I Consent Agenda: Call to Order: Ceremonies and Proclamations: Councilmember Reports: Public Communications:

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1 REGULAR CTY COUNCL MEETNG MNUTES FEBRUARY Call to Order: Mayor Veitz called the Regular City Council meeting to order at 6:02 PM, at the Ocean Shores Lions Club. Flag Salute: Ceremonies and Proclamations: Councilmember Reports: Council present: Mayor Veitz, Councilmembers Creighton, Jordan, Samuels, and Estes. City Staff present: City Manager Dennis Hunter, Police Chief Rich McEachin, City Planner Pat Smith, Fire Chief Dave Cowardin, Finance Director Paul Mentor, and City Clerk Diane Houston. Mayor Veitz led the flag salute. None. Councilmember Estes reported that Rohm and Haas Company in Elma donated $10,000 to the reverse 911 system, which notifies the public during natural catastrophes. Also, regarding the low power FM radio station, the FCC is beginning the licensing process, and the construction permit should be issued by the end of this summer. Mayor Veitz reported that the message received at the Legislative Conference last month in Olympia was that Cities would probably not receive any state funding, due to the $1.2 billion cut required at the state level. Mayor Veitz thanked and gave accolades to the City Manager and Staff for the excellent presentation at the Town Hall Meeting on February 4, Consent Agenda: Tape 1, #150 - Councilmember Creighton moved to approve the Consent Agenda as presented. Councilmember Jordan seconded the motion. 1. Approval of Minutes for the Regular City Council Meeting on January 28, Approval of Claim Warrants: #40435 through #40550 in the amount of $186, for February 11, Approval of Payroll Warrants: #30034 through #30236 in the amount of $408, for February 11, Public Communications: Public Communication from Citizen Sign-in Sheet: Gordon Broadbent commented on the excellence of the presentation at the Town Hall Meeting, assistance from the Attorney General's office for the availability fee lawsuit, in favor of increasing the property taxes, unbiased individuals review of the budget for budget cuts, and increasing the City's revenue from visitors. Mr. Hunter suggested that Mr. Broadbent share his ideas to increase revenue with him at the office. Robert Strermer-Cox commented on accounting for storm drain revenues collected, airport property development, the budget cut at the Chamber of Commerce, and availability of the final 2002 Budget at the Library. Councilmember Jordan responded to the storm drain revenue comment requesting facts regarding Mr. Cox's statement. Steve Bova commented favorably on the Town Hall Meeting Regular Meeting Page 1 of 5

2 REGULAR CTY COUNCL MEETNG MNUTES FEBRUARY Public Communications Continued: presentation, making it illegal to camp on property that is not connected to City utilities and increasing camping time from 90 to 120 days, on last week's The North Coast News article on public documents being subject to attorney-client privilege, and storm drain studies. Karen Fantz commented on the City spending funds for the Soap Lake lawsuit, attorney-client privilege issue, and other financial issues. Consultant Reports: Public Hearing: Moratorium on Property Near the Geotube Project None. To hear public comment on the extension of the moratorium on development in the geotube area, pursuant to the City's agreement with Washington State Parks allowing the installation of the geotubes. Tape 1, #933 - Councilmember Estes moved to recess the Regular City Council meeting to convene into the Public Hearing. Councilmember Creighton seconded the Motion. Jo-Ellen Thomas explained that it is required to have a Public Hearing before authorizing a moratorium prohibiting development applications on property. There was no public testimony. Tape 1, #996 - Councilmember Jordan moved to adjourn the Public Hearing and reconvene into the Regular City Council Meeting. Councilmember Samuels seconded the motion. Mayor Veitz closed the Public Hearing and returned to Regular Session. Old Council Business: Ordinance No.730 Moratorium on Property Near the Geotube Project An Ordinance of the City Council of the City of Ocean Shores relating to planning and the performance of analysis and studies relating to certain real property within the City of Ocean Shores and temporarily prohibiting the acceptance of development applications, including, by way of example only, those relating to the division of land or building permits for said properties, generally described as within 200+ feet of the geotube project. Mayor Veitz read the Ordinance by title. Jo-Ellen Thomas explained that the Ordinance extends the moratorium prohibiting development applications within 200 plus feet of the goetube project. There were no Council comments. Tape 1, # Councilmember Creighton moved to approve the Ordinance as presented. Councilmember Jordan seconded the motion Regular Meeting Page 2 of 5

