Strom Peterson unanimous choice to lead Edmonds City Council

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    Strom Peterson

    Edmonds cheese shop owner Strom Peterson won unanimous election as the new president of the Edmonds City Council Tuesday night but found himself on the losing end of a 4-1 vote to refinance four of the city’s bonds.

    The council, which was missing Adrienne Fraley-Monillas and DJ Wilson when the vote was taken, agreed to refinance the bonds using $1.3 million in a public safety reserve fund created with proceeds from the sale of the city fire department to Snohomish County Fire District 1. Peterson spoke out against the idea, stating it was “reckless” given the city’s current financial state. “It’s short-sighted at best and it’s really quite remarkable, when the finances aren’t clear to some, that we are moving forward,” Peterson said. “This is a million dollars in this economic climate to pay off what we don’t need to pay off right now.”

    Supporters of the measure said that refinancing the bonds, which include water and sewer revenue bonds and general obligation bonds from City Hall construction, will save the city an estimated $54,000 annually in debt service, and that money could be used to purchase additional park property or perhaps for other capital needs such as street repairs.

    The most significant discussion of the evening, however, was a public hearing on a proposed code amendment — recommended by the Edmonds Planning Board — that would change the way that the city permits home-based businesses in residential zones, including allowances for limited visits by customers and employees, and a reduction in fees for those home-occupied businesses requiring a conditional use permit.

    Among the proposed changes: allowing a home-based business to have one employee (currently none are allowed); to have one visit by a vehicle per hour between 8 a.m. and 9 p.m. (now, no customers are permitted to the visit the site); requiring them to prove that they can provide sufficient parking for three vehicles to accommodate those customers or employees; and allowing them to have a four-foot sign to promote their business.

    In addition, under the proposal those home-based businesses that require a conditional use permit would be able to make that request of city staff at a cost of $585, rather than the current process of going before a hearing examiner, which requires a $1,500 fee.

    The two Edmonds residents who signed up to testify during the public hearing offered opposite points of view on the issue: Jonathan Bannister, a martial arts instructor whose Seattle studio collapsed due to the economic downturn, told the council that the changes would allow him to conduct private lessons for a small number of students in his home-based Edmonds studio. Meanwhile, Rick Spellman said he was “vehemently opposed and gravely concerned” about the changes, stating that they will essentially transform existing single-family neighborhoods into commercial zones with increased traffic and noise.

    But the majority of councilmembers didn’t agree with Spellman, and the measure ended up passing 4-2 (Michael Plunkett and Lora Petso opposed). Councilmembers Steve Bernheim and D.J. Wilson (Wilson left the meeting after this vote was taken) said they saw the changes as a way to assist small businesses that are just starting to grow but not quite ready to afford rental space.  In an effort to address the type of concerns raised by Spellman, Plunkett offered several amendments that were defeated, with one exception: A majority of councilmembers did support an amendment to require home-based businesses to obtain a conditional use permit if they want to display a sign.

    In other action, the council:

    – Approved two interlocal agreements: One defining the roles and responsibilities of Sound Transit, the City of Edmonds and Community Transit regarding the long-term operation, use, ownership and maintenance of the Edmonds Commuter Rail Station Transit Center, and the other authorizing participation in the Snohomish County Tourism Promotion Area, which levies a $1 per night fee on lodging establishments with 50 rooms or more. (As the name implies, all money raised is used to promote Snohomish County tourism.)

    – Agreed to create a planning committee to consider formation of a Regional Fire Authority.

    – Discussed procedures for evaluating proposals, interviewing and selecting the City Attorney, with interviews to take place soon.

    11 COMMENTS

    1. No problem just use the cat leash law but be sure the leash you use is the one approved by the council in the city ordinance.

    2. Could someone ( Mr Wambolt maybe) explain how the $1.3 M refinancing works and what effect that will have on the reserves and budget going forward? Thanks.

    3. The original idea was just to take advantage of lower interest rates and just refund (refinance) those bonds that were eligible. The original payoff date would remain the same, the only difference would be the city would pay lower interest rates.

      Lora Petso wanted top use the money from the sale of the Fire Department sale to pay off some of the bonds rather than take the advantage of the lower interest rates. She particularly wanted to pay off the bonds for City Hall. Those bonds are paid out of the REIT funds and by not needing to make those payments the REIT fund could be used for Parks acquisition. You would end up paying no interest as the bonds would be paid off, but you would use $1.3 million in cash.

