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11/12/1996 City Council1 7997 Budget Revenue Sources L� EDMONDS CITY COUNCIL APPROVED MINUTES NOVEMBER 12, 1996 The Edmonds City Council meeting was called to order by Mayor Fahey at 7:03 p.m. in the Library Plaza Room, 650 Main Street, followed by the flag salute. ELECTED OFFICIALS PRESENT Barbara Fahey, Mayor Dave Earling, Council President Roger Myers, Councilmember John Nordquist, Councilmember Dick Van Hollebeke, Councilmember Jim White, Councilmember ABSENT Gary Haakenson, Councilmember Tom Petruzzi, Councilmember APPROVAL OF AGENDA STAFF PRESENT Paul Mar, Community Services Director Brent Hunter, Personnel Manager Art Housler, Administrative Services Director Michael Springer, Fire Chief Sandy Chase, City Clerk Stephanie Goings, Recorder COUNCILMEMBER VAN HOLLEBEKE MOVED, SECONDED BY COUNCILMEMBER MYERS, FOR APPROVAL OF THE AGENDA. MOTION CARRIED. 1. FULL COUNCIL REVIEW A. DISCUSSION OF REVENUE SOURCES Art Housler, Administrative Services Director, utilized the overhead projector to illustrate how the revenue sources were conservatively estimated for 1997. Mr. Housler informed the Council that in some categories the estimation was downsized from the prior year. He pointed out the property tax makes up about 36% of the General Fund budget, and sales tax comprises about 17%. The various taxes and amounts expected for 1997 were outlined. Mr. Housler noted that without the increase in the property tax and ambulance transport fee and other taxes, the increase to taxes as a whole would only be 2.2%. Mr. Housler explained the property tax and demonstrated that in the past it had been projected correctly, and that by reviewing the past years the City had been collecting 100% for the past two years and 99% the two years prior. Mr. Housler felt that the City would collect all of the property taxes that had been projected for 1996. Mayor Fahey pointed out that the reason the property tax revenue of 1996 was up was due to the annexations and not an increase in property values. Mr. Housler reviewed the formulas used to project the 1997 property tax revenue and the proposed increases in the regular property tax and the EMS tax. Edmonds City Council Approved Minutes November 12, 1996 Page 1 The sales tax was discussed and Mr. Housler explained some of the difficulties with trying to project accurately the future sales tax. Mr. Housler showed a chart that reflected all of the targeted sales tax revenue for 1996 and the actual amount collected, with all of the different variances and changes on a month by month basis. It was explained that by looking at the cumulative totals for the year so far, the City was actually on track for the year. The various categories that make up the sales tax revenue were reviewed as of January 1996 through October 1996. Councilmember Myers inquired about the construction of the new Edmonds-Woodway High School and taxes that would be collected from that. Mr. Housler stated that it had been looked at and only about 1% of the cost had been factored in to the contracting sales tax for 1997. Councilmember Van Hollebeke asked if most of the construction tax would be collected in 1998. Mr. Housler agreed that seemed to be the case. Mr. Housler then reviewed the State Sales Tax Equalization and the formulas (given by the State) used to determine the revenue for 1997. He also reviewed the amount budgeted for 1996 and some of the changes that occurred in 1996 as a result of annexations, new cities and interpretation of the law. These factors were involved in the City not collecting the amount originally projected for 1996. Councilmember Earling inquired if Mr. Housler had an opportunity to talk with colleagues in other cities about the legislature considering moving or using the motor vehicle excise tax. Mr. Housler stated that at the Washington Finance Officer's Convention this year a resolution was passed to go to the legislature. The AWC was also lobbying to keep the money the Cities have, and also to have the State contribute more money to the pool. Next, Mr. Housler discussed the Municipal Court revenues and stated this revenue source had been a concern during the year. The targeted revenues had been adjusted down periodically throughout the year and the revenue is currently $11,000 short of its projection. It may be possible that in the next couple of months of the year this might pick up and bring it closer to the targeted amount. Council President Earling asked how quickly all the numbers from