3 REGULAR CTY COUNCL MEETNG MNUTES FEBRUARY Old Council Business Continued: Ordinance No: Budget Ordinance Amendment An Ordinance creating separate Capital mprovement Funds for the City's Proprietary Operations, and amending the 2002 Budget Ordinance No Mayor Veitz read the Ordinance by title. Paul Menter commented that the 2002 Budget Amendment Ordinance creates five new Capital mprovement Funds, and carries forward and transfers approximately two million dollars into the new Capital mprovement Funds. The change will allow the Council to more effectively review Capital Project funding. Mr. Menter answered the question from the previous meeting regarding the Public Works Trust Fund 320. Mr. Mentor recommended adoption of the Ordinance. There were Council comments regarding whether the five new Capital mprovement funds are funded from previously committed and existing allocated funds, and whether this Ordinance would prohibit returning the funds, if Council took proper action, to the source of revenue. Mr. Menter commented that funds were previously committed and they could be returned to the source or revenue. Tape 1, # Councilmember Jordan moved to adopt the Ordinance as presented. Councilmember Creighton seconded the motion. New Council Business: Ordinance: Amending The Low ncome Utility Rate Program An Ordinance of the City of Ocean Shores, Washington relating to Low ncome Utility Customers, and amending Sections 13.12, 13.20, and Ocean Shores Municipal Code to modify certain rates and charges of the Waterworks Utility, including the Water System, Sewer System, and Storm and Surface Water System. Mayor Veitz read the Ordinance by title. Paul Menter explained that the Ordinance extends the program to include storm drain rates and increases the income level for low-income customers. Low-income customers that qualify will be charged half of the adopted utility rates. There were Council comments regarding the method to communicate the new low-income guidelines to City customers, and that this is the right change to make. There were public comments regarding whether renters would be included in the program, what proof will be required to qualify for the program, and comments in favor of the change. Mayor Veitz recessed the Regular City Council meeting at 6:54 Mayor Veitz reconvened the Regular City Council meeting at 7:05 Ordinance No. 732 An Ordinance of the City Council of the City of Ocean Revision of Water Shores, Washington Amending Ocean Shores Municipal and Sewer Code , revising conditions requiring Contingency Rates impl ementat ' n of water and sewer contingency rates. Mayor Veitz read the Ordinance by title. Paul Menter commented that this is the first reading and action is requested. He explained that the Code currently states that contingency rates are to go into effect at the time of an adverse Regular Meeting Page 3 of 5

4 REGULAR CTY COUNCL MEETNG MNUTES FEBRUARY New Council Business Continued: Ordinance No. 732 Continued ruling in the Carillo case. The proposed Ordinance changes the language to allow for rates to "be so fixed at a time and in a manner sufficient to ensure compliance with all applicable bond covenants and to ensure sufficient revenue to provide continuous uninterrupted utility services and to cover payment of the outstanding debt service on the bonds". There was Council comment that for the City to be in compliance with the Code the Ordinance should be adopted. There was no public comment. Tape 1, # Councilmember Jordan moved to adopt the Ordinance as presented. Councilmember Creighton seconded the motion. Resolution: No.450 Adopting the Grays Harbor County Comprehensive Emergency Management Plan A Resolution of the City Council of the City of Ocean Shores, Adopting the Grays Harbor County Comprehensive Emergency Management Plan dated, July Rich McEachin presented the Resolution to adopt Grays Harbor Countywide Comprehensive Emergency Management Plan as the guideline for the City of Ocean Shores. Mr. McEachin explained that the City is required to have an Emergency Plan in place to qualify for disaster reimbursement from the state or federal government. There was Council comment. There was Public comment. Tape 1, # Councilmember Creighton moved to approve the Resolution as presented. Councilmember Samuels seconded the motion. Staff Report: Fire Department Ocean Shores Fire Department n-process Review (PR) Report. Dave Cowardin presented the n-process Fire Department Projects, which included the Spring Open House, upgrades to computer systems, improvement to the Fire Station building structure, planning for communication improvements, and terrorism risk and needs assessment. City Manager's Report: Dennis Hunter reported on the question asked at the last Council meeting regarding the City's progress in connecting the unconnected sewers to the new sewer system. n LD there are approximately 120 properties reported as unconnected that may have septic tanks on them, 60 of which have houses. Also Timberland Bank and Coast Communications are unconnected. They will be connected when the organizations and the City agree upon the correct method. Mr. Hunter commented on the Carillo hearing conducted today in Montesano at 1:30 PM to argue the remedy of repayment of available charges collected. The Judge stated he would consider the argument before making a decision. Mr. Hunter stated that two years ago the City requested the Attorney General to become involved in the Carillo lawsuit. The Regular Meeting Page 4 of 5

