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10/26/2010 City CouncilEDMONDS CITY COUNCIL APPROVED MINUTES October 26, 2010 Following a Special Meeting at 6:30 p.m, to meet with two candidates for the Sister City Commission, the Edmonds City Council meeting was called to order at 7:00 p.m. by Mayor Cooper in the Council Chambers, 250 5`h Avenue North, Edmonds. The meeting was opened with the flag salute. ELECTED OFFICIALS PRESENT Mike Cooper, Mayor Steve Bernheim, Council President D. J. Wilson, Councilmember Michael Plunkett, Councilmember Lora Petso, Councilmember Adrienne Fraley- Monillas, Councilmember Strom Peterson, Councilmember Diane Buckshnis, Councilmember ALSO PRESENT Peter Gibson, Student Representative 1. APPROVAL OF AGENDA STAFF PRESENT Al Compaan, Police Chief Stephen Clifton, Community Services /Economic Development Director Brian McIntosh, Parks & Recreation Director Phil Williams, Public Works Director Lorenzo Hines, Finance Director Doug Fair, Municipal Court Judge Rob Chave, Planning Manager Rich Lindsay, Parks Maintenance Manager Jerry Shuster, Stormwater Eng. Program Mgr. Debi Humann, Human Resources Director Frances Chapin, Cultural Services Manager Renee McRae, Recreation Manager Rob English, City Engineer Scott Snyder, City Attorney Linda Hynd, Deputy City Clerk Jana Spellman, Senior Executive Council Asst. Jeannie Dines, Recorder COUNCILMEMBER FRALEY- MONILLAS MOVED, SECONDED BY COUNCILMEMBER PETERSON, TO APPROVE THE AGENDA IN CONTENT AND ORDER. MOTION CARRIED UNANIMOUSLY. F�K�3►f.`I p1►11 IIxlf1►117:� Y Y1►1(.`l Councilmember Wilson requested Items F and G be removed from the Consent Agenda. COUNCILMEMBER PLUNKETT MOVED, SECONDED BY COUNCILMEMBER PETERSON, TO APPROVE THE REMAINDER OF THE CONSENT AGENDA. MOTION CARRIED UNANIMOUSLY. The agenda items approved are as follows: A. ROLL CALL B. APPROVAL OF CITY COUNCIL MEETING MINUTES OF OCTOBER 19, 2010. C. APPROVAL OF CLAIM CHECKS #121.845 THROUGH #121987 DATED OCTOBER 21, 2010 FOR $745,372.10. APPROVAL OF PAYROLL DIRECT DEPOSIT AND CHECKS #49886 THROUGH #49916 FOR THE PERIOD OCTOBER 1, 2010 THROUGH OCTOBER 15, 2010 FOR $640,417.80. Edmonds City Council Approved Minutes October 26, 2010 Page 1 D. ACKNOWLEDGE RECEIPT OF A CLAIM FOR DAMAGES FROM DONNA L. BRESKE ($799.37). E. COMMUNITY SERVICES AND ECONOMIC DEVELOPMENT QUARTERLY REPORT - OCTOBER, 2010. . H. AUTHORIZATION TO ADVERTISE A REQUEST FOR QUALIFICATIONS (RFQ) FOR DESIGN AND CONSTRUCTION SUPPORT SERVICES FOR THE 2011 WATERLINE REPLACEMENT PROJECT. I. ORDINANCE NO. 3813 - AMENDING ECC 10.90.020 TO PROVIDE FOR UP TO TWO NONVOTING MEMBERS IN THE EDMONDS HISTORIC PRESERVATION COMMISSION. ITEM F: INTERLOCAL AGREEMENT WITH THE SNOHOMISH CONSERVATION DISTRICT. Councilmember Wilson asked why this was being proposed now, why it had not been done in the past and what is new about the Interlocal Agreement. Monte Marty, Snohomish Conservation District, explained the reason for the Interlocal Agreement now and why it has not been done in the past is the Snohomish Conservation District is working with cities throughout the county to enter into Interlocal Agreements to begin engaging in various natural resource issues such as low impact development, information/education about natural resources, etc. Councilmember Wilson asked whether the District had been doing that since 1941. Mr. Marty agreed it had but the District was now reaching out to and working more closely with cities. Councilmember Wilson asked whether the $5 /parcel assessment was new. Mr. Marty advised the County Council approved that fee last November and it was effective January 2010. The fee is charged on parcels that were in unincorporated Snohomish County as of 1941. Since that time some cities have elected to join the Snohomish Conservation District. In some cities, such as Edmonds, part of the city is in the District and part of the city is outside the District. The downtown core in Edmonds, the City limits as of 1941, is not inside the District. The Interlocal Agreement would allow the District to provide some services inside that area. Because the assessment does not include the downtown core, the District could not currently conduct any activities in that area. Councilmember Wilson asked what type of conservation services citizens would receive for the $5 /parcel fee, for a total of approximately $7500 from parcels within the City. Mr. Marty advised the District can partner with the City to provide information /education, engineering services for a variety of projects such as low impact development, water quality monitoring, and urban forestry assistance. Stormwater Engineering Program Manager Jerry Shuster summarized the District provides a skill set that the City does not have in- house. Councilmember Wilson asked how the services provided by the District compared to other small contracts the City has with Sustainable Edmonds, Cascade Land Conservancy, and Climate Solutions. Mr. Shuster answered he was not involved in those contracts. Councilmember Wilson asked whether the Conservation District was a separate municipal corporation created by Snohomish County. Mr. Marty answered it was a subdivision of State government; there are 47 conservation districts in the State. The Snohomish Conservation District serves Snohomish County and Camano Island. The District has been funded in the past by the State, via contracts with Department of Ecology and by Snohomish County. Edmonds City Council Approved Minutes October 26, 2010 Page 2 Councilmember Buckshnis asked where the fee was reflected in the budget. Mr. Shuster answered it is in the Stormwater Utility budget in Citywide Stormwater Projects. Council President Bernheim asked if there was a deadline for the Council to approve the Interlocal Agreement. Mr. Shuster answered there was not. Councilmember Wilson advised he was willing to support this item if another Councilmember made a motion. He was interested in further information. Councilmember Petso pointed out she too had questions regarding this item which was not reviewed by Council Committee. She preferred non - routine Consent Agenda items first be reviewed by Committee. It was the consensus of the Council to refer this item to a Council Committee. ITEMG: INTERLOCAL AGREEMENT WITH THE CITY OF MOUNTLAKE TERRACE FOR AN ENGINEERING STUDY AS PART OF THE LAKE BALLINGER/MCALEER CREEK FORUM CAPITAL IMPROVEMENT PLAN. After conferring with staff, Councilmember Wilson requested this item be rescheduled on next week's Consent Agenda. The Council concurred. 3. COMMUNITY SERVICE ANNOUNCEMENT: EDMONDS CHAMBER OF COMMERCE — TREE LIGHTING. David Arista, Board Member, Greater Edmonds and Downtown Edmonds Merchants Association (DEMA), provided a reminder about the downtown Halloween Trick or Treat sponsored by the Greater Edmonds Chamber of Commerce and DEMA on Sunday, October 31 from 5:00 to 7:00 p.m. Mr. Arista announced the Tree Lighting Ceremony on Saturday, November 27 at 4:30 p.m. at Centennial Plaza (5'b and Bell). The event will include refreshments, entertainment, and a visit from Santa. Santa photos will be available after the ceremony at the Edmonds Conference Center. Councilmember Fraley- Monillas commented she and her son had a terrific time at the ceremony last year. She encouraged the community to attend this family friendly function. 4. PRESENTATION ON WASHINGTON STATE FERRIES (WSF) MUKILTEO MULTIMODAL TF,RMINAT,_ Community Services/Economic Development Director Stephen Clifton explained WSF and the Federal Transit Administration (FTA) are evaluating concepts to replace /relocate the Mukilteo ferry terminal. The environmental process for this project was reinitiated in February 2010 after being on hold since 2007 due to funding and constructability issues associated with previously identified alternatives. As referenced in the July and October 2010 Community Services and Economic Development Quarterly Reports, as part of the National Environmental Policy Act and the State Environmental Policy Act, the City provided responses on May 26, 2010 regarding two concepts being considered as alternatives to the Mukilteo multimodal terminal: the existing Edmonds ferry terminal concept at Main Street and the Pt. Edwards multimodal concept. These concepts which are two of several being considered by WSF were initially discussed at Mukilteo City Hall on May 5, 2010. At that time the WSF proposed Edmonds ferry terminal concept assumed that the present single slip ferry terminal would be maintained at the existing Main Street location in downtown Edmonds and that the slip would continue to maintain service to Kingston. Edmonds City Council Approved Minutes October 26, 2010 Page 3 As part of the process to identify alternatives to be studied in the Environmental Impact Statement (EIS) process for the Mukilteo multimodal project, a project team developed concepts to be evaluated through a two -level screening process. The project team evaluated ten concepts during this process; these concepts are described in the document " Mukilteo Multimodal Project Concept Descriptions" dated September 2010. The concepts were posted on the WSF website and the City's homepage. Five of the concepts under consideration are located within Mukilteo, three concepts are within Edmonds and a tenth alternative is located in the City of Everett. He displayed aerial photographs of the three concepts in Edmonds: 1) Existing Main Street terminal that assumes no improvements. 