The Audit meeting scheduled for 2021-06-17 at Remote

Transcript

The Audit meeting scheduled for 2021-06-17 at Remote

THIS IS COMMISSIONER CHO CALLING TO ORDER THE PORT OF SEATTLE AUDIT COMMITTEE SPECIAL MEETING
TODAY IS THURSDAY, JUNE 17 TH AND THE TIME IS 2 36
WE ARE MEETING REMOTELY TODAY VIA TEAMS TO COMPLY WITH THE SENATE CONCURRENT RESOLUTION 8402 AND GOVERNOR INSLEE'S PROCLAMATION 2028
PRESENT WITH ME TODAY IS PUBLIC MEMBER CHRIS GEHRKE AND COMMISSIONER COMMISSIONER STEINBREUCK WHO IS FILLING IN FOR OH ACTUALLY IS NOT FILLING IN FOR THE COMMISSIONER BOWMAN WHO IS HERE TODAY
EXCUSE ME
AND I BELIEVE COMMISSIONER STEINBREUCK IS HERE AS WELL
WILL THE CLERK PLEASE CALL THE ROLL TO ENSURE ALL COMMUNITY MEMBERS ARE ON THE LINE? THANK YOU
BEGINNING WITH COMMISSIONER BOWMAN PRESENT
THANK YOU
MEMBER GEHRKE PRESENT
THANK YOU, COMMISSIONER STEINBREUCK
HERE, THANK YOU
THANK YOU, COMMISSIONER CHO PRESENT
THANK YOU
YOU DO HAVE A QUORUM OF THE AUDIT COMMITTEE AND ATTENDANCE THERE
GREAT
AS THIS IS THE VIRTUAL MEETING, WE HAVE MADE SPECIAL ARRANGEMENTS TO PROVIDE FOR REMOTE PARTICIPATION FOR ALL OF OUR STAFF, ANY OUTSIDE PRESENTERS AND COMMITTEE MEMBERS
ALSO, PLEASE NOTE THAT ALL VOTES, COMMENTS AND QUESTIONS TODAY WILL BE TAKEN BY ROLL CALL METHOD AS A RESULT OF OUR VIRTUAL ENVIRONMENT TO MAKE THIS MEETING MORE ACCESSIBLE TO THE PUBLIC
THE MEETING IS BEING LIVE, STREAMS AND DIGITALLY RECORDED AND MAY BE VIEWED OR HEARD AT ANY TIME ON THE PORT WEBSITE
BEFORE WE GO INTO OUR FIRST ITEM FOR APPROVAL, I WOULD LIKE TO ASK IF THERE ARE ANY OBJECTIONS TO THE MOVING ITEM SEVEN OF OUR OPERATIONAL AUDITS PERTAINING TO THE ART PROGRAM
TO OUR FIRST ORDER OF BUSINESS
COMMISSIONER STEINBREUCK IS IN ATTENDANCE TO HEAR THE AUDIT REPORT
DO I HAVE ANY OBJECTIONS? ALRIGHT, HEARING NO OBJECTION
WE'LL RE ORDER THE AGENDA TO TAKE ITEM NUMBER SEVEN FIRST
I THINK GLENN AND DAN AND SPENCER BRIGHT ARE UP
SO I'M GOING TO INTRODUCE THIS ITEM
COMMISSIONERS CHO, COMMISSIONER STEINBRUECK, COMMISSIONER BOWMAN, AND TALK A LITTLE BIT ABOUT THAT
DAN CHASE IS GOING TO TALK A LITTLE BIT MORE ABOUT THE ISSUE AND THEN WE'LL HAVE MANAGEMENT RESPOND
WE'LL ALSO TAKE QUESTIONS DURING THIS
BUT IN A NUTSHELL, WE WERE ASKED TO LOOK AT THE ART PROGRAM PRIMARILY BECAUSE OF POLICY DIRECTED IN NOVEMBER 2019 AND TO ASSURE THAT THE PORT WAS FOLLOWING IT AND THE THE PORT DID HAVE ADEQUATE CONTROLS THAT PROCESSES IN PLACE TO DO SOMETHING TO BASICALLY SUPPORT THE ART PROGRAM
I WANT TO KNOW AND I'M GOING TO ASK MICHELLE, IF YOU CAN PULL UP THE DECK, WE PRESENT THAT IT'S SLIDE SEVEN OF THE DECK
MICHELLE, YOU GOT IT
GIVE ME TWO SECONDS HERE
OH, THAT IS STRANGE
IT'S NOT BRINGING IT UP CORRECTLY
HANG ON A MINUTE FOR ME, PLEASE
YOU KNOW, I'M GETTING A WHOLE DIFFERENT PRESENTATION, MICHELLE
I CAN PROBABLY PULL IT UP
I'VE GOT IT AND IT'S SET THAT I CAN ONLY PRESENT
SO THANK YOU FOR THAT
I APPRECIATE THAT
HOPEFULLY WE CAN GET THIS UP AND ROLLING HERE PRETTY QUICKLY
COMING UP
LOOKS LIKE AND NOW YOU NEED TO JUST SCROLL TO SLIDE SEVEN OKAY
SO IT'S PULLED UP ON A DIFFERENT ONE
BEAR WITH ME
ALRIGHT
I AM
YEAH
THIS IS A WHOLE DIFFERENT PRESENTATION ON TEAMS TODAY
THIS IS INTERESTING
THEY DID CHANGED TEAMS AND THEY MADE IT A LITTLE MORE AND TOOK AWAY THE THINGS THAT YOU CAN YOU SEE IT AT ALL? WE'RE GOOD NOW
SO, COMMISSIONERS, I WANT TO POINT OUT THAT
YEAH
JUST A FEW HIGHLIGHTS ABOUT THE PROGRAM
THE PORT OF SEATTLE IN THE LATE 60'S WAS THE FIRST PUBLIC AIRPORT TO ESTABLISH THE CIVIC ART COLLECTION
AND WE HAVE QUITE A SIZEABLE COLLECTION AND QUITE A LARGE PROGRAM AROUND THE ARTS AND THAT SUPPORTS LOCAL ARTISTS AROUND THE SEATTLE AREA AS WELL
WE ALSO HAVE ABOUT 1% OF ALL CAPITAL CONSTRUCTION, LESS CERTAIN ADJUSTMENTS FOR NON PUBLIC FACING CAPITAL
THAT'S SUPPOSED TO GO TO AN ART POOL FOR THE POLICY
THROUGH THE COURSE OF THIS AUDIT, I DO WANT TO POINT OUT WE AUDIT IT TO THE ARTS AND CULTURAL PROGRAM POLICY DIRECTIVE THAT WAS CREATED BY THE COMMISSION AND THAT DIRECTIVE REQUIRED THE COMMITTEE AND MANAGEMENT TO CREATE SOME ART GUIDELINES
NOW, I WANT TO SAY THAT I'M GOING TO HAND THIS OVER TO DAN CHASE, TALK A LITTLE BIT ABOUT THAT AND WHAT WE FOUND
BUT IN A NUTSHELL OF A VERY HIGH LEVEL
YOU KNOW, WHAT DAN IS GOING TO POINT OUT IS THAT DIRECTIVE, YOU KNOW, WHERE DOES THAT DIRECTIVE DOESN'T EXIST UBIQUITOUSLY ACROSS THE PORT AND THAT DIRECTIVE ISN'T CONSISTENTLY FOLLOWED
SO THERE ARE DEFINITELY SOME OPPORTUNITIES
AND WITH THAT, DAN, I'M GOING TO HAND IT OFF TO YOU AND MICHELLE, IF YOU CAN GO TO SLIDE EIGHT AND THE NEXT SLIDE AND IT'S ALL YOURS DAN TO TALK ABOUT WHAT YOU FOUND
YEAH
THANK YOU
GLENN, CAN EVERYBODY HEAR ME? YES
GOOD
I CAN'T SEE ANY SLIDES
SO I'M JUST GOING TO JUST START TALKING AND MAYBE GLENN, YOU CAN ASK TO FORWARD THE SLIDES AS NECESSARY
DAN, BEFORE YOU GET INTO THAT, GLENN, CAN YOU USE THE SLIDE EIGHT? I CAN
OKAY
PERFECT
THANK YOU
GOOD AFTERNOON, COMMISSIONERS AND MISS GEHRKE
SO I'M SURE YOU'RE ALL FAMILIAR WITH THE REPORT
WHAT WE REALLY FOCUSED ON WAS THREE AREAS THAT WE FELT WERE IMPORTANT TO HIGHLIGHT TO THE AUTO COMMITTEE
THE FIRST WAS AROUND GOVERNANCE OR OVERSIGHT
PRIOR TO JUNE OF 2019, THE ARTS AND CULTURAL BOARD HADN'T BEEN MEETING SUBSEQUENTLY
THEY HAVE BEEN
MY UNDERSTANDING, HOWEVER, IS THAT NOT ALL MEMBERS ARE ALWAYS PRESENT
THE BOARD DOES CONSIST OF NINE MEMBERS FOR PUBLIC MEMBERS, THREE ELP OR THEIR DESIGNEE AND TWO COMMISSIONERS
SO THERE ARE QUITE A FEW PEOPLE THAT ARE NEEDED AT THESE MEETINGS
THE NEXT IS AROUND STAFFING
THE LUMIAR GROUP WAS HIRED IN MARCH OF 2020 AND THEY DEVELOPED A FIVE YEAR STRATEGIC PLAN
AMONG SEVERAL OF THE RECOMMENDATIONS
THEY IDENTIFIED STAFFING AS AN AREA THAT NEEDED TO BE ADDRESSED
THEY RECOMMENDED TO HAVE FIVE TOTAL STAFF
RIGHT NOW WE ONLY HAVE TOMMY GREGORY AS A FULL TIME ART MANAGER
I KNOW HE'S ON THE CALL RIGHT NOW
I JUST LIKE TO SAY TOMMY TOOK US ON A TOUR OF THE ART AT THE AIRPORT
HE'S VERY KNOWLEDGEABLE, EXTREMELY PASSIONATE
I THINK THE PORT IS REALLY LUCKY TO HAVE HIM
SO THANKS, TOMMY, FOR WALKING US THROUGH THE ART AT THE AIRPORT AND ANSWERING ALL OUR QUESTIONS
THE STAFFING
THESE ARE TECHNICAL IN NATURE
THESE POSITIONS
SO DEVELOPING GUIDELINES, DISASTER PREPAREDNESS, OVERSEEING ART INSTALLATION TOURS, INVENTORY CONTROL, ACQUISITIONS
THERE ARE QUITE A FEW TECHNICAL RESPONSIBILITIES THAT ARE REALLY NEEDED TO RUN THE PROGRAM
I THINK THE NEXT SLIDE TALKS ABOUT FUNDING
I CAN'T SEE IT
BUT NEXT SLIDE, PLEASE
OKAY
GREAT
LIKE GLENN HAD MENTIONED, ONE OF CAPITAL CONSTRUCTION COSTS ARE SUPPOSED TO BE ALLOCATED TO THE ART POOL
AND SO THE TABLE THAT I THINK YOU'RE LOOKING AT THAT I CAN'T SEE THERE'S A 1.2 MILLION DOLLAR INCREASE TO THE TO THE POOL
THAT WAS A RETROACTIVE ADJUSTMENT AS KIND OF A MAKE UP THE 1.45
I THINK IT IS RECONCILING ADJUSTMENT THAT DECREASES THE POOL
IT WAS FOR A BUDGET ADJUSTMENT
REALLY
WHAT WE'RE SAYING IS THAT WHAT WE'RE TRYING TO SHOW HERE IS THE ART POOL REALLY HASN'T BEEN USED TO QUOTE, UNQUOTE ACQUIRE ART
THE NEXT SLIDE, I THINK, GOES INTO RECOMMENDATIONS
YEAH
BUT WHILE WE'RE ON THIS SLIDE, I JUST WANT TO POINT OUT THERE'S A WITH ABOUT 2,000,000 DOLLARS BALANCE IN THE FUND THEN
YEAH
RIGHT NOW THERE IS THE ART COOL
SO IN SOME PARTS OF THE ORGANIZATION, THE AWARENESS OF THE ART POOL DIDN'T EXIST FROM THE NORTH SAT
AND THE IAF I DO WANT TO POINT OUT THOSE PROJECTS THAT ARTWORK INDEPENDENTLY OUTSIDE OF THE ART POOL
NOW, FOR EVERYTHING ELSE IN THE PORT, THE ARTICLE WASN'T USED AT ALL OTHER THAN THIS ONE TIME ADJUSTMENT THAT WAS MADE UP 1.223 IN FEBRUARY
AND THAT'S STANDPOINT AT 1.453 WAS A RECONCILING ADJUSTMENT FROM BACK IN 2014
SO REALLY, THERE'S NOTHING TRANSFERRED OUT OF THE ARTICLE OTHER THAN THAT RECONCILING ADJUSTMENT
SO THERE'S MONEY SITTING IN THERE
IT'S BEEN SITTING IN THERE FOR A WHILE
IT WAS MORE ADDED IN 2021
AND WE BELIEVE THAT THE BOARD, THE ART BOARD, NEEDS TO BE AWARE OF THIS AND THIS BALANCE AND THESE FUNDS NEED TO BE USED
SO IT'S JUST WE JUST KIND OF WANT TO POINT THAT OUT AND COME TO THE TO FIGURE
WELL, THAT'S REALLY PUZZLING TO ME
WHEN DID TOMMY COME ON BOARD? I THINK
TELL ME YOU CAN CORRECT ME, BUT I THINK IT WAS AROUND JUNE OF 2019
SO MAYBE A LITTLE BIT BEFORE THE BOARD HAD NOT BEEN MEETING, PAYMENTS WERE NOT BEING MADE INTO THE ART POOL FOR ALL THOSE YEARS
AND THEN SUDDENLY A RETROACTIVE PAYMENT
IT'S NOT AS THOUGH WE HAVEN'T HAD CONSTRUCTION PROJECTS DURING THOSE PERIOD THAT PERIOD
WHO IS MANAGING THIS OR WHO WAS NOT MANAGING IT? THE PROGRAM
YOU'RE ABSOLUTELY RIGHT
AND I THINK THAT'S A QUESTION FOR JEFFREY BROWN OR TOMMY, AND THEY ARE ON THE LINE
SO WE WILL PULL THEM UP IN A SECOND, COMMISSIONER
OKAY
I COULD HAVE RESPONDED THAT EVEN THOUGH COMMISSIONER, EVEN THOUGH I CAME HERE IN 2016, I THINK THE RESPONSE LIES WITH ME AS MY POSITION AS CHIEF OPERATING OFFICER TO MANAGE ART POOL
THE 1.2 IS A RETROACTIVE
WE WENT BACK AND LOOKED BACK
WE DID CANCELLATION OF ALL THE PROJECTS THAT SHOULD HAVE TRANSFERRED INTO OUR ART POINT AND REALIZE THAT THE CERTAIN TRANSFER ARE NOT DONE
SO I TAKE FULL RESPONSIBILITY OF THAT
I THINK WHEN WE GO INTO THE RECOMMENDATIONS, YOU SEE WHAT'S RECOMMENDED IS FOR A SIMPLIFICATION OF THE PROCESS
THE PROCESS EXISTS TOO COMPLICATED, AND AS A RESULT, YOU HAVE THESE ERRORS AND OMISSIONS
SO I THINK IF WE SEND FOR THE PROCESS, YOU COULD PROVIDE FUNDING NEEDED TO THE OBJECTIVES OF THE STRATEGIC PLAN
OKAY
THANK YOU, JEFFREY
YOU'RE WELCOME
NEXT
SO WHY DON'T I GO INTO THE RECOMMENDATIONS? AND SO I'LL JUST KIND OF GROUP THEM ALL TOGETHER, YOU KNOW, RE EVALUATING FROM A GOVERNANCE OR OVERSIGHT STANDPOINT IF NINE MEMBERS IS NECESSARY AND IF IT'S REALISTIC
AND IF SO, THEN LET'S MAKE SURE EVERYBODY GETS THERE
AS JEFFREY JUST MENTIONED, WHAT WE OFFERED IS MAYBE SIMPLIFYING THE FUNDING PROCESS TO MAKE A ONE TIME ANNUAL ALLOCATION BASED ON THE CAPITAL BUDGET AND POTENTIALLY CAPPING IT
THAT WOULD REDUCE THE ADMINISTRATIVE TIME NECESSARY TO FIRST IDENTIFY IF THE PROJECT IS BE ELIGIBLE AND THEN DETERMINING THE AMOUNT THAT NEEDS TO BE TRANSFERRED
AND THEN FINALLY, THE STAFFING LEVEL IS IMPORTANT BECAUSE, AS THE FIVE YEAR STRATEGY POINTED OUT, THERE'S GOALS
AND IN ORDER TO MEET THOSE GOALS, WE NEED TO HAVE THE RIGHT PEOPLE IN PLACE
SO SO THAT REALLY CONCLUDES IT BEFORE I'LL TURN IT BACK OVER TO GLENN
BUT I DID WANT TO COMMENT THAT JENNY ALBERT IS LISTENING ON THE LINE RIGHT NOW
SHE LED THIS AUDIT
SHE DID A NICE JOB ON IT
I REALLY ENJOYED LEARNING ABOUT THE PROGRAM
WE DO SEE THE VALUE THAT THE ART BRINGS
AND SO REALLY, WE HOPE THAT WHAT WE'RE RECOMMENDING IN THIS REPORT IS GOING TO IMPROVE THE ART PROGRAM AND HELP IT PROGRESS GOING FORWARD
SO, GLENN, I'LL TURN IT BACK TO YOU FOR DECISION TWO QUESTIONS ABOUT STAFFING
DID YOU LOOK AT OTHER COMPARABLE ART PROGRAMS AS FAR AS STAFFING AND YOU'RE SHAKING YOUR HEAD? NO
I KNOW THERE WAS SOME STUDY DONE BY THE CONSULTANT, I THINK, ON STAFFING, BUT IT SEEMS TO ME THAT ONE ISSUE WITH THE STAFFING IS WHERE THE FUNDS COME FROM
