Finance Committee - Regular Meeting

Approving the oh. Seeing none, all in favor of approving the agenda say aye. Aye. Any opposed, nay. We've got an agenda. Alright. Is there any public comment this evening, Casey? No. There is not. Okay. And I don't see any spectators in the room. Alright.

Spilled right now.

Well, special presenters and consultants. Next up, we have an agenda item for approval of minutes, but we don't have minutes listed there. So I think maybe we'll just bop along to the committee business and start out with the budget briefing. Oh, did you?

There was minutes in the packet. Am I allowed to move it even though it doesn't that for the May 19 meeting? Sure. I'd move to approve the May 19 minutes. What? The packet I downloaded on Friday, Adam.

I believe you.

So council member Green has had an opportunity to review the minutes and is in favor of approving the minutes as they were published.

Mhmm.

Uh-huh. In the registrar. Council member Cooper is gonna consider that. We have a motion and a second to approve the May meeting minutes of the finance committee. All in favor, aye. Aye. Aye. Alright. Good. We've got them.

Got the minutes approved, and now that brings us to uh-huh. Budget. Budget. Yes. A budget briefing. And city manager Bernie are gonna kick us off, and I know Joan is gonna help with this.

I I will. I it's it's real it's really just a j show with how whatever you need from the finance team. So the intent of this item is just to follow-up from retreat and just to check-in with the finance committee about what you heard and what needs some continued follow-up. I can have I asked Joan to have the presentation from the, retreat up. So if you wanna refer to any of the slides, we can do that.

As you know, we didn't get through the last part, which is really talk about how we want to put some sideboards on our conversation around where we look for reductions. We're going to do that on June 24 at your study session. We're going to finish that up. But just thought I would take a moment to check-in with the finance committee about anything you heard on Friday, anything that you still think needs some more detailed conversation with the council. Obviously, most of the revenues stayed in with the idea that we're going to continue to have conversation as we move them forward. But this could be a really quick item if you feel like you got what you need on Friday, but I just wanna give you an opportunity to say, hey. You know, as of all the things you shared, here's something that was missing, or here's something that needs a different level of conversation with the finance committee moving forward, any and all of those things.

Just go ahead.

Yeah. Just one thing that was, rattling around in my head. A couple of us asked for not opening up the exemptions in the b and o conversation, but I don't know if we heard from enough people to know for sure. And so that might be a good thing for you to try and verify in your one on ones. Yeah. But to me, based on what we're hearing about, our work plan and our workload, it doesn't seem like a good use of time and money to get to dig into that. And I just wanna make sure that we're clear before we bring forward a package.

Yep. I can do that.

I I really appreciate that we took the time at the retreat. And and as I as I said at the retreat, I think it this positions us for the revenue conversation. And and I I also think it's important that we continue to tell the story that the priority based budgeting, like switching accounting systems, is a long term shift and isn't necessarily gonna instantly inform this summer's 2026 budget creation. Maybe we'll have some lucky wins out of it, but but that we're we're we're doing the project with a long term QA. I think that that was there's a little confusion about that.

Yeah. I think that was a really good conversation that you all had at the retreat. And I think Debbie did a good job of kinda sharing kinda where we are and where we're going. And I think, I think it'll all start to really come together for the council a little bit more when you get to see the next iteration, when we get a chance to show you that operational report and kinda how it lays out and what some of the preliminary recommendations are. Because it I've seen a lot of it is fascinating, but it's gonna take some time to get through.

While you have the floor and you're on this item, are there any introductions that you'd like to make this evening? Well, that's

a that's a great idea. I'm gonna make an introduction at the full council tomorrow too, but Mike Gibbons is our new finance director, and he started at a really opportune time because day two, he was in a retreat where we talked about budget. And then day three, here he is at his first finance committee meeting. But, Mike, not to put you on the spot at all, but, you and I talked a little bit this morning about about the retreat and kinda your observations and, a little bit, but anything you wanna share?

Well, it's nice to be here and to meet everyone, in these formal meetings. But I appreciated being part of the retreat and hearing counsel and your priorities, and, it's just great to have that knowledge and your participation at such a, level is really helpful thing for the finance staff to work on the budget. So I look forward to getting to know everyone and moving things forward. So thank you.

I'll share one other thing Mike told me today, which I thought was great. He said, boy, this is a really engaged council around the budget. Right? And that's good. Right? That they that they're really involved in it, engaged in it because they can go lots of different ways in lots of cities. Right? And I said, yeah. I don't typically get surprised at the end of things because we talk a lot along the way. Right?

So yeah. But Well, welcome, Mike. We're glad you're on board. Yeah. Anything else on the budget update? Well, let's go ahead and move on. Let's let's ask Jenna Jenica Machado, our economic development director, to join us, and we'll talk about the economy chapter of Olympia 2045, the Olympia comprehensive plan.

This will be my first time, so I appreciate your patience as I get used to this. Alright. So good afternoon. Jenica Machado, economic development division director. I'm happy to be here this afternoon to bring you updates to the draft economic chapter of the comprehensive plan, so the finance committee can have the opportunity to review any recent revisions and provide feedback or opportunity for questions.

As I'm new to this role, this chapter was primarily developed by my predecessor, Mike Reed. And then I believe Joyce Phillips was the last person to chat with you at the council work session. And so I know this chapter has come before the finance committee already, so I'll keep the process overview brief. Thank you. The economy chapter, by design, builds off of the Olympiastrong process.

So the Olympiastrong planning process was designed to help support the comprehensive plan. Olympiastrong focused on how to support a thriving economy and creating pathway opportunities for residents, businesses, and the wider community. The robust Olympia strong public engagement process led to the development of goals and policies designed to address what feedback was received, including closing the equity gap, boosting affordable housing, home ownership, helping people out of poverty, being champions of youth, cultivating career pathways, supporting businesses, and fostering community vitality. In alignment with the Olympia Strong Plan, we continue a people centered approach to strengthen Olympia's economy. So the draft economy chapter was first issued in October 2023 and has moved through a public hearing in February 2024.

