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2023-11-30 Special Meeting 600 PMEDMONDS CITY COUNCIL SPECIAL MEETING APPROVED MINUTES November 30, 2023 ELECTED OFFICIALS PRESENT Mike Nelson, Mayor Neil Tibbott, Council President Vivian Olson, Councilmember Will Chen, Councilmember Diane Buckshnis, Councilmember Susan Paine, Councilmember Chris Eck, Councilmember Jenna Nand, Councilmember 1. CALL TO ORDER/FLAG SALUTE STAFF PRESENT Dave Turley, Administrative Services Director Oscar Antillon, Public Works Director Susan McLaughlin, Planning & Dev. Dir. Shannon Burley, Deputy Parks, Rec., & Human Serv. Dir. Jeff Taraday, City Attorney Scott Passey, City Clerk Jerrie Bevington, Camera Operator The Edmonds City Council special meeting was called to order at 6 pm by Mayor Nelson in the Council Chambers, 250 5th Avenue North, Edmonds, and virtually. The meeting was opened with the flag salute. 2. LAND ACKNOWLEDGEMENT Councilmember Olson 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. APPROVAL OF AGENDA COUNCILMEMBER PAINE MOVED, SECONDED BY COUNCILMEMBER OLSON, TO APPROVE THE AGENDA IN CONTENT AND ORDER. MOTION CARRIED UNANIMOUSLY. 5. AUDIENCE COMMENTS There were no audience comments. 6. RECEIVED FOR FILING Edmonds City Council Approved Minutes November 30, 2023 Page 1 EFFECTS OF COUNCIL CHANGES TO PROPOSED BUDGET 7. COUNCIL BUSINESS 1. APPROVAL OF CONTRACT FOR FIRE SERVICES FEASIBILITY ASSESSMENT COUNCIL PRESIDENT TIBBOTT MOVED, SECONDED BY COUNCILMEMBER CHEN, TO APPROVE SIGNING THE PROFESSIONAL SERVICES AGREEMENT WITH FITCH & ASSOCIATES. Council President Tibbott explained Fitch & Associates are consultants related to exploration of fire services. They have worked with the City in the past and provided very credible data related to service needs and levels of service. The uniqueness of using Fitch & Associates again is their ability to update the information provided 6-7 years ago and help the council evaluate three options for fire service including bringing fire service inhouse again. Fitch & Associates are very data driven which will assist with comparing different service and cost levels. Their contract calls for them to come onsite, collect data, renew their familiarity with the City, crunch the data, and provide an executive report. Details regarding the contract are included in the council packet. He asked for the council's approval for him to sign the contract. Councilmember Olson commented this is both a timely and important issue as a result of the resolution the council passed previously asking for information from the RFA regarding annexation. Knowing the options and associated costs is an important part of the decision making process for both the council and the public. COUNCILMEMBER OLSON MOVED, SECONDED BY COUNCILMEMBER BUCKSHNIS, TO AMEND THE MOTION TO CHANGE THE FUNDING FOR THE FITCH & ASSOCIATES PROFESSIONAL SERVICES AGREEMENT TO THE 2023 COUNCIL CONTINGENCY BUDGET FOR PROFESSIONAL SERVICES. Councilmember Olson explained the funds are available in the 2023 budget, next year's budget will be extremely tight, the initial payment to Fitch & Associates will be made in 2023, and the remaining cost can be taken care of as a carryforward. Council President Tibbott suggested the proper time to consider this amendment would be when the council considers the decision package related to this item. COUNCILMEMBER OLSON WITHDREW THE AMENDMENT WITH THE AGREEMENT OF THE SECOND. Councilmember Paine referred to the , second bullet in Element 1 of the Fitch & Associates' contract which states, "Discuss with the policy group..." and asked who the policy group is. Council President Tibbott answered the policy group is the council. Councilmember Paine wanted to ensure that was clear, as this was coming in hot and fast. She hoped Fitch & Associates would evaluate the cost as well as apparatus in the event additional apparatus are necessary if the City joins another fire service or forms its own department, relaying her understanding new fire trucks cost $2-2.5 million each and EMS vehicles cost $1 million each as well as continued inflationary pressures. Councilmember Buckshnis pointed out 6-7 years ago, the evaluation was a joint effort between the administration and council. Fitch & Associates is very thorough and provided many alternatives including selling fire stations and she hoped they would consider that. She expressed her support for engaging Fitch & Associates and hoped the new mayor would also be engaged as it is an issue that also affects the administration. Edmonds City Council Approved Minutes November 30, 2023 Page 2 Councilmember Nand referred to Item 4 in the Fitch & Associates' professional services agreement, Time of performance, and asked if it would make more sense to obtain the requested information from the RFA regarding annexation without the use of a paid intermediary and once the council has that information, explore options B and C. Council President Tibbott responded he had hoped to have information from the RFA by now but since that hasn't happened, there is no reason information cannot be gathered concurrently and evaluated together. Councilmember Nand commented under Element 2 of the scope of work, Fitch & Associates would be paid to evaluate the efficacy of annexing into the RFA. She questioned paying a third party intermediary to provide this information instead of waiting for the RFA to provide it, process it inhouse and then contract with Fitch & Associates to provide that information in context with the other options and put this off until the 2024 budget cycle due to the current financial pressures. Council President Tibbott answered there is a sense of urgency to learn about the costs and there are three and potentially more options. It would be helpful to have a good idea of the costs early in the year so they can be addressed during 2024. Councilmember Buckshnis commented it is important to have an independent consultant that has experience in the fire business. There is urgency and this is the most positive way for the council to move forward to get information quickly from an outside source that is uniquely qualified to do this investigation. MOTION CARRIED UNANIMOUSLY. 2. STAFF PROPOSED CHANGES TO 2024 PROPOSED BUDGET Administrative Services Director Dave Turley explained most of the work that goes into preparing the budget is done in July -September and presented to council in early October. Things come up at the end of the process that are not included in the budget or occasionally errors are discovered after the budget is prepared. Staff proposed changes are a list of items that need to be added or subtracted from the proposed budget. Some of the proposed changes authorize an expenditure for something the council has already approved; for example, effects of the utility rate changes the council previously approved. There are other proposed changes that the council can approve, not approve, table, talk about later, etc. He did not want the council to feel they were backed into a corner regarding these proposed changes and suggested a process where he will review each of the 11 proposed changes, a councilmember makes a motion, followed by council discussion and a vote. Salary Commission Update for Council - $38,685 General Fund expenditure Mr. Turley recalled the salary commission's recommendation was brought to council at the end of September. The council has approved this increase, this proposed change would add the increased salary cost to the budget. COUNCIL PRESIDENT TIBBOTT MOVED, SECONDED BY COUNCILMEMBER PAINE, TO APPROVE THE EXPENDITURE OF $38,685 FOR COUNCIL SALARIES. Councilmember Olson explained the salary commission's decision is binding. With this tight budget situation, the council would certainly have considered not taking a raise and/or not approving an increase in the mayor's salary even though this is the first raise the council and mayor have received in 3-4 years, but that is not within the council's authority. Recognizing that the salary commission's recommendation is binding and the council cannot reject it, Councilmember Chen asked if the council had the option to bank/delay the increase until 2025. City Attorney Jeff Taraday answered not that he was aware of. The reason for a salary commission is to prevent the city council from setting its own compensation and there are constitutional provisions that prevent council from setting its own compensation. Nothing prohibits an individual councilmember from doing Edmonds City Council Approved Minutes November 30, 2023 Page 3 something different with that money, but as far as council action regarding its compensation, it is not within the council's discretion. Councilmember Chen said suggested the council would accept the raise, but due to the financial situation, bank it for a year until the financial situation eases and then the council would get paid the following year. Mr. Taraday answered that would be deferred compensation, so the council would be taking present compensation and converting it into deferred compensation which would still be an act of the council setting its own compensation and in his opinion, that would not be within the council's authority. Councilmember Eck agreed it was not a great look, but she understood the council was bound to this. For the record, she said with the current budget conversations, she would willingly give this up if she could vote to do so. MOTION CARRIED UNANIMOUSLY. Salary Commission Update for Mayor - $21,904 General Fund expenditure Mr. Turley relayed the salary commission made a recommendation for the mayor's salary and the same rules apply related to the mayor's compensation. COUNCILMEMBER BUCKSHNIS MOVED, SECONDED BY COUNCILMEMBER OLSON, TO APPROVE. MOTION