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10/06/2009 City CouncilOctober 6, 2009 The Edmonds City Council meeting was called to order at 7:00 p.m. by Mayor Haakenson in the Council Chambers, 250 5`b Avenue North, Edmonds. The meeting was opened with the flag salute. ELECTED OFFICIALS PRESENT Gary Haakenson, Mayor D. J. Wilson, Council President Michael Plunkett, Councilmember Peggy Pritchard Olson, Councilmember Dave Orvis, Councilmember Ron Wambolt, Councilmember Strom Peterson, Councilmember ELECTED OFFICIALS ABSENT Steve Bernheim, Councilmember 1. APPROVAL OF AGENDA STAFF PRESENT Tom Tomberg, Fire Chief Mark Correira, Assistant Fire Chief Gerry Gannon, Assistant Police Chief Stephen Clifton, Community Services /Economic Development Director Brian McIntosh, Parks & Recreation Director Noel Miller, Public Works Director Lorenzo Hines, Interim Finance Director Rob Chave, Planning Manager Debi Humann, Human Resources Director Carl Nelson, CIO Stephen Koho, Treatment Plant Manager Rob English, City Engineer Gina Coccia, Associate Planner Kernen Lien, Associate Planner Jennifer Machuga, Planner Scott Snyder, City Attorney Sandy Chase, City Clerk Jana Spellman, Senior Executive Council Asst. Jeannie Dines, Recorder Council President Wilson requested the addition of a Council Work Session on the Fire District 1 Contract as Item 4A and also to postpone Item 11, City of Edmonds Website - City Council Web Pages, to a future meeting. He inquired whether Item 12, Discussion and Potential Action on Ordinance Amending the 2009 Budget, could be delayed to a future agenda. Interim Finance Director Lorenzo Hines explained it was important to pass the ordinance amending the 2009 budget so it could be included in the final ordinance amending the 2009 budget. It was his understanding the amendments were codification of discussions that occurred this year; the only difference between the presentation to the Finance Committee and the agenda item was the elimination of the police buy -back and a decision regarding whether to include the Council contingency fund. He anticipated it would be a brief discussion. Council President Wilson agreed to retain Item 12 and Council consideration would be determined by the lateness of the hour when the Council reached that item. COUNCIL PRESIDENT WILSON MOVED, SECONDED BY COUNCILMEMBER PLUNKETT, TO APPROVE THE AGENDA IN CONTENT AND ORDER AS AMENDED, ADDING A COUNCIL WORK SESSION ON THE FIRE DISTRICT 1 CONTRACT AS ITEM 4A AND POSTPONING ITEM 11, CITY OF EDMONDS WEBSITE - CITY COUNCIL WEB PAGES, TO A FUTURE MEETING. MOTION CARRIED UNANIMOUSLY. Edmonds City Council Approved Minutes October 6, 2009 Page 1 2. CONSENT AGENDA ITEMS Councilmember Wambolt requested Item I be removed from the Consent Agenda and Councilmember Plunkett requested Item J be removed. COUNCILMEMBER WAMBOLT MOVED, SECONDED BY COUNCILMEMBER PETERSON, TO APPROVE THE BALANCE OF THE CONSENT AGENDA. MOTION CARRIED UNANIMOUSLY. The agenda items approved are as follows: A. ROLL CALL B. APPROVAL OF CITY COUNCIL MEETING MINUTES OF SEPTEMBER 22, 2009. C. APPROVAL OF CLAIM CHECKS #114249 THROUGH #114363 DATED SEPTEMBER 24, 2009 FOR $1,059,880.19, AND #114364 THROUGH #114534 DATED OCTOBER 1, 2009 FOR $289,015.39. D. ACKNOWLEDGE RECEIPT OF CLAIMS FOR DAMAGES FROM RAY LANKFORD AND VINCE PETOSA (AMOUNTS UNDETERMINED), AND PATRICIA DORGAN ($800.00). E. AUTHORIZATION TO CALL FOR BIDS FOR THE BNSF DOUBLE TRACK UTILITIES UPGRADE PROJECT. F. AUTHORIZATION FOR MAYOR TO SIGN ADDENDUM NO. 4 TO THE PROFESSIONAL SERVICES AGREEMENT WITH BHC CONSULTANTS, LLC. G. REPORT ON BIDS OPENED ON SEPTEMBER 14, 2009 FOR THE ODOR CONTROL IMPROVEMENT PROJECT AND AWARD TO PROSPECT CONSTRUCTION, INC., FOR THE AMOUNT OF $1,410,312, INCLUDING SALES TAX. H. ORDINANCE NO. 3753 — DESIGNATING THE GREAT NORTHERN RAILWAY SECTION FOREMAN'S HOUSE LOCATED AT 1011 2ND AVENUE SOUTH, EDMONDS, WASHINGTON FOR INCLUSION ON THE EDMONDS REGISTER OF HISTORIC PLACES, AND DIRECTING THE COMMUNITY SERVICES DIRECTOR OR HIS DESIGNEE TO DESIGNATE THE SITE ON THE OFFICIAL ZONING MAP WITH AN "HR" DESIGNATION. K. PROCLAMATION IN HONOR OF PANCREATIC CANCER AWARENESS MONTH, NOVEMBER 2009 ITEM I: ORDINANCE NO. 3754 — DESIGNATING THE RESIDENCE LOCATED AT 533 3RD AVENUE SOUTH, EDMONDS, WASHINGTON FOR INCLUSION ON THE EDMONDS REGISTER OF HISTORIC PLACES, AND DIRECTING THE COMMUNITY SERVICES DIRECTOR OR HIS DESIGNEE TO DESIGNATE THE SITE ON THE OFFICIAL ZONING MAP WITH AN "HR" DESIGNATION. Councilmember Wambolt referred to the Physical Description Checklist which stated the windows were intact; his observation was that the windows in the home had been replaced and the interior had been gutted and renovated. Planner Kernen Lien responded only the exterior of the residence was nominated for designation on the Edmonds Register of Historic Places. The windows can be replaced as long as the appearance is the same as when the house was originally constructed. Edmonds City Council Approved Minutes October 6, 2009 Page 2 COUNCILMEMBER WAMBOLT MOVED, SECONDED BY COUNCILMEMBER PLUNKETT, FOR APPROVAL OF ITEM I (ORDINANCE NO. 3754). MOTION CARRIED UNANIMOUSLY. ITEM J: ORDINANCE NO. 3755 — REPEALING ORDINANCE NO. 2912, AND AMENDING THE PROVISIONS OF THE EDMONDS CITY CODE TO ADD A NEW CHAPTER 3.10 EMERGENCY RESERVE FINANCE FUND. Councilmember Plunkett explained the proposed ordinance placed more constraints on the City's Emergency Reserve. There are approximately $3 million in reserves. He recalled the Council's discussion earlier this year regarding a reduction in funding for Yost Pool and the Senior Center, noting some Councilmembers did not support those cuts and were willing to fund them from reserves if necessary. He did not support placing additional constraints on the use of reserves and wanted the ability to use those funds if necessary to fund items other than designated in the ordinance. Councilmember Wambolt pointed out the fund was designated for emergencies and he supported the proposed amendment. COUNCILMEMBER WAMBOLT MOVED, SECONDED BY COUNCILMEMBER PETERSON, FOR APPROVAL OF ITEM J (ORDINANCE 3755). UPON ROLL CALL, MOTION CARRIED (4 -2), COUNCILMEMBERS OLSON, PETERSON, AND WAMBOLT, AND COUNCIL PRESIDENT WILSON IN FAVOR; AND COUNCILMEMBERS ORVIS AND PLUNKETT OPPOSED. 3. EDMONDS BUSINESS STORY: RUTH JOHNSON- PIRIE. SWEET AND SWEDISH. Ms. Johnson -Pirie provided cookie samples to the audience, staff and Council. She explained her two businesses, Sounds of Comfort and Joy, and Sweet and Swedish, were about soul food and food for the body. She described her background, immigrating to the United States at age 19 and her family's bakery in Sweden. Baking had always been a labor of love for her and she began selling her bakery products, Sweet and Swedish, to support a therapeutic music therapy business, Sounds of Comfort and Joy. Both businesses thrived and customers encouraged her to continue both. She described her cookies as handmade, unique, pieces of art and one of a kind; they are available at Petosa's Family Grocery. She also described her therapeutic music therapy business administering live music one -on -one to residents and patients in their time of need. She advised further information was available on her website. She observed the city, country and world were struggling and in despair. She sang a song, "There are Smiles that Make You Happy, Smiles Are Contagious, Let's Spread Them Around." Council President Wilson thanked Ms. Johnson -Pirie for the cookies and song. He reminded everyone that supporting local businesses results in lower taxes. 4. REPORT ON FIRE DISTRICT 1: BRIER MAYOR BOB COLINAS; MOUNTLAKE TERRACE MAYOR JERRY SMITH• MOUNTLAKE TERRACE MAYOR PRO TEM LAURA SONMORE• MOUNTLAKE TERRACE CITY MANAGER JOHN CAULFIELD. Mayor Haakenson advised the City has been negotiating with Fire District 1 (FD I) on a contract for fire service since April 17, 2009. Council President Wilson recognized Fire Chief Tom. Tomberg who asked the Mountlake Terrace representatives to speak to the Council regarding their experience with FDl. Edmonds City Council Approved Minutes October 6, 2009 Page 3 Mountlake Terrace Mayor Jerry Smith explained Mountlake Terrace entered into a contract with FD in 2001 for transitional service. At that time Mountlake Terrace was functioning with a Fire Department that was two members short. Mountlake Terrace entered into a full contract with FDI in 2005 following a great deal of negotiation. He commented the contract with FD 1 saved their city a great deal of money. They retained their fire stations in order to retain the transport fees. Those fees are used to pay a portion of the FDI costs. Mountlake Terrace's relationship with FDI has been very good. An 8- minute response time was required; their response has been approximately 5 minutes. Mountlake Terrace Mayor Pro Tem Laura Sonmore explained in 2001 Mountlake Terrace entered into a transitional agreement with FDI and in 2005 entered into an Interlocal Agreement with FDI. Mountlake Terrace realized immediate cost savings through salaries, $200,000 from contracting ALS services and a reduction in overtime. Since 2005 Mountlake Terrace's annual savings to the City's General Fund has been over $600,000. Benefits to citizens of contracting with FDI include, 1) increased service - instead of two firefighters at each station, there are now three, 2) better response time, 3) Mountlake Terrace's name remains on their fire trucks to maintain Mountlake Terrace's identity, 4) FDI has more equipment including a ladder truck, and 5) increased community