BECAUSE IF THEY'RE NOT BUDGETED, THEY'RE NOT COMING OUT OF THE ART PROGRAM
THEY'RE COMING OUT OF THE GENERAL, I GUESS NOW PORT WIDE BUDGET PROCESS
AND I'VE ALWAYS WONDERED WHY THE FUNDS FROM THE ART GENERATED BY THE ART POOL COULD NOT BE USED FOR STAFFING
SO WE DIDN'T LOOK AT OTHER AGENCIES FROM A STAFFING STANDPOINT
SO THE ANSWER TO THAT IS NO
BUT I BELIEVE THE THE LUMIER GROUP PROBABLY USED OTHER AGENCIES AS A BENCHMARK
I THINK SAN FRANCISCO IS PROBABLY OUR CLOSEST COMPARABLE
YEAH
SO I WAS JUST GOING TO SAY YOU CAN ANSWER THIS LINE OF QUESTIONS, BUT THERE'S ACTUALLY GOING TO BE TIME TO ASK QUESTIONS AFTER THEY'RE DONE WITH THE PRESENTATION
SO LET'S
ALRIGHT
THANK YOU
I'LL STAY QUIET
THANK YOU
SO AND ONE OF THE THINGS THIS IS TRUE, THIS IS JEFFERY, I NEED TO MAKE A CLARIFICATION
I REALIZED THAT THIS IS A PUBLIC MEETING THEN FOR THE PORT STUFF
WHEN I RESPOND, THEY PROBABLY RECOGNIZE THAT I'M SPEAKING ON BEHALF OF AVIATION DIVISION
SO BY RESPONSE TO COMMISSION STANDARDS QUESTION APPLIES ONLY TO AVIATION DIVISION
I'M NOT SPEAKING ON BEHALF OF THE NON MARITIME OR ON BEHALF OF STEVE METRUCK
SO I JUST WANT TO MAKE THAT CLARIFICATION
SO COMMISSIONERS ON THE FUNDING
ONE LAST THING I WANT TO ADD IS BEFORE I HAND IT OVER TO JEFFREY BROWN AND TO STEPHANIE, JONES-STEVANS, TO RESPOND IS DAN HAD TALKED ABOUT SIMPLIFYING THE FUNDING
THAT'S IMPORTANT
SIMPLIFYING IT EITHER ANNUALLY OR STEVE METRUCK SUGGESTS THAT EVEN WITH THE AUTHORIZATION MEMOS FOR A PROJECT PUT IN THERE, WHAT THE ART POOL FUNDING IS GOING TO BE
SO THERE'S TRANSPARENCY THERE AND THEN IT FUND THE PROJECTS OF THE ARTICLE
BUT THAT NEEDS TO HAPPEN
AND THE COMPLEXITY RIGHT NOW JUST MAKES IT TOO SUBJECTIVE
AND THAT'S WHY THERE WAS A ONE TIME ADJUSTMENT FOR SEVERAL YEARS THAT WAS DONE IN LATE JANUARY, THE FIVE YEAR PLANNED LUMIERE GROUP SET FIVE RESOURCES TO ACCOMPLISH CERTAIN THINGS THAT THEY HAD IN THE PLAN
SO THAT JUST NEEDS TO BE BALANCED
I MEAN, IF WE'RE GOING TO ALLOCATE 1 OR 2 RESOURCES, WE JUST NEED TO KNOW WHAT WE CAN ACCOMPLISH OR PROVIDE JEFFREY WITH RESOURCES
BUT JEFFREY NEEDS TO FIND THE RESOURCES ELSEWHERE
AND THEN THERE'S BOTH MARITIME ECONOMIC DEVELOPMENT AND AVIATION SIDE
SO WITH THAT, I'M GOING TO MOVE TO THE MANAGEMENT ACTION PLAN AND LET JEFFREY START BY RESPONDING FOR THE AVIATION DIVISION
NEXT SLIDE, PLEASE
MICHELLE AND JEFFREY YOUR UP
OKAY
THANKS
THANKS
COMMISSIONS
I THINK WE AGREE WITH THE RECOMMENDATIONS COMING FROM THE INTERNAL AUDIT IN THE THREE AREAS OF GOVERNANCE, FUNDING AND STUFF
IN TERMS OF GOVERNANCE
I THINK IT HAS TO BE A DISCUSSION BETWEEN THE THE BOARD ITSELF, THE ART AND CULTURE BOARD AND STAFF TO AGREE HOW WE REVISE THE GOVERNANCE IN TERMS OF SCHEDULE MEETINGS WHEN WE HAVE MEETINGS AND CORE ROOM AND STUFF LIKE THAT
SO I THINK THERE HAS TO BE A DISCUSSION BETWEEN THE BOARD AND STAFF
OUR FIRST FUNDING
I STATED IT BEFORE
IF WE COULD SIMPLIFY THE FUNDING AND IT'S GOING TO BE A TWO WAY STREET WILL PROPOSE THAT ART PROGRAM, LED BY ME, WOULD DEVELOP WITH TOMMY, THE PORT FIVE YEAR STRATEGIC PLAN AND THE FUNDING NEEDED ON THE CAPITAL PORTION OF THAT PROGRAM
AND A SIGN I LOCATED THE FUNDING FOR THE CAPITAL PORTION THAT'S NECESSARY TO MEET OBJECTIVES OF THE STRATEGIC PLAN OR THE FIVE YEAR CIP
AS FAR AS OPERATIONAL EXPENSES LIKE COMMISSION TIME, WE REFER TO STAFF AND THAT'S OBVIOUSLY THERE'S OPERATIONAL EXPENSES
WE HAVE CERTAIN LIMITATIONS, ACCOUNT LIMITATIONS WHERE WE CAN'T USE CAPITAL FUNDS THAT ARE PULLED FOR OPERATIONAL EXPENSES ANNUALLY
WE ALLOCATE FUND OPERATIONAL EXPENSES FOR THOSE ACCORDINGLY
SO YOU HAVE TWO COMPONENTS OF OUR PROGRAM, CAPITAL EXPENDITURE DONE BY ALLOCATION, AND THEN ANNUALLY YOU ALLOCATE OPERATING EXPENSES FOR FUNDING
WE THINK THAT'S SIMPLE, AND IT WILL BE TAKING CONSIDERATION OF OPERATION NEEDS OF THE AVIATION DIVISION FOR THE STAFFING
WE HAVE PROPOSED THE LUMIERE GROUP PROPOSAL OF FIVE FTES INSTEAD OF THE ONE WE HAVE NOW NOT TO MEET OBJECTIVES OF THE STRATEGIC PLAN
HOWEVER, THAT HAS TO BE A DECISION AND DISCUSSION WITH THE ELT MEMBERS
LANDS AS A MANAGING DIRECTOR OF AVIATION, AS STEVE METRUCK IS THE EXECUTIVE DIRECTOR BECAUSE THEY HAVE TO TAKE INTO CONSIDERATION AND THE OPERATION NEEDS OF THE ENTIRE PORT
THIS IS JUST A SMALL SUBSET OF THE OPERATIONAL NEEDS OF THE ENTIRE PORT
AND THEN WE HAVE TO BALANCE THOSE NEEDS COMING OUT OF THE COVID 19
WE PROBABLY CAN FULLY STAFF ALL THE NEEDS WE NEED
SO THERE HAS TO BE A BALANCE BETWEEN WHAT OUR PROGRAM NEEDS AND WHAT THE OVERALL AVIATION NEEDS FOR OPERATING RESOURCES
AND THAT HAS TO BE A DISCUSSION WITH LED BY BY THE MANAGER DIRECTOR LANDS, AND WITH STEVE METRUCK, EXECUTIVE DIRECTOR GLEN
THAT'S ALL I HAVE TO SAY
THANK YOU
THANKS
THANKS, JEFFREY
AND BEFORE WE JUMP INTO QUESTIONS ALSO, CATHY, CAN YOU UNMUTE AND SPEAK TO THE MARITIME AND ECONOMIC DEVELOPMENT RESPONSE, PLEASE? SURE
THANKS VERY MUCH
YEAH
YOU CAN SEE STEPHANIE AND DAVE AGREED ON THIS RESPONSE, AND I AGREE WITH THEM
WE HAD THE NON AVIATION SIDE HAS NEVER UTILIZED AN ART POOL
WE HAVE ALWAYS INDIVIDUALLY AUTHORIZED ART AS PART OF A PROJECT INSIDE OF A PROJECT SIMILAR TO HOW IF OR NORTH SATELLITE HAS DONE IT AT THE AIRPORT
SO WE SOMEHOW MISSED THE DIRECTIVE THAT WE CHANGED OUR POLICIES TO ACCOMMODATE THE 1% FOR ART FROM THE HALF PERCENT THAT HAD PREVIOUSLY BEEN
BUT WE DID NOT INSTITUTE AN ART POOL
AND SO WE DO HAVE, AND CARA CAN SPEAK A LITTLE BIT ABOUT THE ONGOING ART THAT WE HAVE AT FISHERMAN'S TERMINAL
WE ALSO HAVE AN ART PROJECT IN CONSTRUCTION AT 1 17
BUT PRIOR TO THAT, WE HAD NOT HAD ANY PUBLIC FACING PROJECTS THAT MET THE CRITERIA TO HAVE ART DONE SINCE THE NEW CRUISE TERMINAL AT T 91
SO WE HAVE BEEN TALKING ABOUT THE STAFFING PART OF IT AND HOW WE CAN ACCOMMODATE THAT
AND WE'VE NARROWED IT DOWN TO MAYBE NOT TWO FTES, BUT TWO BODIES OF WORK
ONE WOULD BE TO FACILITATE NEW PROJECT ACQUISITION OR CONSTRUCTION, AND THE OTHER WOULD BE MORE OF AN ASSET CURATOR THAT WOULD HANDLE THE CLEANING AND MAINTENANCE NEEDS AND ARCHIVING AND JUST GENERALLY ASSET MANAGEMENT, JUST LIKE ALMOST ANY OTHER ASSET
SO WITH THAT, COMMISSIONER QUESTIONS, COMMISSIONER BOWMAN, I SEE YOU HAVE YOUR HAND UP
AND, MICHELLE, YOU WANT TO HANDLE THE QUESTIONS
ARE WE READY FOR QUESTIONS? WE SHOULD SEND THIS THROUGH
COMMISSIONER CHO
COMMISSIONER CHO, WOULD YOU LIKE ME TO CALL THE ROLL? YES
PLEASE CALL THE ROLL FOR QUESTIONS
THANK YOU
WE'LL BEGIN WITH COMMISSIONER BOWMAN
THANK YOU
SO MAYBE SOMEBODY COULD SUGGEST A WAY TO RECTIFY SO THAT WE'RE ALL ON THE SAME PAGE, I BELIEVE IN
COMMISSIONER STEINBREUCK, PLEASE JUMP IN
SINCE YOU ARE REALLY THE TRUE ARCHITECT OF OUR OUR NEW ART POLICY, I THOUGHT IT WAS PRETTY CLEAR
AND WHAT CAN WE DO TO RECTIFY SO THAT ALL OF THE DEPARTMENTS ACROSS THE PORT, AT LEAST THAT THOSE INVESTED IN CAPITAL UNDERSTAND WHAT THE INTENT OF THAT MOTION WAS
MAYBE SOMEBODY ON STAFF COULD GIVE ME SOME GUIDANCE IF IT WAS THAT WE WEREN'T CLEAR ENOUGH IN THE MOTION
OR PERHAPS THAT INFORMATION JUST DIDN'T GET RELATED TO YOUR DEPARTMENTS
I THINK IN THE MARITIME SIDE, COMMISSIONER BOWMAN, THE INFORMATION DID NOT GET DOWN TO TO STAFF, AND THEY WERE NOT AWARE OF THE POLICY THAT'S YES
AND IF I MIGHT JUST PERHAPS THIS IS SOMETHING, COMMISSIONER STEINBREUCK, THAT WE COULD TAKE UP WITH OUR EXECUTIVE
BECAUSE I RECALL THE DISCUSSIONS WHEN THE PUBLIC DISCUSSIONS THAT WE HAD WHEN WE PASSED THE ART MOTION AND MY RECOLLECTION
AND PLEASE, AGAIN, CORRECT ME, SOMEBODY IF I'M WRONG
BUT I REMEMBER SPECIFICALLY TALKING ABOUT MARITIME AND WANTING TO HAVE THE ART PROGRAM EXPANDED BEYOND THE AIRPORT
SO I DON'T NEED TO BEAT A DEAD HORSE JUST MOVING FORWARD, SINCE WE'VE NOW NOT HAD IT INCORPORATED
I'D LOVE TO HEAR HOW WE'RE GOING TO REMEDY THIS MOVING FORWARD
BESIDES JUST ADDING AN FTE, I THINK THAT WAS CERTAINLY THE INTENT
AND AGAIN, COMMISSON, SIR, PLEASE JUMP IN
WE DO HAVE KYRA AND CATHY WITH THEIR HANDS UP
IF THERE'S A STAFF RESPONSE, I'LL WAIT FOR A RESPONSE TO COMMISSIONER BOWMAN'S COMMENTS
AND THEN I HAVE 2 OR 3 QUESTIONS
YEAH
I JUST LIKE TO SHARE MY UNDERSTANDING OF THE EVENTS HERE, COMMISSIONER BOWMAN, BECAUSE I THINK I JOINED THE ART BOARD JUST AS LUMIERE'S GROUPS WORK WAS COMPLETED AND WE WERE RESETTING THE TABLE AROUND THE NEW POLICY GUIDANCE DOCUMENTS THAT PROFFERED A PORT WIDE PROGRAM
AND SO WE ALL SAT, WE CONVENED AS AN ART BOARD WITH THE LUMIERE REPORT IN FRONT OF US, WHICH THE STOPPING RECOMMENDATIONS, AND THEN THE CRISIS HIT, AND WE HAVE STAFFING FREEZE
AND I THINK A LOT OF THE INFRASTRUCTURE THAT WAS INTENDED STAY GET UNDERWAY
OKAY
THAT'S TRULY USEFUL
KYRA
THANK YOU
AND I GUESS, AGAIN, I'M JUST THINKING MOVING FORWARD, I WOULD ALWAYS LEAVE IT TO THE STAFF TO DETERMINE HOW TO IMPLEMENT SOMETHING
BUT I GUESS MAYBE AS AN AUDIT COMMITTEE MEMBER MORE, I THINK MY BIGGER QUESTION IS JUST WE IMPLEMENTED A POLICY AND SOMEHOW WE ADOPTED A POLICY, BUT IT HAS NOT YET BEEN IMPLEMENTED
AND THAT'S REALLY THE PURPOSE OF THIS PARTICULAR AUDIT
SO I JUST LIKE TO MOVE FORWARD AND SEE HOW WE CAN RECTIFY
THAT WHETHER IT'S THE STAFF DECIDES YOU NEED MORE FTES, THAT'S A STAFF DECISION
THAT'S NOT AN APPROPRIATE PLACE FOR THE COMMISSION TO GET INVOLVED IN
SO MINE IS JUST I THINK THE BIGGER CONCERN IS THAT WE HAVE MONEY ALLOCATED FROM THESE PROJECTS FOR PUBLIC ART
HOW THAT GOES ABOUT HAPPENING IS REALLY ALL UP TO YOU ALL TO FIGURE OUT
I DON'T WANT TO GET IN THE MIDDLE OF THAT, BUT I HOPE WE CAN JUST GET IT RESOLVED MOVING FORWARD, BECAUSE WE'RE ALL EXCITED ABOUT WE WERE VERY EXCITED ABOUT THIS MOTION WHEN WE PASSED IT
THANK YOU
CAN I ADD STUFF TO [inaudible 00:26:27] ? CAN YOU HEAR ME? GO AHEAD
COMMISSIONER BOWMAN, I THINK YOU [inaudible 00:26:34]
I THINK THE INTENT OF THE POLICY WAS TO TAKE THE ART PROGRAM
WE HAVE IT NOW, WHICH IS BASICALLY FOCUSING ON VISUAL ARTS, AND HE WANTED TO TAKE IT TO INCORPORATE CULTURAL AND PERFORMING ART EVENTS
THAT IT FOCUSES A LOT ON THE AIRPORT
AND YOU WANTED TO HAVE A PORT WIDE STANDARD FOR EVERYTHING
SO I THINK THAT'S THE OVERALL BIG PICTURE
YOU WANT YOU'RE PAINTING FOR US
SO I'M NOT SURE IF I SAID IT CORRECTLY
LET ME KNOW
WELL, I THINK WHAT WE'RE DISCUSSING TODAY IS THE RESOURCES NEEDED AND THE GOVERNENCE NEEDED TO MEET THAT OVERALL OBJECTIVE
SO I HOPE I GOT IT RIGHT
THANKS
SO, COMMISSIONER CHO, WE DO HAVE A DIRECTOR, JOAN STEVENS WITH HER HAND UP
THANK YOU, CLERK HART
AND IF I COULD JUST ADD A CONCUR WITH HOW KIRA LEAST EXPLAINED IT, WE DID HAVE A WE ADOPTED THIS POLICY, AND SEVERAL MONTHS LATER, COVID HIT
AND AS WE LOOKED THROUGH THE BUDGET, IT WAS REALLY A PORT WIDE DECISION
WHEN WE LOOKED AT WHETHER OR NOT TO FILL THOSE POSITIONS WITH THE HIRING FREEZE, THERE WAS A DISCUSSION ABOUT THAT
AND I WILL SAY THAT IN THE PROJECT THAT REMAINED IN THE CAPITAL BUDGET, 1% FOR THE ART REMAINED IN THOSE PROJECTS AS PART OF THE CONCEPT
THERE'S A LITTLE BIT OF A DIFFERENCE BETWEEN THE WAY WE HAVE LOOKED AT IT
