Finance & Asset Management Committee Meeting Agenda

Transcription

1 Finance & Asset Management Committee Meeting Agenda Date: Tuesday, June 20 th, 2017 Time: 4:00p.m. 6:00p.m. Location: Classroom Committee Members: Gloria Skouge (Chair), Ray Ishii, Ann Magnano, Patrice Barrentine, Jim Savitt, David Ghoddousi, John Finke and Betty Halfon 4:00pm I. Administrative: A. Approval of Agenda B. Approval of the Finance & Asset Management Committee May 16 th, 2017 Meeting Minutes Chair 4:05pm II. Announcements and/or Community Comments 4:10pm III. Reports and Discussion Items A Audit Presentation i. Proposed Resolution 17-29: Approval of 2016 PDA Audited Financial Statements B. Review of the PDA Financial Statements for May 2017 i. Checking Account Activity Report C. Parking Garage Revenue Projections and Potential Budget Impacts 5:10pm IV. Action Items A. Proposed Resolution 17-26: Authorization for Contract Authority Emergency Responder System Fairley Building & LaSalle Hotel B. Proposed Resolution 17-30: Authorization for Contract Authority MarketFront Elevator Security Upgrade C. Proposed Resolution Request for Approval to Subdivide Office Space D. Proposed Resolution 17-32: Authorization for Contract Authority Installation of Anti-Graffiti Film on MarketFront Windows Auditors from Peterson and Sullivan Sabina Proto Sabina Proto Ben Franz-Knight Andre Zita Andre Zita Jennifer Maietta Brady Morrison 5:25pm V. Property Management Report A. Residential Property Management Report John Turnbull 5:30pm VI. Public Comment Chair 5:35pm VII. Closed Session A. Property Management Report - RCW [c] B. Review of Lease Proposals New Lease Osara Commissary, 1501 Pike Place #321 Lease Renewal Ghost Alley Espresso, 1499 Post Alley Lease Renewal Lamplight Books, 1514 Pike Place Lease Renewal Maggie s Shoes, 1927 First Avenue Chair Jennifer Maietta Pike Place Market Preservation & Development Authority (PDA) info@pikeplacemarket.org pikeplacemarket.org P: F: Pike Street, Room 500 Seattle, WA 98101

2 5:45pm Lease Renewal Umai Sushi and Teriyaki, 91 Pike Street C. Review of Delinquency Report i. Vacancy Report ii. Current Lease Negotiations VIII. Open Session A. Action Item: Proposed Resolution 17-33: Lease Proposals June 2017 Chair Jennifer Maietta 5:50pm IX. Resolutions to be added to the Consent Agenda Chair 5:55pm X. Concerns of Committee Members Chair 6:00pm XI. Adjournment Chair Pike Place Market Preservation & Development Authority (PDA) pikeplacemarket.org P: F: Pike Street, Room 500 Seattle, WA 98101

3 z Finance & Asset Management Committee Meeting Minutes Tuesday, May 16 th, :00 p.m. to 6:00 p.m. Classroom Committee Members Present: Gloria Skouge, Ray Ishii, Patrice Barrentine, Jim Savitt, David Ghoddousi, John Finke, Betty Halfon Other Council Members Present: Staff/ Consultants Present: Aliya Lewis, Ben Franz-Knight, Sabina Proto, John Turnbull, Jennifer Maietta, Bob Beckstrom, Andre Zita Others Present: Howard Aller, Chris Scott The meeting was called to order at 4:01 p.m. by Gloria Skouge, Chair. I. Administration A. Approval of the Agenda The agenda was approved by acclamation. B. Approval of the Finance & Asset Management Committee April 18 th, 2017 Minutes The April 18 th, 2017 meeting minutes were approved by acclamation. II. Announcements and Community Comments Jim Savitt entered into the meeting at 4:11 p.m. Betty Halfon entered into the meeting at 4:34 p.m. Gloria Skouge noted that next month there will possibly be a MWBE (Minority and Women Owned Business Enterprises) contracting update. III. Reports & Discussion Items A. Review of the Financial Statements for April 2017 Sabina Proto, the Director of Finance, presented a review of the Financial Statement for April Proto discussed the PDA Balance Sheet with the committee. She reported that there was an increase from the prior month in Current Assets. Designated Cash showed a decrease due to spending on MarketFront project construction. Restricted Cash had reported an increase due to the Sellen Retainage and debt service contribution. There were two impacts to the Fixed Assets which included an increase from capital spending in Capital Projects an in the MarketFront project. Current Liabilities had an increase in Accounts Payable related to the MarketFront construction payments. Long Term Debt Pike Place Market Preservation & Development Authority (PDA) info@pikeplacemarket.org pikeplacemarket.org P: F: Pike Street, Room 500 Seattle, WA 98101

4 IV. decreased due to payment on a 2009 PDA bond. The Current Year Operating Result is $731,976. Accounts Receivable increased from the prior month. Sabina Proto went over monthly garage revenue comparisons for the years 2016 and 2015 in relation to 2017 projections. Ben Franz-Knight noted that new garage was projected to open earlier than it has and that the revenue for both garages will be watched closely through the end of June. At the end of June revenue corrections can be made if need be to revenue projections for the end of the year. Ray Ishii asked why the daily revenue is lower than prior year. Ben Franz-Knight note that the difference is in the way people are paying for parking; cash versus credit cards. There was discussion on credit card parking charge rates that followed. Ray Ishii asked where the 2017 expenditures for capital projects shows up on the operating statement or the balance sheet. Sabina Proto noted that it would show up in the balance sheet. There was a discussion on the details of the Capital Projects Report that followed. Sabina Proto that she would need to revise the Capital Projects Spending amount under Current YTD Balance on page 8. An updated copy of the Capital Replace Reserve Fund Balance was given to the executive administrator after the meeting. Jim Savitt asked about a question Note 12 on page 6 related to the Foundation as well as a question on garage revenue in December and January. I. Checking Account Activity Report The Checking Account Activity Report for the month of April 2017 was handed to Aliya Lewis, Executive Administrator. Action Items A. Proposed Resolution 17-21: Authorization for Contract Authority Employee Lockers & Bathrooms Andre Zita introduced proposed resolution which states that: WHEREAS, the Pike Place Market Preservation Development Authority (PPMPDA) was chartered by the City of Seattle pursuant to RCW 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

5 survival of small businesses, and the expansion of services to the public market and community; and, WHEREAS, in order to maintain the viability of the Pike Place Market buildings the PPMPDA has determined that the both Men s and Women s employee lockers and bathrooms are in need of refurbishment and not meeting the needs of the staff, WHEREAS, the PPMPDA has executed a competitive bid process to remodel in order to meet employee needs for expanding market. NOW, THERFORE, BE IT RESOLVED that the PPMPDA Council authorizes the PPMPDA Executive Director or his designee to enter into a contract with Experienced Construction, LLC. in an amount not to exceed $126,693 for related work. The funds for this project will be drawn from the Capital Projects Budget, 2017 COMLAS GL David Ghoddousi moved the proposed resolution and Patrice Barrentine seconded the motion. Jim Savitt asked for a clarification on the price of the project. Andre Zita stated that it was his belief that the price is in line with other projects that have been completed. Zita noted several issues with the project that drive the cost up. Ben Franz-Knight noted that the cost is equal to about $90-$94 per foot and that only one bid has been received. There was a discussion about the proposed resolution that followed. Jim Savitt noted that he believed the expense is too large. John Finke has moved to table the resolution until next month and Jim Savitt seconded the motion. For: Ray Ishii, Patrice Barrentine, Jim Savitt, David Ghoddousi, John Finke, Betty Halfon Abstain: Gloria Skouge Against: 0 Proposed Resolution was tabled until next month with a vote of Patrice Barrentine asked about questions about the space and asked if men and women could share a facility. B. Proposed Resolution 17-22: Authorization for Contract Authority Repaint/Restore the Stewart House SRO Building Exterior

6 Bob Beckstrom introduced proposed resolution which states that: WHEREAS, the Pike Place Market Preservation and Development Authority (PPMPDA) was chartered by the City of Seattle pursuant to RCW 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, in order to maintain the viability of the Pike Place Market buildings the PPMPDA has determined that the paint of the SRO Building is peeling and flaking, and is on the 30 Year Capital Needs Assessment for repainting WHEREAS, the PPMPDA has executed a bid process to restore/repaint the SRO Exterior NOW, THEREFORE, BE IT RESOLVED that the PPMPDA Council authorizes the PPMPDA Executive Director or his designee to enter into a contract with Grund & Co. in an amount not to exceed $50, for the purpose of repainting the Stewart House SRO Exterior. The funds for this projects will be drawn from the Capital Projects RSTE GL Patrice Barrentine moved the proposed resolution and John Finke seconded the motion. Betty Halfon asked if there would be any obstruction to people walking around the area. Bob Beckstrom stated that there would be no obstruction. For: Gloria Skouge, Ray Ishii, Patrice Barrentine, Jim Savitt, David Ghoddousi, John Finke, Betty Halfon Against: 0 Abstain: 0 Proposed Resolution passed by a vote of V. Property Management A. Residential Property Management Report John Turnbull presented an update on the Residential Property Management report, noting the residential vacancy rate, updates on Western Avenue Senior Housing (WASH), rent adjustments, a comparability rent study, and staff emergency trainings. Betty Halfon asked about the new pest control regime and if the older one had worked or not.