The planning commission deliberated and issued a final recommendation letter in March 2024. The Social Justice and Equity Committee reviewed the chapter in May 2024. This was also routed to the Squaxin Island Tribal Council to provide an opportunity for the council to counsel input. Finance committee previously saw this draft in December. And most recently, this went to the council work session in February 2025.

So the version of the chapter for you this evening incorporates changes to reflect the recommendations that were provided at the council work session. Additionally, considering new staff in the Economic Development Division director role and the Community Planning and Economic Development director role, further revisions were incorporated. And so on this slide and the next slide, I'll highlight some of those recommendations and the discussion topics from the February 2025 council work session. So Joyce worked to incorporate some of the feedback provided by council members during the work session. I worked with Joyce to identify remaining feedback and continued revisions.

And so some of the recommendations that came from the council work session include recognizing the value of all workers regardless of career path, incorporating third place spaces across the city, addressing address reducing the affordability gap, collaborating with the Port Of Olympia on topics that impact the port's current and future needs, ensuring flexibility in commercial infill through mixed zoning, encourage collaboration with partners for complete blocks, support space flexibility in storefront sizes, and explore living space and commercial space flexibility. And then some additional revisions. As I mentioned, Susan and I proposed some additional revisions to enhance clarity in language and policy and to improve alignment with other plans. So there are revisions to enhance the narrative on supply chains, workforce, industry change, expand entrepreneurship and small business support, leverage existing downtown community renewal plan, assess utilization of public financing tools, adaptive reuse as a revitalization strategy, and supporting efforts to expand year round tourism and enhance wayfinding signs. And I'm happy to take any questions on those revisions.

Who would like to lead us off? Oh, you're you're okay?

I was just looking for the section. I think this is where I asked to clean up what the role of the council of neighborhoods. Was that in this chapter? Where it had, like No. Because they're in the more information section. Oh, no. They're in that's the ODA. Sorry. Was that Was that the economic development?

No. It wasn't. Was was it say it again? Could you remind us the chapter where we had the discussion about the coalition of neighborhood associations? It was it was we're we haven't been to the land use chapter yet, but it was was it in the environment? Was it Yes. Thank you. Or was just gonna say stay

tuned to public participation.

Okay. So I'm just in the wrong place, so thank you very much.

Alright. He's working on a small screen today. And, Susan, we're glad you're here at the table. I'm sorry I didn't introduce you all. So okay.

Yeah. I had an appointment. I ran out without my big screen, so I apologize. So, no, this generally, this is matches the changes match what we talked about. I'm not seeing anything glaring as I as I scroll through it for the second time this week.

Yes. So just the the slide that had the council suggestions, I'm just I and I I didn't look for all of them in the the red line version here, but I'm it's it's never quite clear what to do when seven people popcorn brainstorm style at the end of a process of whether or not we're you know? So we don't we don't have, other than this check here before it comes to counsel for approval, there's not really another checking back on anyhow, it's it's it's both a blessing and a curse in the flow of our approvement approval of these documents. So there there are several items that are related to continuing to encourage urbanization and infill within those. And I I wonder how you feel about the sort of adding that that weight because it's reflected also in the land use chapter.

So anyhow, I I just Thank

you. If there are any specific of the rec recommendations on there that you'd like to identify in the work, I can pick out the page number or the policy number for you. I have those ready if you'd like to look at them specifically. But in general, Susan and I did take a look at this and looked for, redundancies in which we were able to eliminate. Or, if we felt it offered enough nuance that it was additive to this chapter, it was left in.

That's good. I just wanted to check with you because sometimes I feel like we're adding seven more items at the point that it's been reviewed by many, many bodies and pretty well polished. And but I can see that, like, your your interest in adaptive reuse really aligns with the increased flexibility for commercial infill. And, I mean, so thank you, and I'm I'm pleased that this has had such a robust path from the first we we each got little peaks of it with Mike a couple of years ago. Well, most of us. Go ahead, Jay. Thank you,

mister chair. I just wanted to say that to your question about, you know, when we show up at Council, like, for work sessions and we hear lots of different ideas, we do check-in after with each other to say, okay. Did did we see a lot of head nods there, or is that just a one off? Right? And what was the conversation like, and did anyone else not like that?

And so we do try really hard to to check-in with each other afterwards to say, okay. Was this just one council member saying, or do we think the council as a whole supports moving in that direction or the majority of the council moves in that direction? And so I think everything that's here, to to Jennica's point, she and Susan really looked at it from that that lens and that perspective to see if it showed up in other places or if there's any other nuances we need be aware of. So I think they've done a really good job of taking that into consideration as best we can. But it's a great question because we it comes up in every chapter.

I I really appreciate that. And I just I wanted to leave an opportunity that if you wanted to say, oh, this bunch of knuckleheads just asked us to, you know, change the thrust of some paragraph that that we would reconsider that or have to vote on it to to implement it. But I I but I I do have a sense that all of these they're certainly in alignment with where we're going in the land use chapter. And and I as long as you don't think they're a burden to add them in to this economic developed chapter, I think we're good.

Alright. Other than a lot of worse of use of the word supply chain, it reads there's two paragraphs where it's in five times, but that's the title of the paragraph. So

Do you have some suggested alternative language or an acronym? No. Like, put an exonym?

Just fine. It's really funny. I can make up an acronym right now. Yeah.

Yeah. There's Oh, yeah. Thank you. Yeah. It it it it's special kind of bureaucratic song.

I do really appreciate the way the third place is, sentence is written and added into the opening part, and the goals all make sense. So, yeah, I'm good. Good.

So would you like a motion from us to recommend that this goes to council?

Okay. Alright. I move to forward the economy chapter from finance committee to the city council. Second.

Alright. All of those in favor, aye. Aye. Aye. Thank you. Thanks for your work.

Thank you so much.

It kinda just clarification.

Oh, yeah. One clarification.

And I do I just wanna make clarification too that even though the council's accepting chapters, the council or any individual can suggest changes to any chapter of the final product Yep. Up up to adoption. Right. So it's, it's still but we still have more bites of the apple. Yes. Yep. Okay.

