Committee on Economic Development, Technology, and City Light 7/12/23

And begin now.

Good morning, everyone.

The July 26, 2023 meeting of the Economic Development, Technology and City Light Committee will come to order.

It is 9.37.

I'm Sarah Nelson, chair of the committee.

Council members Strauss and Sawant have requested to be excused.

Will the clerk please call the roll?

Council President Juarez?

Here.

Councilmember Herbold?

Here.

Chair Nelson?

Present.

Three present, two excused.

Thank you.

All right, so we've got eight items on our agenda today.

The first four are reappointments to the Seattle Music Commission.

Then we'll have two presentations from the Office of Economic Development.

The first on the future of Seattle economy and the second on OED's Community Wealth Building Program.

Item seven is a resolution adopting the goals and strategies outlined in the Future of Seattle Economy Investment Agenda for a briefing, discussion, and possible vote.

And then finally, we'll hear from Baker Tilly with its annual independent financial audit of Seattle City Light.

Okay, with that, I will approve the agenda.

If there are no objections, seeing no objection, the agenda is adopted.

And we'll now move into public comments, starting with in-person public commenters.

It appears that we don't have anybody signed up in person.

And we have two people signed up remotely.

So we'll start with the remote speakers.

You will have two minutes.

And please speak to items listed on the agenda.

And when you hear the chime, you have 10 seconds remaining to speak.

And remember to press star six to unmute yourself.

Okay, the first speaker is Shanti Bresnau.

Please go ahead.

This is Shanti Bresnau, and I'm speaking to OED's Wealth Building Program.

I'm sorry, can you hear me?

Yes, I can hear you.

Okay.

So I wanted to provide a little bit of background because there's quite a bit of work that has been done in the past that supported the creation of this new initiative.

In 2015, working in partnership with SCIPTA and Friends of Little Saigon and the BIA in Chinatown, OED started funding community-based small business development services focused on space.

in Chinatown International District.

At the time, there was a vacancy problem.

And the idea was to help fill spaces with culturally appropriate businesses that complemented the existing business myths and to retain legacy businesses.

And this evolved over time into one-on-one technical assistance services around helping small businesses find and evaluate space, make sure it was a good fit for their concept, support them through business planning and financing of any tenant improvements they might need in new space or in existing space to improve what they have, and then critically to support them around negotiation.

Letters of intent with landlords, lease terms, renewals, and also there were workshops that were done in cooperation with OED staff that also helped support this.

Leasing workshops, tenant improvement design workshops, All of which sort of led to understanding that some additional funding was needed to actually support tenant improvement because it is so costly.

Anyway, there's a lot to say.

It's been eight years of work in Chinatown ID, working with the community nonprofits and with OED, and I just wanted to give a little bit of background.

Thank you.

Thank you very much for that.

Our next and last speaker is Binyam Tesfamichael.

Please correct my pronunciation as well.

And press star six to unmute yourself.

Hello?

Hello, we can hear you.

Yeah, my name is D.M.

Tamikel.

I'm the owner of QuickTag Food Mart and I'm one of the beneficiary of the IT fund.

And my experience with the IT fund was very so hopeful and I'm looking forward to work to improve my business.

Right now, I'm in the process of building another addition to my building, building another building and also making things better for my customers to have more seating opportunities.

And I'm very grateful for those three people who are helping me going through, Ms. Green, Mr. Medina, and Mr. Butler for helping me going through the process, helping me with menus and programming, using the space very well.

Thank you.

Thank you very much.

All right.

So I do not see any other public commenters that are signed up either in person or online.

So I will close public comment and we will move on to the first items on the agenda.

And we're going to take the reappointments as a group.

So could you please read those items into the record?

Agenda item number one appointment 02627 reappointment of Jason Clackley as a member of the Seattle Music Commission for a term to August 31, 2026. Agenda item number two appointment 02628 reappointment of Andrew Joslyn as a member of the Seattle Music Commission for a term to August 31, 2026. Agenda item three, appointment 02629, reappointment of Eric Lillivoy as member of Seattle Music Commission for a term to August 31st, 2026. And agenda item number four, appointment 02630, reappointment of Anne Barry O'Dowd as member of the Seattle Music Commission for a term to August 31st, 2026. For briefing discussion and possible vote.

Thank you very much.

So I've given a lot of love to the newly creative Seattle Film Commission this year, and the Music Commission, which was established in 2010, deserves an equal amount of appreciation and my personal gratitude, because this is, the Film Commission is also a driver of economic growth and jobs, and its policy recommendations have have served to strengthen Seattle's music scene, art scene, nightlife scene, and basically Also, let's not forget help keep venues and artists employed and in Seattle throughout the pandemic.

So I just want to make sure that we recognize the importance of the Music Commission to Seattle's creative economy overall.

So with that, I'll have Scott Fusquela talk about the Music Commission a bit more and the reappointments.

great.

Thank you very much, Chair Nelson, and I appreciate the sentiments that you just provided on the Music Commission.

Good morning, Chair Nelson and members of the committee.

My name is Scott Pluskalec.

I'm the nightlife business advocate in the Office of Economic Development, and I am the administrative support for the Seattle Music Commission.

As Chair Nelson noted, the Music Commission was created in 2010 and ratified by a council ordinance in 2014. The Seattle Music Commission is a group of industry and community volunteer stakeholders assembled to advise the Office of Economic Development in its advocacy for and policy related to the cities of Seattle's support and growth of the local music industry and community.

The 21 seats, 11 of which are appointed by the mayor and 10 by council, represent a broad range of music industry backgrounds from artist, venue, nonprofit, and label management to interactive media.

Today, I am bringing forward four appointments as noted, to our mayoral and to our council.

These are currently seated commissioners who are seeking to be reappointed to a second term.

And if I can, I will just do a quick overview of each of them, and I will try to take them in the order as they were listed.

First of all, Jason Clackley, who was a council reappointment, originally appointed in July of 2021 to fulfill a empty seat.

The reappointment will be for a full three-year term expiring 8-26.

A long-time advocate of all ages and DIY music, Jason Clackley is a youth mentor and recording and touring artist.

He's helped run many all-ages programs and DIY spaces, including Fusion Cafe at the downtown YMCA, Black Lodge, and Ground Zero's music program.

He continues this work today as Artistic Director of the Vera Project, and Jason is currently the Vice Chair of the Music Commission.

Next up is Andrew Jocelyn who is a mayoral appointment.

Andrew was originally appointed in August of 2021 to fill the remainder of a term.

This reappointment again will be for a full three-year term expiring in 826. Andrew is an award-winning composer, orchestrator, and violinist who has toured the world performing, co-writing, and arranging music on over 400 songs throughout his career.

He currently runs his own production studio in Seattle and is a national trustee for the Pacific Northwest Chapter of the Recording Academy, otherwise known as the Grammys.

Third is Eric Lillebois, who is also a council reappointment, originally appointed again in July of 2021 to fill the remainder of a term and is reappointed for a full three year term expiring in 826. Eric is a Seattle-based record producer, engineer, mixer, musician, and songwriter who produces a wide variety of musical acts and styles and has earned substantial production, engineering, and mixing credits.

Eric is also an owner of Seattle's famed London Bridge Studio.

And then finally, our fourth reappointment of Anne O'Dodd, also a mayoral appointment, originally appointed in August of 2021 to fill the remainder of a term and a reappointment for a full three-year term expiring in 826. Anne has been executing festivals and events in Seattle and beyond for 20 years, including a decade at the Northwest Folklife Festival, as well as Bumpershoot, Pride Fest, and Capitol Hill Block Party, among others.

Anne is currently putting these skills to work in her role as the Events and Festivals Manager at Friends of the Waterfront Seattle.

And that concludes my presentation.

Thank you very much.

So this is a 21 person commission and it currently has no vacancies.

Correct.

And I that is testament.

First of all, thank you very much for your for shepherding the all of these appointments and and And making sure that the commissioners have everything they need to do their work on the commission.

Basically, it's a lot of work to administer a commission.

I realize that.

And we are lucky, the city of Seattle is so fortunate to have people with the caliber and talent that these commissioners have.

advising the City of Seattle, giving of their time and service.

And so I just wanted to note that in addition to the tidbits we learned about these folks, and I urge everybody to go ahead and read their agenda packets because there's a lot of really, really, really interesting information in there that wasn't said.

I just want to say that the individuals that are serving, thank you very much, and our art scene, our music scene, nightlife, et cetera, the quality of life in Seattle would not be the same without the work of the Music Commission.

And before we go on to a vote, I will ask my colleagues if they have any questions.

No questions, thank you.

Okay, thank you.

Could you please, I attended an event at the Vera Project recently that was convened by the Music Commission in which you presented the results of a survey.

Could you briefly mention what that work was before we go on to a vote?

Sure.

So in 2010, the Music Commission undertook a vision of Seattle music, which was a 10-year plan designed to sort of map out where the commission work and where the city should be in terms of supporting the music industry over a 10-year period, which would have ended in 2020. Of course, we were in the pandemic in 2020, so that wasn't picked up again.

But this year, the Music Commission has re-taken up that mantle to re-look at the revisioning and plan for the next 5-10 years as well.

And part of that was a survey that was done of the music industry stakeholders within Seattle to get feedback from them on where they think the industry should be and where the music commission and the city should be focusing their energies and work.

And so the mixer at the Vera project last month was a way to bring back that feedback to the community.

We invited a large number of the people who had actually filled out the survey, as well as other folks who were just interested in it and provided that the initial sort of high level numbers at that meeting with more in-depth stuff to follow.

Thank you very much, and I look forward to the in-depth direction that we may receive.

Thank you for that.

Thank you.

I will now move these agenda items.

I move that the committee recommends confirmation of appointments 02627, 628, 629, and 630. Is there a second?

Second.

Second.

Thank you.

It's been moved and seconded to recommend confirmation of the appointments.

Will the clerk please call the roll?

Councilmember Juarez?

Aye.

Councilmember Herbold?

Yes.

Chair Nelson?

Aye.

Three in favor, zero opposed.

The motion carries and the committee recommendation that appointments 02627, 628, 629, and 630 be confirmed will be forwarded to the city council for final consideration at council's meeting on Tuesday, August 1st.

Will the clerk please read item five into the record.

Agenda item number five, office of economic development, future of Seattle economy presentation for briefing and discussion.

Thank you.

