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2023-06-27 Regular MeetingEDMONDS CITY COUNCIL MEETING APPROVED MINUTES June 27, 2023 ELECTED OFFICIALS PRESENT Mike Nelson, Mayor Neil Tibbott, Council President Vivian Olson, Councilmember Will Chen, Councilmember Diane Buckshnis, Councilmember Dave Teitzel, Councilmember Jenna Nand, Councilmember ELECTED OFFICIALS ABSENT Susan Paine, Councilmember 1. CALL TO ORDER/FLAG SALUTE STAFF PRESENT Michelle Bennett, Police Chief Oscar Antillon, Public Works Director Dave Turley, Administrative Services Director Angie Feser, Parks, Rec., & Human Serv. Dir. Susan McLaughlin, Planning & Dev. Dir. Todd Tatum, Comm./Culture/Econ. Dev. Dir. Rob English, City Engineer Thom Sullivan, Facilities Manager Jeff Taraday, City Attorney Scott Passey, City Clerk Jerrie Bevington, Camera Operator The Edmonds City Council meeting was called to order at 7 p.m. by Mayor Nelson in the Council Chambers, 250 5' Avenue North, Edmonds, and virtually. The meeting was opened with the flag salute. 2. LAND ACKNOWLEDGEMENT Councilmember Nand read the City Council Land Acknowledge Statement: "We acknowledge the original inhabitants of this place, the Sdohobsh (Snohomish) people and their successors the Tulalip Tribes, who since time immemorial have hunted, fished, gathered, and taken care of these lands. We respect their sovereignty, their right to self-determination, and we honor their sacred spiritual connection with the land and water." 3. ROLL CALL City Clerk Scott Passey called the roll. All elected officials were present with the exception of Councilmember Paine. PRESENTATIONS 2023 FIRST QUARTER FINANCIAL UPDATE Administrative Services Director Dave Turley reviewed: What to expect? o Tonight — first quarter (March 31) financial update o September — mid -year review, finances through June 30 Edmonds City Council Approved Minutes June 27, 2023 Page 1 o October — required presentations reviewing, 1) city revenue sources in general, 2) property taxes in particular o Spring 2024 — recap of 2023 and updating final results for the year • Some items to note this quarter are: o Sales Tax is up $114,851 from this point last year o Gas Utility Tax is up $47,783 o Building Plan Review and Inspection Fees are up $82,333 from this point last year, Building Permits are down $(79,833), and Engineering Fees and Charges are down $(55,549). Development Services revenues overall are down a total of $(65,121) from this point last year o Parks & Recreation Program Fees are up $44,598 from this point last year • Quarter -to -date Sales Tax Revenues for the 3 months ended March 31 $114,851 ahead of last year, and $73,749 under budget • Breakdown by business category of the change in Sales Tax revenue for first Quarter 2023 compared to first Ouarter 2022 • Quarter -to -date Real Estate Excise Tax Revenues for the 3 months ended March 31 is $272,197 behind last year, and $387,714 under budget a.nnual Sales Tax Revenue Tor the tirst time passes Annual 5ales Tax Z= Property Tax -EMS Tax -Other Taxes 12,000,000 10,000,000 _ 8,000,000 _ ------------------ 6,000,000 4,000,000 2,000,000 2017 2018 2019 2020 2021 2022 ax Revenue • How much have Edmonds Property Tax Revenues fallen behind inflation over the last 13 years? $za,o❑❑ o❑a Sis.oa❑.oac gm,00❑,o❑❑ Ss,000,000 5- zmo zo�� zmx zoia zoie zoss m�s zmz zoos zm9 zozo zou mzz aoz3 ■ Property Tax (If Adjusted for Inflation since 2010) ■ Property Tax (Actual` • How much have Edmonds Property Tax Revenues fallen behind inflation over the last 13 years? Edmonds City Council Approved Minutes June 27, 2023 Page 2 S3o,000 uoo $7 s,000.�0 5ao,000,aoo S�s,000,000 S�o,aoo,aoo ss.000,aao $27,989,669 Mr. Turley explained in 2001, the legislature passed I-747 which limited property tax growth to no more than 1%/year. Property taxes actually increase 0% unless council takes action to request a 1% increase. For 23 years, the growth in property has been very limited. Most counties and larger cities have been affected by this more quickly than Edmonds has. Property taxes are one of the biggest revenues sources for the General Fund. Things the General Fund pays for include police, fire, municipal court, salaries, facilities repair and maintenance, parks, and street maintenance including adding new sidewalks. Larger governments have had to consider what to fund via the General Fund; because things like police and fire cannot be cut, so dedicated funding sources had to be found for services they want to provide like parks and street maintenance. Those dedicated funding sources include park levies and for street maintenance, gas taxes, impact fees, federal and state grants, and car tab fees. Mr. Turley referred to the council's special budget meeting that preceded tonight's meeting, recalling the council's interest in funding more sidewalks. The City is currently funding street maintenance, $425,000 in 2023, from the General Fund. If property tax revenues remain flat, the City will be unable to continue that. Inflation has been 8-10% over the last two years which has driven costs up. When costs increase, the City can either increase revenues or cut services. Later on tonight's agenda the council will be discussing an increase in car tab fees. If the council chooses not to increase car tab fees, it will be necessary to take a hard look at things like sidewalks, pot holes and ways to pay for street maintenance. Mr. Turley referred to comments he has heard that now is not a good time to increase car tab fees due to inflation. He commented if inflation was 0% and staff suggested increasing car tab fees, there would likely be resistance because costs were not increasing. The reality is when costs go up, that is the time for local government to increase revenues. There have also been comments that car tab fees are a regressive tax; he agreed there were not progressive or regressive taxes but somewhere in between. The college student taking public transit who likely has a lower income and doesn't have a car, won't be impacted by the increase in car tab fees; the person with three cars and a boat likely has a higher household income and can pay more for their car tab fees. Car tab fees are somewhat of a compromise, a compromise the council has to look hard at accepting at this point. Councilmember Nand relayed her understanding that I-747 limits the increase in property tax to 1%/year and asked whether the actual amount property owners were charged was affected by the increase in land value as assessed by the Snohomish County Auditor. Mr. Turley answered the amount collected does not correlate to assessed value or market values. Over the last 10 years, property values in Edmonds have approximately doubled, but in that time the property tax paid to the City has increased only approximately 7%. Councilmember Nand asked whether someone who lives in a townhouse whose value has doubled in value was paying double in property taxes. Mr. Turley answered some states charge a rate that is a Edmonds City Council Approved Minutes June 27, 2023 Page 3 proportion of the property's value; in that method, if the property value increases, the amount the property owner pays also goes up. In Washington, cities levy a specific amount. Property tax plus EMS tax is approximately $14 million; when the City levies $14 million, that is what the City collects regardless of residents' property values. Washington's levy system is the inverse of states that use a rate system; the amount the City levies is the amount it collects. Councilmember Buckshnis commented the information provided in the report is very dated and quarterly reports have been provided to council throughout the last 13 years. She pointed out property taxes in Edmonds increased a shocking amount this year; she knew it was proportional with regard to the amount the City collects, but she expected to see a blip in property taxes in the June quarterly. Councilmember Buckshnis referred to the investment portfolio, noting in December there was $75,309,000 in the portfolio and $66,702,000 in March. She asked what caused that reduction, whether it was ARPA, payment for goods and services or something else. Mr. Turley said he did not have the full report in front of him, but the City pays a lot of annual expenses such as $1 million for WCIA in January. The monthly report includes a cashflow report that illustrates big spikes when property taxes are paid in the spring and fall. When property taxes comes in, the fund balance is high and it gradually decreases until property taxes come in again which are then slowly spent down. December is high point and March is a low point, especially the first part of the year when a lot of annual expenses are paid. Councilmember Buckshnis recalled staff saying last year that ARPA funds were put into the investment portfolio. Mr. Turley agreed. Councilmember Buckshnis observed the investment portfolio has been around $68 million for a long time and now is down to $66 million. Mr. Turley advised approximately $4 million in ARPA funds have been spent. Councilmember Teitzel referred to retail automotive sales tax March 2023 compared to March 2022, noting that revenue continues to be strong even with supply chain issues in that industry. He assumed the revenue was driven by used car sales and if so, asked whether the revenue was sustainable. Mr. Turley responded he closes his eyes and watches the retail automotive sales tax come in and has not done a deep dive into it. Sales taxes are affected by inflation so when car prices go up due to supply chain issues, sales tax revenue also increases. Councilmember Chen expressed appreciation for the breakdown in sales tax, noting automotive retail sales tax is the strongest. The Economic Development Commission (EDC) has been discussing how changes in the industry such as car sales operating via an internet model instead of a warehouse would change the City's revenue picture in the future. Councilmember Chen commented the quarterly report focused on property tax and how it could have been different if the council had approved an annual 1% increase. On the flipside, expenses such as wages and benefits have increased over the last 13 years. He referred to the strategic outlook on page 22 of the adopted 2023 budget book, in 2020 wages and benefits were $17,373,000 and are forecast to be $26 million in 2024, approximately a 54% increase. He concluded the rate of increase is outpacing revenue by quite a bit. When thinking about increasing revenues, consideration also needs to be given to managing expenses. Mr. Turley agreed. Based on what's transpired between this report and now, Councilmember Olson asked if budgeted sales tax revenue compared to actual was as expected. Mr. Turley said sales taxes are still doing well. A couple months ago, there was one month when sales taxes were less than same month a year ago, the first time that has occurred in four years. Through May, sales taxes