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03/10/1987 City CouncilTHESE MINUTES SUBJECT TO MARCH 17, 1987 APPROVAL 1 EDMONDS CITY COUNCIL MINUTES MARCH 10., 1987 (WORK MEETING) The regular meeting of the Edmonds City Council was called to order at 7 p.m. by Mayor Larry Naughten in the Plaza Meeting Room of the Edmonds Library. All present joined in the flag sa- lute. PRESENT Larry Naughten, Mayor Jack Wilson, Council Pres. Steve Dwyer Laura Hall Jo -Anne Jaech Bill Kasper Lloyd Ostrom John Nordquist Tony Russell, Student Rep. CONSENT AGENDA STAFF PRESENT Mary Lou Block, Planning Div. Mgr. Bobby Mills, Public Wks. Supt. Peter Hahn, Comm. Svs. Director Jack Weinz, Fire Chief Dan Prinz, Police Chief Jim Barnes, Parks & Rec. Div. Mgr. Bob Alberts, City Engineer Art Housler, Admin. Svs. Director Scott Snyder, City Attorney` Jackie Parrett, City Clerk Margaret Richards, Recorder Item (B) was removed from the Consent Agenda. Councilmember Nordquist inquired if Councilmember Kasper would vote on Item (F) because of his affiliation with Rainier Bank. Councilmember Kasper said he did not think that a conflict existed but would abstain from voting. City Attorney Scott Snyder noted that Councilmember Kasper's employer is the contract purchaser of a purchase that has yet to be consummated of Rainier Bank. Mr. Snyder said he did not believe a conflict existed. COUNCILMEMBER NORDQUIST MOVED, SECONDED BY COUNCILMEMBER JAECH, TO APPROVE THE BALANCE OF THE CONSENT AGENDA. MOTION CARRIED. The approved items on the Consent Agenda include the following: (A) ROLL CALL (C) ACKNOWLEDGMENT OF RECEIPT OF CLAIM FOR DAMAGES FROM NINA L. ENG. ($494.92) (D) ADOPTED .ORDINANCE 2605 AMENDING EDMONDS COMMUNITY DEVELOPMENT CODE RELATING TO CONSTRUCTION OF RESIDENTIAL DOCKS AND PIERS (E) ADOPTED ORDINANCE 2606 AMENDING ANIMAL LICENSING ORDINANCE (F) ADOPTION OF FINDINGS OF FACT AND CONCLUSIONS OF LAW REGARDING HEARING ON APPEAL OF ADB DECISION REGARDING PROPOSED DEVELOPMENT AT 8339 - 212TH ST. S.W. (ADB-50-86/APPEL- LANTS: MR. AND MRS. CLYDE M. CLARK AND ROGER HERTRICH) (G) FINAL ACCEPTANCE OF WORK BY KATHOL ROOFING FOR ANDERSON-CENTER REROOFING PROJECT AND SET 30 DAY RETAINAGE PERIOD (H) ACCEPTANCE OF QUIT CLAIM DEED FROM KENNETH AND SHIRLEY BUSHY FOR STREET RIGHT-OF-WAY AT 924 MOUNTAIN LANE APPROVAL OF MINUTES OF MARCH 3, 1987 [ITEM (B) ON THE CONSENT. AGENDA] Councilmember Wilson referred to page 4, paragraph 11, and noted that Fire Chief Jack Weinz re- quested that the figure of 13,000 be corrected to 1,300. Councilmember Hall requested that additional comments be inserted on page 16, paragraph 1, as follows: "Councilmember Hall said Council can discuss individual short-range and long-range goals at the retreat. Then, at a later date, Council can meet with invited community group repre- sentatives and share common concerns". Councilmember Dwyer referred to page 7, paragraph 13, noting that the word "ill -advice" should be "ill-advised". City Clerk Jackie Parrett said it was brought to her attention that the dollar figure in Item.(C) of the Consent Agenda should be $10,000,000 rather than $10,000. COUNCILMEMBER HALL MOVED, SECONDED BY COUNCILMEMBER NORDQUIST, TO APPROVE THE MINUTES AS AMENDED. MOTION CARRIED. REQUEST BY CEMETERY BOARD TO TRANSFER EXISTING LOAN TO ENDOWMENT FUND Parks & Recreation Division Manager Jim Barnes reported that the Cemetery Board is requesting that the $11,000 loan previously given by the City Council for cemetery improvements be trans- ferred to the newly created Endowment Fund (Non -expendable Cemetery Maintenance Fund). Staff recommends that the Council approve the transfer per the Cemetery.Board request. Mr. Barnes said the City Council, with input from the Cemetery Board, adopted Ordinance 2596 on December 16, 1986 which established two funds for the Edmonds Memorial Cemetery: 1) Cemetery Improvement Fund, which is to be used for special projects, special events, and other nonrecur- ring needs. Expenditures may be from both principal and interest of the fund, 2) Cemetery Mainte- nance Fund (Non -expendable Cemetery Maintenance Fund), which is to be used solely for the purpose of maintenance, operations, and capital improvements. Expenditures from the fund are limited to income earned by the fund. The new ordinance requires that in the future a certain percentage of proceeds from lot sales, burial fees, and various other sources will be allocated to the Cemetery Maintenance Fund. Cur- rently, there is a zero balance in the fund. In order to begin this fund, the Cemetery Board is proposing that the now due $11,000 loan given by the Council several years ago be allocated as seed money. It is their belief that this would give the fund a sizable base from which to become effective. Dependence upon a percentage of sales, as required by the ordinance, will likely be a long process before total self sufficiency is attained. Currently, annual revenues and expenditures are very closely matched. There is little left as surplus each year for development of the Cemetery Maintenance Fund. The goal of the proposal is to begin to limit the necessity of General Fund expenditures for perpetual care and maintenance. Mayor Naughten inquired: 1) how an endowment fund is utilized, 2) if State law requires that an endowment fund be set up for all cemeteries. Mr. Barnes said endowment funds are created to provide perpetual care and maintenance of a cemetery. The Council, by ordinance, dictates what percentage of revenues will be allocated to that fund. Councilmember Wilson stated that the only source of revenue for the cemetery was the sale of lots. Mr. Barnes concurred. Councilmember Wilson inquired about potential revenue sources. Mr. Barnes said approximately 2,000 lots are currently available at a value of $1.1 million. Council - member Wilson inquired about the annual maintenance costs of the cemetery. Mr. Barnes replied approximately $26,000 to $30,000. Councilmember Wilson commented that approximately $500,000 in invested funds would be necessary to pay maintenance costs. Councilmember Nordquist inquired if the potential revenue from the urn garden has been projected. Mr. Barnes said there are 48 spaces available which can be purchased for $275 to $300. He said it is anticipated that those monies will be utilized to acquire a second columbarium. Councilmember Nordquist