involvement such as car seat clinics, disaster training, and firefighters participating in community events. The benefits to Mountlake Terrace's firefighters include more career growth, more training and the flexibility to work in different areas. Mountlake Terrace City Manager John Caulfield summarized their relationship with the FDI Board and Fire Chief, Battalion Chiefs, etc. has been outstanding and has exceeded their expectations. Council President Wilson asked for Mountlake Terrace's opinion about the impact of annexations by Lynnwood and Mukilteo on the future of FDI. Mr. Caulfield responded FDI's service area is very large and even with the annexations Lynnwood and Mukilteo are pursuing, the Fire District would continue to be a relevant organization in south Snohomish County. He had no concern with continuing their contractual relationship with FD L Council President Wilson referred to Mountlake Terrace's retention of their fire stations in order to retain the transport fees and asked for their advice on the sale of assets in view of RFA discussions and how the RFA would impact compensation for those assets. Mr. Caulfield responded Mountlake Terrace decided to keep the transport fees, $400,000 per year which total $8 million over the 20 year contract. Mountlake Terrace has two fire stations and their value is much less than $8 million. Financially it made sense for Mountlake Terrace to retain ownership of those assets. He noted there were also philosophical reasons for retaining public ownership of property. Mountlake Terrace constructed Station 19 using funds the City had already identified and set aside. The new fire station was incorporated into the agreement with FDI. Station 19 was incorporated into the Civic Center and Police Department; therefore, operationally it would have been difficult to sell the property. As part of Mountlake Terrace's contract, FDI plans to build a new Fire Station 18. He summarized Mountlake Terrace retained its assets and receives $400,000 /year in transport fees that are used to offset the cost of the contract. Mayor Smith explained citizens' concern with losing their fire stations, firefighters, etc. was one of the reasons for retaining the fire stations to maintain the City's identity. He explained the proceeds of the sale of equipment to FDI was used to compensate for the LEOFF 1 and 2 transferred to FDI. Council President Wilson asked whether the $600,000 savings was cumulative or annually. Mayor Pro Tem Sonmore responded it was per year since 2005. Council President Wilson asked the population of Mountlake Terrace. Mayor Pro Tem Sonmore responded it was approximately 20,000. Edmonds City Council Approved Minutes October 6, 2009 Page 4 Councilmember Wambolt asked whether the fire stations were leased to FD L Mr. Caulfield explained Mountlake Terrace owned the fire stations and paid basic utility costs of approximately $15,000 - $20,000 /year for both stations. FDl operates out of the stations and there is no cost to them other than Mountlake Terrace collects the transport fees. Councilmember Peterson asked if the ongoing maintenance of the fire stations was paid from Mountlake Terrace's budget and if those costs offset the transport fees. Mr. Caulfield answered the maintenance costs were minimal; once the new Station 18 was built, the existing station would be demolished. The utility costs for Station 19, which is connected to the Police Station, are approximately $1.0,000 /year. The Council plans to build a larger Civic Campus in the future that will include a City Hall and community /recreation center and will incorporate Station 19. Councilmember Peterson asked whether Mountlake Terrace would retain ownership of the new Station 18. Mr. Caulfield answered the new station will be built in Brier and FDl will own that station. Mountlake Terrace plans to demolish the current Station 18 and expand the adjacent Firefighters Memorial Park. If the City had sold the fire station to FD I, that would not have been possible. Councilmember Plunkett clarified Mountlake Terrace kept the land and stations but sold the trucks. Mayor Smith explained they sold all their equipment to FD 1 including the apparatus. Council President Wilson asked if FD1 would collect the transport fees from the new Station 18. Mr. Caulfield answered transport fees generated in Mountlake Terrace would still be collected by the City. With the new location of Station 18 in Brier, Brier would have an opportunity to implement transport fees which they currently do not have. It was his understanding FD1 would collect Brier's transport fees. Mayor Smith explained the new Station 18 in Brier would continue to serve the east side of Mountlake Terrace. Council President Wilson asked whether the same contract covered both Mountlake Terrace and Brier. Mr. Caulfield answered they were similar with the exception of the transport fees; Brier does not charge a transport fee. Council President Wilson observed FD1 could own fire stations in either city and the city could collect the transport fee. Mayor Smith commented prior to the contract with FD1, Mountlake Terrace serviced Brier from Stations 18 and 19. Council President Wilson explained Edmonds was discussing who would collect the transport fee. Mr. Caulfield commented everything was negotiable and encouraged Edmonds to negotiate the best deal possible. Councilmember Peterson asked whether FDl had made an offer on Mountlake Terrace's real estate. Mayor Smith advised they did in the original negotiation but the prior City Manager advised Mountlake Terrace was not interested in pursuing that. He commented Mountlake Terrace's negotiations with FD1 took approximately four years. Mr. Caulfield commented one of the reasons the transitional agreement was for a four year period was to allow the City to bring compensation of firefighters closer to FD 1 so that when FD1 assumed Mountlake Terrace's personnel, their compensation would be similar. Mayor Haakenson commented it took four years to implement the agreement but it did not take four years to negotiate the agreement. Mr. Caulfield advised negotiations occurred during those four years; the core agreement was established in 2001 and things were fine -tuned over four years. Mayor Smith explained negotiations took approximately four years. He recalled they talked with Edmonds and Lynnwood who were not interested before pursuing negotiations with FDl. He summarized transition occurred immediately once the contract was signed; negotiations regarding property, apparatus, transport fees, etc. took a long time. Edmonds City Council Approved Minutes October 6, 2009 Page 5 Councilmember Plunkett asked whether negotiations were at the labor level. Mayor Smith agreed the unions were involved in the negotiations. He recalled Mountlake Terrace's firefighters resisted at first due to concerns with losing their identity; they are now happy and most received a pay increase. Councilmember Plunkett asked whether resolution of firefighters' concerns early in the process would have resolved many of their negotiation issues. Mayor Smith agreed it would have helped but the issues were evenly split between labor and the contract. Councilmember Plunkett commented more legwork had been done at the labor level in Edmonds. Councilmember Plunkett asked whether Mountlake Terrace's contract allowed them to buy the trucks back if the contract were terminated. Mayor Smith responded if the contract were terminated in 20 years, the City would purchase new apparatus. Mayor Haakenson thanked Mountlake Terrace for pioneering the contract with FDl which had taken. Edmonds staff approximately five months to negotiate. Council President Wilson commented Edmonds had no better friend than the City of Mountlake Terrace and particularly Mayor Smith who has been a leader in the Lake Ballinger clean up as well as Mayor Pro Tem Sonmore and City Manager Caulfield. Mayor Haakenson asked if Mountlake Terrace had any regrets. Mayor Smith answered none at this time. Mayor Haakenson asked about the quality of service. Mayor Smith answered it was better because Mountlake Terrace had been operating with fewer firefighters as well as volunteers. The service was much better and the firefighters feel they are better trained and outfitted. Mayor Haakenson asked if Mountlake Terrace was better off now than five years ago. Mayor Smith answered definitely. Councilmember Plunkett asked how much costs had increased in the last five years. Mr. Caulfield stated based on the original contract, on average approximately 4% per year which is tied to the annual labor increases. Councilmember Plunkett asked how that compared to the five years before consolidation. Mr. Caulfield answered he did not have those numbers available but traditionally public safety cost increases were more than 4% per year. Councilmember Plunkett concluded Mountlake Terrace had not found costs increased above what would normally be expected. Mr. Caulfield answered they were lower. If Mountlake Terrace was operating its own Fire Department, they would be paying at least $600,000 more than what they were paying FDl and would not be providing the same level of service. Councilmember Plunkett summarized Mountlake Terrace was getting better service for less money. 