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08/11/1987 City CouncilTHESE MINUTES SUBJECT TO AUGUST 18, 1987 APPROVAL 1 EDMONDS CITY COUNCIL MINUTES AUGUST 11, 1987 (WORK MEETING) The regular meeting of the Edmonds City Council was called to order at 7 p.m. by Mayor Larry Naughten in the Plaza Meeting Room of the Edmonds Library. All present joined in the flag sa- lute. PRESENT Larry Naughten, Mayor John Nordquist Steve Dwyer Laura Hall Jo -Anne Jaech Bill Kasper Lloyd Ostrom ABSENT STAFF PRESENT Jack Wilson Jim Barnes, Parks & Rec. Div. Mgr. Scott Tracy, Jerry Hauth, Hydraulics Engineer Student Rep. Robin Hickok, Assistant Chief Peter Hahn, Comm. Svc. Director Mary Lou Block, Planning Div. Mgr. Art Housler, Admin. Svc. Director Bobby Mills, Pub. Wks. Director Chuck Day, Accounting Supvr. Scott Snyder, City Attorney Jackie Parrett, City Clerk Margaret Richards, Recorder Mayor Naughten announced that August 11, 1987 was the City's 97th anniversary. He said cake and coffee would be served following item #4. CONSENT AGENDA COUNCILMEMBER JAECH MOVED, SECONDED BY COUNCILMEMBER NORDQUIST, TO APPROVE THE CONSENT AGENDA. MOTION CARRIED. The approved items on the Consent Agenda include the following: (A) ROLL CALL (B) APPROVAL OF MINUTES OF AUGUST 4, 1987 (C) ACKNOWLEDGMENT OF RECEIPT OF CLAIM FOR DAMAGES FROM SUSAN R. THOMPSON ($415.91) (D) APPROVAL,OF 1987 PRISONER DETENTION AGREEMENT WITH CITY OF LYNNWOOD (E) AUTHORIZATION FOR MAYOR TO SIGN LEASE WITH BURLINGTON NORTHERN FOR INSTALLATION OF AN AUXILIARY POWER GENERATOR AT LIFT STATION 7 (F) REPORT ON BIDS OPENED AUGUST 3, 1987 FOR 8TH AVE. S. WATER PIPE LINE AND AWARD OF CONTRACT TO COMO CONTRACTORS ($270,641.61) CWC-HDR TREATMENT PLANT MONTHLY REPORT Gordon Culp, CWC-HDR, reported that the predesign work for the Dayton Street site continues on ju� schedule and is slightly under budget at the present time. Mr. Culp said the Citizens Advisory Committee met on July 20 to review several concepts with respect to plant appearance and configuration. Mr. Culp noted that the Value Engineering (VE) workshop is scheduled on August 17. Upon comple- tion of the VE analysis, a final predesign report will be prepared. CITIZENS ADVISORY COMMITTEE REVIEW OF DAYTON ST. SEWER TREATMENT SITE DESIGN p ,_, _ Kirby White introduced members of the Citizens Advisory Committee who were in attendance at the Council meeting. Don Hogan, architect, 1100 Eastlake Ave. E., Seattle, reviewed three options for plant design and landscaping at the Dayton Street site. He noted that the Committee favored option #2. Mr. Hogan said most of the plantings included in option N1 were focused around the perimeter of the plant to screen it from view. A jogging path is indicated at the elevation adjacent to the marshlands and continues along SR 104 back toward Dayton Street. Councilmember Ostrom inquired what the landscaping would consist of. Jim Fiori, associate architect, said the perimeter plantings will be primarily to screen the building. The corner plantings will be more of a street tree type of planting. Mr. Fiori said there is a potential for the placement of benches around the base of the trees for the public's use and administrative employees. Councilmember Hall inquired about the height of the pump station wall. Mr. Fiori replied 8 to 12 feet. Councilmember Jaech inquired if any of the existing mature trees along SR 104 will be preserved. Mr. Hogan said it is almost impossible to save trees during construction. Mr. Hogan said option #2 addresses the issue of screening the treatment plant as much as possi- ble from view by residents who live upland. The buildings will be low profile structures to mitigate the height and bulk of the buildings. The administration building will be one level and residential in scale. Mr. Hogan said option #3 will be completely lidded. Park -like areas will be created, each different in character, for the public's use. Mr. Hogan then reviewed the site plan from various elevations. Councilmember Kasper inquired about the height of the trees. Mr. Hogan said the trees will be mature trees. Councilmember Kasper noted that there was a height limitation. Mr. Culp said the trees will be pruned to keep them within the height limitation. Mr. Hogan said although the administration building will be one level, several other buildings will be closer to 40 feet above sea level. Councilmember Hall inquired about the dimensions of the highest buildings. Bud Benges, CWC- HDR, replied 120'x72' and 24'x188'. Councilmember Ostrom inquired about the cost of the various options. Mr. Benges said option#2 has been estimated to cost approximately $500,000 to $900,000 in addition to the base project. He said the final cost estimate for option #3 is not available yet. Councilmember Ostrom in- quired if a final report will be submitted to the Council with more detailed information. Mr. Benges replied affirmatively. He said the intent of the meeting that evening was to present ideas to the Council which had been discussed between CWC-HDR and the Committee. Councilmember Jaech inquired what safety precautions will be provided for option #2. She ex- pressed concern regarding the safety of children. Mr. Benges said alternatives have been dis- cussed and will be presented to the Council in the future. Councilmember Jaech inquired about access to equipment for maintenance and repair purposes if the clarifiers are lidded. Mr. Benges said access will be available in all cases, albeit difficult. Councilmember Hall complimented the Committee. She inquired if the options exceeded the $39.1 million cost. Mr. Benges replied affirmatively.. Mr. Culp clarified that the option at the Pine Street site did not include mitigation costs that may result from the Environmental Impact Statement process. Councilmember Ostrom said he was not enthusiastic about providing amenities within the treatment plant for the public's use. Mike Echelbarger, representing Woodway, also questioned the use of view points within the plant for public use. He said that issue