And while we're waiting for folks to come up to the table, I just want to note that what we're about to hear is essentially a roadmap.

I think of it as a roadmap for how the Office of Economic Development intends to advance its mission to build an inclusive economy in the city of Seattle through specific priority investments.

And it's based on the Future of Seattle Economy report.

the latest, the second part of it, which was released in November.

And that report is the culmination of an intentional process to develop a transparent, community-informed investment agenda for OED and the City of Seattle to promote inclusive economic growth.

The report is the product of a team of collaborative partners, based on a structured work group process and individual consultation that included over 80 individuals representing local economic development, community-based organizations, business, philanthropy, and city and county government departments.

And Director McIntyre will lead us through the report, and I'm honored to welcome two leaders of the Future of Seattle Economy stakeholder process back to committee.

Donna Moody and Aaron Goodman.

Will the presenters please introduce yourselves and please include the work groups that you were parts of.

Thanks, Council Member Nelson.

I'm Mark McIntyre, Director of the Office of Economic Development.

Aaron Goodman, Executive Director of SOTO-BIA, and I was on the neighborhood economic development part of it.

Donna Moody, the Executive Director of the Capitol Hill Eco District and also Executive Vice President of Community Roots Housing.

I own Marjorie Restaurant and was a Chair of the Women and Minority Business Pillar.

Thank you very much.

Please begin.

Great.

We can go to the, I think we can skip that slide because we just did introductions.

So just this whole presentation that we're going to give you this morning, or at least our portion of it is just a refresher on the future of Seattle economy project.

What we did how we got here and the framework, the real meat of the presentation is going to come from our community wealth building team who's sitting behind me, describing that particular body of work so this is again just kind of a refresher and a setup for the for the next presentation.

The pandemic was very difficult, particularly for small businesses, certainly disproportionately impacting certain communities and certain geographies.

We feel like there's a clear moral and economic imperative to center equitable recovery, particularly looking at the racial wealth gap as we think about the future of Seattle's economy.

And so the city council did direct OED to create a plan for how we're going to make investments with these payroll expense tax dollars to help revitalize the economy and set us up for a different, more equitable, more diverse, more resilient economy in the future.

Next slide, please.

So this was the framework that we built to help us do that work.

It starts with this idea that an inclusive economy is a more competitive and prosperous economy.

So if we want a more competitive and prosperous economy, we should try to make it more inclusive.

And so to do that, we wanted to make sure that we aligned around some shared priorities, not just at the city, but with our community partners, with businesses, with the whole kind of economic and workforce development ecosystem.

If we have shared priorities, it makes it a lot easier.

to do the work, agree on the outcomes, and agree on how we're measuring progress.

Then we wanted to think about what are the investments required to do that.

We've listed those out in a few different forms.

And then also thinking about what is the role of the city and OED within that ecosystem?

How do we play an effective role to keep the work moving, but also act as a convener and a visionary?

And so that then led to the purpose, which is what we're describing to you today.

And it is the framework, which is a community-informed investment agenda that's going to promote inclusive economic growth in the city, the region, the state, and beyond.

So the process, we did a number of things to try to reach our conclusions.

One was to do a number of, a fair bit of research looking at what strategic plans were already out there locally, regionally, and nationally to try and understand what people had already kind of thought of for how we come out of the pandemic with a new and better economy.

That formed our phase one research that we then led us to developing these five pillars and our workgroups to help design the investment agendas under each of those pillars.

Each of the workgroups then recommended their immediate investments that we thought would really kind of set that trajectory coming out of the pandemic as well as a few big bets that we'd want to work on knowing that they're kind of big, hairy, audacious goals, but we want to, if we want to design the future of Seattle's economy, we've got to take some moonshots to really, really push forward a different type of economic development.

With that, I'll turn it over.

to our chairs to just see if you've got any comments about the process, how the work groups went, and any sort of reflections you have there.

Thank you.

I think as someone who has worked in a community-based organization, working with the city for a number of years, decade, What I really appreciated about this process was the bottom-up feel to it.

The fact that it wasn't coming at us with, we know what you do.

It's like, what are you doing that's working?

and how do we support that work.

And so when I, to be a part of this and the number of people that were involved was a really unique experience as someone who participates frequently in city processes.

And I would just add that also as someone who participates a lot in the process, this seemed very thorough, very in-depth.

I really appreciated the consultant support and also the precursor.

So when we started the project, we had a very clear idea.

of what the goals were, what the desired outcome was, and how to get there.

And even as we sit here today, what I see and really appreciate is that it's continuing.

It's not something that was done at the end of the process last year, but we're continuing to look at how we can implement these changes that would really impact the stability and the feasibility of small business.

And I think it's clear to everyone I think it's important for us to be clear on council and stakeholders in our city that if we don't do something to support small businesses, we're going to end up with a very big box city that lacks kind of the fabric that makes a city fun and challenging to visit.

And also the whole idea that the diversity of those businesses are what makes Seattle attractive.

And it needs an investment.

And as Donna mentioned, the work ongoes.

So we're really lucky to have such fantastic chairs of these workgroups.

We still continue to meet, still continue to talk about strategy, still continue to figure out how we move the investment agenda forward.

And so it wasn't just a moment in time.

It really is the framework for how OED is doing its work.

Next slide, please.

This is just a reminder of who was in the workgroups.

As Councilmember Nelson mentioned, it was a lot of people from diverse backgrounds, economic, workforce development, community partners.

We didn't call it out, but we did have that sixth work group, the investment alignment, always thinking about it's not just city dollars that we want to put in.

We want to think about how do we activate private and philanthropic and other public dollars to help us do our work.

So that's a key part of how we think about doing this is city being one layer of investment and then bringing other dollars to the city to do that work.

Next slide.

This is just a reminder that all of these pillars, while they have their own work plans, intersect in a lot of different points.

So we've got to think about the interconnectedness, and that's something that as we continue to develop OED's fabulous team, how do we do a better job internally of connecting the work and making sure that we're seeing it as kind of a matrixed approach rather than a siloed approach.

Also trying to think about how we need to think about access, that that is a paramount part of how we make a more inclusive economy.

We've got a very dynamic economy, but knowing that not everyone has the same level of access or opportunity within it is something that we need to level set for.

And then finally, just that this is the framework that's guiding our current spending plan in 2023. And as you see, budget proposals coming forward is going to continue to guide our spending plans.

Next slide.

And as I mentioned, there was just a lot of research undergirding this.

So as much as the workgroups were important and the conversations were important, there is a fair amount of kind of scholarship that undergirds our thinking here.

You can flip through it at your leisure.

There's plenty of pages.

Next slide.

This is the kind of color-coded table that we've shown you before where we're trying to show both the near-term investments as well as the big bets that came out of the workgroups, as well as on the right side there, how there is that interconnectedness between the different workgroups and how these operate kind of in that Venn diagram approach rather than a siloed approach.

And if you go to the next slide, we'll talk a little bit just about some of the specifics here.

So investing in city navigation support, one of the things that we've done is at OED we've transformed one of our teams into a small business navigation team.

This is where the citywide business advocacy team is going to live as well as thinking about just that front door approach of how do we make it easy and accessible.

permitting or construction mitigation or contracting or other kind of city-led processes, having as clean and easy an interface as possible so that we can respond to their needs quickly and efficiently, as well as learn where there's kind of continual problems that we might need to address with policy solutions or other kind of longer-term systemic solutions.

Second, you've heard a lot about our Seattle Restored program.

It's been incredibly successful, but we want to continue to grow and evolve it.

It's been really focused on kind of pop-ups to date, but thinking about how do we get people into longer-term leases.

Some different leasing models and better leasing terms are things that we're working on there, so that program continues to evolve while we're still trying to get storefronts filled as quickly as possible.

We really do need to think about kind of mid-sized business growth, and this actually relates to the first one.

We've heard from a lot of mid-sized businesses that some of their struggles, and we've certainly talked about this at Soto, is when they can't get their hookups as quickly as they'd like, or they're having issues with SPU or other city departments.

So the more that we can be kind of a connective tissue between what the businesses need, what our neighborhood partners are hearing from them, back into the city so that we can try to make that as efficient and clean and efficient as possible is a clear role for us.

But then we need to think about strategies for how do we help them grow.

And a lot of what we're hearing relates to workforce.

They need talents, specifically skilled talent.

So again, thinking about how these things interrelate in art and silos.

You're going to hear more about how we're creating wealth building opportunities for business owners.

It's a really important part of our work.

It's a somewhat new part of our work.

You're going to hear about some of the new models that our team is coming up with.

It's very, very exciting.

I think that that's going to be an important presentation and certainly an important part of our work going forward.

And then lastly, just thinking about childcare.

Again, as we think about barriers to people participating or having access in the workforce, childcare is a hugely important one.

I'll link back to the downtown activation plan at the end and talk a little bit about childcare then.

So next slide, please.

As I mentioned, part of the- Pardon me.

Yes.

Excuse me.

Question.

Oh, yeah.

I had a question about how to read that last slide.

Sure.

In the legend, it shows that a dot, and I'm assuming it doesn't mean a blue dot, it means any of these dots.

Correct.

It says shared priority, and can you just explain shared with whom?

Sure, so for instance, on that specialized assistance for growth-ready mid-sized businesses, as I mentioned, workforce and talent is a big need for them to be able to grow, and so that's why it's a shared priority with the workforce pillar.

So there's a teal

that aligns with the TEAL category?

Correct.

So it shows that it came up in both working groups.

There's different levels of priorities within those working groups, but it shows that it's an area where we at OED, as well as within the ecosystem, need to be thinking about the interconnected nature of the problem.

Perfect.

Thank you so much.

Yep.

As mentioned...

Can I ask a question?

Yep.

Madam Chair?

Yes.

I apologize.

I meant to use a little hand here.

I had a question.

quick one and it's more I don't have the unfortunately I don't have I should have printed out your slide deck I have the slide deck for the resolution but not the actual presentation because Markham this is really really helpful and I wanted to I'll say hello to Don and Erin as well on my O'Donna trip to her restaurant again.

What I wanted to ask is and this may be very simple but it's I just one of those people that kind of has needs to know stuff.

How did you decide on what was a big bet.

Those are the ones that the work groups felt were complex and expensive enough that there were, they weren't going to be something that we could just snap our fingers and do but would require a significant level of.

investigation and planning to move the needle on.

Is that fair?

The child care issue.

That has been an issue as long as I've been in government.

