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HomeMy WebLinkAbout2014-08-25 Committee of the Whole MinutesTukwila City Council Committee of the Whole Meeting City Hall Council Chambers August 25, 2014 — 7:00 P.M. MINUTES COMMITTEE OF THE WHOLE CALL TO ORDER/PLEDGE OF ALLEGIANCE Council President Quinn called the Tukwila City Council meeting to order at 7:05 p.m. and led the audience in the Pledge of Allegiance. OFFICIALS Present were De'Sean Quinn, Council President, Councilmembers Joe Duffie, Dennis Robertson, Allan Ekberg, Verna Seal, Kathy Hougardy and Kate Kruller. CITY OFFICIALS Jim Haggerton, Mayor; David Cline, City Administrator; Derek Speck, Economic Development Administrator; Brandon Miles, Economic Development Planner; Peggy McCarthy, Finance Director; Jack Pace, Community Development Director; Nora Gierloff, Community Development Deputy Director; Carol Lumb, Senior Planner; Rebecca Fox, Senior Planner; Mary Miotke, Information Technology Director; Laurel Humphrey, Council Analyst; Melissa Hart, Deputy City Clerk. CITIZEN COMMENTS There were no citizen comments. PUBLIC HEARING a. Review and update of five of Tukwila's Comprehensive Plan Elements: • Roles and Responsibilities • Community Image • Parks • Economic Development • Tukwila South This periodic review is required by the Washington State Growth Management Act. 7:07 p.m. Council President Quinn opened the public hearing. Rebecca Fox. Senior Planner, explained the Comprehensive Plan, first adopted in 1995, establishes goals and policies that guide Tukwila as it grows and changes over time. The Comprehensive Plan policies and land use map lay out the community's long range vision. The Washington State Growth Management Act (GMA) allows Tukwila to amend the Comprehensive Plan once a year, unless it is an emergency. The Comprehensive Plan has been amended regularly to keep up with changing requirements and to respond to requests from the public. By June 30, 2015, the City is required to complete a periodic review and update of the Comprehensive Plan. Ms. Fox utilized a PowerPoint presentation to identify the five elements being reviewed by the City Council, and provided an update on the process. Highlights of the presentation included: Agenda- Public Hearing: • Overview of update process and status • Staff summary/public comments on the 5 elements under review Comprehensive Plan Update: • Long range plan for community's priorities for growth and development • First adopted in 1995 and last updated in 2004 • Next update is due June 30, 2015 Tukwila City Council Committee of the Whole Minutes August 25, 2014 Page 2 of 13 Policy Framework: Tukwila's Comprehensive Plan needs to be consistent with the layers of policy above, including state, regional, and King County direction. It also needs to support City of Tukwila policies and regulations. As situations change over time and there are new population allocations, laws, needs and issues, it is important to assess how well the plans are working. What is in the update? Keep Comprehensive Plan's basic goals and objectives Update done in phases over several years Required changes for Growth Management Act regional goals Reflect the 2012 Tukwila Strategic Plan Edit/reformat for easier use Status - Updated Elements include: Capital Facilities Utilities Transportation Southcenter Urban Center Natural Environment Shoreline Manufacturing /Industrial Center Status — 2014 Elements to be updated include: Community Image and Identity Economic Development Parks, Recreation, and Open Space Tukwila South Roles and Responsibilities Status — Remaining Elements to be updated in 2015: Housing Residential Neighborhoods Transportation Corridors/Tukwila International Boulevard (TI B) Annexation Introduction Land Use Map Legend Carol Lumb, Senior Planner, explained she is here to address the update to the Community Image and Identity element. Ms. Lumb reviewed the following in the PowerPoint presentation: Community Image and Identity Element: This element addresses a variety of topics that fall broadly under the "sense of place," community image, and community identity category. The recommended element addresses historic preservation, City boundaries, residential areas, commercial areas, transportation corridors, Tukwila Urban Center, open space and parks, and urban forestry as they relate to the appearance or impression a community presents to its residents, visitors and workers. Recommendations to this element of the plan include: • Chapter includes a variety of topics that fall under "sense of place /community image and identity ". • Incorporates Strategic Plan goals /policies on creating inviting neighborhoods and businesses and celebrating Tukwila's cultural diversity. • Urban Center; Forestry; and Parks, Recreation and Open Space goals /policies were moved to more appropriate locations. • Selected policies on historic preservation, business districts and parking standards were added. • Goals and policies on healthy living were added. • Testimony provided by Global to Local, Urban Food Link and Forterra on the healthy living and cultural diversity goals /policies of this element. Tukwila City Council Committee of the Whole Minutes August 25, 2014 Page 3 of 13 • Planning