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Home My WebLink About09/16/2003 Adjourned Business Meeting 470 • CITY OF YAKIMA, WASHINGTON ADJOURNED BUSINESS MEETING OF THE CITY COUNCIL SEPTEMBER 16, 2003 - 7:30 A.M. COUNCIL CHAMBERS - CITY HALL 1. Roll Call Present: Council: Mayor Mary Place, presiding, Council Members Clarence Barnett, Paul George, John Puccinelli, and Bernard Sims Staff: City Manager Zais, City Attorney Paolella and City Clerk Roberts 2. Public hearing to consider recommendations of the Capital Facilities Committee re the rebuilding /paving of arterial streets and alleys presented as the following options: Option 1: Consideration of draft ordinance amending Municipal Code enacting increase in City public utility taxes by 3% for City water, sewer, Refuse Division and Nob Hill Water to finance Councilmatic Bonds for funding arterial street improvements /gravel streets Also, consideration of draft ordinance amending Municipal Code and enacting a second quarter percent real- estate excise tax for arterial street maintenance and gravel streets Option 2: Consideration of draft ordinance amending Municipal Code enacting increase in City public utility taxes by 3% for city water, sewer, Refuse Division and Nob Hill Water to establish on -going resources to finance arterial street improvements without issuing bonds. Also, consideration of draft ordinance amending Municipal Code and enacting a second quarter percent real- estate excise tax for arterial streets maintenance and gravel streets Option 3: Consideration of draft ordinance calling for a municipal election /ballot proposition to increase private utility taxes for telephone, power and gas by 1°/0 to generate resources for arterial street improvements and gravel streets without issuing bonds. Also, consideration of draft ordinance amending Municipal Code and enacting a second quarter percent real- estate excise tax for arterial streets maintenance and gravel streets Option 4: Revise or amend any of the above options Option 5: Take no action (do nothing) If any of Options one through four is accepted after all the public hearings are held, then Council would consider a resolution directing formal amendments to the City's Capital Facilities Plan and Comprehensive Plan 471 SEPTEMBER 16, 2003 . .ADJOURNED MEETING Chris Waarvick, Director of Public Works, discussed the purpose of the meeting and reviewed the funding options, as follows: • Option 1: Includes the increase in public utility taxes and the enabling of the second quarter Real Estate Excise Tax percent. • Option 2: Includes the same tax increases in Option #1; however, in Option #1, the revenues generated support a $10 million bond and in Option #2, the revenues generated support annual activities with no bond — a "pay as you go philosophy ". • Option 3: Includes the 1% increase in the private utility tax and revenues from the second - quarter Real Estate Excise tax. • Option 4: Council would amend or revise any of the above options. • Option 5: Council would take no action (do nothing with the report or recommendations). Neil McClure, chair of the Capital Facilities Improvement Committee, distributed graphs showing the return on investment (ROI) for options 1, 2, and 3, indicating the amount of matched money from state and federal programs. Option 1 shows investments of $17,600,000 with an ROI of $22,000,000. Option 2 shows investments of $17,600,000 with an ROI of $54,000,000. Option 3 shows investments of $24,000,000 with an ROI of $90,000,000. Charts 2 and 3 compare the relative costs of options 1, 2, and 3 against the goods and products the average citizen purchases. Staff responded to questions posed by Council concerning the grind and overlay program being classified as a maintenance program, not as a street improvement; Title 12 requirements, and stormwater issues. • Mayor Place opened the Public Hearing Scott Robertson, Yakima Waste Systems, advised that he is not speaking for any proposal, but wanted to provide information on how the utility tax\affects their customers. He asked Council to consider placing a cap on the utility tax because when it gets too burdensome, a company may utilize an unlicensed hauler, thereby circumventing payment of any utility tax. Doug Rich, broker at Prestige Realty and chair for the Real Estate Association, commented on the positive impact good roads have on a community, however, the proposed second quarter real estate excise tax would also impact the first -time homebuyer. He also mentioned the volatility of the revenue generated from real estate excise taxes due to the uncertain and flexible real estate market. He suggested that the gravel roads and alleys be improved using assessments from Local Improvement Districts as the funding source. He responded to questions asked by Council Member Puccinelli about how this proposed tax would impact new businesses looking to locate here and the cost impacts of Title 12. Asked by Council Member Barnett what his opinion is on taxing refuse, water, and sewer to fund street improvements, Mr. Rich responded that his remarks were intended to share the concerns of other real estate agents about the proposed second quarter percent real estate excise tax. Council Member Sims asked Mr. Rich what the increased value of a house with streets, curb and gutter would be compared to one with a double -shot street. Mr. Rich responded that his opinion would be that the location of a home is more important than the level of the road improvement; however, street lights or sidewalks don't make a difference regarding salability, but the paved streets and location would. 