will be addressed in the future. Mr. Echelbarger said the issue of continuing the jogging trail into the undeveloped property around the perimeter of the treatment plant will also be addressed. Chris Matt said some of the amenities were proposed for the purpose of enticing out-of-towners into the downtown area. EDMONDS CENTENNIAL COMMITTEE'S OBSERVANCE OF CITY'S 97TH BIRTHDAY - AUGUST 11, 1990 2e��� The meeting recessed at 7:45 p.m. for refreshments in celebration of the City's 97th birthday and �Sjr r�cL2i reconvened at 8 p.m. Linda McCrystal, member of the Edmonds Centennial Committee, thanked the public for joining in the celebration. She said a centennial booth will be at the Taste of Edmonds. Centennial pins EDMONDS CITY COUNCIL MINUTES Page 2 AUGUST 11, 1987 will be available, as well as information on the State and City centennial. Ms. McCrystal said the next Committee meeting will be held on September 21 at the Frances Anderson Center at 7 p.m. She encouraged public participation. DISCUSSION ON PROPOSED DECORATIVE STREET LIGHTING PROGRAM FOR DOWNTOWN AREA Planning Division Mary Lou Block reported that in 1984, Staff presented the concept of decorative street lighting to the Architectural Design Board (ADB) for review and approval of light fixtures in order to create a standard for anyone wishing to install lighting in the downtown area. The ADB approved a single bulb fixture. Although no fixtures have been installed yet, Jacque Mayo requested approval for the installation of street lights for his building at 5th and Main. He requested a modification to the approved standard to a three bulb fixture. The ADB approved that fixture for use at intersections only. Ms. Block said the concept of decorative street lighting needs to be coordinated with an undergrounding plan for the downtown area. She said Bobby Mills contacted a lighting engineer to obtain a proposal to do an overall review of the potential project. Mr. Mills is requesting authorization to fund a study by a lighting expert. Ms. Block said in addition to street lighting, Staff and the City's landscape designer have been working on a plan for overall downtown improvements. A large colored rendering will be presented to the Council. Councilmember Jaech inquired if the single bulb fixture would emit enough light. Ms. Block said that issue, among others, will be addressed by a lighting engineer if the Council approved Staff's request to retain a lighting engineer. Councilmember Jaech noted that a firm which manu- factures lighting fixtures is located in Oregon. She said the firm indicated a willingness to ship the product to the City for demonstration purposes. COUNCILMEMBER OSTROM MOVED, SECONDED BY COUNCILMEMBER NORDQUIST, TO AUTHORIZE STAFF TO PROCEED WITH THE DEVELOPMENT PLAN AND STUDY OF LIGHTING PROJECT BY A LIGHTING ENGINEER. Councilmember Nordquist inquired if the existing gas fixtures located in Old Mill Town will be replaced with the proposed fixtures. Ms. Block said those may be retained. She said that issue will also be addressed by the lighting engineer. Councilmember Kasper inquired about the height of the fixtures. He expressed concern that resi- dents who live on the second story of downtown buildings may be adversely impacted by the height. Ms. Block replied 12 feet. She said that issue will be addressed, also. She said hang- ing flower baskets are proposed to be suspended from the light fixtures so they must be a certain height. MOTION CARRIED. Ms. Block introduced Landscape Designer Elizabeth Greenleaf. Ms. Greenleaf reviewed a conceptual plan of the location of the light fixtures, landscaping, as well as other improvements to the downtown area. Ms. Greenleaf said the cost estimate for the street lights is $332,000 (excluding undergrounding of existing electric lines), and the cost estimate for other improvements is approximately $35,000 which, she said, can be phased in over several years. Councilmember Jaech inquired if the cost of $100 per tree included purchase and installation. Ms. Greenleaf replied affirmatively. Councilmember Jaech inquired if the City would receive credit for the existing fixtures if they are replaced. Community Services Director Peter Hahn said there could be a savings, depending upon how the lights are metered. Councilmember Jaech inquired if the City would realize a savings if Staff installed and maintained the fixtures. Mr. Hahn replied affirmatively. Councilmember Jaech inquired if the height of the fixtures could be reduced to fit in better with the residential atmosphere of the community. Ms. Greenleaf said 12 feet is a relatively low height for light fixtures. Councilmember Nordquist said several sight impaired citizens have voiced a concern to him that they are unable to discern the guidelines in the brick walkway around the fountain. He suggested that a lighter brick be utilized to demarcate the guidelines more clearly. DISCUSSION REGARDING HEARING PROCEDURES AND EX PARTE COMMUNICATIONS City Attorney Scott Snyder stated that in a number of cases which have come before the Council for consideration, the Council has expressed concern regarding ex parte communications. The cases have involved both true ex parte communication - that is, information received by EDMONDS CITY COUNCIL MINUTES Page 3 AUGUST 11, 1987 Councilmembers outside of the hearing process - as well as concern regarding voluminous documenta- ry evidence in conjunction with a hearing. Among the concerns expressed by Councilmembers is the difficulty of considering this information while fulfilling its obligations under State law. Mr. Snyder said RCW Chapter 42.36 attempts to summarize and codify prior decisions of the Washing- ton appellate courts regarding ex parte communications and the appearance of fairness doc- trine. RCW 42.36.060 prohibits ex parte communications between City Council and citizens regarding a pending quasi-judicial matter; that is, Councilmembers are prohibited from discuss- ing pending hearings and receipt of information regarding those hearings except