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City of Mercer Island City Council Meeting Agenda

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City of Mercer Island City Council Meeting Agenda CITY OF MERCER ISLAND Monday July 17, 2017 CITY COUNCIL MEETING AGENDA 6:00 PM Mayor Bruce Bassett All meetings are held in the City Hall Council Chambers at Deputy Mayor Debbie Bertlin 9611 SE 36th Street, Mercer Island, WA unless otherwise noticed Councilmembers Dan Grausz, Jeff “Appearances” is the time set aside for members of the public to speak to the City Council Sanderson, Wendy Weiker, about any issues of concern. If you wish to speak, please consider the following points: (1) speak audibly into the podium microphone, (2) state your name and address for David Wisenteiner and Benson Wong the record, and (3) limit your comments to three minutes. Contact: 206.275.7793, [email protected] Please note: the Council does not usually respond to comments during the meeting. www.mercergov.org/council In compliance with the Americans with Disabilities Act, those requiring accommodation for the meeting should notify the City Clerk’s Office at least 24 hours prior to the meeting at 206.275.7793. REGULAR MEETING CALL TO ORDER & ROLL CALL AGENDA APPROVAL STUDY SESSION (1) AB 5332 Proposed Public Engagement Plan on City’s Operating & Capital Funding Challenges SPECIAL BUSINESS (2) Commendation for Jeff Sanderson’s Service to the Citizens of Mercer Island CITY MANAGER REPORT APPEARANCES CONSENT CALENDAR (3) Payables: $982,842.27 (6/22/2017), $261,288.64 (6/29/2017), $182,425.02 (07/06/2017), & $463,068.93 (07/13/2017) Payroll: $858,689.09 (6/23/2017) & $905,795.85 (07/07/2017) Minutes: June 5, 2017 Regular Meeting Minutes, June 19, 2017 Regular Meeting Minutes, & July 5 Special Meeting Minutes AB 5305 Accept MIYFS Foundation Donation REGULAR BUSINESS (4) AB 5328 City Council Vacancy Options (5) AB 5331 I-90/East Link Project Update (6) AB 5329 Open Space Vegetation Management Biennium Report (7) AB 5334 Residential Development Standards Code Amendments (continued 1st Reading) (8) AB 5327 Council Meeting Day Change OTHER BUSINESS Councilmember Absences Planning Schedule Board Appointments Councilmember Reports ADJOURNMENT AB 5332 BUSINESS OF THE CITY COUNCIL July 17, 2017 CITY OF MERCER ISLAND, WA Study Session PROPOSED PUBLIC ENGAGEMENT PLAN ON Proposed Council Action: CITY'S OPERATING & CAPITAL FUNDING Review plan and provide final direction to staff. CHALLENGES DEPARTMENT OF City Manager (Chip Corder) COUNCIL LIAISON n/a EXHIBITS n/a 2017-2018 CITY COUNCIL GOAL 4. Address the City’s Financial Challenges APPROVED BY CITY MANAGER AMOUNT OF EXPENDITURE $ n/a AMOUNT BUDGETED $ n/a APPROPRIATION REQUIRED $ n/a SUMMARY PROBLEM STATEMENT Significant deficits are projected in 2017-2018 in the General Fund and Youth & Family Services (YFS) Fund, which account for most of the City’s services, excluding utilities. Using one-time resources, these projected deficits have been temporarily bridged, buying time to engage the community on the City’s financial challenges. What is driving these projected deficits? Simply put, annual revenue growth is not keeping pace with annual expenditure growth. At the root of the General Fund revenue growth problem is property tax, which makes up 41% of total General Fund revenues and is limited to 1% annual growth per state law plus an allowance for “new construction,” which equates to another 1% per year on average. In addition, development activity, which experienced a spike in 2015-2016, resulting in record levels of construction- related sales tax and development fees, is projected to slow down in 2017-2019, returning to a more normal activity level based on what is known about future development on the Island. For the YFS Fund, the revenue growth problem is directly related to the following: 1. The School District was compelled to reduce its financial support for YFS mental health counselors from 42% of the total cost to a fixed sum of $60,000 beginning in 2010 due to the Great Recession; 2. The City was compelled to reduce its financial support of YFS from $465,000 per year to $320,000 per year in 2011-2013 and then to $200,000 per year in 2014 due to the Great Recession (note: this was increased to $400,000 per year beginning in 2015); 3. After 5 years of strong annual growth in 2008-2012, Thrift Shop sales, which make up 59% of total YFS Fund revenues, plateaued in 2013-2015. Page 1 As a service organization, most of the City’s costs are tied to staff, accounting for 71% of total General Fund expenditures and 83% of total YFS Fund expenditures. Personnel costs grow faster than inflation (even in the private sector). However, unlike the private sector, the City cannot spread those personnel cost increases across the number of “widgets” sold or the number of clients served, with very few exceptions (e.g. parks & recreation fees and development