FOR INSTANCE, WHEN WE'RE DESIGNING PROJECTS AT FISHERMENS, THE IDEA IS THE 1% FOR ART WOULD BE INCORPORATED IN THOSE VERY PROJECTS THERE, VERSUS GOING INTO A COLLECTION SIMILAR TO WHAT MIGHT BE AT THE AIRPORT, SO THAT WE WOULD ACTUALLY THE ART WOULD BE INCORPORATED INTO THE PROJECT WE'RE DOING NOW
OF COURSE, WE KNOW THAT SEVERAL OF THE BIGGEST PROJECTS WE HAD REALLY ENVISIONED A SIGNIFICANT AMOUNT OF ART AS PART OF THE CRUISE PROJECT
FOR INSTANCE, THOSE DID NOT GO FORWARD, BUT THE PROJECT
AND GIVEN THE AMOUNT OF TIME, THE PROJECTS ARE STILL IN KIND OF PLANNING AND DESIGN
BUT THERE IS 1% FOR THE ART IN THOSE, ESPECIALLY THOSE ENVISIONED IS PART OF THE BIG PROJECT
AND ONE OF THE REASONS THAT THE MANAGEMENT RESPONDS IS SLIGHTLY DIFFERENT FROM AVIATION AND THE MARITIME AND ECONOMIC DEVELOPMENT DIVISION IS WE DO FULLY AGREE WITH THE FINDING THAT THERE IS A MISMATCH BETWEEN WHAT IS KIND OF IN THE POLICY AND THE RESOURCES WE HAVE TODAY, AND WE NEED TO RECTIFY THAT AND APPRECIATE THE COMMENTS I HEARD FROM THAT
COMMISSIONER BOWMAN, ESPECIALLY I HEARD WHAT YOU JUST SAID
WE WOULD ENVISION IT WORKING SLIGHTLY DIFFERENT, AS I SAID, AND INCORPORATING THAT INTO THE INTO THE SITE OF THE PROJECT ITSELF
AND I'M SORRY
I'M IN A LOUD ROOM DOWN AT 46 AND I APOLOGIZE FOR THAT, AND I'M JUST GOING TO STOP RIGHT THERE
THANK YOU
WE DO HAVE MISS LEASE
YOU MIGHT WANT TO ADD
YEAH, I DID WANT TO GIVE COMMISSIONER BOWMAN SOME ASSURANCE ABOUT THE POLICY ON THE MARITIME SIDE BECAUSE WE ARE CARRYING A 1% PROJECT FOR THE MARITIME INNOVATION CENTER AS IN ACCORD WITH THE POLICY
AND SO WE WILL MAKE AN INVESTMENT BOTH ON THE MARITIME INNOVATION CENTER AND THE PUBLIC IMPROVEMENT PACKAGE THAT'S ASSOCIATED WITH THAT PROJECT OUT OF THE MARITIME BUDGET AT THE 1%
AND THOSE ARE IN OUR PROJECT BUDGET AT 60% DESIGN WILL CARRY FORWARD
AND I BELIEVE IF I'M NOT INCORRECT, WE ARE CONTEMPLATING THE BEGINNING OF THE PORT PROCUREMENT PROCESS WITH TOMMY AND THE TEAM
THANK YOU, KYRA
LOOKS LIKE AS A HAND UP AS WELL
I WAS JUST GOING TO AGREE WITH KYRA THAT WE HAVE ALWAYS INCORPORATED ART IN OUR PUBLIC FACING PROJECTS JUST WITHIN THE PROJECT BUDGET, NOT IN A SEPARATE ART POOL
AND SO THAT'S THE PIECE THAT I THINK WE HAVEN'T WE HAVEN'T GONE FORWARD WITH YET
MR CHO, LET ME BACK UP
COMMISSIONER BOWMAN, DID YOU HAVE A FOLLOW UP? OKAY
SO LET'S MOVE TO COMMISSIONERS STEINBRUECK
YES, THANKS
I WANT TO FIRST EXTEND MY THANKS TO THE AUDIT OFFICE AND STAFF FOR CONDUCTING THIS AUDIT
I THINK IT HAS DEFINITELY PROVIDED SOME REAL VALUE AND INSIGHT INTO A LITTLE BIT OF HISTORICAL PERSPECTIVE ON THIS PROGRAM THAT FROM MY STANDPOINT APPEARS TO HAVE LACKED FOR WHATEVER BENIGN NEGLECT OR WHATEVER HAS LACKED MANAGEMENT OVERSIGHT AND ACCOUNTABILITY
AND THAT'S WHERE THINGS NEED TO CHANGE
AS LONG AS WE HAVE THIS POLICY, WE HAVE TO HAVE A LEVEL OF ACCOUNTABILITY AND OVERSIGHT AND MANAGEMENT EFFECTIVELY
AND IT NEEDS TO BE INSTITUTIONALIZED SO THAT THINGS DON'T GET LOST YEAR TO YEAR OR FORGOTTEN OR NEGLECTED, AS THEY SEEM TO HAVE BEEN
NOT POINTING FINGERS TO ANYONE SPECIFICALLY
BUT I THINK THERE'S AN ELEMENT OF BENIGN NEGLECT THAT'S BEEN OCCURRING HERE
MY UNDERSTANDING IS THAT THE HALF PERCENT WHICH WAS REDUCED TO THAT PRIOR TO DURING THE LAST RECESSION
IT WAS ORIGINALLY SINCE THE 1970S, AND IT WAS NOT EXCLUSIVE TO THE AIRPORT
I DON'T THINK IT EVER WAS EXCLUSIVELY AN AIRPORT PROGRAM, THOUGH
I THINK THE AIRPORT HAS MANAGED THE LION SHARE OF THE CAPITAL RESOURCES THAT HAVE BEEN GENERATED, PERHAPS OVER THE YEARS
BUT I DON'T THINK THAT WAS ANYTHING THAT THE POLICY DIRECTIVE CHANGED
IT'S ALWAYS BEEN AGAIN, CORRECT ME IF I'M WRONG A PORT WIDE PROGRAM
AND WE HAVE SO MANY NEW PROJECTS COMING ONLINE NOW THAT IT HAS INCREASED IMPORTANCE
I WANT TO POINT OUT ALSO THAT EVEN IF A PROJECT IS NOT ENTIRELY A PUBLIC FACING PROJECT, THAT THE EMPLOYEES SERVE TO BENEFIT FROM THE INCLUSION OF ART WITHIN THE WORKPLACE
SO I DON'T THINK THAT THAT'S AS A POLICY ISSUE, WE SHOULD BE EXCLUDING PROJECTS THAT MAYBE DON'T HAVE A HIGHLY PUBLIC FACING ELEMENT TO THEM
I WANTED TO ASK ABOUT THE CHALLENGES AND POSSIBLE RESTRICTIONS REGARDING AIRPORT GENERATED FUNDS PROJECT FUNDS THAT WOULD THEY NOT HAVE TO BE APPROVED BY THE MII AIRLINE GROUP? NO, I SEE COMMISSIONER BOWMAN SHAKING HER HEAD
IF IT'S OVER 10,000,000 IS NOT OVER 10,000,000
OKAY, SO IT SEEMS TO ME THAT THEY'RE GIVEN IT
I ALSO WAS WONDERING IF CAPITAL FUNDS CAN BE USED FOR PERFORMANCE AND PROGRAMMATIC, OR IF THERE'S SOME RESTRICTION THERE IF WE ARE TO EXPAND OUR ART PROGRAM TO OFFER MORE PROGRAMMATIC
IN OTHER WORDS, TEMPORAL OR NON CAPITAL PROJECT FUNDING
ARE THERE SOME LIMITATIONS TO THAT? THE OTHER THING THAT I WONDER ABOUT FROM THE AUDIT PERSPECTIVE IS ACCOUNTANCY NOTING THAT A RETROACTIVE PAYMENT OF 1.2 MILLION SOMETHING WAS MADE UNDER THE AVIATION SIDE
HOW MUCH HAS BEEN UNDERFUNDED OVER THE YEARS? I'M GUESSING THE AUDIT MAYBE DIDN'T INCLUDE THAT
BUT I SUSPECT THAT THE IF YOU HOLD UP THE CAPITAL PROJECTS OVER THE LAST 10 YEARS OR SO PORT WIDE, WE WOULD FIND A SERIOUS UNDERFUNDING OF THE ART CONTRIBUTION, EVEN AT HALF PERCENT, BUT I DON'T KNOW
DAN, DO YOU WANT TO DAN CHASE? YOU WANT TO ANSWER THAT, TOO? YEAH
I DON'T DISAGREE WITH WHAT PETER SAID
I DON'T HAVE THE ANSWER FOR WE DIDN'T AUDIT THE 1.2 MILLION DOLLAR RETRO ADJUSTMENT
I CAN'T REALLY SPEAK TO THAT
AND I DON'T KNOW IF ANYBODY ON JEFF, YOU CAN SOME COMMISSIONS
SINCE I HAVE BEEN HERE, I PROBABLY UNDERSTAND WHERE IT COMES FROM IN TERMS OF NOT FUNDING PROPERLY
BUT SINCE I'VE BEEN HERE IN 2016, THERE'S NEVER BEEN AN OPPORTUNITY, A REQUEST FOR AN ART PROJECT, BECAUSE THAT'S NEVER BEEN FUNDED
SO WHENEVER THERE IS A NEED IDENTIFIED FOR ART PROJECT HAS ALWAYS BEEN FUNDED AS FAR AS THE FUNDING, THE TEMPORAL OPPORTUNITIES
MY PROPOSAL IS THAT INSTEAD OF TRYING TO WORK WITH WORKING AGAINST LIMITATIONS, WE HAVE
I THINK THAT'S FINE WAY TO WORK WITHIN THE LIMITATIONS
SO WHAT I'M PROPOSING THAT FOR TEMPORARY OPERATIONAL EXPENSES THAT ANNUALLY WE BUDGET FOR THOSE UNDER THE OPERATING BUDGET AND FOR CAPITAL EXPENSES WILL BE FUN, THAT WE ALLOCATE FUNDS FOR THOSE
SO WE DON'T NEED TO HAVE THAT DISCUSSION
IF WE SIMPLIFY, THE PROCESS WOULD BE EASIER
THAT SEEMS REASONABLE OFFER
AND IT SEEMS TO ME THAT THE BUDGET PROCESS IN ITSELF ANNUALLY NEEDS TO RESPOND TO THE PROGRAM NEEDS AND REQUIREMENTS
AND THAT'S WHERE YOUR STAFF IN COMES
AS TO ME HAS TO HAVE A STAFF THAT COULD ASSIST THEM IN DEVELOPING THAT PROGRAM ANNUALLY OR EVEN FOR A FIVE YEAR
OKAY
THANK YOU
THANK YOU, COMMISSIONER STEINBREUCK
COMMISSIONER CHO, I JUST WANT TO DO A TIME CHECK HERE
WE'VE BEEN 45 MINUTES ON THIS ITEM, AND THE AGENDA IS VERY LONG, SO WE WILL MOVE TO MEMBER GEHRKE FOR QUESTIONS NEXT
I DON'T HAVE ANY QUESTIONS
THANK YOU
THANK YOU, COMMISSIONER CHO
AND NEITHER DO I
OKAY, IF WE WANT TO GO AHEAD AND PROCEED
YEAH
WELL, THANK YOU ALL TO THE STAFF OF THE REPORT TO THE MANAGEMENT FOR ALL THE RESPONSES AND COMMISSIONER TIMBER FOR ATTENDING THIS
I APPRECIATE YOUR INVOLVEMENT
WE'RE GOING TO NOW MOVE ON TO AGENDA THE AGENDA ITEM NUMBER TWO, WHICH IS THE APPROVAL OF THE MINUTES FROM APRIL 8 2021 AUDIT COMMITTEE MEETING
OKAY
AND HERE I'M GOING TO SIGN OFF NOW
I'M GOING TO LEAVE THE MEETING
COMMISSIONERS
STEINBRUECK, BEFORE YOU DO THAT, WE MIGHT NEED YOU TO HOLD QUORUM FOR THIS MEETING
SIR, ARE YOU STILL AT I'M TRYING TO PUSH THINGS SO I DON'T HAVE TO LEAVE THE MEETING UNTIL THE VERY END
THANKS, PETER
THANK YOU, MR BOWMAN TO CALL ME BACK A THANK YOU
ALRIGHT
THANKS
ALL
ALRIGHT
SEE YOU LATER
APOLOGIES, COMMISSIONER CHO, THE FLOOR IS BACK TO YOU
OKAY
THANK YOU FOR A PROOF OF THE MINUTES FROM APRIL 8TH 2021 AUDIT COMMITTEE MEETING
ARE THERE ANY CORRECTIONS TO THE MID? IF NOT, IS THERE A MOTION IN A SECOND TO APPROVE THE MINUTES? CAN I GET A SECOND? THAT WOULD BE YOU, SIR? I GUESS SO
SECOND
ALRIGHT
CAN WE REMEMBER THE QUESTION IS ON APPROVAL OF MINUTES, PLEASE SAY YES OR NO WHEN YOUR NAME IS CALLED
THANK YOU
BEGINNING WITH COMMISSIONER BOWMAN APPROVED
THANK YOU, COMMISSIONER CHO
AYE
THANK YOU
YOU HAVE TWO YESSES AND ZERO NOS FOR THIS ITEM
GREAT
THE MINUTES ARE APPROVED AS PRESENTED
THANK YOU VERY MUCH
OUR NEXT ORDER OF BUSINESS IS EXTERNAL AUDITS
PRESENTERS, PLEASE DON'T UNMUTE YOURSELF
COMMITTEE MEMBERS MAY USE THE HAND RAISING TOOL TO INDICATE THAT YOU WISH TO SPEAK OR ELSE I'LL CALL FOR QUESTIONS AT THE END OF THE PRESENTATION
THAT IS
OKAY, ANA
GOOD AFTERNOON, MEMBERS OF THE AUDIT COMMITTEE
I AM OLGA DARLINGTON
I'M A PARTNER WITH MOSS ADAMS, EXTERNAL AUDIT FIRM THAT PERFORMS THE INDEPENDENT AUDIT OF THE PORT
WITH ME TODAY IS ANNA WALDRON, A SENIOR MANAGER ON THE ENGAGEMENT WHO IS REALLY THE DRIVING FORCE FOR OUR TEAM
SHE OVERSEES OUR ENTIRE TEAM AS WELL AS MEMBERS OF THE SMALL BUSINESS FROM MINORITY OWNED BUSINESS FIRM FROM SET, A PART OF OUR AUDIT TEAM ON AN ANNUAL BASIS
SO THE AUDIT WAS COMPLETED AND THE REPORTS WERE ISSUED BACK IN APRIL
WE HAVE A BRIEF SUMMARY OF THE AUDIT RESULTS FOR YOU TODAY AND WE CAN GO AHEAD AND PROCEED TO SLIDE NUMBER THREE THAT SUMMARIZES THE REPORTS THAT WE HAVE ISSUED
AND I'M JUST CHECKING
CAN YOU SEE SLIDE THREE? WONDERFUL
THANK YOU
YES
ALL RIGHT
SO AS PART OF THE AUDIT, THERE'S QUITE A NUMBER OF DELIVERABLES THAT WE PRODUCE AFTER ALL OF THE WORK IS DONE
AND I'M JUST GOING TO GO THROUGH THOSE TO GIVE YOU INFORMATION ON EACH AND EVERY REPORT
SO THE FIRST AND FOREMOST THE REPORT ON FINANCIAL STATEMENTS OF THE PORT
IT'S THE ANNUAL FINANCIAL REPORT THAT INCLUDES TWO FUNDS, THE ENTERPRISE FUNDS FUND, WHICH IS A PORT OPERATIONS, AS WELL AS FIDUCIARY FUND, WHICH IS WHERE A WAREHOUSEMAN'S PENSION TRUST FUND
THAT'S THE REPORT THAT GETS PUBLISHED ANNUALLY ON THE PORT'S WEBSITE
IN ADDITION TO THAT, WE DO PERFORM SEVERAL COMPLIANCE AUDITS
THE FIRST ONE IS UNDER THE REQUIREMENTS OF THE UNIFORM AUDIT GUIDANCE OR MORE COMMONLY KNOWN AS THE SINGLE AUDIT REPORTS
THESE ARE REQUIRED BECAUSE OF THE FEDERAL PROGRAMS THAT THE PORT RECEIVES
FEDERAL GRANTS
THE PORT EXPANDS EVERY YEAR PRIMARILY WAS THE AIP PROGRAM
THERE IS TWO REPORTS
1 IS ON INTERNAL CONTROLS OVER COMPLIANCE AND FINANCIAL REPORTING IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
THIS REPORT REQUIRES US TO LOOK, ASSESS, AND REPORT ON INTERNAL CONTROLS
GENERALLY, IF WE HAVE ANY SIGNIFICANT DEFICIENCIES OR MATERIAL WEAKNESSES, WE WOULD INCLUDE THOSE AS FINDINGS IN THIS REPORT
PLEASED TO REPORT THAT IT WAS A CLEAN REPORT
ONCE AGAIN THIS YEAR, THERE WERE NO FINDINGS INCLUDED IN THERE
SO CLEAN A REPORT CARD
FROM THE COMPLIANCE STANDPOINT, THE OTHER COMPLIANCE REPORT IS ACTUALLY SPECIFIC TO THE MAJOR FEDERAL PROGRAM THAT WE AUDIT
AS I MENTIONED THIS YEAR, IT'S ONCE AGAIN AIRPORT IMPROVEMENT PROGRAM THAT INCLUDED CARES ACT FUNDING THAT WAS RECEIVED BY THE PORT
SO BIG DOLLAR AMOUNTS THAT WERE AUDITED THIS YEAR AND ONCE AGAIN GOING THROUGH ALL OF THE COMPLIANCE REQUIREMENT AS REQUIRED BY THE PROGRAM ITSELF
