
to include in a bond.
3. ADJOURN
The meeting was adjourned at 7:23 p.m.