Loading...
FC051022FINANCE COMMITTEE MEETING May 10, 2022 Elected Officials Participating Virtually Staff Participating Virtually Councilmember Diane Buckshnis (Chair) Dave Turley, Administrative Services Director Councilmember Will Chen Rob English, Interim Public Works Director Council President Vivian Olson (ex-officio) Megan Menkveld, Deputy Admin. Serv. Dir. Thom Sullivan, Facilities Manager Scott Passey, City Clerk Jeff Taraday, City Attorney CALL TO ORDER The Edmonds City Council virtual online Finance Committee meeting was called to order at 5:30 p.m. by Councilmember Buckshnis. 2. COMMITTEE BUSINESS 1. Capital Maintenance Bond Project Mr. English explained when the budget was prepared, the bond was not finalized so projects were put into Fund 016. His and Mr. Sullivan's recommendation is to use general fund dollars for the EV charging stations and the solar project. Mr. Sullivan reviewed a list of current projects and described progress on each: Fund 016 (General Government Funds) Fund 016 (Bond Proceeds) DP#45 Public Works Yard Leveling $110,000 DP#71 Citywide Electric Vehicle Chargers $260,000 DP#73 Painting of Various Bldgs. $230,000 DP#74 Library West Deck Repairs $60,000 DP#75 Fleet EV Charging Infrastructure $90,000 Total $580,000 $400,000 Mr. Sullivan displayed a complete list of building maintenance projects, noting the total ($1,125,000) exceeds the bond amount. Some projects will be included in future budgets; some projects are intended to assist with future grant availability. Questions and discussion followed regarding concern the ordinance does not address financing any new projects but two have been financed (EV charging stations and solar project), budget amendment last month that addressed this issue, no requirement to track bond funds by project, maintenance that addressed leaks in city hall, maintenance of the Boys & Girls Club building, ownership of Boys & Girls Club building, prioritizing projects for expenditure of bond funds, requirement in 2028 for buildings to meet an EUI score, legislative intent to use bond proceeds to fund "unsexy projects," and impact of labor shortage on projects. Action: Information only. 2. Biennial Budget Discussion Mr. Turley described moving to a biennial budget. • Noteworthy discussion points o Operating under a biennial budget instead of an annual budget frees up hundreds of hours in every odd -numbered year — e.g., 2023, 2025, 2027, etc. 05/10/22 Finance Committee Minutes, Page 2 o The term for an appointed councilmember ends when the election is certified — last year this was November 23. This would always happen in an odd year (e.g., 2021) . Because under a biennial budget the new budget is passed in even years, the conflict of seating a new councilmember in the middle of budget deliberations would never happen. o A biennial budget schedule allows more time during the first 18 months of the biennium to monitor and evaluate the city's financial performance and condition. o A biennial budget schedule would allow time in the odd years to undertake major changes, like implementing "Budgeting by Priorities" for example. o A biennial budget would have no impact on planning and budgeting for large capital projects (e.g., Civic Field, Highway 99 Revitalization). Planning for large projects like these already involve multiple years, and a biennial budget would actually be more in line with planning for multi -year projects. o For context, many neighboring cities are already on biennial budgets, including Lynnwood, Bothell, Mountlake Terrace, Shoreline, Marysville, Kirkland, Kenmore, Mill Creek, Arlington, Snohomish, and Stanwood, and is considered a "Best Practice" among finance professionals. For additional information, a copy of biennial budget process used by the City of Kirkland is included in tonight's council packet. o To move to a biennial budget for the upcoming biennium, RCW requires that Council pass an ordinance before June 30, 2022. Earlier would be better for planning and preparation purposes. A draft copy of this ordinance in tonight's council packet. o Some sample schedules are included in the packet to provide a concrete idea of what the new schedules would look like. Questions and discussion followed regarding the council's return to an annual budget during the great recession, concern the council loses control and oversight with a biennial budget, current issues that do not support changing to a biennial budget, concern with last year's budget process, streamlining the budget process, working toward a biennial budget in two years, tangible benefits of a biennial budget such as reducing the labor intensive budgeting process, the June 30 deadline to pass an ordinance to change to a biennial budget, code language regarding biennial budget, biennial budget increasing the council's capacity for other oversight, the council's ability to make budget amendments at any time, reasons to wait two years to change to a biennial budget, citizens having less exposure to the city's finances with a biennial budget, and options (change to biennial budget now, stay with annual budget, or plan to make transition in two years and specify what needs to be done in the meantime to support that decision). Action: Full council. 