in the hearing itself. RCW 42.36.030 indicates that the appearance of fairness doctrine and the prohibition against ex parte communications are not applicable to the legislative decisions of the Coun- cil. Mr. Snyder said fhe prohibition against ex parte communications has an exception built into the statute. Council persons who have received ex parte communications can cure the appear- ance of fairness doctrine problem by placing on the record the entire substance of a written or oral communication. A public announcement is then required of the content of the communication, and the parties and public are to be advised that they have a right to rebut that information during the course of the hearing. He said the statute is structured to give direction on how the Council must proceed. When a Councilmember has received a written or oral ex parte communica- tion concerning a pending hearing, he/she should note that communication for future reference. Written communications may be given to the City Clerk and included in the record but need not be read into the record in their entirety. The public must be informed of the general nature of the content of the letter, however. In situations where detailed information is presented, Mr. Sny- der recommended that the Council either read the specific information aloud or circulate a copy of the communication. Mr. Snyder said if the Council complies with the statutory procedure, individual Councilmembers who have received ex parte communications may then participate in the hearing process. The Council should be aware that in other cities this statute has been used as a tactic to remove Councilmembers from their decision -making process. In one reported case, a group mailed letters to councilmembers in advance of a hearing. When the councilmembers did not follow the statu- tory procedure and reveal the communication, the group then objected to their participation in the hearing. On appeal, the court found that the councilmembers should not have participated. Therefore, the Council should be aware that the use of ex parte communications can be a tac- tic to strike councilmembers with opposing viewpoints, as well as a method for honestly communi- cating information. Mr. Snyder said other closely related issues include how the Council should proceed to accept voluminous documentary evidence given to the Council either shortly before or at the hearing. This issue is one for the Council's discretion and may be addressed by the adoption of procedural rule. From a due process standpoint, the parties must be given a reasonable opportunity to be heard within a reasonable time limit set by the Council. Therefore, the Council has the obliga- tion to provide a reasonable amount of time, but not an unlimited amount of time, at a hearing. Because of time constraints, individuals may resort to introducing written material. The Council could adopt a rule which requires all written materials in excess of a certain length to be sub- mitted to the City Clerk by a given deadline. This rule could be contained in the hearing no- tice. If the Council does not feel that such a rule is appropriate, the Council should consider the use of a continuance so that it may have an opportunity to review the materials when materi- als are received at the hearing. Mr. Snyder recommended that the Council keep negative comments to a minimum concerning the presentation of materials because those comments could present a basis for an appearance of fairness doctrine challenge. Mr. Snyder referred to a related matter in which a recent decision of the Washington Supreme Court was handed down on July 23, 1987. In that case, Nagatani Brothers v. Skagit County Com- missioners, 108 Wn.2d 477, the Supreme Court issued a warning to local governmental bodies concerning statements made regarding a councilmember's personal knowledge or experience. The Supreme Court stated, "Also, we must comment on another aspect of this record. We question the propriety of individual planning commission members putting into the record after testimony at the public hearing was closed but before the decision is made their personal knowledge about potential adverse impacts and supposedly comparable uses. The decision maker should act upon facts present pursuant to statute and on the record. Individual members should not become wit- nesses as has happened here. Nagatani Brothers, supra, at 482". Mr. Snyder recommended, in cases where City Councilmembers have knowledge that has not been brought out at the hearing, that they pursue the information in one of the following ways: 1) during the hearing portion, ask questions of the parties in order to bring out the information within the personal experience of the Council. There is nothing in the case prohibiting a Coun- cilmember from requesting information, but the Court has indicated that it will not tolerate Councilmembers serving both as witnesses and decision makers; 2) if the questioning does not EDMONDS CITY COUNCIL MINUTES Page 4 AUGUST 11, 1987 does not bring forth the material the Councilmember seeks, the Council, as a whole, could either: a) continue the hearing and instruct the parties to present testimony and information on the subject; b) continue the hearing and instruct the staff to gather the information and present it to the Council; or c) in situations where the Hearing Examiner or Planning Board/ADB have held an initial hearing, the matter could be referred back to the Board or Hearing Examiner for further proceedings. Mr. Snyder said while the Nagatani Brothers case is not law, it gives a clear indication of how the Supreme Court will view such a challenge. Attorneys representing developers and other poten- tial litigants can be expected to challenge statements of personal knowledge made by Councilmembers. The Council should avoid using "magic words" in their deliberation such as "I know", "from my past experience, and "in another case". It does not mean that they cannot use their experience, but they will have to be