Commission made revisions to the element based on public input — these are noted in the document. Brandon Miles, Economic Development Planner, explained he will address the update to the Economic Development element. He stated staff is currently working to update some of the data as requested at the August 11, 2014 Committee of the Whole Meeting. Mr. Miles reviewed the following in the PowerPoint presentation: Economic Development Element: The Economic Development element has been rewritten to reflect current conditions and priorities. Given the significant changes that have been made, notes from staff discussing the changes are shown. The recommended updates to this element include: • Updated narrative and statistics • Incorporates Strategic Plan priorities • New language about improving the employment opportunities for Tukwila residents • Support business creation and expansion Ms. Gier!off reviewed the update to the Parks, Recreation and Open Space Element. Parks, Recreation and Open Space Element: The first -ever Comprehensive Plan element dedicated to the parks, recreation and open space system is based on the City's recently adopted Parks, Recreation and Open Space Plan (PROS). The recommended components of this element include: • Relocate and consolidate parks, recreation and open space - related goals and policies from other Comprehensive Plan elements into a single and specific element related to the parks, recreation and open space system • Largely based on PROS Plan (adopted 2/2014) • Build on vision from City's Strategic Plan • Address needs identified by the public • Support healthy lifestyles through a variety of facilities and programs Mr. Miles addressed the update to the Tukwila South element and reviewed the following in the PowerPoint presentation: Tukwila South Element: Significant progress has occurred in Tukwila South over the last 10 years that causes the current Tukwila South element to be outdated. The element has been completely rewritten to reflect these changes. The recommended updates to this element include: • Rewritten to reflect: o Annexation and Tukwila South Master Plan o Sensitive Areas Master Plan o Development Agreement o New policies based on Tukwila South Master Plan • Uses the Tukwila South Master Plan as a basis for the policies provided. Certain parts of the Sensitive Areas Master Plan and Development Agreement are included in the revised Comprehensive Plan element. Rebecca Fox, Senior Planner, addressed the update to the Roles and Responsibilities element. Ms. Fox reviewed the following in the PowerPoint presentation: Roles and Responsibilities Element: This element focuses on the social, rather than the physical, environment. It recognizes problems and offers solutions to ensure basic needs are met, safety and security provided for, and that communication is extensive and clear. It also acknowledges Tukwila's involvement in regional issues and partnerships. The recommended updates to this element include: Tukwila City Council Committee of the Whole Minutes August 25, 2014 Page 4 of 13 • Focus on social environment • City's responsibility: o Meet basic needs o Provide safety and security o Clear communication o Regional issues and partnerships • Partnerships within City and outside • Emergency management • Safety and security • Meaningful City communication to build connections • Cultural, linguistic competency • Regional collaboration Melissa Hart, Deputy City Clerk, acknowledged receipt of 2 written comments received in the City Clerk's Office relating to the proposed review and update of five of Tukwila's Comprehensive Plan Elements. The following written comments were distributed to the City Council and referenced into the record: 1. A 3 -page letter from Sara Hemphill, Executive Director of King Conservation District, dated August 22, 2014, relating to the proposed review and update of the Tukwila Comprehensive Plan Elements. 2. A 2 -page letter from Pam Carter dated August 25, 2014, relating to the proposed review and update of the Tukwila Comprehensive Plan Elements. Council President Quinn called for public hearing comments. Nick Cilluffo, 901 5th Avenue, Seattle, said he is present this evening to represent Forterra. Forterra is a conservation and community building organization dedicated to conserving great land and creating livable communities. Forterra has worked with the City for several years on a variety of projects to include the Duwamish Hill Preserve, establishing the Community Garden at St. Thomas Catholic Church, and the Community Connectors Program. That program was developed as a partnership between Forterra and Global to Local. The Community Connectors Program had a very successful event in March 2014 where the topic of conversation was the update to the City's Comprehensive Plan. From that event, they received a lot of comments about improvements to the Tukwila International Boulevard area, access to healthy food, housing options and transportation for the community. Along with Global to Local, Forterra is participating in the necessary meetings to ensure the comments received through the Community Connector Program outreach are heard. They participated in the hearing and review conducted by the Planning