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06/28/2011 City CouncilEDMONDS CITY COUNCIL APPROVED MINUTES June 28, 2011 The Edmonds City Council meeting was called to order at 6:00 p.m, by Mayor Cooper in the Council Chambers, 250 5`h Avenue North, Edmonds. The meeting was opened with the flag salute. ELECTED OFFICIALS PRESENT Mike Cooper, Mayor Strom Peterson, Council President Steve Bernheim, Councilmember D. J. Wilson, Councilmember Michael Plunkett, Councilmember Lora Petso, Councilmember Adrienne Fraley- Monillas, Councilmember Diane Buckshnis, Councilmember 1. APPROVAL OF AGENDA STAFF PRESENT Al Compaan, Police Chief Stephen Clifton, Community Services /Economic Development Director Phil Williams, Public Works Director Carrie Hite, Parks & Recreation Director Jim Tarte, Interim Finance Director Carl Nelson, CIO Debi Humann, Human Resources Director Deb Sharp, Accountant Sharon Cates, City Attorney Sandy Chase, City Clerk Jana Spellman, Senior Executive Council Asst. Jeannie Dines, Recorder COUNCILMEMBER PETSO MOVED, SECONDED BY COUNCIL PRESIDENT PETERSON, TO MOVE AUDIENCE COMMENTS BEFORE THE LEVY DISCUSSION. MOTION CARRIED UNANIMOUSLY. COUNCIL PRESIDENT PETERSON MOVED, SECONDED BY COUNCILMEMBER PETSO, TO APPROVE THE AGENDA AS AMENDED. MOTION CARRIED UNANIMOUSLY. 2. CONSENT AGENDA ITEMS Councilmember Plunkett requested Items G and H be removed from the Consent Agenda. COUNCIL PRESIDENT PETERSON MOVED, SECONDED BY COUNCILMEMBER FRALEY- MONILLAS, TO APPROVE THE REMAINDER OF THE CONSENT AGENDA. MOTION CARRIED UNANIMOUSLY. The agenda items approved are as follows: A. ROLL CALL B. APPROVAL OF CITY COUNCIL MEETING MINUTES OF JUNE 21, 2011. C. APPROVAL OF CLAIM CHECKS #126143 THROUGH #126293 DATED JUNE 23, 2011. FOR $1,1.91,1.46.96. APPROVAL OF PAYROLL DIRECT DEPOSIT AND CHECKS #50497 THROUGH #50539 FOR THE PERIOD JUNE 1, 2011 THROUGH JUNE 1.5, 2011. IN THE AMOUNT OF $584,499.76. Edmonds City Council Approved Minutes June 28, 2011 Page I D. ACKNOWLEDGE RECEIPT OF A CLAIM FOR DAMAGES SUBMITTED BY ALEX PARLE. E. ACCEPTANCE OF MAY 2011 . WASHINGTON STATE LIQUOR CONTROL BOARD RENEWALS. F. ORDINANCE NO. 3843 — REVISING REGULATIONS CONCERNING OUTDOOR BURNING FOR RECREATIONAL PURPOSES. ITEM G: APPROVAL OF THE COLLECTIVE BARGAINING AGREEMENT BETWEEN THE CITY OF EDMONDS AND THE PUBLIC PROFESSIONAL AND OFFICE - CLERICAL EMPLOYEES AND DRIVERS LOCAL UNION NO. 763 (REPRESENTING THE PUBLIC WORKS AND PARKS DEPARTMENT MAINTENANCE EMPLOYEES), FOR JANUARY 1, 2011 . THROUGH AND INCLUDING DECEMBER 31, 201.4. ITEM H: APPROVAL OF THE COLLECTIVE BARGAINING AGREEMENT BETWEEN THE CITY OF EDMONDS AND THE SERVICE EMPLOYEES INTERNATIONAL UNION LOCAL 925, FOR JANUARY 1, 2011 THROUGH AND INCLUDING DECEMBER 31, 2014. Councilmember Plunkett commented these are both labor contracts; in addition to salaries, the labor contracts include longevity bonuses and step increases. He asked whether the five year budget projection includes the longevity bonuses and step increases. Mayor Cooper answered it does; nothing changed regarding those during contract negotiations and they were already included in the projections. Councilmember Buckshnis asked the percentage that was included in each year. Mayor Cooper responded the forecast provided to the Council in May and the forecast reflected in the 2011 budget shows a 2% per year increase in the salary line beginning 2011 and out to the end of the projection. Mr. Tarte agreed. Councilmember Plunkett commented 2% may be higher than what is projected. Mayor Cooper explained the amount included in the projections includes step increases and longevity as well as merit increases. Although the salary ordinance approved by the Council allows 3% merit increases, he only budgeted for 1.5% merit increases. COUNCIL PRESIDENT PETERSON MOVED, SECONDED BY COUNCILMEMBER FRALEY- MONILLAS, TO APPROVE ITEMS G AND H. Councilmember Wilson explained he has always been a strong advocate for placing a levy on the ballot due to his interest in stabilizing the City's revenue situation. To him, that was the single biggest issue the Council faces. The vote on these contracts has been very difficult for him and he has voiced his concerns over substance and process during executive sessions. As a member of a bargaining team himself, American Federation of Teachers, he knows the frustration union members can have with a management team that does not appear to be listening or be willing to negotiate in good faith. As a Councilmember, he represents parents and taxpayers who are doing more with less as well as City staff who do more with less than any other city or jurisdiction he has ever experienced. Although many have disagreed with him regarding the need for a levy, many agreed with forming a Levy Committee that resulted in a tremendous citizen effort. To fully fund the City's revenue problem, the City must hold the line on expenses everywhere it can be in as reasonable a way as possible. He has worked to reduce the cost of healthcare benefit administration while maintaining existing benefits. As Council President, he led a process to contract for fire services that saved the City approximately $1 million /year. During this economy, Councilmember Wilson felt it was important to maintain the status quo as much as possible with regard to labor agreements. He supported the police contract as an essentially status quo Edmonds City Council Approved Minutes June 28, 2011 Page 2 contract because it was for one year. The contracts under consideration tonight are not status quo contracts. Where other cities are cutting costs and where the State is laying employees off and cutting back 3% and reducing payroll, these contracts add. If these were status quo with only the COLA and step increases, continued to maintain generous benefits and were only for one year, he could support the contracts. To him, the contracts were not about employee compensation but about getting a levy passed. It was difficult to advocate on behalf of parents, taxpayers and City employees if he had to defend things like boot stipend increases, giving 100% of healthcare savings back to the employees, and adding new paid holidays in exchange for the furlough days that were generously given in years past that he continued to appreciate. He found it difficult to sell a levy to the voters if he had to defend things that are over and above the existing contract. Because his most important issue was to get the City on a stable financial footing so that services could continue to be provided to parents, continue to do more with less for taxpayers and to solve the most important issue to City employees — making sure there is enough money in the bank to keep the lights on — Councilmember Wilson summarized