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FC091118FINANCE COMMITTEE MEETING September 11, 2018 Elected Officials Present Councilmember Diane Buckshnis Council President Mike Nelson Councilmember Tom Mesaros Mayor Dave Earling Staff Present Scott James, Finance Director Dave Turley, Assistant Finance Director Scott Passey, City Clerk Jeannie Dines, Recorder The meeting was called to order at 7:13 p.m. in the Jury Meeting Room. The order of Items 8.3 and 8.2 was reversed. 1. Business License Minimum Threshold and Definition of Engaging in Business City Clerk Scott Passey explained in 2017 the State legislature passed legislation requiring cities who have a business license to partner with the State or Filel-ocal to administer business licenses which he noted will streamline the process. Partnering with the State requires the City adopt amendments to the business license code with regard to, 1) business license minimum threshold, and 2) definition of engaging in business. All cities with a B&O tax operate under the definition of engaging in business (definition provided in Council packet); there is no option to change that language. The minimum threshold is the amount of income a business generates to require a City business license. Few cities in the State have established thresholds, of the cities that have, their threshold is $12,000/year which staff found reasonable. Options within the threshold include 1) exempting businesses below the threshold from obtaining a business license, or 2) a fee free/registration business license. Most other cities are leaning toward exempting businesses generating $12,000 or less from a business license. When the State takes over business licensing, compliance will increase; the State will generate a mailing list and send letters encouraging businesses to apply for a business license. Discussion followed regarding why a $12,000 threshold was selected by other cities, staff time to handle business licenses, the State's fee to administer business licenses, the City's current business license fee, current business licenses, and businesses that potentially need to be licensed. Committee agreed with the threshold exemption of $12,000. Action: Schedule adoption of ordinance for full Council by year end 3. July 2018 Monthly Financial Report Mr. Turley responded to questions regarding the Contingency Reserve Fund, grant billing, decrease in telephone utility tax, court revenues, and the CBDG repayment for the Senior Center. Action: Schedule on Consent Agenda 2. Review of UB Penalty Adjustment Policy Mr. Turley explained this was in response to a concern expressed at a Council meeting with the City's inability to accept vouchers. He explained a $25 late fee is charged on water bills; if the bill is not paid, the water is turned off and a $20 fee charged and when the bill is paid, a $20 fee is charged to turn the water back on. With regard to payment via a voucher, acceptance of vouchers requires additional effort and the City does not have a policy regarding forms of payment other than the statement states check, 09/11/18 Finance Committee Minutes, Page 2 cash or money orders. The process for a voucher is a person requests a voucher from an agency, the agencies issues the voucher up to an amount, the person brings the voucher to the City, the City completes the voucher stating the amount due, and the agency then issues a check. Because the process a long time, it is likely the person's water would be shut off. Issues to be discussed include, 1) forms of payment the City accepts, and 2) amount of the late fee and discretion to waive the late fee based on circumstances. Committee members supported accepting vouchers and suggested staff investigate how voucher payments are handled by other cities. Discussion followed regarding how often vouchers would be used and whether to waive the late fee and turn off/on fee when agreeing to accept a voucher. Action: Staff draft policy with options for Finance Committee review. The meeting was recessed at 7:37 p.m. awaiting a staff member and reconvened at 7:50 p.m. in the Public Safety Training Room 4. Public Facilities District (PFD) Bond Refinancing Several members of the ECA and PFD Boards, ECA staff and representatives of First Financial Northwest Bank were present. Mr. James explained the PFD issued bonds in 2008, 7 years remain with an average rate of 4.25%. The PFD received an offer from First Financial Northwest Bank to refinance the bonds at a lower rate and to extend the term from 7 years to 10 years. He referred to Options A and B on the term sheet in the Council packet; staff recommends Option A which has a fixed 3% loan rate for 10 years. The current bonds require a Contingent Loan Agreement (CLA); with acceptance of this offer, the CLA will be replaced with a collateralized certificate of deposit to offset the amount of debt issued. For example, if the debt issued is $2,747,000; the City would deposit the same amount. Benefits include the City's receives a 2.1 % return on investment and the PFD receives financial flexibility via a longer term to repay the debt at a lower interest rate resulting in more cash flow. ECA/PFD Executive Director Joe Mclalwain advised this has been approved by the PFD Board. Discussion followed regarding the offer expiration date, savings to the PFD of Option A, the City's investment earnings, the PFD's plans to begin repaying the contingent loan, Snohomish County PFD's recalculation of sales tax allocation resulting in additional funds to the Edmonds PFD, and timing of the refinancing. Mr. The Committee requested the staff provide the City their financials including sales tax revenue projections every six months. Action: Schedule for full Council on September 25 The meeting was adjourned at 8:00 p.m.