2 472 SEPTEMBER 16, 2003 — ADJOURNED MEETING Larry Mattson, 2810 Shelton, provided background information on the initiation of this proposal. He summarized the key issues: • The backlog of streets needing attention grows bigger every day. We must invest in our streets to protect our investment in them over the long term. • There are state and federal grants and loans, which can leverage local dollars. Why refuse $4 for every $1 we contribute? • Leveraging those state and federal dollars requires a dedicated local revenue stream. Yakima needs a dedicated revenue stream to enable us to compete for low- interest loans and state and federal grants that require a 20% to 50% percent local matching contribution. • The legislature created the 1st and 2nd quarter REET (real estate excise tax) expressly for the purpose of funding capital improvements. • Now is the time to address our street needs, NOT after they are riddled with potholes, and to do so in a way that demonstrates fiscal responsibility and greater accountability. He spoke about accountability to the public, including annual road reports to the community, quarterly reports to Council and community meetings to obtain feedback on how we are doing. He submitted his written remarks to the Council. He suggested evaluating the program after five years and include a sunset clause in the ordinance to ensure the evaluation is done. He stated he prefers Option #2. He commented that he didn't address Title 12 or gravel streets; the arterial streets have the greatest need. • Council discussion Council discussed other revenue sources, i.e. refund of portion of property tax kept by the County or a street utility. City Manager Zais stated that the portion of the property tax kept by the County funds county services and the Legislature did not pass the street utility legislation. The City does receive a small portion of gas tax revenue. Council Member George commented that citizens are not taking advantage of the 50/50 sidewalk program. • More public testimony Jim Kurbitz, Governmental Affairs, Washington Association of Realtors, spoke about the negative impact this proposal would have for the first time homebuyer. When we raise the tax on the real estate transactions, the sales price is increased to cover that expense. The purchaser is the only one bringing money to the real estate transaction. The tax is included in the mortgage and is amortized over 25 -30 years, increasing the cost of the home. He reported that Yakima has almost 46% ratio of renters versus homeowners. He asked Council to also take into consideration the future utility tax increase proposed to fund the stormwater management program. He submitted two charts; one, comparing the City of Yakima's annual programs cost estimates [for stormwater management] with the City of Union Gap, Yakima County — urban and Yakima County rural; and the second chart projecting how much the local Stormwater Utility Fees might be. He stated the real estate excise tax is a regressive tax and is unfair to the low- income people. The stormwater management program is mandated and has to be funded; there are other options to fund street improvements. Council members commented on the business climate of the city and how it could be impacted by an increase in the utility tax. Council Member Barnett expressed his 3 473 SEPTEMBER 16, 2003 ADJOURNED MEETING opinion that the question is not about roads; the question is whether water, sewer and refuse services should provide the funds to improve roads. Joe Walsh, representing Central Washington Homebuilders, submitted his suggestions for cost saving measures that emphasized privatization and competitive contracting (outsourcing), design /build strategies, asset sales, and public /private partnerships. He also suggested aligning the tax with the service provided. He commented that they would provide suggestions for amendments to Title 12 at the next meeting. Referencing the ability of the City Engineer to amend the standards in Title 12 based on circumstances, he stated that any standard that is not applied equitably isn't a standard. The City might want to consider alternatives such as narrower residential streets as a traffic calming measure, or striping a portion of the street for bicycle and /or pedestrian use and eliminate sidewalks; or remove trees from within the sidewalks. • • Mayor Place asked if anyone else would like to speak, and upon hearing no response, she stated that the next public hearing is scheduled for September 30 at 7:00 p.m. 3. Adjournment SIMS MOVED AND PUCCINELLI SECONDED TO ADJOURN THE MEETING. The motion carried by unanimous voice vote. The meeting adjourned at 8:57 p.m. 22 READ AND CERTIFIED ACCURATE BY: .. �,��% J` 3.0"-OY COUNCIL MEMBER DATE CO NCIL MEMB C�IAT ATTEST: fit° 1 CITY CLERK j 1 RY PLACE, MAYOR Minutes prepared by Karen Roberts. An audio and video tape of this meeting are available in the City Clerk's Office 1 4