08/24/1999 City CouncilEDMONDS CITY COUNCIL APPROVED MINUTES
AUGUST 24, 1999
Following a Special Meeting at 6:30 p.m. for an Executive Session regarding two real estate matters, the
Edmonds City Council meeting was called to order at 7:03 p.m. by Mayor Pro Tem Miller in the Library
Plaza Room, 650 Main Street. The meeting was opened with the flag salute.
ELECTED OFFICIALS PRESENT
Thomas A. Miller, Mayor Pro Tem
Dick Van Hollebeke, Council President Pro Tem
Gary Haakenson, Councilmember
Dave Earling, Councilmember
John Nordquist, Councilmember
Michael Plunkett, Councilmember
Jim White, Councilmember
ABSENT
Barbara Fahey, Mayor
ALSO PRESENT
Christie Lee, Student Representative
STAFF PRESENT
Robin Hickok, Police Chief
Peggy Hetzler, Administrative Services Director
Ray Miller, Development Services Director
Jeff Wilson, Planning Supervisor
Arvilla Ohlde, Parks and Recreation Director
Brent Hunter, Human Resources Director
Don Fiene, Assistant City Engineer
Mike Linn, Construction Engineer
Mike Stark, Information Services Coordinator
Jeanne Startzman, Executive Assistant
Sandy Chase, City Clerk
Jeannie Dines, Recorder
Mayor Pro Tem Miller announced that Mayor Fahey was on vacation this week.
1. APPROVAL OF AGENDA
COUNCIL PRESIDENT PRO TEM VAN HOLLEBEKE MOVED, SECONDED BY
COUNCILMEMBER PLUNKETT, FOR APPROVAL OF THE AGENDA AS PRESENTED.
MOTION CARRIED.
COUNCIL PRESIDENT PRO TEM VAN HOLLEBEKE MOVED, SECONDED BY
COUNCILMEMBER NORDQUIST, FOR APPROVAL OF THE CONSENT AGENDA AS
PRESENTED. MOTION CARRIED. The agenda items approved are as follows:
(A) ROLL CALL
pprove
Minutes (B) APPROVAL OF CITY COUNCIL MEETING MINUTES OF AUGUST 17,1999
(C) APPROVAL OF CLAIM WARRANTS #34987 THROUGH #35465 FOR THE WEEK OF
Approve AUGUST 16, 1999, IN THE AMOUNT OF $242,959.77., APPROVAL OF PAYROLL
Claim WARRANTS #25744 THROUGH #25921 FOR THE PERIOD AUGUST 1 THROUGH
Warrants
AUGUST 15,1999, IN THE AMOUNT OF $487,379.46
Edmonds City Council Approved Minutes
August 24, 1999
Page 1
1
im for (D) ACKNOWLEDGE RECEIPT OF CLAIM FOR DAMAGES FROM THOMAS &
ages
ROBERTA MAURICE AND ROBERT & SUSAN ALLEN ($40,000)
eral (E) REPORT ON THE GENERAL FUND FINANCIAL POSITION FOR THE PERIOD
Fund Report
ENDED JULY 31,1999
Police raining (IF) AUTHORIZATION TO SIGN A CONTRACT FOR DAVID MACHADO TO TEACH AT,
cademy THE STATE POLICE TRAINING ACADEMY
(G) ORDINANCE NO. 3273 ANNEXING CERTAIN REAL PROPERTY KNOWN AS THE
rd. #3273 "HALEY KLEIN" ANNEXATION, ESTABLISHING ZONING FOR THE ANNEXATION,
Haley/Klein PROVIDING FOR THE ASSUMPTION OF EXISTING CITY INDEBTEDNESS, AND
exation
FIXING A TIME WHEN THE SAME SHALL BECOME EFFECTIVE.
Library 3. INTRODUCTION OF NEW LIBRARY BOARD MEMBER DONNA PHILLIPS
oard
Library Boardmember Beverly Kaufman introduced new Library Boardmember Donna Phillips. Ms.
Kaufman said Ms. Phillips has been active in the Friends of the Edmonds Library and is the leader of the
Contemporary Book Club. Ms. Phillips explained she has been a resident of Edmonds for 48 years and
was retired from the Edmonds School District. She said she has enjoyed the Friends of the Library as
well as the library and books.
Mayor Pro Tern Miller expressed the Council's appreciation for Ms. Phillips' willingness to serve. He
advised Council confirmation of Ms. Phillips' appointment was not required.,
perty Ta 4. ACCEPTANCE OF PROPERTY TAX DEED FROM SNOHOMISH COUNTY FOR PROPERTY
T.d d LOCATED NEAR WOODWAY MEADOWS, AND DISCUSSION REGARDING THE
odway PROPERTY'S APPROPRIATE USE
ow s
Assistant City Engineer Don Fiene explained there is a Snohomish County owned U- shaped 20 -foot wide
property surrounding the Woodway Meadows area on the west, east and south. He said tonight's
discussion concerns only the east and south 20 feet of the property. He displayed a map illustrating the
property and explained the west 20 feet will be deeded separately to the homeowners in the Woodway
Meadows development. Staff recommends acceptance of the deed from Snohomish County and
authorization to execute the tax affidavit for its filing. The next step will be referral of the east 20 feet
for consideration for inclusion in the Comprehensive Plan amendment process for addition to the Master
Street Map. The south 20 feet needs to be categorized and staff recommends it be referred to the
Planning Board to determine its appropriate use.
