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2023-10-24 Regular MeetingEDMONDS CITY COUNCIL MEETING APPROVED MINUTES October 24, 2023 ELECTED OFFICIALS PRESENT Mike Nelson, Mayor Neil Tibbott, Council President Vivian Olson, Councilmember Will Chen, Councilmember Diane Buckshnis, Councilmember Susan Paine, Councilmember Dave Teitzel, Councilmember Jenna Nand, Councilmember 1. CALL TO ORDER/FLAG SALUTE STAFF PRESENT Dave Turley, Administrative Services Director Todd Tatum, Comm., Culture & Econ. Dev. Dir. Frances Chapin, Arts & Culture Program Mgr. Jeff Taraday, City Attorney Scott Passey, City Clerk Jerrie Bevington, Camera Operator The Edmonds City Council meeting was called to order at 7:04 p.m. by Mayor Nelson in the Council Chambers, 250 5t' Avenue North, Edmonds, and virtually. The meeting was opened with the flag salute. 2. LAND ACKNOWLEDGEMENT Councilmember Buckshnis 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. 4. PRESENTATIONS 1. NATIONAL ARTS & HUMANITIES MONTH PROCLAMATION Mayor Nelson read a proclamation proclaiming October as National Arts and Humanities Month in Edmonds, Washington. 2. CREATIVE DISTRICT REPORT Community, Culture & Economic Development Director Todd Tatum and Arts & Culture Program Manager Frances Chapin reviewed: • Washington Creative Districts o Established by the State in 2017 o Coordinated by the Washington State Arts Commission (ArtsWA) Edmonds City Council Approved Minutes October 24, 2023 Page 1 ■ Modeled after Colorado's Creative Districts program o Goals to celebrate creative diversity and foster economic vitality o ArtsWA provides technical assistance, professional support, and small grant opportunities for certified programs o Creative District program is one tool in the tool box Defining the Creative Sector ■ The Creative Economy's contribution to the state's GDP is 10.3% ■ Creative Sector entities (businesses and not for profits) - defined to include broad range of creative activities, supplies for creation, technical support for creation, and lifelong learning - What is included? • Galleries, art stores, makers, artists, design, software development, multi -media, retail featuring hand crafted, event venues, performance, event planning, arts education, learning, museums, craft food and beverage and more History in Edmonds 0 2014 Community Cultural Plan update recommended economic impact study of arts & culture in Edmonds 0 2017-8 Economic Impact Study recommended City apply for new State Creative District certification o Edmonds certified as the State's first Creative District at the end of 2018 • Washington Creative Districts - 13 certified, 8 pending Twisp Chewelah 0• Coupevillee Newport port Townsend Langley Edmonds Bainbridge lelando � p r�I.., ah B—ftonO OBurien Olympia Ellensburg 0 Moses lake 4PTenino Yakima Kennewick• Wzlla MR./ College Place Certified Creative Disbic1 Vane— �Acii Sbge planning • Edmonds Process and Five -Year Work Plan o Process ■ The process to complete the original application and work plan included extensive community outreach and participation. ■ The original Work Plan goals emerged from this participation. Once certified, an Advisory Committee was created with representatives from creative sector nonprofits and businesses who met monthly for the past five years. ■ The process for reviewing work done and creating a new 5 year Work Plan included a Creative District Advisory Committee retreat last spring. From this work the new plan was developed, building off of goals in the original plan and accomplishments in the first five years. ArtsWA Certification Criteria o Identify contiguous area - include a mix of creative sector uses within its boundaries o Walkable, distinguished by physical, artistic, and cultural resources o Concentration of arts and cultural organizations, and creative enterprises o Complementary non -arts businesses, such as restaurants Edmonds City Council Approved Minutes October 24, 2023 Page 2 o Vigorous arts and cultural activity, such as art walks, festivals, concerts, and community gathering places o Community generated 5 year Work Plan o Governance structure and budget Creative District Focus Areas in Review o Work Plan Areas & Accomplishments ■ Area A. Strengthening and expanding the creative identity of Edmonds - Established and convened Creative District Advisory Committee; developed new brand identity for use in advertising for both tourism and business attraction; expanded marketing activities; and implemented new wayfinding and related signage program for both vehicles and pedestrians ■ Area B. Leveraging and connecting creative experiences in Edmonds - Placemaking- inventoried art experiences in public realm; activation of public space; completing 4t' Avenue Cultural Corridor concept design, and explored potential for internships/mentoring ■ Area C. Retaining and attracting creative businesses and nonprofits in Edmonds - Drafted directory of creative sector organizations and tourism assets Creative District - Facebook Sponsored Ads Lessons learned over the past five years o Internal lessons learned: ■ The development of effective organizational structure takes a significant time commitment. ■ The CD program resulted in closer connectivity and collaboration within the Edmonds arts community. ■ The Creative District brand has been embraced by a broad range of local businesses and organizations. Edmonds is now widely recognized as an arts community but also as a Creative District which is becoming a powerful "brand". ■ The more we communicated with the other Creative Districts, the more we saw the value of this program - there is strength in numbers. ■ Funding from the State was very important and enabled several projects to move forward. o As a member of the state's program: ■ With the growth of the Creative District program, it has become clear that the Creative Districts offer a comprehensible, accessible picture of what the state's creative economy looks like in practice. ■ As the program has grown, communication with other Creative Districts has increased our awareness of our own value and the value of the Creative Districts to the state's economy and quality of life. ■ As the first Creative District, we struggled initially to market ourselves effectively, recognizing that the strength of the program lies in its distribution across the state and its broad messaging appeal. o Recommendations for the State's program: ■ The Creative Districts collectively hone outreach efforts and encourage ArtsWA to continue to be a conduit for sharing and amplifying advocacy efforts. ■ The State CD program should work to create a marketing plan for the collective districts. ■ Continue to emphasize at both state and local levels the importance of collaboration and the ways a Creative District program is a tool that can strengthen the diverse creative sector within a District, within the broader community of that District, as well as regionally across the state. ■ Continue to advocate for funding streams specifically allocated for Creative Districts. The Next Five Years o Core values & Guiding concepts: ■ Collaborative - City departments and local businesses/nonprofits Edmonds City Council Approved Minutes October 24, 2023 Page 3 ■ Inclusive - Envisioned as a "hub and spoke" model, the CD is a central catalyst tied to other parts/neighborhoods of the city through connections with businesses and organizations ■ Intentional Visibility of Arts & Culture - The community intentionally incorporates creativity as a priority in programs and projects o Year 1 (2024) ■ Creative Sector Summit ■ Reengage the community - what is the CD and why is it important ■ Asset map of creative sector (organizations, creatives, events, venues) ■ Activation of public spaces ■ Connect CD to larger community - i.e. Internships ■ Work group for funding strategy for 4th Avenue Cultural Corridor ■ Work group for workforce development/infrastructure needs ■ Work group for marketing coordination ■ Advocate for funding and staff at both City and State levels o Year 2 (2025) ■ Incorporate CD in City Comprehensive Plan documents ■ Implement use of asset map ■ Collaborate on city-wide creative sector marketing strategies ■ Develop informational tools on internship programs ■ Develop pilot intern program for CD ■ Expand creative experiences in CD public realm ■ Advocate for next level of 4th Avenue Corridor design ■ Survey creative sector organizations about needs for space ■ Identify public and private funding opportunities to support CD programs o Years 3-5 (2026-2028) ■ Work plan builds on initiatives and programs listed for Years 1 & 2 o HB 1575 ■ Providing councilmanic authority for cultural access program ■ What is Cultural Access - A publicly funded program that expands community access to cultural programs in science, heritage and the arts - Created by state legislature in 2015, providing taxing authority to cities and counties for 7 years - Voter or council approved 0.1 % increased sales or property tax. Average household would pay $15-$30/year - Increases public access to cultural activities - Expands cultural education activities for public school students at both schools and cultural facilities, including transportation - Provides sustainable funding for not -for -profit science, heritage and arts organizations - A Snohomish County -implemented cultural access program could generate approximately $20 million and an Edmonds -implemented program could generate approximately $1.3 million to support cultural access programs Next Steps for Recertification 1. Finalize draft recertification package with stakeholder input 2. Meet with ArtsWA for application feedback in November 3. Submit final recertification application Councilmember Nand said her questions are related to the equity and inclusivity aspect of the creative district activities and arts and cultural outreach. There is a strong perception that children should have access to arts and culture opportunities through school. A lot of that is being cut due budgetary pressures, for example, she recalled booster groups asking for old instruments to be donated to school music programs Edmonds City Council Approved Minutes October 24, 2023 Page 4 for low income students. There is a perception for adults who cannot afford to rent a music or art space or do not have enough room in their living space to pursue art, music, performing arts or writing space, that that is a luxury not accessible to certain people. In light of that and efforts to put public emphasis on accessibility to the arts, would it make sense to host art, music or maker space in City owned buildings similar to an artist or musician in residence. Ms. Chapin responded that was an interesting question that is discussed a lot by the arts community because space is at a premium for everyone, particularly those without resources. Space is also at a premium within the City which makes it particularly challenging. That is a great question to raise with the creative district because a lot of the discussion is about space and where to make and create. There are performance venues and wonderful organizations that provide things for students such as the ECA and Driftwood Theater who both have programs that go into schools, the nonprofit Music for Life provides instruments, etc. It is much more challenging for adults. She did not have an answer but acknowledged it was a good question. Mr. Tatum said a lot of the arts organizations have programs that actively draw people into their spaces. A lot of the conversation is about the space the City is providing to arts organizations and that conversation needs to deepen over the next several years. There is a strong creative sector economy in the community; it is not unusual for a city to support that sector with some form of infrastructure. The City provides space for arts organizations, for example in the old Public Works building. There needs to be more discussion to give the creative district work group, city council and the state clear opportunities for investment to help alleviate some of those pressures, stresses and inequities. Ms. Chapin added the community makes a lot of effort to provide affordable access to people to experience arts and culture events. The Arts Commission puts on the Writers Conference every year which is the most affordable, accessible conference in the region and very high quality. That is a priority in the community, but the issue of space is always addressed in the cultural plan which will be updated starting next year, a great opportunity to have bigger conversation regarding the need for space and how the City can be a partner in that. Councilmember Nand asked about looking at a youth artist or poet on an annual basis as part of a mentorship program that would be accessible to someone from an underrepresented background. She asked if that could be included in the work plan. Ms. Chapin said that is something the arts commission has talked about. The arts commission recently started poets perspective which is a way to engage both youth and adult applicants. That is a little different and does not require as much management as a youth poet for the year would. The ECA is very active with their statewide spoken word program. Councilmember Nand observed the Port has buskers authorized to do live performances and there are often people performing by Starbucks downtown. She asked if there was a program within the creative district for busking. Ms. Chapin answered there is not an official program; it has always been something where people come and perform. Art Walk has a program where they bring in musicians to perform at specific sites; individual businesses arrange to have someone perform outside their business on Art Walk night. Council President Tibbott said he loved that the branding is coming together and he has been seeing more and more signs around the city which creates enthusiasm for the creative district. Even though the creative district has been in existence for five years, it is still a new program, still in its infancy and there are a lot of opportunities. When his daughter moved back to the area, she wanted to get involved with arts and had opportunity make costumes for Driftwood Players. In terms of a directory, there are a lot of opportunities if people have a name and phone number to contact. Councilmember Paine commented it was exciting that the creative district had reached the five year mark. She asked about spreading the largess and power of the program outside the creative district boundaries, for example encouraging people to visit dining opportunities on Highway 99 and other amenities located in other neighborhoods. Mr. Tatum responded marketing uses the idea of Edmonds as a creative hub with creative institutions, not all within the creative district boundaries. Marketing