2) Existing Main Street alternative with site improvements 3) Pt. Edwards location The non- Mukilteo concepts proposed in Edmonds and Everett would add a new route by reassigning the Mukilteo- Clinton ferry route to create either an Edmonds - Clinton ferry route or an Everett - Clinton route. An October 8, 2010 email with attachments regarding the 10 concepts referenced above was forwarded to the Council on October 12, 2010. He and Mayor Cooper have significant concerns about the existing proposed Main Street concept with no improvements as well as the existing Main Street concept with improvements. The Community Services /Economic Development Quarterly Report references those concerns. During the May 5, 2010 meeting in Mukilteo, WSF proposed an Edmonds ferry terminal concept that assumed the present single slip ferry terminal would be maintained at its existing Main Street location in downtown Edmonds and that the slip would continue to maintain service to Kingston. The proposed existing Main Street concept with improvements was not reviewed or discussed during the May 5 meeting. WSF presented this concept and it was reviewed by a project team on September 29, 2010. He displayed an aerial view of this concept, explaining it adds holding lanes over the water, two ferry slips, uses the existing Skippers property, WSF parking lot and old Safeway property, utilizes Sunset and Main and Dayton Streets for access and assumes that Main Street would be closed between Sunset and the waterfront. Upon review of both proposed concepts located within Edmonds at the Main Street location, Mayor Cooper and staff do not support the existing Main Street concept for reasons cited in a May 26, 2010 email which is included in the Council packet. The May 26 email is not an inclusive list; staff plans to submit comments on behalf of the City before the November 19, 2010 public comment deadline. Mayor Cooper and staff also do not support the recently proposed existing Main Street concept with improvements; the reasons are outlined in the Community Services/Economic Development Quarterly Report and the staff report. Concerns include widening and expanding the existing holding storage area west of the existing railroad tracks and Railroad Avenue which will have significant adverse environmental impacts by encroaching into Brackett's Landing North Park and the Underwater Dive Park. The construction of a massive overwater storage area between Brackett's Landing North and South Parks would include fill into the Underwater Dive Park, create significant lighting impacts, significantly impact views and aesthetics as well as impacting macro algae and eel grass beds. There are also concerns with the closure of Main Street south of Sunset to local traffic, loss of access to Brackett's Landing North via Main Street, retention of an at -grade crossing at Main Street and increased conflicts between ferry and train operations particularly with the addition of 17 boats per day, and increased volume in traffic by reassigning the Mukilteo- Clinton ferry route to the Edmonds terminal. The increase in traffic volume will also significantly affect travel along SR 104. The creation of massive parking and storage areas between Dayton and Main Streets would significantly impact residents by the addition of lighting, significant loss of connectivity between the waterfront and downtown, and questionable traffic flow through this area. Edmonds City Council Approved Minutes October 26, 2010 Page 4 Use of the old Safeway and Skippers properties for vehicle storage and holding would result in a loss of revenue generating property. Staff will provide a comprehensive response to WSF's most recent proposed concepts by the November 19, 2010 public comment deadline. These comments will expanded upon the comments made in the May 26, 2010 email to WSF that ask WSF to address many concerns about the Main Street concepts and the Pt. Edwards location. WSF held public scoping meetings in Mukilteo and Whidbey Island on October 12 and 13 and an online meeting on October 14. At the City's request, a public meeting will be held in Edmonds on October 27 in Council Chambers from 5:00 — 6:30 p.m. A link to WSF's website is posted on the City's website. In response to a comment by Roger Hertrich that staff was not keeping the Council informed regarding this issue, Mr. Clifton assured the Council had been kept up -to -date regarding this project; information has been provided in the July and October Quarterly Reports and it was at his and Mayor Cooper's request that WSF is hosting a meeting in Edmonds. Councilmember Petso asked whether both the Main Street options included adding another route. Mr. Clifton answered both assumed the addition of a route. Councilmember Petso commented residents south of SR 104 often feel cutoff from downtown during ferry traffic which would increase if a second route is added. She asked whether she could make comments to WSF as an individual or only as a Councilmember. Mr. Clifton advised comments submitted on May 26 expressed concern with capacity on SR 104, transportation demand, modal interrelationships, and congestion. City Attorney Scott Snyder advised because there was no pending quasi judicial action, Councilmembers had both their free speech rights and rights as a Councilmember to comment. Councilmember Petso recalled her suggestion to include the concept for a year -round farmers market at the old Safeway and /or Skippers site in the Comprehensive Plan and staff's response that research was not to that point yet. She asked it would be advantageous to include such a project in the Comprehensive Plan to indicate to WSF that other concepts were being considered for those sites. Mr. Snyder requested an opportunity to think about the question. Councilmember Fraley- Monillas asked whether there was any benefit to Edmonds via either concept. Mr. Clifton advised Mayor Cooper and he have many more significant concerns with the Main Street location for either alternative than the Pt. Edwards location. Council President Bernheim commented most of the problems arise from loading /unloading a large number of cars. He asked whether there were any plans for passenger -only terminal development. Nichole Macintosh , WSF, answered there were no plans for passenger -only ferries. The two boats that currently service the Clinton - Mukilteo route would service Edmonds. It would be an approximately 50- minute crossing between Clinton and Edmonds which would be a reduction in car service for Whidbey Island residents. Student Representative Gibson inquired about the route for traffic exiting the ferry at the Pt. Edwards location. Mr. Clifton answered the Edmonds Crossing project Final EIS Record of Decision adopted in 2005 includes improving the intersection of Pine Street & SR 104 to a fully signalized intersection. Ferry traffic on SR 104 would turn west into a new roadway system, turn right at another signalized intersection and continue through toll booths and holding lanes before crossing the railroad tracks to the ferry slips. Councilmember Buckshnis questioned the reason for destroying Edmonds and Mukilteo by moving the Mukilteo - Clinton ferry to Edmonds. Ms. Macintosh explained the Mukilteo area is culturally and Edmonds City Council Approved Minutes October 26, 2010 Page 5 historically significant as the site of the signing of the Pt. Elliott Treaty of 1851. For that reason, WSF was required to expand its consideration of alternatives from Edmonds to Everett to ensure there were no reasonable alternatives for a new terminal. The alternatives are conceptual; WSF is soliciting input at the beginning of the EIS process. The comments Edmonds has submitted and the future comments will be considered in studying the alternatives. She provided a Community Guide to Scoping and the Project Concepts that describes the ten concepts. Councilmember Plunkett asked whether WSF lost the historic grounds if the ferry stays in Mukilteo. Ms. Macintosh answered WSF would not lose the grounds; if WSF remains in the Mukilteo area, they must reach agreement with the Tribes who signed the treaty. Councilmember Plunkett asked whether roads could be constructed over the grounds. Ms. Macintosh responded it remains to be seen what could be done. The concepts in that area minimize penetrations into the ground by the use of fill and avoid areas that are significant. Mayor Cooper advised that Public Works Director Phil Williams, Mr. Clifton and he plan to attend the October 27 meeting in the Council Chambers and he will speak during public comment. November 19 is the deadline for submitting public comments to WSF. Information for submitting comments is available on WSF's website. 5. DISCUSSION OF BOND PAYMENT FOR EDMONDS PUBLIC FACILITIES DISTRICT/ EDMONDS CENTER FOR THE ARTS. Joe McIalwain, Executive Director, Edmonds Center for the Arts (ECA), explained the primary purpose of his presentation was to request the City's assistance with the Edmonds Public Facilities District (EPFD) and ECA meeting an upcoming bond payment due on December 1 as well as update the Council on the ECA's activities. He reviewed ECA programs and services: • ECA's Presenting Season 0 25 Artists /Groups from Around the World o Music, Theatre, Dance, Comedy, Special Attractions • Partner Organizations • Cascade Symphony Orchestra • Olympic Ballet Theatre • Sno -King Community Chorale • Edmonds Community College, Black Box Theatre • City of Edmonds Cultural Services Department • Education & Outreach Programs • Student Matinee Program, In- School Workshops • Focus Primarily on Edmonds School District Mr. McIalwain reviewed the ECA's impact • Quality performing arts events and concerts close to home for South County residents • Attractive venue for arts organizations from around the region to use for events and performances • Active year -round with theatre events, sports activities, classes, meetings, etc. • A resource for local teachers and students as school arts programs suffer budget cuts • A cultural asset for Edmonds, an important piece of Edmonds history — original Edmonds High School Campus, former Edmonds Junior High • 400 events in the theatre to date Edmonds City Council Approved Minutes October 26, 2010 Page 6 • 50,000 people impacted by ECA each year • 46% from Edmonds and surrounding communities • 17% from City of Seattle • 37% from around the Puget Sound region (and beyond) • 100+ volunteers support ECA annually -board members, ushers, administration, special event support • 100% Board commitment to ECA • ECA Patrons frequent local restaurants before and after performances • ECA Patrons visit local shops and galleries • ECA is increasing the region's awareness of Edmonds as an arts, entertainment and shopping destination • Approximately 50% of the audiences ECA attracts say they are attending the theatre for the first time • Annual Economic Impact of ECA: $2,895,600 • National economic impact study conducted by Americans for the Arts, the leading arts non- profit organization estimates the economic impact of non - profit arts organizations • Based on research findings from 156 communities and regions across America • Arts & Economic Prosperity • ECA creates jobs, generates tax revenues in Edmonds and Snohomish County • Arts tourism contributes to tax revenues on a local, state, and national level Mr. Mclalwain explained the Snohomish County Public Facilities District was established in 2001 for the purpose of creating and operating public convention and arts centers to build tourism: • Four Projects: Comcast Arena, Lynnwood Convention Center, Future of Flight Museum, Edmonds Center for the Arts • Edmonds PFD is an independent public agency and is the owner and operator of Edmonds Center for the Arts Edmonds PFD / ECA is affiliated with the City of Edmonds through an Interlocal Agreement • City Council appoints PFD Board Members • The City of Edmonds guarantees bonds issued in 2002 and in 2008 for the renovation and operation of the Center • The City does not currently provide annual financial support to the Center Next, Mr. McIalwain described ECA operation: • The ECA's operating budget is balanced in 2010. This is due to: • Increase in ticket sales ■ Ticket sales up 18% in 2009, steady in 2010 • Increase in rental revenues — ■ Up 15% in 2010 • Increase in contributed revenue ■ Increase of more than 32% in 2010 . ■ 1/3 of annual operating revenue comes from contributions o Decrease in annual operating costs ■ Down 13% since 2008 He also described ECA's capital investments • EPFD retains approximately $10 million in capital debt related to the original renovation project in 2005 -2006 • 2002 Bond Issue - $7 million o To cover a portion of the cost of the 2005 renovation Edmonds City Council Approved Minutes October 26, 2010 Page 7 o Bonds guaranteed by City of Edmonds Private Capital Campaign - $7 million o Combination donations from individuals, corporations and foundations 2008 Bond Issue - $4 million • To cover the balance of the renovation costs • Bonded against a new revenue stream ( "Tier 2 ") from Snohomish County Public Facilities District • Bonds guaranteed by City of Edmonds He reviewed the sales tax revenue streams the ECA receives: • A) Direct Local -Level Sales Tax Rebate o Covers a portion of the 2002 Bond Issue • B) "Tier 1" County -Level Sales Tax Rebate o Covers the remainder of the 2002 Bond Issue C) "Tier 2" County -Level Sales Tax Rebate • Intended to cover 2008 Bond Issue • Revenues projected to exceed $200,000 annually • Economic crisis resulted in a 90% reduction in revenues; the ECA will receive $15,000 from that source this year • This unrealized funding source is the cause of the current shortfall He provided a comparison of projected to actual Tier 2 County PFD revenues for years 2008 -2026; projected revenues totaled $4,882,540; actual revenues will total $529,782. He explained the ECA will cover more than 80% of its capital bond payments in 2010 through a combination of dedicated sales tax funding sources and private donations. He compared revenues from direct local sales taxes, Tier 1, Tier 2, Snohomish County Lodging Tax, and private fundraising to capital bond payments in years 2010, 2011 and 2012. The projected shortfall in 2010 is estimated to be $97,160, $211,788 in 2011 and $210,943 in 2012. Mr. McIalwain explained because County revenue projections have not been realized, additional funds are required in 2010 to help cover a portion of EPFD's bond payment. The projected 2010 . requirement is $100,000. A Contingent Loan Agreement exists between EPFD and the City that provides a mechanism for the City to help the EPFD meet its debt payment via a loan. He requested the City Council consider a providing that support as a grant to the EPFD rather than a loan. That would help the ECA meet the short term challenge and mitigate long term challenges of adding to the ECA's debt obligation. Mr. McIalwain reviewed long term solutions: • The Edmonds PFD Board and Staff are actively pursuing new revenue streams and improving operating performance to help meet future bond debt obligations. Other potential revenue sources include: • Snohomish County Lodging Tax Funds • Building Sponsorship • Extension of PFD Legislation and potential refinance of bonds • Economic Recovery • Improved Operating Performance — Net revenues to capital • Annual Support from the City of Edmonds He requested the Council: • In 2010, consider a one -time grant of approximately $100,000 (as opposed to a loan) to help reduce ECA's future debt burden and encourage its long -term success Edmonds City Council Approved Minutes October 26, 2010 Page 8 • Support the ECA / EPFD Boards and Staff in their efforts to secure a portion of County Lodging Tax Funds • Consider the possibility of annual, on -going support for ECA, as it is an important asset and plays a critical cultural role in Edmonds like the Senior Center, the Wade James Theatre, Yost Pool and may others do • Help maintain ECA as a leading performing arts venue in the Puget Sound region and an economic driver in South Snohomish County Mr. McIalwain noted when the PFD legislation sunsets, the ECA reverts to a City -owned facility. Councilmember Plunkett asked why the ECA did not receive Snohomish County Lodging Taxes today. Mr. McIalwain responded the Chair of the Snohomish County Lodging Tax Advisory Committee (LTAC), Snohomish County Councilmember Brian Sullivan and the Committee made a decision not to allocate revenue until the County's Strategic Tourism Plan was updated in order to use the Plan to inform their decisions regarding allocation. A presentation on the Strategic Tourism Plan update will be provided on October 28 and the Committee will consider it in their allocation decision. He was hopeful the LTAC would move quickly in their decision to allocate funds based on the Plan. The ECA will compete in a process to access that funding. Councilmember Plunkett asked whether it was a funding stream that had not previously been allocated. Mr. McIalwain responded the last allocation 4 -5 years ago when a one time allocation was made to a number of projects. The funds have been accumulating since that time. Councilmember Plunkett acknowledged that the City guaranteed the ECA bonds. He anticipated he was the only current Councilmember to have voted on the 2002 bond issue. He asked whether the Council voted in 2008 to guarantee the bonds or if that was an extension of the 2002 bonds. Mr. McIalwain answered it was a new bond issue that the Council voted to support. With regard to a one -time grant or loan, Councilmember Plunkett observed the ECA's future plans will address future payments. If the ECA was able to implement its plans, he asked whether the ECA could make the payments in the future. Mr. McIalwain agreed that was the goal, referring to long term solutions such as lodging tax, building sponsorship, etc. He reiterated the Council's political support may be needed to realize those solutions. He summarized those revenue streams as well as economic recovery and operations will minimize or eliminate the need for future support from the City. Council President Bernheim suggested referring the request to the Council Finance Committee. Councilmember Buckshnis requested the following documents /information: whether the 2002 bonds can be refinanced, financial statement for the fiscal year end and historical, actual year -to -date and projections. She commented the presentation appeared to indicate the City would be required to contribute support every year from now until 2026. Councilmember Wilson commended Mr. Mclalwain on the work he does for the ECA. He commented the City will stand by its obligation to the ECA and recognizes the value of the ECA. He asked whether the facility was completely renovated. Mr. Mclalwain answered a second phase of renovations was planned for the classroom spaces and gymnasium (back -of- house) and a third phase for new construction. Councilmember Wilson asked whether there was capital available via the bonds to complete the renovations. Mr. McIalwain answered the funds raised were dedicated to the previous renovations; there is no capital available for future renovation for the balance of the facility. Edmonds City Council Approved Minutes October 26, 2010 Page 9 Councilmember Wilson recalled the PFD intended to use some of the 2008 bond revenues to fund some of the start -up costs. Mr. Mclalwain answered that was considered as well as renovation of the center classroom which has been completed. Councilmember Wilson recalled that the use of capital funds for operation was a concern of his that he may not have voiced loudly enough at the time because he was a new Councilmember. In hindsight capital funds should not have been used for operation. He asked how the public could be assured that would not happen in the future. Mr. McIalwain responded in order to get a business up and running, it has to be capitalized with start -up operating funds. When the PFD developed a budget for the renovation and start -up costs, the capital project included funding a portion of operations. He agreed as a result of the economic crisis, the PFD was forced to utilize additional funds from capital to support operations. If the ECA can balance its operating budget in these economic times, he was confident that the use capital for operation would be avoided to the best