HomeMy WebLinkAbout10-01-1996 Special Council Mtgยท &
CITY OF AUBURN
AUBURN CITY COUNCIL SPECIAL MEETING
OCTOBER 1, 1996 - 3:00 PM
Minutes
The special meeting of the Auburn City Council convened at 3:00 PM. Those in
attendance included Mayor Charles A. Booth and Councilmembers Borden, Barber,
Poe, Singer, Brothers, Wagner, and Cerino. City staff in attendance included Finance
Director Diane Supler, Senior Accountant Shelly Coleman, Software Specialist Linda
Martinez, Deputy Finance Director Arlene Mempa, Financial Analyst Sherri Crawford,
Acting Parks & Recreation Director Dick Deal, Library Director Andy Waters, Librarian
Anita Sheneberger, Children's Librarian Terry Hendershott, Library Assistant Dixie Lish,
Deputy City Clerk Dani Daskam, and City Clerk Robin Wohlhueter. Library Board
members in attendance included Nancy Colson, Mel Lindbloom, Kim Harlington, and
Phil Jenkins.
Mayor Booth briefed the Council on the agenda for this evening. Presentations will
center around library issues and areas of potential revenue sources that may be
available to the City in the future.
I. Library Briefing
Dick Deal presented library history, facility options, and annexation options to join the
King County Library system. The Auburn Library has been in existence since 1914. It
was originally located at the Carnegie Library on Auburn Avenue. As the population
grew a replacement facility was constructed in 1964. Three bond issues were
presented to the voters for expansion to the library and senior center, and construction
of a new community center in 1989, 1990, and 1991. These bond issues did not receive
the 60% vote needed to pass.
In 1994 a Library Task Force was appointed by Mayor Booth to evaluate the library
needs and services, to look at other options, and to gather input from the community for
a recommendation to the Mayor and Council. There were 22 members who met over a
period of 14 months. The Library Task Force recommended a larger Library facility to
serve as the center of the community and proposed annexation to the King County
Library system. With other regional library facilities surrounding Auburn, King County
Library System staff have recommended a 15,000 square foot Resource library facility
be built in Auburn.
Library facility options include a remodel and expand of the existing facility, demolish
and rebuild a new facility on the same site, evaluate other locations in the City, and
relocate and build a new facility in another location in Les Gove Park including land
acquisition,
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October 1, 1996
Page No. 2
Other locations evaluated included locating the Librery in the downtown area in the old
Penney's building. Mr. Deal indicated this is not an option at this time because of a
potential purchase of the Penney's building and limited parking areas. Another potential
Library site under consideration is adjacent to Auburn High School. However, the
Auburn School District intents to expand this area for additional parking and school
facilities. Another option included looking at Auburn High School's existing Librery to
cooperatively expand this library for student and public use. Mr. Deal indicated the
school district is not interested in this option at this time.
Mr. Deal and Mr. Bob Hull presented library facility options at Les Gove Park. One is to
build the library at another location that includes purchasing additional land, and another
option is to use the existing facility. Mr. Deal commented when the library, senior center
and community center bond issues were presented to voters, a number of citizens
expressed concern with regard to traffic flow and parking in this area. Staff took these
issues into consideration when looking at redevelopment providing library services in
Auburn. Construction of'a new library that includes land acquisition and development
over existing tennis courts is estimated at $3.75 million. This amount includes
furnishings and equipment within the Library and includes development cost of $600,000
for land acquisition. Purchasing frontages on Auburn Way South would allow a better
sense of entry to the park, provide additional parking, and preserves a line of mature
trees. Using 1989 preliminary design work, Mr. Hull discussed a three to four thousand
square foot extension to the existing facility. Additional parking would be developed by
reconfiguring the existing parking areas. Constructing an addition to the existing facility
to the north and east presents a better view of Les Gove Park. If a new facility is built in
another location, the City may consider remodeling the existing facility. It is estimated at
$1 million for improvement to the exterior shell and core to bring the library facility up to
energy and seismic code. If an alternative location is chosen, there are costs
associated with maintaining the existing facility in the amount of $32,400, and insurance
in the amount of $2,000. Unknown costs at this time are salaries, design and
construction for an alternative use.
Diane Supler presented options for financing a library facility. Options include a voted
GO Bond Issue, issuance of councilmanic bonds, and issuance of bonds by the King
County Library System. Ms. Supler estimated debt service cost in increments of $1
million and assumed an interest rate of 6% on a 15 year repayment schedule. One time
costs are estimated at 3% of bonds issued. For example, with the issuance of a $4
million dollar bond issue additional costs are estimated at $120,000.
