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Cm130917EDMONDS CITY COUNCIL APPROVED MINUTES September 17, 2013 The Edmonds City Council meeting was called to order at 6:15 p.m. by Mayor Earling in the Council Chambers, 250 5' Avenue North, Edmonds. ELECTED OFFICIALS PRESENT Dave Earling, Mayor Lora Petso, Council President Joan Bloom, Councilmember Kristiana Johnson, Councilmember Diane Buckshnis, Councilmember ELECTED OFFICIALS ABSENT Strom Peterson, Councilmember Frank Yamamoto, Councilmember Adrienne Fraley-Monillas, Councilmember ALSO PRESENT Thea Ocfemia, Student Representative 1. ROLL CALL STAFF PRESENT Stephen Clifton, Community Services/Economic Development Director Phil Williams, Public Works Director Roger Neumaier, Finance Director Carrie Hite, Parks & Recreation Director Rob English, City Engineer Leif Bjorback, Building Official Jeff Taraday, City Attorney Sandy Chase, City Clerk Jana Spellman, Senior Executive Council Asst. Jeannie Dines, Recorder City Clerk Sandy Chase called the roll. All elected officials were present with the exception of Councilmembers Peterson, Yamamoto, and Fraley-Monillas. 2. CONVENE IN EXECUTIVE SESSION REGARDING PENDING OR POTENTIAL LITIGATION PER RCW 42.30.110(1)(i). At 6:17 p.m., Mayor Earling announced that the City Council would meet in executive session regarding pending or potential litigation per RCW 42.30.110(1)(i). He stated that the executive session was scheduled to last approximately 45 minutes and would be held in the Jury Meeting Room, located in the Public Safety Complex. No action was anticipated to occur as a result of meeting in executive session. Elected officials present at the executive session were: Mayor Earling, and Councilmembers Johnson, Buckshnis, Petso and Bloom. Others present were City Attorney Jeff Taraday and City Clerk Sandy Chase. The executive session concluded at 7:03 p.m. Mayor Earling reconvened the regular City Council meeting at 7:05 p.m. and led the flag salute. 3. APPROVAL OF AGENDA COUNCIL PRESIDENT PETSO MOVED, SECONDED BY COUNCILMEMBER BUCKSHNIS, TO APPROVE THE AGENDA. MOTION CARRIED UNANIMOUSLY. 4. APPROVAL OF CONSENT AGENDA ITEMS COUNCILMEMBER BUCKSHNIS MOVED, SECONDED BY COUNCIL PRESIDENT PETSO, TO APPROVE THE CONSENT AGENDA. MOTION CARRIED UNANIMOUSLY. The agenda items approved are as follows: Edmonds City Council Approved Minutes September 17, 2013 Page 1 A. APPROVAL OF CITY COUNCIL MEETING MINUTES OF SEPTEMBER 10, 2013. B. APPROVAL OF CLAIM CHECKS #204215 THROUGH #204359 DATED SEPTEMBER 12, 2013 FOR $1,007,587.92. C. ACKNOWLEDGE RECEIPT OF CLAIMS FOR DAMAGES FROM MIKE MCCAUSLAND (AMOUNT UNDETERMINED), JON HIE ($20,000.00), CLIFFORD AND MARIE HACKNEY (AMOUNT UNDETERMINED), CAROLE AND MERLIN KLEVEN (AMOUNT UNDETERMINED), JODI SACKVILLE ($500,000.00), AND FRONTIER (AMOUNT UNDETERMINED). D. APPROVAL OF EDMONDS BUSINESSES APPLYING FOR RENEWAL OF THEIR WASHINGTON STATE LIQUOR CONTROL BOARD LIQUOR LICENSES FOR THE MONTH OF AUGUST 2013. E. AUTHORIZATION TO CONTRACT WITH JAMES G. MURPHY TO SELL SURPLUS CITY VEHICLES. F. AUTHORIZATION FOR MAYOR TO SIGN SUPPLEMENTAL AGREEMENT #4 WITH DAVID EVANS & ASSOCIATES FOR THE 76TH AVE. W @ 212TH ST. SW INTERSECTION IMPROVEMENTS PROJECT. 5. AUDIENCE COMMENTS Donna Breske, Snohomish, explained she applied for a building permit on June 20, 2013 for her property at 9330 2181 Place SW. She displayed a copy of the review letter she received from the City, summarizing there was no reference in the letter to any City Code to support the conclusions. She displayed the site plan and voiced her frustration with attempting to obtain a permit from the City. She referred to comments in a review letter from Jeri Machuga: 1) Indicate what was utilized as a datum point and provide its elevation. Ms. Breske pointed out the DBM shown on the site plan is at the top of the sanitary sewer manhole. This is a standard elevation datum. 2) Confirm the height of the wall along the east property line. Ms. Breske pointed out the top and bottom elevations are on the site plan, standard information on engineering drawings, and can be utilized to determine the 2 foot height. 3) Show the four corners; corner B does not point to the corner of building but rather the overhang. Ms. Breske stated this is nitpicky and reflects the type of review comments she has received. Since a pre -application meeting two years ago she has been asking the City to explain why she is required to divert stormwater. She asserted her due process was being violated so that the City can charge the $1300 park impact fee that will be effective October 1, 2013. Mayor Earling advised a meeting was held with staff today; Ms. Breske will receive a letter from the City no later than October 2, 2013. Al Rutledge, Edmonds, thanked the committee who selected the new City Clerk who will begin work on October 1. Next, he recognized Park Maintenance Manager Rich Lindsay who received an award for 30 years of volunteerism at the Evergreen Fairgrounds in Monroe. He also reported state representatives are exempt from traffic tickets because they may be speeding to avoid missing a vote. He suggested the Council contact the legislature about changing this practice. Roger Hertrich, Edmonds, questioned why it would take two weeks for the City to send a letter to Ms. Breske. He referred to construction of a building on SR104 in Westgate that included removing and replacing the curb and sidewalk. He suggested providing a deceleration lane on SR104 to improve safety and reduce congestion. Next, he suggested Councilmembers drive through Shoreline where nearly every street has been chipsealed. He also referred to plans for a multimodal facility at Unocal, recognizing that Edmonds City Council Approved Minutes September 17, 2013 Page 2 although there was property available there were no construction funds. He recommended any efforts to obtain funds to build an "impossible ferry tunnel" downtown be routed to the multimodal facility. 6. HEARING EXAMINER ANNUAL REPORT Hearing Examiner Phil Olbrechts commented his report was similar to last year; he had the same number of project applications split in the same type of conditional uses, variances, subdivisions and administrative appeals. He asked if the Hillman litigation had been concluded. City Attorney Jeff Taraday advised it had. Council President Petso asked whether any other closed record items were on the list. Mr. Olbrechts acknowledged the Willowdale variance was on appeal to the Council and he would not address that. Edgewood Baptist Church Sign and Setback Variance (8/6/13) Approved. This was a variance request to construct a 36 square foot sign setback 3 feet of 76`' Avenue West. Code only authorizes 24 square foot sign at least 15 feet from 76t' Avenue West. The variances were justified by the fact that onsite landscaping required by City Code would hide any wall mounted signs from public view and would also hide a sign located 15 feet from the street. The sign would serve as the only sign for the church property and would be used to mark the entrance. The sign area variance is usually assigned to the ADB but was consolidated with the setback variance. ADB variance criteria are more lenient than the setback criteria and more focused on aesthetic impacts. The ADB recommended approval. Willowdale (8/6/13): Pending appeal to City Council. Krumova Conditional Use (5/23/13): Approved. The applicant requested a conditional use permit to convert an existing 2,400 square foot building to a daycare at 24310 76`' Avenue West in the community business