said the Council had earlier expressed a concern that a percentage of the revenue derived from the sale of the lots be allocated to the trust fund. Mr. Barnes said the Cemetery Board has discussed various ways to raise revenue for the Endowment Fund, and one concept was to allocate a percentage of the revenue from sales generated by the columbarium to that fund, which would be utilized to purchase other columbariums which would, in turn, generate more revenue. EDMONDS CITY COUNCIL MINUTES Page 2 MARCH 10, 1987 Councilmember Wilson inquired about the methods used to promote sales. Mr. Barnes said the Board has discussed retaining a sales person, who would work on a percentage basis, as well as seek the cooperation of local social clubs. Mr. Barnes said advertisements are included with the wa- ter/sewer billings. As more revenue becomes available, advertising will extend to the newspapers. Mayor Naughten noted that 2,000 informational sales brochures are being printed and will be mailed to the public. Councilmember Ostrom said he would like information regarding the ongoing maintenance cost and revenue base, and then project those figures into the future to determine the revenue that will be necessary to invest in the Endowment fund to maintain the. cemetery as a self-sustaining enti- ty. Mr. Barnes said the Board was unsure how much revenue was necessary to maintain the cemetery until recently because operations had not been consistent. He said he would provide that informa- tion at any time. . COUNCILMEMBER NORDQUIST MOVED, SECONDED BY COUNCILMEMBER WILSON, TO INSTRUCT THE CITY ATTORNEY TO PREPARE THE NECESSARY DOCUMENTS TO EXTEND THE LOAN AN ADDITIONAL YEAR ON AN INTEREST -FREE BASIS. Councilmember Dwyer inquired if the use of those funds would be limited. Mr. Barnes said it may be appropriate to deposit the income earned from the loan into the Endowment Fund. MOTION CARRIED. Mr. Snyder noted that because the original loan was made as a motion entry, no further action was necessary. COMMUNITY TRANSIT PRESENTATION Bill MacCully, Paul Kaftanski, and Dennis Davies -Bloom of Community Transit were present. Copies of a proposal detailing a revised route system were distributed to the Council. Mr. MacCully reported that approximately one year ago Community Transit reviewed all of the routes throughout the bus system. Subsequently, a series of public hearings were held in South County for possible implementation in June .1987 of the revised route system. The implementation schedule.was postponed for the South County routes as a result of those hearings to possibly June of 1988 to allow adequate time to conduct a fairly extensive ridership survey to insure that the service was well planned and designed to provide the optimal service to the majority of the rid- ers in each area. Mr. MacCully said the purpose of the presentation that evening was to review the current route network in South County, as, well as a consultant proposal of a revised route system, and to elic- it Council input. Councilmember Ostrom inquired if the consultant was retained to conduct the study for Community Transit. Mr. MacCully replied affirmatively. Councilmember Ostrom inquired if Mr. MacCully endorsed the revised route system. Mr. MacCully said Community Transit would like to receive Council input with respect to those changes. Mr. Kaftanski reported that the first part of the survey analyzed commuter services into downtown Seattle. He noted that most of the service is provided by Metro at the present time. In 1986, a revised network of routes was implemented within Snohomish County which included service to Park & Ride lots. Since September 1986, ridership has increased by 30%. Service to the North County area (that area north of Everett) was revised in February 1987. Ridership in that area remains at approximately the same levels, and services are being monitored to ascertain if additional measures can be taken to further improve that service. Mr. Kaftanski referred to a map of Snohomish County which represented the current route network in South County. Because service was extended as areas annexed into the public transportation service area and the population increased, there was no particular focus for the South County routes. Mr. Kaftanski noted that the green areas depicted on the map represented areas where services are proposed to be deleted, and the orange areas. represented areas where services are proposed to be added. The basic service will remain the same; however, some of the travel EDMONDS CITY COUNCIL MINUTES Page 3 MARCH 10, 1987 patterns will be altered to provide a central location to the system and easier transfers to other routes. The proposed central location is the Alderwood Mall area. Mr. Kaftanski pointed out that many people who live near a particular routesystem enjoy good connections whereas people who live in other neighborhoods may have to transfer two to three times. Because the needs of the ridership must be balanced more equitably, he said not all of the routes can service one particular destination. Mr. Kaftanski requested the Council to review the revised route system and communicate with the City's constituents to ascertain if the proposal has not included the needs which exist in the Edmonds community. He said Community Transit is attempting to meet the needs of the ridership and minimize discomforts as well as increase the attractiveness of public transportation. Councilmember Jaech inquired if the route from downtown Edmonds to Aurora Village was route 416. Mr. Kaftanski replied negatively. He said route 416 is a commuter route to Seattle. He noted that the revised system addresses only local service. Councilmember Jaech inquired if the commut- er routes will be serviced by Community Transit if the grant is received instead of by Metro. Mr. MacCully said 80% to 85% of the service provided by Metro was given to a private contractor to try to save money, gain control of the service, and to enhance the private sector participa- tion. The grant, if received, will be utilized to purchase the capital portion of contracted services for commuter services with a private sector corporation. In that event, the Board of Community Transit will analyze how to best spend those funds to provide the maximum amount of services. Councilmember Jaech inquired about