Thank you. And speaking of more bites of the apple, we're gonna invite Silvana up or let get back here.

And while Silvana's making her way up and they're loading her presentation, sorry that Silvana's back to talk about Armory and Yelm Highway. But as I've we mentioned to some of you after we left finance committee and we appreciate the support to move the bond measure forward, we went back and kinda took another look at project cost staff did. And whether it be tariffs or other reasons, cost of materials are up, project costs are up significantly. And so I asked Silvana to come back to finance community because I felt like it was too significant of a change to take this to the full council, and it needed another go around here. So Silvana is gonna bring you an update on those those costs so you kinda know how we got here.

And then she has a range of options that she wants to share with you. And you may like one of those options. You may not like any of those options. We may develop another option here tonight. But she's gonna go through some, and then we thought we'd have a conversation about where we can land this plane to get it moving back to the full council. Okay. So that with that, take it away, Silvana.

Alright. Thank you, Jay, for the intro. Good afternoon, Chair Gilman and Finance Committee. My name is Silvana Neehauser. For the record, I'm the interim director of Parks, Arts and Recreation.

And today, I'm presenting an update on the two projects, Yum Highway Community Park and the Armory, renovations. And just as a reminder, these are two long awaited community projects, and, we're, proposing to fund them both at the same time. So just a quick summary of what we'll go into later. So the cost for the combined projects have risen significantly from 37,500,000.0 to 49,000,000. The last time we had gotten cost updates was in December.

So what I brought to you in the spring were those costs. And we on the Elm Highway project, we did quite a bit of value engineering as well as looking at what we could reduce within the scope of work to bring the cost down. We were able to bring those down around 5 or $6,000,000. That does I'll go into the details of what the scope reduction looks like. The armory is currently sitting at 80% design, and we've submitted for a conditional use permit.

Yelm Highway is at 90% design, and it's got all the permits that it needs so far. And I think we have maybe one or two in waiting that we're waiting on, but that it'll be ready for bid come November or December.

So

tonight, I call this the proposal two point o, and we're looking for approval of a debt financing package, whether it's one of the options that are proposed tonight or something that we collaboratively come up with to be able to move these two projects forward. So I'll talk about what has changed. I'll talk about the details of the financing, strategy and the debt package, and then what the next steps would look like, and then we'll have opportunity to have further discussion. So as a reminder, these two projects are legacy projects. They're pretty massive, and to do them at the same time is something that's probably a once in a career opportunity.

And these these projects, whether, they were at the old price or the new price, require debt financing for this this size of a project. So Yelm Highway Park Phase one, we did everything we could to keep all of the recreational amenities in there, and and there's only a slight reduction in the lower center part of the drawing there. You'll see there's three different play features, a Yelp Toro, a Yelp. Those are electronic type of little soccer games. So we're we're proposing getting rid of the one that's the Yelp.

I think it's Sutu. But yeah. And so that that's really the only recreational amenity along with one of the two picnic shelters. We're still wanna move forward with 13 pickleball courts, one of them being ADA accessible, synthetic soccer field, the playground. We've changed some of the features with the playground.

So instead of having some misting poles, we've pulled that out. We're gonna do that as a add all bid so that if there is some savings, we can add those things back in for recreational amenities. And then with the restroom facility, we looked at not building out the spray park mechanical room that we were going to do because that was part we were building that out in anticipation of a future phase of doing the spray So we're we scaled some things back. One of the biggest changes was we changed a lot of our concrete pathways to asphalt. That was a large savings, and we've reduced a lot of the landscaping that we will work on over time adding more more landscaping.

So we brought the project, including design project management, down to $26,700,000. Part of that, though, did include reducing oh, sorry. Can we go back also? Yeah.

Sorry. Can you talk a little bit one that jumped out on on here to me and made me very sad is the maintenance facility shop reduction. Yes. What is the impact of that? And is that something that the other 50% can be built out later? Or is that just

Yeah. So with the maintenance facility, so we had two buildings, a shop and the offices. And we were proposing reducing the four bay shop down to a two bay shop. But we in the future, we need to replace our carpenter shop at Squaxin Park, which will be very challenging under current code. So one of the ideas is that we replace our carpenter shop out there at Yelm Highway using some of the camp dollars that we would have used, the capital asset management program dollars, that we to then be able to build out the shop further.

So so we're looking at the opportunity to to be able to build that out. And we'd still have the old carpenter shop that we could repurpose at Squaxin Park, but it currently doesn't have HVAC or some of the things that you need for doing work with working with wood and paint and things like that. So so we are trying to come up with a plan that'll help with that. We wouldn't reduce the office sizes because that is something that we are truly bursting at the seam, and we'd still have the wash rack and things like that. But it it's close to a $1,000,000 savings by reducing it.

And with that reduction, then we don't need to do as large of an HVAC system in the shop that's out there. And we brought the ceiling height down a little bit so that we don't have, the larger ceiling. So we we did some value engineering of what what we could do that would not impact the park as much or impact the maintenance facility. One the things that we struggled with is if we start taking off recreational amenities, we jeopardize our grants. So we've looked at how we can provide the same recreational opportunities but lower cost.

And so that's what we've had to, within the design, stick with if we wanna hang on to those grants. Otherwise, we'd then start losing the grants, which, you know, you gotta do your cost benefit analysis on that.

And just as a as a follow-up because, Savannah and I had this very conversation, and the office space portion of the maintenance facility is our highest biggest need. The shop space, we'd love to have it all, but we can do with about half the shop space, but we need to maintain the office space. It's the most important piece.

We've also in the 26,700,000.0, we have a 5% contingency for construction, and that also includes our design costs. So this would Alright.

I'm just confused by the answer to Kelly. So you're reducing it in the bond and using camp to still build the full size?

It wouldn't be built at the same time. Okay. It'd be future built. Yeah. Yeah. So we're just now scoping the carpenter shop project, so it'd be a future

Base. Okay.

Phase.

And there and there's no need for, like, water, shop space on that end of town at all?

I like where you're going. I like where you're going, but now

Okay. Thank you.