5 REGULAR CTY COUNCL MEETNG MNUTES FEBRUARY City Manager's Report Continued: Attorney General chose not to get involved but requested that the City keep the AG's office apprised of the status of the case. Mr. Hunter explained that the first two elements in the contingency rate strategy presented at the February 4, 2002 Town Hall Meeting were put into place at the meeting tonight. The other two strategy elements will be presented to the Council in the future. Announcements: Appointments: Mayor Veitz stated that there is an opening on the Library Board. None. Executive Session: Mayor Veitz recessed the Regular City Council Meeting to go into the Executive Session at 7:23 PM to discuss on-going litigation with legal counsel. The Council will meet in Executive Session for thirty minutes, and there may be Council action after the Executive Session is adjourned. Mayor Veitz adjourned the Executive Session and reconvened into the Regular City Council Meeting at 8:00 Councilmembor Creighton moved to not appeal the Carillo lawsuit summary judgment decision. Councilmember Jordan seconded the motion. Adjourn: Councilmember Creighton moved to adjourn the Regular City Council Meeting. Councilmember Estes seconded the motion. Mayor Veitz adjourned the Regular City Council Meeting at 8:05 Signed: Terry^V^/tz, Mayon Attest: Diane J. Houston, City Clerk Regular Meeting Page 5 of 5

6 REGULAR CTY COUNCL MEETNG MNUTES FEBRUARY Call to Order: Mayor Veitz called the Regular City Council meeting to order at 6:02 PM, at the Ocean Shores Convention Center. Council present: Mayor Veitz, Councilmembers Creighton, Jordan, Samuels, and Estes. City Staff present: City Manager Dennis Hunter, Police Chief Rich McEachin, Finance Director Paul Mentor, and City Clerk Diane Houston. Flag Salute: Ceremonies and Proclamations: Mayor Veitz led the flag salute. The Ocean Shores Elks presented the following awards at the annual Law Enforcement Awards banquet: Russ Fitts Officer of the Year Ken Osborne and Tom Milligan Firefighters of the Year Pat Peyton Volunteer Fire Code nspector Ocean Shores City Council Appreciation of Cooperation and Supportive Efforts in 2001 and Councilmember Reports: Dennis Hunter commented on the rumor regarding a potential aquarium project for Ocean Shores. He stated that the City is working with a developer on a potential aquarium, however there has been no formal offer. The anticipated timeline for a formal offer is approximately sixty days, after which the City will make a formal public announcement. Consent Agenda: Tape 1, #184 - Councilmember Estes moved to approve the consent agenda. Councilmember Samuels seconded the motion. 1. Approval of Minutes for the City Council Town Hall Meeting on February 4, 2002, and the Regular City Council Meeting on February 11, Approval of Claim Warrants: #40551 through #40683 in the amount of $256, for February 25, Public Communications: Public Communication from Citizen Sign-in Sheet: Robert Stermer-Cox commented on the difference between the total number of employees reported in the 2002 budget and the actual number of City employees, whether the City intends to hold more meetings for public input regarding the utility increase issue, and that he feels the City should reduce the budget. Consultant Reports: Old Council Business: Ordinance No 733: Utility Rate Amendment for Low ncome Customers None. An Ordinance of the City of Ocean Shores, Washington relating to Low ncome Utility Customers, and amending Sections 13.12,13.20, and Ocean Shores Municipal Code to modify certain rates and charges of the Waterworks Utility, including the Water System, Sewer System, and Storm and Surface Water System. Mayor Veitz read the Ordinance by title. Paul Menter stated that this is one of the elements addressing the City's utility challenges. The City currently has nineteen qualified low income customers. This Ordinance would allow Regular Meeting Page 1 of 4

