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HomeMy WebLinkAbout111606 CITY OF PORT TOWNSEND CITY COUNCIL MINUTES OF THE WORKSHOP SESSION OF NOVEMBER 16, 2006 CALL TO ORDER AND PLEDGE OF ALLEGIANCE The City Council of the City of Port Townsend met in workshop session this sixteenth day of November 2006, at 6:30 p.m. in the Port Townsend temporary Council Chambers in the Port Townsend Fire Station conference room, Councilmember Sandoval presiding. ROLL CALL Council members present at roll call were Michelle Sandoval, Frank Benskin, Laurie Medlicott, Scott Walker and Geoff Masci. Mayor Mark Welch arrived at 6:54. Catharine Robinson arrived at 6:57. Staff members present were City Manager David Timmons, City Attorney John Watts, Finance Director Michael Legarsky, Public Works Director Ken Clow, Development Services Director Leonard Yarberry, Fire Chief Mike Mingee, Police Chief Conner Daily, Planning Director Rick Sepler, Operations Manager Water/Fleet/Facilities Bob LaCroix, Operations Manager-Streets/Sewer/Storm John Merchant, Library Director Theresa Percy and Legal Assistant Joanna Sanders. CITY MANAGER'S 2007 BUDGET Mr. Timmons reviewed the budget schedule as follows: Council has a budget hearing on November 20, a final reconciliation of the budget plan and a first reading of the budget ordinance on November 27, and final budget meetings on December 4 and December 11. December 15, 2006 would be the deadline for the February ballot. Although no decisions can be made tonight - based on tonight's discussion the budget would be modified before the public hearing on Monday. Ms. Sandoval consulted with Council on how to structure the budget discussion and Mr. Timmons began with an explanation of the Enterprise Trust Funds and asked for comments or issues to address as Council moves through the discussion. Memorial Trust Fund - The City is not actually budgeting any expense to the Memorial Trust fund because the City does not yet have a project approved by Council. The project is going into a capital fundraising campaign. Mr. Legarsky noted that he provided a report of contributions to the Steve Corra fund. City Council Workshop Meeting Page 1 November 16, 2006 Northwest Maritime Center Fund - This is a federal pass through grant sponsored by the City. If there is a Federal appropriation to pass through the City, it could be addressed in a supplemental budget. Golf Course Fund - Budgeted expenses are a re-roof of the clubhouse, signage and irrigation improvements. If Council were to choose to surplus land, this is the account where funds would be held. Currently the budget does not include surplus funds. Mr. Benskin expressed concern with $2K in overhead charges to administer $20K. Mr. Legarsky said these costs are reflective of Finance department work reconciling that program. Council agreed to hold the issue of administration fees/overhead charges until the General Fund discussion. Transmission Pipeline Trust Fund (transmission line replacement) - Revenues are interest income and an operating transfer from the water system. Expenses primarily relate to maintenance items to be purchased plus out of pocket costs related to the forest service permit. Mr. Masci suggested that additional piping/materials be purchased in the event of an emergency impacting the water system. Mr. Clow responded that while the City should have some supplies on hand, there are different sizes and if it were a major disaster, you would have to determine how many different lengths you would need. Fire Pension Fund - This trust fund provides medical pension for about 4-5 firemen remaining in this fund that predates the current programs. Mr. Timmons said the City is investigating long-term care insurance for these individuals (estimated at $7-8K in total a year). Mark Welch arrived at 6:54 p,m, Equipment Rental Fund - Staff has already reviewed all planned acquisitions for the year and indicated that charges for this fund for the year are nearly doubling for all accounts based on recent analysis by SES Group. We are charging higher labor costs and equipment replacement cost in addition to depreciation. He explained that this budget is predicated on the fire apparatus not being in the equipment rental fund. Catharine Robinson arrived at 6:57p.m. Ms. Sandoval asked what would happen with the budget if the equipment stayed with the City? Mr. Timmons responded that it would not affect the fund. Staff has discussed how to structure the interlocal agreement and is proposing that if the City transfers the vehicles, the City would retain a lien on the title. If a vehicle were surplused or salvaged, the salvage value would return to the city. If the salvage value were applied to the new replacement vehicle that is jointly purchased, the City would retain a lien on the new vehicle and would retain an equity interest in the vehicle unless the City chooses to relinquish its interest. The City could fully purchase the apparatus and keep the value. These