are still doing fine. Councilmember Olson observed there were a couple EDC members in the audience. She referred to the comparison of sales tax sources, noting small retail is down compared to the previous year, not surprising due to the loss of a few key retailers such as Sound Styles, Garden Gate, and C'est La Vie. Even if that is not impactful when Edmonds City Council Approved Minutes June 27, 2023 Page 4 looking at the big picture financially, she hoped the community was thinking about what that means for the vibe and feel and ability to attract patrons downtown. She hoped if replacements had not already been identified, they were actively being sought. Mr. Turley commented Director Tatum drives that ship, and he gets to looks in the rearview mirror to tell the council whether the City has been. Councilmember Buckshnis referred to the Enterprise Fund Overview, noting between 12/31/22 and 3/31/23, both the storm utility fund and the sewer utility fund increased approximately $4 million, and the water fund only increased $1 million. She asked if that was due to rate increases or funding a project. Mr. Turley answered it would not be the result of a rate increase; a rate increase would not have that much impact that quickly. Without reports and time to research, he did not know the answer. Councilmember Buckshnis offered to email her question to him. 2. HIGHWAY 99 COMMUNITY RENEWAL PLAN Planning & Development Director Susan McLaughlin acknowledged all the previous planning documents and recent conversations reveal the community, elected officials and staff have common goals and want to see positive redevelopment occur on Highway 99 along with infrastructure and community facilities to support a high quality of life for the adjacent neighborhoods. This common goal hasn't changed in two decades in the planning work done by the City. With today's conversation regarding a community renewal plan, she acknowledged and validated the negative connotation that urban renewal has had in the country. The urban renewal of the 50s and 60s led to some of the interstate projects and state highways that are experienced today, demolished housing, and tore through neighborhoods which led to displacement of already vulnerable populations. The restructuring of the community renewal tool of today is basically trying to right the wrongs of the past. The intent is to connect communities that were separated; restructure streets to make more parks, livable spaces, and sidewalks; foster affordable housing; address displacement; and provide housing for those who used to live or continue to live in areas adjacent to Highway 99. The term community renewal can also build parks and community facilities. Ms. McLaughlin reviewed: • Previous Planning Efforts 0 2004 Highway 99 Enhancement Project 0 2004 Highway 99 Enhancement Project Market Assessment 0 2007 Highway 99 Traffic Safety and Circulation Study 0 2015 City of Edmonds Comprehensive plan 0 2014 City of Edmonds Comprehensive Transportation Plan 0 2017 Edmonds Highway 99 Subarea Plan ■ "the Edmonds community expressed a strong desire for a gateway ... a district transition point in and out of Edmonds" - 2017 Highway 99 Subarea Plan ■ Subarea plan led to land use and zoning changes to foster positive redevelopment and provided tools for developers to hopefully expedite and motivate developers to build housing as well as non-residential development along the corridor in keeping with the comprehensive plan as well as the subarea plan. • Development Activity (2017-Present) o Although there has been anecdotal information about how much development has occurred on Highway 99 since the subarea plan was adopted, in fact very little development has occurred. o Subarea plan anticipated and mitigated for 3,325 units over an 18 year period, an average of 185 units/year ■ One development has been constructed in the subarea since 2017 with 192 units or 38 units/year Edmonds City Council Approved Minutes June 27, 2023 Page 5 ■ Including projects under construction increases the number to 53 units/year or 28% of the 185/year that was anticipated ■ Since the 5-year planned action report and subsequent emergency ordinance, there has not been a single development application, and the one there was, has expired Project Address Built/Finaled Issued(#units) Ready to Issue Applied/Design Pre -Application Expired/Withdrawn (# (# units) (# units) Review Stage (# Units) Units) Approved (# units) GRE 23326 Hwy 99 192 Apartments Better 8029238 St 3 Bellevue SW Tuwnhomes Apollo 23601 Hwy 99 255 Apartments Anthology 2120072 Ave 127 Senior Living W Housing Hope 9215236 St 52 SW Terrace Place 2362584 Ave 261 W Behar(F. miry 72122 00 St 394 Fun Center) SW Total 192 130 307 394 X4 o Subarea plan also envisioned about 2.6 million square feet of new non-residential (uses to support the adjacent neighborhood such as grocery stores, cafes, etc.) ■ To date only approximately 23,000 square feet has been built, 10% of the rate assumed in the subarea plan/year. o Decision package approved in the 2021 budget to prepare a community renewal plan. Intended be a companion document to the subarea plan, recognizing land use and zoning changes alone could not stimulate or catalyze the positive redevelopment that the community was hoping to see and to subsequently fund the needed infrastructure ■ Pandemic and termination of initial consultant contract delayed preparation of plan. Benefits of Community Renewal o Determine if area is can meet CRP criteria as defined in RCW 35.81.015 o Unlocks tools for redevelopment to serve public needs o Catalyze investment in CRP area o Enable the city to take an active role in redevelopment and transformative infrastructure Increased capabilities from community renewal Buy, lease, or condemn properties Allowed Allowed Hold, demolish, or improve properties Sell property to a private entity Rezone property Master plan private property Enter into a developer agreement Select a buyer who agrees to further CRA goals Close, vacate, and rearrange streets and sidewalks Borrow money and accept grants to carry out community renewal Aid property owners or tenants affected by the community renewal process Allowed only for public facilities Competitive bidding process Allowed as a Planned Area Not allowed Only though a competitive bidding process Not allowed Allowed for city purposes Not allowed Allowed for those affected by condemnation for public facilities Allowed City can identify preferred partners Allowed as a spot zone regardless of GMA/Comprehensive Plan cycle Allowed City can identify partners to develop all or part of a property. City can specify how the property is to be used. Allowed, with restrictions Allowed to promote economic development Allowed Allowed Analysis confirms that we are eligible to apply for a CRP (per RCW definition) o Eligibility requirements relevant to Highway 99 context Edmonds City Council Approved Minutes June 27, 2023 Page 6 ■ Physical dilapidation of buildings ■ Unsafe conditions ■ Insufficient access to parks/open space ■ Inadequate street layout ■ Inadequate lot layout ■ Excess surface parking coverage • Interviews & Open Houses o Open houses held on June 30, 2021 and October 20, 2022 o Stakeholder interviews held: ■ May 6 interview/site walk (law enforcement, human services and community leaders) ■ May 26 (Burlington site property owner) ■ June 13 (developer forum) ■ July 7 (community service providers) • Study Area: Issues Summary I Extensive nav!nR and lack of tree canonv few safe pedestrian or vehiclecrossings 1-77-7 a Lack of sidewalks on side streets makes r' it hard for on foot, hike, or wheels in neighborhood to access Hwy 99 services Shoplifting hot spot " 1 Vacant building �. Motels -domestic violence hot spot'. -. _ ,- Aging buildings in poor or below average condition Burned -out building - Large underutilized site Vacant parcels - Oversi7ed WSIDOT-rivhN-of-wav inhihit I— mobility and prevent development • Area Study: Assets Summary e Swift Blue Line station Multi -family housing � Businesses � �d fs Service Providers / Sound Transit Ilght rail service at Interurban trail- MountlakeTerracefreewaystaticn I Parks - '- BallingerPark (in Mountlake Terrace) Culturally-relevantdnor-profit ofitsesses r z and non-profit servire�- providers throughout corridor Community garden — -- - � �I City Hall Neigh horhood OHire - ! Full -service grocery &lively 1 - Shopping plaz - Swift BRT st Mathay-Balli ger Pal k - _ Bustransit hub tAuro Transit Centerin cretin Businesses gene to tax \ -- -- revenue for publlc se 'ces s ■ Edmonds City Council Approved Minutes June 27, 2023 Page 7 Structural Issues o Highway 99 cut through existing neighborhoods, creating a barrier Ballinger neighborhood and the rest of Edmonds. Several irregularly created. These lots have been difficult to develop due to their odd shape. I between the Lake shaped lots were o Construction of the Highway 99/SR-104 interchange makes access to Burlington Coat Factory site difficult. Access remains an . ._: Y4F c. 1964 c. 1974 c.1978 Prior to the construction of Interchange under Interchange Complete the interchange construction • Access cutoff between 8411 Ave W and Access to SR-104 direct from Highway Several businesses and residences 242"" St SW 99 displaced Interchange complicates access for • 8411' Ave W connected to 242"" St SW Burlington site Inadequate Street Layout o Highway 99/SR-104 interchange ■ Oversized for existing traffic volumes ■ Occupies a large amount of land ■ Creates unusable dead zones ■ Impedes walkability ■ Complicates vehicle access to nearby parcels ■ Design encourages fast traffic and limits visibility where people cross Site Design Safety Challenges o Physical barriers and poor sight lines create "dead zones", especially between and behind buildings. o "Crime prevention through environmental design" (CPTED) is a program to reduce criminal activity by designing buildings and areas around buildings in a way that deters crime. o CPTED guidance says to avoid: ■ Poorly defined spaces ■ Places with poor sight lines, ■ Places with little or no walking traffic Physical Dilapidation, Deterioration, or Obsolescence o Many existing buildings are more than 50 years old o Cluster of building in "below normal condition" Edmonds City Council Approved Minutes June 27, 2023 Page 8 • Pedestrian infrastructure needs IIIIIIIIr �■�►�,�■ � � ��: High speed aNerial Enls1mg crosswalk _ No crosswalk Missmgsidewalk .._._. Sidewalk wkh fequen[eurb Ms • Implementation Strategies o Adopt Community Renewal Area o Explore Tax Increment Financing as an option to address infrastructure needs o Foster public -private partnerships o Pursue Reconnecting Communities Grant o Continue to invest in parks and transportation per the PROS Plan and the Highway 99 Subarea Plan • Basic TIF (Tax Increment Financing) Model o Generally, TIF captures property taxes generated from the increased assessed valuation on the