AN ORDINANCE providing for the submission to the qualified electors of King County, at a general election to be held on November 3, 2020, of a proposition authorizing the county to issue its general obligation bonds in the aggregate principal amount of not to exceed $1,740,000,000 or so much thereof as may be issued under the laws governing the indebtedness of counties, for the purpose of providing funds to pay for public health, safety and seismic improvements for Harborview Medical Center.
Further questions when we have Mr. Daley, I'll be here for your next two topics as well. So. All right. Thank you. Thank you very much. Appreciate your briefing. And that takes us to item six. Our next item is proposed ordinance 2021, 76, which would place a 1.7 $4,000,000,000.20 year capital improvement bond on the November 2020 general election ballot for health and safety improvements at Harborview Medical Center. In order to put the item on the ballot for US regular council meeting to adopt the proposed ordinance with maximum processing time is July seven. Today. We'll get a preliminary briefing to begin our deliberations. Undecided. We have Sam Carter and Nick Bowman from council central staff in the meeting to brief us and answer questions. There's Carter. Mr. Bowman. The line is yours. CHAIR Thank you, Mr. Chair. Sam Porter, Council Central Policy Staff. I am on page 11 of your packet. As the Chair mentioned, proposed ordinance 2020 20176 would place a 20 year $1.74 billion capital improvement bond on the November general election ballot, the proceeds of which would go toward new construction, renovation, seismic retrofitting and other health and safety improvements of Harborview Medical Center facilities. Attachment of the proposed ordinance provides a high level overview of the improvements which may be funded with levy proceeds. These improvements were based on the Harborview Leadership Group recommendation report that was transmitted to council on April 8th of this year. This report, requested through Council Motion 15183, provides background and detail on the Harborview Leadership Group efforts and summarizes the size and scope of the bond recommendation. Under the proposed ordinance, this bond would result in an average rate of approximately $0.08 per thousand dollars of assessed value over the life of the bond. According to executive staff, a median value home would see an average increase in property taxes of approximately $68 annually over the life of the bond. In order to meet the Elections Department deadline to include the proposed fund on the November ballot. The last regular council meeting to adopt with maximum processing time, which is 25 days, is July 7th. As you know, Harborview was founded in 1877 as a six bed King County hospital in South Seattle. It is now licensed for 413 beds and is located on the western edge of Hurst Hill in Seattle. Our review is the designated disaster control hospital for the region and it serves as the only level one trauma center in the four state region of Washington, Alaska, Idaho and Montana. Our review prioritizes serving the non-English-speaking poor, the uninsured and underinsured people who experience domestic violence and sexual assault. Incarcerated people in King County jails. People with behavioral health illnesses, particularly those treated involuntarily. People with sexually transmitted diseases, and individuals who require specialized emergency care, trauma care and severe burn care. Our review is owned by King County, is governed by a 13 member county board, county appointed board of Trustees and operated by the University of Washington . Our reviews capital facilities have evolved over the years, and while Harborview has funded much of its smaller capital improvements through annual budget and capital facility planning, as the owner of the hospital, King County has provided for major capital facility improvements and expansions through voter approved financing. The most recent, which occurred in 2000 and that was $193 million bond to fund seismic and health and public safety improvements for the facilities. As by way of background. In July 2018, the Harborview Board of Trustees sent a letter to council identifying six areas for focus for a capital plan and acknowledged that there needed to be a need for a wider planning effort. In response, Council passed motion 15183, which created a planning process for a potential bond to support capital improvements at Harborview. That included composing a leadership group. The Harborview Leadership Group consisted of representatives from county executive's office, county Council, Harborview Medicine for the first Hill community and her review's mission population. The leadership group fulfilled their charge when they transmitted their final recommendation report after 13 months of analysis and deliberations on the issues outlined in the motion. And they are they appear on page 13 of your packet and include an evaluation of the size and scope of a potential band effort, exploration of the possibility of private philanthropy, and evaluation of inclusion of the needs of the Department of Public Health and evaluation of Housing needs for the Mission Population. Evaluation of the needs for the Involuntary Treatment Act or court. And evaluation of how best to address behavioral health needs. Whether bond proceeds should be invested in public health facilities beyond the campus of Harborview. And whether bond funds for other public safety infrastructure needs should be included. The final recommendation