Council OKs bond proposals for public facilities district, Civic Field, deferred maintenance

Public Works Director Phil Williams, second from top, speaks about deferred capital maintenance Tuesday night.

Against the backdrop of historically low interest rates, the Edmonds City Council at its Tuesday night business meeting agreed to support bond financing proposals that will save the city money, provide short-term cash relief for the Edmonds Public Facilities District that runs the Edmonds Center for the Arts (ECA), and fund a maintenance backlog in city buildings.

The council unanimously approved the Public Facilities District’s (PFD’s) request to pursue refinancing of district bonds issued by the city on behalf of the district in 2012. Bond refinancing will assist the ECA in its efforts to recover financially from the COVID-19 pandemic, said ECA Executive Director Joe McIalwain. He spoke — along with PDF board members — during the council’s Finance Committee held prior to the full council meeting. Since the district won’t be required to make a principal payment on the debt during the current fiscal year, the bnd refinancing “will free up a good amount of money,” McIalwain said.

A net positive cash flow beginning in 2021 will allow the PFD to pay down other components of its debt more quickly, which includes a direct loan from the city — approved in 2018 –– via First Financial Northwest Bank, McIalwain said. And it will give the facilities district the ability to begin setting aside money for soon-to-be needed capital improvements and replacements for the ECA building.

The council also agreeed to refinance $8.045 million in water and sewer revenue bonds, saving the city over a million dollars in the next 10 years, according to Administrative Services Director Dave Turley.

And it voted to issue new bonds for Civic Field construction to cover a $1.634 million funding gap — as well as $4.4 million to fund the city’s growing facilities maintenance backlog. The council discussed that backlog during both the finance committee and parks and public works committee meetings, as well as during the business meeting Tuesday night.

The discussion was a followup to a 2018 report on the condition of the city’s buildings, based on a study conducted by consultant Mckinstry. At that time, Public Works and Utilities Director Phil Williams said that the city had been underfunding required building maintenance for 20 years, and as a result had a deferred maintenance backlog of $6.5 million. That backlog is now estimated at $11 million.

While the city stepped up its capital renewal investments to $700,000 starting in 2019 and increased them to $1.5 million in 2020, the amount was reduced in 2021 because of the uncertain budget outlook due to the pandemic, Williams told the council Tuesday night.

“Buildings are a little bit like people,” said Williams, who explained that the average age of the city’s buildings is 52 year old, and only two buildings are less than 30 years old. “If their life cycle time period is long enough, you don’t see it day to day. These are just things that accumulate over time.” For example, City Hall needs about $3 million worth of work, including electrical systems and plumbing. The building “was old when we bought it and had not had the maintenance that it needed up to that point,” he added. The Frances Anderson Center also needs improvements, including both new heating and cooling systems.

Addressing questions from councilmembers, Williams agreed that while the $4.4 million won’t address all of the estimated $11 million backlog, he noted that it will allow the city to make significant progress.

As for Civic Field, the estimated total cost of construction is $13.75 million, which is more than $1.6 million over budget due to site design challenges and increasing construction costs. The city council in 2017 approved a plan for redesigning the field, with the goal of transforming it into a downtown Edmonds park with range of amenities — among them, upgraded youth athletic fields and sports lighting, an inclusive playground, a walking path, a petanque court grove and a pollinator meadow.

— By Teresa Wippel

 

8 Replies to “Council OKs bond proposals for public facilities district, Civic Field, deferred maintenance”

  1. ****think I already submitted this but I’ve had spotty internet-thanks****

    Using bonds to pay for maintenance is like putting your mortgage on a credit card. It’s actually worse, it’s putting your mortgage on your kid’s credit card.

    The folks who enjoy the benefit of a thing (roadway, buildings, the environment!, etc) should pay for the use of the thing. Punting to the ‘next guy’ through debt is irresponsible and betrays the American ideal that our kids should have it better than we did (quite the opposite trend currently). Bonds (aka debt paid by the future citizens of Edmonds) should be reserved for emergencies, to address previously incurred but unknown costs, and to fund new things used by the folks paying (new parks, new roads, expanded infrastructure, etc).

    I understand this council was boxed in by years of previous city mismanagement, but i also know we’re not doing enough to pay for maintenance or capture actual costs as we go – thereby perpetuating the cycle. Past generations gave us a debt free and working infrastructure, environment!, buildings, etc – we are morally obligated to leave the next generation the same.

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  2. @nathan – When i started reading this article I was thinking to myself “our property taxes should be paying for this on an annual basis”. I was actually shocked to discover the city of edmonds borrows money to perform maintenance on buildings they own? We need to stop doing this. Your response was well written. I keep thinking about friends telling me… once you start leasing a car you never stop. The city of Edmonds is clearly spending their money on something else.

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  3. Are you kidding me? Our whole economy runs on credit. People maintain and upgrade their homes all the time using credit. Why would the city approach things any differently? Credit is subject to the economic generality of it’s good to buy low and sell high. Credit is generally a cost of doing business and a means to move ahead in life when you otherwise couldn’t, if it wasn’t available. Buying credit when it is dirt cheap is a total no brainer and the city is smart to do it for needed repairs or anything else. Let’s don’t attack these people when they actually manage to do something right.