For Council President Pro Tern Van Hollebeke, Mr. Fiene identified the existing paved 20 feet on the
east that was assumed to be right -of -way but was determined to be owned by Snohomish County. The
south 20 feet requires direction from Council regarding its use. He identified the Woodway Meadows
and Forest Glen developments. He identified Tract 999 in the Woodway Meadows plat that is paved
from the 20 -foot strip to the cul -de -sac on 106"' Place. He said the Woodway Meadows plat refers to the
20 -foot area as emergency access and also as public right -of -way although it was recently determined
this was not recorded with Snohomish County.
For Councilmember Haakenson, Mr. Fiene identified the emergency access to Woodway Highlands. Mr.
Fiene said a right -of -way permit was submitted by the developer of Woodway Highlands whose purpose
Edmonds City Council Approved Minutes
August 24, 1999
Page 2
for developing the 20 -foot strip was to pave it to its full extent to the west to provide emergency access
for the development.
Mr. Fiene explained the western two houses and the eastern three houses on the south side do not use the
20 -foot strip for access but the remaining houses have driveways, garages or gate openings for vehicular
access off the 20 -foot strip of property. The City also has a storm detention system near the western end
of the strip that the City maintains and Olympic View Water District has a sewer system and a water
system in the 20 -foot strip that it maintains. The water system runs from 104'h Avenue into and through
Woodway. The westerly end of the 20 -foot strip is fenced between the Edmonds/Woodway City limits
and a locked gate was installed, presumably when the property was owned by Standard Oil. The
developer of the Woodway Highlands plat submitted a right -of -way permit for improvements in the 20-
foot strip (pavement, additional storm detention, and maintenance of the existing system). Edmonds
informed the developer the City could not review the permit, as this area was not in City right -of -way.
For Council President Pro Tem Van Hollebeke, Mr. Fiene identified the 20 -foot strip on the south side,
which extends from 104' Avenue to the Woodway Town limits and has 8 -10 -foot wide pavement. He
identified the location of the locked gate at the boundary between Woodway and Edmonds.
Councilmember Nordquist asked if Olympic View Water District would apply for an easement for the
water /sewer line in this area if the City accepted the deed. Mr. Fiene answered yes, and indicated he has
been in contact with Olympic View's Manager to ensure the property designation is appropriate for their
use.
Councilmember Plunkett asked if vacation was an option. Mr. Fiene pointed out the property is not
currently right -of -way but vacation could be done. He said Snohomish County is deeding the western 20
feet of Woodway Meadows to residents.
Councilmember Earling referred to City Attorney Scott Snyder's letter that states "the City Council may
wish to establish by motion an interim use for the property. For example, the City Council could
indicate the property can be used for emergency access purposes..." and asked what effect eliminating
the emergency access would have on the developer's ability to develop the Woodway Highlands
property. Mr. Fiene referred to a memo from the Fire Marshal that indicates the emergency access does
not need to be site specific; the emergency access does not need to be in this area if there is another
feasible location. Mr. Fiene said this was an issue that would need to be addressed by the Fire
Department.
Councilmember Haakenson observed there are two other locations that would provide feasible
emergency access. He asked if the Woodway Highlands project could begin without identification of an
emergency access. Mr. Fiene was uncertain. Councilmember Haakenson said the Council could accept
the property from Snohomish County but could not establish an interim use until the Fire Department
indicates what the property would be used for.
Mayor Pro Tem Miller suggested the Council accept the deed and limit the use to emergency access until
the Planning Board has an opportunity to review the matter. Councilmember Haakenson questioned
what the emergency access provided access to, whether it was only to Tract 999 and Woodway Meadows
or if it was the entire road into Woodway Highlands. Mayor Pro Tem Miller said his conversations with
the City Attorney indicated the road would provide emergency access to Woodway. Councilmember
Haakenson pointed out there are currently no houses in the Woodway Highlands development.
Edmonds City Council Approved Minutes
August 24, 1999
Page 3
Councilmember Plunkett stated that this strip could be designated for interim fire access but fire trucks
cannot currently utilize this area. He supported the strip providing interim access pending future
discussion and review. Mr. Fiene read from the Fire Marshal's letter, "Would the Woodway Highlands
development require a secondary means of vehicular emergency access and is this strip of land where
the access will be required? Yes, the Highlands development will require a secondary access built to
specifications for width, clearance and load bearing ability. The access requirement is not site specific,
the Fire Department will review the developer's proposal and approve or reject for purposes of the
requirement. This land is the best location for Fire Department access because of the nearness of
approach from our second and third fire stations for emergency responses. This property also transmits
a water line and thus must remain utilitarian in its use for serving properties in the area. Openness or
restriction with traffic inhibitors would apply also to coordinate emergency use with other uses which
are required or desired for location of City functions. "
Councilmember Earling asked how the timing of the decision affected adoption of the Comprehensive
Plan. Planning Supervisor Jeff Wilson said the GMA allows emergency action to amend the
Comprehensive Plan to address unanticipated/unforeseen circumstances and is not limited to the annual
amendment process. This situation likely would be considered appropriate for an emergency amendment
to the Comprehensive Plan.