Yeah. If we colocate, it might complicate the bond too. So we are collocating with public work at the nursery on a different parcel that's not part of the grants. So, yeah, we've we've, entered into an agreement with them on that. Any other questions before we move to the next?

Okay. So this project for the 26,700,000.0, what we proposed debt financing would be 14,700,000.0, and we would utilize the same voted utility tax fund balance of 2,000,000 and then impact fee revenues for 2026. And then, of course, we've got our grants and our donations piece, and we have cash on hand that we've been setting aside for this project. Alright. With the Armory project, that one, I'll get into the details.

But as you might remember, there wasn't a whole lot to be able to scale back on that one. It was already pretty scaled back. And this is an important project because it supports our city's equity goals as well as creative space needs, and our partners are ready to go. So they're lined up. We have eight anchor partners that are wanting to move in once the building is safe and accessible.

So we this project went from a 12,200,000.0 in December to a $19,000,000 project. Part of that is this is a like a design build, So different than the Elm Highway process where we have a competitive bid. You know, they when we get ready to sign the construction contract on the armory, we'll have a do not exceed amount. And any change orders that come in from or anything unforeseen is gonna have to be absorbed by the contractor. So there's that benefit of knowing that we're gonna be within the budget that we stay you know, we have.

The unfortunate thing is that with tariffs and costs of supplies going up and down, they've built in a little more contingencies here and there. So that project came in at 19,000,000, and this really just covers all of the ADA improvements, some structural improvements that would it would support the solar. So when we put the solar on the roof, we need to do some structural improvements as well as it's gonna trigger some other code updates around lead abatement and asbestos abatement and things like that. So so altogether, the solar kinda triggers about $6,000,000 worth of improvements, seismic upgrades as well. There's elevator installation, which is really important part of the ADA improvements.

Fire suppression and electrical upgrades are also another important piece of that. So this

is

all really critical to getting the building open and available for use to the public. If we were to fund, the the project as I described, it would include 12,200,000.0 in debt financing, which is that piece is more than, I brought to you last time, and, 3,000,000 of the nonvoted utility tax, funding, 2,620,000.00 in, grants. And then we're planning to put some of the OMPD revenue towards it next year as well as we've got some cash in hand that we've set aside for it. So together, that puts a debt financing package at 26,600,000.0 as opposed to 22,000,000 or 20,000,000 that we were aiming for before. And so we've got some options because we know that's a lot of money.

And option one would be to if we wanted to stay within our well, our parks funding currently is allocated towards us that we could use towards the payment, we were we're kinda working backwards. We're looking for a $1,400,000 a year payment, which would give us proceeds right around $18,700,000. And if we were to do this option, we would need to eliminate the solar and all the the $6,000,000 in improvements to the facility. So that would include things like the garage door replacement, the interior doors, the audio visual, the interior finishes, some of the lighting, and then the contractor contractor is willing to reduce their escalation estimates as well since we won't be doing all that work.

Yeah. Removing the solar and solar array prep, is there fiscal advantages to doing those pieces? Like, is there stuff that's already gonna be happening to the building that it makes sense to do solar at the same time? Or is it exactly what it would take to do solar now in terms

of scope of work will be exactly the same in three years or five years? Or is there some logic to why it would be smarter to do it now? We got a a $1,500,000 grant. So if we don't do the solar now, we would need to either see if we could transfer that grant for a project that we're preparing for this year, either in facilities or with parks, or we would turn it back to Department of Commerce. But to answer your question, there is there's nothing that we're doing now that it's like it makes sense to to do the solar.

The advantage of doing the solar is we get a new roof on the annex. We get a new roof on the armory. We get the seismic upgrades. We get the drop ceiling removed. We get some lighting improvements with that. So, you know, there there's those and then the, you know, abatement that would happen as well.

But we're gonna give you some other options too Yes. So we could save try to save some of

this. Yes.

So solar array preparations includes new roofs on both buildings? Correct. Okay. So that's significant.

It is. Okay. It is significant.

Okay. Yeah. I wouldn't I think I would want if you know, I just wouldn't wanna call that out as a separate improvement even though it's triggered by the solar array. When does that solar array pencil at $5,000,000 of improvements? What's the anticipated power cost of the building annually?

So we don't have really good numbers, for that. We we I think what we'll be able to do is I'll be able to do a follow-up and give you the information, when we get the numbers from our energy audit Okay. Dialed in. But, yeah, the the other piece too is that we have an old HVAC system. And so right now, we might be drawing a lot more power than we would be when we update that.

But the boiler is boiled on electricity or on something else?

I don't know.

Because that would Yeah. Be a significant new power draw if you switch to HVAC too. Yeah. I bet it's gas or something.

I bet yeah. You're probably right on that.

So so I don't need that right now. It might not matter knowing that there's other other options coming, but just what I'm what I'm thinking about when I see that.

Silvana, if I may, while we're on this this bunny hole here, it's a a third increase in in the amount is is a is a big shift. How much of that is the energy services contractor? How much is is HVAC solar that in that that package?

Like, how much is

How much of the one third increase, the additional $7,000,000 is related to contracting with an energy services

contractor? So so not DES, but with the contractor. They had a percentage for their profit. Right. So the obviously, the pie is bigger when the cost is higher.

It was really I tried to drill into the numbers like we did with the Yelm Highway. We didn't get to that level of detail with them. We got we got, labor materials went doubled, from their previous, amount that they had quoted us. They also got further in their design. So back in December, they were closer to the, like, 40% design, and we're at 80% now.

So they've uncovered a lot of things. There's also things that they didn't anticipate having to do frontage improvements and things like that. So there there's been some things that they weren't aware of that they were going to need to include as they've moved further along in process. But it it's gotten when we told them that our budget was needed to be around 12,700,000.0, what they gave us was the scaled back version without the solar and said, we can do this for for 12,700,000.0, but this is what's gonna come out of the project.

I guess part of what I'm wondering is the big general contractors I know of are saying it's a modest increase in commercial construction, like, one and a half percent right now. Yeah. Workforce looks good. So they're not the big name brand contractors are not saying it's a big tariff increase now, that there's some speculation about it. Yes.