report was approved by the Harborview Leadership Group, the Capital Planning Oversight Committee of the Board of Trustees, the Board of Trustees themselves, and the King County Executive, in accordance with motion 15183. It was transmitted to council in April and provides background and detail on the efforts and summarizes the size and scope of the recommended bond. Table one on page 13 of your packet outlines the different components recommended in the Harborview Leadership Group report. And they I can go through each one of these and then and then I will hand the presentation over to my colleague. So the first item on this table is a new bed tower. This would increase the bed capacity, expand and modify the emergency department, meet privacy and infection control standards, disaster preparation and the plan infrastructure in this would be $952 million. The next one is a new behavioral health building. This would house the existing behavioral health services and programs and the new Behavioral Health Institute. These would be under one building, and this is proposed at $79 million. Next line is existing hospital space renovations, which includes expanding the idea court and the most appropriate location move and expanding the gamma knife program, moving labs and moving the public health, tuberculosis and STD clinics. And also modifications to the medical examiner's office and a number of other offices. This would be $178 million. The next line is Harborview Hall, which would include seismic upgrades and improving and modifying the space and creating space for up to 150 respite beds. This would also include maintaining the enhanced homeless shelter in the most appropriate location. And this would be a $108 million. Next would be the center tower. This would include seismic upgrades and improving and modifying the space to be used for offices. This would be $248 million. Next line is the Pioneer Square Clinic. These improvements would be seismic and code improvements and modifying the space to allow for better clinic space and office space. This would be $20 million. $9 million would go toward demolishing the East Clinic building and $146 million fall under site improvements and miscellaneous expenses. Those are outlined in the last line on page 14. And attachment to the proposed ordinance provides a high level outline of the improvements which may be performed with from bond proceeds. The contents of Table one, which I just went through, are reflected in an attachment which can be seen on page 31 of your packet. And now I will hand things over to my colleague Mekonnen, who will provide you more detail on the financial analysis and the timing of the proposed ordinance. Afternoon Council members again. Nick Bowman, for the record. As Sam stated earlier, the proposal would place a $1.7 billion capital improvement bond on the November general election ballot. The executive envisions issuing a series of 20 year bonds over several years to finance the proposed improvements to the agents. Council staff analysis finds that the average rate across the life of the bond would be approximately $0.08 per $1,000 of assessed value. This translates into an average increase of $68 annually annually on a median value. Again, those are averages over the life of the bond. The actual tax rate in each year of the repayment period will be based upon the annual debt service for the outstanding bonds. At the beginning of the project, the rates will be comparatively low as the debt has not been fully issued yet. At the end of the repayment period, the rates will also be comparatively low as the initial step would be nearly repaid. During the years when construction is at its peak, the debt service load, and therefore the debt service costs will be at its highest, and so will the annual rate. While staff estimate has estimated that the average annual rate will be $0.08 per 1000 hours of assessed value, the actual annual rate will vary between less than $0.01 to 12 and a half cents. Additionally, as the debt would be issued in a series over several years, the levy will remain in effect until the principal on the last series of bonds has been paid in full. Current estimates from the executive envisaging the last series of bonds being issued in 2029, as the proposed ordinance limits any bonds issued to a maximum duration of 20 years. The rate may continue in effect until 2049, though the proposed ordinance does not prohibit the early repayment of bonds or the issuance of debt maturing maturing earlier than 20 years. Table two on page 15 of your package shows the estimated debt issuance schedule and its impact on the annual tax rate. As the table below shows under current estimates. Interest payments over the life of the bond would be approximately $643 million, bringing the total debt service cost to approximately 2.4 billion. Table three on page 16 of your packet illustrates the estimated change in rates over the repayment period. You can see in table three that the rate rises in line with the issuance scheduled to peak at about 12 and a half cents in 2029 and then gradually decreases as more of the debt is repaid until the final several years where the rate drops off considerably. It should be noted that these estimates are based off of the August 2019 Norwegian forecasts. As such, the economic data does not include the financial impacts of the COVID 19 pandemic. The financial analysis for the proposed bond will surely change as the economic impacts of the pandemic are realized and accounted for. According to