PDA Council Packet July 2020

Section I: PDA Council Agenda & Minutes PDA Council Meeting Amended Agenda, July 30, 2020 ...... 1 PDA Council Meeting Minutes, June 25, 2020 ...... 3 Section II: Programs and Information Items 17 Executive Director Report...... 19 Section III: Key Presentations & Supporting Documents 25 Overlook Walk 60% Design ...... 27 Section IV: Consent Agenda Items 47 Proposed Resolution 20-19: Approval of 2019 PDA Audited Financial Statements (with attached draft audit) ...... 49 Section V: New Business Items 101 Section VI: PDA Committee Minutes 103 Market Programs Committee DRAFT Minutes for July 14, 2020 ...... 105 Finance & Asset Management Committee DRAFT Minutes for July 21, 2020 ...... 113 Executive Committee DRAFT Minutes for July 22, 2020 ...... 125 Section VII: Financials & Additional Enclosures 131 Finance Director Memo and Financial Statements for June2020 ...... 133 Residential Report ...... 145 Market Foundation July Report ...... 147

Pike Place Market Preservation & Development Authority (PDA) · [email protected] · pikeplacemarket.org P: 206.682.7453 · F: 206.625.0646 · 85 Pike Street, Room 500 · Seattle, WA 98101

Agenda for the Pike Place Market PDA Council

DUE TO THE EXTRAORDINARY PUBLIC HEALTH CIRCUMSTANCES RELATED TO THE ONGOING COVID-19 (CORONAVIRUS) OUTBREAK, PARTICIPATION IN THIS MEETING WILL BE TELEPHONIC OR VIRTUAL. ALL PDA COUNCILMEMBERS WILL PARTICIPATE REMOTELY.

Date: Thursday, July 30, 2020 Time: 4:00 p.m. – 6:00 p.m. Location: Join Zoom https://us02web.zoom.us/j/83418169543?pwd=bkJTQ0FXck9DTGtML09LMFJsVXUrQT09 or Dial (253) 215 8782, Meeting ID 834 1816 9543 Passcode 517646

Council Members: Rico Quirindongo (Chair), Colleen Bowman (Vice-Chair), JJ McKay (Secretary/Treasurer), David Ghoddousi, Patrice Barrentine, Ray Ishii, Betty Halfon, Paul Neal, Devin McComb, Mark Brady, and Ali Mowry

4:00pm I. Administrative: Chair A. Approval of Agenda B. Approval of the PDA Council Meeting Minutes for June 25, 2020

4:05pm II. Public Comment Including the Market Community

4:15pm III. Key Issues and Discussion Items A. Overlook Walk 60% Design Angela Brady & Andrew Barash B. Market Foundation Small Business Granting Update Lillian Sherman C. Nomination Committee Update Chair

5:10pm IV. Programs and Information Items A. Council Chair Report Chair B. Director Report Mary Bacarella C. Committee Chair Reports Patrice Barrentine & Devin McComb

5:25pm V. Executive (Closed) Session (This will take place on a private line. Council Chair members will return to the Zoom meeting following this closed session) A. Discussion of a matter subject to collective bargaining – RCW 42.30.140 (4)(b)

5:45pm VI. Action Items A. Consent Agenda Chair i. Proposed Resolution 20-19: Approval of the 2019 Audited Financial Statements B. New Business

5:50pm VII. Further Public Comment Chair

5:55pm VIII. Concerns of Committee Members Chair

6:00pm IX. Adjournment Chair

Pike Place Market Preservation & Development Authority (PDA) · [email protected] · pikeplacemarket.org P: 206.682.7453 · F: 206.625.0646 · 85 Pike Street, Room 500 · Seattle, WA 98101 Page 1

Page 2 PDA Council Meeting Minutes /

DUE TO THE EXTRAORDINARY PUBLIC HEALTH CIRCUMSTANCES RELATED TO THE ONGOING COVID-19 (CORONAVIRUS) OUTBREAK, PARTICIPATION IN THIS MEETING WILL BE TELEPHONIC. ALL PDA COUNCILMEMBERS WILL PARTICIPATE REMOTELY.

Thursday, June 25, 2020 4:00 p.m. to 6:00 p.m. Location: https://us02web.zoom.us/j/83048203569 OR dial +1 253 215 8782, Meeting ID: 830 4820 3569

Council Members Present: Rico Quirindongo, Betty Halfon, JJ McKay, David Ghoddousi, Patrice Barrentine, Ray Ishii, Colleen Bowman, Paul Neal, Devin McComb, Mark Brady, Ali Mowry

Staff/Consultants Present: Mary Bacarella, Brady Morrison, Sabina Proto, John Turnbull, Karin Moughamer

Others Present: Bob Messina, Gordon McIntyre, Patrick Kerr, Haley Land, Clint Bennett, Joan Paulson, Christine Vaughan, Nick Setten, Lillian Sherman, Crystal Dixon, Ann Magnano; Kenneth Loen, Steve Pearce, Catarina Ratajczak, Daniel Grant, Therese Casper

The meeting was called to order at 4:03 p.m. by Rico Quirindongo, Chair

I. Administrative A. Approval of the Agenda The agenda as was approved by acclamation.

B. Approval of May 28, 2020 Meeting minutes The May 28, 2020 PDA Council Meeting Minutes were approved by acclamation. II. Public Comment Including the Market Community Christine Vaughan thanked Rico and Mary for their participation in the Rally for the Market event. She’s hoping to hear today an update on the SDOT application for street use by craft and farm this summer as she believes having a little more space for vendors and shoppers would be beneficial.

Joan Paulson commented that the PDA, to not make decisions based on its goals and objectives stated in the Charter, is called insanity. She noted the following issues continue to be put off: 1) there is no ADA pathway from the waterfront to the Market and Proposed Resolution 20-17 does not go far enough to address this issue; 2) Four council members did not vote to approve Ben Bridge to the PDA Council and no efforts have been made to correct this process outcome; 3) Information that is provided to the PDA board members that is not part of public record needs to be provided. Joan thanked the Market Foundation on their efforts on the Pike Place campaign, which is a good short term effort but there needs to be a 5-10 year plan. Joan sent information from Councilmember Lewis regarding a Town Hall presentation on June 30th. Lastly,

Page 3 regarding Pike/Pine, that project is tied to the Convention Center addition and that is behind schedule and lacking funds. As a result she believes this project will be effected and would like to see a revised timeline.

III. Key Issues and Discussion Items A. Pike/Pine Renaissance Act One Steve Pearce introduced himself, project manager with the Office of the Waterfront and Civic Projects and other members of the team, including Therese Casper the City’s project manager and David Grant, a consultant. Today’s presentation is on the 30% design for the project.

The Pike Pine Renaissance is a partnership between the City of Seattle Office of the Waterfront and Civic Projects, Seattle Department of Transportation and the Downtown Seattle Association. It builds on DSA’s 2013 Pike Pine Renaissance design vision. This project achieves a key Waterfront Seattle objective to improve east-west connections between the waterfront and surrounding neighborhoods. The City of Seattle will construct improvements as part of Waterfront Seattle construction.

Steve shared a map of the project which extends from the waterfront, along Pike and Pine Streets to Melrose Avenue on Capitol Hill.

The guiding principles include:  Reinforce the role of Pike and Pine as primary east-west pedestrian streets.  Offer a generous, safe, and continuous pedestrian experience.  Provide places to linger and enjoy city life.  Foster stewardship and activation by adjacent property owners and tenants.

This project will now include completion of the protected bike lane project and if that had been part of the project in the beginning there would have been a guiding principal associated with bikes lanes.

Therese Casper began by reviewing the project schedule:  Begin 30% design phase – August 2019  Select public artist – March 2020  Complete 30% design and cost estimate – April 2020  Complete environmental review – September 2020  Complete 100$ design – September 2021  Projected construction start date – June 2022

Therese reviewed the budget sources for the projects, which include:  20$M Waterfront LID and other City of Seattle funding  10$M WSCC Public Benefit Streetscape funding  $7-10M WSCC Public Benefit Protected Bike Lanes (a portion of those funds have already been used.)  Total = $37-40M

Page 4 Therese reviewed a map of the project which overlays how and where the funds would be allocated throughout the project. Not all funds have been overlaid with the design elements. She noted that the project is fully funded and the project is being right-sized to fit those funds.

Therese shared a map showing the focus areas for the project, which include west focus, central focus and east focus and there are elements of continuity throughout.

Therese shared some key themes gathered through the community feedback process. Those include:  Prioritize pedestrian comfort and safety  Encourage active and transparent storefronts  Consider many modes of transportation  Incorporate more greenery and landscaping  Building on the successful activation at Westlake Park  Corridor between 4-9th Avenues works well; extend this success to I-5 overpasses and Pike and Pine between 1st – 4th Avenues.

The new Pike Pine Experiences will be:  Safer. Pike and Pine will be comfortable and predictable for all users, with shorter, more visible crosswalks, wider sidewalks, uniform light levels, protected bike lanes and positive street activity.  More dynamic. Public seating and sidewalk cafes, public art, programming, more greenery, active business frontages and iconic lighting will create places to linger and enjoy city life.  Better connected. Pike an Pine will have a more consistent character and identity from end to end. The connection to Capitol Hill over the freeway will be more welcoming, with wider sidewalks, higher rails, greenery and pedestrian lighting. The connection to Pike Place market will feature curbless streets to calm traffic and welcome pedestrians.

David Grant, an urban designer and landscape architect, reviewed the design elements. He began by reviewing the elements of continuity which provide consistent quality of sidewalk paving, signature crosswalk design, protected bike land and vegetated buffer, two-glove pedestrian lighting, and enhanced tree canopy. David shared several ideas for the crosswalk designs. He shared some maps showing current trees and ones that will be added. A map showing the existing lighting and proposed additions was reviewed.

David Grant shared the west focus area for 1st – 4th Avenues. There will be curbless shared streets near Pike Place Market, increased legibility at transit station entrances, repaved sidewalk and crosswalks and space for activation. An aerial drawing of Pike and Pike at 1st Avenue was reviewed and David discussed the goal of expanding the character of the Market and pull that deeper into downtown. With the addition of the streetcar, Pike Street will be a low volume traffic street. They aim to retain the current levels of loading and parking that is being lost due to the streetcar.

David shared a rendering of 100 Pike looking to the Market as well as a plan view of that block. David shared a rendering of 100 Pine Street looking to the Market with an emphasis on

Page 5 protecting the view of Market signage. A plan view and section view were also shared. 300 Pine renderings, plan and section views were shared.

David Grant next reviewed the central focus area for 4th – 9th Avenues which include enhanced paving and crosswalks, infill missing trees and prune existing trees, lighting and landscaping to tie to full corridor, and build on successful activation and programming. The East focus area of 9th – Melrose Avenues will have higher overpass railings with integrated lighting, wider sidewalks, buffering pedestrians from road, increased landscaping and gateway markers for transportation.

David Grant shared a proposed rendering of the Pike and Pine bridges, suggesting reduced car lanes for both bridges.

Steve Pearce concluded that this project is funded and on schedule. He hopes that this project will be a catalyst to help downtown and the Pike Place Market rebound during the current health and economic crisis.

Rico Quirindongo referenced the slide showing First Avenue and Pike and Pine Streets and asked if crosswalk treatments, such as the one at First and Pike, are being considered for First and Pine. Steve Pearce responded that the design for those two intersections were completed as part of the streetcar project. He can discuss adding that design element into the streetcar plans to add continuity of the project.

Mary Bacarella commented that the trees on Pike between First and Second appear, once mature, to block the Clock and Sign. David Grant responded that the Market sign is the primary driver on choosing the right trees. They are looking for trees that grow up and then out, a characteristic that’s common in elm trees. There is a short list of trees they are considering that will help preserve the sight lines.

Mary Bacarella asked for clarification that the cobblestones will remain at First and Pike Street. Steve Pearce responded yes, that element remains in the streetcar design. Mary asked how the streetcar and Pike Pine construction schedules work since the streetcar is paused. Steve Pearce responded that with the streetcar being paused, there is a greater likelihood that this project will start construction first.

Rico Quirindongo asked if there will be an impact on this project budget and LID funds as a result of the COVID-19 pandemic. Steve Pearce responded the plan at this point is to move forward with the LID and this project will continue. The Convention Center funding has already been transferred to the City.

Ali Mowry asked for clarification on what is meant by pedestrian safety and comfort along the corridor. Steve Pearce commented the motto for the project is “Waterfront for All” and that is being carried over to this project. They are designing for everyone.

Ali Mowry specified her question and asked how homeless and vulnerable populations will be affected and what they are doing to accommodate them in the design. Steve Pearce responded homelessness is a big problem facing the city and this project is a capital project with specific design goals. It’s important that everyone benefits from these physical improvements and the

Page 6 solution to the bigger issue of homelessness will be solved by the City’s initiatives. This project does not include funding to address that. Ali believes that homeless people will be affected by this project and she did not hear those impacts addressed in the presentation. Steve responded that they are doing some additional outreach to try to reach all populations affected by this project and noted that this population will be impacted during the actual construction phase. Ali further stated she doesn’t hope an end project of this program will be displacing homeless people to aid in the comfort of others. Steve responded that they are trying to find a design that is attractive to everyone and there are some designs across the country that have been successful in providing space welcoming to all.

Ali Mowry noted that the land encompassed in the project is not our land and she suggested reaching out to the Duwamish Tribe and representatives of the Coast Salish people to discuss which types of plants should be planted along the corridor. She also suggested planting edible plants that will provide food or medicine to people.

Colleen Bowman asked when the western phase of the project will be under construction as that will likely have an impact on the Market. Therese Casper responded they are not far enough along in construction sequencing to know for sure when the Market will be impacted. There is a construction moratorium downtown during the holidays and they will be balancing construction and looking to be efficient. They won’t know the details until closer to construction.

Rico Quirindongo thanked the project team for the presentation.

B. Market Foundation Small Business Granting Policy Crystal Dixon began by providing an overview of the Small Business Program and how they have approached assessing the overall small business needs at the Market. The needs assessment consisted of focused conversations with partners in the PDA commercial department, PDA daystall department, and PDA farm department, and subsequently three targeted surveys to businesses within those categories. About half of the commercial tenants, 1/3 of crafters and 8 farmers responded to the surveys. Crystal clarified that part of the needs assessment was to determine what small business means.

Crystal Dixon reviewed the results from the commercial tenants. The big takeaway is that most businesses need financial support. Many applied for financial support but have not received it. Many businesses do not want to take on additional debt. 62% responded advertising that their business is back and open is a non-financial way to help. Almost 70% of the businesses indicated they are interested in long-term business development.

Crystal Dixon reviewed the Daystall survey responses. Many of the respondents said they are concerned for personal finances, and family health, rather than business finances. 69% expressed interest in long term business development resources. There were lots of good conversations with the farm team and individual farmers. Much of the concern is around the ability to sell produce and flowers during the window for which they are available.

Crystal Dixon next reviewed the overall program scope which is to provide grants and/or programming to qualified businesses that operate within the Historic District based on the

Page 7 demonstration of need via their application. Types of businesses include commercial tenants, daystall permit holders and farmers. The goals include:  Address short term financial gaps and support long term economic transition  Increase sustainability by employing a Community Based model that maintains close contact with the business owners.  Reduce confusion by providing assistance through one centrally identified resource – The Market Commons.

The program timeline is:  Commercial tenant grant program o 12-3 months after re-opening of the Market (late June – September)  Daystall and micro business development program o 1-18 months after re-opening of the Market, launch in Aug/Sept. Crystal is looking for Foundation board approval next month.  Farmers o Ongoing

Crystal Dixon next reviewed the policy and procedures for the Farmer Safety Net, which was approved by the Foundation board. That allows for an expansion of the system already in place for farmers within the community Safety Net. The amount granted could be increased based on identified increased in need due to COVID-19. This would not exclude farmers from accessing the regular safety net program.

Crystal reviewed the policy and procedures for commercial tenant grants. This was approved by the Foundation board and has the following goals:  Create the opportunity for small businesses to return to business after restrictions due to the shutdown are lifted.  Provide investment to bridge the time between re-opening and revenue being restored  Inspire businesses to develop a business plan and goals with support the transition to new economic conditions.

Applications are limited to qualifying small businesses. Eligibility criteria include, and were developed with PDA commercial staff:  Operates in the Pike Place Market Historic District  Had no more than 10 employees prior to COVID-19 shut-down (excluding owner)  Had between $80k and $275k in sales in 2019  Preference will be given to businesses who have not received other significant COVID-19 recovery funds.

There has been a recommendation to eliminate the employee threshold and to increase the sales to $300K. She will be taking that back to the Foundation board. The tenants below $80K will be eligible for the micro loans still being developed.

John Turnbull explained the process for determining the eligibility criteria. They removed the business names, ranked them by sales and by subcategories and reviewed the bottom quarter of businesses, which have sales not exceeding $330K. This application process is a combination of

Page 8 quantitative and qualitative data. This program will help make the most difference with smaller businesses and allow them to open up their doors and generate some revenue.

Crystal Dixon reviewed what would be funded for commercial grants. Eligible applications include requests that clearly identify needs that would directly impact the businesses ability to re-open, and allow the business to bridge until revenue is restored. Grants are one time and award amounts are determined based on the identified business needs, but will be unrestricted. Grantees will have to report what their funds were used for and a grant will not exceed $10,000. They hope to launch this quickly and employ a similar approach to the safety net process. They want to provide some sustainable support and relationship building similar to other programs.

John Turnbull added they hope to target about 100 businesses, about 25-30 micro loans and roughly 70 small business commercial tenants.

Lillian Sherman noted the plan is to put this out there soon and that all they need to do is call the Market Commons to activate the application process. The funds in hand are roughly $270,000 and didn’t want to delay until the entire goal was reached. This program is a priority.

JJ McKay asked if the Foundation is working with the PDA on this funding process. Lillian Sherman responded yes, they are working closely with PDA staff. Crystal Dixon responded Foundation staff will be the ones managing the application process so that it does not get co-mingled with their business end of things through the PDA.

John Turnbull added the PDA’s role will be to validate an application and the PDA will not be deciding who gets money and how much. There is possible synergy with the incentive program approved by the Council last month.

Mary Bacarella asked for clarification on what the funds can be used for, specifically ensuring it can’t be used for personal expenses. Crystal Dixon responded it can only be used on business expenses and once an applicant is approved, a contract would be signed outlining the reporting requirements.

Ray Ishii asked why in the survey data commercial tenants did not report that the PDA had already provided assistance through the waiving of CAM charges. Crystal Dixon responded that’s because the respondents did not click that box on the survey, but staff know that was made available. Ray Ishii added it seems misleading in the data.

Ray Ishii commented that at this point is seems like all of this work is going into providing $2,700 of relief to tenants. He wonders if it wouldn’t be easier to just say that each business gets a grant to cut down on paperwork. Crystal Dixon responded that a one-size-fits-all would result in $1,000 for each business. It also meant that it would be a first come first serve approach and that does not address the opportunity to provide long term relationship building or long term sustainability, which is one of the outcomes. Ray Ishii thought the point of this program is to address impacts related to COVID-19. Long term business issues have been there for years and the PDA has been taking steps to try to address those issues. It sounds like there are already approximately 100 businesses identified that would benefit from this assistance. Crystal noted that the paper work will not be much more than a Safety Net request and they believe they are striking the right balance in paper work and assessing need.

Page 9

Lillian Sherman added that farmers will have zero additional paper work and their funding stays in the Safety Net. The $500,000 goal is for the commercial and micro support. What they are hearing is that people don’t value a quick fix of money but want the opportunity to talk and learn more about ways to sustain their businesses.

Mark Brady noted he’s a business owner and many of the businesses in the DownUnder are not eligible for PPP grants or other grants available to smaller businesses. He noted that he would apply for it and feels it’s an honest and fair program and things other DownUnder businesses will apply as well. He asked if The Market Commons will be fielding requests. Crystal Dixon responded she along with another staff member will manage the program.

Patrice Barrentine commented that should would like to see this program be a little clearer. She is concerned that there are no grants over $10,000 but what the funds can be used for hasn’t been specified yet. She would like to see a list of qualified expenses as well as a way to prioritize paying rent. Crystal Dixon responded the goal of the application process is not to tell them what they can or can’t spend their money on but to help guide them in identifying what they could use funds for. There will be more information on the application on what funds can be used for. Patrice Barrentine commented that it would be great to have that level of detail presented to the Council in the future.

Patrice Barrentine is concerned that if there are not stipulations for what those grants are and there isn’t additional criteria of what you want to fund, it may still be first-come-first-serve and that may not be where the greatest need lies. She doesn’t see how the screening process actually makes sure the money goes to the key places up to $10,000. She wonders if additional criteria will be added to the application process that may focus on certain populations or demographics in the Market. Crystal Dixon responded that the board is invested in making sure that first-come-first-serve and being the loudest is not going to be the criteria that gets you a grant. They aren’t quite there yet for being able to identify the funding mix but she has a lot of faith in that.

Lillian Sherman added that they are aware of how this roles out and are trying to find the best way for it to be successful. They have $270,000 in hand and are committed to reaching their goal of $500,000.

Patrice Barrentine suggested starting with a couple criteria of what they want to fund and then allow people to come back if they need to.