he could not support either contract. He could support a one year status quo agreement but could not support a 4 -year contract that included new benefits and included new paid holidays. Councilmember Fraley - Monillas, Council representative to the negotiating committee, agreed it was a difficult negotiation. She assured benefits were not being maintained, benefits are changing as of January 1. For the staff willing to change earlier, they are giving the cost savings back. With regard to the boot allowance, she explained the City allowed $85 -$90 for boots for 7 -8 employees who needed hard weather boots for outside work. The boot allowance was increased approximately $30. She viewed that as a very minor increase but something that would help the employees while protecting their safety in the workplace. In her view, not a whole lot had been given to the staff during this difficult economic time. Councilmember Fraley - Monillas referred to Councilmember Wilson's comment about giving staff extra holidays, explaining staff was provided a day back of leave. It did not cost the City anything and the contract refers to providing a day per year if it costs no overtime, there are no compensation issues, etc. Employees will not be paid for that day; it is day off, a personal holiday, a low cost/no cost compensation. Employees were not given raises; they receive nothing this year and next year will receive up to 1.5 %. City staff have given a lot and the contract is a minor cost to the City and well within the budget. She encouraged citizens not to connect these contracts with the levy and to read the contracts online. In her 30 years' experience in negotiations, there is give and take during negotiations. She is aware State employees took a 3% reduction; her husband is a State employee. With that 3% reduction he also gets 6 hours of annual leave or an extra day /month for the next year. Councilmember Fraley - Monillas encouraged citizens not to connect a levy with the contracts. She did not believe there were any windfalls on either side and it was as close to status quo as was possible in the next four years. A four year contract is good and brings stability to the City, employees and taxpayers. The only unknown is medical insurance. The unions are aware the City will be considering different types of medical insurance during the next 1 -2 years in an effort to reduce costs. She summarized no one won or lost big and she thanked the employees for not assuming there was a windfall of funding coming up. She assured the City employees work very hard for what they get and these contracts are not out of control. Mayor Cooper cautioned the Council not to discuss anything that reflected the City's strategy because if the contracts are not ratified tonight, the Council will be back in Executive Session to discuss contract strategy. Edmonds City Council Approved Minutes June 28, 2011 Page 3 Councilmember Buckshnis thanked the negotiating team, Rosa Fruehling- Watson and Sharon Cates, City Attorney's Office, Councilmember Fraley - Monillas, Human Resources Director Debi Humann, Police Chief Al Compaan and Public Works Director Phil William. Councilmember Buckshnis commented Councilmember Petso, Council President Peterson and she attended all the Executive Sessions regarding labor negotiations. The contracts provide stability for four years and she did not believe the contracts "give away the farm at all." Councilmember Wilson commented on how strongly Councilmember Fraley- Monillas has advocated for City employees during Executive Sessions. He has had some concern with Councilmember Fraley - Monillas being the negotiator, fearing she would not be an advocate for the City Council. He agreed the boot stipend was not very much and that the limit on the COLA was beneficial to the City. However, the holiday buyback and furlough buyback were not the right message to send to the community. He clarified Councilmember Fraley - Monillas' statement that those are unpaid days, explaining they are floating paid holidays. To Councilmember Buckshnis, Councilmember Wilson agreed the contracts do not give away the farm but he wants to get a levy passed and the best way to do that is a status quo budget. Councilmember Bernheim pointed out the importance of compromise, explaining in his opinion the City could not afford to reject this contract after working on it since September /October 2010. He also cited the importance of retaining the City's great workforce and continuing the fantastic chain of recent hiring that has resulted in outstanding directors such as Carrie Hite and Phil Williams. The Council should examine the contract from the point of view of a responsible employer and mature stewards of their responsibility and not as needle -nosed penny pinchers. He enthusiastically supported the contracts, pointing out the importance of unity and the effort during negotiations to reach an agreement that everyone can live with. He noted the costs of some of the objections are low four figure items. In return for higher levels of employee satisfaction, the City spends a small level of additional dollars. It is a great opportunity for everyone to stand together and approve the contracts even though there may be some items the Council does not like. He too wanted a no increase, one year freeze but he would not oppose the contracts because that was not provided. In his view opposing the contracts at this point was a very weak position because it took no responsibility for the consequences. He disagreed that there were no big wins or big losses; everyone wins big by remaining stable. Councilmember Fraley - Monillas advised the increase in the boot allowance was $13.50 for 7 to 8 employees and she recalled she may have offered to pay for that herself. She recognized Councilmember Wilson's comments were his opinion, pointing out he did not know how negotiations went because he was never in the room. She objected to his characterizing her as an advocate for the employees and not the citizens when he was never in the room when negotiations occurred. She acted professionally and clearly and always kept the Council's directive in mind. She concluded she had nothing to gain or lose as she was not up for election and had tried to do the best job she could. Ii % [oil Y[136NEWI 13131017C'l�i&IU1 001 4 1 004 1Nd1C3BV ILIVI101JOOKLETY101110 0 114. AUDIENCE COMMENTS Matt Wood, negotiator for SEIU 925, thanked the Council for ratifying their agreement. He recognized the contract negotiations have been difficult due to the change in the City Attorney halfway through the process and the parameters provided. The team worked hard, is aware of the City's finances and understands the importance