of their ability. He explained the use of capital funds for operating was done via an interfund loan; as operations improve the interfund loans will be repaid. Observing that the building will revert back to the City in the future when the PFD legislation sunsets and the possibility of the City contributing substantially to the debt service, Councilmember Wilson questioned whether the City should simply take over the facility, keep the staff and change the governance structure. Mr. McIalwain answered an arts organization is a very unique and specific model, difficult to operate and very time consuming for board members and staff. Their expertise and involvement on a daily basis with fundraising and oversight is crucial. There is a non - profit corporation that works side -by -side with the PFD. There are also legal questions associated with whether the City would take over the ECA before the PFD legislation sunsets. Councilmember Wilson commented in the senior center model, the City owns the building and it is operated by a non - profit organization. Councilmember Peterson advised his wife, Maria Montalvo, is a member of the PFD Board as well as the ECA Board. Like other board members, she volunteers a great deal of time. He has championed the cause of the ECA because of the benefits it provides the community and because he knows more about its operation due to his wife's and other friends' involvement. Councilmember Peterson pointed out the ECA is different than other PFD's in Snohomish County in that it is the only PFD that does not receive any financial support from its host city. The Lynnwood Convention Center receives financial support from Lynnwood and Comcast Arena receives financial support from Everett. Mr. McIalwain advised the Lynnwood Convention Center and Comcast Arena receive significant amounts of local level lodging tax. The Future of Flight Museum receives an annual direct subsidy from the Airport via the County. With regard to other non -profit arts organizations in the Puget Sound region, the City of Kirkland owns the Kirkland Performance Center building and provides maintenance and annual financial support. The same is true for the Admiral Theater in Bremerton, Mount Baker Theater, and Broadway Center in Tacoma. The ECA does not receive annual financial support from the City. Councilmember Peterson pointed out the City also does not provide maintenance of the ECA; those functions are performed by ECA staff. 6. AUDIENCE COMMENTS David Clobes, Edmonds, explained that for the past 16 years he has displayed large political signs in front of his house on Olympic View Drive. He defended his personal right to political speech on his own property, remarking his signs do not interfere with the City. Although his signs may offend the Mayor, that is not a reason to silence him. His observation of the City Council over the past 38 years is that it is a club and he did not recognize it as the type of government that should be in charge of the City. He suggested the Council consider merging with Lynnwood. He anticipated changes occurring in the State over the next 18 -24 months may make merging with Lynnwood a possibility. He referred to the Edmonds City Council Approved Minutes October 26, 2010 Page 10 combining of fire stations in south Pierce County to save money, noting businesses often merge to save money. He anticipated future State actions would reap economic woe on the City. Don Hall, Edmonds, referred to the Council's interviews of applicants for the Budget Analyst position, noting many of the interview questions and the answers from the candidates led him to believe the Council did not need to hire an Analyst. He noted the 2011 budget is presented in the same format as has been provided for many years and several Councilmembers have been through the budget process previously. He anticipated answers could be provided to most Council questions by asking the Mayor. If questions are related to perceived incomplete or not up -to -date financial data or changing the system, a Budget Analyst was not the appropriate person to address that issue. He urged the Council to work through the budget process themselves as the Council was elected to do. Natalie Shippen, Edmonds, pointed out WSF's original proposal was to compare two sites in Edmonds as alternatives to Mukilteo; the existing site and Pt. Edwards and WSF added a third alternative at the last minute. All three alternatives include a second slip which may be the answer to her question regarding the $26 million expenditure in Edmonds in WSF's long term plan. She recommended Edmonds adopt policies with regard to ferry operation in Edmonds. The first policy should be that there shall be no further traffic increase in Edmonds except that allowed by the one slip at the Main Street terminal. WSF has indicated two ferries and even an additional ferry can operate from one slip at the Main Street terminal until 2030. Another policy should address the on -grade crossing and coordinated scheduling of ferries and railroad. Another policy should address waterfront parking to avoid development of the old Safeway for ferry parking. She recommended the Council hold a public hearing regarding ferry system operations in Edmonds. Jack Bevan, Edmonds, expressed concern that the average citizen would have difficulty reviewing the 2011 preliminary budget. Due to the number of transfers in the budget, it becomes "voodoo economics." He did not support the Council hiring a Budget Analyst, anticipating by the time he /she got started reviewing the budget, it would be time for the Council to pass the budget. He suggested the Council work on developing a budget that the public can read and understand. Al Rutledge, Edmonds, commented on the formation of the EPFD. While on the road for baseball during that time, he collected information regarding grants and loans provided by cities for performing arts facilities in Utah and Wyoming. Next, he commented on the Sunset Landing project extension that expires October 28. He also reminded of the Log Cabin fund raising event on October 30. Roger Hertrich, Edmonds, expressed his appreciation to Mr. Clifton and Mayor Cooper for their response to WSF regarding the scoping of Mukilteo ferry terminal alternatives. The proposed move exposes the threat the WSF has been to Edmonds. He recalled when he was on the Council, WSF agreed to require that alternate sites would be studied if WSF ever wanted to expand a terminal. WSF's plan at that time was to widen the existing Main Street dock to add a second slip. The City Council at that time passed the 4 No's. He urged the Council to revive the 4 No's and present them to WSF. Next, Mr. Hertrich objected to the 20% utility tax on his water bill, noting that increase would dissuade him from supporting the TBD vehicle license fee or a levy. 7. BUDGET DISCUSSION Council President Bernheim anticipated another public hearing on the budget would be scheduled immediately preceding the Council's adoption of the budget to allow the public to comment on any amendments that Councilmembers propose. The objective of tonight's agenda item is for Councilmembers to ask questions of Directors. He suggested each Councilmember limit their questions to 20 minutes. Budget amendments will be due in November. He envisioned any expenditures that were not Edmonds City Council Approved Minutes October 26, 2010 Page 11 in the budget or added as amendments would not be expended during 2011. Ideally all expenditures would be incorporated into the budget rather than requesting allocations during the year. He agreed with Mr. Bevan that the budget is often difficult to decipher. He reviewed the following schedule with regard to the budget: • November 9: The Finance Committee will address any remaining unanswered questions • November 16: Discussion of possible budget amendments • November 23: Councilmembers provide final written amendments • December 7: Public hearing, vote on amendments and adoption of the budget Councilmember Plunkett advised he had several amendments that he would present on November 23. Councilmember Wilson suggested if Proposition 1 (Annual Additional $40 Vehicle License Renewal) failed, staff would need to change the allocations for 2011. Council President Bernheim agreed. Councilmember Wilson inquired about the location of the B Fund, the fund used to accumulate funds to replace motor stock. Finance Director Lorenzo Hines answered the Equipment Rental Fund is on page 169 of the budget. Councilmember Wilson suggested the fund be referred to by a consistent name. Councilmember Wilson commented the budget was for the most part spot -on with the available funding and maintaining operations. He was interested in restoring cuts made in the past. He requested Police Chief Compaan develop a summary of the cuts that have been made in the Police Department since 2003 such as Crime Prevention and reduction in staff. When the number of uniformed officers per 1000 citizens is compared to other cities, Edmonds is well below average and well below the ratio for surrounding cities. He asked what would be required such as how many more uniformed officers would be needed to be hired to bring Edmonds to an average level of service. Councilmember Wilson asked about the $120,000 expenditure for Yost Park and Pool. Parks & Recreation Director Brian McIntosh responded the pool needs to be replastered approximately every 10 years; it has been 11 years since it was replastered. Some underwater areas of the pool had to be coned off this summer when large chucks of plaster came off. Councilmember Wilson suggested staff develop a schedule to begin self- funding health benefits in 2013 or 2014 and determine the amount that would need to be set aside per month or quarter for that purpose. With regard to Councilmember Wilson's earlier comment regarding the Equipment Rental Fund, Mr. Hines explained the Equipment Rental fund is divided into the A Fund