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2024-09-17 Council Special Packet1. 2 3 OF BbMG ti Agenda Edmonds City Council 1,00 SPECIAL MEETING NOTICE CITY COUNCIL CONFERENCE ROOM 121 - 5TH AVENUE N, EDMONDS, WA 98020 SEPTEMBER 17, 2024, 7:00 PM STAFF AND COUNCILMEMBERS WILL ATTEND THIS MEETING VIRTUALLY, AND MEMBERS OF THE PUBLIC ARE ENCOURAGED TO ATTEND THE SAME WAY. PERSONS WISHING TO ATTEND THIS MEETING VIRTUALLY IN LIEU OF IN -PERSON ATTENDANCE CAN CLICK ON OR PASTE THE FOLLOWING ZOOM MEETING LINK INTO A WEB BROWSER USING A COMPUTER OR SMART PHONE: HTTPS://ZOOM. US/J/95798484261 OR JOIN BY DIAL -UP PHONE: US: +1 253 215 8782 WEBINAR ID: 957 9848 4261 IF MEMBERS OF THE PUBLIC CANNOT ACCESS THE VIRTUAL MEETING USING A PERSONAL DEVICE, A MONITOR IS PROVIDED AT THE CITY COUNCIL CONFERENCE ROOM AT 121 5TH AVE N, EDMONDS WA. CALL TO ORDER AUDIENCE COMMENTS COUNCIL BUSINESS 1. Discussion of Future Property Tax Levy Implications of an RFA Annexation (60 min) 2. Updated Approach to Draft Comprehensive Plan (30 min) ADJOURNMENT: 8:30 PM Edmonds City Council Agenda September 17, 2024 Page 1 3.1 City Council Agenda Item Meeting Date: 09/17/2024 Discussion of Future Property Tax Levy Implications of an RFA Annexation Staff Lead: City Council Department: City Council Preparer: Beckie Peterson Background/History In 2010, the City of Edmonds contracted fire and emergency medical services (EMS) with Snohomish Fire District 1. This contract was revised in 2017. In 2017, Snohomish Fire District 1 and City of Lynnwood formed a new Regional Fire Authority (RFA); South Snohomish County Regional Fire Authority. In 2022, Amendment 1 to the Revised ILA between the City of Edmonds and South County Fire was signed. This increased staffing to address the Neighboring Unit Utilization Factor and Transport Balance Factors which were out of balance. This increased staffing resulted in higher contract rates, and contract payment adjustments were applied retroactively to the implementation date. In July, 2023 Council approved a budget amendment for $1.5 million, anticipating contract adjustment costs that included adjusted labor rates once a collective bargaining agreement was executed by the RFA and IAFF Local 1828. September 2023, Council passed Resolution 1531, requesting information about annexation into the South Snohomish County Regional Fire Authority. This resolution did not meet the legal requirements to initiate RFA action for the annexation process. November 2023, Council contracted the services of Fitch and Associates to study the feasibility of fire and emergency service alternatives. December 20, 2023, South County Fire notified the City of Edmonds via two letters dated December 19, 2023, emailed to Mayor Nelson and councilmembers, of its intention to terminate the interlocal agreement for fire and emergency medical services as of December 31, 2025. April 24, 2024 - Fitch and Associates submitted their final report, City of Edmonds Emergency Services Analysis. May 7, 2024 - Public Hearing on options for City of Edmonds Fire/EMS Services. May 28, 2024 - Council adopted Resolution 1547, stating their preferred alternative for fire and emergency medical services was joining the RFA via annexation, and authorizing the mayor to pursue Packet Pg. 2 3.1 next steps regarding this alternative. June 3, 2024 - Revised Final Fitch Report received. June 11, 2024 - Council passed Resolution 1549, expressing the intent to pursue the benefits of receiving fire and emergency medical services from the South Snohomish County Regional Fire Authority via annexation. June 18, 2024 - Mayor Rosen received a letter from the South County Fire Board of Commissioners in response to questions posed to Fire Chief Bob Eastman regarding contract options. August 16, 2024 - Council discussion during the Budget Retreat regarding the General Property Tax Levy for 2026 if Edmonds joins the RFA via Annexation. September 10, 2024 - Edmonds City Council Public Hearing on Future Property Tax Levy Implications of an RFA Annexation. Council discussion followed. Minutes pending, video is available on city website. Recommendation Discuss and consider a motion of Council's specific intent to use its property taxing authority if RFA annexation is placed on the ballot and passes in 2025. Narrative