zone. Surrounding uses include a church, commercial uses and residential uses. McDonald's Conditional Use (5/9/13): Approved. The applicant requested replacement of McDonald's on Edmonds Way. A new design is subject to ADB review. Maya Taylor, 7 years old, made an eloquent plea for a McDonald's play area and presented a petition with 50 signatures. The approval decision encouraged McDonald's to incorporate a play area as requested by Ms. Taylor. Hillman Variance and Reasonable Use Requests (4/24/13): Approved with conditions. The applicants requested street setback variance, side yard variance and two critical area reasonable use requests to build a single family home at 1139 Sierra Place. The street setback variance involved a request to reduce the street setback from 25 to 12 feet. The side yard setback was for a reduction from 10 to 3 feet to construct a retaining wall. The reasonable use requests involved a request to build within a stream and wetland buffer as well as within the wetland itself. The setback variances were necessary in order to avoid wetland. The reasonable use requests were necessary because it was not possible to build on the lot without encroaching into a wetland or stream. A portion of the property was free from critical areas and their buffers, but accessing it would have required the construction of a driveway across the wetland, which would cause more environmental damage than the proposal made by the applicants. He delegated to staff to determine whether the proposal was the minimum wetland encroachment. Olson Variances (3/l/13): Applicants requested a street setback variance, side yard variance and height variance to construct a single family home; street setback variance was approved and the other two variances were denied. The street setback was necessary to construct a driveway bridge to access the property which is a steep slope hazard area, sloping downward from its adjoining access road. The only way to avoid building the bridge was to push the home into the steeper portion of the lot, which in turn Edmonds City Council Approved Minutes September 17, 2013 Page 3 would require significantly more grading. The side yard variance was requested to provide improved natural lighting in the basement. There were no special circumstances related to the property that necessitated this variance request. Due to the way height is measured in Edmonds, height was measured 2.5 feet below the ground floor level of the home due to the steep slopes. The applicants requested a variance to increase the allowed height from 25 feet to 28 feet. The applicants claimed that without the variance they would have to reduce the pitch of the room which would adversely affect drainage. He ruled the modest loss in building height caused by the steep slopes did not deprive the owner of the use rights and privileges permitted to other properties in the vicinity. Shaw Lane Plat (3/28/13): Approved. This is a six lot preliminary plat located at 8620 218th St. SW. Gifford Conditional Use (1/25/13): Approved. This is a conversion of single family home to an office in the RM-15 zone at 23901 Edmonds Way. Surrounding uses along Edmonds Way are multi -family complexes, a church and an automotive repair shop. A single family residential use adjoins the property away from Edmonds Way. No significant exterior alterations to the home were proposed. Megenity Code Violation Appeal (9/18/12): The Megenitys were cited for topping three trees in City right-of-way to improve their view. The three trees were located on property adjoining the Launcefords' single family residence which is downslope of the topped trees. The Megenitys contacted the planning department who referred them to public works; public works referred them to Snohomish County PUD who indicated they did not plan to trim the trees that year. That was interpreted by the Megenitys that they could trim several trees themselves. Staff cited the Megenitys for three trees that were cut lower than PUD would have trimmed. The base fine for trees with a diameter less than 3 inches is $1000 and $3000 for trees 3 inches or more. As the diameter of the two of the trees could not be verified, the base fine for two of the three trees was based upon the $1000 base fine instead of the $3000 base fine. Staff only assessed 1/3 of the $3000 base fine for each tree because of the Megenitys efforts to work with the neighbors and the City. He increased the fine to 2/3 of the base fine on the finding that the Megenitys exercised deliberate ignorance by not asking City staff if they could legally cut the trees. City Code requires the base fine be tripled if the trees are topped in the right-of-way or a steep slope. The topped trees were in both so the $2,344 in base fines was tripled to $7,000. Councilmember Buckshnis referred to the Megenity Appeal and the indication that more trees were topped yet the only trees the Megenitys were cited for were the ones cut more drastically than PUD would have trimmed them. Mr. Olbrechts stated the only trees he could consider were the three that were subject to the Notice of Violation. Staff could have cited the Megenitys for the other trees that were topped. Councilmember Johnson referred to the upcoming discussion regarding a Code of Ethics, explaining some cities use the hearing examiner as the hearing officer that reviews Code of Ethics violations. She asked whether he had an experience with that or if he had any advice. Mr. Olbrechts responded as the City Attorney for another city in the past, his suggestion was to have a roster of five rotating hearing examiners who considered Ethics Code violations. He referred to the public impression of a hearing examiner ruling on a potential ethics violation for a councilmember who will vote on their contract renewal. Having five hearing examiners on a roster would address that situation. He recalled that city advertised for hearing examiners to be on a roster and only received two responses. 7. JULY 2013 BUDGETARY FINANCIAL REPORT Finance Director Roger Neumaier advised he had been asked to provide a brief update on the City's financials using the July 2013 report and to review the changes he initiated in the format and content of the report. He highlighted the following in the July 2013 report: Edmonds City Council Approved Minutes September 17, 2013 Page 4 • Property tax is approximately 12% higher than a year ago. This may be due to delinquent taxes paid when homes are sold. • July sales tax revenues are up over last year and over budget, trending at 7.5% over budget. This is good news for the City's financials as well as indicative of the improving local economy. • Total General Fund Revenue is at 61 % and approximately $1.3 million over last year. The unknowns with regard to payment of delinquent property taxes may be affecting this amount. • Intergovernmental expenditures are at 71%. This is likely due to major purchases made early in the year. A 2% surplus at yearend is anticipated. • REET revenues are trending significantly above year-to-date, approximately 51 % above budget. Yearend REET projections are $900,000 compared to $650,000 budget. Mr. Neumaier distributed the March and June 2013 Budgetary Financial Reports. Councilmember Buckshnis observed some utility and capital improvement funds and reserves have been combined. She inquired about Fund 412, 414 and 631. Mr. Neumaier suggested his presentation will address this. Mr. Neumaier explained when he was first hired by the City, he was asked to review the monthly and quarterly