sure that information is presented into the record as evidence and not in their comments. Councilmember Ostrom said he did not feel that the submittal of material during a hearing was a problem. He said the Council could continue the hearing to another date if it desired more time to review the material. He expressed concern regarding the time restrictions that are placed on testimony at hearings. He suggested that more time be allotted for complex issues. Mr. Snyder noted that the transcript of the proceeding before the Hearing Examiner is available to the Coun- cil. He said it may not be necessary for the Council to hear that same material. Mr. Snyder said it was the Council's discretion to decide how to best utilize their time. Councilmember Hall said the issue of time allocation was a philosophical issue for the Council to decide. She said the Council must remember that they are elected officials and should listen to the concerns of their constituents. Councilmember Ostrom concurred. He said he did not believe the Code should be amended but, rather, the Council need only to remember to address the inter- ests of the citizenry. REQUESTS FOR APPROVAL OF PURCHASE OF PERSONAL COMPUTER FOR PUBLIC WORKS, SEWER AND WATER FUND Community Services Director Peter Hahn reported that approximately four weeks ago the Council directed Staff to solicit bids for a number of computers and other devices. He said several Councilmembers and the Community Services Committee have asked Staff to present the Council with a description of the existing systems for maintaining sewer inspection and maintenance records and for planning inspection and maintenance activities. A computerized data base system would not only improve the efficiency of record compilation and retrieval, but would also greatly facil- itate generation of reports, work schedules, maintenance history, etc. Mr. Hahn said that a high capacity, high speed PC would be ideal. A printer is also needed. Staff surmised that $4,500 would be sufficient to purchase that equipment. Staff would bid that equipment together with the General Fund acquisitions. Mr. Hahn said 50% would be charged to the Water/Sewer Fund and 50% to the Treatment Plant Fund, of which approximately 50% is reimbursable from the other jurisdictions. Councilmember Jaech suggested that a study be conducted to determine the most feasible equipment available for City use. COUNCILMEMBER JAECH MOVED, SECONDED BY COUNCILMEMBER KASPER, TO APPROVE THE PURCHASE OF A PERSON- AL COMPUTER FOR THE PUBLIC WORKS DIVISION WITH THE PROVISO THAT THE PURCHASE IS INCLUDED IN OTHER COMPUTER PURCHASES SO THAT A QUANTITY DISCOUNT CAN BE OBTAINED. Councilmember Ostrom raised a point of order. He stepped down from the dais due to a conflict of interest. MOTION CARRIED. (Councilmember Ostrom did not vote.) REQUEST FOR AUTHORIZATION TO PREPARE AND EXECUTE CONTRACT FOR DOWNTOWN TRAFFIC STUDY Community Services Director Peter Hahn reported that the Council recently inquired about the status of a traffic study proposal solicitation for the downtown and waterfront areas. The Engi- neering Division intended to pursue the issue immediately following the pedestrian fatality that occurred at 3rd and Main. Bell -Walker Engineers, Inc. responded with a proposal for a pedestrian and traffic study, which would include both the downtown and ferry terminal areas. Councilmember Nordquist suggested that a comprehensive pedestrian and traffic study be conducted from Bell Street to Dayton Street and from the waterfront to 6th, integrating public transit. Mr. Hahn said discussions with respect to major rerouting of traffic, as well as intermodal transportation, will be addressed. EDMONDS CITY COUNCIL MINUTES Page 5 AUGUST 11, 1987 Councilmember Kasper expressed concern regarding the location of particular corner parks because he said he has observed the obstruction of traffic in those areas. He recommended that a study be conducted to determine the practicability of corner parks before any more are installed. Councilmember Kasper said it does not appear that the State perceives a traffic problem in down- town Edmonds. He recommended that a comprehensive plan be developed for the downtown area be- cause of the tremendous increase of traffic. DISCUSSION OF ENGINEERING DEPARTMENT_ FEDERAL RECERTIFICATION Mayor Naughten said it was appropriate that an official response was made in connection with a recent news article regarding the 1985 City Audit and Engineering Certification because there has been so much misinformation and distortion of the facts. Mayor Naughten said the particular project under discussion was the 1982 Dayton Street Project which was completed in April of 1984. Community Services Director Peter Hahn said the misinformation was precipitated by unscheduled comments and references that were made in connection with the certification issue at the Adminis- trative Services Committee meeting last week. Mr. Hahn read a prepared statement into the record which reviewed the facts regarding State certi- fication (see attached). Councilmember Hall referred to an organizational chart which depicted the City Council as the lead agency. She said if the Council was considered to be the lead agency, it should be apprised of all engineering matters. Councilmember Jaech clarified that the issue was not discussed in detail at the Administrative Services Committee meeting. She said she did not recall that the Committee discussed decertifica- tion. Councilmember Jaech referred to a memorandum from Mr. Hahn dated July 20, 1987 which stated, "In an early 1985 process review of the Dayton Street Improvement Project, the State found enough deficiencies in the City's procedures and levels of staffing to justify decertification of the City from administrating such project". Councilmember Jaech said the Committee was concerned that although funds were available, the City could not control those funds and that it would cost the City more money if the project was administered by the State. Mr. Hahn said