The specific question and decision for Council: If the City of Edmonds joins the RFA via annexation in 2026, should the Edmonds City Council change the amount levied for the General Property Tax for 2026? This Council decision is relevant to the future consideration of RFA Annexation, both for future Council decisions and Edmonds voter decisions. It is also relevant to the development of the city's biennial budget, which includes 2025 and 2026. Under the current contract, the City of Edmonds pays South County Fire RFA to provide Fire/EMS services. Property owners indirectly fund contract costs out of the taxes they pay to the city, including a voter approved EMS levy and a city general property levy. In 2024, the contract cost is $11,514,637. The city revenue that covers the contract expense is the voter -approved EMS levy $4,349,145, EMS Transport Fees $1,200,000, and General Fund $5,965,492. (SCF Letter dated February 6, 2024) In 2025, the contract cost is estimated to be 5% higher. The contract with South County Fire terminates on December 31, 2025. If Edmonds annexes into the RFA, Edmonds would no longer fund Fire/EMS from the city budget and would no longer collect an EMS levy. City property owners would pay the RFA directly through Fire/EMS levies and a benefit charge. If Edmonds annexes into the RFA by way of a public vote in 2025, the RFA levy and benefit charges would begin January 1, 2026. Each year, the City Council determines the amount of general property taxes that will be levied the following year. These general property taxes go into the city's General Fund. If annexation is approved in 2025 and RFA levy/benefit charges begin in 2026, what will the city do with the money it has been spending from the General Fund on fire and EMS? In 2024, this amount is $5,965,492. Packet Pg. 3 3.1 From Mayor Rosen, during June 4 Special Meeting/ Council Study Session: "I would suggest that is a decision you need to make before you go to the voters. It is a decision that the Council will make to keep some, none or all. It is a council decision that would be part of the ask to the voters." Scenario 1 "All": The City of Edmonds maintains the amount of general property taxes levied, and retains the dollars in its General Fund that paid for the fire contract, a total of $5,965,492. Scenario 2 "None": The City of Edmonds reduces its general property tax levy by $5,965,492, the amount currently funding the fire contract. Scenario 3 "Some": The City of Edmonds reduces its general property tax levy by a specific absolute dollar amount. Pros and cons: Per the several meetings and reports, the City's budget gap is in excess of $20M, way in excess of the amount that can be met by cuts of services and spending alone making some revenue change a given. On the other hand, there are benefits to keeping the issues of fire service completely separate from the fiscal emergency. Council Decision: As the RFA annexation consideration process moves forward, it is recommended that the City Council make a public statement about how it would intend to use its property taxing authority if RFA annexation is placed on the ballot and passes in 2025. The mayor has spoken of this property tax levy decision as the "some, none, or all" choice. The question really pertains to the taxes that would be collected in 2026. It is assumed here that the maximum legal levy amount would be collected in 2025. Below are three possible motions that could be adopted by the council to correspond with the shorthand of "some, none, or all": •(Scenario 1) "All" - I move that we direct the city attorney to draft a resolution stating that the city council intends to levy the maximum allowable levy amount for collection in 2026. •(Scenario 2) "None" - I move that we direct the city attorney to draft a resolution stating that the city council intends to levy the maximum allowable levy amount minus $5,965,492 for collection in 2026. •(Scenario 3) "Some" - I move that we direct the city attorney to draft a resolution stating that the city council intends to levy the maximum allowable levy amount, minus $ (under the "some" option, this blank should be filled in with an amount stated as an absolute dollar value in an amount less than $5,965,492, e.g., $1,000,000) for collection in 2026. In