uses the creative district Edmonds City Council Approved Minutes October 24, 2023 Page 5 branding and messaging and describes ways to spend the day having creative experiences in Edmonds. Live/work spaces do not need to be in the center of the geographic boundary. As the creative district relationship is deepened with the state, it needs to respect the fact that communities are regional and citywide and can help provide funding for things like live/work space that may not be in the most expensive core of a city, but provide workforce support in the periphery that supports the core at an affordable level. Councilmember Paine asked for example if the multicultural association wanted to put on an event but they are located outside the creative district, would there be partnership opportunities with creative district. Mr. Tatum referred to the core values of inclusive and collaborative. Institutions within the geographic boundary have inclusivity outside the boundary. Councilmember Paine appreciated hearing that it includes all of Edmonds. Ms. Chapin said staff has been grappling with this since beginning, figuring out how to encourage internships and mentorships to learn more about the creative industry. The educational aspect via internships and mentorships is very important and is a way of linking throughout the community. That is a role the creative district can encourage to happen with individual businesses. Councilmember Chen applauded staff for including lessons learned in their presentation, commenting this was the first report/presentation he has encountered with that information. As a private business, he accumulates lessons learned every year so he can improve. He suggested that was a good model that other City departments, board and commissions, etc. can capture. Councilmember Olson wanted to ensure the public knew about Art Works, located in a City building that is not being used for the WWTP yet. There are at least a couple years ahead to thoroughly use and enjoy that space. It is a very economical way for people to take art classes, use equipment for art projects, etc. She asked if staff knew about the internship programs through Edmonds College. Ms. Chapin advised they did. Councilmember Olson commended staff on developing the hub and spoke discussion in the context of recertification because it meets the needs and desires as city and likely the needs and desires of the state to be more inclusive and more equitable. ArtsWA certification criteria in the council packet states there is a contiguous area, walkable and distinguished by physical artistic and cultural resources. There is a concentration of arts and cultural organizations which limits the creative district to a certain space with certain characteristics. The proposed approach is a way around that. Councilmember Buckshnis commented even though she is retiring, she will still support the creative district. She observed the $75,000 in the budget for the cultural element has dropped off and she hoped the cultural element would not be removed from the comprehensive plan. Ms. Chapin suggested addressing that in the budget presentation later on the agenda. She explained the cultural element had to be postponed this year, the intent is to begin the cultural planning process in 2024. Councilmember Buckshnis observed there should be a carryforward in budget. Mr. Tatum advised there has been a selection process and it will be a carryforward item. 5. APPROVAL OF AGENDA COUNCILMEMBER PAINE MOVED, SECONDED BY COUNCILMEMBER TEITZEL, TO APPROVE THE AGENDA IN CONTENT AND ORDER. COUNCIL PRESIDENT TIBBOTT MOVED, SECONDED BY COUNCILMEMBER OLSON, TO ADD DISCUSSION ABOUT COUNCIL BUDGET CALENDAR AS COUNCIL BUSINESS ITEM 10.3. AMENDMENT CARRIED UNANIMOUSLY. MAIN MOTION AS AMENDED CARRIED UNANIMOUSLY. 6. AUDIENCE COMMENTS Edmonds City Council Approved Minutes October 24, 2023 Page 6 Edward Benyas, Bothell, the new executive director of the Cascade Symphony Orchestra, reported last night was the symphony's opening night performance at the ECA, 600 people attended the start of the 62" d season. The symphony is very successful, people come to the symphony, they go downtown and contribute to the economy by going out to eat before and getting drinks afterwards. He invited City leaders to attend "Europe, a Symphonic Journey" on December 10 and 11, hosted by Rick Steves,. The orchestra will play music accompanied by images from all over Europe and commemorative t-shirts will be on sale in the lobby. He and his wife moved to the area three months ago after retiring from a three decade career in Illinois as a university professor. They love Edmonds, but are living in Bothell until they find something in Edmonds. Nora Carlson, Edmonds, a resident of the Westgate neighborhood, recalled previously speaking to the council about creating safer intersections at school crossings. After a few years of persistence, a positive result occurred with improvements made or still to be made at 96t' & 224', along with 96t' and 220' near Westgate Elementary. She appreciated the council's request for support and action. Tonight her request has more urgency and the council's response is vital to the community and the health of the environment. The climate crisis is certainly real and the City needs to make a concerted effort to respond in a meaningful and effective way sooner rather than later. Edmonds needs to do its part to live up to America's commitment to stop the negative impacts of climate change. Edmonds has already fallen behind cities in the region by not implementing the 2010 climate action plan. The time to act is now; taking courageous steps now such as figuring out the best way to hire a climate action manager like other cities have done to lead efforts to address climate change. With the great honor of being selected as the first designated creative district in Washington State, she envisioned the City could have an innovative approach to stemming the progress of climate change in Edmonds. Darrol Haug, Edmonds, a member of the economic development commission and the EDC liaison to the creative district advisory board, said the EDC is responsible for helping Edmonds build jobs and revenue and his comments are offered from that perspective. The creative district can help add jobs and revenue, but it needs to be more inclusive than just the bowl. He urged the City when recertifying the creative district to consider making the boundaries all of Edmonds to take advantage of objectives related to inclusivity. This may help recruit software companies for example to locate in the hospital district and receive grants they would ineligible for if not in the creative district. The City has always affirmed its commitment to the arts and used the creative district as one of the vehicles to expand that role. He referenced the legislature's latest tool for providing greater access to culture, the director of Inspire Washington recently showed the creative district advisory board how the City could obtain $1.3 million/year to provide greater cultural access in the community, revenue that could be used to support educational elements of creative district entities. For example, a program that would rotate among creative district entities to encourage families to come to Edmonds every weekend to expand cultural awareness at one of the creative district entities. Ziggy, Edmonds, who runs the arts supply store on Main Street, said he often has conversations with people about art, their experience, and what they want for themselves and their children. He emphasized the need for the opportunities suggested by Councilmember Nand. People visit the store every day looking for opportunities for their kids, whether it is somewhere to further develop their skills or just somewhere safe and interesting to be for a couple hours after school. He supported looking at the development of a makers space in Edmonds, somewhere that is a reliable, hospitable and desirable third place for people to be without necessarily having to spend money to be there, and easily accessible by public transit so people outside the creative district can share the benefits. He summarized these are things that people come into his store and ask for every single day. Lora Hein, Edmonds, spoke in support of budgeting for a climate action manager. To make progress on the climate action plan, the City needs a climate action manager. Without a climate action manager, the City is falling behind meeting necessary goals. Hiring a grants manager would be a fiscally responsible way to provide for both with no harm to the City's financial situation. This expense as well as the costs of too Edmonds City Council Approved Minutes October 24, 2023 Page 7 little action in addressing the clear and present climate crisis will only become greater in the future if the City does not act now. Edmonds has citizens and community volunteers ready and willing to do their part. Their efforts can be more effective with the support of a climate action manager. The time to act is now; this cannot be put off. The future of Edmonds, and more importantly, the future of children growing up in Edmonds depends on the council's decision. She implored the council to make the right choice. Comments provided via Zoom by Greg Ferguson, Edmonds, a member of climate advisory board, were interrupted by technical difficulties. His written comments are included below: The last time we had as much CO2 in the atmosphere as we do now was 3 million years ago. There were giant camels roaming the forests of Antarctica, large parts of the earth would have been uninhabitable by humans, and sea levels were 70' higher - about the elevation of Edmonds City Hall. There is no scientific uncertainty about climate change, it is happening now and impacts will be accelerating in the coming decades (see the figure attached below). We are not only not reducing emissions but they increased last year by 2ppm, as they have for the last 11 straight years (see the figure attached below). Climate is not something that will be affecting other people in other places. Edmonds is a front line coastal community. Our response involves two main elements, mitigation, that is reducing emissions, and adaptation, which is responding to what will be happening. Taking as one example of impacts that we will need to adapt to - sea levels are likely to be 4.3' higher in 77 years in Puget Sound and they won't stop there. For reference, think about the Christmas flood we had last year and add 4' to that. Our waterfront will not survive without taking action. Options include protection, adaptation, or a managed retreat. We need to figure out what the plan is and we need to start working on the plan now. A few notes on the CAM position: • A bunch of us retired volunteers, with little professional climate experience in this field by the way, are not going to solve these climate issues. We need a full time expert. • This manager would work on all of our environmental issues. Things like stormwater control, watershed protection, tree canopy, are all climate related issues along with the direct climate impacts. • Sharing this position with nearby cities has been suggested. However, these other cities do not share our climate threats, they, for example do not have a large waterfront area under threat and steep slope, salmon bearing streams. • Edmonds is not overwhelmed by city employees, we have a low ratio of employees to population (0.6%), compared to the rest of the state and other nearby cities. For example, this ratio for Lynwood and Mountlake Terrace is twice ours. Let's fix the budget issues and get to work protecting our future. We need to act now by hiring a climate action manager. 7. RECEIVED FOR FILING 1. CLAIM FOR DAMAGES FOR FILING 2. PARKS, RECREATION & HUMAN SERVICES DEPARTMENT - 2023 Q3 ACCOMPLISHMENTS 3. WRITTEN PUBLIC COMMENTS 4. OUTSIDE BOARDS AND COMMITTEE REPORTS 8. APPROVAL OF CONSENT AGENDA ITEMS COUNCILMEMBER OLSON MOVED, SECONDED BY COUNCIL PRESIDENT TIBBOTT, TO APPROVE THE CONSENT AGENDA. MOTION CARRIED UNANIMOUSLY. The agenda items approved are as follows: APPROVAL OF COUNCIL COMMITTEE MEETING MINUTES OCTOBER 10, 20232. Edmonds City Council Approved Minutes October 24, 2023 Page 8 3. APPROVAL OF REGULAR MEETING MINUTES OCTOBER 17, 2023 4. APPROVAL OF PAYROLL AND BENEFIT CHECKS, DIRECT DEPOSIT AND WIRE PAYMENTS. 5. APPROVAL OF CLAIM CHECKS AND WIRE PAYMENTS 6. INTERNATIONAL DISTRICT PERMANENT BANNER DESIGN PROJECT 9. PUBLIC HEARINGS 1. PRESENTATION AND PUBLIC HEARING ON REVENUE SOURCES Administrative Services Director Dave Turley reviewed: • Why are we having this presentation tonight? o RCW 35.33.057 states that "prior to the final hearing on the budget, the legislative body or a committee thereof, shall schedule hearings on the budget or parts thereof' • What is the purpose? o When putting a budget together, we start with understanding our revenues. One purpose of this presentation is to help you understand City revenues to help us make expenditure decisions, another is to give you context later this evening when you decide whether to recapture our banked capacity, and/or increase our property tax levies by 1%. o For both this and the property tax agenda item, tonight is an opportunity to hear comments from the public and for council to discuss whether to adjust our property tax levies for next year. • Budget priorities o What is in the proposed budget in addition to ensuring our commitment to maintaining ongoing city services? ■ Investment in Safe Places to Walk and Drive — In this budget the mayor is prioritizing pedestrian safety. Included is increased funding for traffic calming and for red light cameras which will improve safety for both drivers and pedestrians. Also included is a proposal to add a grants manager, a position that would help bring in additional funds for sidewalks and other city infrastructure. ■ Improving our Parks and Green Spaces — This budget prioritizes upgrades to Mathay Ballinger Park, improving the water quality in the Edmonds Marsh, restoring Perrinville Creek, and responding to the climate crisis by adding a climate action specialist to manage the City's climate response. ■ Highway 99 Revitalization — This budget includes funds for continued improvements to the Highway 99 corridor, reflecting our commitment to that vital area. • Citywide revenues by fund o About 51% of revenues are in the General Fund, another 34% in the water, storm and sewer related funds E enue sources Edmonds City Council Approved Minutes October 24, 2023 Page 9 • General Fund Revenues by Category o About 45-60% of General Fund revenues are made up of property taxes and sales tax. o Property taxes - very predictable and consistent - but little increase, even during period of inflation. o Sales taxes- unpredictable and more volatile Other Other Sales and Utility T- 13% o General Fund - Other 40%) ■ These are things like charges for services, fines and penalties, grants, and other misc. - Planning & Development - Building permits and related fees - Parks & Recreation - Program fees for things like classes • If reduce expenses for programs, may reduce revenue ■ Outside Revenues - Agreements with Woodway and Edmonds School District, Distributions from the State (e.g. liquor and marijuana taxes), Fines and Penalties - - 90 revenue line items in total General Fund Tax Revenue (2017 through 2022) o Growth in sales tax flattenine out General Fund Tax Revenue (2017 through 2022 -- Sales Tax Property Tax EMS Tax Othe, T—, 12,000,000 10,000,000 — - — 8,000,000 -- —__-- 6,000,000 4,000,000 2,000,000 2017 2018 2019 2020 2021 2022 • Inflation o This chart goes back to 2003, showing that we experienced the highest inflation during the last 20 years in 2021 and 2022 Edmonds City Council Approved Minutes October 24, 2023 Page 10 -12-month percentage change. 