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HomeMy WebLinkAboutApproved Minutes - 2010-02-02 PM ,a� F ..4, CITY COUNCIL REGULAR MEETING IMINUTES February 2, 2010 Mayor Jack Hoffman called the regular City Council meeting to order at 6:35 p.m. on February 2, 2010, in the City Council Chambers, 380 A Avenue. Present: Mayor Hoffman, Councilors Johnson, Hennagin, Olson, Moncrieff, Tierney, and Jordan. Staff Present: Alex McIntyre, City Manager; David Powell, City Attorney; Robyn Christie, City Recorder; Joel Komarek, LOIS Project Director; Jane Heisler, LOIS Communications Director; Kim Gilmer, Parks & Rec Director 3. PRESENTATIONS 3.1 Presentation of Distinguished Service Award to Craig Diamond for his service on the Natural Resources Advisory Board and Sustainability Advisory Board Mayor Hoffman presented a Distinguished Service Award to Craig Diamond and thanked him for his service. He mentioned that Mr. Diamond served on the Natural Resources Advisory Board from 2006-2009 (co-chair, 2006-2007). His passion for sustainability led him to create the Sustainability Advisory Board, on which he also served as co-chair. He has been an articulate spokesman for sustainability and encouraged the Council and City staff to adopt sustainability. Mayor Hoffman noted that Mr. Diamond was moving to Hartford, CT. Mr. Diamond thanked the Council and the City for giving him the opportunity to form the Sustainability Advisory Board. He recognized the Council's leadership in sustainability and Ms. Papaefthimiou and Ms. Millhauser for their great work. 3.2 Presentation of Distinguished Service Award to Nancy Niland Shatsky for her service on the Library Advisory Board Mayor Hoffman presented a Distinguished Service Award to Nancy Niland Shatsky and thanked her for her service. He indicated that she joined the Board in March 2007 and served as chair from July 2008. He spoke of her work on the Library Planned Giving Program and the LO Reads Steering Committee, as well as representing the library at citywide events. Ms. Shatsky thanked the library staff and her family for their support. She commented that serving on the Board has been a great experience. She invited the Council members and audience to attend the many LO Reads events occurring this month. 3.3 Proclamation honoring the League of Women Voters on its 90th anniversary Mayor Hoffman introduced Lynn Gordon, League of Women Voters. Ms. Gordon gave a brief overview of the history of the League, which began in 1920 with the conversion of the National American Women's Suffrage Association to the new organization. She described the League's work as political but non-partisan in educating voters on issues, advocating for the passage of legislation, and initiating get out the vote campaigns, as well as other activities as part of their effort to make democracy work. She mentioned that the League sponsored the first Meet the Candidate forum in 1928. City Council Regular Meeting Minutes Page 1 of 11 February 2, 2010 She described how the League grew in Lake Oswego, beginning in 1955, to become the League of Women Voters in Clackamas County with expansion into Milwaukie and east Clackamas County in 2002. She thanked the Council for recognizing the League on its 90th anniversary. Mayor Hoffman read the proclamation and presented it to Ms. Gordon. 3.4 LOIS Update Ms. Heisler mentioned that many barges would leave the lake once the contractor finished installing the less than 50 anchors remaining. She indicated that they were just under 57% on the pipe fusing and replacement. She explained that what Councilor Hennagin saw regarding the pipe fusing machine at the trestle had been the contractor bringing in a smaller machine because they have finished fusing the 42-inch pipe. Mr. Komarek indicated that the contractor expected to complete the ground installation work around February 15. He mentioned that staff was working closely with the Lake Corporation and the contractor to manage the marine traffic congestion that would occur at the entrance to Half Moon Bay and near the entrance of the East Arm when the contractor began focusing on the pile work in those areas. He spoke of the completion of the manhole installations this week and the progress on the placement of the buoyant tether brackets, to which the contractor would attach the 42-inch pipe by mid-February. He mentioned the Council's contract award to J.W. Fowler on January 5 for the Bryant Road and Foothills Road pump stations, and the bid opening on the Lake Down Phase scheduled for mid- February with a tentative Council contract award in early March. He spoke of the Council's authorization to include the cured in place plastic (CIPP) pipe rehabilitation of West Bay, Lakewood Bay, and Foothills into the Lake Down phase for potential cost savings, and the seismic retrofit of the elevated pipe in the Foothills Road area. Ms. Heisler mentioned scheduling Meet the Contractor meetings for the Bryant and Foothill neighbors. She indicated that they were also working with different easement associations to work out the details of the LOIS work, including Village on the Lake, Forest Hills, and Springbrook. She noted the Council LOIS subcommittee meeting last week, a new video on the