CARRIED UNANIMOUSLY. Utility Rate Update Mr. Turley explained the net positive impact to the General Fund is $189,647, $685,249 to the Water Fund, $302,846 to the Sewer Fund and a $324,006 negative impacts to the Stormwater Fund. Net impact overall is a positive impact to fund balances of $853,231. Councilmember Paine observed the $189,647 is the positive impact to the General Fund from the tax collected on utility rates. Mr. Turley agreed. Councilmember Nand noted there have been updates to the website in response to previous discussions related to low income and distressed individuals who may be adversely affected by the utility rate increase. She asked if there was any action taken regarding a previous suggestion to include information or links on the utility bill or as a supplement to disseminate information to the public. Public Works Director Oscar Antillon said he would report back to Councilmember Nand; the changes were requested, but he was unsure if any progress had been made. Councilmember Buckshnis said she did not vote to approve the utility rate increase because she wanted to reduce the stormwater rate by 1/2% so she will probably not support this amendment. COUNCILMEMBER PAINE MOVED, SECONDED BY COUNCILMEMBER OLSON, TO APPROVE THE UTILITY RATE UPDATE AS APPROVED IN THIS DECISION PACKAGE. UPON ROLL CALL, MOTION CARRIED (6-1), COUNCILMEMBERS ECK, CHEN, OLSON, PAINE AND NAND AND COUNCIL PRESIDENT TIBBOTT VOTING YES; COUNCILMEMBER BUCKSHNIS VOTING NO. Transfer to Fund 117 (Municipal Arts Acquisition Fund) Mr. Turley explained this is a request by Community, Economic Development & Cultural Arts to transfer $30,000 from the General Fund to Fund 117 for ongoing support for the Municipal Arts Acquisition Fund Councilmember Olson relayed she has asked questions about this decision package in the last 1-2 days. There is an ordinance that sets the precedent and encourages/demands by ordinance that this action be taken. She spoke with the city attorney about a council's authority to bind a future council and requested he share Edmonds City Council Approved Minutes November 30, 2023 Page 4 that information. It is confusing for the council and the public to have an ordinance in place that the council doesn't follow, but apparently it is not legal for a past council to bind future councils. Mr. Taraday referred to a passage he emailed to Councilmember Olson from a national municipal law treatise, but since then he found a Washington Supreme Court case that says basically the same thing as the treatise. He read from Washington State Farm Bureau Federation v. Gregoire, a 2007 Supreme Court case, noting it refers to legislature instead of council but the concept applies equally to a city council, "Each duly elected legislature is fully vested with this plenary legislative power. A legislative assembly, when established, becomes vested with all the powers and privileges which are necessary and incidental to a free and unobstructed exercise of its appropriate functions. Plenary power in the legislature for all purposes of civil government is the rule. A prohibition to exercise a particular power is an exception. Implicit in the plenary power of each legislature is the principle that one legislature cannot enact a statute that prevents a future legislature from exercising its law making power." Mr. Taraday continued, essentially the City code section that dates back to 1988, makes a commitment to make a transfer from one fund to another on an annual basis. That is, in his opinion, the 1988 city council saying to the 2023 city council how the 2023 city council will adopt its budget and that attempt to bind a future city council is void ab initio which basically means they didn't have the power to do that then and don't have the power to do it now. So, in his opinion the council has never been bound by that particular code section. Councilmember Olson commented there is no question there is a priority in the community to support the municipal arts. However, it is also a community priority not to lose valued employees during this budget crisis. If there was ever a time to forego approving this, this is definitely that year. She encouraged councilmembers to vote against this staff requested change. She also did not want it referenced as a one- time expenditure and hoped it would be a recurring amount in the future and would automatically be included in the budget and the council could remove it if they wished. Another option would be to repeal the ordinance if the intent is not to include those funds in the budget in the future. Mr. Turley said he would have to talk to the city attorney about that; there are several large ongoing expenses such as salaries and benefits that do not have to be requested every year. It appears Councilmember Olson's suggestion is doing the same thing as the 1988 ordinance, binding future councils to continue to make this transfer. There are also several ongoing items included in the budget that the council does have the discretion to remove. Councilmember Olson responded it if was included in the mayor's proposed budget, the council would still have the option of taking it out. Having it included each year as a decision package doesn't seem consistent with an ordinance the council was generally supportive of. If the council was not generally supportive of the ordinance, it should be an agenda item for the council to consider rescinding it. Mr. Turley said the City does not have a robust budget policy; things that do and do not need to be requested every year would be good to include in a budget policy. Mr. Taraday recommended that provision be repealed from the City code as it is already void. There is nothing wrong with an aspirational statement that the council intends to fund the arts at a certain level each year, but it belongs in a resolution or other policy and not in City code. Councilmember Olson observed the council was not taking action on City code today. Observing there are inadequate funds to cover expenses this year, she urged councilmembers to vote against adding this $30,000 to the budget which is the transfer for 2024 as well as 2023. COUNCILMEMBER OLSON MOVED, SECONDED BY COUNCIL PRESIDENT TIBBOTT, TO REJECT THIS DECISION PACKAGE. Council President Tibbott relayed he supports funding the arts, but this is a season in the City's budget cycle that it is advisable to put this off until later in the year or consider it in 2024. He relayed his support for the motion. Edmonds City Council Approved Minutes November 30, 2023 Page 5 Councilmember Buckshnis spoke in favor of the motion. She asked about the 1 % for the Arts. Mr. Turley advised that is an RCW that the City is required to follow. Councilmember Buckshnis recommended repealing this code next year. Councilmember Nand asked if there had been a request for artistic submissions recently that would be impacted by removing these funds. Councilmember Olson recalled she asked Director Tatum or Frances Chapin about that and they said it would not be affected by the decision on this proposed change. Councilmember Nand asked if Councilmember Olson was aware of any dedication of the $30,000. Councilmember Olson responded she did not ask that question but was told it would not affect what had already been advertised. UPON ROLL CALL, MOTION CARRIED (6-1), COUNCILMEMBERS ECK, CHEN, BUCKSHNIS, OLSON AND PAINE AND COUNCIL PRESIDENT TIBBOTT VOTING YES; COUNCILMEMBER NAND VOTING NO. Updated Business Improvement District (BID) Amendment Mr. Turley relayed the BID's request for an adjustment to their proposed budget - $1,050 expenditures and $31,417 revenue reduction, net budget $32,467. COUNCILMEMBER PAINE MOVED, SECONDED BY COUNCILMEMBER CHEN, TO APPROVE THE BID'S REQUEST TO MAKE AN ADJUSTMENTS TO THEIR BUDGET. Councilmember Paine relayed her understanding that this comes from the BID's dues, not the General Fund. Mr. Turley agreed. Council President Tibbott said that was also his understanding and asked the fund number. Mr. Turley answered BID dues are in a special revenue fund, Fund 141 BID, and are not part of the General Fund. Councilmember Buckshnis commented the BID usually presents their work plan and budget to the council prior to the budget process. Director Tatum informed her that will be provided to council on January 16. Councilmember Chen pointed out Fund 141 is the Affordable and Supportive Housing Fund. Mr. Turley answered the BID Fund is 140. MOTION CARRIED UNANIMOUSLY. Police Department Administrative Staff Salary Adjustments Mr. Turley explained the police department did some internal promotions during the year that included a salary increase which are supposed to be presented to council for approval and these have not yet been approved by council. This is catch up for the police department to get the position changes approved as well as the additions to salary and benefits. The estimated effect on the General Fund is about $50,021. Councilmember Olson explained this was presented to the PSPHSP committee; however, neither the committee nor the council authorized this as an ongoing expense and that was intended to occur during the budget process. Approval of this amendment would be this amount for 2024 and approving the ongoing expense. Councilmember Nand, recalled the PSPHSP committee recommended approval following a presentation by Director Neill Hoyson and Chief Bennett regarding why these changes were necessary to improve efficiency within the police department. She encouraged councilmembers to approve the proposed amendment. Edmonds City Council Approved Minutes November 30, 2023 Page 6 COUNCIL PRESIDENT TIBBOTT MOVED, SECONDED BY COUNCILMEMBER NAND, TO APPROVE THIS EXPENDITURE. MOTION CARRIED UNANIMOUSLY. Planning & Development