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06/11/2013 Finance Committee����������������������U�N��� � �����"��~�� COMMITTEE � ���� ������� � ""��� MINUTES ���~ June 11, 2013 Councilmembers Present [oUmj|m8mber Yamamoto COUDCi|OOeOUb8[Fraley-MOOiU8S Council Pr8Sidgntpet8O Public Present RODVVR0bO|t H8rryGahgnS B[uCHVVit9DbHra Staff Present Rog8rN8VmaiSr, Finance Director Stephen Clifton, Comm Sgrv/ECOnD8wDir Carrie Hite, Parks and H8Cr881iOn Director Phil Williams, Public Works [}in8CtO[ Rob English, City Engineer Mike DgLiU8' Senior Utilities Engineer Jeannie Dines, Recorder CoUOci|090ber Yamamoto called the meeting LO order 8L8:52 p.0. and moved Items and HtOthe beginning of agenda. G. Edmonds Downtown Business Improvement District Interim Members Advisory Board's Proposed Bylaws and Work Proaram/Budaet for Year 2013. David Arista introduced the members Of the BID Interim K8gmb8rS Advisory Board who were : P8V| Rucker, 88eti8; Mary Kay Sne8ringer, Edmonds BOOhGiOn3; Steve B8]8S, VV81erfn}ni Coffee; [|8d9DC8 C|ybO[D8, HDR Engineering; and Stephen Clifton, ex-officio 080b8[. Per the O[diO8DC8, the BID had a 90 day deadline to present a work plan and bylaws to the City Council. The bylaws and a p[OpOS8d 2013 work p|8D are contained in the Finance [|O00itte8 packet. The BID worked with City Attorney Jeff T8r8d@yOn the bylaws. The BID has begun CO||HCbng 8GSHSSm8nLS; total 8SSHGSm8ntS anticipated for 2013 are $86,000. As required by the Onjin8nCg, the Advisory Board will present 8 2814 work plan in the last quarter Of2813. Mr. Clifton advised he will email COUDCi|080be[G requesting they review the bylaws and work plan iO the June 11 Finance Committee packet and provide questions prior tOthe COUDCi| meeting. He will inform the BID Board when the presentation iO Council iSscheduled. Action: Schedule for full Council, 30 minute presentation by BID Board. H. Ordinance Amendinci Edmonds City Code Sections 3.75.060 - 100 Relatincl to the Edmonds Downtown Business Improvement District Members Advisory Board. K8[. Clifton reported |Die[OU Finance 0[gCk}[ ROD Cone, who was an ex-officio member Ofthe B|[}, [8CO00eOd8d changes k}the |ROgV8g8 regarding delinquency charges. City Attorney Ta[8dRyand FiD8DCH [}in9CtO[ N8U08iH[ @gn9H with the p[OpOG8d changes. A brief diSCVSSiOD followed regarding delinquency charges ODutilities. I Action: Schedule for full Council. I A. Authorization to Contract With James G. Murphy to Sell Surplus City Vehicles. Mr. Williams advised the two vehicles to bHSUrplVSed are @ utility service truck and @ Crown Victoria. He anticipated the sale would generate approximately $750O that will be deposited in the E-Fund replacement account. Action: Schedule on Consent Agenda. B. Presentation of 2013 Sanitary Sewer Comprehensive Plan Update and Proposed Sewer Utility Rate Increases K8c Williams advised an update to the Sanitary 88vver Comprehensive Plan is required every Six years. One of the primary focuses in the Plan is the sewer collection system and rehab/replacement 06 -11 -13 Finance Committee Minutes, Page 2 of sewer lines that are structurally insufficient, habitually plugged, impacted by roots, have insufficient capacity, etc. Similar to the Water Comprehensive Plan, the Sewer Comprehensive Plan will contain a list of projects and a recommendation for a $2 million /year capital program to rehab /replace sewer lines. Generating $2 million /year for a 6 year capital plan will require borrowing $4 million every other year; the effect on rates will be approximately a 6.5% rate increase most of those years. He distributed photos of the interior of sewer lines taken via video inspection. He noted the Stormwater Plan, which was updated two years ago, did not have a replacement plan for the stormwater conveyance system. That will need to be addressed in the future as well. Mr. English advised the Sanitary Sewer Comprehensive Plan update will be presented to the Planning Board on June 26. The goal is to present it to the full Council in mid -July followed by a public hearing. Mr. Williams reported the City scored very high on a $4.5 million low interest Public Works Trust Fund loan; however, the most recent House budget zeroed out the trust fund for the next two years. That will increase the amount that needs to be borrowed which will be described in the next agenda item. Mr. Neumaier noted interest rates will continue to increase over time, but not maintaining the City's infrastructure is a very expensive strategy. Action: Schedule for full Council following review by Planning Board. C. Adoption of Revenue Bond Ordinance and Resolution Mr. Williams recalled in 2011 the City closed a bond sale for $11 million plus costs to install new water lines, do some wastewater system collection work and to fund some stormwater projects. At that time, the expectation was to borrow funds every two years. He anticipated this borrowing would be a total of $14.45 million, an increased amount due to the unavailability of the State Trust Fund loan. When