choices would go to the Joint Board and then come back to Council. Monies in the equipment rental fund for fire equipment would stay in the equipment rental fund. City Council Workshop Meeting Page 2 November 16, 2006 Any money coming from surplusing or salvaging of vehicle would come back to that fund from the District. Mrs. Medlicott said should a decision be made not to transfer the fire equipment what would be the approximate cost to retain the vehicles? Mr. Legarsky said future replacements would amount to about 42% liability of the fund (about $122K per year). Mr. Timmons reiterated that based on Council's resolution of intent, the preliminary budget does not include the fire apparatus. The City is incorporating additional language in the interlocal that would control ownership of the assets over time. Prior to finalizing the budget, the decision on the fire apparatus and fire consolidation would have been made. It is much more efficient to put the management of the apparatus under one umbrella. Mr. Masci noted that the City contracts with North Kitsap Fire District to fix the vehicles, so there are also cost efficiencies. Mrs. Medlicott said if the Council does not move forward with the consolidation, she would like that budget breakdown. Mr. Timmons explained that the budget would simply reflect a $30K increase in expense and $122K in revenue for the District renting the equipment. The City would also have an expense for maintaining the vehicles. Stormwater Utility Fund - the stormwater utility is status quo, but an issue is whether to adjust rates for inflation (which was about 21%). That money would be allocated to one FTE for maintenance/operations and the balance or $45K for capital stormwater improvements. Ms. Robinson said if the public is going to have an opportunity to comment she would like to have Council direction now rather than at the budget hearing. The Council discussed whether to develop a consensus decision on the stormwater utility fund. Mr. Timmons said Council could enact this at any point in the year with separate action. A rate adjustment could come in parallel with a budget ordinance. Council agreed to add this to the list of issues for further discussion. Water/Sewer Utility (pg. 48) - This is one of the main operating funds. Staff would target January to bring the equipment rate study, but it wouldn't change the current budget picture only how the revenue is allocated among the various users. The shift would be away from residential and more to commercial and government accounts because they are currently being subsidized by residential. If the City were to change the course of the utility fund, it would change projections. When asked if the governments have been notified of this action, Mr. Timmons explained that the study was predicated on the current budget and the study is not calling for any rate adjustment in 2007. Because revenue is fine, there is no reason to rush this decision and this could be transitioned in 2007. City Council Workshop Meeting Page 3 November 16,2006 Utility Construction (pg. 58) - This reflects capital operations in the utility fund for capital improvements. Staff previously outlined the projects during budget discussions, but they are primarily line extensions, line replacements and upgrades. There is a Tier 1 match for both water and sewer, which means the City might simultaneously upsize or extend a line that is connected to any private development. Mr. Clow explained that the capital entry "other improvements" rolls together several different projects, one of which is Tier 1. Mr. Masci agreed to talk with Mr. Clow directly about questions in the capital project plan handout. Fire Station (pg. 47) - This construction fund would close out in 2007. Since it involved a federal grant, there would be an extensive audit. City Hall- This project would also be finalized in 2007. Whatever closeout costs remain when final would be handled as a supplemental adjustment to the budget. Mr. Masci asked whether $133K would be enough to cover punch list and other final construction costs still to come? Mr. Timmons said the items to be paid are retainage, claims and anticipated receivables. Mr. Clow said he believes this sheet needs to be updated and would be addressed as a supplemental. Final numbers are also needed from the Historical Society on their contribution. This project would also receive an extensive audit. CIP General - This contains a variety of projects on which the City would be working. Project figures are dependant on authorization by Council. Project sheets with the estimated budget and expenses occurring in 2007 are available, but they are not yet posted in the actual budget because Council consensus is needed. Mr. Timmons explained that REET I would be listed as REET I and II in the future. When asked when we would have some decision by the school about Mountainview, Mr. Timmons said it would be in their capital facilities plan. He would meet