mistakes were made and corrected and the City was on the right track at the present time. Councilmember Dwyer recalled a meeting in which discussion of reorganization of the Engineering staff, as well as other issues, were discussed. He felt it was important that the public realize that the issue was not a situation were "something bad happened" and the sequence of events that followed was not an attempt to conceal the issue from the Council or the public. He said there was no attempt to obscure the issue. Councilmember Kasper said the problem that resulted was that the Council did not understand the ramifications until recently. Mayor Naughten noted that Mr. Hahn met individually with each Councilmember in past years to discuss the decertification issue. In addition, discussions took place during an Executive Ses- sion to discuss reorganization of the Engineering Division and of employee performances. DISCUSSION OF 1985 AUDIT Administrative Services Director Art Housler read a prepared statement regarding the 1985 audit into the record (see attached). Councilmember Hall said she did not feel that the Administrative Services Committee was fully informed of the status of the audit, as well as other issues. She noted that the State invited the Committee to serve on the Exit Conference Committee which would, she said, benefit the Coun- cil. Councilmember Hall stated, contrary to Mr. Housler's statement, that a copy of the auditor's report was not available in the Council office. Councilmember Hall suggested that Mr. Housler be assigned again to meet with the Administrative Services Committee on a routine basis. Mayor Naughten said Mr. Housler would be reinstated to that position when he was treated in a professional manner and not interrogated on non -Administrative Service Committee matters, such as the comings and goings of employees. EDMONDS CITY COUNCIL MINUTES Page 6 AUGUST 11, 1987 1 CoUncilmember Dwyer inquired of Mr. Housler if his statement, "Further, the Council Administra- tive Services Committee was made aware on October 21, 1986 that the report was later than usual" was "a lie". Mr. Housler had a copy of his memorandum to.the Administrative Service Committee, dated October 21, 1986, and he read from it a description of the sequence of events which led to the filing of the report later than usual. Councilmember Hall expressed concern that the finances of the City are handled properly. She reviewed a chronology of events that took place from July 1986 to July 1987 with respect to the status of the later financial statement. She said the first time the Committee had access to the 1985 audit report was two months ago, and not before. Mayor Naughten noted that the Attorney General reported that 47% of all cities in the State were late in filing financial statements this year. Councilmember Hall said the City must abide by the regulations as specified in the State stat- ute. Councilmember Dwyer said the statute referred to regarding comingling of monies was very ambiguous. He said procedures followed by Staff were never pointed out as being improper. He noted that Staff consistently made more money for the City. Mayor Naughten concurred. He noted that the funds were handled the same way for eight years and this was the first time the Auditor had indicated any problem. Councilmember Hall requested City Attorney Scott Snyder's interpreta- tion of the statute. Mr. Snyder said the statute was also ambiguous to him. Mayor Naughten adjourned the meeting at 10 p.m. COUNCILMEMBER KASPER MOVED, SECONDED BY COUNCIL - MEMBER HALL, TO EXTEND THE MEETING FOR THIRTY MINUTES. MOTION CARRIED. MAYOR Mayor Naughten reminded the Council and public .that the Taste of Edmonds is scheduled this week- end. Mayor Naughten noted that. August 11 was also his son's birthday. He said he was eighteen years old today. COUNCIL. °'� COUNCILMEMBER KASPER MOVED, SECONDED BY COUNCILMEMBER DWYER, TO EXCUSE COUNCILMEMBER WILSON'S 1 ��v t� ABSENCE. MOTION CARRIED. Councilmember Ostrom said he thought the flower program was fantastic and he was enjoying them very much. He noted, however, that someone has been pulling up the flowers at 9th and Puget Lane. Councilmember Kasper referred to item (F) on the Consent Agenda. He said a low bid of $270,000 was received, which indicated that not all bids were overruns. Councilmember Kasper inquired about the basis of the statement that Lynnwood's sewer rates may be lower than Edmonds rates. Community Services Director Peter Hahn said because very little information was available on that subject, Staff reviewed their engineering report. He said, however, Lynnwood's rates are speculative at the present time. Councilmember Dwyer reported that SnbCom and SnoPak continue to be uninsured. He said those two agencies, as well as several others, are investigating the possibility of self insurance. Councilmember Kasper noted that the Sheriff's Department has purchased a new rescue boat. He suggested that Staff investigate that issue. The Council recessed to an Executive Session at 10:06 p.m. to discuss a legal matter for approxi- mately 10 minutes. These minutes are subject to August 18, 1987 approval. JAQU LIVE G. PARRET, City Clerk LAR7RS NAUGHTE �1avor EDMONDS CITY COUNCIL MINUTES Page 7 AUGUST 11, 1987 M E M O R A N D U M August 11, 1987 TO: Mayor Naughten Councilmembers -Media FROM: Peter Hahn Community Services Director SUBJECT: Review of Facts Regarding State Certification Acceptance Program Following unscheduled references to the above subject at the July 28, 1987, Administrative Services Committee meeting, several inaccurate and misleading articles appeared in local newspapers: 1. One newspaper story stated on page 1: "The city is currently not certified by the state to receive federal transportation funds because of errors in 1984..." 