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12/05/2000 City Council1 hange to genda rove im cks ute aking ervices EDMONDS CITY COUNCIL APPROVED MINUTES December 5, 2000 Following a Special Meeting at 6:30 p.m. for an Executive Session regarding a legal matter and an interview of a candidate for the Architectural Design Board at 6:45 p.m., the Edmonds City Council meeting was called to order at 7:00 p.m. by Mayor Haakenson in the Library Plaza Room 650 Main Street. The meeting was opened with the flag salute. ELECTED OFFICIALS PRESENT Gary Haakenson, Mayor Thomas A. Miller, Council President Dave Earling, Councilmember Michael Plunkett, Councilmember Jim White, Councilmember Lora Petso, Councilmember Dave Orvis, Councilmember Christopher Davis, Councilmember ALSO PRESENT Kim Boese, Student Representative 1. APPROVAL OF AGENDA STAFF PRESENT Al Compaan, Assistant Police Chief Duane Bowman, Development Serv. Director Stephen Clifton, Community Services Director Peggy Hetzler, Administrative Services Director Noel Miller, Public Works Director Brent Hunter, Human Resources Director Rob Chave, Planning Manager Steve Bullock, Senior Planner Scott Snyder, City Attorney Sandy Chase, City Clerk Jana Spellman, Senior Executive Council Asst. Jeannie Dines, Recorder COUNCIL PRESIDENT MILLER MOVED, SECONDED BY COUNCILMEMBER PLUNKETT, TO AMEND THE AGENDA BY MOVING ITEM #5 TO ITEM #3A. MOTION CARRIED UNANIMOUSLY. COUNCIL PRESIDENT MILLER MOVED, SECONDED BY COUNCILMEMBER DAVIS, FOR APPROVAL OF THE AGENDA AS AMENDED. MOTION CARRIED UNANIMOUSLY. 2. CONSENT AGENDA ITEMS Councilmember Petso requested Items B and G be removed from the consent agenda. Councilmember Earling requested Item C be removed, and Councilmember Orvis requested Item K be removed. COUNCILMEMBER PLUNKETT MOVED, SECONDED BY COUNCIL PRESIDENT MILLER, FOR APPROVAL OF THE REMAINDER OF THE CONSENT AGENDA ITEMS. MOTION CARRIED UNANIMOUSLY. Items approved are as follows: (A) ROLL CALL (D) APPROVAL OF CLAIM CHECKS #44904 THROUGH #45086 FOR THE WEEK OF NOVEMBER 27, 2000, IN THE AMOUNT OF $274,996.93 (E) AUTHORIZATION FOR MAYOR TO SIGN PROFESSIONAL SERVICES AGREEMENT WITH KARIN NOYES FOR MINUTE TAKING SERVICES Edmonds City Council Approved Minutes December 5, 2000 Page I inute I (F) AUTHORIZATION FOR MAYOR TO SIGN PROFESSIONAL SERVICES AGREEMENT Taking WITH JEANNIE DINES FOR MINUTE TAKING SERVICES Services ublic (H) AUTHORIZATION FOR MAYOR TO SIGN PROFESSIONAL SERVICES AGREEMENT efender FOR LEGAL REPRESENTATION OF INDIGENT DEFENDANTS WITH JAMES FELDMAN ocating ublic (I) AUTHORIZATION FOR MAYOR TO SIGN INTERLOCAL AGREEMENT WITH acilities SNOHOMISH COUNTY ON LOCATING ESSENTIAL PUBLIC FACILITIES [Recycling (,n AUTHORIZATION FOR MAYOR TO SIGN INTERLOCAL AGREEMENT BETWEEN oordinator THE CITY OF LYNNWOOD AND CITY OF EDMONDS FOR JOINT FUNDING OF THE RECYCLING COORDINATOR Item B• Approval of City Council Meeting Minutes of November 21, 2000 Councilmember Petso requested the reference to 2001 in the first paragraph on page 10 be revised to 2000. Councilmember White requested the second sentence in the seventh paragraph on page 13 be revised to read, "He asked how this seuldke ged is regulate " COUNCILMEMBER PETSO MOVED, SECONDED BY COUNCILMEMBER PLUNKETT, FOR Approve APPROVAL OF ITEM B. MOTION CARRIED UNANIMOUSLY. The item approved is as 11/21/00 Minutes as follows: Corrected (B) APPROVAL OF CITY COUNCIL MEETING MINUTES OF NOVEMBER 21, 2000 Item C• Approval of City Council Meeting Minutes of November 28, 2000 Councilmember Earling requested the first sentence on page 16 be revised as follows: "Councilmember Earling reported Sound Transit express bus service moved 15,000 passengers a day in the first year." COUNCILMEMBER EARLING MOVED, SECONDED BY COUNCILMEMBER PLUNKETT, Approve FOR APPROVAL OF ITEM C. MOTION CARRIED UNANIMOUSLY. The item approved is as 11/28/00 follows: Minutes as Corrected (C) APPROVAL OF CITY COUNCIL MEETING MINUTES OF NOVEMBER 28, 2000 Item G• Authorization for Mayor to Sign Employment Contract with Jana Spellman, Senior Executive Assistant to the City Council Councilmember Petso indicated she would vote in opposition to this item as nothing in the packet materials justified the extraordinary increase of 16 %, which was well in excess of COLA and steps. COUNCIL PRESIDENT MILLER MOVED, SECONDED BY COUNCILMEMBER WHITE, FOR �enior APPROVAL OF ITEM G. MOTION CARRIED; THE VOTE WAS 5 -2, COUNCILMEMBERS xecutive PETSO AND ORVIS OPPOSED. The item approved is as follows: ssistant (G) AUTHORIZATION FOR MAYOR TO SIGN EMPLOYMENT CONTRACT WITH JANA SPELLMAN, SENIOR EXECUTIVE ASSISTANT TO THE CITY COUNCIL Item K: Proposed Ordinance Reenacting Certain Ordinances Which Would Purportedly be Invalidated b Initiative 722 by Reenacting Ordinance No. 3280 Establishing a Property Tax Levy, EMS Levy and Levy for Voted Indebtedness• Ordinance No. 3281 Establishing a Tax on Its Sewer Utility; Ordinance No. 3282 Establishing a Transient (Non- Resident) Business License Fee; and Resolution No. 967 Amending the Fee Schedule for Planning, Engineering and Other City Fees Councilmember Orvis advised he would abstain from the vote on this matter as the referenced ordinances and resolution were enacted prior to his being elected a Councilmember. Edmonds City Council Approved Minutes December 5, 2000 Page 2 COUNCILMEMBER EARLING MOVED, SECONDED BY COUNCILMEMBER DAVIS, FOR APPROVAL OF ITEM K. MOTION CARRIED; THE VOTE WAS 6 -0 -1, COUNCILMEMBER ORVIS ABSTAINING. The item approved is as follows: rd (K) ORDINANCE NO. 3337 REENACTING CERTAIN ORDINANCES WHICH WOULD Reenacting ctin Tax Levies PURPORTEDLY BE INVALIDATED BY INITIATIVE 722 BY REENACTING d Fees ORDINANCE NO. 3280 ESTABLISHING A PROPERTY TAX LEVY, EMS LEVY AND LEVY FOR VOTED INDEBTEDNESS; ORDINANCE NO. 3281 ESTABLISHING A TAX ON ITS SEWER UTILITY; ORDINANCE NO. 3282 ESTABLISHING A TRANSIENT (NON- RESIDENT) BUSINESS LICENSE FEE; AND RESOLUTION NO. 967 AMENDING THE FEE SCHEDULE FOR PLANNING, ENGINEERING AND OTHER CITY FEES; PROVIDING FOR SEVERABILITY AND FIXING A TIME WHEN THE SAME SHALL BECOME EFFECTIVE 3. CONFIRMATION OF APPOINTMENT TO ARCHITECTURAL DESIGN BOARD Council President Miller explained the Council interviewed Derek Gustafson prior to tonight's Council meeting. Senior Planner Steve Bullock introduced Mr. Gustafson, a landscape architect, and a resident of Edmonds. Mr. Bullock said the ADB also interviewed Mr. Gustafson and were excited about his joining the Board. Mr. Gustafson stated he was honored to be selected and appreciated the opportunity Confirm to serve on the ADB. Appoint- ment to B COUNCIL PRESIDENT MILLER MOVED, SECONDED BY COUNCILMEMBER ORVIS, TO CONFIRM THE APPOINTMENT OF DEREK GUSTAFSON TO THE ARCHITECTURAL DESIGN BOARD. MOTION CARRIED UNANIMOUSLY Baring 3A. ANNUAL REPORT FROM HEARING EXAMINER RON MCCONNELL xaminer nnual Mr. McConnell advised he had enjoyed the past year and looked forward to another ear. He reported eport P Y Y P 1999 had been the busiest year in the past 10 years; 2000 was a more normal pace. Mayor Haakenson thanked Mr. McConnell for his hard work. Council President Miller complimented Mr. McConnell on his work. He recognized the fair and balanced judicial interpretation he provides and expressed his appreciation to Mr. McConnell for taking the extra step to visit sites to assess the entire picture. 