site that results from private development following infrastructure investment Basic TIF Model' New Tax Incremental Taxes Base m Revenues H x flow Revenues from REGULAR property taxes assessed m Existing Tax Base to normal against the Increment Value only, are captured: Revenues continue to flow to taxing ✓To pay"public Improvement costs" C normal taxing bodies bodies ✓ To repay bonds issued for "public improvements" Statutory life of TIF district • Overview of Tax Increment Financing o Eligible infrastructure improvements owned by a local government within or outside of and serving the increment area that include: o Street and road construction; o Water and sewer system construction and improvements; o Sidewalk and other non -motorized transportation improvement and streetlights; o Parking, terminal and dock facilities; o Park and ride facilities or other transit facilities; o Park and community facilities and recreation areas; o Stormwater and drainage management systems; o Electric, broadband, or rail services; o Mitigation of brownfields; • Recommended CRP Projects o Public -private redevelopment Edmonds City Council Approved Minutes June 27, 2023 Page 9 o Access improvements near interchange o Through block connections o Neighborhood park o Complete Streets o Business revitalization o Interchange replacement Next Steps to advance CRP o Share case studies (Olympia, Tukwila) o Planning board recommendation o Pass a resolution to support the designation of Edmonds as a Community Renewal Agency o Host a public hearing on proposed plan o Adopt plan Ms. McLaughlin summarized the CRP does not obligate the City to anything. It is a tool that fosters public -private partnerships. The CRP does not have to be coupled with the property acquisition but it would be advantageous especially with the TIF financing tool. Councilmember Nand said she was unreservedly in favor of public -private partnerships, reconnecting the community pilot plan and utilizing the Highway 99 subarea EIS. One of her reservations about designating Highway 99 as a CRA is declaring the entire corridor blighted; that was shocking to her considering that Highway 99 generates more sales tax revenue than any other business district in the City. She cited Detroit as an example of blight where people do not have access to running water on their property. She asked why it would be appropriate for the council to pass a resolution issuing findings of blight for the entire corridor at a time when the City is conducting outreach to a community that has traditionally felt underserved. Ms. McLaughlin referred to the list of corridor assets, agreeing the corridor provides very positive tax revenue for the City. The analysis conducted to determine if the City was eligible to apply for a CRP, it did not qualify due to failing businesses. There are case studies that it met the findings due to the amount of resourcing some areas took such as police and planning and it did not provide the revenue to sustain ongoing efforts over decades. This is completely different; Highway 99 is the result of an infrastructure project that occurred decades ago that amazingly businesses and residents have thrived in spite of. That is the reason the City met the criteria, insufficient street layout, skewed parcels, terrible access, lack of walkability, etc. It is not a reflection on the success of the businesses along Highway 99. Councilmember Nand questioned what additional powers would be needed under the CRP that the City would not already have available under the subarea EIS. She found some of the powers under the CRP potentially alarming, such as the ability to condemn property for public use and exercise eminent domain. If the City is trying to build bridges to this community that has traditionally felt underserved, why would the City want to add tools that property owners could consider potentially threatening. Ms. McLaughlin agreed the concept of condemning property was threating; the City's list of projects have nothing to do with condemning properties. The City wants to engage in public -private partnerships and to engage with specific developers to build needed community facilities. Under the City's normal powers, the most competitive bidder must be selected to offer things the community wants such as a community center, library, etc. It would also allow the City to master plan beyond the Burlington Coat Factory parcels, critical when thinking about access, skewed parcels, etc. Just because the CRP provides tools does not mean the City would have any interest in using them. The CRP does not reference condemning properties. Councilmember Buckshnis commented she was unable to open the CRP provided by staff. She expressed concern with how quickly this was coming forward. The presentation indicates stakeholder interviews were completed in one month last year and asked if staff intended to update that outreach. Ms. Edmonds City Council Approved Minutes June 27, 2023 Page 10 McLaughlin advised in reviewing the interview notes, they are all very relevant to today's conversation. Councilmember Buckshnis did not believe 3 developers represented all of Highway 99 or that 3 community service providers represented all of Highway 99. She echoed Councilmember Nand's concerns, this is a good start, but it should be vetted through the Economic Development Commission (EDC), there should be updated open houses, etc., to ensure people understand what it means to say Highway 99 is blighted. The intent is to reach out to people on Highway 99 and help them, not discourage them by classifying their area as blighted. She recommended going through the plan very carefully as there was not enough information from 2023 for her to understand what citizens want. Councilmember Buckshnis said she could provide numerous examples where TIF has been disastrous because it was not transparent and the City selected the developer. If this was done in 2022, she questioned why the EDC and planning board were not involved before dropping this on council. Ms. McLaughlin said she has been to the planning board three times, twice for an overview, and once to review the draft plan. She has also been at council a few times as part of the development work plan, noting this as a key project. With all the work that has been done related to Highway 99 such as the emergency ordinance and speaking to developers, the relevant issues remain and the needs have been the same for the past couple decades such as lack of parks, lack of street connections, etc. Councilmember Buckshnis said she did not disagree and change takes time. She was still looking for the SEIS that the council requested last year and there has been no comprehensive plan review regarding this area. She did not recall Ms. McLaughlin talking to council about the CRP, recalling in last year's budget there was reference to economic enhancement. She recommended sending this back to the EDC and the planning board so they can vet it more closely to what's happening today. Councilmember Olson commented she typically attends public meeting seeking input; she vaguely remembered a public meeting about community renewal on Highway 99, but she did not know anything about the CRP until a couple weeks ago. To the extent that was on her, she apologized. Although staff is saying the CRP does not have to be approved with the parcel, they are being proposed to council together and she wished they weren't. She preferred to deeply vet the CRP, possibly with the advice of the EDC and planning board and input from citizens. She felt it was great the City was thinking big and she urged the council and community not to get hung up on a word that has personal connotations and a history that was upsetting and emotion and let that get in the way of using the legal or statutory definition to the City's advantage and the advantage of that area. She preferred to evaluate the concept and determine if it was a tool the City wanted to use. She referred to the CRP and a property acquisition that might fall under that umbrella, and asked about pros and cons of approaching them together. If the council likes the idea of CRP and likes part of the parcel, what are the options around those approaches. Ms. McLaughlin explained when the decision package was adopted in 2021, it was only $60,000. The CRP included a fair amount outreach and it lasted a long time and when that happens, consultant dollars go quickly. The consultant contract has ended. There is no rush per se, this is a council decision. It is advantageous to couple them because if council pursues an option to purchase, there will be six risk free months to start engaging with the community about what they want on that site. Sometimes it's difficult to do that without a broader view of the entire area. That is not even a driving reason; if in 18 months the council acquires the property, it will be critical to have a CRP designation to drive what happens on the site. The ability to master plan beyond the boundaries of the site and the ability to self-select a developer for specific land uses are the most compelling reasons. The issue of displacement will be a focus of the comprehensive plan and the SEIS that will be rolled into the comprehensive plan scope which will be presented to council on July 5. Under community renewal, the City has additional powers to aid with displacement. Edmonds City Council Approved Minutes June 27, 2023 Page 11 Councilmember Olson referred to staff bandwidths, noting this is a huge projects, and there are other huge projects the council has not seen the progress they were hoping to see such as the code rewrite for example. She was concerned with taking on more than staff could handle. Ms. McLaughlin answered the reason resource constraints worry her is because a great job has been done compiling the plan and she wouldn't be worried about resourcing if a council decision could be made soon. If this drags on longer, alongside all the other plans such as the comprehensive plan and the code modernization, that would cause her concern. Staff will be presenting a code modernization work plan; staff is actively working on minor and major code amendments and she anticipated the frill breadth of code modernization work would not happen until the comprehensive plan policies were more clear in 2024 and then do a complete overhaul once some of the major code work was completed. Councilmember Olson commented this would be a huge, ongoing project. Ms. McLaughlin agreed, the first decision is whether to pursue a community renewal area designation which would make the City a community renewal agency which presents questions related to resourcing. Councilmember Olson asked if those questions would be answered tonight or if the answers were not yet available. Ms. McLaughlin responded the specific answers to those questions were not yet available. Even if the City is designated a community renewal agency, the