04/13/2010 City CouncilApril 13, 2 010
At 5:00 p.m., Mayor Pro Tem Bernheim announced that the City Council would meet in
executive session regarding negotiations for the purchase of real estate. He stated that the
executive session was scheduled to last approximately one hour and would be held in the Jury
Meeting Room, located in the Public Safety Complex. Elected officials present at the executive
session were: Mayor Pro Tem Bernheim, Councilmembers Fraley - Monillas, :Buckshnis,
Peterson, and Wilson. Councilmember Plunkett participated via telephone. Others present were
City Attorney Scott Snyder, Community Services /Economic Development Director Stephen.
Clifton, and City Clerk Sandy Chase. The executive session concluded at 5:44 p.m.
The scheduled open session City Council meeting was called to order at 6:00 p.m. by Mayor Pro
Tem :Bernheim in the Council Chambers, 250 5th Avenue North, Edmonds. The meeting was
opened with the flag salute.
ELECTED OFFICIALS PRESENT
Steve Bernheim, Mayor Pro Tem
Strom Peterson, Council President Pro Tem
D. J. Wilson, Councilmember
Michael Plunkett, Councilmember (via telephone)
Dave Orvis, Councilmember
Adrienne Fraley- Monillas, Councilmember
Diane Buckshnis, Councilmember
ELECTED OFFICIALS ABSENT
Gary Haakenson, Mayor
1. APPROVAL OF AGENDA
STAFF PRESENT
Gerry Gannon, Assistant Police Chief
John Westfall, Fire Marshal
Stephen Clifton, Community Services /Economic
Development Director
Noel Miller, Public Works Director
Lorenzo Hines, Interim Finance Director
Leonard Yarberry, Building Official.
Leif Bjorback, Assistant Building Official
Debi Humann, Human Resources Director
MaryAnn Hardie, Human Resources Analyst
Kernen Lien, Planner
Scott Snyder, City Attorney
Sandy Chase, City Clerk
Jana Spellman, Senior Executive Council Asst.
Jeannie Dines, Recorder
COUNCILMEMBER WILSON MOVED, SECONDED BY COUNCILMEMBER FRALEY-
MONILLAS, TO APPROVE THE AGENDA IN CONTENT AND ORDER. MOTION CARRIED
UNANIMOUSLY.
2. CONSENT AGENDA ITEMS
COUNCILMEMBER WILSON MOVED, SECONDED BY COUNCIL PRESIDENT PRO TEM
PETERSON, TO APPROVE THE CONSENT AGENDA. MOTION CARRIED UNANIMOUSLY.
The agenda items approved are as follows:
A. ROLL CALL
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April 13, 2010
Page 1
3. POTENTIAL ACTION REGARDING THE PURCHASE OF REAL ESTATE WHICH MAY
INCLUDE APPROVAL OF A PURCHASE AND SALE AGREEMENT, AND APPROPRIATION
OF FUNDS FOR STUDIES AND CONSULTANT SERVICES ASSOCIATED WITH THE
PURCHASE.
Councilmember Wilson suggested City Attorney Scott Snyder brief the Council and the public on the
purchase and sale agreement. Mayor Pro Tern, Bernheim preferred the Council comment on the agreement
and consult Mr. Snyder if necessary.
Councilmember Buckshnis explained she read the information provided by Natalie Shippen. The Council
has been in discussion for a number of meetings about purchasing the Skippers property. There are a
number of possible funding scenarios such as using the funds from the sale of assets to Fire District 1,
bonds, etc. She anticipated there would be further discussion regarding funding tonight.
Mayor Pro Tern Bernheim advised Councilmember Plunkett was participating in the Council meeting via
telephone.
MAYOR PRO TEM BERNHEIM MOVED, SECONDED BY COUNCILMEMBER BUCKSHNIS,
THAT THE COUNCIL APPROVE A PURCHASE AND SALE AGREEMENT FOR $1.1
MILLION FOR THE SKIPPERS PROPERTY WITH A $50,000 EARNEST MONEY TO BE
DELIVERED NO LATER THAN 24 DAYS AFTER MUTUAL ACCEPTANCE; WITH A
PROVISION FOR A 30 DAY FEASIBILITY STUDY; WITH A PROVISION FOR AN
ADDITIONAL 30 DAY FEASIBILITY STUDY AT THE COST OF $10,000 TO BE APPLIED TO
THE PURCHASE PRICE IF THE PROPERTY IS SOLD; WITH THE POSSIBILITY OF AN
ADDITIONAL 30 DAY FEASIBILITY PERIOD FOR AN ADDITIONAL $10,000 TO BE
CREDITED TO THE PURCHASE PRICE IF THE PROPERTY IS PURCHASED.