of the contract. The issues covered by the contract are important to the members and a 4 -year agreement also allows time to look at other healthcare options if necessary. The SEIU members ratified the contract nearly unanimously. Edmonds City Council Approved Minutes June 28, 2011 Page 4 Ron Wambolt, Edmonds, referred to the labor agreements, commenting under the circumstances, he doubted the Council could have reached a better agreement because both agreements are identical although they are for two different unions. He anticipated the unions agree what they will pursue such as days back for furloughs in 2009, one day per year or a total of 3 days. He suggested benchmarking what other government organizations have done with regard to furloughs and do no more less or less. In private industry, employees receive merit pay increases. In these agreements, in addition to merit increases for some employees, they receive step increases, longevity pay and COLA. In addition 90% of all the employees' health benefits are paid. When he was on the City Council, the health benefits were superior to anything he had during his career with two New York Stock Exchange companies. The employees also receive a defined benefit pension plan which is virtually a thing of that past. He concluded the Council likely could not have negotiated a better agreement because may of the issues need to be fixed in Olympia such as making Washington a Right to Work State which will not happen without a republican governor. Don Hall, Edmonds, thanked Councilmember Plunkett for removing the contracts from the Consent Agenda to allow Council discussion. The discussion enlightened citizens and informed them that the contracts are available on the City's website. He suggested rather than percentages, the actual cost per year over the 4 years be provided. Councilmember Plunkett commented the actual amount for wages and medical benefits is in the 2011 . budget book as well as the projection. Mayor Cooper commented the actual salary and benefit totals will also be in the adopted 2012 budget. 3. WORK SESSION REGARDING LEVY OPTIONS. Council President Peterson recalled May 17 was the last time the Council discussed levy options and no decisions were made at that meeting. A workshop was discussed and he suggested holding it in the Police Training Room. The date of the workshop was discussed at the May 24 meeting and he mentioned at last week's meeting that it would be a non - televised meeting. Council President Peterson explained the contracts were ratified by the unions late in the week and it was necessary to have Council approval before July 1 due to the healthcare rollover. Although there apparently was some misunderstanding regarding the location of tonight's meeting and whether it would be televised, it had been discussed in public on numerous occasions. He felt he was working according to Council direction to hold an off - camera work session but was happy to have the work session on camera. Mayor Cooper explained he asked Interim Finance Director Jim Tarte to provide historical information. There was intentionally not a packet of information provided because the Council has received/discussed multiple pages of information in the past. He was hopeful the Council would identify areas of agreement such as whether to place a levy on the ballot in November, the size of a levy, whether the levy is a single or multiple proposals, and how much of a levy would fund the deficit reduction and how much would fund other things such as streets. Once the Council identified areas of agreement, they could begin discussing items they need to reach agreement on. The issue that needs the most discussion is the amount of a levy that will fund the General Fund deficit reduction and whether it is a single proposition, multiple propositions or none. Mr. Tarte displayed a graph comparing General Fund revenue and expenditures 2003 — 2016. He explained revenues and expenses for the graph were obtained from the City's audited financial statements (CAFR) for 2003 - 2010 and from the forecast for 2011— 2016. He reviewed the following fluctuations in revenues: Edmonds City Council Approved Minutes June 28, 2011 Page 5 0 2007 to 2008: $1.2 million decrease in revenue due to $800,000 decrease in sales tax collections as a result of recession, 2007 included $600,000 in debt financing 0 2008 to 2009: $3.4 million increase in revenue due to $1.5 million increase in EMS levy rate, $1.2 million increase in utility tax rate, $800,000 in transport fees, $500,000 increase in fire protection service contract with Woodway and Esperance, offset by $500,000 decrease in sales tax collections • 2009 to 2010: $800,000 increase in revenue due to $1.5 million sale of Fire Department (without sales of Fire Department, revenue remains flat 2009 - 2010), taxes and fees remain flat • 2011: .. $2.2 million decrease in revenue due to no sale of assets (compared to previous year sale of Fire Department) 0 2012 to 2016: Revenues increase $400,000 per year or I% Mayor Cooper explained in the forecast, the City's assessed value was projected to decrease 5% in 2012. The Snohomish County Assessor's Office notified the City that the assessed value dropped 10.5% in 2012, from $6.4 billion to $5.9 billion. The result is a loss of $330,000 from the EMS levy in 2012. For illustrative purposes, Mr. Tarte removed one -time events from the chart such as the $1.5 million sale of the Fire Department and the $1.5 million transfer to the Public Safety Reserve which reveals that revenues are trending downward. Mr. Tarte reviewed fluctuations in expenditures: • 2003 through 2005: expenses increase approximately 6% per year • 2005 through 2007: expenses increase approximately 2 8% per year. $1.6 million of increase related to increase in debt service payments • 2008: expenses increase approximately 3% per year • 2009: expenses decrease approximately $50,000 • 2010: removing Fire Department information, expenses decrease approximately $200,000 • 2011: removing Fire Department information, expenses increase approximately 1% per year • 2012 and forward: expenses increase 3% per year. Mr. Tarte's conclusion was once the recession hit, expenses began to level out, flatten and decrease. From 2007 and during the next 4 -5 years, expenses flattened out, a good success story to communicate to citizens. Mayor Cooper recalled early in the legislative session there were several bills proposed to lower the cost of retirement systems to local government, but none of them were approved. Pension payments to retirees did not change. The State actuary requires the State recalculate the cost of the pension system every biennium. The City was notified by the Washington