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Home My WebLink About09/16/2025 - Work Study - MinutesDocusign Envelope ID: D0EC00DB-89E3-4715-831C-55EA9066B55E �Volt ORCHARD Meeting Location: Council Chambers 216 Prospect Street Port Orchard, WA 98366 City Council Minutes Contact us: Phone (360) 876-4407 cityhall@portorchardwa.gov www.portorchardwa.gov Work Study Session of Tuesday, September 16, 2025 Mayor Pro -Tern Diener called the meeting to order at 6:30 p.m. Roll Call was taken by the City Clerk as follows: Present: Scott Diener, Mayor Pro-Tempore, Position No. 3 Fred Chang, Councilmember Position No. 6 John Morrissey, Councilmember, Position At -Large Heidi Fenton, Councilmember, Position No. 5 Eric Worden, Councilmember, Position No. 4 Jay Rosapepe, Councilmember, Position No. 2 Mark Trenary, Councilmember, Position No. 1 Absent: Robert Putaansuu, Mayor Staff present: Public Works Director Ryan, Finance Director Crocker, Deputy Chief of Police Iwashita, City Clerk Wallace, and Deputy City Clerk Floyd. Staff present via Zoom: Community Development Director Bond and City Attorney Archer. 1. CALL TO ORDER A. Pledge of Allegiance Mayor Pro -tern Diener led the audience and Council in the Pledge of Allegiance. 2. DISCUSSION ITEMS A. Schedule for the 2025-2026 Mid -Biennial Review Finance Director Crocker discussed the proposed timeline for the 2025/2026 mid -biennial review process which included: • September o Departments provided Budget Status Report. o Finance Director reviews Budget Status Report with Mayor. o Departments are consulted on possible modifications to the budget. o Potential Department Director interview on modifications. • October o October 7-10, 2025, Council Finance Committee initial review of Status Report. Docusign Envelope ID: D0EC00DB-89E3-4715-831C-55EA9066B55E September 16, 2025, City Council Meeting Minutes Page 2 of 4 o October 14, 2025, Public Hearing on Revenue Sources leading to setting of 2026 Property Tax Levy Collection. o October 21, 2025, Work Study Session Mid -Biennial Review modification recommendations. o October 21, 2025, Public Hearing on modifications to the Biennial Budget shall be advertised at least once and shall be held no later than the first Monday in December and may be continued from time to time. o October 28, 2025, Ordinance setting 2026 Property Tax Levy Collection. o October 28, 2025, Ordinance Adopting Budget Amendments for 2025-2026 At such hearing, the Council may consider a proposed Ordinance to carry out any modification, subject to the other provisions on RCW 35.34. January o Finance Director records modifications to the Biennial Budget. Brief discussions were held on noticing timelines, public notifications, property tax, and clarification of the timeline. B. General Sewer Plan Presentation Public Works Director Ryan introduced Erika and Adam Schuyler with Consor Engineering who provided a presentation 'General Sewer Plan Update' which included introductions, WAC 173-240-050 General Sewer Plan, Overview, Policies and Standards, Service Area Characteristics, Population, Existing Sewer Facilities, Wastewater Flows, Conveyance System Analysis, Collection Facilities Improvements, Financial Program, Operations and Maintenance Program, and Reclaimed Water. Additional discussion was held regarding population and growth, sewer rates, assets and data, asset management, schedule for update of sewer plan, reclaimed water and staffing issues. Additionally, Finance Director Crocker showed the sewer rate study timeline: • July 1, 2023, The City contracted with FCS Group to conduct a Sewer Rate Study Project, C056-23 • June 10, 2025, FCS presented to Utility Committee • June 10, 2025, FCS presented at the Council work study session • June 17, 2025, Sewer rate study and proposal discussed at Finance Committee • August 6, 2025, FCS provided the draft Sewer Rate Study Report • September 16, 2025, Sewer Rate Study and Proposal discussed at Finance Committee • September 16, 2025, Sewer Rate Study and Proposal discussed at Council work study • September 23, 2025, Public hearing on sewer rate changes • October 14, 2025, Adopt sewer rate changes • January 1, 2026, Sewer rate changes become effective He also discussed the proposed sewer rate increase which included revenue increases, residential rate per ERU [Equivalent Residential Unit] and non-residential rate per ERU, and a revised proposed rate per ERU with proposed increases which added two FTE's Docusign Envelope ID: D0EC00DB-89E3-4715-831C-55EA9066B55E September 16, 2025, City Council Meeting Minutes Page 3 of 4 [full time employees]. He asked Council to direct him to which proposed rate he should move forward with; the proposed rate with the two FTE's or the proposed rate without the two FTE's. Council and staff continued the discussion, including community input, discussion from the