Commission, and Forterra supports the Planning Commission's recommendation. They commend the City's effort to engage the community and incorporate the comments from the community members. Monica Devalas, 3700 Southcenter Blvd, stated she has been a resident of Tukwila for the past 9 years. She is part of the Community Connectors Program and she thanked Forterra, Global to Local and the City for this opportunity. Through this program the Latino community has been able to voice their support for various stores in the City and other needs for the community. They have also expressed interest in working with the City on other issues as needed. She thanked the Council for the opportunity to provide comments. Osman Egal, 14254 58th Avenue South, said he has lived in the City for 15 years. He participated in the Community Connectors Program for the Somali community. During this program he has learned about the City, and he has talked to his community members about how they feel living in Tukwila. The new program has helped build a better relationship with the Somali community, and there is great interest by Somali community members to continue working with the City. Sara Hemphill, 1107 SW Grady Way, Renton, is the Executive Director of King Conservation District. She thanked the City Council and the Planning Commission for the interesting reading and opportunity to provide comments on the proposed Comprehensive Plan update. She stated that she has been in negotiations for the King Conservation District work plan and budget. Included in the proposed budget is funding for some of the same programs the City has identified in the Comprehensive Plan update, Tukwila City Council Committee of the Whole Minutes August 25, 2014 Page 5 of 13 including Urban Forestry and approximately $1 million for a Regional Food Project. King Conservation District had great success collaborating on new programs this year. A notable event from this past summer, King Conservation District had an opportunity to bid on a U.S. Department of Agriculture (USDA) Grant, and Tukwila was identified as a City that could benefit from the proposed Regional Food Project. Councilmember Hougardy asked for clarification on the $1 million for the Regional Food Project. Ms. Hemphill explained that King Conservation District is a Special Purpose District that does not have taxing authority. The Washington State Legislature established that Conservation Districts have funding to fulfill a mission and mandate. She stated King Conservation District works with private land owners on conservation stewardship. Food has not been a primary focus, except that the District works with local farmers who have been great stewards of the land. The proposed funding is only granted if there is an agreement between the cities within the District, King County (they collect the funding), and King Conservation District. The three bodies must agree on the agreement or the funding is not approved. They have spent the past 18 months working on an agreement and are very close to having the agreement. In 2013 -2014, King County collected $5.00 per tax parcel located in the District, except from the cities of Enumclaw and Federal Way who are not part of the District. With the new scope of work, there has been a lot of momentum to move forward with three programs: 1) Regional Food Project; 2) Urban and Rural, Small Rural Land Forestry; and 3) Shorelines, Water and Buffers. The King Conservation District Advisory Committee decided the majority of the funding would be dedicated for the Regional Food Project. Councilmember Ekberg asked what Ms. Hemphill needed from the City. Ms. Hemphill said King Conservation District would like notification from the City that it is interested in participating in the program. Councilmember Kruller expressed appreciation to King Conservation District for what they do for the City and the local area. 7:44 p.m. Council President Quinn closed the public hearing. b. Two ordinances relating to the rezone of two properties on the south side of South 180th Street at Andover Park West. These properties were not included in the Southcenter Plan boundary, and a rezone is needed to re- designate the properties to match the adjacent properties to the south. Quasi-judicial (1) Amending the Zoning Map for certain real property from Tukwila Urban Center to Heavy Industrial with a Tukwila South Overlay. (2) Amending the Comprehensive Land Use Map for certain real property from Tukwila Urban Center to Heavy Industrial. This is a quasi - judicial matter, with the City Council acting as a hearing examiner or judge based on the information presented at this meeting. Quasi - judicial matters do not follow the standard Council agenda process of Council Committee, Committee of the Whole and Regular Meeting. The Council is being asked to conduct the public hearing this evening as part of the Comprehensive Plan and Zoning Map amendments. Part of the quasi - judicial process involves Appearance of Fairness questions to be asked of each Councilmember. Council President Quinn explained that staff will be providing information on this item, and the public will be given an opportunity to provide comments. He asked the Council to make note of their questions, which can be asked during the public hearing and after City staff has finished their presentations. 