and B Fund; the A Fund is primarily for administrative purposes, the B Fund is for the actual dollars used to replace City equipment and vehicles. A summary is provided on page 169; details regarding the A Fund are on page 170 and details of the B Fund are on page 171. He recognized the labeling issue and offered to differentiate between the two funds. Councilmember Wilson commented during the last budget cycle, he participated on the Budget Review Committee with then - Councilmember Wambolt and felt he had a strong understanding of the budget. When then -Mayor Haakenson said Yost Pool needed to be closed because there were insufficient funds available, he agreed. Shortly thereafter he learned of the B Fund which he was not previously aware of. He would not have agreed to continue funding the Equipment Rental Fund and close Yost Pool. He summarized that because of labeling he made a policy choice that he would otherwise not have made. Mr. Hines suggested labeling the funds as Equipment Rental A and B. He also offered to make the narrative more descriptive regarding the two separate sub - funds. Edmonds City Council Approved Minutes October 26, 2010 Page 12 Councilmember Petso explained although this was an opportunity to ask questions of staff, she planned to propose some policy questions to allow the public to comment on whether they should be pursued and to avoid any hint of an illegal meeting by raising the ideas now. She expressed interest in restoring the money taken from the Parks Trust Fund for Yost Pool and the Flower Program as well as changing the language of the fund if necessary to effectuate the original intent in establishing that fund — that the contributions to the fund would be preserved and only spend the interest earnings that the contributions generated. She envisioned the City could again generate contributions to Yost Pool, the Flower Program and Beach Ranger Program if the fund were restored in that manner. Councilmember Petso did not support the use of Fire District 1 (FD I) proceeds to pay for fire hydrant maintenance, preferring that that ongoing expenditure be covered by the water utility taxes. She was also hesitant to use one -time revenue such as proceeds from the FDI sale for an ongoing expenditure such as hydrant maintenance. Councilmember Petso expressed interest in paying off bonds on City Hall. The income in the REET Fund is currently less than its obligations and will soon require a General Fund subsidy. If the City Hall bonds were paid off, the fund could be stabilized and there would be no need for a future General Fund subsidy. Councilmember Petso recalled during his budget presentation, Chief Compaan mentioned there was a significant subsidy in the police protection provided for the Town of Woodway. She asked whether he had developed a more appropriate amount to charge Woodway for those services. Chief Compaan answered the Council directed him to follow -up with the Mayor which he did. He explained it is a policy decision for the Council. The City does receive remuneration on a per call basis for first responder activities. Edmonds does not routinely conduct extended investigations; that is handled by Woodway police officers. He recalled preparing a proposal for Woodway in the past for 24/7 police response; to date Woodway has not been interested in that offer. The Edmonds Police Department provides a 24/7 insurance policy for Woodway; the value of that to Woodway is difficult to articulate. Mayor Cooper responded a meeting is being scheduled with Woodway Mayor Nichols and that is one of the subjects he plans to address. Councilmember Petso asked whether the City received less than $10,000 /year for providing emergency response to Woodway. Chief Compaan estimated it was approximately $1000 /month. Councilmember Petso commented if the City simply let the contract run out at the end of the year, it would not have a significant impact on Edmonds. Chief Compaan referred to the situation in southern United States where a building was allowed to burn because the property owner did not pay their fire assessment, pointing out the Edmonds Police Department obviously would respond to Woodway or other locations in an emergency situation. If the contract expired, there would be questions regarding routine responses. The most common response into Woodway is alarms; most alarms are false but not all. City Attorney Scott Snyder commented Edmonds has a pay for service contract with Woodway as well as an Interlocal Agreement for emergency response that includes most south County cities. Chief Compaan clarified that would be Mutual Aid Peace Officers Powers Act rather than an Interlocal Agreement for emergency services with surrounding cities. For example, Edmonds routinely assists Mountlake Terrace, Lynnwood, and Shoreline under the Mutual Aid Peace Officers Powers Act. Councilmember Fraley - Monillas observed Edmonds paid 100% of the cost to provide emergency response to Woodway. She asked the percentage that Woodway reimbursed. Chief Compaan answered it would depend on how that was calculated. Woodway pays Edmonds approximately $10,000 /year. Councilmember Fraley - Monillas asked the cost for the Police Department to respond to Woodway. Chief Compaan answered staff recently considered the amount of time that responding to Woodway takes versus the remuneration the City receives. The amount Edmonds charges on a per 15- minute basis is Edmonds City Council Approved Minutes October 26, 2010 Page 13 approximately equivalent to hard costs. The most important consideration is Edmonds provides the entire infrastructure for law enforcement services to Edmonds and acts as an insurance policy for Woodway. It is difficult to calculate exactly how much that insurance policy is worth. Councilmember Fraley - Monillas asked if there would be any problems for Edmonds if the contract were allowed to expire and the Shoreline Police Department began providing emergency response. Chief Compaan answered no. Councilmember Fraley- Monillas suggested the City needed to at least charge what it cost the City to provide the service. She noted Woodway residents pay among the highest property taxes in the State due to the size and value of the homes. She felt it was fair for Woodway to pay their fair share. Councilmember Petso suggested the City either allow the contract to terminate or charge a different amount. She requested Chief Compaan provide an amount that is greater than the current $7500 /year and that reflected a more equitable charge for the service, particularly the insurance policy Edmonds provides Woodway. Chief Compaan reiterated it was a policy decision for the Council. The question is to what extent is the City and City Council interested in cost recovery and charging for that insurance policy. It was difficult for him to develop hard numbers without further direction. He suggested this be discussed again after Mayor Cooper has had an opportunity to meet with Woodway Mayor Nichols. Councilmember Petso offered to discuss this issue further with Chief Compaan tomorrow. Councilmember Petso inquired about the increase in the Prosecutor's costs. Chief Compaan answered the two principles in the Prosecutor's firm plan to attend the November 9 Finance Committee meeting. He recommended they address Councilmember Petso's questions directly. Councilmember Petso recalled a recent comment that Mr. Hines was looking into savings via refinancing bonds. She asked which bonds could be refinanced. Mr. Hines advised he did not have the list of bond issuances with him but could send her the list. He recalled there were three bond issues and much of the savings would occur in the REST Fund. Councilmember Petso asked the dollar amount to pay off the City Hall bonds. Mr. Hines offered to provide Councilmember Petso that information. Councilmember Petso referred to the comments made by Mr. Mclalwain during his presentation that other cities use their lodging tax to support their PFD. She requested an explanation of the expenditures from that account listed on page 51 of the budget. Although she served on the LTAC in the past, she did not recall what professional services, miscellaneous and interfund transfers are. She also questioned the line item for Interfund Transfer In. Mr. Hines summarized her request for a dollar amount to pay off the City Hall bonds, details based on his conversations with bond counsel, and a breakdown of professional services, advertising and interfund transfer amounts on page 51. Councilmember Wilson commented the City spends approximately $9 million on all police services and there are approximately 20,000 households in Edmonds or $450 per household. If there are 600 homes in Woodway; at $450 per home, the annual cost would be $270,000. Edmonds does not provide all those police services to Woodway so it could be estimated that half that amount was for services Woodway uses or $135,000 annually. He suggested this would be a good starting point for discussions with Woodway. Councilmember Buckshnis suggested Councilmembers research other cities' websites. She found the budgets on Mountlake Terrace, Redmond, Bainbridge Island, Renton and Issaquah's websites very citizen friendly. She referred to Exhibit 1 and asked whether the Council would be provided actual numbers for 2009 as well as the budget before it was amended and when would that be provided. Mr. Hines answered Edmonds City Council Approved Minutes October 26, 2010 Page 14 the current forecast document produced last week included 2009 and 2010 actuals. He offered to work with the Council on any formatting they desired in the final budget. Councilmember Buckshnis requested summary information using actual numbers for Exhibits 1 and 2 be provided as soon as possible. Mr. Hines explained the 2009 columns were not included in the budget because he was concerned there would be confusion when comparing 2009 with 2010 because the City had a Fire Department