4A. COUNCIL WORK SESSION ON THE FIRE DISTRICT 1 CONTRACT. Councilmember Orvis posed the question, would FD 1 collect the transport fees if the City sold the stations? Councilmember Wambolt answered yes. Councilmember Orvis asked whether the City could retain the transport fees and use them to offset the contract cost if the City retained ownership of the stations. Mayor Haakenson answered the transport fees would be deposited into the General Fund. Mountlake Terrace used the transport fees to offset the contract. City Attorney Scott Snyder explained who collected the transport fees was a function of the contract. There was no legal reason the fees must follow any form of ownership. That was how the contract was negotiated. The City imposes a transport fee and where the fee is collected is the subject of the contract and Council discretion; there was no legal requirement with regard to who collected the transport fee. Councilmember Orvis summarized the City could continue to collect the fee even if the City did not own the stations. Mr. Snyder answered yes; the City was still providing fire service via a contract. Mayor Haakenson advised that would be a negotiating point; if the City wanted to keep the $700,000 in transport Edmonds City Council Approved Minutes October 6, 2009 Page 6 fees, FD may increase the contract fee. Fire Chief Tom Tomberg advised FD will be constructing a fire station in Brier. Once that station reaches substantial completion, FD1 has the right to collect fees for EMS services delivered within the City of Brier. Council. President Wilson commented there were three basic questions to be addressed, 1) operation costs and benefits and how they relate to quality of service, 2) what to do with the assets, 3) if the assets are sold, what should be done with the proceeds. He provided a list of questions, clarifying he provided them to staff and Council late today and did not expect full answers tonight: • Section 4.5: 10% of overhead costs - will that be a new cost or part of the $6.2 million cost of contracting for service? Chief Tomberg answered it was included in the contract price. He advised all the costs associated with the annual payment to FD were based on station labor costs. Further information was provided in Exhibit C. • Tab 4: What is the settlement of $100,000 /year? Interim Finance Director Lorenzo Hines answered that was debt owed to FD1 associated with the purchase of Station 20. The amount is actually $65,000 - $66,000 over five years but was included at $100,000 for simplicity. • Tab 6: Why does debt service increase in 2013 here but not in Tab 5? Mr. Hines agreed to research this. • Can the Council have forecasts with the contract but without sale of assets? Mayor Haakenson advised Mr. Hines will email Councilmembers updated forecasts with the FD1 contract and 1) retaining the stations and land and selling the equipment, and 2) retaining the stations, land and equipment. Mayor Haakenson advised under the scenario where the City retained the equipment, stations and land, the contract for service would be pointless as the City would be at the same point it is today. Council President Wilson commented that was an important point; there was no point to a contract for service if the City did not sell any assets, because that indicated there were not enough operational savings to justify the contract. Mayor Haakenson commented the cashflow projections will show the City goes into deficit two years sooner without the sale of the assets. Councilmember Wambolt pointed out when the City's firefighters became employees of FD I, the City must pay accrued benefits such as sick leave. For example leave transfer of $786,000; the current proposal is for that amount to be paid from the sale proceeds in year one. If the City did not sell assets, how would that amount be paid? Mayor Haakenson advised with the FD1 contract and retaining all stations, transport fees, land and equipment, the 2011 ending cash balance would be $823,000. • Does the Fleet Maintenance FTE listed on the "overhead savings" chart go with the fleet? Chief Tomberg advised this position was currently vacant; if the City does not contract with FD1, the Fire Department will hire a fire mechanic. Mr. Hines emphasized the fire overhead was a subset of the overall cost comparison. Mayor Haakenson clarified the non - departmental fire costs were not included. There were approximately $300,000 in non - departmental savings as a result of the FDl contract. Council President Wilson questioned whether they were direct savings or retained savings. Mayor Haakenson answered $220,000 was apparatus replacement. He referred to non - departmental fire costs in Tab 3. Council President Wilson explained direct savings was money the City would no longer spend and retained savings were items such as reduction in workload. Mayor Haakenson advised the $811,842 savings in 2010 includes both direct and retained savings as well as $180,000 of reallocation to other workloads; the direct savings would be $631,000 for 2010. • Tomberg memo dated October 1, Question 3 - Edmonds will still have to pay an increase in costs rising faster than inflation in this scenario. There are no protections in contract scenario from I- Edmonds City Council Approved Minutes October 6, 2009 Page 7 1033. The scenario described in Question 3 suggests annexing service into FDl to avoid I -1033 disaster. Council President Wilson explained if I -1033 passes, the City can only grow its General Fund by the rate of inflation plus population growth. Even if there is an economic turnaround and sales taxes increase, the City would be required to cut property taxes to fix the General Fund at today's level due to the 0% inflation. He anticipated the passage of I -1033 would be that the cuts that have been made would be permanent. Because the Fire District would not be impacted by I- 1033, they would have more flexibility to meet fire service inflation. He concluded the City had no protection from I -1033 whether or not it contracted with FD1 because the City would be responsible for a rate of fire service inflation that exceeded the normal rate of inflation. Chief Tomberg answered the COLA negotiated in the contract would be the same in Edmonds or the Fire District. He suggested the saving derived from the contract could be used to assist the City post I -1033. Councilmember Wambolt pointed out recent information indicated I -1033 would not limit inflation to the Consumer Price Index (CPT) but rather to the Implicit Price Deflator (IPD) which . is typically half of CPI. I -1033 would allow cities to only increase revenues by the change in IPD and population growth. • What is the status of "termination for RFA" language? Chief Tomberg advised new Sections 11.5, 11.6 and 11.7 had been distributed to the Council and staff today. • Ms. Petso's analysis states the savings are only $82,632 in 2010; Mr. Hines' email stated she did not count revenues. Are there any revenues other than the sale of assets? Mr. Hines answered without the details regarding Ms. Petso's analysis, it was difficult to respond to her concerns. He invited Ms. Petso to provide details regarding her analysis. It appeared Ms. Petso did not include the $3.2 million from the sale of assets as revenue in 2010 . and she also did not include the transport fees. He explained either the City received the $3.2 million via the contract or retained the transport fees. Councilmember Wambolt observed there was some merit to Ms. Petso's numbers. The $800,000 savings was determined via an analysis of the Fire Department. Ms. Petso was referring to the total P &L of the City. He concluded there was a discrepancy between the Fire Department's P &L and the total City. Mr. Hines advised he would be happy to review Ms. Petso's assertions with additional detail. Councilmember Wambolt suggested Council President Wilson and he meet with Mayor Haakenson and Mr. Hines. • Under Ms. Petso's analysis if the City enters into the contract and keeps the stations, there is an operational oss of $226,738 ($309,370 in continued maintenance costs less $82,632 savings from operations). Mayor Haakenson reiterated it was difficult to provide an answer without further detail from Ms. Petso. He advised maintenance savings of $380,000 plus the non - departmental fire costs of $286,000 (apparatus replacement fund and Station 20 debt service) bring the savings to $666,000. If the City retains the buildings and equipment, those are additional costs. Council President Wilson summarized if the City entered into the contract and did not sell the building or equipment, there would be a loss of approximately $30,000 /year; the savings of $630,000 less the retained costs of $660,000. Mr. Hines requested Council President Wilson provide the scenarios he wanted staff to analyze. • Billings for transport fees February - July total $763,000, annualized would be $1.5 million. Collections for four months total $353,000, annualized $1.06 million or 69 %. Collection rate in February was 85% and 57% in March. Averaging the three provides a 70.3% collection rate or $1.08 million (of the projected $1.53 million in billings). Mr. Hines responded billings January - July 31 were $864,450 and receipts are $381,337. Receipts through September 30 total $440,000. Edmonds City Council Approved Minutes October 6, 2009 Page 8 The goal for 2009 receipts is $700,000. He offered to provide an estimate for the remaining months. Council. President Wilson summarized if transport fees were greater than budgeted, the operational savings would be significantly less. Council President Wilson asked why the contract included sale of the land, buildings and apparatus as well as allows FD1 to collect the transport fees. Mayor Haakenson advised that was how the contract was negotiated; the annual cost of the contract was $6.2 million and FD1 received the items in the contract in return. He anticipated the cost of the annual contract would have been $6.9 million if the City had retained the transport fees. Councilmember Peterson observed SnoCom charges did not change with or without the contract. He asked whether FD I should pay a portion of SnoCom if they were responding to Edmonds calls. Chief Tomberg advised that would be a question for FD1. They likely would want a seat on the Board if they were being assessed a fee. Mayor Haakenson advised Mountlake Terrace and Brier retain their seat on the SnoCom Board and their assessment. FDI does not have a seat at SnoCom. This kept control of SnoCom with the City Council. Councilmember Plunkett summarized Council President Wilson had posed a series of questions /scenarios to which Mr. Hines would respond with regard to how the City's budget would be impacted. His responses would be available to the Council and the public. 