budget reports and initiate some revisions. An email was sent to Councilmembers and Directors on June 12, 2013 asking for their input; he received written and verbal input from a variety of individuals. Based on that input and his own review he developed a list of proposed changes. Prior to asking staff to program those changes, he offered each Councilmember an opportunity to review the proposed changes. Several Councilmembers met with him to review possible changes; no Councilmembers objected to the changes. The first month the revisions were included was June 2013. Mr. Neumaier stated much of the information in the prior reports was excellent and is still contained in the reports. These include summary revenues and variances by fund for all funds, summary expenditures and variances by fund for all funds, detailed account current year revenues for the General Fund, detailed expenditures by fund, summary current year expenditures for General Fund departments which now include prior year expenditures year-to-date, detailed account current year expenditures for General Fund department other funds, cumulative month -by -month revenues and graphs for key accounts including aggregate General Fund, REET, sales and use tax, gas, telephone, and electric utility taxes. Revenue from water meter sales, stormwater sales and unmetered sewer sales were added. He described changes made to the report package: Order of the reports within each month was changed so that the reports begin with revenues and expenditures by fund and then account -by -account detail for each. Removed report and graph for month -by -month year-to-date total expenditures by department as they were duplicative of other reports in the package and since departments spend close to their entire budgets, the visual difference represented in the graphs were generally not illustrative. In addition the graphs included a projected trend which many people said was misleading because it was based on straight-line projection rather than analysis of spending. For example, if a department made a major one-time purchase in the first quarter, the trend predicted a large negative variance for the year. Removed fund balance analysis and current year graphs that are heavily impacted by cyclical changes in revenues and expenditures. Comments he received indicated this was confusing to the public because fund balances change significantly during the year if tracked on a cash basis. The City's revenues and expenditures are not evenly spread throughout the year. Edmonds, like most local governments, does not make yearly, monthly or quarterly accruals. To illustrate, the General Fund Reserve in March 2013 report showed a year-to-date fund balance reduction of $4 million. Actually the fund balance appears to be stable if not growing. Edmonds City Council Approved Minutes September 17, 2013 Page 5 Added comparable year-to-date information so revenue or expenditures could be compared to results for the same time period in the prior year in addition to comparing to the budget. This was done for all accounts with the exception of the utility accounts because the account structure for the 412 and 411 changed January 1, 2013. A 1-3 page analytic report will be included in the front of the quarterly report. The former monthly and quarterly budgetary report had analysis and descriptive information in various areas throughout the report. Removed the dashboard that tracked six revenue elements by showing the relationship to projections and identifying whether it was a positive, neutral, warning or negative trend. In the first quarter the trend for General Fund revenues was shown as a positive at 12.04% above projections. It is difficult to make such a projection early in the year. The July report now predicts a positive trend for the year of 3%. Making an accurate year-end projection during the first and second quarter report is problematic. At the end of the second quarter, the following statement was included: "Year-to-date General Fund revenues are equal to 56% of budgeted revenues for the year. Revenues year-to-date are 7% greater than the 2012 year-to-date revenues. However, revenue has been strengthened by greater than anticipated property tax for the first half of the year. How much of the positive variance relates to earlier than usual payment of property tax due to home sales remains to be seen; however, it appears the overall General Fund 2013 revenue will exceed budget." Projections will be included in each analysis section of the report with proper caveats. Mr. Neumaier advised he will make a verbal presentation to the Council Finance Committee regarding each month's report and has been asked to provide the Council a verbal quarterly report. He summarized the financial reports were good; the revisions strengthened them and made the reports more meaningful. To Councilmember Buckshnis' question about 411, 412 and 414, Mr. Neumaier explained under former Finance Director Hunstock, those were broken into 421, 422 and 423. That allocation was recently completed; it was a major initiative but will provide better information in the long run. The downside is year-to-date comparables from the year cannot be provided this year. Councilmember Buckshnis inquired about Fund 631 Transportation Benefit District. Mr. Neumaier asked for an opportunity to research that. Councilmember Buckshnis said the new reports use the same format but the charts and graphs are missing which many citizens like. She noted the reports were modeled after Redmond's reports which use charts and graphs. She expressed concern the report format was not vetted well before the changes were made. She recalled Finance Committee Chair Yamamoto asked for last year's information to be included; he did not ask to have information deleted from the report. She preferred the report return to the old format. Councilmember Bloom asked why a decision was made to change the reports. Mr. Neumaier answered he was approached by several people about changes. Councilmember Bloom relayed citizens liked the former report and it was easy to read. Recalling there was a great deal of effort to develop the old reports to ensure they were transparent and user-friendly; she asked why such dramatic changes were made when the reports were working. Mr. Neumaier answered if the Council wants fund balance reports, they can easily be produced but he believed they were misleading. When he interviewed for the position he reviewed the reports and was concerned to see that the fund balance was down 40% in the first quarter before realizing the cyclical nature of revenues and expenditures created that problem. As a CPA he feels a report should not include that misleading information. The report and graph of revenues and expenditures by department month -to -month was eliminated because it was not illustrative and the trends were misleading. Edmonds City Council Approved Minutes September 17, 2013 Page 6 Council President Petso inquired about the elimination of the Change in Fund Balance Summary Report. She wanted to ensure without that report, information would be available that would lead to the discovery of something like the "Haines Wharf fiasco." She asked if that information was somewhere else in the report. Mr. Neumaier responded if a project over -expends, it affects expenditures not revenues. The way to know if a major project materially over -expends is the variance for expenditures. He emphasized if the Council wants that report, it can be provided. He did not consider it a