State Department of Retirement System that the City's pension contribution as well as the employee's cost of Public Employee Retirement System (PERS) effective July 1, 2011 will increase. The impact, not shown in the graph Mr. Tarte displayed, is $90,000 for the remainder of 2011 and $180,000 in 2012 and beyond. He summarized the increase in the pension contribution plus the decrease in assessed value totals nearly $500,000 that now needs to be reflected in the forecast. The 3% expense increase in 2012 and beyond forecast includes increases in Labor & Industry costs, 2012 healthcare savings, healthcare savings 2013 and beyond, and $200,000 /year for Edmonds Center for the Arts. Councilmember Wilson explained Councilmember Plunkett, Councilmember Bernheim and he were on the Council in 2008. When the Council approved the 2009 budget it included a $1 million cut in expenses. In March 2009 in response to the fourth quarter devastation in the economy, then Mayor Haakenson identified another $1 million in cuts. He summarized the flattening of expenses did not occur by accident; it occurred due to $2 million in cuts that included furlough days, holiday buyback, a Edmonds City Council Approved Minutes June 28, 2011 Page 6 $300,000 reduction in the equipment rental fund contribution, and cuts in Parks & Recreation that were offset by a citizen effort to raise funds to operate Yost Pool. In 2009 -2010 expenses were reduced due to the contract with FD1. He cautioned the community not to think of that as the new normal, that expenses were flat in this economy. Typically municipal inflation is much higher than inflation at large. Providing municipal services costs more and the rate of growth is faster than in the average economy. What is normal is the first 4 -6 year period on the graph when expenses increased 3 -6 %. Councilmember Plunkett agreed with Councilmember Wilson's comments, that the decrease in expenses was the result of the administration and Council doing a great deal of good work. The increase in expenses is the cost of doing municipal business. He summarized the reduction in expenses was the result of cuts, cuts that could not continue to be made year after year. Councilmember Plunkett thanked Mr. Tarte for presenting the information in a way that citizens and the Council can understand, noting the Council has not had this type of thoughtful presentation during the past year. He looked forward to Mr. Tarte remaining through the preparation of the 2012 budget. Mayor Cooper advised even the 2011 budget reflected careful and thoughtful consideration during the budgeting process such as negotiating a 0% pay increase for two labor unions in 2011. One of the reasons for his hiring freeze was to reach the end of the year without using reserves. Council President Peterson asked whether Mr. Tarte could update the forecast to reflect the decrease in assessed value and the increase in pension costs. Mr. Tarte answered he will update the forecast in early July taking into consideration the Council's ratification of the two contracts, the decrease in property tax collections due to the decrease in the assessed value and the increase in pension costs. Council President Peterson asked what it would take to bring the revenue and expense lines together. Mr. Tarte answered $6 million for a 4 -year levy or $1.5 million/year for 2012 -2015. Incorporating the new information, he estimated $1.5 - $1.7 million/year would be needed to cover the revenue shortfall. Councilmember Plunkett remarked it did not need to balance completely by revenue; there could also be reductions in expenditures. Mr. Tarte agreed there could be increases in revenue, decreases in expenses or a combination of the two. Councilmember Plunkett pointed out the contracts passed tonight include an agreement by the unions to reopen discussions regarding medical benefits in June 2012. Medical costs are the primary reason for increased expenses. Mayor Cooper advised a $1..5 million /year levy equates to approximately $0.25/$1000 assessed value based on $5.9 billion assessed value. A rate of $0.25/1000 AV would cost the owner of an average Edmonds home $93 -$94 /year. He agreed there were a variety of ways to bring revenue and expense lines together; increasing property taxes, hoping the economy recovers and sales tax increases, looking for new revenue sources such as Ms. Hite is doing in Parks & Recreation, and lowering expenses. Councilmember Buckshnis observed $1.5 million/year was needed to address the General Fund deficit. She echoed Councilmember Plunkett's comments regarding reopening discussions regarding medical benefits in June 2012. She asked Councilmember Wilson whether consideration was still being given to self- insurance. Councilmember Wilson recalled the Public Safety & Human Resources Committee worked on that issue for several months and brought a resolution to the Council but did not get a vote. Councilmember Buckshnis asked Mr. Tarte to explain what had happened to the General Fund over the last few years and why. Mr. Tarte explained whenever revenues exceed expenses, the General Fund balance increases. He reviewed increases and decreases in the General Fund balance in recent years. Edmonds City Council Approved Minutes June 28, 2011 Page 7 Councilmember Buckshnis observed the balance reflects the $1.927 million Emergency Reserve but not the $1.3 million Public Safety reserve. Mr. Tarte agreed. Councilmember Buckshnis observed the General Fund balance would increase if the Public Safety reserve were included. Councilmember Wilson agreed healthcare costs represented the most significant increase. He pointed out the conversation regarding medical benefits had just occurred with the union and during that conversation it was decided to give 100% of the savings to the employees. He feared that would establish a precedent when the issue was reopened next year. Councilmember Bernheim expressed his gratitude for Mr. Tarte's sensible and comprehensible presentation. He inquired about the tax burden for Edmonds residents over the past 8 -10 years, whether residents were paying more or less property and utility taxes today compared to the past. Mr. Tarte suggested he could provide a comparison of taxes for four South Snohomish County cities compared to Edmonds. Councilmember Bernheim was more interested in a comparison of the tax burden for Edmonds residents. He agreed the Council had approved relatively large increases in utility tax, a desperate decision to raise revenue to cover perceived shortfalls. Mr. Tarte answered he could obtain information regarding property taxes from the Snohomish County Assessor's Office and provide it in graphic form. Councilmember Plunkett advised the