all three of these options, the phrase "maximum allowable levy amount" should be understood as depending upon a number of factors, including, but not limited to, the possibility that voters could approve a levy lid lift in 2025 at a separate election than the election for RFA annexation, which would increase the maximum allowable levy amount. Attachments: September 10, 2024 Public Hearing presentation slides Board Communication to the City of Edmonds 6.18.24 Edmonds Fire EMS Cost Comparison SCF 2.6.2024 Packet Pg. 4 3.1.a "Council Decision related to Future Property Tax Levy Implications of an RFA Annexation" Edmonds City Council Public Hearing September 10, 2024 Packet Pg. 5 3.1.a The specific question for discussion: If the City of Edmonds joins the RFA via annexation in 2026, should the Edmonds City Council change the amount levied for the General Property Tax for 2026? Packet Pg. 7 3.1.a m L U- "I would suggest that is a decision you need to make before you go to the voters. _ __ a decision that the Council will make to o keep some, none or all. It is a council decision that would be = 0 part of the ask to the voters:" Mayor Mike Rosen, June 4, 2024 Packet Pg. 8 3.1.a Why is this decision important NOW ? d L LL 4- 0 C O .N 0 .N Q y d CL 0) a N O N O d E d Q d U) C d E L V rr Q Packet Pg. 9 J ^ December 2023 —South County Fire provides notice of intent to terminate • Fire/ EMS contract with City of Edmonds (Fire/EMS services) effective ai� December 2025 Ah June 2024 —Council passes Resolution #1547 identifying joining the RFA 4NA by annexation as preferred alternative for Fire/EMS services al June 2024 —Council passes Resolution #1549 initiating the 42M process/requesting annexation to the RFA August/September 2024 — RFA Plan and pre -annexation plan under 091 discussion. � October 2024 (anticipated) —South County Fire Commissioners will • consider resolution amending RFA Plan and grant the request of the city ma to annex. i* December/January (anticipated) — Council will consider approving RFA plan and pre -annexation agreement Public Hearing Council will consider resolution placing annexation on ballot April 22, 2025 — Special Election regarding RFA Annexation Simple majority of Edmonds registered voters required for approval Annexation would take effect no later than August 1, 2025 January 1, 2026 -Edmonds property owners would begin paying RFA levy/benefit charges. Annual process wherein the City Council determines the taxes that will be levied U to the voter -approved level + 1% �� P P P for the following year. Ah November 2024 — Public Hearing/Ordinance for the 2025 General Property Tax 4%Uh Levy Ah November 2025 —Public Hearing/Ordinance for the 2026 General Property Tax '%hk Levy 3.1.a Fire/EMS Contract Under the current contract: • Edmonds pays the RFA to provide fire/EMS. • Property owners indirectly fund contract costs out of the taxes they pay to the city, including a voter approved EMS levy and city general property tax levy. Packet Pg. 14 3.1.a Fire/EMS Contract - 2024 2024 Fire Service Contract Expense $11.5M City EMS Levy I I General Fund $4.35 M $1.2 M $6M Transport Fees Packet Pg. 15 3.1.a Fire/EMS Contract - 2025 2025 Fire Service Contract Expense $12. 1 M (assuming 5%) City EMS Levy I I General Fund $4.4 M $1.2 M $6.5M (assuming +1%) Transport Fees Packet Pg. 16 3.1.a Fire/EMS Contract - 2026 2026 Fire Service Contract Expense City EMS Levy General Fund $4.44 M $1.2 M $13.9M (assuming +1%) Transport Fees $19.5 M (SCF letter 6/18/2024) Packet Pg. 17 3.1.a Fire/EMS Contract 2024 — 2026 2024 Fire Service Contract Expense $11.5M City EMS Levy I I General Fund $4.35 M $1.2 M $6M Transport Fees 2025 Fire Service Contract Expense $12. 1 M (assuming 5%) City EMS Levy I I General Fund $4.4M $1.2M $6.5M (assuming +1%) Transport Fees 2026 Fire Service Contract Expense $19.5 M (SCF letter 6/18/2024) City EMS Levy I I General Fund $4.44 M $1.2 M $13.9M Packet Pg. 18 Fire/EMS Contract 2024 — 2026 Funding 2024 Fire Service Contract Expense $11.5M City EMS Levy I I General Fund $4.35 M $1.2 M $6M Transport Fees Funded with ARPA 2025 Fire Service Contract Expense $12. 