and 52 -54 additional employees in 2009. For comparability, he felt 2010 was a better starting point. He was happy to add 2009. Councilmember Buckshnis noted Mr. Hines provided her Exhibit 4A but the beginning cash was not included on her copy. She also requested Exhibit 4A be provided in a larger format and in landscape layout. Mr. Hines advised the beginning cash balance for 2010 actuals would be the same as beginning cash balance in the yearend estimate for 2010, $2.167 million. He did not include the cash balance because he typically did not include the ending working capital figure until a CAFR is available to back it up. The beginning working capital figure of $2.167 million has a CAFR to back it up. Councilmember Buckshnis suggested he simply identify it as unaudited. She noted other cities websites include actuals through June, July and August. She requested actuals for the Citizens Levy Committee (CLC) to review, noting the CLC has been asking for that information since July. Mr. Hines explained the 2009 actuals in Exhibit 4A are yearend actuals, the 2010 actuals are actuals as of July 31 per Councilmember Buckshnis ' request. Councilmember Buckshnis observed last year's Exhibit 5 had a General Fund Revenue Summary that broke out all the revenues including bond proceeds and transfers in and out. She requested that summary be provided. Mr. Hines commented a number of exhibits included in last year's budget were not included in the 2011 budget, primarily because some of the exhibits from prior years that he has presented under different circumstances were not meeting the Council's needs. He suggested the Council review the exhibits in the 2009 -2010 and 2007 -2008 budgets and inform him what exhibits they want included in the 2011 budget. He suggested the Council vote on the exhibits they want to see rather than individual members requesting certain exhibits. He clarified during the past year he has presented documents, budget amendments, General Fund updates, quarterly reports, etc. which he was told were not meeting the Council's needs due to their format. In order to avoid that problem with the exhibits, he decided to include only the crucial exhibits and allow the Council to indicate what they wanted for the 2011 budget. Councilmember Buckshnis relayed it is helpful to citizens to see trend analysis and assumptions. She noted last year's budget also included summaries for each cost center; she requested staff provide those for 2011. She referred to page 43 of the budget, non - departmental, inquiring why the budget for elections was increased to $85,000. Mr. Hines answered when the budget was prepared it was anticipated a levy would be placed on the ballot during 2011. Councilmember Buckshnis commented projections were needed in order to make a determination whether a levy would be placed on the ballot in 2011. Mr. Hines asked what information was not provided in Exhibit 4A; it contains 2009 actuals, actuals through July 31, 2010, and trend percentages for revenues and expenses. Councilmember Buckshnis requested the actual beginning cash balance for 2010 as of July 31, 2010. She commented it appears using this analysis that a levy may not be needed until 2014. Councilmember Buckshnis referred to the list of transfers on page 43, noting if the TBD ballot measure does not pass, there is no funding included for the Street Fund from the General Fund; funding in the past has been approximately $700,000. Mr. Hines answered the funding mechanism was changed so that TBD money no longer flows through the General Fund. It goes straight from Fund 631 into Fund 111. Councilmember Buckshnis pointed out if the TBD ballot measure does not pass, the amount will only be $580,000 rather than $700,000. She asked whether an additional $120,000 should be included from the General Fund. Mr. Hines suggested waiting until the next forecast. Edmonds City Council Approved Minutes October 26, 2010 Page 15 Mayor Cooper commented if it was not the intent of the Council to place a levy on the ballot in 2011, the $85,000 could be amended to a lower amount. Councilmember Buckshnis answered that determination has not yet been made; the CLC continues to march forward. Mayor Cooper advised the budget reflects the amount collected by the TBD vehicle license fee; the Council could amend the budget by adding additional funds. Councilmember Buckshnis asked why the 1996/2003 Public Safety Bond Principal increased from $670,000 in 2010 to $715,000 in 2011. Mr. Hines explained it increased from $640,000 in 2009 to $670,000 in 2010, to $715,000 in 2011; it may be an escalation in the payment. He offered to research this. Councilmember Buckshnis asked the different between the two Professional Services, one for $110,037 and another for $55,000. Mr. Hines explained the $110,037 includes the contract amount for the Senior Center and other miscellaneous amounts. The other Professional Services line, 2010 estimate of $53,000 and 2010 estimate of $55,000 are ambulance billings from FDL He offered to revise the labeling to make it clearer. Councilmember Buckshnis asked for further clarity on the information she provided today regarding the Parks & Recreation Flower Fund. She asked why Admin Services budget was separated when it was collapsed two years prior. Mr. Hines explained the Admin Services budget was collapsed into the Finance budget when the Information Services (IS) and fiber functions were moved to the Mayor's office. When he took this position, Mayor Haakenson moved the IS and fiber back to his control. At that point he realized the salaries for his Executive Assistant and he needed to be separated from IS, Finance and fiber optics. The increase in Admin coincides with a decrease in Finance. Councilmember Buckshnis asked whether another FTE was added. Mr. Hines answered no; one of the positions was converted to an Executive Assistant. Mr. Hines summarized Councilmember Buckshnis' requests: the 1996/2003 bond information, Exhibit 4A — include a beginning balance for the actuals for 2010, actual numbers for Exhibits 1 and 2 and the original 2010 budget and the amended 2010 budget Councilmember Peterson referred to the description of the Emergency Financial Reserve Fund on page 44, noting the Council changed the language in October 2009. Councilmember Peterson asked if definitions could be included in the budget such as interfund transfers. Mr. Hines suggested including a schedule of interfund transfers that shows the transfers in and out of all funds. He explained interfund transfers are transfers between funds. For example there are transfers between BEET and Fund 132, a project construction fund. Another example is the proposed transfer of $256,000 from the Public Safety Reserve to cover the fire hydrant liability. Councilmember Peterson suggested creating a glossary of accounting terms. Mr. Hines agreed. Council President Bernheim asked for the following information: • When did the last tax increase occur in Edmonds? Provide a record of property increases over the past five years. • What is the current property tax rate? • What percentage of a citizens' total property tax that is collected by the City of Edmonds? • How much does the City earn annually from real estate property taxes? • What was the amount of utility increases last year? • How much incremental revenue do those utility increases generate for the City? Council President Bernheim reiterated the point about 2009 actuals, noting all the departmental tables in the budget book contain 2009 actuals, but 2009 actuals are not included on Exhibits 1, 2 and 4. He Edmonds City Council Approved Minutes October 26, 2010 Page 16 requested 2009 actuals in Exhibit 1 and 2 similar to Exhibit 3. With regard to potential confusion based on the sale of the Fire Department in 2009 that skew the numbers, the 2009 actuals on Exhibit 3 are controlled by the Fire Department sale. The Fire Department is not included in the 2009 actuals so the problem of presenting 2009 actuals because they include the Fire Department has already been solved because the 2009 actuals on Exhibit 3 do not include actuals for the Fire Department. He suggested using the data on Exhibit 3 in Exhibits 1, 2 and 4, the only places where 2009 actuals do not appear. Mr. Hines clarified he will add the 2009 actual column without the Fire Department amounts and include a footnote stating the number does not include the Fire Department. He noted this would also impact revenue because the revenues associated with the Fire Department would also need to be removed. Council President Bernheim explained his intent was to get this year's chaotic budget in context with next year's orderly budget and to do that he needed to be able to compare past performance. Mr. Hines recommended showing 2009 without the Fire Department because it would allow an apples -to- apples comparison. Councilmember Wilson commented that was appropriate as long as all the Fire Department numbers were removed. Anywhere there is uncertainty whether the Fire Department is completely removed should be footnoted and non - departmental funds such as SNOCOM that may have been counted as Fire Department costs should also be highlighted. He summarized it was nearly impossible to have a purely apples -to- apples comparison. Council President Bernheim referred to the Firemen's Pension Fund on page 27 and questioned the salary position in 2009 that is removed in 2010 and 2011. Mr. Hines answered he needed to research that but assumed the amount shown in salaries in 2009 should be in pension payments. Council President Bernheim requested a third Professional Services item on page 43 be relabeled. He inquired about the alcoholism intergovernmental services line on page 43. Mr. Hines answered he would need to research but his limited research today discovered payments have been made from the General Fund to Snohomish County Human Services using liquor profits. He surmised the City paid