the participation of Community Transit regarding the tunnel system and dual modes. Mr. MacCully said Community Transit has entered into an agreement with Seattle Metro and the City of Seattle which requires Community Transit to enter into the planning process with respect to how transit services will be provided for Snohomish County into downtown Seattle no later than two years prior to the opening of the tunnel. The agreement, he said, does not specify that Community Transit must participate in any bus buy on dual mode busses or how the operation would continue. Mr. MacCully said it was safe to assume that Community Transit would not use the tunnel and that only approximately 50% of Metro busses would use the tunnel. Councilmember Ostrom said he was unsure how the Council could gather information from the citizen- ry other than scheduling hearings, which has already been done. Mr. MacCully said because Mayor Naughten has received a number of concerns from the citizenry, Community Transit would like to know if the Council has also received concerns and would like to ascertain if there are areas within South County that need to be developed. Councilmember Jaech inquired if mail -in surveys have been provided on busses. Mr. MacCully said surveys will be made available in April and May. Mr. Kaftanski added that surveys will also be sent to large employers and organization in the area to ascertain why people do not utilize the bus system and how to attract non -riders. Councilmember Nordquist recommended that the east/west routes in Edmonds be improved and that services be extended into the evening hours. Councilmember Kasper recommended that local bus routes be extended to Edmonds Way. Councilmember Jaech inquired if turnouts will be provided at bus stops where there currently are none. Mr. MacCully said ten turnouts will be provided along SR 104, which will terminate at Westgate Shopping Center. MEETING WITH PLANNING BOARD TO CONTINUE REVIEW OF 1987-1992 PARKS AND RECREATION COMPREHENSIVE PLAN DRAFT Planning Board members Dean Nordquist, Jeff Palmer, Sherri Claussen, and Hank Lewis were present. Parks b Recreation Division Manager Jim Barnes reported that the five year Parks and Recreation Comprehensive Plan has been reviewed and revised at the request of the Council. The revised draft has been approved by the Planning Board and is before the Council for a second joint review. The changes include some reorganization, changes in emphasis, and deletion of some items. A new element to the plan is an Interagency for Outdoor Recreation (IAC) required Capital Improvement Plan (CIP). Although a CIP must be adopted with the plan, it is only a guide as to the direction of anticipated capital improvement needs. Many of the identified items will require IAC assis- tance to become viable. The adopted CIP is not binding on the City of Edmonds budgetary pro- cess. EDMONDS CITY COUNCIL MINUTES Page 4 MARCH 10, 1987 In order to meet a May 1, 1987 deadline for letters of intent for grant assistance, it is desir- able to move forward with the adoption process. Mr. Barnes said Staff recommends that the Council review the plan with the Planning Board and set a public hearing and proposed adoption action for April 7, 1987. The revisions requested by the City Council have been incorporated into the final draft of the Comprehensive Parks and Recreation Plan. The changes are primarily in areas of emphasis and include some reorganization of sections and graphic corrections. The goals and objectives now more closely match the action plan proposals as well as a Capital Improvement program. The major changes are: 1) walking, jogging, and bike path development or renovation have been given a higher profile and priority in the goals and objectives section which include work on linkages, public awareness, signage, and amenities such as benches; 2) the action plan elements have been reorganized to more closely match each other. Specific action plan recommendations better re- flect what was emphasized in the recognized needs, goals, and objectives; 3) increased emphasis on developing interlocal agreements for school sites as opposed to neighborhood play areas; 4) deleted items include Lake Ballinger acquisition, Esperance annexation, McAleer Way development, and the Olympic School site. Councilmember Kasper noted that Sunset view point and Ocean Avenue view point were not addressed in the comprehensive plan. Mr. Barnes referred to page 80, item 6, of the plan which states that "Ocean Avenue and other street ends and public lands should be marked as publicly owned property for the purpose of public awareness and safety". Councilmember Kasper said Ocean Avenue has not been benched or otherwise designated as public property. He said the City is obligated to main- tain areas such as Sunset and Ocean Avenue for public access. Councilmember Kasper inquired why those areas were not designated on that map. Mr. Barnes said areas that were not recognized as part of the park system were not identified on the map. Councilmember Kasper said he did not understand why Sunset Avenue or Ocean Avenue were not part of the park system. Ms. Claussen said she believed those areas were not included because they are not legally on the title. She said that, however, is not an indication that they will be omitted from the comprehensive plan. Councilmember Dwyer inquired of Councilmember Kasper if he wished those areas designated to the Park Department included on the map. Councilmember Kasper said street ends that have been vacat- ed which are utilized as view points should be included. He said those areas are assets of the City and should be included in the park system. Councilmember Ostrom referred to page 87; Estimated Cost Per Year of Project Implementation. He said funds were allocated to improve Meadowdale Playfield to provide a better facility to the public to alleviate overutilization of City parks. He felt that improvements to play fields outside of the City should not be a priority following the completion of the Meadowdale project because he said there are many other projects within the City that need to be developed. Mr. Barnes pointed out that the Woodway/Civic Center ball fields project was a directive of the Coun- cil. Councilmember Ostrom recommended that goals be directed towards providing amenities