resource question will be related to staffing the projects under that agency. Councilmember Chen recalled in early 2022 he was invited to tour the Burlington Coat Factory and he asked some follow up questions that staff was not ready to respond to at that time. In general, blight is a sensitive term, he loves the people who work and do business in that area, they are just as great, smart and hardworking as anyone else. The reality is that it is a high crime area, there are a lot of problems that require attention including an unsolved 7-Eleven murder, and the Safeway store sometimes only has one checkout lane because there is so much theft. He questioned why the City would not use these tools to renew the area. He referred to TIF which basically is issuing bonds based on the projected assessed value increase which is just an imagination. If the City issues bonds, it incurs interest costs and puts that expense on the shoulders of future generations. When it comes to finances, he is very conservative and did not want to spend money the City did not have. He wanted to understand how much would be issued, the projected assessed value increase, and whether the increase was a reasonable prediction. Councilmember Chen continued, he liked the concept in general, having another tool to help develop this area. That area and going toward the Lake Ballinger area has been in decline for the last 15-16 years and in the last couple years there have been a couple murders, car thefts, and other problems and deteriorations. He welcomed having another tool to help enhance that area, but wanted to approach the finances very cautiously. He spoke in favor of adopting the CRP, but separating it from the property acquisition. The property acquisition needs to be based on the community's needs before spending $37 million to purchase it and let it sit. Council President Tibbott commented the timing of when properties become available and ready for redevelopment is usually not sequential. A good example is what is happening along the light trail in Lynnwood. Things rarely happen linearly and calmly in community development. He participated in the last Highway 99 study and has also consulted with people who worked on the previous Highway 99 study; the City has been considering this for decades. Council has had exposure to the TIP, multimodal transportation ideas, etc. going back decades. Things are happening now and for whatever reason, they are happening simultaneously. He has personally been waiting a long time to see progress in that area and has wondered why things haven't happened. He appreciated staff s explanation regarding infrastructure such as the cloverleaf, the highway, narrow sidewalks and poor lighting that gave preference to the highway instead of the neighborhoods. This is the largest community redevelopment project in the history of the City and it is time to roll up our sleeves and get busy utilizing these tools. Edmonds City Council Approved Minutes June 27, 2023 Page 12 With regard to the CRP, Council President Tibbott asked what the rollout looked like for next 6-12 months, and the timing for the council and the community. Ms. McLaughlin agreed with Councilmember Chen and others that coupling these together almost feels overwhelming, but it doesn't have to happen on the same day. The most important thing is for council to focus on the option to purchase with clear sight and judgment. If that happens, staff will lift a community design session/community conversation around that site. Community renewal can occur as part of that six month conversation, it does not have to be done right away. She did not feel urgency now, but if the six month mark passes without a decision, she would start to get nervous. She was confident a CRP would provide access to the right tools coupled with TIF. She recognized these are huge concepts, the largest redevelopment project the City has seen, and she agreed with taking it one step at a time. Council President Tibbott referred to the list of next steps to advance the CRP and asked if adopting a plan could happen in 18 months. Ms. McLaughlin agreed there was no timeline. Council President Tibbott commented the council had time to wrap their head around the renewal options, it did not need to be condensed into the next 3-4 months. Ms. McLaughlin agreed. Councilmember Teitzel referred to TIF, relaying his understanding it was a new concept in Washington, but it has been used elsewhere in the country. It is a concept that bases bond funding on projections of future revenue. Ms. McLaughlin agreed. Councilmember Teitzel pointed out if that projection of future revenue did not happen, then the General Fund picked up the tab. Similar to Councilmember Chen, he was risk adverse in that way. He asked where this had been used, where it hasn't turned out well, and what the City could learn from that to not repeat the same mistakes. Ms. McLaughlin answered although staff has been looking into TIF as it has become relevant to the conversation with the property acquisition, she was unable to answer Councilmember Teitzel's question regarding a city that had lost money on the projection. A two-phase analysis is required; the first phase identifies areas that may be eligible or beneficial for TIF, it is important to get those boundaries right and have the level of confidence to manage the risk. The second phase would be revenue projections, not a perfect science, but there is a high level of confidence this property will redevelop whether it is by the City or another developer which makes the risk fairly low. She recalled looking at a case study where there was no active development, they were hoping to put in infrastructure to catalyze redevelopment, and it was necessary to wait it out. A city has 25 years to pay back the bond so there is time to wait for redevelopment to occur. If the City pursued the TIF model specifically for redevelopment of the Burlington Coat Factory property, Councilmember Nand asked whether the City be tied to public -private partnerships. She lives within walking distance of the Burlington Coat Factory property, grew up going to Burlington Coat Factory, and her neighbors have been incredibly excited since the City announced the potential acquisition and have tons of ideas. Due to the dearth of public venue space on Highway 99, she is hearing about the need for a child -friendly sculpture garden, a community resource center, a stage for public performances, etc. She asked if the City would be penalized via TIF if this space never yielded a boost in sales tax for the City. This is a great opportunity to serve a community that has not been served the way it should be, particularly with the amount of tax revenue they contribute to the City. Ms. McLaughlin said the development potential on that 10.5 acres is very significant. From a massing perspective, there could be community facilities that do not yield tax revenue, but there could also be tax generating businesses and land uses that would hopefully through the TIF analysis meet the revenue projections to build the infrastructure. Councilmember Nand complimented Parks, Planning & Development and Community/Culture/Economic Development staff who have been working on this for years. She echoed other councilmembers' comments that the property acquisition should be decoupled from consideration of more controversial moves on the Highway 99 corridor, especially under the community renewal plan because the acquisition is such an unmitigated positive for the community. She preferred to discuss the potential acquisition Edmonds City Council Approved Minutes June 27, 2023 Page 13 separately before making a determination regarding a finding of blight or saying 50-year old buildings were dilapidated and potentially needed to be condemned. She pointed out the blight justification derives from the idea that this was a net negative for the community in the 1950s and 1960s when highways were built. However, from a civil rights perspective, they connected communities of color to urban centers with high paying jobs which Highway 99, especially with transit, still does. It provides the opportunity for economic growth to immigrant communities and entrepreneurship, something that needs to be highlighted when discussing the effect that the highway had on that area. Councilmember Buckshnis advised she sent a recent example from the Office of Treasury about the City of Chelan's TIF. She recommended being extremely contentious about TIF especially if it is non -revenue. She agreed private -public partnerships would be great but it was important to define the TIF area and the financing. She agreed with keeping the two separated. 5. APPROVAL OF AGENDA COUNCILMEMBER TEITZEL MOVED, SECONDED BY COUNCILMEMBER CHEN, TO APPROVE THE AGENDA IN CONTENT AND ORDER. COUNCIL PRESIDENT TIBBOTT MOVED, SECONDED BY COUNCILMEMBER OLSON, TO AMEND TO MOVE ITEM 9.5, ADOPTING LEGISLATIVE BLAKE FIX, TO 9.1 AND RENUMBER THE REMAINDER. AMENDMENT CARRIED UNANIMOUSLY. MOTION CARRIED UNANIMOUSLY. 6. AUDIENCE COMMENTS Mayor Nelson described procedures for audience comments. Joan Longstaff, Edmonds, commented on the privilege Edmonds residents have to work collaboratively with the City. She almost opened an office in Magnolia in Seattle in 1980 and in meeting recently with CEOs in the Downtown Business Association and top real estate agents in Seattle, they indicated they do not have that same opportunity. She encouraged citizens to understand the privilege and responsibility they have to speak to the council. She thanked the participants in the mayoral debate, commenting she was very impressed with each of the candidates and how respectful they were of each other. She also recognized Teresa Wippel, My Edmonds News, who moderated the event. She thanked the City for the inclusive playground at Civic Park Playfields, advising her brother was in a wheelchair as a result of a traumatic brain injury. She was interested in the Highway 99 corridor, recalling when she opened her real estate brokerage and was a property owner, there were only a handful of downtown business property owners. Edmonds is often thought of as only the downtown bowl; as Chamber president she tried to foster the idea that Edmonds was composed of several areas. 