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[nrr rca- II [ gureau of I ahnr [taeirrirr r' • General taund Revenues — Yroperty faxes o Very predictable and consistent, BUT lag behind during inflationary periods o Presentation to follow later this evening • General Fund Revenues — Sales Tax (-34%) o Retail Sales Tax— 21% o Other Sales Taxes (utilities, criminal justice, leasehold) 13% 2023 Iff II ADD,= 10D00.W0 9.WO.OW &ODD000 7.000.0D) Q W 0.t100 5.000.OW J.WO.WO 3 W0,000 i M0.000 I.000.000 0 ]AN FFB 1114R APR MAY R.N R.i ALJG SFP OCI NOV D£C �Cmal Yer �BvEeet Pnor 1'er Sales and Use Tax DW.000 11.000.000 10.000.000 9.W0.000 &WO.OW 7,WO,OW 4000OW }. u— J.000 000 3,Op0.O110 '_OOD 000 1.000.000 0 JAN FED MAR APR MAN ' JIJN Jl,'L Al. SEP OCT NOl' DBC --Yea �Bvuget Pnv Yee • Real Estate Excise Tax (REET) o A significant revenue source that can help to alleviate pressure on the General Fund (BEET does not affect most household in a given year) REET Revenue 2019 Actual 2020 Acual 2021 Actual 2022 Actual • General Fund Revenues and Budget Planning o What you need to know: I 2023 Estimate 2024 Budget Edmonds City Council Approved Minutes October 24, 2023 Page 11 ■ Transfers — inflation has hit the City hard, and during 2023 council has authorized budget amendments that have caused the General Fund to be forced to utilize restricted fund balance. To resolve this we are proposing to transfer most of our remaining unspent ARPA funds, as well as money from the Building Maintenance sub fund, into the General Fund. This action will immediately resolve this issue and fully restore our fund balances in the general fund. ■ Revenues — Council has not taken action for several years to increase General Fund revenues in any significant fashion. During the coming months we will need to work together to analyze various options, which may involve changing our relationship with South County Fire, may include a property tax levy, or other forms of revenue generation. ■ Expenses — The administration has taken significant action to reduce spending in 2023, including holding positions vacant and reducing spending wherever possible. Departments were given 2023 spending target reductions which they agreed to meet. During the coming months we will need to work together to explore any options that may be available to improve efficiencies and reduce spending where possible. ■ Trends — Our sales tax revenues remain strong, although growth is now just keeping up with inflation. REET revenues have suffered due to slow growth and development in the city. However, the inability to increase property tax collections, dating back 20 years, has caused a serious revenue shortfall whereby our revenue increases are falling behind current and projected inflation. ■ Budget for 2024 — our city remains on solid round. As part of this budget, the Administration has presented a plan that, if followed, will ensure that the city continues in a strong financial position into 2025 and beyond. Next steps o Open public hearing o Accept comments o Close public hearing o This is presentation only, no action is asked from council after the public hearing. Its purpose is to inform council and the public and to help council make budgetary decisions later Mayor Nelson opened the public hearing. Glenda Krull, Edmonds, asked whether the intersections that would benefit from the red light cameras had been identified, whether a study or analysis had been prepared, has there been an analysis or study of how much revenue the cameras will generated and will that information could be shared with the public. If the City feels more money needs to be spent on safety, she agreed crosswalks should be improved because they are horrible to walk across even on a bright, sunny day. As a walker in Edmonds, she relayed she has had several near misses at crosswalks. She questioned including the implementation of red light cameras in the budget if the intersections had not been identified. Darrol Haug, Edmonds, spoke regarding revenue source, advising the finance department likely has a lot of historic data, some of which has been provided tonight, that would help a part-time council with no staff and a general public that simply doesn't know to be on the same page regarding how to collectively make decisions about running the City. As shown in the presentations, there are different patterns for each revenue source. Edmonds could take a cue from Shoreline and develop a citizen -based effort to create long term revenue forecasting. This would facilitate an understanding of how sustainable some plans are for providing public service. In the post -pandemic world, all sorts of activities are undergoing adjustments and even total reset. How people work, entertain themselves and buy things are all changing. Sales tax revenues are a major funding source, sales tax on auto sales is a major part. Where the car is delivered determines where the sales tax goes. The sale of a mid -priced auto generates the same taxes as 8,000 Dick's burgers so the City needs to be concerned about the vulnerability of some of its revenue streams. He suggested assessing how changes in some of these elements could impact future revenues. New revenue sources also present Edmonds City Council Approved Minutes October 24, 2023 Page 12 opportunities. He referred to his earlier comments about the cultural access program that could be developed to bring more families to Edmonds for cultural education. Edmonds does not have a board or commission that addresses increased revenue sources; the council may wish to create a citizen -driven thinktank to help determine vulnerable revenue sources and potential new revenue sources. He joked sitting in council chambers shivering, a possibility is storing cold things in the room. With no further public comment, Mayor Nelson closed the public hearing. Councilmember Nand said it's no secret she is skeptical about the red light camera program. She sees the need for the school zone cameras, but has a lot of questions about implementing a red light camera program in Edmonds, specifically related to potential revenue. The budget estimates the City would issue 280 tickets/month and generate $4 million in revenue/year. According to her calculations, generating $4 million with tickets averaging $200 would require issuing over 1,600 tickets/month. She was concerned about the administrative and logistic impacts to the court with people contesting tickets. She has seen how Lynnwood's court operates; there are dozens of people contesting tickets every day. She reached out to Judge Rivera and she directed Court Administrator Uneek Maylor to determine if additional FTEs will be required. Councilmember Nand clarified her questions were how many tickets would need to be issued to generate $4 million in revenue, the impacts on court staff and if additional FTEs or contractors would need to be hired to process the additional legal activity within the municipal court that could be anticipated from issuing the amount of tickets required to generate $4 million in revenue. Mr. Turley answered he did not have the per ticket calculation. It is assumed five school zone cameras will come on line in January which will give warnings for a month and begin issue tickets in February, so 5 school zone cameras generating infractions for 11 months of the year. The budget includes six red light cameras. The police department does a study to determine the most dangerous intersections which are then proposed for cameras. That is to ensure cameras are really to address traffic and pedestrian safety. Mr. Turley continued, staff then comes to council and asks for approval to proceed with the project. Following council approval, the vendor working on the school zone cameras will verify the study done by the police department and then the cameras can be installed. The revenue projection is based on red light cameras in place for half a year, hopefully longer if there is no foot dragging related to implementing the program. Tickets are $130/each. The revenue Lynnwood generates was used plus the traffic flows on the streets they have cameras on was compared to traffic flows on the streets in Edmonds to develop a ballpark comparison based on Lynnwood's data. The estimates are low to avoid overestimating revenues. Some information is included in the decision package; he can provide more information regarding how many tickets are estimated to be issued per camera per intersection. Mr. Turley agreed it will result in additional workload for the municipal court. The administration did not want to propose hiring someone to handle the additional workload until the addition workload happens. If additional staffing is needed, that can be done quickly. Councilmember Nand advised that will affect the net revenue added to the General Fund. She asked how that assumption was built into the 2024 proposed budget. Mr. Turley answered for the first year it is assumed the number of infractions will not increase from zero in January to 5,000 February. School zone cameras will come on slowly and the red light camera will be installed later and there will be a better idea at that time about the additional workload. He summarized there is not an additional FTE in the 2024 budget for the municipal court. Councilmember Nand asked if the company that runs the red light cameras receives fee for each ticket issued or is it a monthly flat fee. Mr. Turley answered it is a monthly flat fee; it is the same fee whether there are a lot of infractions or a few infractions, so there is no incentive for the vendor to generate more infractions, their incentive is to keep the cameras working. Edmonds City Council Approved Minutes October 24, 2023 Page 13 Councilmember Nand strongly encouraged throwing out Lynnwood as a comparator because of Alderwood Mall and 1961; Lynnwood draws tens of thousands of commuters every day, especially during the holiday season. She referred to the statistic that 80% of people who get a ticket in Lynnwood don't reside in Lynnwood, noting Lynnwood's population is only 18,000. Edmonds has a really nice waterfront, but does not have anything like the Alderwood Mall unless the cameras target ferry traffic which she feared would deter people from using the Edmonds ferry and using the Mukilteo ferry instead. Mr. Turley agreed Lynnwood has Alderwood Mall which generates a lot of traffic; Edmonds has Highway 99, where some of the cameras are proposed, which has about 35,000-40,000 cars/day. While not a mall, Highway 99 is a very high traffic area. To Councilmember Nand's concern that some of the people traveling Highway 99 are Edmonds residents, Mr. Turley pointed out lot of them are traveling through. For example he has driven Highway 99 hundreds of times and has never lived in Edmonds. Mr. Turley found it highly suspect to believe a driver who knows there are traffic cameras in Edmonds, especially because there are traffic cameras in many surrounding cities, would drive to Mukilteo and around to avoid Edmonds and be able to run red lights in Mukilteo. A driver knowing there are red light cameras in Edmonds would drive more safely and stop at red lights versus driving around to Mukilteo. Councilmember Nand said she knows many people who refuse to drive in Lynnwood because they have gotten caught by a red light camera doing a rolling stop and not a full stop and have had to take time off work to contest the ticket. In addition, a lot of people of color feel they get racially profiled because of Lynnwood's decision to use their roads as a revenue generating source which leads to over -policing. She remained very skeptical and would prefer Edmonds not follow the City of Lynnwood in this matter. Mr. Turley said the studies he has seen show red light cameras do not lead to over -policing and if anything it has the opposite effect because patrols can be diverted to other areas because the cameras take care of speeding and red light running instead of officers. Councilmember Nand said the City of Lynnwood decided that a lot of people use their roads to get to the mall and they can make a lot of money pulling people over. Councilmember Teitzel said the council has received input from citizens that state law may require city council take action to investigate the red light camera possibility and initiate studies themselves to determine the right intersections for red light cameras. The first time the council saw the proposal for red light cameras was in the budget when it was received 2%2 weeks ago so council did not initiate this action. He asked if the council is required to take that action before considering red light cameras. City Attorney Jeff Taraday answered the council is not required to take that action before considering red light cameras; council action is required before implementing the cameras. The council can decide whether they like the idea; some code changes and other things will need to come to council before the cameras can be fully implemented. Councilmember Teitzel said he understood that, but asked if the law requires the council to initiate its own studies of which intersections deserve red light cameras. Mr. Taraday answered the study has to come to council for council approval, but he did not think it had to be initiated by the council. Councilmember Buckshnis preferred to see the school cameras installed first. She also supported having a vetting session and public hearing on the red light cameras. She has heard some of the same comments Councilmember Nand has; she has never gotten a red light camera ticket but her sister has. She agreed a rolling stop could generate a red light camera ticket. She was unsure if the revenue source should be included in the 2024 budget. Councilmember Buckshnis recalled in 2021 when interest