Professional Services budget for code updates Mr. Turley explained the professional services were not included in the budget due to an error in the department. The request is $834,000, but it is believed that full amount will not be needed so staff has asked to bring back a revised amendment next week. Planning & Development Director Susan McLaughlin advised this is the result of the late contract for VIA which the council approved in October. As Mr. Turley mentioned, some of the proposed amendments are a timing issue related to when the budget was prepared versus when the contract was approved. The VIA contract is $650,000, but there is $300,000 in 2023. By next week she will have a better idea of how much of that was anticipated in the 2024 professional services and any remainder. It preliminarily looks like the comprehensive plan contract could be covered with the commerce grant in addition to expenditures in 2023. However, this decision package also includes the code modernization work. Typically contract carryforwards are considered in February; however, in discussions with finance, it would have been better to do a decision package for the code modernization work in 2024 instead of assuming a carryforward. She suggested the council consider what level of code modernization work is of interest in 2024. The items listed are existing draft scopes of work that have not yet been awarded. She will provide exact numbers at the next meeting. Councilmember Buckshnis recalled there was a full-time code writer and asked when council approved the unified development code (UDC), what that will consist of, and whether the code writer had already been working on it. She was unaware the code work was contracted out. Ms. McLaughlin answered there was funding in 2023 that covered a term limited position as well as contract work with consultants. A lot of work was done inhouse using the term limited position on minor code amendment packages, the CARA and a series of other code amendments, and no consultants were used in 2023. The code has been completely reformatted and is much more user friendly. She anticipated an overhaul of the code content in 2024. Now that the code has been swept for minor code amendments and bigger ticket items, it will be looked at more holistically like is done in other cities with a UDC. That level of work is typically done by a consultant for expedience. A recent vacancy was filled by the term limited position doing the code modernization, Rose Haas, so she is now in a permanent position and budget is not required for the code modernization work. Councilmember Buckshnis asked if Ms. Haas was still working on the code. Ms. McLaughlin answered she moved into a planner position and is absolutely doing code modernization work as well as permitting which the planner position requires. Councilmember Buckshnis said council has only received 2-3 code changes which were basically formatting. She was hesitant to spend money for a consultant until she understood what the UDC was. She suggested discussing that next week when staff returned with revised numbers. Ms. McLaughlin advised the numbers are completely clear related to code modernization; that work cannot be done in 2024 without these added funds. Ms. Haas will still work on minor code amendments and major code amendment that arise periodically like the CARA, zoning changes and ADU work. However, work on the UDC cannot be done in 2024 without these additional funds; inclusion of those funds in the budget depends on council's interest regarding that work. Councilmember Buckshnis said she was unaware of this policy issue even though the council has been requesting a code update for years. She observed the budget includes over $500,000 for Planning & Development professional services and asked if the intent was to provide a revised amount that included that $500,000. Ms. McLaughlin answered the majority of that is related to the comprehensive plan contract. Councilmember Buckshnis observed some 2023 funds have already been spent on the comprehensive plan update so the proposed amendment that includes $649,000 for the comprehensive plan update is inaccurate. Ms. McLaughlin agreed, advising that is why staff proposed returning to council next week with a revised amount. Edmonds City Council Approved Minutes November 30, 2023 Page 7 Councilmember Paine asked if the need for the UDC was due to Edmonds being a really old city and there are a lot of old things in the code. Ms. McLaughlin explained there are different aspects related to updating code such as minor amendments and ongoing code amendments. The UDC is an opportunity to tackle policy related issues that are inconsistent or in conflict with today's practices. She was unsure if was due to Edmonds being an old city as a lot of cities are doing this to modernize, simplify and make codes more user friendly. It does take a deeper drive because things are interconnected in the development code. Lynnwood recently did this and Kirkland is working on their code. Council President Tibbott summarized this proposed amendment will be postponed until the next regular meeting. Meadowdale Preschool Expenses Mr. Turley explained to continue the Meadowdale Preschool next year, an additional expenditure authority of $64,956 will be needed; this is partially offset by $28,500 in tuition revenues. Councilmember Olson asked if the expenditures anticipated for 2024 represented in the decision package reflected any tuition increase. She recalled when the conversations occurred earlier this year, it was clear this was one of best known, appreciated and recognized preschools in the area and it had a great reputation, even being voted as the top local preschool in 2023, yet it was her understanding it was significantly lower priced than others in the area. Since this is a City of Edmonds program, she suggested the tuition not be quite as much lower than the competition. She asked if the amendment included a tuition increase beginning with the 2024 school year. Deputy Parks, Recreation & Human Services Director Shannon Burley answered she has young kids and is a big supporter of early childhood education. Having done the research as an Edmonds mom, this is a phenomenal program with incredible staff and the students draw huge benefits. There has been a reduction in enrollment, likely not cost related but due to the Edmonds School District (ESD) adding preschool services that are approximately the same price, but offering a longer day, food service, and the convenience of dropping off older kids and preschoolers at the same place. Ms. Burley continued, staff researched similar programs and factored in a price increase that would not impact enrollment; a large increase may reduce enrollment. Staff does not think the preschool is low priced now and there could be capacity for a $20-50/month increase to continue the program. There are currently 19 students enrolled and it is anticipated that number will remain flat. The best way to increase revenue for this program is to increase enrollment; however, the facility and staff only have capacity for up to 28 students. For that reason, the program cannot be cost neutral. The biggest increase has been in salary and benefits; part-time employees now receive full benefits so the two employees running the preschool program receive full benefits and also received significant salary increases. An increase in expenses combined with a decrease in revenue and enrollment creates a challenging situation. This program does not serve low income families as there is no scholarship program. That could be considered, but the more prices increase, the more it prices out families struggling to find affordable preschool. The Meadowdale Preschool is not childcare and is not a licensed childcare facility or licensed program and in fact is only 2'/z hours/day Monday -Thursday which makes it difficult to increase prices much. Ms. Burley summarized it comes down to council's appetite for subsidy. Staff knew 2024 would be a challenging budget year and were trying to be fiscally responsible. To be financially prudent, parks evaluates all its programming and looks at cost recovery. There are cost recovery targets for various programs; some should be subsidized such as environmental education, other programming should be cost neutral such as athletic leagues. Staff would be comfortable with a 10% cost recovery and subsidize the program 10-15%, but the proposed budget is not even close to that. Edmonds City Council Approved Minutes November 30, 2023 Page 8 Councilmember Olson commented this was a very important conversation to have as it was not on anybody's radar that the preschool wasn't cost neutral or flourishing. The first priority should be getting to full enrollment of 28 which would provide additional tuition. She observed there are two classrooms, if only one is full, there are only staff costs for one. Ms. Burley answered there have to be two people at all times. Councilmember Olson observed there are two classrooms. Ms. Burley explained there are an AM and a PM classes with the same two instructors for both. With enrollment of 28 for fall, the City's subsidy would be approximately $84,000 or $3,800/student which is still pretty high. Councilmember Olson commented as a community that values early childhood education, the program is fulfilling a need. She learned some of the students in the program are Mukilteo residents which is a consideration for subsidizing it with Edmonds tax dollars. She observed the Meadowdale Clubhouse is not often used and suggested hosting a for -the -children book club that could meet at that same location and the fees could support the gap between the tuition and expenses. She was