CITY
OF
SHORELINE
CITY COUNCIL
PRESENT: Mayor Hansen, Deputy Mayor Jepsen, Councilmembers Chang,
Fimia, Grace, and Ransom
ABSENT: Councilmember Gustafson
1.
CALL TO ORDER
The
meeting was called to order at
2. FLAG SALUTE/ROLL CALL
Mayor
Hansen led the flag salute. Upon roll
call by the City Clerk, all Councilmembers were present with the exception of
Councilmember Gustafson.
Upon motion by Councilmember
Grace, seconded by Deputy Mayor Jepsen and carried 6-0, Councilmember Gustafson
was excused.
(a) Proclamation of
Kathleen Showalter Week
Mayor
Hansen read the proclamation recognizing Kathleen Showalter for winning a
nationally-sponsored contest and donating her winnings to Seattle-area food
banks. Ms. Showalter was not able to
attend to accept the proclamation, but she sent her regards to the Council in
advance.
3. CITY MANAGER’S REPORT
City Manager
Councilmember Fimia stated that
the Sound Transit Environmental Impact Statement (EIS) contains two maps
concerning the next phase for extending light rail. At present, the next segment will be 14 miles
long. The EIS considers two alternatives:
1) finishing the plan that was voted for in 1996 which includes the system
extending to Northgate; or 2) the plan alternative which is 125 miles of rail
and increased bus routes and the commuter rail.
She said there is a discrepancy between the latest report and the 1993 report
in terms of travel time reliability. She
is concerned because the City has spent time and money on the high occupancy
vehicle (HOV) system, but now Sound Transit says the future of the HOV system
is not good. She advised the Council and
citizens to retrieve the information in Chapter 4 of the Final Supplemental
(EIS) on the Sound Transit website.
Councilmember
Grace discussed the results of the 2004 Employee Survey. He stated employees clearly understand
organizational values, emphasize teamwork and working together as a team,
understand job responsibilities, and the City’s mission and goals. He stated these results in all of these
categories were in the 90 percentile range.
He congratulated City Manager
Councilmember
Chang stated his business has been the target of the Council and the public and
that his private matters shouldn’t be discussed in Council meetings. He said the criminal statistics provided by
the City staff and the police are conflicting and it is time to provide the
real information. He said more than half
of the calls for police response to his business were for community policing
and service calls. He asked that the
City send out data with explanations because the public thinks all of the 158
visits were crime-related calls. He
explained that when he went through the document there were only four crime-related
instances at the Quest Inn.
City
Manager
Councilmember
Chang stated he believed it is the responsibility of the information provider
to provide information that can be understood by the public. He stated he has been quiet about this
because he doesn’t feel during a council meeting is the proper place to discuss
this issue. He said every year his
business is put under the microscope and it is time for it to stop.
Councilmember
Fimia felt that what Councilmember Chang is trying to say is the City staff is
releasing documents without knowing what the numbers mean. Councilmember Chang has been actively trying
to reduce crime in that area, and since he has taken over the business crime
has been reduced. However, because the
statistics contain every call and visit, the data is being misinterpreted
unless City staff provides some explanation.
She felt the Council should also insist on having an explanation.
Councilmember
Ransom emphasized the need to analyze the documents to determine what
categories and background data were used in compiling the information. He said the results could be different
depending on what techniques and protocols were used in data collection. He pointed out there are now four different
reports done by different crime analysts who use different categories and
techniques with different results for the same years. He is asking for actual protocols to analyze
this.
Deputy
Mayor Jepsen agreed with Councilmember Chang that he deserves fairness in this
issue. He stated that Councilmember
Ransom initially requested crime data for only the Quest Inn. The second request, he continued, was for all
the other businesses on
Councilmember
Ransom contended that the report requested on
Councilmember
Chang stated this is not the place to discuss a particular member’s
business. There are agencies who
discipline any councilmember that is involved in any wrongdoing. Calls to 911 should not be misconstrued as
criminal warrant calls, he said.