7. RECEIVED FOR FILING 1. CLAIM FOR DAMAGES FOR FILING 2. WRITTEN PUBLIC COMMENTS 3. OUTSIDE BOARDS AND COMMITTEE REPORTS 8. APPROVAL OF CONSENT AGENDA ITEMS COUNCIL PRESIDENT TIBBOTT MOVED, SECONDED BY COUNCILMEMBER CHEN, TO APPROVE THE CONSENT AGENDA. MOTION CARRIED UNANIMOUSLY. The agenda items approved are as follows: Edmonds City Council Approved Minutes June 27, 2023 Page 14 1. APPROVAL OF COUNCIL COMMITTEE MINUTES 2. APPROVAL OF SPECIAL MEETING MINUTES OF JUNE 12, 2023 3. APPROVAL OF SPECIAL MEETING MINUTES OF JUNE 14, 2023 4. APPROVAL OF REGULAR MEETING MINUTES OF JUNE 20, 2023 5. APPROVAL OF CLAIM CHECKS 6. SUPPLEMENTAL LOCAL AGENCY CONSULTANT AGREEMENT WITH WSP FOR HIGHWAY 99 STAGE 2 7. SUPPLEMENTAL AGREEMENT WITH SCJ FOR HIGHWAY 99 STAGE 2 8. RESOLUTION ESTABLISHING EXPECTATIONS OF EXPENDITURES RELATED TO THE IMPLEMENTATION OF THE MOU 9. COUNCIL BUSINESS 1. ADOPTING LEGISLATIVE BLAKE FIX Police Chief Michelle Bennett explained with the Blake bill, constitutionally it was not enough to just be in possession of a narcotic material for someone to be charged with possession. The laws were changed to require law enforcement give two warnings prior to making an arrest for drug possession. As a result, for the last two years, it has been difficult for law enforcement to make drug arrests because there is no database that records when someone has a drug arrest in another city. A person could easily have received two warnings, but law enforcement would never know it was their third time and could make an arrest. During the last legislative session, the correlation between drug use and retail thefts, increased crime rates, increased fentanyl overdoses, etc. was clarified and the legislature addressed the issue via the Blake fix. Chief Bennett continued, the legislature held a special session in May to address issues with the Blake bill and through a lot of work done by various entities including the Washington State Police Chiefs and Sheriff's Coalition, community members, and government officials, a compromise was struck to encourage people to seek treatment versus an arrestable offense, but also to again made possession of drugs a misdemeanor or gross misdemeanor. The proposed ordinance simply adopts the language in the state law. The state law states July 1 as the effective date; however, the legislation in the RCW that required two referrals prior to arrest has a 90 day clause which will not be repealed until August 14. For all intents and purposes the police department is not able to bypass the requirement for two warnings until the expiration, August 14. Councilmember Nand asked Chief Bennett to clarify for the public's edification, whether once the Blake fix was in place at the county, state and local level, would it lead to people detoxing in holding facilities like jail or would there still be diversion and robust community court available in the City of Edmonds and throughout Snohomish County. Chief Bennett answered it would not negate those options, in fact, the legislation encourages those to continue. Each community/city has a variety of ways deal with such things as community court, pretrial diversion, etc. This legislation encourages treatment and rehabilitation. Councilmember Nand commented unfortunately with the way the system is set up, this is often the easiest way to get someone into treatment versus a voluntary admit through a detox facility due to a lack of available beds. Councilmember Nand continued, expressing the hope that one day society will shift to see this as a health problem versus criminal activity although she was aware there was associated criminal activity. Until then, this is the best that can be done. Chief Bennett commented the best time to address someone's drug use or to have a chance for someone to see the need to get better is the first time not the third time. COUNCILMEMBER OLSON MOVED, SECONDED BY COUNCILMEMBER BUCKSHNIS, TO APPROVE ADOPTION OF THE ORDINANCE IN THE PACKET. Edmonds City Council Approved Minutes June 27, 2023 Page 15 Councilmember Chen commented this ordinance is timely and fills the gap. When the issue arose with the Blake decision, the legislature heard the concerns and came with this fix. Now, with the adoption of this ordinance, the City can address the gap. Council President Tibbott asked for confirmation that the city attorney reviewed the ordinance, that it met the City's standards, and that the council should approve it. City Attorney Jeff Taraday advised his office drafted the ordinance, he modified the effective date clause and he had no concerns with the ordinance. MOTION CARRIED UNANIMOUSLY. Mayor Nelson declared a brief recess. 2. HIGHWAY 99 LANDMARK SITE Parks, Recreation & Human Services Director Angie Feser advised this item is council consideration of the proposed option agreement for what is known as the Highway 99 Landmark property. The agreement will enable the City to investigate the opportunity for development while the property is held off the market. No purchase decision will be made until information is gathered and brought to council at a much, much later date, as long as 18 months from now. She reviewed: • Property information o Address: 24111 Highway 99 o Size 10.06 acres o Tax lots: 11 o Zoned: GC - General Commercial o Purchase Price: $37 million (preliminarily agreed to by the land owner and City representative as a starting point) o Highlights ■ One owner, willing to sell, interest in property having some civic use ■ No significant critical areas ■ Utilities in streets north and south ■ Close proximity to public and non -motorized transportation including Bus Rapid Transit, Interurban Trail Corridor, and light rail station in MLT ■ Burlington Coat Factory lease (January 2029) ■ Community driven development o Due diligence ■ City has been in conversation with land owner for a couple years ■ Completed a zoning memo that identified the highest and best use yields of the property and mixed use development that could be constructed on the site ■ Conducted an appraisal and appraisal review ■ Preliminary conversations with potential partners for development of the site Property potential o Massing study Edmonds City Council Approved Minutes June 27, 2023 Page 16 /a L WKI ( r Y n i 74u o Community visioning process ■ Master planning the site and possibly surrounding area o Council goals o Planning documents ■ Subarea plan ■ Comprehensive plan ■ PROS Plan o Opportunity for public -private partnerships o Discussions occurring in the public regarding options for site ■ Community space ■ Public safety ■ Housing ■ Share Parks & Recreation facilities ■ Civic spaces ■ Community services ■ Commercial ■ Opportunity for reinvestment/revitalization and potential catalyst for Highway 99 development, creating a landmark and gateway into the community Option Agreement o Components ■ Agreement ■ Purchase Agreement — Material Terms (Exhibit B) ■ $100,000 Option Payment Phase Timeline Action Details Activities 1 6 months Exercise of Council decision Community visioning Option $100,000 refundable Due diligence • Purchase agreement Funding options finalized partnerships 2 12 months Agreement Council decision Master Planning/Community Addendum Enacts the Purchase Engagement Agreement (Exhibit B) Due diligence • Earnest Money Deposit Funding options $1 M Partnerships 3 6 months Closing Council decision Purchase executed • Next Steps 1. Council consideration of option agreement 2. Project integration and implementation — how do we get all of the pieces done? Edmonds City Council Approved Minutes June 27, 2023 Page 17 Community/Culture/Economic Development Director Todd Tatum commented this option is an incredible opportunity that provides the City six months of low risk time to coordinate, collaborate and ensure everyone is moving in understanding together and he hoped the council would approve option. He referred to the timeline in the packet that identifies five tasks: • Project management o Contracting plan o Communications plan o Team establishment • Develop a purchase and sale agreement o Negotiate PSA details o Title report o Geotech investigation o Environmental review • Master plan o Contracting o Establish program elements of the site o Conceptual design o Schematic design • Developing financing options o Prepare Tax Increment Finance (TIF) strategy o Bonds o Public/private options • Implementation Planning (2024 and beyond o Ongoing project management o Public/private structure o Team funding ad budget amendments Mr. Tatum continued, there is a lot to examine, manage and integrate, particularly with regard to financing. The function of project management is to plan, execute, monitor and control projects so they meet objectives and effectively manage change. That is a big lift that will have a big impact on staff and council. Making informed, timely and mutual decision is critical to the success of this effort as is clear, thorough communication with residents. A project team and structure is being formed so staff and council have clarity about how the elements of this effort will come together and how to reach timely and informed decisions. One of the first steps is to create a steering committee which would include the council president and another councilmember as plans for community outreach, stakeholder engagement, budgeting and timeline are solidified. Staff is excited to continue the work that brought this opportunity to council and look forward to working with the council and the community. Councilmember Teitzel applauded staff for thinking big, noted this is an exciting prospect. Having said that, he wanted to be clear-eyed, this is a big deal for the City and he wanted to ensure taxpayers would not be overburdened. It appeared the way the option agreement was written, the City would be buying the entire 10 acre parcel. He asked if the property owner would be willing to break up the parcels and the City purchase only 1-2 parcels for park space, a community center, etc. Ms. Feser answered the project began with the City approaching the landowner about the three acres on the eastern half of the property which are undeveloped open space at this time. The City decided not to move forward on just that parcel and it turned into a conversation about purchasing all the parcels. In her conversations with the property owner, she believed he wanted to sell all of the parcels as a unit and has expressed a desire to sell the property by late 2025/2026. City Attorney Jeff Taraday said the core terms of the purchase and sale agreement attached to the option agreement make it so the City can assign part or all of its interest in the purchase and sale agreement Edmonds City Council Approved Minutes June 27, 2023 Page 18 without prior written consent of seller. The only limitation is at least 75% of acreage has to be used for public purposes. The City could assign any acreage of the site to other public entities who want to use the site for public purchases and could also assign up to 25% of the property for for -profit development. He summarized the City would not have to take on the entirety of the site. Councilmember Teitzel relayed his understanding if the City purchased the property, 75% of the 10 acres would need to be assigned to public purposes which would not be revenue generating for the City, only 25% would be revenue generating. Mr. Taraday answered it may be correct, but it may depend on whether a public purpose could occur while the property was owned by a taxable entity; those two things are not always hand -in -hand although they often are. He could conceive