unsure if the council wanted to vote on this tonight or wait a week to get more input. Recognizing it has been a 30-year program, she did not want to throw it out before considering all options. Ms. Burley pointed out the budget ensures all students stay in the program through the end of the June 2024 school year. Because this is preschool, kids do not return year after year. Staff s proposal was for the currently enrolled students to get the full benefit of the preschool through the end of the school year in June 2024 and not open enrollment for next fall due to the new ESD programming that is in direct competition with this program. In the past the City had an ILA with ESD where they referred students to this preschool; they obviously are no longer doing that as ESD has their own program. She concluded this was the convergence of some unfortunate circumstances and she apologized this was a difficult decision for elected officials to make; that was certainly not staff s goal. As staff did a budget scrub and in trying to be fiscally responsible, this bubbled up. Councilmember Nand thanked Ms. Burley for providing context on this very difficult subject. She explained she tries to be very cognizant when discussing increasing councils' asks to staff that council is often describing platinum level service and trying to fund it at an economy level investment. She asked if there would be capacity to establish an enrollment referral system from the Edmonds, Mukilteo or Shoreline school districts to full enrollment. She recognized some people think preschool should be universally funded and that it shouldn't matter whether children from other cities are benefitting from Edmonds' preschool; it is a society wide benefit for children to receive early education. She asked if establishing a referral system would be within staff s capacity. Ms. Burley answered the City had that previously with ESD; this is the first year that that partnership is no longer in place due to ESD reestablishing their own preschool. She did not know if ESD would have any interest in that and would need more time to research it. Councilmember Nand commented the City is directly subsidizing the ESD via ARPA funding provided for the school intervention coordinators. She expressed support for delaying this decision to allow for continued discussion. She recalled the City received very passionate responses from the community at the suggestion that this program would be closed including people who expressed shock they were not aware there was something this affordable. Councilmember Eck referred to the materials council received that state efforts will continue to establish practices that increase revenue while also decreasing expenses and asked what that meant in the way of options if this wasn't approved. Ms. Burley answered the staff running the preschool are currently authorized to work up to 80% FTE so that is what is included in the budget. They have not been reaching that hour load, they are usually reaching an hour load of about 60% FTE. However, that opens a union discussion, she cannot just reduce a person's FTE percentage unilaterally. That is one potential cost saving opportunity, but it would need to be explored with the union and she did not have a lot of confidence about changing it. There may be an opportunity to further increase fees without decreasing enrollment, that is a Edmonds City Council Approved Minutes November 30, 2023 Page 9 balancing act, and there are potentially other programs to increase revenue as Councilmember Olson mentioned. The fastest and most efficient way to increase program revenue is to increase enrollment, but if there isn't demand and with increased competition, it becomes trickier. Councilmember Paine asked if the cost cited included maintenance of the facility. Ms. Burley answered no, it is only staff, supplies, Wi-Fi fee, etc. Councilmember Paine asked if she knew the cost of maintenance. Ms. Burley said she would need to check with the facilities department. It is an older building and it is her understanding it will be included in the comprehensive plan facilities evaluation to see whether the preschool is the highest and best use of that facility. Another way to increase revenue for that facility would be to increase rentals. The upstairs room can be rented but since COVID, the kids have been spread out more in the facility which decreases potential rental revenue. Rental revenue is reflected in facilities rental, not preschool revenue. Councilmember Paine asked if there was a waitlist at ESD for their preschool program for fall 2024. Ms. Burley answered not as she understands it. As a parent of kids in the ESD, she receives quite a few flyers advertising their preschool program. Councilmember Paine observed that indicates the district is still seeking students. She was not opposed to having students move into the Mukilteo or ESD for preschool education. It is unfortunate that the City's preschool program is not self-supporting, but she is always interest in more information. Councilmember Olson cautioned the council to keep in mind the sensitivity to geographic distribution of City amenities. The feedback received from people about the program was that it was the reason they chose to live in that neighborhood, etc. and although that is not at the crux of making a decision, it is something to keep in mind when thinking about equity and distribution of all Edmonds communities. North Edmonds is not a super amenity rich area of the City in terms of clubhouses and/or programs. Reduce Budget for Traffic Impact Fees Mr. Turley explained after further analysis, staff determined estimated traffic impact fee revenue to street construction fund 112 needed to be reduced by $380,000. This does not affect spending authority, but helps more accurately estimate funds by the end of the year. COUNCILMEMBER OLSON MOVED, SECONDED BY COUNCIL PRESIDENT TIBBOTT, TO APPROVE. Councilmember Buckshnis asked if the reason for the reduction was reduced construction. Mr. Turley said the information provided to him was it was related to estimates of future building and development in the City. The planning department knows what permitting has come in and estimates what will be developed in the next 1-2 years which is how the traffic impact fee budget is calculated. MOTION CARRIED UNANIMOUSLY. Commissioned Officer Negotiations Mr. Turley advised there is one labor contract outstanding. When the budget was prepared, an estimate was included for the anticipated increase once the contract settled. Five months later, it is believed the contract will be higher than originally budgeted. The best estimate is a budget increase of $200,414. In an effort to minimize surprises to council, staff is trying to update estimates as much as possible. This is an example of one the council does not have to approve now because the contract has not been settled yet. The contract could be settled soon or could take months. Councilmember Olson thanked Mr. Turley for bringing this forward, advising she had been stressing about it coming as a surprise. The lower the reserves are, the more critical it is for predictions to be accurate and conservative so the council can make good choices in weathering the coming storms. Edmonds City Council Approved Minutes November 30, 2023 Page 10 A MOTION WAS MADE BY COUNCILMEMBER OLSON AND SECONDED TO APPROVE THIS DECISION PACKAGE. Councilmember Buckshnis commented this will impact the strategic outlook on page 16 that initially included 7% for increases. Mr. Turley answered the 7% is for 2025. This would update the numbers in the 2024 budget column and would flow through to future years via the formulas. The 2025 estimate would increase 7% x $200,000 or about $15,000. Council President Tibbott relayed his understanding this was the best estimate of the amount once the contract is settled and he agreed it helped for planning purposes. He asked the effect of waiting until later in the year to approve this as an amendment to the budget. Mr. Turley said council and staff over the next weeks and months will be working together to make adjustments to the 2024 budget. Not having this in the budget would be one more line item that needs to be taken into account when making those adjustments. All staff can do is provide the best estimates possible and try to fit them into the budget. It would make next year's budget look better when it is adopted, hopefully in the next 1-2 weeks, but it would add an extra layer of work during first quarter 2024. Council President Tibbott did not support the motion, preferring to look at it when the council has had a chance to evaluate the budget during the first quarter. Councilmember Olson pointed out these contracts have retroactive pay so expenses are being incurred even before the contract is approved. She encouraged councilmembers to approve the motion so a more accurate reflection of what will be spent is included in the budget. Councilmember Paine encouraged councilmembers to spend time looking at revenue, something the council has not talked about yet. It is absolutely critical to collect additional revenue starting in 2024. If not, there will be a lot of pain in the community and in the employee family. The council needs to start having that discussion fairly quickly to avoid causing worry, anxiety and hurt across the entirety of City of Edmonds staffing and in the community. She was glad to have the Fitch & Associates contract in place to begin looking at expenses and options once SCF provides numbers to the City. She reiterated the need for the council to start looking at revenues. Councilmember Buckshnis said the council has been talking about revenues and she recommended forming a taskforce related