Finance, Native Communities, and Tribal Governments Committee 5/1/2024

Good morning.

The May 1st, 2024 Finance Native Communities and Tribal Governments Committee will come to order.

It is 9.30 a.m.

I'm Dan Strauss, chair of the committee.

Will the clerk please call the roll?

Council Member Kettle?

Here.

Council Member Morales?

Here.

Council President Nelson?

Vice Chair Rivera?

Present.

Chair Strauss?

Present.

Council member Nelson's excused.

Four present, one excused.

Thank you.

Before we begin, I just want to note that it is May 1st, 2024, 10 years after we passed $15 minimum wage here in the city of Seattle.

It's a good day.

We have five items on the agenda today.

A discussion on the Human Services Aging and Disabilities Services Office Lease and Renten.

Council Bill 120779, a briefing discussion on City Light Guarantee of Museum Development Authority Refunding Bonds legislation.

Council Bill 120779. three a briefing discussion on legislation to address unanticipated expenses and correct accounting errors which result in spending exceeding the budget control levels budget authority uh council bill 120774 briefing discussion on carry forward unexpended appropriations from 2023 budgets the 2024 budget and uh 2019 to 2024 budget review presentation by central staff before we begin if there's no objection I see.

Before we begin, if there's no objection, the agenda will be adopted.

Hearing no objection, the agenda is adopted.

Councilmember Nelson is now in attendance.

We will now open the hybrid public comment period.

Public comments should relate to the items on today's agenda or within the purview of the committee.

Clerk, how many people are signed up today?

One in person.

Thank you.

We will have two minutes.

Just as a reminder to the public and to committee members, if we exceed 15 members of the public, we will reduce it from two to one minute.

If we exceed 20 people, we will reduce it to 30 seconds.

At this time, each speaker will have two minutes.

We will start the in-person speakers first.

Clerk?

I'm going to read the public instructions.

The public comment period will be moderated in the following manner.

Public comment period is up to 20 minutes.

People will be called in the order in which they registered.

Speakers will alternate between...

We're not going to alternate.

We have one person today.

With this, public comment period is now open.

Cindy Bolton, I see you are here.

Please, any microphone.

Yes, it is.

Great.

Good morning, thank you for the opportunity to address the committee.

My name is Cindy Bolton and I am the Chief Financial Officer, the Seattle Art Museum, representing and working with the Museum Development Authority on the proposed MDA bond refunding.

We've been looking forward to this moment for the past couple of years when these bonds would be eligible for refinancing.

Not surprising or unique to us, the pandemic hit the museum hard and it is taking a couple of years for us to fully come back.

We believe that a healthy arts and culture ecosystem is a necessary element of a thriving and vibrant city, and that we play a role in the city's economic wellbeing.

The savings from this refunding will be a critical source of funds for the museum in the years to come, and the timing couldn't be better with the exciting events on the horizon starting with the opening of the waterfront next year.

We are excited to contribute to this important initiative directly, both at the museum downtown and the Olympic Sculpture Park.

I'd be remiss if I didn't take this opportunity to thank our colleagues in the city debt management team and city finance department and legal for allowing us to piggyback on the important work they are doing this time of year for the city's LTGO process.

It is an incredibly busy time of the year for them and we greatly appreciate all of their assistance and support in getting to this point.

Thank you again for your time this morning.

Thank you, and as seeing as we have no additional speakers present virtually or physically, we will move on to the next agenda item.

Clerk, will you please read the short title of the first item into the agenda?

Item one, informational item 2461, HSD Aging and Disability Services Rent and Office Lease for briefing and discussion.

Thank you, Clerk.

We've got Human Services Department here to present on the HSD lease in Renton.

I want to give a couple opening remarks as to why this is an informational item and not a council bill or temporary bill.

This is because the lease has not been transmitted to us at this time, and that's okay.

We have some time, but because of the structure of how we are doing budget reform here at the city council, and we are using the select budget committee for the two meetings in June and the other meeting in May.

So for the next three meetings, we will be in select budget committee.

This means that for us to be able to pass this lease before we need to execute it, as well as keep this lease and finance native communities and tribal governments as compared to moving to select committee where it's not necessarily appropriate.

We are briefing this item for you today so that we meet my internal requirement of briefing an item twice before voting on it.

So colleagues, today is the time to get familiar with this lease so that we are able to move forward come June so that we can execute it on time.

Just a couple comments ahead of time and HSD will also share these remarks.

I had a lot of questions for them about why we have a lease in Renton, how we are, if we are using general fund, I can tell you top line, we are using federal dollars to implement federal programs.

We as the city of Seattle are not, this is not a hit to the general fund as well as the people we are serving through our federal dollars as per the federal requirements are throughout King County and having a space in Renton allows us to achieve these goals.

That said, I will now turn it over to our our members of HSD.

And first, I want to pass it to Jen Labreck from Council Central staff to give any opening remarks, and then we'll pass it to you, Director Kim.

All right, I will have a very brief opening remarks.

As HSD is just about to describe to you, the city does require that some leases have authorization by city council before the executive enters into such a lease and HSD will describe those terms.

So it is not atypical for city council to be considering certain types of leases and being asked to approve them.

Just as Chair Strauss mentioned, this lease is a bit unusual since it is for office space outside of the city of Seattle.

But HSD, again, will explain the business rationale and sort of the funding that drives that decision.

And I will now turn it over to them.

Thank you.

Okay, good morning.

For the record, we'll introduce ourselves and then get into it.

I may ask for support to make sure that this is...

being previewed appropriately.

I don't know.

I'm a director, not smart with technology.

Director Kim, I also have operated PowerPoints from the dais.

Oh, okay.

So don't worry, we'll get you.

But let's do introductions and then if we've got an issue, we'll take care of it.

Sounds good.

Okay, great.

Tanya Kim, Human Services Department Director.

Mary Mitchell, the Director of Aging and Disability Services Division within Human Services Department.

Thelamini, Chief Finance Officer at the Human Services Department.

At where?

Chief Finance Officer, Human Services Department.

And I'm Karen Gruen.

I'm with the Finance and Administrative Services Department.

My role is Real Estate and Planning Services Division Director.

And here's my phone-a-friend in person.

So I'll go ahead and get us kicked off while we bring up the deck.

And so you can see we've got two departments here, and we're going to begin with some opening remarks that are very brief.

Really, I think you've hit the punchline.

There is federal dollars that we implement on behalf of the county through the state and the federal government.

And so the city of Seattle is privileged to serve in this function.

We'll go into more detail about that.

This is, while ordinary, it's an opportunity for also us to talk publicly about what we do in our Aging and Disability Services Division.

Thank you.

With that, we are going to cover several different items, but first I'll go ahead and start by thanking Chair Strauss for allowing us to be here today and council members.

If there are further questions, happy to take that here today and follow up, of course, outside of this meeting in between potential vote.

We've got several different items.

We're gonna talk about the Human Services Department, the specific program area.

Again, go into why South King County and Renton, there's lots of advantages, including saving some money.

We have the lease renewal, and in addition, just logistics.

And so with that, I get to showcase our division director, Mary Mitchell, and so she's gonna present the majority of the presentation.

We'll then focus in on the financial piece and the lease.

Go ahead, Mary.

Thank you, Director Kim.

So the Older Americans Act created the Area Agencies on Aging, or the AAAs, to administer the federal investments to support older adults at the local level.

So HSD, Aging and Disability Services Division, has operated since 1973 as the Area Agency on Aging for King County through an interlocal agreement with King County.

We are legally obligated to provide services for all of King County for other federal and state mandated programs, the largest being Medicaid.

So in King County, we serve about a quarter of the state's aging population, and that's about 50,000 clients.

And two thirds of those clients reside outside of the city of Seattle.

And of those 50,000 clients, there's about 14,000 in our largest program, Medicaid, and 50% of those clients reside in the city of Seattle and 50% in South King County.

We also contract with four community partners to help us with the case management services with the goal of helping clients to age with grace and dignity in the homes and the communities they love instead of in institutionalized settings.

So, this slide I won't spend too much time on, but this is a snapshot of the services that we provide, and the Older American Act requires that we focus on populations that are most in need and are at risk of institutionalized care.

So, services from home-delivered meals, and I'll just highlight the congregate meals.

So, if you think senior centers, which helps to reduce social isolation, which can lead to depress and a decline in client's health.

And so, our focus populations, right, most in need tend to be communities of color and individuals where English is not a primary language.

So, you may be wondering, why do we need an office outside of Seattle, right?

And that's a great question.

And operationally, we've divided the county in half.

So, clients that are from downtown to the North County border are serviced from our office in Seattle Municipal Tower on the 51st floor, And then for our south office, we have about 103 team members that work in South King County, and they provide service all the way down to South King County, so Auburn, Federal Way.

So you can imagine the impact to our case managers who are required to perform, they perform about 750 in-home assessments a month.

So if they had to drive from Auburn to downtown Seattle, find parking for their personal vehicles, pay for that parking, and then go back out to the county, they are not going to be able to meet their mandated in-home assessments each month.

And so that's for about 5,000 clients that they provide those case management services for.

And our Renton office also serves as our hub, our training facility.

So we are legally required to provide training for our contracted providers.

and we also do new employee training for their new employees.

We host community meeting there, and there's parking.

It's easier access just for the work on the South End.

So in 1993, our first South End office opened in Kent, and in 2024, we moved to our current location in Renton.

So why are we looking to move to a new location?

Great question.

So our current lease ends on August 31st of 2024, and our current space needs significant upgrade.

The potential new location that you see here in the slide, Triton Towers 3, offers two key opportunities.

benefits that we need.

So increased access to public transportation for our clients who are older adults, individuals with disabilities that may rely on public transportation will be across the street from Renton Park and Ride that has routes to downtown Seattle, South County and the East Side.

And then also security is a main concern.

We experienced a recent break in at our current location.

and we're on the first floor in a dark commercial area.

So it's like a fishbowl effect at night when you're working in the office with the lights on, even with the blinds are closed, you feel really exposed.

So the new location, we will be on the seventh floor with increased access in a more visible location and a half a mile from the police department and, that just helps us with our security issues.

