The Lynnwood City Council last week held the first of several discussions regarding the city’s proposed 2021-22 biennium budget and how its response to the COVID-19 pandemic will impact the city’s finances.
During the council’s Sept. 14 business meeting, city staff presented a preliminary look at the city’s anticipated revenues and expenditures for the next two years. Due to the pandemic, staff have projected a decrease of more than $7 million from the last biennium in both revenues and expenditure.
The proposed budget also included a reduction in property tax revenue paid to the city in 2021 and a flat property tax of $4.3 million — the same amount levied in 2020. Finance Director Sonja Springer said the amount equates to a levy rate of approximately $0.54 per $1,000 of assessed value, and she estimates that will translate into a decrease of roughly $2 for the average property taxpayer.
Springer also said future project developments in the city pay a “significant portion” of the cost typically paid by homeowners.
“What this means is there’s going to be a reduction to the average homeowner, because as you know as new development occurs those new buildings take some of that property tax burden off the taxpayer,” she said.
Due to the city’s response to the pandemic, Springer said two of the city’s largest revenue generators — sales tax and the city’s parks and recreation revenues – are projected to decrease. Based on the current economic trends, Springer said she estimates a $2.8 million reduction in sales tax revenue and a $1 million decrease in parks and recreation revenues the city gets from fees.
However, Springer added there has been growth in the city’s development and business services revenues, including a $3.5 million projected increase in permit and land use fees over the next two years.
During the presentation, Springer highlighted other significant changes to the city’s finances including transferring the $400,000 budget for the city clerk program from administrative services to the executive department.
There is also a $620,000 decrease in the city’s legal budget because the city attorney budget was dispersed from the legal department to different city departments that use legal services. Springer said this will help control costs by finding out the departments’ true legal services cost.
The permits and supports services program — which was previously part of the city’s public works department — was recently transferred to the city’s development and business services department, taking $1.2 million in funds with it.
The city also recently combined the community development and economic development departments with development and business services, resulting in a $8.2 million transfer to development and business services.
As part of its response to COVID-19, the city took steps to save costs, including discontinuing nonessential travel and training, issuing a partial hiring freeze and curtailing expenditures for professional services. Some departments — like parks and recreation – closed due to the pandemic, reducing the need for staff. Savings were also realized when employees went part time or took advantage of early retirement. As a result, the city reduced staff by a little more than 18 full-time equivalent (FTE).
According to Senior Manager of Strategic Planning Corbitt Loch, staff have been asked to review their budgets and look for additional cuts for the new biennium.
“After we saw the departments’ initial budget proposals and updated our financial forecasts, it was clear we needed to find more savings,” he said.
In the coming weeks, each department will present its budget proposals to the council with additional cutbacks. A public hearing is scheduled for the council’s Sept. 28 business meeting to allow community members to comment on the city’s budget priorities.
Following the presentation, Councilmember Jim Smith asked if the city was hiring any new personnel. In response, Mayor Smith said the city would be hiring personnel for essential functions on an as-needed basis and within the budget constraints.
“There are no positions that we’re hiring that are frivolous,” she said. “Every one of the positions has to be fought for within our strategic plan goals and it varies from department to department.”
In other business, the council held a public hearing for a draft ordinance proposing amendments to the city’s development agreement and binding site plan codes. Prior to the hearing, city Planning Manager Ashley Winchell reviewed the proposed changes, which she said would provide more flexibility in the development agreement process.
Under the current municipal codes, flexibility is only allowed in Lynnwood’s City Center district and designated regional growth center. The proposed amendments would expand flexibility for developments across the city, with the exception of single-family zones, Winchell said.
“Development agreements help (the city) provide flexibility to meet our city goals while mutually helping these projects meet their goals,” she said.
The ordinance would also allow the city to recoup costs related to development. Currently, there are no costs to the developers for development agreements and the city is responsible for paying for all city attorney fees and notification costs. The amendment proposes that a $2,500 deposit paid by the applicant be put in a trust fund. Fees exceeding $2,500 would be billed to the developer and required to be paid before a city council hearing. Excess fees remaining after project approval would be refunded to the applicant, Winchell said.