1 M (assuming 5%) City EMS Levy I I General Fund $4.4M $1.2M $6.5M (assuming +1%) Transport Fees 2026 Fire Service Contract Expense $19.5 M (SCF letter 6/18/2024) City EMS Levy I I General Fund $4.44 M $1.2 M $13.9M Q 3 3 U. 4- 0 _ O N 3 0 N d .N O w as SD L Q _ cc d a N O N O Q M E a� a a� Cn w E a Packet Pg. 19 3.1.a If RFA Annexation - 2026 If Edmonds annexed into the RFA: • Edmonds would no longer fund Fire/EMS out of its city budget and would no longer collect an EMS levy. • City property owners would pay the RFA directly through Fire/EMS levies and a benefit charge. Packet Pg. 20 3.1.a If RFA Annexation 2026 2024 Valuations $0 No fire service contract expense to City of Edmonds �$6M - $6+.5M (General Fund previously applied Ito $0 $0 Fire Service Contract) No City EMS Levy No Transport Fees Edmonds property owners pay RFA directly $19.5* Min RFA general levy, RFA EMS levy, RFA benefitch arge (*2024 figures from SCF letter2/6/2024) L 3 3 LL 4- 0 0 U) U) U) Packet Pg. 21 3.1.a If RFA Annexation 2026 - Taxpayer Impact LL 2024 Valuations0 O Annexation taxpayer cost impact on an average home (SCF Fire letter dated February 6, 2024) o • Scenario 1 "All": The City of Edmonds retains the dollars in its general fund t at paid or t e fire contract, a total of $5,965,492. • Scenario 2 "None": The City of Edmonds reduces its general fund levy by $-5-,965,492, the amount currently funding the fire contract. • Scenario 3 "Some": The City of Edmonds reduces its general property tax levy by a different specific absolute dollar amount. Packet Pg. 22 If RFA Annexation 2026 - Taxpayer Impact LL 2024 Valuations0 O Calculations Based on a 2,000 sq. ft. home with $836,183 AV .N 0 General/Fire Benefit Total Annual Levy EMS Levy Charge Increase Monthly Q •L Scenario 1: City does not reduce general levy $ 1,303.36 $ 290.72 $ 71.64 $ 809.24 $67.44 a Scenario 2: $5,965,637 general levy reduction $ 978.46 $ 290.72 $ 71.64 $ 484.33 $40.36 N 0 (SCF Fire Letter dated February 6, 2024) L Packet Pg. 23 3.1.a DS id S: • Per the several meetings and reports, the City's budget gap is in excess of $20M, way in excess of the amount that can be met by cuts of services and spending alone making some revenue change a given. • On the other hand, there are benefits to keeping the issues of fire service completely separate from the fiscal emergency. Packet Pg. 24 3.1.a The specific question for this Public Hearing: If the City of Edmonds joins the RFA via annexation in 2026, should the Edmonds City Council change the amount levied for the General Property Tax for 2026? Packet Pg. 25 3.1.b SOUTH COUNTY FIRE 12425 Meridian Ave S., Everett WA 98208 tel (425) 551-1200 • fox (425) 551-1249 www.southsnofire.org Mayor Mike Rosen City of Edmonds 121 5th Ave. N Edmonds WA 98020 June 18, 2024 Mayor Rosen, South County Fire has been providing high -quality fire and emergency medical services to the people of Edmonds since Jan. 1, 2010, and we hope to continue that service long into the future. The Board of Commissioners is committed to achieving parity with all served by the RFA paying at the same rate for the same service. As you know, our current contract with Edmonds has not kept pace with growing call volumes and expenses. As a result, Edmonds now pays the equivalent of 71 cents/$1,000 AV, which is substantially less than what residents of the RFA pay ($1.24/$1,000 AV). This is not sustainable or fair to our taxpayers. For the Board of Commissioners to consider a long-term contract, the city's cost would be set at a rate no lower than that paid by RFA property owners. As an example, under these terms, the City of Edmonds would have paid just under $19.5 million in 2024. Washington courts have held that RCW 43.09.210 prevents one government entity from receiving services from another at a reduced cost. Any future interlocal agreement for services would be structured to maintain rate parity for RFA taxpayers over the term of the contract. Contracting would mean: • The city would continue to pay contract costs out of its general fund. • The contract rate would be no lower than that paid by RFA property owners. • Edmonds residents would not have a vote on RFA funding measures that would impact the contract rate. Under annexation, city residents would vote on all RFA ballot measures. • The city would retain pension liabilities. Under annexation, this would transfer to the RFA. • Transport fees would not be remitted to the city. We believe annexation