Councilmember White said it would be appropriate for the Council to accept the deed and present the
-matter to the Planning Board who will establish a public hearing process under the Comprehensive Plan
amendment provisions. He pointed out.it was not necessary to make a decision regarding emergency
access as the Fire Department has the authority to use this property, and any other property, for
emergency access as necessary.
Councilmember Nordquist referred to the last three sentences of the staff report, "is not to be put to any
use until such time as a Planning Board recommendation is returned to the City Council .... " He hoped
the Council would allow utility maintenance in this area and continued use by adjacent property owners.
COUNCILMEMBER WHITE MOVED, SECONDED BY COUNCH.MEMBER NORDQUIST, TO
ACCEPT THE PROPERTY TAX DEED FROM SNOHOMISH COUNTY FOR THE PROPERTY
LOCATED ADJACENT TO WOODWAY MEADOWS AS DESCRIBED AT TONIGHT'S
DISCUSSION AND AUTHORIZE CONTINUED USE OF THE PROPERTY UNDER THE
PRESENT CONDITIONS FOR UTILITY MAINTENANCE AND PRIVATE PROPERTY
OWNERS ADJACENT TO THE PROPERTY.
Council President Pro Tem Van Hollebeke suggested the continued use of the property for emergency
access also be allowed. Councilmember White explained he specifically did not include emergency
access to avoid setting a precedent. He reiterated the Fire Department has the authority to use the
property for emergency access as necessary.
Councilmember Earling said it was his understanding the Planning Board would review appropriate use
of the property and the Council's action would be an interim action. He said indicating emergency
access would be allowed on an interim basis would not be detrimental to the process. Councilmember
White said he could foresee problems that were better discussed during Executive Session. He asked
what advantage indicating emergency access would have. Councilmember Earling said it would indicate
to the property owners adjacent to the strip that the property is available for interim.Fire Department use
as emergency access at least until the Planning Board's process is complete.
Edmonds City Council Approved Minutes
August 24, 1999
Page 4
Councilmember Haakenson expressed concern that including any information regarding emergency
access as the Engineer and Fire Department have issued a memo to the developer of Woodway
Highlands indicating he cannot begin construction until an emergency access is provided. If emergency
access is permitted and then the Planning Board determines this is not appropriate, the City could be in a
bad legal situation as the developer could indicate the access was allowed, they began their project
utilizing this as emergency access, and then it was taken away.
Council President Pro Tern Van Hollebeke said it appeared the City Attorney suggested it would be
appropriate to allow emergency access on an interim basis. Councilmember Haakenson reiterated there
are no houses in the Woodway Highlands development at this time, therefore, the developer does not
need emergency access.
In view of the lack of staff from the Fire Department and City Attorney's Office to address the Council's
questions, Councilmember Earling made the following motion.
COUNCILMEMBER EARLING MOVED, SECONDED BY COUNCILMEMBER WHITE, TO
TABLE THIS ITEM UNTIL THE NEXT COUNCIL MEETING (SEPTEMBER 7). MOTION
CARRIED, COUNCILMEMBER NORDQUIST OPPOSED.
Self- 5. QUARTERLY REPORT ON SELF - INSURANCE HEALTH BENEFIT FUND
Insurance
Health Human Resources Director Brent Hunter explained this was a third quarter report on the self - insurance
Fund nd health benefit fund and would include a report on the problems that have been experienced with claims
administration, how medical inflation is affecting the plan, a recommended rate increase for next year,
and an update on the LEOFF 1 long term care. He displayed a graph illustrating revenue, stop loss
administration, claims, and balance for the Self- Insurance Health Plan. He explained the plan's cash
balance was increasing at the beginning of this year following an increase in rates in November 1998.
Claims increased in June 1999 due to several major claims as well as an additional claim period resulting
in an ending balance in July of $172,000. He said although this sounds like an appropriate amount, the
plan must maintain a cash reserve balance to continue to pay claims for 90 days if the plan were to be
discontinued. He summarized the major claims include one that is approaching $66,000 and another
approaching $40,000.
Mr. Hunter explained although it was thought claims difficulties that were encountered when the plan
switched to Regence had been resolved, those problems in fact still exist. He explained Regence's
computer system does not accept electronic billing as well as claimed and as a result, claims are rejected
and must be manually input. He said this is causing some employee dissatisfaction. He said Regence is
providing the expected discounts, noting First Choice provided a discount of approximately 25% during
the first year and Regence provides a 35% discount.
Mr. Hunter displayed a table from another major carrier illustrating medical inflation. He explained
during the past several years, medical inflation was stagnant and each year required only a 0 % -2% rate
increase. In recent years, this has been catching up with medical carriers and the City's consultant
advises a 10 -15% increase should be anticipated due to medical inflation. Mr. Hunter displayed a chart
showing premiums for another carrier, claims, and claims loss administration, which illustrates that for
several years the premiums versus claims provided a healthy balance. For the past five years, when the
federal government became interested in health insurance, pressure was put on the medical industry to
reduce costs. Because many carriers have not increased their rates, their profit margins have dropped
Edmonds City Council Approved Minutes
August 24, 1999
Page 5
resulting in the need for a rate increase. Mr. Hunter said AWC would be raising their rates 24%. One
of the reasons they will not raise rates substantially is due to the healthy reserve they have maintained in
the past. AWC's Group Health rate will increase 17 %.