4. PUBLIC HEARING REGARDING PROPOSED UTILITY RATE INCREASES roposed . PROPOSED INCREASE IN WATER AND SANITARY SEWER CHARGES FOR NEW Utility Rate ncreases DEVELOPMENT • PROPOSED GENERAL RATE INCREASE FOR SANITARY SEWER SERVICE FOR ALL RESIDENTS AND PROPERTY OWNERS Public Works Director Noel Miller explained the first issue under consideration was whether to establish new capital charges for new development when connecting to the water and sanitary sewer; the second issue was whether to increase sanitary sewer rates for all residents. He explained during the past year, staff proposed raising the sanitary sewer rates to provide funds to repair /replace aging infrastructure and comply with federal clean water laws. He advised the Council packet contained the minutes for the March 21, 2000 public hearing which described the need for the rate increase. Following the public hearing, the Council delayed any action due to requirements of I -695 which required a utility rate Edmonds City Council Approved Minutes December 5, 2000 Page 3 ;.; increase to be decided by the voters. During the March 2000 public hearing, the Council questioned whether the rate increase could be reduced by securing Public Works Trust Fund loans from the State of Washington and /or by imposing a capital connection charge on new development. Therefore, the utility rate study contract with Financial Consulting Solutions Group (FCSG) was extended to consider the effects of using Public Works Trust Fund monies and additional revenue generated by a capital connection charge. Tracy Dunlap, Senior Project Manager, Financial Consulting Solutions Group, explained although capital connection charges may also be referred to as system development charges, general facilities charges, capital facilities fees, etc., it was essentially a one -time, up -front fee collected from new development or re- development that placed new demands on the utility system. She explained RCW 35.92.025 granted the City the authority to impose connection charges as a condition of utility service. She said the main purpose of the capital connection charge was to provide an additional funding source for capital but also addressed the issue of equity. The City currently charges $200 per connection for water and has no charge for connection to sewer. Ms. Dunlap reviewed the methodology used to determine the capital connection charge, the buy -in method. She explained this method was based on investment in the existing utility systems, where a new customer "buys" a proportionate share of the existing utility built by existing customers. Future planned capital was included since projects are replacement in nature. She said an interest component was included to recognize the cost of capital for excess capacity in the system to serve new growth. She reviewed the steps for calculating a connection charge, 1) calculate the net allocable investment in utility plant, adjusting for contributed assets (such as state and federal grants provided to construct wastewater treatment plant), outstanding debt paid by rates, and adding interest, 2) determine customer base over which the costs should be allocated (meter equivalents for water and ERUs for sewer), and 3) calculate the proposed charge by dividing the allocable plant by the appropriate customer base. She explained Step 2 included a proposed change to base the charge on meter equivalents (demand that each meter can place on the system) rather than $200 per meter. Step 2 also recommended the use of Equivalent Residential Units (ERUs) for sewer. Ms. Dunlap displayed the results of the above calculations: Utility Current Proposed Water $200 per connection $ 908 per meter equivalent Sewer $0 $ 739 per ERU TOTAL $200 $1,647 Ms. Dunlap displayed a connection charge comparison that indicated Edmonds' connection charge would continue to be one of the lowest. She explained this was due to 1) much of Edmonds' system was constructed using Local Improvement Districts (LID), 2) the City has a dense, well developed system, and 3) sewer costs are shared with other agencies. She pointed out cities /water districts that were less developed extended water service into less developed areas, thus the higher cost. She acknowledged although Edmonds' connection charge would continue to be one of the lowest, the proposal represented an increase of over $1,400 for each single family equivalent unit connected to the system. Ms. Dunlap reviewed the impact the connection charge had on the sewer rates recommendation. She recalled a recommendation was provided earlier this year that sewer rates increase by 5 -6 %. She explained the recommended scenario reflected the City's current budget, assumes the $739 per ERU Edmonds City Council Approved Minutes December 5, 2000 Page 4 would be implemented (which generates additional revenue for capital), and assumes the City would secure approximately half the funding for capital improvements from the Public Works Trust Fund. She recommended the Public Works Trust Fund monies be aggressively pursued. Other assumptions include that the sewer utility will meet debt service- coverage on a stand alone basis beginning in 2001, a growth rate of about 80 ERUs per year generating annual connection charge revenue of $60,000 per year, connection charge revenues are available toward debt service coverage, there is an increase in the capital payments from King County, operating expenses have grown at a slower rate than projected, and half of one of the CIP projects will be paid by other agencies (reducing the CIP by $325,000). Ms. Dunlap stated the assumptions in this scenario reduced the increase to approximately 4.2% per year for four years. She recalled one of the recommendations from the study that resulted in a large rate increase in 1997 was that the City impose several moderate increases rather than no increases for a number of years followed by large increases. Ms. Dunlap explained the impacts of the connection charge on the water utility had