to long range financial planning and a levy. That will require engaging the administration; the council is trying to get through the budget process now. She recalled the council approved a decision package that provided $3.2 million credit for vacancy rates. She was on the fence with Council President Tibbott that although this $200,000 includes retro pay, the amount is unknown although she recalled the budget amendment in April 2023. She referred to page 16, the strategic outlook, that illustrates an approximately $2 million increase in labor. She asked if the proposed $200,000 was for labor or labor and benefits. Mr. Turley responded it included labor and benefits. Councilmember Chen said he will support the proposed amendment because last year's mid -year budget amendments that included retroactive pay had a significant effect on the budget. This is a proactive approach and even though it is a rough estimate, it is a good idea to include it in the budget. UPON ROLL CALL, MOTION CARRIED (6-1), COUNCILMEMBERS ECK, CHEN, BUCKSHNIS, OLSON, PAINE AND NAND VOTING YES; COUNCIL PRESIDENT TIBBOTT VOTING NO. Reduce Non -Rep Salaries and Benefits from 4.6% to 4.0% Mr. Turley explained the budget included a 4.6% increase for non -rep employees. The council approved a 4.0% increase which results in a $54,2313 reduction in non -rep salaries and benefits. Edmonds City Council Approved Minutes November 30, 2023 Page 11 COUNCILMEMBER PAINE MOVED, SECONDED BY COUNCILMEMBER CHEN, TO SUPPORT ADJUSTING THE EXPENDITURE AMOUNT BY REDUCING THE AMOUNT FOR NON -REP SALARIES TO 4% WHICH IS $54,213. MOTION CARRIED UNANIMOUSLY. 3. PROPOSED REVISION OF PURCHASING POLICY AND SPENDING AUTHORITY Council President Tibbott explained this is a proposed revision to the current purchasing policy and spending authority. Currently the mayor's spending authority without council approval is up to $100,000 and staff s spending authority is $50,000. The proposal is to reduce that on a temporary basis and sunset at the end of 2024 to, 1) ensure the council is better informed in a timely manner of contracts that may impact the budget, and 2) encourage staff to think ahead about purchases/contracting and bring it to council either in the budget year it is most needed or put it off to another year. It is really an awareness so council can exercise fiscal restraint when needed and advise staff when best to expend funds. He recognized it was a blunt instrument and it was not nuanced in any particular way. He was open to additions to the policy in the first quarter of 2024 but encouraged the council to approve this now so it is in place to practice fiscal restraint. COUNCIL PRESIDENT TIBBOTT MOVED, SECONDED BY COUNCILMEMBER BUCKSHNIS, TO APPROVE REVISIONS TO THE PURCHASING POLICY. Councilmember Buckshnis said the revised purchasing policy does not say anything about sunsetting. She asked whether this would be adopted via a resolution indicating the change would sunset at the end of 2024, noting policies are typically adopted by ordinance. City Attorney Jeff Taraday said to his knowledge the purchasing policy has never been adopted by ordinance. There is a resolution in the packet that would adopt the revision to the purchasing policy; Section 2 of the resolution references the sunset. Councilmember Buckshnis Buck suggested addressing something she has seen a number of times in the last couple years, two different directors approve a contract for the same consultant so together they are actually over the contract limit. She asked if there was a way to require an accumulation of contracts by two different directors for nearly the same reason be approved by council. Mr. Taraday said language could be drafted to get at that issue, but he would need to confer with staff before drafting to understand the impacts. He suggested there are aspects of the purchasing policy that might warrant more careful study and more in-depth review at a later date; this might be something that could be addressed then instead of tonight. Councilmember Buckshnis pointed out the council are policy makers and she has seen this abused a number of times where the council denied a contract and then another director approves it under their limit. She preferred to add this amendment tonight because she has seen the council disregarded time and time again even though the council are the policy makers. Mr. Taraday said he was not trying to deprive the council of its policy making authority; he was saying if the council wanted the amendment to be well drafted, he was not confident he could do that on the fly as it is a complicated document. Councilmember Buckshnis suggested she could make a motion saying that any accumulation of similar contractors needs to be approved. Mr. Taraday responded he would not stop her from doing that, but he did not have confidence that something drafted from the dais would be well drafted. COUNCILMEMBER BUCKSHNIS MOVED, SECONDED BY COUNCIL PRESIDENT TIBBOTT, TO AMEND THE RESOLUTION THAT ANY ACCUMULATION OF SIMILAR CONTRACTORS NEEDS TO BE APPROVED. Council President Tibbott suggested the city attorney could draft the language. Councilmember Olson expressed support for adding language to the policy and having the city attorney work with council to draft language about accumulating, not only by contractor, but also by project such as Edmonds City Council Approved Minutes November 30, 2023 Page 12 3-4 contracts that support the same project and that project being over the contracting limit. Mr. Taraday asked if Councilmember Olson intended that as an amendment to the amendment or a later amendment. He will happily follow whatever direction the council provides, but the project based aspect adds yet another later of complication because it would require defining what constitutes a project, etc. He was not saying it couldn't be done, it just would require some careful thought. Councilmember Olson said she will offer that as a separate amendment. Councilmember Paine assumed all contracts are reviewed by committees and then by council so there are multiple opportunities for council to ask questions including whether a contract will be bundled from different funding sources. It is not an unusual practice in municipalities to have funding from multiple departments. She wanted it to be clear that the council has its fingerprints on contracts on a regular basis and also has access to the people that put the contracts together. That probably should be included in the draft policy, but the council always has the opportunity to do that and there has never been a gap. Councilmember Nand thanked Council President Tibbott for bringing this forward and starting the conversation and for acknowledging this is kind of a blunt instrument although it provides space to discuss issues to be addressed in this context. She serves on the SNOCOM 911 board who chose to raise its executive director's contracting limit in response to inflation and to maintain nimbleness and functionality in the program. She was concerned about administrative backlog and forcing council to micromanage most of the directors and staff s activities when the council is part-time. Council President Tibbott raised a point of order, asking if Councilmember Nand was speaking to the amendment. Councilmember Nand offered to make a motion to table, because she would like to get feedback from staff and directors regarding the impact this would have on their ability to perform tasks. Councilmember Eck said her question was similar to Councilmember Nand's question, she wanted to understand the impact to the process and staff s ability to move as quickly as they need to in many instances. She did not know many contracts this would require come to council for approval versus the administration approving the contracts. She did not want the revised policy to be a bottleneck. Councilmember Buckshnis found it odd and concerning that this was happening with the new mayor. Few contracts come through council committee unless they are over the limit. Her concern is the use of the same contractor to do branding and visioning which the council did not even know about, something council needs to be very contentious about. She suggested not changing the mayor's limit and only changing the director's limit. Councilmember Olson said she also thought about only changing the director's limits, fearing it would be a lot for the council to get involved in and it may not be a bad idea for the directors to have more contracts approved by the mayor to avoid overspending available funds. Mr. Taraday restated the motion: DIRECT THE CITY ATTORNEY TO BRING BACK LANGUAGE THAT WOULD ADDRESS THE ISSUE COUNCILMEMBER BUCKSHNIS RAISED ABOUT TWO DIFFERENT CONTRACTS FOR THE SAME VENDOR BY DIFFERENT DIRECTORS. Councilmember Olson commented it appeared several issues needed to be addressed so possibly forming a taskforce that included staff, councilmembers, and the city attorney would be more productive. She will probably not support the amendment because she did not feel it was a very constructive way to make policy changes. Councilmember Chen said he was seriously considering tabling this. Like Councilmember Nand said, the council does not want to micromanage and make operations inefficient. There are many instances where Edmonds City Council Approved Minutes November 30, 2023 Page 13 directors need to move and this policy has been in place and has worked well. Some of the instances of overspending, he envisioned with new leadership and different styles, it would be a different direction. Mayor Nelson questioned Councilmember Chen making such a statement, relaying his hope that the dialogue would remain respectful. COUNCILMEMBER CHEN MOVED, SECONDED BY COUNCILMEMBER OLSON, TO TABLE THIS ITEM. MOTION CARRIED UNANIMOUSLY. 