NO FINDINGS OR NON COMPLIANCE NOTED AS PART OF THAT PROGRAM AUDIT AS WELL
SO CLEANER REPORTS ON COMPLIANCE THERE
ON THE NEXT SLIDE, SOME MORE DELIVERABLES THERE
ANOTHER COMPLIANCE AUDIT THAT WE PERFORM IS ON RECEIPTS AND EXPENDITURES OF PASSENGER FACILITY CHARGE
ONCE AGAIN, THIS IS A PROGRAM SPECIFIC AUDIT THAT WE PERFORM
WE DO LOOK INTO INTERNAL CONTROLS AS PART OF THAT PROGRAM AS WELL
NO FINDINGS OR NON COMPLIANCE NOTED AS PART OF THAT POCKET
THERE'S ADDITIONAL REPORTS THAT WE ISSUE
ONE IS ON SCHEDULE OF NET REVENUES AVAILABLE FOR REVENUE BOND SERVICE DEATH SERVICE
THAT'S JUST TAKING THE ANNUAL REVENUES AND MAKING A FEW ADJUSTMENTS TO THEM AS REQUIRED BY THE BOND INDENTURES TO MAKE SURE THAT THE ANNUAL COVENANTS ARE MET OR ANNUAL RATIOS
COMPLIANCE RATIOS ARE MET, AND TWO REPORTS ON AGREED UPON PROCEDURES THAT ARE REQUIRED BY THE DEPARTMENT OF ECOLOGY AND THE ENVIRONMENTAL PROTECTION AGENCY
SO WHOLE A LOT OF DIFFERENT REPORTS THAT WE ISSUE AS A RESULT OF THE AUDIT
ALL OF THEM ARE UNMODIFIED OR CLEAN REPORTS
NO ISSUES IDENTIFIED THERE
WE DID IDENTIFY A FEW ITEMS ON THE INTERNAL CONTROLS AS PART OF THE AUDIT
WE'RE RECOMMENDATIONS TO MANAGEMENT THAT WE WILL COVER A LITTLE BIT LATER IN OUR PRESENTATION
SO IF WE GO TO THE NEXT SLIDE, I WILL GO AHEAD AND PASS THE MIC TO ANA, WHO WILL TALK ABOUT SIGNIFICANT AUDIT AREAS WHERE WE FOCUS OUR AUDIT EFFORTS
AWESOME
THANKS, OLGA
SO NEXT WE'LL WALK THROUGH JUST A HIGH LEVEL OVERVIEW OF SOME OF THE KEY AREAS OF EMPHASIS FOR AUDIT THIS YEAR
THE FIRST AREA, WHICH IS IN SCOPE FOR OUR WORK EACH YEAR, IS THE INTERNAL CONTROL ENVIRONMENT, AND AS PART OF OUR TESTING, WE CONSIDER THE DESIGN, IMPLEMENTATION, AND OPERATING EFFECTIVENESS OF THE KEY CONTROLS AROUND CASH RECEIPTS, CASH DISBURSEMENTS, PAYROLL CAPITAL, ASSET CYCLES, AS WELL AS THE ADMINISTRATION OF FEDERAL AWARDS AND SPECIFIC TO 2020
WE ALSO PERFORMED WALKTHROUGHS TO OBTAIN AN UNDERSTANDING OF ANY CHANGES TO KEY PROCESSES OR CONTROLS AS A RESULT OF THE COVID 19 PANDEMIC AND MOVING TO A PARTIALLY REMOTE WORK ENVIRONMENT
MANAGEMENT ESTIMATE IS ANOTHER AREA THAT'S IN SCOPE FOR OUR WORK EACH YEAR
THE AREAS THAT WE'VE IDENTIFIED AND LISTED ON THE SCREEN REALLY REQUIRES SIGNIFICANT ESTIMATES BY MANAGEMENT BASED ON THEIR KNOWLEDGE, EXPERTISE, AND EXPERIENCE, AS WELL AS CONSIDERING CURRENT AND FUTURE EXPECTED CIRCUMSTANCES
AND WHILE THE NORTHWEST SEAPORT ALLIANCE ITSELF IS AUDITED BY ANOTHER FIRM AS PART OF OUR AUDIT, WE DO CONFIRM THE RESULTS OF THE ALLIANCES OPERATIONS WITH THE AUDITOR, AS WELL AS RECALCULATED THE PORT SHARE OF THOSE OPERATING REVENUES FOR THE YEAR IN A NEW AREA OF EMPHASIS
THIS HERE, AS A RESULT OF THE PANDEMIC, WAS AUDIT PROCEDURES OVER THE PORT RENT DEFERRAL PAYMENT PLAN
AND AS PART OF OUR PROCEDURES, WE OBTAINED AN UNDERSTANDING OF THE PORT COMMISSION APPROVED DEFERRAL PAYMENT PLAN, THEIR METHODOLOGY FOR TRACKING AND RECORDING THOSE DEFERRALS
AND THEN WE SELECTED A SAMPLE OF TENANTS TO REVIEW THEIR SIGNED AGREEMENTS INVOICING AND PAYMENT SUPPORT
IN ORDER TO EVALUATE ADHERENCE TO THE APPROVED PLAN, WE CAN MOVE TO THE NEXT SLIDE, PLEASE
SO AS PART OF OUR TESTING OF CAPITAL ASSETS, WE CONSIDER THE APPROPRIATENESS OF THE PORT CAPITALIZATION POLICIES IN PLACE
SELECTED A SAMPLE OF NEW ADDITIONS, RETIREMENTS OVERHEAD APPLICATIONS, AND DEPRECIATION TO PERFORM DETAILED TESTING PROCEDURES OVER, AND THEN ALSO CONSIDER THE TIMELY CLOSING OF CIP PROJECTS
THERE WASN'T TOO MUCH OUT OF THE ORDINARY FOR BOND ACTIVITY DURING 2020, AND OUR AUDIT PROCEDURES INCLUDED TESTING THE THREE PARTIALLY DIFFUSED BONDS, AS WELL AS TESTING DEBT REPAYMENTS, AND AS PART OF OUR CONSIDERATION OVER THE AIRLINE LIASON OPERATING AGREEMENTS, WE DO SEND CONFIRMATIONS TO THE AIRLINES TO CONFIRM THEIR OPERATING REVENUE UNDER THESE AGREEMENTS
IN ADDITION, WE PERFORM SUBSTANTIVE ANALYTICAL PROCEDURES TO EVALUATE THAT THE REVENUES THAT ARE RECOGNIZED UNDER THESE AGREEMENTS ARE APPROPRIATE, ESPECIALLY CONSIDERING ANY CURRENT YEAR EVENTS THAT WOULD AFFECT REVENUE, INCLUDING CONSIDERATION OVER BOTH FINANCIAL AND FINANCIAL DATA
AND OUR TESTING OVER THE PORT FIDUCIARY ACTIVITIES INVOLVES CONSIDERATION OVER THE INVESTMENT BALANCES PLAN CONTRIBUTIONS AND DISTRIBUTIONS FOR THE WAREHOUSEMAN'S PENSION TRUST FUND
AND WE DID IDENTIFY ONE CONTROL MATTER AS A RESULT OF OUR TESTING IN THIS AREA, WHICH WE'LL TOUCH ON A BIT LATER IN THE PRESENTATION
NEXT SLIDE, PLEASE
SO TESTING FOR APPROPRIATE REVENUE RECOGNITION INCLUDED AN OPERATING REVENUE ANALYSIS WHICH USES BUSINESS INDICATORS SUCH AS LANDED WEIGHT, GATE USAGE, AND EMPLOYMENT
AND THEN WE ALSO PERFORM TESTING PROCEDURES OVER THE PORT NON OPERATING REVENUES, SUCH AS TAX LEVIES, INVESTMENT INCOME, PASSENGER FACILITY, AND CUSTOMER FACILITY CHARGES, AND THEN FEDERAL GRANTS, AS WELL AS THE CONSIDERATION OVER THE COLLECTABILITY OF THE RELATED RECEIVABLES FROM THESE REVENUE STREAMS, ESPECIALLY THIS YEAR
JUST GIVEN THE IMPACTS OF COVID 19 ON SOME OF THE PORT CUSTOMERS
AND DUE TO THE IMPACT OF KEY IT SYSTEMS ON THE PORT FINANCIAL REPORTING PROCESS, WE UTILIZE OUR MOSS ADAMS IT AUDIT TEAM TO PERFORM TESTING OVER INFORMATION TECHNOLOGY TECHNOLOGY, GENERAL COMPUTER CONTROLS IN ORDER TO ENSURE THAT THE PORT HAS THE PROPER CONTROLS IN PLACE FOR SECURITY AND ACCESS AND CHANGE MANAGEMENT OF KEY FINANCIAL SYSTEMS AND THEN FINALLY, FOR OUR FEDERAL GRANT TESTING, WE NOTED TOTAL FEDERAL AWARDS WERE REPORTED ON THE SIFA OF 163.7 MILLION DOLLARS THIS YEAR
AND WE HAD ONE MAJOR PROGRAM IN SCOPE WHICH WAS THE FAA AIRPORT IMPROVEMENT PROGRAM, WHICH HAD TOTAL FEDERAL EXPENDITURES OF 161,000,000
DEFINITELY THE MOST FULL BULK OF EXPENDITURES FOR THE YEAR, AND INCLUDED IN THAT PROGRAM WAS 147,000,000 OF CARES ACT FUNDING THAT WAS TESTED AS PART OF OUR TESTING OVER THAT MAJOR PROGRAM
AND NEXT SLIDE, PLEASE
SO NEXT, WE WANTED TO DISCUSS ONE INTERNAL CONTROL MATTER WHICH HAS BEEN DISCUSSED WITH MEMBERS OF MANAGEMENT AND THE AUDIT COMMITTEE DURING OUR AUDIT FIELD WORK
AS BACKGROUND, THE IDENTIFIED MATTER RELATED TO A BREAKDOWN IN THE TIMELY COMMUNICATION BY CAPITAL PROJECT MANAGEMENT OF PORTIONS OF CAPITAL PROJECTS THAT HAD BEEN COMPLETED AND PLACED IN SERVICE
COMMUNICATING THAT TO CENTRAL ACCOUNTING IN ORDER TO ENSURE THAT THERE'S TIMELY UPDATES TO THE FINANCIAL RECORDS FOR ASSETS THAT ARE PLACED IN SERVICE
AND THE TOTAL IMPACT OF THE ERROR WAS DETERMINED TO BE 31.2 MILLION DOLLARS OF CONSTRUCTION WORK IN PROGRESS THAT SHOULD HAVE BEEN CLASSIFIED AS IN SERVICE AND BEGUN DEPRECIATION AS OF THE END OF 2019
AND THE MISCLASSIFICATION IS CORRECTED IN THE 2020 FINANCIAL STATEMENTS
SO IN RESPONSE TO OUR INTERNAL CONTROL MATTER, PORT OF SEATTLE MANAGEMENT, WHICH INCLUDED AVIATION PROJECT MANAGEMENT AND FINANCE, AND DESIGNED AND IMPLEMENTED A NEW STANDARD OPERATING PROCEDURE TO ADDRESS THE DEFICIENCY THAT WAS IDENTIFIED
AND THE NEW SOP WAS FULLY IMPLEMENTED IN APRIL 2021
AND WE FURTHER NOTE THAT THIS ITEM IS SCHEDULED FOR AN INTERNAL AUDIT LATER IN THE YEAR AND AS THE NEW PROCEDURES WERE IMPLEMENTED SUBSEQUENT TO THE YEAR THAT WE WERE AUDITING, THIS WILL BE AN AREA OF EMPHASIS FOR OUR 2021 INTERIM AUDIT PROCEDURES THAT WE PLAN TO PERFORM THIS FALL
AND THEN I'LL ALSO JUST NOTE HERE THAT WE DID IDENTIFY A FEW CONTROL MATTERS THAT WERE RELATED TO IT CONTROLS, WHICH WILL BE COVERED IN A SEPARATE MEETING WITH THE AUDIT COMMITTEE
AND NOW I'LL TURN IT BACK OVER TO OLGA TO TALK THROUGH OUR REQUIRED COMMUNICATIONS
THANK YOU, ANNA
ALL RIGHT
THE REQUIRED COMMUNICATIONS THAT WE ARE REQUIRED TO COMMUNICATE TO THE AUDIT COMMITTEE BY OUR AUDITING STANDARDS ARE SUMMARIZED HERE WILL JUST BRIEFLY TOUCH ON SOME OF THE MORE IMPORTANT ONES, THE AUDITOR AND MANAGEMENT RESPONSIBILITIES WITH RESPECT TO THE FINANCIAL STATEMENT
OF COURSE, WE BEING THE INDEPENDENT AUDITOR, WE'RE NOT PREPARING FINANCIAL STATEMENTS, WERE NOT PREPARED PREPARING ANY OF THE RECORDS OR RECONCILIATIONS
WE'RE NOT IMPLEMENTING INTERNAL CONTROLS
WE DO PERFORM AUDIT ON ALL OF THE FINANCIAL INFORMATION THAT IS PROVIDED TO US BY MANAGEMENT AND I DO HAVE TO SAY THAT MANAGEMENT TAKES THEIR RESPONSIBILITY FOR FINANCIAL REPORTING VERY SERIOUSLY
THEY TAKE THE RESPONSIBILITY FOR IMPLEMENTING EFFECTIVE INTERNAL CONTROLS VERY SERIOUSLY
EVEN WITH THIS MATTER OF INTERNAL CONTROLS ON THE CIP CLASSIFICATION, MANAGEMENT WAS VERY FORWARD
FORTHCOMING WAS ADDITIONAL FINDINGS AND ADDITIONAL TWEAKS TO THE AMOUNT DOLLAR AMOUNT AS IT WAS BEING DISCOVERED AND ADDITIONAL ITEMS WERE BEING UNCOVERED
SO MANAGEMENT DOES TAKE US VERY SERIOUSLY
AND ONCE THE FINDING WAS DEVELOPED, MANAGEMENT TOOK A VERY PROACTIVE ROLE IN IMPLEMENTING A CORRECTION PLAN THAT IS BEING PUT IN PLACE RIGHT NOW
SO WE DO THANK MANAGEMENT FOR THEIR WORK THERE
AUDIT WAS PERFORMED IN ACCORDANCE WITH SCOPE WITH PLANED SCOPE
OTHERWISE, THAT PLANT SCOPE
WE COMMUNICATED TO YOU, THE AUDIT COMMITTEE BACK IN OUR PLANNING COMMUNICATION BACK IN DECEMBER
THERE WEREN'T ANY SURPRISES OR ANY OTHER ADDITIONAL ITEMS THAT WERE UNUSUAL OR UNEXPECTED IN AUDIT
THE AUDIT, ALTHOUGH BEING VIRTUAL, ENTIRELY VIRTUAL ONCE AGAIN THIS YEAR, DID GO REALLY ACCORDING TO PLAN AND ALL OF THE INFORMATION WAS PROVIDED TO US TIMELY
ALL OF THE SCHEDULES WERE PROVIDED TIMELY
ALL OF THE PORT SUPPORTING DOCUMENTATIONS AND QUESTIONS WERE BEING ANSWERED AS SOON AS POSSIBLE
SO I REALLY HAD A GOOD PLAN THAT WE WERE CARRYING OUT AND MANAGEMENT WAS VERY HELPFUL
SIGNIFICANT ACCOUNTING, NEW POLICIES ARE DISCLOSED, IN FOOT NOTE ONE, TO THE FINANCIAL STATEMENTS
THOSE DID NOT CHANGE SIGNIFICANTLY THIS PAST YEAR OTHER THAN IMPLEMENTING A NEW ACCOUNTING PRONOUNCEMENTS
AND I WILL TOUCH ON THOSE OF YOU A LITTLE BIT LATER IN THE PRESENTATION
WE DID NOT HAVE ANY DISAGREEMENTS WITH MANAGEMENT OR AN AUDIT
GOOD PRODUCTIVE DISCUSSIONS WERE HELD ON ONCE AGAIN IMPLEMENTATION OF NEW ACCOUNTING STANDARDS AND THE FINDINGS, INTERNAL CONTROL ISSUES, BUT NO DISAGREEMENTS TO REPORT TO YOU ON THE NEXT SLIDE
SOME MORE REQUIRED COMMUNICATIONS WE ARE REQUIRED TO COMMUNICATE TO YOU IF ANY SIGNIFICANT AUDIT ADJUSTMENTS OR PROPOSED AUDIT ADJUSTMENTS
AS A RESULT OF OUR WORK, WE DID IDENTIFY ONE ISSUE WITH RESPECT TO THE WAREHOUSEMEN'S PENSION TRUST, WHEREBY ONE PARTICULAR BENEFICIARY DID NOT RECEIVE THEIR BENEFIT PAYMENTS TIMELY IN 2020 THEY WERE ABRUPTLY STOPPED IN THE BEGINNING OF THE YEAR
AS A RESULT, WE PROPOSED AN ADJUSTING ENTRY FOR BENEFITS PAYABLE TO THIS ONE BENEFICIARY IN THE AMOUNT OF $20,856 TO BE PAID OUT TO THAT BENEFICIARY
THE PLAN ADMINISTRATOR IS FOLLOWING UP ON THAT MATTER
WHAT ARE THE CIRCUMSTANCES SURROUNDING THIS PARTICULAR BENEFICIARY? SO IT'S ONE OF THOSE THINGS THAT EVEN THOUGH THE DOLLAR AMOUNT IS NOT VERY SIGNIFICANT AND MATERIAL TO THE FINANCIAL STATEMENTS OF THE ENTIRE FIDUCIARY FUN BECAUSE IT DOES IMPACT A BENEFICIARY OF THE PLAN, WE WRAPPED IT UP AND INCLUDED IT AS A PROPOSED ADJUSTMENT
AS FAR AS WE KNOW, THE MANAGEMENT DID NOT CONSULT WITH ANY OTHER INDEPENDENT AUDITORS
