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05/30/2006 City CouncilMay 30, 2006 The Edmonds City Council meeting was called to order at 6:00 p.m. by Mayor Haakenson in the Council Chambers, 250 5th Avenue North, Edmonds. The meeting was opened with the flag salute. ELECTED OFFICIALS PRESENT Gary Haakenson, Mayor Deanna Dawson, Council President Michael Plunkett, Councilmember Richard Marin, Councilmember Mauni Moore, Councilmember Peggy Pritchard Olson, Councilmember Dave Orvis, Councilmember Ron Wambolt, Councilmember STAFF PRESENT Tom Tomberg, Fire Chief David Stern, Chief of Police Duane Bowman, Development Services Director Dan Clements, Administrative Services Director Lyle Chrisman, Engineering Program Manager Jana Spellman, Senior Executive Council Asst. Sandy Chase, City Clerk 1. APPROVAL OF AGENDA Approve Agenda COUNCILMEMBER MARIN MOVED, SECONDED BY COUNCILMEMBER WAMBOLT, TO APPROVE THE AGENDA AS PRESENTED. MOTION CARRIED UNANIMOUSLY. 2. CONSENT AGENDA ITEMS COUNCILMEMBER MARIN MOVED, SECONDED BY COUNCILMEMBER MOORE, TO APPROVE THE CONSENT AGENDA AS PRESENTED. MOTION CARRIED UNANIMOUSLY. The agenda items approved are as follows: Approve (A) ROLL CALL potes (B) APPROVAL OF CITY COUNCIL MEETING MINUTES OF MAY 23, 2006. Approve Claim (C) APPROVAL OF CLAIM CHECKS #88193 THROUGH #88351 FOR MAY 25, 2006, IN Checks THE AMOUNT OF $238,987.35. Claims for (D) ACKNOWLEDGE RECEIPT OF CLAIMS FOR DAMAGES FROM CAROL Damages TORNROOS ($134,644.27) AND AMY JO MCKILLOP -WEIR (AMOUNT UNDETERMINED). sw Storm (E) REPORT ON BIDS OPENED ON MAY 16, 2006 FOR THE 242ND STREET SW STORM Improvements IMPROVEMENTS — PHASE H AND AWARD OF CONTRACT TO INTERWEST CONSTRUCTION, INC. ($134,151.58). t e an Parade and ( ) F AUTHORIZATION FOR THE MAYOR TO SIGN THE CONTRACT WITH THE Fireworks GREATER EDMONDS CHAMBER OF COMMERCE FOR THE 4TH OF JULY PARADE AND FIREWORKS DISPLAY. Taste of (G) AUTHORIZATION FOR THE MAYOR TO SIGN THE CONTRACT WITH THE Edmonds GREATER EDMONDS CHAMBER OF COMMERCE FOR THE TASTE OF EDMONDS. Edmonds City Council Approved Minutes May 30, 2006 Page 1 Hot Autumn (H) AUTHORIZATION FOR THE MAYOR TO SIGN THE CONTRACT WITH THE Nites GREATER EDMONDS CHAMBER OF COMMERCE FOR HOT AUTUMN NITES. Old Woodway 3. DISCUSSION AND POSSIBLE ACTION REGARDING OLD WOODWAY ELEMENTARY Elementary SCHOOL PROPERTY. School Marla Miller, Edmonds School District, explained her intent was to provide background on the School Board's decision to surplus the old Woodway Elementary School property. In August 2004, the District hired a property consultant to look at ten properties, including old Woodway Elementary School, that were either previously surplused and unused or sites that were strategically located in the District that could be put to a better use to generate revenue for school construction. This study was conducted following two unsuccessful bond measures to rebuild Lynnwood High School and Scriber Lake and public comment suggesting the District consider the use of surplus property to generate revenue to offset taxes as a means of funding for new schools. She clarified the Edmonds School District served 21,000 students and represented 145,000 citizens in Lynnwood, Edmonds, Mountlake Terrace, Brier, Woodway and unincorporated Snohomish County. Therefore the District's assets are not only of Edmonds but of the taxpayers throughout the District. Following the study, a recommendation was made to the School Board in November 2004. In a public meeting in December 2004, the Board provided direction to explore the sale or long term ground lease of five properties. Old Woodway Elementary School was identified in the study as a property not used for a school purpose for some time, in an area of the District that had other elementary schools that served students and a property that could potentially be sold without creating long term deficiencies for the District. Ms. Miller further recalled in January 2005 she made a presentation to the Council regarding the process. She referred to a quarterly newsletter published by the Edmonds School District which also covered the progress of the property study. The January quarterly newsletter contained an invitation to the public to participate in several community meetings regarding surplusing or entering into ground leases for properties. Eight public meetings were held in March, April and May 2005 to gather community input which resulted in nearly unanimous support for doing something with the properties that would support school construction and reduce the need for taxes. With the input from the community, the School Board developed their election proposal which was approved in September 2005. The election proposal stated that if the voters approved $140 million in bond authority, the District would match it with $140 million in property revenues to offset construction. She noted the District was limited to funding those projects identified to be funded via bond proceeds. The District also identified projects to be funded via property revenues. The combination of bond - funded projects and property- funded projects was processed between September 2005 and the February 2006 election. That process included approximately 60 community meetings throughout the District. In February 2006, approximately 62% of the voters approved the bonds. Old Woodway Elementary was one of the original ten sites identified for study, selected in December 2004 as a site to be surplused and sold. Since that time the District has been involved in a public process regarding the