And then lastly, this move, because we have a Medicaid program, that's a federal program, we'll be using the savings from that program to cover this in no general funds.

And with that, I will turn it over to our CFO D to talk about the budget.

So we are estimating approximately $600,000 in savings over the 10-year life of the new lease.

What you're seeing on this slide are the two lease options, both the current location at Times Square and then the preferred location at the Triton Towers.

I just want to briefly touch on, again, the Title 19 federal grant funds are specifically are covered, the allowable uses are covered extensively in federal uniform guidance.

In simple terms, what that means is that we can only use any savings or fund balance for services that are covered under the contracted grant service, the grant that we have with the state.

And that includes all of the services that Mary Mitchell has just covered, case management, in-home services, et cetera.

It does also cover building space, lease, and some of our indirect costs from the city, including IT, et cetera.

So we're estimating that the new lease will reduce not only just cost savings, but the big driver for the reduced cost is also a smaller footprint, about 35% less.

While there are some one-time costs, estimated about $386,000, we also expect that those will be offset by costs that we won't be spending on new furniture.

So we are going to inherit some of the previous tenants' improvements, and that includes office furniture and supplies.

The majority of those one-time costs are really related to setting up the technology infrastructure that staff will need to be able to interact with the city systems in that location.

And also some security doors that are required for HIPAA compliance.

If there are no questions, I will turn it over to Karen Gruen, our partners at FAS.

And if I can just interject for a moment off script, sorry.

I want to underscore, because we're being extra prudent, and I think we're always wanting to ensure that we're compliant with our grant funds in particular, but again, underscoring that the funds not only go to case management but all the the program that is associated with this and so there are things like the nursing services the personal services home care caregiver transportation all of those different items can go towards this it cannot the funds cannot supplant general fund or other existing programs that we currently have and so Really, it's just making sure that the funds go to the services and the related costs associated with that, such as personnel and rent.

So just wanting to underscore that.

Thank you.

Thank you.

Thank you, HSD team.

A few basics that bring us here to the committee today.

HSD requested that FAS perform a search for suitable office space for the Aging and Disability Services Division located in Renton.

The property, known as Triton Towers 3, met all of HSD's requirements namely the enhanced security that you've heard about with offices located on a higher floor.

The property offers close proximity to mass transit services for both clients and employees and offers amenities for both clients and employees.

The new offices, as you've heard, represent about a 65% footprint downsize from the current existing lease space.

And the city and Triton Towers have reached agreement on the terms of the lease.

From a legislative perspective, The Seattle Municipal Code Section 3.127 requires that for city office space that is over 5,000 square feet and on lease for a term of over five years must be authorized by the City Council in order for the FAS Director to execute the lease.

This new lease is for an initial 10-year term, and it contains two options for five-year renewals each.

The square foot of the space at Triton Towers III is 12,410 square feet.

Looking ahead to the timelines associated with the project, we finalized the lease terms in April.

We're of course here in front of the committee May 1st.

The goal is to have the legislative package submitted to full council in early May.

We are looking at a June timeframe for the committee votes and then the council votes.

And then at this point, it's to be determined what date the lease would actually be signed.

But of course, that's pending full council approval.

Once the lease is signed, the office improvements would be made and the ADS unit would transition from its existing space to the Triton Towers 3 property with a projected move-in date of September 1st.

And with that, I think I turn it back to Director Kim.

What questions do you have?

Thank you, Director.

Before I open it up to my colleagues, I'm going to make a couple statements here, and then I'm going to use your lease as an example for other work that this committee will go through.

Colleagues, you might notice this is Human Services Department work that is coming through my committee.

because the Finance, Native Communities, and Tribal Governments Committee is responsible for the backbone of all city services through the budget, through FAS, and leases.

So Human Services Department does the good work, and this committee takes up items such as leases.

This is why we have Karen Gruen from Finance and Administrative Services at the end of the table.

In brief, I just want to kind of repeat what I've heard here is that this is federal funding that cannot supplant general fund.

This lease is a downsize.

It is closer to transit.

It has cost savings despite an increase annually.

And it is a safer building and has increased HIPAA protections because we have to protect the documents that are within this space.

So colleagues, I feel very comfortable with this lease and I would like to move quickly once we receive the legislation.

If we could go back to slide seven.

Colleagues, I use slide seven as an example of how leases create cost savings in the long run, but our cost increases up front.

This is some of the work that we are doing within the budget reform of our city budget right now, where we have empty space in Seattle Municipal Tower and we have leases in private buildings throughout the city and especially down here in our downtown city hall campus.

I call it a campus because we have...

CITY OFFICES IN THE BANK OF AMERICA BUILDING, THE COLUMBIA TOWER, THE CENTRAL BUILDING, AS WELL AS SEATTLE MUNICIPAL TOWER, AND I'M BEING REMINDED CITY HALL.

CITY HALL IS AN FAS ADMINISTERED SPACE.

I BRING THIS SLIDE TO YOU BECAUSE IT IS MY DESIRE TO MOVE THE LEASES THAT ARE IN THE CENTRAL BUILDING, BANK OF AMERICA TOWER, AND COLUMBIA TOWER INTO SMT AT THE RIGHT TIME.

This will create savings in the long run.

However, it does create an increase in the short term.

You can see here at the last line of this slide being the moving cost, right?

So the tenant improvements, we don't have to do tenant improvements at this building in Triton Towers because they are already completed and we're inheriting that furniture.

But even if we are moving a city department from Bank of America Tower into SMT, there are tenant improvements that we have to incur.

Karen, do you have anything that you want to, I didn't prep you that I was going to say any of this.

Nothing to add for me.

Thank you.

Dee?

Councilmember, just a correction.

The annual rent in this case is not higher.

The annual rent increases by 0.75, correct?

Correct.

I have it as...

That's what it says on the slide.

Yes, sorry, 5.75, that's right.

Vice Chair.

Chair, thank you so much for going through that on the leases.

I appreciate that.

I did want to underscore that in this particular case, it's prudent to do the review that you're doing on the leases for the other spaces.

On this one, it is federal funding, so it won't save the city general fund money because it needs to be used back toward the program because it's federal money.

So I just wanted to make sure and make that distinction clear because saving money on this lease isn't necessarily saving us money for general fund since it does need to be used for the federal allowance.

But yes, for the other leases you're looking at, I very much appreciate that.

Thank you.

Colleagues, any other questions?

Got a few on the floor, if I could.

Council Member Morales.

Thank you.

So saying on this same slide, so just to be clear, it does say that the rent is increasing per square foot, but the footprint is smaller.

So that's why the total annual rent will be smaller, right?

Okay.

And so you've also identified costs, one-time costs for the moving, Can you tell us if the move upgrades will be done by FAS or are you contracting those services out?

How does that work?

FAS oversees the move.

There are some costs that are associated with providers, but FAS oversees it.

And then, of course, Seattle IT does the IT work.

And then in terms of related to the smaller footprint, of the 103 employees that are in the Renton office, how will they be affected by the smaller space?

Well, they're currently abiding by the two days in office requirement.

So we have a lot of just unused space right now.

I see.

Okay.

We're at about 19,000 square foot at our current location and we just do not need that much space.

Okay.

Council Member Morales, may I tag onto that to also say that there's in-home work that these folks are accomplishing.

So there's fewer people in the office.

Yeah, so 95 are case managers that come into the office for their administrative needs, but spend the majority of their time in the field.

Yes.

And if I could piggyback off that.

I'd like to just keep rolling through, if we could.

She's got the floor.

So the last question I have, thank you, Chair.

The last question I have is that related to the number of offices, can you just share, you may have said this and I missed it, how many HSD offices are in the city and how many are outside of the city limits?

For HSD as a whole?

Just for HSD, yeah.

So we're primarily located in the Seattle Municipal Tower to Council Chair Strauss' point.

We're also in the central building right now.

And then we have this Renton office.

Okay.

So that's the only one.

There's a thing called the barn, but I understand that that's, I haven't visited, but that's in the city.

Okay.

Thank you, Chair.

Vice Chair, we're going to come back to you at the end.

I can follow up with the department directly.

Thank you, Chair.

Thank you.

Councilmember Kettle and Councilmember President Nelson.

Good morning, everyone.

I just wanted to say thank you for coming.

I realize, as Chair Straus said, this is not the Housing and Human Services Committee, but I did want to take an opportunity to say thank you for those that do the work of that area.

As a son of a father and mother that I've done this process through, in New York State and Western New York, but I recognize the hardships of that and, you know, the disservice that this has done, and I hope there's more that can take advantage of it.

I also know how difficult it is to do the outreach to get people to come.

And as it turned out, on my wife's side, I married into a Boeing family, so I know Renton very well.

I know exactly where this building is, and everything that you've been saying about it is true.

And I do believe it would be a better location.

So from the FAS point of view, thank you for your service in finding it.

And I suspect, by the way, that if I remember right, that is actually an old Boeing building originally.

So you see how the and how things are changing over the years.

I recognize the point made by HR, too, although I have to note that we are two days legislative department, but we're shifting to four, so as we're planning these things out, hopefully we're taking account that the pendulum may swing a bit in terms of you know, working from home and the like, and that's part of these considerations as we go through these leases, as we're trying to, you know, that we don't just assume we're going to be two days forever, because obviously the executive in King County may follow legislative department's lead on that point.

But overall, I appreciate the points made in terms of the coming back to the finance community.

You know, we do need to do these smarter, you know, to the point regarding the other locations.

And...

You know, and hopefully there's opportunities to be in different, you know, the point about having, you know, the two operationals is like, you know, how best to serve the entire city.

Because, you know, we relocated our comp plan open house from City Hall to the McClure Middle School.

And little things like that make a difference.

I recognize what we had with the SMT, but also the SMT is cutie corner from our office, and it's not as accessible as one would think and hope for particularly elderly people or those trying to support elderly people.

So, again, appreciate the points made on the finance side.

Thank you.

Well said, Council Member Kettle.

Director Kim?

If I may, thank you so much for your remarks.

One note of clarification is that we consider per the city policy that when you are in the field, that is in office.

And so many of our colleagues, case managers and direct service providers have throughout the pandemic and continue to be in the field or in office, but they might not physically be in their seat.

you know, five days a week.