7:46 p.m. Council President Quinn opened the public hearing. Melissa Hart, Deputy City Clerk, asked the following Appearance of Fairness questions of each of the 7 Councilmembers: Tukwila City Council Committee of the Whole Minutes August 25, 2014 Page 6 of 13 1. Do you or your family have any interest in the subject properties located at 6101 South 180th Street and 18000 Andover Park West in Tukwila? 2. Do you stand to gain or lose by your decision on this matter? 3. Have you had any ex -parte communications regarding this application? All 7 Councilmembers answered "No" to all the above questions. Let the record show there were no objections. Council President Quinn asked for a staff report on the Comprehensive Plan and Zoning Map amendments. Nora Gierloff, Community Development Deputy Director, came forward to speak. Melissa Hart, Deputy City Clerk, administered the oath as follows: "Do you swear or affirm that the testimony you are about to give is the truth, the whole truth and nothing but the truth ?" Ms. Gierloff answered in the affirmative. Ms. Gierloff explained this is a Quasi - judicial matter and therefore did not follow the standard Council process. The two proposed changes are City- initiated changes relating to a rezone and Comprehensive Plan Map amendment. There are two parcels zoned in the Tukwila Urban Center (TUC) that were not included in the Southcenter Plan, as they were originally included in the Tukwila South Master Plan area. With the recent adoption of the Southcenter Plan, the two properties have TUC zoning that no longer applies and the proposed amendments are housekeeping measures to establish more appropriate zoning. The properties to the south are Heavy Industrial (HI) with Tukwila South Overlay for development. The housekeeping change would correct the zoning issue while keeping with the Tukwila South Overlay development guidelines. The two sites are already developed and no new development is planned as a result of the proposed change. The proposed zoning change to HI would not create any non - conformity for the existing properties. The property owners are aware of the proposed amendments and have participated in the process. Since the City is limited to updating the Comprehensive Plan only once a year, staff is asking that the draft ordinances to update the Comprehensive Plan map not move forward to a Regular Meeting until the other Comprehensive Plan updates are moved forward in October. Councilmember Robertson asked for clarification as to why the properties were not included in the Southcenter Plan. Ms. Gierloff explained that the properties were originally analyzed as part of the Tukwila South Master Plan. The intent was that the properties were to become part of the Tukwila South Subarea, rather than the Southcenter Plan Subarea. Councilmember Ekberg commented that since the Tukwila South Overlay supersedes the zoning, he asked what the process would be to change the overlay. Ms. Gierloff stated if the City wanted to repeal the Tukwila South Overlay, it would require a Zoning Map amendment that would be processed similar to this amendment before the Council. Council President Quinn called for public comments. Jamie Balint, came forward to speak. Melissa Hart, Deputy City Clerk, administered the oath as follows: "Do you swear or affirm that the testimony you are about to give is the truth, the whole truth and nothing but the truth ?" She answered in the affirmative. Ms. Balint, Segale Properties, stated that Segale Properties supports the proposed amendment. She announced that this evening will be her last Council meeting, as she has accepted a new position elsewhere. She stated it has been an honor working with the City Council for the past four years. Tukwila City Council Committee of the Whole Minutes August 25, 2014 Page 7 of 13 7:57 p.m. Council President Quinn closed the public hearing. SPECIAL ISSUES a. Review and update of five of Tukwila's Comprehensive Plan Elements: • Roles and Responsibilities • Community Image • Parks • Economic Development • Tukwila South The City has been preparing the update in phases over several years. The updates to the Manufacturing /Industrial Center and Shoreline elements were completed in 2011. The new Parks, Recreation and Open Space (PROS) element, Roles and Responsibilities, Community Image and Identity, Economic Development, and Tukwila South elements are scheduled for updates in 2014. Councilmember Robertson commented that he has several housekeeping suggestions that he would like to discuss at the September 8, 2014 meeting. He explained that at the August 11, 2014 meeting, he discussed adding "stewardship" to the Roles and Responsibilities element. He distributed . sample language for the Council to consider relating to the suggestion. His proposed edits /amendments are as follows: REGIONAL RESPONSIBILITIES Goal 15.2 Foster a strong sense of our City's regional responsibility and accountability balanced by an awareness of the region-at region's impacts on the our City, its citizens, and other natural environment. Add new policy 15.2.5. as follows: 15.2.5 Adopt a long -term, steward's