authority to proceed with the projects and the marketing and distribution of information . regarding the availability of the site. In March 2005 the District issued an RFQ /RFP to those interested in developing the site and provided information to the City in the event they were interested in purchasing the property. In June 2005 the District received the first letter of interest from the City for a Right of First Refusal, to purchase the property at 90% of the value of an offer acceptable to the District. The School Board felt strongly that the District needed to maximize the revenue from the properties and declined the City's offer. In order to give the City additional time, the School Board asked the City to advise them by Edmonds City Council Approved Minutes May 30, 2006 Page 2 March 1, 2006 of their interest in the property. Prior to March 1, 2006 the District received a letter stating the City's interest in working with developers to create a park on the site along development of the I I acre site. Several additional proposals from the City followed; today the City has offered to purchase approximately half the property which the District has accepted in concept. Ms. Miller further informed the Council that the District has offers in hand from private developers for the remaining half of the property and is anxious to move forward. There are two construction projects that would be funded with the proceeds of this sale. The architects and development teams have begun working with the schools to be rebuilt and are on target to go to bid in early 2007. If that process continues on schedule, it is believed the projects can be completed for the amount estimated to the voters. If these projects are delayed, escalating construction costs may add to the cost of the projects. Ms. Miller referred to the proposal that requested the District work with the City to allow time for an election in November and for the City to fund the District's cashflow requirements to keep the two construction projects on target. She noted at this time it was unclear whether the Council as a whole wanted to pursue that option. Councilmember Plunkett advised the Council was interested in pursuing a ballot measure but further discussion was necessary with regard to the $1.6 million non - refundable deposit. He asked if it would be possible to identify alternatives to the $1.6 million non - refundable deposit. Ms. Miller responded the $1.6 million was a figure that matched the District's cashflow requirements above the $3.2 million offer made by the City for the first half of the property. In communication with the City, it was not her intent that amount be viewed as a hard - and -fast non - refundable amount; however, to keep pace with the construction schedule and cashflow requirements, the District would need payments equal to $1.6 million and any refunding provision would need to have a time delay to ensure other funds were available to pay that amount back. There were two alternatives, first that the revenue from the City would be used to support the contract payments; a second alternative would be a construction bridge loan with those funds used for debt service payments until other funds are available. The District's concern is that those payments would not be refundable immediately because they would need the other revenue for debt service. Councilmember Plunkett acknowledged the District had needs; however, the ways and means of the $1.6 million was the issue, not that it was non - refundable. Ms. Miller agreed, but added an offer made today may not be available in six months. Another aspect of the District's response was if the sale of the property, due to a delay for an election, did not generate as much revenue as was currently offered, the District asked that the City guarantee the difference. The goal was to avoid penalizing the District with regard to the cost of construction or financing because of an agreement reached with the City. Councilmember Orvis envisioned a September election which would not significantly delay the process. He did not envision the District would return the funds provided by the City until the property was sold. Councilmember Moore thanked Ms. Miller for her presentation and for working with City staff on the purchase of half the property. She was troubled by Ms. Miller's comment that the District wanted the City to guarantee any shortfall between an offer the District had today and a future offer, anticipating this would invite a developer to offer less in the future. Ms. Miller advised since the District's response to the City, the District has been working with the developers who have submitted offers to determine their willingness to fix their offer in the event there was a delay. She noted the City would then be asked to cover any escalation in construction and/or financing costs. She explained construction escalation has traditionally ranged from 3 -7% annually; in the last several years, construction escalation has been 10 %+ depending on the trade. Thus the District's concern that a delay could increase the construction cost estimates. She noted for two years, the staff at the schools to be rebuilt, architects, engineers, etc. have Edmonds City Council Approved Minutes May 30, 2006 Page 3 been working on design plans and the cashflow is necessary to maintain the design process so that the project can go to bid in February 2007. Councilmember Moore questioned how an election this Fall would delay the District from going to bid in February 