7 John Turnbull stated that a new approach to pest control was decided on, where units would be cleaned quarterly. There was a discussion on pest control, specifically on bed bugs, that followed. John Turnbull gave an update on events. VI. Public Comment Chris Scott asked to remind council that after this meeting during the Constituency meeting there will be a presentation from an SDOT (Seattle Department of Transportation) representative discussing the center city connector and a station that will be built on 1 st Avenue between Pike Street and Pine Street. There will be a discussion on the options that SDOT has formulated for delivery access. VII. Closed Session The Committee Chair stated that the committee would go into closed session at 5:30 p.m. to discuss the property management report and return into open session at approximately 5:45 p.m. The committee entered into closed session at 5:19 p.m. I. Property Management Report - Closed Session (RCW [c]) II. III. Review of Lease Proposals Relocation Little Fish (Jarr & Co.), MarketFront Suite F New License Chief Seattle Club, 1901 Western Avenue Review of Delinquency Report a. Vacancy Report b. Current Lease Negotiations The committee entered into open session at 6:02 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. VIII. Open Session A. Proposed Resolution 17-23: Lease Proposals May 2017 Jennifer Maietta introduced the lease proposals which included the following businesses: Tenant Term Start Date Little Fish / Little Fish, LLC Ten (10) Years Upon Delivery of Premises Chief Seattle Club One (1) July 1, 2017

8 The proposed resolution was amended as follows: Tenant Term Start Date Little Fish / Little Fish, LLC Ten (10) Years Upon Delivery of Premises Patrice seconded the motion. For: Gloria Skouge, Ray Ishii, Patrice Barrentine, Jim Savitt, David Ghoddousi, John Finke Against: 0 Abstain: 0 Proposed Resolution 17-23: Lease Proposals May IX. Resolutions to be added to the Consent Agenda Proposed Resolution 17-22: Authorization for Contract Authority Repaint/Restore the Stewart House SRO Building Exterior Proposed Resolution 17-23: Lease Proposals May 2017 X. Concerns of Committee Members None. XI. Adjournment The meeting was adjourned at 6:03 p.m. by Gloria Skouge, Chair Meeting minutes submitted by: Aliya Lewis, Executive Administrator

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21 PIKE PLACE MARKET PRESERVATION AND DEVELOPMENT AUTHORITY FINANCIAL REPORT WITH SUPPLEMENTARY REPORTS AND SCHEDULES IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS AND THE UNIFORM GUIDANCE DECEMBER 31, fs123116

22 C O N T E N T S INDEPENDENT AUDITORS' REPORT... 1 and 2 MANAGEMENT'S DISCUSSION AND ANALYSIS FINANCIAL STATEMENTS STATEMENT OF NET POSITION STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION STATEMENT OF CASH FLOWS and 13 NOTES TO FINANCIAL STATEMENTS SUPPLEMENTARY REPORTS AND SCHEDULES IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS AND THE UNIFORM GUIDANCE INDEPENDENT AUDITORS' 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 and 33 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE and 35 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Page SCHEDULE OF FINDINGS AND QUESTIONED COSTS fs123116

23 INDEPENDENT AUDITORS' REPORT To the Council Pike Place Market Preservation and Development Authority Seattle, Washington We have audited the accompanying financial statements and the aggregate discretely presented component units of the Pike Place Market Preservation and Development Authority ("the PDA"), a public governmental corporation, as of and for the year ended December 31, 2016, 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; 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 an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States 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. 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 PDA'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 PDA'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 opinion.

24 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the PDA and the aggregate discretely presented component units as of December 31, 2016, and the respective changes in their net position and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States. Required Supplementary Information Accounting principles generally accepted in the United States require that the management's discussion and analysis 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 supplementary information in accordance with auditing standards generally accepted in the United States, 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. Report on Schedule of Expenditures of Federal Awards Our audit was conducted for the purpose of forming an opinion on the financial statements that comprise the PDA's basic financial statements. The accompanying schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) 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 financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States. In our opinion, the information is fairly stated, in all material respects, in relation to the 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 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 fs123116

25 MANAGEMENT'S DISCUSSION AND ANALYSIS We are pleased to present the Pike Place Market Preservation and Development Authority ("the PDA") financial report for the year ended December 31, This report was prepared by the PDA's finance staff. The 2016 financial statements were audited by the public accounting firm of Peterson Sullivan 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 designated 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 over 396 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 direct 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 supported entirely from its tenants' rents, commercial, residential, and daystall, plus minor amounts from investment and miscellaneous sources. 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 fs123116

26 Major Initiatives The PDA is currently involved in the development of the MarketFront project. The MarketFront will encompass a low-rise, mixed-use development that will provide parking for the Market and waterfront, low-income housing for seniors, expanded social services, and added Market retail space. The site will also provide generous accessible public open space and expansive views of Elliott Bay while providing a critical new connection between Pike Place Market and the City of Seattle's central waterfront project ("Central Waterfront") that will emerge after the demolition of the Alaskan Way Viaduct. Construction began in June 2015 and is scheduled for completion by summer The total cost of the project is estimated to be approximately $73 million. Funding for this amount has come from various sources including PDA reserves, proceeds from bond issuances in 2015, the City of Seattle and State of Washington grants, low-income housing and New Markets Tax Credit investors, and a capital fundraising campaign led by the Pike Place Market Foundation. Capitalized expenditures related to the MarketFront project as of December 31, 2016, totaled approximately $57.7 million and consist of architectural design and construction costs. The project faced no significant cost overruns or schedule setbacks in 2016 and none are foreseen in the completion of the project. In February 2016, the PDA closed on a Low Income Housing Tax Credit financing of approximately $7.9 million and a New Markets Tax Credit financing of approximately $2.3 million to assist in certain components of the MarketFront project. Overview of the Financial Statements Assets of the PDA exceeded liabilities at December 31, 2016, by $134.1 million (net position). Of this, $23.5 million is unrestricted and may be used to meet the PDA's ongoing operating obligations. Net position increased by $7.3 million in 2016, primarily due to $17.1 million in capital grants received from the City of Seattle, $3.0 million in capital contributions received from the Market Foundation, offset by $17.0 million granted to Pike Place Market QALICB3 ("PPMQB3"), and a $4.2 million non-operating grant from Pike Place Market QB2 ("PPMQB2"). Net capital assets increased by $13.2 million and was financed primarily through capital grants and contributions fs123116

27 Financial Position (or Net Position) Excluding Discretely Presented Component Units Assets Current assets $ 9,531,254 $ 9,927,814 Non-current assets 71,886,691 64,296,801 Capital assets, net 129,972, ,790,781 Total assets $ 211,390,812 $ 191,015,396 Liabilities Accounts payable and accrued expenses $ 11,434,261 $ 6,161,804 Accrued interest 114, ,667 Current portion of master lease revenue advance 565, ,332 Current portion of non-capital grant advances 526, ,445 Current portion of loans payable - 180,000 Current portion of bonds payable 635, ,000 Total current liabilities 13,276,179 7,977,248 Master lease revenue advance, net of current portion 32,073,381 22,927,991 Non-capital grant advances, net of current portion 4,210,525 4,722,222 Loans payable, net of current portion 455, ,000 Bonds payable, net of current portion 27,324,626 28,174,224 Total long-term liabilities 64,063,532 56,279,437 Total liabilities 77,339,711 64,256,685 Net Position Net investment in capital assets 101,558,241 87,371,557 Restricted for required reserves 8,978,516 4,045,869 Unrestricted 23,514,344 35,341,285 Total net position 134,051, ,758,711 Total liabilities and net position $ 211,390,812 $ 191,015,396 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 $211.4 million and $191.0 million at December 31, 2016 and 2015, 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 four entities in 2016 (two in 2015) controlled by the PDA and capital spending has occurred in these properties. The complete financial statements indicate the full amount of the increase in capital assets. The PDA's primary asset base is its real property in the Market Historic District and these properties make up $130.0 million of the total $211.4 million or 61% of total assets as of December 31, The remainder of the PDA's total assets is comprised, for the most part, of cash, cash reserves, a financing lease receivable, and a loans receivable, representing 35% of the total assets fs123116

28 Total liabilities of the PDA were $77.3 million and $64.3 million at December 31, 2016 and 2015, respectively. The PDA's major liabilities consist of outstanding bonds and advanced master lease revenue. In 2016, the PDA collected $9,711,325 from PPMQB3 as an advanced master lease payment (a liability) for the entire lease term upon execution of a 50-year lease for commercial space within the MarketFront project. Net position represents the PDA's equity and represents 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 and 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. Statement of Revenues, Expenses, and Changes in Fund Net Position Excluding Discretely Presented Component Units Operating revenue $ 13,821,186 $ 13,396,324 Operating expenses (16,886,328) (16,205,611) Operating loss (3,065,142) (2,809,287) Non-operating revenue 7,584,182 6,731,393 Non-operating expenses (1,129,472) (1,138,725) Net non-operating income 6,454,710 5,592,668 Income before capital grants and contributions 3,389,568 2,783,381 MarketFront capital grants and contributions, net 3,902,822 15,162,900 Change in net position 7,292,390 17,946,281 Net position, beginning of year 126,758, ,812,430 Net position, end of year $ 134,051,101 $ 126,758,711 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. Approximately $3.6 million and $3.7 million of the total operating expenses as of December 31, 2016 and 2015, respectively, is depreciation and amortization expense fs123116