provides the most cost-effective way to fund and maintain high -quality fire and EMS to the people of Edmonds now and going forward. Annexation would give Edmonds residents a vote on RFA ballot measures and direct representation on the Board of Commissioners. I hope this provides clarity for you and the council. We value our partnership and look forward to working with the City of Edmonds on finding a path forward that will allow us to continue to serve your residents with high quality fire and emergency medical services. Sinc rely, / _ G Jim Kenny Board Chair SERVING SOUTH SNOHOMISH COUNTY • BRIER • EDMONDS • LYNNWOOD • MILL CREEK • MOUNTLAKE TERRACE Packet Pg. 26 3.1.c SOUTH COUNTY FIRE 12425 Meridian Ave 5., Everett WA 98208 tel (425) 551-1200 • fax (425) 551-1249 www.southsnofire.org February 6, 2024 To: Mayor Mike Rosen, City of Edmonds From: Fire Chief Thad Hovis / AC Bob Eastman, South County Fire Edmonds Fire/EMS Cost Comparison This comparison looks at the Fire/EMS costs in Edmonds under the current contract and if the city was part of the regional fire authority (RFA) using 2024 data from the Snohomish County Assessor's office. Annexation into the RFA would change the way Edmonds residents pay for fire and EMS. Under the current contract: • Edmonds pays the RFA to provide fire/EMS. • Property owners indirectly fund contract costs out of the taxes they pay to the city, including a voter - approved EMS levy and city general property levy. If Edmonds annexed into the RFA: • Edmonds would no longer fund fire/EMS out of its city budget and would no longer collect an EMS levy • City property owners would pay the RFA directly through fire/EMS levies and a benefit charge. Since neither model funds fire/EMS based solely on property taxes, we used 2024 county tax data to calculate the equivalent levy rate per $1,000 of assessed property value to compare what Edmonds residents are indirectly paying for fire/EMS under the current contract to what they would pay in the RFA. • Edmonds residents pay the equivalent of $0.75 per $1,000 of assessed property value under the current contract. • RFA residents pay the equivalent of $1.29 per $1,000 of assessed property value. Under the Current Contract: The 2024 fire/EMS contract cost is $11,514,637. City revenue sources that cover the contract expense: • Voter -approved EMS Levy $ 4,349,145 • EMS Transport Fees $ 1,200,000 • General Fund $ 5,965,492 See Appendix Afar detail on City of Edmonds 2024 property tax collection City property owners pay an equivalent levy rate of $0.75 per $1,000 of assessed value. SERVING SOUTH SNOHOMISH COUNTY • BRIER • EDMONDS • LYNNWOOD • MILL CREEK • MOUNTLAKE TERRACE Packet Pg. 27 3.1.c With Annexation: The total cost for fire/EMS in Edmonds in 2024 would be $19,472,764, an increase of $7,958,127 above the contract cost. RFA property owners pay the equivalent of $1.29 per $1,000 of assessed value. Edmonds property owners would pay the RFA: • A fire levy of $0.82/$1,000 AV • An EMS levy of $0.35/$1,000 AV • A benefit charge based on structure size and use See Appendix 8 for detail on RFA 2024 property tax collection The City of Edmonds would no longer: • Collect the city EMS levy of $0.28/$1,000 AV • Pay Sno911 for fire dispatch Annexation taxpayer cost impacts on an average home This evaluates the tax impacts on the average homeowner in Edmonds. The average assessed value and size of a home in Edmonds was not available from the Snohomish County Assessor. This data looks at costs associated with a 2,000-square-foot home valued at $836,183 (Zillow average home value for Edmonds). The city's EMS levy would be replaced by the RFA's EMS levy. Here are two possible scenarios: Scenario 1: The City of Edmonds retains the dollars in its general fund that paid for the fire contract, a total of $5,965,492. Scenario 2: The City of Edmonds reduces its general fund levy by $5,965,492, the amount currently funding the fire contract. Calculations Based on a 2,000 sq. ft. home with $836,183 AV General/Fire EMS Benefit Total Annual levy Levy Charge Increase Monthly Scenario 1: City does not reduce general levy 1303.36 290.72 71.64 809.24 67.44 Scenario 2: $5,965,637 general levy reduction 978.46 290.72 71.64 484.33 40.36 See Appendix C for supporting information Packet Pg. 28 3.1.c