5. PUBLIC COMMENT ON THE FIRE DISTRICT I CONTRACT OFFER. Rich Senderoff, Edmonds, commented many of his questions had been answered by the representatives from Mountlake Terrace. His primary interests were the best long term arrangement for the community, the best long term arrangement for the firefighters and the appropriate value and financial terms of the contract. He pointed out Mountlake Terrace entered into a contract for service with Fire District 1 but did not sell their capital assets nor did they sell them at depressed market values. He suggested contracting for service and entering into a lease with an option to buy for the equipment and facilities and possibly selling the assets in five years when the real estate market has stabilized and the City has some experience with Fire District 1's service to the community. He viewed this as a compromise that moved the City toward fire service consolidation and would make the firefighters who are interested in joining Fire District 1 happy. He expressed concern that the contract was pointless without selling the assets; his understanding was the driving force behind the contract was access to training facilities, potentially better service, and the firefighters wanted to join Fire District 1. He was also concerned that some Councilmembers had endorsed the proposal before all the information had been provided. He urged the Council to continue its deliberations and get all the answers to ensure the decision they made was based on what was best for the community and the firefighters. Lora Petso, Edmonds, urged the Council to reject the proposed contract and either continue negotiating to retain the transport fees and assets or do something different such as forming a Fire District with Woodway or keep the City's Fire Department and place a levy on the ballot. She described how she reached the $82,632 savings, pointing out two typographical errors. Her numbers were determined using 2010 revenues, 2010 expenses, under the scenarios of 1) no contract, 2) contract with sale of the stations and proceeds placed in the General Fund, and 3) contract with capital proceeds set aside. She summarized with the contract and placing the proceeds of the sale of capital assets in the General Fund, the City would be negative in 2013. She concluded the City needed to retain the transport fee revenue. Joan Bloom, Edmonds, thanked Council President Wilson for raising these questions, observing the discussion around his questions had been very tense. She was concerned Mountlake Terrace's contract with Fire District 1 was much better than the proposed contract. She was also concerned with how quickly the Council was moving toward a decision which did not reflect the amount of time and attention Edmonds City Council Approved Minutes October 6, 2009 Page 9 to detail Mountlake Terrace spent on their contract. The tense discussion made it seem Mayor Haakenson and Mr. Hines were trying to push through the contract. She urged the Council to take their time. Mayor Haakenson responded Council President Wilson provided his questions at 4:00 p.m. today. Staff has been asking the Council to submit their questions for months. Staff has been working on the contract for the past seven months. Ms. Bloom pointed out Mountlake Terrace took four years to negotiate their contract with Fire District 1. Mayor Haakenson commented the situation in Mountlake Terrace at that time was completely different. He offered to meet with Ms. Bloom to discuss the matter further. Diane Buckshnis, Edmonds, complimented Council President Wilson for the questions he has been asking. She commented the numbers with regard to assets did not make sense. While doorbelling, she has encountered many citizens who are confused, upset and angry with the proposed contract with Fire District 1. She encouraged the Council to slow down the process and educate the public. She recalled when Chief Tomberg first presented the contract, the Council promised to have public hearings ad nauseam which had not happened. Council President Wilson advised this was the third meeting the Council has discussed the contract and the third meeting where public comment has been accepted. He assured more opportunities for Council discussion and public comment were planned. Roger Hertrich, Edmonds, commented several people who have done an in -depth study of the numbers still have a number of questions. He pointed out if the people studying the issue still had questions, the general public was certainly confused. Observing that many people were reacting negatively toward government, he anticipated the public would react negatively to being conned into a sale. He encouraged the Council to answer all the questions. Ray Martin, Edmonds, compared Mountlake Terrace's 4 year negotiation to Edmonds 7 -8 month negotiation. Although he was impressed with what he heard about Fire District 1, he suggested also seeking input from representatives in Lynnwood and Mukilteo regarding their opinions about Fire District 1. He commented I -1033 has nothing to do with this discussion and I -1033 did not prevent the City from placing a levy on the ballot. He objected to Councilmembers taking a position on the contract with Fire District 1 before all the facts were presented. He requested a response to Diane Buckshnis' comments regarding present value versus future value. He encouraged the Council to do the right thing regardless of how long it took. Betty Larman, Edmonds, expressed her appreciation to the EMS personnel who responded when she fell last March. She wanted what was best for the Edmonds firefighters as well as the community. She noted although the Council had scheduled a time for the public to speak regarding the Fire District 1 contract, most citizens did not realize the Council was contemplating selling the fire stations or the impact it would have on their lives or the lives of the City's firefighters. She questioned whether the City would have enough information to make a decision in two weeks. Interim Finance Director Lorenzo Hines thanked Ms. Petso for providing her analysis. He noted her analysis typically used annual revenue from current forecasts which are based on annual revenues plus beginning fund balance. He suggested running the numbers with the addition of beginning fund balance for each year. Council President Wilson disagreed, pointing out the numbers were operational revenue less operational expenses; the ending fund balance did not matter. Edmonds City Council Approved Minutes October 6, 2009 Page 10 Councilmember Plunkett invited the firefighters' representative in the audience to speak. Doug Dahl, Executive Board Member, Local 1828, advised he was on duty and was uncomfortable speaking in uniform. He requested an opportunity to comment at the next Council meeting. 6. CONSIDERATION OF WHETHER TO ADOPT A MOTION OR RESOLUTION IN SUPPORT OR OPPOSITION TO INITIATIVE MEASURE 1033. PUBLIC COMMENTS WILL BE RECEIVED BOTH PRO AND CON TO THE INITIATIVE. THE BALLOT TITLE FOR THE INITIATIVE READS AS FOLLOWS: INITIATIVE MEASURE NO. 1033 CONCERNS STATE, COUNTY AND CITY REVENUE. THIS MEASURE WOULD LIMIT GROWTH OF CERTAIN STATE, COUNTY AND CITY REVENUE TO ANNUAL INFLATION AND POPULATION GROWTH, NOT INCLUDING VOTER - APPROVED REVENUE INCREASES. REVENUE COLLECTED ABOVE THE LIMIT WOULD REDUCE PROPERTY TAX LEVIES. SHOULD THIS MEASURE BE ENACTED INTO LAW? [I YES [INO City Attorney Scott Snyder explained the purpose of the statutory structure was to allow comment before Council deliberation. Council President Wilson explained I -1033 would be on the November 3 ballot and will limit the growth of the General Fund to only inflation. If the economy rebounds and the sales taxes collected by the City increase, there must be an offsetting property tax cut which in his opinion would essentially make the current budget crisis permanent. Councilmember Plunkett commented if I -1033 limited inflation to Implicit Price Deflator (IPD), IPD was always lower than inflation. Mayor Haakenson opened the public comment portion of this item. Roger Hertrich, Edmonds, commented as elected officials, Councilmembers could have individual opinions, but as a governmental body it was inappropriate for the Council to adopt a resolution regarding a ballot measure. He did not support I -1033. Adrienne Fraley- Monillas, Edmonds, encouraged the Council and citizens to vote no on I -1033. She explained the most serious impact it would have would be on social services and as a result would harm children, food stamp programs, senior citizens and other vulnerable populations. Ray Martin, Edmonds, commented there was nothing to fear from the passage of I -1033 if the Council, Mayor and staff were doing their job in a dedicated manner, working for citizens. The Council could always place a levy on the ballot to provide adequate support for City services. Hearing no further public comment, Mayor Haakenson closed the public participation portion of this item. Mayor Haakenson asked Mr. Snyder to address Mr. Hertrich's comments regarding the Council's ability to speak regarding ballot measures. Mr. Snyder advised state statute prohibits the use of public funds to oppose or promote a ballot measure or individual candidates. There are very narrow exceptions to the law; there are only two ways in which Councilmembers can express an opinion, 1) at an open press conference on other subjects in response to a specific inquiry and 2) to take collective action as a group at an announced public meeting in accordance with specific notice provisions after an opportunity for comment on both sides. Edmonds City Council Approved Minutes October 6, 2009 Page 11 COUNCILMEMBER WAMBOLT MOVED, SECONDED BY COUNCILMEMBER PETERSON, TO ADOPT RESOLUTION NO. 1208 DECLARING THE COUNCIL'S OPPOSITION TO INITIATIVE 1033. MOTION CARRIED UNANIMOUSLY. Mayor Haakenson declared a brief recess. 