29 Non-operating revenue and income reflect non-capital grant revenue and related-party grant revenue. This revenue is classified as non-operating as it is nonrecurring and it is not a part of the PDA's normal operations. Non-operating revenue also includes interest income from reserves and investments. Non-operating expenses consist primarily of interest expense on bonds and loans payable. The PDA also had capital grants and contributions during 2016 and 2015, which were primarily related to two main sources, including a grant to finance the design, planning, construction, and equipping phase of the MarketFront project and the fair value recognized related to the contribution of land for the MarketFront project from the City of Seattle (2015 only). The Impact of Discrete Component Units The PDA has certain properties held in separate entities that it reports in its financial statements as discrete component units. This category includes LaSalle Senior Housing LLC ("LaSalle"), PPMQB2, PPMQB3, and Western Avenue Senior Housing LLC ("WASH"). The four organizations 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 a new market tax credit ("NMTC") financing programs, which commenced in 2003 (LaSalle), 2011 (PPMQB2), 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 PPMQB2 in 2011 and 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, in which the PDA subleased the property in 2016 from PPMQB3. Based on these agreements, rents are collected by LaSalle, PPMQB2, and WASH. Each entity reimburses the PDA for operating expenses, capital repairs, lease payments, and management fees. Under the PPMQB3 agreement, in 2016, PPMQB3 paid the PDA in advance for all future lease payments through the 50-year term totaling $9,711,324. Under the sublease agreement with PPMQB3, the PDA pays annual lease payments to PPMQB3. All revenues from tenants within the PPMQB3 leased property will be collected by the PDA. The PDA also entered into a "Transfer Agreement" with the PPMQB2, which allows PPMQB2 to grant to the PDA the excess cash over 4% of the aggregate unadjusted basis of the master leased property of PPMQB2. This amount received by the PDA from PPMQB2 is recorded as related party grant revenue in the non-operating revenue section of the statement of revenues, expenses, and changes in fund net position, based on the Governmental Accounting Standards Board ("GASB") criteria of revenue classification. Although classified as non-operating revenue per GASB, this revenue does not have any restrictions, and can be used in the same manner as all other operating revenue generated by the PDA. The amount of related-party grant revenue was $4,224,617 and $3,883,482 for the years ended December 31, 2016 and 2015, respectively. By combining the related party grant revenue amount (which is presented net of related-party grant expense of $71,494, totaling $4,153,123 in 2016) with the operating income (loss) results in operating income (loss) (including non-operating related-party grant revenue) of $1,087,981 and $1,024,195 for the years ended December 31, 2016 and 2015, respectively fs123116

30 Economic and Other Factors Affecting the PDA's Future The PDA will continue to invest in maintaining, managing, and supporting the Market's core infrastructure, mission, and programs. With the completion of the new MarketFront project, 2017 is a year to refine existing programs and operations while incorporating this new section of the Market. Our priorities include: Operations Continued support of quality security, parking, and facilities efforts Marketing Modest expansion of marketing and promotion efforts to celebrate our 110th Anniversary and MarketFront opening with a continued focus on direct community engagement, including social media Events Enhancement of Atrium Kitchen events and development of MarketFront Plaza Arts and Public Activation Programs Farm and Daystall Active recruitment of new farmers, artists, and crafters and growth of the night market Programs Increase capacity and reach of the Education Program Management Oversight of growth and additional needs for the MarketFront Preservation Appropriate Capital Budget and maintenance program allocations to ensure preservation of existing assets Residential Continued focus on delivering a high level of service and resident support and integration of MarketFront apartments When completed by summer 2017, the MarketFront will provide 40 new low-income housing units, 300 new parking spaces, approximately 10,000 square feet of new enclosed retail space, a weather protected plaza canopy for daystall tables, demonstration areas, and events with approximately 30,000 square feet of new public open space. This new building will require expansion and growth in several key operational areas, as well as increased oversight from current PDA management staff. The Pike Place Market continues to demonstrate economic growth with diverse revenue sources that meet and/or exceed local and national trends. Revenue projections for 2017 reflect thoughtful analysis of historic trends and actual performance in recent years. With a continued focus on the health of the Market within the Historic District, it will also be important to stay engaged with projects adjacent to the Market. In 2017, this will include renovations of Steinbrueck Park/Native Park, design development for the Overlook Walk and Building B, and Center City Connector Streetcar progress. 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 or please call (206) fs123116

31 LaSalle and PPMQB2 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. The financial activity of PPMQB3 and WASH was audited in conjunction with the audit of the PDA, as PPMQB3 and WASH are not required to issue separately audited financial statements for the period ended December 31, 2016, however are expected to issue separately audited financial statements for the year ending December 31, fs123116

32 PIKE PLACE MARKET PRESERVATION AND DEVELOPMENT AUTHORITY STATEMENT OF NET POSITION December 31, 2016 ASSETS PDA Discrete Component Units Current Assets Cash and cash equivalents $ 2,775,681 $ 1,156,301 Accounts receivable, tenants 222,338 2,539 Accounts receivable, levy 700,872 Accounts receivable, other 130,429 Accounts receivable, related parties 5,415, ,443 Prepaid master lease expense, current portion 565,935 Prepaid expenses and other assets 286,578 Total current assets 9,531,254 2,249,218 Long-Term Assets Designated cash and cash equivalents 27,135,062 Restricted cash and cash equivalents 8,978,516 2,693,756 Financing lease receivable 2,814,727 Prepaid master lease expense, less current portion 32,073,381 Loans receivable - tax credit projects 32,958,386 Intangible assets, net of accumulated amortization 249,342 Capital assets, net 129,972,867 41,073,748 Total assets $ 211,390,812 $ 78,339,445 LIABILITIES AND NET POSITION Current Liabilities Accounts payable $ 9,474,889 $ 39,239 Accounts payable, related party 524,443 5,378,279 Accrued expenses and deposits payable 1,434,929 23,739 Interest payable 114,667 1,340,625 Current portion of master lease revenue advance 565,935 Current portion of non-capital grant advances 526,316 Current portion of loans payable 19,399 Current portion of bonds payable 635,000 Total current liabilities 13,276,179 6,801,281 Long-Term Liabilities Master lease revenue advance, net of current portion 32,073,381 Non-capital grant advances, net of current portion 4,210,525 Loans payable, net of current portion 455,000 49,651,454 Bonds payable, net of current portion 27,324,626 Total long-term liabilities 64,063,532 49,651,454 Total liabilities 77,339,711 56,452,735 Net Position Net investment in capital assets 101,558,241 Restricted for required reserves 8,978,516 Unrestricted 23,514,344 21,886,710 Total net position 134,051,101 21,886,710 Total liabilities and net position $ 211,390,812 $ 78,339, fs123116

33 PIKE PLACE MARKET PRESERVATION AND DEVELOPMENT AUTHORITY STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION For the Year Ended December 31, 2016 PDA Discrete Component Units Operating Revenue Rent $ 9,652,348 $ 6,781,665 Parking 3,267,409 Management fees 567,993 Security 63,102 Contributions and grants 25, ,455 Miscellaneous 245,334 Total operating revenue 13,821,186 7,128,120 Operating Expenses Property management 10,182,954 2,223,203 Depreciation and amortization 3,604, ,439 Parking 1,675,230 Security 1,306,499 Professional fees 116, ,469 Total operating expenses 16,886,328 3,423,111 Operating income (loss) (3,065,142) 3,705,009 Non-Operating Revenue (Expenses) Interest income 1,004,265 1,363 Forgiveness of loan payable 180,000 Forgiveness of interest 22,750 Related party grant revenue (expense) - PPMQB2 4,224,617 (4,224,617) Related party grant revenue (expense) - PPMQB3 (71,494) 71,494 Levy revenue 1,089,634 Non-capital grant revenue 429,826 Developer fee - PPMQB3 440,000 Developer fee - WASH LLC 264,584 Interest expense (1,129,472) (953,026) Amortization of intangible assets (9,011) Net non-operating revenue (expenses) 6,454,710 (5,113,797) Income before capital grants and contributions 3,389,568 (1,408,788) City of Seattle MarketFront Capital Grant 17,161,134 Market Foundation MarketFront Capital Contribution 3,000,000 State of Washington MarketFront Capital Grant 776,000 Contribution of MarketFront Capital Assets to PPMQB3 (17,034,312) 17,034,312 Change in net position 7,292,390 15,625,524 Net Position, beginning of year 126,758,711 6,011,086 Contributed Capital from Members 250,100 Net Position, end of year $ 134,051,101 $ 21,886, fs123116