good report because the City does not make accruals during the year. He summarized the interim fund balances are very easy to present; they just do not have meaning. Councilmember Buckshnis disagreed, pointing out Mr. Hunstock, Mr. Bailey and Mr. Hines were also CPAs. She explained the reason the Haines Wharf issue was so sensitive was because Mr. Hines inflated the General Fund by $750,000 by doing a 511 transfer amendment without Council approval. That is one of the reasons the Council likes to have the General Fund encapsulated in its entirety. The Council likes to have that information because they have been stung in the past. Citizens like to look at graphs and the data in a snapshot. Mr. Neumaier advised he will defer to the Council's decision. Council President Petso referred to the comment that there had been inadequate vetting of the changes to the quarterly report. She asked for Mr. Neumaier's input on moving ahead with selecting a report format, observing that three Councilmembers were absent tonight. Mayor Earling suggested having a discussion with directors first. This was agreeable to the Council. Councilmember Bloom said she likes the graphs and the City needs to provide information in ways that everyone can understand. She was leaning toward retaining the old reports, finding they worked better for people who do not understand numbers the way a CPA does. She preferred to design the reports for citizens not the directors. Unless there was strong direction from the directors, she preferred to return to the old report format. Council President Petso stated the narrative in the most recent report was excellent and hoped if the reports returned to the previous format, future presentations would include what was in the narrative. 8. RECOMMENDATION FOR DEPARTMENT PRESENTATIONS DURING 2014 COUNCIL BUDGET PROCESS. Finance Director Roger Neumaier reviewed the timeline for review of the 2014 budget: October 1: Mayor's presentation of proposed 2014 City Budget. October 22: Department presentations October 29: Department presentations November 4: Council Budget Public Hearing November 12: Possible Budget Work Session (prior to committee meetings) November 19: Council Budget Adoption Department presentations will include: a. Up to three minute presentation on department's 2013 accomplishments. b. A brief review of the business challenges and uncertainties for the department in the coming year. c. A brief review comparing department's year end projected actual expenditures and revenues to budgeted levels with an explanation of how and why there are material differences between the projected actuals and the budgeted appropriations. d. A brief review of what is different about the 2014 budget proposal from the current budget. This review should emphasize decision packages, why those changes and decision packages are being recommended and what will be the impact on outcomes to the City and its citizens. e. Responses to Council questions regarding department's budget. Edmonds City Council Approved Minutes September 17, 2013 Page 7 He provided the proposed schedule of presentations: October 22nd: 1. Municipal Court 2. City Clerk 3. Mayor's Office 4. Council 5. Human Resources 6. Economic Development 7. Finance & Information Services 8. Nondepartmental (Presented by Finance) 9. Development Services 10. Parks. October 29th: 1. Police 2. Public Works Utilities 3. Public Works Roads 4. Public Works Administration, Facilities Maintenance, ER&R & Engineering. Council President Petso advised although Council adoption is scheduled for November 19, adoption could occur later. Councilmember Bloom observed the schedule only included one public hearing but Mr. Neumaier indicated public comment would be taken on the dates of the department presentations and the work session. She asked the difference between a required public hearing and public comment. Mr. Neumaier advised Municipal Services Research Center (MSRC) recently issued a statement that there should be public testimony taken at the public hearing as well as other opportunities for public comment. Council President Petso explained it is easier for the City Clerk to schedule public comment than a public hearing because a public hearing requires paying for newspaper ads and compliance with all applicable requirements. Rather than a public hearing on the date of the department presentations, the intent was to advertise the agenda item as department presentations and public comment. 9. CITY ASSETS INVESTED IN THE COUNTY INVESTMENT POOL Finance Director Roger Neumaier explained the City Investment Policy emphasizes prudent investments with the primary objectives being (in priority order): safety; liquidity; and return on investment. Interest rates have been significantly down from historical levels since 2008. In 2013, partly due to low interest rates and partly due to change in key personnel, funds in bank balances (for which we receive credits to be applied to services incurred, but for which no interest will be received) and in the State Treasurer's Local Government Investment Program (for which we are currently receiving interest of 0.12% annually) have grown. The City also has $3 million in bonds earning between 0.54% and 0.90%. These bonds all mature in the next month. The options facing the City are to: • Invest in bonds which can include risk and if done on a broader basis requires a higher level of staffing than the City currently has; • Continue to invest in the State Local Government Investment Program earning 0.1%; or • Identify a different model which would meet the City's investment policy guidelines and produce a higher investment yield. The Snohomish County Treasurer established the Snohomish County Investment Pool (SCIP) for investment of multiple county and other districts' funds. The SCIP earns a significant higher return. For example, in 2012 the State Pool paid 0.17%, the SCIP paid 1% and a 2-year Treasury Note paid 0.27%. Edmonds City Council Approved Minutes September 17, 2013 Page 8 He anticipated investing in the SCIP would result in an increase in revenue in the General Fund in 2014 of $80,000; other funds would also be positively impacted. Mr. Neumaier explained the City's investment policy is nearly identical to the Snohomish County investment policy. He is familiar with Snohomish County's investment policy as well as the investment staff. He and Accountant Sarah Mager met with Snohomish County staff and were informed there would be flexibility with regard to release of funds and the City could initially identify amounts for six months, a year and possibly two years. He also recommended continuing to invest in the State Pool as well as possibly bond funds. Mr. Neumaier explained he is authorized to make this decision himself but felt he should inform the Council because it is a policy issue. He did not anticipate any increase in risk or problems with liquidity. Councilmember Buckshnis inquired about a prospectus with regard to SCIP's investments. Mr. Neumaier offered to provide SCIP's investment policy to the Council. He explained they invest heavily in very conservative bonds. He suggested providing that information to the Council this week and scheduling this topic on next week's agenda. Councilmember Buckshnis observed the MEBT fund earns much more than the State Pool. Councilmember Johnson asked what other cities participate in SCIP. Mr. Neumaier answered at this time there are no other cities; several water districts participate. He offered to provide the Council that information. Councilmember Buckshnis asked how long SCIP has been in place. Mr. Neumaier answered their first year was 2006. Investment staff was investing prior to that for Snohomish County; in 2006 the Snohomish County Council established it as separate. Councilmember Buckshnis observed the investment staff is employed by the investment group to function as an investor. Mr. Neumaier answered yes and they also hire other investors. The SCIP has an investment officer, a skill neither he nor staff have, to structure the investments. He offered to provide further information regarding the investment staff and said they could provide a presentation to Council. He summarized while he was employed by Snohomish County, the county experienced no unusual losses. He was confident the SCIP was secure. 