So that's more care years and I can't admit.

And I know that we've had success with reward in child care and pre K centers.

But We haven't invested in the physical infrastructure as a city for mainly women to get their kids into childcare for the women workforce and for working with Wimby.

So for me anyway, for a policy perspective, Um, I think that that's like more than a big bet.

I think that that's like a priority, not, not a side, not quite a side issue.

Cause that's such a barrier, um, for small business, small business, women owners, when be, um, is childcare and it should just be like anywhere else.

It should just be like a basic.

And we don't see that in our reflected in our policy, actually not just here, but across this nation.

Um, and so I'm glad to see that there.

And I'm hoping that I'm glad you're giving it the attention.

And I'm hoping that we see more of that.

And I know that only 15% of the jumpstart is dedicated to this.

But hopefully we'll see more attention given to that we actually need brick and mortar childcare centers close to employment, to light rail stations, colleges, we have one at North Seattle College, because that is very, very It's more than a convenience.

I think it's a necessity that people should have.

So thank you.

Council President Juarez, I couldn't agree with you more as a mother who's now at the point where my youngest is going into high school.

This was a reality through most of my career.

I think just to clarify on the big bet, what we were told as chairs was that Things that we thought that the city could easily pick up would be the first ones.

And things that might need the involvement of other city departments outside of OED or additional legislation or additional funds was how we put the Big Bet star on it.

But I think that doesn't undermine the fact that it's extremely important to the committee.

Thank you.

I would add to that too, that I think it requires a collaborative belief that it's possible with effort, but that it would be a huge undertaking.

And the belief would be in many ways, the first stage that people determine it's worth investing the effort to get there.

Thank you.

Anything else you do want to add about what's in the investment agenda or the process to get there?

No, I'm good for now.

Thank you.

Oh, okay.

I'm happy to.

You know, I think what we saw and I think this is a testament to the work OED has done over the years, was that when we spoke amongst the work groups, it wasn't a list of all new ideas.

It was a combination of things that had been started in a small way through OED that the community really felt were working and needed more investment and some things that the community brought forward.

So I think that that is, you know, an ideal way to say that, you know, OED was doing a lot of the right things and these were some additional things the community felt needed to add to that agenda.

I will just pile on and then I'll let you go on.

But you mentioned something, Director, in the beginning, which I termed as we're not reinventing the wheel completely here.

So you're looking at what's already happening, what strategic plans have we already endorsed.

All that whole process was really important because we didn't put a bunch of people in a room and tell them to just drop a wish list.

This was very intentional process in trying to figure out how we can leverage the knowledge and expertise of the workgroup members to really put forward a coherent plan.

Go on.

I think that's spot on.

Part of the work is fighting against fragmentation.

Like the more boutique programs that we kind of throw up there, the less we can spend on scaling for impact.

And that's really what we want to do is scale for impact.

Which leads us to this next slide, which is just clarifying as part of the, one of the outcomes was to clarify OED's role.

And so, these are the three buckets that really came forward, which is responding and implementing to businesses that have an immediate need that are in some sort of emergency or crisis moment to organize and build.

So, thinking about how are we analyzing the entire ecosystem and landscape and where are we identifying gaps or opportunities where we can really provide a clear and comprehensive wraparound support for businesses and workers.

And then the most interesting one was this call for the city to have a real vision about the future of Seattle's economy and how we transform it.

And that gets to some of those big bets, some of those things that have either been sticking points for a while or are real clear opportunities where if we make investments and play our role, we can make a difference in the future of Seattle's economy.

And then lastly, just making sure that all the while we're supporting leadership of other departments, of our community partners, making sure that we've got a good culture within the economic development ecosystem, not just kind of a tactical list.

So that's close to the end of the presentation.

I did just want to mention, we've talked a lot about, and you've hopefully seen the news about the mayor's downtown activation plan.

OED was leading the development of that with a number of other city departments.

All the while, we wanted to make sure that that downtown activation plan fit within the framework of the Future of Seattle Economy framework.

So it wasn't a separate thing.

So a lot of the things that OED is being asked to do within the downtown activation plan are very consistent with what we outlined in the Future of Seattle Economy project.

So I'm pleased that it's not two separate things, but it's a well-integrated set of priorities.

And again, this is how we use the framework.

It's a great example of how we use the framework going forward.

And so we want to make sure that we operate within it, even when we're given kind of different charges from the mayor's office or others.

We always want to make sure that it's consistent with what our community partners have asked us to do.

So you can see a short list here of some of the things that are within the Downtown Activation Plan that come into OED that are highly consistent with FSC.

And the last one I'll note, because Council Member Juarez brought it up, is we are incentivizing the development of educational and child care facilities That's one way we can use land use policy to help increase the capacity of child care, especially downtown, so close to job centers, close to transit centers, which is really where we want to see it happen.

And also where space is more expensive.

That's true.

It's important to do that.

It is.

With that, anything that either of you would like to mention as we close out?

You know, one thing that I would just add is that, to me, a lot of this work has asked for collaboration between departments, and I think that's when the city shines and is the most successful.

The idea of the Department of Neighborhoods benefiting from a program that's run through OED, from OPCD, the Office of Environmental Sustainability, when they are all working together, to create an active neighborhood, an active retail corridor.

I think that's when we see the best results.

And in that action, we're also supporting small business.

And so the end winner is the city and its residents and people who visit the city because of what they're able to see and I just think that we're on the right track and there's so much collaborative effort to make this a win that I just really see this as one of the most successful attempts I've seen during a lot of my volunteer time.

I'm really impressed with the work that Markham and his team have done and how inclusive it's been of other departments.

You mentioned the interdepartmental work, and that's where the city shines.

I will note also that that's sometimes where things fall through the cracks.

And so I have a couple comments and questions about direct services, but I'll...

allow you to ask a question first.

Thank you.

I have two, and I'm happy to just take one right now and hold the other one, however you want to do it.

The first relates to a question that I gave sort of a heads up in my pre-briefing, so it won't be a surprise.

But it relates specifically to the composition of the workgroup.

I know folks at the table have heard me long talk about my interest in the creative economy.

As we know, the creative economy had the highest percentage of employment loss of any sector, 55%, according to Washington State's employment security data.

But we also know that the creative economy has really served as an engine to drive our economy here in Seattle.

In Seattle, the creative economy is 18% of our gross regional product, compared to 4% nationally.

So that really shows that investments in creative economy sort of have exponential benefits.

The influence of the creative economy on Seattle's economic vitality is more than four times higher than the rest of the country.

And so my interest is really in knowing a little bit about how that part of the economy was engaged in this process.

I do see that the executive director of the Cultural Space Agency, actually I think he's transitioning out, but Matthew Richter was included in this.

I'm wondering if there are some others that you could point to that participated in this process.

I mean, we engaged a lot of folks that weren't just on the work groups through our surveys and interviews and one-on-one meetings.

So I don't have a list ready made, but I'll just agree with you that we're really excited about the potential of the creative economy.

Three things I'll mention.

One, we're currently in the process of hiring a creative economy manager.

So at OED, we'll have somebody whose charge is really looking at that.

Two, we've got a brand new arts director who just started.

We're really excited about partnering more with our Office of Arts and Culture as we think about the creative economy.

And then third is going back to the downtown activation plan.

You saw that as a one of the seven goals is really increasing arts, culture, entertainment, sports in the downtown area where there is that density and real opportunity.

And so there's a lot of work that we're doing right now with a number of the arts and culture leaders as we think about how to really help them come out of the pandemic, but just the tremendous opportunity we've got as we think about downtown revitalization for them.

Can I add something?

Yeah, sure.

You know, we talk in my work group about space matchmaking, and we talk about it in terms of business, and I just want to clarify that, for example, in Soto, a lot of the space matchmaking we're doing is for creative economy businesses.

I've worked with Teatro Zanzani and Cafe Nordo and We moved, you know, our place down into...

So, business gets a little bit of a broader brush, but in actuality, a lot of it is related to creative economy jobs.

And I would add to that that the Capitol Hill Eco District is very committed to using art implementations to activate the streets, combining the efforts of art and business to create something that entices the public to support and visit these businesses.

So while they might have a hard time getting classification, I think they're the heart of the creative economy.

And that's also a component of Seattle Restored as well.

Absolutely.

and part of the evolution of that program.

Thank you.

So I wanted to note that sort of taking off the last business, building on the conversation at the last small business roundtable and what I just said a moment ago, what we learned from the directors of BIAs across the city, and Erin was one of the participants, is that sometimes small businesses are having a hard time just working with the city departments.

And especially when they've got an issue that spans more than one department.

I was just at, for example, the Eastlake Community Council, and the topic of the main conversation had a link to transportation and transit.

So this is not just a visionary plan of things you want to do in the future that are endorsed by all of the participants.

They are also things that I believe meet OED's primary responsibility, which is do no harm and help businesses deal just with the city itself.

And so I really appreciate that one of the things that on page 35 of the very long second report here, it does talk about service delivery.

And you and I have spoken about creating a one-stop shop on the website so that all that you need to do to start a business is right there.

That's ambitious.

You mentioned the team that will help businesses negotiate cross-departmentally.

And so could you just, One of the service deliveries that you mentioned a couple times in here is city navigation.

Is that what you're talking about when you talk about city navigation?

And can you add some detail about that?

Yeah, so there's really two kind of core components.

One is the inside the city infrastructure, which is some of what you're mentioning about relationships and structures and systems to communicate and coordinate between the departments.

So, the citywide business advocacy team is one way of doing that, of kind of triaging problems with decision makers of other departments in real time.

So, there's the internal city kind of infrastructure and relationship building that OED needs to work on, and then there's the external facing kind of front door that businesses use to access those services.

We know that businesses don't don't speak city speak.

Sometimes it's just either an actual language barrier or just a jargon barrier.

And so we've got to present a front door, whether it's on the website or through our customer service, speaking what, in a way that the businesses are going to understand and it's going to be culturally appropriate for them to access those services.

So those are really the two things that we're working on is building that city infrastructure to triage and solve some of those problems.

And then what's our external face and how are we making sure that it's accessible to the business owners within the city?

And then there's also the element of building up neighborhood business district capacity and bringing in, because, you know, I'm often asked when I'm out in the neighborhood, do I work for the city?

And I said, no, I don't work for the city.

I help people work with the city.

And so the more, that's where you see this layering on of this plan.