the executive, an updated with a forecast will be available in late May or early June, and the revised fiscal analysis could be provided to the council by June 15. Before I move on from the financial analysis it was, are there any questions you'd like me to go over? Colleagues. Counsel. Thank you, Mr. Chair. So a couple of things. The 2000 bond for $193 million. What is the payoff date on that bond? The it was last payment. Was made. 1/2 here. So is this then taking us to $68 above what people were paying back then or is it on par? Plus, it's going to be 3.2 as opposed to 193 million. Is it $68 more or can we subtract what was part of the payment before? My understanding is that we are in the final year of the repayment period for the initial 2000 bond, and so this would be additionally $68 on top of that. But as you look at the table, the the actual I think the average impact to the median home value the first couple of years is in the first five years combined is less than $100. And then so that initial 2000 bond will be completed and we will start paying on the new taxes will start paying on the new bond for the approved development. And then as people achieve 5% interest, still the best interest rate even at this point post-COVID. That is my understanding from executive staff. But expand upon that should be like. Okay. And just one last thing on the medical examiner's office, I'd like to know more. I am concerned about the fact if co-located the birth certificates, it's very difficult for somebody that's going in to get a certificate for their child to be standing next to somebody without seeing their baby getting a birth certificate. I'm interested in surge capacity and also proper storage, which I believe is not up to what we're detected. So I more information on that. Thank you. Thank you. Councilmember Dan Belsky. Well, thank you, Mr. Chair. Following up on Councilmember Lambert's inquiry that the table shows a three and a quarter percent interest rate, which that on top of the principal drives the estimated mill rate per thousand assessed value. And I'm just wondering, I was looking at the case for the Conference Board and Financial Report and our current portfolio looks like it has a range of two and a half to 5% for bonds. I'm wondering what Dwight or our central staff sees. I know it's hard to predict that far out, but what do you see today, given that that was last fall's estimate? What do you see today on on borrowing costs? I think we would defer to Dwight. He's available. Yeah, I've. I've been unmuted. You know, I'm you. Okay. So obviously, right now the interest rates available in the market are significantly lower than that. You know, we're looking at interest rates probably on 20 year bonds of less than 2% if issued today, particularly for voter approved bonds. Now, over the life of several Bond series that we would be issuing, as your staff explained, it's unlikely that rates will stay that low. So three and a quarter was kind of conceptually an average over that period of time. It probably is a little higher than we would do it if we'd set out to do it today. But still, something like 3% is probably a reasonable average. So the results would be a little lower than what you're showing here, but probably not a lot. Further questions. Please proceed, Mr. Bowman. Okay. Moving on to bond, timing and voter turnout requirements. Table four at the top of page 17 in your packet provides the November 2020 general election processing deadlines. At the last regular council meeting to adopt the proposed ordinance with a maximum processing time of 25 days is July seven and with minimum processing, time of ten days is July 21st. Under state law, a general obligation bond ballot measure requires at least 40% of the turnout in the preceding election and a 60% yes vote to be approved, according to the King County Elections. Validation Summary for 2020 bond measures, a turnout of approximately 180,000 voters would be needed to meet this 40% participation threshold. Lastly, I just wanted to touch briefly on the construction timeline and permitting Table six on page 18 of your package shows the executive's estimate of project phases and timelines should the voters approve the bond measure? Phase one Selecting the project management and design teams would occur in 2022, 2021, Phase two and three, which involve design, space planning and sequencing as well as permitting, would occur in 20 2021, 2023 and phase four construction would begin in 2023, though it should be noted that these are just initial estimates and all timelines are subject to change. That concludes the staff report. A staff and legal counsel analysis is still ongoing. And with that said, we're happy to take any questions. Thank you very much. It was really my honor and pleasure to be able to serve with Councilmember Dombroski on the Harvey Harborview Leadership Group that, as Mr. Lewis said in his public comment today, initially gathered information about various needs and priorities, weighed those, and unanimously made a recommendation to the Harborview Board of Directors Board of Trustees who has made the recommendation to the executive that is now before us. While we always knew that seismic upgrades and some of the other work included in the proposal was going to be vitally important. We know now, in the middle of a pandemic, even more about the life saving work and imperative need that Harborview provides to our community every day, in particularly infection control and in converting hospital rooms to single patients