In response to whether the City could return to AWC, Mr. Hunter said AWC would allow the City to
return at any time but will be experience -rated by their Board of Directors and a surcharge established on
the premium rate if necessary. Once they are satisfied the City is "normal," the surcharge would be
eliminated. He reiterated the need to maintain a reserve balance to pay residual claims for approximately
90 days following discontinuation of the self - insurance plan.
Mr. Hunter displayed the recommended budget for 2000, illustrating the impact of a 10% increase in the
premium rate and a 13% increase in the premium rate. He said the amount of budgeted claims in 2000
represents a 10% medical inflation on previous years' claims. Administration costs would remain the
same. He explained the ending cash balance in the self - insurance plan for 1998 was $66,000 and the
ending cash balance is projected to be $161,000 in 1999. With a 10% premium increase, the ending cash
balance in 2000 is projected to be $203,000. He explained the State's Claim Manager recommended the
City maintain a 15 -20% reserve to pay residual claims should the self - insurance plan be .discontinued.
He referred to the 17% reserve amount indicated on the budget, noting the plan has been under- reserved
for the past two years. He said with a 10% premium increase, the reserve will still be under by
approximately $60,000; by establishing a 13% premium increase, the City will be close to the
recommended reserve amount. The Health Insurance Committee recommends a 13% premium increase.
Council President Pro Tem Van Hollebeke requested Mr. Hunter clarify the plan year. Mr. Hunter
explained the plan year ends September 31 and a new plan year begins October 1. As the City cost
shares the premium, the City's contribution for a 13% premium increase would be $31,000 for 1999 and
$124,000 for 2000.
Mr. Hunter said LEOFF 1 continues to be the outstanding part of the self - insurance plan. When the plan
began two years ago, it was hoped excess funds would be generated that could be placed into the long-
term care LEOFF 1 fund. By comparing premiums to expenditures, the LEOFF is approximately
$200,000 ahead, basically subsidizing the remainder of the group. No funds have been placed into the
long -term care, as those funds are necessary to maintain reserves.
Council President Pro Tem Van Hollebeke, a member of the Health Insurance Committee, said the
committee unanimously agreed the self - insurance plan should be continued for one more year. His
experience with insurance indicates health insurance rates nationally will increase 9 -10 %. His
experience with small insurance groups has been that their insurance rates have increased 20 -50 %. He
said Washington is experiencing higher rate increases than the remainder of the nation because of the
State Legislature's decision that everyone in the State be insurable which drove up the cost to carriers
and eliminated many carriers. This results in less competition and increased losses by the carriers who
remain. He pointed out the self - insurance plan allows control by the City rather than by AWC.
In response to Councilmember White's request for a comparison between the self - insurance premiums
and the AWC premiums, Mr. Hunter said that until this rate increase, the premiums were fairly close.
With this rate increase, the self - insurance plan premiums will be more than AWC's rates. He said AWC
(and the City) implemented an 11% rate increase last year and the City adopted the AWC rates for the
previous year. Mr. Hunter said the City's Group Health premium would decrease 5 %, primarily due to
the timing of the City's plan year. AWC's Group Health premiums will increase 17% on January 1. He
commented approximately 10% of the City's workforce subscribe to Group Health coverage.
Edmonds City Council Approved Minutes
August 24, 1999
Page 6
Council President Pro Tem Van Hollebeke asked if the Council needed to take action on the premium
increase and to continue the self - insurance plan. Mr. Hunter answered Council action is not required, as
there are sufficient funds in the budget due to the PERS reduction to continue the self - insurance plan. He
said the rate increase would be included in the 2000 budget. He said a motion to approve continuing
with the self - insurance plan for another 12 months and approving implementation of a rate increase
would be appropriate.
Councilmember Plunkett preferred the Council not take action tonight regarding continuing with the self -
insurance plan as the Council agenda indicates no action would be taken on this item. Councilmember
White said prior to taking action on this item, he wanted to hear further logic regarding the expenditure
of $124,000 in 2000 for a 13% increase, particularly in view of AWC's 24% increase and what the City
gets for this increase. He requested this be more fully addressed in the budget process.
Council President Pro Tem Van Hollebeke pointed out the self - insurance plan is out of sync with the
budget process as their plan .year begins October 1. He said the Council could agree in concept to
proceed with self - insurance without making a decision regarding a rate increase. He cautioned against
waiting until the budget process to determine the rate increase, as this would be beyond the renewal date.
Councilmember White stated that the impacts of I -695 may be devastating and it may not be feasible to
expend an additional $124,000. Council President Pro Tem Van Hollebeke suggested the Human
Resources Committee bring this issue back to the Council at the earliest possible date in September with
as much detailed information regarding the impacts of other items on the City's budget.
ublic 6. REPORT ON PUBLIC SAFETY CONSTRUCTION PROJECT
afety
Construction Construction Engineer Mike Linn reported that the Public Safety project is approximately 75% complete.