So building that expertise within the Office of Economic Development, but also building out the capacity within neighborhood business districts, whether they are a BIA or not, to be able to self-help as well, to provide that bridge between the cities.

So that is the layering on that we see in this plan.

Right, and we can't depend on the work of BIAs to do that job for us.

And I know that you mentioned matchmaking, so helping businesses find spaces.

And so there is, I always say that you don't provide supplemental, but you provide, BIAs provide essential services.

And we need to make sure that we're doing everything that we can to provide those, some of those basics ourselves.

I saw you nodding, Donna.

Did you want to?

Okay.

I'm in a full agreement.

Right.

As a small business owner, you know what I'm talking about.

And that's something that I realized.

Taking a break from city policy to start a business and then coming back, it does focus one's attention on the needs.

So I really appreciate that you're going forward.

And I did promise the BIA directors last time that I would mention that you are rebuilding this team and Some of the things that they mentioned was permitting and garbage pickup, especially in neighborhoods where there's a high concentration of food and drink establishments and not a lot of, I was gonna say modern infrastructure, but everything goes in the alley and that's a problem.

So more on that later.

But that's an example of what we're talking about.

Go ahead, what were you gonna say?

I was just going to add on those two, plus construction mitigation, when there's a construction project happening in front of storefronts, and then city contracting are some other issues that we hear a lot about.

So those four, I'd say, were pretty good issues.

I would just reiterate on construction.

I've had so many people ask me how it was possible to remain in business over the last year with what's happening with the Madison Rapid Ride Route.

Oh, yes.

I mean, it literally has, like, concentrated all the businesses to be surrounded by construction.

And just the idea of being aware of that and figuring out how to navigate that and allowing people to know who they can reach out to to get some kind of response or answer.

Yes.

That's another big bet, figuring out how to make sure that businesses don't go under during major road projects.

I would put that on the list if I were part of that thing.

Anyway, so is that a new hand, Council Member Herbold?

It is.

It was my second question, sorry.

So my understanding is that The intent of this work was meant to guide OED's JumpStart funding, 15% of the JumpStart funding that council designated for OED's use.

Just, can you share approximately what percentage of OED's funding comes from JumpStart?

And given that this, as I understand it, not necessarily a framework for OED as a whole, but for the Jumpstart funding investments.

I'm just wondering, do you have a similar framework for work that's not funded by Jumpstart?

So, this is the framework that OED is operating on for the entire department.

Okay, but I thought there wasn't the request specifically about

Yes, but what's outlined for these investments is what the future of Seattle's economy needs.

So this is generally the framework that OED is using for all of our work.

Jumpstart accounts, as you know, the payroll expense tax is a little bit of a moving target.

But in our current budget, it's about half of our budget.

All right, so in asking for a framework for the jumpstart investments, you're just using that framework for the entire departments?

Yeah, we took the opportunity with the charge that council gave us to kind of think about how to revive our, revitalize our economy as the charge for OED.

And so it made sense to not have kind of separate frameworks for one amount of funding versus other funding.

It was also at a moment where OED was going, we've talked to you, OED was going through a lot of transition staff wise as well as culture and kind of purpose.

And so it made sense to use the opportunity that council gave us to do this incredible process with our community partners to develop a framework for the entire department of which payroll expense tax is a portion of that funding.

I think I understand.

I'm just not, what is giving me pause is, You know, there are certain eligible expenses for Jumpstart per the Seattle Municipal Code and the legislation.

And so, are you saying that everything that OED does is considered, I don't have a list in front of me, is considered an eligible expense?

No, in fact, that's part of the work that we do internally, and I think you'll hear some of that with the community wealth building.

We pay a lot of attention to the color of money and the different uses, whether they're federal recovery funds or payable expense tax dollars or state dollars or partner dollars.

That's actually some of how we choose to do our work and getting creative with the color of money and which buckets goes to which projects is something that we're keenly interested in.

devising some pretty creative solutions about how to do it to give us more flexibility and have broader and deeper impact.

Thank you.

Yeah.

That's outlined in the aligning the six.

Investment alignment group, yeah.

Investment alignment, yeah.

Yeah.

Thank you.

Can I make one final thing?

Yes, please.

I'm just, I said it at the front, but I'm just really excited about this next presentation.

We have a fabulous team with our community wealth building group.

They're all gonna come up to the table for this for this presentation, but I hope you pay attention, because Council Member Herbold, I think it's going to address some of your questions about this.

And as we've mentioned with OED Rebuilding, this is a great team.

Like, they've put in so much work.

They've really stepped up and been creative with some challenging constraints.

But I think you're going to hear about some of the impact that they've had with small businesses across the city.

And it's really powerful stuff, and it is really what's going to drive the future of Seattle's economy.

So, very excited about it.

Thank you very, very much for this information.

And the report is on your website, so anybody can go ahead and access it there and get more information.

All right.

Thank you for coming today and welcome back.

Thank you.

All right.

Would the clerk please read the next item into the record?

Agenda item number six, OED Community Wealth Building Program presentation for briefing and discussion.

And we are waiting for folks to come to the table.

And I was just going to introduce this in the same way that Director McIntyre just outlined, which is that this next presentation is a bridge from the last presentation, which is a little bit forward thinking.

This one zeroes in on one of the five pillars of the future of Seattle economy.

which is Building BIPOC Community Wealth, formerly called Asset Ownership, and the ongoing work that OED is doing right now to realize those goals.

So with that, would the presenters please introduce yourselves?

Thank you, good morning.

My name is Heidi Hall and I manage our Community Wealth Building team.

Do you want us to introduce all now together or as we speak?

Yeah, just say your names, go around the table.

Good morning.

My name is Shara Amlag.

I'm the Commercial Affordability and Real Estate Advisor.

Hi.

My name is Agraj Dungal, and I'm the Capital Access and Finance Advisor.

My name is Michelle Pollard.

I own MLK Commissary Kitchen and some other small businesses in the Seattle area.

Hi.

I'm Selwyn Green.

I'm a Community Development Specialist.

Hi.

Good morning.

My name is Sonia-Lena Benohar.

I'm a business owner of La Union Studio.

Good morning, my name is Sergio Max, Lagon Talimony, and I am an architect by trade, and I run a small business with my partner, Sonia, here.

I'm Robin Duckett, and I am a community development specialist.

Hi, everybody.

I'm Jen Shirony, also a community development specialist.

Thank you very much.

All right, welcome.

So thank you, Council Member Nelson and members of the committee.

Thanks for inviting us here today to talk about our community wealth building strategies.

So this work reflects ongoing engagement and partnership with community stakeholders and it has been noted it falls under the building community wealth pillar for the future of Seattle economy, which we just discussed.

So, some of the challenges we're addressing through this work are rising commercial rents, which are displacing many community businesses.

And in addition to the loss of that personal business owner's income, this can also mean the loss of treasured neighborhood businesses, community stories, services, and goods that serve that community.

So, it has a lot of impact on our neighborhoods.

Also, pre-existing inequities, Markham mentioned this, have been compounded by the economic crisis brought on by the pandemic.

Many businesses have yet to recover, and we know that this recovery has been uneven.

And then finally, racial wealth gaps translate to business ownership.

And so racial wealth gaps and systemic barriers and access to capital make it harder to start and scale businesses owned by people of color.

And national data has shown that white-owned entrepreneurs start their businesses with three times as much capital as black-owned businesses.

And we know that capital is the lifeblood of entrepreneurship.

Next slide.

So we're working to close racial wealth gaps and interrupt displacement through economic development strategies rooted in community wealth building.

So this approach to economic development keeps wealth in our communities with an emphasis on economic justice, shared wealth, and ownership.

And we're also working with our colleagues on the generational wealth initiative to build out, to explore community wealth building framework for the city.

And we see business ownership as a really important path to generational wealth building, particularly in our bi-pocket immigrant communities.

And so we're doing this through several key strategies.

One, commercial affordability and ownership to help businesses stay in their neighborhoods or come back to neighborhoods.

access to affordable capital to support business ownership and growth, and culturally responsive business assistance, building better business support systems that address systemic barriers and racial discrimination.

And then also community engagement and neighborhood partnerships.

We work closely with our neighborhood business districts and other partners to build programs and learn together.

I think you heard some of that through the process of the Future Seattle Economy.

And that informs this work as well.

And the work that we're talking about today leverages other investments through OED, including our neighborhood business district investments, like our Only in Seattle programs, and our small business support and navigation team that was just discussed.

Next slide.

And so these strategies reflect ongoing engagement with neighborhood partners and small businesses through both formal and informal tables.

We work and we're constantly talking, meeting with our partners.

There's been multiple engagements over the years that inform this work.

And many of the themes and priorities we hear from community has been consistent and guides the work that we hear today from accessing commercial spaces, business support systems, navigating challenging policies, as well as access to resources and understanding how to work with the city.

Next slide.

And so we're developing, we're really focusing on building out multiple strategies to support businesses at different points in their journey.

And together these programs provide a continuum of commercial affordability to support a range of community goals.

All of these programs integrate technical assistance and wraparound supports for the small business owners and integrate our building, our growing work around access to capital, access to affordable capital.

Different programs are meeting different city priorities, from Seattle Restored, focusing on activating bank and storefronts downtown, to our Tenant Improvement Program, which is focusing on neighborhoods and making sure businesses can stay by investing in their infrastructure, to our new Business Community Ownership Fund, which is targeting long-term stability through ownership of commercial space.

Next slide.

And I'm going to pass it on to my colleague, Shara, to talk about Seattle Restored.

Thank you.

So Seattle Restore began as a pilot program during the winter of 2022 to fill our city's empty storefronts by supporting small business owners and creative entrepreneurs in the pop-up to long-term lease pipeline.

This commercial affordability strategy aims to minimize the upfront investment and risk business owners take to test their product in the market.

learns at a lower cost, and offers a longer runway to success.

In the past 16 months, since our first activation in March of 2022, we have worked with a total of 42 property owners and have matched 84 participants in 74 activations to date, with over two-thirds of these participants identifying as BIPOC and women.

Through coaching and deep wraparound services, eight businesses have signed long-term leases or currently negotiating their long-term lease.

Next slide.

One example of a long-term lease is Avery Barnes, owner of Tesawira, an African streetwear store in Pioneer Square.

She, like many other entrepreneurs, share with us the importance of the access to property owners, business coaching, and lease subsidies to succeed as a local small business in downtown Seattle.