rates were low, the City issued $2.3M in bonds for the building maintenance fund. That was discussed by the finance committee last year and it specified the funds were for building maintenance. She asked about transferring the $2 million in bond proceeds into the General Fund or was the $2 million accumulation of building maintenance money from another source. Mr. Turley answered it was from the 016 Fund. Councilmember Buckshnis observed the bond proceeds were moved into Fund 016. She recalled when those bonds were issued, other bonds were consolidated. Edmonds City Council Approved Minutes October 24, 2023 Page 14 In response to comments that the red light cameras capture rolling slow stops, Mr. Turley said the red light cameras are first and foremost a public safety issue and not just cars crashing in the intersection. For example, his wife was entering an intersection and a car making a very slow, rolling stop hit her, knocked her over, injured her wrist and her wrist is still sore to this day. Even though slow rolling stops might not total a car, it is a public safety issue for pedestrians and vehicles. Councilmember Olson said the Edmonds Police Department has initiated a study and has the information regarding the intersections. She asked if the studies and data would be provided when it comes to council for consideration. Mr. Turley agreed the police department has identified dangerous intersections for cameras. He has not seen the data himself but believed it would be shared with council. Councilmember Olson said she has been on the receiving end of a lot of complaints and concerns from residents about reckless driving and high speeds so she was not as automatically opposed red light cameras as some other councilmembers. Relying on it in the budget is why the council is talking about it. She took exception and was offended by staff saying the City was on solid ground because that solid ground assumed $4 million in revenue from red light cameras, using a $6.5 million ARPA patch and $2 million that was set aside for deferred maintenance. It also assumes there won't be any budget amendments despite knowing the police contract is being renegotiated and there will be approximately a 10% increase. She wanted to be honest and she did not feel that was an honest assertion. She was interested in seeing the information related to red light cameras, and being open to the possibility it may be a program that is appropriate for Edmonds, but it is dangerous to assume that large amount for that many intersections. The council was completely on board with the school zone cameras. She suggested separating the revenue from school zone cameras versus red light cameras so the council knows the revenue they can count on versus what they are still considering. Councilmember Olson referred to the assertion that permits only cover the cost of processing. Residents are interested in DADUs and although there is time before the City has to implement them based on the state mandate, they could be implemented sooner. If the City was generating more than the cost to process those permits, that could be a way to generate more revenue this year. She asked if that was true, that the cost of processing permits is just a break even. She noted the City should be implementing DADUs because the people are asking for it. Mr. Turley said he is not an expert in how permit fees are calculated, but it is his understanding a study is done every 2-4 years to compare the costs of permitting and adjust rates accordingly; it is not allowed to be profit center, to use permit and inspection fees to do anything other than support the planning & development department. Further details can be provided by Planning & Development Director McLaughlin. If permitting activity goes up, it generates more revenue, but may require hiring more staff to handle the activity. He summarized the revenues and expenses kind of match. In response to earlier points, Mr. Turley said this has not been a fun year to put the budget together. The administration was tasked with a big job to put together a sound, solid budget that would put the City on solid ground which he believed they did. Many things in the 2024 budget are estimates; that's what a budget is, a projection. If council approves expenses in the budget and takes away a good chunk of revenue, the City won't be on solid ground and that won't be the fault of the administration. The council and the administration need to work together to ensure these revenues come into the budget. Councilmember Paine said discussing ways to generate revenue is not a fun conversation and requires being more creative. She recalled during the presentation regarding red light cameras there were six intersection scattered around including 100t1i & SR 104 and 76'1i & 220'h. She described driving to tonight's meeting, she was nearly T-boned at Olympic View Drive and Puget Drive by someone who did not stop at the red light. She agreed with Councilmember Nand that there are likely to be additional expenses associated with red light cameras. There will need to be an understanding of how much and to include estimates in the budget for those and other expenses. The budget anticipates 6 cameras but 12 dangerous intersections have been identified. She emailed staff asking for the location of those 12 intersections, noting they are in areas Edmonds City Council Approved Minutes October 24, 2023 Page 15 where there have been a lot of accidents. For example 100t1i & SR 104, she knows three people who have been hit by cars at that intersection. The council needs information, calculations and formulas. Councilmember Paine continued, recalling there is always an attachment to the budget regarding revisions to permit fees. She agreed permits are a cost center, are intended to be self-supporting and cannot make a profit. She recalled two years ago, there was an amendment to allow the City to charge for attorney fees for technically difficult permits such as wireless cell cabinets which she hoped had been implemented. Councilmember Chen suggested when talking about revenue, the council also needs to talk about expenses. Inflation has an impact, but it is not totally to blame. Spending habits and staff headcount also need to take some of the responsibility, recalling HR's presentation last week on their efforts to recruit 60+ people and transitioning out about 20 for a net gain of 47 staff in the first 9 months of the year. A combination of factors are responsible for the City's financial situation. He agreed the City was far from being on solid financial ground at this point. There is work to do and the council and administration need to work together to resolve it. Councilmember Chen continued, transferring $2 million from the building maintenance fund to the General Fund for day-to-day operations is very costly because the City issued bonds, meaning the City incurred costs issuing the bonds and is paying interest on borrowed money. The deferred maintenance was needed which is why the City borrowed money. The proposed transfer will further delay that maintenance and transfer money with interest incurring. The red light cameras have to be for safety and should not be targeting certain areas or considered as a revenue generator. The study results from the police department and other resources need to be reviewed to ensure the red light cameras are related to public safety and not for the purpose of generating revenue. With regard to the ARPA fund transfer, Councilmember Chen said that is needed for an immediate patch, but Congress' intent was to use those funds to help out small businesses and other one-time expenditures. He hoped the City would only use enough ARPA funds to patch the hole, and leave some for critical, one time needs. The budget also assumes there will not be any RFA or fire service expenses in 2025, with the assumption the City joins the RFA. That may be a premature conclusion and other options may need to be considered. He reiterated his comment about the need to consider cutting expenses along with generating revenue. He was hopeful during council discussions, there will be opportunities to cut expenses. Councilmember Nand agreed it was not appropriate to view the red light cameras as a revenue generating exercise and it was very inappropriate to target one area of the City with the red light cameras . She was sick and tired of the Highway 99 community being referred to as an income generating part of town; everything that everyone considers unpleasant like car dealerships and red light cameras that generate a lot of money for City government, go into that part of town so the other parts of town are much more pleasant. Conversely, public safety in the Edmonds bowl is a radar sign that voluntarily slows drivers to 25 mph, huge safety bumps, and extra wide sidewalks. The Highway 99 community is being told that public safety has to look like red light cameras which she felt was very inappropriate. 2. PRESENTATION AND PUBLIC HEARING ON PROPERTY TAXES Administrative Services Director Dave Turley relayed at the request of council, he will go off script and do show and tell of the Assessor's website. The council's budget workshop on Thursday, October 19 included a great presentation by the Snohomish County Assessor regarding property taxes. He demonstrated property tax information available on the Snohomish County Assessor's Office website by clicking on Tax Distribution, and entering a parcel number. Mr. Turley reviewed: • Why are we having this presentation tonight? Edmonds City Council Approved Minutes October 24, 2023 Page 16 o RCW 84.55.120 States that we must "hold a public hearing on revenue sources for the district's following year's current expense budget." (General Fund) What is the purpose? o In our case, Property Taxes make up about 33% of GF budget, excluding transfers. One significant purpose of this presentation is to give you context when you decide whether to increase our property tax levies by 1%. o A complete and detailed view of revenues and expenses, and fund balances, are included in the Mayor's Proposed Budget. Introduction: o Washington State property tax laws are among the most complicated in the entire country. o There are many sources out there that I can direct you to if you would like more details on the intricacies of Washington State property tax laws. One very good, concise description can be found at http://mrsc.org/Home/Explore-Topics/Finance/Revenues/The-Property-Tax-in- Washington-State.aspx o A law was passed in Washington State 20 years ago that limited property tax increases to 1 %/year. Examples of other jurisdictions facing General Fund shortfalls o King County— tweet from King County Executive Dow Constantine regarding major shortfalls in the General Fund o Poulsbo - Kitsap Daily News: Poulsbo looks at options to bring in more revenue o City of Seattle — Seattle Times: As budget shortfall looms, Seattle City Council debates need for new revenues • How do we compare to other cities in Snohomish County? o 2023 Levy Rate for Cities in Snohomish County: Ir $9.OD[1a Sg a000 $7 000a $e o000 55 000a S+ 000a $' noon S2 0ao0 Si OD a o e a w 0 ¢� oµ A x ¢ 5'�� � c S¢,¢ ';` . rP�c Jcc Property Taxes make up about $15.9 million, or 25% of the General Fund budget (Budget Book page 27) Edmonds City Council Approved Minutes October 24, 2023 Page 17 General Fund Revenue Budget by Category o Property Taxes that go to the City of Edmonds make up only 10.2% of the Property Tax bill paid by the typical Edmonds homeowner o This declined from 10.3%, 11.2%, and 14.6% in the previous years Chart: Budget Book page 27) —099 2022 PROPERTY TAX RATE PER $1,000 OF AV • What would be the estimated annual impact per household on increasing the 2024 levy? (the average AV in Edmonds is $896,700) Regular Levy 1% $ 106,852 Approx. # of Households 17,845 Annual Increase per Household $ 5.99 EMS Levy 1% $ 42,861 Approx, #of Households 17,845 Annual Increase per Household $ 2.40 Regular Levy 1%+Banked Capacity $ 633,282 Approx. #of Households 17,845 Annual Increase per Household $ 35.49 Number of households in Edmonds is 17,845 per the 2020 US Census I o Our banked capacity is $526,430, which results from not taking the full 1% allowable for the last five years. This is the full amount that Council could still levy if it wished. • What would be the estimated annual impact per household in increasing the 2024 Regular levy by 1% and adding the banked capacity? Edmonds City Council Approved Minutes October 24, 2023 Page 18 Edmonds Residence AV Est)mated Rate I per thousand) AV per thousand X Rate The formula Is: AV / $1,000 X Rate Average Residence 5500,o00 AV S1 AI AV S M7+00 S SCIUS00 S 1.000,000 S 0.6%831542" S 1169683154244 $ 0.6%83154244 S 39G 70 S S00.00 S l oco.00 Increase by 1% S Ga s S 3,48 S 691 Add Banked Capacity (assurne 17,e45households) S 29Y,1 S 16AS S 329:1 Average increase per 1111 S 3535 S 19.93 S 39.S • Senior Citizen / Disabled Persons Exemntion for 2023 tax vear Status Income Level Amount of Reduction A $0 to $38,591 Exempt from excess levies (ie: local school levies) and Part 2 of the state school levy imposed under RCW 84.52.065(2), plus a reduction of assessed value of 60% or $60,000, whichever is greater B $38,952 to $47,167 Exempt from excess levies and Part 2 of the state school levy imposed under RCW 84.52.065(2), plus a reduction of assessed value of 35% or $50,000, whichever is greater, not to exceed $70,000 F-7y $47,168 to $55,743 Exempt from excess levies and Part 2 of the state school levy imposed under RCW 84.52.065(2) • Senior Citizen/Disabled Persons F,xemnticln for 2024 Tax Status Income Level Amount of Reduction A $0 to $54,000 Exempt from excess levies (ie: local school levies) and Part 2 of the state school levy imposed under RCW 84.52.065(2), plus a reduction of assessed value of 60% or $60,000, whichever is greater B $54,001 to $64,000 Exempt from excess levies and Part 2 of the state school levy imposed under RCW 84.52.065(2), plus a reduction of assessed value of 35% or $50,000, whichever is greater, not to exceed $70,000 C $64,001 to $75,000 Exempt from excess levies and Part 2 of the state school levy imposed under RCW 84.52.065(2) • Property Tax Decision for tonight: Does Council wish to add the banked capacity, as well as increase either the Regular Property Tax Levy or the EMS Levy by 1% over last year? (Amounts provided by the Snohomish County Assessor's Office) Edmonds City Council Approved Minutes October 24, 2023 Page 19 Adding036 Adding1% Adding 1%+Banked Amount levied last year $ 10,685,180.54 $ 10,685,180.54 $ 10,695,180.54 Add 1% - 106,851.81 633,281.70 Add New Construction 29,052.71 29,052.71 29,052-71 From Previous Slide: Utilities 4,600.45 4,600.45 4,600.45 Refunds and other Assessor Adjustments 29,126.21 