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HomeMy WebLinkAbout2012-11-13 Committee of the Whole MinutesTukwila City Council Committee of the Whole Meeting City Hall Council Chambers November 13, 2012 — 7:00 P.M. MINUTES COMMITTEE OF THE WHOLE MEETING EXECUTIVE SESSION Start: 6:03 p.m. Council President Seal announced the purpose of the Executive Session is to discuss Potential Litigation — Pursuant to RCW 42.30.110(1)(i). It will last no more than 60 minutes, and no decisions will be made during the Executive Session. Attendees: Jim Haggerton, Mayor; David Cline, City Administrator; Bob Giberson, Public Works Director; Jack Pace, Community Development Director; Rachel Turpin, Assistant City Attorney; Kimberly Matej, Council Analyst; Tukwila City Councilmembers Joe Duffie, Dennis Robertson, Verna Seal, Kathy Hougardy, De'Sean Quinn, Kate Kruller. Councilmember Ekberg was not present. End: 6:50 p.m. CALL TO ORDER/PLEDGE OF ALLEGIANCE Council President Seal called the Tukwila City Council meeting to order at 7:00 p.m. and led the audience in the Pledge of Allegiance. OFFICIALS Present were Verna Seal, Council President, Councilmembers Joe Duffie, Dennis Robertson, Kathy Hougardy, De'Sean Quinn, Kate Kruller. Councilmember Ekberg was not present. CITY OFFICIALS Jim Haggerton, Mayor; David Cline, City Administrator; Mike Villa, Police Chief; Jack Pace, Community Development Director; Bob Giberson, Public Works Director; Peggy McCarthy, Finance Director; Stephanie Brown, Human Resources Director; Mary Miotke, Information Technology Director; Vicky Carlson, Deputy Finance Director; Gail Labanara, Public Works Analyst; Kimberly Matej, Council Analyst; Barbara Saxton, Administrative Support Coordinator. SPECIAL PRESENTATION Swearing in of Dean Kolstad, Lateral Police Officer (Badge #207) Police Chief Mike Villa introduced Dean Kolstad. Officer Kolstad was born in southern California, where he joined a Police Explorer Post in middle school and served on the Huntington Beach Search & Rescue. He was hired by the Los Angeles Police Department in 2009, where he served in the Rampart and North Hollywood Divisions, and was asked to be part of their Special Problems Unit. Mayor Haggerton administered the oath of office to Officer Kolstad. Officer Kolstad's wife pinned on his badge ( #207). Officer Kolstad introduced his family and expressed appreciation for the opportunity to serve in Tukwila. Tukwila City Council Committee of the Whole Minutes November 13, 2012 Page 2 of 9 The Mayor and City Councilmembers extended congratulations to Officer Kolstad. CITIZEN COMMENTS There were no citizen comments. PUBLIC HEARING An ordinance increasing the regular property tax levy one percent from the previous year commencing January 1, 2013, on all property, both real and personal, in compliance with RCW 84.55.120; providing for severability and establishing an effective date. Council President Seal asked for a staff report. Vicky Carlsen, Deputy Finance Director, explained the ordinance is required to approve an increase of 1 percent to the regular property tax levy. This is an annual process that needs to be complete by November 30, 2012. 7:06 p.m. Council President Seal opened the public hearing. Arlene Krussel, owner of the Town & Country Suites, stated her business already pays close to $60,000 per year in property taxes. An additional one percent will- make their tax burden even more difficult. She also noted that their customers also pay a tax on the cost of their stay. John Krussel, who works on site at the Town & Country Suites, explained that their rental prices must be increased when costs such as taxes go up. He also asked how public hearings —such as the one this evening —are advertised. 7:10 p.m. Council President Seal closed the public hearing. SPECIAL ISSUES a. Tax levy legislation: (1) An ordinance increasing the regular property tax levy one percent from the previous year commencing January 1, 2013. (2) An ordinance levying the general taxes for the fiscal year commencing January 1, 2013. Councilmember Quinn indicated these items were discussed at the Finance & Safety Committee meeting on November 6, 2012. The committee members were unanimous in recommending approval. Ms. Carlsen noted the above public hearing was advertised in The Seattle Times" on October 29, 2012, as well as on the City's website. Kimberly Matej, Government Relations, confirmed a notice for the public hearing was advertised separately, in addition to any notices for tonight's Council meeting. In response to a question regarding the newspaper of choice for publication of such notices, it was noted the "The Seattle Times" has a more widespread distribution than the more local newspapers, and the local newspapers do not publish with the same frequency as "The Seattle Times." COUNCIL CONSENSUS EXISTED TO FORWARD THESE ITEMS TO THE NEXT REGULAR MEETING. b. An update on the self- insured health care plan funding. Stephanie Brown, Human