Finance Committee, sewer and utility bills, and using a consultant for the rate study. Councilmembers Rosapepe, Trenary, Worden, Diener, Morrissey and Chang are in support of adding two FTE's. Councilmember Fenton is in support of the original proposed increase without the two FTE's. Council direction: Staff to move forward with a public hearing on the proposed increase with the two FTE's. C. Multifamily Tax Exemption (MFTE) Community Development Director Bond said this is a continuation of our multifamily tax exemption [MFTE] discussion from the July work study meeting. At that meeting, the direction that he received was to draft a multifamily tax exemption ordinance that would be roughly based on the ordinance that had been repealed in 2023. We wanted to bring forward both an 8- and 12 -year multifamily tax exemption. We want to try to accomplish two things. One, to encourage the development of higher - value buildings so that the City's long-term tax revenues would be more favorable than they are, given what the market is currently producing, and two, for the 12 -year exemption option, we wanted to have a more aggressive affordability target. The law on 12 -year multifamily tax exemptions requires that 20% of the units in the complex be affordable. That number is staying the same. What's changing is the actual amount that somebody would pay for one of those units is going to be reduced quite a bit over what had been in our previous ordinance. To recap what multifamily tax exemptions are, these programs are a property tax waiver, and cities can enact them to support local housing goals. They can apply for conversion of housing, rehabilitation, and new construction, where there are at least four residential units. The big change is that we've added definitions for middle housing and for mixed -use shopfront buildings, because those are two things that we are trying to encourage under the new proposed framework. Also, we've clarified what it is to be an urban center, and the law requires that to designate MFTE target areas, the city has to adopt a map and indicate where its urban centers are. So we have discretion to determine what is an urban center and what is not. Lastly, Community Development Director Bond explained the Land Use Committee and the Economic Development Committees had different recommendations to the draft MFTE Docusign Envelope ID: D0EC00DB-89E3-4715-831C-55EA9066B55E September 16, 2025, City Council Meeting Minutes Page 4 of 4 Residential Targeted Areas map. The Land Use Committee recommended pulling properties of the map if the zoning didn't allow for the four-story apartment buildings, and the Economic Development Committee thought that the area between the Bethel Centers ought to be included. Additional discussion was held regarding changes to project eligibility and new criteria that would apply to all multifamily tax exemption projects, income requirements, discussion with Kitsap Builders Association (KBA), parking, Overlook and Peyseno apartment complexes, tax savings, Council has the power to repeal this program [MFTE] at any time, tax shifts, the proposed map and changes from the Land Use and Economic Development and Tourism Committees and height overlay and view protection districts. Council direction: Staff to draft the ordinance with the 8 and 12 -year MFTE options and to use the Economic Development and Tourism Committee recommended map. 3. GOOD OF THE ORDER Councilmember Rosapepe said COVID shots are available should anyone want them. Community Development Director Bond reported on outreach and a workshop for the Sherman Avenue Stormwater Park. City Clerk Wallace mentioned there is a regularly scheduled City Council meeting on November 11th. City Hall is closed that day in observance of Veterans Day and Mayor Putaansuu recommended to cancel that meeting and make the November 18th City Council meeting a regular business meeting instead of a work study. City Council agreed with this change and City Clerk Wallace indicated she would update the 2025 City Council Meeting Schedule resolution and bring it back to Council for adoption. Councilmember Fenton would like the City to better notify the citizens about SeeClickFix. Public Works Director Ryan spoke to SeeClickFix, explaining it is managed by Kitsap County and not the City. If the City would like to manage it, there would be a charge. He also reported on TV'ing the sewer systems and open sewer tasks. Councilmember Morrissey reported that everyone can donate blood as it is always needed, and he will not be in attendance for the September 23rd City Council Meeting. 4. ADJOURNMENT The meeting adjourned at 9:02 p.m. No other action was taken. ,QSigned by: \\,t1 �O�eQT 9f'' ",_ Signed by JJYA u � =G��4ORgr�Q•.�� 1: �� esItiU 4RASA54RRD00418 I Ci Z C �,.�rSE�L'� Brandy Wallace, MMC, City Clerk Robert Putaansuu, Mayor