not been addressed because a water utility rate study had not been conducted. Increasing the water charge from $200 to $908 (assuming approximately 80 ERUs per year) would be $56,000 over what is currently collected. Mayor Haakenson asked for clarification of why the increase and connection charge was necessary. Mr. Miller explained the primary reason was to fund capital projects. He recalled at the March 2000 public hearing, staff presented a Sewer Comprehensive Plan update that identified a number of sewer lift stations that needed to be replaced /upgraded /rehabilitated and sewer lines that needed to be replaced or relined due to signs of deterioration. City Attorney Scott Snyder explained most of the expansion in the City's system had been in annexed areas, funded via LIDS. Since future annexations will be limited, expansion will occur via infill development. Without a connection charge, new development "gets a free ride" on the system built by current ratepayers. Councilmember Orvis requested clarification on applicable interest. Ms. Dunlap answered the statute allows the City to incorporate an interest component into the cost of the system to recognize either the City financed the assets incurring a debt service cost or there was a carrying cost for having that capacity in place. The statute allowed the City to accrue a maximum of 10 years of interest or the age of asset to recognize there is a proportionate cost for the excess capacity in the system that was funded via the existing ratepayers. She said in their calculations, 5% per year in simple interest was accrued on the actual cost of the asset for the number of years the asset had been in service. Councilmember Orvis asked how the rate of 5% was determined. Ms. Duncan answered the municipal borrowing rates have been approximately 5 -6% per year and the earning rates have been approximately 4'/2 - 6' /z %. The rate of 5% results from a conservative estimate of the City's interest earnings if the asset had not been constructed and the funds invested. Mr. Snyder explained GMA requires the City issue a certificate of sewer and water availability for each new subdivision. Had excess capacity not been maintained, the City would have been unable to approve development permits. Councilmember Orvis clarified the treatment plant was constructed with excess capacity. Mr. Miller agreed. Councilmember Orvis asked if the excess capacity was used in any way. Mr. Miller answered some of it was used to accommodate flows from Shoreline and Metro which assists in keeping the city's rates down. Mr. Snyder said the City reserves the treatment plant's excess capacity for itself, therefore, as the City grows, flows from other jurisdictions could be reduced. He said although the City received Edmonds City Council Approved Minutes December 5, 2000 Page 5 revenue for operating costs, the City paid the capital costs for the treatment plant. He clarified the revenues provided by jurisdictions were operating costs and not original capital costs of construction. Councilmember Orvis recalled the previous presentation regarding the rate study included revenue and expenditure detail by year. Ms. Dunlap answered that level of detail was provided at the last public hearing but was not provided in this update. She said that information could be provided again if desired. Councilmefber Orvis observed a 4.2% increase over 4 years represented approximately an 18% increase in sewer rates. Mr. Miller said the increase would fund the cost of borrowing monies to construct the proposed capital improvements over the next 5 -6 years. Councilmember Orvis asked if consideration had been given to delaying some capital projects to reduce the amount of the increase to at or below inflation. Mr. Miller did not recommend the proposed capital program be delayed due to the need to replace pump stations and reline sewer lines to avoid overflows. Councilmember Orvis asked what the impact would be if the sewer rates were increased by the rate of inflation this year. Ms. Dunlap answered the effect would likely be increases higher than 4.2% in subsequent years due to the compounding effect of deferring increases. She recalled in 1997 there was a 17% increase due in part to the cumulative effect of several years of no increases. Mr. Miller said if the sewer rates were not increased enough to fund the proposed capital program, projects would have to be delayed. Council President Miller asked if the proposed connection charge was for new construction only. Ms. Dunlap answered the connection charge would be imposed on new construction or redevelopment that changed the demand on the utility system. She clarified an existing customer remodeling their home would not be effected. Council President Miller referred to the connection charge comparison (page 11) which indicated Edmonds' combined water /sewer connection charge would be $1,647, the average of cities /districts surveyed was $3,807, and the highest, Olympic View Water and Sewer District, was $5,039. He questioned whether the proposed connection charge was adequate. Ms. Dunlap answered there were differences in how utility districts constructed their system. One of the main differences in Edmonds was the City used LIDS fairly extensively, requiring each parcel to fund their portion of the extension. Further, water supply was not a component of the City's capital investment cost because it purchased water from Alderwood and Seattle. Another factor was the City has very dense development with a lot of customers connected to a smaller amount of infrastructure as compared to a jurisdictions whose development is more spread out. Further, because the City's system was fairly old, the original cost of the infrastructure was quite low. Another reason the City's connection charge may be low was due to other agencies participating in the funding of the wastewater treatment plant. Councilmember Plunkett recalled when the original presentation was made, he was concerned about the rate increase; however, Mr. Miller convinced him of the need to upgrade the system.. 