Finance Committee

City Hall Meeting Minutes 601 4th Avenue E Olympia, WA 98501 Finance Committee Information: 360.753.8447 Friday, March 27, 2015 12:00 PM Room 207 1. ROLL CALL Present: 3 - Chair Jim Cooper, Committee Member Nathaniel Jones and Committee Member Cheryl Selby 2. CALL TO ORDER Chair Cooper called the meeting to order at 12:02 p.m. 3. APPROVAL OF MINUTES - None 4. COMMITTEE BUSINESS 4.A 15-0282 Oral Report: Long-Term Funding Options Administrative Services Director Jane Kirkemo summarized discussions on funding gaps from previous committee meetings and identified how some of the funding gaps have been temporarily addressed (i.e., unbudgeted property tax due to annexation, higher than expected sales tax revenue, lower LEOFF I premiums). Ms. Kirkemo reviewed previous discussions on long-term funding options and discussed a new one combining a Metropolitan Parks District and a Levy Lid Lift. Chair Cooper mentioned a proposed Thurston County ballot measure for a public safety sales tax of three-tenths of one percent, which would increase Olympia's sales tax to 9.1%. City Manager Steve Hall recommended gathering more information about the possible Thurston County ballot measure issue. Overview of Priority Gaps $1.1 million/year Parks Operations & Maintenance (O&M) ($600K CAMMP & $500K O&M) $600,000/year Citywide Operating Gap $20 million Percival Landing Replacement $1 million/year Transportation Infrastructure Maintenance Revenue Options - 2015 estimated Assessed Value (AV) is $5.67 billion with a property rate of $2.39/$1,000 of AV The average home is assessed at $250,000 and the homeowner pays approximately. $600 in property tax. * Option 1 - Do nothing. This option keeps the City working within the current City of Olympia Page 1 Finance Committee Meeting Minutes March 27, 2015 unsustainable revenue sources. If we choose this option there will be significant cuts to non-essential City services within two to five years. *This option was eliminated at the March 11 meeting.* * Option 2 - Levy Lid Lift A levy lid lift of $0.63 ($0.7022 max capacity currently available) would generate approximately $3.5 million per year for general operations and maintenance. Cost to a $250,000 homeowner would be an additional $158 per year. ($0.18 = $1M; $0.54 = $3M; $0.63 = $3.5M) This is a 26% increase in current property taxes. * Option 3 - Excess Levy for the Waterfront Issue $35M voted debt through an excess levy. On a 10-year bond it would cost the average $250,000 homeowner an additional $171 per year. Or on a 20-year bond it would cost the average $250,000 homeowner an additional $102 per year. This is a 28.5% increase in property taxes. * Option 4 - Metropolitan Parks District (MPD) An MPD would generate $3M per year at $0.54/$1,000 of AV ($0.75 max capacity) for Parks O&M and cost the average $250,000 homeowner an additional $135 per year. This is a 22.5% increase in property taxes. * Option 5 - MPD + Excess Levy for the Waterfront Both the MPD and a $35 million bond levy would cost the average $250,000 homeowner an additional $306 per year for a 10-year bond or $237 per year for a 20-year bond. These are 51% or 39.5% property tax increases respectively. * Option 6 - MPD + Levy Lid Lift An MPD for $3M per year and a levy lid lift for $2M per year would cost the average $250,000 homeowner an additional $225 per year. This is a 37.5% increase in property taxes. Funding Gaps for Transportation Public Works Transportation Director Mark Russell talked about the City's pavement condition rating, funding, and projects. He stated things are being maintained but there is currently a $48 million backlog. In 20 years, if funding levels remain where they are, our rating will fall to 59 (from the current 72) and the backlog with be $85 million. The Transportation Department would need $7 million per year (an additional $4 million per year from current funding) to maintain and improve the rating and eliminate the backlog. Funding Gaps for Facilities Public Works General Services Director Debbie Sullivan discussed Facilities/Building Repair and Replacement funding needs. She stated that high-priority projects -- assets that have surpassed their useful life and need replacement -- can be funded through 2019 via Capital Facilities funds. Although there is a sizable deficit in funds for projects that are funded out of the operating budget because they cost less than $50,000, she expressed satisfaction with current funding. City of Olympia Page 2 Finance Committee Meeting Minutes March 27, 2015 Funding Gaps for Parks: Operations and Maintenance Parks, Arts and Recreation Director Paul Simmons reviewed operations and maintenance funding gaps and discussed what deficiencies can be addressed at differing funding levels. Mr. Simmons reviewed the impact of not using Voted Utility funds for operations and maintenance; the department will see a maximum $721,000 deficit. 6-Year Annual Funding Levels Severity Rating $250,000/year High Severity Deficiencies only $500,000/year Medium and High Deficiencies $750,000/year All Deficiencies Funding Gaps for Parks: Percival Landing Percival Landing will require $158,000/year for assessment and repairs. The second phase of Section A replacement will cost an estimated $18 million using the 2009 concept vision. Future replacement phases include Section B with an estimated cost of $24 million and Section C with an estimated cost of $24 million. Committee member Jones opined a simpler ballot measure is easier for the public to understand. He believes putting two separate measures on the ballot is risky because the measures might compete with each other. He thinks the MPD is probably the better option as it is cleaner for the voter, allows money to go toward maintenance, and we can take advantage of the momentum around parks. Committee member Selby agreed and added she thinks it would be best to wait to seek funding for Percival Landing, possibly combining it with Heritage Place (formerly known as the Isthmus) plans and funding at a later time. She would like to recommend moving forward with the MPD option in the general election. Chair Cooper concurred and would like to make a Committee recommendation at the $3M level to the Council. Chair Cooper announced the April 8 Finance Committee meeting will begin at 6:00 p.m. in Council Chambers. This meeting will continue discussion of long-term financing options for a sustainable budget. Long-term financing will also be the topic of the City Council's May Study Session. Chair Cooper said he would like to have any City Council work completed on this topic by July 1, 2015. Thurston County's deadline for putting something on the general election ballot is 5:00 p.m. on August 4. The information was provided. 5. ADJOURNMENT Chair Cooper adjourned the meeting at 1:42 p.m. City of Olympia Page 3