OF COURSE, MANAGEMENT DOES WORK WITH THE AUDITORS OF THE NORTHWEST AT SEAPORT ALLIANCE AS A RESULT OF IT BEING AN ORGANIZATION THAT'S A JOINT CENTER BETWEEN THE TWO HOME PORTS
BUT AS FAR AS CONSULTATIONS
WE WERE NOT AWARE OF ANY IN OUR WORK
AS WE MENTIONED, WE DO QUITE A BIT OF COMPLIANCE REVIEW AND INTERNAL CONTROLS REVIEW, LOOKING AT ANY CONTRACT COMPLIANCE AND LOOKING FOR ANY POTENTIAL SIGNS OF ILLEGAL ACTS OR FRAUD
WE DID NOT IDENTIFY ANYTHING THAT WOULD NEED TO BE RAISED TO YOUR ATTENTION TO YOUR COMMUNICATION WITH RESPECT TO FRAUD OR ILLEGAL ACT OR MISAPPROPRIATION OF ASSETS WITH RESPECT TO THE PORT, THE ABILITY TO CONTINUE AS A GOING CONCERN
THIS WAS AN INTERESTING ITEM FOR MANY OF OUR CLIENTS, PARTICULARLY IN 2020 AUDIT, GIVING THE EFFECTS OF A PANDEMIC ON ALL OF OUR AIRPORT CLIENTS AND A SIGNIFICANT IMPACT AND DECREASE ON REVENUES, AERONAUTICAL AND NON AERONAUTICAL, AND ASSISTANCE FROM THE FEDERAL GOVERNMENT WITH RESPECT TO THAT
OVERALL, NO SPECIFIC DISCLOSURES REGARDING GOING CONCERN ARE INCLUDED, BUT ME AND INTENT DID INCLUDE EXTENSIVE DISCUSSION ABOUT THE PROGRAMS THAT IMPLEMENTED DURING A YEAR TO MITIGATE THE EFFECTS OF THE PANDEMIC AND PROVIDE RELIEF TO THE TENANTS OF THE AIRPORT AND THE PORT
ON THE NEXT SLIDE, A NEW ACCOUNTING PRONOUNCEMENTS THAT WERE IMPLEMENTED IN 2020 I DID MENTION THERE WERE A COUPLE OF THOSE, PARTICULARLY GASB 89 ACCOUNTING FOR INTEREST COST INCURRED BEFORE THE CONSTRUCTION PERIOD IS OVER
THIS PARTICULAR STANDARD GOES AWAY FROM CAPITALIZATION OF INTEREST ON FUNDS THAT ARE BORROWED FOR CONSTRUCTION
SO IN THE PAST, INTEREST PAID ON BONDS WAS CAPITALIZED AS PART OF THE CAPITAL PROJECTS
IT WILL NO LONGER BE DONE THIS WAY
IT WILL ALL BE EXPENSED
GASB ISSUED A STATEMENT 95 IN 2020 TO HELP ITS CONSTITUENTS WITH PUSHING OUT SOME REPORTING DATES OR SOME IMPLEMENTATION DATES FOR SOME SIGNIFICANT GASES THAT WERE UPCOMING FOR IMPLEMENTATION IN 2020
IN GASB, 95 ALLOWED FOR DEFERRAL OF THAT IMPLEMENTATION PERIOD FOR ANOTHER YEAR
SO FOR THAT REASON, SOME OF THE SIGNIFICANT GASBS SUCH AS LEAST STANDARD GOT PUSHED OUT FOR ANOTHER YEAR OR SO TO GIVING CONSTITUENTS TO A LITTLE BIT MORE TIME TO DEAL WITH THAT IMPLEMENTATION
AND GASB 97 ANNA MENTIONED EARLIER IN 2019 AUDIT, THE EFFECTIVE STANDARD WAS THAT SCOPED IN FOR RECORDING AS FUNERARY ACTIVITIES 401-K PLANS
GASB 97 PROVIDED ADDITIONAL GUIDANCE THAT ALLOWED US TO SCOPE THOSE PLANS OUT
SO WE'RE BACK TO SIMILAR REPORTING AS WE DID PRIOR TO 2019, WHERE THE ONLY PLAN THAT'S REPORTED AS PART OF THE FIDUCIARY FUND IS THE WAREHOUSEMAN'S PENSION PLAN
THE OTHERS ARE JUST MENTIONED IN THE FOOTNOTES TO THE PORT FINANCIAL STATEMENTS
SO THOSE THREE WERE IMPLEMENTED
AND ON THE NEXT SLIDE, JUST A QUICK HIGHLIGHT OF SOME UPCOMING STANDARDS
IT'S NOT A FULL LIST, BUT WHAT'S REALLY ON THE HORIZON AND BEEN KEEPING THE FINANCE TEAM VERY, VERY BUSY IS A LEASING STANDARD
WE'VE BEEN WORKING WITH MANAGEMENT ON VARIOUS ASPECTS OF IMPLEMENTATION OF THE STANDARD AND IT WILL BE IMPLEMENTED IN 2022
AND ON MY FINAL SLIDE IN THE NEXT ONE, JUST A COUPLE OF ADDITIONAL HIGHLIGHTS FOR YOU
AS I MENTIONED, THE AUDIT WAS DONE ENTIRELY VIRTUALLY
WE DID HAVE SECURE ACCESS TO THE PORT SYSTEMS AS WE DO WHEN WE USUALLY PERFORM THE WORK ONLINE THAT WORKED VERY WELL
MANAGEMENT, AS IT HAS DONE IN A PAST, PREPARED TECHNICAL WHITE PAPERS WELL IN ADVANCE OF THE YEAR END CLOSE
SO WE WERE ABLE TO EVALUATE THOSE SIGNIFICANT NEW TRANSACTION ACTIONS AND IMPLEMENTATION OF ACCOUNTING STANDARDS IN ADVANCE OF THE COMPLETION OR START OF THE FINAL FIELD
OR EVERYBODY ACROSS ALL DEPARTMENTS HAVE BEEN VERY VERY HELPFUL AND RESPONSIVE TO OUR QUESTIONS AND REQUESTS
SO THERE WAS NO DELAY IN US PERFORMING ANY OF OUR WORK
AND AS I SAY, EVEN AS THINGS WERE EMERGING FROM THE STANDPOINT OF INTERNAL CONTROL QUESTIONS, THOSE WERE BEING ADDRESSED VERY QUICKLY
AND I JUST WANTED TO SAY A HUGE THANK YOU TO EVERYONE ACROSS ALL TEAMS AT THE PORT AND PARTICULARLY FINANCIN, AN ACCOUNTING TEAM WHO HAVE BEEN SO HELPFUL IN THE AUDIT
I DID WANT TO MENTION THAT FOR THE SECOND YEAR IN A ROW HAD TWO SMALL BUSINESS FIRM PARTICIPATE AS PART OF OUR AUDIT TEAM
BRANCH RICHARDS
WE HAD A SENIOR FROM THAT FIRM AND ONE PERSON FROM THERE, SCOTT PALOMINO AND ASSOCIATES
THE TWO INDIVIDUALS CONTRIBUTED ABOUT 345 HOURS TO OVERALL AUDIT EFFORT, AND THAT ACCOUNTED TO ABOUT 12% OF TOTAL FEES THAT WE PAID TO THE SMALL BUSINESS FIRMS TO ONCE AGAIN SUPPORT THAT EFFORT AND COMMITMENT BY THE PORT AND THE COMMISSIONERS TO SUPPORT SMALL BUSINESSES AND MINORITY OWNED BUSINESSES IN THE AREA THAT'S BEEN WORKING VERY, VERY WELL
AND WE PLAN ON CONTINUING OUR RELATIONSHIP WITH THE SMALL BUSINESS FIRMS AND THE UPCOMING AUDIT HERE AS WELL
WITH THAT, THAT COMPLETES MY PRESENTATION, I WILL TAKE ANY QUESTIONS IF THERE ARE ANY ON THE THE AUDIT REPORT
WELL, THANK YOU SO MUCH, OLGA, ANNA AND THE ENTIRE MOSS ADAMS TEAM FOR THE PRESENTATION
NO FINDINGS IS A GOOD THING
IN THIS CASE, A COMMITTEE MEMBERS, PLEASE UNMUTE YOURSELF FOR QUESTIONS AND COMMENTS PRESENTATIVE WILL REMAIN UNMUTED
CLERK HART
PLEASE CALL THE ROLL
THANK YOU, BEGINNING WITH COMMISSIONER BOWMAN
HI
THANK YOU
I DON'T HAVE ANY QUESTIONS
I GOT A PRE BRIEF ON THE AUDIT RESULTS AND REALLY, AGAIN, APPRECIATE ALL OF YOUR WORK AND GLENN TO YOU AND YOUR TEAM OUTSTANDING JOB AS ALWAYS
BUT I REALLY APPRECIATE THE MOSS ADAMS TEAM FOR YOUR REALLY IN DEPTH LOOK AT THIS, SO THANK YOU
THANK YOU TO MR BOWMAN MEMBER GERHKY
I DON'T HAVE ANY QUESTIONS
THANK YOU
THANK YOU, COMMISSIONER CHO
I DON'T HAVE ANY QUESTIONS EITHER, BUT I DO WANT TO THANK THE MOSS9 ADAMS TEAMS FOR POINTING OUT THE WMBE BUSINESSES THAT THEY WORK WITH
I THINK IT'S A HUGE PRIORITY OF OURS HERE AT THE COMMISSION DEPORTMENT
SO I REALLY APPRECIATE YOU ALL OF POINTING THAT OUT DURING THE PUBLIC SESSION
AND I'M GLAD YOU ALL INTEND TO CONTINUE THOSE RELATIONSHIPS SO VERY MUCH APPRECIATE THAT
IT LOOKS LIKE RUDY HAS HIS HEAD UP
YES, THANK YOU, COMMISSIONER CHO
RECOGNIZING ME, I JUST WANT TO EMPHASIZE ONE AREA THAT SHOULD HAVE BEEN CALLED OUT WITH REGARD TO THE UTILIZATION OF WOMEN MINORITY OWNED BUSINESSES
MOSS ADAMS HAVE GONE BEYOND JUST GIVING OUT PART OF THE CONTRACT
THEY INCORPORATE THE AUDIT TEAMS INTO THEIR AUDIT TEAMS AND THEY BECOME INTEGRAL PART OF THE AUDITORS
AND THEY BASICALLY ARE HOLISTICALLY PERFORMING THE AUDIT ALONG WITH MOSS ADAMS AND WHY THIS IS SO IMPORTANT IS BECAUSE THE WHOLE OBJECTIVE WITH REGARD TO THE POLICY DIRECTIVE OF THE COMMISSION IS TO ENSURE THAT OUR WOMEN MINORITY OWN BUSINESS CAN STAND ON THEIR OWN
THEY ARE RESUME BUILDING FOR US AND THEY ARE BEING PROACTIVE ABOUT THAT
AND MARY SCOTT PALOMINO, AS WELL AS BRANCH FEATHERS, ARE NOW ABLE TO GO OUT AND COMPETITIVELY BID TO SAY WE'VE DONE POOR TO SEATTLE AUDIT VERSUS BEING RESTRICTED TO A PIECE OF THE ACTION AND BEING LESS COMPETITIVE
SO I JUST WANT TO THANK YOU WITH REGARD TO THE POLICY DIRECTION THAT THE PORT COMMISSION IS SET
WE STAFF HAVE EMBRACED THAT TO THE MAX AND WE WERE ABLE TO ACCOMPLISH THAT
AND MOSS ADAMS IS DEMONSTRATING THAT
WHILE WE'RE HITTING THE ROAD
THANK YOU
EXCELLENT
THANK YOU
READY FOR THOSE COMMENTS? IF THERE ARE NO ADDITIONAL QUESTIONS AT THIS TIME FOR MOSS ADAMS, WE WILL MOVE ON TO THE NEXT ITEM
ITEM NUMBER FOUR ON THE AGENDA IS AN APPROVAL OF A REQUEST FOR QUALIFICATIONS OF EXTERNAL AUDIT SERVICES FOR 2022 TO 2026 OPERATING PERIODS
PRESENTERS, PLEASE MUTED YOURSELF
MISS LAM AND MR KALUZA, PLEASE PROCEED
HI
GOOD AFTERNOON
COMMISSIONER CHO, COMMISSIONER BOWMAN AND PUBLIC MEMBER GERHKY I'M LISA LAM, THE ASSISTANT DIRECTOR OF ACCOUNTING AND FINANCIAL REPORTING
I'M HERE TODAY TO SEEK YOUR REVIEW OF THE [inaudible 01:04:41] OF THE EXTERNAL AUDIT SERVICE AND SEEKING YOUR RECOMMENDATION TO THE FULL COMMISSION AUTHORIZATION FOR EXECUTIVE DIRECTOR TO INITIATE THE PROCUREMENT OF EXTERNAL AUDIT SERVICES
I BELIEVE IN THE PACKAGE PROVIDED
WE PROVIDED THE DRIVE ASSOCIATION DOCUMENT THAT'S NOT AVAILABLE FOR PUBLIC REVIEW YET, BUT IT IS AVAILABLE FOR THE AUDIT COMMITTEE FOR TRANSPARENCY TO FOLLOW THROUGH THE AUDIT COMMITTEE CHARTER SO THAT YOU HAVE VISABILITY HOW THE ASSOCIATION THAT THE STAFF PUT TOGETHER A PLAN TO PROCEED? IN THE AUDIT COMMITTEE MEMO, YOU'LL SEE THAT HIGH LEVEL SUMMARY WE ARE ASKING FOR SOLICITATION OF THE EXTERNAL AUDIT SERVICES FOR THE PORT FISCAL YEAR
2022 TO 2026
IS THE [inaudible 01:05:30] PLANS TO BE COVERED THREE YEAR DURATION PLUS TWO 1 YEAR OPTIONS TO EXTEND
AND THE TOTAL OF THE FIVE YEAR DOLLAR VALUE IS SET TO NOT TO EXCEED 3,000,000 DOLLARS
THE SCOPE OF THE EXTERNAL AUDIT SERVICE THAT WE ARE LOOKING FOR IS KIND OF VERY SIMILAR TO WHAT YOU ALREADY JUST HEARD IN THE IMMEDIATE PRECEDING PRESENTATION
HERE
THE SCOPE OF WORK COVER AND THE FINANCIAL STATEMENT AUDIT OF THE PORT ENTERPRISE FUND AND THEN THE FIDUCIARY FUND OF THE WAREHOUSEMAN PENSION TRUST
ALSO, THE PASSENGER FACILITY CHARGE FOR THE PROGRAM AUDIT FOR OUR PFC COLLECTED BY THE AIRPORT
SINGLE AUDIT FOR THE FEDERAL GRANT AWARD THAT WE GOT FROM THE FEDERAL GOVERNMENT AND THE NET REVENUE SCHEDULE AVAILABLE FOR REVENUE BOND DEBT SERVICE HAS ESSENCE TO AUDIT OPINION ON THE BOND COVENANT CALCULATION AND THEN TWO KINDS OF CREATE POINT PROCEDURE REPORT
ONE IS FOR THE WASHINGTON STATE DEPARTMENT OF ECOLOGY, DOE
THE OTHER ONE IS FOR THE ENVIRONMENTAL PROTECTION AGENCY, EPA
REQUIREMENTS AGREEMENT ON PROCEDURES
THE EVALUATION TEAM PANEL IS ENCOMPASSED ACROSS MULTIPLE DEPARTMENTS, INCLUDING A REPRESENTATIVE OF INTERNAL AUDIT DEPARTMENT CAN KIND OF REPRESENTING THE AUDIT COMMITTEE
THAT WILL BE EVERY SINGLE STEP ALONG THE WAY FROM THE KICKOFF OF THE PROCUREMENT OFFICE DRAFTING ASSOCIATION DOCUMENT TO EVALUATE THE WRITTEN DOCUMENT DOWN THE ROAD TO INTERVIEW PROCESS
SO EVERY STEP OF THE WAY, WE WILL HAVE AN INTERNAL AUDIT DEPARTMENT REPRESENTATIVE AS WELL AS WORKING SHOULDER SHOULDER WITH OUR CENTRAL PROCUREMENT OFFICE, OUR CPO OFFICE FOR THIS
THE TIME SCHEDULE
IF TODAY'S THE AUDIT COMMITTEE APPROVED TO MOVE FORWARD WITH THE FULL COMMISSION, WE ARE PLANNING TO SCHEDULE TO BE THE COMMISSION AGENDA ON JULY 13
AND THEN IF THAT COMMISSION MEETING WENT SUCCESSFUL, THEN THE SOLICITATION WILL GOING OUT TO THE STREET IN JULY AND THEN HOPEFULLY THE WHOLE PROCESS WILL GET WRAPPED UP AND GET A CONTRACT SIGN BY END OF 2021
SO THAT'S KIND OF THE HIGH LEVEL OF THE BACKGROUND AND THE SCOPE OF THIS REQUEST OF THE EXTERNAL AUDIT SERVICES PROCUREMENT
DO YOU HAVE ANY QUESTIONS? GREAT
THANK YOU FOR THAT
QUICK PRESENTATION
COMMITTEE MEMBERS, PLEASE UNMUTE YOURSELVES FOR QUESTIONS AND COMMENTS
PRESENTERS WILL REMAIN UNMUTED
CLERK HART
CAN YOU PLEASE CALL THE ROLL? THANK YOU
BEGINNING WITH COMMISSIONER BOWMAN
AT LEAST I DON'T HAVE ANY QUESTIONS
THAT WAS A GREAT OUTLINE AND WE LOOK FORWARD TO HOPEFULLY I'M SUPPORTIVE AND SEE AT THE COMMISSION MEETING
THANK YOU
THANK YOU
REMEMBER GERHKY FOR QUESTIONS