And so, to your point, absolutely...

Totally understand that point.

Saddle City Light, there's a whole host of offices that do similar things.

So I acknowledge that point, yes.

So the minimum two days is not a problem.

We're doing that work.

Thank you.

Sounds like you might be doing more.

Council President.

Thank you.

On page six, the slide deck says that the fund source is Title 19 Federal Grant Fund Balance.

When I hear fund balance, I think...

A little bit left over this time, you know, not necessarily ongoing.

So is that fund balance ongoing and that has always been and is projected to be the funding source for this lease?

Great question.

Dee?

The fund balance is a result of significant savings from the structural issue of not being able to recruit caseworkers.

For some time, I believe last time we were at council, HSD had significant underspend due to shortages, national shortages in case-managed workers.

So the fund balance has accrued over time.

However, the WE WILL BE USING THE FUND BALANCE PRIMARILY FOR THE UPFRONT COSTS RELATED TO THIS MOVE.

ONGOING COSTS SHOULD BE COVERED WITHIN THE SCOPE OF THE GRANT ITSELF.

SO THANK YOU.

THAT'S AN IMPORTANT CLARIFICATION.

CHEN, DO I SEE YOU HAVE SOMETHING TO SHARE?

NO.

GREAT.

COUNCIL PRESIDENT.

SO ARE YOU MEANING, SO ACCORDING TO MY Very simple math.

The square footage times .75 is 8,687.

So next year it'll go up that much.

Will it keep going up that much annually every year?

It does, yes.

Okay.

Last question is, I understand the point you made that a lot of people are in the fields and not in the office.

For the people in the office, it sounds like they're at about two weeks or two days a week and less, not five days.

If the policy were ever to change and the required in-day minimum increases, is it anticipated that you can fit more people?

Let's say if it were to go up to four days when you look at the whole department and include only the people that are in sight, you know...

Is there room for that?

We're utilizing the space flexibly.

So it's a minimum two days or more, not less.

And most folks do work more than two days by virtue of being in the field.

And so because it's case management, they're in-home assessments, going to meetings and organizations and doing the trainings.

And so there's a way that we can ensure that there's like, these are not the proper words, but hoteling or shared space.

And so we're taking, some of the flexibility into consideration, I think, for the future state, knowing that there are some unknowns, but we're operating under full-time work.

And we just know that through the pandemic, we can be a little bit more flexible, that I don't, if I'm not in office, physically in office, but I'm in meetings or chambers, I could certainly share my space with somebody else.

And so that's the mindset of how do we do things a little bit differently so we can make sure that the funds that we do have go back into our priorities such as more services or if we can hire more case managers.

This is a free public service announcement that we're hiring case managers, by the way.

And so, but we're just being more flexible rather than doing the old school way of having a dedicated space for every person, regardless of whether they're there 40 hours a week or not.

But they're in the field, which does count towards being in office.

I trust that you would know what your employees want in terms of that.

I just don't want to get us locked into a two-day-a-week or a lot of unusual vacancy rate also.

So I'm always thinking on the bright side, hire everybody we need and we can be present.

We're not locked in and we're recruiting.

Absolutely.

Okay.

And so 95 of the 103 team members are case members.

So 95 people are responsible.

They're in the field.

So we do, our office is open five days a week for clients and providers to come in.

and for training.

So, and then for, we are doing quarterly in-person meetings.

And so we rotate the teams, right?

When they have to come in and be physically in the office, we will have a schedule of rotation to make sure that we can also just keep the connection of the team building and being in person.

Thank you.

Anything further, Council President?

Nope.

Great.

Vice Chair, last word.

Thank you.

These folks are out in the field because they're servicing our seniors, and it's advantageous and the right thing to do to service our seniors in the field.

I think obviously what you're hearing is if you should have more days physically in office, not on the field, would you have the ability to accommodate folks if they have to be in the office, right?

But I fully understand.

These are folks that have been working through the pandemic full-time.

It's just their full-time job happens to be on the field and we so appreciate that.

So really wanted to make that distinction.

It's not that we're saying you're not working full-time.

It's just field work versus needing a desk space in the office.

And I'll just say that it is a requirement to do the in-home assessments.

Many folks are also maybe not homebound, but that is where they're located.

And so having eyes on the person, being able to see the environment, that's all a part of it too, isn't it?

And so that is a requirement of the work.

Thank you.

And not making folks come in just to meet, meeting seniors where they're at and where they need to be.

So wanted to underscore that work and then just thank you for all the work that you do for seniors in Seattle and in the county.

This is really important work.

It was so pre-pandemic and now especially post-pandemic as we've seen the impacts of the pandemic on our seniors.

So very much, again, appreciate that you have folks going to our seniors where they're at and mitigating for their having to come in.

And in many instances, they're not able to.

So really appreciate all the work that you do.

Thank you, Chair.

Thank you, Vice Chair.

Well said.

Colleagues, any final seeing good?

This item will be back before our committee for a final vote likely in June.

Thank you, HSD.

Thank you, FAS.

Thank you, Jen.

Clerk, will you please read the short title of the second item of the agenda into the record?

Item two, CB120779, City of Seattle Museum PDA Debt Restructure for briefing and discussion.

Thank you.

And as we're doing some transitions here for presenters, I can tell you that our second item on the agenda today is the Museum PDA debt restructure legislation.

We are joined by Interim City Finance Director Jamie Carnell, Debt Management Director Christy Beattie, and Mayor Harrell's Director of Policy Dan Eder is here within his scope and role with Debt Management Policy Committee.

And just as I was reviewing these slides since our last presentation, I can tell you I'm still not seeing the interest rate difference, but we can come back to that.

Hopefully it will be within your notes.

I will also share with you colleagues, Jamie Carnell's appointment will be coming to committee at some point in the future, in the near future.

Jamie essentially works as our comptroller, if you are more familiar with finances.

The finance director is a lay person's term.

If you need to understand what she does for our city, she is our comptroller in essence.

So with that, I am going to turn it, and we have Allie Panucci from council central staff here as well.

Allie, I'm gonna turn it over to you and then just roll down the line to Dan, Jamie, and Christy.

Thank you.

Thank you, Chair Strauss.

Good morning, council members.

I'm Allie Panucci of your central staff, and I'm really just here in case there are procedural questions or things that might be more appropriate for central staff, but your experts are really on the executive side.

I, too, will turn it directly over to the content experts, and I'm here to answer any questions that the committee may have.

Great.

Well, it looks like we are ready to go.

Good morning.

Director Carnell, you need to bring the microphone much closer to you, and as well, if Christy wants to introduce herself, and then let's get rolling.

Just didn't want to overpower.

No, you got, no, it even needs to be closer if you could.

All right, so good morning, counsel.

I'm sorry, go ahead.

Still a little closer if you could, sorry.

It's a, I know it feels uncomfortable.

And I apologize.

I also have a hearing impairment.

So if you can speak.

All right.

Good morning, Council Chair Strauss and members of the Finance Committee.

My name is Jamie Carnell and I am the Interim City Finance Director.

I'm joined by my colleague, Christy Beattie.

Director of Debt Management for the City of Seattle, and Dan Eder, Policy Director from the Mayor's Office.

And we are here to talk about legislation related to the Museum Development Authority of Seattle, or MDA, which is one of the city's public development authorities.

And I'd like to thank Cindy also for being here in support today.

For our agenda day, I will share a brief overview of the Office of the City of Finance, which is the city office that is bringing forward this legislation today.

I will then hand the presentation over to Christy to speak more specifically to the legislation regarding the city's guarantee of the MDA bonds.

And we will conclude with any questions the committee has.

So the Office of City Finance or OCF is responsible for overseeing citywide financial operations, including financial control functions, such as citywide accounting, payroll and enterprise reporting.

OCF works closely with the city budget office in accomplishing this work.

OCF also houses the debt management function for the city, which has centralized role for issuing municipal and revenue bonds to support the city's general government and utility capital needs.

In addition, our office takes the lead on engaging with the city's public development authorities, or PDAs, regarding financial matters that arise.

I'm going to now hand this over to Christy to present on the following slides.

Thank you, Jamie.

I think you need to turn on your mic.

Can you hear me now?

Yes, we can.

Beautiful.

Take it away.

Great.

Thank you so much.

As Jamie mentioned, my name is Christy Beattie, and I'm the city's debt management director.

I'm glad to be with you today.

Before speaking directly to the MDA legislation, we wanted to take a moment and just provide context for the City of Seattle's public development authorities, which you already may be familiar with.

PDAs are public corporations that are formed by cities, towns, or counties to carry out a specific function that is in the public interest of the entity forming the PDA.

The city's PDAs are chartered by the city pursuant to the RCW and the Seattle Municipal Code.

to carry out a specific function that may include purposes such as museum development, housing, economic development, or public market purposes.

And a number of the city's PDAs are shown on this screen, including the Museum Development Authority of Seattle.

The Museum Development Authority of Seattle was chartered by the city approximately 40 years ago to provide for the management and operation of public art museum facilities through agreements with the Seattle Art Museum, which is an independent nonprofit entity.

These facilities include the Seattle Art Museum facility, the Olympic Sculpture Park, and the Seattle Asian Art Museum.

As a PDA of the city, the MDA owns the downtown Seattle Art Museum facility and leases that facility to the Seattle Art Museum as a non-profit entity.

We'll look more specifically now at the legislation that is before council.

The legislation before council authorizes the city's director of finance to approve and sign an amended third guarantee agreement with the MDA and SAM.

This guarantee agreement will authorize the city's guarantee of the MDA refunding bonds in 2024, and we'll speak more about that in the following slides.

It also increases the city's flexibility under the agreement to respond to proposals that would address financial needs that may arise from the Seattle Art Museum and the MDA, should those come to the city in the future.

And importantly, the amended agreement retains the terms of the current agreement between the city, the MDA, and SAM that preserve the city's right to be reimbursed if there are any advances by the city under the agreement.

And it preserves the requirement that any changes to the agreement in the future would be brought back to council for future authorization.

And that would be by ordinance.

And Christy, before we move on to the next slide, colleagues, this is a conversation.

