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HomeMy WebLinkAboutCity Council Committees - Operations - 02/01/2011 i i KENT W A S H I N O T O N OPERATIONS COMMITTEE MINUTES February 1, 2011 Committee Members Present: Debbie Raplee, Jamie Perry, Les Thomas (Chair). The meeting was called to order by L Thomas at 4:02 p.m. 1. APPROVAL OF MINUTES DATED JANUARY 18, 2011 D Raplee moved to approve the Operations Committee minutes dated January 18, 2011. J Perry seconded the motion, which passed 3-0. 2. APPROVAL OF VOUCHERS DATED JANUARY 15, 2011 J Perry moved to approve the vouchers dated January 15, 2011. D Raplee seconded the motion, which passed 3-0. 3. MOVE TO RECOMMEND CITY COUNCIL AUTHORIZE THE MAYOR TO APPROVE PURCHASE ORDERS WITH HEWLETT-PACKARD COMPANY (HP) IN THE AMOUNT NOT TO EXCEED $119,176,96, INCLUSIVE OF APPLICABLE STATE TAXES. The Information Technology Department is looking to purchase a server enclosure with two (2) internal computer host blades in support of the department's enterprise Storage Area Network (SAN) project. This hardware and software purchase will also provide the necessary infrastructure to enhance and provide greater business continuity for many of the city's key business systems as well as the associated disaster recovery readiness project. In February of 2010, City Council approved the purchase of virtual server hardware and software that has been deployed in our current disaster recovery site of Fire Station #74. This request is to purchase the matching virtual server hardware and software for City Hall that will complete the system design for disaster recovery. Deploying the matching server infrastructure will allow the city to recover critical business systems in the event of a catastrophic disaster as well as provide for some redundancy that will provide improved system up-time and minimize impacts from required maintenance. Curt clarified for I Perry and L Thomas that this is new hardware similar to the hardware that was deployed at Fire Station #74. This will be the matching, integrated pair that will be installed at City Hall. D Raplee questioned the need for upgrades what is anticipated in 3-5 years. Curt responded that this hardware has an extended life span to it to the point that the equipment can be maintained and will not need to look to upgrade this for 5-8 years down the road. D Raplee moved to recommend City Council authorized the Mayor to approve purchase orders with Hewlett-Packard Company (HP) in the amount not to exceed $119,176.96, inclusive of applicable state taxes. J Perry seconded the motion, which passed 3-0. ` 4. MOVE TO RECOMMEND THAT THE OPERATIONS COMMITTEE AUTHORIZE THE BUDGET ADJUSTMENT TO REDUCE THE UTILITY TAX REVENUES BY $1,276,595 IN THREE FUNDS AND REDUCE THE EXPENDITURE BUDGETS IN THOSE FUNDS BY $1,276,595 AND FORWARD THIS ITEM TO THE FEBRUARY 15, 2011 CITY COUNCIL AGENDA. Operations Committee Minutes February 1, 2011 Page: 2 As was explained to the Operations Committee in both December and January, telephone utility tax is significantly underperforming and the budget should be reduced. The budgets for three funds will be affected by this reduction. The General Fund's budget will be reduced by $1,000,000, The Street Fund's budget will be reduced by $212,766, and the Youth/Teen Fund's budget will be reduced by $63,829. L Thomas asked City Finance Director Bob Nachlinger to provide a brief explanation of what has happened to get to this point. Bob explained that a major provider in telecommunications has quit paying utility tax on communications for data services. This is not just a city, but is a state wide issue. Our City Attorney is working with other City Attorneys on this issue. The outcome will depend on the Federal Communications statutes and the desire at the Federal level to have a free and open internet with no taxes associated with it. Since we are anticipating a decline in the budget we want to acknowledge that and take it into consideration. 3 Perry moved to recommend that the Operations Committee authorize the budget adjustment to reduce the utility tax revenues by $1,276,595 in three funds and reduce the expenditure budgets in those funds by $1,276,595 and forward this item to the February 15, 2011 City Council agenda. D Raplee seconded the motion, which passed 3-0. S. MOVE TO RECOMMED THAT THE OPERATIONS COMMITTEE APPROVE THE CERIFICATION OF $4,530,373 FOR THE ANNEXATION SALES TAX CREDIT FOR THE PERIOD JULY 1, 2011 THROUGH JUNE 30, 2012 AND FORWARDING THE ITEM TO THE FEBRUARY 15, 2011 CITY COUNCIL AGENDA. The City is required to certify to the State of Washington before March 1 of each year the amount needed from the annexation sales tax credit to provide services in the annexed area. The Finance Department has calculated the costs and revenues within the annexation area and has determined a gap between revenues generated and expenditures used to provide services of $4,530,373 for July 1, 2011 through June 30, 2012 period. The budget for the Panther Lake Annexation area for the State's fiscal 2012 year is anticipated to be $11,142,127 in expenditures to provide City services to those residents while we anticipate revenues of $6,611,754 from property taxes, sales taxes and other sources. The net of the revenues and costs produces a deficit of $4,530,373 which is the amount being certified as the amount we are requesting from the State in the annexation Sales Tax Credit. J Perry questioned Finance Director Bob Nachlinger about whether or not we looked ahead since at what needs we might have since this period runs through June 30, 2012. Bob indicated that yes, we did. There were 3 positions in the original plan which would be added to the annexation area beginning January 1, 2012. Also took some growth factors in for employees, we're actually anticipating inflation to happen again, also some increase in our supplies and services to those areas. i Operations Committee Minutes February 1, 2011 Page: 3 Wanted to be somewhat liberal in our estimates because this is the maximum amount, if we spent more than that we couldn't get reimbursed for it. J Perry further questioned the long term outlook. We have the tax and get back money for 10 years. The hope is at the end of this, revenues in the annexation area will catch up so that we no longer need that. With the numbers we have now, do we still assume that will happen. Bob responded that our goal is to wean ourselves away from the annexation sales tax credit, to reduce our costs in future years which means that the general fund will have to absorb more of that cost. But the goal is at the end of 10 years to have no negative impact on the general fund. D Raplee moved to recommend that the Operations Committee approve the certification of $4,530,373 for the annexation sales tax credit for the period Julyi, 2011 through June 30, 2012 and forwarding the item to the February 15, 2011 City Council agenda. 6. MOVE TO RECOMMEND THAT THE OPERATIONS COMMITTEE APPROVE THE REIMBURSEMENT RESOLUTION ALLOWING THE CITY TO REPAY ITSELF FOR CAPITAL EXPENDITURES FROM THE ISSUANCE OF BONDS AND FORWARD THE ITEM TO THE FEBRUARY 15, 2011 CITY COUNCIL AGENDA. Bob Nachlinger, Finance Director, advised that the City is required under Internal Revenue Service regulations to declare its intent to repay itself from the issuance of future bonds for capital expenditures before those expenditures may be reimbursed. The City is beginning work on storm drainage improvements to alleviate flooding along 76 Avenue. We do not plan to enter the bond market until later in the year and this resolution is necessary in order to repay the costs of this project from that future bond sale. J Perry moved to recommend that the Operations Committee approve the reimbursement resolution allowing the City to repay itself for capital expenditures from the issuance of bonds and forward the item to the February 15, 2011 City Council agenda. D Raplee seconded the motion, which passed 3-0. City Attorney, Tom Brubaker came forward to advise that the resolution that is in this packet will change some between now and when it comes to Council. He will be working with Bob and the Bond Council to make sure it is consistent with the bond that is going to go out. So basically what is in today's packet is a draft. The meeting was adjourned at 4:21 p.m. by L Thomas. Nancy I y Operations Committ Secretary I