      Strom Peterson suggested that this was not a good idea as you would take away any flexibility to use the $1.3 million for any other purpose. For example the roof on the Center for the Arts needs replacement. He didn’t feel it wise to spend down our cash reserves given the current economic state. He felt it would be better to leave that money for unforeseen needs. It’s sort of like not taking all of your savings to pay off your house when you are not sure you will have your job next year.

      By paying off the City Hall bonds you limit your options as the REIT funds can only be used for Parks and cultural acquisition. When we are not sure how we going to pay for police in the near future, I am not sure this is a prudent decision. Lora pointed out that the council can decide to change where the money could be spent but that certainly isn’t her intention.

      I am not sure that more parks should be the City’s top priority right now, but that is my own personal opinion.

    4. I was not able to attend the meeting last night, so I will not have full information until I watch the tape. I do know that the estimated $54k savings in debt service will not benefit the general fund, because the savings will cause reduced expenditures by a REET (real estate excise tax) fund that’s primarily used to fund parks. For that reason I believe that Council President Peterson was correct in opposing the action. The council needs to be taking actions that provide relief for the general fund; they should not be depleting a fund that could possibly have been used to cover general fund obligations. When the FD1 agreement was approved by council in 2009, it was envisioned that proceeds from the sale of equipment to FD1 would be placed in the general fund.

    5. Thank you both, Harry and Mr. Wambolt for the concise explanations. It is often difficult for those of us who aren’t financially in the ‘know” to make heads or tails of such issues. Your willingness to help us understand is greatly appreciated.

    6. I have now watched the tape of last night’s meeting and have a few more comments to add.
      It was said last night that it was never envisioned that funds from the FD1 agreement would be used to cover general fund obligations. That is not correct. Council had several contract options to choose from in 2009 and they selected option 4. Here are the key elements of option 4. OPTION 4 – WITH FD1 CONTRACT (sell apparatus; keep stations, land, and transport fees)
      *We sell depreciating assets, and we retain appreciating assets.
      *We place the proceeds in the G.F. to run the city
      *We retain the transport fees
      It was also said last night that using the $1.3 million available in the public safety fund to retire a similar amount of debt would “create flexibity” – make more REET funds available to do a variety of things, since those funds wouldn’t have to be used to pay debt. It seems to me that their action has actually reduced flexibility – council had $1.3 million with which they could have done anything, now they must wait until there are sufficient real estate sales to create $1.3 million in excise taxes; and when that amount is created there will be restrictions on what they can do with the money, as Harry said in his comments.

    7. One of the reasons given by the council members who voted to retire building debt, was that the $1.3 million in funds from asset sales and reserves should not be used to cover operational expenses. In fact all of the council members in attendance stated that since the source of the funds was capital assets, then its use should be restricted to capital assets.

      In coming to that conclusion the council members overlooked the fact that there are two types of capital assets; there are fixed assets (land and buildings) and there are depreciating assets ( like the fire equipment that was sold and for which there are reserves). If the funds from FD1 had been for the sale of fire stations, then it would be proper to retain those funds for expenditures related to buildings. That not being the case,
      it is entirely appropriate to use the $1.3 million for operational purposes.

      I don’t know what the purpose is for capitalizing depreciating assets in the world of government accounting. It is done in the business world because the IRS will not allow 100% of the value of an asset having an expected life of more than one year to be expensed in a single year.

      I strongly urge city council to reconsider the action they took and rescind retiring building debt.

    8. I have several questions about 1.3 million expendature. As I read the agended item it was about refunding the bonds not paying off the bonds. I think the public was mislead. There should of been a public hearing on such a large expendature. I thought there was going to be more open gov. I wonder. There was no discussion as to how long it would take to recoup the money, there was very little discussion about the savings to the citys general fund. What was the big rush. It is also my understanding that only 700 thousand came from the sale of fire dept assets the other 600 thousand came from another fund and yet the council kept saying it was coming from the sale of the fire deptartment. Again mis leading. I think the council should reconcider and hold a public hearing so all the questions can be answered. I dont think this was sound fiscal policy. I wonder was this done for special interest and politics

    9. Thank you Strom for taking this on and good luck this coming year. Also thank you for your lone vote. You were spot on. I hope the Council will reconcider spending the 1.3mil.

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