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HomeMy WebLinkAbout09-17-1996 Special Council Mtg AUBURN CITY COUNCIL SPECIAL MEETING MINUTES September 17, 1996 The special meeting of the Auburn City Council was called to order at 6:00 PM in the Council work area located in the Mayor's Office of Auburn City Hall. Those in attendance included Mayor Charles A. Booth, and Councilmembers Sue Singer, Gene Cerino, and Stacey Brothers. Staff members in attendance were Finance Director Diane Supler, Assistant Planning Director Lynn Rued, Planning & Community Development Director Paul Krauss, City Attorney Michael Reynolds, Assistant City Attorney Judith Ausman, and City Clerk Robin Wohlhueter. I. Introduction The purpose of the meeting is to satisfy an element of the City's compact with Washington Cities Insurance Authority in order to maintain a low assessment rate. City Attorney Michael J. Reynolds discussed the differences between quasi judicial verses legislative processes. II. Washington Cities Insurance Authority Michael C. Walter, Attorney for Keating, Bucklin & McCormack representing Washington Cities Insurance Authority, provided training on potential litigation in the area of land use. The Special Council meeting was recessed to executive session at 6:10 PM. No action was anticipated by the City Council at this meeting. III. Discussion Mayor Booth, Councilmembers, and staff discussed many issues facing cities in the area of land use. Mr. Walter answered questions and commented on several potential litigation areas of interest. The meeting reconvened at 8:30 PM. IV. Adjournment The meeting adjourned at 8:30 PM. Charles A. Booth, Mayor Robin Wohlhueter, City Clerk 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 Cedno. City staff in attendance included Finance Director Diane Supler, Senior Accountant Shelly Coleman, Software Specialist Linda Martinez, Deputy Finance Director Arlene Mempa, Financial Analyst Sherd 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. Auburn City Council Special Meeting October 1, 1996 Page No. 2 Other locations evaluated included locating the Library 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 Library 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. Auburn City Council Special Meeting 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 Auburn City Council Special Meeting October 1, 1996 Page No. 4 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 aleregulation, 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. Suplet 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. Kent's 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 Auburn City Council Special Meeting 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. Suplet 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/Enhancements 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. Auburn City Council Special Meeting October 1, 1996 Page No. 7 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 priority 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. Suplet 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.