But they're and and with concrete, they're looking at, largely flat, like, a a one or 2% change from a year ago. So as of the May anyhow Yes. There's nothing specific about either labor or materials having a big jump. And so that's why I was just I just I I wouldn't be comfortable talking about a one third increase in the the contract that's related to, increases in the cost of doing business because I I I don't think that's materialized. That's a fear people have, but I I don't think that's real at this

point. I agree with you. Excuse

me. I've been told that Valerie Roberts is available to speak to answer a question about a boiler. Valerie, we would love for you to come light up your camera, microphone, whatever you can do to tell us.

Eventually, we don't Hello?

Can you hear me?

Yes. You're coming in loud and clear.

Oh, perfect. Hi, everybody. It's nice to see you all remotely.

Go ahead, Val. I think you're gonna respond to the Okay. The boiler issue. Yes.

So the boiler is a gas boiler. The HVAC upgrade is actually being reserved for a future phase of work because it is gonna be expensive to move ourselves to what is called a VRF system. That's gonna be a heating cooling system that's electric, and that would really greatly save on things. That is going to be about a $4,000,000 project, and it's the thing that we want to tackle next after phase one and when we open. I also wanna note that in the investment grade audit, the, annual savings for the electrical for based on the solar project was at minimum $16,000 per year.

I haven't calculated how long it would take for that to pencil out. Although the cost of the solar and battery storage itself is fully covered by the grant we would receive, and then there's additional tax credits that would cover a portion of the installation fee. So there is some compounded benefits that would I would have to calculate into that, but I'm happy to do that math, and get it back to you all.

Oh, so Kelly says we could probably break even at about 312 years if we so that's the so no. Thank you. And I know that that direct offset of electrical bill isn't the only advantage by any stretch, and and we made a commitment as a council that we would prioritize having renewable energy on city buildings as much as possible. And and there's a grant paying for part of the cost of the system.

Yeah. And one thing to note is we've broken the solar arrays piece out as it's a separate project. And with the grant that we received as well as the credits that Val is talking about, it does make it break even. But what happens is the solar array triggers all these other improvements that then equate to about $5,000,000. And so if we do anything with the roof, it's going to trigger those other things. So if it starts leaking and and we have to replace the roof, it's gonna trigger a lot of those upgrades. Not maybe not all of them, but it will trigger some.

Just just two things. One, I just wanted to highlight that one of the reasons that the this is the proposal for what we might not do is the most critical pieces of this is the ADA work and the elevator work and the fire suppression work because that's what gets your anchor partners into the building. If we don't do those things, we might as well not do any of that because they're not going to get in. Right? So that's just wanted to give you that rationale of why we chose solar over anything else, because it still allows us to get the building up and functional for those anchor partners.

The other thing, too, is and I think Silvana talked about this a little bit. You might want to dig into this a little bit deeper. So the energy savings performance contractors fee, it does change as more becomes known. So as they get further along in the project, I don't think costs are up just because material costs are up, but because more has been known and we've uncovered more projects, and they're on a percentage basis in terms of how their contract works. So as we've uncovered more costs in terms of roofing and seismic and other things, those costs go up, and so their costs go up, in terms of the fee structure.

So I think you said that, Silvana, but I just wanna make sure, that that that we that you you got that piece of it because it's important to this, Clark, to the question that you asked about materials because it's not just that. Correct.

Thank you. Well, thank you for indulging our our conversation here. We'd be glad to hear about the three scenarios that you're It's alright. So but wait.

Yeah. So I just wanna check on the is the battery storage a benefit to anything beyond this property, or is it just battery storage to operate this property in an outage?

It's for this property. We do get credit if, we produce more solar than what we use. That's the normal. Okay. Got it.

Okay. Thank you. Yeah.

Are you

muted?

I am. I apologize. I am I'm watching my my daughter today. That's why I can't be there. I'm happy to answer any additional questions. I didn't hear a question.

Oh, no. So thank you. We were just checking to see. Somebody's phone was ringing through the Zoom call.

So Oh, weird. Okay.

Alright. So option two. So with this option, we would oh, I'm sorry. Let me go back with option one. I also wanna be clear that we would need to use additional fund balances, about 2,300,000.0, to pay down the projects.

And so that would include taking a 1,000,000 from the Squaxin inclusive playground project, which is 1 and a half million. And then it would also include another million of voted utility tax fund balance, so that would leave that account at a million dollar balance and then an additional 300,000 in impact fees. And then we would need to decrease the projects by another 1,200,000.0. So that would be further reductions to the Elm Highway project. So that's for option one, to get us down to the 18,700,000.0 to finance.

Option two, we would not take those fund balances, and we would not have to decrease the projects any further. This would be with a reduced scope of work for the armory, so the things that you saw in the last slide would not be included in the project. And we would be proposing to extend the half a percent of NVUT money that not the one that expires this year, but the one that expires in 2029. And we would use around 300,000 250 to 300,000 to pay back the twenty year bond. What that would do is if the 500,000 or 525,000 stayed with Parks for beyond its sunset at of 2029, and it would stay till 2047.

It would allow the other half of the money that's not being used to repay the bond to either go towards projects like Rebecca Howard Park or acquisition or Lily Road Park development or something like that. So or it could be split as well. So that's kind of a hybrid option of asking counsel to continue the NVUT funding with Parks, the second half a percent to help pay the bond.

And I'll just say, I asked Savannah to give you this option around the second half in VUT. And so I know our budget challenges in the moment are hard. And my hope is that by the time we get to 2029, we're not still in the same place we are today. Alright? And then we're not relying on on the need for half $1,000,000 to to balance our budget. Right? And so it would just be more work we have to do over the long term so we don't need to rely on that in the future. So, for those reasons, I I asked Ivan to look at this because I think it is a valid option you could consider. And it, what I like about it is, at least and we're gonna talk about another option here too. But in the in these scenarios, it doesn't take away from the other projects.

It doesn't take from your other fund balances. It allows you to to stay on on track without doing, reducing your fund balances and sacrificing other projects in the moment, which option one does. But, again, just for clarity, that's why it's here.

