2023-07-20 Special Finance CommitteeFINANCE COMMITTEE MEETING
July 20, 2023
Elected Officials Present Staff Present
Councilmember Will Chen (Chair) Dave Turley, Administrative Services Director
Councilmember Susan Paine (arrived 3:02 p.m.) Jeff Taraday, City Attorney
Council President Neil Tibbott (ex-officio) Scott Passey, City Clerk
Councilmember Vivian Olson
CALL TO ORDER
The Edmonds City Council Finance Committee meeting was called to order virtually and in the City
Council Conference Room, 212 — 51" Avenue North, Edmonds, at 3 p.m. by Councilmember Chen.
2. COMMITTEE BUSINESS
1. Resolution for Annexation into RFA
Mr. Turley explained the resolution is the first step in exploring whether to join the RFA as a member
instead of remaining a contract city. The steps outlined in the RCW include the City passing a
resolution which is sent to the RFA. The RFA then passes a resolution and that allows the two entities
to discuss the City joining the RFA. If a decision is made to join the RFA, the council passes another
resolution stating the City wants to proceed and then the issue is placed on the ballot for voter
approval. The next opportunity to place it on the ballot would be April 2024. He referred to the wording
in Section 1 and 2 which is outlined in the RCW and is the wording requested by the RFA. He relayed
his understanding some councilmembers would like to change the wording.
Questions and discussion followed regarding the resolution starting the conversation but not
committing the City to a certain path; annexation applicable only to Edmonds city limits as South
County Fire (SCF) already direct bills Esperance residents; support for placing the resolution on the
council agenda; concern with language in resolution, "The City requests annexation into the South
Snohomish County Regional Fire..." when the City wants to do more research; determining the
financial impact to taxpayers; preference to do research before requesting annexation; disagreement
that the RCW requires "The City requests annexation..."; past practice of hiring a consultant to
conduct a study before the City signed a contract with SCF; current contract through 2030 so there is
abundant time for study; support for revising the language in Section 1; and cost benefits of
considering annexation into the RFA due to annual rate increases in the contract.
Suggested alternate language:
• Revise Section 1 to read, "...the City requests detailed information, financial and other, for
consideration regarding annexation into the...";
• Retain existing language in Section 1 and add a whereas clause, "We look forward to detailed
financial and other information that will be forthcoming from this process that will aid our
decision."
Mr. Taraday explained the language in the proposed resolution tracks the statute and that language is
significant because, 1) it starts a formal annexation process, and 2) it does not commit the City to
putting anything on the ballot. A policy question for council to consider is whether they are ready to
start that formal process or if they would prefer to have a less formal investigatory period before
starting the formal annexation process.
07/20/23 Finance Committee Minutes,
Questions and discussion continued regarding the City having ample time for investigation, options for
proceeding, editing the resolution during discussion at the council meeting, action and planning the
RCW requires the RFA to do if the council approves the proposed resolution, option for the City to
explore annexation without passing the resolution, whether annexation is a good deal for taxpayers
(same service for less money), whether the cost to be a member of the RFA will be significantly more
than remaining a contract city, how the contract amount the City currently pays is determined, the
City's current control over level of service and indirectly over costs, control residents in the RFA have
via voting for RFA board members, and the possibility that station locations could change in the future
with the purchase of the Value Village site which could affect LOS.
Committee recommendation: Full council.
2. May 2023 Monthly Financial Report
Mr. Turley advised he did not have a presentation, but was prepared to respond to council questions.
Questions and discussion followed regarding YTD sales tax revenue 2023 compared to 2022, funds
moved from Snohomish County LGIP into the Washington State LGIP, concern the majority of the
investment portfolio is in Snohomish County LGIP which has a lower interest rate than the State LGIP
and a recommendation to reverse that, practices in the City's investment policy, timing to withdraw
funds from the Snohomish County LGIP, sales tax collections exceeding property tax revenue, the
auditor's request to change the timing of when property taxes are reported (April instead of May),
building maintenance fund expenditures and why projects are not being done, and change in the
General Fund and Subfunds balance in Q1.
Committee recommendation: Received for Filing
3. Surplus Assets
Questions and discussion followed regarding notifying the council before items are surplused instead
of after the fact, and whether there is a policy related to surplusing assets.
Committee recommendation: Received for Filing.
4. Fund Balance Reserve Policy Discussion
Questions and discussion followed regarding the schedule for review in the policy (every five years),
reserves addressed in the policy (General Fund Operating Fund Reserve (16% of General Fund
expenditures) and Contingency Reserve (4% of General Fund expenditures) for a total of 20%,
reserves required by this policy are not required by the state, conflicting language in the policy
whether the percentages are minimums or maximums, suggestion to correct the wording so the
reserve is not limited to 20%, purpose of the General Fund Operating Reserve and the Contingency
Reserve, amount in both reserves in 2023, reserves as part of the fund balance, and whether the fund
balance policy has an impact on the City's bond AAA rating.
Committee recommendation: Discussion.
3. ADJOURN
The meeting was adjourned at 4:20 p.m.
6:�
SCOTT PASSEY; CLERK