7. CONTINUED PUBLIC HEARING ON THE PLANNING BOARD RECOMMENDATION TO APPROVE THE CREATION OF A NEW MIXED USE ZONING CLASSIFICATION FOR FIRDALE VILLAGE TO IMPLEMENT THE COMPREHENSIVE PLAN. (FILE NO. AMD -2008- 10 / APPLICANT: SHAPIRO ARCHITECTS) Planning Manager Rob Chave explained this was a proposal by the applicants that would result in adding a new zoning classification to the City's Code with accompanying design standards. The Council held a public hearing previously on this item; the applicant made modifications to the proposal in response to Council and public comment at that public hearing. If the Council agrees to add this code language, the applicant would then need to submit an application to apply it to the property which could be done via a development agreement that would identify the specific measures they would apply to the property to implement the Zoning Code. City Attorney Scott Snyder explained in order to achieve the proposed buffer, a development agreement or other form of assured dedication would be appropriate to satisfy the criteria. If the Council feels the tree buffer should be preserved, it cannot be imposed by ordinance but would need to be required via a development agreement. Councilmember Plunkett clarified this was a legislative matter. Mr. Snyder agreed. Tony Shapiro, Shapiro Architects, advised his client and he participated in at least four meetings with Councilmember Wambolt, Council President Wilson, and Planning Manager Rob Chave to address the Council's concerns. He reviewed modifications made to the zoning criteria: • The 25% criteria dedicated to commercial and retail space in the zoning criteria was clarified. • Multi family dwellings are prohibited in District 1 so no housing will be in the zone facing Firdale Avenue • A limit of 2,500 square feet for retail spaces throughout the complex was discussed. In discussion with Mr. Chave and property management experience, it would be challenging to implement that limit. He suggested market conditions be allowed to drive small retailers in this zone. • A clause was added to allow only retail and restaurants on the ground floor to enhance the neighborhood feel of the complex and commercial space such as professional offices would be on the upper floors. • Mr. Snyder provided several clarifications to the language throughout the document. • The design standards were reviewed in detail and many "should" became "shall." He commented the proposed design standards struck a balance between establishing minimum criteria as well as providing sufficient flexibility to achieve a good product. Council President Wilson thanked Mr. Shapiro for working with them over the past two months. He assured the design standards were reviewed in detail and of the 67 "should" statements in the design. standards, 56 were changed to "shall." There were also incentives added for green buildings, not just experiential elements but also stormwater management. He summarized the design standards had several innovative elements. Edmonds City Council Approved Minutes October 6, 2009 Page 12 Councilmember Orvis inquired about the lot coverage requirements for the zone. Mr. Shapiro answered there was no specific lot coverage requirement. They must achieve a 20% open space criteria that cannot include parking lots or traffic /service areas. Councilmember Peterson commented the standards provided some incentives for achieving a LEED gold certification. He asked whether a LEED gold certification changed the other standards such as the parking requirements. Mr. Shapiro answered one of the key components of LEED was site orientation such as toward solar or territorial winds. It does not address parking. To achieve four stories and the desired density, a project would need to achieve a LEED gold certification or other green criteria. Mr. Snyder agreed, noting the only incentive is the four stories shown on page 5. Councilmember Peterson expressed his support for incorporating progressive design into the standards. As an example, Mr. Shapiro commented green roofs were very expensive, but up to 75% of the water could be retained in a green roof, allowing smaller detention tanks and reducing the load on the City's stormwater facilities. Councilmember Peterson wanted to ensure the code language made it easy to achieve these goals. Mr. Shapiro commented the LEED rating was achieved via meeting criteria on a checklist. Mr. Snyder responded the technical details would be addressed via the determination of impervious surface via the City's stormwater standards. Council President Wilson expressed concern the language was not clear enough that there was a three story limit in District 2 with the exception of when LEED gold standard was achieved. When a LEED gold standard was achieved, a four story building could be attained. He recommended including language in zoning criteria section 16.100.040.13.1.b.1 and B.l.b.2 regarding a three story height limit if the LEED gold standard was not achieved. Mr. Snyder offered to make the appropriate revision. Mayor Haakenson opened the public participation portion of the public hearing. Lora Petso, Edmonds, expressed her appreciation for including the 25% commercial requirement and asked if it would result in more or less commercial space at the site. She requested staff review the parking requirements, commenting it appeared this project may require only 1 parking space per 400 square feet of commercial. In downtown Edmonds, the parking ratios are 1 space per 300 square feet of commercial, in an area where there is also on- street parking versus Firdale Village where there is no on- street parking. Roger Hertrich, Edmonds, commented he had good feelings about the changes that had been proposed and the neighborhood also supports the proposed changes. Observing mixed use would result in additional residents, he inquired whether there was a requirement for additional park facilities. He suggested rather than establishing a percentage for retail, requiring no less retail space than currently exists. He expressed concern with imposing rules on development such as green roofs, pointing out such requirements increase the cost to the developer. He pointed out there was no developer for Firdale Village; this was only a change in zoning. Hearing no further comment, Mayor Haakenson closed the public participation portion of the public hearing. For Council. President Wilson, Mr. Snyder advised the proposed change was within the range of alternatives that had been considered and would not require that the public hearing be continued. He advised this would be put in ordinance form and scheduled on a future Consent Agenda. COUNCIL PRESIDENT WILSON MOVED, SECONDED BY COUNCILMEMBER WAMBOLT, TO DIRECT STAFF TO PREPARE AN ORDINANCE FOR COUNCIL ADOPTION. Edmonds City Council Approved Minutes October 6, 2009 Page 13 Councilmember Orvis advised he would not support this action due to his concern with the conversion of a Neighborhood Business Zone, specifically allowing a 52 -foot tall building within 20 feet of a residential boundary. He understood the economic development opportunity but questioned the need to allow over three stories. He preferred to require the LEED standards. He was willing to go slightly above 30 feet for multi family but not as high as 52 feet. Council President Wilson commented there was a great deal of support for redevelopment of Firdale Village. The question was the vision for the site and how to integrate it into the community. If development occurs based on this zoning, it would be one of the more innovative developments in the area. He advised the development would be three stories unless the developer used innovative design and development techniques to develop a project everyone could be proud of. This was an opportunity to make good on promises for redevelopment and interest in providing smart, innovative development, managing stormwater, and fostering transit oriented development. Councilmember Wambolt acknowledged Councilmember Orvis' concern with the 52 -foot tall building adjacent to residential property, pointing out the property owners have offered to retain the existing stand of trees via a development agreement to mitigate the building height. MOTION CARRIED (5 -1), COUNCILMEMBER ORVIS OPPOSED. 