Colleen Bowman reiterated that per the Services Agreement this is the Foundation’s program to fund and administer. Colleen asked what is the best way to get feedback to the Foundation.

David Ghoddousi commented that all the things Patrice Barrentine mentioned he was thinking as well. He would like to ensure that one of the questions on the application is what funding have they already received. David asked whether creating a social media platform would be a criteria to fund.

Patrice Barrentine stated she is really excited for this program but voiced concern that farms are not included in the small business portion of the program because production costs have gone up to implement COVID-19 safety precautions. Crystal Dixon responded they are hoping that the farmers will want to participate in the developing business resources and farmers who need

Page 10 additional funds related to COVID can apply and through the interview process they could identify their need.

Crystal Dixon concluded by stating they are developing this program and fundraising simultaneously. She ensured the council the Foundation continues to support and fund social services and will continue to look at a whole community approach. Any questions or concerns can be directed through the council board liaisons, Mary or Lillian. Lillian Sherman added they are looking forward to rolling this out in early July and there will be evaluations as they go.

IV. Programs and Information Items A. Council Chair Report Rico Quirindongo did not provide a council chair report in lieu of time. He did comment that Ed Bridge has removed himself for consideration for the vacant mayoral council seat. The nomination committee will need to reconvene to search for a new candidate. Come July 1st there will still be a vacancy and he will start to work out the plan for the vacancy.

B. Executive Director Report Mary Bacarella provided the following updates:  Garage modifications will start up again in the fall but she is waiting on the final drawings so everyone is on the same page.  Market to MOHAI city funding has been deferred. The history blades and sidewalk tiles are being installed this July.  The streetcar has been paused.  Early bird parking is $10 from 9:30 am – 9 pm.  Seattle is in Phase 2 of the Safe Start Plan and staff have been working hard on reopening safely. At the moment a little over 100 businesses are open. Farmers are onsite Thursday and Saturday. Craft will return July 2 and there are 40 inside slabs available. There will be a table between crafters. DownUnder is open Thursday – Sunday. There are numerous decals and floor signs throughout the Market and we are trying to clean up the Market and get any unapproved signs removed.  The governor has mandated people need to wear masks in public starting tomorrow. We are encouraging people to wear masks in the Market. The PDA just received 8,000 cloth masks and 144,000 disposable masks for our tenants and visitors. A plan for how to distribute them is being developed.  A webinar on de-escalation is being presented by the security department next Tuesday.  A new marketing campaign is getting ready to launch and a video is being created to highlight all of our businesses.  Staff are starting to return to the office. The office if closed to visitors so tenants need to schedule meetings with their managers.  Mary congratulated the Foundation on their event last week and are currently at $500,000!

C. Committee Chair Reports Patrice Barrentine and Devin McComb did not provide committee reports due to time.

D. Other Reports

Page 11 i. Market Foundation Update Colleen Bowman noted that Nicole Bahr is now the Foundation Board president and the Foundation received a clean audit. Rico Quirindongo thanked Lindy for her service as president.

Betty Halfon left the meeting at 6:00 p.m.

V. Action Items A. Consent Agenda i. Proposed Resolution 20-17: Authorization to Enter into Contract with Ron Wright & Associates/Architects for Design Services for PC-1S Elevator ii.Proposed Resolution 20-18: Lease Proposals – June 2020

The Consent Agenda was approved by acclamation.

B. New Business i. Proposed Amended Resolution 20-13: Authorization for Contract Authority – Emergency Repair Work at Neighborcare Health at Pike Place Market Brady Morrison introduced Proposed Amended Resolution 20-13 which states:

WHEREAS, the Pike Place Market Preservation and Development Authority (PPMPDA) was chartered by the City of Seattle pursuant to RCW 35.21.730 et seq. with the mission of promoting enterprises essential to the functioning of the Pike Place Market, including the preservation and expansion of the low-income residential community, the promotion and survival of small businesses, and the expansion of services to the public market and community; and,

WHEREAS, for several years Neighborcare Health at Pike Place Market (Clinic) has been experiencing an intermittent sewer smell during the winter months, with no clear indication of the cause; and,

WHEREAS, investigations during the fall of 2019 indicated the smells may be a result of voids in the basement walls that are below street grade, however demolition was required to corroborate this possibility; and,

WHEREAS, in order to maintain the viability of the Pike Place Market buildings the PPMPDA determined that emergency work was required in January to assess the extent of the problem and identify solutions; and,

WHEREAS, starting in January, My-Way Construction LLC was selected to conduct the demolition, identify the issue and repair the work; and,

WHEREAS, in May Council approved Resolution 20-13 for an amount not to exceed $25,000, however final invoices have been received and exceed the original amount.

NOW, THEREFORE, BE IT RESOLVED that the PPMPDA Council authorizes the PPMPDA Executive Director or her designee to approve payment to My-Way Construction LLC for

Page 12 $21,466.77 and to Pioneer Masonry Restoration Co. for $6,292.22 for a total amount of $27,758.99 for the purpose of this emergency repair.

The funds for this project will be drawn from Tenant Improvement: 160280-00

Colleen Bowman moved the proposed resolution and Paul Neal seconded the motion.

For: Rico Quirindongo, JJ McKay, David Ghoddousi, Patrice Barrentine, Ray Ishii, Colleen Bowman, Paul Neal, Devin McComb, Mark Brady, Ali Mowry Against: Abstain:

Proposed Amended Resolution 20-13 passed by a vote of 10-0-0. ii. Proposed Resolution 20-16: Redeeming 2009 PDA Refunding Bond Sabina Proto introduced Proposed Resolution 20-16 which states:

WHEREAS, the Pike Place Market Preservation and Development Authority (PPMPDA) was chartered by the City of Seattle pursuant to RCW 35.21.730 et seq. with the mission of promoting enterprises essential to the functioning of the Pike Place Market, including the preservation and expansion of the low-income residential community, the promotion and survival of small businesses, and the expansion of services to the public market and community; and,

WHEREAS, the PDA has issued and refunded various series of tax-exempt Special Obligation Revenue Bonds, beginning in 1991. The bonds were issued in order to refinance certain private bank mortgages. The final refunding occurred in 2009 when the bonds were refinanced with City of Seattle with a face value of $4,390,000, and interest rate ranging from 4.0% to 5%. PDA makes monthly payments to City of Seattle, which include Principal and Interest. These bonds mature on May 1, 2021. The City of Seattle and the PDA have agreed to redeem these bonds earlier in order to save in interest payments. The amount necessary to carry out the redemption is $460,434.72. The amount currently held in City’s debt fund is $126,728.45. Therefore, the City requires an additional $333,706.27 from the PDA; and,

WHEREAS, 2009 PDA Refunding Bond has its own Debt Service Reserve with a balance of $321,793 as of June 26th, 2020. The entire balance of this reserve will be used to pay the outstanding balance of the principal of 2009 PDA Refunding Bonds. The remaining balance of $11,913.27 would be paid by funds drawn from the CRRF.

NOW, THEREFORE, BE IT RESOLVED that the PPMPDA Council authorizes the PPMPDA Executive Director or her designee to proceed with the early redemption option of 2009 PDA Refunding Bonds, on June 26th, 2020 , by paying to the City of Seattle the amount of $333,706.27.

The funds for the principal will be drawn: $321,793 from 2009 PDA Bond Debt Reserve, Account #110955-00, and $11,913.27 from CRRF, Account # 160630-00.

Page 13 Devin McComb moved the proposed resolution and Patrice Barrentine seconded the motion.

David Ghoddousi asked if the reserve fund is exclusively for this bond? Sabina Proto responded yes, this reserve was set up in 2009 just for this purpose. David further asked if Sabina followed up with the city regarding legal fees associated with this transaction. Sabine Proto responded there will not be any legal fees.

Devin McComb noted that this resolution passed in Finance & Asset Management Committee but was not put on the Consent Agenda due to one abstention. He feels that by spending nearly $12,000 the PDA will save in interest and therefor a good option to take.

JJ McKay and Ray Ishii agreed with Devin’s statement.

For: Rico Quirindongo, JJ McKay, David Ghoddousi, Patrice Barrentine, Ray Ishii, Colleen Bowman, Paul Neal, Devin McComb, Mark Brady, Ali Mowry Against: Abstain:

Proposed Resolution 20-16 passed by a vote of 10-0-0.

VI. Further Public Comment Joan Paulson clarified her previous comment in that she does understand the Pike Pine project is fully funded but what is not fully funded is the Washington State Convention Center, which is reliant on hotel/motel tax and not enough funds are being generated through that tax. Joan noted she loaned Mary and Devin a copy of the 1929 Goodwin book, Markets: Public and Private. This market has seen a similar event to the 1918 flu pandemic and she asks “have we learned any lessons?” To make better current decisions one needs to understand history. Those markets still surviving have focused on locals and the Market needs a better PR and marketing plan to address locals. Second, Joan noted the PDA website that discusses opening a business does not talk about the goals listed in the PDA Charter. She sees this as a major oversight that needs to be corrected. She thinks the PDA council should have earlier review of what types of businesses have applied to be at the Market. She does not understand how a multi-million dollar Native American owned business can own 8th Generation. This process and result should never happen again.

Haley Land noted that he had a lengthy conversation with David Dickinson regarding the craft reopening on July 2. The Daystalls will have a gradual opening, and David is hoping that it will start out small and ramp up so that they can work out the bugs and solve the problems that arise.

Christine Vaughan, in reference to the Pine/Pine presentation, underscored that any project that goes west of the middle of First Avenue needs to go to the Market Historical Commission and that the Historical Commission works to keep the Market authentic and true to itself.

Page 14 VII. Concerns of Council Members David Ghoddousi congratulated and thanked the Foundation for doing such a great job of fundraising. He had the chance to watch the event with a friend and found it exciting to watch the thermometer go up. He thanked all those involved in the event and proud of the Market for coming together for this event.

Ali Mowry agreed with everything David Ghoddousi said above. Ali clarified her comments with SDOT on the Pike/Pine presentation and noted that when she was asking about homelessness that the immediate thing the presenter noted is that it’s a City issue. Ali is less concerned with how the City is affected by this and more concerned with how people are affected by homelessness.

VIII. Adjournment The meeting was adjourned at 6:21 p.m. by Rico Quirindongo, Chair.

Meeting minutes submitted by: Karin Moughamer, Executive Administrator

Page 15 Page 16 Section II:

Programs and Information Items

Page 17 Page 18 Executive Director’s Report July 2020

Date: July 27, 2020 To: PDA Council From: Mary Bacarella

SUMMARY Have you heard the new radio ads on KUOW or KNKX? Or maybe you’ve caught the ad on KING5 or while watching the Mariner’s game. Either way, this summer is all about focusing on the amazing businesses at the Market and encouraging locals to make the Market their new place for essential shopping and dining. The revised marketing plan was presented at the Market Programs Committee earlier this month and since then we have launched the radio and TV ads. Here is a link to the current TV spots. Bookmark this page, share with friends, and come back in early August for new content. https://www.youtube.com/playlist?list=PLxKSRAaww47roPVnUkg0aiva-IaKntjaS

All departments have been working 110% during the pandemic and have been integral to ensuring we remain a safe and secure place to shop. As I’ve mentioned before, we are constantly pivoting in our approach to COVID-19. Just when we have a plan set for a week or two, there are new guidelines or rules coming from the state and county that need to be shared with the community. We will continue to constantly track the ever changing landscape of operating a business during this time. Thank you for all your support and patience.

OPERATING METRICS

Commercial Tenant Sales as Compared to Previous Year*

Year to Date Sales (May 2020)** -15%

Restaurants -17%

Food -11%

Mercantile -17%

Operating Income After Required Reserves and Debt Service:

Annual Goal $3,245,666

Year to Date: June 30, 2020 $(316,918)***

Page 19 Farm and Daystall Attendance Due to COVID-19, the craft tables remained closed in June but farm tables opened June 18 and were only open Thursday and Saturdays each week. Change from June 2019 to June 2020

Craft -100%

Farm -92%

*Several charts are also attached highlighting year-over-year sales trends through May 2020 with partial sales reports for June 2020. **There are 41 missing sales reports for May 2020. Of those 41, at least 17 were closed and therefore many not have had any sales to report. Commercial is still requesting sales reports, even if they were not open. ***Actual performance is $1,183,758 under budget as of June 30, 2020.

Operating Statement Total operating expenses through June was $6,373,654 (under budget by 23.9%) and total operating revenue was $7,358,013 (under budget by 30.2%), with a net result after debt service and reserves of $984,359 under budget. During June the total amount of revenue received was $1,030,819 which is almost half of what was budgeted for June. The budgeted operating expense was $1.4M for June, while actual spending was $878,000, almost 40% less. So far, $1.5M of the cash allocated from the Minimum Operating Reserve has been transferred to cover the cash shortage. The remaining $500,000 will be used during July and August.

Farm and Craft Attendance and Revenue During June the craft tables remained closed but Daystall staff were working hard to finalize plans for reopening of the day tables. Staff worked diligently to ensure the plans worked for all, including moving roll call to an online platform and having a process in place allowing safe retrieval of goods from storage areas in the Market. Crafters returned to the Market for the July 4th weekend with a small but enthusiastic number. The August report will have more details on revenue and attendance but everything seems to be working well so far.

Farmers returned to the Market June 11th, with a variety of produce, flower and value added farmers. Again, the number of farmers at the Market remains small in order to provide everyone with a safe work environment as well as to allow permit holders the option to return when it’s right for them. The number of farmers has varied, ranging from 22-24, with an average of 18 vendors each day. The CSA program is going well too. New this year is the option to sign up for different seasons. The summer season lasts for 10 weeks and currently there are about 250 boxes being packed each week. A 3rd of those are going through the Market Commons for low income customers. The fall season will last 8 weeks and there will also be a two week fall harvest season.

MARKET PROGRAMS Marketing, social media a PR continue to work diligently to ensure the press and City know that there are still businesses within the Market that are open, both onsite and digitally. A revised marketing plan was presented that continues to focus on locals.

Page 20 Marketing & PR  Followers continue to increase for Facebook, Twitter and Instagram in June, however, Instagram followers increased by nearly 9,000 followers (6.6%), a record for month-over-month increase for the Market. 5,000 of those followers were in response to posts about Black Lives Matter. Engagement across all platforms increased dramatically as well compared to May, in the case of Facebook by over 1,300%. This is due in large part to the Market’s support of Black Lives Matter, black owned businesses in the Market and changing the Clock and Sign to only have the letters “B-L-M” illuminated. o Top three blogs in June: We’re Open with Changes (12,836 views), Black Owned Businesses (4,074 views) and Support the Market (4,074 views).  There was one press release, 3 features and 49 separate press coverages garnered nearly 107 million impressions for the Market.  135 Residential concierges were contacted via email to share important information about the Market and encourage local residents to conduct their essential shopping at the Market.

Programs The school education program is currently canceled for the remainder of the school year and will assess the program for next fall based on local school district guidelines for field trips.

Market Programs Committee - Key Actions and Discussions  Daystall and farm provided updates on vendors selling at the Market.  Daystall rules review has been put on hold but anticipate re-starting the conversation this summer.

FINANCE AND ASSET MANAGEMENT Finance and Accounting Department  Processed all payables and receivables.  Revenue and expenses are closely being monitored as the Market has been hit hard by the effects of COVID-19.

Commercial  The commercial reopening guide and FAQ continue to be updated as new information is released by the county and state.  Two terminated their leases and moved out in June/July: Bound by Sky and Growing Washington.  Staff continue to work with tenants to answer questions and to help provide information that may allow businesses to reopen that are currently allowed under the governors Stay Home, Stay Healthy order.

Residential  Vacancies are at 5% at the moment. Unit renovations have started again in an effort to fill vacant units. Emergency work orders are being fulfilled.  Staff are working diligently to ensure residents have access to food, are performing regular wellness checks, and are keeping common areas sanitized. Staff are working both on-site and from home.  Pest control continues and there are no reported infestations.

Page 21

Capital Projects  All capital projects are on-hold except emergency projects.

Parking  Parking revenue is slowly increasing, but still well below anticipated budget and currently $808,256 under budget. On July 18th we hit a record high of 613 tickets pulled. That’s the highest number we’ve seen in a day since the beginning of COVID. Staff continue to receive requests for monthly parking, which will in the long run help with revenue.  Staff are working reduced hours on-site to be able to respond to issues that arise from those parking in Market garages.

Maintenance & Facilities  Maintenance staff continue to spend a lot of time installing signs throughout the Market related to COVID-19, masks and completed 150 work orders in May. As a result, there were fewer work orders completed (40) compared to previous months. Eighteen apartment rehabilitations are in progress.  With an increase in visitors we are seeing a slight increase in waste. Garbage increased by nearly three tons to 52.8 tons (still over 100 tons less than June 2019) while recycling and compost each increased by roughly 20 yards to 45 yards and 41 yards. In addition, only 12 bales off cardboard were recycled and 0.3 tons of fish ice was melted.

Security  Assisting in conversations regarding building and reopening hours associated with COVID  Regularly informing community of recent and upcoming protests and marches that may have an impact on the Market.  Responded to calls for service in the Market, fire alarms and requests for assistance.  Staff are taking extra precautions to remain safe and healthy, including wearing face masks.

Finance and Asset Management Committee - Key Actions and Discussion  Consent Agenda: o Proposed Resolution 20-19: Approval of the 2019 Audited Financial Statements

PDA Employee June 2020 Anniversaries: 22yrs Zack Geberkidan Parking 18yrs Joseph Strong IT 17yrs Stacey King Security 9yrs Michael Hill Security 7yrs Calvin Williams Residential 2yrs Amy Wallsmith Marketing 1yr John Goins Maintenance

Page 22 All businesses Sales Report Last 12 months and prior 12 months Year to year through May 2020

Prior 12 months

Current 12 months

Food business slaes - 4 year comparison by month

Page 23 Non Food sales reports by month through April 2020

Restaurant Business Sales - February 2020

Restaurants reported sales m by month through April 2020

Page 24 Section III: Key Presentations & Supporting Documents

Page 25 Page 26 OVERLOOK WALK: 60% DESIGN UPDATE Angela Brady, Deputy Director July 30, 2020

Page 27 AGENDA

• Schedule • 60% February 2020 • Final Design - Fall 2020 • Construction - Spring 2022 • Design Update • Past Engagement • 60% Design Review

Page 28 TIMELINE

Page 29 Page 30 OVERLOOK WALK

Page 31 BLUFF WALK

Page 32 BLUFF WALK

Page 33 BLUFF WALK

Page 34 CAFÉ/PAVILLION

Page 35 CAFÉ/PAVILLION

Page 36 CAFÉ/PAVILLION

Page 37 CAFÉ/PAVILLION

Page 38 CAFÉ/PAVILLION

Page 39 SITE FLOW

Page 40 PIKE PLACE MARKET CONNECTION

Page 41 THE NEW ELLIOTT WAY

Page 42 THE NEW ELLIOTT WAY

Page 43 SALISH STEPS

Page 44 Page 45 QUESTIONS?

Contact us at: [email protected] 206.499.8040 waterfrontseattle.org

Page 46 Section IV: Consent Agenda Items

Page 47 Page 48 PROPOSED RES OLUTION 20-19

Approval of 2019 PDA Audited Financial Statements July 2019

BE IT RESOLVED that the PDA Council hereby approves the 2019 PDA financial statements, audited by BDO, Certified Public Accountants, covering the period beginning January 1, 2019 through December 31, 2019.

______JJ McKay, Secretary/Treasurer Date

Date Approved by Council: For: Against: Abstained:

Page 49 Page 50 Pike Place Market Preservation and Development Authority

Financial Report with Supplemental Reports and Schedules in Accordance with Government Auditing Standards and Required by the Uniform Guidance Year Ended December 31, 2019

DRAFT

Page 51 Pike Place Market Preservation and Development Authority

Financial Report with Supplemental Reports and Schedules in Accordance with Government Auditing Standards and Required by the Uniform Guidance Year ended December 31, 2019

DRAFT

Page 52 Independent Auditor’s Report 3-5

Management’s Discussion and Analysis 6-12

Financial Statements

Statement of Net Position – Proprietary Fund 13

Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Fund 14

Statement of Cash Flows – Proprietary Fund 15-16

Statement of Fiduciary Net Position – Fiduciary Fund Component Unit – Pension Trust Fund 17

Statement of Changes in Fiduciary Net Position – Fiduciary Fund Component Unit – Pension Trust Fund 18

Notes to Financial Statements 19-40

Supplemental Reports and Schedules in Accordance with Government Auditing Standards and Required by the Uniform Guidance

Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 42-43

Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance 44-45

Schedule of Expenditures of Federal Awards 46

Notes to Schedule of Expenditures of Federal Awards 47

Schedule of Findings and Questioned Costs 48

.

