The following letter to members of the Ferndale City Council is provided courtesy of Ferndale City Administrator Jori Burnett. It is regarding the Ferndale City Council meeting agenda for the regular meeting scheduled for 6pm, Monday, October 21st. The public is welcome to attend. As noted, there will be a study session at 5pm prior to the regular meeting at 6pm. The public is welcome to attend both.
Your agenda for Monday night is as follows:
5:00 pm Budget Study Session: Finance Director Sirke Salminen and Public Works Director Kevin Renz will discuss budget implications for the water, sewer, and stormwater funds. Director Salminen will also review the City’s Current Expense fund.
Item A: Public Comment
Item B: Consent Agenda, including approval of October 21, 2019 Council Meeting Minutes, October 20, 2019 payroll.
Item C: Private Developments Update – Community Development Department staff will provide an update on issues related to private development in Ferndale.
Item D: Presentation, Mark Kaiman, Ferndale Municipal Court Judge – Judge Kaiman will return to the City Council to provide an update on a recent visit to Ferndale by several Washington State Supreme Court justices. The justices toured the City’s Municipal Court/ Council Chambers and discussed the challenges the facility presents.
Item E: Public Hearing: 2020 Property Tax Levy – Per RCW 84.52.020, it is the duty of the City Council to notify the Whatcom County Assessor of the “amounts to be raised by taxation on the assessed valuation of the property in the city” by November 30th of each year. A public hearing has been scheduled for November 4, with a vote on the matter scheduled for November 18th. The City Council is asked to consider taking 100% of the available banked capacity (estimated to be approximately $1.4 million per year) on November 18th .
As described in the accompanying staff reports and exhibits, City Staff have concluded that the failure to take the full banked capacity on November 18th will defer funding and decision making for a variety of projects and general City services, resulting in a potential reduction in service and higher eventual costs.
Item F-I: Mayor, Council, and Department Reports, Committee Minutes.
Without question, the primary focus of Monday’s meeting will be banked capacity. Typically in this section, I seek to provide additional information or a summary of the issue at hand, generally in a less-technical writing style than what would normally be found in a staff report.
There are a lot of things to consider for this decision, but it all boils down to one basic point: banked capacity is needed because the City’s revenues have not kept up with expenditures. This is not a new development that has occurred only in 2019. Instead it is the result of a number of factors and decisions 3 which, while appropriate in the moment, did not provide the City with a long-term, sustainable financial plan.
Over the last two decades, the City was able to sustain itself through cost cutting and austerity measures, with the expectation that sales tax revenues from large retail development would eventually transform the revenue makeup of the City. Due to its proximity to Bellingham, Ferndale has always lagged behind other Whatcom County cities in terms of its per capita sales tax revenue: many Ferndale residents work in Bellingham, and it is convenient to shop there as well.
By stretching every penny, Ferndale has been able to balance its budget from year-to-year, but it has done so by deferring decisions on large capital projects, maintenance, staff resources, contingency reserves, and more. Those without direct experience may argue that public agencies could spend more frugally; however, many of the issues that we face today were caused by the fact that the City has been so frugal.
It is also easy to suggest that the revenues derived from taking banked capacity would be utilized for non-essential projects. Staff has attached a chart listing some of the projects that the banked capacity revenues would address, and while there can be debate over which projects should take priority, objectively very few of the projects would fall under an “optional” category. Each project or expense, including those that would remain unfunded even with the full banked capacity, addresses needs that currently or will soon impact the City’s ability to deliver services to the community.
There are a number of projects listed in the accompanying chart that are described as “recurring.” Some of these projects, such as staffing obligations or ongoing maintenance are anticipated to remain the same (or to grow) through a twenty-year timeframe, or longer. However other projects, including Capital Facility funding and the City’s LEOFF 1 fund will change over time. As described in a banked capacity presentation earlier this year, Staff is proposing the utilization of $1 million per year of banked capacity for the first several years in order to establish a significant down payment for the facility in Year One of its construction. This would allow the City to then save significant money in interest payments in subsequent years, allowing a reduction in the per-year use of banked capacity for that purpose, and allowing funding for other projects.
For different reasons, funding for LEOFF 1 retirees will no longer be necessary at some point in the future, allowing those funds to be used for other purposes as well. As these funding obligations for these projects reduce in scale, Staff believes that new projects already on the 6-Year and 20-Year plans can be funded, and that the City will be able to increasingly leverage its funding to serve as a qualifying match for grant purposes. Conversely, failure to take the banked capacity will necessarily reduce the City’s ability to match grant opportunities, as the available funds will be used for basic City services.
As the Council knows, we have a new City Administrator – me. Throughout this year I have listened to Staff and have been forced to see first-hand the challenges that the previous administrator faced and the decisions that were made. I don’t know that I would have made different decisions in the moment. But I also cannot remain silent when I see a real and emerging issue – and our Staff feels the same way.
This clear need has shaped our discussion all year long. In January, the City initiated a utility rate analysis, based in large part because the Council had expressed concern that the City had not been laying away funds for a new wastewater treatment plant. In April, we talked about purchasing Old Main because we needed to begin work on a new courthouse and city hall, and it was clear that this council 4 would make the financial decision to set us on that path. In July, we discussed the financing options for a future courthouse and city hall, and the recommended option was taking the full banked capacity. This use of banked capacity was discussed again on September 3rd and October 7th.
In September, we talked about union negotiations and the rising cost of police personnel and the challenges of maintaining our level of service. On October 30th I asked the Finance and Administration Committee if these conclusions were really a surprise. Perhaps this was slightly unfair, because they have been surprised by the magnitude of the issue.
I recognize that this year has been extremely busy and has placed great stress on Staff and on the Council. And to a certain extent there has been a steady drumbeat of sobering long-term financial news. It is not fun being the messenger, but it is Staff’s obligation to bring that message to Council, and to provide options. As we have discussed extensively, with the exception of a large private development project such as large retail or a major industry or corporate headquarters, there are few funding options that bring “new” money to bear. Instead the funding for these obligations must come from within.
In conclusion – it would be easy to second guess past decisions and to find fault with them. Should we have done something differently? Would a vote have been different? But all that does is shift blame. The same goes for simply punting the decision to the next Council – that would simply shift responsibility. We are a solution-oriented Staff and we are asking that on November 18th, the Council act as a solution-oriented Council.
See you Monday – Jori
The public is encouraged to attend City Council meetings. They are held on the 1st and 3rd Mondays of each month (on the following Tuesday in event of a national holiday) at 6pm in Council Chambers at the City Hall Annex at 5694 2nd Avenue.