so that they don't lose access to some number of licensed beds for infection control purposes. We've seen since we finished our work in Leadership Group exactly how imperative that is. And we were very mindful of the eight year court and her would be hall on providing those rested beds so that again the maximum capacity of the hospital was preserved probably remains a gem in our community and this is a great opportunity to brief and introduce the bond measure to us and then look for surface questions. Staff indicated staff work and research is still going on with the goal of taking action on this in time for the November ballot. Councilmember Bousquet was a pleasure to serve with you on the Harborview leadership team, and I'd be happy to turn it over to you for any comments, questions as well before we open it up generally to our colleagues. Well, thank you very much, Mr. Chair, and the privilege of serving with you as much appreciated and really enjoyed the joint collaborative work. I want our colleagues to know how serious this group of experts under two took this work to be over an extended period of time. We really went and got the best help we could get. We brought patients and clients to the table in a meaningful and equal way. Frankly, some of their comments and inputs were the best. From my perspective, they really helped shape this package. It was a very impressive process. We use some outstanding consultants to help cast this out. What this does is it brings this critical piece of infrastructure into the 21st century and will prepare it to carry on for the number of decades ahead that we need it to. It is the only level one trauma facility for the whammy, right. The Washington, Alaska, Idaho and Montana area. So if someone's hurt seriously in those areas, they come here. As you know, we have the incredible burn unit there. We have the wonderful clinics. What's exciting to me about this is a number of things, but it is I want to highlight for you the investment in the Behavioral Health Institute. It sets us up to have really the leading comprehensive system of clinical care and research in the behavioral health arena in the country. It's a great partnership we have with the University of Washington Medical School, and I think it's a really key point. I thought a lot about Councilmember Dunn and his leadership in this area as we worked on that and and this institute, I really commend it to you to look at it builds on the investment this council has made in recent years and getting Harborview Hall, the old nurse's dorm, partially open, as Customer McDermott noted. This COVID crisis has really demonstrated the need for this resource, for example, on the going to single patient rooms, but also for handling folks who are at the edges coming in or out of the medical care system. We've used the shelter space in our view hall for surge capacity. The where the leadership group made a recommendation to preserve 100 shelter beds, which is what about what we've delivered there? About 85, but about 100 shelter beds in the most appropriate location, but then add 150 respite care beds. In our research, we identified respite care and that's folks that are coming out of medical care but don't really have secure housing or stable housing to go to that respite care that transitory bed need as a high priority. So they don't fall back into the cycle of needing the more costly medical care that takes up beds and emergency room space. We put 150 respite care beds into this proposal, and I think it will really pay dividends. There is a new tower here, a new emergency room, and it preserves the Pioneer Square Clinic a very important footprint. So it's a it's not a small tab. I think there is a silver lining here in that the timing, while I would normally be reluctant to go in this time where we have approaching 20% unemployment and serious economic disruption, go to the voters with a request for more revenue. The revenue on this and the charts important doesn't really come on for three or four years. I think Nick noted the first three or four years, the total impact might be $100 cumulatively. So that's that's something to keep in mind as you assess this. And I really want to again wrap up by saying the whole process was robust. I have a high degree of confidence in the results, and I encourage you to look at it as hard questions tested against your values and goals, and I think it'll come out favorably. So thank you, Mr. Chair. And thank. Thank you. As I said, a pleasure. Colleagues Questions for Ms.. Porter, Mr. Bowman now. Questions we can bookmark for a future committee meeting. Right. I think they love our work. They're speechless. I I'm not that. I'm not. I'm not that ready. Are optimistic. I think they're just preparing the hard questions. Thank you, Mr. Chair. Member Lambert. Thank you. Yes, we were speechless. But I want to say also that I really appreciate the fact that you put in as a dedicated caregiver in the room. I think that is a very important thing. And I think that many nights in a chair, in a hospital, I mean, dedicated caregiver space where you can actually lay down is a very good thing. So I think you really part of that whole needs of the people being cared for as well as the people caring for the people who care for them. Thank you. Thank you. All right. See no further discussion on this item today. We will look forward to taking it up further. And that takes us to item seven on our agenda. Finally, the proposed ordinance 2020 186 with rates and charges related to sewer disposal.