Municipal Court revenues can be pulled together at the end of the month. Mr. Housler stated that it would be possible to have the numbers by the 8th to the loth of the month. Council President Earling asked for a memo to Council as quickly as the numbers are available for November and December. Mr. Housler showed a new chart reflecting calls for the Fire District and presented the assumptions being used in calculating the cost for the Fire District and that a conservative approach had been used. Councilmember Myers inquired as to why the estimation on Chart 2 for Licenses & Permits was so low. Mr. Housler stated that he relied on Rob Chave, Planning Manager, and Jeff Wilson, Current Planning Supervisor, to develop this number. It was based on the amount of projects that were being considered and on the drawing board right now. Mr. Housler reviewed some of the initiatives that have been proposed and how they could possibly effect the City's revenue projections for 1997. Council President Earling clarified with Mr. Housler that the property tax revenue was based on 106% tax but it was not reflecting any retroactive tax that the City could go back and legitimately collect. Mr. Housler agreed with this statement. Mayor Fahey informed the Council that she had previously stated that a City could only go back 2 years for collecting the retroactive portion of tax, but in fact there is no time limit. Mr. Housler stated that the legislature had changed the law. Edmonds City Council Approved Minutes November 12, 1996 Page 2 Councilmember Myers inquired about gambling taxes -and the effect of the Indian Reservations' gambling. Mr. Housler stated that over the past couple of years the gambling tax had stayed flat. He was not aware of the reason for this; but it was possible that the little .local business were being affected by the reservation gambling. B. FIRE APPARATUS REPLACEMENT OPTIONS Fire Apparatus Replacement Fire Chief Springer thanked the Council for the opportunity to present the findings of a task force which options was created to help research and find ways for the Fire Department to obtain new fire apparatus in the future. He introduced the members of the task force: Assistant Fire Chief Tim Whitman, Fire Mechanic Dave Sittauer, Fire Lieutenant Steve Allison and Firefighter Joe Soucy. Chief Springer reviewed prior planning options for purchasing of fire apparatus. The task force looked at the Department's current replacement needs time frame; how long do you keep fire apparatus, a ladder truck, an aid car, before they are non-functional. Fire Mechanic Dave Sittauer helped by taking a hard look at all the current apparatus, and started replacing items (i.e.- maintenance on current vehicles) before they break. He also did an analysis of the length or life expectancy of current apparatus. It was found that the length of use for an aid car could be increased from 7 years to 10 years, the 30-year replacement for a ladder truck was firm, and 25-year replacement of the fire engine is stretching it but by having a dedicated mechanic it was possible. Chief Springer stated that in past years, local municipalities had looked at bond issues as well as the federal government for help with replacing fire apparatus. This was the way the original ladder truck had been purchased. There are no longer any federal government moneys to help with the replacement of fire apparatus. The task force did find a new option available - lease option with a residual payment or lease -purchase options. Chief Springer presented an overhead spreadsheet to the Council and reviewed it step-by-step, vehicle by vehicle. Chief Springer explained the cost breakdown for each replacement vehicle which the task force had determined was current market value. He then outlined the bond issue versus lease -purchase of the vehicles and a comparison of costs. Chief Springer stated that the lease purchase looked extremely promising to the task force and Fire Department as a good way to acquire replacement apparatus. Council President Earling asked how long the City had been setting aside $100,000 a year for the replacement ladder truck.: Chief Springer responded that it had been 4 years. Council President Earling pointed out a concern that once the Council begins contributing to something it is assumed (and shown in the flow chart) that it will continue forever, and it assumes that the contribution will step up to $150,000 .in the year 2000. Council President Earling stated that this money was to be for a single