a certain amount of liquor profits to Snohomish County Human Services to support an alcoholism program. Council President Bernheim referred to Police Administration cost center on page 61 which indicates a 21.4 reduction in salaries but salaries are actually increasing each year from $575,000 in 2009 to $584,000 in 2010 and $594,000 in 2011. The percentage change that compares 2010 budget to 2011 budget shows a 21.4% decrease, yet a comparison of 2009 actuals to 2010 estimate shows a significant increase. Chief Compaan explained the 2010 budget contemplated restructuring the command structure of the department and an FTE was moved into the administrative salary line. That restructure did not occur and may be one of the budget adjustments. That FTE was paid out of the patrol cost center. Council President Bernheim referred to the prisoner care cost center on page 87 that increased from $586,000 in 2009 to $605,000 in 2010 and was projected to be $660,000 in 2011. One of the reasons this number has been high in the past is due to arrests and incarceration for Driving with License Suspended and possession of marijuana, a non - violent criminal offense. He questioned the increase from $605,000 in 2010 to $660,000 in 2011. The narrative indicates there are no increases to the booking and daily fee charged by either the City of Lynnwood or Snohomish County Jail for 2011. Chief Compaan answered he would need to research that. There had been significant increases due to Snohomish County passing on costs for prisoners' prescription drugs and certain medical care. Council President Bernheim expressed his preference for the police in Edmonds to be given the discretion not to take a person found smoking marijuana or driving on a suspended license to jail. Edmonds City Council Approved Minutes October 26, 2010 Page 17 Council President Bernheim asked where the revenue from the Woodway police contract was reflected in the budget. Mr. Hines answered it was included in intergovernmental revenue. Council President Bernheim inquired where in the budget the cost of gasoline was reflected. Public Works Director Phil Williams answered it is in the A portion of Fund 511. Fuel was budgeted to be $499,000 in 2010 and $300,000 in 2011. Council President Bernheim asked where the City's fuel expenditures were in the budget. Mr. Williams answered it was in Supplies Purchased for Resale on page 169. Councilmember Fraley- Monillas explained one of the reasons the Council asked so many questions was this was not their field of expertise. With regard to prisoner costs, she asked if the City was able to recoup any of those costs. Chief Compaan stated there are opportunities for the court to assess certain payments; however, prisoners are indigent. Generally the costs were not recouped and it is part of the cost of maintaining public safety. Councilmember Petso referred to the Decision Package Requests on page 8, and asked for confirmation that these items were not already included in the budget. Mr. Hines assured they were not yet included in the budget and were awaiting Council decision. He planned to prepare a schedule that identified decision package expenditures by fund. Councilmember Wilson acknowledged the importance of the Council reviewing the budget in detail. He recommended the Council also step back from the detail and ask themselves the broader question about how to collect more revenue or eliminate more services so that Edmonds can be the type of community citizens want it to be. That was the reason for his question to Chief Compaan regarding how the City could reach an average level of service in the Police Department; Edmonds is a number of uniformed officers away from the median. Councilmember Wilson explained he voted against placing the TBD vehicle license fee on the ballot because he felt those services should be paid out of the General Fund. The list of projects in the community is long, such as purchasing the Civic Playfields, but the Council is not planning for any of those via the proposed budget. The proposed budget uses the revenue the City receives to fund existing services. The proposed budget does not address cuts that have been made over the past decade. He referred to Exhibit 4 on page 6, Current Forecast, that indicates the City slips into a negative reserve balance in 2014. According to Exhibit 4, the City will be in deficit spending in 2012 — the City will spend more than it collects in revenue. The 2011 budget does not include the $100,000 to cover the ECA bond payment and the presentation indicates the City likely will be paying $100,000 every year for the next several years. He doubted there would be sufficient economic turnaround to change that situation. Councilmember Wilson explained if the liquor initiatives on the November ballot pass, it will have major impact on City revenues, upwards of $500,000 /year. With $100,000 for the ECA in 2010, 2011 and 2012 and the $500,000 /year loss beginning in 2011 if the liquor initiatives pass, that is a cumulative $1.3 million that disappears from the City's budget, placing the City into deficit spending next year. By the end of 2012, the City's reserves will be well below an acceptable level. If the Council waits until 2012 to place a levy on the ballot, by the time the funds from the levy are collected in 2013, the City will have paid another $100,000 for the ECA debt as well as lost another $500,000 in liquor profits and excise taxes, increasing the loss to $1..9 million. The result is a negative reserve balance of $600,000 in 2013. He summarized the Council could not afford to wait until 2012 to put a levy on the ballot. Councilmember Buckshnis assured the Citizen Levy Committee is marching forward and moving toward financial clarity. She referred to information from Mountlake Terrace that outlines every revenue stream. The Committee is also considering other revenue sources. Edmonds City Council Approved Minutes October 26, 2010 Page 18 Councilmember Wilson commented Councilmember Buckshnis' response highlighted their fundamental difference of opinion. Although the CLC is doing good work and should continue its work but it was nowhere near having a levy proposal ready. It is not the CLC's responsibility to develop a levy; it is the Council's responsibility. In the 4 -5 months the CLC has been working, many of the questions Councilmember Buckshnis has asked have not been answered to her satisfaction. He feared her questions may not be answered to her satisfaction in the next 4 -5 months. Regardless of what the CLC proposes, it is the Council's responsibility to lead the community. Councilmember Wilson summarized although the 2011 budget is a good budget, it does not answer the most important question. If the Council does not address that, it will be hard for him to support the budget. He recalled in the 2009 -2010 budget the Council added a budget note that committed the Council to a process. He hoped at a minimum that could be done this year. Councilmember Peterson referred to the Decision Package Request, explaining the Stormwater Maintenance Worker and Engineer Technician are paid for. Mayor Cooper advised Mr. Hines and he are developing a chart that describes the funding source for each decision package. The largest decision package proposed to be funded from the General Fund is the Strategic Plan. The $83,000 for the GIS Analysis is funded from the Combined Utility via the stormwater fee increases, the Stormwater Maintenance Worker is paid from the Combined Utility and the Stormwater Engineer is funded from Combined Utility- Construction. He offered to email Councilmembers the chart tomorrow morning. Councilmember Peterson suggested where there are large percentage increases or decreases, staff provide a footnote to explain the reason. He suggested the Mayor establish a percentage threshold for including a footnote. Mayor Cooper advised Directors would answer the questions the Council asked tonight along with the questions that Councilmembers provided over the last few days. He explained the position proposed for the City Clerk's Office is included in the budget. It was a vacant position that is proposed to be filled in the 2011 budget to handle public records requests. Because the FIE positions on the decision packages are new positions, they were not included in the budget. Staff will also provide Councilmembers actuals for the Prosecuting Attorney since 2005 and describe any built -in escalators in the contract that cause it to increase each year. Mayor Cooper indicated he has also asked Mr. Hines to prepare projections that, 1) assume the Council chooses not to use the one -time money, and 2) the Council chooses to make the contribution to Fund 511 - B. If the Council chose to either not use one time money or to make the contribution to Fund 511 -B, the City's finances are not in trouble until 2013 with a decision regarding a levy needed in early 2012. If the liquor initiatives pass, everything changes. If the Council chooses to make the contribution to 511 -B and not use one -time money, the City's finances are in trouble at the end of 2011. In that scenario the reserves drops to $2 million in 2012 and $800,000 in 2013. Mayor Cooper clarified he supported the proposed decision packages; they were not included in the budget to allow the Council to deliberate each one on their own merits. He offered to confirm whether any or part of the Health Insurance Brokerage Fee listed in the decision packages will be necessary. Staff is also developing a spreadsheet to illustrate the City can afford not to make the contribution to Fund 511 - B. COUNCIL PRESIDENT BERNHEIM MOVED, SECONDED BY COUNCILMEMBER PETERSON, TO EXTEND THE MEETING FOR ONE HOUR. MOTION CARRIED UNANIMOUSLY. Edmonds City Council Approved Minutes October 26, 2010 Page 19 Council President Bernheim advised the Council's questions would be answered in two weeks and any remaining questions will be asked. The following week each Councilmember will be provided an opportunity to reflect on the budget. Written amendments will be presented at the November 23 meeting. A public hearing will be held on December 7 followed by amendments and a vote on the budget. (Councilmember Fraley- Monillas left the meeting at 10:07 p.m.) 11LY�11L.Y. C �P►/\► 17I�Z .Y.