I DON'T HAVE ANY QUESTIONS
SOUNDS LIKE A GOOD PLAN TO ME
THANK YOU, COMMISSIONER CHO, I AGREE
NO QUESTIONS
THANK YOU FOR THAT
THANK YOU FOR YOUR SUPPORT
THANK YOU VERY MUCH
HEARING NO FURTHER DISCUSSION
IS THERE A MOTION TO APPROVE ITEM NUMBER FOUR? AND I WILL SECOND
CLERK HART, PLEASE CALL THE ROLL FOR THE VOTE
THANK YOU
BEGINNING WITH COMMISSIONER BOWMAN, AYE
THANK YOU, COMMISSIONER CHO AYE
THANK YOU
I HAVE TWO YESSES AND ZERO NOS FOR THE ITEM
EXCELLENT
IF THERE ARE ANOTHER QUESTION AT THIS TIME, WE WILL MOVE ON TO NEXT ITEM
AND COMMISSIONER CHO TO NOTE FOR THE RECORD THAT THAT LAST ITEM WAS APPROVED
THANK YOU
ALRIGHT
THANK YOU
THANK YOU
READY? THANK YOU SO MUCH
WE ARE NOW ON TO ITEM NUMBER FIVE ON THE AGENDA, THE 2021 AUDIT PLAN UPDATE
MR FERNANDEZ, I BELIEVE YOU ARE THE SPEAKER FOR THIS ITEM
YES, MICHELLE, IF YOU COULD PULL UP THE DECK AND WE'RE GOING TO START AT PAGE TWO
AT THE TIME
SO I KNOW WITH A LITTLE BIT OF SHUFFLING AROUND, MICHELLE'S JUMPING AROUND, PULLING UP DIFFERENT PRESENTATIONS, BUT SHE IS ON THE BALL LIKE PLEASE
THANK YOU, MICHELLE
SO JUST I'LL KEEP THE PACE GOING
SO WE DO END ON TIME AND I COMMISSIONER CHO WHAT I'D LIKE TO DO AT THE END OF THIS IS TALK A LITTLE BIT ABOUT BIOMETRICS
ALSO, AT THE END OF ALL THE AUDITS, AND I'VE GOT A FEW SLIDES THAT MICHELLE WILL PUT UP THERE THAT ARE AVAILABLE TO THE PUBLIC
FIRST OFF, YOU KNOW, INTERNAL AUDIT IT IS THE LAST LINE OF DEFENSE BEFORE SOMETHING GETS OUTSIDE TO THE STATE AUDITORS, TO THE EXTERNAL AUDITORS THAT YOU'VE HEARD FROM OR TO THE MEDIA
SO MANAGEMENT'S RESPONSIBLE FOR CONTROLS WHERE LIKE THE LAST LINE BLOCKING, AND THEN THEREAFTER, IT'S NOT GOOD TO HAVE ISSUES BECAUSE THEY'RE OUTSIDE IN THE PUBLIC
WE FOLLOW BOTH INTERNATIONAL STANDARDS AND GOVERNMENT STANDARDS
THE INTERNATIONAL FRAMEWORK FOLLOWED BY EVERY LARGE CORPORATION OUT THERE AND MANY GOVERNMENT ORGANIZATIONS AS WELL
AND THEN THE GOVERNMENT STANDARDS ARE VERY PRESCRIPTIVE FOR GOVERNMENT
AND WE FOLLOW THOSE AS WELL
WELL DURING LAST YEAR BECAUSE OF COVID
WE ADJUSTED OUR PLANW, DID QUITE A FEW THINGS BECAUSE OF THE CHANGES TO THE BUSINESS
FOR INSTANCE, IN LIMITED CONTRACT COMPLIANCE THAT LOOKED AT RECOVERIES AND THE COVID IMPACT THERE, WE'RE GOING TO BE DOING AN OPERATIONAL AUDIT OF RENT CONCESSION DEFERRAL RECOVERY
WE'VE DEFERRED A LOT OF REVENUE, AND THERE'S A LOT THAT WE NEED TO COLLECT GOING FORWARD
SO ARE WE COMPLYING WITH STATE LAW? ARE WE DO WE HAVE PROCESSES IN PLACE TO GET THIS BACK? AND THE REASON WE DO IT IS WE'RE GOING TO DO THIS ON IT BEFORE THE STATE AUDITOR COMES IN
SO WHEN THEY COME IN, WE WANT TO MAKE SURE THE CONTROLS IN PLACE AND THINGS ARE ADDRESSED
WE HAD A LOT OF CHANGE ORDERS OF CAPITAL PROJECTS
AND AS YOU'LL SEE, AS YOU'VE SEEN IN THE PAST, WE'VE HAD A LOT OF EXCEPTIONS THERE
SO WE CONTINUE TO LOOK AT THOSE COBA CHANGE ORDERS BECAUSE THEY'RE A VERY MANUAL PROCESS
AND THEN SMALLER ITEMS LIKE THE CRUISE TERMINALS OF AMERICA NEEDED AN INTERNAL AUDIT DONE OR AN AUDIT DONE BY THE TERMINAL, SUCH TO GET ANY OF THEIR REVENUES, THE RENTS WAIVED
SO THERE ARE CLAUSES IN THECRUISE AGREEMENT THAT SAID, IF YOU HAVE NO REVENUE, YOU'VE GOT AN INTERNAL AUDIT
YOU NEED INTERNAL AUDIT TO DO CERTAIN THINGS? SO WE DID THAT TO HELP THE BUSINESS OUT
ADDITIONALLY, A NEW RCW, WE'RE GOING TO BE DOING A LOT OF GCC AND CAPITAL PROJECTS
NEW RCW REQUIRES MORE WORK THERE
SO WE'RE GETTING MORE INVOLVED THERE
WE'RE WORKING AN INDEPENDENT AUDIT NEEDS TO BE DONE
AND ALTHOUGH THAT WORK WILL BE CONTRACTED OUT IN THESE SITUATIONS WELL BE WELL INVOLVED THERE
AND THEN FINALLY, PCI, BECAUSE WE ACCEPT A LOT OF CREDIT CARD PAYMENTS, PAYMENT CARD INDUSTRY ASSESSMENT OR AUDITS REQUIRED TO BE DONE EVERY YEAR AND HISTORICALLY HAS BEEN OUTSOURCED
BUT WE'VE GOT INVOLVED
WE'VE BEEN DOING THAT, AND WE DO HAVE ALL THE CERTIFICATIONS REQUIRED TO DO THAT
SO WE'LL BE DOING IT IN HOUSE IN 2021
NEXT SLIDE, PLEASE
THE COMMISSIONERS
WE'VE GONE OVER THIS
THIS IS JUST A SNAPSHOT FOR THE PUBLIC
AGAIN, A [inaudible 01:13:20] PLAN AND THE NEXT SLIDE I'LL SHOW
WE'RE MAKING GOOD PROGRESS ON THIS
SO AS YOU CAN SEE, EVERYTHING IN GREEN IS DONE
EVERYTHING IN YELLOW IS IN PROCESS AND THE ORANGISH COLOR THERE WILL KICK OFF AND WRAP UP IN THE NEXT TWO QUARTERS
SO WE ARE ON SCHEDULE TO COMPLETE OUR PLAN
SO WE'RE IN GOOD POSITION AS BEFORE
I MOVE ON TO THE NEXT SLIDE, I'LL PAUSE AND THEN SEE HEAR ANY QUESTIONS
COMMISSIONER CHO, I CAN CALL THE ROLL
PLEASE DO
COMMISSIONER
BOWMAN FOR QUESTIONS
I DON'T HAVE ANY QUESTIONS
I THINK IT'S A GREAT PLAN
AND SORRY
TURN ON MY CAMERA
HEARD ABOUT SO
NO QUESTIONS
THANK YOU
THANK YOU, MEMBER GEHRKE, FOR QUESTIONS
I DON'T HAVE ANY QUESTIONS
THANK YOU
THANK YOU, COMMISSIONER CHO
AND I DO
I THANK YOU IN YOU CAN PROCEED
NEXT SLIDE, PLEASE
MICHELLE
SO, COMMISSIONERS, ONE OF THE THINGS WE DO AND WE'RE REQUIRED TO DO BY OUR STANDARDS
AND WE HAVE BOTH THE GOVERNMENT AND INTERNAL INTERNATIONAL STANDARDS NOT ONLY FIND ISSUES, BUT FOLLOW UP ON THEM, MAKE SURE THAT THEIR ADDRESS AND CLOSED OUT, AND MANAGEMENT TAKES ACTION ON THEM
THE LAST THING YOU WANT IS AN AUDIT DONE, SOMEBODY PUTS IT ON THE SHELF AND NOTHING HAPPENS THEREAFTER
YOU KNOW, IT'S SOMETHING THAT WAS HIGHLIGHTED
AND THIS SLIDE ACTUALLY WAS RECOMMENDED BY OUTSIDE MEMBER CHRISTINA GEHRKE
THAT SAID, YOU KNOW, I'D LIKE A SLIDE
THE AUTO COMMITTEE THAT AGES EVERYTHING SHOWS US WHERE THE ISSUES OF STANDING ARE THE TRENDING
ARE THEY GETTING ADDRESSED? ARE THEY PILING UP? SO, YOU KNOW, THIS DOES SHOW THAT WE DO HAVE A LITTLE BACKUP BECAUSE OF COVID WE HAVE A LOT OF IT ISSUES THAT ARE A LITTLE OVERDUE
WE'LL TALK ABOUT THOSE IN THE NON PUBLIC SESSION, BUT THE REASON THEY'RE SLIPPING IS BECAUSE OF COVID
ON THE OPERATIONAL SIDE, WE'VE GOT NO, WE'RE UNDER GOOD CONTROL
WE'VE GOT 1 OR 2 ISSUES THAT ARE SLIPPING A LITTLE BIT
PRIMARILY, THE REASONS ARE EXPLAINED BELOW
WE WERE GOING TO BUILD AN INHOUSE SYSTEM
ACTUALLY, WE'RE GOING OUT TO A VENDOR FIRST
THAT DIDN'T QUITE WORK OUT
SO NOW WE'RE BUILDING THE MARINA MANAGEMENT SYSTEM IN HOUSE, AND THAT GOT PUSHED OUT
YEAH, BECAUSE WE HAVE TO DO IT IN HOUSE, SLOWING THE PROCESS DOWN A LITTLE BIT
BUT OTHER THAN THAT, OTHER THAN THE IT ISSUES THAT ARE SLIPPING, I DON'T SEE ANY BIG AREAS AT RISK HERE
THE MANAGEMENT IS ADDRESSING THEM
SO BEFORE I GO INTO AUDITS ON FOLLOW UP, ANY QUESTIONS, IT LOOKS
TAKE THE ROLL
SORRY, COMMISSIONER CHO, I WAS JUST GOING TO SUGGEST THAT WE DO THAT BY A SHOW OF HANDS
THERE ARE ANY QUESTIONS AND I DON'T SEE ANY
I WAS TRYING TO RAISE MY HAND
REMEMBER GERHKE
YEAH, I WAS TRYING TO RAISE MY HAND
JUST JUST CLICKING IN
IT WOULDN'T WORK
SORRY
SO MY CONCERN IS IT SEEMS LIKE, WELL, I KNOW COVID HAPPEN AND THINGS ARE GETTING BEHIND THAT
SEEMS LIKE THERE'S A LOT OF IT ISSUES THAT ARE GOING TO BEHIND
AND FROM THE AUDITORS PRESENTATION, THEY HAD SOME IT ISSUES, TOO
SO I FEEL LIKE MAYBE WE COULD CAN WE HAVE SOME MORE TRANSPARENCY INTO THESE IT ISSUES? AND MAYBE WE'LL TALK ABOUT THE NON PUBLIC SESSION, BUT I'M WONDERING IF WE SHOULD ADD THE AUDIT, THE EXTERNAL AUDIT ISSUES TO THIS, JUST TO KIND OF KEEP AN EYE ON WHAT ARE ALL THE TECHNOLOGY ISSUES OUT THERE THAT HAVE COME TO THIS COMMITTEE THAT ARE NOT BEING RESOLVED? YES
SO, MS GERHKE, WE WILL TALK ABOUT THOSE IN THE NON PUBLIC SESSION
I DO HAVE A LISTING OF ALL OF THE IT ISSUES IN THE DECK THAT ARE OPENED, AND I DO HAVE A LISTING IN YOUR PACKAGES
FOLLOW THE MOSS ADAMS AND IT ISSUES AS WELL
SO I CLEARLY AGREE WITH WE WILL FOLLOW UP ON THOSE
I SAW COMMISSIONER BOWMAN GIVING YOU THE THUMBS UP MAYBE
YES, IT HAS TO BE DONE
AND I HEAR YOU LOUD AND CLEAR
WE'LL DO THAT
THANK YOU
MEMBER GERHKE
MOVING TO COMMISSIONER CHO
NO, I AGREE, BUT THANK YOU FOR BRINGING THAT UP
NO FURTHER QUESTIONS
VERY GOOD, MICHELLE
AND WE'RE GOING TO MOVE RIGHT TO RESTROOM RENOVATIONS, PHASE THREE, SINCE WE DID TALK ABOUT THE ART PROGRAMS READY
AND THAT IS GOING TO BE YOU DO VERY GOOD
I'M GOING TO OPEN THIS UP AND TALK A LITTLE BIT ABOUT THE AUDIT ITSELF
AND THEN WE HAVE ONE ISSUE ON THIS, SPENCER
BRIGHT, WHO'S A CAPITAL AUDIT MANAGER, WILL TALK ABOUT THAT
THE MANAGEMENT PROVIDE THEIR RESPONSE
BUT IN A NUTSHELL, WE WERE RENOVATING ONE OF THE RESTROOMS HAD CONCOURSE D, AND, YOU KNOW, A LOT OF PLUMBING WORK AND DESIGN WORK THERE
THE PROJECT
THE MOST IMPORTANT THING THAT I WANT TO TRY TO GET OUT OF THIS SLIDE IS THAT THE PROJECT WAS ESTIMATED BY AN OUTSIDE FORM AT 1,860,000 DOLLARS
THERE WERE TWO BIDS RECEIVED, WHICH, AGAIN, JUST TWO BIDDERS, WHICH CAME IN A LITTLE BIT HIGHER, ABOUT 3.08 MILLION
THE TWO BIDS WERE RELATIVELY CLOSE TO EACH OTHER, BUT QUITE A BIT MORE THAN THE ESTIMATE
THAT OBVIOUSLY RAISES A FLAG FOR EVERYONE, INCLUDING THE PORT STATF
WE WENT AND TALKED TO THE ESTIMATOR
HE FELT THAT HIS ESTIMATE WAS ACCURATE AND BASED ON THE DESIGN, THE HE WAS GIVEN
YOU KNOW, YOU DID POINT OUT THAT WHEN YOU HAVE FEWER BIDDERS AND SOMETIMES THEY MAY BE USE THE SAME SUB CONTRACTORS, IN THIS CASE, MECHANICAL PLUMBING SUBCONTRACTORS ON THE SAME FOR BOTH, THERE'S A CHANCE THAT YOU'RE GOING TO LIKELY HAVE A HIGHER BID
BUT HE DID SAY HE WAS COMFORTABLE WITH HIS BID HE CIRCULATED CLEAN AS FORM
WE DIDN'T TALK TO PORT STAFF AS WELL
WHO CAN OCCUR THAT BECAUSE IF YOU HAVE TWO BIDDERS, YOU'RE GOING GET A HIGHER BID
AND SEATTLE MARKET HAS BEEN CHALLENGING
AND BECAUSE OF THAT, OBTAINING BIDS AND SUBCONTRACTORS AND FROM CONTRACTORS, TOUGH MARKET MAKES RATES GO UP
BIDS COME IN HIGHER, BUT IT'S JUST SOMETHING THAT WE NEED TO BE COGNIZANT OF AND KIND OF WANT TO POINT THAT AT THIS POINT, NEXT SLIDE, PLEASE
SO THERE WERE SOME CHANGE ORDERS ON THIS, AS WITH COVID, YOU KNOW, AND AND MOST PROJECTS HAVE CHANGE ORDERS
BUT BECAUSE OF COVID, WE'RE SEEING A LOT OF THOSE COVID RELATED CHANGE ORDERS
THERE WAS SOME CHANGE ORDERS WE'LL TALK ABOUT IN THE ISSUE
BUT IN ESSENCE, THE PROJECT WAS COMPLETED IN DECEMBER OF 2020
AND IN THESE CHANGE ORDERS, WE DID FIND THERE'S TIME AND LABOR
AND YOU'VE GOT TO MANAGE AND TRACK ALL OF THOSE AND RECONCILE THOSE WHICH WE DO THROUGH THE COURSE OF THE AUDIT, WE FIND EXCEPTIONS
SO WITH THAT, SPENCER, IF YOU CAN UNMUTE YOURSELF AND MICHELLE, YOU CAN TAKE US TO THE NEXT SLIDE
AND SPENCER, MAYBE YOU CAN TALK ABOUT THE ISSUE
THANKS, GLENN
GOOD AFTERNOON, COMMISSIONERS CHO AND BOWMAN AND MS GERHKE
BEFORE I JUMP INTO THE RESULTS, I DO JUST WANT TO GIVE KUDOS TO THE PORT CONSTRUCTION MANAGEMENT TEAM AND THE GENERAL CONTRACTOR FOR WORKING TOGETHER TO CREATE A THOROUGH, DETAILED COVID SAFETY PLAN
THIS PARTICULAR PROJECT WAS GOING ON RIGHT AS SOON AS COVID HIT THE WORKING SPACE
IT WAS A VERY SMALL WORKING SPACE BEING RESTROOMS, WHICH THAT WAS CREATING A POTENTIAL FOR A MAJOR COVID PROBLEM
BUT BECAUSE OF THE STRICT ADHERENCE TO THE SAFETY PLAN, IF MY MEMORY SERVES ME CORRECTLY, I DON'T THINK THERE WAS ONE INSTANCE OF COVID ON THIS PROJECT
SO SO CONSTRUCTION MANAGEMENT AND THE CONTRACTOR DID A GREAT JOB ON THIS COVID PLAN AND AND ADHERING TO IT