within the City of Edmonds for its citizenry in the future. Councilmember Jaech inquired how projects identified in the comprehensive plan would be main- tained if the plan is adopted. Mr. Barnes said a great majority of the funds identified have been earmarked for maintenance of existing facilities. Mayor Naughten added that the goal of the plan is to improve and maintain already -existing facilities and not to expand the park system. Councilmember Jaech clarified that the plan has identified projects as capital improvements. She said, however, that capital improvements are separate from maintenance and should not be con- fused. Councilmember Jaech also said that maintenance must be projected on an ongoing basis. Councilmember Wilson said the proposal to develop interlocal agreements with the School District was an indication that more play fields were needed. He inquired about the extent of development of play fields. Mr. Barnes said development was dependent upon the demand for play fields. Councilmember Hall referred to page 61 regarding developing standards for Edmonds. She inquired if the parcel that will be placed on the market in the near future will be considered. She in- quired if the Board was aware of an area within the City that does not have a facility and should be considered. Councilmember Hall referred to page 38. She inquired if the Anderson Center was utilized only modestly, as indicated. Councilmember Hall also inquired if over development of the Meadowdale project was a possibility. Ms. Claussen said specific park acreage has yet to be identified. She questioned the percentage used in the survey regarding use of the Anderson Cen- ter because she said a lot of people who do utilize the Center were not involved in the survey. EDMONDS CITY COUNCIL MINUTES Page 5 MARCH 10, 1987 Mr. Barnes said $15,700 is anticipated to be spent on the Meadowdale clubhouse project in 1987. He said many requests to rent the Plaza Room are denied. He said the Meadowdale facility will be an ideal facility for rental purposes. Ms. McCrystal reiterated that many requests to rent the Plaza Room have been denied because it is completely booked. Bookings continue at the Meadowdale clubhouse facility even in its present condition. Mr. Barnes said the question in the survey regarding the Anderson Center was deceiving because it related to the usage in outside parks. Councilmember Ostrom said he thought the plan draft was outstanding and commended the Planning Board. He recommended that copies be made available to the public at the library and at City Hall. Mr. Barnes noted that the document has been available in those areas. Councilmember Kasper inquired about the maintenance of Elm Street as a park. Community Services Director Peter Hahn said that area is surplus property, and the Council will likely be presented with a proposal to surplus it to raise money for other projects. Ms. Claussen noted that Elm Street has been designated as non -park public lands. Councilmember Kasper inquired if there were street ends in the Meadowdale area. Planning Divi- sion Manager Mary Lou Block replied affirmatively. Councilmember Kasper recommended that those areas be identified. Mr. Nordquist said revisions of the plan could be endless. He requested that the Council give the Board some direction in implementing the plan. He added that. it could always be reviewed in a year's time. Councilmember Ostrom recommended that a final hearing be scheduled to elicit public input. Ms. Claussen said she was amenable to another hearing but recommended that the process not be pro- longed because: 1) the City is currently eligible for IAC funding, but the time period to apply is running out, 2) implementation of the plan would be via the budget process. Mr. Palmer said the document can be utilized as a tool to identify particular concerns and to form the goals into reality. Mr. Lewis said he enjoyed participating in formulating the plan and looked forward to developing the individual parks. He said he felt there was a poor distribution of parks throughout the City but selling land to gain more uses within the City was unrealistic. REPORT BY YEASTING & HUGHES ASSOCIATES IN FINANCING ANALYSIS OF SECONDARY SEWER TREATMENT PLANT Mary Hughes said the report has attempted to outline logical alternatives to secondary sewer treatment financing, and make preliminary recommendations to the City of Edmonds. Ms. Hughes reported that the project consists of a 10.8 million gallon per day secondary sewage treatment plant. The assumption was made that the new plant would be located at the site which currently houses the existing plant and will be completed in 1991. Ms. Hughes said Edmonds, as well as Mountlake Terrace, Olympic View Water District, Ronald Sewer District, Lynnwood, and Woodway will be serviced by the plant. Presently, use of the plant by Edmonds is 49.3%. However, projections have been made that ultimate use by Edmonds will total 42.3% because some of the other agencies will grow faster than others. Even though Edmonds will be the largest user, it will not be as large in the future. Lynnwood and Woodway have been pro- jected to remain as minor users of the plant. Ms. Hughes said the existing contracts with the five other agencies were reviewed to determine if they were suitable for financing the project. The existing contracts expire long before the bonds for the project are retired. The hardship would arise when marketing project bonds. Cost sharing between the agencies must be on the basis of current sewage flow at the plant. The exist- ing contracts do not allow Edmonds to charge the other agencies for bond debt service coverage or bond issuance costs, which would mean that costs to Edmonds residents could be $2 to $3 higher each month. Ms. Hughes explained that bond buyers require that an entity not only have sufficient funds to pay the debt service but also a margin of safety above the debt service. Ms. Hughes said that the current contracts dictate that Edmonds would have to pay that bond coverage and precludes EDMONDS CITY COUNCIL MINUTES Page 6 MARCH 10, 1987 Edmonds from charging bond debt service payments to the other agencies until the project is com- pleted. Thus, bonds could not be issued until 1991. The project could be financed through short-term notes. Ms. Hughes said in view of the