Third option would be to fund the solar, part of the project, and it would be still a twenty year debt. Annual payment would be 1,950,000.00, and this would be using all of the NVUT, that half a percent that expires in 2029 going towards the bond payment. There are other options like thirty year, twenty five year. So there are things that can it can be sliced and diced a bunch of different ways, but we've felt like twenty year was where staff felt comfortable versus 30. So

Probably for Jay and our finance team, talk to me about the the rationale of, like, '25 or '30 not showing up in here as a viable option. You earlier, Silvana, used the phrase, you know, this is a once in a career kind of thing where we're working on these two really milestone projects. Is it worth considering a longer option recognizing that this type of moment doesn't come around every twenty five or thirty years?

Yeah. I'll start. And then, Mike, you're just entering this conversation, so you can chime in there as you want. I think the answer is yes. I think we can go back and look at twenty five or thirty year debt.

When Savannah first presented that to me, I had a feeling about it. And it just locks up a large portion of Parks' resources for an additional ten years, which could it's hard to look thirty years down the line. But as counsel knows, we have other significant projects out in the horizon, like personal landing, like West Bay. And just the thought process about keeping it at 20 gives us some glimmer out on the horizon of those projects being built in a lifetime. So that's kind of why I landed and had Savanna Land on a twenty year, but but you're very right.

We can definitely look at a twenty five or a thirty year option if you'd like to do that. It does change all these numbers and considerably. I know, if the finance team wants to weigh in, but that's just

Yeah. So I think I provided this, kind of matrix here in in the packet just just in case we started talking about this. But one thing I also wanna mention is that we have a million dollar bond repayment on land acquisition right now that goes till 2040. So after 2040, that frees up a million dollars that we're currently using towards bond payment. And there's other options too, just to note that if the council ever wanted to explore a parks ONPD levy lid lift in the future, there is that, option as well for projects and for funding.

Long term?

Long term. Yes.

And I I don't know if you have any questions, but just so you know, we do have Deanna, Scott Bauer, and Melinda from the Bond Council who are on Zoom if you have any questions for them.

I'll just for me, it's less a question about how else we might bond and more that it felt like a big bite when we thought that existing park revenue could service the debt. And now as we imagine what else, like, rather than having the nonvoted utility tax returned to the general fund or bringing additional fund balance in, then I start thinking about Percival Landing Library, Eastside Maintenance Center, the Ben Moores Block, the 108 State, the Olympia Center. It's like so Yeah. This fits somewhere in that whole continuum of properties that we own and projects we aspire to to move along. So that's where I'm I'm just I'm really torn about are these two projects the projects to use a good portion of parks flexible money and to take additional city capital money and, you know, bet it all right here.

I'm just I'm really torn on that. But Jay?

Well, I think the reason to spend it on these projects is twofold. One, your investment today Yalm Highway, your investment today is $14,000,000. I think that's the number. You've already put that much into it. And two, between the two projects, how much grant money is at is at risk? And so you've got a lot of also grant money that if we don't move these projects, goes back and and we

we 6,000,000.

It's around $6,000,000. So to me, Clark, I think that's the answer. Why these two? So I think the second part of this is then then what's the right debt strategy that gets us that gets us there?

And if if the, another option, not using the NVUT money or the nonvoted utility tax, would be that we could do a thirty year bond, and not do the solar or the those improvements on the armory, and we could pay that within the parks resources. So that would put us at a four point or a $1,400,000 bond payment or around there. I I wanna clarify that these are we're using kinda some round numbers here.

Just just to even further cloud the water. I'll also say that any big project that we can take on now and build in 2025 construction costs, even if we're gonna finish paying for it in 2045, we know it's gonna be be an even bigger ask of the community twenty years from now to take on similar projects. So Yeah. So I I weigh that too. But I I just welcome both your thinking on where do we go from here?

Yeah. I think I'm in that same place. I I think well, in parks, for sure, these are the two longest standing things in our parks plan, like having an art center and a commune well, the pool's new in this in the parks plan, actually, but the but art center and and the and the community soccer fields have been there for a long since these voted utility tax Yeah. Measures. Right?

And they are mentioned in the ballot measure Mhmm. As well.

So For the MPD and for those Yeah. Voted utility. And then just for my clarification, so we have a half a percent that's coming back next year and then another half a percent in 2029. Did you look at using this this one that's coming back next year too?

I did not. I left the one that's expiring in 2026 available to you now fund. To general fund because I think there's a there's a clear need now to get there to balance in 2026 and beyond. And in my mind, you know, 2029 is another four or five years out. A lot can change in our budget process, but it gives us some time to get on a better path. I mean, again, my hope is that we're on a much better path by 2029 and not relying on the last $500,000 in to balance our budget. That's my hope.

Yeah. No. I agree with that. So the only other thing that kinda comes into my mind is whether there's more impact fee money that we're not using here. And I'm thinking we've done our acquisition. So, like, if there's any other acquisition money, let's move it for ten years.

Yeah. So, we as you're aware, we do have, some acquisition money that's committed to something that's gonna come before you in the next few months, that has already been presented, I think, in exec session. And then, it'll after doing these projects, it would leave us with a million dollar fund balance. And so we could.

And with nothing else coming in or with indexes coming in?

With nothing else coming in because we would be utilizing those funds.

Okay.

And we still would have some money going towards our camp program for our current infrastructure. I wouldn't feel comfortable taking any more money from that because we I feel strongly about being responsible for maintaining our current assets.

For you.

Yes. Exactly. So

K. Gotta offer you one more thing to consider, and we'd have to run the numbers, but I think it gets us a little I mean, the other thing that I'm sitting here is if you ran a twenty five year debt, then it would reduce the amount of the half percent in VUT in 2020 that you would need. So maybe you get it down to under $200,000 or less, which means you're still keeping the majority of it either in parks use or right now, what I'd recommend is you leave it in parks use. But if at some point in time later we need that $300,000 in the general fund, available to you. But I bet you if you go to a twenty five year debt service, you're gonna cut back on not needing $300,000 of that half percent in VUT.