Comparing a Regional Library and a Resource Library, Ms. Supler reported it would cost
$2.3 million to operate a Regional Library and $1.3 million to operate a Resource library
on an annual basis. If Auburn annexed, the King County Library System would be
responsible for collection of $900,000 a year from library revenue sources to fully fund
and operate a regional library in Auburn.
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October 1, 1996
Page No. 3
In response to a question raised by Councilmember Poe, Diane Supler explained the
difference between a voted GO Bond Issue and issuance of bonds by the King County
Library System. Ms. Supler explained Auburn would not incur any debt or assume any
liability for debt if the King County Library System issued the bonds. It was noted that a
few years ago the King County Library System issued a large GO Bond issue for the
construction of multiple library facilities within the region. Questions were raised with
regard to the taxing area should Auburn residents choose to annex to the King County
Library System. Additional questions were raised with regard to the obligation of
property owners already paying a King County 20-year library tax obligation who annex
to the City of Auburn.
Dick Deal reviewed action required to annex to the King County Library System. An
interlocal agreement would need to be crafted to determine and identify the service
levels and responsibilities for each jurisdiction, and a determination of a financial
contribution. At this point $250,000 is what King County Library System has identified
as its contribution. They are evaluating other options. Mr. Deal reviewed a schedule for
annexation to the King County Library System. He anticipates Council action at its
November 18, 1996 meeting to place this issue on the ballot on February 4, 1997.
Mayor Booth urged Councilmembers to review and decide whether or not to go for an
annexation vote in February. He pointed out this decision is independent of any of the
funding decisions or anything else. If the City decides to go for a vote, we will evaluate
three financial options and present a proposal to the voters.
At 4:15 PM the meeting recessed.
The meeting reconvened at 4:30 PM.
II. 5-Year Revenue Forecast
Diane Supler briefly described the order in which each presentation will be given with
regard to-current revenue projections and what the City can anticipate in revenue in the
future. Components of this presentation include a 5 Year Revenue Forecast, 1997
Revenue Presentation, Revenue Options/Enhancements, and Capital Improvements.
Ms. Supler introduced Shelly Coleman, Senior Accountant, who has been with the City
of Auburn for four months.
Shelly Coleman presented 5 Year Revenue Forecast. Staff assumed population growth
at 2%, an inflation factor at 3%, utility rate increase at 2%, assessed valuation increase
at 5%, and property tax limit at $3.60 for 1997, and $3.10 for 1998-2001 assuming
library annexation to the King County Library System. Ms. Coleman illustrated a five
year forecast by seven revenue types. Property, sales tax and other taxes comprise
80% of General Fund revenue in the City. In 1999-2000, Ms. Coleman noted the City
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October 1, 1996
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will reach its property tax lid which is why the percentage of revenue change drops at
that time.
With regard to current legislative impacts, Ms. Coleman illustrated an estimated $1.9
million revenue loss per year. Diane Supler explained that in 1995 legislation was
passed at the state level exempting machinery and equipment used in a manufacturing
business from sales tax. The law went into effect in July 1, 1995. Based on financial
information provided over 14-15 months, Ms. Supler explained the City of Auburn has
seen a reduction annually of $1.2 million in revenue.
In addition, legislative action in 1996 exempted sale tax for retooling and repair of
machinery and equipment used in a manufacturing business. Because this legislation
has only been in existence for one month, minimum reduction for the City of Auburn is
estimated at approximately $420,000 annually. An application process is required in
order to receive the exemption through the Department of Revenue. Ms. Supler
anticipates Auburn's loss to be at approximately $500,000 to $550,000. Other factors
such as inflation reflects an increase in sales tax, but that is without the revenue enjoyed
in previous years which will be illustrated later in the presentation.
In 1996 a research and development sales tax exemption was also approved by the
state. There is little effect of this legislation in Auburn. In Redmond, however, they
anticipate a $4 million loss because of Microsoft. Ms. Supler explained the reason
Auburn has been hit so hard with this legislation is because the sales tax collected is
based on leased equipment.
City of Auburn sales tax revenue net loss due to legislation is estimated at $1,900,000
million for 1997, $1,995,000 for 1998, $2,094,800 for 1999, $2,199,500 for 2000, and
$2,309,500 for 2001.
Potential legislative actions that could result in further revenue reductions are
warehousing activities, gambling tax reduction from 5% to 2.5%, loss of motor vehicle
excise tax, property tax relief, welfare reform, and research and development. Ms.