current interest rate level, it would be risky to delay bonding of the project to 1991. Community Services Director Peter Hahn clarified that bonds may be issued but monies cannot be collected from the other communities because the reimbursement from those communities is for ser- vice and not costs. In addition, under the terms. of the present agreement, the design costs would not be reimbursable until 1992. Councilmember Dwyer inquired if the City would ultimately be reimbursed for all costs, with the exception of bond coverage. Mr. Hahn replied affirmatively. Councilmember Dwyer said he under- stood that it would be more orderly to renegotiate the contracts at the same time at the present time rather than recoup the monies from the other agencies as the contracts expired. He inquired what terms were written into the contract to preclude the City from recouping those monies at time of contract expiration. Mr. Hahn said there is a clause in the contract which states that Edmonds shall provide secondary treatment until 1997. Ms. Hughes said the worst case scenario would be to proceed with the contracts as they are presently written. She pointed out that she was only reviewing the current contracts and scenario and would make recommendations for the Council to consider. Councilmember Kasper inquired if the bond debt service coverage could be expended. Mr. Hahn replied affirmatively. Councilmember Kasper inquired if the coverage would only be expended for capital costs. Ms. Hughes replied affirmatively. She said the bond debt service coverage must be an actual revenue amount and cannot be money in a savings account brought in through the sys- tem. Ms. Hughes reviewed the three ownership options as follows: 1) joint ownership with all six agencies, 2) ownership by Edmonds with contracts with the other agencies for service agreement, 3) ownership by Edmonds and each agency could purchase a percentage of the capacity of the plant. Ms. Hughes recommended that Edmonds own the plant since it would be located in Edmonds and because Edmonds will continue to be the largest user of the plant and, also, because Edmonds has operating experience. The financing system, she said, will assure marketability of bonds, allocate project costs equitably, provide efficient plant operation, and minimize conflict be- tween agencies. Edmonds could finance the entire project or each agency could finance its share. Ms. Hughes recommended that each agency finance its share of the project because of the following advantag- es; a) each agency would generate and pay its share of the debt service and debt service cover- age, b) each agency could keep its own debt service coverage monies rather than kept within a sewage treatment system and available for only treatment -related future capital projects, c) each agency could "fit" or "wrap" the debt service for the project around its existing debt to minimize maximum annual debt service, d) each agency would determine the lien position the debt would have relative to its outstanding and future sewer revenue bonds, e) each agency could ad- dress its own credit considerations, such as bond ratings, separately, f) each agency would make its own assessment of the bond market and take its own interest rate risks, g) the debt attribut- able to each agency would appear only on that agency's sewer utility balance sheet, h) each agen- cy would have more latitude in structuring and timing customer rate increases, i) should help minimize conflict between the agencies. Councilmember Kasper inquired if the debt, to date, has been separated from revenue debt. Ms. Hughes said the bonds for the project will be intermingled with the outstanding sewer bonds and not the general obligation bonds. Ms. Hughes said the size of each agency's bond issue would be dependent on numerous financing variables. Assuming a $1 million grant for the project, current interest rates, bonds issued in EDMONDS CITY COUNCIL MINUTES Page 7 MARCH 10, 1987 1988, customer .rates raised in 1988, .debt service and coverage based on capacity purchased per projected ultimate flows, each agency would bond approximately as set forth: SEPARATE BOND ISSUES Estimated Amounts Annual Annual Annual % Share Size of Issue Debt Service Coverage Edmonds 42.30 $18,760,000 0,801,000 $450,060 Mountlake Terrace 30,95 13,730,000 1,318,000 330,000 Ronald 17.60 7,805,000 750,000 187,000 Olympic 8.63 3,830,000 367,000 92,00.0 Woodway .19 85,000 8,000 2,000 Lynnwood .33 145,000 14,000 4,000 100.00% $44,355,000 $4,258,000 $1,065,000 Ms. Hughes said Edmonds could issue either sewer revenue bonds or voted general obligation bonds to finance its share of the project. Sewer revenue bonds are usually used to finance these kinds of projects, since cost can be clearly allocated to the users of the project, voter approval is not required and revenue bonds do not impact the general credit of the City. General obligation bonds could probably be issued at a somewhat lower interest rate but would require voter approv- al, would use a significant share of the City's general credit, and would not necessarily equita- bly allocate costs to users unless sewer revenues were actually used to pay debt service rather than property taxes. Ms. Hughes said unless sewer bonds were used to pay general obligation bonds, the City would be proposing a property tax in lieu of a sewer charge, and she recommended that general obligation bonds not be utilized. Ms. Hughes said municipal bond interest rates are currently at levels lower than those of the past seven years. Over the past thirteen years, rates have not been more than approximately one hundred basis points lower for any significant period of time. Because of this favorable bond market, it would be desirable to finance the project as soon as possible. However, the process of negotiating the amendments to the contracts with the agencies to provide for the project may be time-consuming and could put the financing into an entirely different bond market. She said if bonds were not issued until 1991, there is a significant risk that interest rates could be 1.5% or more higher than current rates. This would cost approximately $1.7 million on a present value basis. If interest rates were the same in 1991, the present value savings would be approximately $4.3 million. Ms. Hughes recommended to