07/28/2017 - MinutesCity of Port Orchard
Council Finance Committee
A meeting of the Council Finance Committee was held at City Hall on July 28, 2017 at
7:30 a.m.
PRESENT: Members John Clauson, Beck Ashby, Shawn Cucciardi, Mayor Putaansuu,
Engineer Mark Dorsey, Thomas Hunter, and Treasurer Martin.
Chairman Clauson called the meeting to order at 7:30 a.m.
Finance Report
The Committee reviewed the Sales Tax Collection Report. Year to Date (ytd) collections
are $107,564.68 above projection. Total collection for 2017 ytd $2,627,985. Real Estate
Excise collection remains strong at ytd $510,396. June 30, 2017 fund balance reports
were reviewed.
Limited Tax General Obligation Bond, 2017. The City received 7 responses to its
request for indicative rates for the Limited Tax General Obligation Bond, 2017 Tremont
Widening Project funding. JP Morgan offered a final 15 year term 10 year par call at a
rate of 2.09% and an All-in-TIC of 2.23% with fees of $4,000. The offer was 41 basis
points lower that the next lowest offer. Closing on the $5,800,000 borrowing is
scheduled for August 10, 2017.
The Tremont Widening Construction Finance Plan was presented. The City realized
the first construction phase expenditures and finance is in the process of seeking
reimbursement from the Transportation Improvement Board grant.
Procurement of Goods and Services
Language relating to Contracting and Purchasing Limitations in the Public Works
procurement policy was discussed. Specifically “Contracts or purchases of any amount
that are not consistent with the adoption of the budget require Council Approval.”
Members stated that as long as the budget contained authority within the $35,000 not
requiring council approval that would be consistent. The ambiguity should be removed
from the policy. The Committee directed that the “not consistent” be clarified either
through a resolution or in the definition section of the policy document. Mr. Martin
said he would work on doing so and bring it forward to Council for acceptance.
State Capital Budget impasse impact
Mayor Putaansuu addressed the legislature’s failure to pass a state Capital Budget and
how it impacted the Well 10 Drinking Water State Revolving Fund Loan No.
DM13-952-185. In effect stopping the Well 10 project. A notice from the Public
Works Board served as Official Notice that the contract is suspended.
Thomas Hunter and Mark Dorsey explained the current status of the project which was
just moving into a bid process. That process is on hold. The Committee asked if the
city could continue to fund the project out of utility funds. Mr. Thompson provided an
expenditure projection that showed the next phase at $1,175,000 an amount Mr.
Thompson said would be difficult to absorb in the current budget. Mr. Martin said it
would not be prudent to continue to funding the project under the circumstances based
upon a determination of how much money needed to remain in the utility fund made in
2012. Mr. Thompson also said grading and ground work done in the fall, and dormant
until spring, could cause erosion mitigation problems over the winter months. The
Committee decided to take a wait and see position until more is learned about the
legislatures’ actions in approving a Capital Budget.
Draft Development Agreement
The City received a draft proposed development agreement from McCormick
Communities, LLC. Staff reviewed the document and provided comments which have
been sent to the Lighthouse Law Group for review. The city may or may not want to
enter into the agreement. Staff comments aligned the agreement to a percentage of
developer cost and city costs. The developer drafted agreement sought 100%
reimbursement. The city would only reimburse those amounts benefiting the city’s
utility system, and not at 100%. The original developer agreement that is being
modified was executed by Kitsap County when the property was within county
jurisdiction and cited county statutes. Staff suggested seeking clarification from the
attorneys whether or not the city can continue to cite a county authorization for the
current draft or should the city be operating and contemplating an agreement under city
authorization in RCW 35.91 Municipal Water and Sewer Facilities.
Staff will discuss the agreement with city attorneys to answer which statute guides the
city prior to the city responding to the developer and bringing the agreement back to the
committee for discussion.
The meeting was audio recorded.
The meeting adjourned at 8:45
Next meeting August 18, 2017 Council Chambers meeting room 7:30 am