Councilmember Wilson explained the Council had been holding executive sessions on this topic. He
agreed the Skippers site was an unusual piece of property, that it was important for the future
redevelopment of the near waterfront area and that it was a critical gateway into the community. He
pointed out the current condition of the site, asphalt and a vacant fast food restaurant, could not be much
worse and was not the window into the community he wanted. For those reasons, his presentation last
week, contrary to the perception/spin of some, was a framework for acquiring or guiding development of
the property. However, with a purchase price of $1.1 million, even if the Council is creative with funding
such as using the Fire District 1 funds, the projected ending cash balance for 2012 is in the red $500,000.
Councilmember Wilson found it premature to spend $1.1 million to purchase this parcel with no plans for
a levy or other alternative revenue source to address the fact that in 1 -2 years the City will be unable to
keep the lights on. The budget that will be prepared this summer for 2011 and 2012 . will require decisions
to be made regarding which departments stay or go and which staff members stay or are forced to leave.
He summarized purchasing a $1.1 million property was ambitious but premature until the Council
determined how it would foster redevelopment or how a proforma analysis would benefit the City.
Council President Pro Tem Peterson commented not only was the Council ill prepared for the looming
budget problem that has been discussed extensively for at least the past year, the Council was ill prepared
for what would be done with the property. He applauded the three Councilmembers who have been
working on this issue and the presentation made last week, however, the presentation demonstrated there
were at least 100 steps to be taken to reach the first step. Until the Council developed a vision for the
property with regard to what it would be used for, he was unable to put that much money at risk. Even
though it was a few thousand here and there for a feasibility study or an appraisal, he was unwilling to go
into the budget process, putting these funds at risk particularly in view of staff members who have made
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April 13, 2010
Page 2
significant sacrifices over the past year. He acknowledged there could be a vision for the property in the
future that made sense as an investment for the City. But until that vision was presented, he could not
support a purchase and sale agreement that put the cart before the horse.
Councilmember Buckshnis disagreed with Council President Pro Tern Peterson's comments, urging the
Council to stop being stagnant and start taking action. She refused to look at financials that were not
substantiated, commenting she has provided Finance Director Lorenzo Hines a number of examples of
financial information with background information to help her understand the City's financial condition
but has yet to see a comprehensive analysis since September 2008. This is a critical piece of property and
she did not believe the City would be closing its doors or going into the red in 2012 as Councilmember
Wilson stated. She urged the Council to think about the future; this property is an investment for the
future.
Councilmember Fraley - Monillas was interested in exploring the need for this property and what could be
done with it and viewed the sale and purchase agreement as a win -win situation. If the Council chose to
back out for any reason, that could be done. She was disturbed with the thought of using the remaining
$600,000 Fire District 1 funds for staff, wages, to keep the lights on, departments, etc. Those were one-
time funds that should benefit the citizens and not be used for City operations.
Councilmember Fraley- Monillas commented little has been done over the past few years until a few
months ago the fear that the City would run out of money was voiced. The Council established a levy
work group last year that recommended the Council proceed with a levy; however, the Council at that
time voted against proceeding with a levy. She supported the City living within its budget, noting the City
has not lived within its budget recently. She was disappointed previous Councils had not kept the City on
budget. The Council needed to consider the City's expenditures and make some decisions for the future.
She disagreed with using the funds from the sale of assets to Fire District I money to pay for daily
expenses.
Councilmember Wilson agreed with Councilmember Fraley - Monillas' comments regarding using funds
from the sale of assets to Fire District 1 to pay for daily expenses. He pointed out that was not the topic of
discussion today; the question was how to come up with $1.1 million cash to purchase this parcel. To
Councilmember Fraley- Monillas' point that the City should live within its budget, he pointed out this
expenditure was not budgeted.
Mayor Pro Tern Bernheim commented although the Council did not have a levy in place at the moment,
when the Council last considered the levy, the decision was to postpone the levy until 2010. . Under the
terms of the purchase and sale agreement, the City could withdraw without any penalty within 30 days of
extending the offer and would also be able to withdraw at a loss of $10,000 /month for two consecutive
months thereafter. He agreed with Councilmember Buckshnis that it is a leadership and future of the City
issue; the Council must be careful about passing up an opportunity to acquire properties with the potential
to be a gateway or an asset to the community as a whole. If the purchase and sale agreement is approved,
it is with the idea that a short amount of time is set aside to take public comment and consider the
Council's values and priorities.
