10/08/2013 Finance CommitteeFINANCE COMMITTEE MEETING MINUTES
October 8, 2013
Councilmembers Present Staff Present
Councilmember Adrienne Fraley-Monillas Roger Neumaier, Finance Director
Councilmember Diane Buckshnis Phil Williams, Public Works Director
Jeannie Dines, Recorder
Public Present
Ron Wambolt
Roger Hertrich
Bruce Witenberg
Councilmember Fraley-Monillas called the meeting to order at 8:01 p.m.
A. Discussion eegardinA the Establishment and [Operation of Any Structures or Uses
Relating to Collective Gardens, Marijuana Production, Mariivana Processing, or
Mariivana Retailing in the City of Edmonds
Councilmember Buckshnis reported Seattle approved allowing collective gardens in industrial areas
and limited plants to 45 per garden. Mr. Neumaier advised the only revenue the City will receive is
retail sales tax, 0.85% local and 0.10% criminal justice. He did not anticipate sales tax or permitting
fees would have a substantial impact on City revenues.
Action: Schedule for full Council.
B. Authorization for Mayor to Sinn 2013-2015 Coordinated Prevention Grant Agreement
with department of Ecolvaav
Mr. Williams relayed the $27,000/year grant supports the work of the City's Recycling Coordinator
Steve Fisher who also works for Lynnwood. Lynnwood applies for and obtains a similar grant. The
balance of Mr. Fisher salary in Edmonds is supported by Water Utility.
Action: Schedule on Consent Agenda.
C. Presentation and Discussion of Utility Rate Adjustments
Mr. Williams distributed a Summary of Proposed Rate Action and a proposed rate ordinance that
would institute a 3 -year annual rate increase of 9.5% for sewer; 9% for water and 4.5% for storm on
January 1 of 2014, 2015 and 2016 per the Comprehensive Plans for those three utilities. Under this
proposal the City will be independent of debt financing for pipe projects within 6 years. This proposal
will also save approximately $7 million in 6 years and an additional $45 million over the following 13
years, a total of $52 million in savings that can be used for pipe replacement versus interest
payments. He provided a comparison of the City's current total utility bill to 2016.
Discussion followed regarding whether the current strategy of borrowing every three years is possible
or wise, all citizens paying for improvements via rates, saving that can be realized by eliminating
bonding, and availability of a low income utility discount.
Councilmember Buckshnis supported the proposed increase. Councilmember Fraley-Monillas was not
convinced.
Action: Schedule for full Council.
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10-08-13 Finance Committee Minutes, Page 2
D. Backflow Prevention Compliance Fee Authorization Discussion
Mr. Williams explained water utility customers with sprinkler systems or businesses that require
backflow prevention are required to have a certified backflow prevention device in place that prevents
contamination flowing back into the system. That device is required to be tested annually and the test
results submitted to the City. Current practice is to turn off the customer's water if the test results are
not submitted after three reminders. The proposal is a $125 fee (the same as the fee to turn water on
after shutoff) if they do not comply after the third letter. Currently about 5% do not comply; the fee is
expected to increase compliance. The fee is not expected to generate a great deal of revenue. A brief
discussion followed regarding how the City knows which residences have backflow devices.
Action: Schedule for full Council as part of permit fee proposal. An amendment will be required to add
this to the fee ordinance.
E. Bond Counsel Contract for Edmonds Center for the Arts
Mr. Neumaier recalled he relayed a proposal at the September Finance Committee meeting to change
the loan structure to a grant. At that time Council President Petso requested it be addressed by the
Task Force. The Task Force needs to reach agreement before a recommendation is made to the
Council.
Action: Allow the Task Force to pursue.
F. Snohomish County Investment Pool
Mr. Neumaier recalled at the September Finance Committee meeting he recommended utilizing the
Snohomish County investment pool. He made a presentation to the Council and his response to
follow-up questions was referred to the Finance Committee. He highlighted an outstanding question:
• King County incurred significant losses several years ago. Could that happen here? The City's
investment policy is nearly identical to Snohomish County's policy. The derivatives that King
County invested in are not allowed by the City's and Snohomish County investment policy.
The only investments that are allowed are government bonds and bank bonds that are backed
by assets that have been committed through state. It is low risk and fairly low return but a
higher than the current return.
Discussion followed regarding returns, fees and the investment manager's background. Mr. Neumaier
will provide information regarding the fee structure. He will proceed with utilizing the Snohomish
County investment pool and provide periodic updates to the committee.
Action: Information only.
G. August 2013 Budgetary Financial Report
Mr. Neumaier relayed next month's report will again include department graphs and change in fund
balances. He highlighted the following:
• Property tax revenue is 11.2% over last year, that may be due to penalties and refinancing
• Sales tax revenue is 7.5% above budgeted levels
• Charges for Goods and Services are 15% over last year
• Fines and penalties are 15% over last year
• General Fund revenues are projected to be 3% over budget
• Department expenditures are anticipated to be 3% under budget by yearend
• The 2013 surplus is projected to exceed $1.2 million
• REET continues to trend $900,000/year
10-08-13 Finance Committee Minutes, Page 3
Mr. Neumaier will research whether Park Impact fees will be collected on hospital construction.
Action: Schedule on Consent Agenda.
Councilmember Buckshnis suggested an update to Ordinance 3789 (financial reporting) as a future
agenda item. She also suggested Mr. Neumaier utilize a matrix to track Council suggested changes to
the budget.
H. Public Comments
Roger Hertrich, Edmonds, referred to General Fund Expenditures by Department, pointing out 2012
expenditures for Water, Storm and Sewer Utility are not available. Mr. Neumaier explained in 2012 the
three utilities were in one fund, in 2013 they were divided into three separate funds. Mr. Hertrich
expressed concern with the $2 million expenditure in professional services.
Bruce Witenberg, Edmonds, expressed his continued concern with the Council not announcing the
reason for a settlement after meeting in executive session. He relayed Council President Petso asked
the City Attorney whether the Council could indicate what the settlement was for and to whom it was
paid and the City Attorney's answer was yes. Mr. Witenberg also suggested the budget separate
attorney fees and fees for the City Attorney, Prosecuting Attorney and Public Defender.
Councilmember Fraley-Monillas suggested seeking direction from the City Attorney regarding how
much information can be released when the Council announces a settlement.
Adjournment — The meeting adjourned at 9:01 p.m.