Project
Phase I is anticipated to be complete by January 2000, although it is hoped this can be moved up a month
or two. Phase II, site work west of 5' Avenue, will be completed by May 2000. He explained a meeting
today with the contractor and architect indicated problems are being reduced and staff is able to get a
better handle on costs and time available to complete the work. Contingencies are approximately
$450,000 although determination of a final amount continues. He said the major issue at this time is
resolution of schedule delays, most of which occurred early in the project, primarily due to utility delays
and site work at the Fire Station. He said the Fire Station is essentially complete and finishes and
fixtures are being installed. The drywall on the Police Station has been completed on the upper level and
the drywall on the lower level will begin August 25. The roof between the Courts building and the
Police Station is complete which reduces standing water in the lower level of the Police Station.
Councilmember Haakenson asked Mr. Linn to describe the location of Phases I and II. Mr. Linn said
Phase I represents completion of the Fire Station, Police building, and Courts building. Enough of the
site work will be completed to allow these buildings to function — parking on the north side of the Fire
Station, the area between the Police and Fire Stations, and handicapped access to the building. The
permanent parking, west of the buildings, will not be completed until the existing structures are removed.
Once City staff is moved out of the existing buildings, Phase H will begin. He said the Council would
not be able to occupy the new Council Chambers until adequate public parking can be provided.
ynndale 7. UPDATE ON LYNNDALE PARK PHASE III DEVELOPMENT
Park
Parks and Recreation Director Arvilla Ohlde explained Lynndale Park Phase III development is a
partnership project with the City of Lynnwood. She pointed out the Comprehensive Park and Open
Space Plan indicated the Perrinville neighborhood was deficient in a community park amenity. During
Edmonds City Council Approved Minutes
August 24, 1999
Page 7
the Comprehensive Park and Open Space Plan process, consideration was given to 1) building a
community park in that area, 2) not having a community park in that area, or 3) entering into a
partnership project with Lynnwood to develop Lynndale Park. She said Lynndale Park Phase III also
included a skateboard park. She explained the improvements include a restroom, children's playground
area, a sport court, and a skateboard park. She said a partnership has been developed with the Youth
Police Association who provided a team of youth who provide recommendations regarding signage, use,
etc. She invited the public to the opening of the skateboard park on Friday, September 24 (a school
holiday) at 2:00 p.m.
For Student Representative Lee, Ms. Ohlde described the Phase III improvements near Perrinville. She
said the existing tennis courts have been retained in Lynndale Park.
Council President Pro Tem Van Hollebeke complimented Ms. Ohlde and the Parks and Recreation
Department, pointing out this represents a joint venture that benefits the citizens of Edmonds but the City
only pays half the development cost and less than half to maintain the park.
Mayor Pro Tem Miller declared a brief recess.
Initiative 8. REPORT: INFORMATION ON PROPOSED INITIATIVE 695 — "SHALL VOTER APPROVAL
695 BE REQUIRED FOR ANY TAX INCREASE, LICENSE TAB FEES BE $30 PER YEAR FOR
MOTOR VEHICLES, AND EXISTING VEHICLE TAXES BE REPEALED ?" AND POTENTIAL
IMPACT ON GENERAL FUND
Administrative Services Director Peggy Hetzler said her information was based on an analysis provided
by Foster Pepper and Schefelman, the firm who assists the City with bond transactions. She clarified the
examples she would provide in her presentation were for illustrative purposes only, specific
recommendations to offset revenue losses would be developed in conjunction with the 2000 budget and
would be presented to the Finance Committee and Council later this fall.
Ms. Hetzler said I -695 contains two major provisions, 1) the repeal of the Motor Vehicle Excise Tax
(MVET) statute from which the City receives approximately $1.1 - $1.5 million annually, and 2)
requiring a public vote on any new or increased State or local government revenue sources. She outlined
the broad impacts that include major revenue losses for transportation including the State Ferry System,
elimination of approximately $1.5 billion that would be generated for the 1999 — 2001 biennium of
which 75% is slated for transportation projects, and unknown impacts on Sound Transit's ability to
assess and collect taxes as I -695 repeals the statutes that govern the calculation of some Sound Transit
taxes. Other implications include reduced funding for public health programs, city and county criminal
justice programs, and city and county sales tax equalization. Further, the $30 fee that will replace the
MVET will not be shared with local governments.
Ms. Hetzler said counties in Washington are authorized to impose a $15 local option fee on certain
vehicle licenses, a fee Snohomish County imposes, and distributes a portion of to the City of Edmonds.
I -695 may eliminate this fee because it repeals the statute that identifies vehicles that are subject to the
fee. In 1999, the City's projected revenue from this source was $280,000, currently dedicated to road
projects. An unexpected tax source may result from passage of I -695. Before the MVET was imposed,
vehicles were considered personal property and were taxed based on 1% of their blue book value. Some
legal experts believe repealing the MVET statutes would reinstate the personal property tax status of
vehicles.
Edmonds City Council Approved Minutes
August 24, 1999
Page 8
Ms. Hetzler - reviewed charges that would require voter approval such as City taxes, special assessments
for local improvements, product or service fees, library cards, recreation fees, municipal court filing fees,
permit fees, license fees, etc. If I -695 passes, increasing or imposing any of these taxes would require
voter approval. She listed various governmental entities that will be affected by I -695 such as counties,
fire protection districts, housing districts, port districts, public utility districts, public hospital district,
school districts, sewer /water districts, etc. As an example, if I -695 passes, an election would be required
to increase the cost of a driver's education class or a meal ticket.