DRAFT

Page 53 Independent Auditor’s Report

To the Council Pike Place Market Preservation and Development Authority Seattle, Washington

We have audited the accompanying financial statements of the proprietary fund, aggregate discretely presented component units, and fiduciary fund component unit of the Pike Place Market Preservation and Development Authority (the “PDA”), a public governmental corporation, as of and for the year ended December 31, 2019, and the related notes to the financial statements, which collectively comprise the PDA’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. The financial statements of Pike Place Market QB3 (a blended component unit) and Western Avenue Senior Housing LLC (a discrete component unit) were not audited in accordance with Government Auditing Standards.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

DRAFT

Page 54 Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the proprietary fund, aggregate discretely presented component units, and fiduciary fund component unit, as of December 31, 2019, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of a Matter

As discussed in Note 1 to the financial statements, the PDA has evaluated the impacts of Governmental Accounting Standards Board (“GASB”) Statement No. 84, Fiduciary Activities, and as a result, determined its sponsored tax advantaged deferred compensation plan (the “Pension Trust Fund”) is a fiduciary fund component unit. GASB Statement No. 84, became effective for the PDA during the year ended December 31, 2019. Therefore, the Pension Trust Fund is included within these financial statements.

Other Matters

Required Supplemental Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 6 through 12 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Government Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplemental information in accordance with auditing standards generally accepted in the United States of America, which consisted principally of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that comprise the PDA’s basic financial statements. The schedule of expenditures of federal awards as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards is presented for purposes of additional analysis and is not a required part of the basic financial statements. DRAFT

Page 55 The schedule of expenditures of federal awards is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated ______, on our consideration of the PDA’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the PDA’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the PDA’s internal control over financial reporting and compliance.

______

DRAFT

Page 56 We are pleased to present the Pike Place Market Preservation and Development Authority (the “PDA”) financial report for the year ended December 31, 2019. This report was prepared by the PDA’s finance staff. The 2019 financial statements were audited by the public accounting firm BDO USA, LLP. The information presented in this report is the responsibility of the management of the PDA. To the best of our knowledge, the information presented is accurate in all material respects and is presented in a manner designed to fairly state the financial position and results of operations of the PDA and includes all necessary disclosures to present a complete understanding of the PDA’s financial affairs.

Profile

The PDA is an independent public corporation created and chartered by the City of Seattle (the “City”) in 1973 to own and operate the buildings and open spaces in the Pike Place Market Historic District (the “District”). After a citizen’s initiative in 1971 directed the City to create a Historic District in and around the Pike Place Market (the “Market”) and to rehabilitate the properties therein, the City purchased the majority of properties in the District, rehabilitated these buildings, and transferred them to the PDA to operate in accordance with the initiative directive and City charter. The PDA is not a component of the City, and the City is not financially accountable for the operations of the PDA. The PDA is an independent public corporation, and its governance rests in a 12-member Council. This Council appoints an Executive Director to administer the affairs of the PDA as prescribed by its charter.

The charter of the PDA directs the PDA to manage the buildings and open space in the Market so that the properties and traditional uses of the Market are preserved and maintained. The charter also directs the PDA to ensure that a place for farmers to sell their goods directly to consumers is maintained, that services to low- and moderate-income persons continue to be provided, and that opportunities for small, owner-operated businesses continue to be available in the Market.

The PDA owns approximately 80% of the property in the District. To that end, the PDA provides property management services to over 220 small commercial tenants within its properties in the nine-acre district. It offers space to four social service agencies at lower-than-market rates and provides approximately 400 residential units to the low- and moderate-income population. The PDA also offers year round sales space on a daily basis to farmers wishing to sell directly to the public in a farmers’ market venue. Daily rental spaces (daystalls) that are not rented to farmers are rented to craft vendors selling their original arts and crafts.

As an independent public agency, the PDA operations are primarily supported from its commercial, residential, and daystall tenants’ rents.

The PDA, as a real estate owner and development entity, has some properties held in separate entities that it reports as discretely presented component units in these financial statements, and the PDA itself is referred to as the primary government, as required by the Government Accounting Standards Board. DRAFT

Page 57 Overview of the Financial Statements

The financial statements herein comprise the statements of net position, revenues, expenses, and changes in fund net position, and cash flows. These financial statements and accompanying notes provide information about the activities of the PDA, including resources held by the PDA but restricted for specified purposes by contributors, grantors, lenders, or enabling legislation.

The PDA has certain properties held in separate entities that it reports in its financial statements as blended and discrete component units. The sole blended component unit consist of Pike Place Market QB3 (“PPMQB3”). PPMQB3 is reported as blended, as the PDA is the sole corporate member of PPMQB3. Discrete component units include LaSalle Senior Housing LLC (“LaSalle”) and Western Avenue Senior Housing LLC (“WASH”). The three organizations remaining at December 31, 2019, are independent from the PDA but are managed by the PDA.

The PDA always searches for ways to secure additional funds for capital improvements in the Market. As a result of these efforts, the PDA has benefited by participating in low income housing tax credit (“LIHTC”) and new market tax credit (“NMTC”) financing programs, which commenced in 2003 (LaSalle) and 2016 (PPMQB3 and WASH). To facilitate the LIHTC, the PDA created LaSalle in 2003 and WASH in 2016, and to facilitate the NMTCs, the PDA created PPMQB3 in 2016, and master leased certain buildings to each entity. The PDA maintains a Property Management Agreement and Master Lease Agreement with each entity, with exception to PPMQB3 (the PDA subleased the property in 2016 from PPMQB3). Based on these agreements, rents are earned by LaSalle and WASH. Each entity reimburses the PDA for operating expenses, capital repairs, lease payments, and management fees.

The PDA is the trustee, or fiduciary, for its employees’ pension plan. The PDA’s pension plan activities are reported in a separate statement of fiduciary net position and statement of changes in fiduciary net position on pages 17 and 18. The PDA excludes these activities from the PDA’s other financial statements because the PDA cannot use these assets to finance its operations. The PDA is responsible for ensuring that the assets reported in this fund are used for their intended purposes.

Financial Highlights

• Assets of the PDA exceeded liabilities at December 31, 2019, by $163.2 million (net position). Of this, $32.1 million is unrestricted and may be used to meet the PDA’s ongoing operating obligations.

• Net position increased by $0.5 million in 2019 primarily due to income from operations and other non-operating activity.

• Capital assets decreased by $4.0 million primarily due depreciation and amortization ($6.1 million) exceeding capital additions ($2.1 million).

• Long-term liabilities decreased $1.4 million due to expected principal maturities on bonds payable, amortization of bond premiums, and recognition of non-capital grant advances.

DRAFT

Page 58 Statements of Net Position

December 31, 2019 2018 Assets Current assets $ 4,034,290 $ 5,063,701 Non-current assets, less capital assets, net 38,318,350 34,354,357 Capital assets, net 158,746,621 162,788,071 Total Assets $ 201,099,261 $ 202,206,129

Liabilities Accounts payable and accrued expenses $ 2,980,393 $ 3,221,692 Accrued interest 92,928 92,928 Unearned revenue 255,601 308,442 Current portion of non-capital grant advances 526,316 526,316 Current portion of bonds payable 740,000 705,000 Total Current Liabilities 4,595,238 4,854,378 Non-capital grant advances, net of current portion 2,631,578 3,157,894 Loans payable 10,705,000 10,705,000 Bonds payable, net of current portion 19,936,486 20,798,670 Total Long-Term Liabilities 33,273,064 34,661,564 Total Liabilities 37,868,302 39,515,942 Net Position Net investment in capital assets 127,365,135 130,579,401 Restricted for required reserves 3,738,723 3,706,332 Unrestricted 32,127,101 28,404,454 Total Net Position 163,230,959 162,690,187 Total Liabilities and Net Position $ 201,099,261 $ 202,206,129

The statement of net position presents the assets, liabilities, and net position of the PDA at the end of the fiscal year. The purpose is to give a snapshot of the financial condition of the PDA at a certain point in time.

Total assets of the PDA amounted to $201.1 million and $202.2 million at December 31, 2019 and 2018, respectively. Investments in Market properties are reflected in both the PDA (primary government) and the component units, as some of the properties have been master leased to three entities controlled by the PDA in 2019 and 2018 and capital spending has occurred in these properties.

The PDA’s primary asset base is its real property in the Market Historic District, and these properties make up $158.7 million of the total $201.1 million (or 79%) of total assets as of December 31, 2019. The remainder of the PDA’s total assets comprise, for the most part, current cash, designated cash reserves, a financingDRAFT lease receivable, and loans receivable.

Page 59 Total liabilities of the PDA were $37.9 million and $39.5 million at December 31, 2019 and 2018, respectively. The PDA’s major liabilities consist of outstanding loans, bonds, and non-capital grant advances.

Net position represents the PDA’s equity and a strong financial position relative to the PDA’s debt. Net position is divided into three categories. The first category is net investment in capital assets and represents the PDA’s land, buildings, structures, equipment, and construction in progress, less any outstanding debt related to these assets. The second category is restricted for required reserves and represents assets, generally cash that has external limitations on the way it may be used. The last category of net position is unrestricted; these are available for use in the PDA’s normal operations. Certain amounts of unrestricted net position are designated by the PDA Council for particular uses and those are described in more detail in the notes to the financial statements.

Statements of Revenues, Expenses, and Changes in Fund Net Position

Years Ended December 31, 2019 2018

Operating revenue $ 22,955,492 $ 21,693,712 Operating expenses (22,790,733) (21,486,933)

Operating Income 164,759 206,779

Non-operating revenue 1,388,388 9,183,881 Non-operating expenses (1,012,375) (993,145)

Net Non-Operating Income 376,013 8,190,736

Change in Net Position 540,772 8,397,515

Net Position, beginning of year 162,690,187 154,292,672

Net Position, end of year $ 163,230,959 $ 162,690,187

The purpose of this statement is to present the PDA’s operations and net revenue earned from those operations. The PDA’s operations are primarily real estate development and management. The PDA’s real estate holdings consist of commercial and residential properties, and its primary revenue source is rent from these holdings. The PDA’s purpose is to operate the Pike Place Market in accordance with its charter mandates, not necessarily to maximize income from operations. Residential rentals are made primarily to low- and moderate-income persons, and commercial spaces are leased to small and unique owner operated businesses at rates not generally available in other parts of downtown Seattle. The PDA’s objective is to be financially strong while preserving the traditional character of this unique commercial and residential community.

Operating revenues increased marginally due primarily to increased consumer activity within the Market in 2019. Operating expenses increased in relative proportion. Approximately $6.1 million and $6.0 million of the total operating expenses as of December 31, 2019 and 2018, respectively, is depreciation and amortization expense. DRAFT

Page 60 Non-operating income decreased from 2018 primarily due to a $6.9 million bargain purchase gain on the acquisition of PPM Phase II Investment Fund, LLC (“PPM Investment Fund”) recognized in 2018. PPM Investment Fund was the effective owner of all debt of the PPMQB2, a blended component unit of the PDA. PPMQB2 was a Washington State nonprofit corporation formed in 2010 to obtain funds under the new market tax credit NMTC financing program, which commenced in 2010. PPMQB2’s NMTC “earn-out” period ended on February 28, 2018, upon which U.S. Bank (the “NMTC Investor”) exercised its put option to sell all interest in the PPM Investment Fund, a limited liability company wholly owned by U.S. Bank, for $1,000 to the PDA. The bargain purchase gain recognized was the result of assets acquired (mainly building improvements and cash) exceeding other assets and liabilities cancelled (mainly a loan receivable from PPM Investment Fund and deferred obligations for future lease payments received in advance by the PDA from PPMQB2). Upon the PDA’s acquisition of PPM Investment Fund, PPM Investment Fund and its wholly owned subsidiaries, as well as PPMQB2, were dissolved.

Non-operating revenue also reflects interest income and non-capital grant revenue. This revenue is classified as non-operating, as it is nonrecurring and not a part of the PDA’s normal operations.

Non-operating expenses consist primarily of interest expense on loans and bonds payable.

Capital Asset and Debt Obligation Administration

The PDA has invested $158.7 million and $162.8 million in net capital assets as shown in the table below at December 31, 2019 and 2018, respectively.

December 31, 2019 2018

Buildings and improvements $ 207,229,341 $ 206,336,596 Equipment 1,497,450 1,350,784 Capital improvement plan 549,364 549,364

209,276,155 208,236,744

Less: Accumulated depreciation (55,998,304) (50,783,501)

153,277,851 157,453,243

Land 5,268,168 5,268,168 Construction in progress 200,602 66,660

Total $ 158,746,621 $ 162,788,071

The decrease in 2019 is attributed to depreciation and amortization ($6.1 million) exceeding capital additions ($2.1 million). Additions, while made up of numerous improvements to the Market Historic District, were primarily (approximately $596,000) related to improvements to the parking garage. DRAFT

Page 61 The PDA has debt obligations of $31,381,486 and $32,208,670 as shown in the table below at December 31, 2019 and 2018, respectively.

December 31, 2019 2018

Loans payable Creamery loan $ 455,000 $ 455,000 PPMQB3 - Loan A 7,310,125 7,310,125 PPMQB3 - Loan B 2,939,875 2,939,875

Bonds payable Series 2009 bonds 817,500 1,235,833 Series 2015A bonds 18,360,000 18,650,000

Unamortized bond premiums 1,498,986 1,617,837

Total $ 31,381,486 $ 32,208,670

Economic and Other Factors Affecting the PDA’s Future

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.

The PDA’s operations are heavily dependent on the ability to collect commercial and residential rents and parking revenues. Further, commercial rents are determined at a base rent or percentage of rents, whichever is lower. Most commercial tenants’ sales exceed the base rent minimum due to strong historical sales in the Market. The outbreak may have a continued material adverse impact on economic and market conditions, triggering a period of global economic slowdown. This situation is expected to adversely impact the commercial rent and parking revenue base, and to depress the value of the PDA’s holdings in the Local Government Investment Pool and pension-related investments in marketable securities. The situation may also adversely impact the PDA’s ability to deploy its workforce as effectively. While expected to be temporary, prolonged workforce disruptions may negatively impact performance of services. As such, this may hinder our ability for the PDA to meet the needs of its constituents. As such, our financial condition and liquidity may be negatively impacted for the fiscal year 2020.

On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security (CARES) Act.” The CARES Act, among other things, includes provisions relating to refundable payroll tax credits and deferment of employer side social security payments.

The PDA continues to examine the impact that the CARES Act may have on its business. Currently, the PDA is unable to determine the impact that the CARES Act will have on its financial condition, results of operations, or liquidity. DRAFT

Page 62 Requests for Information

This financial report is designed to provide users with a general overview of the PDA’s finances and to demonstrate the PDA’s accountability for the money it receives. If you have any questions about this report or need additional financial information, a request should be addressed to the Pike Place Market Preservation and Development Authority, 85 Pike Street, Room 500, Seattle, WA 98101, or please call (206)-682-7453 or email [email protected].

LaSalle, WASH, and PPMQB3 issue their own separate audited financial statements. These statements may also be obtained by contacting the Pike Place Market Preservation and Development Authority at the address or phone number indicated above.

DRAFT

Page 63 Primary Government - Proprietary Fund Blended Discrete Component Component December 31, 2019 PDA Unit Eliminations Total Units Assets Current Assets Cash and cash equivalents $ 3,093,111 $ 3,241 $ - $ 3,096,352 $ 86,136 Accounts receivable, tenants 229,634 - - 229,634 11,337 Accounts receivable, other 164,497 - - 164,497 - Accounts receivable, related parties 133,619 - (11,760) 121,859 - Prepaid master lease expense, current portion - 199,207 (199,207) - - Prepaid expenses and other assets 421,948 - - 421,948 - Total Current Assets 4,042,809 202,448 (210,967) 4,034,290 97,473 Noncurrent Assets Designated cash and cash equivalents 24,040,804 - - 24,040,804 - Restricted cash and cash equivalents 3,595,433 143,290 - 3,738,723 1,632,068 Financing lease receivable 3,228,698 - - 3,228,698 - Prepaid master lease expense, less current portion - 9,014,101 (9,014,101) - - Loan receivable - tax credit project 7,310,125 - - 7,310,125 - Intangible assets, net of accumulated amortization - - - - 222,310 Capital assets, net 142,843,418 15,903,203 - 158,746,621 14,860,192 Total Noncurrent Assets 181,018,478 25,060,594 (9,014,101) 197,064,971 16,714,570 Total Assets $ 185,061,287 $ 25,263,042 $ (9,225,068) $ 201,099,261 $ 16,812,043

Liabilities and Net Position Current Liabilities Accounts payable $ 1,357,507 $ - $ - $ 1,357,507 $ 96,212 Accounts payable, related party - 11,760 (11,760) - 88,212 Accrued expenses and deposits payable 1,622,886 - - 1,622,886 52,890 Interest payable 92,928 - - 92,928 1,877,533 Unearned revenue 255,601 - - 255,601 - Current portion of master lease revenue advance 199,207 - (199,207) - - Current portion of non-capital grant advances 526,316 - - 526,316 - Current portion of loans payable - - - - 19,989 Current portion of bonds payable 740,000 - - 740,000 - Total Current Liabilities 4,794,445 11,760 (210,967) 4,595,238 2,134,836 Long-Term Liabilities Master lease revenue advance, net of current portion 9,014,101 - (9,014,101) - - Non-capital grant advances, net of current portion 2,631,578 - - 2,631,578 - Loans payable, net of current portion 455,000 10,250,000 - 10,705,000 4,762,309 Bonds payable, net of current portion 19,936,486 - - 19,936,486 - Total Long-Term Liabilities 32,037,165 10,250,000 (9,014,101) 33,273,064 4,762,309 Total Liabilities 36,831,610 10,261,760 (9,225,068) 37,868,302 6,897,145 Net Position Net investment in capital assets 121,711,932 5,653,203 - 127,365,135 10,077,894 Restricted for required reserves 3,595,433 143,290 - 3,738,723 1,605,821 Unrestricted (deficit) 22,922,312 9,204,789 - 32,127,101 (1,768,817) Total Net Position 148,229,677 15,001,282 - 163,230,959 9,914,898 Total Liabilities and NetDRAFT Position $ 185,061,287 $ 25,263,042 $ (9,225,068) $ 201,099,261 $ 16,812,043 See accompanying notes to financial statements.

Page 64 Primary Government - Proprietary Fund Blended Discrete Component Component Year Ended December 31, 2019 PDA Unit Eliminations Total Units

Operating Revenue Rent $ 18,132,432 $ 392,533 $ (490,767) $ 18,034,198 $ 656,169 Parking 4,218,944 - - 4,218,944 - Management fees 155,035 - - 155,035 - Security 70,661 - - 70,661 - Contributions and grants 178,262 - - 178,262 499,424 Miscellaneous 298,392 - - 298,392 -

Total Operating Revenue 23,053,726 392,533 (490,767) 22,955,492 1,155,593

Operating Expenses Property management 13,181,410 500,992 (490,767) 13,191,635 691,818 Depreciation and amortization 5,714,091 425,858 - 6,139,949 638,158 Parking 1,377,733 - - 1,377,733 - Security 1,753,101 - - 1,753,101 - Professional fees 328,315 - - 328,315 89,584

Total Operating Expenses 22,354,650 926,850 (490,767) 22,790,733 1,419,560

Operating Income (Loss) 699,076 (534,317) - 164,759 (263,967)

Non-Operating Revenue (Expenses) Interest income 839,243 79 - 839,322 - Forgiveness of interest 22,750 - - 22,750 - Non-capital grant revenue 526,316 - - 526,316 - Interest expense (898,241) (114,134) - (1,012,375) (199,794) Amortization of intangible assets - - - - (10,873)

Net Non-Operating Revenue (Expenses) 490,068 (114,055) - 376,013 (210,667)

Change in Net Position 1,189,144 (648,372) - 540,772 (474,634)

Net Position, beginning of year 147,040,533 15,649,654 - 162,690,187 10,389,532

Net Position, end of year $ 148,229,677 $ 15,001,282 $ - $ 163,230,959 $ 9,914,898

See accompanying notes to financial statements.

DRAFT

Page 65 Primary Government - Proprietary Fund Blended Discrete Component Component Year Ended December 31, 2019 PDA Unit Eliminations Total Units

Cash Flows from Operating Activities Cash received from tenants for rent $ 17,862,040 $ 392,533 $ (490,767) $ 17,763,806 $ 655,301 Cash received from parking 4,218,944 - - 4,218,944 - Cash received from management fees and other customers 914,061 - - 914,061 499,424 Cash paid to employees (6,652,323) - - (6,652,323) (92,233) Cash paid to suppliers and others (10,267,256) (301,785) 490,767 (10,078,274) (618,635)

Net Cash Flows from Operating Activities 6,075,466 90,748 - 6,166,214 443,857

Cash Flows from Non-Capital Financing Activity Advances from (to) related parties 30,770 (53,822) - (23,052) (754)

Cash Flows for Capital and Related Financing Activities Purchases of capital assets (2,129,550) - - (2,129,550) (399,313) Interest paid (994,341) (114,134) - (1,108,475) (6,172) Repayment of bonds and loans payable (708,334) - - (708,334) (19,840)

Net Cash Flows for Capital and Related Financing Activities (3,832,225) (114,134) - (3,946,359) (425,325)

Cash Flows from Investing Activities Change in restricted cash (63,062) 30,671 - (32,391) 49,870 Interest received 694,895 79 - 694,974 -

Net Cash Flows from Investing Activities 631,833 30,750 - 662,583 49,870

Net Change in Cash and Cash Equivalents 2,905,844 (46,458) - 2,859,386 67,648

Cash and Cash Equivalents, beginning of year 24,228,071 49,699 - 24,277,770 18,488 Cash and Cash Equivalents, end of year $ 27,133,915 $ 3,241 $ - $ 27,137,156 $ 86,136

Included in the Statement of Net Position as Follows: Cash and cash equivalents $ 3,093,111 $ 3,241 $ - $ 3,096,352 $ 86,136 Designated cash and cash equivalents 24,040,804 - - 24,040,804 -

$ 27,133,915 $ 3,241 $ - $ 27,137,156 $ 86,136

DRAFT

Page 66 Primary Government - Proprietary Fund Blended Discrete Component Component Year Ended December 31, 2019 PDA Units Eliminations Total Units

Reconciliation of Operating Income (Loss) to Net Cash Flows from Operating Activities Operating income (loss) $ 699,076 $ (534,317) $ - $ 164,759 $ (263,967) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation and amortization 5,714,091 425,858 - 6,139,949 638,158 Loss on disposal of capital assets 31,051 - - 31,051 - Changes in operating assets and liabilities: Accounts receivable, tenants and other 193,367 - - 193,367 (868) Master lease revenue advance/prepaid lease (199,207) 199,207 - - - Prepaid expenses and other assets (68,772) - - (68,772) - Accounts payable and accrued expenses (241,299) - - (241,299) 70,534 Unearned revenue (52,841) - - (52,841) -

Net Cash Flows from Operating Activities $ 6,075,466 $ 90,748 $ - $ 6,166,214 $ 443,857

See accompanying notes to financial statements.