amount per $1000 is available in the last ten years of budget books. He recalled ten years ago citizens were paying $2.85/$1000 for the Edmonds portion of their property tax. Mr. Tarte was uncertain the amount per $1000 that citizens pay now. For Councilmember Petso, Mr. Tarte explained Washington Cities Insurance Authority (WCIA) provides the City's property and errors and admissions insurance, a portion of which is based on labor hours. When the Fire Department was sold, the City's labor hours decreased 25 %. The WCIA premiums paid in 2010 and 2011 do not reflect that decrease. Mayor Cooper and he plan to meet with the WCIA Senior Executive Director to discuss how the premiums are calculated. The City pays WCIA approximately $700,000 /year, a 25% decrease would be $150,000 /year multiplied by 2 years, a significant amount. Councilmember Petso asked whether an ongoing reduction in the premium would also be expected. Mr. Tarte explained WCIA indicated the premiums will be reduced by $200,000 in 2012. He was uncertain whether that was reflected in the forecast. Mayor Cooper advised the full premium was not reflected in 2011 due to the anticipated decrease. The forecast may reflect the $200,000 decrease. Councilmember Buckshnis commented on the use of a modified working capital approach, pointing out the figures Mr. Tarte relayed use a modified working capital approach which is not sanctioned by the Government Finance Officers Association (GFOA). Councilmember Petso, Ms. Sharp and she are working toward obtaining "real numbers" that reflect all fund balances. Mr. Tarte clarified it was a different basis of accounting, not "real numbers." Councilmember Buckshnis commented the 2010 -2011 Citizen Levy Committee (CLC) and the Mayor's survey indicate citizens preferred separate levies. The CLC recommended a $1.5 million specialized levy for streets and blacktop. She asked Public Works Director Phil Williams to explain how many miles that would pave, what is a street overlay, whether street overlays would address potholes, etc. Mr. Williams answered there will always be potholes; it is a question of frequency, intensity, size, etc. An active paving program where surfaces are reestablished on a regular basis and water kept out of the sub -base will result in far fewer potholes and a much safer pavement surface for pedestrians, bicycles and vehicles. The City currently does not have any money budgeted for preservation paving which has resulted in a significant deficit. He estimated it would require $1.5 million in current dollars to fund a sustainable paving program. He clarified that would not provide perfect or the best streets in the State but would prevent the street system from getting worse each year such as it is doing now. Edmonds City Council Approved Minutes June 28, 2011 Page 8 Mr. Williams advised the City has approximately 133 centerline miles of City streets or approximately 200 lane miles. Typically the replacement cycle is 15 -18 years for arterial streets and 30 -35 years for residential streets. In between replacement, regular maintenance is required such as repairing cracks, filling potholes, etc. He assured staff was doing the best they can to keep up with cracks and potholes but as the street system's quality continues to deteriorate it becomes a case of chasing ones tail. It is no longer cost effective to maintain the street surface with crack sealant; a new surface is required eventually. Staff's estimate is $1.5 million in today's dollars on an ongoing basis to have a sustainable street system. If the voters approved $1.5 million per year for overlays, Councilmember Buckshnis asked if that could be used as a match for federal funds. Mr. Williams answered no, he knew of no source of federal or state funding to match local dollars for paving. There are grants, and the City has obtained three in the last year, for improvements in the transportation system such as new streets, new amenities, safety projects, etc. Preservation paving is not considered an improvement but major maintenance, taking care of existing assets. He noted the one exception was in 2009 when the City paved two major portions of Dayton with funds from the federal stimulus program. That was the first time in his career that federal dollars were available for preservation paving. Mayor Cooper commented there was very limited federal and state funding available for anything. For example, the State recently eliminated large portions of the Public Works Trust Fund Program. Mr. Williams explained in the past funds were transferred annually from the General Fund to the Street Fund for overlays which has not been done in recent years. The establishment of the Transportation Benefit District (TBD) in 2008 and collection of funds beginning in 2009 provided approximately $580,000 for street maintenance and partially offset what the General Fund provided in the past. Councilmember Buckshnis observed the TBD funds were used for maintenance and not overlays. Mr. Williams agreed the TBD funds were used strictly for maintenance. Councilmember Petso clarified her interest was a $700,000 levy for overlays, not the $1.5 million that was recommended by the CLC. She explained the Council began ignoring roads during her first term in 2000 and apparently has continued to ignore roads for many years. Although she understood the need, she was concerned with asking the public for the full recommended amount for roads in this economy. She preferred to do something to demonstrate the Council wanted to address the problem, but also understanding that times are tough. She suggested a $700,000 levy for a couple years with no escalator. If the preservation paving makes an impact, when it is up for renewal, voters may approve the recommended amount. She summarized she did not plan to make a motion at tonight's work session; she was interested in a proposal that could be presented to the Council in the future for an up /down vote with no amendments or discussion. Mayor Cooper suggested the Council strive to reach consensus rather than the exercise several weeks ago where there were motions and several amendments. Council President Peterson advised a levy discussion was scheduled on next week's agenda. He suggested the Council address the size of a levy, the number of ballot proposals, and what the ballot proposals would fund. He observed $750,000 for roads appeared to have the support of the Council. He asked if the Council would support a $750,000 standalone levy for roads or include it in a single broader levy. Councilmember Wilson responded he could not support a roads levy without the context of the package. He feared the Council would undermine the public's trust by proposing levies that