Next slide.

We have learned a lot through this pilot, such as not all businesses are ready for a brick and mortar.

The challenges in a changing market directly impacted the program's ability to secure short-term leases.

And businesses want deeper business coaching and wraparound supports.

So as the program evolves, we will be focusing on longer term leases, like Markham had mentioned, a lot more creative leases at that, exploring how we can scale up the business to property matchmaking process.

implement a stronger coordinated strategy between OED's technical assistance programs and the Seattle Restored participants, and provide more targeted support to micro-businesses to meet them at the business phase they are in prior to matching them to a property.

Next slide.

So I'll go ahead and talk about our Business Community Ownership Fund.

So this is a new investment model for ownership of commercial space that we are developing here in Seattle.

The Business Community Ownership Fund aims to address commercial displacement, empowering small businesses with long-term affordability and ownership of their own commercial spaces to help them stay in Seattle, stay rooted in Seattle neighborhoods, or to come back to neighborhoods of their choice.

This is a partnership with OED and National Development Council, which is matching city funds dollar to dollar through financing and grants.

And I want to acknowledge Melissa Lafayette is here with us today from the National Development Council, so we really appreciate that ongoing partnership.

Next slide.

So how the fund works, the business owners partner with the business community ownership fund and form a real estate partnership or an LLC.

This might be one business or it could be multiple businesses and larger projects with multiple storefronts.

The fund purchases ground floor commercial space in a mixed use building in one of our neighborhoods.

The business owners own and control the commercial space as part of the real estate partnership, which leases the space to the business at a below market rate.

Next slide.

And the financing works so the businesses are paying below market rents and the lease payments are flat over time.

So the business owner's occupancy costs stay consistent while rents around them may be increasing.

And this ownership model allows for greater stability and control of their commercial space, security from being displaced, and long-term affordability for the community.

We're limiting the appreciation of the real estate with a restrictive covenant on the property.

to ensure long-term affordability for that community.

So we're not solving this problem over and over.

The wealth building strategy is through the small business.

So through this stability and long-term affordability, allowing them to invest increased income and value into their business to build generational wealth.

Next slide.

And then businesses also benefit from a community of support with other small business owners and access to tools and resources including business financing that promote their future growth.

And happy to say we closed on our first project a few weeks ago this was the Maddox.

This is an affordable housing project in Mount Baker, and we worked with the Mount Baker Housing Association, who was really trying to figure out, really committed to the idea of providing affordable commercial space and trying to figure out how to make this work.

And so we purchased a ground floor commercial space with La Union Studio, the business partner owner in this project, and you'll be hearing more from Sonia and Sergio shortly.

And we're working closely with our partners to build our pipeline of potential business ownership projects.

So talking to projects in Rainier Beach, Chinatown ID, Central District, Othello, and Lake City.

And we're also talking with our colleagues at Affordable Housing to think about new housing projects that are coming online in the next you know, year to two years and where we can really partner on those ground floor early to have efficiencies in design and cost.

So we're really excited about this opportunity and what we can offer to small businesses in Seattle and really appreciate the ongoing partnership with all of the many partners that came together to make this possible right now.

And I'll, next slide, pass it back to Sharon.

So our Tenant Improvement Fund is another commercial affordable strategy which makes initial tenancy costs more affordable for small businesses at risk of displacement.

Or it lowers the cost to a small business interested in renovating and or upgrading their equipment and space to help with business efficiency and generate additional revenue.

We scaled up our tenant improvement fund in the summer of 2022 and received 507 applications, representing a total of $37 million in total requests.

Next slide.

Every application was reviewed.

And through a community process and alongside the National Development Council, we are funding a total of 37 tenant improvement projects representing a total of 3.4 million in investments.

And our projects represent over 90% BIPOC owned businesses in high displacement areas and over 50% of them with over 10 plus years in business.

Next slide.

These projects would not have been possible without the wraparound services from our commercial space and accounting and business consulting programs.

Our commercial space consulting program was designed and stood up in tandem with this TI fund, knowing that these supports were needed, and they continue to grow.

Business coaching and support available include landlord advocacy and lease review, space planning and design, consultants with restaurant operations expertise, accounting and marketing, to name a few.

Almost all of our TI projects are using these supports to complete their projects, with space planning and design being the most requested service.

Additionally, our partnership with the SDCI, Seattle Department of Construction and Inspection, expedited permitting services has been extremely valuable in helping these projects run smoothly and help coach our businesses through the permitting process.

A couple of examples in how the integration of these supports are both valuable and necessary is one TI awardee who utilized our business development and lease advocacy services were able to negotiate an entire year of free rent during their lease negotiation.

Another example of a TI awardee in South Seattle whose lease was not going to be renewed until they acquired the appropriate permit, which would bring them from retail to restaurant.

And through the support of our space planning and design consultants, they were able to receive support to submit for their change of use.

And through SDCI's expedited permitting services, shaved approximately 105 days from this process.

now allowing them to stay in their business and grow.

Next slide.

Before you move on, I just want to note that this is an extremely important component.

And when you see technical assistance, a lot of people that sort of, you know, some people might just gloss over not really knowing what that is.

But this enables someone, an entrepreneur with an idea, with a great idea to translate that into a business.

And I just remember that when we started our family business, if it weren't for the fact that my husband was previously an attorney, Negotiating a lease would have been really, really difficult.

And I mean, not even knowing Excel to build a business plan was hard enough.

But I just want to say that this is a crucial service that is provided.

Go on, please.

Absolutely.

And we're really excited to actually have Ms. Shaya Pollard, one of our small business owners and TI awardee to share more about that as well.

And so what have we learned?

Again, similarly to Seattle Restored, we've learned a lot.

And we have taken a lot of feedback and continuing to evolve and grow these programs.

And so we've definitely realized that businesses are all at very different places.

And so doing a round of applications all at one time and ushering the 37 while they're all at very different phases and their tenant improvement projects has been challenging and so we also in addition to that continue to work through the complexities of using public funds for TI projects.

To your point Council Member Herboldt and I am very proud of our team in terms of being able to be creative and navigate around that.

So we're really proud to say that we have hired on a prevailing wage consultant that is an expert in this field.

You know, typically understands how the larger public works projects works, but we've created a plan and support so that we can create and have our businesses and the general contractors stay in compliance with LNI through this consultant support.

And so we're really excited for this and to be able to utilize these funds while also staying compliant.

And so as we evolve the program, we're definitely rethinking about the very distinct phases that businesses are in through the project lifeline, life cycle of a tenant improvement project, and looking at more targeted support for each phase and really scaffolding that support based off of the phase that the business is in.

And so more to come on that, but we're really excited to dive deeper into that redesign at the end of summer.

Madam Chair?

While we discuss about all these programs that we are doing, no matter what stage a business is at, there is always a need for funding.

Capital access is a big component for business, whether they are at a starting phase or scaling, sustaining, or growing.

And access to capital has been historically challenging for certain communities, and there have been a lot of barriers.

Our program around capital access program revolves around three major strategies.

The first to be the capital readiness where we try to lower the barriers of information asymmetry which has barred communities from accessing finance with the traditional financing sources, not knowing about what kind of financial product is right for them and then being finance ready.

and understanding the effects of certain financing structures.

And the second one is subsidizing the financial product and business owners, although access is an issue, but then affordable access is a greater issue, and how can we make sure that there is an equitable way to approach that.

And the third strategy is to reduce further barriers, such as credit score, minimum collateral requirement, and other barriers that have been keeping communities outside of the traditional financing structure.

So, how have we approached it so far?

Next slide, please.

Before you continue, just a second.

You had a question, Council Member Herbold?

I did.

I can hold it to the end if that would be easier.

It was about the Tenant Improvement Fund.

Okay, let's hold that, but I'll make sure to get back.

Go ahead.

So what have we done so far?

With the Washington State Recovery Fund loans, capital access program 1.0 lowered the cost of the funding by paying down 25% of the loan principal.

So that was a way for us to make capital more affordable for businesses that would not have had that access to affordable capital.

A part of that program, 295 business owners received an award of totaling up to $6.9 million, and that helped us leverage $27.8 million in total loan funds in the city of Seattle, out of which 56% were BIPOC-owned businesses and 52% were women-owned businesses.

And we also tried to find ways to make these programs better by involving in user experience researches and understanding the perspective of lenders and the service providers along with the business owners.

And that brings us to the next capital access program.

What does it look like?

And we'll be talking about in the next slide where we have learned about The communication and there are gaps when we work with partners in the capital access program because OED in itself does not run all the programs and we partner with local institutions.

financial institutions, community-based organizations, and businesses need to understand the financial product.

Just because there is a financial product available, that might not be right.

The business might not be at the right stage for the loan or any other capital program.

So a robust loan readiness program is a big component in that.

and evolving the program would involve expanding the loan readiness support that enables businesses to learn more about the financial product and How can we make sure that capital is furthermore affordable?

So capital pay down strategies and supporting more culturally relevant, not just the language, lowering the language barriers by partnering with organizations, but also we talked about all the jargons that financial institutions use.

So how do we make sure that the businesses and the lenders speak the same language?

How can we mitigate and bridge that gap?

And also explore new strategies that have not existed and then work with local financial institutions to mitigate those barriers and understand what the real need is.

So we are accompanied here by two business owners, three business owners.

I'll start with Michelle Pollard with MLK Commissary.

Michelle is a longtime business owner and who's born and raised in Seattle.

Michelle is a proud owner of MLK Commissary.

And following her, we have Sonia Lin and Sergio Max, who are the founders of La Union Studio, which is a full-service architectural and interior design studio based in Seattle, Washington.

We'll start with Michelle.

Thank you.

So my name is Machea.

I own MLK Commissary Kitchen, which is meant to house anywhere between 24 and 28 small business restaurant concepts in the South end of Seattle.

And it's meant to incubate those businesses and provide options in the inner city that would like mimic a mall and maintain culture through cuisine in Seattle.

When we talk about system change for demographics with significantly less access and tearing down system barriers, we are actually talking about high-level support.

And this is grossly undervalued.

For example, my expertise in food trucking and restaurant operations and managing personnel and the like there, that's where it ends.

It ends right there.

Grant writing and permitting for expansion and contractors meeting prevailing wage standards were all brand new to me.

I'm literally a baby in the room where those conversations happen.

So the wraparound services were just as valuable to me as the funding.

So I'm not wasting money trying to figure out how to grow.