Feel free to pipe up if you have questions.

As my practice, I am also doing briefings ahead of these meetings, so I've already asked most of my questions.

I'm just going to highlight what I'm seeing here.

And can you confirm for me, refunding is another word for refinancing, is that correct?

Yes, that is exactly right.

So refunding is very much like a refinancing, where the debt service is able to be reduced, the term of the bonds remains the same, But there's actually a savings that occurs because the interest rate is lower under the new refinance terms.

And so the easiest way to think of it might be like refinancing a home where you retain the same length of your payments, but the payment is reduced because you've accomplished interest rate savings.

This is something that Councilmember Kettle has brought up to me many times before.

So bringing it forward to you, my friend.

I see that you've already moved on to the next slide, but I guess my comments work for either, which is that it's my understanding that this is a 30-year bond with two opportunities to make these refinancing changes.

In that 30-year period, one of those periods was 10 years ago.

The other period is today, and then we have another 10 years on the bond.

Is that correct?

That is absolutely correct.

Thank you.

That's right.

Yeah, go for it.

Okay, great.

Sorry, I thought you kept talking.

I just also want to bring out in slide nine that we as the city council still retain the authority for any changes in the future.

So we're simply refinancing, but I will ask Mr. Eater to speak to some of the requests that we've received that we have not yet engaged in.

But back to you, Christy.

Perfect.

Thank you.

Moving to the next slide, we do wanna take a minute and look at the background and the city's engagement with the MDA bonds that does date back to 2005. As you can see on this slide, in 2005, the Seattle Art Museum and MDA undertook a significant capital development program to expand the Seattle Art Museum and the Olympic Sculpture Park.

At that time, MDA issued $61 million in bonds, and the city provided its guarantee of those bonds under the terms of a guarantee agreement.

That guarantee agreement was between the city, the MDA, and SAM, and it was authorized by city council in 2005. In guaranteeing the bonds, the City committed its full faith and credit to replenish a debt service reserve account in the event that the MDA were to need to draw on that account to fulfill the debt service obligations.

The City's guarantee in that way serves as a backstop to the debt service requirements over time.

This also provides assurance to the investors who purchased the bonds, giving the investors the insurance that the city will step in and ensure that the payments are made whole out to the maturity of the bonds in 2031. This guarantee allowed the MDA to issue the bonds at a lower financing cost than the MDA would have been able to achieve on its own.

And this is something that the city has done from time to time with various PDAs.

The MDA bonds were refinanced in 2014 with the city's guarantee, also with the city council approval in 2014. Now in 2014, the MDA bonds are again eligible to be refinanced or refunded.

At this time, 22.8 million in principal remains on the bonds and MDA would like to refund the bonds again in 2024 for additional debt service savings.

City council authorization by ordinance is again required to provide the city's guarantee of the refunding bonds in 2024. And that's why the legislation is before you.

The MDA bonds, again, will mature in 2031. And moving to the next slide, I wanted to take a moment and just talk about the mechanism of the payment of the debt service on the bonds.

And this is something that was established in the Guarantee Agreement back in 2005, and it is important because it does provide additional security for the city under its guarantee.

So we'll take a moment and just look at the flow of funds for the debt service for just a moment.

Debt service on the bonds is approximately $3.9 million per year.

As described in an earlier slide, the MDA owns the downtown Seattle Art Museum facility and leases it to SAM as the nonprofit operator.

SAM, again, being the Seattle Art Museum.

SAM leases out the eight floors of office space above the art galleries, and in doing so, generates lease revenues.

SAM uses those lease revenues to pay the debt service on the MDA bonds.

In this way, it is the lease revenues that fund the debt service and not the museum admission funds.

The master tenant and all of the subtenants of those eight floors are required to pay those lease amounts into a lockbox that is held by a separate financial institution that was agreed upon by all parties.

On a monthly basis, the lockbox agent receives those funds and applies those lease revenues to pay the debt service on the bonds.

Once that has been fully accomplished and the debt service has been paid, all residual funds return back to the Seattle Art Museum for use for its operations.

And that arrangement is important because it essentially reduces the city's risk because the city has access to all of those funds that reside in the lockbox until the full debt service is paid.

And so that occurs on a monthly basis.

And all payments are current and have been since the beginning of the agreement.

And Christy, before we move on to the next slide, I've just got some questions, comments back and forth with you.

Just understanding that the guarantee, our role as the guarantor of these bonds is in common language as if we were co-signing.

Is that correct?

That is exactly right.

And so we do have in the lockbox, if there are any issues with the payment, we are the first to receive these payments out of the lockbox to make ourselves whole as the co-signers.

Is that correct?

Yes, the city has the ability to essentially close that lockbox if there were any issues with the payments.

At that point, any amounts would accrue and could be used to make whole the city.

And where I have fallen short with Council Member Kettle's desire to get better interest rates back for the general fund, these funds will not necessarily, the savings don't necessarily come back to the city because the overall bond is being paid by the MDA and the savings do help our downtown vibrancy and activation by allowing the Sam Seattle Art Museum to have increased revenue as they are still recovering from the pandemic where they did not necessarily receive the federal funds that they needed to be made whole while they could not have visitors.

Is that the plain language?

That is absolutely correct.

The savings from this refunding will flow directly back to the Seattle Art Museum and benefit the Seattle Art Museum for its operations.

The city does undertake refundings each year for its other bonds, which include revenue bonds for the utilities and for its general obligation bonds as market conditions allow.

And so we are undertaking that evaluation for our general obligation bonds as well, but that is separate from this MDA.

Fantastic, thank you.

Perfect, okay.

So we'll move then to the next slide.

Just wanted to underscore that refunding the MDA bonds benefits the MDA, the Seattle Art Museum, and the city.

Refunding benefits SAM and the MDA because savings from the refunding will flow back to the Seattle Art Museum, as we just discussed.

Lower debt service means that Seattle Art Museum will have additional funds freed up to use for museum operations.

Lower debt service also benefits the city because it reduces the city's exposure under the guarantee of the bonds that currently exists and would continue if the legislation is passed.

In terms of timing and next steps, the city's guarantee of the MDA bonds in 2024 was reviewed by the city's debt management and policy advisory committee in March and found to be consistent with the city's debt policies.

Council authorization by ordinance is needed to provide the guarantee under the refunding in 2024. And the refunding of these bonds is considered to be most advantageous in 2024 because it would maximize the savings under the refunding.

And this actually comes back to one of the questions that Council Chair Strauss had in beginning this discussion.

We are watching in terms of evaluating what the savings might be.

We are in a somewhat volatile interest rate environment, and we have been for municipal bonds coming out of COVID.

But we do expect that there would be material savings from the refunding.

The interest rate is subject to change between now and when we anticipate the refunding would occur in the middle of the summer, but we anticipate material savings somewhere in the range of 250 to 500,000.

That is a refunding that is managed by the MDA directly, but in terms of our evaluation of the savings, we believe that there are material savings through the refunding.

And I'd be happy to provide additional information on interest rates and where we think that might go.

But at this time, interest rates are still moving in the market.

I'll just point out that those are annual savings that will accrue to effectively to the museum so that they have the ability to repurpose those funds for other good purposes.

That's exactly right.

Wonderful.

And finally, if legislation is approved by council, the city's debt management team will work closely with the MDA to accomplish the refunding, and we do expect that transaction would occur in the middle of the summer.

Finally, in summary, the legislation before council really presents the question, does the city council authorize the city's guarantee of the MDA refunding bonds to be issued in 2024?

If the legislation is approved, the refunding would proceed, the amount of the debt service would be reduced, and the city's exposure would also be reduced.

Any future changes to the underlying security agreements would require separate legislation and be brought back to council in the future.

If the legislation is not approved, the refunding would not occur, the debt service on the MDA bonds would not be reduced, and the city's exposure under the guarantee would also not be reduced.

The current agreement would remain in place with the city's guarantee ongoing and would continue out to 2031 under the 2014 bonds.

And with that, I will pause and ask if there are any questions from the committee.

Thank you, Christy.

Mr. Eater, if you would share with us.

So colleagues, I chair a lot of meetings and I attend a lot of meetings as your finance chair that you might not be aware of.

I sit on SERS, which also has two subcommittees.

I sit on Debt Management Advisory Council as well.

And so oftentimes this role has a lot more meetings than your own council meetings, right?

And that's okay and that's good.

So I've already been briefed because I was at DIMPAC.

I voted on it, but Mr. Eater, could you share with us some of the other requests that were made of us that we did not move forward with?

I'd be happy to do that, Chair.

The Museum Development Authority, first of all, I just want to reiterate, this is a win-win for both the city and the Museum Development Authority in the short term and for the duration of the bonds.

We expect up to a half million dollars of savings annually from just the refinancing with no changes to the financial terms.

The Museum Development Authority has asked us to consider some potential changes to effectively the collateral that they put up to back the city's guarantee and to protect us against any potential that they may even theoretically not be able to pay their debt service, and we would have to step in with our guarantee We have agreed to consider those proposals and have some ideas ourselves about ways that things might change, but that, as it turned out, was going to take longer to sort out than we were able to devote time-wise and keep on track the short-term up to a half million dollars worth of savings that we're bringing forward today.

Step one is the proposal that is before the committee today.

Step two is to continue engaging with the Museum Development Authority on potential evolutions to the financial arrangements, which would, as you heard, would be coming back to you if we reach agreement with Museum Development Authority in a future ordinance.

Thank you, Mr. Ederson.

To summarize, we split the process out so that we could increase the savings faster.

We have agreed to a conversation.

We have not agreed to outcomes.

Is that essentially it?

That's very correct.

Excellent.

Colleagues, any questions?

Council Member Kettle.

Thank you, Chair Strauss.

Thank you, everyone, for coming.

You know, our committee meeting, our Finance Committee meeting has gone from being a Housing and Human Services Committee meeting to now a Sustainability, City Light, and Arts and Culture Committee meeting.

And my question, the MDA is pretty straightforward, all the points you made.

Mr. Eder, your points afterwards, yes, I understand.

Going to the arts and culture piece, you know, there's bigger picture issues here.

I was at the SAM.