4. COUNCIL 2024 BUDGET DELIBERATIONS DP or New CM Fund Description Department New Tibbott GF Add $44,500 for Fire Service Feasibility Assessment Council Council President Tibbott explained instead of a 2024 budget item, the council would like to pay the first half out of council contingency funds and carryforward council funds into 2024 to pay the remainder, essentially approving funding authority using the 2023 budget with carryforward into 2024 for the remainder of the contract. COUNCIL PRESIDENT TIBBOTT MOVED, SECONDED BY COUNCILMEMBER OLSON, TO APPROVE FUNDING AUTHORITY USING THE 2023 BUDGET WITH CARRYFORWARD INTO 2024 FOR THE REMAINDER OF THE CONTRACT. Councilmember Buckshnis observed there is $35,000 in council contingency, so the motion would be reduce that to $9,500. Council President Tibbott advised the miscellaneous fund has not been not completely exhausted. The carryforward would be to use the remainder of the council budget for the remainder of the contract. Councilmember Olson asked Mr. Turley if he objected to the council passing something tonight with the understanding it would be paid from the 2023 budget or would he prefer it be discussed at the next council meeting after conferring with him. Mr. Turley said the amount to be appropriated is $44,500. The City is not a cash basis entity and reports on a modified accrual basis. In this case, his understanding is regardless of when payment is made, the majority of the work will be done by the consultant in 2024 and the product delivered in 2024. It doesn't matter when the check to pay for it is written, it will end up in the 2024 budget. If the council adds it to the 2023 budget, there would need to be a carryforward into the 2024 budget as that is where it ultimately will be recorded. Councilmember Olson agreed that was the intent. She asked if anything needed to be done behind the scenes between now and when the council votes to make that work. Mr. Turley responded the decision package is to add $44,500 to the 2024 council budget and that would be the appropriate method. Councilmember Olson said that would be done via a carryover from 2023 which is the desired change. Mr. Turley answered there was no benefit to doing that because it will have no effect on 2023 when everything is done. It doesn't matter when the check is written, it matters when the product is delivered and when the work is done. Councilmember Olson reiterated the desire was to have it be a carryforward using funds that were already in the 2023 council budget. She wanted to use the 2023 budget carried forward into 2024. Mr. Turley answered it doesn't work that way. The 2023 budget is not affected so there is nothing to carryforward. If this contract had been approved in June and funds allocated in 2023, it could be carried forward to 2024 if it did not get done until next year, but there is no point to putting into 2023, taking it out and putting it in 2024. That is what she would be asking to do with a carryforward. Councilmember Olson observed Fitch & Associates are starting work right away. Mr. Turley said that is irrelevant, it doesn't matter when the check is written because the City is not a cash basis entity. Edmonds City Council Approved Minutes November 30, 2023 Page 14 Councilmember Buckshnis explained there is only $5,000 in the council's 2024 budget and $44,000 in miscellaneous and professional services. She relayed her understanding that Mr. Turley was suggesting the council change the 2024 budget even though there would be a payment in 2023 using $5,000410,000 from the 2023 budget. Mr. Turley said that is what the finance department spends a lot of time doing in January/February, looking at when the check went out the door and ensuring it is charged to the expense account in the right period. For example, some things the City pays for in January and the work was done the previous year needs to be accrued back into the previous year. Sometimes things are paid at the end of the year, but there is nothing received until the following year so the expense has to be moved to the following year for financial reporting. If expense authority is added to 2023, it will just be moved to 2024 a part of the yearend closing process. Councilmember Buckshnis observed it would not need to be included as a carryforward. Mr. Turley agreed, things should not be added to the 2023 budget to be carried forward to 2024. Councilmember Buckshnis asked if Mr. Turley was suggesting the council amend the 2024 budget to add a $44,500 expenditure. Mr. Turley answered yes, increase the 2024 budget by $44,500. COUNCIL PRESIDENT TIBBOTT WITHDREW THE MOTION WITH THE AGREEMENT OF THE SECOND. COUNCIL PRESIDENT TIBBOTT MOVED, SECONDED BY COUNCILMEMBER BUCKSHNIS, TO APPROVE THE DECISION PACKAGE IN THE PACKET. Council President Tibbott referred to the decision package on packet page 57, funding of $44,500 for Fire Services Feasibility Assessment. The justification is council has passed a resolution expressing intent to pursue the benefits of receiving fire and emergency medical services from the South Snohomish County Regional Fire Authority via annexation. Council will use the analysis of this study to evaluate alternative fire service options. The total cost of this study is $44,500 funded via the General Fund. A check can be written to the consultant this week and the final check will be written in 2024. The decision package accurately reflects that movement of funds. Mr. Turley said the check written in December could put into a deposit or handled as a prepay so it doesn't hit the expense account in 2023. Councilmember Chen suggested doing a budget amendment in 2024 to capture the 2023 expenditure, but Mr. Turley' approach with a prepay will also work. MOTION CARRIED UNANIMOUSLY. DP or New CM Fund Description Department NEW Buckshnis ARPA Direct $6,250,000 directly to Fire Services Contract Inter -departmental COUNCIL PRESIDENT TIBBOTT MOVED, SECONDED BY COUNCILMEMBER BUCKSHNIS, TO DEDICATE $6.25 MILLION IN AMERICAN RESCUE PLAN ACT FUNDING TO THE 2024 SOUTH COUNTY FIRE EXPENSE AND PAY THAT FROM THE ARPA FUND INSTEAD OF THE GENERAL FUND. Councilmember Olson asked if the council had already done this. Council President Tibbott advised this was to designate funds specifically for the fire service contract. Councilmember Paine said she was glad to see this. As the council worked through amendments, she wanted to have ARPA funds, if not appropriated for other expenses, be used for SCF expenses. Edmonds City Council Approved Minutes November 30, 2023 Page 15 MOTION CARRIED UNANIMOUSLY. DP or New I CM Fund I Description Department New I Chen GF I Reduce 2024 Overall Expenditures Budget Council President Tibbott advised this budget amendment proposed two weeks ago by Councilmember Chen that was tabled. COUNCILMEMBER CHEN MOVED, SECONDED BY COUNCILMEMBER BUCKSHNIS, TO REDUCE OVERALL EXPENDITURES BY $4 MILLION. Councilmember Chen explained this proposal is an overall approach. The council has a big decision next Tuesday about Landmark 99 which has a direct impact on the 2024 budget. However, the current 2024 budget proposal does not have any expenditures budgeted if the council approves moving forward. As a tradeoff, he respectfully invited Mayor Nelson and the administrative team to fully cooperate with the council to find opportunities to reduce overall expenditures so there will be funds to move the Landmark 99 project to the next stage. He summarized that was a different angle to this amendment to invite cooperation from Mayor Nelson's administrative team. Mayor Nelson asked the city attorney to explain how the budget process and amendments work and the specificity or lack thereof that is needed for these sorts of actions. City Attorney Jeff Taraday said he addressed some of this when Councilmember Chen made this motion previously. The mayor's proposed budget has been delivered to council and now it is the council's budget to do with as they like. The council has full legislative discretion to do what it wants with the budget, including adopting this motion which is a legal option for the council to exercise in adopting the budget. However, the council cannot force the mayor to essentially deliver a second proposed budget with $4 million less in expenditures. The mayor is only required to submit one proposed budget which he has done. To the extent any additional involvement from the administration in terms of working with council is required, that is entirely up to the mayor and his staff. Councilmember Chen clarified this is an invitation. Councilmember Paine commented it is the council's responsibility to make these decisions. She did not support the motion as there are revenue opportunities for the council to consider, specifically the unpopular red light cameras or revisit transferring $2 million from the building maintenance fund to help bolster the 2024 budget. It is not responsible to take $4 million out of the budget; it will take time to look at every item in the budget book and the operations of the City. Such cuts will also impact delivery of services to the community. The City is not overly staffed or flagrantly making large expenditures without discussing them. The council looks at every contract and wordsmiths them from the dais on a regular basis and is well informed about what is going on in the City. This proposal will require looking at staffing reductions which is not something the City can afford at this time because the level of service is pretty much the right shape. She encouraged the council to begin looking at revenues. Councilmember Eck commented the risk is the council would be compelling staff to make extreme choices that might not be