website on pipe bending, an article about the pump station contractor, the soon completion of the third webisode, the placement of videos on Facebook and YouTube, an upcoming article in Hello LO on the Lake Down Phase, and the Council weekly update in the Digest. She presented several photos of various aspects of the project work. Mr. Komarek noted the acceleration in the schedule of the CIPP work and the Foothills seismic upgrade work from the later part of 2011/2012 to the second or third quarter of 2011. He explained that the project cost estimate was now just under$100 million, with the good bidding climate and the deferral of a portion of the Foothills sewer replacement until they knew more about the redevelopment and streetcar activities in the Foothills area. COUNCIL QUESTIONS Ms. Heisler thanked Mayor Hoffman for his report that the shareholders at the Lake Corporation Shareholders Meeting had been complimentary with respect to the contractor and the staff, as staff did try to stay on top of any issues. Mr. Komarek indicated to Mayor Hoffman that it was likely that staff would nominate the project for national and international engineering awards, as it was an innovative use of materials and an application not done before. Councilor Hennagin congratulated staff that the cost of this project has come down from an original estimate of$120 to $124 million to under$100 million. Mr. Komarek commented that staff was proud of that and always looking for ways to economize and improve efficiencies, such as packing in as much work as they thought could reasonably be done while the bidding climate was good. City Council Regular Meeting Minutes Page 2 of 11 February 2, 2010 Councilor Jordan commented that the City's change of direction on the project, which occurred shortly after Mr. McIntyre came on board, has proved to be the right action and made a major contribution to the reduction in cost. She expressed her appreciation for the staff advice and willingness to undertake this difficult task. Councilor Tierney observed that the project was under budget, on schedule, and looked terrific. Mr. Komarek, on behalf of the LOIS team and Brown & Caldwell, thanked the Council for its continued support and interest in this project. 4. CONSENT AGENDA Councilor Hennagin moved adoption of the Consent Agenda. Councilor Jordan seconded the motion. A voice vote was taken, and the motion passed with Mayor Hoffman, Councilors Johnson, Hennagin, Olson, Moncrieff, Tierney, and Jordan voting "aye." [7-0] 4.1 REPORTS 4.1.1 Resignation of Craig Diamond from the Sustainability Advisory Board, effective February 28, 2010 Action: Accept resignation 4.1.2 Service contract renewal to provide temporary workers for Parks Maintenance activities Action: Approve renewal of service contract with The Personnel Department in the amount of$185,000. 4.2 RESOLUTIONS 4.2.1 Resolution 10-07, authorizing an amendment to the Intergovernmental Agreement with the Clackamas County Department of Human Resources, Social Services Division, for Fiscal Year 2009-2010 Action: Adopt Resolution 10-07 4.2.2 Resolution 10-11, authorizing an intergovernmental agreement with the City of Portland Bureau of Environmental Services for the purpose of facilitating a habitat enhancement project on Tryon Creek in an area that includes real property owned by the City of Lake Oswego Action: This item was pulled for discussion. END CONSENT AGENDA 5. ITEMS REMOVED FROM THE CONSENT AGENDA 5.1 Resolution 10-11, authorizing an intergovernmental agreement with the City of Portland Bureau of Environmental Services for the purpose of facilitating a habitat enhancement project on Tryon Creek in an area that includes real property owned by the City of Lake Oswego Ms. Gilmer recalled that last January she had discussed with Council the components of an IGA with the Portland Bureau of Environmental Services (BES) regarding a stream restoration project along Tryon Creek that included City property. She reviewed the project location on a combination of Metro, Portland, and Lake Oswego properties along the creek in Tryon State Park. She described the proposed work to grade back the bank and to slow the creek down through increased meandering, as well as through wooden structures and boulders placed in the creek (p.21). She mentioned that BES's initial cost estimates came in at more than their grant, and, therefore, they scaled back the amount of debris that they would place in the creek. She used plans of the City Council Regular Meeting Minutes Page 3 of 11 February 2, 2010 project area (pp.22-23) in describing the proposed restoration work. She used plans of the project area (pp.23-24) in describing the proposed mitigation measures that BES would take in different areas on the project site. She mentioned the use of shrubs, trees, and native grasses. She indicated that the mitigation on the Lake Oswego property would improve the bank and create a little grassy meadow that would be easier for the City to maintain in the long run. She pointed out the area on Lake Oswego property where BES would deposit the soil that it had to remove from the project site. She explained that this would minimize the grading that the City would have to do eventually