7 REGULAR CTY COUNCL MEETNG MNUTES FEBRUARY Old Council Business Continued: Ordinance No 733 more customers to qualify for low-income rates. There was Council discussion regarding whether the Ordinance is a stand-alone document, and the method to notify the utility customers of the higher qualifying income level. Tape 1, #547 - Councilmember Jordan moved to approve the Ordinance as presented. Councilmember Creighton seconded the motion. New Council Business Resolution No 451; Banking and nvestment Policy A Resolution adopting a Banking and nvestment Policy for the City of Ocean Shores, and Rescinding the City's prior Banking and nvestment Policy. Paul Menter presented the Policy for Council's annual review and requested the following revisions: 1. Delegate daily banking and investment transaction authority to the Assistant Treasurer, under the direction of the Finance Director/Treasurer. 2. Eliminate the language that authorizes lower rate investments offered by Grays Harbor financial institutions. 3. Eliminate the language of "collateralized mortgage obligations" in section 9.3 of the current Policy. 4. Allow investments in securities with maturities exceeding one year, providing the investment coincides with the expected use of the funds. Mr. Mentor requested Council approval of the revised Policy. There was Council discussion. There was public comment regarding using the City's assets to pay for the availability lawsuit penalty, and what the Resolution payback is. Tape 1, # Councilmember Creighton moved to approve the Resolution as presented. Councilmember Estes seconded the motion. Resolution No 452: Amend Threshold for Fixed Assets A Resolution Establishing a Fixed Asset Policy to Raise the Capitalization Threshold from $1,000 to $5,000. Paul Menter stated that the Resolution is an administrative policy that requires Council approval to increase the capitalization threshold, and establish procedures for capitalization of fixed asset to comply with the State Budgeting, Accounting, and Reporting System. There was no Council discussion. There was public comment regarding whether the Resolution changes the spending authority of the City. The staff answer was no, as the City operates on a warrant system. Tape 1, # Councilmember Estes moved to approve the Resolution. Creighton seconded the motion Regular Meeting Page 2 of 4

8 REGULAR CTY COUNCL MEETNG MNUTES FEBRUARY Resolution No 453: Request to State Legislature to Amend Use of Hotel/Motel Tax A Resolution of the City Council of the City of Ocean Shores, Washington Requesting the State Legislature take the Appropriate Action to Allow for Hotel/Motel Tax, Collected under RCW , to Aid in the Costs of Public Safety Protection. Rich McEachin commented that the Resolution purpose is for Senator Hargrove to introduce a Bill allowing the use of the Hotel/Motel (2/3%) tax funds for public safety protection. He stated that between 50 to 80 percent of the calls for service are for visitors. Chief McEachin recommended Council approval of the Resolution. There was Council discussion agreeing with the Resolution. There was public comment regarding whether the City is going to take over management of the Convention Center and in opposition to the Resolution. Mayor Veitz stated that the City Manager was directed during the 2002 budget study sessions to research the Convention Center structural integrity, and costs to repair and upgrade the building. Tape 1, # Councilmember Creighton moved to approve the Resolution as presented. Councilmember Jordan seconded the motion. Request: Black and Veatch Agreement for System Development Charges Study A Request for Council approval of the Agreement with Black and Veatch for a study to recommend System Development Charges for the Water and Sewer Utility Systems. The Request was removed from the agenda. Request: Grays Harbor Economic Development Council 2002 Agreement City Manager's Report: A request for Council approval of the Grays Harbor Economic Development Council Agreement for the year David Saunders requested Council approval of the Grays Harbor Economic Development Council agreement. There are annual dues of $2,300, which has been budgeted for There was Council discussion regarding the benefits received by the City from the partnership with Grays Harbor Economic Development Council and for the $2,300. There were several statements affirming the many benefits received from the partnership and the $2,300 annual payment. Tape 1, # Councilmember Jordan moved to approve the request. Councilmember Estes seconded the motion. Dennis Hunter handed Council information on economic development goals, objectives, and scope of work for the Economic Development Specialist, and commented that he was to provide the information prior to completing the contract for the Specialist, and that the contract will be on the next agenda. Mr. Hunter reported that the City did not receive the Department of Transportation TP grants that would have provided funds for a two-lane roadway, with sidewalks from approximately the hotels to Ensign on Ocean Shores Boulevard Regular Meeting Page 3 of 4