DRAFT

Page 67 December 31, 2019

Assets Cash and cash equivalents $ 103,639 Investments 4,903,495 Employer contributions receivable 450,000 Participant loans receivable 115,439

Total Assets $ 5,572,573

Net Position Restricted for pension benefits $ 5,572,573

See accompanying notes to financial statements.

DRAFT

Page 68 Year Ended December 31, 2019

Additions Contributions: Employer $ 450,000 Plan members 5,899

Total contributions 455,899

Investment earnings: Interest and dividends 243,507 Realized and unrealized gains 668,865

Total investment earnings 912,372

Total Additions 1,368,271

Deductions Benefits 108,676 Administrative expenses 11,387

Total Deductions 120,063

Change in Net Position 1,248,208

Net Position, beginning of year 4,324,365

Net Position, end of year $ 5,572,573 See accompanying notes to financial statements.

DRAFT

Page 69 1. Organization and Summary of Significant Accounting Policies

Organization and Nature of Operations

Pike Place Market Preservation and Development Authority (the “PDA”), is a public governmental corporation established by charter issued by the City of Seattle (the “City”) in 1973. The charter obligates the PDA to preserve, redevelop, and manage the Pike Place Market (the “Market”), which resides in a nine acre historical district in downtown Seattle. According to the charter, the PDA is required to preserve these historical properties, assure the Market’s economic viability, provide opportunities and services to low- and moderate-income people, maintain the tradition of a farmers’ market for direct sale of fresh produce by the farmer to the consumer, and enhance the economic health of small owner operated businesses, farmers, and craftspeople. The Market properties were renovated using a combination of private and federal funds during the 1970s and early 1980s. In addition, the State of Washington (the “State”) Department of Community Development has a historic preservation easement on the property.

Blended Component Unit

Pike Place Market QALICB3 (“PPMQB3”) is considered a blended component unit of the PDA as the PDA is the sole corporate member of PPMQB3. PPMQB3 is a Washington State nonprofit tax exempt organization affiliated with the PDA. PPMQB3’s financial data is included on the face of the PDA’s basic financial statements as allowed under the Governmental Accounting Standards Board (“GASB”). All inter-entity transactions are eliminated on the face of the PDA’s basic financial statements. PPMQB3 reports on a fiscal year end consistent with the PDA primary government. The financial statements of PPMQB3, for the purposes of these financial statements, are presented in accordance with GASB. PPMQB3’s financial statements were audited separately, and those audited statements were prepared using generally accepted accounting principles for nonprofit organizations, which differ from governmental accounting principles. Copies of these financial statements may be obtained by contacting the PDA.

The following notes to the financial statements are presented including the financial information of PPMQB3.

Discretely Presented Component Units

LaSalle Senior Housing LLC (“LaSalle”) and Western Avenue Senior Housing, LLC (“WASH”) are considered component units of the PDA (collectively, the “Discrete Component Units”), discretely presented in a separate column on the face of the PDA’s basic financial statements. As the managing member of LaSalle and WASH, the PDA is financially accountable for and oversees the day-to-day operations of these separate legal entities. The Discrete Component Units report on a fiscal year end consistent with the PDA primary government. The financial statements of the Discrete Component Units were prepared in accordance with accounting principles generally accepted in the United States of America, and the financial statements of the Discrete Component Units were audited separately. The financial statements of the Discrete Component Units for the purposes of these financial statements, are presented in accordance with GASB. Copies of these financial statements may be obtained by contacting the PDA. The Discrete Component Units are also discussed in Note 12.

DRAFT

Page 70 Fiduciary Fund Component Unit – Pension Trust Fund

The PDA has evaluated the impacts of GASB Statement No. 84, Fiduciary Activities, and as a result, determined its sponsored tax advantaged deferred compensation plan, a defined contribution plan (the “Pension Trust Fund”), is a fiduciary fund component unit. GASB Statement No. 84, became effective for the PDA during the year ended December 31, 2019. Therefore, the Pension Trust Fund is included within these financial statements.

The Pension Trust Fund is a governmental 457 type plan and is used to account for assets held in trust by TD Ameritrade Trust Company for the benefit of qualified employees of the PDA. The Pension Trust Fund is sponsored by the PDA and governed by a Plan Administrative Committee (acting as Board of the Pension Trust Fund). The Plan Administrative Committee is made up of the PDA Finance Committee Chair, the PDA Executive Director, and the PDA Director of Finance and Administration, which are appointed by the PDA Council (which thereby, may impose its will on the Pension Trust Fund). Therefore, the Pension Trust Fund is included as a component unit of the PDA.

Basis of Accounting

Due to its business like operations, the PDA is considered a stand-alone proprietary entity. The financial statements have been prepared using the economic resources measurement focus and the accrual basis of accounting. All assets and all liabilities (whether current or noncurrent) associated with its activities are included on the statement of net position. Revenue is recognized when earned and expenses are recorded when an obligation has been incurred. Capital asset purchases are capitalized and, when appropriate, depreciated.

The financial statements of the Pension Trust Fund are prepared using the accrual basis of accounting. Discretionary contributions to the Plan are made by the PDA in order to maintain sufficient assets to pay benefits and are recognized when due. Benefits are recognized when paid in accordance with the terms of the Pension Trust Fund.

Cash and Cash Equivalents

For cash flow purposes, highly liquid investments with an original maturity of less than three months, including those investments held at the Local Government Investment Pool (“LGIP”) described below, that are not restricted are considered cash equivalents. Cash and cash equivalents, including those designated and restricted are described in Notes 2, 3 and 4.

Custodial Credit Risk

Custodial credit risk for deposits is the risk that, in event of a failure of a depository financial institution, the PDA would not be able to recover deposits or will not be able to recover collateral securities that are in possession of an outside party.

At December 31, 2019, the PDA had cash and cash equivalents held in banks in excess of federally insured limits. At December 31, 2019, $1,031,230 of the PDA’s bank balances of $1,281,230 was uninsured and uncollateralized.

DRAFT

Page 71 Investments in Local Governmental Investment Pool

The PDA is a participant in the LGIP. The LGIP was authorized by Chapter 294, Laws of 1986, and is managed and operated by the Washington State Treasurer. The State Finance Committee is the administrator of the statute that created the pool and adopts rules. The State Treasurer is responsible for establishing the investment policy for the pool and reviews the policy annually and proposed changes are reviewed by the LGIP advisory Committee.

Investments in the LGIP, a qualified external investment pool, are reported at amortized cost which approximates fair value. The LGIP is an unrated external investment pool. The pool portfolio is invested in a manner that meets the maturity, quality, diversification and liquidity requirements set forth by the GASB Statement No. 79 for external investments pools that elect to measure, for financial reporting purposes, investments at amortized cost. The LGIP does not have any legally binding guarantees of share values. The LGIP does not impose liquidity fees or redemption gates on participant withdrawals. According to GASB guidelines, the balances are also not subject to custodial credit risk.

The Office of the State Treasurer prepares a stand-alone LGIP financial report. A copy of the report is available from the Office of the State Treasurer, PO Box 40200, Olympia, Washington 98504-0200, online at http://www.tre.wa.gov.

Investments – Pension Trust Fund

Investments in money market funds, mutual funds, and marketable debt securities are carried at fair value based on quoted market prices. Investment income, including net realized and unrealized gains or losses, and interest and dividends earned are recorded as nonoperating income (loss). Gains and losses from the sale of securities are recorded using the specific-identification method.

Accounts Receivable

Accounts receivable from tenants are due for rent and related expenses and are generally unsecured. Accounts receivable from others are due for the reimbursement of expenses. Related-party receivables are discussed in Note 5. The PDA considers all accounts greater than 30 days old to be past due and uses the allowance method for recognizing bad debts. When an account is deemed uncollectible, it is generally written off against the allowance. Management determined no allowance was necessary at December 31, 2019.

Participant Loans Receivable – Pension Trust Fund

Participant loans receivable are recognized at net realizable value and are limited to the lesser of $50,000 or 50% of the participant’s vested balance. Loans generally have repayment terms of five or 10 years, and bear interest at fixed rates of 3.25% to 6.50%. Loans are secured by the vested portion of the participants loan balance. Management has determined no allowance was necessary at December 31, 2019.

DRAFT

Page 72 Capital Assets

The capitalization policy for building improvements includes all items with a unit cost of $2,500 or more and an estimated useful life of more than 10 years. The capitalization policy for equipment includes all items with a unit cost of $500 or more and an estimated useful life of more than five years. The costs of normal maintenance and repairs, which do not increase the value of the assets or materially extend asset lives, are charged to operating expenses in the year the expense is incurred.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Buildings (excluding the garage) are depreciated over periods up to 70 years. Building improvements and the garage are amortized/depreciated over periods up to 40 years. Other property and equipment are depreciated over five years.

Capital assets are also discussed in Note 7.

Debt Premiums and Discounts

Debt premiums and discounts are netted against the debt payable and are deferred and amortized over the life of the related debt using the effective interest method.

Net Position

Net position is composed of various net earnings from operating revenue, non-operating revenue, capital grants and contributions, and expenses. Net position is classified in the following three components:

• Net investment in capital assets – This component of net position consists of capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, loans, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. As of December 31, 2019, the total invested in capital assets, net of accumulated depreciation, was $158,746,621, and related debt was $31,381,486.

• Restricted for required reserves – This component of net position consists of external constraints imposed by creditors (through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation, that restrict the use of net position. The PDA had restricted net position (made up of cash and cash equivalents) of $3,738,723 as of December 31, 2019 (see Note 3).

• Unrestricted – This component of net position consists of net position that does not meet the definition of “restricted for required reserves” or “net investment in capital assets.” DRAFT

Page 73 Classification of Revenue and Expenses

The PDA distinguishes operating revenue and expenses from non-operating items in the preparation of its financial statements according to the following criteria:

Operating – Operating revenue and expenses generally result from providing rental, parking, and security services in connection with the PDA’s principal ongoing operations. Principal operating revenue includes rent, parking, property management, and security fees. Operating expenses include property management, parking, security, professional fees, and other expenses related to the delivery of rental, parking, and security services.

Non-Operating – Almost all revenue and expenses not meeting the definition above are reported as non-operating revenue and expenses. Related-party grant revenue (expense) is considered non-operating given that it is discretionary in nature and calculated based on a non-operating measure.

Rent Revenue and Unearned Revenue

The PDA receives regular monthly income from residential and commercial tenants under operating leases. Revenue is recognized in accordance with the lease agreement rather than on the straight-line method over the lease term, as management believes the difference would be immaterial. Residential leases are stated at a fixed monthly rate, and commercial leases are stated at a base rate or a percentage of monthly sales, whichever is greater. Most commercial tenants pay rent based on a percentage of monthly sales. Generally, residential lease contracts are for a one-year term and are always cancelable with a 30 day notice by either party. Commercial lease contracts generally have terms up to 10 years and are noncancelable (see Note 10).

Rent revenue received in advance of the rental service period are recognized as unearned revenue.

Master Lease Revenue Advance

On February 11, 2016, the PDA entered into a 50-year lease agreement allowing PPMQB3 to lease commercial space in the MarketFront building within the Pike Place Market Historic District. The PDA received $9,711,325 from PPMQB3 for the lease of the building for the 50-year period from February 11, 2016, to February 28, 2066. The master lease revenue advance is being recognized on the straight-line method over the life of the lease. Lease revenue in 2019 was $199,207, and lease revenue over each of the following full years under the agreement is expected to be $199,207.

The current and noncurrent portions of the prepaid master lease payments are presented as follows in the statement of net position:

December 31, 2019

Current portion of master lease revenue advance $ 199,207 Master lease revenue advance, net of current portion 9,014,101

$ 9,213,308

DRAFT

Page 74 This amount is considered an asset of PPMQB3 (a blended component unit) as it represents lease payments made in advance. The amount has been collected in advance by the PDA, so it is considered a liability by the PDA. The assets, liabilities, revenue and expense related to this master lease have been eliminated in the blending of the PDA and PPMQB3.

Parking and Management Fee Revenue

Parking and management fee revenue is recognized when the service is provided.

Non-Capital Grant Advances

Non-capital grant advances represent funds received by the PDA under an agreement with the Washington State Department of Transportation to restrict 450 of its existing parking spaces to short-term parking through December 31, 2025. Non-capital grant advances are recognized ratably over the term of the agreement.

Income Taxes

As a public governmental corporation, the PDA is exempt from income taxes.

Fair Value of Financial Instruments

The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GASB Statement No. 72, Fair Value Measurement and Application, establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted market prices in active markets for identical assets (Level 1) and the lowest priority to observable inputs (Level 3).

Use of Estimates

The preparation of financial statements in conformity with governmental accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

2. Cash and Cash Equivalents

The PDA’s cash and cash equivalents are held with the following institutions:

December 31, 2019

Investment in State of Washington LGIP $ 29,725,226 Cash and cash equivalents held in banks 1,150,653

$ 30,875,879

DRAFT

Page 75 These amounts are presented in the statement of net position as follows:

December 31, 2019

Cash and cash equivalents $ 3,096,352 Designated cash and cash equivalents 24,040,804 Restricted cash and cash equivalents 3,738,723

$ 30,875,879

The composition of designated cash and cash equivalents is as follows:

December 31, 2019

Capital equipment and capital budget carryovers $ 17,661,077 MarketFront project reserve 2,786,476 Minimum operating reserve - PDA 2,357,064 Low-income housing reserve 931,476 Reserve for contingencies 304,711

$ 24,040,804

The composition of restricted cash and cash equivalents is discussed in Note 3.

3. Restricted Cash and Cash Equivalents

Restricted cash and cash equivalents consist of the following:

2015 bond reserves – Debt service reserve funds for special obligation and refunding bonds issued in 2015.

MarketFront project retainage reserve – Consists of retainage for construction performed through December 31, 2018, related to the MarketFront project that is expected be paid during 2020.

Security deposits – Funds held as tenant security deposits.

2009 bond reserves – Debt service reserves funds for bonds refunded in 2009.

Senior Center reserves – Funds reserved for Pike Market Senior Center capital maintenance and replacement.

Minimum operating reserves – PPMQB3 – Funds restricted under loan reserve and security agreements of PPMQB3.

DRAFT

Page 76

The composition of restricted cash and cash equivalents is as follows:

December 31, 2019

2015 bond reserves $ 1,944,512 MarketFront project retainage reserve 567,619 Security deposits 456,263 2009 bond reserves 320,203 Senior Center reserves 306,836 Minimum operating reserve under loan and security agreement - PPMQB3 143,290

$ 3,738,723

4. Cash and Cash Equivalents and Investments – Pension Trust Fund

The PDA’s cash and cash equivalents and investments of the Pension Trust Fund are summarized as follows:

December 31, 2019

Cash and cash equivalents $ 103,639 Mutual funds - mid and large cap equities 1,938,562 Mutual funds - international equities 841,364 Mutual funds - small and mid-cap equities 508,865 Mutual funds - fixed income 1,614,704

$ 5,007,134

Credit Risk

With respect to fixed income investments, credit risk is the risk that an issuer or other counterparty to an investment will not fulfill their obligations as required by the fixed income security. The PDA’s investment policy, adopted by the Plan Administrative Committee, allows for up to a moderate amount of risk. As of December 31, 2019, the Pension Trust Fund’s fixed income securities had a range of credit ratings of BB to AAA.

Interest Rate Risk

Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. There is no formal policy for the plan that limits investment maturities as a means of managing its exposure to fair value losses. The mutual funds held by the Pension Trust Fund all have a weighted average maturity of less than one year.

Custodial Credit Risk

Custodial credit risk is the risk that, in the event of the failure of the counterparty, the PDA will not be able DRAFTto recover the value of its investments or collateral securities that are in possession of a third party.

Page 77 Investments are exposed to custodial credit risk if the securities are uninsured, are not registered in the name of the PDA, and are held by either the counterparty or the counterparty’s trust department or agent, but not the PDA’s name. As of December 31, 2019, the PDA’s investments are in open-end mutual funds and are not exposed to custodial credit risk. As of December 31, 2019, the cash deposits did not have custodial credit risk.

Concentration of Credit Risk

The PDA’s investment holdings include mutual funds, which are intended to cover an appropriate range of asset classes that reasonably span the risk/return spectrum. Within mutual fund holdings, there are no significant concentrations of investments in any one entity. Holding targets by mutual fund type are set by the PDA’s investment policy. All holdings are within the investment policy’s acceptable ranges at December 31, 2019.

Foreign Currency Risk

As of December 31, 2019, the PDA did not have any significant exposure to foreign currency risks.

Fair Value

The three levels of fair value hierarchy are as follows:

Level 1 – Quoted prices for identical assets or liabilities in active markets

Level 2 – Quoted prices for similar instruments in active markets; for identical instruments in markets that are not active; any model-driven valuations whose inputs are observable either indirectly or directly

Level 3 – Unobservable inputs that are significant to the fair value of the assets or liabilities

Although PDA management believes the fair value accounting estimates reflected in the PDA’s financial statements are reasonable, there can be no assurances that the PDA could ultimately realize these values.

The following table presents the PDA’s fair value hierarchy for investments in the Pension Trust Fund at December 31, 2019:

Total Level 1 Level 2 Level 3

Mutual funds - mid and large cap equities $ 1,938,562 $ 1,938,562 $ - $ - Mutual funds - international equities 841,364 841,364 - - Mutual funds - small and mid-cap equities 508,865 508,865 - - Mutual funds - fixed income 1,614,704 1,614,704 - -

$ 4,903,495 $ 4,903,495 $ - $ -

DRAFT

Page 78 5. Related-Party Transactions

LaSalle Senior Housing LLC (LaSalle)

LaSalle is a limited liability company formed by the PDA and the Market Foundation (described below) to develop and operate low-income residential housing in the LaSalle Building. The LaSalle Building is one of the buildings located in the Market. The PDA is the managing member of LaSalle and holds a 0.01% interest. The remaining 99.99% interest is held by an investment company called National Equity Fund Partners (“NEFP”). NEFP has the right to receive low income housing tax credits resulting from this low income residential housing project. In exchange, NEFP committed to invest over $8,000,000 into LaSalle.

In April 2005, the PDA leased property to LaSalle for $2,020,000 under a financing lease agreement, which terminates on December 31, 2085. Upon execution of this lease, LaSalle paid an initial rent payment of $240,000 to the PDA. Interest at the rate of 4.68% compounded annually accrues on the unpaid balance of $1,780,000. Interest earned from LaSalle was $144,348 in 2019. Interest receivable from LaSalle (included with the unpaid principal balance to make up the financing lease receivable on the statement of net position) was $1,448,698 at December 31, 2019. The financing lease receivable is unsecured.

LaSalle is liable to make annual payments (considered principal and interest) at a maximum of $92,723, based on available net cash flows subjected to payment priority according to the agreement between the PDA and LaSalle that describes how the property is to be managed (the “Operating Agreement”), with all unpaid principal and accrued interest due on December 31, 2057. Beginning in 2058, annual rent payments will be $100 through 2085, assuming the lease arrangement is still in existence. As of December 31, 2019, there were no available net cash flows, and no interest or principal has been paid to date.

Additionally, under this financing lease, the PDA was granted first right of refusal to purchase the residential portion of the LaSalle Building or the NEFP’s interest in LaSalle after April 2021 (the end of the tax credit period). The purchase price is outlined in the Operating Agreement.

Certain administrative expenses are initially paid by the PDA and subsequently reimbursed by LaSalle. Additionally, the PDA earned management fees (including accounting fees) of $104,099 in 2019. Accounts receivable related to unreimbursed expenditures and unpaid management fees at December 31, 2019, was $43,671.

Under the Operating Agreement, the PDA has agreed to advance funds to cover operating deficits not funded from the operating reserve. Any such advances may be repaid from project cash flow in subsequent years or from proceeds of sale or refinance of the property, if that were to occur.

LaSalle is included in these financial statements as a discretely presented component unit. The determination of discrete instead of blended presentation was made given that the governing body of the PDA and its component unit are not substantively the same.