10. PRESENTATION OF 2013 SANITARY SEWER COMPREHENSIVE PLAN UPDATE AND PROPOSED SEWER UTILITY RATE INCREASES. Public Works Director Phil Williams explained the Sanitary Sewer Comprehensive Plan is now complete and is scheduled for a public hearing on September 24. He recalled a draft plan was presented to the Finance and Parks, Planning & Public Works Committees in June for their consideration and input. The draft plan was subsequently presented to the Council for input. Mr. Williams explained the Sanitary Sewer Comprehensive Plan is: • One element of the City's Comprehensive Plan • Guides operations of the City sewer utility by: o Identifying and proposing solutions to known conveyance, maintenance and other problems o Details the actions necessary to ensure compliance with applicable local, state and federal requirements o Presents an operation and maintenance plan, capital improvement plan, and financial plan • Since Edmonds is primarily a built out city, most of the identified issue are a result o£ o Aging infrastructure o Current size of infrastructure in relation to current and future population o Root intrusion o Infiltration and inflow Edmonds City Council Approved Minutes September 17, 2013 Page 9 Mr. Williams explained why the Plan needs to be updated: • Last plan 2006 • Reprioritize capital projects • Reflect actual change due to population growth • Future population growth projections • Include wastewater treatment plant • Improved tracking methods o Video recording of each pipe reach o GIS o Use of metering data Mr. Williams reviewed what the Plan covers: City Owned Item Quantity Flow Meters 10 Manholes (junctions) 3,200 Sanitary Sewer Pipe Main 128 miles Lift Stations 14 Wastewater Treatment Plant (WWTP) 1 WWTP Primary Clarifiers 3 WWTP Aeration Basins 3 WWTP Secondary Clarifiers 3 WWTP Incinerator 1 Mr. Williams described capital projects in the Plan: • Conveyance Projects: Provide a basic or essential level of service for the sanitary sewer utility o Complete citywide pipe replacement/restoration projects ■ Excessive root intrusion ■ Conveyance problems ■ Old/damaged pipe • Wastewater Treatment Plant o Replacement of emergency power switchgear system o Incinerator regulatory compliance improvements o Recoating of clarifiers • 100% Sanitary Sewer rate funded (incl. revenue bond payments). Mr. Williams referred to the rate study conducted by FCS and displayed the recommended rate increase, an annual increase of 9.5% 2014 — 2018 to create a rate structure that would generate enough cash for capital projects and begin to wean the City off borrowing $2 million every 2 years for capital projects. He provided a comparison of current monthly rates (based on 1000 cubic feet): Seattle $116.50 Kirkland $ 91.15 Ronald Wastewater District $ 75.14 Arlington $ 70.15 Woodinville Water District $ 65.77 Mukilteo Water and Sewer District $ 57.59 Lake Forest Park $ 55.44 Redmond $ 52.89 Alderwood Water & Wastewater $ 51.46 Edmonds City Council Approved Minutes September 17, 2013 Page 10 Lynnwood $ 39.57 Everett $ 34.94 Edmonds $ 27.85 Olympia View Water & Sewer District $ 23.66 He provided a comparison of sewer rates - no bonding after 2018 (assumes other cities do not raise their rates): Seattle $116.50 Kirkland $ 91.15 Ronald Wastewater District $ 75.14 Arlington $ 70.15 Woodinville Water District $ 65.77 Mukilteo Water and Sewer District $ 57.59 Lake Forest Park $ 55.44 Redmond $ 52.89 Alderwood Water & Wastewater $ 51.46 Edmonds $ 48.01 Lynnwood $ 39.57 Everett $ 34.94 Olympia View Water & Sewer District $ 23.66 He provided a comparison of total utility bills: City Current 2016 Projected at 3%/ ear Seattle $200.24 $218.81 Shoreline $159.63 $174.43 Kirkland $155.86 $170.31 Lake Forest Park $140.46 $153.48 Woodinville $135.81 $148.40 Arlington $129.77 $141.80 Redmond $106.92 $116.83 Mukilteo $106.35 $116.21 Edmonds $80.74 $103.15 Everett $78.24 $85.49 Lynnwood $74.81 $87.17 Council President Petso asked the amount of the sewer rate increase if the intent was not to avoid bonding for capital projects. Mr. Williams answered it was 6%/year. Council President Petso inquired about utility tax, referring to page 11-2 of the Sanitary Sewer Comprehensive Plan that indicates the utility tax was raised in 2009 from 6% to 10% which resulted in additional revenue to the Utility. She assumed the additional utility tax revenue should have resulted in additional revenue for the General Fund not the Utility. Mr. Williams responded the additional revenue is collected by the Utility and transferred to the General Fund. For example a sewer utility bill may indicate the charge for service is $25.32/month and 10% utility tax is $2.53, for a total $27.85. The $27.85 is revenue to the Utility on which State B&O tax is charged. The utility tax is then transferred to the General Fund. Council President Petso commented one of the challenges with infiltration and inflow is political; some areas of the City may have improperly connected their storm sewer into the sanitary sewer but it is difficult to convince them not to do that. She asked whether there were any plans to enforce or improve the infiltration and inflow situation. Mr. Williams agreed it is a difficult topic. He referred to intentional inflow where someone intentionally connects roof, driveway, etc. drains to the sanitary sewer. Conversely there is infiltration that occurs accidentally when it rains hard or snow melt results in saturated soil that Edmonds City Council Approved Minutes September 17, 2013 Page 11 runs into the sanitary sewer pipe. Although there are separate stormwater and sanitary sewer systems, after heavy rains, there are high flows at the treatment plant. Even with an effective engineering solution to prevent water from entering the sewer line, the water has to go somewhere and likely will cause a problem by going somewhere else. Therefore there needs to be a very comprehensive solution such as an improvement to the storm system. The City does not have any projects that are specific solutions to infiltration or inflow problems. He knew of incentive programs whereby stormwater rates are reduced if a property's storm drains are separated from the sanitary sewer system. Councilmember Buckshnis expressed support for the proposed rate increase due to the increased cost in the future and unknowns with regard to rates, the City's future finances and bond rating. She asked whether the rate could be implemented and changed in the future. She inquired about the reduction in the City's sewer rates in the past. Mr. Williams explained wastewater rates were raised in 2003-2004; the only change since then was a 2.2% reduction in 2006. Councilmember Buckshnis commented it was progressive to create a rate structure that would generate enough cash for capital projects instead of continuing to bond for capital projects. Mr. Williams commented even with the recommended rate increase, the City would continue to borrow for a few more years until there was enough rate capital to do capital projects without borrowing. Mayor Earling declared a brief recess. 