of a hypothetical where the property remains in a taxable state and is still used for public purposes. Councilmember Teitzel relayed his understanding the $37 million was a starting point for negotiations. Ms. Feser answered that is the currently agreed upon purchase price. Councilmember Teitzel asked why that number would change. Ms. Feser answered if something was discovered during due diligence that drove down the purchase price, the City could approach the land owner to negotiate the price. At this point in time, the purchase price is $37 million from now until the closing in two years. Mr. Taraday clarified during the six months while the purchase and sale agreement is being formalizing, anything could happen. Once the purchase and sale agreement is solidified, the property owner would not be able to increase the price and would be locked in at $37 million. As Ms. Feser stated, if during the course of the City's due diligence something was discovered that made the property not worth $37 million, the deal would not have to close. Councilmember Nand thanked staff who have involved in bringing this incredible opportunity to the community. She asked if the land owner could get more than $37 million for the property if it were put on the market. Ms. Feser answered that was speculating real estate and it would be difficult to say. Councilmember Nand asked if the relationship with the land owner would be jeopardized if the council did not approve the option agreement tonight. Ms. Feser answered it did not need to be approved tonight. If the option to purchase was not executed with the land owner, it would eventually jeopardize communication and negotiations with the property owner. Councilmember Nand asked if 75% were designated toward public uses, did staff anticipate the City would be able to easily find grant partners to finance the property purchase. Mr. Tatum answered there are a number of grants available to help fund the purchase and development of this property. Public purposes can vary so without a specific public purpose in mind, he could not identify a specific grant. The goal/intent over the next several months is to explore those public purposes and levels of public/private partnership to make this a make feasible project. Councilmember Nand referenced discussions regarding the Unocal property and asked if staff anticipated looping in the state and county legislative delegations. Mr. Tatum answered one of the first steps will be contacting state and federal representatives; that conversation needs to start early and continue as there are number of things on which their help and support will be needed. Councilmember Nand asked if staff anticipated reaching out to neighboring cities about potential interlocal agreements. Mr. Tatum answered staff has discussed that and there has been outreach to other municipalities, exploring uses and programming on the site. Councilmember Nand asked if staff anticipated getting buy -in from the Edmonds School District or Sno-Isle Libraries for usage of the property. Mr. Tatum said he could not speak to that at this point. Councilmember Buckshnis referred to the indication in the presentation that an appraisal was conducted and asked why it was not included in the packet and what the appraised amount was. Ms. Feser said she would be happy to share the appraisal and amounts in executive session. Councilmember Buckshnis Edmonds City Council Approved Minutes June 27, 2023 Page 19 asked about the estimated cash flow from the Burlington Coat Factory and other businesses, noting the appraisal must have included cash flow. Ms. Feser suggested discussing details of the appraisal in executive session. Councilmember Buckshnis hoped an executive session would be scheduled. Councilmember Buckshnis asked how the 75/25 split was determined and why not a 50150 split. Mr. Taraday answered he did not have a lot of detail on it except that it was his general understanding the property owner would not have accepted a 50150 split. Councilmember Buckshnis asked if cottage housing or affordable housing would be considered a public purpose. Mr. Taraday answered it is an interesting question whether affordable housing would be considered a public purpose. That is a detail that will be worked out when negotiating the purchase and sale agreement. Market rate housing would not be a public purpose. To the extent that any portion of the site was used for market rate housing, it would need to be limited to 25% of the acreage. Councilmember Buckshnis observed only 25% or approximately 2.5 acres could be revenue generating like a store. Mr. Taraday answered affordable housing is revenue generating. He suggested Councilmember Buckshnis clarify what she mean by revenue generating. Councilmember Buckshnis commented most of Highway 99 is revenue generating for the City such as car dealerships, restaurants, stores, international district, hospital, etc. Mr. Taraday clarified she meant sales tax generating which would need to be limited to 25%. Councilmember Buckshnis found this exciting, but wanted to drill down on the numbers. The timeline in the packet does not have enough council touchpoints and is very aggressive with regard to TIF. She hoped to have a clearer understanding as this moved through the process. Councilmember Olson relayed her understanding TIF could not be used for 75% of the purchase as TIF is based on projected future revenue. Ms. McLaughlin answered property tax revenue primarily. Mr. Tatum said it is based on the tax increment area. Ms. McLaughlin pointed out the City may purchase the property but may not be the resultant land owner at the end of the process. If the City engages in a public -private partnership, it may be more advantageous for the City not to own the land and negotiate via a development agreement to have public facilities on the site. Mr. Taraday it has not been fully evaluated whether a nonprofit that owned a portion of the site and operated affordable housing on the site would be exempt or subject to property tax. If the nonprofit -owned portion was subject to property tax, then TIF would still potentially apply to that acreage. That is still being evaluated and something the City will need to be sure about before financing anything with TIF. COUNCILMEMBER OLSON MOVED, SECONDED BY COUNCILMEMBER BUCKSHNIS, TO TALK ABOUT THE HIGHWAY 99 LANDMARK SITE AS AN OPPORTUNITY TO VET ITS ACQUISITION VERSUS A PLAN TO ACQUIRE IT. Councilmember Olson agreed the council needed to go through this public process and talk about all the possible opportunities because there is risk involved in a huge capital investment and a huge investment of time and staff effort. The City will need to figure out whether all the things being planned are worth all the other things. She was concerned there was already discussion about the City planning to buy the property. She agreed the six month window was pretty low risk, basically losing the interest opportunity on the $100,000 for six months and staff and consultant time. Her biggest concern was just assuming the council will make this happen because it may not be worth the capital investment, the risk and the time when all is said and done and that will not be known until there is a plan for the site. Her pie in the sky vision is to have arena sports and partner with the Boys & Girls Club and the City where there is nighttime and weekend use by the community like at the Edmonds Waterfront Center. Arena sports is a great revenue generator, there is a need for an indoor sports arena in south Snohomish County, and it is a great location close to major arterials. There is great potential and she was excited about looking into it, but the council needs to know about opportunities on the site before they know if it is worth pursuing. She Edmonds City Council Approved Minutes June 27, 2023 Page 20 was concerned with setting the community up for disappointment if after vetting, it is not the best use of the City's time, money and effort. Council President Tibbott asked if that language changed the option agreement, noting it seemed like semantics. Ms. Feser asked if Councilmember Olson wanted to change components of the option to purchase. Councilmember Olson said she did not see anything in the option agreement that said otherwise, it is not binding, and either party can walk away after six months. Her concern was related to what she heard at the media launch announcement as well as conversations in the media and comment threads. Councilmember Chen thanked the three directors for their efforts and the time they have devoted to this project. He lives in that area and was very excited about the possibility, but wanted to emphasize City government was not in the business of buying, selling, and flipping land. Councilmember Olson raised a point of order, requesting councilmembers speak to the motion. Mayor Nelson ruled point taken. Councilmember Nand commented the motion was putting the cart in front of the horse and it seemed like a more appropriate process to pursue through the steering committee that would be chaired by the council president. At that point it would be appropriate if Councilmember Olson or other councilmember wanted to go through a public process to determine whether to acquire the property or not. She preferred to execute the option agreement tonight or as soon as possible to protect and preserve this incredible opportunity for the community. She did not support the motion. Councilmember Chen said he did not support the motion. Councilmember Teitzel commented the motion was well intended, however, the option agreement as written allows flexibility to vet the purchase without risk. The option agreement accomplishes what the motion proposes so he will vote against the motion.. Councilmember Olson commented the motion may have been misunderstood; her thought was for the council to have a meeting of the minds and agreement that the council should be careful about how they speak about the purchase and be sensitive to the community's expectations if the purchase is discussed as a plan versus a vetting process. UPON ROLL CALL, MOTION FAILED (1-5), COUNCILMEMBER OLSON VOTING YES; COUNCILMEMBERS TEITZEL, CHEN, BUCKSHNIS, OLSON AND NAND AND COUNCIL PRESIDENT TIBBOTT VOTING NO. Councilmember Chen commented the City is not in the real estate business. This area of the City needs a lot of improvements, but the City needs to determine what the community needs before purchasing 10 acres of land. The area needs a police substation and community center. The City needs to do the necessary outreach and buy land that fits the needs, not just buy 10 acres and try to flip the land. COUNCILMEMBER CHEN MOVED, SECONDED BY COUNCILMEMBER BUCKSHNIS, TO REJECT THE PURCHASE OPTION AGREEMENT WHILE WE DO FURTHER EXPLORATION. Councilmember Chen reiterated the City needs to understand the community's needs first and based on those needs, determine