29,126.21 29,126.21 Adding only 1% to the regular levy adds about $5.99 per household per year. ESTIMATED Regular Levy for 2024 $ 10,747,959.91 $ 10,854,811.72 $ 11,381,241.61 Adding 1% to the EMS levy adds about $2.40 per household. EMS Levy Or adding 1% plus the banked capacity Adding0% Adding1% No Banked Capacity Would add $35.49 per household per Amount levied last year $ 4,286,135.47 $ 4,286,135.47 $ - year. Add 1% - 42,86L35 Add New Construction 11,653.88 11,653.88 Utilities 1,832.65 1,832.65 Refunds and other Assessor Adjustments 1L616.41 11,616.41 ESTIMATED ENS Levy for 2024 $ 4,311,236.41 $ 4,354,099.76 0 Next Steps: o Open Public Hearing o Accept comments o Close Public Hearing o After the public hearing, council needs to discuss the alternatives and decide on 1% or 0% increases on both the Regular and EMS levies, as well as whether to recapture the city's banked capacity on the Regular Levy. Then we will prepare an ordinance reflecting the decision arrived at tonight and place it on the next available Consent Agenda. ■ Action Needed: - Motion to approve a 0% increase to the Current Expense (Regular) Levy, or - Motion to approve increasing the Regular Levy by 1%, or - Motion to approve increasing the Regular Levy by 1% plus the banked capacity. - Also need a second motion to approve a 0% or 1% increase to the EMS Levy. Mayor Nelson opened public hearing. Darrol Haug, Edmonds, commented property taxes are a mystery to everyone; if your home value goes up, do your property taxes go up? If your home value goes down, do your property taxes go down? Most people say yes to both those questions; 50% of the time that answer is wrong. People need to understand how property taxes work, it is pretty complicated. He suggested a presentation on the website that helps people learn about complicated issues such as this. Due to higher assessed values in Edmonds, tax dollars are actually exported to the rest of Snohomish County, to schools, and to the library. The council packet shows raising regular property tax levy and the EMS levy by the 1% allowed by the initiative enacted by the legislature in 2001; 1% does not cover inflation. Labor costs for union and non -represented employees and growth rates all exceed 1 %. Those increasing costs need to be covered in order to sustain city services. The council should vote in favor of the 1 % increase in property taxes, not just for this year but also the banked capacity. It will not solve the problem, but it will help and a do a few good things. He thanked Councilmember Buckshnis for her efforts over the years to help residents understand taxation and budget. He congratulated the council for their efforts this year to help the public understand taxes and the budget. This is a public hearing with limited scope and time does not permit him to offer ideas regarding how to tackle this inflationary problem so he will correspond with councilmembers with more ideas related to inflationary pressures on the budget. Kim Bayer-Augustavo, Edmonds, said in order to comment on the property tax public hearing, she needed to go back to the revenue presentation because they are intertwined. She found the revenue presentation included too many fear tactics; for example, sales tax revenue is relative to inflation and consumer spending and she did not see it spiraling as Mr. Turley indicated. She urged councilmembers not to fall prey to the Edmonds City Council Approved Minutes October 24, 2023 Page 20 plea for more money in property taxes especially those seeking reelection. The council cannot continue to raise taxes; there is slush in the budget and she urged the council to cut the fluff and get back to the basics. Pet partisan projects need to go and there are too many with this administration. She urged the council to do what they were elected to do, represent the citizens by cutting expenses and not raising property taxes. Debra Arthur, Edmonds, said she is more concerned about taxes on utilities and keeping them at a decent amount than she is about an increase in property tax. A $35.49/year increase is nothing, it is $4/month. She supported the increase and did not think most property owners would have a problem with it. With no further public comment, Mayor Nelson closed the public hearing. As Councilmember Olson began making a motion, Councilmember Buckshnis raised a point of order, suggesting a question and answer period before a motion. City Clerk Scott Passey advised a motion was not out of order. Mayor Nelson ruled point not taken. COUNCILMEMBER OLSON MOVED, SECONDED BY COUNCILMEMBER PAINE, TO APPROVE INCREASING THE REGULAR LEVY BY 1% PLUS THE BANKED CAPACITY. Councilmember Olson echoed one of the commentors who said a 1% tax increase does not keep up with inflation. There have been some very bad years with regard to inflation and the council has not approved a property tax increase in a long time. As shared in the presentation, this is approximately $500,000 citywide with the amount distributed evenly. Had she better understood the way taxes were assessed sooner, and she apologize to the residents that she did not understand it better and sooner, she would not have been voting no on the 1% increase each year. She recommended future councils approve the 1% increase each year because everything the City buys, whether labor or lumber or services, is going up at a rate higher than 1%. Due to the very difficult times with the budget this year, the council needs to approve the banked capacity. She recognized the increase would be felt a little more this year than it will in subsequent years when only the allowed 1% increase is approved. Councilmember Nand said due to the severe budget issues the City is facing, unfortunately the council will need to approve the 1% and the banked capacity. During her presentation, Snohomish County Assessor Hjelli said in regard to the slide about potential relief for low income and seniors, her staff have paper packets they use to help people with disabilities and/or are elderly and who may have computer access issues complete the necessary forms. She expressed support for the City making those paper packets available and helping people who are negatively impacted such as people with disabilities or elderly on a fixed income apply for relief. She asked if that would be feasible. Mr. Turley assumed the City could help people fill out the form although the application has to be submitted to Snohomish County. Councilmember Nand assumed people who are adversely impacted by a $40 increase in their property taxes would need a lot of help. Those are individuals the City should connect with household support grants and other human services. The incredible inflation the City is facing is unfortunately the reason for taking this leap; $40 may not sound like a lot but the banked capacity is 5%, a total of a 6% increase which is significant to a lot of people and she wanted to ensure the people at the margin do not feel like they are being thrown under the bus. Mr. Turley advised it is not a 6% increase, it is only a'/2% increase in property taxes because only 10% of what someone pays comes to the City so the 6% increase coming to the City is only a %z% of the overall bill. Councilmember Teitzel commented this is always a difficult discussion but especially in an election year because some voters will say they will not vote for a councilmember who approves this property tax increase. However, the council has not approved an increase since 2018 and inflation has vastly outstripped the City's ability to generate revenue. He did not see another choice at this point so he will support the motion. As the council thinks about the impact on citizens, it is not just a property tax increase, there will Edmonds City Council Approved Minutes October 24, 2023 Page 21 also be increases in utility rates, and the EMS levy, and he wanted to ensure that everyone who qualifies for a reduction knows how to obtain it even if they do not speak English. He expressed interest in exploring that outreach further. Councilmember Chen thanked Mr. Turley for demonstrating the Snohomish County Assessor's site. When it comes to a tax increase, the City is in a situation where it is short of revenue to fund operations and needs the additional funds generated by a property tax increase. The council has been banking the property tax increase for years and now the City need the money to function. He supported the motion, but like other councilmembers mentioned, he wanted to ensure people who need help can get that help either by being aware that assistance is available, help with filling out forms, etc. He volunteered the Asian Service Center to help the Asian -speaking population, commenting outreach may be needed to other non-English speaking populations. It is not just the City proposing an increase, the school district is also considering issuing bonds to build new schools and raise money, which also impacts taxpayers. With staff s commitment to assisting vulnerable residents who need help, he will support the motion. Councilmember Buckshnis referred to the slide in the presentation with the estimated annual impact to the average household, summarizing a 1% increase would generate $106,852; the 1% + banked capacity generates an additional $526,430. She asked if the banked capacity was for five years. Mr. Turley answered yes, advising the numbers in the slide were provided by the county assessor so they are correct. Councilmember Paine pointed out the 1% was not taken in a couple of high revenue years. Taking the 1 %/year increase is a best practice and it is unfortunate the council did not take it each year. She was glad the council was having this discussion and it is great for the community to have this information. It's unfortunate the City has to continue to do this, but it is a structural problem created by 1-747. She will support the motion. With regard to the City's commitment, Councilmember Olson wanted to ensure people have access to programs, but in her opinion it did not necessarily have to be from staff. The Waterfront Center has volunteers who help people prepare their taxes and perhaps something similar could be set up through the Waterfront Center and other charities where the paperwork would be available and assistance provided instead of using staff time. With regard to the 5.9% increase, she noted that was partially because the 1% increases compound. Councilmember Teitzel was committed to combing the budget to find every penny of expense savings possible. It is not just blindly asking for revenue increases, the council will be looking for additional cost savings to ensure as lean a budget as possible is delivered. COUNCILMEMBER BUCKSHNIS MOVED, SECONDED BY COUNCILMEMBER TEITZEL, TO EXTEND FOR 30 MINUTES. MOTION CARRIED UNANIMOUSLY. Councilmember Buckshnis defended what has happened over the last 13 years. She recalled the City started doing pay as you go and utility rates spiked between 2010 and 2019. There were some good revenue years but there was also the Great Recession, synthetic interest rates that were low for many years, and then high inflation because printing money spikes inflation. It is important to realize this will be very impactful to residents because there will also be utility rate increases. She was committed to looking at the budget to cut as much as possible. It is unfortunate utility rates have spiked so much over the last ten years. In response to Councilmember Olson's comment, Councilmember Nand said while she did not want to unfairly burden staff, government has an important obligation to provide services to vulnerable members of the community, especially when they will be negatively impacted by this property tax increase as well as utility rate increases. The City cannot expect nonprofits to step in with their limited capacity to help the most vulnerable and easily hurt members of the community; the City has to directly help provide those Edmonds City Council Approved Minutes October 24, 2023 Page 22 resources and be seen as a source to provide that assistance. She has already started a conversation with Director Antillon regarding the utility rate increase and accessibility to utility assistance programs. MOTION CARRIED UNANIMOUSLY. COUNCILMEMBER BUCKSHNIS MOVED, SECONDED BY COUNCILMEMBER CHEN, TO PASS A 1% INCREASE TO THE EMS LEVY. MOTION CARRIED UNANIMOUSLY. 10. COUNCIL BUSINESS 1. YEAR IN REVIEW / DECISION PACKAGE PRESENTATION - COMMUNITY CULTURE & ECONOMIC DEVELOPMENT (CCED) Community, Culture & Economic Development Director Todd Tatum reviewed: • Organization Economic Development & Community Sery e Todd Tatum Administrative Arts&cultural Communications Assistant Community Services Services Program StrategisVPublic Diversity Commission (PT) Progra m Coordinator Manager Information Officer Coordinator g (PT) Cultural Arts Program SPe cialist • Program Areas o Neighborhood City Hall ■ Front Desk ■ Rent ■ Construction ■ Space use and interdepartmental coordination o Community Services ■ Communications ■ Intergovernmental Relations ■ Special Projects ■ DEIA Commission o Economic Development ■ LTAC ■ Tourism ■ BID ■ Economic Development Commission ■ Creative District o Cultural Services ■ Arts Commission - WOTS - Concerts - Public Art - Exhibits ■ Tourism ■ Promotion ■ Creative District o Communications Edmonds City Council Approved Minutes October 24, 2023 Page 23 ■ Launched Instagram account ■ 103 press releases as of 10/24/23 ■ Translated 11 board recruitment notices into three languages (Spanish, Korean, Chinese) ■ Reach 2 1 K households via print newsletter ■ Produced in person State of the City, simulcast online and TV ■ Produced promotional video for new Fix It app ■ Increased local and regional news coverage online, in print, radio, and TV o Community Services ■ Staff Diversity, Equity, Inclusion & Accessibility Commission - Continue the Diversity Film Series - DEIA Commission grant program - $2000 ■ Increased community outreach and support activities such as Lunar New Year; Pride Event; Community Fair; Juneteenth Event Economic Development o ARPA funding: ■ Account `B" shall be the "Edmonds Rescue Plan Household Support" account - Likely to grant the entirety of the $920,000 allocated to household grants this year ■ Account "C" shall be the "Edmonds Rescue Plan Business Support" account - No funds were disbursed from this account ■ Account "D" shall be the "Edmonds Rescue Plan Nonprofit Organization Support" - Disbursed final $79,000 of grants ■ Account "E" shall be the "Edmonds Rescue Plan Job Retraining Program" - Disbursed additional $108,300 to Edmonds College - Additional ARPA distributions $210,000 to Edmonds School District for SINC positions o Edmonds Tourism Marketing ■ Consolidated a talented local team of marketing professionals ■ Focused on improving