fees). To maintain current service levels, a new, ongoing revenue source is needed. Otherwise, it is estimated that 27% of the City’s workforce will have to be cut in 2019-2024 to balance the budget due to a projected $1.23 million, or 2.9%, average annual growth differential between total expenditures and total revenues in the General Fund and YFS Fund combined in 2019-2024. PROPOSED PUBLIC ENGAGEMENT PLAN Originally, staff had recommended conducting a public engagement process in February-April 2017 following the adoption of the 2017-2018 Budget. However, the City’s I-90 loss of mobility negotiations with Sound Transit became an all-consuming issue for the Council, the City Manager’s Office, and the community in the first half of 2017. In addition, during the same timeframe, DSG staff was in the midst of engaging the public on updating the City’s residential development code. Trying to engage the public on a third major issue, the City’s operating and capital funding needs, at the same time was deemed to be too much for the community to digest. Accordingly, the Council supported the City Manager’s recommendation at the Council’s February 4, 2017 Planning Session to push the public engagement process to the second half of 2017. The following proposed public engagement plan reflects two timeline options for seeking voter approval for an operating levy lid lift and possibly a capital levy lid lift: 1) February 13, 2018 (special election), which is when the Mercer Island School District will most likely seek the renewal of its four-year maintenance and operations levy, and 2) April 24, 2018 (special election). Feb 13, 2018 Apr 24, 2018 Action Special Election Special Election Quality of Life Partners meeting: Brief them on City’s financial challenges & Jun 27, 2017 Jun 27, 2017 solicit feedback on City’s proposed public engagement plan Council meeting: Review & finalize public engagement plan on City’s Jul 17, 2017 Jul 17, 2017 operating & capital funding challenges City Manager: Solicit applications to serve on community stakeholder group Jul 18 – Aug 1, 2017 Jul 18 – Aug 1, 2017 (limited to approximately 20 residents) Information for stakeholder group: Distribute 2017-2018 Budget Message, Aug 25, 2017 Aug 25, 2017 Mar 2016 citizen survey results, and other information in advance of Sep meetings Initial public notification: Advertise dates/times/locations of community Aug 25, 2017 Aug 25, 2017 stakeholder group meetings & community meetings in Sep-Oct Island-wide mailer: Distribute information summarizing the City’s financial Sep 1, 2017 Sep 1, 2017 challenges & detailing the public engagement process in Sep-Oct Stakeholder group meetings: Review operating funding challenges & options Sep 9, 2017 (Sat) Sep 9, 2017 (Sat) (1st meeting), review capital funding challenges & options (2nd meeting), and Sep 23, 2017 (Sat) Sep 23, 2017 (Sat) rank capital projects & solicit a preliminary recommendation (3rd meeting) Oct 2, 2017 (Mon) Oct 2, 2017 (Mon) Page 2 Feb 13, 2018 Apr 24, 2018 Action Special Election Special Election Other public engagement: Meet with community groups in Sep-Oct & hold 3 Sep 11 – Oct 20, 2017 Sep 11 – Nov 3, 2017 community meetings in Oct over a 6 or 8 week period (6 weeks) (8 weeks) Community survey: Conduct telephone survey on potential operating & Oct 22-28, 2017 Nov 12-18, 2017 capital levy lid lifts Stakeholder group meeting: Solicit a final recommendation, taking into Nov 1, 2017 (Wed) Nov 29, 2017 (Wed) account feedback from community group meetings, 3 community meetings, and community survey results Council meeting: Review community stakeholder group’s final Nov 7, 2017 Dec 5, 2017 recommendation, review community survey results, and direct staff to prepare levy lid lift ordinance(s) or to identify services to reduce/eliminate Council meetings: If the Council favors going to the voters, conduct first & Nov 21, 2017 Jan 16 2018 second readings of proposed levy lid lift ordinance(s) Dec 5, 2017 Feb 6, 2018 King County Elections Office: Submit levy lid lift ordinance(s), ballot Dec 8, 2017 Feb 9, 2018 measure(s), explanatory statement for voter’s pamphlet, and pro/con (due Dec 15, 2017) (due Feb 23, 2018) committee appointments King County Elections Office: Submit pro/con statements for voter’s Dec 19, 2017 Feb 27, 2018 pamphlet King County Elections Office: Submit rebuttal statements for voter’s Dec 21, 2017 Mar 1, 2018 pamphlet Special election Feb 13, 2018 Apr 24, 2018 There are three complicating factors that make going to the voters on February 13, 2018 or April 24, 2018 less than ideal: 1. Sound Transit 3, which passed in November 2016, will have a significant tax impact on Island residents in 2017 and beyond. For an Island family of four with a $1.0 million home (assessed value) and two cars, the estimated annual tax impact is $500-$700, depending on the value of the two cars.
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