City
Manager
4. REPORTS
OF BOARDS AND COMMISSIONS: None
5. PUBLIC COMMENT
(a) Dale
Wright, Shoreline, refuted the criticism that the City is not prudent in
financial policy and careful in cost control.
He explained that the City inherited numerous shortcomings from
(b) Gretchen
Atkinson, Shoreline, Events Coordinator for the North City Business Association,
invited the City Council to the 3rd Annual Classic Car Show on
(c) Lance
Blair, Shoreline, on behalf of the Crisis Clinic Board of Trustees, thanked the
City Council for its funding of the Crisis Clinic in 2004. He reported that 4,170 residents called the
Crisis Clinic in 2004, and the Council funding of $7,300 covered the costs for providing
services to 845 Shoreline residents, which required the Clinic to seek other
support to ensure residents got the help they needed. In early 2006, the Crisis Clinic will abbreviate
the dialing prefix of 211 available to residents. To extend the operating hours of the 211 line
to seven days a week, the Crisis Clinic is asking each City for a funding
increase of $0.10 per capita. Thus, the
Crisis Clinic is requesting an increase of $1,600 from Shoreline.
(d) Rick
Stevens, Shoreline Chamber of Commerce Economic Development Committee,
commented on the Aurora Corridor improvements and stated he is very pleased
with the barrels, cones, and business access signs. He requested that the business access signs
be printed on both sides in order to alert traffic going in both
directions. In conclusion, he stated it
is very hard to see at night when driving on
6. APPROVAL OF THE AGENDA
Councilmember Fimia moved
approval of the agenda. Councilmember Grace
seconded the motion, which carried 6-0, and the revised
agenda was approved.
7. CONSENT CALENDAR
Councilmember Ransom moved approval of
the consent calendar. Councilmember
Ransom seconded the motion and the following items were approved unanimously:
Minutes of Workshop
of
Approval of expenses
and payroll as of September 1,
2005 in the amount of
$2,295,532.98
Ordinance No. 399, consolidating
City Parking Regulations into the Model Traffic Ordinance and Adoption of
Vehicular Trespass as a Code Violation
Ordinance No. 394
amending Section 9.10.420 of the Shoreline Municipal Code related to gambling
offenses
8.
ACTION ITEMS: OTHER
ORDINANCES, RESOLUTIONS AND MOTIONS
(a)
Ordinance No. 391
amending regulations defining
public nuisances and enforcement procedures in Title 10,
Title 13, Title 15, and Title 20 of the Shoreline Municipal
Code
Councilmember Fimia moved to
substitute Attachment A with Attachment B.
Councilmember Ransom seconded the motion.
Councilmember
Fimia explained that Attachment B contained all of the revisions that were done
by the Planning Commission and portions of the Interior Property Standards from
the IPMC.
Councilmember
Ransom stated there was no conversation concerning the interior standards
portion of this Ordinance that is being proposed by Councilmember Fimia. He stated the public has looked at the
exterior portion only.
Mayor
Hansen called for public comment.
(a) Jose Shdo,
Shoreline, discussed proposed changes to Section 20.50.410(b) of the Shoreline
Municipal Code. He stated this amendment
affects the number of vehicles that can be parked on residential property. He urged the City Council not to restrict or
deny residents the opportunity to use their own property for parking RVs, boats
and trailers. He said there was no
attempt to contact RV, boat or trailer owners of these meetings. He said he moved to Shoreline specifically
because of its suburban nature and because his home would accommodate RV, boat,
or trailer parking. This amendment
forces residents to pay to store potentially expensive vehicles at places that
are high risk, thus raising insurance rates on those vehicles. In his opinion, the real problem in the City
is junk cars. He concluded that the City
needs to enforce the regulations on junk cars and either have them removed or
inform residents about charitable organizations that will remove them.