The reality is that many small business owners don't even know what's keeping them small.

or keeping them smaller than they could be.

So the TI Fund has been a major catalyst for growth for my shared commercial kitchen and in turn allows me to support other small businesses through peer mentorship, which is how I move into my next position in life, which is a social innovator.

So thank you all to the city personnel and everyone involved in the TI Fund for what it's done for changing my community.

And growth becomes less intimidating because of programs like this.

Thank you.

Thank you.

Thank you, council members, for the opportunity to speak here today in support of these programs.

My name is Sergio Max, and my partner Sonia and I run a Seattle-based boutique, architectural design and interior design practice.

We're here to share the good news and speak on the success of these programs mentioned today.

Because of the BCO Fund and the Capital Access Program, we've been able to purchase and own our very first commercial office space in the Mount Baker neighborhood that will allow us to grow and scale our design services.

We've been running our business out of our home for the last five years, and through the pandemic, we felt like it was a critical time for us to secure a commercial location for us to grow into and provide a physical space to collaborate with our team.

Sonia and I are both from South Seattle, and it's been truly humbling to be able to remain in our neighborhood and have a permanent home to run and grow our design studio.

Through the BCO Fund, we will have the peace of mind because of the stability of affordable rent.

We're able to reinvest our business income back into our business, grow our wealth, and provide opportunities for community benefits.

Thank you.

And for those who aren't familiar with our work, La Union Studio specializes in commercial space and cultural spaces throughout the city.

We founded our studio based on the values of advocacy and support for celebrating the small business community in Seattle.

You may have heard of or visited some of the spaces we've supported and designed, like Hood Famous Café and Bar in the CID, Raised Donuts and Cakes in the Central District, Boon Boona in the U District, and many more across the city.

Two of the most recent projects and legacy businesses that just reopened on Beacon Hill are Che Bogs Filipino Food and Baja Bistro, which Councilmember Tammy Morales has been following these projects pretty closely.

These clients of ours have also benefited from the Tenant Improvement and Cap Fund programs.

And this just goes to show the impact of how these OED programs can make a difference for small businesses like ours.

and our clients and many others across the city.

And without the support from OED and team and our partners, La Union Studio would not be here where we are today.

We are just one of a handful of small businesses, BIPOC, women-owned and operated design studios in the region.

And because of these opportunities, we've solidified our presence in South Seattle.

And we'll be able to continue to serve more businesses through advocacy and design.

We full-heartedly believe in the work that the OED team is doing for the small business ecosystem here in Seattle, as we have benefited directly from these efforts.

Council members, we thank you so much for your time and hope that you can continue to support these programs so that other small businesses can achieve their own success stories.

Thank you.

Thank you.

Thank you.

That's inspiring.

That's it.

Yeah, if there's any questions, we're happy to answer them.

All right.

Thank you so much for your stories and for the time you took to come here and explain to us, to really bring it down for us and let us understand how what OED is doing is actually helping directly the small businesses of our community.

Before I say more, I'll turn it over to Council Member Herbold who had a question.

Thanks so much.

Just have a long time interest in the Tenant Improvement Fund.

There's been a variety of different iterations of this fund over the last eight years that I've been tracking it.

There was a specific fund for which there was a Seattle Investment Fund Advisory Board that OED was managing.

It was with some dollars that I think were finite.

And I was actually on the advisory board, but I think we that we expended all of those funds.

And so I'm wondering, for the current Tenant Improvement Fund, if I'm correct that the other fund sources is no longer available, what is the fund source for the Tenant Improvement Fund?

And specifically, you'd mentioned one of the learnings being around how to address the public benefit obligations accompanying the fund.

I'm just wondering, because this was a big barrier, right?

We had to, in the past, really focus these funds on low-income business owners.

Just wondering how you're handling that now.

Yeah, and this is where the creative part gets it.

So I'll talk a little bit about the budget that supported the pilots, and then Cheri can add in on some of the other pieces.

So initially, you're right, there was the New Market Tax Credit Committee, and that's how we piloted this.

So this has been, I think, ongoing for multiple years to try to figure out how to get more commercial affordability through lowering occupancy costs.

Some initial pilots were funded through the new market tax credit fees, which were overseen by that Seattle Investment Fund Committee.

We also piloted some projects with community development block grant funds.

And then with this expansion that Shara mentioned, we used our Clifford Recovery Funds, and then we're also using our Payroll Expense Tax Funds.

And so moving forward, we are really excited about being able to figure out how to make this work with our Jumpstart Funds.

And so there's different requirements for each funding source, and so we're working really closely with our business partners.

They know well all these pieces.

So with the block grant funds, those are justified through jobs created, is one of the public benefit categories that the federal funds look at.

So we track and monitor the number of jobs created.

With the other funds, we're really, we're documenting public benefit.

Each business partner lays out the different public benefits that they'll be providing.

And similar with the business community ownership fund as well.

Sonia and Sergio are actually providing some in-kind design services, workshops for the community, as well as hiring local residents as they grow their business.

Anything else you wanna add about public benefit?

Yeah, I think what's been really exciting and fun about the process, because it has been challenging, is really trying to think through what are the amazing, these business owners are already doing so much, and I think they were chosen for a reason, so the public benefit didn't really, come as challenging and it was really exciting to see and hear as we asked, what do you do for community?

What can your business give back?

And so every single TI project that falls under the payroll expense tax is being funded by PET, has gone through that, those questions and conversations with businesses.

So in addition to Jobs Created, an example, of a project that we're working on on Delridge is a daycare they're building out and they are really, really interested in figuring out how to continue to provide scholarships and tuition subsidies on top of their mentorship that they're doing.

And so we found that it's actually not, that challenging to find the public benefit as long as, you know, we're really able to, you know, select those businesses that really truly are businesses that are doing community benefit.

And so, that's just an example and we have colleagues here too that have been undergoing those conversations if you're interested in sharing some of the public benefit.

It sounds like it's more just learning how to quantify and talk about things that are already being done.

Yeah, and I should acknowledge too, our city attorney's office has been a really great partner as we've been working out through the business community ownership fund and trying to figure out how to document this and the right way to report it and all that.

So it's been a good collaboration.

That's great.

And then the future and active projects map, what period of time does that cover?

Is it the Business Community Ownership Fund?

I think this is the commercial affordability slide.

It shows a number of Seattle Restored projects, Tenant Improvement Fund projects, and Business Community Owners.

So that's as of now.

Those are our current investments that have been funded.

Okay, thank you.

From 20, when did Seattle Restored start?

2022?

2022, winter.

So 2022, 2023.

Great, thank you.

Thank you so much.

I just want to mention that I have been waiting to learn more about the commercial ownership program.

And you just touched on some of the elements today.

And I just want to elevate that as, to me, probably the best way we can fight displacement, which is allowing for or providing the ability to entrepreneurs to actually own their space and take the worry of higher rents or just a building getting sold off the plates.

And so thank you very much for explaining that today.

And I am probably going to ask for you to come back at some point and give some more detail because this is groundbreaking work.

that you've been able to get off the ground.

And I do have to say for the viewing public.

It is very difficult for Washington.

Your question, Council Member Herbold, is driven in part by the fact that our Constitution prohibits the gifting of public funds to a business owner, to a person, whatever.

And so public benefit has to be demonstrated, quantified, et cetera.

And so you can't just give a business owner $2 million for them to buy their space.

And so we're thinking creatively about how to do that.

And so thank you very much for the launch of this program and good work on that one segment.

I've heard about the other programs before quite often, but I just wanted to elevate that one.

And can I just say too, I just want to acknowledge just the hard work of all this team around the table and our folks that aren't here today.

It's just, we have been learning and doing new programs on the fly.

Folks have been just picking things up and doing whatever it takes to get these programs off the ground.

So just did want to acknowledge all the hard work from the team, the community wealth building team.

Yeah.

And this is real money in your hands.

This is direct aid.

And that is what I came into office always saying that, you know, that's what's important is making sure that our public dollars are going to the people that need it most so you can stay in town, create jobs, and generate wealth for yourselves.

So thank you so much for today's presentation.

I look forward to learning more about your individual projects and supporting the programs going forward.

Great.

Thank you to the committee.

Really appreciate the opportunity.

Thank you.

All right, as noted while we're waiting for everybody to come up, as has been touched on already, the Jumpstart Fund provides, the spending plan for Jumpstart allocates 15% of the revenue for economic revitalization.

This resolution is a way to, well what I intended with this resolution was to endorse OED's priorities for those dollars which have been defined by the future of Seattle economy report and work group process.

Jasmine is going to, from central staff, you'll introduce yourself in a second, go through the components of this resolution, but it is intended as a sort of a, not necessarily a preview, but we're setting the stage for the budget discussions that are coming forward so that my colleagues and the public are clear that there is a rationale behind the budget that we'll see coming forward from OED.

With that, I will ask you to read the next item into the agenda and we'll go forward.

Agenda item number seven, resolution 32099, a resolution establishing the shared city and community goals and strategies of the future of the Seattle economy investment agenda as city policy and a critical foundation for economic development work in Seattle.

For briefing discussion and possible vote.

Thank you very much.

Go ahead, please introduce yourself and begin the presentation.

Good morning, council members.

My name is Jasmine Marwaha.

I'm on city council central staff.

Thank you.

And I'll go ahead and just jump right into the presentation.

Sure, yeah, just jump right in.

Great.

And thanks to Stephen for running the slides.

So as noted in the title of the resolution, one of the goals is to establish the future of the Seattle economy investment agenda as city policy, as a foundation for economic development work in Seattle.

It specifically endorses the use of the 15% of Jump Start Fund revenues slated for economic recovery and resilience, to advance the recommendations in the FSC agenda.

And it encourages OED and other departments to identify shared and complementary strategies and coordinate their implementation.

Next slide.

And so the, as you've heard before, the FSC agenda is organized into five buckets or strategic pillars.

And I'm not, I won't go into detail into all of them.

But I thought it might be worth putting into these slides in a slightly different format because the resolution kind of reorders some of the recommendations and puts them at a little bit of a higher level for purposes of establishing that foundation.

So, for example, in the FSE Investment Agenda Report, there's one recommendation that asks for building two-generation caregiver supports for participants in the Summer Youth Employment Program.

And that's a great recommendation, but for purposes of establishing that foundational framework, you know, that has become wraparound support services for participants in city-supported workforce development programs.