8. PUBLIC HEARING ON THE PLANNING BOARD'S RECOMMENDATION TO ADOPT AN ORDINANCE ADDING A NEW SECTION TO EDMONDS COMMUNITY DEVELOPMENT CODE 17.40 TO ESTABLISH A QUALIFIED BUILDING SETBACK EXEMPTION FOR RESIDENTIAL PROJECTS WITH EXPIRED COUNTY BUILDING PERMITS (FILE NO. AMD20090011). Planner Jennifer Machuga explained following annexation from Snohomish County into the City, the County did not transfer all records of pending building permit applications for approval as required by the Annexation Agreement. As a result, there is at least one project that received approval by the County based on the setbacks in effect prior to annexation. The permit expired prior to final approval. Per the Annexation Agreement all vesting is lost and the applicant must obtain permits based on current City code. In this example, the project does not comply with current City setback requirements. The proposed ordinance strives to remedy this situation by allowing a building setback exemption for projects that had County approval for property annexed since 1994. The Planning Board recommends approval of the proposed ordinance. Mayor Haakenson opened the public participation portion of the public hearing. There were no members of the public present who wished to address the Council. Mayor Haakenson closed the public testimony portion of the public hearing. COUNCILMEMBER WAMBOLT MOVED, SECONDED BY COUNCILMEMBER ORVIS, TO APPROVE THE ORDINANCE RECOMMENDED BY THE PLANNING BOARD (ORDINANCE NO. 3756). MOTION CARRIED UNANIMOUSLY. 9. AUDIENCE COMMENTS Diane Buckshnis, Edmonds, encouraged the Council not to take action on Agenda Item 12 which would adopt an amended 2009 budget. She recalled informing the Council she was unable to balance the General Fund beginning balance for 2009 to the ending balance December 31, 2008. She emailed Interim Edmonds City Council Approved Minutes October 6, 2009 Page 14 Finance Director Lorenzo Hines who responded by reconciling the net worth but not the cash portion of the net worth. Mayor Haakenson asked Ms. Buckshnis if she was a CPA or accredited in any way in governmental accounting in the State of Washington. Mr. Buckshnis answered she was not. Joan Bloom, Edmonds, referred to her earlier questions regarding the public process for ESC Associates' application for a contract rezone. She relayed the property owner determined they had missed their notification deadline by one day for the surrounding property owners and two days for the site posting. She was uncertain whether the property owner had reapplied but was told if they reapply, everyone who submitted comment would be notified. She advised the SEPA comment period had not yet begun and public comments would be taken until the public hearing at the Planning Board. She asked Mayor Haakenson if he planned to write an article to address questions. Mayor Haakenson advised the applicant has not decided whether to reapply; be planned to delay his article until they reapplied. Next, Ms. Bloom recommended the Comprehensive Plan be included on the City's website in an easy to find location. She also suggested the old Chapter 20 and the new Chapter 20 be easily accessible on the City's website to allow citizens to compare them. Lora Petso, Edmonds, recommended the Council reconsider the parking issue to ensure it was a business district and not another multi family project. With regard to Item 13, she relayed the agenda language stated it was related to playfield maintenance. It was actually a hearing required by the Comprehensive Plan when the City abandons a park. The Growth Management Hearings Board ordered the City to hold the hearing; tonight the Council would be considering appropriate notice for that hearing. She requested the Council include mailed notice to property owners within 300 feet of the property. The only notice requirement is publication in the legal section of the Everett Herald, posted in the City and on the website, and posting on an adjacent property. She also requested the notice state this is an abandoned park and not that it is related to playfield maintenance contracts. George Murray, Edmonds, thanked the Council for reviewing the numbers related to Fire District 1. He asked how taxes were impacted by the proposed contract with Fire District 1. With regard to comment from residents at 523 Alder whose views were impacted by a building constructed next door, he pointed out Chapter 16 of the Edmonds Community Development Code listed the purpose of zoning to protect the character and the social and economic stability of the residential areas and to do this by regulating the use of individual parcels of land to prevent unreasonable, detrimental effects on nearby users. He questioned why the application of the code differed from the intent. Next he referred to application R20090042, the 4 -acre parcel on the waterfront, advising of the 128 people that have been notified, 80 are companies. He recommended the Planning Department expand the notification process to include full page ads in the Edmonds Beacon. Mayor Haakenson advised there was no change to citizens' taxes if the City contracted for fire service with Fire District 1. COUNCILMEMBER ORVIS MOVED, SECONDED BY COUNCILMEMBER PETERSON, TO EXTEND THE MEETING FOR ONE HOUR. MOTION CARRIED UNANIMOUSLY. Ray Martin, Edmonds, was disappointed the Council had again delayed discussion regarding the Council web pages. He recalled the Council changed their web pages a few days prior to the primary election and some of the information included on the pages created confusion and consternation. He Edmonds City Council Approved Minutes October 6, 2009 Page 15 recalled Council President Wilson stating the Council followed the law with regard to information on Council web pages, and recommended the Council adopt standards with regard to content. He pointed out information on Channel 21 states Council President Wilson is the Chair of Community Transit; however, Council President Wilson actually resigned that position in August. He expressed concern the City no longer was represented on the Community Transit Board. Council President Wilson responded he had hoped that the website standards would be complete by now but other issues have taken priority. He acknowledged Mr. Martin had filed a public disclosure violation alleging Mayor Haakenson, Councilmember Peterson and he had broken the law; the Public Disclosure Commission (PDC) found there had not been any wrongdoing. He found it necessary to resign from Community Transit due to the amount of time he devoted to the Levy Review Committee, Firdale Village zoning criteria and design standards, the I -1.033 resolution and the FD contract. Roger Hertrich, Edmonds, commented the Council had apparently changed its rules and was responding to audience comment. He referred to Consent Agenda Item E, Authorization to call for bids for the BNSF Double Track Utilities Upgrade Project, and suggested the City require BNSF pay for the utility upgrade. He pointed out that project also included water mains at Brackett's Landing North and James Street, noting those would benefit the Al Dykes project. With regard to Consent Agenda Item G, Report on bids opened on September 14, 2009 for the Odor Control Improvement Project, he advised the $800,000 project was increased to $1.4 million of which the City would pay approximately $800,000. He questioned the Finance Department's recommendation to pay the $800,000 cost in cash rather than finance at the current low rates. He thanked Council President Wilson for releasing three attorney - client emails and requested the email between Mr. Snyder and Senior Executive Council Assistant Jana Spellman also be released. In response to Mr. Hertrich's comment about the Council responding to public comment, Mayor Haakenson advised there was no rule that Councilmembers or the Mayor could not respond to citizen requests /comments. In response to why he often did not respond to public comments, Mayor Haakenson commented he was accustomed to picking his battles. In response to Mr. Hertrich's comments about the City paying for the utility upgrade due to BNSF's double tracking, Councilmember Wambolt advised the City did not want to pay for the upgrade but was required to. 10. REPORT ON PETITIONS RECEIVED REGARDING THE "MEADOWDALE BEACH AREA" ANNEXATION. Associate Planner Gina Coccia explained the City received a request from residents outside the City interested in annexing. The "Meadowdale Beach Area" Annexation refers to an area within unincorporated Snohomish County lying east of 68th Avenue West. She provided the following information regarding the annexation area: • A "10 %" petition to annex into the City of Edmonds was circulated in April and August of 2009. • 48 lots in the area. • 41 owners signed the petition. • The area is approximately 18.5 acres in size (roughly 0.029 square miles). • The total County assessed value (2009) for this area is approximately: $19,865,500. • The average assessed value is $413,864. • For a "10% Annexation Petition" to go before Council, owners making up at least 10% of the total assessed value of this area need to sign a petition (10% is $1,986,550). • Owners making up $17,313,300 or 87% signed the petition. Edmonds City Council Approved Minutes October 6, 2009 Page 16 The lots are developed with single - family homes built in the 1960s- 1970s. The average parcel size is .38 acre (16,000 square feet). Most lots are .29 acres (about 12,600 square feet). There are 48 single - family lots (approximately 2.3 people per family = approximately 110 people). Per RCW 35A.14.120 the City Council needs to meet with the petitioners tonight to determine three things: L Whether the Council will accept the proposed annexation. The boundary is logical as it is a residential neighborhood adjacent to Lynnwood to the south and County Parks to the north and east. Staff sees no reason to adjust the proposed boundary. 