Resources Director, explained that Council- requested an actuarial report on the City's self- insured health care plan at their budget work session on October 11, 2012. She stated they will be presenting information on both the 502 Fund (active employees plan) and 503 Fund (for LEOFF retirees). Tukwila City Council Committee of the Whole Minutes November 13, 2012 Page 3 of 9 Ms. Brown introduced Doug Evans, President of R. L. Evans Co., who serves as a benefits consultant and provides assistance to ensure compliance with federal, state and local laws; negotiates for insurance vendor services; resolves claims issues; and meets with the City's health care committee. He has also provided seminars for City employees on structure and costs associated with the City's benefit programs. Mr. Evans utilized a PowerPoint presentation to review the actuarial reports. The plan for active employees is a self- funded plan, including medical, prescription drug, dental, and vision. The plan utilizes a third party administrator (HMA) for claims, customer service and reporting. Stop loss insurance is purchased for protection against large claims (over $125,000). Medical claims represent the plan's largest expenditures (65 %). The plan's administrative cost (i.e. HMA) is 5 %, which is very low compared to other plans. Dental claims represent 11%, and prescription claims are 13 %. Vision claims make up a very small piece of the total cost. Mr. Evans noted that while the trend has been for an increase in the use of generic drugs (versus brand name), those savings have been offset by an overall increase in prescription costs from the drug companies. Graphs were shown to depict the difference between premium funding and expenses. In the past few years, funding (including reserves) has exceeded actual costs. For year -to -date (September 2012), costs are running above funding. The actuarial numbers show that an increased level of funding would be required in 2016. Mr. Evans explained that the goal for reserves is 2 -1/2 times the estimated liability for incurred - but - not - reported claims. Councilmember Robertson asked how much more the budget would need to increase in order to fully fund the reserve and projected costs. Mr. Evans explained that the required funding is recalculated each year by an actuary. He projects 15 to 20 percent —or even 25 percent —if the projected numbers hold true. He noted that trend rates have come down the last few years, and that trend (where the rate of growth is not as fast as it was previously) is continuing. Mr. Evans reported on the LEOFF 1 retiree plan, which is also self- funded and uses HMA. There are approximately 37 members who are responsible for paying for their costs. As those members become eligible for Medicare, the City's liability for their costs goes down as the City plan becomes secondary for most expenses at that point. The City plan still pays for prescription drugs, and also has liability for long- term care. Funding for this plan has been well above expenses, with a projected need to fund again in 2015. Reserves are 16 to 18 times what is needed relative to goal. Mr. Evans noted that high reserves are needed in the event claims for long -term care are received. Councilmember Robertson noted that he reviewed the Association of Washington Cities' annual report on benefits. When comparing eight cities of comparable size (to Tukwila), Tukwila's average expense cost is $200 to $300 per month lower per employee. Mr. Evans replied that luck may play a part in that, and referenced other possible factors such as his organization's meeting with 85 to 90% of City employees regarding efficiency measures when using the plan, the City's Wellness programs, and the plan's extremely low administrative cost. 7:45 p.m. – Councilmember Seal left the Council Chambers. 7:49 p.m. – Councilmember Seal returned to the Council Chambers. Councilmember Robertson referenced the trend rates chart for active employees on page 39 of the agenda packet and asked for clarification regarding what numbers are used to determine whether the 8 percent growth rate as mentioned in union agreements has been exceeded. Ms. Brown explained the chart does not reflect the numbers used for that purpose. Medical, dental, prescription and vision expenses are included when those numbers are calculated, and administrative costs are not broken out. Tukwila City Council Committee of the Whole Minutes November 13, 2012 Page 4 of 9 c. A supplemental agreement for additional design work for the Duwamish Gardens project. Councilmember Hougardy indicated this item was discussed at the Community Affairs & Parks Committee meeting on October 22, 2012. The committee members were unanimous in recommending approval. Bob Giberson, Public Works Director, noted the original agreement signed in February 2012 included excavation of a series of narrow probes from the site. Several of those samples revealed the presence of organic material, which