11. CONTINUED DISCUSSION REGARDING CODE OF CONDUCT AND CODE OF ETHICS Mayor Earling inquired about proceeding with Agenda Items 11 and 12 when three Councilmembers were absent. Council President Petso was hopeful Councilmember Bloom could describe areas of agreement/disagreement between Public Safety & Personnel Committee Members (Councilmember Bloom and Peterson) and take Council comments to allow Councilmember Bloom and Executive Council Assistant Spellman to prepare a draft for Council consideration. Councilmember Bloom explained the committee was directed to prepare a separate Code of Conduct and a Code of Ethics. When the Council last discussed this, it was suggested the committee use the Kirkland Code of Conduct and the Snohomish County Code of Conduct. She also found a section in the Bellevue Code of Ethics related to conduct. The committee reviewed the three and identified language for a Code of Conduct. A portion of the Kirkland Code of Conduct relates to conduct in a Council -City Manager form of government. The committee did not discuss that and she suggested the Council discuss whether to eliminate it. With regard to the Kirkland Code of Conduct, Councilmember Bloom explained Councilmember Peterson and she agreed to bring forward the Kirkland Code of Conduct, with the exception of the language related to Council -City Manager form of government, for the purpose of developing a draft Code of Conduct. She advised the title would need to be changed to "A Code of Conduct for City Council, Mayor and Boards and Commissions." Council President Petso asked whether Councilmembers Peterson and Bloom agreed on the items in the Kirkland Code of Conduct with the exception of the language regarding Council -City Manager form of government. Councilmember Bloom answered yes and suggested the following statements from the section related to the Council -City Manager be included: "We will not knowingly blindside one another in public and will contact staff prior to a meeting with any questions or issues." With regard to the Snohomish County Code of Conduct, Councilmember Bloom said it was primarily related to Boards and Commissions. Councilmember Peterson and she found the following paragraphs relevant: Edmonds City Council Approved Minutes September 17, 2013 Page 12 1. Board members are expected to be respectful at all times. Councilmembers had no objection to the proposed language. 2. Any Board member who is disrespectful, disruptive, divisive or dominating time in a meeting will be asked, by staff or the Board Chair, to cease and desist such behavior. Repeated behavior of this type can result in the recommended removal of the board member from the Board to the County Executive and County Council with a super majority vote of the Board. Council President Petso explained although she supported the ability for staff or the chair to prevent domination by one member, she did not like the removal portion for a volunteer commission or board. Councilmember Bloom answered Councilmember Peterson and she also discussed including the last sentence of the Snohomish County Code of Conduct, "In the event that a board members is unable to abide by the "Expectations and Code of Conduct" policies the Board, with a super majority vote, can recommend removal of the board member to the county Executive, for action by the County Council." Council President Petso said she would also object to that language. Councilmember Bloom suggested retaining that language in the draft due to Councilmember Peterson's interest in the ability to remove board members. That was acceptable to Councilmembers. 9. Board members will strive to appreciate and respect differences in approach and point of view, whether from each other, the community or staff. Councilmembers had no objection to the proposed language. 10. The Board Chair will ensure that all members have a fair, balanced and respectful opportunity to share their knowledge and perspectives. Councilmembers had no objection to the proposed language. 4. No Board member shall give anyone the impression they are representing the Board without express written permission authorized by a simple majority vote of the Board. Councilmember Bloom advised Councilmember Peterson and she agreed to retain "No Board member shall give anyone the impression they are representing the Board." There is also language in the Bellevue Code of Ethics that addresses this. Councilmembers had no objection to the proposed language. With regard to the Bellevue Code of Ethics, Councilmember Bloom referred to language in paragraphs B 1-6, page 5, that appears to be more conduct related than ethics related. Paragraphs relate to personal integrity, working for the common good, respect for process, commitment to transparency, conduct of public meetings, decisions based on merit. She relayed Councilmember Peterson and she agreed these could be included in the Code of Conduct. Council President Petso advised that decision was apparent from the committee minutes; she had not had an opportunity to review that language. She recalled not being supportive of the Bellevue Code of Ethics. Councilmember Bloom relayed paragraph 7 regarding ex parte communications could be included in a Code of Ethics, paragraph 8 regarding attendance could be eliminated, and paragraph 9 regarding nepotism could be discussed further as part of a Code of Ethics. Councilmember Peterson and she considered including a portion of paragraph 10 regarding advocacy and suggested it be discussed further. Councilmember Buckshnis supported Hearing Examiner Phil Olbrechts' suggestion for a rotating team of hearing examiners or ethics officers to consider ethics violations. Councilmember Bloom responded that would be addressed in a Code of Ethics. Mayor Earling referred to City of Edmonds Chapter 10, Employee Responsibilities Code of Ethics, that was included in the packet. He expressed concern there may be union related issues with regard to a Code of Ethics. Councilmember Bloom responded the proposed Code of Conduct and Code of Ethics would be for elected officials and members of boards and commissions. Mayor Earling relayed if the Council was Edmonds City Council Approved Minutes September 17, 2013 Page 13 interested in a Code of Ethics for staff in the fixture, a) there already is one, and b) there is potential for significant union issues. With regard to a Code of Ethics, Councilmember Bloom suggested using the Bellevue Code of Ethics as a template with the exception of the language that was proposed to be included in the Code of Conduct. She also suggested adding #4 from Bainbridge Island's ethics requirements for boards and commissions, Conduct of Public Meetings, regarding disclosure of potential conflict of interest at the beginning of each meeting. Councilmember Bloom relayed Councilmember Peterson and she had discussed using an ethics officer rather than the hearing examiner. Councilmember Buckshnis asked whether the ethics officer was an attorney. Councilmember Bloom responded the ethics officer would be an attorney on contract that would work on an as needed basis. Parks & Recreation/Human Resources Reporting Director Carrie Hite explained that is a model used by several