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Page 79 Western Avenue Senior Housing, LLC (WASH)

WASH is a limited liability company formed in 2016 by the PDA to construct and operate 40 low-income residential units in the MarketFront building. The PDA is the managing member of WASH (through Western Avenue Manager LLC, the PDA’s wholly owned subsidiary) and holds a 0.01% interest. U.S. Bank is the 99.99% owner and investor member. In addition, U.S. Bank obtained the right to receive low income housing tax credits resulting from this low income residential housing project. In exchange, U.S. Bank committed to invest approximately $8,000,000 into WASH.

In February 2016, the PDA leased the residential portion of the MarketFront building to WASH under a 100-year lease agreement, which terminates in December 2115. Under terms of the agreement, WASH pays the PDA a fixed annual amount of $10. Due the related nature of the entities, there is no financial statement impact recognized by the PDA or WASH for rent below fair market rates.

In addition, WASH entered into a property management agreement with the PDA, whereby the PDA earns 8% of gross rents collected. The agreement renews annually.

Certain administration expenses paid by the PDA on behalf of WASH are reimbursed by WASH. During 2019, the following transactions occurred between the PDA and WASH:

• As of December 31, 2019, $44,541 of unreimbursed expenses is receivable from WASH.

• The PDA earned a management fee of $50,936 from WASH in 2019.

Additionally, under the WASH Operating Agreement, the PDA was granted first right of refusal to purchase the residential portion of the MarketFront building or the U.S. Bank’s interest in WASH after January 2032 (the end of the tax credit period). The purchase price is outlined in the WASH Operating Agreement.

Also, under the Operating Agreement, the PDA has agreed to advance funds to cover operating deficits not funded from the operating reserve. Any such advances may be repaid from project cash flow in subsequent years or from proceeds of sale or refinance of the property, if that were to occur.

WASH is included in these financial statements as a discretely presented component unit. The determination of discrete instead of blended presentation was made given that the governing body of the PDA and its component unit are not substantively the same.

Pike Place Market QALICB3 (PPMQB3)

PPMQB3 is a Washington State nonprofit corporation formed in 2016 to obtain funds under the NMTC program, which commenced in 2016. Certain PPMQB3 board members are members of the PDA Council, and the PDA is the sole corporate member of PPMQB3. During 2016, the PDA leased commercial space related to the MarketFront project to PPMQB3 for purposes of renovating and rehabilitating them through the NMTC financing program (the “PPMQB3 Agreement”). Simultaneously, PPMQB3 subleased the space back to the PDA with a term expiring on December 31, 2051. DRAFT

Page 80 Rent revenue from tenants is earned by the PDA, and the PDA pays an annual fixed sublease payment to PPMQB3. Certain administration expenses paid by the PDA on behalf of PPMQB3 are reimbursed by PPMQB3. During 2019, the following transactions occurred between the PDA and PPMQB3:

• The PDA earned $199,207 from PPMQB3 in rent revenue relating to the leasing of commercial space within the MarketFront to PPMQB3.

• Certain administrative and operating expenses were initially paid by PDA on behalf of PPMQB3 in 2019. As of December 31, 2019, $11,760 is receivable for unreimbursed amounts.

Under terms of the sublease from PPMQB3, the PDA is required to make fixed annual sublease payments. Future minimum payments are as follows:

Years Ending December 31,

2020 $ 404,309 2021 416,438 2022 428,931 2023 441,799 2024 455,053 2025-2029 2,488,419 2030-2034 2,884,758 2035-2039 3,344,225 2040-2044 3,876,875 2045-2049 4,494,360 2050-2051 1,992,170

$ 21,227,337

Rent expense incurred under the sublease in 2019 to PPMQB3 was $392,533.

Additionally, under the PPMQB3 Agreement, the PDA has guaranteed any future operating deficits PPMQB3, and the PDA has guaranteed payment of any unearned NMTCs to MS NMSC Equity Fund, LLC (“MS NMSC”), the NMTC investor, in the event of an NMTC recapture event. No recapture events occurred in 2019.

The PDA and MS NMSC have entered into a put/call option agreement to take place at the end of the seven year NMTC reconveyance period ending January 2023. Under the agreement, Morgan Stanley (“MS”) NMSC can exercise a put option to sell all interest in the Pike Place MarketFront Investment Fund, LLC (“PPMIF”), a limited liability company 99.99% owned by MS NMSC, for $1,000 to the PDA. If MS NMSC does not exercise the put option within six months of the end of the seven-year period, the PDA has an additional three months in which it can exercise a call option to purchase the interest of the PPMIF at an appraised fair market value. As a result, if the option is exercised, the outstanding loan balances of PPMQB3 are expected to be forgiven in consideration of PPMQB3 transferring all of its leasehold improvement property to the PDA.

Certain disclosures in these financial statements may be significantly impacted in the event that the put/callDRAFT option is exercised.

Page 81 As described in Note 1, PPMQB3 is included in these financial statements as a blended component unit, and therefore all balances and transactions between the PDA and PPMQB3 have been eliminated in blending.

The Market Foundation

The Market Foundation is a nonprofit corporation incorporated under the laws of the state of Washington. The Market Foundation raises money to help pay for the services for the needy within the Market’s historical district and contributes to the PDA’s food subsidy and capital programs. Under the terms of a service agreement, the PDA subsidizes certain Market Foundation employees’ salary and benefits and a portion of its administrative office expenses. The total subsidized expenses incurred during 2019 were $271,805. Accounts receivable from the Market Foundation is $33,647 at December 31, 2019.

Although the Market Foundation is a related party, due to lack of control, it is not included in these financial statements.

Summary of Related-Party Receivables

Related-party receivables (excluding the financing lease receivable from LaSalle and those eliminated when blending PPMQB3) are as follows:

December 31, 2019

Due from LaSalle $ 43,671 Due from WASH 44,541 Due from the Market Foundation 33,647

Accounts Receivable, related parties $ 121,859

6. Loan Receivable – Tax Credit Projects

In 2016, the PDA loaned $7,310,125 to Pike Place MarketFront Investment Fund, LLC (“PPMIF”). PPMIF used the loan proceeds, through other intermediary entities, to make a NMTC loan to PPMQB3. The loan bears interest at 1.1%. Beginning June 15, 2023 (after the end of the tax credit earn-out period), annual principal and interest payments are due in the amount necessary to repay the outstanding principal and unpaid interest of the loan by June 15, 2042 (maturity). The loan is effectively secured by the capital investments of PPMQB3. During 2019, the PDA earned $73,101 of interest on this loan receivable.

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Page 82 7. Capital Assets

The following is a summary of capital assets at cost for 2019:

Balance, Balance, December 31, December 31, 2018 Additions Retirements Transfers 2019

Capital Assets not Being Depreciated Land $ 5,268,168 $ - $ - $ - $ 5,268,168 Construction in progress 66,660 133,942 - - 200,602

Total Capital Assets not Being Depreciated 5,334,828 133,942 - - 5,468,770

Capital Assets Being Depreciated Buildings 87,365,609 - - - 87,365,609 Building improvements - PDA 101,896,675 1,807,658 (914,913) - 102,789,420 Building improvements - PPMQB3 17,074,312 - - - 17,074,312 Equipment 1,350,784 187,950 (41,284) - 1,497,450 Capital improvement plan 549,364 - - - 549,364

Total Capital Assets Being Depreciated 208,236,744 1,995,608 (956,197) - 209,276,155

Accumulated Depreciation

Buildings 18,806,927 1,663,590 - 157,923 20,628,440 Building improvements - PDA 29,682,528 3,944,290 (883,863) (157,923) 32,585,032 Building improvements - PPMQB3 745,251 425,858 - - 1,171,109 Equipment 1,073,059 91,755 (41,283) - 1,123,531 Capital improvement plan 475,736 14,456 - - 490,192

Total Accumulated Depreciation 50,783,501 6,139,949 (925,146) - 55,998,304

Total Capital Assets Being Depreciated, net 157,453,243 (4,144,341) (31,051) - 153,277,851

Capital Assets, net $ 162,788,071 $ (4,010,399) $ (31,051) $ - $ 158,746,621

8. Long-Term Liabilities

Loans Payable

Creamery Loan

In December 2004, the PDA acquired land (referred to as the Creamery lot) from the City in exchange for a loan due to the City in the amount of $455,000. The loan accrues interest at 5% per annum. According to the terms of the loan agreement, the principal and accrued interest become due in December 2023, at which time the City has agreed to forgive these amounts as long as the PDA used the land for the intended use outlined in the sales agreement. The PDA will recognize forgiveness of principal whenDRAFT compliance with terms of the loan have been significantly met (expected in 2023). Interest of $22,750 was forgiven by the City for the year ended December 31, 2019.

Page 83 PPMQB3 Loans A and B

In February 2016, PPMQB3 borrowed a total of $10,250,000 from Morgan Stanley (“MS”) New Markets X LLC (the “Lender”) (Loans A and B) for the purposes of constructing the retail buildings within the MarketFront. The Lender was created solely for the purpose of obtaining the benefits of New Market Tax Credits. The tax credit investor/lender is MS NMSC Equity Fund, LLC (the “NMTC Investor”) and the NMTC Investor owns the Lender. Both loans bear interest at an annual rate of 1.1135% and mature on February 11, 2051. Quarterly interest only payments are due and payable through March 2023. Starting in June 2023 through the maturity date, payments of interest and principal, amortized over the remaining term, shall be payable in quarterly installments due and payable on the last day of March, June, September, and December. All remaining principal and accrued and unpaid interest shall be due and payable on the maturity date.

All loans are secured by the assignment of rents and restricted cash of PPMQB3. Additionally, all loans are guaranteed by the PDA. The PDA and PPMQB3 have also guaranteed payment of any unearned New Market Tax Credits to the NMTC Investor in the event of an NMTC recapture event, as defined in the financing arrangement. No recapture events occurred in 2019 or 2018.

The PDA and the NMTC Investor have entered into a put/call option agreement to take place at the end of the seven-year NMTC period. Under the agreement, the NMTC Investor can exercise a put option to sell all of its interest for $1,000 to the PDA. If the NMTC Investor does not exercise the put option within six months of the end of the seven-year period, the PDA has an additional three months in which it can exercise a call option to purchase the NMTC Investor’s interest in the Lender at an appraised fair market value. As a result, if either the put option or the call option is exercised, the outstanding loan balances are expected to be forgiven in consideration of PPMQB3 transferring all of its leasehold improvement property to the PDA.

Certain disclosures in these financial statements may be significantly impacted in the event the put/call option is exercised.

Following are the changes in loans payable for the year ended December 31, 2019:

Balance, Balance, December 31, December 31, Current Loans Payable 2018 Additions Reductions 2019 Portion

Creamery loan $ 455,000 $ - $ - $ 455,000 $ - PPMQB3 - Loan A 7,310,125 - - 7,310,125 - PPMQB3 - Loan B 2,939,875 - - 2,939,875 -

Total Loans Payable $ 10,705,000 $ - $ - $ 10,705,000 $ -

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Page 84 The principal and interest maturities of loans payable are as follows:

Years Ending December 31, Principal Interest Total

2020 $ - $ 114,134 $ 114,134 2021 - 114,134 114,134 2022 - 114,134 114,134 2023 690,659 113,479 804,138 2024 317,284 110,188 427,472 2025 - 2029 1,640,437 496,922 2,137,359 2030 - 2034 1,734,224 403,236 2,137,460 2035 - 2039 1,833,373 303,987 2,137,360 2040 - 2044 1,938,192 199,170 2,137,362 2045 - 2049 2,049,002 88,359 2,137,361 2050 - 2051 501,829 3,919 505,748

$ 10,705,000 $ 2,061,662 $ 12,766,662

Bonds Payable Summary

Bonds payable are as follows:

Year Ended December 31, 2019

Refunding Bonds - Revenue

2009 PDA Refunding Bonds, with interest at 5%, interest payments made semi-annually, and remaining annual principal payments ranging from $382,500 to $435,000 through May 1, 2021. $ 817,500

Special Obligation and Refunding Bonds 2015A - MarketFront Project

Series 2015A PDA Special Obligation and Refunding Bonds, with interest at 5%, interest payments made semi-annually, and remaining annual principal payments ranging from $305,000 to $1,380,000 through December 1, 2040. 18,360,000

19,177,500

Less: Current portion (740,000)

Plus: Unamortized premiums on Series 2015A bonds payable 1,498,986

$ 19,936,486

The PDA is required to maintain certain debt service reserve levels for each of the outstanding bond series. All reserve requirements were met in 2019. DRAFT

Page 85 Bonds Payable – Details

Refunding Bonds – Revenue

The PDA has issued and refunded various series of tax exempt Special Obligation Revenue Bonds, beginning in 1991. The bonds were issued in order to refinance certain private bank mortgages.

The final refunding occurred in 2009 when the bonds were refinanced with the City with a face value of $4,390,000.

Series 2015A and 2015B Special Obligation and Refunding Bonds – MarketFront Project

In June 2015, the PDA issued Special Obligation and Refunding Bonds (the “Series A Bonds”) and Special Obligation Bonds (the “Series B Bonds”), collectively referred to as “2015 Bonds,” for the purpose of financing the design, acquisition, construction, and equipping of parking and other improvements related to the MarketFront Project, and to also refinance and pay in full certain bonds, a commercial mortgage, and another long-term obligation previously outstanding of the PDA. The Series B Bonds were paid in full in 2018. The Series A Bonds are secured by restricted cash and, effectively, the unrestricted net position of the PDA. The bonds include a covenant that the PDA to maintain a minimum debt service coverage ratio. The PDA is in compliance with the bond covenant at December 31, 2019.

Following are the changes in bonds payable for the year ended December 31, 2019:

Balance, Reductions Balance, December 31, and December 31, Current Bonds Payable 2018 Additions Amortization 2019 Portion

Series 2009 bonds $ 1,235,833 $ - $ (418,333) $ 817,500 $ 435,000 Series 2015A bonds 18,650,000 - (290,000) 18,360,000 305,000

19,885,833 - (708,333) 19,177,500 740,000

Unamortized bond premiums 1,617,837 - (118,851) 1,498,986 -

Total Bonds Payable $ 21,503,670 $ - $ (827,184) $ 20,676,486 $ 740,000

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Page 86 The principal and interest maturities of bonds payable are as follows:

Years Ending December 31, Principal Interest Total

2020 $ 740,000 $ 951,625 $ 1,691,625 2021 927,500 914,125 1,841,625 2022 575,000 875,500 1,450,500 2023 605,000 846,750 1,451,750 2024 635,000 816,500 1,451,500 2025 - 2029 3,665,000 3,575,000 7,240,000 2030 - 2034 4,680,000 2,562,500 7,242,500 2035 - 2039 5,970,000 1,269,750 7,239,750 2040 1,380,000 69,000 1,449,000

$ 19,177,500 $ 11,880,750 $ 31,058,250

9. Pension Trust Fund

The PDA’s Pension Trust Fund is a nonqualified, single employer, tax advantaged deferred compensation plan (a defined contribution plan). All covered employees are general employees of the PDA who are at least 21 years of age and work 1,000 hours a year or more are eligible to participate in the Pension Trust Fund on the first day of the month following the month in which the member satisfies these eligibility requirements. Members generally become fully vested as to benefits upon completion of five years of service. At December 31, 2019, there were 107 members in the Pension Trust Fund.

During the year ended December 31, 2019, the PDA recognized pension expense of $450,000, and a related pension liability (included within accrued expenses and deposits payable on the statement of net position) for the discretionary amount to be contributed to the Pension Trust Fund. The Pension Trust Fund recognized a corresponding employer contribution in 2019 and employer contribution receivable at December 31, 2019. Employees are not required to make contributions to the Pension Trust Fund. However, if they elect to contribute, employees must contribute a minimum of a minimum of 2% and maximum of 10% of their compensation to the Pension Trust Fund.

The Pension Trust Fund was established by the PDA Council for the benefit of employees meeting eligibility requirements. The PDA Council has the right to amend or terminate the Pension Trust Fund at any time at its sole discretion. Any amendments will not cause the fund assets to be used for any purpose other than for the benefit of all eligible employees, retired employees, or their beneficiaries, or pay for reasonable administration costs. Forfeitures are immaterial.

10. Future Rental Revenue

The PDA leases nearly all of its land, buildings and building improvements to residential and commercial tenants under noncancelable agreements. As discussed in Note 1, leases to residential tenants have one-year terms and are cancelable with a 30-day notice by either party, and are therefore excluded from the future minimum rental schedule below. DRAFT

Page 87 The terms of commercial leases are generally up to 10 years with options to extend up to two years (however, certain longer term leases do exist). Most commercial leases include percentage rent (based on a percentage of the tenant’s sales) and fixed or variable escalation clauses. Future minimum rentals to be received excluding options to extend, percentage rent, and variable escalation clauses are approximately as follows:

Years Ending December 31,

2020 $ 3,964,779 2021 3,234,033 2022 2,488,691 2023 1,577,075 2024 1,026,052 2025-2029 2,284,178

$ 14,574,808

11. Risk Management

The PDA is subject to claims and litigation incidental to its business. Management believes the ultimate resolution of these routine matters will not have a material adverse effect on the PDA’s statements of net position, operations, or cash flows. The PDA purchases commercial insurance coverage to mitigate such risks.

The PDA provides coverage up to the maximum of $2,000,000 and $1,000,000 per occurrence for general liability and automobile claims, respectively. There were no changes in coverages in 2019. No settled claim exceeded these commercial coverages in 2019, 2018, or 2017.

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Page 88 12. Discretely Presented Component Units

As discussed in Note 1, LaSalle and WASH are considered component units of the PDA and are discretely presented in a separate column on the face of the PDA’s basic financial statements.

Summarized discretely presented component unit statement of net position information is as follows:

LaSalle Senior Western Avenue December 31, 2019 Housing LLC Senior Housing LLC Total Assets

Current Assets Cash and cash equivalents $ - $ 86,136 $ 86,136 Accounts receivable, tenants 3,785 7,552 11,337

Total Current Assets 3,785 93,688 97,473

Restricted cash 1,364,617 267,451 1,632,068 Intangible assets, net of accumulated amortization 222,310 - 222,310 Capital assets, net 6,516,609 8,343,583 14,860,192

Total Assets $ 8,107,321 $ 8,704,722 $ 16,812,043

Liabilities and Net Position

Current Liabilities Accounts payable $ 79,212 $ 17,000 $ 96,212 Accounts payable, related party 43,671 44,541 88,212 Deposits payable 26,247 26,643 52,890 Interest payable 1,838,514 39,019 1,877,533 Current portion of loans payable 19,989 - 19,989

Total Current Liabilities 2,007,633 127,203 2,134,836

Long-term liabilities: Loans payable, net 3,459,050 1,303,259 4,762,309

Total Liabilities 5,466,683 1,430,462 6,897,145

Net Position Net investment in capital assets 3,037,570 7,040,324 10,077,894 Restricted for required reserves 1,338,370 267,451 1,605,821 Unrestricted deficit (1,735,302) (33,515) (1,768,817)

Total Net Position 2,640,638 7,274,260 9,914,898

Total Liabilities and Net Position $ 8,107,321 $ 8,704,722 $ 16,812,043

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Page 89 Summarized discretely presented component unit statement of revenues, expenses, and changes in fund net position information is as follows:

LaSalle Senior Western Avenue December 31, 2019 Housing LLC Senior Housing LLC Total

Operating Revenue Rent $ 331,962 $ 324,207 $ 656,169 Contributions and grants 499,424 - 499,424

Total Operating Revenue 831,386 324,207 1,155,593

Operating Expenses Property management 507,391 184,427 691,818 Depreciation and amortization 408,610 229,548 638,158 Professional fees 33,648 55,936 89,584

Total Operating Expenses 949,649 469,911 1,419,560

Operating Loss (118,263) (145,704) (263,967)

Non-Operating Expenses Interest expense (186,092) (13,702) (199,794) Amortization of intangible assets (10,873) - (10,873)

Net Non-Operating Expenses (196,965) (13,702) (210,667)

Change in Net Position (315,228) (159,406) (474,634)

Net Position, beginning of year 2,955,866 7,433,666 10,389,532

Net Position, end of year $ 2,640,638 $ 7,274,260 $ 9,914,898

13. Subsequent Events

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. DRAFT

Page 90 The PDA’s operations are heavily dependent on the ability to collect commercial and residential rents and parking revenues. Further, commercial rents are determined at a base rent or percentage of rents, whichever is lower. Most commercial tenants’ sales exceed the base rent minimum due to strong historical sales in the Market. The outbreak may have a continued material adverse impact on economic and market conditions, triggering a period of global economic slowdown. This situation is expected to adversely impact the commercial rent and parking revenue base, and to depress the value of the PDA’s holdings in the LGIP and pension related investments in marketable securities. The situation may also adversely impact the PDA’s ability to deploy its workforce as effectively. While expected to be temporary, prolonged workforce disruptions may negatively impact performance of services. As such, this may hinder the ability of the PDA to meet the needs of its constituents. As such, the PDA’s financial condition and liquidity may be negatively impacted for the fiscal year 2020.

On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security (CARES) Act.” The CARES Act, among other things, includes provisions relating to refundable payroll tax credits and deferment of employer side social security payments.

The PDA continues to examine the impact that the CARES Act may have on its business. Currently, the PDA is unable to determine the impact that the CARES Act will have on its financial condition, results of operations, or liquidity.