2. Whether the Council will require the simultaneous adoption of proposed zoning regulations for the proposed area to be annexed. The County's zoning is R -9600 and Lynnwood's zoning is R- 8400. Most parcels are .29 acres. Staff feels establishing zoning as RS -8 (8000) would be the best fit and most consistent with the neighborhood. 3. Whether the Council will require assumption of existing City indebtedness by the area to be annexed. Staff sees no reason why the Council would not require this area to assume their portion of City indebtedness Staff recommends the Council, 1) accept the proposed annexation, 2) require the simultaneous adoption of proposed zoning regulations for the proposed area to be annexed, and 3) require the assumption of existing City indebtedness by the area to be annexed. Ms. Coccia reviewed next steps in the annexation process: • Move forward with a "60% petition " - staff drafts a new petition containing all required elements. • Signatures collected totaling at least 60% value. • Signatures certified by the County Assessor within 180 days of collection. • Council reviews the new 60% petition and decides if they will accept it. Meanwhile, potential zoning will be analyzed. • If accepted by Council, staff submits application to the Boundary Review Board (BRB) for decision. • If approved by the BRB, Council will finalize an ordinance. Mayor Haakenson advised former Development Services Director Duane Bowman began this process with the residents quite some time ago and at least one neighborhood meeting has been held. Councilmember Plunkett asked why Lynnwood or Mukilteo had not pursued annexation of this area. Mayor Haakenson advised Lynnwood's Planner came to the neighborhood meeting and accepted the residents' desire to annex to Edmonds. Mukilteo is not adjacent to the area. Councilmember Orvis commented although it appeared the density was being increased via the proposed zoning, in Snohomish County a duplex could be constructed on a lot and a half. Ms. Coccia advised the zoning would be analyzed further in the next steps. Mr. Snyder pointed out the Council was initiating the zoning process that would occur simultaneously with the circulation of the petition. Councilmember Wambolt asked if there were any known upgrades that would be necessary in this area. Planning Manager Rob Chave answered there are service agreements in place for police and fire in this area and residents would see no change in those services. The homes in the area currently have septic systems and Public Works will be working with them on an LID to connect to sewer service. Councilmember Wambolt observed the City would not be incurring a large expense for improvements. Mr. Chave agreed. Edmonds City Council Approved Minutes October 6, 2009 Page 17 Mayor Haakenson invited residents of the area to speak regarding annexation. Lewis Soraich, a resident of the area to be annexed, thanked Lynn and Mike Treseler for initiating the process of gathering signatures. He recalled 92% of the residents in the area supported annexation into Edmonds. He asked how many more times petitions would need to be circulated. Mr. Snyder answered this was the last time. The first petition required only 10 %; the second petition must contain information regarding the simultaneous adoption of zoning and assumption of all bonded indebtedness. COUNCILMEVIBER PLUNKETT MOVED, SECONDED BY COUNCILMEMBER WAMBOLT, TO ACCEPT THE PROPOSED ANNEXATION AND, A) DIRECT STAFF TO INITIATE THE PROCESS FOR THE SIMULTANEOUS ADOPTION OF RS -8 ZONING OR SUCH OTHER ZONING CATEGORY AS IS CONSISTENT WITH THE EDMONDS COMPREHENSIVE PLAN AND AS NEAR TO THE CURRENT SNOHOMISH COUNTY ZONING AS PRACTICABLE; AND B) PROVIDE FOR THE ASSUMPTION OF ALL OF THE BONDED INDEBTEDNESS OF THE CITY. MOTION CARRIED UNANIMOUSLY. 11. CITY OF EDMONDS WEBSITE - CITY COUNCIL WEB PAGES. This item was removed from the agenda by motion on Agenda Item 1. 12. DISCUSSION AND POTENTIAL ACTION ON ORDINANCE AMENDING THE 2009 BUDGET. Mayor Haakenson asked Interim. Finance Director Lorenzo Hines to address Ms. Buckshnis' request that the Council not approve the ordinance amending the 2009 budget. Mr. Hines responded he met with Ms. Buckshnis within days of her raising the issue regarding the "missing" $2.2 million. He described to her the role of the annual financial statement versus the role of the current forecast, the City's cashflow statement. At the end of the meeting he asked her three times if he had answered her questions and she responded he had. That evening he received an email with more questions to which he had not had an opportunity to respond. He referred to Ms. Buckshnis' original email that questioned the $5.188 million less the emergency reserve that leaves $3.3 million which she felt should be the beginning balance reflected on the current forecast. He explained the $5.188 million was fund balance that was part of the income statement and balance sheet in the Comprehensive Annual Financial Report (CAFR). The formula is assets = liabilities + equity. The $5.2 million is equity; it is the overage of assets over liabilities as of December 31, 2008. That $5.2 million consists of five reserves in the General Ledger. In the private sector that is shareholders equity or owners' equity but in government it is fund balance. Ms. Buckshnis is attempting to reconcile the $5.2 million to the beginning balance in the current forecast of $977,000. The difference is the $5.2 million is the fund balance per the CAFR, the $977,000 is working capital; cash minus current liabilities. The working capital figure was estimated by former Finance Director Junglov in August 2008 and was included in the 2009 budget. As 2009 progressed, the $977,000 figure was revised in the outlook column to $1.341 million. Budget amendments must begin with the $977,000 figure because that was the number included in the budget. He will be refining the $1.341 million figure to determine the final beginning working capital. He summarized $5.188 million is fund balance per the balance sheet in the CAFR versus working capital of $977,000. It is a comparison of equity to a subset of assets and they will never match. Council President Wilson asked whether the audit determined the December 31, 2008 number. Mr. Hines responded the City's financial statements are on an accrual basis. When the books are closed as of December 31, accounts receivable and payable are estimated. As amounts are paid and received the working capital for January 1 is adjusted. Council President Wilson recalled the ending balance has usually been established by April. Mr. Hines answered this is the first budget amendment; had a prior Edmonds City Council Approved Minutes October 6, 2009 Page 18 budget amendment been adopted, there would likely have been some adjustment. He commented there were several reasons a budget adjustment may not have been presented including turnover midyear of the Finance Director, preparation of the FD1 numbers, etc. It was important to adopt this ordinance to allow him to prepare the final budget amendment. Council President Wilson observed the General Fund balance was comprised of four funds plus the Emergency Reserve. He questioned the existence of an Animal Reserve Fund and the $92,000 balance in the Council Contingency. Mr. Hines responded it was his understanding that a Council fund was eliminated in 2003 and the amount placed in this reserve. Mayor Haakenson recalled the Council created the Animal Benefit Fund. Council President Wilson commented he never would have considered closing Yost Pool had he known there was a Council Contingency Fund with a balance of $92,000. He asked for a better understanding of the City's General Fund. Mr. Hines commented the City's fiscal policy appears to be to not reach into the fund balance unless absolutely necessary. Mr. Hines advised there were two versions of the ordinance for the Council's consideration, Version 1 includes the Council Contingency budget reduction, and Version 2 excludes the Council Contingency budget reduction. He advised the amendment was discussed by the Finance Committee. Council President Wilson recalled he requested up to $3600 from the Council Contingency Fund be used for legal efforts associated with Lake Ballinger. He suggested enough be retained in the Council Contingency Fund to cover that amount. He asked the status of the fire and police give -back. Mr. Hines answered Fire has not entered into an agreement to participate in the buy -back; the police buy -back has also been removed from this budget amendment. Mayor Haakenson explained that was done because it was not paid until December 31 and will be included in the year end budget amendment. Council President Wilson observed Fire had not signed a Memo of Understanding and if the City signs a contract with FD 1 they will not participate in the give -back. If the City does not enter into a contract with FD I, Fire will not participate in the give -back. Mayor Haakenson answered the first statement was true; however, if the City does not enter into a contract with FDI, there will be negotiations between the fire labor union and him. Council President Wilson