Council President Pro Tern Peterson agreed this was a crucial piece of property and that it was bad
business sense to use the sale of assets to pay for ongoing expenses. He commented if this opportunity
arose five years ago, the City likely could have purchased the property with REET 1 funds due to the
active real estate market. The economy has declined significantly since then and he questioned how it was
fiscally conservative for the Council to purchase this property in this economy and with many experts
saying commercial real estate has not reached the bubble that residential real estate has gone through over
the past year. He pointed out nearly every member of the Council either at a Council meeting or during
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April 13, 2010
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their campaign has said that they were fiscally conservative. He questioned how this purchase was fiscally
conservative when due diligence had not yet been conducted.
Council President Pro Tern Peterson pointed out due diligence would cost more money, $7,000 for an
appraisal and $20,000 - $50,000 for a proforma. He disagreed there was no risk in the first 30 days because
money would need to be expended to determine what the Council wanted to do with the property. In 60
days, it would cost another $10,000, and another $10,000 in 90 days. He disagreed with approving a
purchase and sale agreement and then deciding what to do, pointing out information from professionals,
estimated to cost $50,000, would be required to determine if it was a worthwhile purchase. He recalled
the big discussion last summer about the need for $50,000 to keep Yost Pool open, questioning how the
Council could now gamble $50,000 in this economic climate especially when the Council was facing
other issues such as upcoming bond payments and other investments that were not penciling out due to
the economy. If he could be assured this was a wise investment, he would support it but as a gamble, he
could not support it.
Councilmember Wilson noted a purchase and sale agreement was a legislative action over which the
executive has no veto authority. Mr. Snyder agreed. Councilmember Wilson pointed out Mayor
Haakenson could veto a bond ordinance or budget ordinance. Mr. Snyder agreed the Mayor could veto an
ordinance. Councilmember Wilson commented if there was a 4 -3 vote, an executive veto was highly
likely. If there was an executive veto of a budget ordinance, the Council would be unable to fund the
purchase and would be out the $50,000 earnest money as well as $10,000 /month until the Council got out
of the deal. He recalled some who argued against a levy last year did not want to pursue a levy at that
time because of the $80,000 cost of the election and the possibility it might not be successful. Now they
are unconcerned about losing $10,000 or $50,000. He urged Councilmembers to be consistent about the
fiscal conservativeness they exhibited during their campaign or during past comments.
Councilmember Buckshnis commented she was a fiscal conservative but was also a very wise person and
knew when something was a good investment. She pointed out there are also funds available in the
emergency fund, a fund that the Council voted last year to require be used only for an Act of God. The
Council could amend that ordinance to allow the funds to be used for the original intent under former
Mayor Laura Hall's administration, for a shortfall in revenue or an economic catastrophe. She objected to
speculating what action Mayor Haakenson would take because he was not here. She supported the
Council purchasing the property for future generations; concluding this was sustainability, to give future
generations something that represented Edmonds as people exited the ferry.
Councilmember Fraley- Monillas did not see this as a gamble but as an investment in the future. Referring
to past discussion regarding economic development and the future of Edmonds, she did not want the view
down Main Street in the future to be a parking lot and a Jack -in -the Box, the company that has been
considering purchasing the property. She wanted a gateway to the City on this site. If the goal was to have
people come to Edmonds to shop, live and stay, it needed to be a viable place to come. Past Councils have
purchased property for parks throughout the City; this was one of the most important pieces of property
the City could buy for economic development. It was not about whether the City could afford it or
whether it was a gamble, it was about reality. The Council can purchase the property and develop a
private- public partnership, bond or whatever later. She found it very close minded for Councilmembers to
support economic development and allow Jack -in- the -Box to locate on this corner.
Councilmember Plunkett referred to Councilmember Wilson's scenario regarding losing $50,000,
assumed if the Council approved the purchase and sale agreement and Mayor Haakenson vetoed it, the
Council could simply get out based on the feasibility contingency and the $50,000 earnest money would
be returned. Mr. Snyder explained Councilmember Wilson's point was Mayor Haakenson could not veto
the purchase and sale agreement but could veto an ordinance to appropriate funds. It would be some time
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April 13, 2010
Page 4
before those ordinances were presented to the Council, likely at the time of the mid -year budget
amendment. If the purchase and sale agreement is approved, the next action will be an appropriation.
Staff developed estimates for the consulting costs for the various feasibility stages; $25,000450,000 is
the estimated amount should the purchase and sale agreement be in place for 60 -90 days before the
Council were to "pull the plug."
Mayor Pro Tem Bernheim acknowledged there were additional consultant fees, environmental
assessments, etc. the City would incur if the property were purchased.