34 PIKE PLACE MARKET PRESERVATION AND DEVELOPMENT AUTHORITY STATEMENT OF CASH FLOWS For the Year Ended December 31, 2016 PDA Discrete Component Units Cash Flows from Operating Activities Cash received from tenants for rent $ 9,259,620 $ 6,779,568 Cash received from parking 3,291,936 Cash received from management fees and other customers 871, ,455 Cash received from (paid to) prepaid master lease 9,711,325 (9,711,325) Cash paid to employees (6,666,811) (84,547) Cash paid to suppliers and others (6,335,570) (2,175,785) Net cash flows from operating activities 10,132,096 (4,845,634) Cash Flows from Non-Capital Financing Activities Advances from (to) related parties (249,801) 253,737 Related party grant funds received (paid) 4,153,123 (4,153,123) Developer fees received 440,000 Contributed capital 250,100 Net cash flows from non-capital financing activities 4,343,322 (3,649,286) Cash Flows from Capital and Related Financing Activities Purchases of capital assets (33,124,318) (2,193,142) Developer fees paid (690,000) Levy funds received 884,370 Capital grant funds received 26,488,170 Debt issuance costs (494,753) Interest paid (1,204,156) (738,580) Issuance of loans payable 13,907,569 Repayment of loans payable (19,206) Repayment of bonds payable (612,497) Net cash flows from capital and related financing activities (7,568,431) 9,771,888 Cash Flows from Investing Activities Change in restricted cash (4,932,647) (1,122,756) Contributed capital (100) Issuance of loan receivable (7,310,125) Interest received 878,425 1,363 Net cash flows from investing activities (11,364,447) (1,121,393) Net change in cash and cash equivalents (4,457,460) 155,575 Cash and Cash Equivalents, beginning of year 34,368,203 1,000,726 Cash and Cash Equivalents, end of year $ 29,910,743 $ 1,156,301 Included in the Statement of Net Position as Follows: Cash and cash equivalents $ 2,775,681 $ 1,156,301 Designated cash and cash equivalents 27,135,062 $ 29,910,743 $ 1,156, fs123116

35 PIKE PLACE MARKET PRESERVATION AND DEVELOPMENT AUTHORITY STATEMENT OF CASH FLOWS (Continued) For the Year Ended December 31, 2016 PDA Discrete Component Units Reconciliation of Operating Income (Loss) to Net Cash Flows from Operating Activities Operating income (loss) $ (3,065,142) $ 3,705,009 Adjustments to reconcile operating income (loss) to net cash flows from operating activities Depreciation and amortization 3,604, ,439 Changes in operating assets and liabilities Accounts receivable, tenants and other 68,298 (2,097) Master lease revenue advance/prepaid lease 9,244,993 (9,244,993) Prepaid expenses and other assets (92,190) Accounts payable and accrued expenses 371,221 12,008 Net cash flows from operating activities $ 10,132,096 $ (4,845,634) fs123116

36 NOTES TO FINANCIAL STATEMENTS Note 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 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. Levy Renovation Some of the Market buildings are approximately 100 years old, and the last major renovation was completed in the late 1970s. At that time, most Market buildings were purchased by the City and transferred to the PDA. In 2017, the PDA is expected to complete a major renovation to the Market that has been ongoing since 2009 and was financed through a City-approved $73 million property tax levy ("the Levy"). These improvements included seismic retrofitting, mechanical and electrical upgrades, major plumbing and building repairs and replacements, as well as public amenities such as new public restrooms and elevators. As of December 31, 2016, $1.7 million of the total available Levy funds have not yet been earned or collected by the PDA and are, therefore, excluded from these financial statements. MarketFront Project With the Levy renovation project substantially completed, in 2015, the PDA began construction on a new project: the development of the MarketFront. The MarketFront will encompass a low-rise, mixed-use development that will provide parking for the Market and waterfront, low-income housing for seniors, expanded social services, and added Market retail space. The site will also provide generous accessible public open space and expansive views of Elliott Bay while providing a critical new connection between the Market and the City of Seattle's central waterfront project ("Central Waterfront"), which will emerge after the demolition of the Alaskan Way Viaduct. Construction began in June 2015 and is scheduled for substantial completion by summer The total cost of the project is estimated to be approximately $73 million. Funding for this amount will come from various sources including PDA reserves, the 2015 PDA bond issuance (see Note 7), City of Seattle and State of Washington grants, low-income housing and new markets tax credit investors (see Note 4, PPMQB3 and WASH), and a capital fundraising campaign led by the Pike Place Market Foundation ("the Market Foundation"). Capitalized expenditures related to the MarketFront project as of December 31, 2016, totaled approximately $57.7 million and consist of architectural design and construction costs. At total of $33.5 million of costs are capitalized at the PDA. As described in Note 4, Pike Place Market QALICB3 ("PPMQB3") and Western Avenue Senior Housing, LLC ("WASH") have capitalized the remaining construction costs of $17.0 million and $7.2 million, respectively, related to the MarketFront project fs123116

37 Discretely Presented Component Units LaSalle Senior Housing LLC ("LaSalle"), Pike Place Market QALICB2 ("PPMQB2"), PPMQB3, and WASH are considered component units of the PDA (collectively "the 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, and the sole corporate member of PPMQB2 and PPMQB3, the PDA is financially accountable for and oversees the day-to-day operations of these separate legal entities. The Component Units report on a fiscal year-end consistent with the PDA primary government. The financial statements of the Component Units are presented in accordance with accounting principles (as opposed to governmental accounting principles) generally accepted in the United States, and the financial statements of LaSalle and PPMQB2 were audited separately. Copies of these financial statements may be obtained by contacting the PDA. The financial activity of PPMQB3 and WASH was audited in conjunction with the audit of the PDA, as PPMQB3 and WASH are not required to issue separately audited financial statements for the period ended December 31, However, they are expected to issue separately audited financial statements for the year ending December 31, The Component Units are also discussed in Note 11. Financial Statement Presentation The financial statements of the PDA are presented in accordance with governmental accounting principles generally accepted in the United States. As noted above, the financial statements of the Component Units are presented in accordance with accounting principles generally accepted in the United States. 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. Cash and Cash Equivalents For cash flow purposes, highly liquid investments with an original maturity of less than three months that are not restricted are considered cash equivalents. Designated and restricted cash and cash equivalents are described in Notes 2 and 3. The PDA places cash and cash equivalents with banks and the State of Washington Local Government Investment Pool ("the LGIP"). The LGIP is an external investment pool, of which all investments in and distributions from, are reported at amortized cost (as opposed to fair value), as defined by Governmental Accounting Standard No. 79. Accordingly, participants' balances in the LGIP are not subject to interest rate risk, as the weighted average maturity of the portfolio will not exceed 90 days, and therefore are considered cash and cash equivalents for the purpose of these financial statements. According to Governmental Accounting Standards guidelines, the balances are also not subject to custodial credit risk. The credit risk of the LGIP is limited as most investments are either obligations of the United States government, government-sponsored enterprises, or insured demand deposit accounts and certificates of deposit. Investments or deposits held by the LGIP are all classified as Category 1 risk level investments. They are either insured or held by a third-party custody provider in the LGIP's name. At December 31, 2016, the PDA had other cash and cash equivalents in excess of federally insured limits fs123116

38 Accounts Receivable Accounts receivable from tenants are due for rent and related expenses and are generally unsecured. Accounts receivable from the Levy and MarketFront capital grants and contributions consist of unreimbursed capital expenditures from the City under the Levy and MarketFront project. Accounts receivable from others are due for the reimbursement of expenses. Related party receivables are discussed in Note 4. 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, 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 6. Debt Premiums and Discounts Debt premiums and discounts are netted against the debt payable and are deferred and amortized over the life of the bond using the effective interest method. Net Position Net position is comprised 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, 2016, the total invested in capital assets, net of accumulated depreciation, was $129,972,867 and related debt was $28,414,626. 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 of $8,978,516 as of December 31, 2016 (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." fs123116

39 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 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. Levy revenue is considered non-operating given the non-recurring nature of the project to which it relates. Related party grant revenue (expense) is considered non-operating given that it is discretionary in nature and calculated based on a non-operating measure. Other Certain other revenue-producing capital grants and contributions are required to be presented below non-operating revenue and expenses in accordance with Governmental Accounting Standard No. 34. City MarketFront capital grants and contributions revenue is recognized when capital expenditures are incurred and determined to be qualified as reimbursable, or at the time of donation in the case of donated capital assets (revenue or expense). Rent 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 five years and are noncancelable (see Note 9). Master Lease Revenue Advance On March 2, 2011, the PDA entered into a 55-year lease agreement allowing PPMQB2 to lease six buildings within the Pike Place Market Historic District. The PDA received $25,648,261 from PPMQB2 for the lease of the six buildings for the 55-year period from March 2, 2011, to February 28, The master lease revenue advance is being recognized on the straight-line method over the life of the lease. Lease revenue in 2016 was $466,332, and lease revenue over each of the following full years under the agreement is expected to be $466,332. 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, The master lease revenue advance is being recognized on the straight-line method over the life of the lease. Lease revenue will not be recognized until 2017 when the MarketFront project is completed and tenants occupy the space. As the building is expected to be in operation on June 28, 2017, lease revenue is expected to be recognized for six months in 2017 in the amount of $99,603, and lease revenue over each of the following full years under the agreement is expected to be $199, fs123116