Well, in the thirty year model that's here, you don't need the 1,300,000.0 in cash on hand either. So, like, I I'm gonna actually lean towards a little bit longer model just because it leaves us more cash on hand and flexible funding. But and there's no penalty to pay off early.

There is not. And I think we wanted that guidance from you and said my spidey sense said that would be hard, but we want to enter let you entertain that because it is a real option to go off to thirty years.

Yeah. I I I personally when I look at this, I feel like I don't love any of these opt not not you know, it's, like, it's not it's not the options. It's the situation. Right? It's frustrating. I don't think I mean, for all the reasons you've said, I think options one and two don't make sense. Even if we didn't do solar at the armory, the roof has to be ripped. Like, there's so much else that goes with that. It just doesn't that's not a real option for savings. So I feel like the only thing for me that feels like it would give this just a little bit of cushion would be potentially that longer. You know, even just a 25, I feel like would give enough relief to to make it a little more palatable.

Silvana, could you help me remember again as we're looking at this? In order to service that longer bond period, what what ongoing park revenue are we tying up for ten or fifteen more years? Or It

would be 750,000 of our Metropolitan Parks District funding and 700,000 of our voted utility tax.

And then because those are both so those those taxes as the the general size of the economy increases and the value of property increases, we can expect, right, that that the revenue is gonna increase across the life of this. So that so that this it's all of our money right now, but ten years from now, if things go right, we should still have some cushion in there, I think.

With the Metropolitan Parks District one, because it is a property tax, we are limited to 1%

Right.

For increasing. So even if the property values and the home values go up, that's what actually drives the rate down. But we do have capacity to increase the rate if we if we went out to the voters.

Right.

And I

it again, if yes. If we or if either the legislature or we run a a ballot measure for a levy lid lift to try to adjust that that cap. Yeah.

Some of them don't affect junior taxing districts, but if you increase the general fund through Levy Lidliff, that would increase the 11% that Parks get. So, yeah, that goes towards operating, which means that we would transfer less revenue from capital to cover expanded operating expenses.

Yeah. There's there's three scenarios that will impact your parks funding in in the future, have the potential to. One is Southeast Annexation. So that's a larger conversation, but Southeast annexation by itself does bring you more parks revenue and actually expands your revenue that comes into parks. The second is a general fund levied the lift if we pursued that with the voters because the 11% parks benefits and depend on what level. The third is, and Savanna mentioned this, if we don't need to do that, you could at some point in time do a levy the lift on the OMPD and lift that back to 1.75 And that also could change

75.

Sorry. 75. That also could change the picture in the future.

But utility taxes grow like he's explaining. Do you grab that growth in your calculation?

I don't know what what the what's in this model. We'd have to go back and look and how we what we assumed in terms of, the utility tax, model growth.

Do the utility taxes what's the percentage of growth year over year? Do you know? I don't think it's that high. But oh, yeah. Okay. And I know that we we use conservative numbers. So so that's why we probably didn't assume any 5% increases. Tammy, do you know how much we projected out the voted utility tax? Okay. There we go. Thank you.

So maybe the way we could take this on is first talking about whether we would recommend going with a version of option three that that fully funds the two projects, to reach agreement there first and then talk about whether we wanna have more specific recommendations. Please go ahead, council member Green.

You give me the text of that motion again.

Oh, No. No. I'll make a motion.

Not necessarily a motion. Just for the purpose of our discussion, could we talk first about whether we're in favor of fully funding the two projects and getting them going?

Yeah. Thank you. No. I'm fully in favor of funding the two projects, but I would like to see some additional options potentially leveraging a longer bond time frame.

Yeah. And I agree because I came here to ask for HVAC, and I'm not getting it today because of this. But

Great. Add that in.

Doing it and just add the

whole Middle East store to the project, that'd be great. But I think it'll be good to not be in electricity for a minute, and I lean towards the thirty year model that's here. But I but I'm happy to look at other scenarios.

So under, option three, going with the fully funding of the projects, if we were to move it to a thirty year bond, we would, then be looking at an annual debt payment of just about $1,700,000. And so the parks resources, as a reminder, are about 1,450,000.00. And so we would need an extra 250,000 from the nonvoted utility tax to cover that. And right now, we were estimating the voted utility tax at about 525,000 a year, and like Tammy mentioned, with a 2% escalation each year.

I'll float you something that you can think about, in terms of an option. And and, really, it may be not be that you settle on a option, but give us some direction as we come to counsel with this. And that might be that, we go to counsel with options that limit the use of taking further fund balance as much as possible, that look at twenty five or thirty year options to model both those to do the best we can to limit the use of the twenty twenty nine MVUT as much as possible. And then as we put those options together, we can bring both solar and no solar options. If that works, then I think we can work within that structure to put a variety of options together the full council can see.

I like all of that, but I'd love to hear from my colleagues. My exception is that I personally don't feel like looking at a no solar option is very viable, again, just because of all the things that come. The solar is not entirely about the solar. It's if we don't do that roof, we're gonna have to do it and

I can I can eliminate that piece of it and just say it's it's limit use of fund balance, keep solar in the project, in in the armory, look at twenty five and thirty year terms, and try to limit the use of the 2029 NVUT as much as possible?

Another option we could explore is putting it out to bid for competitive bid. It would take some of our staff time, so that means that we would delay some projects that our engineering staff were going to start working on this upcoming year. And and we have the option to do that with our current contract with DES. If we say this is our budget and the solar has to be a part of it and they're not able to do the project within our budget, we could put it out to bid, but then you are risking not knowing what those bids would come in at. So

And I'm I'm suggesting you don't do that, that you stay on track. It is a very valid option that Savanna brings out because she and I talked about that too. But I think when the within the framework that we've we've given you here, it's gonna take time, and this keeps this thing moving on a schedule, moves us towards a bond sale and with more certainty.

I agree. And and and though I raised those concerns about Yeah. How much is inflation, I I really trust that there there's a lot of value in the design build model. And I I trust the DES consultants on this. I I Yeah.

DES has been amazing to work with.