in building a trail at that location. She mentioned the removal of 13 trees, which BES would either chip on site or lay down as wildlife habitat. She mentioned the environmental testing that BES had done at the park site in 1999. The insignificant amounts of hydrocarbons and heavy metals found would not require clean up when the City built its pathway. She indicated that staff negotiated with BES that, in the event of any necessary clean up, the two organizations would either share the costs, modify the project, or terminate the project. She described the provision in the BES project design for a 50-foot corridor without trees along a desirable trail alignment for a pedestrian bridge crossing from Foothills Park to Tryon Cove Park. She explained that the City stood a better chance of getting permits from the environmental agencies along this alignment, which also allowed an ADA-accessible pathway. She indicated that BES did not grant a trail easement to the City for the narrow portion of its property that the preferred trail alignment crossed because they were not yet certain about the results of their re- master planning of the water treatment plant. However, they did agree to work in good faith towards getting a pathway. Mr. Powell concurred, noting that the language in paragraph 9, p. 29, was not a guarantee but rather a good faith obligation on Portland's part. COUNCIL QUESTIONS Ms. Gilmer confirmed to Councilor Hennagin that what BES intended to accomplish with the project was to lay back the steep slope next to the creek to provide for a wider creek channel. She noted that it affected about 50 linear feet of City property. Mayor Hoffman commented that the idea was to allow the stream to find the most efficient way to get from the pipe under Hwy 43 to the Willamette River, which could include finding a new channel. Mayor Hoffman observed that one of the problems that they had with many creeks was that the creeks were channelized. A goal of watershed management was to unchannelize the smaller creeks and eliminate the culvert. Ms. Gilmer recalled an Oregon Fish & Wildlife project from last summer that created a series of steps up to the culvert as a way for fish to get up to and through the culvert. Mayor Hoffman indicated to Councilor Hennagin that Metro, Portland, and Lake Oswego pooled their money to purchase the Jarvis property in 2002, with the property divided up according to contribution amount. Ms. Gilmer indicated to Councilor Olson that the increased acreage from the mitigation should not increase the City's maintenance level because those areas would return to a natural state, and the City was not maintaining what was there now anyway. Councilor Jordan moved to adopt Resolution 10-11. Councilor Johnson seconded the motion. A voice vote was taken, and the motion passed with Mayor Hoffman, Councilors Johnson, Hennagin, Olson, Moncrieff, Tierney, and Jordan voting "aye." [7-0] 6. CITIZEN COMMENT Councilor Johnson moved to suspend the Council rules and set the time limit at three minutes per citizen. Councilor Jordan seconded the motion. A voice vote was taken, and the motion passed with Mayor Hoffman, Councilors Johnson, Hennagin, Moncrieff, Tierney, and Jordan voting "aye." Councilor Olson voted 'no.' [6-1] City Council Regular Meeting Minutes Page 4 of 11 February 2, 2010 7. PUBLIC HEARINGS 7.1 Resolution 10-03, a resolution of the Lake Oswego City Council approving a change in the methodology relating to system development charges for the water utility, and, Ordinance No. 2547, amending Chapter 39 of the Lake Oswego Code relating to Water System Development Charges STAFF REPORT Mr. Komarek indicated that staff was seeking Council approval of Resolution 10-03 to modify the City's current water SDCs methodology. He introduced Jon Ghilarducci, a principal with FCS Group, a municipal financial consulting firm. He recalled the July 2009 staff presentation to the Council of the findings of the technical analysis, and the September 2009 staff report to Council on staff conversations with Metro staff regarding how to use SDCs to encourage vibrant communities and different types of development. He mentioned Council's direction in September for staff to publish the 90-day notice. Mr. Ghilarducci gave an abbreviated presentation of the technical analysis findings. He discussed the calculation methodology for the two components of an SDC, the reimbursement fee and the improvement fee, which represented one share of system capacity to serve each increment of new growth. He reviewed their key assumptions behind the SDC methodology, including the use of the demand forecasts from the 2007 Corolla Report, improvement fee cost estimates updated to current year dollars, and a 20-year CIP but not future financing costs. He indicated that they calculated the charges on a meter equivalent basis (Lake Oswego used a 3/4 inch meter). He mentioned their use of a technical, cost-based, solution, as opposed to a policy- based solution. He reviewed the fee calculations resulting in a reimbursement fee of$947 per meter equivalent and an improvement fee of$5,041 per meter equivalent, plus an additional $416 for administrative cost recovery, for a total SDC of$6,404 per meter