Councilmember
Fimia spoke in favor of adopting Attachment B, noting that Interior Property
Standards will help the City carry out its mission of ensuring the health,
safety and welfare of the community. At
present, tenants have no recourse under the Code to help them with substandard
living conditions.
Ms.
Markle explained that the Planning Commission did not recommend adopting the
interior standards because they wanted more information on how the changes
would impact staff resources and the budget.
They also speculated that some of the issues would be addressed by the
Department of Health or through the Landlord-Tenant Act, so there could be
duplication of efforts if Shoreline adopts the changes.
Mayor
Hansen added that the Planning Commission Chair indicated that based on public
comment, this area was not a problem in the community. Therefore, the intent was to study it and
perhaps refine it at a later date.
Ms.
Markle clarified that the interior standards were not identified as a high
priority when the City conducted a dot exercise with selected community
members.
Mr.
Olander summarized that the Planning Commission was not opposed to interior
standards, but they were not comfortable making a recommendation to adopt them
at this time.
Councilmember
Grace inquired as to whether Section 108 is adequate for enforcement purposes. He also asked if Code language relating to
abatement of dangerous buildings was present prior to 2004.
Deputy
Mayor Jepsen felt that this language was never taken out, as it is not
presented as new language in the packet.
Councilmember
Fimia stated that Sections 305, 306, and portions of Chapter 5 and Chapter 6
were added back in for Council approval.
The City Attorney’s language is general and contains no standards by
which to measure violations. She noted
that Shoreline is the exception in this regard, since other cities have adopted
interior standards. She felt adopting
the interior standards would have a minor impact on staffing but it would have
a major impact on the people who are living in substandard conditions.
Councilmember
Ransom was opposed to the substitute motion.
He expressed concern that there are separate laws and public safety,
health, and fire codes which apply to multiple housing or rental units. He felt approving this Code would be
redundant and cause conflicts with existing agencies. He stated the Council should not create new
rules and regulations that are difficult to enforce. There is no demonstrated need as evidenced by
the lack of calls to the Planning Department, he concluded.
Councilmember
Chang supported the substitute motion because he felt it made common
sense. He said he has personally
witnessed poor conditions, and the City needs to have Code that is consistent.
Councilmember
Grace was opposed to the substitute motion and said the Planning Commission’s
direction for the Council was correct.
The decision by the Planning Commission to take some time and gather
information on what complaints the City receives is the right solution. He did not favor taking certain sections from
the IPMC and adopting them into our Code.
The Planning Commission should take a comprehensive look at the IPMC and
bring their recommendation back to the Council to adopt as a part of the Code.
Deputy
Mayor Jepsen said he appreciates Councilmember Fimia’s efforts, but he is
concerned that not all of the IPMC is included and he would like to go back and
determine why. He supported the main
motion and the Planning Commission’s recommendation to collect more data.
Councilmember
Fimia said her revisions are an attempt to put the basic interior standards
back into the Code. She inquired whether
or not there is language in the Code pertaining to multifamily housing or
rentals for existing housing. She asked
what happens when dangerous conditions exist and someone calls the Customer
Response team (CRT) for assistance.
Additionally, she questioned, whether any cases have been prosecuted or
have they all been resolved.
Ms.
Markle stated there is language covering multifamily housing and rentals in the
dangerous building provision in the Code.
A part of the research the City would be doing concerns looking at the
cases received in the past and determining how they were resolved. Many of the cases were possibly resolved by
voluntary compliance rather than prosecution.
Councilmember
Fimia summarized that if the substitute language is not approved then there are
no specific standards for basic electrical, plumbing, and heat. She felt the proposed revisions constitute “just
the basics,” and urged the Council to reinstate this code language. Then, she continued, the Council and the
Planning Commission can review the code later and make any necessary
adjustments. If this is not done, she
said, residents will not be protected nor feel safe.
A vote was taken on the
motion to substitute Attachment A with Attachment B, which failed 2-4, with Mayor
Hansen, Deputy Mayor Jepsen, and Councilmembers Grace and Ransom dissenting.