2. Another newspaper had the following headline: "State OK on federal funds lacking since '85." The opening paragraph further stated "Edmonds lost its state certification for federal transportation projects more than two years ago..." Both of the above quotes are in serious error and need fuller explanation from Community Services Department staff. It is my understanding that these stories arose out of comments made at the Administrative Services Committee meeting on July 28, 1987. This subject was not on the Committee agenda, Department staff was not invited to the best of my knowledge, and the Community Services Department staff and the Mayor were at another Council committee meeting. While I have no way of knowing precisely what was said to generate these erroneous statements, the sources of these stories created a real disservice to the City by obscuring the positive accomplishments made by the Department. The people of Edmonds, and the newspapers, should be told the precise facts. I also believe the newspapers should repeat the stories, and the positive aspects on the basis of information presented by the Department most knowledgeable about the facts. Here are the points that must be made: A. The City Did Not Lose Funds Certification 1. There is all the difference in the world between not getting program funds and not being able to administer them. Certification Acceptance (CA) is simply a procedural option by which the State Department of Transportation (WSDOT) can choose to delegate administration of federally funded projects to a City. Administration means the hiring of the design consultant, the implementation of the many complex program guidelines and procedures, the performance of field inspections, etc. 2.- The only thing the City lost was the option of administering these projects, not the funds. The Process Review uncovered a number of procedural deficiencies which, more than anything else, indicated a sloppiness and lack of total attention to the demanding federal and state guidelines. They also indicated the lack of sufficient staffing. Both the physical project and the expenditures were properly implemented, but the paperwork was poor. 3. . It is not simple to assess the exact dollar impact of having the State administer federal projects instead of the City. To properly administer these complex, heavy "red tape" projects requires considerable staff time. This is expensive. Unless a City hires new persons, there may actually be advantages in having the State administer the projects. We assume the State charges the City a "premium" for doing this for the City, but it is not really obvious what it is and what the full City administration costs would be. More important than the potential reduction in net funding available for projects is the loss of flexibility in scheduling. Assuming the City is willing to hire people, it is generally advantageous to administer projects ourselves, and we intend to ask for more staff now that the State is prepared to re -certify the City's administrative roles. 4. The basis for the withdrawal of CA Status was the Dayton Street project which was undertaken by the City under the previous administration by the previous City Engineer. B. What Corrective Actions Did the Department Undertake in 1985 and Thereafter? 1. Corrective measures were taken almost immediately in 1985, as the Mayor and the Council well know. The State Process Review findings were one of several factors leading to changes in the Engineering Division. The new City Engineer has diligently worked to regain Certification Acceptance which would allow the City to administer the projects. Most of the improvements have been in reviewing and amending control and project accounting procedures. The effectiveness of these improvements is the willingness of the State to reinstate CA status to the City. In fact, the 1987 headlines should be "City wins back Certification Status on the basis of improvements to the Engineering Division." C. Was the Council Told? 1. The Council was informed of this as well as of other problems in the Engineering Division in 1985. I have exact dates and times of when I met individually with every Councilmember regarding the problems and the planned changes in Engineering Division management. I have all the notes I had at these meetings and at the City Council Executive Session on the City. Engineer's performance. The Certification Acceptance status withdrawal was mentioned among the numerous other factors leading to changes. Several Councilmembers have affirmed their memories of these meetings. I did not go into detail on this issue any more than I did on a number of other Division problems -- the uniform reaction of the Councilmembers was great pleasure at, and support for, the Mayor's and my proposed solutions (Adams change) and no one was very interested in dwelling on the Process Review problems in 1985. In fact, from their perspective they knew the problems all too well, and understood that the Dayton Street project findings were inherited by the Mayor. We greatly appreciated the Council's support in implementing our changes. I do not understand why the details of the Process Review are being brought up in 1987, two years after the Council was informed about it. This subject was also included in a Council Executive Session on the performance of the City Engineer, which followed the individual meetings. Again, the Councilmembers were most interested in the solutions we were proposing and how we were going to recruit the new City Engineer. There was no great interest in pursuing the details of the problems that led to this, especially in light of the individual briefings. D. Implications of the Issue 1. We greatly appreciate the comments which Councilmember Kasper, publicly, and others, privately, have made in congratulating the Engineering Division and the City Engineer for what they have accomplished in the past year and a half, including the regaining of the CA Status. That is a positive approach, and we want to be one team with the Council and the residents of the City. 2. It is logistically awkward to have Community Services Department matters discussed by another Council Committee without inviting any of the involved