The DSA had an event at the SAM in terms of how we support the arts and culture community.

And there's a lot of challenges out there, generally.

And as seen here with the MDA in this whole briefing, you know, the MDA is part of that same market.

You know, we see those challenges in that market, the office leasing and the like.

And so, which, by the way, is a little bit of a Public Safety Committee meeting, because public safety drives a lot what's happening in that market.

But in my experience in working through the issues in District 7, arts and culture is very big in District 7. I've been at different locations, Seattle Center.

I was just recently at Ben Royal Hall.

So my question is, and this may be more for Chair Strauss than the table, but...

Are there other areas that we should be looking at as well?

You know, I'm thinking about Benaroya Hall.

How can we support Benaroya Hall?

Is there mechanisms?

I mean, should we have a finance review of the arts and culture community, you know, working with the other committee to see what issues are out there?

You know, it's much better to address issues early rather than later.

You know, and this might be an area where we can do that.

Because, you know, the Benaroya Hall, for example, we own that building.

You know, it's different, but there's similar challenges.

And so my question is, like, we as a council, should we be looking at the health of the overall arts and culture community, in this sense, from the financing side, from the business end of operations, you know, to ensure the health of the overall system?

And I just say that because I recognize that there's other different but similar circumstances out there, and would it be helpful for us as a city and into the arts and culture community that we kind of do this look and see, hey, what other win-wins are out there, you know, And so I just raise that as a thing, an observation based on when I'm out and about in the district, that's something we should think about.

So I turn, you're in that both committees, Chair Strauss, so I turn it back to you.

Fantastic.

Or more meetings that you can have.

And lucky for you, item five of today's agenda starts speaking to just this.

And what I would say is that we do have a fantastic city staff working on this.

The reason that this is before us today is because it's part of the 30-year cycle prearranged moments for refinancing.

But yes, let's...

We'll get to item five very shortly.

Council President.

Team effort.

Yeah, team effort.

Exactly.

Well, my gut instinct is to do whatever we can to help Sam.

I'm just using the vernacular because Sam is not only a gem of our downtown, it's also a driver of economic growth.

and so whatever we can do to help, we should do to help.

That's my impulse, but also I'm not privy to all of the conversations that have been mentioned, so I don't understand the nuances here, but I love me a win-win situation here.

My question is whether or not the office vacancy rate has impacted the museum's ability to pay its debt service, and is that at play at all in here?

That's a great question.

The lease agreements that are in place are actually in place until 2031 when the bonds retire.

And so those are essentially locked in, in sync with the bonds.

And so the master tenant in place actually manages that risk.

The MDA and SAM are somewhat insulated by that per the terms of those lease agreements with the master tenant and the subtenant.

I was referring to the eight floors above the museum that is the source of revenue, and I'm assuming that those eight floors are empty at about the same rate as all the other buildings downtown.

That's exactly right.

There may be vacancies from time to time, and there are some vacancies now.

However, that risk really flows to the master tenant that is in that agreement with SAM.

And so that essentially ensures that the master tenant will make those lease agreement payments into that lockbox, even if there are vacancies in those eight floors.

So it really was structured so that the lease agreement with the master tenant extending to 2031 to match the term of the bonds helps provide that protection from the flows and changes of vacancy downtown.

Got it.

Thank you.

That was a really good question, Council President.

And Christy, may I, in plain language, tell me if I have this wrong.

So Sam leases to a Master tenant, which has the long-term lease for all of these floors, they then sublet or release to the individual offices.

Is that correct?

That is correct.

Fantastic.

Thank you.

Colleagues, any other questions?

Wonderful.

We look forward to having you back in committee.

And I believe it will be at the next committee where we will be taking these votes in the Select Budget Committee.

I do flag for you as presenters, make sure you brief any council member who's not here.

Thank you for your time and good work.

Thank you.

Fantastic.

Clerk, if you could read the short title of the next item into the agenda.

And please read both carry forward and exceptions.

item three and four council bill one two zero seven seven three and one two zero seven seven four carry forward and exceptions for briefing and discussion thank you uh this is i stumbled on the intro about the agenda because we were using the long and technical language to say carry forward and exceptions so we have two different bills today and they are in a single presentation and so And I know I will be making a point of can we pause at the end of exceptions So we will pause at the end of Carry Forward before we move into exceptions.

We have Ed and Cizek as well as Deputy Director Ali Panucci here with us today as they are coming to the table.

I will pass it over to them.

I will say that if you have amendments to either of these bills, please have them to central staff by May 6th.

It is currently May 1st.

That includes a weekend.

What I can tell you is that these are pretty standard bills each year that essentially account for typical budgeting practices of either needing to spend more money for a program with good reason or needing to pay encumbered funds in a different year than the funds were encumbered.

With that, I will pass it over to Eden and Allie.

Take it away.

you'll need to turn on the mic.

Mic check, one, two.

Good to go.

You're rolling, Bob.

All right, good morning, council members.

My name's Ed Cisich with council social staff.

On today's menu, we've got the council bill 120774 and 120773, the exceptions and the carry forward legislation.

So I will start by providing an overview of the city's budget adjustment process and how the budget gets modified throughout the year, starting with the adopted budget.

Then I'll cover the bullet items that you see on the PowerPoint before we get into specific details and highlights of the carry forward ordinance and the exceptions, which are defined in this overview slide for reference.

And I will come back to each of these in the next few slides.

So by state law, we're required to adopt a budget 30 days prior to the ensuing fiscal year, which we did in 2023 on November 21st, and we adopted a $7.8 billion budget across all departments and fund sources.

And also while the budget adoption itself includes a six-year CIP and references that, only the first year of the capital investments are appropriated in the budget adoption itself.

so moving into the operating phase of the 2024 budget year automatic carry forward is the first thing that takes place and that is sort of an administrative adjustment which carries forward budget for non-lapsing mostly capital appropriations from 2023 into 2024 in this case SO THAT MEANS THAT MONEY DEDICATED TO CIP AUTOMATICALLY CARRIES FORWARD FROM 2023 UNTIL IT'S EITHER FULLY SPENT OR REDUCED OR ABROGATED BY COUNCIL ORDINANCE.

AND ONLY CERTAIN APPROPRIATIONS ARE ASSUMED TO BE NON-LAPSING, MEANING THAT authority carries forward into the next year for operating and that's grants and service contracts and encumbrances.

Encumbering essentially means setting aside money for already legally executed contracts since the city doesn't pay until we are invoiced for the work that's already been completed.

So, for example, a big chunk of the carry forward is in the multifamily lending program and for already executed contracts with developers.

So the work is on its way, but we haven't been fully invoiced for it.

That said, there is...

And before you move on to the next slide, I've got some questions, so let's finish up with what you're saying.

Yep, just last...

So there's $1.8 billion of automatic carry-forwards across all funds, and most of that is in capital budgets, so...

Wonderful.

And so when you talk about encumbrances, if you could maybe take another moment there or just I'll say what I believe to be true.

So if we sign a contract in November and the that contract isn't fully implemented by the outside contractor until January.

We are not invoiced until January, even though we encumbered the funds in November.

Is that a good example of what would be kept within here?

So, encumbering funds essentially is...

So, in November, it's a little bit too late, actually, because of the way our procurement process works.

You can choose a different month.

A little early in the year.

Any month, August.

And, yes, so essentially, yes, the answer is yes.

We encumber funds to essentially set aside money for already executed contracts, and so...

when they perform the work, that encumbrance goes and becomes actual spent money.

And so the encumbrance gets reduced, actual expenditures increase, and so it offsets.

And I'll just know it is pretty normal for this type of activity because the budget is adopted at the end of November and goes into effect December 1st.

You know, there's often, you know, new things that departments are being asked to do, and so it takes some time to get those contracts done.

So council and the mayor may have provided 12 months of funding for something, but the work and like the contracts not signed until March, April, May.

And so 12 months of funding will carry into the next year.

So if those contracts are fully executed, work is underway, but they have a couple of months left of funding to complete the contract that will automatically carry forward into the next year's budget.

And so those pieces are not, but we highlight it for the council just for full awareness of all the moving parts of the budget throughout the year because the flow of money doesn't exactly meet a 12-month budget cycle.

Very helpful.

And then, Eden, can you share with us, you say here two-thirds of which are capital budgets.

Can you share what the other third would be?

It would be operating expenses.

However, most of them are related to capital.

A majority of it is in multifamily lending with the Office of Housing and Housing, I believe the other biggest item was KCRHA funding that they're looking to carry forward into 2024.

Thank you, and your memo is also very helpful.

Please take it away.

Great.

Okay.

All right, so the next piece, which is most relevant to our conversation today, is regarding supplementals.

State law allows supplementals to take place, and we categorize supplemental bills are standalone or comprehensive.

Standalone or more specific, single subject, a good example of that would be the most recent legislation for the Wing Luke Museum Repairs, a grant from Washington State Department of Commerce.

And then comprehensive legislation is more of a process by which CBO solicits feedback from departments and packages that as a package of items for consideration and That affects multiple funds and multiple departments, which is what we're talking about today for both of the bills before you.

And so, Eden, I'll just pause here.

This is the end of the background on our supplemental budgeting section of this presentation.

We're now going to move forward into the carry forward.

We'll then take another brief pause before we move into exceptions.

Is that correct, Eden?

That is correct.

Fantastic.

Take it away.

Perfect.

so council bill 120774 that carry forward legislation requests a approval for a total 2024 budget increase of 201.4 million dollars from several city funds this bill is essentially seeking council approval to continue various work that was budgeted in 2023 and is anticipated to continue into 2024 so they just need the funding to be reappropriated again in order to continue that work So I'll highlight the departments with the highest increases proportional to their adopted budget.

And in the memo, I've highlighted several other items with the high carry forward amounts or ones that council may be interested in.

And that was starting on page five in the memo.

So starting with OPCD, this carry forward would double the department's revised budget.

And the bulk of that is for, Equitable Development Initiative awards that haven't been contracted.

So the contracting process for these long-term projects often takes multiple years and funds do not always get expended in the same year of the RFP.

And for the Office of Housing, of the $72 million total increase, 71.5 million is Jump Start Fund related to multifamily housing.