'He asked if the proposed increase was sufficient -to do the upgrades and maintenance in the future. Mr. Miller referred to the 1999 Comprehensive Plan Sewer Plan, displaying a map that identified problematic pump stations and lines. He said once these were replaced /repaired, a significant rate increase would not be necessary unless other problems were identified. Councilmember Plunkett asked whether a 4.2% increase for 4 years for a total of 18% would be sufficient for the future. Ms. Dunlap explained the projections were done one year beyond the four -year Edmonds City Council Approved Minutes December 5, 2000 Page 6 period with an increase proposed in the fifth year of 3.7 %. Mr. Miller pointed out there were unknowns such as the amount that will be funded via Public Works Trust Fund loans. Ms. Dunlap said she would not guarantee there would not be increases in subsequent years; however, they would be more inflationary in nature. She said the proposed increase was driven primarily by capital needs. For Councilmember Petso, Ms. Dunlap recommended the connection charge be considered every 2 -3 years or a minimum of every five years to reflect the investment being made in the system. Councilmember Petso asked whether staff's request was for the Council to approve a four -year rate increase or just an increase of 4.2% this year. Mr. Miller stated the number of years was up to the Council. Councilmember Petso said the City may not need a 4.2% increase for four years if King County flows changed, more residential units were built, the City was successful in obtaining Public Works Trust Fund monies, etc. Mr. Miller agreed that was a possibility. Councilmember Petso asked if the utility would survive if the Council approved a 4.2% increase for two years and then considered another rate increase. Miller answered yes. Ms. Dunlap said that would also address the possibility of the need for additional rate increases if the City was not successful in obtaining Public Works Trust Fund monies. Councilmember Davis asked why the original costs were used. Ms. Dunlap said case law in Washington did not support a replacement cost approach. She said a Washington State court case found "investment in utility system" meant original investment. She pointed out the interest component recognized the increase in the value of the investment over time although that did not equate to replacement cost. She said there was no way to use true replacement costs without risking a legal challenge. Councilmember Davis asked if the increased needs in the system were due to the age of the system or to provide capacity. Mr. Miller answered it was primarily due to the age of the system. Councilmember Earling recalled at the public hearing in March, staff made a compelling case regarding the deterioration of the existing system. He stated his preference for staff to recap that information when the issue was presented for public hearing. COUNCIL PRESIDENT MILLER MOVED, SECONDED BY COUNCILMEMBER ORVIS, TO EXTEND THE PUBLIC HEARING FOR 30 MINUTES. MOTION CARRIED UNANIMOUSLY. Mayor Haakenson opened the public participation portion of the public hearing. Al Rutledge, 7101 Lake Ballinger Way, Edmonds, did not support an increase in the connection charge, commenting new development already provided increased revenue. He did not support an increase in the sewer rates and suggested holding another public hearing to address individual circumstances. He urged the Council to place the proposed increases on the ballot, referring to the message sent by the public via I -695 and I -722. Shirley Gauthier, 23820 84th Avenue W, Edmonds, agreed the proposed increases should be placed on the ballot. She said her neighborhood voted against annexation for many years but were annexed without their vote. Since then prices have increased. She objected to increases, stating she and many others including seniors could not afford to pay the continual increases. Roger Hertrich, 1020 Puget Drive, Edmonds, acknowledged there were problems that needed to be fixed and the City needed the funds to make the repairs. Although he did not object to an increase, he Edmonds City Council Approved Minutes December 5, 2000 Page 7 did object to a 4.2% increase for four years and recommended the increase be approved for two years and then recalculated. He supported the proposed connection charge. Tel Sladum, 21103 78th Avenue W, Edmonds, asked whether each apartment/condominium unit paid the same sewer rate as single family residential and if not, why? Juan Campion, 7701 202nd Place SW, Edmonds, did not support paying any further increases. He described his participation in the construction of the Lynnwood and Edmonds treatment plants, and offered to assist the City working for minimum wage. He asked where the money was going and why sewer and water rates were so costly. Hearing no further comment, Mayor Haakenson closed the public participation portion of the public hearing. In response to the question whether apartments paid the same as single family residential, Ms. Dunlap explained apartments pay slightly less than single family because as a group, they use less sewer services than single family. The sewer utility rate study indicated the average sewer usage for a single family resident was 700 cubic feet per month; the average per multifamily unit was 500 cubic feet. Although individual units may use different amounts, the rate structure was done on a class basis. She said the usage reflected that the average occupancy of a multifamily unit was lower than the average occupancy of a single family residence. She said multifamily pays the same rate structure for water but may have a lower bill because they tend to use less. In response to the question of where the money goes, why repairs to the system are so costly and why water costs so much, Mr. Miller advised the monies collected were used for capital projects such as rebuilding lift stations, force mains, trunk lines and pipelines in the system that are bid on a competitive basis. Monies are also used for operation and maintenance of the stations to ensure they did not fail and for maintaining and inspecting the lines. He said other costs included insurance, electricity to operate the pump stations, etc. Regarding water costs, Edmonds has one of the lower water costs in the Seattle metropolitan area. The City's water is obtained from the Cascade Mountains via pipelines in Everett (through the Alderwood Water District). The City also obtained water from the City of Seattle. Water passes through a meter, the City is charged for the amount of water used and costs passed along with the City's operational costs to ensure clean, safe water is provided to the City's customers. Mayor Haakenson asked the average age of the City's sewer lines. Mr. Miller answered most sewer lines were built in the 1960's; lifetime expectancy if the lines were well maintained was 100 years. Sewer lines in the downtown area were built in the 1920's. It was anticipated with continued good maintenance, those lines could be maintained for a number of more decades. Councilmember Plunkett asked Mr. Miller to describe federal, environmental and ESA regulations that caused water rates to be so