40 The current and non-current portions of the prepaid master lease payments are presented as follows in the statement of net position at December 31, 2016: Current portion of master lease revenue advance $ 565,935 Master lease revenue advance, net of current portion 32,073,381 $ 32,639,316 These amounts are considered assets of PPMQB2 and PPMQB3 (the discretely presented component units) as they represent lease payments made in advance. The amounts have been collected in advance by the PDA, so they are considered liabilities by the PDA. 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, 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. Use of Estimates The preparation of financial statements in conformity with governmental accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and 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. Note 2. Cash and Cash Equivalents The PDA's cash and cash equivalents are categorized to give an indication of the level of custodial risk assumed by the PDA. Category 1 includes cash and cash equivalents (including those at amortized cost held by the LGIP) that are insured or registered and are held by the PDA or its agent in the PDA's name. All cash and cash equivalents at December 31, 2016, are Category 1. On December 31, 2016, the cost basis of cash and cash equivalents was as follows: Cost Category Investment in State of Washington LGIP $ 35,133,560 1 Money market and checking accounts 3,755,699 1 $ 38,889, fs123116

41 These amounts are presented in the statement of net position as follows: Cash and cash equivalents $ 2,775,681 Designated cash and cash equivalents 27,135,062 Restricted cash and cash equivalents 8,978,516 $ 38,889,259 The composition of designated cash and cash equivalents is as follows: MarketFront project reserve $ 17,457,860 Capital equipment and capital budget carryovers 7,631,432 Minimum operating reserve 1,357,064 Low-income housing reserve 383,995 Reserve for contingencies 304,711 $ 27,135,062 The composition of restricted cash and cash equivalents is discussed in Note 3. Note 3. Restricted Cash and Cash Equivalents Restricted cash and cash equivalents consist of the following: MarketFront project costs Consists of funds received from various sources restricted for the purpose of construction costs related to the MarketFront project. MarketFront project retainage reserve Consists of 5% of construction costs incurred as of December 31, 2016, related to the MarketFront project that will be paid at the end of the project period bond reserves Debt service reserve funds for special obligation and refunding bonds issued in Low-income housing reserves Funds restricted for supporting and maintaining the affordability of certain low-income housing units. Security deposits Funds held as tenant security deposits. Senior Center reserves Funds reserved for Pike Market Senior Center capital maintenance and replacement bond reserves Debt service reserves funds for bonds refunded in Replacement reserves Funds restricted for Sanitary Market capital replacement fs123116

42 The composition of restricted cash and cash equivalents is as follows: MarketFront project costs $ 3,276,489 MarketFront project retainage reserve 2,195, bond reserves 1,870,087 Low-income housing reserves 512,255 Security deposits 411,115 Senior Center reserves 331, bond reserves 304,082 Replacement reserves 77,889 $ 8,978,516 Note 4. 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 Market Foundation owned the other 99.99% interest, and in 2005, the Market Foundation transferred its interest in LaSalle to an investment company called National Equity Fund Partners ("the NEFP"). In addition, the NEFP obtained the right to receive low-income housing tax credits resulting from this low-income residential housing project. In exchange, the 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, 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 $125,840 in Interest receivable from LaSalle (included with the unpaid principal balance to make up the financing lease receivable on the statement of net position) was $1,034,727 at December 31, 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, Beginning 2058, annual rent payments will be $100 through 2085, assuming the lease arrangement is still in existence. As of December 31, 2016, 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 $85,571 in Accounts receivable related to unreimbursed expenditures and unpaid management fees at December 31, 2016, was $70, fs123116

43 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. 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 subsidizes a portion of its administrative office expenses. The total subsidized expenses incurred during 2016 were $424,427. Other related administrative expenses of the Market Foundation are initially paid by the PDA and subsequently reimbursed by the Market Foundation. Total reimbursable other administrative expenses paid by the PDA on behalf of the Market Foundation were $378,340 in Accounts receivable from the Market Foundation on December 31, 2016, was $37,077. Although the Market Foundation is a related party, due to lack of control, it is not included in these financial statements. Pike Place Market QALICB2 (PPMQB2) PPMQB2 is a Washington state nonprofit corporation formed in 2010 to obtain funds under the NMTC program, which commenced in Certain board members are members of the PDA Council and the PDA is the sole corporate member of PPMQB2. During 2014, the PDA leased six buildings (Corner, Economy, Sanitary, Soames-Dunn, Stewart, and Triangle) to PPMQB2 for purposes of renovating and rehabilitating them through the NMTC financing program ("the PPMQB2 Agreement"). All rent revenue is collected by the PDA and distributed to PPMQB2. Certain administration expenses paid by the PDA on behalf of PPMQB2 are reimbursed by PPMQB2. During 2016, the following transactions occurred between the PDA and PPMQB2: The PDA collected $6,475,979 in rent revenue from the tenants and owes PPMQB2 $524,443 related to these collections at December 31, 2016, presented as accounts payable, related party. The PDA earned $466,332 in rent revenue relating to the leasing of the six buildings to PPMQB2 mentioned above. The PDA earned and received a management fee of $482,422. Under a transfer agreement ("the Transfer Agreement") with the PDA, PPMQB2 is required to maintain 4% of the unadjusted bases in property in non-qualified financial property ("NQFP"), as defined by the Treasury Regulation Section (d)(i)(E) (effectively cash and cash equivalents), and NQFP held in excess of this threshold is to be granted to the PDA. During 2016, $4,224,617 was granted and paid to the PDA under the terms of the Transfer Agreement. Certain administrative and operating expenses initially paid by PDA and subsequently reimbursed by PPMQB2. As of December 31, 2016, $906,224 was receivable for unreimbursed amounts fs123116

44 Under the terms of the PPMQB2 Agreement, the PDA earns rent revenue for the six buildings, and an annual management fee through Future revenue to be earned under the PPMQB2 Agreement are variable based on future rentals. Additionally, under the Agreement, the PDA has guaranteed any future operating deficits PPMQB2 may incur and the PDA has guaranteed payment of any unearned NMTCs to US Bancorp Community Development Association Bank ("U.S. Bank," the NMTC investor) in the event of an NMTC recapture event. No recapture events occurred in The PDA and U.S. Bank have entered into a put/call option agreement to take place at the end of the seven-year NMTC reconveyance period ending February Under the agreement, U.S. Bank can exercise a put option to sell all interest in the PPM Investment Fund, LLC ("PPM"), a limited liability company wholly-owned by U.S. Bank, for $1,000 to the PDA. If U.S. Bank does not exercise the put option within four months of the end of the seven-year period, the PDA has an additional six months in which it can exercise a call option to purchase the interest of PPM at an appraised fair market value. As a result, if the option is exercised, the outstanding loan balances (of PPMQB2) are expected to be forgiven in consideration of PPMQB2 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. PPMQB2 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 Certain PPMQB3 board members are members of the PDA Council, and the PDA is 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, Rental operations within MarketFront commercial space have not begun as of December 31, 2016, as construction is not expected to be completed until All rent revenue from tenants will be collected and earned by the PDA, and the PDA will pay an annual fixed sublease payment to PPMQB3. Certain administration expenses paid by the PDA on behalf of PPMQB3 are reimbursed by PPMQB3. During 2016, the following transactions occurred between the PDA and PPMQB3: The PDA collected $9,711,325 from PPMQB3 as an advanced master lease payment for the entire lease term. See Note 1. The PDA earned a developer fee of $440,000 from PPMQB3. Certain administrative and operating expenses were initially paid by PDA on behalf of PPMQB3 in As of December 31, 2016, $58,705 was receivable for unreimbursed amounts. The PDA granted $17,105,806 to PPMQB3 as required under the PPMQB3 Agreement, of which $17,034,312 consisted of construction costs paid on behalf of PPMQB3, and the remaining $71,494 as an operating grant fs123116

45 Under terms of the sublease from PPMQB3, the PDA is required to make fixed annual sublease payments. No amounts were paid or due in Future minimum payments are as follows for the years ending December 31: 2017 $ 370, , , , ,438 Thereafter 20,406,590 $ 22,370,970 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 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 Under the agreement, 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 MSNMSC, 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 the put/call option is exercised. PPMQB3 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. 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 Under terms of the agreement, WASH pays the PDA a fixed annual amount of $10. 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. Rental operations within MarketFront residential space have not begun as of December 31, 2016, as construction is not expected to be completed until fs123116

46 Certain administration expenses paid by the PDA on behalf of WASH are reimbursed by WASH. During 2016, the following transactions occurred between the PDA and WASH: As of December 31, 2016, $4,342,663 of unreimbursed expenses (including the developer fee below) is receivable from WASH at December 31, The PDA earned a developer fee of $264,584 from WASH. 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. Related party receivables (excluding the financing lease receivable from LaSalle) as of December 31, 2016, are as follows: Due from LaSalle $ 70,687 Due from the Market Foundation 37,077 Due from PPMQB2 906,224 Due from PPMQB3 58,705 Due from WASH 4,342,663 Accounts receivable, related parties $ 5,415,356 Note 5. Loans Receivable Tax Credit Projects In 2011, the PDA loaned $25,648,261 to Pike Place Market Investment Fund, LLC ("PPM"). PPM used the loan proceeds, through other intermediary entities, to make a NMTC loan to PPMQB2. The loan bears interest at 2.5%. Beginning March 31, 2018 (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 on March 2, 2041 (maturity). The loan is effectively secured by the capital investments of PPMQB2. During 2016, the PDA earned and received $641,205 of interest on this loan receivable. 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 1.0%. 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 2016, the PDA earned and received $42,360 of interest on this loan receivable fs123116