caused some concern with the Army Corps of Engineers, who will eventually issue a Section 106 Cultural Historic Resources Permit. This supplemental agreement for $91,341.80 covers additional work to meet Corps of Engineers requirements. To save money, City forces will do some of the work, which includes excavating 16 trenches. Additional grant funding ($500,000) is available through King County Flood Control District, and the project is still fully funded for design. COUNCIL CONSENSUS EXISTED TO FORWARD THIS ITEM TO THE NEXT REGULAR MEETING. d. A supplemental agreement for additional work on the Water and Sewer Comprehensive Plans. Councilmember Robertson indicated this item was discussed at the Utilities Committee meeting on October 23, 2012. The committee members were unanimous in recommending approval. A modification to the Comprehensive Water Plan is required to meet new guidelines established by the Washington State Department of Health regarding standby water storage requirements. The additional work will focus on updating the City's revised growth projections using new 2012 population data compiled by the Department of Community Development and creating new analyses related to water supply and demand. Mr. Giberson referenced page 88 of the proposed 2013 -2018 Capital Improvement Program (CIP), where the future water reservoir is now called out as 5.1 million gallon, instead of 7.1 million gallon. A siting and feasibility analysis will be done next year to demonstrate compliance with the Department of Health's comments, with installation of the reservoir to occur in later years. COUNCIL CONSENSUS EXISTED TO FORWARD THIS ITEM TO THE NEXT REGULAR MEETING. e. A resolution regarding water, sewer and surface water rates. Councilmember Robertson indicated this item was discussed at the Utilities Committee meeting on October 23, 2012. The committee members were unanimous in recommending approval. Gail Labanara, Public Works Analyst, explained the proposed water, sewer and surface water rate increases for 2013. The minimum water meter base charge would increase from $12.00 to $14.00 per month for single and multi - family residences, with no increase in consumption charges for single family. The multi - family consumption charges would be split off (reference page 114 of the agenda packet) and increase approximately 5% per ccf. Commercial base rate charges were increased fairly significantly last year; this year the consumption charges would be increased 10% across the board. Commercial customers are approximately 81% of the City's base rates. Sewer rates would increase approximately 20% for all customers. The City's sewer rate will increase for residential and commercial /industrial customers, and King County has increased their sewer rate (from $36.10 to $39.79 per residential customer equivalent per month), resulting in a total increase of approximately $7.00 per month. The base surface water rate would increase 5 %, which translates to approximately $5.00 per residential parcel per year (from $102.00 to $107.00). Ms. Labanara referenced a matrix on page 115 of the agenda packet, which shows the total average increase for residential customers would be $9.95 per month. Tukwila City Council Committee of the Whole Minutes November 13, 2012 Page 5 of 9 Councilmember Robertson referenced Attachment E on page 133 of the agenda packet. The Sewer Fund Ending Balance is $592,000 in the 2013 column and $553,000 for 2014. He noted the Council recently adopted a policy (to go into effect in 2014) that states the fund balance must be 20% (1 /5th of total revenue). That percentage rate would mandate a fund balance higher than $592,000 in order to meet reserve policy requirements. The city has reduced sewer capital improvement projects as low as possible and continues to raise rates. In order to meet the established reserve policy, the City would need to borrow money for utility funding or take money out of the General Fund. As a way to help meet reserve policy requirements, he suggested reducing (or temporarily ending) the interfund utility tax that currently transfers funds from the utility fund to the General Fund. The City's utility fund is charged 10 %, although other utilities (such as cable and electric) are charged 6 %. Reducing the interfund utility tax from 10% to 6% (for the sewer fund) would result in an additional $300,000 per year for the sewer utility fund. Council discussion on the proposal included the importance of acknowledging the capital needs of the City, the fact that the utility tax has a sunset clause of 2015, the impact this change would have on the City's General Fund, and appreciation to Ms. Labanara for her diligence in compiling all the information provided. COUNCIL CONSENSUS EXISTED TO FORWARD THIS ITEM TO THE NEXT REGULAR MEETING, INCLUDING A REQUEST FOR ADDITIONAL INFORMATION SHOWING THE EFFECT OF A REDUCTION (TO 6 %) TO THE INTERFUND UTILITY TAX. f. Purchase of 190 Leotek LED