Ms. Hetzler said there are many unanswered questions such as who would vote to approve rent increases
in a Housing Authority because they do not have a defined electorate. Another major uncertainty is the
definition of "a monetary increase" in the initiative — whether it means increases in a rate imposed on a
per -unit basis or if it would prohibit a government from collecting more money from a revenue source in
2000 than was collected in 1999. Using the City's water bill as an example, Ms. Hetzler said one
interpretation was the City could not increase the rate of per cubic foot consumed without a public vote.
However, the wording could also be interpreted to mean that once the City collects an equal amount of
water revenue in 2000 as was received in 1999, all remaining water usage would be free. Another
example would be sales tax — if revenues collected through November 2000 exceed total sales tax
revenues for 1999, no further sales taxes could be imposed for the remainder of the year without a public
vote.
Another significant impact on local government is the ability to raise capital through the sale of
municipal bonds. The City has several bond issues outstanding for construction of the Police and Fire
complex, the Wastewater Treatment Plant expansion and various park purchases. These existing bonds
will require the City to implement taxes and rates in amounts sufficient to repay the debt service because
of the contractual relationship that exists between the bond owners and the City. However, this
contractual relationship appears to be in conflict with the provisions of I -695. The greater impact would
be on future debt issuance. Underwriters and bond insurers require some proof that a government has the
ability to meet its payment requirements before bonds can be marketed. In order to show this ability,
Washington governments will likely have to obtain voter approval for each new bond issue. Because of
the difficulty in obtaining bond insurance, the City may likely experience higher interest rates, resulting
in increased project costs over time. According to the City's bond counsel, this initiative appears to have
several constitutional defects and one or more post - election challenges are a virtual certainty. The
uncertainties are how long until the challenges are resolved and what is the status in the interim period.
Ms. Hetzler reviewed suggested action items for governments to consider to best position themselves for
post I -695 such as consulting with the City Attorney about the City's specific circumstances, speeding up
any debt issuance and LID assessments to be effective prior to the end of the year, assessing non -voted
taxes now, establishing water and sewer rates and permit fees on a multi -year basis, and adding
automatic CIP adjustments to existing rate ordinances. The City may also want to consider speeding up
the adoption of the budget process and reviewing notice periods that are required for alerting citizens to
potential rate increases.
Ms. Hetzler summarized if approved; I -695 takes effect January 1, 2000; however, the Washington State
Constitution states poll- approved initiatives take effect 30 days after the election. To be safe, the City
should consider having any new charges or taxes in place prior to December.
Ms. Hetzler explained in response to a request by the Finance Committee to present revenue trend
information assuming different property tax levies. She reviewed a 5 -year revenue /expenditure forecast
Edmonds City Council Approved Minutes
August 24, 1999
Page 9
trend for 1998 actual and 1999 — 2004 under three different scenarios: (1) a 3% annual increase in
property taxes (without I -695), (2) no increase in property taxes, and (3) enactment of I -695 and no
increase in property taxes. In order to minimize variables, she noted the forecasts assumed revenues
would increase by a measure of inflation, no new revenue sources had been included, expenditure
projections assume 1999 status quo service levels adjusted by an inflation factor, no future provisions
had been included for the Snohomish County 800 MHz debt payments, and no funding was included for
the three battalion chiefs, new or unfounded capital projects or the medical self - insurance rate increase.
Under the first scenario (a 3% annual increase in property taxes without I -695), expenditures exceed
current year revenues and revenues balance expenditures by the use of cash that is carried forward from
previous years. Under the first scenario, excesses increase over the five -year period.
Under scenario two (no increase in property taxes without I -695), expenditure growth exceeds revenue
for all five years and annual deficiencies increase yearly. Ending cash decreases from $1.4 million in
1999 to (negative) $278,000 in 2004.
Under scenario three (enactment of I -695 and no increase in property taxes) huge deficits accumulate as
a result of the cumulative effects of the MVET and sales tax equalization losses coupled with lost
property tax revenues. Under this scenario, the General Fund cash balance becomes negative in 1999.
She displayed a graphic of each scenario illustrating a comparison between revenues and expenditures.
Ms. Hetzler displayed a pie chart illustrating the revenue sources that comprise the General Fund,
pointing out property taxes comprise 38% of all General Fund revenues, Sales Taxes represent 19% of
the General Fund and MVET and Sales Tax Equalization represent 7% of General Fund revenues
(estimated to be $1.4 million for 2000). In order to compensate for such significant revenue losses
programs or service levels will be impacted. Over the past few years, the City has implemented a
modified Zero Based budgeting approach that incorporates the use of cost centers. Cost centers are
designed to reflect the costs associated with providing each City program and have been ranked based on
three criteria, 1) whether the program is legally required, 2) does the program generate revenue, and 3)
what is the public impact from this program. She said the programs that are not identified as legally
required or self - sustaining are the programs that are first considered discretionary and are considered for
potential elimination during periods of economic downturn. She identified costs centers that, based on
their previous ranking in the 1999 budget, could potentially be affected by the need to reduce General
A Fund expenditures by the revenues lost by I -695. These programs included fire reserves, fire training,
police reserves, crime prevention, youth services, the canine unit, police training, police property
management, numerous parks programs, street repairs and building maintenance. She stressed these
programs were identified only for illustrative purposes. She said although elimination of these programs
would provide the funds required to offset funds lost as a result of I -695, it would also displace
approximately 25 employees.