equivalent. He presented the schedule showing the charges increasing by meter size. He presented a comparison of area water SDCs. He pointed out that it was an apples to oranges comparison, as each system was different. He recommended Council adoption of the $6,404 per meter equivalent SDC, clarification of Code language regarding the application of credit to new connections, and consideration of phasing in the charge. Mr. Komarek indicated that staff presented this same information to the Homebuilders Association and local developers so that they would understand the City's approach and numbers. He reported that both groups expressed concern with the City enacting the fee all at once (they preferred a phased approach) and including speculative future debt financing costs. He noted that Resolution 10-03 phased in the fee in three parts and did not include debt financing in the fee. COUNCIL QUESTIONS Mr. Komarek indicated to Councilor Tierney that he would report back on the percentage increase in the cost estimates from the master plan costs to 2009 dollars, per the Engineering News-Record construction cost index. Mr. Ghilarducci indicated to Councilor Tierney that Wilsonville reduced its SDC temporarily to give relief to the development community. Mr. Ghilarducci indicated to Councilor Hennagin that the 40% of the $78 million allocated to growth was roughly proportional to what was left to grow to build out, according to the forecasts in the Joint Water Supply report. He said that the $78 million included more than Lake Oswego's share in the LO/Tigard water project, as it included the master plan projects as well. City Council Regular Meeting Minutes Page 5 of 11 February 2, 2010 Councilor Hennagin asked what the logic was behind not including the debt service for a bond. Mr. Ghilarducci indicated that the two main concerns were the speculation inherent in trying to determine how much debt the City would issue in the future and what the interest costs would be, and double-charging new homes through a one-time SDC that included those costs, in addition to the ongoing water rates that repaid the debt. Mr. Komarek indicated to Councilor Olson that the number of new units included the projected growth in the City's USB outside the city limits (including Foothills) plus some development in the Stafford area. Councilor Olson asked if the difference between the $32 million and the $78 million represented system upgrades needed regardless of whether the city grew. Mr. Komarek explained that each project had a different cost allocation for growth-related costs and for capacity for existing customers costs, although the bottom line was roughly proportional. He gave an example of the raw water transmission main cost allocation of 60% for serving existing customers and 40% for growth. Mr. Ghilarducci clarified to Councilor Tierney that because the improvement fee reduced the rate burden for every ratepayer in the future, a homeowner paying both an SDC and the ongoing water rate was not charged twice. Mr. Powell recommended re-inserting the word `capital' before `improvement plan' in Section 1.b of the proposed ordinance (p.61) for consistency with other references to the `capital improvement plan' in the ordinance. PUBLIC TESTIMONY Mayor Hoffman opened the hearing to public testimony. • Ernie Platt, Homebuilders Association (HBA) He thanked staff for the considerable time they spent in helping the Homebuilders Association to understand this complex SDC. He mentioned his appreciation of the Council asking similar questions to what the HBA members had asked. He noted that it was a 157% increase over the current rate, which was a lot for anyone in business to absorb, especially during these tough economic times when developers did not have the additional financing to pay for such a large increase. He stated that the Homebuilders Association fully supported the staff recommendation to phase the SDC in three parts, reaching the final number in two years, and not to include the debt financing costs. He commented that they were not happy about the increase but understood that those who used the water needed to pay for it. Mr. Platt indicated to Mayor Hoffman that developers paid the SDC when the City issued the building permit. Mayor Hoffman observed that the challenge from a builder's perspective was up fronting the SDC fee and then waiting until the house sale closed for payback. Mr. Platt commented that more and more often they were finding construction financing sufficient to cover the construction but not the upfront fees; a builder had to use operating capital extracted from his business while the project was under construction. He indicated to Councilor Hennagin that the cause was a combination of tighter construction loans and the loan to value calculation. • John Surrett, 1685 Edgecliffe Terrace He asked a series of questions. Mr. Komarek indicated that staff did not include SDC revenue in the water rate forecast because the bond rating agencies did not allow inclusion of that revenue when bonding. Mr. Ghilarducci explained that the bond market required a jurisdiction to set its water rates to recover the debt service and would not even consider using SDC revenues. Mr. Komarek