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10/09/2012 Finance CommitteeFINANCE COMMITTEE MEETING MINUTES October 9, 2012 Councilmembers Present Staff Present Councilmember Buckshnis Shawn Hunstock, Finance Director Councilmember Yamamoto Rob Chave, Development Services Director (Acting) Public Present Carl Nelson, CIO Ron Wambolt Bruce Witenbera Councilmember Buckshnis called the meeting to order at 6:03 p.m. Mr. Hunstock requested the committee modify the agenda to add an issue related to an agreement between the City and Black Rock Cable, Inc. for fiber services. The agenda modification was approved and the item was inserted as new item #B. A. Historic Preservation Commission 2013 Calendar /Fundraising /Account Mr. Chave explained the new account being proposed will help facilitate fundraising efforts of the Historic Preservation Commission. One of the fundraising mechanisms is the sale of an annual calendar that is coming up soon. Councilmember Buckshnis asked that the next calendar start with Sunday as the first day of the week. Mr. Chave indicated he previously expressed that desire to the Commission, and he will work with them to insure the change happens for the 2013 calendar. Action: Schedule for full Council next week. B. Indefeasible Right of Use (IRU) Agreement between the City and Black Rock Cable, Inc. Mr. Nelson explained the item was not originally included in the agenda packet because we just today received revisions back from the City's legal counsel. The IRU Agreement relates to the City's fiber connection from Edmonds to the County's Data Center. That fiber run, among other things, provides the infrastructure for video arraignment at the Court as well as connection to SnoCom 911 dispatch. The agreement is for 30 years at a cost of $57,750. Mr. Nelson indicated time is of the essence with this item due to the impending sale of Black Rock Cable, Inc. to Wave Division Holdings. It is likely the cost of such an arrangement will go up after the sale. Also, the current cost of $57,750 is less than what we would otherwise have to pay on a monthly basis for this service over 30 years at an estimated total cost of $174,000. Funding for this item will be included in a subsequent budget amendment prior to the end of 2012. Action: Schedule for full Council next week. C. 2013 Property Tax Levy Mr. Hunstock indicated this item is the annual ordinance setting the property tax levy for the following year. Due to assessed valuation for real estate in Edmonds that continues to decline, the City's regular property tax levy rate would go up from the current $1.66 to an estimated $1.76. The increase in levy rate is necessary in order to capture the 1% increase in revenue the City is allowed to collect. Mr. Hunstock noted the levy rate and assessed value could change between now and when Council is asked to adopt the ordinance due to changes still being made by the County Assessor's Office. Mr. Hunstock also noted that due to the decline in assessed values, the amount collected for the EMS levy will decline because it is capped at $0.50. This decline in revenue to be collected from the EMS levy more than offsets the allowable 1 % increase on the City's regular levy, resulting in an overall decline in total property tax revenue for 2013, not including the voted bond levy for the public safety complex. 10 -09 -12 Finance Committee Minutes, Page 2 Action: Schedule for Public Hearing and consideration by full Council on November 5, 2012. D. October 2012 Budget Amendment Mr. Hunstock and Mr. Chave responded to questions related to position changes within their respective departments. Funding for those position changes will be from reallocated resources within the departments. The Council is not being asked for additional money related to the changes. These two changes, as well as the addition of the HR Analyst classification, are being added to the position listing that is part of the originally adopted budget document. Mr. Hunstock explained the Council approved funding for the HR Analyst position as part of the April 2012 budget amendment, but the position listing was not updated at that time and staff is now correcting that oversight. Mr. Hunstock explained another item included in the budget amendment relates to changes being required by the State Auditors Office of every City related to their chart of accounts. The State Auditors Office is changing many of the codes used for how City's account for revenue and expenses. These changes are effective 1/1/13. The amount requested is for programming that will be necessary by the City's accounting system software provider, EDEN Financial Systems, to make the required changes. Mr. Nelson responded to questions related to two fiber related items. Those items will help connect different parts of the City to the fiber network, thereby offsetting fees that are paid to other businesses, as well as expand the ability to lease excess capacity to Edmonds businesses. Mr. Hunstock explained the final three items included in the budget amendment relate to 1) conversion of fleet vehicles to propane, the agreement for which Council previously approved, 2) closure of the Criminal Investigations Fund and transfer of the $2,500 currently in that fund to the Drug Enforcement Fund, and 3) minor corrections to a previously submitted budget amendment as it related to interest costs on refunded utility bonds. E. August 2012 Monthly Financial Report Mr. Hunstock explained the General Fund is currently slightly overspent. That situation relates to contract payments that are made to Fire District #1 in advance of the quarter, as well as some other costs that are annual expenses but relate to the entire year like liability, property and equipment insurance. Mr. Hunstock noted no funds were currently overspent, and no departments were overspent in the General Fund. Council member Buckshnis requested that large changes in the graphs be footnoted with an explanation. Mr. Hunstock indicated that and other changes would be included in future versions of the monthly and quarterly financial reports. Action: Schedule for Consent Agenda. F. Public Comments Ron Wambolt, Edmonds, was concerned about a 30 year fiber lease given the company the City will be dealing with will be sold soon. Mr. Nelson indicated the City has commitments from Wave to honor and continue the agreements entered into by Black Rock. Mr. Wambolt mentioned the City also receives increases in its property tax levy for the value of new construction. Mr. Wambolt also indicated he was concerned about the length of time it is taking for the development agreement topic to return to Council from when it was originally proposed in the summer of 2011. 10 -09 -12 Finance Committee Minutes, Page 3 Bruce Witenberg, Edmonds, also expressed concern with the length of time it is taking for development agreements to be considered by the Council. Adjournment — The meeting adjourned at 6:59 p.m.