recalled Police signed a Memorandum of Understanding but if Fire does not give back, Police does not want to give back either. Mayor Haakenson responded that was incorrect. Council President Wilson recalled in April there were approximately $300,000 in proposed cuts such as Yost Pool, paying for the flower program from the Parks Trust Fund, etc. He also recalled approximately $600,000 in labor cuts including furloughs, give -backs and a cut to the automobile replacement fund. Mayor Haakenson clarified the transfer to the automobile replacement fund was not made. Council President Wilson summarized policy statements had been made based on what the Council foresaw as the annual deficit projection, cuts had been discussed and the levy was delayed because those decisions had been made. Now further changes had made between this proposal and what was presented to the Finance Committee. Mr. Hines answered the only difference between what was presented to the Finance Committee was the police buy -back. Mayor Haakenson clarified the police buy -back should not have been included because it is not typically done until year end. Council President Wilson was concerned if those costs were not removed, it elevated expenses and if expenses were elevated, it made the FD 1 contract more attractive. Mr. Hines explained the 2009 budget needed to be closed by December 31; this amendment needed to be approved so that staff could prepare the final budget amendment as well as the supplemental biennial budget. Edmonds City Council Approved Minutes October 6, 2009 Page 19 Council President Wilson commented this was the most important budget document the Council would vote on this year to date. It was 20 pages long and the narrative states only, please review the attached documents and details of this amendment. There are no written answers to questions raised at the Finance Committee, answers that have implications on the FD 1 contract discussion and all policy deliberations. For those reasons he would not support the amendment. Councilmember Wambolt commented he did not recall the Finance Committee discussing a $600,000 reduction in labor. Mayor Haakenson advised all the cuts are listed in Exhibit C; they include transfer from the Parks Trust Fund, reduce Council Contingency, report additional. Yost Pool revenue, eliminate Crime Prevention Program, eliminate Animal Control Officer, eliminate funding for Edmonds Night Out, eliminate funding for DARE, and furlough day buy- backs. Council President Wilson pointed out the furlough day buy -backs were only for non - represented employees. Mayor Haakenson agreed, advising those were the only furlough days taken to date. Council President Wilson advised the three biggest items were not included, the Fire and Police buy -back and the automobile replacement transfer. He expressed concern with the Council making decisions on the fire service contract and relying on budget numbers that were not accurate because additional amendments would be made at the end of the year. Mayor Haakenson advised once this budget amendment was approved, Mr. Hines could prepare the final budget amendment. Mr. Hines advised there would be another opportunity to amend the budget and to address the buy -back and automobile replacement transfer. He planned to present another amendment to the Finance Committee at their November 10 meeting. According to Ms. Junglov's notes, all the items the Council agreed to were included in this budget amendment. Council President Wilson pointed out the Police buy- back had been agreed to but was not included nor was the automobile replacement fund transfer. Mayor Haakenson pointed out Exhibit C includes $280,000 to eliminate the 2009 General Fund contribution to the B Fund. He clarified that was the automobile replacement fund transfer. The only item not included in the budget amendment was the Police buy -back which historically has been paid in December and therefore a budget amendment is made in December. COUNCILMEMBER PLUNKETT MOVED, SECONDED BY COUNCILMEMBER ORVIS, TO ADOPT ORDINANCE NO. 3757, VERSION 1 WHICH INCLUDES THE COUNCIL CONTINGENCY FUND CUT. Councilmember Wambolt asked how the $3700 in legal fees for Lake Ballinger would be paid if the Council Contingency Fund were cut. Mr. Hines advised the proposal was to reduce the Council Contingency Fund from $20,000 to zero. Council President Wilson recalled the original budget was $25,000; some funds were retained for the Levy Review Committee, approximately $5,000. A number of payments had been made out of the fund for legal fees and Rick Jenness. COUNCILMEMBER PLUNKETT WITHDREW HIS MOTION WITH THE AGREEMENT OF THE SECOND. COUNCILMEMBER PLUNKETT MOVED, SECONDED BY COUNCILMEMBER WAMBOLT, TO ADOPT ORDINANCE NO. 3757, VERSION 2, WHICH DOES NOT INCLUDE THE COUNCIL CONTINGENCY FUND CUT. MOTION CARRIED (5 -1), COUNCIL PRESIDENT WILSON OPPOSED. The ordinance approved reads as follows: AN ORDINANCE OF THE CITY OF EDMONDS, WASHINGTON, AMENDING ORDINANCE NO. 3711 AS A RESULT OF UNANTICIPATED TRANSFERS AND EXPENDITURES OF VARIOUS FUNDS, AND FIXING A TIME WHEN THE SAME SHALL BECOME EFFECTIVE. Edmonds City Council Approved Minutes October 6, 2009 Page 20 Mr. Hines advised he inadvertently left the Police buy -back in the 2009 furlough savings in Exhibit C. In addition, the next amendment will include unanticipated legal costs from Ogden Murphy Wallace. Mr. Snyder clarified they were not unanticipated; they were unbudgeted litigation costs that he has reported to the Council several times in Executive Session. 13. RESOLUTION ESTABLISHING NOTICE PROVISIONS FOR A HEARING BEFORE THE HEARING EXAMINER REGARDING THE TERMINATION OF AN INTERLOCAL AGREEMENT RELATING TO THE MAINTENANCE OF PLAYFIELDS AT A SITE FORMERLY OWNED BY THE EDMONDS SCHOOL DISTRICT AND ADJACENT TO HICKMAN PARK. City Attorney Scott Snyder explained the Growth Management Hearings Board (GMHB) upheld the Council's substantive determinations regarding the Parks Plan. The GMHB remanded to the City for two hearings. The issue is termination by the City of an Interlocal Agreement between the City, Snohomish County and Edmonds School District regarding maintenance of playfields on property that is no longer owned by the School District and via a contract that has been terminated by the School District and Snohomish County. Therefore the description of the agenda item is accurate. The GMHB pointed out the City's Comprehensive Plan requires abandonment of any park or other facility to have a Hearing Examiner hearing and recommendation which due to the nature of the contract was not done. The notice is as provided for in the code for a Comprehensive Plan amendment. If the Council wants mailings to properties within 300 feet, that could be done. COUNCILMEMBER WAMBOLT MOVED, SECONDED BY COUNCILMEMBER PLUNKETT, TO ADOPT RESOLUTION NO. 1209. Councilmember Plunkett asked about the notice requirement. Mr. Snyder advised it was as required by the City's code for Comprehensive Plan amendments. MOTION CARRIED UNANIMOUSLY. 14. MAYOR'S COMMENTS Mayor Haakenson advised he had been interviewing Finance Director applicants and has narrowed candidates to three. He planned to introduce the three to the Council prior to the October 20 Council meeting. Mayor Haakenson expressed his appreciation to Ms. Buckshnis for her efforts and her concern with the City's financial figures. He did not appreciate her insinuation at a candidate forum that there was $2 million missing from the City's coffers and that the balance sheets and financial statement could not be reconciled. He referred to Mr. Hines' explanation which unfortunately was not adequate for Ms. Buckshnis. Mayor Haakenson recalled he invited Ms. Buckshnis to sit in on the meeting with the State Auditor. He asked the State Auditor whether the citizens of Edmonds should be happy about the audit to which the Auditor responded they should be ecstatic; this is a very good audit, the City is in good hands. He urged Ms. Buckshnis to stop making insinuations that there was $2 million missing. 15. COUNCIL COMMENTS In response to Mr. Martin's comment that the City need not worry about I -1033 because the recourse was to ask the voters to approve a levy, Councilmember Wambolt agreed that could be done; however, the cost of an election was $70,000 - $80,000. Edmonds City Council Approved Minutes October 6, 2009 Page 21 In response to Ms. Larman's comment that the ED contract needs to be a win -win for the taxpayers as well as Edmonds firefighters, Councilmember Wambolt assured the firefighters were a driving force behind the contract. He was glad a representative of the firefighters union planned to speak to the Council at next week's meeting. He noted the numbers, how we are going to come out at the end of the year, are not going to determine how he voted with regard to the FD 1 contract. He did not view the contract as a way to bail out the City; if it was the right thing to do, it should be done regardless of the City's financial state. He recalled discussions that even with the FD contract, a levy would be necessary. Recent reports indicate the County and State's financial situation has not improved and the outlook for 2010 is grim. He recommended the Council resume plans for a levy increase in February. He explained plans for a levy on the February ballot were not ceased due to the FDI contract but because I -1033 would invalidate the levy. 16. ADJOURN With no further business, the Council meeting was adjourned at 11:18 p.m. Edmonds City Council Approved Minutes October 6, 2009 Page 22