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Page 91 Supplemental Reports and Schedules in Accordance with Government Auditing Standards and Required by the Uniform Guidance

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Page 92 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on and Audit of Financial Statements Performed in Accordance with Government Auditing Standards

To the Council Pike Place Market Preservation and Development Authority Seattle, Washington

We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States of America, the financial statements of the proprietary fund, aggregate discretely presented component units and fiduciary fund component unit of the Pike Place Market Preservation and Development Authority (the “PDA”), a public governmental corporation, as of and for the year ended December 31, 2019, and the related notes to the financial statements, which collectively comprise the PDA’s basic financial statements, and have issued our report thereon dated ______. The financial statements of Pike Place Market QB3 (a blended component unit) and Western Avenue Senior Housing LLC (a discrete component unit) were not audited in accordance with Government Auditing Standards, and accordingly, this report does not include reporting on internal control over financial reporting or instances of reportable noncompliance associated with Pike Place Market QB3 and Western Avenue Senior Housing LLC.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered the PDA’s internal control over financial reporting (“internal control”) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the PDA’s internal control. Accordingly, we do not express an opinion on the effectiveness of the PDA’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

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Page 93 Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the PDA’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of This Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the organization’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the organization’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

______

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Page 94 Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance

To the Council Pike Place Market Preservation and Development Authority Seattle, Washington

Report on Compliance for Each Major Federal Program

We have audited the Pike Place Market Preservation and Development Authority’s (the “PDA”) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the PDA’s major federal programs for the year ended December 31, 2019. The PDA’s major federal programs are identified in the summary of audit results section of the accompanying schedule of findings and questioned costs.

Management’s Responsibility

Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.

Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of the PDA’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the PDA’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for the major federal program. However, our audit does not provide a legal determination of the PDA’s compliance.

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Page 95 Opinion on Each Major Federal Program

In our opinion, the PDA has complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended December 31, 2019.

Report on Internal Control Over Compliance

Management of the PDA is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the PDA’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the PDA’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

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Page 96 Pass-Through Federal Entity CFDA Identifying Federal Federal Grantor/Pass-Through Grantor/Program Title or Cluster Title Number Number Expenditures

U.S. Department of Housing and Urban Development Section 8 Project-Based Cluster Passed through the Bremerton Housing Authority - Contract Management Services: Section 8 Housing Assistance Payments Program 14.195 WA-19-8023-004 $ 532,882 Section 8 Housing Assistance Payments Program 14.195 WA-19-8023-005 612,616

Total Section 8 Project-Based Cluster 1,145,498

Housing Voucher Cluster Passed through the Seattle Housing Authority: Section 8 - Housing Choice Vouchers 14.871 WA001VO0142 171,383 Section 8 - Housing Choice Vouchers 14.871 WA001VO0178 54,784

Total Housing Voucher Cluster 226,167

Total U.S. Department of Housing and Urban Development and Total Federal Expenditures $ 1,371,665 The accompanying notes are an integral part of this schedule.

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Page 97 1. Basis of Presentation

The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of the Pike Place Market Preservation and Development Authority (the “PDA”) under programs of the federal government for the year ended December 31, 2019. The information in the Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administration Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”). Because the Schedule presents only a selected portion of the operations of the PDA, it is not intended to and does not present the financial position, changes in net position, or cash flows of the PDA.

2. Summary of Significant Accounting Policies

Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement.

Pass-through entity identifying numbers are presented where available.

3. Indirect Cost Rate

The PDA has elected not to use the 10% de minimus indirect cost rate as allowed under the Uniform Guidance.

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Page 98 Section I - Summary of Auditor's Results

Financial Statements:

Type of report the auditor issued on whether the financial statements audited were prepared in accordance with GAAP Unmodified

Internal control over financial reporting:

• Material weakness(es) identified? _____ yes __x__ no

• Significant deficiency(ies) identified? _____ yes __x__ none reported

Noncompliance material to financial statements noted: _____ yes __x__ no

Federal Awards:

Internal control over major federal programs:

• Material weakness(es) identified? _____ yes __x__ no

• Significant deficiency(ies) identified? _____ yes __x__ none reported

Type of auditors' report issued on compliance for major federal programs: Unmodified

Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a) _____ yes __x__ no

Identification of Major Programs: CFDA Number(s) Name of Federal Program or Cluster 14.195 Section 8 Housing Assistance Payments Program

Dollar threshold used to distinguish between type A and type B programs: $750,000

Auditee qualified as low-risk auditee: __x__ yes _____ no

Section II - Financial Statement Findings

There were no findings identified that were required to be reported.

Section III - Summary of Auditor's Results

There were no findings identified that are required to be reported in accordance with Title 2 , Part 200 of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards . DRAFT

Page 99 Page 100 Section V: New Business Items

Page 101 Page 102 Section VI: PDA Committee Minutes

Page 103 Page 104 Market Programs Committee z Meeting Minutes

DUE TO THE EXTRAORDINARY PUBLIC HEALTH CIRCUMSTANCES RELATED TO THE ONGOING COVID-19 (CORONAVIRUS) OUTBREAK, PARTICIPATION IN THIS MEETING WILL BE VIRTUAL OR TELEPHONIC. ALL PDA COUNCILMEMBERS WILL PARTICIPATE REMOTELY.

Tuesday, July 14, 2020 4:00 p.m. to 6:00 p.m. Location: https://us02web.zoom.us/j/87941232312?pwd=ck8reThrODBITHhHYkJXMDRpMEdDdz09 OR dial +1 253 215 8782, Meeting ID: 879 4123 2312, password: 742673

Committee Members Present: Patrice Barrentine, Paul Neal, David Ghoddousi, Colleen Bowman, Mark Brady, Betty Halfon

Other Council Members Present:

Staff/ Consultants Present: Mary Bacarella, Amy Wallsmith, Karin Moughamer, David Dickinson, Leigh Newman-Bell, Tanya Sinkovits, Madison Bristol

Others Present: Joan Paulson, Gordon McIntyre, Patricia Gray, Nick Setten

The meeting was called to order at 4:02pm by Patrice Barrentine, chair.

I. Administration A. Approval of the Agenda The agenda was approved by acclamation.

B. Approval of the Market Programs Committee June 9, 2020 Minutes The June 9, 2020 meeting minutes were approved by acclamation.

II. Announcements and Community Comments Joan Paulson noted that at a previous meeting Gerry Johnson referenced state legislation that was going to be shared. To date she has not seen that legislation and would like to get a copy.

Patrice Barrentine noted that more information is needed in order to assist her in this request. Karin Moughamer noted she will reach out to Joan via email to get more information.

III. Programs and Marketing Report Amy Wallsmith noted this update will be brief to save time for her report later in the meeting. She thanked her team and other departments for working so closely on COVID-related reopening plans and communications. It has truly been a team effort. Amy noted that impressions and engagement on both Facebook and Instagram were way up in June. The Black Lives Matter (BLM) sign resulted in the biggest surge but other quality content helped the Market finish June with more than double the amount of engagement we typically see on both platforms. That success is continuing into July. The

Page 105 Instagram and Facebook engagement is currently tracking slightly above average. Blog traffic increased in May and held in June.

David Ghoddousi noted that he saw a story on Q13 about the Point Defiance Zoo reopening and suggested that the Market could benefit from a story like that. Amy Wallsmith responded that there is a little difference in the approach, as the Market never closed and the focus has been on the businesses that have been open and continue to open.

IV. Reports and Discussion Items A. Daystall and Busker Program Update David Dickinson began by noting that Daystall reopening is going well. This weekend (Thursday – Sunday) will mark the third week for craft sales. From the first week to the second week, the number of crafters increase by 2-3 permits. He’s glad the program is starting off slowly as that allows staff and crafters time to adjust and make changes if need to. Crafters are wearing masks and there have been a few issues/confrontations with customers and mask wearing. All in all, things are going well.

David Dickinson provided an update on the busker program. He has sent a message to 2019 busker permit holders outlining the permit process for 2020. No new buskers will be permitted until further notice. To initiate the process, a busker will need to email a Market Master, agree that they will wear a face covering, manage social distancing with crowds, and be prepared for temporary general suspension of busking if the PDA deems it necessary. Buskers can be a part of a duet or trio if they are members of the same household. So far only one busker has been approved and they are processing another request.

Patrice Barrentine noted that she was on a call regarding farmers markets in which a County health representative mentioned that acoustic performances with masks and social distancing are ok, but vocal performances would return with Phase 3.

B. Farm Program Update Leigh Newman-Bell provided an update on the CSA program, which this year has been divided into three seasons.  10 week summer season  8 week fall season  2 week fall harvest season

Breaking the program into three season allows the farm team to pivot depending on where the County is with the phased reopening and also gives the PDA the ability to offer customers a shorter and more affordable season. Right now the summer CSA program is around 250 boxes per week with about a 3rd going through the Market Commons to low income customers. Pick-up has been running smoothly and it’s easy to follow social distancing measures in the temporary commercial space.

Leigh Newman-Bell provided an update on the farm table reopening. The number of permit holders averages 18 vendors per day with the busiest day being Saturday at around 22-24 vendors. New this season is the collecting of revenue reports. A few stand out vendors have had good sales but most seem anecdotally to be down at least 50%. Since this is the first time collecting this data, there is no baseline to compare it to, but it is helpful to have the data for decision making purposes. The response to this request has been positive from farmers so far.

Page 106 Betty Halfon asked if she’s received any feedback from farmers regarding the collection of sales revenue. Leigh Newman-Bell responded, not really. Most farmers that participated in the remote markets were already familiar with the process and for those new to this idea, she’s ensuring that the information is only being used to generate ways to further assist the farmers.

Mary Bacarella congratulated Leigh Newman-Bell on her promotion to Farm Manager as Zack Cook has moved into the Commercial team and is now a Commercial Property Manager.

Paul Neal congratulated Leigh and asked if this is a permanent move. Mary Bacarella responded both positions are under evaluation and if things go well, yes, they will stay in these new positions. Paul also commented that he likes the new CSA program that has been split into seasons as it allows for more flexibility and options for customers to sign up for the times that work best for them. He suggests considering that model into the future.

Patrice Barrentine would like to see a permanent pick up site at the Market and one that is indoors, which would help with packing during fall and winter.

C. 2020 Marketing Plan, Revised Advertising – Creative - PR Amy Wallsmith began by introducing her presentation and noting that since this plan was presented earlier this year, her team has had to pivot and refocus efforts to provide marketing and PR support to a Market in response to COVID. The following presentation builds on the strength of the Make it a Market Day and the continued focus on locals to drive customers to Market businesses. Amy shared images taken downtown (4th and Pike, Westlake Center) on Wednesday, July 8th at noon, which shows almost no people walking around. She compared that to pictures taken at the same time at the Market, which shows there is foot traffic (not nearly as many compared to a busy summer day) and people are wearing face coverings.

Amy next shared data collected from the pedestrian counters, which shows a drop in attendance that coincides with the introduction of COVID in the community (March), however, since then visitation has been increasing slightly. So far in July, the Market has seen more pedestrians that the entire month of April and is not far from beating May’s numbers. She then shared two charts comparing daily visitation per day for two different weeks and that shows pedestrian counts increasing, with the most visitors on Friday, Saturday and Sunday.

Amy Wallsmith reviewed the revised campaign and the background on how the team ended up with the current plan. The team answered several questions, including:  Close your eyes. What is the color of the Market?  What is the voice?  What is the music?  What is the vibe?  How do we be relevant?  How do we get attention?  What does the audience want?

After reviewing those questions, the team landed on the following: Pike Place Market – Where Seattle Eats, Shops, Meets and Rejuvenates

Page 107 As part of the first wave of recovery marketing, this video and digital ad campaign series encourages locals to come visit their Market in the summer of 2020. We inspire them, we education the, and we are welcoming them back to their Pike Place Market.

Amy reviewed some of the sample campaign messaging, which include:  Seriously. Summer 2020. Calling all locals. There’s never been a better time. C’mon down. You deserve it.  The tourists are home. It’s all yours to roam.  Parking galore. Handmade art and more.  No crowds in the way. Make it a day.  There’s beauty. There’s soul. It’s the best place to stroll  No crowds to fear. Get your butt down here.  Less congestion. Better digestion.  Fewer touristas. Happy baristas.  There’s never been a time like this to be at your world famous, one and only, open-air market. Own it, Baby.  Hand out. Relax. Recuperate. It’s been a long summer.

Amy Wallsmith shared an example of a print ad that will be in Seattle Met. She discussed that over 100 different digital ad sets with 56 different creative designs will be created featuring Market businesses using user generated content (UGC). The different categories include restaurants, eateries, grocery shopping, retail, handmade art, services and experiences.

Amy Wallsmith next shared an example of the videos that are being created. In July the following vides will be produced:  Where Seattle Eats, Shops, Meets and Rejuvenates (general video)  Where Seattle East (restaurant focused)  Where Seattle Shops (grocery focused)  Where Seattle Shops (retail focused)  Where Seattle Eats (eateries focused)

In late summer/early fall there will be videos on Where Seattle Meets and Where Seattle Rejuvenates.

Amy shared a spreadsheet showing the general advertising messaging timeline and the various categories.

Amy next reviewed the various tactics that will be used throughout the campaign. She started with the top-funnel tactics which include:  Streaming Television: Hulu, people who live near the Market.  Broadcast TV: includes KING 5 and Mariners TV  YouTube: people who live near the Market  Audience Targeted Video: Locals who haven’t been to the Market since the beginning of March 2020.  Radio: Advertising on bothy KUOW and KNKX NPR stations. They have very little duplication in listenership and both reach urban, educated audiences interested in dining out, shopping and supporting local businesses. July 20 – August 9.

Page 108  Print: Seattle Met package includes full page print ad (on newsstands July 23 – September 24th), sponsored content story (August) and Holiday Gift Guide print ad and digital elements (Nov/Dec)  Digital Local Publications: The Stranger from July – September.  Social Media Advertising. The Market is currently boycotting Facebook and Instagram to demonstrate support for those who have been affected by the hate speech featured on the social media platforms. Potentially returning to these platforms in September with boosted posts, blogs, videos, events and more.

Amy Wallsmith reviewed the top-funnel tactics for Public Relations, which focuses on weekly media pitches. She shared the July PR editorial calendar which is focused on promoting the return of craft and farmers as well as how COVID has effected the small business economy and ways PPM businesses have adapted to survive COVID.

Amy reviewed the mid-funnel tactics which include:  Audience Targeted Video  Video Retargeting using Facebook and Instagram.

Amy reviewed the bottom-funnel tactics, which include:  Retargeting people who have previously visited key pages on the Market website.  Google Search focused on an audience shoring sincere interest in visiting the Market.  Waze directed at people near the parking garages or searching for parking  Direct Mail: the direct mail campaign will feature a mailing to downtown Seattleites that arrives as a packet of postcards, each one featuring special photography and graphic images and statements about Where Seattle Eats, Shops, Meets, and Rejuvenates. It will feature categories like DownUnder, restaurants, eateries, bakeries, and more. 28,740 households are included around the Market and will be mailed out in August.

Amy Wallsmith next reviewed ongoing opportunities for businesses and permit holders, including:  Co-op Marketing: this plan is being revised and will be presented in August.  Content editorial calendar: being revised and will be presented in August  Consumer content: available now and working on creating an easier way for businesses to get involved.  Public relations content: available now and working on creating an easier way for businesses to get involved.  Business directory listings: available now.

Ongoing recourses for programs include:  Market events and celebrations will continue but the dates are subject to change for core events and adjustments will continue to align with the WA Safe Start Plan. o Pike Place Market Anniversary – August 17 o Labor Day – September 7 o Costumes on the Cobblestone/Fall Festival – Oct. 31 o Veteran’s Day – November 11 o Thanksgiving – November 26 o Magic in the Market – November 28

Page 109  PDA Small Business Webinars – working on creating additional webinars to assist Market businesses, including: o Reopening Marketing Checklist (July) o Learn about our new Co-Op Advertising Program (August) o Start planning for the holiday season (September)  Residential concierge program: ongoing outreach but we are revising our full plan and will present in August  Visit Seattle advertising campaign: in progress  COVID-19 Recovery Resources Program: current Neighborhood News Page content, Foundation resources, etc.  Businesses and Market Shopper Oath – signage created, complete tool kit in the works, presenting in August.

Amy Wallsmith concluded her presentation by noting there is an appendix at the back with definitions for the terms she used throughout the presentation.

David Ghoddousi thanked Amy for the presentation and commented that he likes the idea for the postcard mailer. He suggested another idea for the mailer could be to encourage people to send them around the world and return to the Market and see how far the postcards go. Amy Wallsmith thanked him for that idea and will explore that option.

Paul Neal asked if this plan will stay in place after COVID and commented that he’s worried that the copy for the print ad might imply that the Market is only for locals when tourists are not there. Amy Wallsmith responded that she hopes that the copy isn’t interpreted that way but understands what he’s saying. The plan is to allow the copy to change throughout the seasons and adapt to the current landscape, much of which is still unknown. Copy may even change day-to-day if needed.

Paul Neal commented that the music for the video did not feel like the Market. Other council members agreed. Mary Bacarella noted there has been a lot of conversation about the music and they will continue to work on finding music that fits the Market.

Mark Brady asked if the Co-Op advertising program will be available for businesses that are not in good standing. Amy Wallsmith commented that previously the Co-Op program was only available to businesses in good standing but that the Marketing team is re-evaluating the program and will provide more information in August.

Mark Brady also noted that he feels more security is needed in the Market, and specifically in the DownUnder, during this period of COVID. He is seeing increased visitation by people who are homeless and mentally unstable. Mary Bacarella responded that this has been an issue since the beginning of COVID and the security team responds to these issues every day and will continue to address it.

Colleen Bowman appreciated the presentation and plan but commented that she did not see much talk about promotion of parking, other than by using the Waze app. She would like to see it be top of messaging in order to attract parkers and revenue during this time. Amy Wallsmith noted she will continue to look for was to advertise parking.

Page 110 V. Public Comment None.

VI. Concerns of Committee Members Joan Paulson was not able to provide public comment during the meeting due to technical issues with Zoom, however she provided the following comment via email to K. Moughamer:

For the month of August, 2020, we get to celebrate 113 years of this Market, 100 years of the Women Right to Vote and 151 years of Seattle being Seattle. The question that needs to be asked/answered is: Help us, at this Market, understand what this Market’s future will be for you, the local citizen shopper of Seattle, County and State? What do you see for this Market ahead?

Develop a Market gift card program, in which individual stores can get paid cash for a gift card. This card can be a future birthday/holiday gift for family/friend or a donated card, to be placed in the Foundation pig, under the Clock. The Foundation can find someone to make use of this gift card, at the Senior Center, resident or person in need. This gift card can be from a merchant for food, restaurant, personal items or craft. For every one dollar purchased, one gets a multiplier effect of 4 or more dollars, to spend locally. This would increase the local economy, which is what we need to be doing.

I also wished to thank you all, for bringing some of the buskers back. I had reached out to Johnny Hahn, two months ago and asked ‘if’ anyone had reached out to him, to come back to the Market. He said that: No one had. He had learned that the farmers and crafts had PDA contact. I then asked: Do you want to come back? He said yes, I just need to have the PDA say how to work, their process. I told him that I would see if I could help, at the Market Constituency, to move the mountain. I asked him to call David, to start that process officially. He stated that he would. So, it only took 2 months. World Health Organization (WHO) is conducting some testing now, to determine if wind instruments and voice, can spread the virus and what can be done, to reduce the virus spread or not. Results will be provided in 6 months. So, we will not have Christmas carols this year! Yet, another thing to miss and remember.

VII. Adjournment The meeting was adjourned at 5:59 p.m. by Patrice Barrentine, chair

Meeting minutes submitted by: Karin Moughamer, Executive Administrator

Page 111 Page 112 Finance & Asset Management Committee z Meeting

Monday, July 21, 2020 4:00 p.m. to 6:00 p.m. Location: https://us02web.zoom.us/j/82653358716?pwd=bUJYVlh6RnVrZThXTENFakU1RWdOQT09, OR dial +1 253 215 8782, Meeting ID: 826 5335 8716, password: 834345

DUE TO THE EXTRAORDINARY PUBLIC HEALTH CIRCUMSTANCES RELATED TO THE ONGOING COVID-19 (CORONAVIRUS) OUTBREAK, PARTICIPATION IN THIS MEETING WILL BE TELEPHONIC OR VIRTUAL. ALL PDA COUNCILMEMBERS WILL PARTICIPATE REMOTELY.

Committee Members Present: Devin McComb, Ray Ishii, Patrice Barrentine, Mark Brady, Paul Neal, David Ghoddousi, JJ McKay, Ali Mowry, Kristie Beattie

Other Council Members Present: Colleen Bowman, Betty Halfon

Staff/ Consultants Present: Mary Bacarella, Sabina Proto, Brady Morrison, Erica Bates, John Turnbull, Amy Wallsmith, Karin Moughamer, Sarah Leaptrot, Susan Brems, Jay Schalow, Zack Cook, Matt Smith, Ray Holmdahl

Others Present: Bob Messina, Joan Paulson, Gordon McIntyre, Nick Setten, Haley Land

The meeting was called to order at 4:01 pm by Devin McComb, Chair.