So really creating that higher level.

And additionally, as you saw in OED's presentation, there were a few recommendations that were echoed in multiple pillars.

And so the resolution simplifies the list so that each investment is only mentioned once.

So here you see that list for the investing in talent and building our workforce pillar and this supporting small business and women and minority owned business enterprise pillars.

And if there's any questions, feel free to stop along the way, but I'll just keep going to the next slide.

And so you just got an extensive presentation on the generating wealth in communities of color pillar.

So we can go to the next slide, unless there's questions.

And then the last two pillars are investing in our neighborhood business districts and growing businesses and key industries.

Go to the next slide.

And as also discussed in the previous presentation, there are a few big bets mentioned, and those are where OED plans to work with other departments or jurisdictions or other partners and organizations to lay the groundwork for these big bets.

And one of the questions I had is, what does it mean to lay groundwork?

And I think it's the recognition, as Director McIntyre mentioned, that these are moonshots and the 15% of the Jump Start funding won't necessarily address significantly any of these areas.

But there are roles in which there could be some strategic investments made or at least coordinating and conversations had to truly give an economic development perspective to some of these items.

So that's the big bets and that moves us along to the next steps.

So as mentioned, the resolution has a report back to committee because many of these investments, the big bets as well as even the specific investments, are overlapping with some of the programs and investments in other departments.

And so I think there's a shared interest between the department and council to de-silo a lot of this work and to clarify roles and responsibilities, to coordinate outreach to key stakeholders so we don't have community fatigue, to strategically deploy different funding sources where it makes sense, and leverage the complementary strategies depending on different departments' expertise.

So that report back is requested in the first quarter of next year.

And then, as Chair Nelson mentioned, this is really setting up the conversation for the fall budget process.

The devil's in the details, right?

This is a framework that's mentioned at a high level, but we're gonna dig into more specifics in the budget process around the funding levels and the prioritization.

potentially the sectors, as Council Member Herbold mentioned, around the emphasis around creative economy, that's really the place where we're gonna be diving into the focus areas of some of these foundational pieces.

And then central staff is interested in learning more about the plan for a continued community co-design.

Very encouraging that there's been a robust community process so far, and as we know, implementation requires iterative community engagement and processes.

So we'll be looking for that.

And then also looking at sort of the program evaluation pieces.

How are they going to measure success?

What are the specific outcomes and indicators?

And how did those indicators advance that vision for an inclusive Seattle economy?

So we hope to dive into all of that.

That's a little budget question preview for the department.

And yeah, we, I think that concludes my presentation.

Thank you very much.

And so, just for the folks that are watching and listening, there are no dollar amounts in this resolution.

Obviously, that is, the budgets are still being produced.

Council sees that in September, so this is not, we're not talking about, actual expenses.

We're talking about the foundation that lies at the basis for OED's budget and the expenditures that they will bring forward.

And, you know, I wanted Today's conversation doesn't just establish that there's community buy-in to all this.

That's not why we bring all these people to City Hall and to sit around a table and talk to us.

This is community-driven.

And so that is something that I really want to emphasize.

And this resolution does, by reiterating the five pillars and what OED is trying to do with its expenditures, really does It's important because it's an educational tool so that people know how city resources are being spent for the benefit of the wider community.

And, you know, it's also so not only is it an endorsement of your of OED's budget coming forward, but it's also a recognition by the city that the business community is generating shared prosperity that the city itself relies on to be able to provide services for a city.

That's what local government does.

So thank you very much.

Big thanks to you.

You've been working on this for months and months and months, Jasmine.

So I couldn't obviously have done this without you, and I really appreciate the work that you've put into this.

Do my colleagues have comments or questions?

I will, before I move it, and then address the amendment.

No, I will hold my comments and questions for the amendment.

Thank you.

All right.

Just a moment, please.

I am getting off this screen here.

If there are no further questions or comments or anything like that, I will say this thing here, just a moment.

I move, one moment.

Yeah, I am just, yeah.

I move this.

I did not put this in my script.

I move resolution four for the committee to consider the recommendation that this pass full council and that is my motion.

Second.

That is my very sloppy motion.

I'm sorry, everybody.

Thank you very much.

It's almost, yes.

So in any case, we do have an amendment and I will go forward and ask you to move that amendment and then talk about it.

Absolutely.

Thank you so much.

I move to amend resolution 32099 as presented in amendment one, which was also recently distributed.

Thank you very much.

It's been moved and seconded.

Let's go ahead and discuss the amendment.

Very appreciative of the opportunity to discuss this amendment that was distributed by my office yesterday at around 6 o'clock.

Committee members saw it.

Appreciate Jasmine Maraha for drafting it very quickly yesterday afternoon after receiving my pre-briefing from the Office of Economic Development on the content of the resolution and the presentation today.

This amendment just simply adds the Office of Housing and the Office of Arts and Culture to the list of departments that the council is requesting that OED work with on its future of Seattle's economy investment agenda.

In this committee meeting and in many others over the years, I've spoken to the importance of including artists, the creative economy among the key industries for the city of Seattle.

The Office of Economic Development's own work product shows that our economic vitality is unusually driven by creative industries.

And to ensure that our arts and cultural sector is not left behind, I think it's really important that we lift up that work so that while OED does work collaboratively with the Office of Arts and Culture, I think it's important to, again, to highlight that underpinning of a policy intent.

Similarly, on the housing side, with the goal of co-locating affordable housing and affordable commercial space, I asked both Director McIntyre and Director Winkler-Chin of the Office of Housing about how they would accomplish this longstanding goal during the confirmation process.

I've been pursuing this goal for many years and I'm really excited to hear about some of the projects that are moving this objective forward.

Many of you have probably heard me talk about the Dumar site in District 1. city light property where the community is really interested in having housing with some sort of a ground floor space that can be community use, whether or not it's commercial or otherwise.

So I'm really appreciative of OED leading in this work, working with the Office of Housing, and just I'm taking this resolution as an opportunity to lift it up, totally understand that as drafted, the resolution did not preclude collaboration with Arts and the Office of Housing, but it's just important to me to see these important priorities specifically mentioned.

Thank you.

Thank you.

So, thank you very much for that explanation.

It is on the screen for folks to see.

And so, just for work group members, this is encouragement, if I understand correctly, that it's an encouragement and a basic putting down on paper the fact that OED will coordinate with all of the departments that are involved in executing the elements of the future of Seattle economy.

And so I recognize that even though the creative economy is not directly spelled out in the future of Seattle economy, it is likely that obviously the steps that you will take, as you explained earlier in the meeting, will promote those businesses involved in that economy and there will necessarily have to be coordination.

amongst departments.

So I appreciate the added emphasis on that.

Because what frustrates people in community and small businesses to no end is the siloization of local government.

And so thank you.

All right.

Yes?

Did somebody?

OK.

All right, with that, if there are no other questions on the amendment, will the clerk please call the roll on the amendment?

Council President Juarez?

Aye.

Council Member Herbold?

Yes.

Chair Nelson?

Aye.

Three in favor, zero opposed.

Excellent, thank you very much.

The motion carries and we now have the base legislation before us.

Are there any other questions for discussion?

All right.

Seeing none, will the clerk please call the roll on Resolution 32099?

Council President Juarez?

Aye.

Council Member Herbold?

Yes.

Chair Nelson?

Aye.

Three in favor, zero opposed.

Thank you very much, everybody.

The motion carries, and the resolution is going to be recommended for passage before full council on Tuesday, Council President Willing.

So let's move on to the final agenda item.

Thank you very much for your support for this resolution and for everybody that came to talk with OED for being here today.

While the next item is being teed up, could the clerk please read it into the record?

Agenda item number eight, presentation of report on Seattle City Light 2022 financial audit for briefing and discussion.

Thank you very much.

When one hears audit, one gets worried, but this is an annual independent financial audit of City Light, which is required.

And so go ahead with your presentation.

Thank you, Chair Nelson.

Thank you, council members.

Good morning.

My name is Mike Haynes, I'm the interim general manager for Seattle City Light.

As tough an act to follow as that OED presentation has been, I think we're here to present some good news on the financial framework for Seattle City Light, and we have our independent auditor online as well to do the presentation.

I'll hand it off to Natalie to do some intros.

Hi, Natalie Hayashi, Seattle City Light Controller and Accounting Director.

Good morning.

I'm Julie Levin, General Accounting Manager.

Thank you very much.

When you speak, can you bring your microphone a little bit closer?

Thank you very much.

Go on.

Baker Tilly, our independent auditor, our partner is Aaron Worthman, and he will be presenting the findings and the status of our 2022 financial audit.

That's great.

Thank you, Natalie.

Again, my name is Aaron Worthman.

I'm the lead audit partner on Seattle City Lights Audit, and I'm pleased to present the fiscal year 2022 financial audit.

First thing I want to do is go through an audit overview.

I'll give you some background as to what an audit entails.

I want to discuss some main areas of audit focus, go through our required internal control communication, and then go through the required communication with you charged as governance, and then open up to any questions you might have.

Next slide.

So if we take a step back and look at the audit this year, I'd say this year's audit went very well.

Just to give you some perspective, our firm spends about 1,250 hours of effort conducting the audit.

So that would be going through the audit process and then taking a look at your financial statements.

Now, even though we spend about 1,200 hours on the audit, your management team, although they may not spend that much, they spend a considerable amount of time preparing for the audit and answering our questions.

And we thought they did a great job this year.

Everyone was well prepared.

and answered our questions timely.

Our firm conducts four weeks of field work, which were conducted in combination onsite and remotely.

So we conducted one week of preliminary field work onsite and three works of final remotely.

The last date of our field work was April 7th.

And one thing to note as part of this audit process, we had no adjusting journal entries, which is good.

And I'll touch on that a little bit in a little bit.

If we were to look at this year's audit, I'd say it was a pretty normal year.

The only difference this year was there was a new or there was new accounting guidance relative to leases.

That guidance came out probably four or five years ago.

So I'd say really over the last two years, your management team, along with Baker Tilly, have taken a look at the processes that your management team has for not only identifying leases, but recording leases.

So that's really the one change that you had in this year's financial audit, and you'll note that in your audit report.

Next slide, please.

So our audit was performed in accordance with generally accepted auditing standards.

Those are the standards that we're required to follow as your audit firm.

In addition to that, we also audit you in compliance with government auditing standards.