cities; no charges are incurred if there are no ethics violations. Council President Petso said she has numerous concerns with the Bellevue Ethics Policy and was not interested in using it as a template. For example, there was language that would have prevented her serving as a Councilmember while her son-in-law served on the Sister City Commission. She did not want a Code of Ethics that made that an issue. She would likely not support a Code of Ethics based on Bellevue's. Councilmember Bloom advised paragraph 9 in the Bellevue Code of Ethics related to nepotism was retained for further discussion due to concerns. Council President Petso responded she was only providing that as an example of her concerns, she had many others. Councilmember Buckshnis preferred Bainbridge Island's ethics requirements. She did not support having a citizen ethics board and preferred an attorney or hearing examiner. Councilmember Bloom advised Bainbridge Island's ethics requirements are much broader. Councilmember Johnson suggested a Code of Ethics be created in a streamlined fashion to avoid frivolous or unsubstantiated claims. She also supported limited time to file a claim and found two years to file a claim extensive. She requested an estimate of the costs associated with an ethics officer. She preferred to deal with major issues and not minor infractions. 12. DISCUSSION: EDMONDS CITY CODE CHAPTER 2.10 REVISIONS Councilmember Bloom explained the current code, which requires the Mayor to present three candidates for Council to interview for director positions, has not always been followed. She suggested City Attorney Jeff Taraday review the proposed changes. Mr. Taraday explained he initially created a draft to promote discussion, not necessarily advocating for a particular outcome. More recently by reviewing committee minutes and attending a committee meeting, he was able to glean areas of committee agreement and disagreement. The draft now contains bracketed words where alternatives are proposed due to disagreement between committee members. In addition, after getting some big picture direction from the committee, he drafted some language that he believed was consistent with their direction but he was uncertain the committee had adequate time to review the revisions before they were included in the Council packet. He highlighted the areas of disagreement between committee members that relate to the interview requirement: Currently the code requires the Council interview the top two candidates. There is no language in the code about the ability for the Council to waive that requirement; in practice the Council has waived that requirement on a number of occasions. Section 2.10.010.D: The mayor shall appoint, subject to council confirmation, the depai4me > > Edmonds City Council Approved Minutes September 17, 2013 Page 14 humanr-esoufees a"-eete appointive officers. The city council shall interview the top [two][three] three candidates for each position prior to the mayor's final seleetieappointment, PROVIDED that the city council may waive the [two][three]- interview requirement by motion and may opt to interview as few as [one candidate] [two candidates] for any vacant appointive office. The mayor's appointments to all other employee positions shall not be subject to city council confirmation. rn�2�z, 19991. Mr. Taraday relayed Councilmember Bloom's position was there should never be fewer than two interviews and Councilmember Peterson's position was there may be circumstances where the Council may, via motion to waive, be satisfied with interviewing one candidate. Council President Petso was uncertain why an interview would be conducted if there was only one candidate. Mr. Taraday responded the Council still has the ability to not confirm. He presented a hypothetical scenario: the Mayor recruits and can only find one acceptable candidate. The Mayor proposes the candidate and asks the Council to waive the requirement and to interview just one candidate. The Council interviews the candidate, does not find him/her acceptable and does not confirm. Another possible scenario is the Council interviews two candidates, the Mayor appoints candidate A, the Council did not like candidate A and does not confirm the appointment. In that scenario the Mayor would not be required to appoint candidate B just because the Council did not want Candidate A. Council President Petso recalled a time where Council was told the Mayor had made his choice and even if the Council did not confirm, the individual had been hired and it was a done deal. She asked if the code needed to include language that Council confirmation was required. Mr. Taraday was uncertain how that could have occurred under the current code. His interpretation of the statement in the code that the appointment is subject to Council confirmation was that an appointment that was not confirmed was void. He summarized the Council's confirmation was a serious power and could not be ignored by the Mayor. Councilmember Bloom explained she felt strongly about this because she believed confirmation of the Mayor's appointment was put in place as a check and balance of the legislative branch, the Council, on the executive branch, the Mayor. The balance of power is meant to be righted via this process. In her experience the code has not been followed; three candidates have not been presented for interview by the Council and in the case of the last Finance Director, the Council did not waive their right to interview three candidates and interviewed only two candidates. She voted against the confirmation of the Finance Director because the Council was not presented three candidates as the code required and because she felt her input was not considered by the Mayor because he received it after he had made his decision. Councilmember Bloom hoped if the code were clarified it would be followed. She felt the City's strong Mayor form of government has resulted in a weak Council. She did not want the code to make the Council any weaker than it already was. Allowing only one candidate to be presented completely ignored the Council's confirmation of the Mayor's appointment. Council President Petso observed throughout this chapter there has been an effort to replace "directors" with "appointed officials." In Section 2.10.020 the word "director" has reappeared. Mr. Taraday answered that could be changed. Councilmember Johnson said her comments were not regarding one administration or one director but the issue from a broad perspective. The department director serves both the executive and legislative branches of city government. They attend weekly Council meetings and provide information; therefore the Council needs a strong sense of reliability and trust in the directors. The current code provides for a well honored system of checks and balances in city government. The Council has the responsibility for approving the job description and the candidate for department directors and should not relinquish that responsibility and should fully participate in that process. In a perfect world she would like the Council to Edmonds City Council Approved Minutes September 17, 2013 Page 15 interview the top three candidates as well as review the job description. In cases where the job description has recently been reviewed it would not be necessary for the Council to review the job description again. Councilmember Buckshnis said she was on the fence with regard to this; she understood Councilmember Bloom's point of view as well as Council President