the branding and delivery of tourism messages ■ Increased organic social media ■ Continued to build web presence and work with regional publications such as 425 and The Seattle Times ■ Continued the Holiday and Winter Markets ■ Created the Edmonds Community Fair ■ Supported non-profit events through LTAC grants ■ Continued to promote the Creative District ■ Staff Economic Development Commission o Economic Development Decision Packages ■ #610-24001 Business Improvement District - This decision package was developed by the BID and approved by the BID board in August 2023 FISCAL DETAILS 2024 Operating Expenditures 140.000.61,558.70.31.00 SUPPLIES 10,650.00 140.000.61.558.70.41.00 PROFESSIONAL SERVICES 67,500.00 140.000.61.558.70.41.40 ADVERTISING 19,975.00 140.000.61.558.70.49.00 MISCELLANEOUS 4,370.00 Total Operating Expenditures 102,495.00 Total Expenditures 102,495.00 Revenues 140.000.321.99.000.00 ED! ASSESSMENT FEE -110,626.00 Total Revenues -110,626.00 Net Budget -8,131.00 ■ #610-24002 Lodging Tax Fund Budget - Tourism Promotion Edmonds City Council Approved Minutes October 24, 2023 Page 24 - This decision package allocates Lodging Tax funds. The LTAC approved the allocation of funds on June 15, 2023 FISCAL DETAILS 2024 Operating Expenditures 120.000.31.575.42.41.00 PROFESSIONAL SERVICES 72,400.00 120.000.31.575.42.41.40 ADVERTISING 55,000.00 120.000.31.697.73.55.17 TRANSFER TO FUND 117 4,000.00 Total Operating Expenditures 131,400.00 Total Expenditures 131,400.00 Revenues 117.100.397.73.120.00 TRANSFER FROM FUND 120 -4,000.00 120.000.313.31.000.00 HOTEUMOTEL EXCISE TAX -120,941.00 Total Revenues -124,941.00 Net Budget 6,459.00 #610-24004 Grant Specialist - This decision package requests a new position for a grant specialist. This specialist's work will focus on bringing new money in to the city, specifically from the Inflation Reduction Act and the Bipartisan Infrastructure Law. This position will focus initially on preparing grants for multi -modal infrastructure and on preparing a cross -department grant -writing work plan to support the city's most strategic initiatives. FISCAL DETAILS 2024 Operating Expenditures 001.000.61.557.20.11.00 SALARIESIWAGES 142,450.00 001.000.61.557.20.23.00 BENEFITS 32.550.00 001.000.61.557.20.31.00 SUPPLIES 5.000.00 512.000.31.518.88.35.00 SMALL EQUIPMENT 3.000.00 Total Operating Expenditures 183.000.00 Total Expenditures 183.000.00 Net Budget 183.000.00 #610-24008 Household Support Grants - Household Support Grants have used the Edmonds Rescue Plan Funds to supplement Edmonds resident's income during the COVID pandemic recovery. Households who meet strict criteria are eligible for a $2,500 grant that can help pay for household expenses that they are struggling to pay. FISCAL DETAILS 2024 Operating Expenditures 142.000.39.518.63.41.00 COMMUNITY RELIEF FUNDS 300.000.00 Total Operating Expenditures 300.000.00 Total Expenditures 300.000.00 Revenues 142.000.333.21.019.00 CORONAVIRUS RELIEF FUND-300.000.00 Total Revenues-300,000.00 Net Budget 0.00 Cultural Services - o WOTS: Nationally known three day Writers' Conference. In 2023 - 197 registered in person for conference, 47 attended the online preconference, Over 30 hotel night stays. Attendees from 11 states/Canadian provinces. Presenters from 13 states o Public Art: Permanent Public Art - 2023: Civic Park art by Clark Wiegman completed, Highway 99 permanent replacement Banner Project in progress, 2024 start Library art project (approved by city council in 2020), Temporary Public Art - On the Fence installations, Poet's Perspective poetry, Mika's Playground concert performance at Civic o Summer Concerts in the Parks - expanded to 7 concerts at City Park, 1 at Hickman, 14 at Hazel Miller Plaza o Tourism Promotion Award - $20,000 Lodging Tax funds allocated in 2023,$32,000 proposed 2024. Supports nonprofit arts organization to promote events that attract tourists Edmonds City Council Approved Minutes October 24, 2023 Page 25 o Decision package #610-24005 Municipal Arts Fund Budget ■ Increase $100,000 for Library project from ending cash, $39,535 from 332 Fund - The proposed public art includes two projects: one on Hwy 99 for permanent metal banners in the International District, and one in the Creative District for the Library site. Both are near term implementation as one-time expenditures FISCAL DETAILS 2024 Operating Expenditures 117,100.64.573.20.41.00 PROFESSIONAL SERVICE 100.000.00 Total Operating Expenditures 100.000.00 Capital Expenditures 332.000.64.594.76.65.00 CONSTRUCTION -PARK FACILITIES 39.535.00 Total Capital Expenditures 39.535.00 Total Expenditures 139.535.00 Net Budget 139.535.00 o Decision Package #610-24011 Lodging Tax Fund Budget - Arts Promotion - Increase to $43,400, use ending cash ■ $31,400 LTAC approved budget on June 15, 2023. Additional $12,000 for tourism promotion grants pending approval by LTAC due to higher than forecasted ending balance and increased need to attract audience as local arts organizations continue to recover from impacts of pandemic FISCAL DETAILS 2024 Operating Expenditures 123.000.64.573.20.41.40 ADVERTISING 43.400.00 Total Operating Expenditures 43.400.00 Total Expenditures 43.400.00 Revenues 123.000.313.31.000.00 25 % HOTEUMOTEL TOURISM TAX-40.313.00 Total Revenues-40.313.00 Net Budget 3.087.00 Councilmember Buckshnis commented she has been in the grant world for a long time. Congressman Derek Kilmer is giving grants right and left; staff needs to find a congressperson to assist them. She did not think a grant specialist would be advantageous especially in the watershed because there is not a complete design to use in writing a grant. If the City needed assistance writing grants, she preferred to use a contractor, noting one of the examples was an IT grant, she was unsure of the job description for a grant specialist qualified enough to write an IT grant. Grant writers rely heavily on the City to provide information in order for the grant writer to complete the forms. City staff has been successful in obtaining grants although she acknowledged staff was spread thin due to the time spent on things like the Landmark property. If the City needs grant assistance, she preferred to use a consultant since the City is in a fiscal emergency and needs to worry about new and existing FTEs. Congressman Kilmer gave out $5 million to small coastal cities in his jurisdiction; the City needs to tap into him or Representative Rick Larsen. WRIA 8 is meeting with Puget Sound Partnership to look at the issues with Perrinville. Writing a good grant requires data to support the grant and she did not see that happening especially with any of the watershed programs. Councilmember Teitzel said he was torn about the grant specialist position. He was tempted to support it, but he would hate to hire this person and just transfer the work being done by people who are currently writing successful grants to that person and not gain anything and just spend $183,000/year in salary and benefits. If he could be convinced this person would bring in new grants to more than offset the cost, he would be more supportive. He summarized he was wavering and needed to hear more. Mr. Tatum said the point is net new money. City staff have a great track record in getting the grants they traditionally receive and he did not want to pull that work from them. There are a number of things the City does not have with regard to grants, including a comprehensive understanding of all the grant sources the City is currently using. Part of the grant writer's role would be to get a comprehensive view of the grants being written at the department level and identify gap in the grants that are not being pursued. Staffing is lean and staff Edmonds City Council Approved Minutes October 24, 2023 Page 26 needs to pursue easier targets and grants they know they can be successful at obtaining and cannot spend time writing a federal grant they only have a 15% chance of obtaining; the 15% chance may be increased by a dedicated grant writer with federal experience. He summarized the purpose of the grant writer would be getting a comprehensive picture, understanding the gaps, working cross -departmentally to fill gaps and working on harder, more complicated grants that staff do not have the ability to pursue. COUNCILMEMBER TEITZEL MOVED, SECONDED BY COUNCILMEMBER PAINE, TO EXTEND FOR 15 MINUTES TO 10:45. MOTION CARRIED UNANIMOUSLY. Councilmember Paine asked if the funding for the police parking lot was in the budget. Mr. Tatum answered that was ARPA funded. With regard to the grant specialist, Councilmember Paine said she liked the idea of reconnecting communities, anticipating there was a lot of potential in that. Funding for human services is $300,000 and the need is anticipated to be $920,000. She hoped the grant specialist would spend time helping human services write grants for additional funding. Inflation is impacting everyone in the community and those without any wiggle room in their budget are feeling it the most. When she asked IT Manager Brian Tuley if there were grants he was not pursuing, he said absolutely. It would be helpful to ask about rounding out the skill set for this position. There are options for spreading out the work and filling in gaps related to applying for grants. She was excited to see more information, especially the possibility of bringing in new revenue to support the work the City does for the community. Councilmember Nand said her questions are primarily things she contacted Mr. Tatum about and wanted to bring to the awareness of other councilmembers, Mayor Nelson and other members of the administration. She referred to ARPA funding in Account C, Edmonds Rescue Plan Business Support, and asked if there were plans to distribute funds in 2024 though the facade improvement program or would it be helpful for her to suggest a budget amendment to convert the funds into $5,000 grants to businesses. Mr. Tatum answered the way the 2024 budget is structured, there are only a couple different ARPA funds available for anything other than transfer to the General Fund to help fill the gap so someone would need to propose that. Councilmember Nand said she enjoyed the banner program that is part of the tourism spending. She asked about the Loving Edmonds Summer window clings and decals and the chalk art, whether that was related to the BID or the City's economic development tourism fund. It was her understanding the BID's tourism funds must be spent with the BID boundaries. Mr. Tatum answered the Loving Summer window clings are part of the BID's appearance committee. The BID does appearance and branding in the downtown core as well as market the downtown core. Their marketing budget is relatively small, approximately $42,000. Councilmember Nand recalled Mr. Tatum saying Explore Edmonds highlights businesses on Highway 99. She asked if it would possible to emphasize one area each month. Mr. Tatum answered that would be difficult. Explore Edmonds often highlights an experience or opportunity which includes highlighting different neighborhoods, parks, cuisine, etc. There have been Highway 99 specific ones. Marketing has to grab people's attention and get them excited, that often includes combining easily digestible, already branded things and throwing in things from other neighborhood. Councilmember Nand offered alternative suggestions related to the decision package for the grant specialist. She did a little grant writing when she was the office manager of a nonprofit for $16/hour; she was not comparing what she did to the prospective grant writing this person would do. She asked if it would be possible to put this position in the N29 salary range and target someone more junior in their career who could step up through years of involvement with administration to 183. Mr. Tatum answered potentially. This was funded for a person who could write federal grants at an autonomous level and also take responsibility for consolidated grant tracking and leading that citywide. Funding it at a lower level would requiring moving the dials on how ambitious grants could be and managing the City's grant program. Edmonds City Council Approved Minutes October 24, 2023 Page 27 Councilmember Nand recognized there would be a tradeoff regarding the training Mr. Tatum and the other director would need to do with a more junior position, but it might be a way to get the position included in the budget with the current economic forecast. Councilmember Nand recalled Mr. Tatum saying some of the grants could have a multijurisdictional benefit. She asked about reaching out to neighboring jurisdictions about participating in funding this position to benefit them multi jurisdictionally. Mr. Tatum answered that would be a challenge. As jurisdictions are successful with grants, there are overhead funds available to help pay for the position. It would be a challenge for a person to work with multiple jurisdictions because everyone will have their own priorities. Councilmember Nand recognized the goal to fund the position at an FTE and $183,000, but wanted to offer those alternatives if there needed to be a plan B to fund this position. Councilmember Chen said he was open to the idea of a grant writer, but considering the current financial situation, he preferred to delay it until a balanced budget is figured out and perhaps it can come back as budget amendment in the first quarter. 