These funds have been awarded to specific projects but have not been encumbered in the city's financial system due to the timing of loan closings for funded projects.

And we've also got a $29 million increase across multiple funds and finance general.

The largest chunk of that is to continue the participatory budgeting program.

And again, this represents most of the carry-forward requests, but details on the remaining items are itemized in the memo and also in Summary Attachment A attached to legislation, so please review those ahead of the vote.

And all of the items have been reviewed by central staff to make sure that they meet the nature of a carry-forward.

Fantastic.

Thank you.

And I know that I asked you a number of questions during our briefings.

I'm not going to take up committee time because we're running a little late, but I do want to stop pause before we move to exceptions.

Colleagues, any questions on carry forward?

Council Member Kettle.

Chair, thank you very much.

You know, as Chair Strauss has mentioned, and as the central staff, you know, you know, reform of the budget process is, I think, is very important, and this is an opportunity this year to do so.

I'm, you know, the grants piece is very, you know, what the changes there, I think, are very helpful.

And in the area of I don't know what I don't know, like, the carry forward all makes sense from, like, this budgeting point of view, but Does these pieces may seem, okay, standard to you from your line of business, what you're looking at, but do they indicate that we potentially may have a trouble or an issue in another area?

Like, you know, the fact of the percent increase on the EDI, does that indicate that another committee should be working at it from a substantive point of view?

It's like, hey, why is this, like you said, multi-years.

Is there an issue that needs to be addressed so it's not multi-years?

is this an indicator of issues that need to be worked by other committees?

Not so much from a budgeting and finance perspective, but maybe from a program, you know, operations.

I'll take that.

I think whether it's an issue or not, I think is really your call.

I absolutely think that if council members have questions about the specific programs and the flow of money through these programs, that it would be appropriate to take that up in a subject specific committee.

I will just say some of these programs are sort of designed to have funds carry forward from year to year just because of the nature of the types of projects.

And for the Equitable Development Initiative and the Office of Housing Projects, those are development projects that often take several years.

funder in, and so they have the commitment from the city, but it takes some time for them to get a full funding package where they can, you know, move forward with the project and start drawing on the funds.

However, it's absolutely a policy call on whether or not this council thinks that is an appropriate use of, or a good program or, you know, not trying to make a judgment here, you know, so there are policy decisions within that.

But this from our perspective, our understanding of these programs, this is not unexpected or unusual.

Thank you.

Fantastic.

I'm not seeing any other questions regarding carry forward.

And if you'd like to move on, Vice Chair.

Thank you, Chair.

I just want to say that I've had similar questions as my colleague, Council Member Kettle.

And I have reached out to essential staff to ask more questions specifically about these types of carry forward.

And I do think that there's, that we should be looking at these programs.

The housing development programs do take a long time.

There are other programs where it's not clear why it's taking longer.

And I think there's opportunity and we should be looking at these and whether or not there are term limits by which we allow a project to run before we say it's not going to get off the ground, and then do we continue to carry forward, or do we need to make a decision?

So my understanding is from questions I've recently asked, there aren't necessarily term limits put, and I think that this is something that we really ought to look at.

Yeah, and I would also just add, we have been looking at patterns.

Are there patterns of carry forward?

And there is certainly a pattern with the Equitable Development Initiative and the Office of Housing Funding.

And we were looking for other areas where they're not those types of projects.

So like, is it indicating that essentially we're over budgeting for those departments and we could right size those budgets?

We need to brush off that analysis.

We pivoted towards the budget review document.

We will turn our attention back there.

team of three fiscal analysts here at Council Central staff, but we have been looking at that and so far have not, you know, if we have any takeaways of like, it looks like this department year over year is always carrying forward X amount, that might be an indication that that department could be right-sized without really impacting programs or services.

So just know that that analysis is happening.

Fantastic, good questions.

Moving forward to exceptions.

All right, so now we're on Council Bill 120773, the exceptions.

Exceptions bills provides retroactive budget authority to the prior year's budget for spending that has exceeded the revised budget.

So the total 2023 exceptions request is $12.8 million, Over $12 million of that is for two items which have exceeded their 2023 budget appropriations.

So first, high volume of pension payouts has driven the $8.3 million industrial insurance fund in Seattle Department of Human Resources.

And the second is an SPU item, which is a $3.3 million solid waste fund exception, a request driven by higher than expected inflationary adjustments to SPU's major service contracts and related taxes on the solid waste line of business.

But that only represents about 3% of the total budget in solid waste, so it's a small amount compared to their overall budget.

And that is the only slide I have on the exceptions.

So I will go into, do you guys have questions before I conclude us with the last slide?

Vice Chair, can I ask that?

Yes, Council Member Kettle.

Just had a quick question.

If you can go back that one slide.

And this kind of goes back to anticipating patterns.

As Ms. Minucci knows, I'm on the Labor Committee and I'm well aware of the CVI and the inflationary impacts.

And so part of me is wondering, are there any other SPU inflationary adjustments out there that we should be anticipating?

Because with the abnormal, at least from the recent past in terms of the inflation rate, should we be anticipating more exceptions due to the higher than average inflation rate?

I think, you know, the exceptions bill is a bit unusual.

We're not aware of any other jurisdiction that processes such a bill.

It's essentially asking for forgiveness after our department has overspent their budgets.

I will say we have been working with the city budget office for several years on this and have really reduced the size of this exceptions bill.

So there has been a concerted effort to try to better project what the year-end spending will look like so that we avoid these types of exceptions.

I do think that we all for many years got comfortable in a low inflation environment.

And so I think we're still adjusting to better plan and try to project in a in an environment where inflation is changing.

So it is absolutely, I think, something both we and the city budget office are looking at to try to avoid these types of situations in the past.

And in some cases, it may just mean that some departments need more buffer in their annual budget because things come up at the end of the year.

Like this is the first year in my memory, I can remember that there was not an exception from the Department of Transportation.

And that's often due to December related issues transportation issues like a snowstorm that was worse than anticipated and that sort of thing.

So that's an example of work that has been done to sort of right size those budgets to avoid exceptions.

And I would love a year where there are no budget exceptions.

It would make my year.

That would make Councilmember Kettle very happy.

And I will say just is a way of demonstrating how much you've reduced this.

I know that in the past, our exceptions ordinance has been very long.

It has been reduced to the point that you were able to brief this in a shorter period of time than it took me to use the restroom.

Colleagues, I will also share with you Council Listen Line is a very great way to stay up, stay within the meeting.

So I was listening in real time the entire time I was doing that.

So...

Sorry for too much information, Council Member Morales.

Here we go.

Any other questions?

Seeing none, just as a recap, amendments are due May 6th.

We'll have this in committee, select budget committee for the whole council May 15th.

Anything else from you, Ed and Allie?

I would just note that we did set an amendment deadline.

Your amendment options are pretty limited here.

I would say you really don't have much in terms of amending the exceptions bill.

You could reject or not that bill, but the money has already been spent.

So do with that what you will.

And then, in terms of the carry-forward, you could reject any proposed carry-forwards, which would mean that funding for those purposes would not move forward, but you couldn't reject it and program it for something else.

You could reject it now and consider future use of that money in a mid-year supplemental or next year's budget.

Very helpful.

Uh, Council President.

So, carrying forward is moving money around, right?

but it's not spending it.

So what, I'm just following up on what you just said.

Yeah, so for example, yeah, it's essentially transferring the budget authority from last year into this year.

And it was budgeted last year in the example of the office of housing for projects that have been given award letters from the office of housing.

Like it was one of the, it was a project that responded to the annual notice of funding availability.

They have a commitment from the Office of Housing that they'll be awarded funds, but they haven't yet, they're not yet under contract or drawing on those funds.

If this money carries forward, it will allow that contracting work to continue and eventually that project will spend those funds.

If you've rejected the carry forward, it would mean that project or those projects, in the case of the Office of Housing, would not receive funding and they would have to you know, rethink how they're moving forward with their project.

But there are contracts.

I mean, would that then put us in a breach of contract situation?

In these cases, they're not yet officially under contract.

They have a...

It is a somewhat of a long process and I have more detailed information from Tracy that we can forward around to everyone.

I'm not gonna try to find the email right now, but it's essentially, it's not yet fully under contract.

It is a, there's a project, They have put a proposal into the Office of Housing.

The Office of Housing has said, this looks like a project that's ready to be funded.

We're giving you, let's say it's 10% of their funding needs.

They're now working to identify their other funding sources.

And as they do that, they will then get under officially contract with the city and their other funders and start drawing on the funds.

So it's typically about a three-year process.

So it might not be...

fully under contract, which means fully encumbered for another year in some cases, it might be next month in other cases.

So really the decision is you, not you specific, well, maybe you specifically, but not all of you specifically have previously approved these funds for housing projects.

They've not moved forward in the same year that they were budgeted.

Do you want to keep that money in that project or do you wanna project it and use it for something else?

Right.

Well said.

Vice Chair.

Thank you, Chair.

Allie, in some cases, there have been there's been a process and that entity has been awarded, but not contracted.

in which case there is a commitment made from the city, even though there's no actual contract.

Correct.

Correct.

So, you know, we need to consider that.

There is also, if we decide to move this through and approve it, there's opportunity as part of our budget process for next year to continue to look at these projects.

And then we could effectuate whatever, is being contemplated for the following year as part of our review and our commitment to look at the programs and projects and rightsizing, et cetera.

Right.

You might look at the project list that is sort of in the hopper and based on the length of that list or that sort of thing, you know, reduce next year's NOFA to focus on getting those projects moving.

And given that for some projects, just to be clear, I'm not recommending we don't fund more affordable housing.

But, you know, we are also seeing a lot of cost increases for these providers, both on the capital side and in the operating side.

So, it will absolutely be part of our ongoing conversation as you all dig into the budget.

And I was also just contemplating in general, yes, with this, if we carry forward this, we can look at how long it's taking, make sure these are covered before we might make decision about others or just in general with any projects or programs we're looking at.

We should be looking at how long they're taking.

I don't mean just housing.

I mean, in general.

and we can make a determination then.

Thank you.

Well said.

That was a very helpful summary about the NOFA vice chair.