how much land is needed. This is not the only property on Highway 99; there are other properties for sale on Highway 99, in Five Corners, etc. He noted $37 million is significantly higher than the assessed value and he agreed council needed to look at the appraisal. It will take the taxpayers a Edmonds City Council Approved Minutes June 27, 2023 Page 21 long time to pay off $37 million and based on the 75/25% assignment, he feared the City may end up in a big hole. Mayor Nelson commented there is a lot of rushing to judgment, noting it is an 18 month process. Councilmember Nand spoke against the motion, stating it is putting the cart in front of the horse. She did not support devoting any staff resources or engaging the community on potential uses for the property without an option agreement to protect the City's right to purchase. It would be cruel and foolhardy to get the Highway 99 community's hopes up that they could have a community center and other wonderful uses without the protection of an option agreement and have a developer outbid the City. The conversation has already started in the community and the public is excited. Their enthusiasm, ideas and engagement needs to be respected by the City dotting it's I's and crossing it's T's via having an option agreement in place before beginning to discuss potential uses of the property. Councilmember Buckshnis expressed concern with how this was rolled out, noting it was an ethics issue but the City does not have a good code of conduct. The council should have held an executive session to talk about the appraisal and look at the numbers so everyone is informed instead of just running on blind faith. A lot of people are excited, it is a great concept but it's like throwing 50 million snowballs at once. This was not in the CIP/CFP, a huge consideration that was troublesome to her. At one point in time there was discussion about 3 acres and now suddenly it was 10 acres and the cost was $37 million which was a lot of money. She has seen TIFs fail terribly and developers make a lot of money because of insufficient code. There is hope and she will support the option even though she did not like how it was rolled out. She hoped to have an executive session to talk about this freely and not be blindsided regarding what's going on. She did not support the motion. Councilmember Olson said what got her attention tonight is the 75% for public use versus commercial; she did not see how TIF would work in that scenario. Second, the property is right at the border of the City and making a $37 million investment there means the City will not have money for other public uses. She recalled comments from residents saying this site on the City's border is not the best place for a police station or even a community center unless it is shared with Shoreline. She expressed a preference to wait a week to make a decision. With the 75%/25% split, she did not see how the council could ultimately move forward with the purchase. She did not want to damage the relationship with the landowner, but that part of the deal makes it unlikely funds would be available to make investments near 220t' or 228' that would serve more of the Edmonds corridor. Mr. Tatum said TIF is not the 100% solution for purchasing this property. The greatest thing about the option is it provides 6 months of worry free/risk free time, followed by 12 months and during that time, the opportunity to work on partnerships, work with legislators, explore grant funding, etc. He knew the property would require a lot of funding sources; the 18-month timeframe allows exploration of a lot of options. He agreed it was possible at the end it may be that none of the funding options will work or maybe the public component is actually revenue generating depending on how it is structured. There is a lot of study to be done to reach a workable project. There is a lot of uncertainty but the timeline provides an opportunity for exploration. Ms. McLaughlin said Councilmember Olson's point about the 75%/25% split in the revenue projection is a valid factor that needs to be considered in the initial TIF analysis to determine if the TIF tool will work. That analysis will be complete before the conclusion of the six month risk free period. The TIF tool would be better used for infrastructure and not property acquisition. A multitude of finance options need to be considered and the revenue projections need to be considered based on the 75%/25% split. Edmonds City Council Approved Minutes June 27, 2023 Page 22 UPON ROLL CALL, MOTION FAILED (2-4), COUNCILMEMBERS CHEN AND OLSON VOTING YES; COUNCIL PRESIDENT TIBBOTT AND COUNCILMEMBERS TEITZEL, BUCKSHNIS, AND NAND VOTING NO. A MOTION WAS MADE BY COUNCILMEMBER BUCKSHNIS AND SECONDED, TO TABLE UNTIL THE COUNCIL HOLDS AN EXECUTIVE SESSION TO FINALLY VET THIS WHICH SHOULD HAVE DONE AT VERY BEGINNING OF TIME. UPON ROLL CALL, MOTION FAILED (3-3), COUNCILMEMBERS CHEN, BUCKSHNIS AND OLSON VOTING YES; COUNCILMEMBERS TEITZEL AND NAND AND COUNCIL PRESIDENT TIBBOTT VOTING NO. Council President Tibbott advised an executive session would be held at the soonest possible date on this topic so the council could be well informed. He asked the building height for the site. Ms. McLaughlin answered it is the City's most generous building height, 75 feet. Council President Tibbott commented that would allow commercial space with approximately 6 stories above and on 2.5 acres, that could be a significant amount. Ms. McLaughlin agreed, especially if there was a publicly funded shared parking facility. Council President Tibbott commented housing on 25% of the site would be a fairly significant income generator. He asked when the $1 million in earnest money was due. Ms. Feser answered it was when the purchase and sale agreement was executed. Mr. Taraday answered it was due when the option was exercised; there was an 18-month option period, the first 6 of which was the preview and at the end of 18 months at the end of 2024, the City would exercise the option or not. Exercising the option means the City was in a binding purchase and sale agreement where the City puts down $1 million in earnest money followed by six months to close. He clarified while theoretically there was no deadline by which the council needed to act on the option agreement, the 18 months would not keep extending. The clock has already started essentially; the council can act tonight or in two or four weeks in the future, but that reduces the due diligence period, it does not get pushed out. COUNCILMEMBER NAND MOVED, SECONDED BY COUNCIL PRESIDENT TIBBOTT, TO AUTHORIZE THE MAYOR TO EXECUTE THE OPTION AGREEMENT BETWEEN EASTERN INVESTMENT CORPORATION AND SOUTHEAST 888 INVESTMENT LLC WITH THE ANTICIPATION THAT WE WILL GO INTO EXECUTIVE SESSION AND THE COUNCIL PRESIDENT WILL HEAD UP A STEERING COMMITTEE WITH A COUNCILMEMBER TO BEGIN A ROBUST PUBLIC PROCESS. Councilmember Olson asked if the reason to proceed before holding an executive would be because waiting for the executive session would reduce the due diligence period. Mr. Taraday explained the option agreement states the option needs to be exercised by December 31, 2024. That date is not likely to change. Regardless of when the city council decides to act on the option agreement, the December 31, 2024 deadline will probably not change. Councilmember Olson asked if the start of the six month window could change. Mr. Taraday answered it was his understanding that could change. To set expectations regarding the executive session, he clarified the only topic that could be discussed in executive session would be the relationship between the option price and the appraised value; everything else would need to be discussed in public so it would be a very short executive session. Councilmember Olson said she will vote no on the motion since it has already been agreed to hold an executive session. Mr. Taraday pointed out since this is a regular meeting, an executive session could be held tonight. Councilmember Nand commented it is incredibly benevolent of the property owner to have such a strong desire that the property be used for the good of the community. Now that everything is public, this is an Edmonds City Council Approved Minutes June 27, 2023 Page 23 incredible opportunity for the City and she wanted to ensure the City's bargaining position was protected while what would occasionally be thorny public discussions occurred related to acquisition of the property, how it would be financed, whether it was a good deal, etc. Under no circumstance did she want the property owner to be spooked by discussions that occur at the dais or in executive session. Transactionally the council needs to protect its bargaining position and options before processing questions related to funding, whether to split up the property, etc. The process needs to come later and she encouraged councilmembers not to put the cart in front of the horse. The council needs to guarantee this opportunity will not go away based on the whim of the property owner by executing this option agreement. She agreed with having an executive session to very narrowly discuss the difference between the appraised value and the $37 million and having a robust public process. She looked forward to the council president's plans for the steering committee. Councilmember Chen was excited about the possibilities related to this potential acquisition, but he did not want to make a mistake by committing the City to $37 million before having a full understanding. He urged councilmembers not to put the cart in front of the horse, to hold the executive session first and then make a decision. Councilmember Teitzel asked if the council approves the option agreement tonight and then learns something in the executive session that causes severe concern, can the council unwind the vote. Mr. Taraday corrected his earlier statement; the effective date is a defined term in the agreement, July 1, 2023 so regardless of when the council acts, the six months start July 1, 2023. In response to Councilmember Teitzel's question, he read key language from the option agreement, "If the parties have not executed such an addendum, for any reason, within ONE HUNDRED EIGHTY (180) days of the Effective Date, Optionor shall return the entire Option Payment to Optionee and this Agreement shall terminate." Council President Tibbott called for a 10 minute executive session. Mr. Taraday advised the executive session would be pursuant to RCW 42.30.110(1)(b), To consider the selection of a site or the acquisition of real estate by lease or purchase when public knowledge regarding such consideration would cause a likelihood of increased price. COUNCILMEMBER OLSON MOVED, SECONDED BY COUNCILMEMBER NAND, TO EXTEND TO 10:30. MOTION CARRIED UNANIMOUSLY. Executive Session At 9:51 p.m., the city council convened in executive session for approximately 10 minutes pursuant to RCW 42.30.110(1)(b), to