noted that the bond market did not like the variability in the collection of SDC revenues. City Council Regular Meeting Minutes Page 6 of 11 February 2, 2010 Mr. Komarek directed Mr. Surrett to the Corolla Report for the projected population growth figures for Lake Oswego and Tigard. Mr. Surrett commented that Tigard had an aggressive population growth and expansion program, (looking to increase from a mid-40,000 population to 100,000) while Lake Oswego's growth projection of half of one percent a year was quite conservative. Mr. Ghilarducci indicated to Mr. Surrett that Tigard was due to update its SDCs to reflect the costs of the partnership agreement. Mr. Komarek stated that the forecasted number of residents in the Stafford Triangle at build out was around 6,900. Mr. Surrett asked how the City would be able to show beneficial use for the purposes of increasing water rights on the Clackamas to 16 mgd when the people in the Stafford Triangle did not exist. He mentioned that LONAC submitted testimony endorsing the Stafford Triangle as rural reserve. Mr. Komarek indicated that he would be happy to meet with Mr. Surrett to discuss the population forecasts. Councilor Jordan pointed out that the City could not put SDCs towards the cost of a project that it was anticipating right now in its rate calculation, but somewhere down the line, it could apply the SDCs to the expansion part of a project. Mr. Ghilarducci observed that the issue with SDCs was always cash flow. The City needed to build the projects now, yet it collected the SDCs incrementally over time. He discussed how this related to rates. He explained that water rates needed to meet all the utility's cash needs, such as operating expenses, debt service, and capital cash funding, and to meet revenue bond coverage requirements. Since bond market did not allow the City to count SDCs in meeting the coverage test, SDCs did not have a dollar for dollar impact on the water rates, even though the City could use them to pay the debt service. Mayor Hoffman closed the hearing to public testimony. COUNCIL DISCUSSION Councilor Jordan moved to adopt Resolution 10-03 and to enact Ordinance 2547. Councilor Johnson seconded the motion. Councilor Moncrieff thanked Mr. Platt, the Homebuilders Association, and staff for working cooperatively on this matter. Councilor Tierney indicated that he supported the resolution with some hesitancy. He discussed his concern that the City continue to look at SDCs across the entire spectrum of housing growth in Lake Oswego, especially with regards to attainable housing. He commented that SDCs were an impediment to some of the Council's goals. A voice vote was taken, and the motion passed with Mayor Hoffman, Councilors Johnson, Hennagin, Olson, Moncrieff, Tierney, and Jordan voting "aye." [7-0] Councilor Olson asked to see the comparison to other jurisdictions table again. Mr. Komarek confirmed that Lake Oswego would hit the high end on SDCs in a year. Councilor Olson asked staff to let the Council know when Tigard updated its SDCs. Mr. Komarek indicated to Mayor Hoffman that staff presented the full range of SDCs across all utilities to the Council last July. Mayor Hoffman commented that the Council needed to keep track of that information when it discussed attainable housing. Councilor Jordan pointed out that there were alternatives that the Council could take with respect to SDCs in order to make things work in favor of affordable housing projects. Mayor Hoffman recalled that, at a meeting with Metro staff, they identified opportunities to promote certain types of developments, with the big benefits coming from the transportation SDCs and surface water fees. 8. INFORMATION FROM THE COUNCIL 8.1 Councilor Information City Council Regular Meeting Minutes Page 7 of 11 February 2, 2010 8.1.2 Centennial Celebration Councilor Jordan announced that the new website, LO100.com, with the Centennial events schedule, was up and running. She mentioned that the video of Lake Oswego history was also available at the website. 8.1.3 LO Reads Councilor Hennagin reminded the audience that February was LO Reads month. He mentioned an open house this Thursday at Graham's Stationary and Chrisman Framing Galleries and the unveiling of 18 paintings done by local artists reflecting their thoughts after reading LO Reads book selection, The Whistling Season. 8.2 Reports of Council Committees, Organizational Committees, and Intergovernmental Committees 8.2.1 National League of Cities (NLC) Annual Meeting Report Councilor Tierney reported that, as a consequence of attending some sessions associated with First Tier Suburbs (a special group within the NLC), the new NLC president appointed him to the group's Steering Committee. He said that he asked staff to check with their Washington lobbyists to see what value this appointment might have. He mentioned that he would talk with Mr. McIntyre about potential travel costs associated with his participation. He observed that active participation in an organization probably meant getting more out of the organization for the community. Mayor Hoffman mentioned the benefits in learning from other people, as opposed to keeping a narrow focus. 