high. Mr. Miller advised there were several unfunded mandates such as the Clean Water Act that required the City not pollute any bodies of water, keep sewage out of these bodies of water, keep runoff from roadway and properties clean, and reduce erosion so silt does not wash into streams. He said even more protection for bodies of water would be required once ESA requirements were finalized. He summarized there was limited funding available from the federal government to respond to these mandates. Councilmember Plunkett asked if the regulations were in place 40 years ago. Mr. Miller answered the regulations were enacted primarily in the 1970's. Mr. Snyder said the cumulative impact of the Edmonds City Council Approved Minutes December 5, 2000 Page 8 regulations Mr. Miller cited created a situation where the ability to develop new. well sites, and dam and contain, had virtually been eliminated.'' As a "result, more people seeking limited resources increased the price of water. Councilmember Orvis observed the General Fund received revenue from sewer taxes and asked how they were levied. Mr. Miller answered they were levied at the rate of 6% on the amount of the utility bill. Mr. Snyder said the 6% was the same rate that was levied on all utilities within the City (cable, water, electricity, etc.) Councilmember Orvis observed if the sewer rates were increased, the revenue from sewer taxes would also increase. Mr. Miller agreed there would be a 4.2% increase in the revenue generated via the sewer utility tax. Councilmember Orvis asked if staff had considered a scenario that placed the increase generated by the sewer utility tax into Fund 411 or reduced the sewer utility tax rate. Mr. Miller answered the utility taxes were intended to generate revenue for the General Fund. Mr. Snyder said the utility taxes were used to fund regulatory measures and the employees who were not compensated via the utility such as enforcement, sewer infiltration, etc. Councilmember Orvis questioned whether this required an 18% increase. Mayor Haakenson remanded the matter to Council for deliberation. COUNCIL PRESIDENT MILLER MOVED, SECONDED BY COUNCILMEMBER PLUNKETT, TO EXTEND THE PUBLIC HEARING FOR 10 MINUTES. MOTION CARRIED UNANIMOUSLY. Council President Miller observed tonight's presentation was an abbreviated version of an issue that has been discussed over the past year. In response to comments by the audience that this matter should go to a vote of the people, he emphasized the Council was representative government, elected to represent the people so that numerous elections were not required. He said extraordinary steps had been taken to gather information including an extensive study conducted by FCSG and subsequent reports regarding the appropriate adjustment to keep the system operating in the black, provide capital funding for infrastructure, identify equitable increases, and recognize new construction should pay a connection fee to pay for the initial cost of the lines. He agreed with Councilmember Petso's suggestion to adopt a 4.2% increase for two years. This would allow the City to reduce the increase in the event additional funding was obtained via Public Works Trust Funds or increase it if additional funds were necessary due to unforeseen circumstances. COUNCIL PRESIDENT MILLER MOVED, SECONDED BY COUNCILMEMBER EARLING, TO INCREASE THE SANITARY SEWER RATES FOR THE YEARS 2001 AND 2002 BY AN ANNUAL RATE OF 4.2% ALONG WITH ADOPTION OF THE CAPITAL CONNECTION CHARGES OF $908 PER METER EQUIVALENT FOR WATER SERVICE AND $739 PER EQUIVALENT RESIDENTIAL UNIT FOR SANITARY SEWER SERVICE. Councilmember Petso pointed out the rate increase was less than previously recommended. When the Council received the materials in the spring, the recommended increase was 6.8% for the next 4 -5 years. As a result of staff's work, the increase was reduced to 4.2% which she emphasized was progress. If additional funding was available via Public Works Trust Funds, the increase could be reevaluated. Councilmember Orvis indicated he would not support the motion. Although he was glad the Council was proposing an increase for a two year period versus four years, he preferred only a one -year increase. He was cautious about multi -year increases and felt it was his duty as a Councilmember to keep a close watch on increases. He also would not support the motion because he wanted to consider other scenarios Edmonds City Council Approved Minutes December 5, 2000 Page 9 that could bring the rate down. He recommended there be further study, particularly reducing the utility tax rate on sewers to lower the rate. MOTION CARRIED; THE VOTE WAS 5 -2, WITH COUNCILMEMBERS PLUNKETT AND ORVIS OPPOSED. rosecutor 6. ANNUAL REPORT FROM PROSECUTOR JEFFREY GOODWIN nnual e ort Jeffrey Goodwin, Prosecutor, commented it was an exciting time because the City was looking for a new judge and the court would be moving into a new building. He indicated the current budget for the prosecutor was appropriate and he was not seeking an increase. He reported that over the last year, there has been a decrease in the number of DUI cases, but an increase in trial issues related to domestic violence cases. He was unsure of the reason for this increase although domestic violence had been a focus of Washington courts over the past five years and the message was getting out regarding the seriousness of domestic violence and the need to report it. Councilmember White recalled the Public Defender reported the City budgeted an additional $15,000 for his services due to an increase in assigned cases. Councilmember White asked if that increase affected Mr. Goodwin. Mr. Goodwin said there had not been a substantial increase in his caseload. He said a portion of the public defender's increase was due to the necessity of his appearing in Lynnwood for In Custody matters. Mr. Goodwin said he was not appearing at any .additional calendars. Councilmember White pointed out this would be a transitionary period and schedules may change. He invited Mr. Goodwin to return to the Council if he, too, experienced an increase in his caseload. He cautioned Mr. Goodwin against becoming frustrated and discouraged and said the City wanted to maintain him as the prosecutor. Councilmember White pointed out it was unrealistic not to request an increase in two years. Mr. Goodwin did not anticipate becoming frustrated or discouraged and said he was excited about the opportunity to make changes that increased the efficiency of the court and the public's confidence in the court as the new court facility was opened and a new judge hired.. Mayor Haakenson thanked Mr. Goodwin for the terrific job he