I. Administration A. Approval of the Agenda The agenda was approved by acclamation.

B. Approval of the Finance & Asset Management Committee June 16, 2020 Minutes The June 16, 2020 meeting minutes were approved by acclamation.

Patrice Barrentine entered the meeting at 4:03 pm.

II. Announcements and Community Comments Bob Messina noted that if someone in a wheel chair or with a stroller tries to access the Overlook Walk from Victor Steinbrueck Park, they will see stairs and not be able to go down. Likewise, if they are on the wood plaza of MarketFront and head down the ramp, they will get to the same set of stairs blocking their way. In order to bypass stairs people have to enter the MarketFront from Western Avenue. This is the only ADA access point to the OLW. Bob suggested that now is a good time to talk to the City on how to direct people to the Western Avenue ADA access point.

Betty Halfon and Ali Mowry entered the meeting at 4:05 pm.

Page 113 Joan Paulson noted that at two previous council meetings, Rico [Quirindongo] has mentioned a new and revised process for the nomination committee would be developed. She would like to know the status of that and if it’s had a public review yet. Second, at the June Council meeting she requested a copy of the state legislation that Gerry Johnson referenced in discussing why the PDA will not be forgiving past due rents. Joan references page 70 of the audit in the packet and notes there needs to be an understanding of how state legislation works with the PDA. She does not believe this current audit has been done correctly since the time of the adoption of the state legislation in 2002. This needs to be corrected for past audits. She also noted that past discussions included a performance plan and she asked where that is in the PDA work plan. Third, Joan mentioned Resolution 20-17 regarding hiring of Ron Wright for the elevator design work. She believes the location of the second elevator will be built on land not owned by the PDA. She wants to know why the PDA would pay for design services on land not owned by the PDA.

Haley Land commented that he has been in touch with Johnny Hahn, one of the Market buskers, who was informed after playing in the Market for a few weeks that he, and all buskers, are no longer allowed to play per state guidelines. Johnny has brought this up with PDA staff but Haley wanted to make the council aware of the situation.

III. Reports & Discussion Items A. 2019 PDA Audit Ray Holmdahl began by noting the Peterson Sullivan joined forces with BDO USA, effective November 1, 2019. BDO represents companies ranging from closely-held private businesses to leading nonprofits to Fortune 500 multinationals. BDO has more than 60 offices and more than 650 independent alliance firm locations around the country. BDO has been serving clients for more than 100 years. The client service team remains the same, the fees remain the same and the client service experience will be better with global resources at our fingertips.

Ray Holmdahl reviewed the nonprofit and government experience of the Seattle office. IN addition, BDO audits numerous government and quasi-government entities and staff serve on boards or committees at more than 30 nonprofit organizations.

Ray Holmdahl noted that COVID-19 has effects on internal control and cyber security as well as effects on the audit process, which this year was done almost entirely remote.

Ray Holmdahl reviewed the summary of deliverables:  Financial Statement Audit o Unmodified option – this is a “clean” opinion o Emphasis of a matter – implementation of GASB statement no. 84, Fiduciary Activities o LaSalle, WASH LLC and PPMQB3 also received clean audits (issued earlier in 2020)  Single (Federal Compliance) Audit o Report on Internal Control Over Financial Reporting and Compliance – unmodified o Report on Major Programs – unmodified . No findings or questioned costs in 2019  Management Letter

Page 114 o No matters identified during the 2019 audit o No matters from the 2018 audit to follow up  Tax Returns o LaSalle LLC Form 1065 – filed earlier in 2020 o WASH LLC Form 1065 – filed earlier in 2020 o PPMQB3 Form 990 – in process, due November 15, 2020

Ray Holmdahl reviewed the required communications:  Our responsibility under government auditing  Significant accounting policies (and the quality of those policies) o Component Units (blended vs. discrete) o Revenue recognition (rent, parking, and non-capital grant revenue)  Management’s judgements and accounting estimates o Useful lives of capital assets  Audit adjustments (none)  Passed adjustments (none)  Disagreements or difficulties with management (none)  Independence  Management representations  Steps left to complete: o Board approval o Signed representation letter from management o Final quality control process

Matt Smith next reviewed the initial pre-audit discussion topics:  No matters identified in the pre-audit conversations with governance (Ray Ishii and Devin McComb)  Implementation of GASB 84 and inclusion (and audit of) the Deferred Compensation Plan within the PDA financial statements as a fiduciary fund component unit.  Subsequent event disclosure (Note 13) related to the impacts of COVID-19.  In our transition to BDO audit “procedures,” we looked at payroll differently (much more time spent in employee contracts) and rent revenue (higher sampling). No exceptions were identified.  Implementation deferral allowed for numerous upcoming governmental accounting standards. The most impactful being GASB 87, Leases until the year ending December 31, 2021.

Matt Smith discussed the PDA comparative statements of net position (assets) for the PDA for the last five years. 2019 was a great financial year and will certainly help the PDA deal with 2020. The financials for the PDA couldn’t be healthier at the end of December 31, 2019. Matt reviewed the current liabilities comparison and noted the biggest change in 2018 was the unwind of QB2. The net position has slowing been increasing over the last five years. The liability to equity ratio is at 25% which is healthy. There have been positive changes in net position over the last five years and that is hard to do. There are no giant red flags to point out. A separate national reviewer took a look at the PDA audit and there was no issues identified.

Page 115 Sabina Proto noted in 2018 the Market also brought online the MarketFront which increased revenue as well as costs.

Ray Holmdahl briefly noted the importance of paying attention to cybersecurity. He cautioned the PDA to be careful about emails. He also noted there is a lot of fraud taking place, especially during the COVID pandemic. He encourages the PDA to keep an eye out for fraud.

Ray Holmdahl concluded by thanking Sabina, Jay and the PDA staff for their assistance during the audit.

Matt Smith noted the second to last slide has some resources and links regarding topics relevant to nonprofit governing boards and financial executives.

Ray Holmdahl added BDO also audits the Market Foundation and Market preschool.

JJ McKay thanked BDO for their work and noted he’s glad to see that there is no management report for the PDA. JJ commented that this audit shows the PDA is very transparent in their fiscal management. Ray Holmdahl commented that from their perspective they see strong financial transparency. Matt Smith added the PDA financial statements are public record as are contact information and meeting minutes. Of the organizations he audits, the PDA is one of the most transparent.

Ray Ishii asked if they are seeing any impacts over the last few months on the tax credit partnerships and is there anything the PDA should be planning for. Matt Smith responded he hasn’t noticed anything for the ones that are already in process and set up. However, for those organizations initiating the process this year, there is a lot of hesitation and they may not happen.

Ray Ishii asked if they recommend, given all the issues they are seeing with cybersecurity and fraud, the PDA Council establish an audit committee. Ray Holmdahl responded it’s worth the Council discussing but at a minimum he would recommend it’s a topic for the finance meeting. Matt Smith added that for larger organizations with more exposure points, they are having a cybersecurity risk assessment. It serves as a health check and it’s a good way to determine if there are major holes. BDO offers these services.

i. Proposed Resolution 20-19: Approval of 2019 PDA Audited Financial Statements Sabina Proto introduced Proposed Resolution 20-19 which states:

BE IT RESOLVED that the PDA Council hereby approves the 2019 PDA financial statements, audited by BDO, Certified Public Accountants, covering the period beginning January 1, 2019 through December 31, 2019.

JJ McKay moved the proposed resolution and David Ghoddousi seconded the motion.

For: Devin McComb, Ray Ishii, Patrice Barrentine, Mark Brady, Paul Neal, David Ghoddousi, JJ McKay, Ali Mowry Against: Abstain: Ray Ishii

Page 116 Proposed Resolution 20-19 passed by a vote of 8-0-0.

B. Review of the PDA Financial Statements June 2020 Sabina Proto reviewed the financials for June, which are so different from other months. Sabina reviewed the balance sheet, noting the unrestricted cash is almost $1.4M, rental accounts receivable was almost $700,000 with an outstanding balance of almost $700,000. The restricted cash and designated cash each have a small reduction and the long term liability (payment of the 2009 refunding bond) is $0. Sabina noted the work in progress is a very small amount that is associated with the issue with the clinic.

Sabina Proto reviewed the accounts receivable, which has an outstanding balance of $680,897 which is mostly due to commercial rents.

Sabina Proto next reviewed the Operating Statement which shows total revenue of $7,358,013, under budget by $3,187,816 (30%) and operating expenses for end of June was $6,373,654, under budget by $2,004,058 (23.9%). Nearly $1M in savings is due to reductions in staffing and salaries. Net result after debt service and reserves was negative $316,918 which is $1,183,758 under budget. The PDA is up to date on the pension plan contributions. $1.5M of the approved $2M from Minimum Operating Reserves has been transferred, so $500,000 is still waiting to be transferred. She noted the status of the three columns noting the current month revenue and expenses which shows what the PDA is able to collect. The PDA is being very cautious not to over spend.

Sabina Proto noted that she will send Karin Moughamer a revised page for the packet showing the accurate revenue numbers for revenue footnotes.

Sabina Proto noted that the Capital Replacement Reserve remains at $19,576,205 with only $564,374 spent. The PDA is aware that many businesses may run out of PPP loan and that will have an effect on the PDA financials.

Ray Ishii asked if Sabina has an estimate of how much of the receivables may be uncollectable. Sabina Proto believes that all of the current amount and that will continue to grow throughout the year. Mary Bacarella added that until the ordinance is up the PDA cannot start collecting funds and they will probably roll over into 2021.

Ray Ishii wonders if the financial statements should have an allowance for uncollected funds. Sabina Proto responded the normal allowance has been $40,000, which is usually added at the end of the year, but this year will be different. He believes keeping the entire amount on the books impacts both the balance sheet and income statement. Sabina Proto added that is why she is pointing out the monthly receivables.

JJ McKay suggested noting a percentage on the balance sheet of what the PDA anticipates will not be collected in rent revenues. Sabina Proto responded she can do that.

C. Capital Projects Update Brady Morrison noted that the maintenance team is working on prioritizing residential unit turnovers in order to get vacant units rented. The LaSalle improvements are nearing completion.

Page 117 The last big project is updating the fire alarm panel. The previous bid received does not accurately reflect the work that is required which means the amount will increase. He hopes to have a resolution to review at the August FAM meeting.

D. Checking Account Activity Report for June 2020 Sabina Proto provided Karin Moughamer with a copy of the June 2020 checking account activity report via email.

E. City of Seattle COVID-19 Support for Pike Place Market PDA Mary Bacarella noted that due to the type of governmental agency we are, the PDA was not allowed to apply for a PPP loan. Together with the other PDA’s in Seattle a meeting was held with the City. The PPM PDA originally asked for a $10M no interest operating loan but the City was not able to assist due to their budget shortfall.

The City is able to subsidize the Market’s cost of borrowing through City LTGO bonds by up to 50% of the total interest cost, up to a total of $250K, for the entire term. If the Market is interested in this approach, the Market would be included as a project in the 2021 City Proposed Budget for the 2021 LTGO issuance. The deadline to be included in the LTGO 2021 projects is August 15, 2020. The estimated interest rate for tax-exempt bond issued for capital purposes is likely around 3%, depending on the term, and for taxable bonds interest is 3.5%.

For tax-exempt bonds, the City will need more information on how the Market will be spending the proceeds. This will require the Market to provide the City with details on how the funds will be spent to ensure this meets the tax-exempt requirement prior to including this in the 2021 budget (by August 15). In addition, ongoing reporting/monitoring is required to ensure the spending is for tax-exempt purposes. Conversely, issuing taxable bonds looks possible, but would have a higher interest rate. The benefit is that the taxable bonds would give the Market the flexibility to spend on expenses that are both taxable and tax-exempt in nature.

Mary Bacarella estimates the PDA needs to borrow $3MM-$6MM, depending on the financial performance of the Market during 2021 and 2022.

Kristi Beattie added the City has been working with the Market trying to thoughtfully identify ways to provide support. The City is able to issue LTGO bonds and with the City’s AAA bond rating, they are in a position to achieve a low borrowing rate. The mayor’s office approved a plan to offer this loan option and subsidize up to 50% of the interest cost or up to $250,000. In order to utilize this loan, the PDA would need to provide a list of capital projects. They would need an amount to be included in the city budget to be authorized for next year, subject to Council approval this fall. The PDA would not need to identify an exact amount until January or February 2021, given the uncertain nature of financials at this time. If the PDA were to submit an amount, say of $6M, that amount could be broken down until smaller increments issued over the next three years. If the amount exceeds the original amount, a budget revision going through the Council would be required.

Kristie Beattie noted the interest rate is conservative and it will most likely be lower. The City can be helpful in structuring the repayment schedule. The PDA will be required to repay the principal. A decision on tax or tax exempt does not need to be made right now. At the moment there is not a lot of difference in the interest rate between the two. The timing for the City

Page 118 requires confirmation by the PDA by August 15 and the City Council would discuss during the budget process in the fall. They would also be open to having this same discussion in 2021 if it’s not needed this year.

Sabina Proto added that she, Mary and Devin McComb have been discussing this a lot and trying to figure out the right amount to borrow and they prefer the option to incrementally borrow.

Devin McComb noted that this conversation is to introduce the concept and provide an update to Council. He appreciates Kristi’s help in trying to identify a loan from the City. This is just the beginning of the conversation and nothing will be voted on today.

JJ McKay clarified the option which is that the City will help the PDA with a loan for which they will help pay the interest and is restricted to Capital so that the PDA can, in the short term, use funds reserved for Capital to cover operating expenses. Mary Bacarella responded that is correct. JJ McKay thanked the City for being willing to work with the PDA during a time when they have limited funds to ensure the Market survives.

Colleen Bowman would like to have some context for how the capital lending worked in the past.

Gerry Johnson provided some background on how the PDA and City have worked on bonds in the past. In the past the city has provided credit enhancement for the PDA, and as far as he can recall, that was for projects that were self-funded, such as PC1 garage. He is not suggesting this idea is not useful and gives the PDA an option, but in the context of the relationship between the City and the Market for Capital projects, the City has more often than not provided funding the PDA did not have to pay back. Those projects include PC-1N and levy for the substantial renovation of the Market. In shaping the levy, the city understands that even though the Market will do it’s best to generate reserves to pay for capital, it is not possible for the Market to do that for all of its capital needs. The PDA should make sure we don’t set a precedent on the principle that in 15 years from now when the Market may need to do a large capital renovation, the City will only lend the PDA money that is has to pay back. There will have to be another levy or subsidy at that time.

Gerry Johnson imagines there will be some kind of reimbursement agreement that manages and governs how this will work. He understand that Kristi is willing to go through with the budget process subject to an agreement that would be mutually beneficial to the PDA and city. Kristi Beattie responded that is correct and they would work together on a bond agreement and similar to the past there would be a monthly payment due to the City. The City would then reimburse the Market for any expenses paid for capital projects. This does not envision what may be needed in the future but only what is happening right now.

Mary Bacarella clarified the timing. The Council will be discussing this for the next few months but the City has a deadline to get it started and in the budget by August 15. The PDA can submit the request and amount that makes sense, but that the final decision does not need to happen until early in 2021. Kristi Beattie responded that is correct and outlined the following process. If the Market is interested the PDA needs to identify an amount for the bond. That notification does not commit the PDA to that amount. The City and PDA would have a conversation in

Page 119 January/February 2021 to determine if the Market is still interested and what the amount would be. There are no costs associated with making the decision.

Mary Bacarella asked if the PDA is committed to the amount asked for in August. Kristi Beattie responded no.

Gerry Johnson added that since the PDA Council will not have a chance to approve a resolution by August 15, would a letter from Mary suffice. He suggested the letter could include the following: The Market is appreciative of the City’s offer. We are interested in continuing to explore this with you. We appreciate the city budgeting up to $6M for this facility, all subject to PDA Council review and approval of a reimbursement agreement. Kristi Beattie responded a letter like that would be great and there is no understanding the agreement needs to be in place by August 15th.

F. Planning for the year 15 Compliance Period for LaSalle Senior Housing LLC Sabina Proto began by providing a summary of the LaSalle Senior Housing LLC project. The LaSalle-Creamery Development Project was approved by the Pike Place Market PDA Council in October 2004, through resolution 04-51. The Construction was completed in 2006 and was comprised of three separate condominium units: (1) a commercial unit of approximately 30,649 square feet to be owned and operated by the PPM PDA; (2) a senior center unit(commercial space) 6,941 square feet to be owned by PDA and leased to and operated by Pike Place Market Senior Center; (3) a housing/residential unit compromised of approximately 39,556 square feet to be leased pursuant to a long term financing lease to the LaSalle Senior Housing LLC, a limited liability company in which the PPM PDA served as the managing member and limited/investor member is NEF(National Equity Fund).

The housing project ensured the preservation of 40 units of Section 8 housing in the existing LaSalle. In addition, it created 20 net new units of low-income housing utilizing one of the last vacant sites available in the Market area. The City of Seattle transferred the Creamery lot to PDA, upon which the new building was constructed, subject to a deferred loan in the amount of $455,000 (PDA Balance Sheet).

Sabina Proto reviewed the financing for the housing portion of the project which included:  Low Income Housing Tax Credit $8,200,000. The compliance period ends in 2021  State of Washington in the amount of $839,212  City of Seattle Housing Levy Loan in the amount of $839,212  Pike Place Market PDA through long term financing lease in the amount of $2,300,000  Grant from Federal Home Loan Bank $321,954

The PDA has agreed to keep all apartments units as rent restricted units and the units must be occupied by low income tenants and extremely low income tenants for a period of 50 years beginning in 2006. The tax credit compliance for the housing portion period will end in 2021 but the goal is to exit December 31, 2020.

Sabina Proto noted NEF, the investor/limited member is ready to get out of the deal and assign its interest to whoever is interested. The PDA has the first right of refusal, and we are in the

Page 120 position to exercise that right, by taking back the LaSalle building, just as was intended in the first place. NEF will sell its interest for $1. Of course PDA will absorb all the outstanding loans.

Total fixed Assets $12,476,252(today) Depreciation and amortization $5.3MM Net Book Value $7,112,310 Cash Balance $1 MM (today)

Outstanding Debt: Debt to PDA $3,228,699 Washington State Housing Trust $599,941 City of Seattle Housing Levy Loan $964,233 ($839,212+$125,021 Accrued Interest)

Sabina Proto noted that in exchange for Assets worth $8,112,000 (Building & improvements(net of depreciation)) and cash, PDA has to write off a long term receivable from LaSalle for $3,228,699, absorb two loans, terms for each 40 year 1% interest. One loan is active, quarterly payments, the other one accrues interest and is due in 40 years. LaSalle is self-sustained; with the revenue that it generates. The building can pay its own debt and will not be a financial burden to PDA, in contrary, it will strengthen it.

Sabina Proto stated the PDA has retained the legal firm of Kantor Taylor and has been working with them since the beginning of LaSalle LLC and WASH LLC. They are experts in tax credit law. Mark Kantor and his team are not strangers to the PDA council and I am moving to close this deal on December 31, 2020.

In order accomplish on time all the steps, the following must happen:  Kantor Taylor’s immediate next steps include opening an order with Chicago Title and completing their review of the due diligence materials.  Once they complete the due diligence review, they’ll prepare a resolution for the August board meeting and will plan to have the Washington State Housing Finance Commission, Department of Commerce, City of Seattle, and all other consent requests/applications ready for submittal by late summer/early fall.  Kantor Taylor will also prepare the lease termination/conveyance documents (including the documents that NEF describes on their requests) to complete the property transfer to the PDA.

Devin McComb noted this will be voted in August. This arrangement was set up to unwind in this way. The compliance period is over the investors have reached their return. The investor wants to exit and the PDA wants to take possession of the building. He has confidence in the firm of Kantor Taylor.

IV. Property Management Report John Turnbull began by reporting that vacancies are increasing now as turn times are increasing due to limitations in staff. Right now vacancies are at 5%. The focus is on the units with tax credit or Section 8 status. There is about $30,000 in back rent for residential which is not too bad and continue to work with residents one-on-one when needed. He noted a typo in his report which stated the LaSalle renovations are complete. However, Brady Morrison noted

Page 121 earlier that the fire suppression panel is still in the works. The biggest issues right now are smoking in rooms. The summer picnic will be virtual with a to-go lunch.

V. Public Comment Joan Paulson commented the LaSalle presentation was informative and glad to hear the PDA is following the agreements in place since 2006. She noted there is a lot of work to do on residential turnovers but is glad to hear work is being done. She asked if there is any additional training that would speed things up to deal with COVID and ensure safety for workers. She thinks the PDA needs to revisit what is needed with regards to the reserves and that the PDA should be planning 5-10 years out rather than 3 years as there will be more impacts ahead.

VI. Executive (Closed) Session The Committee Chair stated that the committee would go into closed session at 5:45 p.m. to discuss the property management and vacancy report and return into open session at approximately 5:55 p.m.

The committee entered into closed session at 5:46 p.m.

A. Property Management Report - Closed Session (RCW 42.30.110(c))

B. Review of Delinquency Report i.Vacancy Report ii.Current Lease Negotiations

The committee entered into open session at 6:06 p.m.

The committee discussed the property management report which included the delinquency and vacancy report along with the current commercial lease negotiations during the closed session.

Colleen Bowman left the meeting at 6:05 pm.