8.2.2 Metro Policy Advisory Committee (MPAC) Report Mayor Hoffman reported that MPAC made its last recommendation with respect to urban and rural reserves to leave Stafford undesignated. He indicated that it was now up to Metro and the Core 4. He mentioned the anticipation of a decision by the end of February. If they made no decision, then the process reverted to the old method based on soil types. In that case, Stafford would undoubtedly come in 2010 or 2015. 8.2.3 Mayors' Streetcar Summit Mayor Hoffman announced that he would attend the Mayors' Streetcar Summit in Washington, D.C., at the end of this month. This involved ten mayors from around the country meeting with Rep. Blumenauer and various agencies to discuss streetcars and the New Starts program. 9. REPORTS OF OFFICERS 9.1 City Manager Mr. McIntyre announced that the City received notice today from the State that it has funded the City's Safe Routes to School project of Pilkington Road/Jean Road to Dawn Street. He explained that staff would use the funds for the preliminary engineering with construction slated for next year. He indicated to the Mayor that he would notify the interested parties. 9.1.1 Review of Council Schedule 9.2 City Attorney Mayor Hoffman recessed the meeting for a break at 8:17 p.m. He reconvened the meeting at 8:24 p.m. City Council Regular Meeting Minutes Page 8 of 11 February 2, 2010 10. EXECUTIVE SESSION 10.1 Closed session under authority of ORS 192.660 (2) (d) conduct deliberations with persons designated to carry on labor negotiations Mayor Hoffman recessed the meeting to Executive Session at 8:24 p.m. He reviewed the Executive Session parameters. 11. RETURN TO OPEN SESSION Mayor Hoffman reconvened the regular meeting at 9:02 p.m. The Council reviewed the remainder of the draft goals at Councilor Olson's request. The Council discussed the goal relating to the City's financial audit. Councilor Tierney suggested striking the word `strive' from `Strive for the audit...'. He held that the goal should be the City having no material weaknesses in light of the audit. Mr. McIntyre mentioned Ms. Euler's concern that she was inheriting the `material weaknesses,' and that she did not want to be held accountable for those errors. Councilor Tierney pointed out that all the material weaknesses were date specific events. Councilor Olson commented that Ms. Euler was addressing those identified areas, which were fixable; Council would check back in March and expect a lot of progress in fixing them. Mr. McIntyre acknowledged that ultimately he was accountable for the situation. He indicated that Ms. Euler, as she unearthed the non-computer financial systems in place now at the City, was seeing a need for a big fix in order to get on rock solid financial ground again. He clarified that all the money was accounted for, but Ms. Euler was giving the rudimentary, fundamental elements of the organization's non-computer financial systems `F grades.' Councilor Tierney mentioned goal language indicating that the Council understood that the issues were systemic, and that the solutions would fix the problems. Councilor Johnson suggested a compromise goal of the City achieving an audit without any material weaknesses or errors in the next two years. Mayor Hoffman commented that that was not a goal for the Council, as the Council would not do that work. Mr. McIntyre recalled the Council discussion of a goal as something achievable. He suggested that Councilor Tierney's goal was not achievable as of today, although it would be in two years. He observed that an unspoken expectation was that the City would have a clean audit. He noted that the City has always had a clean audit, even though it had some material weaknesses showing up in this year's audit. He indicated that staff was struggling in the financial arena to strengthen the foundations. Councilor Jordan observed that they were trying to support the identification of system changes that would eliminate material weaknesses. Councilor Olson indicated that her goal was to strengthen the Financial Department to the point where the City no longer had material weaknesses. Councilor Moncrieff agreed. Mayor Hoffman described the goal as telling the City Manager that the Council would give him the tools that he needed to succeed, as opposed to the Council controlling things. The Council agreed on a goal of strengthening the financial systems in order to eliminate material weaknesses in future audits. Councilor Olson mentioned another goal of the Council receiving rock solid financial reports from the Finance Department in order to do its job. Mr. McIntyre indicated to Councilor Tierney that Council had asked staff to identify untapped funding opportunities, which he acknowledged might not be a goal. City Council Regular Meeting Minutes Page 9 of 11 February 2, 2010 Councilor Tierney asked to see a summary of the cost allocation study before the Council adopted the report's recommendations. He noted that the recovery of the indirect program costs of implementing the cost study allocation study recommendations would be in the budget. Mr. McIntyre explained that this involved an internal administrative policy, which he would provide to the Council. He confirmed to Councilor Jordan that this was not