Ms. Hetzler reviewed a list of contractual services such as the library and advance life support services
that may need to be revisited in light of possible revenue reductions. She said the next steps include an
examination of revenue enhancement options to be considered by the Finance Committee at their
September 14 meeting and City staff will continue with the development of cost centers.
Council President Pro Tem Van Hollebeke observed the City could lose $1.4 in revenues and asked how
those funds were allocated. Ms. Hetzler answered approximately $500,000 comes to the City designated
for public safety needs although there is no legal requirement that they be expended for those purposes.
Edmonds City Council Approved Minutes
August 24,1999
Page 10
There are no restrictions on the use of Sales Tax Equalization funds. Council President Pro Tem Van
Hollebeke asked for an overview of the City's total budget and how much of it is mandated. Ms. Hetzler
answered the cost centers she indicated could be eliminated are the programs not legally required to be
provided. The total General Fund budget is approximately $20 million of which $1.4 represents
approximately 7 %. She said approximately 50% of the General Fund budget is public safety related
costs. Council President Pro Tem Van Hollebeke observed mandated programs could not be eliminated;
therefore, the loss of $1.4 in revenues would have a huge impact on the remaining items in the budget.
Mayor Pro Tem Miller asked if Mayor Fahey has discussed the possibility of a hiring freeze pending the
outcome of I -695.. Ms. Hetzler answered that discussion has not occurred with Mayor Fahey but the
cabinet has had that discussion. The cabinet has not yet reached a decision on hiring for existing
vacancies but has put a limit on hiring the new position approved last week.
Councilmember Earling said many entities and cities are preparing two budgets, however, due to
Edmonds' use of cost centers, this is not necessary. He suggested Administration provide a
recommendation on prioritization of cost centers that could be eliminated if necessary.
Councilmember White requested a copy of the cost centers that might be eliminated and a copy of Ms..
Hetzler's presentation. Council President Pro Tem Van Hollebeke requested a copy of the pie chart.
Mayor Pro Tem Miller said USA Tod av reported .a survey indicated 59% of Washington residents
support I -695.
udget 9. DISCUSSION REGARDING BUDGET APPROACH
Approach
Administrative Services Director Peggy Hetzler said the uncertainty regarding I -695 makes it difficult
for staff to develop reliable revenue estimates. The potential loss is too great to be offset by across -the-
board budget reductions. Since cost centers have been developed and prioritized for just such a purpose;
this would be the appropriate time to identify cost centers that might be eliminated from the budget. The
Department Directors have been instructed. to prepare their budgets on the cost center basis, assuming
there will be no impact from I -695 and assuming realistic service levels and based on status quo service
levels. She suggested Mayor Fahey and Department Directors, in conjunction with the Finance
Committee, prepare a budget reduction plan to be presented to the Council that could take effect should
I -695 pass. This reduction plan would include the elimination of certain cost centers, reduction in certain
service levels and potential new revenue proposals. She requested revenue projections from General
Fund departments that receive fees, grants, contractual revenue or other miscellaneous revenue sources.
She requested departments that impose fees and/or rates consider the adequacy of those rates over time
and possibly develop a multi -year rate structure that would include a CPI increase in the ordinances that
establish these revenues. She referred to a 2000 Budget Calendar that was presented to the Finance
Committee last month, pointing out the property tax levy process is scheduled to take place prior to
December 1 in an effort to respond if I -695 passes and is deemed to be effective December 2.
Ms. Hetzler requested the Council provide input regarding whether this is the direction staff should
proceed in development of the budget, or if a different approach is desired, staff should be informed soon
so that departments can be instructed to proceed in a different manner.
Councilmember Earling said the Finance Committee has been reviewing a variety of potential revenue
sources that may be available and these will be reviewed again at the September Finance Committee
meeting. He did not recall the Finance Committee would be involved in the process of eliminating cost
Edmonds City Council Approved Minutes
August 24, 1999
Page 11
centers as that was viewed as an administrative process in which the Council should not be involved.
The Council could consider administrations priorities and make adjustments if they chose. Ms. Hetzler
said it was her intent for the Department Directors and Mayor Fahey to develop a plan, keep the Finance
Committee apprised, but the Finance Committee would not be actively involved.
Councilmember Haakenson stated that due to I -695, the 800 MHz Board will be selling bonds prior to
November 2. The charges to cities in 2000 will be relatively minimal in 2000, approximately $10,000 -
$20,00, but there will be significant funds required in the 2001 budget for 800 MHz to repay Snohomish
County. He recommended this be kept in mind when developing the 2001 budget.
10. MAYOR'S REPORT .
Mayor Pro Tern Miller wished Council President Pro Tem Van Hollebeke a happy birthday (last week).
Mayor Pro Tern Miller advised there would not be a Council. meeting on August 31, the fifth Tuesday,,
and the next Council meeting would be Tuesday, September 7.
ound Councilmember Earling advised Sound Transit will begin their first service in September. Eight regional
ransit bus lines will be activated; three of which will originate in Snohomish County from Everett and go to
Bellevue or, Seattle. Public notice will be distributed informing of ribbon cutting ceremonies.