VII. Resolutions to be added to Consent Agenda  Proposed Resolution 20-19: Approval of 2019 PDA Audited Financial Statements

VIII. Concerns of Committee Members Devin McComb noted that the agendas are challenging as there is a lot to do. He will be talking with Sabina and Mary to ensure there is enough time to digest the information. Many of the topics are complicated and will require more time. He also wants to respect everyone’s time and be efficient with the time we have.

Patrice Barrentine commented that she appreciates Devin’s comments and noted that this time is truly unprecedented. Getting background information in advance has been great and for her, the pace of the meetings is ok. She urged other council members to speak up about their experience.

Paul Neal stated Devin is doing a good job but feels that we need to ensure there is enough time during closed session because some topics are coming down the pike that will require more time.

Page 122 Mark Brady suggested the meeting start at 3:30 pm so that it doesn’t run into the Constituency meeting at 6 pm.

David Ghoddousi suggested the Constituency could talk at the board level about moving their meeting to another day to avoid the overlap.

Devin McComb will talk with Mary and others at the Constituency about options.

IX. Adjournment The meeting was adjourned at 6:12 p.m. by Devin McComb, Chair

Meeting minutes submitted by: Karin Moughamer, Executive Administrator

Page 123 Page 124 Executive Committee Meeting Minutes

Wednesday, July 22, 2020 4:30 p.m. to 5:45 p.m. Location: Join Zoom Meeting:

DUE TO THE EXTRAORDINARY PUBLIC HEALTH CIRCUMSTANCES RELATED TO THE ONGOING COVID-19 (CORONAVIRUS) OUTBREAK, PARTICIPATION IN THIS MEETING WILL BE TELEPHONIC OR VIRITUAL. ALL PDA COUNCILMEMBERS WILL PARTICIPATE REMOTELY.

Committee Members Present: Rico Quirindongo, David Ghoddousi, Devin McComb, Patrice Barrentine, Mark Brady

Other Council Members Present: Betty Halfon, Colleen Bowman, JJ McKay

Staff Present: Mary Bacarella, Karin Moughamer

Others Present: Joan Paulson, Haley Land

The meeting was called to order at 4:37 p.m. by Rico Quirindongo, Chair.

I. Administration A. Approval of the Agenda The agenda was approved by acclamation.

Approval of the June 17, 2020 Executive Committee Meeting Minutes The June 17, 2020 Executive Committee Meeting Minutes were approved by acclamation.

II. Announcements and/or Community Comments Joan Paulson asked for an update on the status of the revised nomination committee process. Joan, in reference to resolution 20-17, asked why the PDA is paying for elevator design services if the PDA doesn’t even own that land which is outside the Market Historical District and not consistent with Charter. She believes this is an example of the Market continuing to implement changes incrementally on the central waterfront project. She asked if what the PDA is doing is hurtful or harmful. She believes these are harmful and undermine the PDA Charter and Market Historical Commission.

III. Council Chair Report Rico Quirindongo noted he will opt to forgo his report in order to allow for more time for discussion of topics on the agenda.

IV. Committee Chair’s Report A. Market Programs Patrice Barrentine noted that there have been on average 18 crafters attending Thursday – Friday and the farm program is working well. The bulk of the programs meeting focused on the revised marketing plan. She noted there is a multimedia roll out associated with how to bring people to the Market and in addition there is a postcard mailer that she is excited about. She mentioned that pictures were shown of

Page 125 people walking around downtown and the Market during lunch time in early July. Those pictures show that of the people who are walking around downtown and visiting businesses, the Market is fortunate that most of those people are at the Market. Patrice thanked the marketing team for making it a priority to increase marketing efforts for the Market during this pandemic.

B. Finance & Asset Management Devin McComb noted that the 2019 audit was reviewed and presented by BDO. This year it’s a clean audit with no issues. The auditors reviewed some of the impacts of the audit process due to COVID-19. They identified cybersecurity as an area of interest and suggested the Market look into a risk assessment. Devin agrees it’s something to look into. The June financial statements were reviewed and it was almost a break even month for revenue and expenses but soon the Committee and Council will probably need to address use of reserves for operation expenses. There are no major capital projects but maintenance is working to turnover residential units as quickly as possible given they need to work independently to reduce COVID risks. There was a conversation on financial lending by the City during the pandemic. The City has offered the Market access to their ability to obtain loans at low interest rates and has offered to split the interest 50/50 up to $250,000. The first step if for Mary to write a letter expressing interest by August 15th and the Council will continue to work through that process with legal counsel and the City. The last topic was an overview of the completion of the year 15 transition of the LaSalle housing back to the PDA. Once the 15 years has lapsed, the PDA will pay the investors $1 for all interest in the LaSalle apartments. Further discussion and a resolution on this will be presented at the August FAM meeting.

Betty Halfon suggested splitting up the FAM meeting into two meetings, like it used to be. To her, it was a lot of information presented in that one meeting. Devin McComb agrees that it was a long meeting and he will continue to talk with Mary and the Council on how to ensure there is enough time to discuss the topics, both in open and closed session, at FAM.

V. Executive Director’s Report Mary Bacarella provided the following updates:  While the Busker program got started again a couple weeks ago with a few buskers, including pianist Johnny Hahn, the Market has had to stop this program due to a recent state ruling that no live music is allowed. This has to do with reducing people gathering in public spaces. She noted that she’s had conversations with the County and DSA on this ruling. She knows it’s important to have the Buskers at the Market but with the numbers going up this is related to keeping people safe at the Market.  DownUnder hours were changed to seven days a week and that seems to be going well so far.  Design work on the PC-1S garage elevator continues with Ron Wright.  Sellen has currently finished their work on the MarketFront but they will be back at the end of October to hopefully finish the entire Market.  Satellite Markets are officially canceled for the summer due to a lack of customers in the downtown core.  Starting outdoor dining on sidewalk and streets as a result of the county’s ruling on outdoor dining. Barque Brontes and Jarr Bar have started down on Western Avenue. Each business is responsible for cleaning the tables and chairs after every customer. The commercial team is starting to work with businesses without outside dining to set up tables on Pike Place. She hopes that will start soon.  The new marketing ads have started running on NPR. Mary will share the final video at the Council meeting. Video ads are running on King 5 and during Mariner’s games. This marketing plan will evolve, as will the messaging, throughout the year. There is also a digital campaign that will feature all of the businesses in the Market.

Page 126  Mary noted the Council has great concerns and ideas, but asked council members to come directly to her with those ideas and concerns. Staff are constantly working on the changing landscape related to COVID and other issues in the City, including protests and demonstrations. As a result, staff are taxed. She noted that staff are constantly responding to all of the stakeholders and having to prioritize the work. Two of the main goals are 1) make everything as safe as possible and 2) allow businesses to stay open as much as possible.  Staff are putting together data on the diversity of our tenants and staffing and how we market commercial spaces to diverse audiences.

David Ghoddousi commented that he appreciates the PDA staff and they are working at 150% to support all of the businesses at the Market in the hopes they can make some money during this time. David asked how the PDA can initiate a conversation with the state regarding busking at the Market. He hopes some middle ground can be found in order to make everyone happy. He suggested reaching out to the King County Health Director, Jeff Duchin, who is a customer at the Market, to see if he could come down to the Market to identify a way to make this work. David would also like to see a breakdown by diversity of the vacant commercial spaces at the Market over the last five years.

Mark Brady suggested a Tenant Alert listing out all of the hour’s buildings and restrooms are being opened throughout the Market. Mary Bacarella responded that all of this information has already been shared in a Tenant Alert however, things change rapidly due to the changing rules and guidelines and staff have to pivot in order to respond. She can have another Tenant Alert listing all of the hours. Mark Brady clarified that it would be helpful to have signs with hours on each of the buildings. Mary Bacarella noted all of that information is on the website and will consider finding a way to communicate this to the community.

David Ghoddousi noted he investigated why merchants are handing out their tenant restroom keys to customers. He noted all the bathrooms now open at 10 am and the north tenants have been sending customers to the porta potties in Victor Steinbrueck Park. He believes if there are businesses open at 9 am then restrooms should be available.

Patrice Barrentine noted that it took six weeks for the farmers markets to reopen and 10 weeks to get clarification from the Governor’s office to sell flowers at farmers markets as being essential. That was a multiparty project with frequent meetings to use all the connections they had. She encouraged the buskers to set up a collaborative group to pursue that. She is wary to add anything more to the PDA’s list. She believes everyone is doing a remarkable job given how quickly things are changing. We need to be patient and thoughtful in what we do ask.

JJ McKay noted that Dr. Duchin is in charge of COVID response for all of King County. Reopening the farmers markets involved hundreds of people and it was an intense process and not sure the staff have the capacity to manage this conversation.

Mary Bacarella added she is in constant communication with the King County person responsible for music and entertainment. They are making it a priority to get music venues open throughout the county. She understands this is difficult and she wants buskers back at the Market too. Things change constantly so she hopes we can have them back soon.

Mark Brady suggested finding a way to feature buskers through the website or social media. Mary Bacarella will take that into consideration. She added that staff have constantly been trying to find ways to support the community and noted we don’t forget about people here at the Market.

Page 127 VI. Discussion Topics A. Nomination Committee Update Rico Quirindongo noted Ed Bridge removed his name from mayoral consideration as his nomination was not supported by the Constituency. He noted the process needs to start anew. Rico has been reaching out to committee members who support reopening the process.

Administratively, two members of each appointing organization will remain on the committee with equal voice and representation by all parties. Last time a number of months were spent putting together a robust list that was shortened to a small group for interviews. A recommendation was then put forth to council. That process will start again. He understands that council members have recommendations for people to consider. The committee has a responsibility to put people forth and for council members to provide personal recommendations. The committee then can champion the person that makes the most sense to fill this vacancy.

Rico Quirindongo asked Karin Moughamer to send the current nomination committee the following:  Council roster showing term expiration  Document created this year with the issues important to consider during the nomination process  Spreadsheet with all candidates originally considered by the committee  Resumes for the short list of candidates interviewed

Rico Quirindongo noted the nomination committee members include David Ghoddousi, Mark Brady, Ray Ishii, Colleen Bowman, JJ McKay and himself. He is concerned about the timeline. He would like to get a meeting on the calendar given that it takes the mayor’s office 3-4 months to process. He will coordinate with Karin Moughamer how to collect nomination suggestions. Mary will continue to be a part of the conversation as her time allows but the burden is on the committee to put forth a recommendation. This conversation will also take place at the council meeting.

Ali Mowry entered the meeting at 5:24 pm.

JJ McKay commented that he would like to address what happened before the committee can move on. He understands the committee was following the process and David Ghoddousi and Mark Brady were not happy with the process or that it didn’t go well. He suggested the committee start fresh with new committee members and believes this was a black eye for the Market and doesn’t want to rush forward with the process.

Rico Quirindongo asked for clarification on what JJ meant by starting over. JJ McKay responded that he thinks everyone who was on the committee last time and allow the other council members to be on the committee this time around. Rico Quirindongo asked for clarification that the chair of the council should not be on the nomination committee. JJ McKay responded Rico, as chair, has the right to nominate a chair for the nomination committee. Rico Quirindongo noted that in the past the chair has been a member of the nomination committee.

David Ghoddousi noted the chair has always been the chair of the nomination committee and thought the process went smoothly until the last meeting.

Colleen Bowman agrees with JJ McKay but feels the chair should be on the committee. She thinks it would be interesting to allow those who wanted to be part of the process but weren’t a member of the committee, have first right of refusal to be on the committee this time around. She offered up her seat and fully trusts fellow council members to make this decision.

Page 128

Rico Quirindongo suggested having the discussion on committee make-up at full council and allowing people not involved last time be a part this time. If council consensus is to provide as many new spaces at the table as possible, they will work through it.

Mark Brady commented that from the constituency, one seat is up for reelection and another seat is iffy, so really it’s only him and David that could sit on the nomination committee. He wants to ensure that this time any conflict of interests are identified at the beginning of the process so that they can’t make it far in the process. He believed that caused dissention at the end of the process as there was no choice.

Mary Bacarella clarified that during the process she had questioned why the council would want to bring on someone from another city office that is just like the Market and also this candidate has the same type of experience as Rico, which seems duplicative. She was not implying there was a conflict of interest she only asked two questions about the candidate.

Rico Quirindongo will talk with each of the five existing nomination committee members and ask if they are willing to have their seat open up to someone else or if they want to maintain on the committee.

Ali Mowry asked for clarification on how Rico Quirindongo will move forward with the process. Rico Quirindongo will talk to each of the five committee members if they wish to remain.

Ali Mowry noted she finds this process bizarre and doesn’t understand why it is happening this way. Rico Quirindongo replied this conversation will take place at full council.

Devin McComb commented that he believes the job of the original nominating committee is done as they identified a candidate that was voted on at council. He doesn’t’ believe the job of the committee was to handle nominations for the duration of the year.

David Ghoddousi does not believe the job of the committee is done as they chose to remove their name from the process. He still wants to retain his position on the committee and the people who are on the committee should be attending all meetings. He was not on the previous nominations committee and doesn’t believe Mark Brady was either.

Rico Quirindongo noted this conversation will be had at council next week. We will be reconvening a board nomination committee and have some reference points from the previous process. All council members have the opportunity to submit candidates. This will be an open process where everyone has a voice. He had no control over the mayor’s office.

Patrice Barrentine wants to ensure majority vote is the manner in which the council continues to do business. It’s important to have a majority vote on important issues like this and unanimous is even better. She is hearing some confusion on the process with how the final vote took place. She encouraged better information being shared about the background of people when they are introduced at the meetings. Key information about candidates is important and suggested providing five key points that are relevant to the candidates. This is really important and timely and we need to do this well. Having a clear process in place from the beginning is important and each council member gets a vote at the council level. In the end, majority vote will move this resolution forward.

Rico Quirindongo added he is personally interested in consensus but understands it’s a majority vote. Rico lost signal and had to reconnect via phone. He clarified the closer we can get to consensus will help

Page 129 the council. He is hopeful all council members put forth resumes and recommendations for candidates they would support and a candidate is voted on and brought forth to council for approval.

Colleen Bowman will talk with Rico Quirindongo more about her seat vacancy but would like to talk more with Ray Ishii and Devin McComb on who that replacement may be.

JJ McKay left the meeting at 5:47 pm.

VII. Public Comment Joan Paulson asked when constituency budget request for 2021 is due. She thanked Rico for the open process for the nomination committee and would like to see more ethnic diversity. She also suggested that there could be a Zoom meet and greet of the candidates to ensure a better match for the Market.

VII. Concerns of Committee Members None.

VIII. Adjournment The meeting was adjourned at 5:50 p.m. by Rico Quirindongo, Chair.

Meeting minutes submitted by: Karin Moughamer, Executive Administrator

Page 130 Section VII: Financials & Additional Enclosures

Page 131 Page 132 Date: July 21, 2020

To: PPM PDA Council

From: Sabina Proto, Director of Finance

Subject: Financial Statements for June 2020

Page 3:

PDA Operating Statement Notes:

Total YTD Revenue for the end of June 30, 2020 was $7,358,013, under budget by $3,187,816 or -30.2%

Total YTD Operating Expense for the end of June 30, 2020 was $6,373,654, under budget by $2,004,058 or 23.9%.

Net Result after Debt Service and Reserves was negative $984,359, which is $1,183,758 under budget.

Information regarding month of June:

Due to the closure of the Market because of Covid19, we have considered providing some relief to our Commercial Tenants; we gave them a credit of 4 months of CAC charges, which are equivalent to two months base rent. Half this credit was posted in April, and the other was posted in May.

The financials are prepared on accrual basis, and don’t provide a real clear picture of cash shortage. For this reason we wanted to inform you regarding the amount of money we received and spent during month of June: total amount received during June = $1,030,819, which is almost half from what was budgeted for June. The budgeted amount for operating expenses was $1.4MM and the actual spending was $878K, almost 40% less.

Also, our Council approved $2MM transfer from Minimum Operating Reserve to cover for the cash shortage. We have deployed $1,5MM out of that amount so far. The rest will be used during July and August.

We are up to date on all debt payments.

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Footnotes on the Operating Statement (accrual)

Commercial Revenue is under budget by $1,885,381

Residential Revenue is over budget by $693

Page 133 Daystall Revenue:

Daily Crafts is under budget by $254,687

Farm revenue is under budget by $99,788

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Garage Revenue is under budget by $808,256

Miscellaneous Revenue is under budget by $127,026. A considerable reduction on investment income, which will continue for the upcoming months.

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Operating Expenses overall under budget, mostly due to working under less capacity than normal.

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Percent Rent spreadsheet- Percent Rent is $961,806 under budget.

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The report states the balance of the Capital Replacement Reserve, which was $19.6 MM for the end of June 30, 2020. Capital projects spending has been placed on stop, until further decision.

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Capital Projects Report provides the status and YTD spending on different Capital Project we have been working so far.

Page 134 Page 135 Page 136 Page 137 Page 138 Page 139 Page 140 Page 141 Page 142 Page 143 Page 144 Residential Property Update Report July 20, 2020

Overall occupancy rate: 95% Increased time for turnovers due to COVID-19 restrictions on staffing and work access.

Move-ins: 2 Move-out Notice received: 6

Page 145 HIGHLIGHTS

COMPLIANCE / HUD o Internal audits completed o NEF audit - all required files & docs were sent electronically – no update yet o Mandatory certification appointments will resume in July following CDC & State guidelines

BUILDING AND STAFF ISSUES o Low Income Housing Tax Credit (LIHTC) & easy to turn units continue to be the focus of staff. o Completing emergency only work orders as needed. All other projects on hold. o Pest control - one unit in treatment, K-9 inspection in August. o We are still continuing to mindfully work with all residents who are behind their rent. o COVID – 19 related info o Resident wellness check continues o No known cases o In unit / on premises smoking is becoming a larger health issues in several building

RESIDENT UPDATES AND INVOLVEMENT o Food Bag delivery continues (through Market Commons) o Meal Delivery – Every Tuesday & Friday - (through Market Commons & other sources o Virtual summer picnic = Summer Social Distancing Event – Lunch delivery – 1st week of August o We received 500pcs of cloth mask & 500 pcs. disposable mask from the City.

LASALLE UPDATES o Capital upgrades nearing completion. Last major project is upgrading the fire alarm panel. o Termination of Tax Credit lease in process for end of year.

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July 2020 - PDA Report

Our mission is to nurture a thriving Market community. Values: Collaboration, Inclusion, Respect, Optimism, Gratitude ​

Power of Pike Place Campaign Fundraising update:

What’s new? ● Our Power of Pike Place website is updated with direct messaging to drive urgency, articulate needs ​ ​ ​ and inspire donations. You’ll find our impact videos from Support the Market! and a list of our major donors to the campaign on the site. ● Power of Pike Place Recovery campaign PSAs are now running on KOMO4 ● In the News:

Page 147 ● Forbes: How the Pike Place Market is Helping its Community During Covid-19 Closures ● KCTS9: Locals are Key to Pike Place Market Recovery

● Starbucks Merchandise: On August 4th, the original Pike Market ​ Starbucks store will start selling Pike Place Market Foundation merchandise to benefit our recovery fund. The goal is to raise at least $10,000 with this promotion, that’s in addition to our $50,000 annual trademark partnership for Pike Place Roast.

What’s next?

● Launch Power of Pike Place campaign to those who didn’t see the virtual event: ● Donors - Summer newsletter & email campaign ● Public - Social Media Ads & Media Outreach ● Shoppers in the Market community

Grants: ● Grants awarded so far this fiscal year: Wells Fargo $22,750; Wyncote Foundation $50,000, Joshua Green ​ Foundation $50,000; Starbucks $5k; Rotary $5K for Food Bank; WA Federal Foundation $2,500; Synchrony $2,500

● Grant asks pending: Umpqua Bank $10K; TEW Foundation $25k; Whole Cities Foundation $8K, BECU People ​ Helping People Awards $15K+

● We are always open to new grant ideas and most larger corporations have grants as an option in addition to sponsorship. Funding criteria has also gotten more flexible in response to COVID relief. Let us know if you know of any we should be applying for! [email protected] ​

Sunset Supper - Dine & Donate: On what was supposed to be our 25th Sunset Supper, we are launching a “Dine & Donate” campaign to help recover ​ ​ some funding and activate our supporters to pledge their ticket price to support our local restaurants and the Power of Pike Place Recovery campaign.

Join us the week of Friday, August 14th – Friday, August 21st, as we celebrate the 113th anniversary of the Market and give back to our small businesses who need our help. We are including 58 Market businesses in this promotion - both loyal Sunset Supper vendors and operating Market restaurants and food establishments

This short campaign will target Sunset Supper loyal patron guests, corporate tables and general admission ticket purchasers. We’ve added a SUNSETSUPPER to 91999 text option and are in the process of building a microsite on ​ ​ MobileCause

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Cooking with Class - Virtual Dining Experience: On Thursday, Sept 10th 6pm - 7pm, we will hold Cooking with Class virtually!

Join three top regional chefs for short cooking demonstrations, recipes, and a live auction full of culinary and travel packages. Fred Northup, Jr. will be our MC for the evening, as we share ways to help the seniors of Pike Place Market and the Power of Pike Place Recovery Campaign.

Registration is free, and the auction will open one week prior to encourage guests to log in and participate.

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