Councilmember
Ransom discussed the vehicle parking allotment as it was proposed in the last
Council meeting. He stated the proposal
was to revise the language to include RVs, boats and trailers in the total
number of six vehicles allowed on a residential property. He is opposed to this proposal.
Councilmember
Chang stated he made the motion to delay this matter to this meeting because
there are large houses in Shoreline. He
felt that Mr. Shdo has six legitimate, working vehicles and a trailer
home. The focus on this language should
be on nuisances and junk vehicles. He
stated he supported not revising the language and leaving it to reflect six
vehicles, excluding RVs, boats and trailers.
Councilmember
Grace concurred with Councilmember Chang and agreed that the reason this was
brought up to the Council was to address inoperable vehicles. However, he questioned whether the change
could allow an unlimited number of RVs, boats and trailers on a given property.
Councilmember
Ransom replied he has never seen more than one boat on a property. He felt the maximum number should be at eight
total vehicles to include RVs, boats and trailers.
Mayor
Hansen stated he has observed properties with many vehicles parked on them, and
many of these are in poor condition. He
is in favor of limiting what residents can store outside.
Councilmember
Fimia suggested the Council focus on what they are trying to accomplish with
this code. If there are a large number
of vehicles parked on a small space, it can impact the neighborhood. She suggested the Council allow more than six
vehicles, including licensed or registered boats, RVs, and trailers, as long as
they are parked in carports or on improved parking areas.
Mr.
Olander said the current Code requires that vehicles parked outside must be
parked on impervious surfaces.
Responding
to Mayor Hansen, Ms. Markle said she is not aware of the number of complaints
regarding the number of vehicles, but a study indicated there were equal number
of complaints about junk vehicles and service vehicles. She stated there were, however, 765
complaints regarding unsightly or junk vehicles.
Deputy
Mayor Jepsen emphasized this language pertains to the vehicles outside and does
not concern those that are parked in a garage.
He explained that if the Council needs to raise the total number of
vehicles to seven or eight, it should be addressed because right now there is
no maximum number as it pertains to RVs, boats, and trailers.
Councilmember Ransom
moved to insert the words “or carport” between the words “building” and “shall”
in SMC 20.50.410(B) and to amend the section to read “excluding a maximum
combination of any two boats, recreational vehicles, or trailers.” Councilmember Chang seconded the motion.
Councilmember
Fimia inquired as to whether or not language pertaining to licensed and
registered vehicles needed to be added. Mr.
Olander responded that it is covered in other sections of the Code.
A vote was taken on
the amendment, which carried 6-0.
A vote was taken to
adopt Ordinance No. 391 as amended, which carried 6-0.
9.
NEW BUSINESS
(a)
Review of Casino
Profitability and Cardroom Gambling Tax
Continuing,
she noted that the financial analysis that was completed included a review of
revenues and expenditures and the components and relations to each other. In the category of operating expenditures, the
largest expense for the casinos is the salaries and benefits of hourly
employees. This category makes up 44% of
the average total expenditures for all the casinos. The second highest expenditure is the general
and administration cost which includes salaried personnel costs, insurance, and
professional fees. This expenditure averaged
out to about 19% of all operating expenses.
City taxes are noted as a percentage of the operating expenses of the
casinos. She outlined City taxes make
up 9% of the expenses for all Shoreline casinos. The operating income average set by the
industry standards is 10% and a number of the casinos are below that with the
City average being 5%. She stated the
average City tax rate for cities in the State of
Councilmember
Ransom clarified that a 12% tax rate is not based on cities that have casinos,
such as
Ms.