The ordinance also proposes a longer vesting period for binding site plans to align with development agreement timelines. According to Winchell, a binding site plan is an alternate process to subdivide non-single-family residential property into smaller lots that can be legally sold and developed, typically for commercial and mixed-use projects.
“It puts projects in this situation where they may need to subdivide their property and they are limited on how they can do that because their time frames don’t align,” she said. “(The ordinance) would allow the binding site plant to align to the development agreement time frame.”
The ordinance also proposes changes to the fee structure for binding site plans. Applicants currently make a one-time payment of $15,000, which includes review of the project’s preliminary and final stage. Winchell said the current fee structure does not take multiple final plat reviews into consideration. The ordinance proposes an initial $10,000 payment for the preliminary review and $5,000 for each final plat review, which Winchell said would help the city recoup costs based on added work from proposed phasing.
“So, if (developers) are doing five phases instead of paying that $15,000 up front and then passing it over years, (the city) would get $10,000 for the preliminary and then $5,000 for each subsequent binding site plan,” she said.
During the hearing’s public comment period, former Lynnwood City Councilmember Ted Hikel said the proposal would give the mayor more power over the approval of development agreements than the council. According to Hikel, allowing the mayor to approve the preliminary binding site would mean the project’s proposed design and relationships with adjoining property would move forward without council approval.
“How are you going to control that effect when you have such a limited opportunity the way this is reading as I see it?” he said. “You have a limited opportunity to take control of what is going to happen on large projects in the city.”
In response, Winchell said there would be no changes to the mayor’s power to approve binding site plans. Additionally, she said phasing would only be permitted with a binding site plan when there’s a development agreement in place, which requires city council approval.
“We are not allowing for phasing outside of a development agreement approval at this time,” she said.
Also during the meeting, the council discussed how to spend an additional $594,000 in federal CARES Act funds the city received. The funds must be used to reimburse pandemic-related expenses.
In addition to covering costs incurred by the city in response to the pandemic, the city created two relief programs — one for local business owners and another for community members. The council agreed to allocate $300,000 to the business relief fund, but were unsure if the community relief fund — which was created to help impacted community members cover rent and mortgage costs during the pandemic — needed the extra $100,000 proposed by city staff.
In July, the council approved $200,000 for the community relief program and partnered with the Communities of Color Coalition (C3) to distribute the funds. The community relief fund awarded grants ranging between $500 to $1,000 per household to qualified community members.
However, the funds were not dispersed as quickly as the council anticipated and some did not think the program needed an additional $100,000. During the discussion, Councilmember Smith made a motion to reduce the amount to $50,000 and proposed setting the other $50,000 aside to assist the Lynnwood Food Bank in purchasing a vehicle to distribute food to homebound residents.
“It would help the City of Lynnwood — that particular population — not only…during the COVID period of time, but also following that,” he said.
Some councilmembers supported the idea of reserving $50,000, but said they were concerned about appearing to show preferential treatment to one non-profit organization if they used it to aid the food bank. Additionally, councilmembers said they would like to hear directly from food bank staff about plans for a vehicle.
“As much as I love the food bank…so far, none of our community funds have gone directly to a nonprofit,” said Council Vice President Shannon Sessions. “I would hate to just leave another local nonprofit out without talking about that since we haven’t done that.”
Timing was another factor regarding the funds. According to city spokesperson Julie Moore, the council has to decide how the funds would be spent before the Nov. 30 deadline. Additionally, the city is looking to purchase a full-body scanner for the Lynnwood Jail, which would reduce contact between officers and inmates. Moore said there is currently only one scanner for sale and the council needed to act fast to ensure the city receives it.
Following additional discussion — including assurances from his fellow councilmembers that the topic of how much would be allocated to the community relief fund would be discussed at a later time — Councilmember Smith made a motion to withdraw his original. The council then voted 6-0 — with Councilmember Julieta Altamirano-Crosby recusing herself — to allocate funds not to exceed $300,000 to the community relief program.
“I’m going to go on faith of my (fellow) councilmembers,” Smith said.
–By Cody Sexton