Councilmember Plunkett explained in the mid- 1990's the Legislature passed the Commute Trip
rking Reduction Act in an effort to get single occupants who were employed by large companies out of their
mmittee vehicles. The City of Edmonds, as a large employer, is required to adhere to the provisions of the
Commute Trip Reduction Act. Human Resources Director Hunter made a presentation to the Downtown
Parking Committee, explaining the City has been working toward the goals but still need to do more
work. Per Mr. Hunter's suggestion, the Downtown Parking Committee will interview representatives
from CT to discuss potential efforts the City can use to meet the goals of the Commute Trip Reduction
Act which may result in recommendations to the Council.
ealth Councilmember Nordquist said when the Health District was reformulated in the 1960's, it received
District some of its revenue from each city on a per capita basis. The Legislature replaced some of that funding
with MVET funds. He said 17% of the Health District's budget comes from MVET; if I -695 passes, the
Health District will again seek funding from cities on a per capita basis. He reported the Health District
has completed their 2000 budget.
Councilmember Earling suggested the Health District make a 15- minute presentation on the potential
impacts of I -695.
With no further business, the Council meeting was adjourned at 9:00 p.m.
BARBARA S. FAH EY, AYOR -SANDRA S. CHASE, CITY CLERK
1
Edmonds City Council Approved Minutes
August 24, 1999
Page 12
AGENDA
EDMONDS CITY COUNCIL
Plaza Meeting Room - Library Building
650 Main Street
7:00 -10:00 p.m.
AUGUST 24, 1999
SPECIAL MEETING
6:30 P.M. - EXECUTIVE SESSION REGARDING A REAL ESTATE MATTER
7:00 P.M. - CALL TO ORDER
FLAG SALUTE
1. APPROVAL OF AGENDA
2. CONSENT AGENDA ITEMS IV
(A) ROLL CALL
(B) APPROVAL OF CITY COUNCIL MEETING MINUTES OF AUGUST 17, 1999
(C) APPROVAL OF CLAIM WARRANTS #34987 THROUGH #35465 FOR THE WEEK OF AUGUST 16, 1999, IN
THE AMOUNT OF $242,959.77. APPROVAL OF PAYROLL WARRANTS #25744 THROUGH 425921 FOR
THE PERIOD AUGUST 1 THROUGH AUGUST 15, 1999, IN THE AMOUNT OF $487,379.46.
(D) ACKNOWLEDGE RECEIPT OF CLAIM FOR DAMAGES FROM THOMAS & ROBERTA MAURICE AND
ROBERT & SUSAN ALLEN ($40,000.00)
(E) REPORT ON THE GENERAL FUND FINANCIAL POSITION FOR THE PERIOD ENDED JULY 31, 1999
(F) AUTHORIZATION TO SIGN A CONTRACT FOR DAVID MACHADO TO TEACH AT THE STATE POLICE
TRAINING ACADEMY
(G) PROPOSED ORDINANCE ANNEXING CERTAIN REAL PROPERTY KNOWN AS THE "HALEY KLEIN"
ANNEXATION, ESTABLISHING ZONING FOR THE ANNEXATION, PROVIDING FOR THE ASSUMPTION OF
EXISTING CITY INDEBTEDNESS, AND FIXING A TIME WHEN THE SAME SHALL BECOME EFFECTIVE
3. (5 Min.) INTRODUCTION OF NEW LIBRARY BOARD MEMBER DONNA PHILLIPS
4. (20 Min.) ACCEPTANCE OF PROPERTY TAX DEED FROM SNOHOMISH COUNTY FOR PROPERTY LOCATED
NEAR WOODWAY MEADOWS, AND DISCUSSION REGARDING THE PROPERTY'S APPROPRIATE USE
5. (10 Min.) QUARTERLY REPORT ON SELF - INSURANCE HEALTH BENEFIT FUND
6. (10 Min.) REPORT ON PUBLIC SAFETY CONSTRUCTION PROJECT
7. (10 Min.) UPDATE ON LYNNDALE PARK PHASE III DEVELOPMENT
8. (30 Min.) REPORT: INFORMATION ON PROPOSED INITIATIVE 695 - "SHALL VOTER APPROVAL BE REQUIRED
FOR ANY TAX INCREASE, LICENSE TAB FEES BE $30 PER YEAR FOR MOTOR VEHICLES, AND
EXISTING VEHICLE TAXES BE REPEALED ?" AND POTENTIAL IMPACT ON THE GENERAL FUND
9. (15 Min.) DISCUSSION REGARDING BUDGET APPROACH
10. (5 Min.) MAYOR'S REPORT
11. (15 Min.) INDIVIDUAL COUNCIL REPORTS /UPDATES ON RESPECTIVE BOARD MEETINGS
Parking and meeting rooms are accessible for persons with disabilities. Contact the City Clerk at (425) 771 -0245 with 24 hours advance
notice for special accommodations. The Council Agenda appears on Chambers Cable, Channel 32 or 46 Delayed telecast of this meeting
appears the following Wednesday, Friday and Monday at noon on Channel 32 or 46