Appendix A The City of Edmonds 2024 property tax collected based on the Snohomish County Assessor: • 2024 assessed value $15,352,931,155 • 2024 General levy $11,376,608 @ mill rate/Levy rate of $0.74100563111 • 2024 EMS Levy $4,349,145 @ mill rate/levy rate of $0.28327782858 Appendix B The RFA 2024 property tax collection based on the Snohomish County Assessor: • 2024 Assessed value $59,924,440,250 • 2024 Fire levy $49,000,000 @ mill rate/Levy rate of $0.81769641561 • 2024 EMS Levy $20,834,575 @ mill rate/levy rate of $0.34768076531 • 2024 Benefit Charge $7,764,590 Appendix C 2024 property taxes in the City of Edmonds (not specific to fire/EMS costs): 2024 General levy $619.62 @ mill rate/Levy rate of $0.74100563111 2024 EMS Levy $236.87 @ mill rate/levy rate of $0.28327782858 2024 total property tax $856.49 2024 RFA property taxes and benefit charge if the city annexed in 2024: • 2024 Fire levy $683.74 @ mill rate/Levy rate of $0.81769641561 • 2024 EMS Levy $290.72 @ mill rate/levy rate of $0.34768076531 • 2024 Benefit Charge $71.64 • 2024 total property tax $974.47 plus the benefit charge ($1,046.11) 2024 property taxes if annexed into the RFA to include City property tax: • 2024 General levy $619.62 @ mill rate/Levy rate of $0.74100563111 • 2024 Fire levy $683.74 @ mill rate/Levy rate of $0.81769641561 • 2024 EMS Levy $290.72 @ mill rate/levy rate of $0.34768076531 • 2024 Benefit Charge $71.64 This is if the city retains the dollars in the general fund that paid for the fire contract. The total collected in property taxes to include the benefit charge would be $1665.72 which would be an increase of $809.24 dollars. To break this down further the actual increase for the cost of Fire and Emergency Medical Services is $484.33, as $324.90 is dollars that were retained by the city that was used to pay for the contract (equivalent to $0.388557203818191 per thousand). If the city reduced the general levy the amount being used for the contract would result in the following: 2024 General levy $294.71 @ mill rate/Levy rate of $0.352448427 2024 Fire levy $683.74 @ mill rate/Levy rate of $0.81769641561 Packet Pg. 29 3.1.c • 2024 EMS Levy $290.72 @ mill rate/levy rate of $0.34768076531 • 2024 Benefit Charge $71.64 Packet Pg. 30 3.2 City Council Agenda Item Meeting Date: 09/17/2024 Updated Approach to Draft Comprehensive Plan Staff Lead: Shane Hope Department: Planning & Development Preparer: Scott Passey Background/History The Edmonds Comprehensive Plan Update process has come a long way in terms of identifying background information and suggesting alternatives for the City's future growth, economic vitality, and environmental quality. However, with various issues that were raised during this process and with the leaving of the former Planning and Development Director, the acting Planning and Development Director finds that the current process needs to be paused just a bit, so that the material can be reviewed and some adjustments made. This affects both the content of the draft Comprehensive Plan material and the schedule. Many of the content changes being drafted now are intended to: (a) Remove items that have been labeled "policies" but would better be considered "action steps" and handle them in a different way; (b) Adjust or drop some potential goals and policies that are either more detailed than necessary for a broad Comprehensive Plan or that are not appropriate at this time to be included in a draft Comprehensive Plan Update. Regardless, much of the background data and basic alternatives that were discussed previously are expected to be the same in the publication of a draft Comprehensive Plan. All due speed by staff is being given to this drafting effort, with the accompanying recognition that the state deadline for completing the Comprehensive Plan Update is December 31, 2024. Upon issuance of the draft Plan, it will be further considered by the public. The draft will then be further refined and the City Council will consider adoption of a final Comprehensive Plan, including any other changes. Staff Recommendation For information only. Narrative At the City Council's meeting, the acting Planning and Development Director will provide more information about the Update status and respond to questions and comments from the Council. Packet Pg. 31