`1103a WIT" I030030reIawc§ 100 161IaCii1Z!1YJW."WER11•f.`lil� Councilmember Wilson explained the Council interviewed three highly qualified applicants. He did not feel any of the three applicants were an appropriate fit for the current challenge. After watching the interviews and reading the applicants' responses to the RFQ, not spending the money to hire a Budget Analyst was preferable to hiring one of the applicants. Councilmember Buckshnis agreed with Councilmember Wilson. Questions she has had since April have not been answered; she questioned how a Budget Analyst would be able to get answers for the Council. Her goal is financial clarity; the reason the CLC is moving slowly is the lack of financial clarity. Councilmember Plunkett commented he was interested in hiring a Budget Analyst but two of the four applicants are no longer interested. Councilmember Wilson anticipated the Council may need to hire a Budget Analyst to get four votes to approve the budget. If there were three members of the Council who did not envision they could approve the budget without a Budget Analyst, he would be willing to spend the money to ensure the budget is passed. The Budget Analyst will not be of assistance in addressing his fundamental concerns with the budget. Councilmember Buckshnis commented if she was unable to get answers to questions she has asked since April, how will a Budget Analyst get the answers? She is still seeking financial clarity with regard to revenues and expenses and actuals. If a Budget Analyst could provide that information, she would support hiring one. COUNCILMEMBER PLUNKETT MOVED, SECONDED BY COUNCILMEMBER BUCKSHNIS, THAT HARRY GATJENS BE HIRED AS THE BUDGET ANALYST FOR THE EDMONDS CITY COUNCIL. Councilmember Peterson explained some of the applicants' responses deterred him from hiring a Budget Analyst. There is not a clear scope of work and the Council has not given enough direction to get the work done in the short period of time available. With regard to Mr. Gatjens, he was uncomfortable with someone who has been intimately involved with the Edmonds budget process. Although he valued Mr. Gatjens' knowledge, his work on the City Levy Committee and his efforts to communicate with the community, he preferred a fresh set of eyes. He did not support hiring a Budget Analyst. Councilmember Petso commented she has previously supported hiring a Budget Analyst and likely would support it tonight because she wanted to support Councilmembers who felt a Budget Analyst was necessary to reach a decision on the budget. Council President Bernheim explained he objected to hiring a Budget Analyst when it was first proposed and he continued to object. He preferred to work within the system and not proliferate staff even on a special projects basis. He was confident the objective, getting a workable realistic budget passed, could be Edmonds City Council Approved Minutes October 26, 2010 Page 20 accomplished based on the data available, regardless of whether answers to all questions are provided. He agreed with Councilmember Peterson's comments regarding Mr. Gatjens; he did not want to hire someone involved in the CLC. If he supported hiring a Budget Analyst, he wanted someone with a more objective point of view. Councilmember Wilson echoed Councilmember Peterson and Council President Bernheim's concerns, acknowledging Mr. Gatjens' value as a citizen volunteer. However he has openly expressed interest in being a Councilmember and running for a Council position next year. He did not support hiring Mr. Gatjens nor would he support hiring the former Brier Councilmember who he envisioned would be more of a Councilmember than a staff person. He was open to considering Ash Consulting; the principal would be great but the other person would be doing the work and she did not answer any of the interview questions. He reiterated he would support hiring a Budget Analyst unless three Councilmember stated they could not approve the budget without an Analyst. He recalled Councilmember Plunkett has said that was the case for him. Councilmember Plunkett clarified Councilmember Wilson was assuming he could not reach a budget decision without the Budget Analyst, he had not stated that. He had more confidence in a Budget Analyst for a number of reasons, many of which he would only share in executive session. Mayor Cooper has begun to introduce additional scenarios which will raise additional questions. History would not indicate that starting over with the Finance Department with new questions would be productive. He was not incapable of reaching a decision on the budget without a Budget Analyst. He would support hiring Mr. Morgan (the former Brier Councilmember) but not Ash Consulting. UPON ROLL CALL, MOTION FAILED 3 -3, COUNCILMEMBER BUCKSHNIS, COUNCILMEMBER PETSO, PLUNKETT VOTING YES; AND COUNCIL PRESIDENT BERNHEIM, WILSON AND PETERSON VOTING NO. City Attorney Scott Snyder advised this decision was preparatory to an appropriation in a contract and he recommended Mayor Cooper allow the Council to resolve the matter. Mayor Cooper chose not to break the tie and to allow the Council to resolve the issue when all seven members are present. 9. COUNCIL REPORTS ON OUTSIDE COMMITTEEBOARD MEETINGS. Councilmember Buckshnis commended staff for their presentations at the Seashore Transportation Forum; Transportation Engineer Bertrand Hauss provided a presentation on transportation projects including the interurban trail and medians on 76`" and 212. Mr. Clifton and Mr. Williams provided a presentation on the TBD. Councilmember Petso reported she attended two Port Commission meetings this month. The Port is also working on their budget as well as reviewing third quarter financials. The Port Commission will hold one more public hearing on the budget; information regarding the budget is available on the Port's website. Councilmember Wilson reported he served as a judge for the SNOCOM Chili Cook -Off last week. The SNOCOM Board adopted its final 2011 budget and is moving toward reinstating Fire District 1 to the Board. Councilmember Wilson reported membership on the Lake Ballinger Forum now includes Edmonds, Mountlake Terrace, and Lake Forest Park and likely Snohomish County. Edmonds City Council Approved Minutes October 26, 2010 Page 21 Councilmember Peterson reported on the Disability Board which administers LEOFF 1 pensions. The City spends approximately $350,000 annually honoring the pensions of police and fire employees hired prior to 1977. . Councilmember Peterson reported the Edmonds Public Facilities District has been discussing the issues covered in the presentation provided by Mr. McIalwain. Council President Bernheim stated he serves as the alternate, non - voting member of the Community Transit Board. He reported he planned to attend the annual Community Transit Board retreat tomorrow. Community Transit will announce at the retreat massive cuts made to operators, routes and executives. Councilmember Wilson relayed Councilmember Petso's inquiry whether it would be appropriate for an additional Council to serve as a liaison to the PFD. Councilmember Peterson advised the meetings were open to the public and another Councilmember was welcome to attend. Councilmember Petso requested Council President Bernheim add the PFD to her list of committees. 10. MAYOR'S COMMENTS Mayor Cooper reported the application period for the Parks, Recreation and Cultural Arts Director position closed and staff is in the process of screening applicants. He anticipated the three finalists would be presented to the Council in December. With regard to Mr. Clobes' comments about being silenced by the City, Mayor Cooper explained he was informed after the fact by Code Enforcement that they had received complaints about the large banners and had initiated code enforcement on the signs because they exceeded the maximum square footage the sign code allows. His position as Mayor has been to not interfere with code enforcement action. Although he disagreed with Mr. Clobes' signs, it was his free speech and had the signs been smaller, they could still be displayed. The code enforcement action has nothing to do with his political position. 11. COUNCIL COMMENTS Councilmember Peterson reported the Friends of the Library book sale this weekend was very successful. He called Animal Control today after seeing a sick raccoon while driving on Olympic View Drive. Animal control informed him there have been a number of sick raccoons in the area and anyone observing a sick raccoon should call 911. Councilmember Buckshnis explained Hutt Park has been a non -dog park in the past. The signage is an effort to encourage the City Council to allow on -leash dogs in Hutt Park. She has also called 911 after seeing raccoons in the daylight. Councilmember Petso congratulated the Edmonds - Woodway High School boy's tennis team who participated in the district tournament in Stanwood. Two doubles teams advanced to a semi final where they played each other. One of the teams will now go on to state. The singles player beat the north district's #1 player to advance through the winner's bracket. Council President Bernheim clarified he did not suggest the bond refinance; it was suggested by Mayor Cooper in the preliminary budget. He thanked Mr. Hines and Mayor Cooper for developing the preliminary budget. He thanked the Council for their cooperation in the budget process. Edmonds City Council Approved Minutes October 26, 2010 Page 22 12. ADJOURN With no further business, the Council meeting was adjourned at 10:34 p.m. Edmonds City Council Approved Minutes October 26, 2010 Page 23