did over the past year. 7. AUDIENCE COMMENTS Kiwanis Al Rutledge, 7101 Lake Ballinger Way, Edmonds, reported on the Kiwanis Club's IDD program, Club Food expressing appreciation to the Gates for their donation to the program. He reported the Kiwanis Club Drive would be conducting a food drive at Top Foods on December 8, 9, & 10. Mr. Rutledge also suggested the Council read emails and faxes at the Council meeting and /or allow the public to call during meetings. ibrary I Richard Marin, 18918 88th Avenue West, Edmonds, suggested the Council consider a different unding approach to the library funding rather than annexing into Sno Isle Library District. He recalled at a recent presentation, the Sno Isle Director indicated 8% of the district's revenue came from Edmonds and 9% of the usage came from Edmonds, implying there was a problem with this ratio. Mr. Marin said the numbers that should be considered were revenue and operating expenses and suspected since the Sno Isle Director did not mention those numbers, the library was in good shape in that respect. He said the motivation for annexing to the Sno Isle Library District was to provide a steady source of income to ensure there was not an interruption or reduction in library service. He was concerned with the potential risk of an unsuccessful vote to annex to SnoIsle. He said a recent headline in the Enterprise indicated there would not be a property tax increase and suspected the perception among voters may be the library Edmonds City Council Approved Minutes December 5, 2000 Page 10 was not a problem, although a campaign must soon be mounted to educate the public to vote on a new tax to fund the library. He proposed a new tax, outside the General Fund, that represented continuation of the current funding arrangement. tility Rates Roger Hertrich, 1020 Puget Drive, Edmonds, agreed with Councilmember Orvis regarding increasing utility taxes on sewer rates. He proposed the Council develop a formula that increased the sewer rate but not the revenue generated by the sewer utility tax. In regard to the upcoming discussion regarding the [Role of role of the Architectural Design Board (ADB), he recommended the public process at the Planning Board MB and ADB occur before any changes were made to the role of the ADB. Pine Street Carol Hahn, 1031 2nd Avenue S, Edmonds, objected to the reference to the Pine Street traffic study as raffic the Pine Street Closure Study. The issue was not closing Pine Street but how to provide ferry access. Study She urged the Council to consider the whole issue and not find a way to close Pine Street. ift Stations Juan Campion, 7701 202nd Place SW, Edmonds, asked whether the lift stations had a secondary pump. Mayor Haakenson stated he would ask Public Works Director Noel Miller to call him. tility Rates Peter Beck, 723 Hanna Park Road, Edmonds, commended Councilmembers Plunkett and Orvis for realizing the sewer rate study was not a very thorough study. He objected to Ms. Dunlap's response to the question regarding why replacement costs could not be used. He agreed with Mr. Hertrich's comments regarding the utility tax on sewers. As a member of the ADB for 11 years, he offered to D13 answer questions when the Council discussed that issue. Shirley Gauthier, 23820 84th Avenue W, Edmonds, speaking on the behalf of crafters who, although fters/ they do not make a great deal of money making crafts, would like to be able to put out a sign, nsmg uirement particularly at Christmastime stating they sell a craft without running into problems with the City. ' She asked the Council to consider making such an amendment to benefit crafters. tility Rate John Hayward, 1130 4th Avenue S, Edmonds, expressed concern with increased taxes in general and ncrease said numerous small tax increases equated to a big tax increase. He said the Council was not listening to voters in elections. He commented the sewer rate study did not consider demographics or the impact the increase would have on seniors. He said the 4% increase consumed the money he needed to put away for retirement. He suggested the connection charge for new development be sufficient to pay for repairs. [AT&T Mr. Hayward questioned how AT &T was able to purchase the cable system from Chambers Cable and able why subscribers now paid more and did not get the stations they did before. Mayor Haakenson noted AT &T had been scheduled on the extended agenda for this evening but rescheduled for January as their representative could not be present tonight. Mayor Haakenson explained there was nothing in the City's agreement with Chambers Cable that prevented AT &T from purchasing the system, however, AT &T must live up to the provisions in the franchise agreement. Unfortunately, neither the Council nor the City had any control over rates, the federal government eliminated that ability. lectric Mr. Hayward pointed out electricity would soon be deregulated which would result in major increases. ates The news reported electric rates in this area were $30 /kilowatt hour; rates on the open market were $1,000 /kilowatt hour. He recommended the City establish a contingency plan for utility rate increases. City Attorney Scott Snyder pointed out the City has adopted rate reductions for any low income citizens. He encouraged anyone impacted by the increase who felt they may qualify for the reduction to check with the Finance Department. Edmonds City Council Approved Minutes December 5, 2000 Page 11 eso #989 MEBT 8. RESOLUTION NO. 989 APPROVING AMENDMENTS TO THE CITY'S MUNICIPAL Amend- EMPLOYEE BENEFIT TRUST PLAN AUTHORIZING PICK UP CONTRIBUTIONS IN ents ACCORDANCE WITH IRS CODE SECTION 414(H)(2), AND ESTABLISHING AN EFFECTIVE DATE Human Resources Director Brent Hunter explained the Municipal Employee Benefit Trust (MEBT) program, provided to employees in lieu of Social Security, was created in 1977 and was last updated in 1989. The program was administered via an employee committee with outside contracts for legal assistance, record keeping, and trust arrangements. The program is funded via employee and employer contributions in the same amount most people pay into Social Security. Changes to the program were due to legal requirements, employee recommendations, and practices in other MEBT programs. The resolution had been reviewed by legal counsel and employees and he recommended approval. Mr. Hunter highlighted several of the proposed changes to the MEBT program. 