2007. Ms. Miller answered for a purchase and sale offer to close, the purchaser, needed 30 -60 days to complete due diligence such as testing the soil, materials in the existing building, etc. If the election was not successful and the City did not purchase the property, those activities would need to occur after the election. Councilmember Moore suggested the City reimburse the cost of the due diligence if an election failed. Ms. Miller commented because the District had accepted an offer in principle from the City for a portion of the property, the District also needed to short plat the property. If the City purchased the entire parcel, that process would be unnecessary. Councilmember Moore inquired about the time required for a short plat. Development Services Director Duane Bowman answered a normal short plat took approximately 90 days although it could be expedited to approximately 30 days. Councilmember Orvis asked if the District had the ability to do interfund transfers. Ms. Miller answered it was a limited option for the District. The issue is that this transaction was connected to the 2004 capital levy that provided funds for technology and other capital improvements. The District collects revenue from a capital levy each year and although the cashflow plan intended to utilize the funds as they were received, technology deficiencies required front - funding some technology purchases with existing reserves to provide computers in classrooms faster than the receipt of revenue from the capital levy. Councilmember Orvis commented the $1.6 million was intended to cover the District's cashflow until the results of an election were known. Ms. Miller advised the District was willing to work with the City to structure interim payments to match their cashflow requirements until the sale occurred. Ms. Miller relayed the School Board's request for a decision from the City by June 5 regarding how the City planned to proceed with regard to the remaining half of the property. She pointed out the District's willingness to delay previous timelines regarding the sale of the property to provide an opportunity for the City. As this has progressed, fewer developers have been interested in submitting proposals and the School Board is anxious to move forward with the transaction. Councilmember Dawson acknowledged there had been numerous delays and asked the nature of the decision the School Board was seeking by June 5. She noted there were numerous issues to be resolved before the Council could make a decision to proceed by June 5. Ms. Miller explained if the City were to provide a written offer that stated the City's intent to proceed with purchasing the remainder of the property under the structure described — that the City would meet the District's cashflow requirements and the City would guarantee to cover cost escalation due to the delay— that would provide the certainty the District sought. Councilmember Dawson asked how firm the June 5 deadline was. Ms. Miller answered the District planned to accept another offer if they did not hear from the City by June 5. If the City chose to pursue the property after that date, the City would need to negotiate with the developer. Ms. Miller observed the City appeared to be interested in a contingent offer subject to the outcome of an election. The District would need a firm commitment that the City would purchase the property if the election were successful. She has discussed with a developer an offer that would be contingent on the outcome of the election and if the election were unsuccessful the developer would purchase the property. Edmonds City Council Approved Minutes May 30, 2006 Page 4 The District would then want a guarantee from the City with regard to covering any escalation in construction and/or financing costs due to the delay as well as costs associated with reduced interest in the property. Councilmember Plunkett commented the Council's intent could be known by June 7 following the June 6 Council meeting but he did not envision a contingency Purchase and Sale Agreement could be presented by June 7. He asked whether Ms. Miller had the authority to extend the deadline until June 7 and whether a statement of intent regarding proceeding with a ballot measure and submitting a contingent offer was sufficient. Ms. Miller explained the direction provided by the School Board was a fixed date of June 5 to allow the Board to proceed with their decision at their June 6 meeting. Councilmember Plunkett asked whether she could obtain authorization to delay a decision until June 7. Ms. Miller answered it was unlikely an alternate date could be requested as the School Board had numerous commitments at the end of the school year and their next meeting was June 6. Councilmember Plunkett commented the Council would need further discussion with staff and the best the Council could do by June 5 would be an agreement subject to various elements. Ms. Miller advised a letter of intent would suffice but it needed to be a decision by the Council to proceed with purchasing the remaining property. Councilmember Plunkett asked whether staff could develop alternatives for Council consideration within 4 -5 days. Mr. Clements answered yes, although it would be unknown whether those alternatives would be acceptable to the District. Councilmember Plunkett asked whether staff could meet with Ms. Miller during those 4 -5 days to discuss the alternatives. Mr. Clements agreed that would be possible, pointing out the Council first needed to decide whether