Yeah. So I'm I I'm not concerned about the the team you have together. Okay. That's and I but and I wonder I I think, you know, we're we're talking about wanting to have the the project built both projects built about considering a longer time frame, but I I wonder about whether we give you direction to come back with a preferred alternative rather than starting this whole conversation with counsel that you might explain each of these things that you'd considered along explain the path Mhmm. But then bring us a hard to swallow proposal that that, gets both projects moving forward.

That that's that's my sense is I I just I wouldn't leave it too wide open.

So Yeah. You wanna let the council see what you wrestled with here that led to. Right? And so we can figure out how we storytell that piece when it comes to the full council about the range of things we considered, the feedback we received from the finance committee that led to, these options that are presented with the full council for consideration. Does that work?

Like, piece of moving to council. Is that

what saying?

Yeah. And that would should be our preference.

And and having a clear preferred path for council so that so that we we have a yes or no decision about a particular project, and you can you can or a path for financing. And you can explain all these variations, and somebody could poke at it or offer, you know, an alternative. But but I I think this is one that is such a difficult decision to make in the midst of our our budget work right now

Absolutely.

That that it the more confident and clear we are, I think, in in urging moving forward, I think I I just think that's important.

Yeah. And I think in a twenty five or thirty year model, having just a little bit extra cash will alleviate the frustration I felt my first I don't know how long, ten years. When till whenever we paid off a big acquisition bond, like, all of the parks money was locked up. We couldn't do anything, and then we then we pat till we passed the MPD. But I think this will that would allow for a little bit more flexible funding in the system at at the long even though you're paying more in debt service.

Yeah. And I appreciate that. I you know you know, I my spidey sense isn't always right. Debbie Debbie finds it hard to believe. But I think that hearing from you about your willingness to look at a longer term is super helpful to this, and I think It does. Opens up a world of possibilities to make this easier. So so I really appreciate that, that guidance from you. I think Savanna does too.

I do. Yeah. We're we our preferred option with the twenty year was to fully fund the projects, but being able to to consider the thirty year, is also, I think, even better because then we don't have to take from other fund balances or projects. So

Before I ask for a motion, I just wanna say this is one of the really proud moment, big decisions, I think, of the the time that I've served and that starting with, you know, serious caution and conversations with Jay and conversations with the the finance team of, you know, what do we do when says, actually, you know that that $20,000,000 we were gonna raise? That won't do the job.

It's like, woah, bro.

So yeah. So I anyhow, I'm just thank you all for your your work and risk taking because I I I I think you're right that they're they're both projects that we either do them now or they'll be like the swimming pool. And nobody has enjoyed the swimming pool. So

so We could learn to swim in the swim. Well, we bought. We

need to to have a motion, a recommendation to issue debt for the Yelm Highway Community Park phase one construction and Armory Center phase one renovations. As discussed. As discussed. So moved. Second. Great. So we have a motion and a second. Any closing comments before we vote on this one? No. Alright. All in favor, say aye. Aye. K. It's unanimous, and we hope that council agrees with us. Yeah.

Thank you for the thoughtful discussion and recommendations. It's always good. We appreciate it.

Oh, and, Silvana, we're so glad that you're serving as interim director and that you brought your knowledge of the project to the conversation. That makes it much more possible. Thank you.

Yeah. No. 4,000,000.

Yeah. And let's get going on phase two.

Well, I was just gonna say we you know, separate from this discussion is our ask at our state level and our federal level moving forward too. Like, we're gonna try to pick off some other portions of these projects either through a state ask or federal ask, HVAC being a big one on that list.

And

we can utilize the investments after we complete the construction on the armory as match for future grants. So that is something that I I think is pretty pretty amazing. So it gives hope for these future projects and future phases.

So do we have do you Joan, do you have any reports this this evening?

I do not.

Well, Mike oh oh, Jay has a report. And then I was gonna ask Michael if you might just take a couple of minutes to introduce yourself and tell some so, well, Jay, what which item did you have to

I just wanna report that we officially closed today on the sale of 900 Plum Street. So it is it is a done deal as of as of, this morning. So I just wanted to I sent a note of congratulations to David Burnett and the tribe as well and got one back from them, but it's a big it's a big day today.

And finance director Michael Gibbons, you just tell us a little bit about yourself. Welcome. Welcome. Thank you.

Fill up the rest of the time with a little story of myself or keep it short. Okay. Okay. It's a pleasure to be here. This is, I think the leadership team knows this, but it was a goal of mine to lead a finance, department in a larger city.

I've most recently served as the finance director nearby at the city of Shelton, and I was talking with Joan earlier today. I think that's stepping into this role in a bigger city, having that experience has prepared me very well. There's a lot happening at a city this size, and, you know, I'm on day three. Well, the end of day three. But it's really, I think the effectiveness of the finance director is attributed to such a great staff, and I'm stepping into just a really great, finance department, city leadership team, and overall, just a very well run city.

So that's exciting for me to be a part of. There's a lot happening, but I'm excited to bring my experience and, excitement for the job into the city of Olympia. So thank you.

Welcome, Aaron. I I have one item that we might consider, and that's that Owen has attended every finance committee and many, many city council meetings. And I'm wondering if we might make him a name plate also and just welcome you to the table. You have one there? You had a paper with So I you know, you know, I'm I'm really grateful that you've been closely tracking the deliberations from from both the finance committee and council as we work on budget and finance issues, and I know that you're welcome to the table. So yeah. With no any any oh, wait. Wait. Wait for it.

I have a request. And if this is not the right forum or if I could have just done this via email, forgive me. I'm wondering if for our November 17 meeting so let's go way ahead to November, if it's possible to adjust the start time to 04:30.

Oh.

It's a big ask. I know.

At a staff level, it's totally fine with us.

At that point, Jim won't care.

Happy be like Yeah. Like, talk about your

time. Yeah. Yeah.

Joan, does that sound alright with you? Does he well Okay. Consider it done.

Thank you all.

Wonderful. It's our last one of the

Yes. Yes. Very good. Well, at 05:20PM, we will adjourn the June meeting of the Olympia City Council Finance Committee. Thank you all. Thank you. Thank you.