approach to protect and work with, rather than against, natural processes whenever possible to reduce risks to people, the environment, and property. Add new implementation strategies as follows: IMPLEMENTATION STRATEGIES • Pursue a long term view of the Green River and its valley walls and floor which balances commercial and residential uses and needs against the river's natural floodplain, floodway, and native species land uses and needs. • Benefit native fish and wildlife by enhancing natural riverine processes versus traditional structural approaches to reduce flood risks to people and property whenever possible. • Replant and reforest the City's share of the Green River Watershed wherever possible to protect and preserve our native species' needs. Protect future citizens and native wildlife by adapting and implementing policies and processes to reduce impervious surfaces and storm water runoff within the City. He provided background information relating to concerns about the Green River and Puget Sound. He asked the Council to review the proposed language, so it could be discussed at the September 8, 2014 meeting. Councilmember Hougardy asked that staff review the proposed changes and determine where the language would best fit in the update. Tukwila City Council Committee of the Whole Minutes August 25, 2014 Page 8 of 13 Councilmember Seal thanked Councilmember Robertson for his suggested additions and asked that staff have the City Attorney review the suggested language. Councilmember Duffie thanked Councilmember Robertson for reminding the Council of the environmental issues, and he voiced his support for the proposed additional language. Councilmember Kruller asked that staff provide a recommendation as to where the proposed amendments would best fit in the Comprehensive Plan. Council President Quinn voiced his support for the proposed amendments, and he concurs with Councilmember Robertson's suggested placement in the "Roles and Responsibilities" element. Councilmember Kruller referred to the written comments submitted by King Conservation District and Pam Carter. She feels there are some good suggestions for the Council to consider. Councilmember Hougardy asked if the Council should contact staff with any questions or comments they have on the proposed update. Ms. Gierloff explained the goal is to incorporate all the comments the City has received relating to the Comprehensive Plan Update into a comment matrix for the Council to review at the September 8, 2014 meeting. Council President Quinn referenced the written comments submitted by Ms. Carter and the King Conservation District, and he feels the intent of the comments is good. b. Two ordinances relating to the rezone of two properties on the south side of South 180th Street at Andover Park West. These properties were not included in the Southcenter Plan boundary, and a rezone is needed to re- designate the properties to match the adjacent properties to the south. Quasi-judicial (1) Amending the Zoning Map for certain real property from Tukwila Urban Center to Heavy Industrial with a Tukwila South Overlay. (2) Amending the Comprehensive Land Use Map for certain real property from Tukwila Urban Center to Heavy Industrial. The intent of the proposed rezone is to correct an inconsistency created by the adoption of a new subarea plan and zoning for the Southcenter area. The two subject properties are zoned in the Tukwila Urban Center, and were not included in the Southcenter Plan boundary at the property owner's request. The Council is being asked to approve a map amendment to re- designate the properties as Heavy Industrial to match the zoning of the adjacent properties to the south. Ms. Gierloff stated the Council is being asked to consider the draft ordinances at a future Regular Meeting in conjunction with the other proposed Comprehensive Plan amendments. CONSENSUS EXISTED TO FORWARD THESE ITEMS TO A FUTURE REGULAR MEETING (tentatively scheduled for October 6, 2014). c. Financial policies: (1) A resolution adopting revised financial policies. The draft resolution restates Resolution No. 1586 while removing the policies related to debt and the policy related to fund balances. The debt policies have been rewritten as a stand -alone document and will be approved in the resolution that follows this item. Until the remaining financial planning model and general financial policies can be reviewed and updated as needed, they are being restated in the draft resolution with minor adjustments that update the names of schedules and statements currently utilized by the City for financial planning purposes. Tukwila City Council Committee of the Whole Minutes August 25, 2014 Page 9 of 13 (2) A resolution establishing a debt policy. The proposed resolution will adopt a new debt policy. The policy outlines the purpose, type, and use of debt, responsibilities of certain City officials, methods of bond sales including when refundings could occur, structural elements of debt, and the use of professionals and other service providers for debt related matters. Peggy McCarthy, Finance Director, conducted a brief review of the proposed debt policy on pages 31 -38 of the agenda packet. The Councilmembers exchanged comments and