luminaires for the 2012 annual Traffic Signal Program. Councilmember Quinn indicated this item was discussed at the Transportation Committee meeting on November 5, 2012. The committee members were unanimous in recommending approval. Mr. Giberson explained this is the second phase of the City -wide conversion to LED fixtures, which is funded from the traffic control budget. These fixtures use less than half the energy of high pressure sodium lights, require less maintenance, have a longer life (10 years versus 2 to 3 years), and provide improved lighting. The new lights will be installed on arterials that are metered outside of traffic signal areas and outside of Seattle City Light's conversion areas. This phase will include areas on Interurban Avenue and Tukwila International Boulevard, Phase 1. The first phase of the LED conversion included the Tukwila Urban Center (areas that are metered) and Southcenter Boulevard. A future phase will include areas where there are no service cabinets with meters (such as Andover Park East and Andover Park West toward 180th). It will be to the City's advantage to install meter bases and meters where needed as part of future projects to allow for conversion to LED fixtures in those areas: COUNCIL CONSENSUS EXISTED TO FORWARD THIS ITEM TO THE NEXT REGULAR MEETING. g. Acceptance of a grant for the East Marginal Way South Overlay & Repair Project (South 81st Place to Norfolk Street). Councilmember Hougardy indicated this item was discussed at the Transportation Committee meeting on November 5, 2012. The committee members were unanimous in recommending approval. Mr. Giberson noted Robin Tischmak, City Engineer, presented the City's grant request to the Puget Sound Regional Council. The $1,000,000 grant requires a 13.5% match (reference page 15 of the CIP). The funds will allow for repair and overlay of a large stretch of East Marginal Way. COUNCIL CONSENSUS EXISTED TO FORWARD THIS ITEM TO THE NEXT REGULAR MEETING. Tukwila City Council Committee of the Whole Minutes November 13, 2012 Page 6 of 9 h. An Interlocal Agreement with the Tukwila Metropolitan Park District. Councilmember Quinn explained the related bond issuance was discussed at the Finance & Safety Committee meeting on November 6, 2012. The interlocal agreement itself was not presented at that meeting so this item is coming to the Council with no committee recommendation. Peggy McCarthy, Finance Director, explained the City has researched options available for assisting the Tukwila Metropolitan Park District (MPD) with capital improvement financing. The most promising financing mechanism was bond financing, where (1) the MPD would issue bonds and the City would create a debt payment guarantee, or (2) the City would issue bonds and loan the proceeds to the MPD. She referenced the chart on page 174 of the agenda packet, which compares the two options. Ms. McCarthy stated it would be unlikely the bonds could be issued in 2012 under Option 1. In addition, a recent ruling from the State Supreme Court stated that a loan guarantee is considered debt, so the City would be in the same position with either option. Option 2 is a more straightforward method, which would use the City's bond rating to issue the bonds and then loan the proceeds to the MPD. Ms. McCarthy referenced the interlocal agreement on page 175 of the agenda packet and noted the date in the first sentence will be November 19, 2012, if the proposed schedule is met, including City Council and MPD Board approval. She also referenced Section 1.7 on page 176, which states "...authorizing the issuance of not to exceed $1,000,000 Limited Tax General Obligation Bonds, 2012 and... ". The $1,000,000 amount will be changed to $1,100,000 in order to build in the cost of bond issuance and allow the MPD to realize net proceeds of $1,000,000. Ms. Matej clarified the Council is scheduled to discuss the draft interlocal agreement this evening, and the bond issuance itself at the Council meeting on November 26, 2012. COUNCIL CONSENSUS EXISTED TO FORWARD THIS ITEM TO THE NEXT REGULAR MEETING. 8:39 p.m. — Council President Seal declared a brief recess. 8:47 p.m. — Council President Seal reconvened the Committee of the Whole Meeting. i. A discussion on the 2013 -2014 Budget and 2013 -2018 Capital Improvement Program. Councilmember Quinn indicated these items were discussed at the Finance & Safety Committee meeting on November 6, 2012. The committee members forwarded the items to the Committee of the Whole meeting for discussion. Ms. McCarthy noted the information memo explains the changes that have been made to the preliminary 2013 -2014 biennial budget and draft Capital Improvement Program (CIP) that were distributed on October 22, 2012. An overestimation was identified in the beginning fund balances for the City's General Fund and the Bridges and Arterial Street Fund 104. Proposed changes are outlined in items 1, 2 and 3 of the Information Memo on pages 187 and 188 of the agenda