2. RESOLUTION CONCERNING STRUCTURAL BUDGET DEFICIT Councilmember Buckshnis advised two resolutions were submitted, calling for a general operating reserve and considering a declaration of a fiscal emergency. Council President Tibbott expressed appreciation to Councilmember Buckshnis for getting this started. Via conversations with other councilmembers and bringing together different ideas and interest in a more precise resolution, he asked the city attorney to draft another resolution that he considered a companion version. The resolution references budget shortfalls and provides direction to City staff regarding the use of reserves. Exhibit C was drafted by Councilmember Buckshnis and Exhibit D was drafted by City Attorney Jeff Taraday. Councilmember Buckshnis said she tried to be extremely high level, because the numbers are projections. The resolution prepared by Mr. Taraday includes numbers that do not match. Two weeks ago the council was informed there is a $2.2 million budgetary shortfall into the General Fund reserves. Everyone interprets the reserve policy differently. Had the administration come to council in March/April or whenever this structural imbalance began, Mr. Taraday's resolution would be appropriate, but she believed the City was in a fiscal emergency now and needed to bite the bullet to figure out how to correct the $2.2 million deficit in the 2023 budget as well as look at projections for 2024 and ensure those are realistic and not embed items like the RFA or potential levy. Councilmember Buckshnis continued, Mayor Nelson called her today, and she agreed to work with a taskforce on the plan required by the fund balance policy. The resolution she drafted talks about the shortfall, recognizing there is a fiscal emergency as required by Section V of the fund balance policy, and that the council is authorizing the mayor to use General Fund reserve funds which for 2023 will be ARPA funds and create a taskforce to create a plan to ensure the City is on strong footing in 2024. Not only did inflation hit the City hard, like Councilmember Chen stated in his article, there has been a significant growth in staff and other significant changes which all came to a head this year which she felt resulted in a fiscal emergency Council President Tibbott expressed support for Councilmember Buckshnis' resolution including authorizing the mayor to use General Fund reserves and a plan for replenishing it. COUNCIL PRESIDENT TIBBOTT MOVED, SECONDED BY COUNCILMEMBER BUCKSHNIS, THAT THE COUNCIL PASS THIS RESOLUTION. Edmonds City Council Approved Minutes October 24, 2023 Page 28 Councilmember Teitzel did not dispute that there is a structural budget deficit or gap as stated in the policy on page 12 of policy. The final line in that section defining a structural budget deficit states, "Another description is that the current revenue structure is insufficient to maintain services at the current level." He said although that sounds complicated, it is much like a family's budget. He provided the analogy, if you have to dip into your savings to make ends meet, that's fine until those savings are gone and you have to dip into your kids' college fund to make ends meet. In that case, unless the structural, fundamental problem is fixed, the kids don't go to college. The City has a structural imbalance of about $2.3 million for 2023. The resolution Mr. Taraday prepared speaks to that and states that needs to be resolved by transferring money out of the reserves into the General Fund to close that gap and then come up with a plan by November to refill that $2.3 million in the reserve account. He, Councilmember Buckshnis, then -Finance Director Scott James and then -Assistant Finance Director Turley coauthored the policy in 2019. The policy took over a year to complete, requiring a lot of review and input and he acknowledged it is not perfect. COUNCILMEMBER OLSON MOVED, SECONDED BY COUNCILMEMBER TEITZEL, TO EXTEND TO 11. MOTION CARRIED UNANIMOUSLY. Councilmember Teitzel continued, it can be argued based on a strict reading of the policy whether or not there is a fiscal emergency. In fact if the actions defined in the resolution prepared by Mr. Taraday are taken, the problem will be resolved in 2023 and there will no longer be an emergency. The council will need to work on the 2024 budget. If the motion is to support the resolution drafted by Councilmember Buckshnis, he will not support it. He will support the version drafted by Mr. Taraday. Councilmember Nand acknowledged she is the new kid on the block, in reading the reserve fund policy at Thursday's special budget meeting, it states the mayor is to first declare a fiscal emergency before council votes to agree there is a fiscal emergency and therefore authorize the mayor and administration to access the contingency and emergency reserve funds. She asked if that was correct. Mr. Taraday answered the policy describes various different kinds of emergencies, but it only gives the mayor the power to declare a fiscal emergency in three of those and there are more than three types of emergencies. None of the three apply in this instance because there is not a decline in General Fund revenues; what exists is a significant increase in General Fund expenses. That is the reason the resolution he drafted does not refer to the mayor declaring a fiscal emergency. Councilmember Nand referred to the second whereas in the version of the resolution authored by Mr. Taraday which states, "Whereas the city council adopted a budget for fiscal year 2023 on December 20, 2022 with Ordinance 4289." She asked since the administration was spending into the reserve funds at that point shouldn't the resolution have come then and is the council backdating a year to authorize the expenditure of the contingency reserve funds that were authorized last year. Mr. Taraday explained the last budget adoption via Ordinance 4289 complied with the fund balance reserve policy so there was no need at that time to ask the city council to authorize use of the fund balance. Councilmember Nand observed it was due to budget amendments. Mr. Taraday agreed. Councilmember Nand asked him to describe the substantive differences between the resolution he drafted and the version Councilmember Buckshnis drafted. Mr. Taraday answered in looking at the Now Therefore section of the resolution, the version he drafted has two sections, Section 1 expressly authorizes use of the operating reserve for General Fund expenses, and Section 2 requests a replenishment plan and report. He will allow Councilmember Buckshnis speak to her resolution, but at a high level Section 2 of Councilmember Buckshnis' resolution looks similar to Section 1 of his and Section 3 looks similar to Section 2 of his resolution. It would appears Section 1 is not contained in the resolution he drafted. The reason that language is not includes is because he did not feel it was necessary. Councilmember Paine said when she looks at the two resolutions, the one the motion refers to is 10.2.0 in the packet where Section 1 declares a fiscal emergency. She did not support that version. The other Edmonds City Council Approved Minutes October 24, 2023 Page 29 resolution offers a plan and a report in November and she wanted to hear how replenishment would happen. Mr. Taraday said both resolutions call for a replenishment plan. Councilmember Paine found the declaration of fiscal emergency a little extreme and feared it would dramatically affect future budgets. The council is up to its elbows in budget and revenue discussions; this is not happening in June when it could constitute an emergency. She did not support the version of the ordinance in 10.2.0 but could support the resolution in 10.2.D. Councilmember Chen observed Mr. Taraday's version calls for use of ARAP funds in 2023. Mr. Taraday answered not specifically; it calls for a replenishment plan, but does not specifically identify ARPA as the source of the replenishment, but also does not preclude that source. It asks the finance director to come back in November with a replenishment plan. Councilmember Chen observed Councilmember Buckshnis' resolution also call for a replenishment plan so from that perspective they are the same and either version accomplishes the goal of identifying revenue sources, looking for opportunities to cut expenses opportunity and getting through this difficult time. He asked if both versions of the resolution accomplish that. Mr. Taraday answered they both do that. Sections 2 and 3 of Councilmember Buckshnis' version generally align with Sections 1 and 2 of the version he drafted. At a high level, they both accomplish the same general objective. He referred to the word "amendment" in Section 3 of Councilmember Buckshnis' resolution which does not appear in the resolution he drafted. A replenishment plan could take the form of a 2023 budget amendment, but it does not have to and he was unsure why Councilmember Buckshnis included that. The resolution he drafted would not preclude a 2023 budget amendment, it still allows that as a possibility, but it does not require that happen as part of the plan. Councilmember Buckshnis said she did not believe the city attorney should review policy issues. She felt it was inappropriate for Mr. Taraday to read and try to interpret the policy because it is the council's policy. The council is faced with something that needs to be corrected by yearend and the council will work together with a taskforce to attempt to strengthen revenue streams using the projections that Mr. Turley has provided. Councilmember Buckshnis continued, Councilmembers Teitzel and Chen and she have probably spent 100 hours discussing the difference between a structural imbalance and a fiscal emergency. If the mayor will not declare that there is an issue with future revenue streams, council is stepping in which she believed was a fiscal emergency. Council is requesting the amendment occur by November 2023 and that there be a plan in place that is not predicated on joining the RFA or installing red light cameras. There are significant issues that need to be worked on which is why the mayor called her today. There is a plan to create a taskforce to work through the projections so when the budget comes to council for approval, there is a realistic status quo situation. Councilmember Buckshnis relayed Councilmember Teitzel has drafted another section that calls for the formation of a taskforce. She had tremendous issue with the numbers Mr. Taraday used in the resolution he prepared because he did not pull them from the adopted budget and there are other discrepancies and she did not think details such as what ordinances and amendments caused the imbalance were necessary. COUNCILMEMBER OLSON MOVED, SECONDED BY COUNCILMEMBER TEITZEL, TO EXTEND TO 11:15. MOTION CARRIED UNANIMOUSLY. Councilmember Buckshnis opined the resolution created by Mr. Taraday includes a tremendous amount of stuff that is not needed and was already identified in her resolution. If the council wants to go with Mr. Taraday's resolution and call it a structural imbalance, she will make a lot of amendments. There is an imbalance that the council wants to take care of to correct and to work together. She suggested adding the formation of a taskforce to the resolution. Edmonds City Council Approved Minutes October 24, 2023 Page 30 As co-author of the policy, Councilmember Teitzel read the paragraph regarding what is a fiscal emergency, "The Mayor has power to declare a fiscal emergency based upon one of the following: 1) A natural catastrophe; 2) An immediate threat to healthy and public safety; or 3) A significant decline in General Fund revenues." If the mayor refuses to declare a fiscal emergency, council can step in and declare one, but in his mind, it had to be related to one of those three things. There has been discussion tonight that expenses have exceeded revenues fairly dramatically, primarily driven by high inflation, but that does not qualify as a fiscal emergency as the policy is written. Discussing whether a fiscal emergency exists distracts the council from the problem; the problem is what to do to fix the structural imbalance. Both resolutions call out what needs to be done in 2023 using $2.3 million from reserves to plug the whole in the General Fund and then backfill the $2.3 million in reserves this year which will get things even by yearend. The resolutions say nothing about 2024; as Councilmember Buckshnis mentioned, the council is committing to work on that with Mr. Turley to figure out how to improve the City's financial situation. In his opinion, in a strict reading of policy, there isn't a fiscal emergency. Instead, there is a structural imbalance in the budget which is being resolved by the resolution. Council President Tibbott read from the resolution drafted by Mr. Taraday, Whereas, Article III, Section 1 states that "[a]ny use of the committed General Fund Operating Reserves shall be used only in cases of fiscal emergency", which are defined broadly to include "economic uncertainties, unforeseen emergencies and unanticipated operating expenses or revenue shortfalls" and he felt the City was definitely in a situation of revenue shortfalls. The council can declare a fiscal emergency to draw attention to an important thing that needs to be remedied, the use of reserve funds to fund the City. Whether it is called a fiscal emergency or something else doesn't really matter to him, what mattered to him was focusing on resolving the issue and resolving the problem. He agreed with Councilmember Buckshnis that her version of the resolution is simpler and not quite as specific and even though it calls for declaring a fiscal emergency in Section 1, but Sections 2 and 3 describe how to resolve the issue so he will support the resolution drafted by Councilmember Buckshnis. Councilmember Nand commented since there have apparently been late developments by Mayor Nelson and the administration deciding to implement a taskforce, she wondered if both resolution were premature until the taskforce is formed and could address whether to issue a resolution declaring a fiscal emergency before finalizing the 2024 budget. She asked Councilmember Buckshnis, Councilmember Teitzel or Mayor Nelson to address the purpose of the task force and the timing of the resolution. Mayor Nelson responded he greatly appreciated everyone's interest, recognizing everyone collectively wants to resolve the revenue shortfall. There are more things everyone wants to achieve which he felt could be done if they worked together. He referred to Councilmember Chen's recent article about wanting to work with the administration and solve the issue, he agreed everyone wants to solve the problem. Where things get more heated is calling it certain things or trying to get people excited about things in a negative way. If the goal is to solve the issue, addressing the revenue shortfall, that was his hope with a taskforce. The taskforce would consist of three councilmembers working closely with City staff and himself to put forth some other options besides the budget he proposed and ways to address the revenue shortfall. It was his understanding that Councilmember Teitzel had an amendment that will address that. A MOTION WAS MADE BY COUNCILMEMBER TEITZEL AND SECONDED, TO AMEND COUNCILMEMBER BUCKSHNIS' VERSION OF THE RESOLUTION, ADD NEW SECTION 4 THAT READS "THE CITY COUNCIL RESOLVES TO WORK COLLABORATIVELY WITH THE ADMINISTRATION TO ESTABLISH A BUDGET TASKFORCE BY OCTOBER 31, 2023, CONSISTING OF THREE COUNCILMEMBER AND SELECTED MEMBERS OF THE ADMINISTRATION. THIS TEAM WILL IDENTIFY SOLUTIONS TO THE STRUCTURAL BUDGET DEFICIT (THE GAP) IN THE PROPOSED 2024 CITY OF EDMONDS BUDGET. THESE SOLUTIONS SHOULD NOT INCLUDE AS AN OPTION USE OF ALL REMAINING ARPA FUNDS TO CLOSE THE BUDGET GAP. Edmonds City Council Approved Minutes October 24, 2023 Page 31 Councilmember Teitzel said he believed the amendment goes beyond either version of the resolution which only focus on 2023. His amendment would add focus on 2024 including potentially identifying additional revenue streams and what else can be done to cut expenses to ensure the budget is actually structurally in balance. This amendment accomplishes