presented to full Council, the ordinance will authorize the Finance Director to execute the bond sale at the most appropriate time within an interest rate cap and time period. Mr. Neumaier provided a brief summary of the ordinance. Mr. Williams recalled water rates have been increased 7.5% each year to generate funds for a capital program, the past 3 -4 stormwater rate increases have been 8% and there has not been an increase in sewer rates since 2004. He distributed a comparison of 2012 water, sewer, stormwater rate for incorporated cities in King and Snohomish County, pointing out Edmonds' sewer rate is the lowest, Edmonds' water rate is in the lower third and Edmonds' stormwater rate is in the middle. A brief discussion followed regarding the bond term. Action: Schedule for full Council, include presentation by bond counsel. D. Discussion Regarding Future City Utility Rate Adjustments Mr. Williams referred to the Water Comprehensive Plan that anticipates a 7.5% increase every year and borrowing every 2 years to fund the replacement of 1 % of the water lines /year. He suggested the Council evaluate that strategy, explaining continued borrowing and annual rate increases of 7.5% plus inflation will result in high rates and a great deal of debt. Another strategy would be a rate structure that generates sufficient funds for the capital program rather than debt. He suggested evaluating the time period and amount that rates would need to be increased to generate an extra $2 million /year for ongoing water line replacement. Action: Staff analyze the necessary rate increase and the number of years versus borrowing. E. Authorization for Mayor to Sign Acceptance of Additional Coordinated Prevention Grant Funding. Mr. Williams explained Steve Fisher, Recycling Coordinator, is funded in part by a Coordinated Prevention Grant. He also provides services to Lynnwood, funded via another grant. The remainder of Finance Committee Minutes, his salary iSpaid by the City's Water Utility as he also works ODwater conservation, water quality, etc. The State has offered to add $7,000 to the grant which will reduce the cost to the Water Utility. Action: Schedule on the Consent Agenda. M[ NeUOOaie[ reported there are DO big OD8OCia] surprises in the first four months; General Fund 8wp8ndhunSS and revenues are On track. Through Anh| the C|hv has CUUeCtgd 28% Of revenue compared with 28% in 2012. REET[eVeOV8 i850% over budget and 5O% over 2O12; he anticipated 2O1OREET revenues will b8$20O,000-$30O.0O0 over budget. M[. N8U08ier reported there is opportunity to enhance the monthly and quarterly budget reports. He p|8OS to GV[VHy the Council LO ask, 1\ what iDfO[Dl81iOO in the CU[F9Dt reports is HGpHCi8Uy VS8fU|, 2) what information iG extraneous/not useful, 8) what information could be added 1O the reports tOmake them more useful, and 4) what formatting improvements would make the reports more useful. M[. NgUnO8ig[ reported his CUr[8Ot p[iO[iiv beyond learning about the City's fiOaOCgS is updating the City's Gt[818giC fiD8DCi8| projection in anticipation Of the 2014 budget p[OCHGS. In July he will provide an update tO the Council including aSSUDlptiODS. Action: Schedule on Consent Agenda. Park Impact Fee Study Direction Ms. Hite recalled when Randy Young made 8presentation to the Council last month, the Council was generally in favor Uf Park Impact Fees but divided On three issues: 1- Residential only versus residential and commercial Mr. Young described amounts each could generate and pros and cons. Following diSCUG8iOD, COVDCi|080be[8 Yamamoto and F[8|e\+K8OOiURS8Dd COUDCi| President P8t8O supported imposing 8 Park Impact Fee Un residential and commercial. 2' Phasing Mr. Young reviewed pros and cons and examples O[phasing. FO||OvviOg diSCU88iOD' [|OUDCi|OOeOObg[ \/80aOOOtO supported DO phasing, COUOCi|0g0b8[ F[8|ey-K8ODi||8S supported phasing 50% the first year and 50% the SeCODd year, and COUDCi| President P8iSO suggested 8 compromise Of75% the first year and 25q6 the second year. 3' Exemption for low income housing Mr. Young explained the City's Transportation Impact Fee does not have an exemption for low iDCO08 housing. The pO|iCi8G do not have to be the G808. If the City exempts |OVV iDCO08 housing from the Park Impact Fee, the law requires the City fund the impact fee account from the General Fund. There are two ways to exempt, a) non-profits only, or b) low income defined as |gSS than 80% Of COUDiv'S nO8di8D hOUSghO|d iDCOnO8. FO||OvviDg diSCUSSiUD, [|OUDCi|090bH[ Y@080OtO supported DO 8X90ptiOD and [|OUDCi|080b8[ F[8|Hy-K8ODi||8S vv8Dtgd aD opportunity tO consider the issue further. Action: Schedule for full COUDC|, draft GD ordinance for COUDC| consideration 81 next COUDC| meeting, discuss options for each. J. Public Comments Ron Wambolt' Edmonds, explained h8 reviewed the monthly financial report; the projections StiUUS8 an improper methodology. Bruce Witenberg, Edmonds, welcomed Finance Director Roger Neumaier. Adjournment — The meeting adjourned at 8:15 p.m.