Councilmember Orvis commented it was his belief the public wanted the City involved with the
waterfront and this was a good way to do it. The purchase would allow the Council to have more
influence on the waterfront and more leverage to get what they wanted. He recalled a presentation made
by Lora Petso in the past of a 30 -foot tall building lot line to line, something he did not find very
attractive. He summarized if the Council wanted to control the site, there was no better way than to own
it.
Councilmember Wilson pointed out the terms have already been negotiated; therefore, there was no
question whether it would be accepted. Mayor Pro Tern Bernheim responded there was no binding
agreement to accept the proposed terms; an oral agreement for the purchase of real estate was not binding.
MOTION CARRIED (5 -2), COUNCILMEMBER WILSON AND COUNCIL PRESIDENT PRO
TEM PETERSON VOTING NO.
Mr. Snyder requested the Council appropriate $50,000 - $100,000 to represent the potential costs of the
transaction; individual contracts would be presented to the Council for approval in the future. The
Council's first action will be to establish a process to determine a public use and assist in the feasibility
studies.
To Councilmember Buckshnis' comment about a number of scenarios, Mr. Snyder explained no decision
had yet been made regarding financing because the Council could discuss the terms of real estate
agreements in executive session but could not make budget decisions. His advice to the Council has been
any discussion regarding financing should be made during an open public meeting.
MAYOR PRO TEM BERNHEIM MOVED, SECONDED BY COUNCILMEMBER BUCKSHNIS,
TO ALLOW FOR AN APPROPRIATION FROM SOME SOURCE OF $50,0004100,000 TO
COVER THE COSTS OF THESE STUDIES, SUBJECT TO COUNCIL APPROVAL OF
INDIVIDUAL CONTRACTS AT A LATER DATE.
Mr. Snyder clarified the budget adjustment would be at the time of the mid -year budget adjustment.
Individual contracts would be placed on the Council's next Consent Agenda for approval.
Councilmember Wilson commented this was just the first "chunk of change" that was being outlaid to
purchase the property in addition to the acquisition costs, with no thought yet to the cost of development.
He pointed out $100,000 was the equivalent of one Police Officer; Edmonds has fewer Police Officers per
capita than any other comparable city. One of the reasons the ending cash balance is as high as it is, is
because positions have not been filled such as the Development Director, which is now in the process of
being filled at a cost of approximately $150,000 /year with benefits. He anticipated the ending cash
balance of $500,000 in the red would only increase and the deficit would move closer to 2011. He
emphasized $100,000 here, $100,000 there represented jobs and service. He recognized the purchase was
the result of a sincere vision for the community but found it financially irresponsible given the current
numbers.
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April 13, 2010
Page 5
Councilmember Buckshnis disagreed this was the first chunk of change; her understanding was that
approximately $100,000 represented all the costs associated with the purchase. If necessary, the Fire
District 1 funds could be used.
Council President Pro Tern Peterson commented although there would be positive public reaction to the
Council's action, he recalled Roger Hertrich's comment that in difficult economic times, people
concentrated on food and shelter. He questioned how a $50,000 - $100,000 expenditure fell into that
category. He objected to this expenditure when the Council was faced with budget shortfalls, other
outstanding debts and a Police Department with fewer officers per capita than comparable cities. He
summarized this expenditure was contrary to be being good stewards.
Councilmember Buckshnis pointed out the EMS fees were not yet reflected in the budget and have been
estimated to be approximately $700,000. Until the Council got to the bottom of all the budget numbers,
she did not see a downside to this action.
As a taxpayer, Councilmember Fraley- Monillas was irritated the Council passed budgets that put the City
in the red in a few years and left it up to this new Council to resolve the past. She summarized there
needed to be accountability and ethics and people needed to look at the future.
MOTION CARRIED (5 -2), COUNCILMEMBER WILSON AND COUNCIL PRESIDENT PRO
TEM PETERSON VOTING NO.
4. MAYOR'S COMMENTS
Mayor Pro Tem Bernheim had no report.
5. COUNCIL COMMENTS
Councilmember Buckshnis announced the next TGI Friday forum would be held in Firdale at Colonial
Pantry Family Restaurant on April 30 from 6:00 - 8:00 p.m.
Councilmember Wilson pointed out there was typically audience comments at every Council meeting but
there was no public comment on tonight's agenda. He asked if public comment was required at a public
meeting. Mayor Pro Tern Bernheim agreed there was no opportunity for audience comment on tonight's
agenda, advising it was not required.
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With no further business, the Council meeting was adjourned to Committee meetings at 6:35 p.m.
Edmonds City Council Approved Minutes
April 13, 2010
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