Tarry explained that currently, based on their overall financial status, Shoreline
casinos do not have enough assets to pay their current obligations. As far as net losses, she stated Hideaway had
the highest net loss for the year 2004 and the City has had some concerns with its
ability to stay in business. Goldie’s
and the Golden Nugget also experienced net losses of $14,000 and $16,000 in
2004, respectively. Three of the four
larger casinos showed positive net incomes in 2004. All casinos showed positive cash flow from
operations in 2004. Additionally, she
said, the owners of the casinos had average cash draws of approximately
$473,000. She explained that owners and
members can draw cash as a return on their investment, but it does not include
any salary or guaranteed payments that an owner is eligible to receive from
working in the casino. The costs derived
from salary or guaranteed payments that would be given to an owner would show
as expenses on the income statement.
Mr.
Cupler explained that in most limited liability corporations (LLC) or limited
liability partnerships (LLP), owners will take cash draws out to pay federal
income taxes at a personal level. The
financial reports do not reflect any federal income tax information because in
this case all of these are corporations or partnerships.
Ms.
Tarry stated there was some trend analysis done from the Drift-on-Inn. She said there was a drop in the net income
for the Drift-on-Inn from 2003 to 2004.
There also was a 5% increase in operating profit at the Drift-on-Inn
from 2003 to 2004, she outlined. Goldies
also submitted trend analysis data and has experienced net losses for the past
four years. However, Goldies showed a
positive operating position in 2004 with an operating profit of 3.4%. She summarized that card room gross receipts
have increased 44% when comparing the figures from 1st Quarter 2002
to 1st Quarter 2005. Nonetheless,
from 2004 to 2005 there was a 4% drop in these gross receipts primarily because
of the Hideaway closure. She noted comparable
card room tax rates from other cities.
There are three cities that also have a B&O tax on top of the card
room tax. In conclusion, she said, these
cities are Burien which has an 11% card room tax rate, Everett who has a card
room tax rate of 10%, and
Mr.
Burkett outlined the two Council options for this item. First, he said, the Council can take no
further action, which would mean the gambling tax would revert back to 11% on
Mayor
Hansen called for public comment.
(a) Mark
Mitchell,
(b) Eng
Seang, Shoreline, said she works at Club Hollywood and makes “decent money” to
take care of her family. She stated
without this job she would have to work full-time, and she cannot afford to
lose her job.
(c) William
Hubble, Shoreline, expressed support for a 10% tax and thanked the Council for
its support in the past. He said in
addition to this tax, his establishment is also paying the other 28 taxes and
B&O fees that any other business would pay.
This additional tax is not seen by other businesses at this level and is
unjustifiable at this rate. He stated the
casino industry is changing based on the explosion of the tribal casinos, which
have taken gaming from privately-owned casinos.
Overhead and expenses have increased, and the state has required
increased standards for security and surveillance, entailing increased staffing
costs. He claimed that Starbucks,
Paccar, and Boeing would not be profitable with this tax. He noted that the national average for
minimum wage is much lower than what is in the State of
(d) Giulian
Sipmael, Shoreline, stated she is fortunate to have her job. She said if she lost it she would have to
work full-time and would not be able to spend time with her children.
(e) Larry
Wheaton, Shoreline, said Goldies has 160 employees that receive full medical
and dental benefits. If this tax rate
returns to 11%, he stated he would definitely have to lay off people,
particularly in light of the current construction on the Aurora Corridor. He explained that his business revenues have
decreased 20% this quarter. A 1% change is
the difference between making a profit and not making a profit. He said he would appreciate the Council
consideration at maintaining a 10% tax rate.
(f) Rick
Stephens, representing the Shoreline Chamber of Commerce, said the gambling tax
rate is about jobs, people, families, health care, and productive
citizens. He said casinos are
recreational establishments that provide people a place to meet and socialize. He considered the gambling tax unfair because
it is an income tax on only one group of people. He pointed out that income taxes have been
voted down time and time again in the state of
MEETING
EXTENSION
Councilmember Ransom
moved to extend the meeting to
Councilmember Ransom
moved that staff draft an ordinance to keep the tax rate at 10 percent. Councilmember
Grace seconded the motion.