minimize the size of the bond issue to the extent practical and pay the costs from cash on hand or increases in customer rates. She said interest could be capitalized from now until the plant is completed in 1991; any customer rate increases could be forestalled during the interim; capitalize the bond reserve and bond issuance costs. Ms. Hughes recommended that only the bond issuance costs be capitalized because they are related to the bond issue. The bond reserve would assure the marketability of the bonds. She said it may be funded from the bond issue and cash on hand. Councilmember Ostrom asked why. Ms. Hughes said the size of the bond issue should be minimized because it is less costly to pay with cash than it is to bond. Ms. Hughes said a present value savings of approximately $3 million can be realized if the bond reserve fund and interest during construction are not included in the bond issue. The customer will save money if rates are raised early. The savings from raising rates early are due to the costs associated with issuing bonds and to "negative arbitrage" on bond proceeds during con- struction. Negative arbitrage occurs when the interest rate on the funds borrowed is higher than the investment rate on those funds which will be invested during the construction period. The assumption was made that bonds would be issued at 7.5% and the average investment rate on bond proceeds pending expenditure would be approximately 6.5%. Raising rates early results in a smaller bond issue and less negative arbitrage. EDMONDS CITY COUNCIL MINUTES Page 8 MARCH 10, 1987 Ms. Hughes said it is expected that approximately $1 million and $8.4 million will be available in grant monies for the project. The rates for Edmonds customers in 1992 for sewer treatment costs will be $22.73 if only $1 million in grant monies were available versus $19.41 if $8.4 million in grant monies were available.. Councilmember Hall inquired if consideration was given to the fact that 50% of the grant monies could be received in the form of low interest rate loans rather than full grants. Ms. Hughes said low interest rate loans were not addressed, but Yeasting & Hughes would certainly address that point if the Council desired. She said because the analysis was conservative in not address- ing loans, rates would be that much lower if low interest rate loans were obtainable. Mr. Hahn said the State has taken the position that a loan option would have the equivalent benefit of a 20% grant. Ms. Hughes said because it was recommended that each agency finance their own share of the costs of the project that debt service and coverage would be allocated on the basis of capacity pur- chased. Operating and maintenance expenses would be allocated by the agency's actual sewage flow. Councilmember Wilson inquired if the other agencies provided any input with respect to the financ- ing analysis. Ms. Hughes said she met with the other agencies in December of 1986 and addressed their concerns at that time. Mr. Hahn said they expressed concern regarding change from flow base to capacity base as well as individual financing of the debt service. Councilmember Wilson inquired if the agencies expressed a desire to be involved in the selection of the consultant, design of the plant, or the drafting of the contract. Mr. Hahn said the agencies have been in- volved throughout the process on an ongoing basis. Councilmember Wilson inquired if the agencies were as satisfied with the recommendations by Yeasting & Hughes as the City of Edmonds was. Mr. Hahn said he was unsure because the first effort was to present the document to the Council. He said a meeting is scheduled on March 18 with those agencies to discuss the analysis and how it impacts them. Councilmember Wilson said he was stunned that the analysis was formulated so far into the process because the other agencies may or may not agree with the recommendations. Mr. Hahn said the analysis would have been premature if it had been presented at an earlier time. Councilmember Wilson inquired if the City would be reimbursed for the time and effort expended in developing the project. Mr. Hahn said all direct involvement time to the present has been charged to the common pool of costs. Councilmember Wilson inquired about the format for renegotiation of the contracts. Mr. Hahn said Staff would like direction from the Council with respect to the major issues. The City, he said, will meet with the other agencies next week and discuss the various scenarios. Councilmember Wilson said the analysis was an excellent report and endorsed the format that Staff proposed. Ms. Hughes noted that a proposed timetable was included on page 33 of the report. Councilmember Hall said she felt as though the report discouraged raising rates. She inquired if an analysis was done with respect to raising rates on April 1, 1987 as opposed to January 1988. Ms. Hughes said the schedule of rate increases was formulated on the basis of her perception of when it would be practical for the City to increase the rates. She said the rate increase sched- ule could be revised accordingly. Councilmember Hall inquired if the "VE" (value engineering) portion was factored into the analy- sis. Mr. Hahn said the "VE" cost is estimated at $150,000, which was included in the $39.1 million. Staff will be seeking authorization next week to sent out proposals for value engineer- ing. Councilmember Jaech inquired if Ms. Hughes would be available to attend the Saturday morning retreat session to assist the Council in further discussing the analysis and to answer any ques- tions the Council may have at that time. Ms. Hughes said she was available on Saturday. COUNCILMEMBER JAECH MOVED, SECONDED BY COUNCILMEMBER HALL, TO DEVOTE THE SATURDAY SESSION AT THE RETREAT TO REVIEW AND RESOLVE THE RATE STRUCTURE AND THE PROPOSED CONTRACT. Councilmember Wilson objected to the motion. Councilmember Hall inquired about the retreat agenda. She said she would like to set aside some time to discuss the analysis. Discussion ensued regarding whether or not it was necessary to further discuss the analysis at the retreat. EDMONDS CITY COUNCIL MINUTES Page 9 MARCH 10, 1987 A ROLL CALL VOTE WAS TAKEN. MOTION CARRIED WITH COUNCILMEMBER HALL, COUNCILMEMBER JAECH, COUNCIL - MEMBER KASPER, AND COUNCILMEMBER OSTROM IN FAVOR AND COUNCILMEMBER