did not solve the problem. The City would be no further ahead if the voters approved a $750,000 levy for roads but the Council then had to close parks or lay off employees because the operating deficit had not been addressed. Edmonds City Council Approved Minutes June 28, 2011 Page 9 Councilmember Bernheim responded he could support a roads proposal because he believed in offering voters the opportunity to vote on separate issues. If the voters want to spend $750,000 to fix the City's road problems, then they should be given that choice. He supported allowing the voters the opportunity to impose costs on themselves. He could support a $750,000 - $1 million roads proposal. A $1 million levy for roads would add approximately $60 per year to the average homeowner's ($375,000 AV) property taxes. Councilmember Bernheim did not support combining proposals into one proposition. He supported implementing the propositions for a limited time such as 3 years. He supported targeted proposals and he could support a proposal to address the General Fund deficit. He suggested segregating the fire costs because the City is paying the expense out of the General Fund and when costs increase in the future, it may be useful to have a dedicated tax for fire similar to the library. He suggested the Mayor's budget committee assist with organizing a group to scrutinize expenses. Mayor Cooper clarified Councilmember Bernheim would support up to $1 million for streets. Councilmember Bernheim supported starting with modest options and earning the trust of the voters by demonstrating success. Councilmember Buckshnis echoed Councilmember Bernheim's comments. She wanted to be sensitive to voters' situations, recognizing there are citizens who are unemployed. Separating the levies allows voters to determine how much they want to spend and to realize the impact of not supporting a specific levy. Councilmember Fraley- Monillas asked what the Mayor's poll indicated. Mayor Cooper responded in the survey a high percentage of voters said they would like to vote on separate ballot measures. In response to another question, respondents said they would support the levy package he proposed. He summarized the voters stated by a fairly significant margin that they would prefer to vote on separate ballot measures but when asked a specific question about a packaged $2.2 million proposal, respondents said they would support it. It is the Council's decision whether to place separate or a combined levy on the ballot. Also in the survey, voters said they would like some Council unanimity in what is proposed. He feared placing a levy or levies on the ballot with a 4 -3 vote would result in a situation like the TBD vote that the voters defeated by 70 %. He summarized the most important thing was for the Council to agree with a super majority on the ballot measures. Councilmember Plunkett responded the only thing he would support was capital. He was interested in a $700,000 levy for roads. He pointed out the Council had not ignored roads, funding for roads was reduced due to voter approval of initiatives. The Council then approved the use of some REET funds for roads but the downturn in the economy eliminated those funds. Councilmember Petso requested the City Attorney work on the language for a ballot measure, suggesting that the term preservation paving may cover both Council intent and the work Mr. Williams needs to do. She did not want another ordinance that referred to maintenance that would allow funds to be diverted to salaries. She asked whether including an escalator in a levy made the levy permanent even if the term was limited. City Attorney Sharon Cates responded she would need to research that. Councilmember Petso suggested rather than researching it, the ordinance not include an escalator. Mayor Cooper advised City Attorney Jeff Taraday is working on ordinance language. With regard to Councilmember Petso's concern about diverting funds to salaries, Mr. Williams explained any large program, particularly a new program that the City is currently not doing, will require management and inspection, development of standards and requirements, ensuring standards are met in the field, etc. He summarized there is a labor component to that type of capital work. He suggested a Edmonds City Council Approved Minutes June 28, 2011 Page 10 $750,000 levy may result in $700,000 for actual improvements and provide resources to manage the program. Council President Peterson recalled in recent discussions the biggest issues were, 1) multiple ballot measures, and 2) a General Fund deficit levy. He observed Councilmember Petso and Councilmember Plunkett have indicated they would support a standalone capital roads package but they would be hesitant to support a second ballot measure to address the General Fund deficit. He supported having a similar number of Councilmembers supporting each measure to avoid pitting roads against the General Fund. He commented it was all well and good to fund road improvements, but if there was not the same Council support for General Fund expenditures, he would have a difficult time supporting a levy that only funded roads. He was willing to have two ballot measures, one for roads and a second to address the General Fund deficit. It was not his ideal; he would rather combine them. If the Council cannot reach a consensus on this it may not be worthwhile to continue the discussion. Mayor Cooper declared a brief recess at 8:00 p.m. Councilmember Fraley- Monillas asked who would do the work if voters approved a $700,000 levy for overlays. Mr. Williams answered the City does not have the equipment to do significant amounts of paving and it would be contracted out to the private sector. Councilmember Wilson asked if a $1.5 million levy would fund overlays of 1/35`h of the City's streets or repaving all the roads in the City every 35 years. Mr. Williams answered it would be more frequent than that, approximately 20 -25 years because of the different paving frequencies for residential and arterial streets. Councilmember Wilson observed with a $750,000 levy, that rate would be doubled so that all roads would be paved every 50 years. If all the City's 133 centerline miles were paved every 50 years, every year about 2% of the 133 centerline miles or 3 total miles would be paved. He observed 3 miles per year for $750,000 seems like a drop in the bucket. He agreed it was better than nothing but the line "go big or go home" may apply. He noted the $1.5 million would simply maintain the City's streets but by doing no overlays in recent years, there is a need to do catch up as well. Councilmember Wilson asked Mr. Williams to quantify the deficit created by not maintaining the City's