1. Tax Deferred Participant Contributions: Proposal to change contributions to the plan, currently made with post -tax contributions, to a pre -tax basis. Legal counsel advised this change was possible under current IRS regulations. This change enhances the program without any additional cost to the City or employees or change in the mandatory nature of the plan. 2. Extra Participant Contribution: Proposal to increase the voluntary contributions an employee was allowed to make to the plan. This change benefited the employee at no increased cost to the City. 3. Vesting Schedule: The vesting schedule determines the amount of the employer contribution credited to the employee account. This is currently on a 10 year schedule, for each year of service, 10% of the employer contribution is credited to the employee account. The recommended change was a 7 -year vesting schedule which was comparable to other cities. This change benefits the employee with no increased cost to the City. 4. Distribution Options: Employees who leave the City prior to retirement must withdraw their funds from the plan (retirees currently may leave the funds in the plan and withdraw as desired). The recommendation was to revise the plan so that employees who leave the City with a minimum of $10,000 in the plan and are fully vested be allowed to leave their funds in the plan and withdraw as desired. A small fee would be charged to remain in the plan. 5. Rehire Vesting: Change the program so that employees rehired by the City can claim past vesting benefits. This change was a benefit to the employee with no cost to the City. Mr. Hunter recommended the proposed changes be effective January 1, 2001. Once the program was approved by the Council, it would also be filed with the IRS for their approval. Assistant Police Chief Al Compaan introduced the members of the MEBT Board, Human Resources Director Brent Hunter, Assistant Administrative Services Director Doug Farmen, Facilities Supervisor Tom King, Accountant Scott James, Senior Planner Steve Bullock, and Senior Fire Inspector Mike Smith. He said the Board has considered the changes over the past year and the proposed changes have the unanimous support of the Board. An employee education program has been conducted by individual board members including dialogue with work groups, and providing feedback to the Board. Citywide written communications have been provided to educate employees regarding the changes and four employee meetings were held to explain the changes. The outcome of the meetings as well as various Edmonds City Council Approved Minutes December 5, 2000 Page 12 1 communications has been very positive. He noted this was a win -win situation and did not require a request for funding. MEBT was a program that allowed the City to attract and retain qualified employees. Councilmember White asked who manages the fund and what the return has been. Assistant Chief Compaan answered the fund had been managed for the past two years by Prime Asset Consulting. The average annual rate of return over the past 10 years has been slightly over 12 %. He explained the fund was conservatively invested due to the judiciary responsibility to participants. The portfolio is comprised of approximately 55% stocks and 45% bonds and fixed income investments. Councilmember White inquired how the City's contribution was determined. Assistant Chief Compaan answered it was the same 7.65% that was contributed under Social Security as this was a Social Security replacement plan. COUNCILMEMBER ORVIS MOVED, SECONDED BY COUNCILMEMBER PLUNKETT, FOR APPROVAL OF RESOLUTION NO. 989. MOTION CARRIED UNANIMOUSLY. ole of 1 9. DISCUSSION OF ROLE OF ARCHITECTURAL DESIGN BOARD REVIEW (PRE- DESIGN OR DB AFTER DESIGN) Planning Manager Rob Chave advised this item was primarily for Council discussion and the packet included information the Council requested at the last meeting. He requested Council provide as much direction as possible for the Planning Board. The Planning Board would take the proposed Design Guidelines through the public hearing process and forward a recommendation to the Council. Once that was completed, they would consider the ADB process and make suggestions regarding their role. Councilmember Petso observed in reviewing the materials, there appeared to be more than one issue regarding the ADB such as the timing of the process, how authoritative the process was, and what the thresholds should be. Mr. Chave said he was most interested in process, whether the Planning Board should complete the Design Guidelines process before considering the ADB process or do both at the same time. Further, the Council could provide specific direction regarding the process to narrow the range of possible solutions the Planning Board may consider. City Attorney Scott Snyder said strengthening the Design Guidelines was a requirement; this was in response to the Anderson v. Issaquah case that required cities, if they had design guidelines, to have specific direction in the design guidelines. Changing the process was an optional decision. He recommended the City get the design guidelines in place first as the stopgap measure that was in place was not as specific as the proposed guidelines. Mr. Chave agreed that he did not want the Planning Board review of the design guidelines slowed by consideration of the process. Councilmember Plunkett recalled the ADB process has been considered by the Council for the past two years. The Council had decided to front -end the ADB process when staff suggested developing draft design guidelines first. He concluded the City needed the knowledge and skills of the ADB at the beginning of the process so that designers knew what was expected up front rather than waiting until the end of the process as they do now. He said appeals would still go to the Hearing Examiner and City Council. He recommended moving the ADB process forward as an advisory group as recommended in the Cedar River Study. Edmonds City Council Approved Minutes December 5, 2000 Page 13 COUNCILMEMBER PLUNKETT MOVED, SECONDED BY COUNCILMEMBER ORVIS, THAT THE DRAFT GUIDELINES BE AMENDED TO REFLECT THAT THE ADB SERVE IN THE FRONT END OF THE PROCESS AS AN ADVISORY BOARD AND ALL REFERENCES TO THE ADB IN THE DRAFT GUIDELINES THAT CALL FOR THE ADB TO BE QUASI JUDICIAL BE STRUCK AND REPLACED BY THE HEARING EXAMINER AND CITY COUNCIL. Councilmember Petso pointed out the proposed change would complicate the process. She observed the Planning Board and ADB wanted to complete the design guidelines first and then discuss the ADB process. Councilmember White recalled the comments at various meetings regarding the ADB's role were that it should be moved forward in the process. He was concerned about changing the quasi judicial role of the ADB, pointing out sufficient consideration had not been given to possible implications of that change