tomorrow with users of the pool to begin to develop a strategy to take to the voters. The School District said they were going to present their plan this month, but have agreed to write off $25K of past expense so the City could get through this year. Staff has developed a budget for next year based on anticipated operating costs. The City cannot move forward with any capital improvements until there is clear direction from the school district about this facility. While the budget is status quo, if there is a major equipment failure the City may be in a position where it cannot be fixed. There is a $100K placeholder in the capital projects sheets in case the City needs to get involved in design development of a new facility or begin renovations of the existing facility. When there is Council consensus on the project sheets, Staff would incorporate those into the budget sheets. Mr. Legarsky reminded that in September, Council was told the Capital Projects had not yet been developed. Mr. Timmons added that the City has been in limbo, because it does not have a defined capital program for the pool. Until the school district makes a decision about the future of their facility the City is only showing operations. City Council Workshop Meeting Page 4 November 16, 2006 Mrs. Medlicott asked to clarify what is being budgeted for 2007 for the pool. Staff reiterated that page 39 reflects $222K for operation and maintenance. Under capital, there is a $100K placeholder. Mr. Timmons explained that the City recommended a $500K improvement to the pool then the school district changed their mind and said they would rather wait to complete their facility study. In the meantime, other opportunities arose, so Council authorized a transfer of funds to the Wave viewing gallery rather than seeking another bond on that project. The intent was to bring back a recommendation for a reallocation of a new bond based on what the City would get when they are ready to make a decision. General Government Debt fund (pg. 40) - This is a combination of utility debt and the general government. As previously mentioned, the City looked into refinancing utility debt a couple of times to see if that was an option, but the rates do not work. Community Services - This contains parks, pool, and YMCA. An issue is the continuation of the YMCA contract after April and May. The cost of operating the pool in the school district has increased. Parks is also less than status quo in terms of desired level of service. The funding for community services are revenues from charges for service park/pool use fees, licenses and permits, and miscellaneous income), but the bulk - $600K - comes from the general fund. Mr. Timmons explained the arrangement was to provide $90K a year for five years with a progressively expanding program so that monies that the YMCA raises would proportionately increase with the City's $90K as the foundation. The YMCA program was noted as a point for further discussion. Community Services - Boiler Room. Ms. Medlicott recalled support funds were to decrease to $3,000 instead of the listed $4,000. Mr. Timmons agreed this is a Council decision. Ms. Medlicott said she would be inclined to go with the original agreement to decrease funds and not approve the additional $1,000. Mr. Masci said he would be disinclined to clip them and believes a way to improve Boiler Room function would be to give them a raise to $5,000 with some conditions about it becoming self-supporting. This was noted as a point for further discussion. Public Works Administration and Engineering - (pg. 27) Oversight for utilities, streets, parks, and capital programs. The expense in this fund is charged to funds that it oversees and manages. Mr. Masci commented that the administrative overhead being charged seems duplicative and asked for an explanation of what this covers. Mr. Legarsky reminded that Public Works Administration and Engineering used to reside in the utilities in 1999. In 1999 at the direction of Council to see the actual cost of providing service split out they were moved. The primary work of Public Works is in utilities and streets, so the revenues listed are charging those funds they serve the fees to cover their expenses. The expense matches exactly the cost of the operation. That's why the fund balance begins and ends at zero - we are recovering 100% of the cost of the operation from utilities. Staff said this is not a general fund charge. Likewise the other general fund City Council Workshop Meeting Page 5 November 16,2006 administrative cost is for City Manager, City Clerk, City Attorney, Finance, and Council overhead. Mr. Timmons said in an effort for more transparency all of the costs of public works were cost allocated into the various funds, but you could not find the total anywhere. I nstead all of the costs were transferred into a fund and after two years of tracking hours, the City went to a simplified formula allocation so that it would be easier to