I really appreciate that.

Seeing as we have no further questions on carry forward and exceptions short titles, we're going to move into the long-awaited budget review.

I believe we are keeping Deputy Director Ali Panucci.

I need a problem.

I got a binder.

Channeling Council Member Saka.

I have my printed copy here along with Council Member Kettle.

Clerk, will you please read the short title of the final item into the record?

Item five, informational item 2019 to 2024 budget review.

Thank you.

Okay, I've got a lot on this script that I'm gonna just freewheel it.

Colleagues, you've heard me talk a lot about the budget reform, reforming the process, reforming the budget.

You've heard me talk a lot about Merriam-Webster's definition of an audit, a careful review and examination.

What we have before us is something that has never been done by central staff in the last 25 years.

We have that on good authority from central staff.

This is the next step of what I believe meets the definition of an audit.

These 244 pages are more than we can go into page by page, line by line in this committee.

The reason that we are daylighting it today in Finance, Native Communities, and Tribal Governments rather than in the Select Budget Committee is because this document is going to inform our work throughout the remainder of the year.

We don't necessarily need to go through this document line by line in committee because this budget review, this budget reform is a team sport.

Each of us needs to be going on a deep dive into each of the departments that report to our committees.

As well, we will be using this as a guiding document throughout This summer select series, which is what I'm naming this new select budget committee process that we are using that started in April and will end in August.

This again has only been the only other time that we've had select budget committees in the summer was in 2020 when we were responding to a recession and federal one time funding.

We are joined today by Central Staff Deputy Director Ali Panucci.

I want to take this moment to thank Ali for all of your hard work, because I know that when I initially asked for this document, you were pretty unsure that we could perform.

And I really want to congratulate you and your team for being able to not only perform, but perform so quickly.

And so there's, I think, for all of us, this document probably raises more questions than it answers, and that's good.

because this is a document that will allow us to look at each of the departments in a way that when, to Council Member Kettle and Vice Chair Rivera's points of, are we seeing a pattern?

This allows us to dig into that.

I will say that this is not the end of our, what I'm calling our audit.

There is more work that is coming down the pike We will share more news about that later.

But today's presentation in Finance, Native Communities, and Tribal Government is going to be a high level.

We're going to be looking at the buckets within this document, and I sincerely ask that each of us take time with central staff in our offices to go deep into these reports, to go deep into each of your departments, and use this document throughout the Select Summer Series.

With that, over to you, Allie and Edna.

Thank you, Chair Strauss, and thank you for the kind words.

I just want to say this really was an all-hands-on-deck effort.

The entire central staff team contributed to producing this document, and Eden and Tom on the fiscal policy team did a lot of the work to get all the data in front of you.

So thanks to the entire team for that work, and it's my privilege to be here today to talk to you all about it.

Let's see if I can...

Okay, so as Chair Strauss described, this document was really prepared to facilitate your review and examination of the city's budget.

It provides details on each department's budget and describes the relevant programmatic changes focusing on key drivers of growth that occurred between 2019 and 2024. And really, our goal here is to help you all identify and refine priorities and uh identify where you want to dig in more because as chair strauss said it would take us until the end of the year to try to go line by line through all of this um we did preview this document a bit at the april 17th select budget committee meeting where we were focusing on the city wide review which is at the front end of the the budget book so we won't be focusing on that today um today i'll provide more of an overview of the information presented in the document on the policy groupings, and I'll provide an example of one of the department reviews.

So like the executive's annual budget book, we have organized this document into policy areas or functional clusters.

That is really to help with a, if you're looking at budget books and looking at our document, it is easier to compare and flip between the two.

It is then organized by department and within each department, we describe at the budget summary level.

So we have the department's budget that has then broken into budget summaries or budget control levels that sort of give you another layer of how funds are programmed.

And then we take another look at the budget program, which is not the level at which the council controls, but it does provide more insight into where departments are investing funds approved by the council.

And Deputy Director, before we move on, I just wanna use this slide to help us navigate our budget process at large.

And so what is helpful with this slide is this is a reader's digest, this is a reader's guide to your entire budget book.

I'm gonna really highlight the asterisk that's in gray that might be hard to see at the bottom of the slide.

And what it says is this document was produced by the entire central staff team, hence department narratives.

will vary in writing style and the level of detail and information provided will vary based on how individual analysts determines what best practices describe and highlights key information about the department's budget the reason that i highlight this is because right now all analysts are assigned to specific committees that they're reporting to essentially when we get to budget much like one of the previous bills that we had here we we rely on every single central staff analyst to get through the budget.

This document here and your engagement with this document is going to help all of us get ready for the fall budget process that starts the last week of September, hopefully sooner so we can be out by Thanksgiving.

That's why you will get, by using this document, you will get to know the analysts within your departments in a different way than is just policy that is taking up from January to September.

So I also want to thank all central staff analysts for all hands on deck to get this accomplished.

We couldn't be in this place without you.

Deputy Director, back to you.

Thank you.

So this slide just highlights the six policy areas that this book is organized around and we'll walk through a high level summary of each of those.

So I'm not gonna spend a lot of time on it, but just chair, if I don't see a hand, just please interrupt me.

I got you.

Here.

Okay, so I am going to start with a overview of the livable and inclusive communities policy area.

As the first example, this policy area includes nine departments.

So within each policy group, there are a number of departments that are related in some ways.

And as I think I mentioned in the last committee, there could be many ways of organizing these, but this is just consistent with how we have done the budget book for several years.

So for each policy group in the book, there is a cover page that illustrates total growth in the department budgets within this policy area, and then the department summaries follow.

So I am going to show an example of one of the departments that is included in the...

And Allie, let me, if you want to go back to this, let me re reframe for us.

So we're going to first go through what essentially, again, a reader's guide, and then we're going to go through some of the policy buckets.

So these first, these next three slides are essentially helping us navigate the document.

And then we're going to go into the document.

Yeah, and I jumped ahead too quickly anyway.

So thank you for the pause there.

I will just say, cause I'm not gonna return to the livable and inclusive communities later in the slide.

So I'm also just gonna provide a high level summary of this policy area before I move into the department example.

And so the chart on this slide is showing how much the department budgets have grown in the five year period.

So it's not their total budget, it is how much it has grown or not in this period.

So in this example, the budgets in this policy area overall increased by 174%.

The majority of that growth occurred in three of the departments, the Office of Housing, the Office of Economic Development, and the Office of Planning and Community Development.

That is largely driven by the introduction of the Jumpstart Fund in this five-year period that has increased investments in work that those departments lead.

And then the subsequent department pages provide more details about all the ins and outs of what's going on in those departments.

So as Chair Strauss described, and then we will move, I'm just gonna show one program, one department, and I'm not even presenting the entire department summary, but I just wanted to highlight sort of how we organize the information.

And it is, the whole book is kind of, I think of it as a funnel.

It starts at a high level and builds downward.

So if you wanna dig deeper, you can, and I expect some of you will wanna go even deeper than what is provided in this book.

So we look forward to those conversations.

So in this example, it's the Office of Housing Budget.

And the first page shows the Office of Housing, you know, shows what the department is.

It includes the analyst's name.

I highlight that because as Chair Strauss described, we all staff the budget and analysts are assigned to specific departments.

So if you wanna dig in on the Office of Housing, Tracy is your go-to to understand more.

You can, of course, engage with the fiscal policy team, but at some point we will be out of our depth in terms of the details of that department's specific budget.

And then that information is followed by a summary table for each department that highlights growth over the past five year period at the budget summary level.

So in this example, it shows that overall, the department's budget has grown by 389%.

And you get a breakdown of the three main areas of programming in this department, homeownership and sustainability, leadership and administration and multifamily housing.

So you can see another layer of how it's grown.

And Ali, on the presentation loaded to Legistar, I'm not seeing the gray shading that is being presented on Seattle Channel.

Yeah, that was just for my, so I could have you to focus on what I'm describing to you.

It's my clunky way of animating it, but the information, so I kept the slide number the same.

It's slide five.

Council Member Kettle.

Director, she knows her audience, so.

Amen.

Good on you.

Keeping you all on task here.

Doing my best anyways.

And so now you can watch the magic.

So the department summary, the BSL summary table is followed for most departments by a bar chart that visually portrays that budget summary level breakdown and also shows it broken down by fund source.

And again, we organized this focusing on the general fund, the jumpstart fund, and then grouped all other funds together.

There are about 40 funds or over 40 funds, I think across the city.

So it wouldn't, be easy to present a chart that broke down every single one.

And given the focus on the general fund deficit and what role Jumpstart will play, we've really focused on those two, but the summaries include explanation of all of it.

And so in this example, you can see in the bar chart that OH is primarily funded by other funds.

So for OH, this includes things like primarily the housing levy.

It also includes funding from the mandatory housing affordability program.

And then there are other funds that contribute to the Office of Housing's work and then the Jumpstart Fund.

So what you, you know, for me, one of the key takeaways, you look at this and you're like, they are not a general fund funded department.

They are primarily other funds.

So that is one just takeaway you can get by looking at the chart.

Next to or below the chart in the budget review document, you will see some notes summarizing what's driven that growth.

So in this case, you would read about how the increased funding has really been driven by the renewal of the housing levy, as well as the jumpstart funds and, of course, inflationary adjustments and that sort of thing.

only read the first page, you'd get a snapshot of like, in general, what's been going on in this department, what's driven growth.

There's also a table that shows the breakdown of their funding in terms of labor and non-labor and the number of FTE and how that's grown over the five-year period.

So that's a snapshot for some departments that might be as far as you go.

And then when you go to the second or third page of the department summary, you'll find another level of detail.

And so it starts with a description, the name of the budget summary level and the purpose statement.

So in the budget process, when the council is authorizing funding to the office of housing, This is really you are controlling at the budget summary level and the fund level.

So any funds appropriated to this budget summary level can be used broadly for anything consistent with this purpose statement.

So that is kind of the level at which we are controlling.

And then that is followed by more detailed tables about the budget program.

So this budget summary level includes three budget programs.

Two of them are presented here on the screen.

And this kind of helps you see what is really going on.