9 REGULAR CTY COUNCL MEETNG MNUTES FEBRUARY City Manager's Report Continued: Mr. Hunter reported that he and Larry Brewer visited Seaside and Lincoln City, Oregon last week. They talked with City Administration and the Convention Center Director and received valuable information to help the economic development in Ocean Shores. They also visited the aquarium in Oregon and learned that there were 750,000 visitors in 2001 Mr. Hunter informed the Council that Mike Daniels with Pacific nternational Engineering has scheduled a trip to Washington DC to lobby for additional coastal community project funding on March 5 through 7, Mr. Hunter will go to DC unless Council would prefer to send someone else. Announcements: Mayor Veitz announced an opening on the Library Board. Please send letter of interest to City Hall. Mayor Veitz also announced that a City Council Study Session is scheduled for Thursday, February 28, 2002 at the Convention Center from 1:00 to 5:00 PM, and that the Chehalis River Basin Watershed Management Partnership will hold a public meeting with exhibits on Tuesday night, February 26, Appointments: Executive Session: None. Mayor Veitz recessed the Regular City Council Meeting to go into the Executive Session at 7:28 PM to discuss on-going litigation with legal counsel. The Council will meet in Executive Session for thirty minutes. There may be Council action taken after the Executive Session. Mayor Veitz called the Executive Session to order at 7:36 Councilmember Jordan removed himself from the Council Chambers under the appearance of fairness doctrine at 8:05 The public was notified at 8:05 PM that the Executive Session would continue approximately thirty minutes. Mayor Veitz adjourned the Executive Session and reconvened into the Regular City Council Meeting at 8:40 No Council action was taken. Adjourn: Councilmember Estes moved to adjourn the Regular City Council Meeting. Councilmember Samuels seconded the motion. The Motion passed unanimously, with Councilmember Jordan absent. Mayor Veitz adjourned the Regular City Council Meeting at 8:41 Signed:, Mayor Attest: Diane J, Houston, City Clerk Regular Meeting Page 4 of 4

10 CTY COUNCL STUDY SESSON MNUTES FEBRUARY Call to Order: Mayor Veitz called the City Council Study Session to order at 1:04 PM, at the Ocean Shores Convention Center. Council present: Mayor Veitz, Councilmembers Creighton, Jordan, Samuels and Snyder. City Staff present: City Manager Dennis Hunter, Finance Director Paul Menter, Public Works Director John Gow, Public Works Coordinator Karen Thevik, Librarian Judy Stull, Police Chief Rich McEachin, Court Administrator Barb Lyda, Fire Chief Dave Cowardin, City Planner Pat Smith, Street Department Crew Chief Jim Ammons, Firefighter/Paramedic Pat Hegge, Sewer Crew Chief Marshall Read, Police Lt. Mike Styner, Building Official Nolan Giles, and City Clerk Diane Houston. Flag Salute Mayor Veitz lead the flag salute. Tape 1, #23 - Councilmember Creighton moved to suspend the rules. Councilmember Samuels seconded the motion. Discussion: City Council discussion with City Staff to Review 2002 Review Budget for Budget for Potential Reductions. Potential Dennis Hunter reported that staff has reviewed the budget for Reductions potential cuts to provide funding to offset the Carillo lawsuit penalty. He commented that in the last two years the City's Operating expenditures have been reduced approximately $350,000 and the property tax has increased zero percent. This year energy costs increased 40%, employee health care premium costs increased 25%, the mandated employee salary increased 3.6%, and still staff prepared a recommended balanced budget for the year 2002 without reduction of services. Mr. Hunter reported on his review of City staff positions. The one possible staff reduction is at City Hall, the City Attorney position, however the City Attorney has been directed to begin providing Prosecuting Attorney services for the City beginning March 1, 2002 with a possible $500 a month increase in salary, if approved by the Council. This would create a monthly saving of approximately $1,300. He discussed this with Mr. Hagen who agreed to terminate the agreement for City Prosecuting Attorney as of March 1, Mr. Hunter presented a commentary on the City Departments, noting departments and staff functions, and recommended no reduction in City staff. The next step of the budget review was a line by line examination to determine where cuts were possible with minimum impact on services. Paul Menter reported on the operating budget and its history. The operating budget was reduced in the years 2001 and 2002, while Council voted no increase in property taxes. The savings from the operating budget cuts will not provide the entire revenue needed to offset the loss from availability fees. The 1998 and 2001 Utility Revenue Bonds should be refunded with General Obligation Bonds otherwise the required contingency utility rates would be implemented, which would result in about a 50% rate increase. Mr. Hunter commented that methods other than the operating budget reduction are also being researched to provide additional revenue to offset the availability fee revenue loss. Possible methods include discussions with the County, State and Federal agencies for grant funds Study Session Minutes Page 1 of 3