DWYER, COUNCILMEMBER NORD- QUIST, AND COUNCILMEMBER WILSON OPPOSED. Mr. Hahn inquired if Councilmember Wilson would like the attorney that the City retained to be present at the meeting on March 17 to answer legal questions with respect to the contract. Coun- cilmember Wilson replied affirmatively. Councilmember Hall said she felt the additional expenditure for the contract was unnecessary because the contract was pretty standard. Councilmember Dwyer said the expenditure was made to obtain expertise. He said he was happier with that expenditure than any other made. COUNCILMEMBER HALL MOVED, SECONDED BY COUNCILMEMBER JAECH, TO INVITE MS. HUGHES TO THE SATURDAY MORNING SESSION AT THE RETREAT AT PORT LUDLOW. A ROLL CALL VOTE WAS TAKEN. MOTION CARRIED WITH COUNCILMEMBER HALL, COUNCILMEMBER JAECH, COUNCILMEMBER KASPER, AND COUNCILMEMBER OSTROM IN FAVOR AND COUNCILMEMBER DWYER, COUNCILMEMBER NOROQUIST, AND COUNCILMEMBER WILSON OPPOSED. Councilmember Jaech raised a point of order. She recommended that Item #7 on the agenda (Recom- mendation to Refund 1980 Anderson Center Bond Issue) be discussed before Item #6 on the agenda (Proposal to Rescind Resolution Regarding Sledding) because Item #7 was reviewed by Yeasting & Hughes, and Ms. Hughes was present at that time. Mayor Naughten adjourned the meeting at 10 p.m. COUNCILMEMBER HALL MOVED, SECONDED BY COUNCILMEM- BER JAECH, TO REOPEN THE MEETING. MOTION CARRIED. RECOMMENDATION TO REFUND 1980 ANDERSON CENTER BOND ISSUE Administrative Services Director Art Housler reported that the Council Administrative Services Committee reviewed the recommendation on February 24, 1987. During the recent budget process, the City explored all possibilities of increasing revenues. One of those possibilities was refunding the 1980 bond issue. Refunding is a governmental term for refinancing debt, the same as what many people are doing with their home mortgages. Savings are realized as a result of refinancing at interest rates at least 2% less than the original rate. From the in-house analysis, it appeared refunding would generate approximately $100,000 in sav- ings. Based upon that analysis, Foster & Marshall was requested to determine more accurately the savings amount. Since there are other factors that should be considered when refunding, Yeasting & Hughes was requested to review the findings. Yeasting & Hughes concluded that a savings of $102,000 would be realized as a result of refunding. Mr. Housler said the Council Administrative Committee recommends to proceed with preparing the necessary documents and arrangements to consummate the refunding on or before June 1, 1987. COUNCILMEMBER KASPER MOVED, SECONDED BY COUNCILMEMBER OSTROM, TO PREPARE THE NECESSARY DOCUMENTS . AND ARRANGEMENTS TO CONSUMMATE THE REFUNDING AS SOON AS POSSIBLE. MOTION CARRIED. Mr. Housler said the Mayor and Staff recommend that the $102,000 be appropriated as follows: $52,000 should be placed in the Building Maintenance Fund #116 for resolving the space needs and building maintenance problems which will be addressed; $50,000 should be placed in the General Fund #001 to replace the copier in Administration ($20,000) and purchase PC's, display sta- tions, and printers ($30,000). These items were requested by the departments but were eliminated from the budget due to lack of funds. Councilmember Dwyer inquired what process was followed to determine the allocation of the $102,000. He questioned if the recommended expenditure of $50,000 was the best utilization of those funds. Mr. Housler said a prioritization process was used to determine the expenditure of the funds, and the computer equipment was determined to be the highest priority. Councilmember Dwyer inquired about the second highest priority. Mr. Housler said the copier in Administration was rated as the second to third highest priority. Councilmember Dwyer said he did not recall the copier being discussed as a priority during the budget process. He said the money should be expended in the same process as was budgeted for and not on a first -come -first -serve basis. EDMONDS CITY COUNCIL MINUTES Page 10 MARCH 10, 1987 Councilmember Kasper did not feel the money should be spent but, rather, allocated to reduce the annual payments of the bond issue throughout the balance of the project. Councilmember Ostrom recommended that the utilization of the funds be discussed at a future date due to the time involvement to resolve the issue. Councilmember Kasper inquired if the funds could be allocated to reduce the annual payments. Mary Hughes, Yeasting & Hughes Associates, replied affirmatively. The issue of allocation of the funds was scheduled for further discussion on April 14, 1987. Councilmember Hall recommended .that the allocation of the funds be discussed during the budget process. PROPOSAL TO RESCIND RESOLUTION REGARDING SLEDDING Public Works Superintendent Bobby Mills had requested that Resolution No. 486 and No. 541 be rescinded with reference to closing certain City streets for the purpose of sledding. Several concerns have been raised since those resolutions became effective: 1) vehicles parking on street when street is closed for sledding, 2) no mail service on closed street, 3) no garbage service on closed streets, 4) other streets are unnecessarily blocked off, 5) sleds run into curbs, 6) sledding begins before streets are officially blocked off, 7) some residents want streets sanded while others do not because they wish to use them for sledding purposes. According to Staff's knowledge, there has been no emergency to respond to in regards to sledding accidents. The streets designated for sledding are not sanded, but the fire and police depart- ments have chains on their vehicles which does not make mobility a problem and enables those vehicles to respond to an emergency in a timely fashion. The post office will not deliver mail on any street that is blocked off for sledding or safety purposes. A week could go by without mail service, which may be critical to people who live on a pension. The issue has been before the Public Safety and Community Services Committee. They recommended that it be presented before the full Council for discussion. The Public Works, Police, and Fire Departments recommended that Resolutions No. 486 and No. 541 be rescinded. Mr. Mills said the Fire Department has expressed a concern