to proceed with a ballot measure and whether to purchase the remaining property. Councilmember Plunkett disagreed, noting the Council needed further information regarding what a proposal might look like. He pointed out there were numerous aspects and risks the Council needed to consider in addition to the cost of an election. Mr. Clements explained the major exposures the City faced were the $1.6 million cashflow, the potential increase in construction costs, the cost of the election, and passage of the election. Councilmember Moore acknowledged the Council should have discussed an election previously and assured the last - minute nature of this action was not the District's doing. She suggested this was workable (1) if the Council provided a letter of intent offering interim payments to match the cashflow until the sale occurred; (2) if the District had a developer who would agree to purchase the property for the amount offered now; (3) if the short plat could occur in 30 days; and (4) if the developer's due diligence could start now. She suggested staff estimate the cost of a developer's due diligence. She did not envision there would be escalations in construction costs if bids went out in February 2007. She concluded in this scenario the risk to the City was limited to due diligence costs. Ms. Miller agreed with Councilmember Moore's summary. Councilmember Moore advised the question before the Council was whether to proceed with a ballot measure, pointing out the importance of any ballot measure including other items such as roads, sidewalks, etc. to ensure citizens felt they would receive value for their money. Councilmember Dawson asked whether the District would be agreeable to an offer from the City to proceed but that any funds would be refundable and the risk would be borne by the District. Ms. Miller answered no, because the District was also dealing with public property and funds. The risk that would shift from the City to the District would not be a cost the District should bear in view of the ability for the District to sell the property and move forward at this time. For Councilmember Plunkett, Ms. Miller confirmed the deadline was end of the work day, June 5. Edmonds City Council Approved Minutes May 30, 2006 Page 5 Councilmember Moore concluded this was doable and the City needed only to provide a letter of intent. She requested staff identify other projects that could be funded via a ballot measure that included sidewalks, roads, etc. Councilmember Wambolt suggested the Council vote whether to place a measure on the ballot with the assumption if the election failed, the City would be under no obligation to the District. If four members would not agree, the discussion was essentially over. Councilmember Olson commented if the Council agreed to use BEET funds for purposes other than parks, a bond measure for roads and sidewalks would not be unnecessary. She found it disingenuous to discuss a ballot measure including roads and sidewalks when those items could be funded via other means. Councilmember Plunkett pointed out the first step was the Council agreeing on a letter of intent although he noted that would be without the knowledge of the potential risks. He preferred to have staff present further information for Council consideration including potential risks. Councilmember Wambolt commented if four Councilmembers would not agree to placing a measure to purchase the property under the optimistic, although possibly unrealistic, scenario he described, further discussion was unnecessary. Councilmember Plunkett envisioned there were 5 -6 Councilmembers who would agree to place the issue on the ballot. Council President Dawson commented it was unlikely staff could fully calculate the risk due to the unknowns such as the real estate market, the odds of a developer backing out, etc. that were in addition to the cost of an election. She commented on the unlikelihood of the public approving a ballot measure for only the purchase of this property which then required identification of other projects to be included in the ballot measure. She questioned whether a measure that the public would support could be developed in time for a September election. A November election would be more realistic and she questioned whether the Council wanted to put the City's resources at risk of the passage of the ballot measure. She did not sense the voters felt there was a need to raise their taxes for anything at this time. Council President Dawson recalled the potential to fund road projects via REET without seeking voter approval. She agreed it was disingenuous to ask the voters to tax themselves when staff had identified a method of funding road and/or sidewalk projects via REET. She was uncertain that a package of projects could be developed that would be acceptable to the voters and had a reasonable chance of passing that was sufficient to take the risk of the cost of the election and potentially guaranteeing cost escalations, etc. to the District. After hearing the comments of the District representative and the community's comments regarding increasing taxes to fund this purchase, she was not convinced to a point she was willing to accept that level of risk. At this point, she would vote against placing a measure on the ballot and submitting a letter of intent to the District. She commented if this was the only way a park could be located in that area, it may be a different issue; however, the property the City had agreed to purchase would provide a good sized