Those are additional standards relative to our team's continuing professional education, the supervision of my audit team, Our independence, not only for Baker Tilly, but the individuals on the audit, the quality control of the audit, and due care.

Our audit objective is to obtain reasonable assurance that your financial statements are free from material misstatement.

At the end of this year's audit, your financial statements have received an unmodified opinion, which is also known as a clean opinion, which is the highest level of assurance that we can provide as your audit firm.

Next slide.

So if we were to take a look at the audit, I'd say roughly 30% of what we do has to do with internal controls.

So what we'll do is we'll go out and we will map and take a look at all your major processes, whether it be fixed assets, revenues, disbursements, we'll map those processes.

We'll then identify the key controls, and then we'll test those key controls for effectiveness.

One thing of note, we spend a significant amount of time looking at your information technology controls.

So much so in fact, we have a certified information systems auditor as part of our audit team, but that's about 30% of what we do.

40% of what we do then are the substantive tests.

That's the nuts and bolts of our audit, if you will.

That would be taking a look at your fixed asset additions, you know, confirming all those items with source documents, confirming your cash and investment balances, confirming the fair value of those investments.

That's about 40% of what we do.

And the remaining 30% has to do with taking a look at your financial report and then planning of our audit engagement.

But what I've done here is I've outlined some of the major areas of audit focus.

Not surprisingly, one would be information technology, which I had talked about, your capital assets.

If you look at your balance sheet, I'd say capital assets make up a majority of your balance sheet.

So we spend a significant amount of time taking a look at those capital assets.

A regulatory accounting.

Environmental liabilities, and I'll touch on that in a little bit when I talk about significant estimates.

Leases, there was the implementation of the new leases standards, so we spent some time there.

Expenditures and payables.

And then lastly, financial reporting.

Next slide.

So I'd mentioned earlier that we provide an audit or opinion on your financial statements.

One thing I wanted to clear up, though, is we do not provide an opinion on internal control.

However, If we find significant breakdowns in internal control that we deem to be material or significant, we would be required to communicate those to you as governance.

So what happens with internal controls, when we identify internal controls, the profession requires us to categorize those in area of severity, the most severe of which would be a material weakness.

And it's any breakdown or lack of controls that would lead to more than a reasonable possibility that your financial statements could be materially misstated because of that breakdown.

And we did not identify any material weaknesses.

The next categorization down, which is less severe than a material weakness, is called a significant deficiency.

And that definition is, it's large enough or it's a big enough deficiency that it would warrant your attention as governance.

And we did not have any significant deficiencies.

I will say as part of any audit, whether it be your utility or some of your peer utilities, we will often have minor control deficiencies or what we call industry best practices.

When we identify those items, we will discuss those with management.

Management then will cure those deficiencies.

And then our subsequent audit, we will go back and look to see the progress they made on these minor control deficiencies.

But the important thing to note is relative to this year's audit, Seattle City Light did not have any material weaknesses or significant deficiencies, which is a great job by management.

Next slide.

So one of the deliverables you had received is what we call our audit communication or audit results letter.

I just wanted to touch on some of those highlights.

One refers to your significant accounting policies, which are within note one to your financial statements.

If you haven't taken a look at those before, I'd urge you to do so.

An example of this would be your capitalization policy.

So what we do as auditors is we make sure that your policy complies with GAAP which is generally accepted accounting principles.

And not only that your policy complies with it, but that you're following it.

Oftentimes governing bodies will ask me, you know, Aaron, when we take a look at these financials, what are the limitations of the, what should we really take a close look at?

And I'll say the limitations of these statements or items for your attention would have to do anything with an estimate.

So as auditors, we're required to point out to you any significant accounting estimate within your financial statements.

And those estimates within your statements, not surprisingly, are your net pension liability, your self-insurance claims, your allowance for doubtful accounts relative to your accounts receivable, your net other post-employment benefit liability, your unbilled revenues, and then your environmental remediation liabilities.

So just know when you take a look at those statements that those specific items, they're significant estimates, and you could see some changes year to year.

For instance, when you look at your net pension liability, you'll see some significant fluctuations relative to how the market performs.

Next slide.

If we had any significant difficulties, we would be required to disclose those, and we did not have any difficulties in performing this year's audit.

If we had any uncorrected misstatements, we would be required to communicate those.

And you'll see attached to that audit results letter, we have what we called our waived adjusting journal entries.

Those are adjustments to your financial statements that are considered insignificant and not material.

So management has chose not to post those into your financial records.

The simple being is they did not want to open up their books and records for those insignificant adjustments.

But what we need to do is we need to accumulate all those to make sure in total, they don't become material to your financials.

So again, you'll see a copy in that letter of some immaterial financial statement adjustments.

And those adjustments were determined and found by your management team.

Next slide.

If we had any disagreements with management or any significant findings or issues, we'd be required to disclose those to you.

Just now, if at any point in the audit process, we had a significant finding or significant issue, This would not be the first time you would be hearing about that.

I would reach out to the governance chair to have those discussions on a timely basis.

The last thing we want to have, or the last thing I would want to have if I'm in your shoes is a surprise as you come into this audit presentation.

So no disagreements or significant findings as part of the audit process.

Next slide.

If we had any material corrected misstatements or journal entries that we found as part of the audit process, we would be required to communicate those to you, and we did not identify any material adjusting journal entries as part of this year's audit.

Next slide.

Attached to that audit communication results letter, we have a letter from management that's called our management representations.

If you haven't seen this before, I'd urge you to take a look.

What it is is it's a list of all the representations that your management team makes relative to the audit process into your financial statements.

It'll touch on items such as internal control, new accounting pronouncements, fraud, related party transactions, things like that.

But again, if you haven't, I'd urge you to take a look at that to see what types of representations your team makes as part of the audit process.

Next slide.

If your team consulted with any other accounting firms or accountants relative to accounting policies, we would be required to be notified of those communications, and we were not notified of any communications taking place in this past year.

Next slide, please.

Now, one item that often gets discussed is auditor independence.

So our firm and every individual on our team is required to be independent relative to your organization.

And I'm here to say that our firm and every individual is independent in fact and appearance.

Next slide.

And then lastly, we want to thank everyone for their help.

As I said before, your team spends a significant amount of time not only preparing financial statements, but preparing all the books and records for us to audit and answer our questions and answer them timely.

So a huge thank you to Kirstie, Natalie, Julia, Barry, and the rest of the City Lights accounting team.

Again, we thought this was a very good audit.

I think part of what helps or part of what aids in having a good audit is conducting a year-round audit, having a proactive audit relationship in that when management has questions, they reach out right away to have those discussions.

When we have new accounting pronouncements, such as leases, your team will work on that a year or two before it's actually due to be implemented.

So we can vet any questions at that time.

We can also share industry best practices with your peer organizations.

So when we get, when it gets time for the audit, it's a pretty seamless process.

So again, a great job by everyone.

And with that, I'll open it up to any questions anyone has.

Thank you, Aaron.

So it sounds like we got a grade of very good.

And I don't know if that is an official designation, but I'll just take it as above average, at least.

So why do we have to do this?

I think that, let's step back, because when you say 1,200 hours, is this a requirement of publicly owned utilities?

It is.

So since you have revenue bonds and you have debt within your Seattle City Light, one of those requirements of having that debt is you're required to have an annual audit.

under the requirements that I had just read earlier.

So this is an annual requirement that you will have indefinitely as long as you have outstanding debt.

And also for an organization your size, even if you didn't have debt, it would be definitely something that you'd want to have conducted.

And in fact, as part of the state, the state would probably require you to have that audit conducted as well.

So on an annual basis, you can look forward to going through this process.

Thank you for answering that for folks that might not understand that.

And I will, what section of this audit are, do the questions that you met with me to, to ask, because I will have to say that, you know, he is required and the audit requires that the, the, the people in the governing body are questioned.

So there's a standard, it's called statement on auditing standards 99 was when it was implemented.

And that came effect about, boy, had to be maybe 10 years or so ago.

Uh, but what it really did is it set rules or I guess, direction relative to fraud and fraud risks.

And part of that is we're required to reach out to various individuals throughout the organization to get their thoughts in the planning process, the audit relative to internal controls, fraud and fraud risks.

Uh, some of those required interviews would be with you, the chair as governance.

We also are required to reach out to individuals, uh, for management.

and then reach out to miscellaneous individuals throughout the organization.

The hope is what we then do is we take that information.

If we find or hear of any fraud or any control breakdowns, we then use that, incorporate those items in our audit plan and test accordingly.

Very much.

Do my colleagues or would any of you at the table from City Light Care to make any comments or questions?

No comments.

This was a, the audit went really well.

We really appreciate Baker Tilley's partnership.

They're a great audit firm to work with.

The City Light accounting team, the entire team did a great job supporting the audit, fulfilling PBCs prepared by client schedules timely and accurately.

Clean audit, good financial results, strong financial results as well.

That's about it, which is good.

Great.

Yeah, Chair Nelson, I would just add that it's a pleasure to work with the talented team and two of the smart people here at the table with me today.

I'm just super proud as a representative here, so I just want to thank them.

And this is really important when we talk about government accountability and stewardship of public resources.

I've mentioned this already today.

Thank you very much for your professionalism.

And what I'm hearing is that for another year, City Light is in good position.

And I do want to recognize that year over year, this has been the case.

This is testament to your leadership, Mike, and this is a good opportunity to thank Deborah Smith, who has transitioned away from City Light, and there is a search for a new general manager going on right now.

but much appreciation and credit goes to her leadership as well.

So, thank you so much for another great year of results.

I know that behind this presentation is a lot of work on your behalf and constant diligence to make sure that you're doing right by the public and by the utility itself.

So.

Thank you.

Thank you very much and thank you Mr. Werthmann for yet another thorough and well-explained audit.

Thank you.

Appreciate the opportunity.

Okay, I'm, if there aren't any other questions about this agenda item, we will, you'll probably be back next year at about this time to talk about the previous year's audit as well.

So, this concludes the agenda for the July 26th meeting of the Economic Development Technology and City Light Committee.

Our next committee is scheduled for Wednesday, August 9th, 2023 at 9.30am.

If there's no other business, looking around, seeing heads shaking, this meeting will adjourn.

And hearing no further business, it is 1141 on a gorgeous day.

So this meeting is adjourned.

Go out and enjoy the weather.

All right.

Thank you, everyone.

Bye.

Thank you.

Bye.

Thank you.