regarding access of emergency vehicles to streets blocked off for sledding purposes. Councilmember Ostrom inquired where sledders may go if they are not allowed on designated streets. Mr. Mills said Staff does not recommend that public streets be designated for sledding. Mayor Naughten said the City cannot designate streets for sledding purposes because of liability factors.. Councilmember Hall recommended that those streets that are closed off not be signed. COUNCILMEMBER DWYER MOVED, SECONDED BY COUNCILMEMBER OSTROM, TO RESCIND RESOLUTION NO. 486 AND NO. 541. MOTION CARRIED. SCHEDULED EXECUTIVE SESSION City Attorney Scott Snyder said he would require approximately forty-five minutes of the Coun- cil's time to discuss legal matters during the Executive Session. He suggested that those mat- ters be postponed to a later date due to the lateness of the hour. Mr. Snyder expressed concern regarding excess retainer fees of $40,000 for litigation costs. He said 11 actions are pending and that $40,000 will not cover the costs of those actions and may well be expended before summer's end. He suggested that the issue be discussed at a committee meeting. Councilmember Jaech recommended that the issue be discussed on March 24, 1987. Councilmember Dwyer recommended that the issues of the Executive Session be discussed on March 31, 1987 (when a dinner meeting is scheduled): EDMONDS CITY COUNCIL MINUTES Page 11 . MARCH 10, 1987 MAYOR Mayor Naughten reported that the National League of Cities meeting in Washington D.C. was very - informative. He said he will provide the Council with a report of that meeting next week. Mayor Naughten announced that the Hubbard Trust Foundation donated $10,000 to the Medic 7 Founda- tion.project. Mayor Naughten said four students from Hekinan will be visiting the City of Edmonds for two weeks as part of the sister city relationship. They will arrive in Edmonds on March 13. Mayor Naughten said the Volks Marchers event was held over the weekend, which was a six -mile event. Over 1,000 participants were involved in the walk-a-thon. COUNCIL Councilmember Hall said she attended the AWC conference, and it was very informative. She said there are bills in the legislature that the City should stay informed on, and she would provide Council President Wilson with copies of those bills. Councilmember Hall said she attended the party for County Councilman Bruce Agnew. She said Shir- ley Bartholomew, County Councilwoman, was the master of ceremony. Councilmember Hall said a retirement party for Jim Reid was held in the Plaza Room. Two former mayors, three former Councilmembers, and one former City Attorney attended the party and gave speeches. The general theme was how honest and sincere Jim Reid was. Councilmember Hall reported that she attended a Health Board meeting that day. She said funding of AIDS and hepatitis programs is essential. COUNCILMEMBER JAECH MOVED, SECONDED BY COUNCILMEMBER DWYER, TO EXCUSE COUNCILMEMBER KASPER"S ABSENCE AT LAST WEEK'S COUNCIL MEETING. MOTION CARRIED. Councilmember Jaech said she read an article in the newspaper regarding a court decision for disability benefits for a policeman in Spokane who receives full disability from that police department for battle fatigue from service in Viet Nam. She inquired if the Federal government was an entity that should be pursued for recourse or if the City of Edmonds may be involved in similar lawsuits in the future. City Attorney Scott Snyder said the Civil Service system is required to give veterans preference benefits to Viet Nam veterans as they apply. He said like veterans, it does not make any difference whether LEOFF employees are disabled on or off the job. Councilmember Jaech inquired if claims of that nature would affect the budget. Mr. Snyder said he did not believe so. Councilmember Ostrom rquested that the subject matter of Executive Sessions be revealed to the Council prior to the meeting to better prepare the Council for those discussions. Mr. Snyder said he would be happy to provide reports to the Council in advance. Councilmember Ostrom said he was not just referring to legal issues but also other issues of the City. Councilmember Dwyer said bill SSB5768 is pending in the legislature which preempts local zoning control on the location of mobile homes on a lot of 8,000 square feet or less. COUNCILM'EMBER DWYER MOVED, SECONDED BY COUNCILMEMBER JAECH, TO COMMUNICATE TO THE CITY'S THREE LEGISLATORS THE CITY'S OPPOSTION TO SSB5768. MOTION CARRIED. Councilmember Dwyer announced that Chief Watson from Mountlake Terrace is retiring at the end of the month. He said Chief Watson has served as the Chairman of SnoCom Budget Committee for a long period of time. He recommended that a resolution be prepared thanking Chief Watson for his ser- vice to the people of Edmonds in his capacity as Chairman of Snocom Budget Committee. The Coun- cil concurred. Councilmember Hall read a letter into the record which she proposed be submitted in support of the Health Board as follows: "The Edmonds City Council supports the current application of Snohomish Health District for grant funding for an AIDS health education project in Snohomish County. The surgeon general of the United States has described AIDS as a major public health issue with devastating present and future impact on our society. A greater effort is needed to EDMONDS CITY COUNCIL MINUTES Page 12 MARCH 10, 1987 1 reach all citizens with correct and understandable information on this disease; how it is trans- mitted and the changes in behavior which may be necessary if spread is to be minimized. The project proposed by the Snohomish County Health District will be very valuable as an education effort. I urge your office to support the full funding request. Sincerely yours, Edmonds City Council". Councilmember Hall said it is unsure at the present time how communicable AIDS is. Councilmember Hall requested consensus of support of the letter. Mayor Naughten gave his approv- al. Councilmember Ostrom requested that his name not be included in the letter. He said the solution to the AIDS epidemic was extraordinarily simple. He said he thought the lengths of discussion regarding that disease was absurd. The meeting adjourned at 10:33 p.m. EOMONDS CI COUNCIL M,ITES� • Page 13 C 10� 1987 JACQ LINE G. PARRETT, City Clerk LARRY S. NAUGHTEN, Havor