individuals from the Department. While the Administrative Services Committee was "discussing" the above questions on July 28, the Mayor and the CS Department staff were in the Community Services Committee discussing the Street Improvement Bond Program, the Shell/Chase Lake Basin Studies, and the Centennial Downtown Beautification Program -- three important, long-range planning initiatives being prepared by the Administration (it would have been instructive for people to read stories on these major issues). There was no way for us to attend the Administrative Services Committee on this unscheduled, minor item. I have previously informed the Council in writing that staff cannot attend two Committee meetings at one time. In conclusion, I hope that this will help clarify the certification story, and assist in preventing the creation of erroneous or misleading information. STATEMENT ON AUDIT REPORT A. J. Housler While I was out of town on vacation, several newspaper articles contained information that was misleading and should be put in proper perspective at this time. I have established very high standards for myself and my department. This is reflected in accomplishments we have attained over the years and has led to the reputation of the City of Edmonds being leaders in financial circles. I support this statement with the following information: 1978 We designed, prepared and published a budget which contained less than half the number of pages previously and which more importantly was a lot easier for the public to understand. Redmond, Bothell and Lynnwood are some of the cities that have copied our format. Just recently Bremerton requested and was sent information on our budget format and entire budget process. 1980 We were the first small city in the state of Washington to receive the national Certificate of Conformance in Financial Reporting. We also received the award in 1981, 1982 and 1983. Our notes to the financial statements were published nationally as examples to be used for proper reporting. 1981 We were the first city in the state of Washington to utilize data mailers for utility customer.billings. This resulted in a savings at the time of approximately $7,500 per year and provided the base for future improvement in efficiencies and savings. 1982 At the time we were preparing to issue bonds, we aggressively pursued improving the City's bond rating. The arguments we presented resulted in Moody's and Standard & Poors upgrading the City's revenue bond rating from A to A-1. This saves approximately 1/4 of 1% in interest payments on future issues. As an example, the City saved $26,000 in interest payments on a 1983 bond issue. Because of high interest rates and my anticipation that rates would be lower in 1983, we delayed issuing the bonds. At the time I forecasted rates would be lowest in late Spring or early Summer. When we issued the bonds on August 5, 1983, we caught the bottom of the market. Thereafter, clients of the brokerage firm of Foster & Marshall reportedly advised the brokers, "we will issue and market bonds when the City of Edmonds does". 1984 A comparison of staffing levels of all cities in the state of Washington with a population range of 15-50,000 revealed that the City of Edmonds' levels of staffing in the Accounting and Data Processing Divisions were 26% and 44% below the average respectively. I think this reflects our leadership in accounting and data processing efficiencies. 1985 We were the first city. in the state of Washington which converted entirely from a centralized batch processing to a distributive, interactive processing computer system. Although I do not know which cities have actually copied our computer system's structure, I do know we provided considerable information to Bellingham, Redmond, Lynnwood, Kent, Community Transit and others seeking guidance on computer systems. 1980 1985 Because of our City's demonstrated leadership in the aforementioned areas, I was invited to and did serve on the Board of Directors for the Washington Finance Officers Association and the Puget Sound Finance Officers Association. Also I served on the State Auditors Committee for rewriting the Budgeting, Accounting and Reporting Systems manual. Our reputation as a leader in financial circles has been established. The employees of the Accounting and Data Processing Divisions are a hardworking group .of people who have received national recognition for their efforts. We are all proud of our accomplishments and our reputation. It is unfortunate these accomplishments and eight years of good audit reports get overshadowed by our inability to get one annual financial report completed on time and because of negative fund balances, which resulted from commingling monies for investment purposes. Let me emphasize there was no misappropriation of monies; there was no misuse of monies; there was no mismanagement of investments; and there was no loss of monies. N In fact there was a gain in monies. By commingling monies from various funds we were able to invest in jumbo CD's ($100,000 or more). At today's rate, we would earn approximately $22,000 more in interest. It is essential for the "public" to understand that the comments in the newspapers reference two entirely different documents. The documents are titled the Report of Examination and the Exit Conference Agenda Items. Report of Examination is the official auditor's report which is fi.led in Olympia and the City Clerk's ffice, and accordingly is available for review by bond brokers, bond rating services, investors and in fact anyone. When we receive this report, a copy is immediately delivered to the City Council Office as it was in February, 1987. We have done this since 1981 when the City Council's Office was first established. Investment/financial agencies are most interested, if not solely interested, in the opinion about the fair and accurate presentation,:.of Page 2 the financial statements which are also included in the report. This opinion specifies reliability and it provides the degree