47 Loans receivable were as follows at December 31, 2016: Loan related to PPMQB2 $ 25,648,261 Loan related to PPMQB3 7,310,125 Loans receivable $ 32,958,386 Note 6. Capital Assets The following is a summary of capital assets at cost for 2016: Description Balance, December 31, 2015 Additions Grant to PPMQB3 Retirements Transfers Balance, December 31, 2016 Land $ 5,268,168 $ - $ - $ - $ - $ 5,268,168 Construction in progress 19,699,781 33,821,314 (17,034,312) (1,721,620) 34,765,163 Buildings 40,559,664 40,559,664 Building improvements 85,900,843-1,624,828 87,525,671 Equipment 1,035,485 - (3,449) 96,792 1,128,828 Capital improvement plan 530, ,883 Total cost 152,994,824 33,821,314 (17,034,312) (3,449) - 169,778,377 Accumulated Depreciation Buildings 14,386, ,071 15,194,405 Building improvements 20,558,166 2,701,758 23,259,924 Equipment 821,861 82,402 (3,449) 900,814 Capital improvement plan 437,682 12, ,367 Total accumulated depreciation 36,204,043 3,604,916 - (3,449) - 39,805,510 Capital assets, net $ 116,790,781 $ 30,216,398 $ (17,034,312) $ - $ - $ 129,972,867 Construction in progress consists primarily of construction equipment, materials, and service costs related to the MarketFront project. Construction in progress will begin being depreciated on the date the asset is placed in service. The PDA has outstanding construction commitments related to the MarketFront project of approximately $7,100,000 as of December 31, Note 7. Long-Term Liabilities Loans Payable 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 (all of which was outstanding on December 31, 2016). 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 when 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, fs123116

48 In 2006, the PDA borrowed $180,000 from the City through a promissory note for the purpose of financing a portion of the costs of development of the Community Facility to be used to serve primarily low- to moderate-income persons through programs performed by LaSalle. The promissory note was forgiven in its entirety in Following are the changes in loans payable for the year ended December 31, 2016: Balance, Balance, Loans Payable December 31, 2015 Additions Loan Forgiven December 31, 2016 Current Portion City of Seattle loan $ 455,000 $ - $ - $ 455,000 $ - City of Seattle loan 2 180,000 (180,000) Total loans payable $ 635,000 $ - $ (180,000) $ 455,000 $ - Bonds Payable Summary Bonds payable for the year ended December 31, 2016, are as follows: Refunding Bonds - Revenue 2009 PDA Refunding Bonds, with interest at 5%, interest payments made semi-annually, and remaining annual principal payments ranging from $370,000 to $435,000 through May 1, 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 $265,000 to $1,380,000 through December 1, $ 2,008,333 19,195,000 Special Obligation Bonds 2015B - MarketFront Project Series 2015B PDA Special Obligation Bonds, with interest at 5%, interest payments made semi-annually, with one balloon principal payment of $4,550,000 due on December 1, ,550,000 25,753,333 Less: current portion (635,000) Plus unamortized premiums on series 2015A and 2015B bonds payable 2,206,293 $ 27,324,626 The PDA is required to maintain certain debt service reserve levels for each of the outstanding bond series. All reserve requirements were met in fs123116

49 Bonds Payable Details Refunding Bonds Revenue The PDA has issued and refunded various series of tax-exempt Special Obligation Revenue Bonds, beginning in 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 bonds are secured by restricted cash for 2015 bond reserves and, effectively, the unrestricted net position of the PDA. Following are the changes in bonds payable for the year ended December 31, 2016: Bonds Payable Balance, December 31, 2015 Additions Repayments & Amortization Balance, December 31, 2016 Current Portion Series 2009 bonds $ 2,365,830 $ - $ (357,497) $ 2,008,333 $ 370,000 Series 2015A bonds 19,450,000 (255,000) 19,195, ,000 Series 2015B bonds 4,550,000 4,550,000 26,365,830 - (612,497) 25,753, ,000 Unamortized bond premiums 2,418,394 (212,101) 2,206,293 Total bonds payable $ 28,784,224 $ - $ (824,598) $ 27,959,626 $ 635,000 The principal and interest maturities of bonds payable for the years ending December 31 are as follows: Principal Interest Total 2017 $ 635,000 $ 1,281,500 $ 1,916, ,000 1,249,125 1,924, ,000 1,214,875 1,919, ,290,000 1,179,125 6,469, , ,125 1,852, ,175,000 4,075,000 7,250, ,040,000 3,199,500 7,239, ,160,000 2,082,750 7,242, ,135, ,750 5,792,750 $ 25,753,333 $ 15,853,750 $ 41,607, fs123116

50 Note 8. Employee Benefit Plan The PDA has a defined contribution retirement plan covering substantially all employees. The plan provides for voluntary after-tax contributions by employees and contributions by the PDA at the discretion of the PDA's governing Council. The PDA incurred approximately $345,000 in pension expense in Note 9. Future Rental Revenue The PDA leases space to commercial tenants under noncancelable agreements. Terms of leases are generally up to five 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 for the years ending December 31 are approximately as follows: 2017 $ 1,736, ,335, ,049, , ,367 Thereafter 332,255 $ 5,692,309 Note 10. Contingencies 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. Note 11. Discretely Presented Component Units As discussed in Note 1, LaSalle, PPMQB2, PPMQB3, and WASH are considered component units of the PDA, discretely presented in a separate column on the face of the PDA's basic financial statements fs123116

51 Summarized discretely presented component unit statement of net position information as of December 31, 2016, is as follows: LaSalle Senior Housing LLC Pike Place Market QALICB2 Pike Place Market QALICB3 Western Avenue Housing LLC Total Assets Current assets Cash and cash equivalents $ - $ 1,153,474 $ 323 $ 2,504 $ 1,156,301 Accounts receivable, tenants 2,539 2,539 Accounts receivable, related parties 524, ,443 Prepaid master lease, current portion 466,332 99, ,935 Total current assets 2,539 2,144,249 99,926 2,504 2,249,218 Restricted cash 1,254, , , ,772 2,693,756 Prepaid master lease, less current portion 22,461,659 9,611,722 32,073,381 Intangible assets, net of accumulated amortization 249, ,342 Capital assets, net 7,227,908 9,648,674 17,034,312 7,162,854 41,073,748 Total assets $ 8,733,829 $ 34,504,522 $ 27,011,964 $ 8,089,130 $ 78,339,445 Liabilities and Net Position Current liabilities Accounts payable $ 24,655 $ - $ - $ 14,584 $ 39,239 Accounts payable, related party 70, ,224 58,705 4,342,663 5,378,279 Deposits payable 23,739 23,739 Interest payable 1,321,535 19,090 1,340,625 Current portion of loans payable 19,399 19,399 Total current liabilities 1,460, ,224 58,705 4,376,337 6,801,281 Long-term liabilities Loans payable, net 3,517,814 32,720,824 9,950,626 3,462,190 49,651,454 Total liabilities 4,977,829 33,627,048 10,009,331 7,838,527 56,452,735 Net position Unrestricted 3,756, ,474 17,002, ,603 21,886,710 Total liabilities and net position $ 8,733,829 $ 34,504,522 $ 27,011,964 $ 8,089,130 $ 78,339, fs123116

52 Summarized discretely presented component unit statement of revenues, expenses, and changes in fund net position information for the year ended December 31, 2016, is as follows: LaSalle Senior Housing LLC Pike Place Market QALICB2 Pike Place Market QALICB3 Western Avenue Housing LLC Total Operating Revenue Rent $ 305,686 $ 6,475,979 $ - $ - $ 6,781,665 Contributions and grants 346, ,455 Total operating revenue 652,141 6,475, ,128,120 Operating Expenses Property management 456,578 1,766,625 2,223,203 Depreciation and amortization 407, , ,439 Professional fees 30, ,422 1, ,469 Total operating expenses 894,482 2,526,374 1, ,423,111 Operating income (loss) (242,341) 3,949,605 (1,820) (435) 3,705,009 Non-Operating Revenue (Expenses) Interest income ,363 Interest expense (164,625) (686,949) (101,452) (953,026) Related party grant revenue (expense) (4,224,617) 71,494 (4,153,123) Amortization of intangible assets (9,011) (9,011) Net non-operating revenue (expenses) (173,636) (4,911,240) (29,859) 938 (5,113,797) Income before capital grants and contributions (415,977) (961,635) (31,679) 503 (1,408,788) Contribution of MarketFront Capital assets 17,034,312 17,034,312 Change in net position (415,977) (961,635) 17,002, ,625,524 Net Position, beginning of year 4,171,977 1,839,109 6,011,086 Capital Contributions 250, ,100 Net Position, end of year $ 3,756,000 $ 877,474 $ 17,002,633 $ 250,603 $ 21,886, fs123116

53 S U P P L E M E N T A R Y R E P O R T S A N D S C H E D U L E S I N A C C O R D A N C E W I T H G O V E R N M E N T A U D I T I N G S T A N D A R D S A N D T H E U N I F O R M G U I D A N C E fs123116

54 INDEPENDENT AUDITORS' 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 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 and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements and the aggregate discretely presented component units of the Pike Place Market Preservation and Development Authority ("the PDA"), a public governmental corporation, as of and for the year ended December 31, 2016, and the related notes to the financial statements, which collectively comprise the PDA's basic financial statements, and have issued our report thereon dated. 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 opinion 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. 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.