AND SO FOR THE RESULTS
AGAIN, WE REVIEWED NUMEROUS CHANGE ORDERS, IN PARTICULAR THE CHANGE ORDER ASSOCIATED WITH REIMBURSING THE EXTRA COSTS WITH COVID 19
UNLIKE THE AUDIT PRESENTED AT THE LAST QUARTERS AUDIT COMMITTEE MEETING, WHICH YOU MAY REMEMBER THAT THERE WERE SOME QUESTIONABLE CHARGES BILLED IN THIS PARTICULAR INSTANCE
I'M COMFORTABLE IN SAYING THAT THESE OVER BILLINGS WERE JUST DONE IN ERROR AND THERE IS NO INDICATION OF INTENT OF INCORRECT BILLING
AND SO FOR THIS PARTICULAR FINDING, IT'S RELATED TO THE BILLING RATES OF COVID SUPERVISORS
AT THE BEGINNING, THE CONTRACTOR BROUGHT IN ONE OF THEIR OWN SUPERVISORS TO TAKE ON THE COVID SAFETY REQUIREMENTS, AND SO THEY USED A APPROVED AN APPROVED BILLING RATE THAT IS NORMALLY USED ON OTHER PORT ACCOUNT CHANGE ORDERS
HOWEVER, WITH SPECIFIC TO COVID 19, IT WAS ACTUALLY TO BE BILLED AT THE ACTUAL RATE
AND SO FOR THAT SUPERVISOR ONE, AS WE HAVE IN THE TABLE, THE BILLED RATE WAS 107 DOLLARS, WHEN IN ACTUALITY THE CONTRACTOR WOULD HAVE BEEN ENTITLED TO APPROXIMATELY 110 DOLLARS
SO IN THIS CASE, WE NOTED AN UNDER BILLING OF THE 700 DOLLARS
LATER ON, THE CONTRACTOR HIRED A SPECIFIC STAFF TO BE THE COVID SUPERVISOR AND STILL USE THE 107 DOLLARS BILLING RATE, WHICH DID RESULT IN THAT APPROXIMATELY 14,000 DOLLARS WITH A NET OVER BILLING OF 12,000 DOLLARS
AND IN ADDITION TO THAT FOR COVID, FOR SUPERVISOR NUMBER TWO, OUT OF THE FOUR MONTHS THAT THEY WERE ON SITE, OUR RECONCILIATION JUST NOTED ONE PARTICULAR DAY WHERE THE PORT WAS BILLED FOR EIGHT HOURS AND SUPERVISOR WAS WORKING FOR ONLY SIX
NEXT SLIDE, PLEASE
MICHELLE, OVERALL, WHEN THIS WAS BROUGHT TO THE CM TEAM'S ATTENTION, THEY IMMEDIATELY NOTIFIED THE CONTRACTOR OF THE RESULTS
VERY PROACTIVE IN OUR RECOMMENDATION OF SEEKING REIMBURSEMENT FOR ANY COSTS DUE TO THE PORT
AND THE CONTRACTOR WAS AN AGREEMENT AND THE PORT HAS ALREADY RECEIVED THE RECOMMENDED MONEY, AND THAT'S ALL I HAVE
ANY QUESTIONS? COULD YOU HAVE JANET, DOES JANICE ON WANT TO SEE ANYTHING? I BELIEVE JANICE AND NICK GABRIEL ARE ONLINE IN CASE THERE'S ANY QUESTIONS FOR THEM? WELL, YES, I'M HERE AS WELL
AND I WOULD SAY THAT THIS PROJECT WAS DEFINITELY ONE OF OUR MORE CHALLENGING ONES BECAUSE OUT OF ALL OF OUR PROJECTS THAT WERE STILL GOING ON DURING COVID, IT WAS THE ONE WHERE ALL THE WORKERS WERE REQUIRED TO WEAR A RESPIRATOR IN ORDER TO WORK BECAUSE OF THE SIX FOOT DISTANCE
AND I DO THINK THAT THEY TRIED THEIR BEST TO MAKE SURE THAT ALL OF THE PAPERWORK WAS CORRECT AND COMPLETE
WHEN THIS ADDITIONAL PAPERWORK THAT THE AUDIT DEPARTMENT RECEIVED FROM THE CONTRACTOR IDENTIFIED AN ISSUE, WE ACTUALLY PULLED THIS PROJECT BACK FROM CLOSE OUT PROCESS TO ISSUE THE DEDUCTIVE CHANGE ORDER AND GET THE MONEY BACK FROM THE CONTRACTOR
SO THAT'S WHY THIS ONE ACTUALLY, WE RECEIVE MONEY BACK FROM THE CONTRACTOR VERSUS JUST REMOVING MONIES THAT THEY WOULD NOT BE PAID AS PART OF THE PROGRESS BILLING
SO THAT'S THE MAIN DIFFERENCE IN THIS PROJECT VERSUS THE PREVIOUS ONE WHERE THERE WAS AN ISSUE IDENTIFIED AND THAT PROJECT WAS NOT YET COMPLETE
AND SO WE ISSUED THE DEDUCTIVE CHANGE ORDER AND THAT WAS JUST MONEY THAT WE DID NOT PAY THE CONTRACTOR
THANK YOU JANICE
TO COMMISSIONER QUESTIONS, MICHELLE
YEAH
CLEAR
HART, DO YOU WANT TO CALL THE ROLL? THANK YOU
BEGINNING WITH COMMISSIONER BOWMAN
THANK YOU
MY QUESTIONS ARE MORE RELATED TO THANK YOU FOR THE EXPLANATION AND REALLY VERY MUCH APPRECIATE THE CHALLENGING CIRCUMSTANCES OF DOING RENOVATIONS IN PARTICULAR
BEGINNING COVID AND JANICE, THANK YOU FOR CALLING THAT OUT
I'M ACTUALLY A LITTLE MORE CONCERNED ABOUT THE ISSUE AND WONDERING IF SOMEBODY COULD SPEAK TO IT ABOUT THE FACT THAT THERE WERE ONLY TWO BIDS AND THAT BOTH BIDS RELIED ON THE SAME SUBCONTRACTOR AND WHAT WE CAN DO TO PROVIDE MORE VISIBILITY TO THOSE THINGS PRIOR TO, AT LEAST FOR THE COMMISSION
THAT DOES SEEM TO BE SOMEWHAT PROBLEMATIC ON THE SURFACE, NOT CLAIMING ANYTHING
JUST THE BID WAS CONSIDERABLY OVER WHAT OUR ENGINEER HAD ESTIMATED
AND THE AUDIT REPORT DOES CALL OUT THAT IT'S MOST LIKELY BECAUSE THERE WERE VERY FEW BIDDERS AND THE AUDIT REPORT COST THAT BOTH BIDDERS WERE USING THE SAME SUBCONTRACTOR
SO I GUESS I'M MORE MOVING FORWARD
I WOULD LOVE TO HEAR FROM MANAGEMENT ABOUT HOW WE MIGHT ADDRESS THESE SITUATIONS MOVING FORWARD AND PROVIDE MORE TRANSPARENCY TO THE COMMISSION IN CASES LIKE THIS
SO, THAT WOULD BE A QUESTION FOR DAVE
[inaudible 01:29:12] OR
YEAH
WELL, I CAN GIVE A LITTLE BIT OF SOME CONTEXT FOR THE COMMISSION
SO THIS PROJECT, WHEN IT WAS ADVERTISED, WAS A TIME WHERE THE INDUSTRY IN GENERAL WAS VERY, VERY BUSY AND SO OFTENTIMES WE WILL NOT GET AS MANY BIDDERS
AND I CONTRAST THAT WITH THE LAST YEAR WHERE WE'RE GETTING A LOT MORE BIDS AND PROPOSERS BECAUSE THE MARKET IS SUCH THAT THERE'S A LOT MORE INTEREST IN BIDDING THAN THERE WAS WHEN THIS PARTICULAR PROJECT WENT OUT TO BID
WE DO A VERY ROBUST OUTREACH WITH OUR CPO PROCUREMENT OFFICE TO MAKE SURE THAT CONTRACTORS ARE AWARE OF OUR PROJECTS AND IF THEY'RE ON THE CALL, CERTAINLY MIGHT WANT TO COMMENT AS WELL
BUT I DID WANT TO NOTE THAT THE TIMING OF THIS PARTICULAR PROJECT WAS AT A TIME WHERE WE DID SEE A REDUCTION IN THE NUMBER OF BIDDERS IN IT
THANK YOU FOR THAT
THANK YOU FOR CALLING THAT OUT
I DON'T HAVE ANY CONCERNS ABOUT THAT OVER MY YEARS, SEEING THE EBBS AND FLOWS WHERE WE SOMETIMES HAVE LOTS OF BIDS AND SOMETIMES VERY FEW MORE
IT WAS ABOUT LOOKING FORWARD THAT BOTH OF THESE BIDDERS WERE USING THE SAME SUBCONTRACTOR, AGAIN, WONDERING ABOUT THE COMPETITIVE ASPECT OF THAT, AND REALLY MORE ABOUT TRANSPARENCY
IF MANAGEMENT COULD PROPOSE SOME WAYS TO PROVIDE MORE TRANSPARENCY TO THE COMMISSION, THAT IF BOTH ARE USING ONLY THE SAME SUBCONTRACTOR, THAT IT WOULD BE GOOD TO KNOW THAT
THAT PROVIDE
AND MAYBE YOU SAY, HEY, THAT'S JUST THE WAY IT IS
THERE'S REALLY ONLY ONE COMPANY THAT DOES THIS WORK AND NOBODY ELSE DOES IT
BUT IT WOULD BE GREAT TO HAVE THAT VISIBILITY IF THAT IS TRULY THE CASE
SO PROBABLY I KEEP LIKE, SORRY, I WAS GOING TO SAY I DON'T KNOW IF MY CONSTRUCTION MANAGERS ON THE CALL
I BELIEVE THAT THAT PARTICULAR SUBCONTRACTOR IS ONE OF OUR FIRMS PART OF DIVERSITY AND CONTRACTING
AND SO THAT MAY BE AS PART OF THE OUTREACH TO BRING MORE DIVERSE CONTRACTORS
THAT THAT'S WHY THAT PARTICULAR CONTRACTOR WAS BEING USED BY BOTH GENERAL CONTRACTORS PROPOSING
AND IT COULD JUST BE A FOLLOW UP ITEM
IT WOULD BE I THINK WE DON'T NEED TO SPECULATE, BUT IF WE COULD MAYBE JUST GET NOT MAYBE IF WE COULD GET FROM MANAGEMENT SOME RECOMMENDATIONS ABOUT, AGAIN, THE TRANSPARENCY
AND IF THAT'S THE CASE, THEN WE CAN LOOK AT HOW TO ADDRESS IT, BUT IT'S UNCLEAR WHETHER THAT'S THE CASE
APPRECIATE A FOLLOW UP ON THAT FROM STAFF
THANK YOU
WILL DO
AND I'LL WORK WITH YOU AND DAVE AND NORA OFFLINE ON THIS
WE CAN RESPOND BACK
THANK YOU
COMMISSIONER BOWMAN MOVING TO ME
BURGER FOR QUESTIONS
NO QUESTIONS
THANK YOU, COMMISSIONER CHO, YEAH
I THINK THIS JUST HIGHLIGHTS HOW COMPLICATED IT CAN GET
ONE QUESTION THAT I DO HAVE, THOUGH, BEYOND THIS EXAMPLE, IN MY EXPERIENCE, OR AT LEAST WHAT I'VE SEEN, EVEN ON THE FEDERAL SIDE, IT'S KIND OF UNUSUAL FOR ONE SUBCONTRACTOR
USUALLY THE SUBCONTRACTORS STICK TO ONE CONTRACTOR THAT THEY WORK WITH
AND WHEN IT COMES TO THESE BIDS AND THEY BID AS A PACKAGE
AND SO DO WE SEE THIS OFTEN WHERE WE SEE SUBCONTRACTORS GOING WITH MULTIPLE COMPANIES ON ONE RFP, WE CAN COME BACK WITH THE MORE COMPLETE ANSWER FOR YOU
I THINK IT REALLY DEPENDS ON THE CONTRACTOR THE SCOPE OF WORK
SOMETIMES WHEN WE HAVE VERY SPECIFIC SCOPE OF WORK, THAT SUBCONTRACTOR MAY VERY WELL PROPOSED TO MULTIPLE GENERAL CONTRACTORS BECAUSE THIS WAS A DESIGN BIT BUILD, SO THEY'RE NOT IN AN EXCLUSIVE RELATIONSHIP LIKE YOU MIGHT FIND WITH A DESIGN BUILD
OKAY
ALRIGHT
THANK YOU
YEAH, I WOULD LOVE TO LEARN A LITTLE MORE ABOUT THAT BECAUSE I FEEL LIKE IF THAT'S THE CASE BEYOND THE WMBE ASPECT OF IT, YOU COULD HAVE A GROUP OF CONTRACTORS JUST BIDDING ON ALL SIDES
WE CAN COME BACK
I'LL TALK WITH THE PROCUREMENT OFFICE AND MY PROJECT MANAGEMENT PARTNERS AND WE WILL COME BACK AND PROVIDE MORE INFORMATION
OKAY
THANK YOU FOR THAT
COMMISSIONER CHO, I THINK WE CAN MOVE ON COMMERCIAL, SO I'M GOING TO HAVE TO PICK UP THE PAGE HERE
IN THE INTEREST OF TIME, WE CAN GET TO BIOMETRICS
NEXT ONE IS LENIN LIMITED
LENIN DOES CURRENCY EXCHANGES AT THE AIRPORT
THEY'VE GOT KIOSKS THAT TRANSFER
BASICALLY, IF YOU BUY FOR POINT EXCHANGE FROM THEM OR YOU SELL YOUR FOREIGN EXCHANGE TO THEM AND THEY MAKE THEIR PROFIT OFF THAT
AND AS YOU CAN SEE FROM THE TABLE DOWN BELOW, QUITE A SIZABLE AMOUNT OF REVENUE PULL IN A YEAR
OBVIOUSLY, COVID HAS BEEN HARD ON THEM, BUT DURING THE SCOPE OF HER ON IT, WHICH WAS PRIMARILY PRE COVID THEY HAD A SIGNIFICANT AMOUNT OF REVENUE AND A DECENT AMOUNT RENT THAT THEY PAY THE PORT TO THE ABOUT A MILLION THREE A YEAR
NEXT SLIDE, PLEASE
MICHELLE, RELATIVELY SMALL ITEM ON ON REVENUE, BUT THEY HAVE SPREADSHEET ERROR AND THAT'S WHY WE DO THESE ON IT
WE WERE LOOKING AT THEIR FINANCIAL STATEMENTS
THEY HAD A MISTAKE THERE
THEY UNDERREPORTED ABOUT $324,000 TO US, WHICH OTHER NORMAL CIRCUMSTANCES WOULD HAVE BEEN ABOUT $30,000 BECAUSE IT'S ABOUT 10% THAT THEY PAY US
BUT BECAUSE OF THE MAG WAVE AND SOME OTHER ADJUSTMENTS THAT WERE IN THAT ENDED UP BEING ABOUT $12,000 ADDITIONAL PERCENTAGE FEES GO TO THE PORT
SO THEY HAD A CREDIT ON THEIR ACCOUNT
WE APPLIED IT
THE TEAM AT DINING RETAIL TEAM APPLIED THAT WE'RE WORKING WITH A FR, APPLIED THAT TO THEIR ACCOUNT
AND THIS ISSUE AGGRESSED
SO IT'S PURELY A MISTAKE
AND LIKE I SAID, THAT'S WHY WE DO THESE AUDITS
NEXT SLIDE, PLEASE
THIS ESSENTIALLY IS A LITTLE MORE DETAIL, BUT BASICALLY TELLS YOU MORE IN THAT 12,000 TELLS HOW YOU GET HOW WE GOT TO THAT 12,000 DOLLARS
AND NEXT SLIDE, THE RECOMMENDATIONS ESSENTIALLY SAY COLLECTED 12,000 DOLLARS AND THE MANAGEMENT RESPONSE IS IN THE NEXT SLIDE, MICHELLE, WILL, COMMISSIONERS WILL SAY THAT WE'VE COLLECTED TO 12,000 DOLLARS AND IT'S BEEN ADDRESSED
ANY ANY QUESTIONS ON THIS AUDIT COMMISSIONERS, OR CAN YOU TAKE OKAY, THEN, MICHELLE, IF YOU WANT TO PULL UP
IF YOU COULD PULL UP THE BIOMETRICS PRESENTATION THAT I SENT YOU, JUST GIVE ME JUST ONE MOMENT
I'VE GOT TO SWITCH OVER FOR THAT ONE
3 SLIDES
AND WHILE SHE'S PULLING THAT UP, A LOT OF THE BIOMETRICS WORK THAT WAS DONE AS SECURITY SENSITIVE, BUT THERE WERE SOME SLIDES THAT WERE NOT AND A PART OF THE WORK WAS NOT
COMMISSIONER CHO ASKED THE TRANSPARENCY TO THE PUBLIC IF WE COULD MAKE AVAILABLE THE NON SECURITY SENSITIVE ITEMS TO THE PUBLIC
TO JUST SHOW THAT WHAT WE'VE DONE AND THAT WE HAVE DONE AN AUDIT OF COMPLIANCE AND AND WHY IT'S BETTER FOR THE AIR EXIT TO MANAGE IT IN HOUSE
AS OPPPOSED TO HAVING CBP MANAGE IT
THIS ONE'S NOT WANTING TO COME UP, AND GIVE ME A MINUTE
IF I CAN TRY TO FORCE IT
YEAH, IT'S NOT COMING UP FOR ME
THIS IS SOMETHING IS NOT RIGHT WITH MY TEAMS TODAY
I APOLOGIZE
UNFORTUNATELY, YOU'RE THE ONLY ONE WHO CAN SHARE SCREEN