made if the council could be more thoughtful with their suggestions. Everyone can agree that staffing changes should be a last resort and to her, doing something this broad was unnecessary when the council could be more specific. She expressed interest in the council doing that work. Councilmember Nand said the council spent the first part of tonight's meeting discussing things like defunding the Meadowdale Preschool which staff had recommended and this council did not have the political will to do that tonight. The council has to have the political will to make unpopular decisions to reduce $4 million in spending. Staff has undertaken their due diligence and been responsive to council Edmonds City Council Approved Minutes November 30, 2023 Page 16 requests and suggesting changes and now it's council's responsibility to make those cuts even though it will be at a political cost. If there is a desire to cut $4 million from the budget, she suggested revisiting the Meadowdale Preschool, the Fitch & Associates contract and looking at how to cobble together $4 million in savings from the dais because council already has the necessary information. Council President Tibbott did not support the motion because it lacks specificity. There are ways the council can look at the 2024 budget and be more surgical to get the budget to a place the council would be comfortable passing it that leaves some reserves in place by the end of the year and then work on it in the first quarter when there is a better scope of what's ahead. He did not support this amendment, but was prepared to make motions on a list of proposed budget cuts at the next council meeting. Councilmember Buckshnis expressed shock at Councilmember Chen's horse trading find it shocking that he would make a statement that he would pass something costing $37 million to have the mayor reduce the budget by $4 million, those are two separate topics. When the council received the mayor's budget, it included imbedded policy decisions that the council never approved or even knew about. In essence the council was given a fluffy budget with policy decisions the council did not make. The City has gone from a $12 million reserve to $868,000 and council has still not seen all the numbers or reviewed all the decision packages so they really don't know the real numbers. She asked if there was anything that could be done from a policy level to prevent this from happening, the council receiving a budget that looks fabulous, showing reserves of $12 million, when that in fact was not the case. Councilmember Buckshnis asked if there was a way to ensure the council receives a realistic budget based on policy decisions made by council. Mr. Taraday answered each year's budget contains the mayor's proposed vision for the next year. The council is not obliged to accept that vision and can make whatever changes it wants such as not accepting proposed revenue sources. It is the mayor's proposed budget and vision and then it becomes the council's budget and vision. There is nothing improper about the mayor providing his proposed budget and vision. The mayor's budget does not bind the council or require that the council agree with the mayor. The mayor is an elected official and has the duty to put forward a proposed budget which this mayor has done. He did not think there have been anything improper; the council can disagree with the budget, but as far as whether the mayor has satisfied his duty to provide a proposed budget, Mr. Taraday concluded he has. Councilmember Buckshnis said she was trying to get answers for some very financially astute citizens. The City has a crisis, the burn rate is still unknow and the City may not be able to sustain itself for the next three months due to the burn rate and the real numbers have not yet been received. She did not support the motion. The council approved a $3.2 million vacancy amendment on the fly which added $3.2 million to the budget. She has also found a number of savings such as in professional services, a budget line that has gone out the roof. She hope when the council started going through the budget process and getting the real numbers, savings could be identified. She was unsure how the figure of $4 million was identified. The council needs to be extremely conservative when reviewing the mayor's proposed budget. Councilmember Olson did not support the motion. She appreciated the idea behind the motion and $4 million is on target and maybe a smaller target for the cuts that are needed. She had been hopeful, especially based on the memo from staff saying they wanted to be collaborative and work with the council on this challenge, that the proposed staff changes would include significant cuts, but that didn't happen. She stayed up all night reviewing the budget line item by line item and found $1.25 million in cuts which is a lot less than $4 million. There needs to be $4 million or more cut from the budget. The tradeoff was not $4 million in cuts for Landmark 99, it was whether the City would need to take on debt to pay its bills. To those who do not understand that the City is there yet, they need to sit down with the finance director and other municipal finance directors and understand exactly where the City is. It is not a pretty picture; replenishing the reserves by the end of the year is not in the cards without debt financing and significant new revenues. Edmonds City Council Approved Minutes November 30, 2023 Page 17 Councilmember Olson continued, a councihnember has said twice that the council looks at every contract; that is absolutely not a true statement; the council does not look at every contract. In fact, there was a very significant one just under the mayor's contracting authority for Reimaging Streets that the council had no idea was going on until a resident saw it and brought it to the council's attention. She clarified she was not saying that was a problem, it was the truth about the way contracts work, the council did not see contracts unless they were over the contracting authority. She hoped the council appreciated where the City was at, that there needs to be $4 million in cut and it will be a very painful process to do that. Councilmember Chen clarified the purpose of the motion is realizing the situation the City is in, the council needs to find opportunities to make cuts and $4 million may not be enough. It is a good gesture when the City either borrows money or raise taxes to show the council is sincere about controlling expenditures. If the council wants to take a different approach, there is opportunity to do that. For example, $3.2 million in anticipated under -expenditure, professional services, etc. The council needs to roll up its sleeves and go line by line looking for opportunities. He wanted it to be clear that this was not an effort to impact City employees who are hardworking and have jobs, careers and families. The $4 million is the fat in the budget and the intent is not to impact jobs or careers. He was willing to take a different approach, where the council rolls up its sleeves and goes line by line to find opportunities. COUNCILMEMBER CHEN WITHDREW THE MOTION WITH THE AGREEMENT OF THE SECOND. Councilmember Nand said some people have raised the possibility of looking at terminations of some professional service contracts and attempting to negotiate lower performance from the City. She asked if that would be feasible to do or would that potentially expose the City to liability. Mr. Taraday answered it would need to be done on a contract by contract basis. He suggested the council identify specific contracts for staff to provide an opinion regarding whether it could be terminated without significant liability. He requested that direction from council because there are many outstanding contracts and wouldn't be an efficient use of staff time to review them all. Councilmember Nand said she was hesitant to mention specific contracts from the dais due to the prospect of anticipatory beach if the other party wanted to make arguments. She asked if councilmembers should just list contracts via email, which are producible/searchable, and discuss either reducing or terminating entirely. Mr. Taraday said a councilmember could send him an attorney -client privileged email identifying contracts for him to look into. Councilmember Buckshnis said she goes line by line every year and found $1,048,470 in cuts. For example, the 2023 budget indicated an amount and what has been spent is less. She also recommended cutting professional services to a certain level based on prior years and having staff request budget amendments for any additional funds. She wanted to see the numbers first and all the decision packages before requesting $4 million in cuts. The council doesn't have correct numbers other than a cheat sheet provided on packet page 4. DP or New I CM Fund I Description I Department 18 1 Teitzel GF I Remove DP 18 Security and Safety System I Facilities Council President Tibbott suggested relooking at DP 18 suggested by former Councilmember Teitzel related to upgrading security systems which was tabled. COUNCIL PRESIDENT TIBBOTT MOVED, SECONDED BY COUNCILMEMBER BUCKSHNIS, TO REJECT DECISION PACKAGE 18. Edmonds City Council Approved Minutes November 30, 2023 Page 18 Council President Tibbott recalled when this was first proposed, Public Works Director Antillon was not present to answer questions. He asked Mr. Antillon if he had an additional information and Mr. Antillon said he did not. Council President Tibbott encouraged the council to support the motion and when additional information was available, it could be presented as a budget amendment if necessary in 2024 or considered for a subsequent year. MOTION CARRIED UNANIMOUSLY. DP