asked clarifying questions of staff. After Council discussion, there was consensus to have staff provide a grammatical change to the following sentence: "Long -term debt will not be issued prior to reviewing the impact of the Six Year Financial Planning Model and its policy guidelines." Ms. McCarthy confirmed that revised language will be provided for the specified sentence at the next Regular Meeting. COUNCIL CONSENSUS EXISTED TO FORWARD THESE ITEMS (AS AMENDED) TO THE NEXT REGULAR MEETING. d. A resolution adopting a financial plan for the Urban Renewal Tukwila International Boulevard (TIB) Redevelopment Project. In 2013, the City began budgeting for a project intended to reduce crime through acquiring key properties within the City's urban renewal zone. On Aprii 22, 2013, the City Council approved an ordinance authorizing the City to use condemnation, if necessary, to purchase up to seven properties in the urban renewal zone. Those properties were the Boulevard Motel, Great Bear Motel, Jet Inn Motel, Knight's Inn Motel, Pawn Shop, Smoke Shop, and Spruce Motel. On August 27, 2013 the City helped the Federal government seize three crime - involved motels: Boulevard Motel, Great Bear Motel, and Traveler's Choice Motel. In August 2014 the City purchased two of the seized motels at the appraised value (the Great Bear and Traveler's Choice) from the Federal Government and is close to completing the purchase of the Boulevard Motel. The City then plans to purchase the Spruce Motel and Sam Smoke Shop. On August 4, 2014, the Council authorized the use of interfund loans to temporarily finance the property purchases until a financing plan could be developed and executed. Ms. McCarthy explained the City, in conjunction with its financial advisor the PFM Group, considered various financing options for the redevelopment project. Based on in -depth analyses, the recommended plan is as follows: • Enter into a $2,250,000 taxable line of credit for acquisition costs estimated to be recoverable through future property sales; funds would be drawn as needed and the line would be paid off upon sale of the land. • Issue $3,850,000 twenty -year taxable bonds for the estimated net cost to the City. • Annual debt service under this plan would approximate $313,000 for 2015 — 2016 and $287,000 for 2018 — 2034. Councilmember Ekberg asked if the 7 property owners have been notified of the City's intent to purchase the subject properties or if this topic should be discussed in an Executive Session. David Cline, City Administrator, clarified that the agenda topic is focused on 5 specific properties: Great Bear Motor Inn, Traveler's Choice, Boulevard Motel, the Spruce Motel and Sam's Smoke Shop, and the property owners are aware of the City's interest. The original 7 properties identified in the City's condemnation ordinance (2013) were notified through the public process. Ms. McCarthy explained the financial advisor team is present to update the Council on the proposed financing plan. She introduced Susan Musselman, Director, and Marc Ragan, Analyst, of PFM (Public Financial Management Inc.). Tukwila City Council Committee of the Whole Minutes August 25, 2014 Page 10 of 13 Ms. Musselman utilized a PowerPoint presentation to update the Council on the analysis of financing options and the proposed financing plan. Financing Plan Overview: The City will acquire a number of properties, demolish the current improvements and offer the vacant land for sale, subject to development conditions, estimated at a cost of $6.1 million. Recommended Financing Plan: • $3.85 million to be financed as a 20 -year taxable bond; issuance in October • The remaining $2.25 million to be financed with a 3 to 5 year taxable line of credit • Line of credit to be drawn on an as- needed basis and repaid with proceeds from the sale of properties Financing Considerations: • Could the City use tax exempt financing for any part of the project in order to reduce underlying cost? • Should the City finance all of the $6.1 million long term or can a short term financing be used for the $2.25 million expected to be recovered from property sales? Taxable versus Tax Exempt Borrowing: • Certain restrictions result from tax exempt eligibility, including restrictions on the following: o Use of proceeds, timing of sale of property and who may buy the property, ongoing agreements with purchasers of the property • Difference in tax exempt vs. taxable yields are near historical lows • The difference in debt service using a combination taxable and tax exempt borrowing versus an all taxable borrowing would be approximately $19,000 per year • The City would be best served by using a fully taxable financing option Financing Options: Scenario Number Description of Scenario Total Debt Service Net Present Value DIS Comments Benefits and Risks 1 Issue $6,100,000 of 20 -year bonds in 2014. Use proceeds of property sales to prepay bonds on the first possible date, in 10 years. $8,220,361 $6,171,160 -Lock in today's rates - Minimize interest rate risk - Potential higher total debt service overall - Higher near -term payments 2 Borrow $6,100,000 for short term in 2014. Issue long term bonds for the net amount of borrowing (est. $3,850,000) in 2017. $7,870,365 $5,703,787 -Lower short term interest rates -If long term rates rise less than 1.50 /o to 1.85 /o between 2014 and 2017 -High degree of interest rate exposure on $3,850,000 3 Issue $3,850,000 of 20 -year bonds in 2014 and enter into a $2,250,000 Line of Credit in 2014, due in 2017. $8,063,175 ,,175 $6,,711 $6,029,711 -Lock in today's rates on $3,850,000 long term portion -Lower short term rates on $2,250,000 portion -Matches term of each portion with expected need - Interest rate risk on short term portion, for a short term period - Current market rates; savings estimated at $165,000, even if short term rates rise Tukwila City Council Committee of the Whole Minutes August 25, 2014 Page 11 of 13 Recommendation: Scenario 3: • A combination of short term financing of $2,250,000 and long term financing of $3,850,000 • $3.85 million to be financed as a 20 -year taxable bond issuance in October • The remaining $2.25 million to be financed with a 3 to 5 year taxable line of credit • Line of credit to be drawn on as needed and repaid with proceeds from the sale of property • The interest rate risk for this scenario is limited to the smaller amount and for a shorter term • Expected to provide overall debt service savings compared to a long term issuance of $6,100,000 of bonds (1) Assumes the $2,250,000 in property sale proceeds are escrowed to the first call date for the Bonds (2) Assumes the $2,250,000 in property sale proceeds are not used to call Bonds prior to maturity Councilmember Robertson asked if a delay in selling the properties would be an issue for the City. Ms. Musselman stated if the City were to retain the properties for 10 years, it would not change the analysis. Councilmember Robertson commented that if the City has $3 million to purchase some of the properties, he feels the remaining balance is what should be financed. He reviewed potential funds where the City could use the fund balances to purchase the subject properties. He asked for an analysis on a lesser amount of financing for the Council to review. Ms. Musselman commented that the City could use long -term (bonds) for the $3.85 and cash for the balance needed to purchase some of the properties. When the properties are sold, in three to five years, the City would recoup some of the funding. Ms. McCarthy explained the City has approximately $9 million in the General Fund. At the end of 2013 the City did recoup funding used for the Klickitat Project. She has been working on the budget (for 2015- 2016 biennium), and the level of reserves would be a policy question for the Council. Based on the guidelines from the credit rating agencies, it is prudent to retain the current reserve. She stated there will be a budget presentation at the next Regular Meeting (Tuesday, September 2, 2014). Councilmember Robertson thanked staff and Ms. Musselman for the presentation and in -depth analysis conducted for this item. Councilmember Ekberg concurred with the process, and inclusion of Councilmember Robertson's suggestion for the use of some City reserve funds to purchase the subject properties. David Cline, City Administrator, clarified that the Council had previously adopted a financing plan using the Urban Renewal funding in the 2013 -2014 biennial budget. The proposed plan provides a lower debt service than what was approved. Councilmember Robertson asked if the current Financial Planning Model, Attachment A, included a higher rate financing plan. Mr. Cline answered in the affirmative. Mayor Haggerton commented when the City used $8 million from the General Fund for the Klickitat Project, knowing the City would be reimbursed at the end of the project, the bond rating agencies did not view that favorably. While it is tempting for the City to use cash on these types of things, the bond rating agencies frown on this type of practice. Councilmember Robertson asked for clarification on the proposed budget review that was previously mentioned. Scenario 1 (') Scenario 1 b (2) Scenario 2 Scenario 3 Total Debt Service $8,220,361 $9,032,194 $7,870,175 $8,063,175 Present Value $6,171,160 $9,035,194 $5,705,787 $6,029,711 (1) Assumes the $2,250,000 in property sale proceeds are escrowed to the first call date for the Bonds (2) Assumes the $2,250,000 in property sale proceeds are not used to call Bonds prior to maturity Councilmember Robertson asked if a delay in selling the properties would be an issue for the City. Ms. Musselman stated if the City were to retain the properties for 10 years, it would not change the analysis. Councilmember Robertson commented that if the City has $3 million to purchase some of the properties, he feels the remaining balance is what should be financed. He reviewed potential funds where the City could use the fund balances to purchase the subject properties. He asked for an analysis on a lesser amount of financing for the Council to review. Ms. Musselman commented that the City could use long -term (bonds) for the $3.85 and cash for the balance needed to purchase some of the properties. When the properties are sold, in three to five years, the City would recoup some of the funding. Ms. McCarthy explained the City has approximately $9 million in the General Fund. At the end of 2013 the City did recoup