packet. The Arterial Street (104) Fund's beginning fund balance has been reduced by $2.8 million, with the overestimation due to revenue being budgeted but not realized. The General Fund was reduced by $1.2 million, which is a conservative stance as expenditures will be higher than originally anticipated and revenues may be lower. These reductions resulted in changes to the CIP and budget as follows: Residential Streets: In the CIP, the 42nd Ave. South street project has been moved out by one year (from 2014 to 2015). The funding for sidewalks, specifically for 53`d Ave. South, will now begin in 2016 (instead of 2015). Facilities: Funding in the CIP for facilities planning has been reduced from $1.5 million to $500,000, which is considered sufficient to fund preliminary scoping and needs analysis work. In addition, money that is set aside each year for facilities improvements has been reduced from $300,000 to $200,000 per year. Tukwila City Council Committee of the Whole Minutes November 13, 2012 Page 7 of 9 Equipment Rental: The two fire engine pumpers budgeted for purchase will be purchased via financing rather than a cash payment, which will result in a cost savings. In addition, the Mayor's Office budget includes the addition of a Government Relations Manager, who will serve as a liaison between the City and regional, state and federal governmental entities and associations, including pursuing potential grant funds and other revenue opportunities. Ms. McCarthy distributed revised budget pages to replace those pages that reflect a significant change. Councilmembers discussed the following budget topics: Salaries Councilmember Robertson noted that salary increases are shown for employees for 2014. He asked whether these numbers were for budgeting purposes only, as no commitment has been made regarding salaries for any employee or any position. Ms. McCarthy stated that the salary schedule reflects step increases that happen on the anniversary of a person's employment and are outside of cost -of- living adjustments. She clarified that if any budgeted funds are not approved for expenditure, the funds would revert to the ending General Fund balance. Parks & Recreation Budget Councilmember Robertson requested a proposal on options available for restarting the preschool program— within the current Parks & Recreation budget — including information on the steps it would take or an explanation of why it would not be feasible. Councilmember Quinn suggested an accounting be made of the efforts involved in gathering this information. Council consensus existed to have staff compile the requested information. Debt Service Councilmember Robertson distributed a spreadsheet he created using numbers from the budget and CIP that shows the City's current debt service, including bonds and Public Works Trust Fund loans, and also considering REET money and impact fees. He explained it is difficult to consider the financing proposal for the fire engine pumpers without knowing how that debt fits in with the City's existing debt. He requested staff provide information showing all City debt and the duration of each item, which will help Council understand the implications of their decisions. Council clarified that the information should be submitted in a worksheet format prior to voting on the budget this year. If useful, this type of information could be considered as a regular part of the budget document in the future. Council consensus existed to have staff compile the requested information. Facilities Plan Councilmember Robertson referenced page 73 of the CIP, which includes a capital project summary for "City Hall Campus /Community Justice Center." He suggested the title be revised to reflect a more generalized name (i.e. "City facility needs ") until priorities are established. He also suggested revising the text under "Description" as follows: Delete the sentence: "Results may include constructing a new City Hall Campus." Add the following sentences: "The second step is to prioritize based upon public safety needs. The third step is to minimize capital borrowing needs." Additional Council discussion regarding the Facilities Plan included: Whether the budgeted amount should be reduced again (from $500,000 to $250,000) and what the difference would be in deliverables received; the need at this time for additional analysis and establishment of priorities, rather than actual design work; the possibility of interim seismic improvements versus full replacement of some facilities; the need for agreement on the guiding principle (i.e. public safety) to be followed when making decisions; and how current projects such as Tukwila Village and the Tukwila Urban Center may influence those decisions. Tukwila City Council Committee of the Whole Minutes November 13, 2012 Page 8 of 9 Council consensus existed to incorporate the verbiage changes suggested by Councilmember Robertson. Strategic Plan Councilmember Robertson noted the preliminary