So on the first page of the department summary, you would see that this budget summary level has increased by 327% since 2019. As you go deeper into the budget program level, you'll see that much of that growth is within the home ownership budget program.

And so that can help you just think about where we're directing our funds, are those priorities consistent with your priorities, that sort of thing.

So in the book itself, below the budget program table will be notes further describing what's going on.

So we provided both the data and then some narrative to give you clues on what we see as some of the takeaways of this information.

Any questions about that?

Vice-Chair?

Thank you, Chair.

I just want to, well, first of all, thank the central staff profusely for all the work that has gone into this.

This is going to be summarily helpful as we go into the budget discussions later on this year.

I really appreciate that staff highlighted certain programs.

Departments have many programs and projects.

I know they could not all be contained in this document.

So I very much appreciate you highlighting the key ones of note.

I will encourage my colleagues to dig deeper with the departments that are under their particular committees If there are programs that you really care about then you can reach out to both central staff and the department on those particular programs.

But I very much appreciate the work that's gone on here that you've done here and the highlighting of the key programs is going to be really helpful.

because as the chair said earlier, and as I've said at other council meetings, we don't have the ability to do an official audit of the full budget.

And so this review is really meant to help us as we review the budget proposal later this year.

And as we all made different commitments to look at programs and projects throughout the city to make sure that we're providing the eye toward accountability.

So thank you.

Well said.

Colleagues, anything else?

Otherwise, back to you, Allie, to keep walking us through.

Thank you.

And thank you for that comment, Councilmember Rivera.

It's a good flag also to note.

Some departments are not broken down into very many budget programs, and particularly in those cases, and I know one of the departments that's in your committee, for example, the Department of Education and Early Learning, really doesn't have a lot of specific budget programs or even budget control levels.

And so in that case, we might have listed some examples and provided links to the pages about those programs to give you some more clues of how this larger bucket of funding is allocated.

So thank you for that segue for me.

I appreciate it.

Okay, so I'm going to briefly walk through the five remaining policy areas and just give a high level of what's going on.

So the administrative policy area includes 13 department budgets, many of which are the city's internal service departments like IT and Finance General, like IT, and then also includes Finance General, which is a non-departmental area.

budget.

In the review document for this policy area in particular, we provided additional review using three subgroups, policy and oversight, non-departmental and internal services.

Because it's a big category that includes a lot of different types of activities and it kind of can get I think misrepresented as a sort of bloated bureaucracy.

And it is really like finance general is a large part of this budget.

That is where the funds for the public library are transferred through annually.

It's where the transfer from the jumpstart fund to the general fund happens, and so it is quite large and quite technical, and so we've provided more details in the document.

In this policy area, overall, the budgets have grown 33%, and that is primarily driven by baseline and technical cost increases, so inflationary impacts and the like.

The departments that have increased most significantly are finance general, a non-department that is again, primarily driven by those fund transfers to the general fund and other sort of technical things.

And in addition increases in our internal departments.

So the Department of Finance and Administrative Services, the IT department and the Department of Human Resources.

And Ali, before you move on here, I will just flag for my colleagues, I'm not going to make comments or go into questions here, just that this is an area that I'm taking a lot deeper look and we have a lot more work to do to unpack this and then the other cascading slides that are within this budget book.

Just highlighting, I have a lot of questions here.

Yeah, thank you.

The internal services was an area of a lot of discussion during last year's budget process, and we are continuing to try to get more information to better understand what's really going on and what's driving those costs.

So I know I had deep conversations with the council president last year, and I expect I'll do more this year.

Right.

So.

The next category, the arts, culture and recreation policy area.

This includes four department budgets, parks, libraries, arts and culture and Seattle Center.

Since 2019, the budgets within this policy area increased overall by 28%.

And that's again, primarily driven by baseline and technical cost increases.

The two departments in this group that increased most significantly is Parks and the Office of Arts and Culture.

In Parks, beyond the standard inflationary increases, this reflects the approval of the $780 million six-year park district funding plan that was approved in 2022. doubling the annual funding.

And in arts, the majority of the growth is due to one-time expenditures from the admission, from increased admission tax revenues, and that's supporting activities like the Downtown Activation Plan, Seattle Center programming, bridge funding for institutions still in pandemic recovery, so to your comments earlier.

Council Member Kettle, there has been some concerted effort to look at arts organizations and graffiti prevention strategies.

And those are all one-time investments, because admission tax revenue can fluctuate over time.

And we're still trying to see how that revenue source operates coming out of the pandemic, because it did take a hit during the pandemic when a lot of venues were closed.

Move on?

Mm-hmm.

Okay.

The Education and Human Services Policy Area includes just two departments, the Human Services Department and the Department of Education and Early Learning.

Since 2019, overall, the department's budgets increased by 65%.

A lot of this was driven by changes in the human services department, the cost for Seattle, excuse me, human service contracts tied to inflationary adjustments, the expansion of investments in homeless response services and investments in food and nutrition programs, youth development, as well as increased grant funding for the aging and disability section that you heard a bit about earlier today.

And then in deal, the growth is primarily driven by funding and programming from the 2019 Families Education Preschool and Promise Levy, also referred to as the FEPP Levy, and the addition of funding from the Jumpstart Fund for school-based mental health services, which is a new investment over the last couple of years with a pretty significant increase in this year's budget of $20 million from the Jumpstart Fund.

And then the public safety policy area includes 10 department budgets.

It is a little, which includes the police relief and pension fund.

So it's not really a separate department, but is certainly part of the public safety portfolio.

Since 2019, the budgets within this policy area overall increased by 16%.

So primarily again, driven by inflationary adjustments.

It also includes a lot of moving things around the creation of the care department, as well as the Office of Emergency Management.

And so I will just flag here that while it appears that the Seattle Police Department's budget was reduced over this period, that is really a reflection of functions being transferred out of the department to other new departments like CARE and the Office of Emergency Management.

And there are more details in the review document about that.

And then our final policy group is the utilities, transportation, and environment policy area.

This includes four departments, including the utilities and the Department of Transportation, so our big capital departments.

Since 2019, the budgets within this policy area increased over .

The most significant growth is in the Office of Sustainability and Environment.

And this is the fourth department that saw a significant increase in their budget from the introduction of the Jumpstart funds.

And in this case, it was for investments in Seattle's Green New Deal.

So there are many more details in the 200 plus page document.

And we really invite you all to continue to dig in and consider areas where you wanna learn more, particularly in the context of constrained resources.

We're hoping that it helps you think through priorities as we move into the budget discussions later this year.

Thank you.

Thank you very much, Deputy Director Panucci and colleagues.

Also, thank you for reserving questions because I know we all could be up here for hours.

Interest of time, two minutes left in this committee.

I will just share high level.

This committee, through the demonstration of the lease, through the MDA bonds, through this work, This committee really is the backbone to all of your policy committees to be able to do that work, as well as I need your help from those policy committees here in this committee to take a deep dive into each of these departments.

Much like your policy can't work without a budget, Our budget and our work cannot occur without the staff here in Central Staff and our city workers to do this.

I just want to make some high-level review about this budget.

Typically, in a typical year, we only review our budget incrementally, so year over year.

This book that we have before us is our five year look back.

This builds on our April select committee that took a look back to 2013. We focused in on the last five years for this budget book.

If we had focused on the last 10 years, It would have been, if five years is 244 pages, I'm not going to guess how long it would be.

I want to call our attention to what was presented in the April committee and contained within this book, which is not only that 10 year look back, but it's also the policy changes BASELINE GROWTH, AND THAT IS SINCE 2019 AS WELL.

THIS BOOK WILL ACT AS OUR GUIDE THROUGH THE SELECT SUMMER SERIES AS WELL AS OUR FALL BUDGET PROCESS, AND I KNOW THAT WE'VE GOT A LOT MORE QUESTIONS, AND I REALLY THANK YOU FOR YOUR HARD WORK ON THIS.

I SEE COUNCIL PRESIDENT NELSON AND THEN COUNCIL MEMBER KETTLE.

THANK YOU VERY MUCH FOR THIS PRESENTATION.

YOU KNOW, WHEN NEW COUNCIL MEMBERS CAME ON THIS YEAR, MANY OF THEM because they were facing a $230 million operating deficit rounded, you know, for convenience, many of them started demanding an audit or some sort of way of understanding how we got here.

And as those conversations were reported, I sensed a little bit of sort of maybe maybe an eye rolling between the lines, basically like, well, that'll be difficult because this is too complicated and that consultant body of work would be much too expensive, et cetera, et cetera.

There seemed to be some resignation that the complexity was just un-understandable or too difficult to document and you have actually done it.

So, and I didn't even know that you had embarked on this work until the morning where you presented the big reveal of the secret weapon, tool, whatever you want to call it, that we'll be able to use going forward this year because we sure do need this.

And so I just have to say kudos to you for embarking on this for the first time ever.

It's incredibly impressive, and just from the three years that I've been on board, or two and some change, not having a baseline every year or for the past few years to understand percent increases from year to year in so many of the, except for some of the highlighted programs that are getting an increase or a decrease has been really difficult.

this gives us so much more information to be able to make good decisions um in our oversight capacity so thank you all colleagues for pushing the needle on on that uh on that request and um and thank you very much for giving us this really appreciate it thank you i really appreciate the

kudos, the support.

It feels good after producing that document.

Councilman Kettle.

Chair Strauss, I just wanted to, Ms. Vannucci, I just want to say thank you for this document.

I love it, and you know in summary this is about good governance and it's about allowing us to do due diligence when i say us the entire building it's not just here on the council this committee or the council or the ledge or the executive departments it's all of us and it's about doing due diligence and to allow us to do good governance and this is such a great way to kick this process off as it relates to budget so thank you thank you

Any further questions?

I mean, I know we all have so many, we are two minutes over committee time.

I will tell you the amount of time that we spent on the lease this morning, I did not think that we would get here on time.

So compliments to each of you colleagues for holding questions, because I know each of you are meeting about this document.

multiple times over.

I just closed my script, so I will go off of memory to say this concludes the May 1st, 2024 meeting of the Finance Native Communities and Tribal Governments Committee.

Our next committee meeting is the Select Budget Committee on May 15th.

Colleagues, we are adjourned.