or New CM Fund Description Department DP56 Buckshnis Carbon recovery project WWTP DP66 Buckshnis Street Capital Council President Tibbott advised the above two amendments were withdrawn. COUNCILMEMBER PAINE MOVED, SECONDED BY COUNCILMEMBER CHEN, TO MOVE $250,000 RESERVED FROM ARPA FOR SMALL BUSINESS SUPPORT GRANTS TO THE SOUTH COUNTY FIRE CONTRACT SO THE PAYMENT TOTALS $6.5 MILLION. Councilmember Paine commented this is a good way to pay the fire contact, it one of the City's major expenditure, it is an allowable use of ARPA funds, and it is prudent for the City to do at this time. Councilmember Buckshnis recalled the amendment had been withdrawn. Councilmember Nand advised she had withdrawn this motion until the end of the budget process to see if it could possibly be funded. She will speak against it. Councilmember Olson spoke against the motion, explaining the reason she encouraged Councilmember Nand to separate this out and pass the fire service payment using ARPA funds in the amount of $6,250,000 instead of $6.5 million was due to their hope the small business support grants could be funded with the remaining ARPA funds. They have specific businesses in mind that were impacted by COVID. One of them that was recently discussed in the media, the Edmonds Theater, was closed during COVID. These small business support grants could be extremely helpful to businesses including some who were victims of an arson fire and hate crimes related to the COVID virus. She was hopeful the council could get through the budget process and be able to use the ARPA funds in that way. They recognized the fiscal emergency and knew those funds would be needed and approved a lower payment amount to SCF in the short term, hoping to hold these funds in the hope they could be used for the small business grants. Councilmember Nand explained this $250,000 is money originally presented to the community through a fagade improvement program that was never advertised even though specific businesses, for example the owner of Maize & Barley, Venus Forteza, approached her to ask how she could access these funds. She works over 50/hours week trying to keep her business afloat and didn't have time to figure out the bureaucratic maze, however, the program was never offered in 2023 as originally intended. So much time has been spent discussing how to preserve the City's own workforce that the ARPA funds originally intended by congress to address the financial and economic impacts of the pandemic are entirely bypassing the small business community. There are now empty storefronts in Edmonds and the community is poor from the loss of these jobs and engines of economic opportunity. Councilmember Nand continued, in her opinion, devoting $250,000 out of $6.5 million in ARPA funds would not be determinative or significant enough to this budget compared to the impact to these small businesses, possibly the difference between them staying open or closing. For example, the Edmonds Theater has a donation box because they are desperately trying to keep their employees working. Fourteen businesses in the Plum Tree Plaza were impacted by an arson fire that targeted a Muslim owned business. Some of those businesses could potentially return to Edmonds if they had a little financial incentive and by Edmonds City Council Approved Minutes November 30, 2023 Page 19 the City acknowledging they have had a terrible experience but that is not representative of the community. The grants may only be $5,000, but that is an important message to send to those businesses. She will push hard to save these funds, but understood the totality of the fiscal emergency and if at end of the budget process this small sliver of the $6.5 million could not be preserved for small businesses, she will yield. Councilmember Paine was supportive of supporting small business, but the City has already spent $77,000 for business support, $318,000 for job retraining, $59,000 for nonprofit support, and $778,000 for household support in 2023, a total of $1.2 million. She respected the desire to continue to support small businesses, there is a program in place and she hoped there was a commitment to work with the program in place and not asking Director Tatum to develop a new program to distribute those funds. She preferred the funds be used to pay SCF, recognizing there are needs in the budget to keep the ship afloat that will help the entire community. Council President Tibbott expressed support for the motion. It was not that he did not support small businesses, but it would be valuable to provide that level of support for the fire service contract and later in the year, possibly in the second or third quarter, grant funds could be set aside to provide support for businesses and work with the economic development director to that end. Councilmember Chen expressed support for the motion, echoing Councilmember Paine's comments. The City has been supporting small businesses; the City is in a financial crisis and needs to pay for fire and emergency services, one of the biggest expenditures other than police. Public safety is always his top priority. Congress has allowed the use of up to $10 million in ARPA funds for General Fund expenditures. Councilmember Olson advised ARPA funds can be used to support businesses impacted by COVID; General Fund money, assuming they are available in the future, cannot be used for that purpose. She asked if that was correct, assuming it would be a gift of public funds. Mr. Taraday answered that was generally correct, he would be hesitant to recommend General Fund dollars be gifted to businesses. It is not to say in every case it would be an unconstitutional gift of public funds, but he would definitely have concerns about it, whereas ARPA funds are specifically allowed for that purpose. Councilmember Olson said those funds was purposedly preserved in that way because she understood if the council cannot get through the budget process without making that $250,000 available for the fire contract, the intent was to revisit this. She encouraged councilmembers to vote no for now so there is that option in the event the council can make it happen. She summarized it was not that it would never be used to pay the fire contract, it was just delaying that decision to see if there was an opportunity to use it to fund small business grants. Councilmember Nand explained the reason she withdrew these funds and was willing to work with staff on the parameters of the program was to be respectful of the City's financial situation. This is a historic avenue of federal funding the City will not see again. It potentially could have a very positive impact on preserving the vibrancy of small businesses throughout Edmonds. It would be premature to move these funds to the SCF contract. She reminded small businesses do not generally have funds for lobbyists or people to approach government bodies to ask for funding. This is a very small sliver of support the City can provide to the small business community to recognize their suffering. During the pandemic there were empty storefronts for the first time since she was a 12-year old. She will continue to advocate for delaying the decision to allocate all $6.5 million to the fire service contract to see if $250,000 can be preserve for what was council's original intent. Council President Tibbott relayed his understanding the intent is to set aside $250,000 to develop a program for small businesses that is not currently in place that differs from the previous program related to facades. If that can be successfully administrated, then funds would be used for that purpose, and if not, they could Edmonds City Council Approved Minutes November 30, 2023 Page 20 be used for the fire contract in the future. Councilmember Nand agreed, advising this would not be the $25,000 grants originally contemplated under the fagade program; it would $5,000 in general grants for anything the businesses have accumulated such as extra debt during the pandemic. Council President Tibbott said with that explanation, he will support it. UPON ROLL CALL, MOTION FAILED (2-5), COUNCILMEMBERS CHEN AND PAINE VOTING YES; COUNCILMEMBERS ECK, BUCKSHNIS, OLSON AND NAND AND COUNCIL PRESIDENT TIBBOTT VOTING NO. Councilmember Buckshnis asked if the council would begin reviewing the administration's decision packages next week. Council President Tibbott answered yes. She asked how that review would occur, advising her amendments are strictly related to professional services. Council President Tibbott explained the intent is to streamline the line by line process. Councilmembers will have time over the weekend to work on that and begin that process at Mondy's meeting. For example, he identified some amendments in the decision packages and there are some queries that council has been wanting to hear more information about. If information is not available, council can move ahead with the information that is available. He suggested councilmembers focus on the General Fund. Councilmember Olson asked if any there were any decision package in the mayor's proposed budget that councilmembers were ready to bring forward and vote on tonight. Council President Tibbott preferred to dig into those at Monday's council meeting. Councilmember Nand asked if councilmembers could inform Council President Tibbott of contracts they were interested in potentially renegotiating, delaying performance, or terminating and have him send them to the city attorney under attorney client privilege. Council President Tibbott answered yes. ,t�11-role] "11I0 10401" With no further business, the Council meeting was adjourned at 8:34 pm. cszle- SCOTT PASS EY; CLERK Edmonds City Council Approved Minutes November 30, 2023 Page 21