55 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 PDA'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 PDA's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. 33

56 INDEPENDENT AUDITORS' 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, The PDA's major federal programs are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants 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; 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 each major federal program. However, our audit does not provide a legal determination of the PDA's compliance.

57 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 each of its major federal programs for the year ended December 31, 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 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. 35

58 PIKE PLACE MARKET PRESERVATION AND DEVELOPMENT AUTHORITY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended December 31, 2016 CFDA Current Year Federal Grantor/Program Title Number Other ID Number Expenditures Department of Agriculture Agricultural Marketing Service Farmers' Market and Local Food Promotion Program FMPPX-WA-0174 $ 11,477 Department of Housing and Urban Development Office of Housing - Federal Housing Commissioner Section 8 Project-Based Cluster Passed through the Bremerton Housing Authority - Contract Management Services Section 8 Housing Assistance Payments Program* WA ,478 Section 8 Housing Assistance Payments Program* WA ,527 Total Section 8 Project Cluster 839,005 Housing Voucher Cluster Passed through the Seattle Housing Authority Section 8 - Housing Choice Vouchers WA001VO ,222 Section 8 - Housing Choice Vouchers WA001VO ,744 Total Housing Voucher Cluster 237,966 $ 1,088,448 * Major program tested. See Notes to Schedule of Expenditures of Federal Awards fs123116

59 NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Note 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, The information in the schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) 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 assets, or cash flows of the PDA. Note 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. Note 3. Indirect Cost Rate The PDA has elected not to use the 10% de minimus indirect cost rate as allowed under the Uniform Guidance fs123116

60 PIKE PLACE MARKET PRESERVATION AND DEVELOPMENT AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2016 A. Summary of Audit Results Financial Statements: Type of auditors' report issued: Internal Control Over Financial Reporting: Material weaknesses identified: Significant deficiencies identified not considered to be material weaknesses: Noncompliance material to financial statements noted: Federal Awards: Material weaknesses identified: Significant deficiencies identified not considered to be material weaknesses: Type of auditors' report issued on compliance for major programs: Any audit findings disclosed that are required to be reported: Unmodified No None reported No No None reported Unmodified No Identification of major programs: CFDA Number Name of Federal Program Section 8 Housing Assistance Payments Program Dollar threshold used to distinguish between Type A and B programs: $ 750,000 Auditee qualified as low-risk auditee: Yes B. Findings - Financial Statement Audit None C. Findings and Questioned Costs - Major Federal Awards Program Audit None fs123116

61 PROPOSED RESOLUTION Approval of 2016 PDA Audited Financial Statements June 2017 NOW, THEREFORE, BE IT RESOLVED that the PPMPDA Council hereby approves the 2016 PDA financial statements, audited by Peterson Sullivan LLP, Certified Public Accountants, covering the period beginning January 1, 2016 through December 31, Gloria Skouge, Secretary/Treasurer Date Date Approved by Council: For: Against: Abstained: Pike Place Market Preservation & Development Authority (PDA) pikeplacemarket.org P: F: Pike Street, Room 500 Seattle, WA 98101

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71 Garage Revenue and Budget Impacts FINANCE AND ASSET MANAGEMENT COMMITTEE JUNE 20, 2017

72 2017 Projections 2017 Budget projected a modest 2.6% increase in existing garage revenue and an additional $800,000 in revenue from the new garage. Assumptions included new garage opening in January of 2017 and an increase in the hourly parking rate of $1. 2

73 First and Second Quarter Budget Impacts State subsidy of $3/hr parking rate ended in January of 2017 hourly rate correction occurred on March 1, 2017 to $4/hr Record wet weather in January, February and March Homeless encampment on west side of garage for most of January Significant weekend protest activity that disrupted access to downtown in January New garage opened later than expected on May 12 th Alaskan Way reconfigured for final piece of Seawall construction Parking industry as a whole down in the region 3

74 Year to Year Revenue Comparisons 4

75 YTD Detailed Analysis Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total YTD , , , , , , , , , , , ,503 1,618, , , , , , , , , , , , , ,980 1,820, , , , , , , , , , , , ,090 83,910 1,767, , ,901 95, , , , , , , , ,651 90, ,926 1,526, , , ,177 94, , , , , , , , , ,371 1,814, , , , , , , , , , , , , ,046 2,001, , , , , , , , , , , , , ,173 2,160, , , , , , , , , , , , , ,356 2,273, , , , , , , , , , , , , ,073 2,562, , , , , , , , , , , , , ,404 2,873,668 1,048, , , , , , , , , , , , ,754 2,966,959 1,108, , , , , , , ,828 5

76 YTD Detailed Analysis June Garage Revenue June 2016 vs. June 2017 June1-June /(-) % Daily 157, , (4,414.00) -3% Monthly 18, , , % Total 175, , % Only Weekends /(-) % Daily Revenue: 1st 23, , , % 2nd 34, , (690.00) -2% 3rd 31, , % 91, , , % 6

77 Year to Year Surface Lot Comparisons 7

78 Marketing and Promotion Improve signage on Waterfront and Western Ave - underway Add garage ambassadors at peak times Enhance parking message in all promotions underway Dedicated marketing dollars just to affordable/accessible parking Early Bird bring back Early Bird while capacity allows already done Monthly parking ensure that we are within approved limits Reduce 4-10hr rate to soften sticker shock/disincentive in process 8

79 Budget Realities If YTD trend holds it will require a reduction in projected revenue and corresponding adjustment in expense Ongoing national and regional economic uncertainty Period of economic growth from 2012 through 2016 appears to be reaching a peak PDA coming off of two large scale projects over the last 8 years funded with significant external resources 9

80 Budget Cuts Under Consideration If garage revenue trends do not improve materially by mid-july the following budget cuts may be necessary: 3% cut in all departments Defer major equipment purchases and upgrades Reduce Marketing programs post 110 th Anniversary Reduce projected CRRF year-end contribution Streamline Front Office Management already underway Eliminate community transit subsidy program assumes preservation of early bird parking Other ideas? 10

81 Next Steps Will track parking revenue closely and return in July with updates and recommended budget adjustments as necessary 11

82 PROPOSED RESOLUTION Authorization for Contract Authority Emergency Responder System Fairley Building & LaSalle Hotel June 2017 WHEREAS, WHEREAS, WHEREAS, the Pike Place Market Preservation and Development Authority (PPMPDA) was chartered by the City of Seattle pursuant to RCW 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, in order to maintain the viability of the Pike Place Market buildings, the PPMPDA has been directed by the Seattle Fire Department (SFD) to comply with Section of the Seattle Fire Code requirement and upgrade all buildings over 50,000sf with an emergency responder system. This system is designed to ensure continuous communication on the Public Safety 800 MHz bandwidth during a disaster; and, two buildings have been found out of compliance by SFD: The Fairley Building and the LaSalle Hotel; and, WHEREAS, the PPMPDA has executed a competitive bid process to meet Seattle Fire Code Section requirement. A total of six vendors were solicited, three responded, two submitted and three remain unresponsive; and, NOW, THEREFORE, BE IT RESOLVED that the PPMPDA Council authorizes the PPMPDA Executive Director or his designee to enter into a contract with Skyline Communication in an amount not to exceed $133,971 for work to be compliant. The funds for this project will be drawn from the Capital Projects Budget, 2017 COMMULTI Emergency Responder System - GL Gloria Skouge, Secretary/Treasurer Date Date Approved by Council: For: Against: Abstained: Pike Place Market Preservation & Development Authority (PDA) info@pikeplacemarket.org pikeplacemarket.org P: F: Pike Street, Room 500 Seattle, WA 98101

83 Proposed Resolution Authorization for Contract Authority Emergency Responder System Fairley Building & LaSalle Hotel June 2017 Proposed Resolution Costs: $133,971 Project: Account: 2017 COMMULTI Emergency Responder System Capital Projects Accounting Code: Project Description: Execution of all preparatory tasks, supervisory coordination of, as well as, procurement, fabrication and installation of an Emergency Responder System to meet Seattle Fire Code requirement Scope: Scope includes installation of 2 Bidirectional Amplifiers, 14 roof antenna, 13 Directional Couplers, 3x backup battery packs, 42 connectors, Lighting Arrestor, 1400 lf of cable and conduit, permits & testing for compliance, and As-builts. Bid Process: The PPMPDA has contracted two consultants to independently validate the extent and applicability of the requirements and how best to meet this Seattle fire code section. Both consultants performed tests that confirmed the failure status. These consultants also researched other possible exclusionary conditions like Grandfathering or Historic status that were rejected by the SFD as not applicable to this particular fire life-safety requirement. Bid process: Solicited six bids. Received two responsive, qualified bids: Skyline Communications $133,971 ($110,720 w/ Taxes and 10% Contingency) Day Wireless $212,150 Teknon Responsive - but did not submit Puget Sound Instruments Unresponsive Bearcom Unresponsive DAS Simplified Unresponsive