11 CTY COUNCL STUDY SESSON MNUTES FEBRUARY Discussion Continued: Review Budget for Potential Reductions There was Council discussion regarding: The proposed cut for fire operating leases and whether that was included in the 2002 budget. t was included in the 2002 budget. The funds from Public Works surplused items do not appear in the budget as an asset, Survey equipment not being used valued at $25,000 to $30,000 could be sold, Selling City owned property, Revenue projection changes, and General Obligation Bonds, assessment on property, and the source and capacity of funds to cover the $100,000 monthly availability fee loss. Mr. Menter explained that sources are from cash balances of the Sewer and Water Utilities. Sewer has approximately $1.4 million and Water approximately $218,000. The important issue is meeting the Bond Covenant requirement, which requires collection of rate revenue that equals a minimum of 125% of operations, maintenance and debt service costs for the Water and Sewer Utilities. There was further Council discussion regarding: The minor impact of the proposed $184,000 operating budget reduction compared to the large revenue issues, The $81,000 budget item for the Beach Pathway, Cost of possible audit by the State, Reduction of City capital projects, A 17% reduction of Water, Sewer, and General Fund budgets for a total $1.2 million reduction, ' The service level affects of a 5%, 10%, 15%, or 20% possible budget cut, Annual revenue from storm water utility, The amount of funds returned to the General Fund Revenue from the bond guaranty fund annually, The property tax ballot issue, A possible LD to replace the loss of availability fees, and Using General Funds to pay utility debt. Mayor Veitz recessed the City Council Study Session at 2:48 Mayor Veitz reconvened the City Council Study Session at 3:02 Tape 2, #404 - There was Council consensus to direct the City Manager to bring a 5%, 10%, 15%, and 20% Budget reduction to Council by April 1, There were public comments regarding employee salaries, benefits, and professional services budgeted; reduction of City employees work week and closing the library for two weeks; City vehicle use; a hiring freeze; closing the airport; the employee cuts in Aberdeen and cutting employees in Ocean Shores; a minimum 10% reduction in cost of City government spending; request of Executive Session minutes; the legality of Ordinance No. 725; the possible voted property tax issue; government's charge to protect the citizens and community; and comment about the tremendous improvements in the City over the past nine years Study Session Minutes Page 2 of 3

12 CTY COUNCL STUDY SESSON MNUTES FEBRUARY Discussion: Availability Fee Replacement Strategy City Council discussion with City Staff regarding Availability Fee Replacement Strategy. Dennis Hunter commented that the Availability Fee Replacement Strategy was discussed during the pervious item. Mr. Menter commented that he believes the best legal solution, which is the most practical and provides the most equity, is to change the method of financing the Utility Revenue Bonds. There was no Council discussion. There was public comment regarding the City appealing the Superior Court decision. t was stated that the City retains the right to appeal the remedy judgment. There were further public comments regarding the airport; and the golf course. Tape 2, # Councilmember Creighton moved to reinstate the rules. Councilmember Estes seconded the motion. Tape 2, # Councilmember Creighton moved to adjourn the City Council Study Session. Councilmember Jordan seconded the motion. Adjourn: Mayor Veitz adjourned the City Council Study Session at 3:55 Signed: Attest: ^ Terry/VeiJz, Mayor^ } Diane J. Houston, City Clerk Study Session Minutes Page 3 of 3