park. She was not comfortable with the level of risk for the entire community associated with purchasing the remaining property. Councilmember Marin was not comfortable with this level of risk, commenting there was risk to both the City and the School. District. He cited incredible transportation needs in the entire region and upcoming large ballot issues to fund those needs, cautioning that other ballot measures increased the risk that voters would defeat vital transportation funding measures. He pointed out the transportation system in Atlanta that was funded with money earmarked for the Seattle region 30 years ago that Seattle voters defeated. He concluded although it would be nice to have a large park in that area, the additional funds that would be required were unacceptable to him and he envisioned the voters would agree. Edmonds City Council Approved Minutes May 30, 2006 Page 6 Councilmember Orvis was encouraged by Ms. Miller's comments and envisioned the purchase of the additional property was possible and with an acceptable level of risk. He supported proceeding with the purchase including if necessary scheduling a special meeting to approve a letter of intent. Councilmember Wambolt agreed with Councilmember Marin's comments, stating the City could not afford to purchase the additional property. He referred to Shoreline's recent passage of a parks bond, commenting their average cost to purchase 24.9 acres was $412,000 per acre compared to the cost to purchase the additional 51/2 acres at the old Woodway Elementary School which was approximately $900,000 per acre or 1.2 times what Shoreline paid. Another aspect of this issue was the Growth Management Act (GMA) required the City add 5,000 citizens by 2025; there needed to be housing for those residents. He noted additional housing has been provided in the City via infill development although there has been little infill development in this area. He did not support a ballot measure for parks although he could be convinced to place a measure on the ballot for roads and /or sidewalks. Councilmember Olson acknowledged this was a difficult decision, noting the City had paid a reasonable price for the first 5'/z acres, $3.2 million. To purchase the entire 11 acres, the total cost approached $8 million. She pointed out voters would be asked to fund desperately needed items in the near future. Although she would like to provide an 11 acre park in this area, she could not justify the cost. Councilmember Moore commented the purchase of the park was not for the residents of the south end but for all residents of the City. She disagreed that this was a GMA issue, pointing out there was adequate space in the City to accommodate 5,000 additional residents without developing the last remaining open space in this area of the City. COUNCILMEMBER PLUNKETT MOVED, SECONDED BY COUNCILMEMBER ORVIS, THAT COUNCIL PRESIDENT DAWSON CALL AN EMERGENCY SESSION OF THE COUNCIL BEFORE 5:00 P.M. ON MONDAY, JUNE 5; STAFF TO BRING THE COUNCIL RISK OPTIONS AND BALLOT ITEMS TO CONSIDER. Council President Dawson commented it was not staff responsibility to develop possible items to be funded via a ballot measure. She objected to placing a measure on the ballot unless the Council felt those projects were desperately needed. She acknowledged there were road projects but staff had proposed a funding method that did not require a property tax increase. If that option was not possible, she could agree to ask the voters to increase their taxes to provide adequate funding, but at this time she was unwilling to ask the voters for a tax increase to fund these items. She reiterated the inability to quantify the level of risk to the City. She agreed with Councilmember Olson that the City purchased 51 /a acres and were committed to developing a park for the community. She urged the community to be excited about that project and move forward with it. UPON ROLL CALL, MOTION FAILED (3 -4), COUNCILMEMBERS ORVIS, MOORE AND PLUNKETT IN FAVOR; AND COUNCIL PRESIDENT DAWSON AND COUNCILMEMBERS MARIN, WAMBOLT, AND OLSON OPPOSED. Mayor Haakenson asked if the Council wanted to take a vote regarding whether to place a measure on the ballot. Council President Dawson referred to the School District's indication that if the City did not present an offer by June 5, they would proceed accordingly. She concluded that was the will of the Council at this point and a further vote was unnecessary. RCK*1104 104 1 low Mayor Haakenson reported he had an enjoyable, restful two -week vacation, the first time since he has been Mayor that he had taken two weeks of vacation in a row. Edmonds City Council Approved Minutes May 30, 2006 Page 7 5. COUNCIL COMMENTS Council President Dawson urged the community not to get caught up in negativity, explaining the Council had tried hard, although there were differences of opinion with regard to the end result, to do the right thing for the citizens of Edmonds as a whole. She commended the Council for their professionalism and their civil and open discussions over the past few weeks, acknowledging it was an issue upon which there were differing opinions. Councilmember Olson thanked the School Board for allowing Ms. Miller to speak to the Council. Councilmember Moore expressed her disappointment at not purchasing the entire I I acres of open space but expressed her appreciation for the Council's discussion. 7�KVIXIIKIWl With no further business, the Council meeting was adjourned at 7:10 p.m. Edmonds City Council Approved Minutes May 30, 2006 Page 8