funding used for the Klickitat Project. She has been working on the budget (for 2015- 2016 biennium), and the level of reserves would be a policy question for the Council. Based on the guidelines from the credit rating agencies, it is prudent to retain the current reserve. She stated there will be a budget presentation at the next Regular Meeting (Tuesday, September 2, 2014). Councilmember Robertson thanked staff and Ms. Musselman for the presentation and in -depth analysis conducted for this item. Councilmember Ekberg concurred with the process, and inclusion of Councilmember Robertson's suggestion for the use of some City reserve funds to purchase the subject properties. David Cline, City Administrator, clarified that the Council had previously adopted a financing plan using the Urban Renewal funding in the 2013 -2014 biennial budget. The proposed plan provides a lower debt service than what was approved. Councilmember Robertson asked if the current Financial Planning Model, Attachment A, included a higher rate financing plan. Mr. Cline answered in the affirmative. Mayor Haggerton commented when the City used $8 million from the General Fund for the Klickitat Project, knowing the City would be reimbursed at the end of the project, the bond rating agencies did not view that favorably. While it is tempting for the City to use cash on these types of things, the bond rating agencies frown on this type of practice. Councilmember Robertson asked for clarification on the proposed budget review that was previously mentioned. Tukwila City Council Committee of the Whole Minutes August 25, 2014 Page 12 of 13 Ms. McCarthy clarified that the Council will ,receive a review of the preliminary 2015 -2016 biennial budget. Councilmember Robertson asked that the budget discussion take place before the Council considers this item. He asked if there is an urgency to pass the resolution. Ms. McCarthy explained the City is currently using an interfund loan to purchase the three motels and moving forward would repay the loans. Councilmember Hougardy spoke in favor of the proposed financing plan resolution. Councilmember Seal said the City might have excess funds available to use for this item. However, if bond rating agencies do not approve of using cash reserves, and the City's experts are recommending the City move forward with the financing plan, she supports the proposed resolution. Councilmember Ekberg said he is not in favor of the City taking on debt. He asked if the City were to establish the line of credit and not use it, would there be a fee charged to the City for non -use. Ms. Musselman stated yes, the City would be charged a fee for non -use. Councilmember Ekberg asked for staff to provide that cost to the Council at the next meeting. Council President Quinn commented that while there is $9 million in the General Fund, using a portion of that money would reduce the reserves the City has established. The Mayor mentioned prior guidance from the bond rating agencies, and he said that information will be provided to the Council. COUNCIL CONSENSUS EXISTED TO FORWARD THIS ITEM TO THE NEXT REGULAR MEETING. REPORTS a. Mayor Mayor Haggerton attended the South Park Duwamish River Festival on Saturday, August 23, 2014. b. City Council Councilmember Duffle had the opportunity to tour the Tukwila South site this weekend, and he commented on the amount of work that has been done in this area of the City. Council President Quinn attended the Tukwila Children's Festival at Cascade View Park and the South Park Duwamish River Festival. He commented on the types of vendors and entertainers that participated at the event, specifically the Sounders Band. He suggested the City contact them or a similar band for a City event. Councilmember Ekberg updated the Council on his weekend events that included providing assistance to a senior citizen. Councilmember Seal reported on an item that was discussed at the recent Finance and Safety Committee meeting relating to billing for motor vehicle accidents (refer to the August 19, 2014 Finance and Safety Committee minutes). She updated the Council on the information that was presented to the Committee. Councilmember Hougardy attended the Seattle and King County Economic Development luncheon on August 20, 2014, and she provided information to the Council on a few of the topics of discussion from that meeting. On August 23, 2014, she attended the Tukwila Children's Festival at Cascade View Park. Councilmember Kruller attended the recent HealthPoint Tour at Highline Plaza, and the National League of Cities Transportation Infrastructure and Services Steering Committee meeting on August 22, 2014. On August 23 — 24, 2014 she volunteered at the Boeing Classic. Tukwila City Council Committee of the Whole Minutes August 25, 2014 Page 13 of 13 c. Staff There was no report. d. City Attorney The City Attorney's presence is not required at Committee of the Whole meetings. e. Intergovernmental There was no report. ADJOURNMENT 9:53 p.m. COUNCIL PRESIDENT QUINN DECLARED THE COMMITTEE OF THE WHOLE MEETING ADJOURNED. V'S -..' Quinn. Council President Melissa Hart, Deputy City Clerk APPROVED AND SIGNED BY THE COUNCIL PRESIDENT ON 09/15/2014 AVAILABLE ON THE CITY'S WEBSITE 09/16/2014