understand. RECESS Mayor Welch declared a recess at 8:20 p.m. for the purpose of a break. RECONVENE The meeting was reconvened at 8:35 p.m. Library - We are down one FTE. To bring it up to level of service would be $64.5 plus $1 OK to increase circulation. The library has been effective with the implementation of fines ($10K), but they have little ability to generate revenue so they are dependent on general fund support. An additional FTE is a point for further Council discussion. Fire EMS - The budget is predicated on the district consolidation with 100% of the EMS property tax levy transferred to the district and $801 K allocated out of the General Fund to the Fire Fund that is then paid to the District. The $801 K is roughly 50% of the general fund property tax. New construction property tax would go to the district. Not reflected is that the ambulance billings are submitted directly through the district. There was some Council discussion and clarification about past history and how we arrived at the figure of 50% of general property tax levy. It was calculated based on the equivalent levy burden the City would assume if it were part of the district. After annexation, the tax levy would take this out of the City budget. Mr. Mingee clarified that the bottom line increase from last year to this year is $21 K. Street Fund - What is presented is the bare minimum and does not provide for any rehabilitation or maintenance effort. Revenue of $220K comes from the gas tax, $26K from permits, and then the balance of $127K is from the General Fund. To bring it up to a reasonable level of service would need to be closer to $1 M. An increase necessary to support the street was noted as a point for further Council discussion. System Development Fees - (p.36). These are connection fees collected at the time new construction occurs. This year, some of the funds are earmarked to debt service in the utility fund and some is earmarked to the utility construction fund as an expense. This would also vary depending on what permits are issued. City Council Workshop Meeting Page 6 November 16, 2006 Fire Equipment Joint Maintenance Fund - This is a trust fund that over the years has accumulated monies for maintenance of the fire station's CVA equipment. The assumption is that this would transfer to the District and give the City the ability to close this ($10K) fund out. Lodging Tax - This is status quo with one exception being the allocation of funds to research effectiveness of marketing and strategic targeting of advertising dollars. With this report, would also try to refine the amount of money spent on marketing and allocating more to infrastructure improvements. Mr. Masci asked if the City could accelerate payoff to pay existing debt. Mr. Legarsky agreed this could be done for the Marine Science Center, but because McCurdy Pavilion/balloon hangar is a partnership between the City, County and State, the City would have to negotiate that payoff. Mr. Walker asked why the City is carrying such a large reserve. Mr. Timmons responded that it was building reserves in anticipation of additional marketing to offset impacts due to the Hood Canal Bridge closure. The auditor has said that the jurisdiction has to have ownership interest and therefore leasehold interest does not constitute ownership interest. Fort Worden was collecting the full 4% and sending it to headquarters in Olympia and between the headquarters and the Dept. of Revenue, the City was only getting 2% back. The City got these funds back and has been investing in one-time expenses looking at the design of the public restrooms, police station, and research efforts. Mr. Timmons explained that lodging tax fund pays for Enjoy PT, 50% of the Chamber marketing budget, and marketing through Peninsula Ad Works. Special events would be advertising, promotion, and marketing. Mr. Walker asked if L TAC could be spent on other things like capital projects, like downtown sidewalks, etc. Mr. Legarsky said it could not be used for sidewalks because of the tight limitations. CDBG - This was money originally acquired for redevelopment of the Rose Theatre and as money is paid back on loans, it is used as a revolving loan fund. Contingency Fund - This is a set aside account for emergency appropriations based on a percentage and we are currently at the maximum percentage. No action is needed unless Council wants to increase the amount or needs to declare an emergency. Drug Enforcement - Right now there is a nominal amount of money in the fund. Money can only be used for drug intervention and prevention. This fund would hold any seized assets coming back to the City. Information Services (Pg. 64) - Mr. Benskin would either like to pull a couple items or consider renaming them. He noted that $101K is allocated for Granicus system, which the Council has not authorized. It shows $74K for the system, $18K for the software City Council Workshop Meeting Page 7 November 16, 2006 license, and $9K for