Supler reported the Department of Revenue is conducting a warehousing study at the
request of the State. To stimulate economic development the State directed a task
force to review warehousing activities for a possible tax exemption. Legislation
introduced last year would have reduced gambling tax from 5% to 2.5%. The impact to
Auburn, should this legislation be reintroduced and passed, would be $130,000 annual
loss. The State of Washington is looking at alternative sources of revenue as a result of
funding reductions. An option for the State is to divert the motor vehicle excise tax,
typically provided to the cities, back to the State for highway operations. The motor
vehicle excise tax was originally set up in lieu of personal property tax on motor
vehicles. Ms. Supler reported over 80 pieces of legislation was introduced relating to
property tax relief. Initiative No. 184 is an assertive campaign in an attempt to reduce
property taxes. There is a good potential for property tax relief during the next
Auburn City Council Special Meeting
October 1, 1996
Page No. 5
legislative session. Another area the federal government is transferring out of the
welfare business. It is being passed down to the state level. Welfare reform may
implicate our community to provide services for programs should State level suspend
services for some community residents.
III. 1997 Revenues
Diane Supler presented the breakdown of anticipated 1997 revenue projections.
Comprising 62% of total anticipated revenue are collection of sales tax and property
taxes. Utility tax include the collection of the utilities operated and maintained by the
City and other sources such as Puget Power, Washington Natural Gas, and Cable TV
companies. The City's beginning fund balance is estimated at $2.7 million. Currently,
the City's budget is out of balance by $1.0 to $1.6 million. Part of 1996 revenues
projections are anticipated at $2.7 million. The $700,000 will be used to offset the
increase in expenditures.
Comparing 1997 to 1996, Ms. Supler explained the reduction in debt service at
approximately $330,000. This amount is being used for 1997 operations. Prior to this
preliminary numbers showed the budget out of balance by $2.5 million. For sales and
use tax there is a marginal increase of $200,000, interfund utility tax (inside utility) an
increase, other utility tax is decreased due to electric utility deregulation, admission tax
increase, and anticipate a decrease in gambling tax, Muckleshoot Casino, and other
taxes for 1997.
With regard to property tax rate information, revenue is calculated at the 106%. The
King County Assessor's Office does not have all the values for new construction.
Depending on new construction, staff is estimating the property tax levy rate at $2.98 or
$3.04 of assessed valuation. Comparing 1996 to 1997, Diane Supler explained a large
portion of the increase is a result of no Councilmanic bond payment for 1997.
Ms. Supler illustrated jurisdictional property tax levy rate comparisons for a typical
residence in 1996. Collection of property tax in Auburn is less because of our lower
assessed valuation given the high population of low income residents. A typical
residence in Auburn is valued at $121,000 compared to Bellevue at $251,800. Ms.
Supler explained the reason the property tax levy rate in Bellevue is lower is because
they do not have to levy as much to generate the revenue needed. Kenrs average
home is listed at $136,200 with a levy rate of $2.81. Renton has reached its lid at $3.60
for a levy rate, and Seattle's average home is valued at $169,800 with a levy rate of
$3.29.
Ms. Supler provided a historical perspective in collection of sales tax. In 1994 to 1995
the City saw growth in its collection of sales tax. Between 1995 and 1996 there is an
estimated reduction from $8.5 to $8.2 million. During 1996 the City realized the full
impact of the 1995 legislative exemption on machinery and equipment. If the City had
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October 1, 1996
Page No. 6
not realized a loss of $1,4 million due to the impact of the sales tax exemption on
machinery and equipment revenue would have been at $9.6 million, For 1997 Revenue
would have been $10.2 million with an anticipated loss of $1.8 million. The City
anticipates a modest growth in collection of sales tax for 1997.
Regarding licenses and permits, Ms. Supler reported the City will see decreases in
building and plumbing permits and increases in business registrations and other permits.
Ms. Supler predicted a slight decrease in collection of Intergovernmental revenue, Police
grants, motor vehicle excise, liquor excise, liquor profits, and basic life support. In the
area of motor vehicle excise tax, Shelly Coleman explained that state revenues are
shrinking as a result of newly incorporated cities taking their portion. Basic life support,
a voted levy, will expire in 1997. Liquor excise is declining. Liquor profits are
maintaining revenue levels. Other intergovernmental revenue include criminal justice
grants and camper excise tax. A loss of approximately $65,000 because the City did
not qualify to receive funds because crime is down.
Ms. Supler reviewed anticipated revenue in the area of charges for services which
include the sale of maps/photostats, fire protection service, prisoner lodging, outside
engineering, plan check fees, recreational classes, arts/senior programs, and other.
Miscellaneous revenue reflects an anticipated increase in interest income due to
investment flexibility. 1996 revenue for police officers at the Supermall is reflected at a
high level than 1997 because of a delay in receiving 1995 revenue. Revenue changes
from 1994 to 1995 were increased by 9%, 1995 to 1996 increase of 1/2%, and
anticipated increase in 1996-1997 is 3%. Minimal growth is predicted for 1997 with the
exception of property taxes. Expenditures are growing faster than revenues.