under Regulatory Reform such as the consequences to a subsequent reviewing body. Councilmember Earling suggested the Planning Board be directed to complete the design guidelines first with the clear indication that the recommendation submitted by the Planning Board should have ADB review in the pre- design stage. He said this would free up the Planning Board to look at the design guidelines more clearly. He was also sensitive to the need to have adequate public input. Councilmember Davis stated the Cedar River Study concluded the ADB review should be at the front end of the process. However, he wanted the public process to occur at the Planning Board before making a decision regarding that issue. He was unsure the public had had sufficient opportunity to provide input. Councilmember White responded the public had had numerous opportunities to provide input; the public participated in the Cedar River Study and there were no objections to moving the ADB process to the pre - planning stage. Councilmember Davis indicated, as a new Councilmember, he had not seen any public involvement described in the materials. Further, he has heard from citizens who do not agree with moving the ADB process to the pre - planning stage. MOTION FAILED; THE VOTE WAS 2 -5, COUNCILMEMBER PLUNKETT AND COUNCILMEMBER ORVIS IN FAVOR, AND COUNCIL PRESIDENT MILLER AND COUNCILMEMBERS EARLING, WHITE, DAVIS, AND PETSO OPPOSED. Council President Miller offered to draft a letter to the Planning Board describing the issues discussed by the Council tonight. Councilmember Earling recommended it be made clear that the Council preferred the ADB's involvement occur at the front end of the process so that design issues could be identified at the beginning. He commented the complaints regarding the ADB process have been that because the ADB is brought into the process so late, a great deal of money and time is required to review the project. This could be avoided by having the ADB process at the beginning. Councilmember Plunkett recommended the City notify specific organizations of any public hearings regarding the design guidelines such as the Chamber of Commerce, the staff and director of the Edmonds Alliance for Economic Development, and all architects in the City. Mr. Chave advised extensive public involvement was planned at the Planning Board level. 10. MAYOR'S REPORT mencan ea cross Mayor Haakenson reported the American Red Cross had their Real Heroes Breakfast today that cal Heroes Y p Y celebrateI the real stars in Snohomish County in 2000. He read a nomination for Edmonds Police Edmonds City Council Approved Minutes December 5, 2000 Page 14 rOfficer Bill Nelson under the category of Police Rescue that described Officer Nelson's involvement in preventing an imminent suicide when be went'to a residence to serve a court order. Mayor Haakenson commented that Officer Nelson and other officers placed themselves at great personal risk to bring the situation to a successful conclusion. Mayor Haakenson said the City was proud of Officer Nelson, a very kind, gentle officer who was a credit to the Edmonds Police Department. 11. COUNCIL REPORTS Councilmember White advised the train station's annual open house would be Saturday, December 8, from 8:00 a.m. to 4:00 p.m. With no further business, the Council meeting was adjourned at 9:45 p.m. WIMM NSON, MAYOR SANDRA S. CHASE, CITY CLERK Edmonds City Council Approved Minutes December 5, 2000 Page 15 Revised 1211100 —1: 00 p. m. LL_ AGENDA EDMONDS CITY COUNCIL Plaza Meeting Room - Library Building 650 Main Street 7:00 -10:00 D.m. DECEMBER 5, 2000 SPECIAL MEETING 6:30 PM. — EXECUTIVE SESSION REGARDING A LEGAL MATTER 6:45 P.M. — INTERVIEW CANDIDATE FOR THE ARCHITECTURAL DESIGN BOARD 7:00 P.M. — CALL TO ORDER FLAG SALUTE 1. APPROVAL OF AGENDA 2. CONSENT AGENDA ITEMS (A) ROLL CALL (B) APPROVAL OF CITY COUNCIL MEETING MINUTES OF NOVEMBER 21, 2000 (C) APPROVAL OF CITY COUNCIL MEETING MINUTES OF NOVEMBER 28, 2000 (D) APPROVAL OF CLAIM CHECKS #44904 THROUGH #45086 FOR THE WEEK OF NOVEMBER 27, 2000, IN THE AMOUNT OF $274,996.93. (E) AUTHORIZATION FOR MAYOR TO SIGN PROFESSIONAL SERVICES AGREEMENT WITH KARIN NOYES FOR MINUTE TAKING SERVICES (F) AUTHORIZATION FOR MAYOR TO SIGN PROFESSIONAL SERVICES AGREEMENT WITH JEANNIE DINES FOR MINUTE TAKING SERVICES (G) AUTHORIZATION FOR MAYOR TO SIGN EMPLOYMENT CONTRACT WITH JANA SPELLMAN, SENIOR EXECUTIVE ASSISTANT TO THE CITY COUNCIL (H) AUTHORIZATION FOR MAYOR TO SIGN PROFESSIONAL SERVICES AGREEMENT FOR LEGAL REPRESENTATION OF INDIGENT DEFENDANTS WITH JAMES FELDMAN (1) AUTHORIZATION FOR MAYOR TO SIGN INTERLOCAL AGREEMENT WITH SNOHOMISH COUNTY ON LOCATING ESSENTIAL PUBLIC FACILITIES (J) AUTHORIZATION FOR MAYOR TO SIGN INTERLOCAL AGREEMENT BETWEEN THE CITY OF LYNNWOOD AND CITY OF EDMONDS FOR JOINT FUNDING OF THE RECYCLING COORDINATOR (K) PROPOSED ORDINANCE REENACTING CERTAIN ORDINANCES WHICH WOULD PURPORTEDLY BE INVALIDATED BY INITIATIVE 722 BY REENACTING ORDINANCE NO. 3280 ESTABLISHING A PROPERTY TAX LEVY, EMS LEVY AND LEVY FOR VOTED INDEBTEDNESS; ORDINANCE NO. 3281 ESTABLISHING A TAX ON ITS SEWER UTILITY; ORDINANCE NO. 3282 ESTABLISHING A TRANSIENT (NON- RESIDENT) BUSINESS LICENSE FEE; AND RESOLUTION NO. 967 AMENDING THE FEE SCHEDULE FOR PLANNING, ENGINEERING AND OTHER CITY FEES; PROVIDING FOR SEVERABILITY AND FIXING A TIME WHEN THE SAME SHALL BECOME EFFECTIVE 3. ( 5 Min.) CONFIRMATION OF APPOINTMENT TO ARCHITECTURAL DESIGN BOARD 4. (45 Min.) PUBLIC HEARING REGARDING PROPOSED UTILITY RATE INCREASES: • PROPOSED INCREASE IN WATER AND SANITARY SEWER CHARGES FOR NEW DEVELOPMENT • PROPOSED GENERAL RATE INCREASE FOR SANITARY SEWER SERVICE FOR ALL RESIDENTS AND PROPERTY OWNERS Page 1 of 2 �I 1 CITY COUNCIL MEETING AGENDA DECEMBER 5, 2000 Page 2 of 2 5. (15 Min.) ANNUAL REPORT FROM HEARING EXAMINER RON McCONNELL 6. (15 Min.) ANNUAL REPORT FROM PROSECUTOR JEFFREY GOODWIN 7. AUDIENCE COMMENTS (3 Minute Limit Per Person) 8. (10 Min.) PROPOSED RESOLUTION APPROVING AMENDMENTS TO THE CITY'S MUNICIPAL EMPLOYEE BENEFIT TRUST PLAN, AUTHORIZING PICK UP CONTRIBUTIONS IN ACCORDANCE WITH IRS CODE SECTION 414(H)(2), AND ESTABLISHING AN EFFECTIVE DATE 9. (20 Min.) DISCUSSION OF ROLE OF ARCHITECTURAL DESIGN BOARD REVIEW (PRE- DESIGN OR AFTER DESIGN) 10. ( 5 Min.) MAYOR'S REPORT 11. (15 Min.) COUNCIL REPORTS Parking and meeting rooms are accessible for persons with disabilities. Contact the City Clerk at (425) 771 -0245 with 24 hours advance xotice for special accommodations. The Council Agenda appears on AT &T Cable, Channel 21. Delayed telecast of this meeting appear: `he following Wednesday at noon and 7:00 p.m., as well as Friday and Monday at noon on Channel 21.