streets. Mr. Williams responded for any program that has a built in deficit, the first money collected will be used to pave streets that have a zero pavement rating. If the goal is to build the overall pavement rating the worst streets will be addressed first which will dramatically impact the average pavement rating. Councilmember Wilson recalled from an earlier presentation that 97% of the 133 centerline miles needed some repair. Mr. Williams answered the City's streets are rated severe or poor or good; the severe and poor streets need attention. Councilmember Wilson asked the cost of rebuilding approximately 1/2 of the City's 133 centerline miles of road. Mr. Williams offered to research that. Councilmember Wilson commented there are five basic areas in which the City runs in dramatic deficit, such as a deficit that the City has changed the way it does business, 1) parks — the City does not fix broken playground equipment, 2) buildings, 3) streets — huge backlog of repairs, 4) General Fund deficit, and 5) human asset — the City does not have enough staff to provide answers so that the Council can make a decision or the services that citizens deserve. He acknowledged this was a tricky time financially but encouraged the Council to think big and address some of these issues. For example, he noted the Council will not get their questions answered without more Finance staff. Councilmember Buckshnis commented she is getting her questions answered by Finance. Councilmember Wilson recalled Mr. Tarte informed the Council there needed to be 2 -3 more people in Finance to answer Council questions and provide reports in the future. Councilmember Buckshnis expressed support for 2 -3 Edmonds City Council Approved Minutes June 28, 2011 Page 11 targeted levies on the ballot. Mr. Tarte, Mr. Haug, Councilmember Petso, Deb Sharp and she are working on the financials. She would be willing to include a General Fund levy if the Mayor would commit to moving forward on the financial issue that was to have been addressed in January. She was hopeful that good financial clarity could be provided by November. Council President Peterson asked if Councilmembers were willing to put some sort of General Fund levy on the ballot in November. If not, this conversation could end now. He added another deficiency to Councilmember Wilson's list, public safety. Mayor Cooper encouraged the Council to state whether they were interested in a levy — General Fund deficit, streets, etc. — or not. If Councilmembers are interested, there is work to be done over the next six weeks regarding what a levy or levies would look like. If Councilmembers are not interested in a November levy and are more interested in delaying until spring or fall 2012, there is much more time to continue massaging numbers, discuss expense reductions, etc. Councilmember Fraley - Monillas was uncertain she had all the necessary information to express support for a levy. She agreed something needed to be done but wanted to hear more specifics. She supported the TBD fee increase because transportation affects everything in the City including tourism, economic development, residents' ability to get around, etc. She does not live in the bowl; there are far more transportation issues in areas outside the bowl. She supports a transportation levy due to the importance of transportation to get people around the City whether by bus, bike, to ferries, etc. If nothing is done, she assumed the roads would continue to deteriorate until they were inaccessible. Mr. Williams explained roads deteriorate on a fairly predictable curve. There is little change in a recently paved road if cracks and potholes are addressed; the road surface will last a long time without showing visible signs of deterioration. As the condition begins to decline, at the mean of the curve, the road deteriorates quite quickly once the base has been compromised. There are many streets in the city that have reached and are beyond the mean of the curve and will deteriorate at a more rapid rate. Councilmember Fraley - Monillas emphasized the need to address road conditions. If the City does not maintain its roads, it will begin to lose its tourism base. Having tourists get a flat tire or dented wheel from roads in poor condition is a problem. Mr. Williams added it is not just that the road condition deteriorates, the cost of the cure also increase. A road that cost X to repair may cost three times that in 5 years. Councilmember Fraley - Monillas agreed park maintenance was an issue and the City needs to find a way to fund park maintenance. She suggested including funds for park maintenance /repair in a levy. Councilmember Bernheim supported putting a General Fund levy on the ballot. He preferred separate ballot measures and did not think three was too many. He felt voters will support a levy if it is a good package, well explained and there is enough time to present the information. He favored giving voters an opportunity to agree to increase the level of self- taxation to maintain and improve the City or if they did not want to increase taxes, apparently they did not care if the City deteriorated. Councilmember Buckshnis relayed her understanding that $300,000 /year was needed for park maintenance, playground equipment, etc. Council President Peterson reiterated his question regarding whether Councilmembers supported placing a General Fund levy on the November ballot. Mayor Cooper urged the Council to state whether they were willing to place some type of levy on the November ballot. Staff has been responding to Council questions and is beginning to feel like squirrels in a squirrel cage. He remarked tonight's meeting seemed to be a replay of the meeting held a month ago; productive discussion but no movement toward placing a levy on the November ballot. Once there was consensus regarding whether or not to have a levy on the November ballot, the Council could discuss the substance of the levy or levies. The Council has indicated Edmonds City Council Approved Minutes June 28, 2011 Page 12 they are interested in roads and separate ballot measures. A straw poll showed all Councilmembers except Councilmember Plunkett supported placing some type of levy on the November ballot. For Councilmember Buckshnis, Ms. Hite assured the City's playground equipment is safe; they are inspected on a regular basis and are repaired if broken. There is currently $1.4 million dedicated to park maintenance and a need for $330,000 annually to address deferred maintenance such as playgrounds, restroom improvements, gateway signs and entrances, turf drainage issues, tree pruning, tennis and basketball court resurfacing, etc. In addition there is a capital cost of approximately $80,000 to replace the boiler at Yost Pool. Councilmember Buckshnis asked Mr. Williams the annual amount needed for building maintenance. Mr. Williams answered the term of a levy was an important component. There are several projects that need to be addressed; the amount needed depends on the length of the levy. He estimated $500,000 for 2 -3 years would address many of the needs. Councilmember Buckshnis suggested bundling parks and building maintenance in an $800,000 - $900,000 maintenance levy. Councilmember Petso said she would support a roads levy in a modest amount this November. She was not interested in a bundled maintenance levy or a General Fund levy at this time. For those Councilmember interested in pursuing those levies, she suggested making them permanent levies because they involve staff. She did not want to hire staff and the money to pay them to disappear, forcing layoffs in the future. Mayor Cooper suggested Council President Peterson and he work with the City Attorney to draft three separate levy proposals with numbers for discussion at the next meeting. Councilmember Buckshnis questioned how a number would be determined for a permanent facilities and park maintenance levy. Councilmember Petso answered it would depend on the staff component. Mayor Cooper advised staff has numbers regarding the backlog as well as the ongoing costs of parks and facilities maintenance. Councilmember Buckshnis referred to information provided by Mr. Tarte regarding a $600,000 General Fund deficit. Mayor Cooper pointed out that does not include the items he informed the Council of tonight such as the decrease in the assessed value and the increased pension plan contribution. Councilmember Buckshnis noted she is still waiting to get a good handle on the numbers. Council President Peterson asked if Councilmembers wanted to wait for the good, accurate numbers before scheduling a levy discussion on the agenda. Councilmember Petso relayed Mr. Tarte's indication that he would have significantly improved numbers after the close of the 2nd quarter and all the adjustments could be made at that time. Mayor Cooper advised the deadline to place a measure on the November ballot is August 16. The end of the second quarter is June 30 but it will be the end of the following month before the numbers are provided. That would only allow 1 -2 meetings after July 31 to discuss a levy. City Clerk Sandy Chase advised there is a Council meeting on August 2, committee meetings on August 9 and a special Monday meeting on August 15. Mayor Cooper advised good numbers could potentially be provided by the July committee meeting. In the meantime, Council President Peterson and he will work with the City Attorney to draft ordinances for Council discussion. Council President Peterson suggested removing the levy discussion from next week's agenda. Councilmember Buckshnis suggested staff provide the dollar amount for park and facility capital improvements, separate from staff hours. Council President Peterson responded a lot of those numbers Edmonds City Council Approved Minutes June 28, 2011 Page 13 have been provided. He suggested Councilmember Buckshnis email staff a request to separate capital from staffing. For the next meeting he encouraged Councilmembers to identify what they wanted included in a levy. He remarked the Council was far beyond the point of gathering information. Hoping to avoid another circular conversation, he tentatively scheduled a levy discussion on the July 19 or 26 meeting agenda. 5. COUNCIL REPORTS ON OUTSIDE COMMITTEE/BOARD MEETINGS No reports provided. 6. MAYOR'S COMMENTS Mayor Cooper reported Ms. Hite and he kicked off the first senior walk sponsored by the Parks & Recreation Department. Ten people participated. All Councilmembers have been invited to lead a walk. Mayor Cooper provided a reminder about the upcoming 4th of July celebration, parade, activities in the park and fireworks, sponsored by Chamber of Commerce. The new Celtic Cowboy BBQ will be at the New American Brewing Company on the 4"' of July with live music. The City has an entry in the parade, displaying clean energy vehicles purchased with federal grant funds. He invited Councilmembers to ride in one of the Prius vehicles in the parade. 7. COUNCIL COMMENTS Councilmember Wilson reported last week he represented the City at the Association of Washington Cities (AWC) annual conference. He was appointed to the nominating committee and carried the Edmonds flag in the parade of flags. The AWC conference is an important meeting for the City to attend. He paid for the travel expenses himself. He reported on some of the breakout sessions he attended including one by the Lakewood Police Department regarding what they had in place to manage the murder of four of their police officers and what they wished they had in place as well as the relationships that occurred between the Chief of Police, City Manager and Mayor. Another session addressed civility between Councilmembers, between Councilmembers and the Mayor, and between Councilmembers and staff. The point made by City Managers and Mayors was Councils are only as good as their staff. If they were not getting the type of information that made them look good, they needed more or different staff. Another session addressed the importance of planning and budgeting for the three bottom lines: financial, environmental, and social so that the things that the community and the Council do reflect the values in those three areas. He encouraged Councilmembers to participate in the conference in the future and to include funds in the budget so that Councilmembers can attend. He was the only Councilmember who paid his own way. Councilmember Bernheim agreed Councilmembers should pay their own way to attend events like the AWC conference. He expressed concern with scheduling the levy discussions so that there was little time left before the deadline. He preferred to adopt proposals ahead of schedule to allow more time to support them. Over the next week he will attempt to develop a proposal using the Citizen Levy Committee recommendation, observing there is support for separate levies, modest levies, targeted levies, and levies with specific terms. Councilmember Buckshnis also provided a reminder that Edmonds has an Adopt -A -Park link on the Parks & Recreation webpage. She thanked the citizens who assisted her at the dog park recently. Edmonds City Council Approved Minutes June 28, 2011 Page 14 Council President Peterson thanked the Chamber of Commerce for sponsoring the 4`" of July festivities, their 103`d year. 8. ADJOURN With no further business, the Council meeting was adjourned at 9:03 p.m. Edmonds City Council Approved Minutes June 28, 2011 Page 15