a new policy, as the new study updated the figures in the previous cost allocation study. Mr. McIntyre indicated that the five-year capital improvement plan (CIP) would come to Council in March for approval; the first year of the CIP would then go into the FY 2010/2011 budget. Councilor Tierney referenced "Department budgets will fully fund all positions in budget reasonable amounts in line item accounts for unforeseen circumstances." He asked whether departments had contingency funds. Mr. McIntyre clarified that the City funded contingencies by fund, and not by department. He explained that the idea was to provide some flexibility within the budget in order to allow him to respond to unforeseen circumstances. He mentioned that, per Council direction, the budget was lean; the only thing left to cut were people. He commented that a budget could be so tight that it was inflexible and effectively hamstrung the entire organization. Councilor Tierney concurred on having a contingency, provided that it was done under Mr. McIntyre's control and not on a department basis. Councilor Tierney referenced "Fund streets and Comprehensive Plan improvements from revenues generated in the street funds." He spoke to using other funding sources, such as franchise fees, to fund street improvements. Mr. McIntyre clarified that this bullet meant that whatever revenues were coming into the street fund he would use on the streets. He would not use other revenue sources unless the Council directed him to do so. He indicated that all franchise fees currently went into the general fund, but he would check into whether some of the PGE franchise fee was supposed to go to the street fund. Mr. McIntyre indicated to Councilor Olson that he would "fund the balance of the Foothills Framework Plan from the general fund reserves" (p.4, #4) because he could not pay that amount of money out of operations. He said that he called this out explicitly in order to verify that what he heard Council say at goal setting regarding funding one-time costs was correct. He confirmed that the City would get the money back. He indicated to Councilor Olson that the language about "developing a baseline budget unless otherwise directed" (p.3) was the same language that staff presented at goal setting. Since he did not hear anything different, he was presenting it again for verification. He mentioned his intention to have the department heads (on a monthly basis) brief the Council on what services each department provided. He referenced his earlier comment about how the organization has absorbed many services that were now part of the baseline. He described another staff pilot effort to plug performance measures into the budget in order to give Council a sense of measures for City services. Councilor Olson expressed her concern that if they added services in one area (such as strengthening the Finance Department), then they needed to cut somewhere else. She commented that she hesitated to agree to the baseline budget. Councilor Jordan recalled her concern at goal setting that she did not know what the baseline services were. She observed that if Clackamas County Social Services did reduce the amount of money it gave to Lake Oswego to provide services, the City would still have to provide those services unless it had a filter in place that eliminated the service because the cost benefit was not worth it. She indicated that she trusted that staff was using filters to decide whether to end a service or not. Since she did not know what those were, she would like information on the filters. She commented that the City has provided services to its citizens through projects funded for a few years, and then continued the service after the funding ran out because the people liked the service. City Council Regular Meeting Minutes Page 10 of 11 February 2, 2010 Mayor Hoffman mentioned his assumption that the City would aspire to meet Lake Oswego citizen needs and expectations, which the City Manager would do through building a baseline budget. Councilor Jordan concurred but pointed out that citizens often had no perspective that if the City did not offer a program that only 10 to 12 people used, then the City might have money to maintain the streets and fill potholes. She reiterated that she wanted to know what services were truly baseline at this point in time. Councilor Tierney mentioned the need to fund increased personnel costs and PERS. He indicated that the other part of the equation was finding more revenue or reducing services. Councilor Moncrieff recalled that Ms. Gilmer tried to do that through the budget, and the Council pulled her down. She spoke to having respect for the process and the plan for addressing the many legitimate needs in the community, as opposed to a knee-jerk reaction when one need came forward. Mr. McIntyre indicated to Mayor Hoffman that staff would write up the Council's direction and return on February 16. 12. ADJOURNMENT Mayor Hoffman adjourned the meeting at 9:31 p.m. Respectfully submitted, Robyn Christie /s/ Robyn Christie City Recorder APPROVED BY THE CITY COUNCIL: ON May 18, 2010 Jack D. Hoffman /s/ Jack D. Hoffman, Mayor City Council Regular Meeting Minutes Page 11 of 11 February 2, 2010