Councilmember
Ransom expressed concern about the 11% tax rate because the data indicates
Shoreline businesses are weaker than the industry average. He said many people do not realize that the
tax is on gross income before any business expenses, which makes the tax
particularly onerous. Furthermore, he
noted that businesses also pay a 2% B&O tax, but this was not included in
the figures presented in the packet.
There are approximately 900 living wage paid employees working for
casinos in the City of
Continuing,
Councilmember Ransom pointed out that the City would probably make a commitment
to attract a similarly large business with 900 employees with gross sales of
over $40 million. Most cities provide
tax incentives to bring in a major employer, and the City certainly does not
want to lose a major employer. He noted
that tribal casinos have made it difficult for privately-owned casinos to
remain profitable because private casinos must spend more money to attract
customers by offering discounts and incentives.
Last year the casinos provided the City with $3 million in gambling
taxes, which equates to approximately 60% of all collected property taxes. It is also equivalent to over 50% of the
City’s sales taxes. He concluded that
the City cannot afford for these casinos to close their doors.
Councilmember
Fimia concurred that it would be a huge mistake not to keep the rate at 10%,
but the issue should be reviewed periodically.
She noted that since there is a moratorium on casinos in Shoreline, a
tax reduction does not represent an expansion of gambling in Shoreline. She inquired about City staff’s plans for filling
the revenue gap if the tax reduction is approved. She said after spending $10,000 on studying
the issue, it is troubling that the City couldn’t have taken the word of the
casinos back when they first came to the Council with the problem. She said the industry is unnecessarily regulated
and is in need of assistance. She
concluded that a 10% tax rate will allow the casinos to stay in business and
keep hundreds of people employed.
Councilmember
Grace expressed support for the motion, but felt it was prudent on the part of
the City to do the research. He said the
City’s largest private employers have come to the Council with a reasonable
request and the Council should support them.
Councilmember
Chang concurred that this is not a good time to increase the gambling tax
rate. Aurora Corridor construction has
had a negative impact on all of the casinos.
He commented that casinos are secure and do an excellent job of taking
care of their premises. As a business
owner, he said, a 1% change in a tax rate can make a huge difference to a
business. He stated that casinos are a
part of the economic development of Shoreline, and the City needs to retain and
expand all the businesses here. The
Council needs to listen and be compassionate to them.
Deputy
Mayor Jepsen referred to page 195 of the Council packet. He inquired if the federal taxes and
individual taxes were paid by the member draws listed on page 195.
Ms.
Tarry said that member draws of cash from the business does not necessarily
mean that they are using it to pay income taxes.
Deputy
Mayor Jepsen said that based on the reports, the owners are
taking out between $330,000 and $734,000 in member draws. He wondered if cash is being taken out of the
establishments prior to generation of the profit/loss statement or the net
income statement.
Mr.
Cupler stated that owner draw has no impact on profitability; the owner draw is
a return of earnings. It is just an
owner taking cash out of the business and it is not reflected on the profit and
loss statement.
Mayor
Hansen felt that the 1% tax rate change would not have a significant impact on whether
or not a business stays open or closes.
He felt that there was an overemphasis on the 1% tax reduction.
Councilmember
Ransom informed the Council that the City of
A vote was taken directing
staff to draft an ordinance lowering the gambling tax to 10 percent, which
carried 5-1, with Deputy Mayor Jepsen dissenting.
Mayor
Hansen wanted confirmation on whether or not guaranteed payments or salaries
were included in the financial statements of the casinos. Mr. Cupler responded that guaranteed payments
or salaries would be included as an operating expense in the financial statement;
however, they are not broken out. The
best way to determine what the guaranteed payments would be is to look at the
tax returns.
Councilmember
Fimia clarified Councilmember Chang’s statement about expanding businesses was
not concerning gaming businesses. Councilmember
Chang concurred.
9. ADJOURNMENT
At
/S/