RIGHT? HANG ON A SECOND FOR ME
I CAN ACTUALLY PROBABLY CHANGE THAT EASIER THAN I CAN GET THIS TO COOPERATE WITH ME
OKAY
YOU SHOULD BE ABLE TO, BUT I THINK YOU'RE IN PRESENTER STATUS
OKAY, I'M PULLING IT UP RIGHT NOW
ONE SEC
THAT'S FULL COUNTER SECOND OR TWO MORE
I HOPE IT WILL LET YOU SHARE THAT
IT LOOKS LIKE IT WILL
OKAY
SOI
OKAY, PERFECT
THANK YOU
IS IT UP? IT IS THAT I CAN SEE IT
AND, BRUCE, IF YOU CAN UNMUTE YOURSELF AND I'M GOING TO HAVE YOU HELP ME OUT HERE
CERTAINLY
SO I'M BRUCE CLOSEL
I'M THE PORT'S ID AUDIT MANAGER
SO THIS AUDIT COVER THE PERIOD FROM JANUARY 2020 THROUGH MAY OF 2021
AND THE AUDIT WAS EVEN THOUGH WE CALLED IT BIOMETRIC AUDIT, IT WAS ACTUALLY AN AUDIT OF THE PORT BIOMETRIC AIR EXIT PROCESS FOR DEPARTING INTERNATIONAL PASSENGERS
AND WE PERFORM THE AUDIT TO EVALUATE THE ADEQUACY OF INTERNAL CONTROLS RELATED TO SECURE DATA STORAGE, PRIVACY, AND NETWORK SECURITY AROUND THE PROCESSES FOR CREATING, STORING, AND TRANSMITTING THE BIOMETRY DATA FOR THE BIOMETRIC ARE PROJECT
IN ADDITION, WE REVIEWED COMPLIANCE WITH 49 REQUIREMENTS OF THE PORT'S EX23 BIOMETRIC AREAS OF POLICY AND THE U S CUSTOMS AND BORDER PROTECTION BIOMETRIC AIR EXIT BUSINESS REQUIREMENTS
SO THE PORT HAD DEVELOPED A BIOMETRIC AIR EXIT POLICY
AND IF YOU'RE GOING TO IMPLEMENT CBP'S BIOMETRIC AIR EXIT SYSTEM, YOU HAVE TO FOLLOW THEIR DETAILED REQUIREMENTS
WE WERE ACTUALLY FAIRLY IMPRESSED WITH THE REQUIREMENTS
THEY DID A FAIRLY GOOD JOB OF INCLUDING PRIVACY AND SECURITY CONTROLS IN THE REQUIREMENTS
AND SO WE WERE VERY HAPPY WITH THAT
WE ALSO KNOW THAT CBP IS CONGRESSIONALLY MANDATED TO IMPLEMENT A BIOMETRIC ENTRY AND EXIT SYSTEM
SO IF THE PORT HADN'T HAVE CHOSEN TO HAVE DONE THIS THEMSELVES, CBP WOULD HAVE COME IN AND THEY WOULD HAVE DONE IT
NEXT SLIDE, PLEASE
AND SO WE JUST NOTE THAT ON MARCH 2020, THE PORT COMMISSION DIRECTOR OF THE STAFF AT THE NEW POLICIES, WHICH WAS BASICALLY THE PORT'S EX 23 BIOMETRIC EXIT POLICY
AND THE CONCLUSION OF OUR AUDIT WAS THAT BASED ON THE WORK WE PERFORMED AND THE INFORMATION GATHERED, INTERNAL AUDIT CONCLUDED THAT THE BIOMETRIC ER EXIT PROGRAM HAD ACHIEVED REASONABLE COMPLIANCE WITH BOTH THE CDP AND THE PORT POLICY REQUIREMENTS
IT WENT VERY WELL
WE HAVE A NEXT SLIDE
SO THIS SLIDE IN PARTICULAR, IF YOU NOTICE IN THE DISTANCE, THIS IS THE S 15 GATE IN THE SOUTH SATELLITE
AND SO THIS IS WITH THIS IS WITH EDA AIR, WHO WAS THE INITIAL IMPLEMENTER OF THE, LIKE THE PILOT, THE PILOT METRIC PROGRAM
AND SO IF YOU LOOK AT THE FAR DISTANCE OF THAT PICTURE, YOU CAN SEE A SMALL BLUE SITE DOWN THERE
AND THAT'S ACTUALLY THE FACE OF THE BIOMETRIC CAMERA WITH THE DISPLAY THAT IS SHOWING THE PERSON WALKING UP TO IT WHAT THE CAMERA RESULTS ARE
AND SO IN THE MID DISTANCE, YOU'LL SEE TWO SMALLER WHITE SIGNS
THOSE ARE ACTUALLY THE CDP REQUIRED SIGNS
THIS IS WHAT YOU HAVE TO PUT UP ACCORDING TO THEIR REQUIREMENTS
IN THE IMMEDIATE PRESENCE, YOU SEE THE HUGE SEATTLE PORT SIGN THAT WE PUT UP
AND SO, YOU KNOW, BY IMPLEMENTING THIS, WE WERE ABLE TO RECEIVE FROM CBP THE APPROVAL TO BE ABLE TO DEVELOP OUR OWN SIGNAGE
AND WE HAD VERY LARGE SIGNS
IT MAKES IT VERY OBVIOUS RIGHT UP FRONT WHEN YOU GET IN LINE
SO IT'S MUCH EASIER FOR PEOPLE TO SEE THIS COMPARED TO WHEN YOU'VE ALREADY GOTTEN A LONG LINE OF PEOPLE AND YOU JUST GET UP THERE
AND THEN YOU REALIZE YOU HAVE TO READ THE FINE PRINT
AND IN ORDER TO ACTUALLY OPT OUT, YOU ACTUALLY HAVE TO GO TO THE FRONT COUNTER AND PERFORM SOMETHING SO IT WOULDN'T BE VERY CONVENIENT
WE ALSO NOTICED THAT BECAUSE THE PORT WAS ABLE TO DO THIS THEMSELVES, THEY'RE ALSO ABLE TO IMPLEMENT THEIR OWN TRAINING
SO THE TRAINING OF PORT STAFF AND THE TRAINING OF ALL OF THE AIRLINE STAFF THAT PARTICIPATE IN THIS, THE PORT COULD THEN CUSTOMIZE THAT TRAINING TO MAKE IT MORE HELPFUL FOR THEM AND TO ALSO MAKE IT SO THAT WE COULD TRAIN THEM TO BE MORE SENSITIVE IN DEALING WITH PASSENGERS WHO POTENTIALLY MIGHT HAVE CONCERNS ABOUT THE PROCESS
I'LL ALSO NOTE THAT THE AVIATION INNOVATION TEAM THAT WAS RESPONSIBLE FOR INFLAMATING THIS PROCESS ALSO CAME UP
THERE'S NO REQUIREMENT FOR THIS
THEY ALSO CAME UP WITH AUDIO RECORDED ANNOUNCEMENTS
SO AS YOU'RE WAITING IN LINE, THERE ARE ANNOUNCEMENTS THAT ARE PLAYED THAT TELL YOU THAT YOU HAVE THE OPTION TO OPT OUT OF THE PROCESS
SO IF I GET COMMISSIONERS, IF I CAN ADD TO THAT TO BRUCE'S POINT, BY US DOING IT, YOU GET THE BIG SIGNS, YOU GET AUDIO ANNOUNCEMENTS
IT'S A LOT MORE USER FRIENDLY EXPERIENCE
AND A CBP WE'RE RUNNING IT, WHICH THEY THEY'RE CONGRESSIONALLY MANDATED TO DO IT
IF WE DON'T DO IT, YOU HAVE VERY SMALL SIGNS AND INTIMIDATING INDIVIDUALS, CDP UNIFORM STANDING AROUND
THAT REALLY WOULDN'T BE ITS USER FRIENDLY AND WOULD BE A LOT MORE INTIMIDATED TO UPLOAD ANYTHING ELSE
BRUCE, I ACTUALLY WENT TO THE PORT AND WATCHED ONE OF THESE IN OPERATION
AND IT WAS AMAZING BECAUSE AS YOU WALK UP TO THAT CAMERA, THEY HOLD EVERYBODY BACK FROM THAT CAMERA BY ABOUT 4 OR 5 FEET
AND THEN AS THE INDIVIDUAL APPROACHES A CAMERA, PRETTY MUCH BY THE TIME YOU GET UP TO THE CAMERA, THE RESULTS ARE DISPLAYED AND YOU'VE PASSED
SO IT IS A VERY QUICK SYSTEM
IT WAS VERY IMPRESSIVE
I'M DONE
WE HAVE SOME OPPORTUNITIES
WE'LL TALK MORE ABOUT THEM AND IN NON PUBLIC SESSION, BUT THEY'RE ALL ADDRESS, AND THAT'S THE ADVANTAGE OF HAVING AUDIT IN THE PROCESS
FILES WERE ACTUALLY LOADING THE PORT IMPLEMENT THE PROGRAM
SO ANY C AND THE PORT WERE VERY RESPONSIVE AND EVERYTHING WERE IDENTIFIED WERE ADDRESSED RIGHT AWAY
AND THAT'S WHY IT'S CLEAN AUDIT, AND WE'LL TAKE QUESTIONS
GREAT
IF YOU WANT TO CALL THE ROLL CLERK HART ABOUT BEGINNING WITH COMMISSIONER BOWMAN, I DON'T KNOW THAT I HAVE ANY QUESTIONS
I APPRECIATE THE CALL OUT OF THE PORT MORE PROACTIVE ROLE THAT WE HAD A LOT OF DEBATES AND A LOT OF EXPERT TESTIMONY COME IN PRIOR TO ADOPTING OR TALKING ABOUT BIOMETRICS AT THE AIRPORT, INCLUDING HEARING FROM CBP AND EXECUTIVE DIRECTOR METRUCK
AND I TRAVEL TO A COUPLE OF OTHER AIRPORTS TO SEE WHAT IT LOOKED LIKE IN IMPLEMENTATION
AND YOU'RE RIGHT
IT CAN BE VERY QUICK
THE CONCERNS ARE ALWAYS ABOUT PRIVACY
BUT I WILL SAY IT'S GOOD TO HEAR THROUGH THE AUDIT PROCESS THAT YOU FEEL THAT SOME OF THE THINGS THAT THE PORT STAFF IS IMPLEMENTED, WE'RE EXACTLY WHERE WE'RE FROM THE COMMISSION LEVEL HOPING TO GO IS REALLY PROVIDING TRANSPARENCY ABOUT THE OPT IN, OPT OUT OPTION THAT PASSENGERS HAD
THAT WAS NOT CLEAR IN OTHER AIRPORTS FROM THE CBP ISSUED POSTERS AND THINGS LIKE THAT
I LOVE THE FACT THAT YOU PUT IN THE AUDIO
THAT'S REALLY GREAT
I HAVE THE NOT HEARD ABOUT THAT
SO CONGRATS
THAT'S A REALLY GOOD EXTRA STEP
AND IT JUST SOUNDS LIKE AT LEAST IN THOSE RESPECTS, WE'RE DOING WHAT WE CAN TO PROVIDE TRANSPARENCY TO THE PUBLIC
I KNOW THERE OBVIOUSLY ARE JUST STILL ENORMOUS CONCERN ABOUT DATA STORAGE, BUT THANK YOU FOR THIS PART OF THE PRESENTATION
THANK YOU TO COMMISSIONER BOWMAN
MOVING TO MEMBER GERHKE
NO QUESTIONS, NO QUESTIONS FOR ME
THANK YOU
THANK YOU
COMMISSIONER CHO
YEAH
I JUST WANTED TO MAKE A QUICK COMMENT HERE
AND, GLENN, I REALLY APPRECIATE HOW QUICKLY YOU RESPONDED TO THE SUGGESTION I MADE WHEN WE DID OUR CHECK IN PRICE TO THIS MEETING
BUT THE REASON THAT I WANTED TO MAKE SURE THAT THE NON SENSITIVE PARTS OF THIS AUDIT WERE PUBLIC IS BECAUSE THE STEPHANIE PROBABLY REMEMBERS WE WERE KIND OF ROLLED FOR TAKING ON THIS RESPONSIBILITY AT ALL
RIGHT
AND THERE WERE MEMBERS OF THE COMMUNITY WHO SAID THAT THE PORT SHOULDN'T HAVE A HAND IN THE USE OF BIOMETRICS, PERIOD
AND WE MADE THE CASE THAT IF WE DON'T DO THIS, THEN WE'LL HAVE ZERO CONTROL OVER THE BOTTOM OF HOW IT'S USED OR WHAT WE DO
AND I THINK THIS IS JUST ANOTHER EXAMPLE
AUDIT IS AN EXAMPLE OF WHY WE DID WHAT WE DID LAST YEAR
THE FACT THAT WE ARE THE ONES ADMINISTERING IT ENABLES US TO AUDIT OURSELVES, WHEREAS IF CBP OR DHS, WE'RE DOING THIS ON THEIR OWN, WE WOULDN'T ACTUALLY BE ABLE TO AUDIT THIS, IF MY UNDERSTANDING THIS CORRECTLY
SO THE FACT THAT WE TOOK THIS ON IS WHAT ENABLED US TO DO THIS IN THE FIRST PLACE
AND I'M GLAD THAT WE'RE TAKING THE STEP TO ACTUALLY PROVIDE THE NONSENSE SENSITIVE SITES OF THE AUDIT TO THE PUBLIC SO THAT THE PUBLIC CAN ALSO BE READ IN ON HOW IT'S GOING
AND SO THANK YOU GLENN FOR KIND OF ACCOMMODATING MY REQUEST ON THAT
AND I KNOW THAT IT WASN'T INITIALLY THE PLAN, BUT I JUST THINK TO STEPHANIE'S POINT ABOUT TRANSPARENCY, IT WAS REALLY IMPORTANT THAT THE PUBLIC COULD SEE THAT WE ARE ACTUALLY WALKING THE WALK AND NOT JUST TALKING THE TALK
AND THE SYSTEM IS WORKING IN
ALL THE SIGNAGE AND EVERYTHING THAT WE INTENDED TO BE TALKED ABOUT LAST YEAR IS HAPPENING, BUT IT LOOKS LIKE YOU GOT SOMETHING ADD THERE
I DO
I ALSO LIKE TO NOTE THAT THOSE PICTURES THAT ARE TAKEN ARE RETAINED FOR EXACTLY 45 SECONDS AND NO LONGER
SO WE TESTED THAT, SO THEY'RE GONE PRETTY FAST
THAT'S GREAT
THAT'S GREAT
WONDERFUL
SO THAT'S IT
YOU CAN CLOSE US OUT COMMISSIONER CHO AND WE CAN GO TO THE NON PUBLIC SESSION
VERY WELL
THANK YOU SO MUCH, GLENN
I THINK THAT CONCLUDES OUR PUBLIC AUDIT MEETING ITEMS FOR TODAY
AGAIN, MANY THANKS TO THE AUDIT STAFF AND MANAGEMENT FOR WORKING TOGETHER TO JUST ALL THESE ISSUES
WE WILL RECESS INTO THE NON PUBLIC PORTION OF THE MEETING TO ADDRESS ITEM NUMBER NINE, WHICH IS AN INFORMATION TECHNOLOGY AUDIT ITEM
ARE THERE ANY CLOSING COMMENTS FROM THE MEMBERS BEFORE WE RECESS? CLERK HART, MAYBE WE SHOULD CALL THE ROLL ONE MORE TIME
THANK YOU, COMMISSIONER BOWMAN, FOR CLOSING COMMENTS
NO OTHER QUESTIONS
I JUST WE HAVE TO EXIT THIS MEETING AND RE ENTER
YES, COMMISSIONER
SO THERE IS A SEPARATE MEETING LINK FOR THE NON PUBLIC PORTION OF THIS MEETING, AND YOU WILL EXIT THIS AND GET ON THAT MEETING LINK AND THEN CONDUCT THAT MEETING THERE
THANK YOU
MEMBER GERKY, NO ADDITIONAL QUESTIONS OR COMMENTS
THANK YOU
THANK YOU, COMMISSIONER CHO DONE FOR ME EITHER
ACTUALLY, THE ONLY QUESTION I HAVE IS DO PEOPLE WANT A FIVE MINUTE BREAK OR CAN WE GO STRAIGHT INTO THE NON PUBLIC SESSION? WE HAVE A LOT GOING ON RIGHT NOW
SORRY I MISSED THE FIRST PART OF YOUR COULD WE POWER THROUGH? OKAY
YEAH, THAT'S OKAY
I'M FINE WITH THAT
OKAY, GREAT
SO WE WILL NOT TAKE A BREAK, BUT WE WILL RECESS INTO A NON PUBLIC PORTION OF OUR MEETING AND WE WILL GO STRAIGHT INTO IT TO DISCUSS ONE MATTER RELATED TO SECURITY SENSITIVE INFORMATION
THE NON PUBLIC PORTION OF THE MEETING WILL APPROXIMATELY LAST 30 MINUTES, I BELIEVE, AND THE MEETING WILL ADJOURN WITH NO FURTHER BUSINESS AFTER THAT TIME
PARTICIPANTS JOINING THE NON PUBLIC PORTION OF THE MEETING PLEASE CLOSE OUT OF THIS MEETING, LINK, AND JOIN THE 4 30 TEAMS MEETING
LINK, THE CURRENT TIME IS 426, AND I WILL JOIN THE PUBLIC PROCESSION
THANK YOU, COMMISSIONER
GOOD MEETING
AND THEN JUST TO NOTE THAT THAT 4 30 LINK IS LIVE AT THIS TIME, SO YOU DON'T HAVE TO WAIT FOR THAT TIME TO LAPSE VERY MUCH
MICHELLE, I'M GOING INTO THAT RIGHT NOW
THANK YOU
HAVE A GOOD MEETING
THANK YOU.

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