budget includes the following statement (on page 14): "Additional funding for the Strategic Plan initiative increased General Fund biennial expenditures by $200 thousand dollars," and asked if Council was in agreement regarding the need for this expenditure ($100,000 per year). He also asked whether funds discussed in the past for community outreach ($40,000 to $60,000) was included in that amount. Ms. McCarthy stated community outreach funds are shown as a separate $30,000. Council discussion included acknowledgement that the need for community outreach has been discussed frequently in the past; the value of acting on the important information received through the Strategic Plan process by following through with its implementation; the benefit of establishing a sustainable infrastructure of community contacts and networks, rather than re- establishing that infrastructure every 4 years; and the understanding that Council would see cost proposals (i.e. consultant contracts) prior to implementation of those expenditures. Residential Sidewalks Councilmember Duffie expressed concern that funding for sidewalks on 42nd Ave. S. and 53rd Ave. S. was being delayed, as he feels this is a public safety issue, particularly for children getting to and from school. Councilmember Hougardy asked why the residential street/sidewalks projects were selected as the projects to be delayed and how Council can ensure these projects are not put off again in the future. Ms. McCarthy stated that commitments have been made to fund several large capital improvement projects, including annual overlay work on arterial streets and the transit center project, plus establishing a reserve policy. The budget process involves choosing priorities to fund with a set amount of resources. Mr. Giberson stated the 42nd Ave. S. and 53rd Ave. S. projects will remain in the 6 -year Capital Improvement Program unless Council directs otherwise. The replacement pages distributed show the 42nd Ave. S. project beginning in 2015 and the 53rd Ave. S. project starting in 2016. David Cline, City Administrator, noted these types of discussions provide direction for the CIP every year. The last CIP did not show either of those projects being built until 2016. Based on budget discussions a year ago, however, the 42nd Ave. S. project was moved up to begin in 2015. A year ago there was no funding for sidewalks in the 6 -year plan, and now $1.5 million has been budgeted, with 53rd Ave. S. as a first priority, plus additional funds for sewer /surface water improvements on 53rd Ave. S. Council consensus existed to leave funding for 42nd Ave. S. and 53rd Ave. S. as shown in the CIP replacement pages. Reserve Policy Councilmember Robertson explained that Council set a policy regarding reserve funds, which was meant to ensure the ending fund balance was always 10% of revenues. He referenced Attachment A in the CIP where line 37 ( "Ending fund balances ") is 10% or more of general revenues through 2015, and then steadily decreases. He asked whether the reserve policy was meant to apply only to the biennial budget years or through the full 6 -year CIP period. He stated that budgeted costs are increasing faster than revenues, and the ending fund balance in 6 years will be significantly less if the figures shown are correct. He noted the City is committed to a number of bonds and other long -term debt. Departmental Budgets Councilmember Kruller referenced the increase in expenses shown in the budget for "Mayor's Office — Administration" (page 75 of the preliminary budget), from $385,861 in the last cycle to $540,098. She requested additional information on these increases. Tukwila City Council Committee of the Whole Minutes November 13, 2012 Page 9 of 9 Ms. Matej explained the public defender costs (under Professional services) have affected the costs in the Mayor's Office budget significantly, as this expense was previously covered under the Court's budget (prior to the current budget cycle). Council expressed appreciation to the Mayor and City administration for the level of partnership demonstrated by their willingness to provide a new process this year to present the preliminary budget to Council for discussion and obtain weigh -in on policy. Council President Seal explained there will be a public hearing on the budget and CIP on November 26, 2012, with approval scheduled for December 3, 2012. REPORTS COUNCIL CONSENSUS EXISTED TO DISPENSE WITH REPORTS. Councilmember Quinn stated that he would be in Washington, DC later this week. Councilmember Kruller reported that she attended a full military ceremony for former City Councilmember Dave Fenton today. 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 10:25 p.m. COUNCIL PRESIDENT SEAL DECLARED THE COMMITTEE OF THE WHOLE MEETING ADJOURNED. Verna Seal, Council President Barbara Saxton, Administrative Support Coordinator APPROVED AND SIGNED BY THE COUNCIL PRESIDENT: 12/3/2012 AVAILABLE ON CITY WEBSITE: 12/4/2012