84 PROPOSED RESOLUTION Authorization for Contract Authority MarketFront Elevator Security Upgrade June 2017 WHEREAS, WHEREAS, WHEREAS, the Pike Place Market Preservation and Development Authority (PPMPDA) was chartered by the City of Seattle pursuant to RCW 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, in order to maintain the viability and security of the Pike Place Market buildings, the PPMPDA has determined that elevator hoist cars of the Waterfront building need a security upgrade to restrict afterhours operations to residents and authorized personnel only; and, the PPMPDA has reached out to the proprietary network installer and elevator company for the installation of FOB card readers inside the elevator hoist cars and on each respective floor landings; and, NOW, THEREFORE, BE IT RESOLVED that the PPMPDA Council authorizes the PPMPDA Executive Director or his designee to enter into a contract with Reliable Security Inc. in an amount not to exceed $16,377 for work to upgrade elevator security. The funds for this project will be drawn from the Capital Projects Budget, 2016 Market Front GL for Post construction - GL Gloria Skouge, Secretary/Treasurer Date Date Approved by Council: For: Against: Abstained: Pike Place Market Preservation & Development Authority (PDA) info@pikeplacemarket.org pikeplacemarket.org P: F: Pike Street, Room 500 Seattle, WA 98101

85 Proposed Resolution Authorization for Contract Authority MarketFront Elevator Security Upgrade June 2017 Proposed Resolution Costs: $16,377 Project: Account: 2016 COMSOA MarketFront Elevator Security Upgrade MarketFront Post construction Accounting Code: Project Description: Scope: Execution of all preparatory tasks, supervisory coordination of, as well as, procurement and installation of elevator security features to restrict operation during non-business hours. Scope includes expansion of controller panel, installation of wall and elevator car switch readers, labor and programing of elevator cars to new security protocols for residents, commercial and special events tenants. Bid Process: Proprietary vendor: Reliable Security: $16,377 ($14,241 w/ Taxes and 15% Contingency)

86 PROPOSED RESOLUTION Request for Approval to Subdivide Office Space June 2017 WHEREAS, WHEREAS, WHEREAS, the Pike Place Market Preservation and Development Authority (PPMPDA) was chartered by the City of Seattle pursuant to RCW 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, the office space known as 93 Pike Street, #315 consisting of approximately 1,520 square feet is currently leased to Cedar River Group, who wishes to downsize its business and requirements for office space. The Landlord and Tenant have agreed to downsize the Lease Premises to allow for two smaller office spaces with one approximate 920 square feet space leased by Cedar River Group and one approximate 600 square foot additional office space with the tenant yet to be determined; and, the PPMPDA has executed a competitive bid process to subdivide the office into two leasable office spaces to include, but not limited to, the addition of a demising wall and doorway and related finish work. NOW, THEREFORE, BE IT RESOLVED that the PPMPDA Council authorizes the PPMPDA Executive Director or his designee to enter into a contract with Experienced Construction in an amount not to exceed $21, for work to subdivide office space in the Economy Market building with the funds for this project coming from the Commercial Tenant Improvement Budget GL Gloria Skouge, Secretary/Treasurer Date Date Approved by Council: For: Against: Abstained: Pike Place Market Preservation & Development Authority (PDA) info@pikeplacemarket.org pikeplacemarket.org P: F: Pike Street, Room 500 Seattle, WA 98101

87 Proposed Resolution Request for Approval to Subdivide Office Space June 2017 Proposed Resolution Costs: $21, Project: Account: Subdivide Office Space Commercial Tenant Improvements Accounting Code: Project Description: Scope: Bid Process: Addition of a demising wall and door, to include demolition, minor electrical work, paint, trim and carpet tile installation. Scope is to subdivide current office space into two leasable office spaces. Bid process: Solicited Four (4) bids, and received one qualified bid: Experienced Construction $17, including WSST B & K Walkinfaith Handyman Services Declined to bid Pro.com Declined to bid GBO Construction Services Unresponsive

88 PROPOSED RESOLUTION Authorization for Contract Authority Installation of Anti-Graffiti Film on MarketFront Windows June 2017 WHEREAS, WHEREAS, WHEREAS, the Pike Place Market Preservation and Development Authority (PPMPDA) was chartered by the City of Seattle pursuant to RCW 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, in order to maintain the viability of the Pike Place Market buildings the PPMPDA has determined that the exterior commercial space windows in MarketFront need protection from graffiti and acid etching; and, the PPMPDA has executed a bid process to install anti-graffiti film on glass; and, NOW, THEREFORE, BE IT RESOLVED that the PPMPDA Council authorizes the PPMPDA Executive Director or his designee to enter into a contract with ABC Sun Control in an amount not to exceed $24, for installation of anti-graffiti film. The funds for this project will be drawn from the Capital Inventory GL Gloria Skouge, Secretary/Treasurer Date Date Approved by Council: For: Against: Abstained: Pike Place Market Preservation & Development Authority (PDA) info@pikeplacemarket.org pikeplacemarket.org P: F: Pike Street, Room 500 Seattle, WA 98101

89 Residential Property Update Report June, 2017 Higher than normal vacancies reflect 4 transfers to Western Avenue Senior Housing, 3 evictions, internal transfers and move outs for other causes. Vacancy rate for April and May about double what projected in budget. Economic vacancy at 4%.

90 Page 2 1. Property Update o Overall Occupancy ( by unit count) : 97 % ( 3 move-ins early June) La Salle 100% Leland 100% Sanitary vacancy: % Triangle 100% Market House - vacancy: 304 and % Stewart House vacancy: 429 and % Livingston Baker - vacancy: B105 B207,B302,B502,L211, BM4 and BM2 92% Western Ave. 100% 2. Compliance o HOTMA HUD update effective 8/1/2017 o HUD Income limit change AR corrections o VAWA requirements in place effective June 14 o Lasalle Funders audit on going; WSHFC 6/9 o Western Ave ( WASH) Funder s audit on going; Seattle Office of Housing 6/15 3. Tenant issues o Compliance action in progress with about 10 tenants. 4. Fair Housing/Reasonable Accommodation/Special Request or Issues o 2 in process 5. Residential Staffing o Some staff vacations, one manager to be on family leave. o Met with residential assistants on 4/4 (FH, Safety, Team & Open); Tool Kit; follow up meeting in June 6. Staff Training o AHMA Conference - April in Seatac - Done o Earthquake Preparedness Learning Session 05/04 Done o Fair Housing workshop in Seattle All managers, 9/20 whole day i:\executive directors\017 ed & admin\committees\finance and asset management\06\asset management june 2017.docx

91 Page 3 o Fair Housing workshop in Seattle All asisstants, 11/15 whole day 7. Building Maintenance and Unit Turn-over o Area of focus to get units occupied o Expect to file for special claims for HUD reimbursement on vacancy for 6 units (Lasalle, Stewart House and Market House) due to extensive repairs needed for turnover). o Close to selection of term architect - priority project will include Lasalle unit modernizations ( 40 years old), ADA audits. o Courtyards pressure washed. o Special cleaning completed of Lasalle north wall ( old ivy stains) 8. Pest Control o Stewart House 1 st quarter cost and contract review still have recurring issues in Stewart House, some new issues in Livingston Baker 9. Thoughts/Ideas/In the Works/On Radar o Joe working on getting our market rate lease in Yardi - autofill o Reviewing website residential info o Complete residential handbook 07/31/2017 o Residential Policies and Procedures Manual 07/31/2017 on going o Fire Drill schedule o Review of emergency procedures Western Avenue Senior Housing Fully leased some late move in on 100 level ( one tenant declined unit and was replaced) Several inspections by funders with no significant issues. Continue to work with maintenance on breaking-in routines as we get used to building operation systems. Composting systems in place. Continue to work with tenants on building rules and regulations Working with Foundation to purchase furnishings for the building rooms and common areas with Boeing Employees Foundation grant. Initial list includes pest resistant furnishings ( beds/tables/chairs), outside patio furnishings, wi-fi service for lobby, etc. i:\executive directors\017 ed & admin\committees\finance and asset management\06\asset management june 2017.docx

92 Page 4 EVENTS SPACES REPORT Kitchen Highlights below for month of May. May s Market Meal served over 200 plates and saw a significant increase in the number of seniors served, as well as our more mentally and economically challenged neighbors. $160 in cash donations were collected, which Succulent Catering matched and turned around as a donation to GiveBIG for a larger matching donation to benefit the Pike Market Senior Center and Food Bank. Total donation to equal $637. (15) Private Chef Cooking Classes were held (2) Pop Up Dinners held Weddings (120) person wedding & reception that utilized all of our upstairs event spaces & Atrium Kitchen - hosted Memorial Day Weekend, generous amounts of 1930 s era furniture used in space Corporate Meetings (14) Board Meeting/Staff Retreat/Offsite events clients included Olson Kundig, Nordstrom, Starbucks, Sound Transit, Precept Wine and Oceania Cruises. Other i:\executive directors\017 ed & admin\committees\finance and asset management\06\asset management june 2017.docx

93 Page 5 Market Community Events Foundation Cut the Pie Event Seattle Yacht Club Canadian Women's Luncheon High Road Communications Photography workshop PDA Sponsored Community Events Daystall Workshop for Market Vendors: How to price your product ACTIVITY SUMMARY i:\executive directors\017 ed & admin\committees\finance and asset management\06\asset management june 2017.docx