item purchase, and as represented by the flowchart, the funding continues. He commented this issue provides a very fundamental question of does the Council want to continue doing this forever. Councilmember Myers inquired about line 6, Ford -type aid vehicle. The purchase price in 1994 was $88,000 and it is anticipated that it only goes up by $7,000 in 10 years. Chief Springer stated that was correct because once a unit type is developed and accepted in the market there is not a large increase in costs. Dave Sittauer, Fire Mechanic, stated that this was the information given to the task force by the manufacturer. Chief Springer stated that the task force did work with the Finance Department to develop the spreadsheet to make sure it was accurate. They also looked at a 10-year time frame for replacing vehicles. Chief Springer outlined the cost comparison of bond versus lease purchase for a 10-year time Edmonds City Council Approved Minutes November 12, 1996 Page 3 frame and stated that it was felt that the interest paid over that period would be less with the lease - purchase option. Council President Earling stated that the lease -purchase option would require, over the next 10 years, $1.5 Million from the General Fund as well as the $400,000 that has already been set aside. Chief Springer agreed that this was correct. Councilmember Myers asked if there were other municipalities that had already done this. Fire Lieutenant Allison stated that the samples in the back of the book were actual municipalities that had participated in the program. Council President Earling stated that it would be helpful for the Council to have a sample of the cities from the Northwest that have participated in the program so they can do some research. Fire Lieutenant Allison stated that they would provide the Council with that information. Councilmember Van Hollebeke inquired about the interest rate for the lease option at 4.481%, which seems like an aggressively low interest rate. Had any leasing agencies been contacted? Lieutenant Allison stated that the task force had been in contact with an agency and recently the rates had changed, that they had gone down by .02% with the best option plan. Councilmember Van Hollebeke asked if this company had been providing lease purchase of fire apparatus for a long period of time. Lieutenant Allison informed the Council the company had been providing this service for about a year and a half. Council President Earling asked how quickly the task force could get the information requested to Council. Lieutenant Allison informed the Council they could get the information to them in a week to 10 days. Council President Earling thanked the members of the task force for their effort and time they had taken to provide this information to the Council. Mayor Fahey closed the full Council meeting at 8:12 p.m. and adjourned to committee work meetings. � � �d'4� - ( z-, &� " - BARBARA S. FAHEY, MAYOR SANDRA S. CHASE, CITY CLERK Edmonds City Council Approved Minutes November 12, 1996 Page 4 47 Y AGENDA _." r.,:9: EDMONDS CITY COUNCIL Plaza Meeting Room - Library Building 650 Main Street -7:00 -10:00 p.m. NOVEMBER 12,1996 COMMITTEE WORK MEETING (Second Tuesday of Each Month) The three City Council committee meetings are work sessions for the City Council and staff only. The meetings are open to the public but are not public hearings. The Council will first meet together as a full Council, and will then meet separately as committees in different meeting rooms as indicated below. CALL TO ORDER - 7:00 P.M. FLAG SALUTE 1. FULL COUNCIL REVIEW Large Plaza Meeting Room, Library Building (A) (60 Muir.) DISCUSSION OF REVENUE SOURCES (B) (30 Mna.) FIRE APPARATUS REPLACEMENT OPTIONS ADJOURN TO COMMITTEE MEETINGS 2. PUBLIC SAFETY COMMITTEE Small Plaza Meeting Room, Library Building (A) (15 Mua.) REVIEW OF DARE PROGRAM 3. COMMUNITY SERVICES COMMITTEE Large Plaza Meeting Room, Library Building (A) (30 Min.) DISCUSSION OF SUGGESTED CODE CHANGES FOR BUSINESS AND COMMERCIAL ZONES (B) (20 Min.) PROPOSAL FOR USE OF CITY FACILITIES BY ARTS GROUP (C) (15 Min) PROPOSAL BY PACIFIC LITTLE LEAGUE 4. FINANCE COMMITTEE Anderson Center, 700 Main Street, Room 113 (A) (5 Min.) APPROVAL OF PETTY CASH EXPENDITURES FOR THE MONTH OF OCTOBER 1996 Parking and meeting rooms are accessible for persons with disabilities. Contact the City Clerk at 771-0245 with 24 hours advance notice for special accommodations. The Council Agenda appears on Chambers Cable, Channel 32. This meeting is Iml televised.