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06/14/2011 Finance Committee MinutesFINANCE COMMITTEE MEETING MINUTES June 14, 2011 Present: Councilmember Petso Councilmember Buckshnis (arrived 6:35 p.m.) Councilmember Wilson (arrived 6:36 p.m.) Staff: Carrie Hite, Parks & Recreation Director Jim Tarte, Interim Finance Director Deb Sharp, Accountant Sandy Chase, City Clerk Carl Nelson, CIO Public: Ron Wambolt Councilmember Petso called the meeting to order at 6:00 p.m. Councilmember Petso excused Councilmember Bernheim's absence. He is out of town and offered to participate by telephone but she informed him that was not necessary. A. Park Impact Fee Discussion Ms. Hite explained the discussion regarding park impact fees began a couple months ago and Councilmembers Petso and Bernheim asked her to prepare a presentation to the full Council to begin the discussion regarding park impact fees. Park impact fees are very complicated; a RCW allows park impact fees but the rules are extensive and can be interpreted many ways. Park impact fees are charges paid by new development to reimburse local governments for the capital cost of public facilities that are needed to serve new development and the people that occupy the new development. Requirements include: • Have to be spent on capital costs of public facilities that are determined in the Capital Facilities Plan (CFP) element • CFP must identify additional facility capacity needed for new development • Have to expend within 6 years after collection • New or expanded facilities, not renovation or remodel of existing • Can provide exemptions (i.e. low income housing) The CFP must identify additional facility capacity needed for new development. In Ms. Hite's interpretation, the City's Park, Recreation and Open Space (PROS) Plan identifies deficits and demand for the current population, not future demand. The City currently leases and uses the Civic Fields; unless a different use was identified for the facility such as expanding it for soccer tournaments, in her interpretation it would not qualify for park impact fees. Ms. Hite described how fees are determined: impact fees can only cover the proportionate share of system improvements, capital facilities development. The City does not currently spend any General Fund dollars on capital facilities development; other tax revenues such as REET and grant funds have been spent on capital facilities development. This is a gray area; if the existing population's proportionate share is zero, the new development's share would be zero. This needs to be clarified to determine whether park impact fees are a possibility for Edmonds. A consultant, Henderson and Company, who has done studies for several cities offered to spend a couple hours with Ms. Hite free of charge to review the City's PROS Plan to determine whether it would make sense for Edmonds to explore park impact fees. He also offered to come to a Council 06-14-11 Finance Committee Minutes, Page 2 meeting as subject matter expert. Ms. Hite reviewed a sample formula for figuring a park impact fee for Edmonds and the amount it could generate annually. All the cities Ms. Hite spoke with that have imposed park impact fees have completed a rate study. The cost of a rate study is $20,000-$25,000. Councilmember Petso asked several questions regarding the availability of funds from park impact fees for a pool project or Civic Center Field, amending the PROS Plan, Esperance Park, and the park deficit near Safeway. Ms. Hite reported on preliminary discussions with Snohomish County regarding transferring Esperance Park to Edmonds. ACTION: Councilmember Petso requested Ms. Hite meet with the consultant to determine whether imposing a park impact fee in Edmonds merits any further exploration and return to the June 12 Finance Committee. Councilmember Petso offered to research the PROS Plan for language referring to future growth needs. B. Authorization for Mayor to Sign a Lease Agreement with Pitney Bowes for Postage Meter Equipment. Councilmember Petso asked whether a 5-year contract was too long. City Clerk Sandy Chase responded that was the length of the previous contract and it has worked out well. ACTION: Councilmember Petso requested Ms. Chase investigate the cost of purchase verses lease prior to scheduling this item on the Consent Agenda. C. General Fund Update May Mr. Tarte reported the YTD working capital balance is $5.2 million. He highlighted several percentages, advising this report shows 5 of 12 months or 42%. Sales taxes are 42%, property taxes are 50% and charges for good and services are 48%. Mr. Tarte reported the 2011 Monthly Revenue Forecasting Model graphs are correct but there is a formula error in the numbers. ACTION: Councilmember Petso requested a historical average column for the past three years be added. D. Quarterly Resort — 4"' 2010 Revised Mr. Tarte explained the 4th quarter report was revised to a format that the Council has seen in the past. Ms. Sharp and he also reconciled it to the financial statements submitted to the State. He is confident the quarterly report ties to what will be audited by the State. The State audit will begin in July; there will be 2-4 people on site for two months. Councilmember Petso asked staff to ensure Councilmembers were invited to the entrance interview and for the City Clerk to notice it as a public meeting in case four Councilmembers attend. Councilmember Petso asked whether the report was in the same format as last year. Mr. Tarte answered it was not, this is on a modified accrual basis so that it will tie with the financial statements. Last year was most likely a cash basis quarterly report. Therefore the 2009 41h quarter report cannot be compared to the 2010 4th quarter report as they are not in the same basis of accounting. Councilmembers requested the following: • Include an explanation for each Interfund Transfer • Replace the 4th quarter "data dump" report on the website with this report 06-14-11 Finance Committee Minutes, Ms. Sharp and Mr. Tarte responded to questions. Ms. Sharp will research salaries shown in the Firemen's Pension Fund and REET 2 expenditures related to Haines Wharf. E. Update on Financial Policies and Reporting Councilmember Petso recalled Mr. Tarte's indication that more staff was needed before financial policies could be implemented. She suggested developing a risk management report that reports claims filed against the City, who is handling it (City Attorney or WCIA), and estimated cost. Mr. Tarte advised of a similar report provided by WCIA. Councilmember Petso requested Mr. Tarte confer with the City Attorney regarding how that information can be shared quarterly with the Council. Councilmember Buckshnis offered to provide Councilmember Petso the policies she has obtained from other cities. Councilmember Petso asked whether Councilmembers are interested in establishing an operating reserve. Councilmembers and staff discussed the GFOA's reserve policy, the City's two bank accounts allocated to the 20-some funds, interfund loans made before property taxes are received, other cities' operating reserves, reserves in addition to an operating reserve, and whether Council approval is required to make payments when the General Fund is negative before property taxes are received. Mr. Tarte reported he has met with all five people in Finance and identified what they do on a daily, weekly, monthly, quarterly and annual basis. There has been some discussion about reorganizing Finance; he will be meeting with Mayor Cooper and Debi Humann next week to discuss and give his recommendation. Councilmember Petso suggested Mr. Tarte research automation/technology related to utility payments. F. Public Comments — None Adjournment — The meeting adjourned at 7:36 p.m.