3. Enterprise Resource Planning System (ERP) Replacement: Update Request Ms. Menkveld reviewed ERP system options: OpenGov Budget Suite option 1.Only OpenGov (12 to 15 months) 2. Only Munis (24 to 28 months) Or other 3. OpenGov Budget plus Munis ERP Budget Suite (5 months) ERP (x r • Sole Source • Attaches to any ERP system Questions and discussion followed regarding progress on the ERP system, go live date for OpenGov budget and reporting suite, elements of the ERP system, vendor selection for the ERP system, hiring a project manager to assist with selection of an ERP system, and vetting OpenGov and Munis. Action: Update only. 05/10/22 Finance Committee Minutes, Page 3 4. Proposed Updates to Leak Adjustment Policy Mr. Turley reviewed: • What is a leak adjustment: o Occasionally a water customer will discover that their plumbing has a leak. This will cause higher water usage and a higher water bill. If caught quickly, the additional cost may only be a few hundred dollars more than normal. Sometimes a leak may be large and go undetected for several weeks, causing the loss of large amounts of water and increases to the customer's water bill of several thousand dollars. The City could just charge the full amount, but we have tried to provide a way to mitigate this unexpected cost. o Current Policy: ■ Customer has to show that they took reasonable steps to fix the leak as soon as it was discovered. Subject to meeting certain requirements, the City will do the following: - Compute what their average bill has been and charge them that, then - Forgive up to $1,000 of the excess, then - Take the remainder and bill that amount to them at wholesale, then - Add a 15% administration fee to the wholesale amount. • Considerations o Question 1. Should we forgive $1,000 of the bill, and do we need to add back the 15% administration fee? (Proposal #1 would be to remove the forgiveness of $1,000 and remove the 15% administration fee add back) o Question 2. Why are we reducing their bill at all? (Proposal #2 would be to offer no leak adjustment) o Question 3. Does council have an alternative proposal? o Payment plan ■ Under the old policy, customer is allowed to pay the balance off over 3 months at 12% interest. ■ Proposal is to update this to allow them to pay it over 6 months at 0% interest. • Comparison of proposed policies o Let's say a current customer usually consumes 14 units and pays $59 per invoice, but after having a large leak they consumed 1,726 units and their bill with tax came to $8,030. o Our wholesale rate is $1.50 per unit, our retail rate is $4.23 per unit. o Our computations would be: Proposed Policy Proposal #2-No Current Policy #1 Adjustment Average Units Billed (14 UnitsE at retail $ 59 $ 59 $ - ExcessUnits(1,725-14)at wholesale 21568 2,568 - Subtotal - revised bill computation 2,627 2,627 7,300 Add 15%Admin Fee on the Excess Units 385 - - Subtotal 3.012 2,627 7,300 Forgive $1,000 (1,0001 - - Subtotal 2.012 21627 7,300 Add M tax 2D1 263 720 Total Due (Revised Bill to Customer) $ 2,214 $ 2890 $ 8,030 Clriginal Bill(IncludingrFax} $ sjin $ R,03n $ 8,030 Revised Bill 2,214 2,890 8,030 AmountPeduced due to policy $ 5,916 $ 5,140 $ - Questions and discussion followed regarding support for helping residents particularly during these hard times, investing in a smart system in the long term to monitor flow and avoid wasting water, and a suggestion to charge wholesale for leaked water and offer a payment plan. 05/10/22 Finance Committee Minutes, e4 I Action: Staff return to committee with a policy that charaes wholesale for the leaked water. I 5. March 2022 Quarterly Financial Report Mr. Turley responded to council questions regarding the anomaly in the gas utility tax, and REET being below budget. Action: Short presentation to full council. 6. Finance Committee Agenda Planninq Topics the committee identified included: • Risk review policy • Fund balance policy • Utility rate issue • Public safety complex relocation review • Budget calendar Questions and discussion followed regarding the EDC investigating relocation of the public safety complex, and past investigation done of available space on Highway 99. Councilmember Chen will contact the employee staffing the EDC with the suggestion that the EDC investigate relocation of the public safety complex. Action: Planning purposes. 7. 2022 State Auditor Office (SAO) Audit Exit Follow Up Mr. Taraday relayed his understanding that the audit finding regarding CARES funds distribution was that the City did not document compliance with the City's own eligibility requirements; there was no finding that the City's CARES fund distribution failed to comply with any state or federal criteria, therefore, there was no basis to conclude the money needed to be paid back based on the limited findings by the state auditor's office. Mr. Turley explained the auditors highlighted 109 businesses with questioned costs, they did not say the businesses were not eligible, only that they could not tell if they were eligible based on documentation the City received. Businesses were asked to submit information related to business loss for April and May 2020. City staff is reviewing those 109 businesses to determine how to proceed and available options. Mr. Taraday relayed the administration has not finalized its recommendation regarding these 109 businesses. Questions and discussion followed regarding the auditor's comment regarding the municipal court, whether CARES distributions need to be returned, the auditor's finding that CARES fund distribution did not meet the City's eligibility requirements, how the issues will be corrected, the council's role in pursuing businesses that did not meet the criteria, administration providing a recommendation at some point regarding whether to pursue repayment, timeframe for administration to provide a recommendation and whether additional help will be necessary, whether council would direct the city attorney to pursue legal action, steps for determining who warrants further action, whether small claims was an option, and long term debt the auditors said should be under direct borrowing instead of general obligation bonds. Action: Revisit at the next committee meeting. 3. ADJOURN The meeting was adjourned at 7:25 p.m.