repair and maintenance. He would like further Council discussion of this. Mr. Benskin also inquired about the computer permitting system for DSD. Mr. Timmons explained that the cost of acquisition is in 2007 so for the first year maintenance and repair expense is part of the contract. In 2008, it would be shown as a line item. Ms. Sandoval asked where equipment needs are for upgrades to Council Chambers. Mr. Timmons said this is an item for Council discussion. It is not budgeted. He suggested looking at a 5% cable utility tax to leverage a technology bond to upgrade public access systems. This would not occur before budget adoption. Mr. Legarsky noted that these numbers are prior to the FCSG study, so the final figures are not available for this budget. Mr. Benskin asked whether hookup to old City Hall would come under Information Services. Mr. Timmons said we haven't decided how we would pay for it. The current equipment is seriously out of date. City Hall was noted as an item for further discussion. General Fund - There was support for the suggestion to discuss the General Fund and then postpone discussion of specific items until after the November 20 public hearing on the budget. City Council - Mr. Masci inquired about professional services, which Mr. Timmons explained as Hearing Examiner expense. Staff also responded to several other questions, including whether there were any issues in the 2007 Council budget that the Council did not utilize in 2005. Mr. Legarsky reviewed several changes that would be made in a 2005 supplemental budget (hearing examiner and voter registration costs). City Attorney - Questions addressed by Staff related to the City Prosecution and District Court services expense monitored by the City Attorney. Development Services Planning - In response to a question from Ms. Robinson about what has changed in salary and wages, Mr. Legarsky responded that the Planning Director position was added. Mr. Timmons also explained that the large decrease from 2005 to 2005 was due to City/County administering the Housing Needs Assessment. Year 2005 also reflects Shoreline Master Program expenses. Mr. Sepler explained that the $15K 2007 proposed allocation would be used for Code updates. Development Services Permitting - Mr. Masci asked how to cover the land use planner we need. Mr. Timmons said if we incorporate land use fees we could accomplish this however there would need to be an adjustment in the staffing schedule to make this happen. When asked how many FTEs this represents, Mr. Timmons said there are two schedules. One schedule has 8 FTEs and Mr. Yarberry has another proposal to bring forward. Council agreed to put this matter on the list for further discussion. Police (pg 11) - Mr. Masci asked how many FTEs the operations figure represents? Mr. Timmons responded it is 13.5. There are two positions recently vacated that would be City Council Workshop Meeting Page 8 November 16, 2006 filled by the two individuals currently in the academy. Two additional patrol officers are needed just to handle the increase. A third officer would be needed in order to keep the School Resource Officer. If Council gave its authorization today, due to competition, the City might not be able to fill the positions for nine months. Officers are not as concerned about the pay rate as their time off. The City needs to reduce staffing or find the income to support it. General Fund Overhead allocation - Mr. Timmons reviewed that the overhead accounts (City Manager, City Attorney, City Clerk, Council, Facilities) total nearly $1,074,000. The overhead allocation of 10% across all funds raises $913K. Mr. Legarsky reviewed that $2.3M Police and $800K Fire total $3.1 M. The street allocation is $127K, community services is about $600K, Library is about $700K, totaling about $4.6M. Property tax revenue is $1.6M, retail sales tax is $1.6M, totaling $3.2M. When adding Utility taxes of $1.2M, the total is $4.4M. Those taxes are still $100K short of covering those core services Council has requested be budgeted so far. If there were not an overhead allocation the City could not pay for administration. Mr. Timmons said if you looked at the budget on a programmatic budgeting basis, tax allocations go towards the Police, Fire, Streets, Parks, and Library. Overhead is then assessed across all the others. Mr. Welch suggested Council direct staff to bring forward ordinances to address options for expansion of revenues. Mr. Timmons said Staff would prepare a variety based on the memo he provided and Council could use them as desired at the November 27 Council Meeting. Mr. Welch suggested adding to the list of items for Council discussion PTTV reorganization. ADJOURN There being no further business, the meeting was adjourned at 9:52 p.m. Minutes by Joanna Sanders Legal Assistant Attest: ~~, ,/- 'j , /If/! ., ,,"! ,- , ~ - /' ' , '. _..1 cl . J l--~ ,// < '- ~ Pamela Kolacy, CMC City Clerk City Council Workshop Meeting Page 9 November 16,2006