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08/09/2011 Finance Committee MinutesFINANCE COMMITTEE MEETING MINUTES August 9, 2011 Present: Councilmember Petso Councilmember Buckshnis Staff: Jim Tarte, Interim Finance Director Deb Sharp, Accountant Stephen Clifton, Community Services/Economic Development Director Carrie Hite, Parks & Recreation Director Carl Nelson, CIO Public: Darrol Haug, CTAC Member Joan Bloom Roger Hertrich Councilmember Petso called the meeting to order at 6:01 p.m. She moved Item D up to follow Item A. A. Quarterly Report repardin_p Fiber Optics CIO Carl Nelson reported there had been no major changes since last quarter and no major unexpected costs. The date for payback is still April 2015. The State Court of Appeals confirmed the City's right to sell its excess capacity. Seattle paid a portion of the appeal costs. Bellevue chose not to participate in the appeal. Efforts will now focus on pursuing "low hanging fruit." Mr. Nelson reported Edmonds Center for the Arts is a potential customer. The availability of a high speed live feed will allow presenters to do live video streaming from the facility, a potential new revenue and economic strategy for the ECA. Mr. Clifton reported the Port is interested in fiber at the Port as well as Harbor Square. There are also buildings downtown that are interested in connecting to fiber. Mr. Nelson commented on the economic advantage of hook- up and cost justifying the build -out. For example the $25,000-$40,000/mile cost to extend fiber to a new building located a mile from the fiber is an insignificant cost to a developer if tenants need high speed bandwidth. Mr. Clifton advised the medical community is another cluster/opportunity for fiber. A brief discussion followed regarding how customer charges are determined, leasing dark fiber verses selling bytes of capacity, potential future customers, and marketing. Recommended Action: 5 minute presentation to full Council. D. Review of Minor Changes by SNOCOM Legal to the `Interlocal Agreement for SNOCOM Internet Access" That Was Approved for Mayor's Signature on 11-16-2010 Mr. Nelson explained the Interlocal Agreement with SNOCOM for bandwidth commitment was originally presented to Council in November 2011. SNOCOM requested minor changes and has now signed the agreement. The agreement is being presented to Council for reauthorization with the changes proposed by SNOCOM. Mr. Nelson briefly reviewed the pricing matrix. Recommended Action: Schedule on consent agenda next week. B. Park Trust Fund Ordinance Amending City Code 3.16.020 Ms. Hite explained this is a housekeeping item to make the ordinance consistent with the code. Recommended Action: Schedule on consent agenda next week. Finance Committee Minutes, Page 2 C. Old Milltown Courtvard Budaet Review. Proiect Timin Ms. Hite explained this is scheduled on the August 23 agenda for public comment. The next deadline to submit an application to the Hazel Miller Foundation is September 23 with decisions made early October. If construction is delayed until after the grant decision, the project will not begin this fall. She asked whether the Council was interested in allocating additional REET funds to construct the project this year, advising the foundation grant is not guaranteed. If the foundation grant is approved, the funds would be used to replenish the REET fund. The budget for the project is $120,000; funding is comprised of $60,000 from the Hazel Miller Foundation, a $40,000 allocation in the budget, $10,000 from the Floretum Garden Club $4,000 from Edmonds in Bloom and the City has applied for $6,000 from the Hubbard Foundation. The project is based on the preferred alternative presented to the Council in July. A brief discussion followed regarding including kid -friendly features in the design. Recommended Action: Schedule request for allocation of an additional $60, 000 in REET funds to begin construction this fall. REET funds to be replenished if the City receives the Hazel Miller Foundation grant. E. Update on Financial Policies and Reportinq — Finance Reserve Policy Examples Councilmember Buckshnis referred to three cities' reserve policies, GFOA standards, and a resolution regarding a reserve policy attached to the packet. She recommended the City establish one reserve that can be used for a catastrophic event or downturn in the economy as well as determine a percentage for the reserve. Councilmember Petso agreed with clarifying the City's reserve policy. Councilmember Petso inquired about establishing a separate Council Contingency Fund. Mr. Tarte explained creating a separate fund would be more complicated. The Council Contingency Fund is not a separate fund; it is a segregated balance within the General Fund. The current balance is $68,000. The Council budgets $25,000/year from that balance that can be spent on miscellaneous items. The balance decreases as money is spent. If Council spends over $25,000 in a year, a budget amendment is required. A simple solution would be to eliminate the $68,000 balance and establish a Council contingency line item in an amount the Council establishes each year. Recommended Action: Staff presentation to full Council with a suggestion to discontinue using the phrase "Council Contingency Fund" and to establish a Council contingency line item in the budget in an amount that the Council establishes each year. The Finance Committee will discuss the reserve policy again next month. Councilmember Petso asked several questions about Actuarial Funds. Committee members and staff discussed funds in the Animal Reserve and the original intent of this reserve, other cities' reserve policies, GFOA's recommendation for a two month reserve, bond refinancing and establishing a policy regarding the spending of reserves. F. Public Comments Darrol Haug, Edmonds, asked whether the latest forecast includes the 1 % annual property tax increase. Mr. Tarte responded it did. Mr. Haug asked when that is approved by Council. Ms. Sharp answered it is adopted by ordinance during the budget process. Mr. Haug summarized this is an unusual year because the budget will be prepared before the outcome of the levy is known. Citizens need to be aware that the 1 % property tax increase is included in the forecast. Roger Hertrich, Edmonds, inquired about the budget format, recalling in the past the budget included salary and benefit costs for each department. He suggested the City return to that format. Next, he inquired about the FD1 contract. Councilmember Buckshnis advised it is a 5 year contract so Finance Committee Minutes, Page 3 it can be adjusted in 3 years. Mr. Hertrich suggested the Council consider what would be necessary for the City to establish its own Fire Department again. Joan Bloom, Edmonds, inquired about the Mayor's plans to form a budget committee. Mr. Haug explained he received an email from the Mayor inviting him to participate in a committee that will meet four times between now and when the budget is prepared to provide input and analysis of the budget. The email did not indicate the number of participants or who else was invited to participate. He offered to forward Ms. Bloom the email. Ms. Bloom was not opposed to the committee, but was concerned it was not common knowledge and Councilmembers were not informed. Next, Ms. Bloom inquired about the 2009 Ogden Murphy Wallace billings. Mr. Tarte advised the 2009/2010 Ogden Murphy Wallace billings are available on the Finance Department page of the City's website. Adjournment— The meeting adjourned at 7:24 p.m.