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  4. Financing $4.4m will end up costing at least 50% more with the low interest rates. Probably 75% more? So at plus 50% the total cost will be $6.6m or greater. With 20,000 households, the cost for each household we be $220 now or $330 later, probably closer to $400. But here is the financial political reality. After 7 teams of citizens meet to discuss a levy for Edmonds, each concluded we needed a levy. Council did not act on those reports. Another levy team was put together and reported to council the need for a levy and in 2010 a ballot measure to fund streets and building maintenance was on the ballot. It failed. Council is authorized to raise revenues by 1% per year with out a vote. (I-747). Generally expenses increase by 5%+ and revenues increase by around 3%. Council has on occasion not raised revenues by the allowed amount.

    When it comes to the “popularity” of a levy, saying the levy is for parks or EMS is more likely to win more voters than streets or old building maintenance. Council approved in budget recently that had an EMS levy built into the data in our years. They did not act on their own budget.

    When we did the Strategic Action Plan, council approved it on two separate occasions. The SAP had as a key component “find a permanent funding for streets”. The Highest vote getter was to set up Budgeting by Priorities or Outcomes. If we had done that when first approved by council we would not be the same financial situation we find ourselves in now.

    Sadly we have built a wider and wider gap between what some folks want and what other folks are willing to pay. I would far rather pay $220 now than pay $330 to 400 later. Thanks Nathan and Jim above. Clint, you and I are both old enough that if we finance this thing we will not have to pay much.

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  5. Why would I want to pay the $220 now, when I probably won’t even be around to have to pay the $300+ later? Why shouldn’t the actual living people to come later, also have to pay some of the freight for the cost of living the good life in Edmonds? Should you and I have to pay for the park and fixing the buildings, for them to use later, after we aren’t around to benefit?

    Another angle on this is that, when you consider inflation, it’s probably smarter to borrow more valuable cheap money now and pay it off with lower valued money later. It’s like when you bought that first home at 5% interest and wondered how you would ever make all the expensive monthly payments and, then, ten years later, you look like a genius for having such a nice house worth so much, for so little a month. Man, you can sell the house when the market is in the buyers favor (buy low and sell high) and buy something a lot bigger and nicer with the inflated money you made. I’ve done that and I bet you have too. When you consider inflation, that $400 paid later, might be more like $200 in terms of it’s real value and impact on your own inflated income.

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  6. Thanks for the history Darrol. I’m always amazed at how much stuff you keep in your head.

    Clinton-we agree with respect to new stuff. It’s perfectly appropriate and right for new parks to be paid for with bonds (and cheap bonds? Even better). This way, folks using the park pay for the park.

    What isn’t right and doesn’t make sense, is for the maintenance of stuff (parks, buildings, roadways, pipes, etc) to be funded with bonds. Not only does it add borrowing costs, ultimately cost more (deferring maintenance almost always does), and eliminate our borrowing capacity for emergency needs – it also forces people who didn’t use something to pay for it. Think of it this way, roadways deteriorate over time without upkeep (fixing potholes, etc). We’re out here using the usable life of that roadway and without a routine maintenance program, it’s deteriorating. It’s not fair to tell the next folks that they have to pay to fix the roads that we ruined (they do need to pay for the roads they ruined/are ruining!). Conversely, building a new road or bridge is something that should be funded with a bond since only future people will use it.

    A good maintenance program should be funded by taxes, paid reliably and consistently, and is the responsibility of current residents (who are also living that good life). A poor maintenance program is deferred and uses bonds.

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    1. All of our heads are like disk drives. Mine is so old it is like the floppy drive media we used to install DOS!

      Great points Nathan. Citizens felt the same way when they said in the SAP they wanted a permanent funding source for streets and even parks. The street study recently done suggests we need to allocate about $2m each and every year to catch up and keep up. That’s $100/household/yr. Residential streets need major work in a cycle about once in every 28-32 yrs. Arterials about 18-20yrs. In 30 yrs households would have put in $3000. Some would go for the street in from of our home and the rest for the other major streets. Not a bad deal in the long run but folks were very concerned that the last levy would do nothing to fix “their” street. Policy makers simply should treat streets in the say way we treat other infra structure. Set up a way to consistently collect the needed funds to keep the full system running. We did that with water and sewer by putting the charges on the bill. If elected policy makers would just set up BBP like the citizens requested some of these decision would already be in place.

      Also in the article is the note that City Hall need $3m of repairs!!! The land value is $1.4m and the building is $5.9. Does is make sense to put that much into repairs. Sell it and move to other city property. Good bones and could make a nice DT hotel. Frees up DT parking. One of the Economic Development Commissioners did some interesting work on relocating. Dust off that work GB.
      Disk drive is getting tired and warm. Got to shut it down for a while.

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  7. Whatever. Just seems to me like when you can borrow money for next to nothing, just do it and use it wisely for whatever needs/wants you have. If maintenance is the area of neglect and need, so be it. Dumping debt on future generations is the American way of life, whether we like it or not. As a total aside, there were no provisions to pay for the war on terror and your children and grandchildren (I don’t have any) will be paying the bill for it the rest of their lives. Life isn’t fair at all.

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