One reason staff is limiting growth to 5% Ms. Supler explained, is because they are
seeing a reduction in personal property tax revenue. Companies used to amortize a
new computer over a period of ten years. Life of the asset is shrinking to three years.
Also there are decreases in assessed valuation on state utilities which the City has
collected a small portion of property tax revenues.
IV. Revenue Options/Fnhancements
Total revenue for the City of Auburn is estimated at $25.6 million and expenditures are
at $27 million. The City is using 1996 revenues to balance the 1997 budget. Ms. Supler
recommended the City evaluate long term planning.
Diane Supler presented revenue options and enhancements. She presented ideas to
increase revenues by levying an additional one quarter of one percent on real estate
excise tax, increasing utility tax rates 1/2%, adding false alarm fees, parking fees, a
business & occupation tax, charging for uniform fire code permits, fire mitigation fee for
SEPA review, increase building permits, increase parks and recreation fees,
incident/accident report copies, and outside jail booking and maintenance fees.
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October 1, 1996
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Councilmember Wagner suggested staff look at the possibility of adding an airport tax,
tourist tax, and hotel/motel tax. Admission tax collection at the Auburn Performing Arts
center was discussed.
It was suggested the City look at options for increasing revenue stream by adopting
additional real estate excise tax, increase existing fees for utility tax and parking fees,
increase building permits, parks and recreation fees, adopt new fees for services
provided, and implement a false alarm ordinance. Based on requests for additional
research, staff will provide other options for revenue increases.
V. Capital Facilities/Bonding
Sherri Crawford described future capital needs in three areas. They include Capital
Equipment, Capital Facilities, and Maintenance. Identified needs for Capital Equipment
include a $100,000 fire aid vehicle, $60,000 passenger van, $400,000 third fire engine,
$350,000 technology upgrade, and $650,000 for swat, hazmat, and street sweeper.
Diane Supler reported no anticipated funding is available for these items. Some items
will become a pdodty as time goes on which needs to be considered in long term plan.
Capital Facilities requiring financing include a Criminal Justice Facility, Community
Center, Senior Center, Library, Shooting Range, City Hall Expansion, and Jail
Remodeling. Ms. Supler pointed out the Criminal Justice Facility may be better called a
Public Safety Facility. In planning for future needs the City is closely monitoring the
needs associated with potential annexation areas, legislative changes mandating
sentencing resulting in an increase in jail population as a reason to look at combining
police, fire and the court system into one facility.
Ms. Crawford illustrated estimated financial cost and levy impact for each facility.
Ms. Supler explained how the levy impact was calculated. Based on a 15 year
amortization schedule, the principal and interest was divided by the levy rate to service
the debt. For example, Ms. Supler explained at least $.18 out of $2.92 would be
available to finance the Library project. Another option is take the entire capital facilities
projects to the voters for financing.
The City is in the process of completing a Transportation Plan. With that plan it is
estimated there is a shortfall of $400,000, if the City is classified at a Level of Service
(LOS) D, to $2.0 million, if the City is classified LOS C, that will be needed annually to
finance street preservation and improvements. Ms. Crawford recommended the Council
consider adopting criteria for evaluating projects. This may include legal mandates,
emergency repair, contractual obligations, and other considerations as evaluation
criteria.
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October 1, 1996
Page No. 8
Ms. Crawford presented two options for consideration in looking at the City's debt
capacity in issuance of general obligation bonds. The first is without a vote of the
people or commonly referred to as Councilmanic bonds. The bond issue capacity can
be issued at 1.5% of the assessed valuation with a debt limit of $40 million, the face
amount of the bonds. In 1996 a final payment will be made in the amount $890,000.
The second type is a general obligation debt with the vote of the people. The limit is
2.5% of the assessed value with a debt limit of $66.5 million. Currently the City has
incurred a $1.4 million leaving a 2.5% available for utility improvements, parks or open
space development. Due to the City's large capacity for debt, consideration should be
given on the ability to pay, the willingness to pay, and the ability to sell.
Diane Supler summarized past financial bond issues. If the City is interested in issuing
debt, it may not be a bad time, after the Presidential election, because of the market
demand. Because of the competing needs for capital improvements, and the decline in
revenues, Ms. Supler urged identification of the City's fundamental needs.
Ms. Supler distributed a description of Taxes, State Shared Revenues, and Criminal
Justice Revenues dated October 1, 1996 for Council review. This includes a detail of
1995 revenues presented on the last page.
A general discussion ensued with regard to the budget process for 1997 and the library
annexation issue.
The meeting adjourned at 7:30 PM.
Charles A. Booth, Mayor Robin Wohlhueter, City Clerk
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