Petso's comment. She recalled emailing the Mayor prior to the appointment of the Finance Director because she did not support confirming him but because all other Councilmembers supported him, she voted in favor of confirmation. She suggested Councilmembers have an opportunity to provide input publicly following the interview so that Councilmembers knew how other Councilmembers felt. Councilmember Bloom stated Council may want to include language regarding how Councilmembers can be involved in the interview process prior to the presentation of candidates. She suggested allowing up to three Councilmembers to be involved in the initial interviews and if a fourth Councilmember wants to participate, the Council will select three. She noted it is difficult for Councilmembers to ask only a few questions and not have an opportunity to learn how other Councilmembers feel about a candidate. For example she was not aware of Councilmember Buckshnis' position regarding the Finance Director or what other candidates had been interviewed by the selection team. Mayor Earling explained he was very aware the Council wanted to be involved in the process of interviewing the Finance Director; Councilmembers Buckshnis and Yamamoto were involved. In addition to the Council's reaction, he was also interested in the reaction of staff, citizens and his own reaction. He noted it is already difficult to manage the number of people involved in the interviews. Council President Petso liked Councilmember Bloom's suggestion, recalling at least one Councilmember requested an opportunity to participate and did not, for whatever reason, participate. She supported revising the code to allow up to three Councilmembers to participate in the interview process. Mr. Taraday reminded Council that although they may not utilize this opportunity often, the RCWs allow the Council to discuss and evaluate the qualifications of an applicant for public employment in executive session. He anticipated that opportunity may alleviate some of the Council's concerns. Councilmember Bloom suggested reference to the RCW be included in Chapter 2.10 definitions. She was unaware that option was available to the Council and anticipated many former Councilmembers were also unaware of that option. Mr. Taraday agreed reference to the process could be included in Chapter 2.10. Councilmember Johnson agreed with Councilmember Bloom's suggestion. The question was not only the number of candidates the Council interviews but also the Council's views regarding the candidates. Mayor Earling referred to selection processes that have occurred in the past few years. In the selection of the previous Finance Director Shawn Hunstock, there were at least two efforts made to find a Finance Director that the former administration and staff were comfortable with advancing. The first two efforts did not yield any qualified candidates. Mr. Hunstock was found in the third effort and he was the only qualified candidate and was confirmed. He anticipated requiring a certain number of candidates could be problematic. For example in the most recent effort to hire a Finance Director, if he had been required to provide a third candidate, the City would have been required to fly him from Kentucky even though the person was not a candidate he was interested in advancing. He urged the Council to provide some flexibility with regard to reducing the number of candidates for the Council to interview. 13. REPORT ON CITY COUNCIL COMMITTEE MEETINGS OF SEPTEMBER 10, 2013. Finance Committee Council President Petso advised most of the items the committee discussed were on tonight's agenda. The remaining item, Bond Counsel for Edmonds Center for the Arts Contract, included a request to restructure Edmonds City Council Approved Minutes September 17, 2013 Page 16 the City's involvement with the PFD's debt service issues. That request was referred to the PFD Task Force that met last Friday. A number of questions were asked about the details of the City's relationship with the PFD; the Task Force will meet again before the next Finance Committee meeting to review the responses to those questions. The matter will be discussed by the Finance Committee again in October. She assured there will be a deliberative and informational process before it is forwarded to Council. Public Safety and Personnel Committee Councilmember Bloom reported the committee discussed a Code of Conduct and Code of Ethics. The committee also discussed Council attendance via speaker phone; guidelines will be presented to the Council at a future meeting. Parks, Planning & Public Works Committee Councilmember Buckshnis reported a citizen asked the City to increase the number of chickens allowed in the City. The committee told him there needed to be more interest expressed from citizens. The committee was introduced to the Capital Facilities Plan and the Capital Improvement Program which will be presented to the Council in the near future. The committee continued their discussion on developing a decision tree for Harbor Square deliberations. A revised decision tree will be presented to the committee at their October meeting. 14. MAYOR'S COMMENTS Mayor Earling welcomed Student Representative Thea Ocfemia. 15. COUNCIL COMMENTS Council President Petso advised she will bring forward a request for payment from attorney Carol Morris as soon as she has both the invoice and the employment contract. Council President Petso advised she will be scheduling Harbor Square for consideration by the full Council, possibly at the October 1 meeting. She will work with the City Attorney to ensure the notice required by Roberts Rules is provided and will inform Councilmembers when it will be on the agenda. COUNCIL PRESIDENT PETSO MOVED, SECONDED BY COUNCILMEMBER JOHNSON, TO EXCUSE COUNCILMEMBER YAMAMOTO FROM TONIGHT'S MEETING. MOTION CARRIED UNANIMOUSLY. Councilmember Buckshnis thanked all the citizens who called her regarding the City's finances. Councilmember Johnson welcomed Student Representative Thea Ocfemia. Student Representative Thea Ocfemia thanked the Council for the opportunity to serve as student representative. She enjoyed attending Council meetings and looked forward to participating. 16. CONVENE IN EXECUTIVE SESSION REGARDING PENDING OR POTENTIAL LITIGATION PER RCW 42.30.110(1)(i). At 9:57 p.m., Mayor Earling announced that the City Council would meet in executive session regarding pending or potential litigation per RCW 42.30.110(1)(i). He stated that the executive session was scheduled to last approximately 15 minutes and would be held in the Jury Meeting Room, located in the Public Safety Complex. Action may occur as a result of meeting in executive session. Elected officials present at the executive session were: Mayor Earling, and Councilmembers Johnson, Buckshnis, Petso and Bloom. Others present were City Attorney Jeff Taraday and City Clerk Sandy Chase. At 10:20 p.m., Edmonds City Council Approved Minutes September 17, 2013 Page 17 Mayor Earling announced to the public present in the Council Chambers that an additional 5 minutes would be required in executive session. The executive session concluded at 10:24 p.m. 17. RECONVENE IN OPEN SESSION. POTENTIAL ACTION AS A RESULT OF MEETING IN EXECUTIVE SESSION Mayor Earling reconvened the regular City Council meeting at 10:25 p.m. No action was taken as a result of meeting in executive session. 18. ADJOURN With no further business, the Council meeting was adjourned at 10:26 p.m. Edmonds City Council Approved Minutes September 17, 2013 Page 18