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.