consider the selection of a site or the acquisition of real estate by lease or purchase when public knowledge regarding such consideration would cause a likelihood of increased price. The executive session concluded at 10:00 p.m. The meeting was reconvened at 10:01 p.m. Councilmember Nand restated the motion: THAT COUNCIL AUTHORIZE THE MAYOR TO EXECUTE THE AGREEMENT BETWEEN EASTERN INVESTMENT CORPORATION AND SOUTHEAST 888 INVESTMENT LLC AND THE CITY OF EDMONDS PURSUANT TO US ENGAGING IN AN EXECUTIVE SESSION TO DISCUSS THE NARROW TOPIC OF THE APPRAISED PRICE AND THEN ALSO ON THE ASSUMPTION THAT THE COUNCIL PRESIDENT AND THE VARIOUS DIRECTORS WOULD ENGAGE IN A ROBUST PUBLIC PROCESS OVER THE NEXT SIX MONTHS RELATED TO USAGE OF THE PROPERTY. UPON ROLL CALL, MOTION CARRIED (3-1-2), COUNCILMEMBERS TEITZEL AND NAND AND COUNCIL PRESIDENT TIBBOTT VOTING YES; COUNCILMEMBER OLSON VOTING NO; AND COUNCILMEMBERS CHEN AND BUCKSHNIS ABSTAINING. Edmonds City Council Approved Minutes June 27, 2023 Page 24 3. CLEAN BUILDINGS ACT - FRANCES ANDERSON CENTER INVESTMENT GRADE AUDIT Facilities Manager Thom Sullivan advised the State of Washington enacted the Clean Buildings Act (CBA) in 2019 which requires more energy efficient standards for aging buildings. The Frances Anderson Center is 95 years old and the last major remodel was 72 years ago. Several infrastructure upgrades have been done since the City has owned the property include new roofs, insulation, electrical, plumbing, etc., but the CBA will address the inefficient HVAC system, gas fired boilers. He reviewed: • Project goals o Aging infrastructure ■ Inefficient and inadequate HVAC serving building ■ Equipment failures and costly emergency repairs o Climate Action Plan ■ City goal to be carbon neutral by 2050 ■ Study is the first step in planning process o Clean Building Compliance ■ Legislation requiring compliance by 6/l/2028 - Frances Anderson Center is 55,000 W Study Scope o Energy Audit ■ Evaluate existing building systems and operation ■ Propose initiatives addressing: - Replacement & upgrades to aging systems - Associated energy savings - Guaranteed project cost and savings - Support planning pathway to compliance Department of Enterprise Services (DES) o Partnering with DES to utilize state program o Provide energy project management, support customers to reduce operational costs What is the role of DES? 0 1986 RCW 39.35: Legislative Authority to DES o Prequalified providers o Project oversight o Contractual framework & coordination o Financial transparency Project benefits o Facility Updates ■ Address facility HVAC needs ■ Improved equipment efficiencies ■ Avoid costly emergency repairs o Community Support ■ Added resiliency to HVAC system ■ Supports needs for cooling center ■ Improve shelter potential o Funding resources ■ Align with grant and rebate opportunity ■ Avoid CBPS compliance issues and costs ■ IRA funding reimbursement Edmonds City Council Approved Minutes June 27, 2023 Page 25 Councilmember Olson commented it was exciting for the community to learn how the City was upgrading its facilities. COUNCILMEMBER OLSON MOVED, SECONDED BY COUNCILMEMBER TEITZEL, TO ACCEPT THE PROPOSAL FOR AN INVESTMENT GRADE AUDIT TO IDENTIFY AND ANALYZE PERFORMANCE BASED CONTRACTING MEASURES AT FRANCES ANDERSON CENTER. MOTION CARRIED UNANIMOUSLY. 4. AWARD CONSTRUCTION CONTRACT FOR CITYWIDE BICYCLE IMPROVEMENTS AND ELM WAY WALKWAY PROJECTS City Engineer Rob English reviewed: • Project Overview Map o Alignment Al: 100t' Ave W from 244t' SW/205'h St SW to Walnut o Alignment A2: Bowdoin Way from 9'h Ave to 84'h Ave W o Alignment A3: 228'' St SW from 80'h Ave W to 78'' Ave W o Alignment A4: Sharrows along 80'' Ave W from 228h St SW to 2201h St SW • Citywide Bicycle Improvements o Bicycle lanes and sharrow pavement markings (-7.5 lane miles) 0 15 new ADA compliant pedestrian raps 0 3 Rectangular Rapid Flashing Beacons (RRFB) systems ■ 9'h Ave/Pine St ■ 100'h Ave/224'h St ■ Bowdoin Way/Pioneer Way o Pedestrian safety modifications at: ■ Yost Park entrance ■ Woodway campus entrance o Traffic signal modifications a5 100'h Ave/220'h St and 100" Ave/SR104 o Pavement widening on 228'h St (80'h Ave to 78'h Ave) • Elm Way Walkway — 8t1i Ave to 9'h Ave 0 700 feet of new curb, gutter and sidewalk (south side) 0 6 new ADA compliant pedestrian ramps o Stormwater improvements (detention system, piping and catch basins) o Pavement striping and signing • Bid results Contractor Bid Results Amount Laser Underground & Earthworks $2,675,267 Kamins Construction $2,682,121 Road Construction NW 2,767,012 A-1 Landscaping $3,135,894 Colacurcio Brothers $3,185,070 Engineer's Estimate $1,997,231 • Construction budget Item Citywide Bikelane Elm Way Walkway Total Contract Award $1,925,350 $749,917 $2,675,267 Construction Mgmt, Inspection & Testing (15%) $288,803 $112,488 $401,291 M mt Reserve 10% $192,535 $74,992 $267,527 1% for Arts local funds $5,452 $7498 $12,862 Total $2,412,140 $944,895 $3,357,035 Edmonds City Council Approved Minutes June 27, 2023 Page 26 • Construction Funding Funding Source Citywide Bike Lane Elm Way Walkway Total Sound Transit Grant $1,365,000 $1,380,000 REET (125/126) $496,655 $535,348 $1,074,394 Storm Utility 422 $338,384 $349,927 76' Overlay Savings 125/1260 $189,255 $189,254 2023 Overlay 125/1260 $62,000 $62,000 2023 Storm Projects 422 $43,522 $43,522 Added Funds 126 REET) $299,230 $27,641 $326,871 Total $2,412,140 $944,895 $3,357,035 *Green = in 2023 budget *Red = additional funds are needed to fund construction • Staff recommendation o Award Construction Contract to Laser Underground & Earthworks, Inc. for $2,675,267. o Authorize a 10% Management Reserve of $267,527. COUNCILMEMBER OLSON MOVED, SECONDED BY COUNCILMEMBER CHEN, TO AWARD THE CONSTRUCTION CONTRACT TO LASER UNDERGROUND & EARTHWORKS, INC. FOR $2,675,267 AND AUTHORIZE A MANAGEMENT RESERVE OF $267,527. Councilmember Olson relayed her understanding the Elm Way Walkway project was quite expensive, commenting it was great to do the projects together so there is less disruption in the neighborhood as well as cost savings. Elm Way is an extremely dangerous situation for pedestrians and she was excited to have the project moving forward. Councilmember Chen thanked staff for moving this project forward. It will provide more connections within the City and improved safety for pedestrians and bicyclists. Councilmember Teitzel asked if the construction budget included the cost of signal changes at SR-104 and 100t' intersection and the pedestrian and bicycle safety improvements. Mr. English answered it includes what was in the original bid package. Councilmember Nand found it fascinating that it costs $3.3 million to pave and build out 700 feet of sidewalk. During the council budget workshop in north Edmonds, there was concern expressed with the perceived delay in street improvements. When one looks at the numbers and sees how time intensive and incredibly expensive it is to build sidewalks, she hoped the community realized why projects take so long. MOTION CARRIED UNANIMOUSLY. 5. RESOLUTION INCREASING VEHICLE LICENSE FEE - TRANSPORTATION BENEFIT DISTRICT COUNCIL PRESIDENT TIBBOTT MOVED, SECONDED BY COUNCILMEMBER CHEN, TO POSTPONE ITEM 9.5, RESOLUTION INCREASING VEHICLE LICENSE FEES — TRANSPORTATION BENEFIT DISTRICT, TO ANOTHER EVENING. Councilmember Olson commented if people have the energy to stay, she would rather the council consider this item. Councilmember Nand commented the council has received public comment that call this a regressive tax and it deserves a robust public discussion. She preferred to move this item to another meeting. Edmonds City Council Approved Minutes June 27, 2023 Page 27 MOTION CARRIED UNANIMOUSLY. 10. MAYOR'S COMMENTS Mayor Nelson thanked for community members and City staff for the wonderful park opening and amazing turnout. With the 4' of July celebration coming up and the increased risk of fire and dangers of fireworks, he reminded of the City's $500 fine for lighting off fireworks. He urged the community not to light off fireworks. 11. COUNCIL COMMENTS Councilmember Olson expressed her commitment to addressing the lack of amenities and the infrastructure needs of the south Edmonds area. Her vote tonight did not reflect a lack of commitment on those items, but instead a concern that it would distract the council from the things they need to act on most. Councilmember Teitzel echoed Mayor Nelson's comment about the wonderful opening of Civic Park Playfields. He expressed disappointment with graffiti tagging at several locations in the park last night when the park has been open less than a week. He urged the public to keep their eyes open and to say something if they saw anyone spray painting or defacing the area. Councilmember Chen assured the public and his family that he cares about Highway 99 and the property the council discussed tonight. His vote tonight was out of caution due to unanswered questions. Moving forward the council will be working with staff and the public to see the project come to fruition with caution. He advised of fireworks in Mountlake Terrace on Lake Ballinger on July 3. The Edmonds side of the park is closed for construction; the best viewpoint is on the Mountlake Terrace side in the boat launch area. Council President Tibbott reported on the grand opening of the park; it was a beautiful day with many activities and it was a lot of fun. He referred to a council special meeting prior to this meeting regarding the 2024 budget where he may have observed just a little excitement about the budget season. Councilmember Nand gave a shout out to the Edmonds Chamber of Commerce who are responsible for the wonderful 4th of July celebrations. The Chamber has a very small staff on a shoestring budget that pull off miracles every year. The new executive director, Ryan Crowther, and staff members Alicia, Erica and Caitlin work extremely hard. She noted many think the City puts on the 4t' of July celebrations, but it is really the Chamber of Commerce. Councilmember Buckshnis said she read all about the opening of Civic Park; it looked like a great time. She had a nice time in Happy Camp, Oregon. She reported she abstained from the vote tonight because she is a numbers person and the council was not given sufficient information. That did not mean she did not support the effort, she will wholeheartedly support it, but an executive session should have been held first instead of throwing 500 snowballs at council. It will be interesting to see how the City proceeds; there is still the comprehensive plan, Perrinville, Shell Creek, and the budget to do and she hoped the City did not lose focus on other issues. 12. ADJOURN With no further business, the council meeting was adjourned at 10:27 p.m. Edmonds City Council Approved Minutes June 27, 2023 Page 28 Nicholas Falk, Deputy City Clerk for SCOTT PASSEY, CITY CLERK Edmonds City Council Approved Minutes June 27, 2023 Page 29