of confidence which brokers, investors and rate services such as Moody's and Standard & Poors can determine the financial condition of the City. The o in.on on our financial statements has always been "unqualified", which signifies the best any organization can obtain. The financial condition of an organization determines the bond rating. It is very, very doubtful if insignificant -findings are even considered. There was some mention of the City's bond rating being effected. I want to assure you that neither Moody's nor Standard & Poors would downgrade the city's bond rating because we did not get our report completed in accordance with the State Auditors deadline. Besides, anyone reviewing the Report of Examination would consider the City's response included in the report on page 41. I quote from page 41, "The annual financial report was not prepared until October, 1986 specifically due to turnover. We did not have staff available to meet the report deadline. I would like to point out this was a very unusual circumstance for us; nevertheless, we have restored the accountant position and have a new supervisor on staff..... These corrective actions will preclude a reoccurrence." On the subject of deficit or negative fund balances, I responded in the same letter (page 41) by saying, and I quote, "as the examiner has stated., commingling of monies is accomplished for investment purposes. With the new computer system we will be able to better determine daily cash balances and therefore not over invest." I have a little difficulty in understanding this finding by the auditor. Over the past seven years it has always been our practice to commingle funds to obtain a higher rate of return on our investments and it never has been included in any of the previous audit reports. We are trying to get a clarification on the interreptation of the RCW referenced by the auditor, but until we do we will not continue with the practice of commingling funds. For your information, I wrote a letter to the Assistant State Attorney General on April 20, 1987 requesting clarification. Further the Council Administrative Services Committee was made aware on October 21, 1986 that the report was later than usual. This concludes my statement on those comments in the newspaper that address the auditor's findings reported in the official Report of Examination. As I had previously mentioned there are two distinct audit documents. Other comments in the newspapers reference the second document which is titled Exit Conference Aqenda Items. In order to put things in perspective, one must understand these are internal work papers for management or administrative use. In private industry it is known as the "management" letter. Further, one should understand that an audit is one of the tools management has to determine the effectiveness of other controls without spending a lot more money on staffing to reduce irregularities. In fact, I expressed this at the conclusion of my Page 3 response letter (page 41) and I quote, "For your information, I consider the audit experience a positive one for the examination brings to my attention irregularities which may exist." Management has received an Exit Conference Agenda Items every year that I know of and this is the first time any of the findings have been treated as more than routine auditing/administrative procedures. There -were comments about the petty cash fund being used to cash employees personal checks. A memorandum dated December 30, 1986 was sent to all managers accountable for custodians of petty cash funds instructing them of the regulation and to advise the custodians. There were comments about the Criminal Investigation Contingency Fund to the effect the City Council was not aware of the fund balance and the monies received. This simply is not the case. All of the City Council members receive these monthly accounting reports; Cash Flow Report, Summary Revenue Report and Summary Expenditure Report. The Cash Flow Report shows the balances, revenues and expenditures of all funds. The fourth line from the top shows Fund 004 Criminal Investigation Revolving Fund. The Summary Revenue and Expenditure Reports show more detail of cash receipted and disbursed. In conclusion I want to say I intend this statement to be a clarification of facts. I invite the public to come to my office to review the documents I have referenced. Our books and records_ are always open to the public AH081071/TXTKDM25 Page 4 1 1 AGENDA EDMONDS CITY COUNCIL PLAZA MEETING ROOM -LIBRARY BUILDING 7 :00 - 10:00 P.M. AUGUST 11., 1987 WORK MEETING - NO AUDIENCE PARTICIPATION CALL TO ORDER FLAG SALUTE 1. CONSENT AGENDA (A) ROLL CALL (B) APPROVAL OF MINUTES OF AUGUST 4, 1987 (C) ACKNOWLEDGMENT OF RECEIPT OF CLAIM FOR DAMAGES FROM SUSAN R. THOMPSON ($415.91) (D) APPROVAL OF 1987 PRISONER DETENTION AGREEMENT WITH CITY .OF LYNNWOOD (E) AUTHORIZATION FOR MAYOR TO SIGN LEASE WITH BURLINGTON NORTHERN FOR INSTALLATION OF AN AUXILIARY POWER GENERATOR AT LIFT STATION 7 (F) REPORT ON BIDS OPENED AUGUST 3, 1987, FOR 8TH AVE. S. WATER PIPELINE AND AWARD OF CONGRACT TO COMO CONTRACTORS ($270,641.61) 2. EDMONDS CENTENNIAL COMMITTEE'S OBSERVANCE OF CITY'S 97TH BIRTHDAY - (15 MINUTES) AUGUST 11, 1990 3. CWC-HDR TREATMENT PLANT MONTHLY REPORT ( 5 MINUTES) 4. CITIZENS ADVISORY COMMITTEE REVIEW OF DAYTON ST. SEWER TREATMENT (20 MINUTES) SITE DESIGN 5. DISCUSSION REGARDING HEARING PROCECURES AND EX PARTE COMMUNICATIONS (60 MINUTES) 6. DISCUSSION OF PROPOSED DECORATIVE STREET LIGHTING PROGRAM FOR (20 MINUTES) DOWNTOWN AREA 7. REQUEST FOR APPROVAL OF PURCHASE OF PERSONAL COMPUTER FOR PUBLIC WORKS, ( 5 MINUTES) SEWER AND WATER FUND DIVISIONS 8. REQUEST FOR AUTHORIZATION TO PREPARE AND EXECUTE CONTRACT FOR DOWNTOWN ( 5 MINUTES) TRAFFIC STUDY 9. DISCUSSION OF ENGINEERING DEPARTMENT FEDERAL RECERTIFICATION ( 5 MINUTES) 10. DISCUSSION OF 1985 AUDIT (20 MINUTES) 11. MAYOR 12. COUNCIL 13. EXECUTIVE SESSION - LEGAL MATTER THE PUBLIC IS INVITED TO ATTEND PARKING AND MEETING ROOMS ARE HANDICAPPED ACCESSIBLE