that and lets the council and administration work collaboratively. Councilmember Paine commented the council is talking about a lot of topics. She suggested having more discussion regarding Councilmember Nand's question, whether a resolution needs to be adopted right now. Councilmember Olson raised a point of order, reminding councilmembers to speak to the amendment. Mayor Nelson ruled point taken. Councilmember Paine said she had no objection to the amendment, but wondered if it was timely and needed right now, because the resolution declares a fiscal emergency which the council heard last week might harm the City's bond rating in the future. She would support the amendment, but wanted to ensure the City's future was not harmed. Councilmember Chen said Councilmember Teitzel's amendment focuses on solving the problem. There is a revenue shortfall, meaning expenses outpace revenues not only in 2023, but also 2024. The council also needs to cast its sights on 2025 and beyond. Councilmember Buckshnis expressed support for the amendment, commenting it was unknown whether the City would be financially stable in 2024 which is why she considered it a fiscal emergency. For someone who really understands municipal bonds, she assured it would have no impact on municipal bonds because the City is going for revenue bonds. She urged everyone not to worry about that rumor being passed around. Councilmember Nand expressed support for the amendment and found two aspects very positive, first the council and administration have agreed to set aside some of their finger pointing and work collaboratively to see how to ameliorate the situation the City finds itself in. Second, she is also concerned about using all remaining ARPA funds to plug the budget gap because council by ordinance directed the administration to use ARPA funds in a manner intended to aid the community and she wanted to ensure funds set aside for that purpose were preserved. AMENDMENT CARRIED UNANIMOUSLY. MAIN MOTION AS AMENDED FAILED (3-3-1), COUNCIL PRESIDENT TIBBOTT AND COUNCILMEMBERS BUCKSHNIS AND OLSON VOTING YES; COUNCILMEMBERS TEITZEL, CHEN AND PAINE VOTING NO; COUNCILMEMBER NAND ABSTAINING. COUNCIL PRESIDENT TIBBOTT MOVED TO USE THE RESOLUTION PRODUCED BY THE CITY ATTORNEY. Councilmember Buckshnis suggested if the council wanted to call it a structural imbalance, the resolution could be changed. She expressed concern with including projections in the resolution. She suggested changing the resolution title and remove Section 1 to achieve the same content. COUNCILMEMBER TEITZEL MOVED, SECONDED BY COUNCILMEMBER PAINE, TO EXTEND TO 11:30. MOTION CARRIED UNANIMOUSLY. COUNCILMEMBER BUCKSHNIS MOVED, SECONDED BY COUNCIL PRESIDENT TIBBOTT, TO USE THE TITLE OF THE RESOLUTION PREPARED BY MR. TARADAY, "A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF EDMONDS, WASHINGTON, AUTHORIZING THE USE OF GENERAL FUND OPERATING RESERVES FOR 2023 GENERAL FUND EXPENSES" ON THE RESOLUTION SHE PREPARED. Edmonds City Council Approved Minutes October 24, 2023 Page 32 Councilmember Nand suggested tabling this to next week as there seemed to be significant changes occurring and potentially both resolutions could be merged. COUNCILMEMBER NAND MOVED, SECONDED BY COUNCILMEMBER PAINE, TO TABLE UNTIL NEXT WEEK. UPON ROLL CALL, MOTION FAILED (3-4), COUNCILMEMBERS BUCKSHNIS, PAINE AND NAND VOTING YES; COUNCILMEMBERS TEITZEL, CHEN, AND OLSON AND COUNCIL PRESIDENT TIBBOTT VOTING NO. Councilmember Teitzel advised he would offer his amendment to the version of the resolution prepared by Mr. Taraday. Mayor Nelson clarified the motion on the table was Councilmember Buckshnis' amendment to swap the title of the resolution, putting the title of the resolution prepared by Mr. Taraday on the resolution she prepared. COUNCIL PRESIDENT TIBBOTT CALLED THE QUESTION. VOTE ON THE CALL FOR THE QUESTION CARRIED (6-1), COUNCILMEMBER PAINE VOTING NO. UPON ROLL CALL, MOTION CARRIED (5-2), COUNCILMEMBERS CHEN, BUCKSHNIS, OLSON AND NAND AND COUNCIL PRESIDENT TIBBOTT VOTING YES; COUNCILMEMBERS TEITZEL AND PAINE VOTING NO. COUNCILMEMBER BUCKSHNIS MOVED, SECONDED BY COUNCIL PRESIDENT TIBBOTT, TO DELETE THE LAST WHEREAS CLAUSE WHICH STATES WHEREAS THIS 2023 GENERAL FUND $2.2 MILLON SHORTFALL IS NOW CONSIDERED AS A FISCAL EMERGENCY BY THE CITY COUNCIL AS REQUIRED BY POLICY. MOTION CARRIED UNANIMOUSLY. COUNCILMEMBER BUCKSHNIS MOVED, SECONDED BY COUNCIL PRESIDENT TIBBOTT, TO REMOVE SECTION 1 WHICH STATES ON OCTOBER XX, THE CITY COUNCIL RECOGNIZES AND APPROVES THE FISCAL REFERENCE AS REQUIRED BY SECTION VII OF THE FUND BALANCE RESERVE POLICY. Councilmember Paine said she did not see the language Councilmember Buckshnis was reading. Mayor Nelson relayed it was on page 206, Councilmember Buckshnis' resolution as amended. Councilmember Paine pointed out that did not pass. Mayor Nelson clarified Councilmember Buckshnis' resolution was the basis of the amendments that are being made. The first amendment was swapping the title followed by an amendment to remove another section and now this amendment. Councilmember Olson observed Councilmember Buckshnis' amendment removes the last reference to any kind of an emergency. She preferred to leave something in the resolution about an emergency as stated in the policy and she did not understand why the council cannot say the truth. She will vote against the amendment. COUNCILMEMBER NAND MOVED TO TABLE TO GIVE HER COLLEGE COUNCILMEMBER BUCKSHNIS A CHANCE TO PRESENT A CLEAN COPY WITH AMENDMENTS AND CHANGES AS NECESSARY TO BRING IT INTO COMPLIANCE WITH THESE LATE DEVELOPMENTS AND THEN BRING IT BEFORE THIS BODY AND THE PUBLIC FOR US TO VOTE ON. Councilmember Olson raised a point of order, whether it was appropriate to have a motion to table when the council already voted on that. Mr. Passey advised the council just had that vote so the motion could be ruled as dilatory or meant to delay. Edmonds City Council Approved Minutes October 24, 2023 Page 33 COUNCILMEMBER NAND WITHDREW THE AMENDMENT. UPON ROLL CALL, AMENDMENT CARRIED (4-3), COUNCILMEMBERS CHEN, BUCKSHNIS AND NAND AND COUNCIL PRESIDENT TIBBOTT VOTING YES; COUNCILMEMBERS TEITZEL, OLSON AND PAINE VOTING NO. COUNCILMEMBER TEITZEL MOVED, SECONDED BY COUNCIL PRESIDENT TIBBOTT, TO ADD NEW ITEM 3 ON THE BUCKSHNIS VERSION AS AMENDED THAT READS, "THE CITY COUNCIL RESOLVES TO WORK COLLABORATIVELY WITH THE ADMINISTRATION TO ESTABLISH A BUDGET TASKFORCE BY OCTOBER 31, 2023, CONSISTING OF THREE COUNCILMEMBER AND SELECTED MEMBERS OF THE ADMINISTRATION. THIS TEAM WILL IDENTIFY SOLUTIONS TO THE STRUCTURAL BUDGET DEFICIT (THE GAP) IN THE PROPOSED 2024 CITY OF EDMONDS BUDGET. THESE SOLUTIONS SHOULD NOT INCLUDE AS AN OPTION USE OF ALL REMAINING ARPA FUNDS TO CLOSE THE BUDGET GAP. AMENDMENT CARRIED UNANIMOUSLY. COUNCILMEMBER OLSON MOVED, SECONDED BY COUNCILMEMBER NAND, INSTEAD OF IT BEING AN OUTRIGHT VOTE, TO SEND IT TO THE CONSENT AGENDA SO EVERYBODY CAN SEE IT. MOTION CARRIED UNANIMOUSLY. 3. DISCUSSION ABOUT COUNCIL BUDGET CALENDAR COUNCIL PRESIDENT TIBBOTT MOVED, SECONDED BY COUNCILMEMBER TEITZEL, TO EXTEND 10 MORE MINUTES TO 11:40 P.M. MOTION CARRIED (6-1), COUNCILMEMBER CHEN VOTING NO. Council President Tibbott commented next week is a 5t' Tuesday when normally there would not be a council meeting; however, the budget calendar proposed a workshop on Monday, October 30. The idea of a workshop was an opportunity to discuss council proposed decision packages and amendments to the administration's decision packages. He wanted council to have an opportunity to discuss whether to continue with that workshop format or delay that workshop so the taskforce meeting could move forward. He suggested the council not meet on October 30 to give time for a taskforce to be formed. Councilmember Buckshnis explained she agreed to the mayor's proposal to form a taskforce but she will not comply with having the budget approved by Thanksgiving. She acknowledged the budget will need to be approved by December, but she did not want to rush the taskforce through. She wanted to get the taskforce moving in the right direction to ensure the council had sufficient time to work through things which means the budget will probably need to be moved into the first week of December. Councilmember Teitzel raised a procedural question; the council passed a motion to bring the resolution back on the consent agenda in its final form but did not pass the resolution so the council has not formally voted to form the taskforce. He asked whether formation of the taskforce could proceed even though the resolution had not been approved. Mr. Taraday agreed the resolution had not been approved, but the taskforce could be formed by consensus of the council. He joked there was City code that prevented the council from meeting on Halloween. Councilmember Paine said she had no objection to allowing the taskforce to meet on October 30 rather than holding a council workshop. Councilmember Nand concurred with Councilmember Paine and hoped discussions between the administration and councilmembers on the taskforce are fruitful. She found the taskforce a very good solution and compliment her colleagues for forming the taskforce. Edmonds City Council Approved Minutes October 24, 2023 Page 34 Councilmember Chen expressed support for the idea of taskforce; the council and administration need to work together to solve this problem. Council President Tibbott summarized it appears the council will not hold a special meeting on October 30 and instead will give that time to the work of a taskforce. 11. MAYOR'S COMMENTS Mayor Nelson reported a 12 member delegation from Edmonds' Sister City Hekinan will be visiting Edmonds. He was super excited to have them visit Edmonds and said a warm welcome is planned. 12. COUNCIL COMMENTS Councilmember Nand reported she was very excited to hear about the outcome of the Landmark 99 discussion. She apologized that she and Councilmember Chen were unable to attend due to attending the Asian Service Center's annual board retreat. She was hopeful there could be additional fruitful discussion with the City's various neighborhoods about development issues and feedback. She reported on October 26 there will be a discussion regarding the rise of white supremacy in Snohomish County with journalist David Neiwert. She invited anyone interested in attending to contact her for more information. Councilmember Buckshnis reported on the great ribbon cutting for Meadowdale Beach Park which was one of WRIA 8's first RCO grants; RCO initially did not want to fund the park because they felt it was too recreational. She thanked Council President Tibbott for supporting her fiscal emergency. She did not believe forming the taskforce meant everything would be hunky dory, roses, candy and ice cream next year or the following year. She still viewed it as a fiscal emergency, but was willing to acquiesce to Councilmember Teitzel because they have spent about 100 hours talking about it. Councilmember Olson apologized for having to rush through this important comment, relaying this is the first meeting with council comments since the heinous attack on Israel by Hamas, a terrorist act and an international war crime. The death and devastation, although aimed at the devastation or destruction of the State of Israel, affects innocent civilians of both the Israeli and Palestinian nations and it's right to be angry. She hoped the public was angry and encouraged their anger to stay targeted on the Hamas organization and not the Palestinian people. This is the beginning of what is likely to be a very protracted engagement with terrible images especially as they related to the hostages and what Hamas promises to do to the hostages when Israel engages in retribution. There are lots of ways to support the victims and hostages, financial support is very much appreciated to vetted, reputable organizations only. Send your thoughts and if you are a praying person, please pray, reach out to friends and family who are Jewish and let them know you are thinking of them. They are hurting in general and some are very directly and personally affected. What people do not have to do to support the hostages is watch; terrorists want the public to watch, but that does not help the hostages. Regarding the resolution the council passed this evening, Council President Tibbott explained a lot of work went into it although he was not privy to all the background. The reason the discussion may look disjointed was the council was trying to work on two resolutions. He expressed appreciation to all who contributed to the conversation and recognized Mayor Nelson for bringing forth the idea of a taskforce. When Mayor Nelson called him today to propose the idea, he immediately thought it was both generous and obviously a collaborative effort to bring together solutions that desperately need to be considered. This is one of the ways the council can effectively work with the administration. He anticipated bringing together some of the best thinkers related to financial policy and looked forward to really good work. Councilmember Chen expressed appreciation to the public engaged in the budget process. The City has a budget imbalance and this is a very challenging budget cycle. He thanked the people who commented on Edmonds City Council Approved Minutes October 24, 2023 Page 35 his articles on article in MEN and expressed appreciation to Teresa Wippel for posting it. He echoed Council President Tibbott's comment about Mayor Nelson taking the advice about working collaboratively with the council. The true intent is to solve the problem so hopefully the taskforce will develop revenue generating ideas as well as opportunities to cut costs while still delivering excellent city services to residents. Councilmember Paine expressed appreciation to everyone who comment tonight and over the past several weeks regarding the state of the budget and revenues. She also appreciated tonight's discussion about what needs to be done and she liked the idea of working together, anticipating the right solutions can be identified. She often says, we have all the right elements so that makes us a good team. Councilmember Teitzel reported on Sunday, he, Councilmember Olson and Teresa Wippel attended the 50' anniversary gala event for Edmonds South Snohomish County Historical Society, the managing entity for the museum. It was a great event, a great auction and great time to celebrate a great organization. He expressed appreciation for the museum, the summer markets they put on and the scarecrow festival they sponsor. He congratulated the Edmonds South Snohomish County Historical Society on 50 years. 1911010 1a11111 711 With no further business, the council meeting was adjourned at 11:35 p.m. sx-:� - SCOTT PASSEY, -ClCLERK Edmonds City Council Approved Minutes October 24, 2023 Page 36