Name: Bellingham City Council - Budget and Finance Committee meeting, Aug 24, 2026
Start: 2026-08-24
End: 2026-08-24
Location: City of Bellingham

City Council - Budget and Finance Committee

Mon, August 24, 2026

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Budget and Finance Committee — August 24, 2026

This was a regular meeting of the Budget and Finance Committee, chaired by Council Member Lisa Anderson and joined by Council Members Dan Hammill and Michael Lilliquist. The committee reviewed mid-year finances, approved a budget amendment, and advanced a long-overdue land use fee update.

Second Quarter 2026 Financial Review (Item 25016)

Finance Director Andy Bjornson presented the city's financial position through the end of June 2026, with some data updated just hours before the meeting to incorporate the latest sales tax figures.

Sales tax is the headline good-news story: the city is running about $2 million ahead of its $3.3–3.5 million growth projection, largely driven by a 38% year-over-year surge in construction-related sales tax. New state tax categories (IT software, security, live presentations) and World Cup-related activity contributed modestly as well. The recently approved "Safe and Stable" 0.1% sales tax has also been collected since March and is showing up in revenues.

Permits and housing tell a more cautious story. Only 279 housing units have been permitted so far in 2026 — well below the prior two years — largely because high interest rates are making projects difficult to finance. However, $93 million in construction value sits in "ready to issue" status, meaning permits are approved but developers are waiting on financing before pulling them. Planning Director Blake Lyon noted the city is actively reaching out to those developers and has implemented parking requirement reductions and multifamily tax exemption expansions to help projects pencil out.

Lodging tax is underperforming expectations, coming in around $2.2 million for the year — similar to 2025, not the bump hoped for from World Cup activity. Border crossings did tick up in June, but that traffic translated to spending rather than hotel stays.

Health benefits costs are up roughly 20% year-over-year — about $2 million over budget — a significant pressure point that is being addressed in the budget amendment below.

General fund summary: Through June, the city is 1% ahead on revenues and 3% under budget on expenses, netting a positive variance of roughly $2.7 million. That said, three months of jail invoices (at roughly $477,000–$500,000 each) have not yet posted, which will erode that cushion. The jail's current bed-day rate is $240 plus booking costs; Deputy Police Chief Ty Elmadorf noted a potential 4% rate decrease may be coming for 2027. Hammill flagged concern about transportation costs to municipal court once the new jail facility opens in 2028 and urged the county to implement a second courtroom.

Fire department held no recruit academy in 2026 — a deliberate cost-saving move made possible because the department had caught up on staffing for newly added BLS units and had enough pre-hired retirees in the pipeline. Fire Chief Bill Hugh confirmed one academy is planned for 2027 to manage ongoing attrition, at an estimated cost of about $1.5 million.

Looking ahead: The city has approximately 39 vacant positions (representing $5.3 million in potential annual savings if held open all year). The 2027 budget, to be presented September 28, is projecting a deficit of approximately $8.5 million in the general fund — driven by escalating benefits, utility costs, and cost-of-living adjustments — though strong current-year revenues and departmental restraint may soften the actual shortfall. A budgeted $6.3 million deficit for 2026 rises to about $7.9 million with today's budget amendment, but Bjornson expressed cautious optimism the city could end 2026 close to balanced.

Anderson noted the committee should expect a conservative 2027 budget given that construction activity (which is fueling current revenue) will eventually taper as the permit pipeline normalizes. No vote was taken on this item — it was an informational presentation.

2026 Budget Amendment No. 3 (Item 25015)

Budget and Treasury Manager Eric Johnson presented the third amendment to the 2026 budget. The amendment increases revenues by $4,492,873 and expenditures by $22,189,674 across multiple funds. Key components include:

Health benefits fund: Increased revenues and expenditures to cover the 20% spike in medical costs, with corresponding adjustments across all city funds that employ staff.

General fund additions ($1,601,628 in new expenditures): Covers health benefit cost increases, a remodel of the old Parks suite in City Hall for HR staff relocating from the federal building, and a $150,000 increase for the hearing examiner (whose caseload has run significantly over budget).

Tiny house village: Just over $1.2 million to stand up a 40-unit pallet home village, funded through the public safety sales tax and affordable housing funds, with $100,000 from PeaceHealth and $200,000 from Whatcom County as community contributions.

Affordable housing projects: Budget authority increased in the affordable housing sales tax and housing levy funds to cover several projects moving forward in 2026, plus acknowledgment of approximately $1 million in grant revenue ($716,000 received to date).

Dispatch/WCOM building ($1.9 million): Covers debt service on bonds sold for the new Whatcom dispatch center, plus equipment and furnishings. Lilliquist confirmed this was an expected expense, not a cost overrun.

Lilliquist moved to approve; no second was recorded in the transcript but all members present voted in favor. The amendment will go to full council for a vote the same evening.

Vote: Approved unanimously in committee (Anderson, Hammill, Lilliquist). Full council vote pending.

Land Use Application Fee Schedule Update (Item 25014)

Planning Director Blake Lyon and Development Services Manager Kurt Abfeld presented a resolution to update land use application fees for the first time since their original adoption in 2007 — nearly two decades without adjustment. The development services fund is currently not recovering its costs, and the backlog of permits is straining the department.

The proposed update applies a roughly 37% inflation adjustment (based on cumulative CPI since 2007) to fees for design review, conditional use permits, critical areas reviews, subdivisions, and similar applications. Fees would be rounded to the nearest dollar. The resolution also adds:

Annual CPI adjustment going forward (starting 2028, giving a longer runway after the initial increase takes effect October 1, 2026).

A 5% technology fee added to each application, dedicated to funding a modernized permit tracking system to improve transparency and state reporting compliance.

The anticipated additional revenue is approximately $200,000 per year, which would be used to fund a comprehensive market rate study in 2027 to inform further fee adjustments — potentially in 2028 — and to develop a cost recovery system that could eventually allow the city to charge actual staff time for complex or repeated resubmittals and refund unused balances to applicants.

Amendment: Lilliquist moved to add a new Section 3 titled "City Council Review," requiring staff to bring the fee schedule back to council for review before the first half of 2032 (rather than letting the CPI auto-adjustment run indefinitely without council oversight). Lyon indicated the market rate study will likely trigger a council review even sooner — probably by 2028. The amendment passed unanimously.

Lilliquist then moved to approve the resolution as amended; all voted in favor.

Vote: Amendment and full resolution approved unanimously in committee (Anderson, Hammill, Lilliquist). Full council vote pending.

Key Takeaways

2026 finances are running better than feared — the city is $2.7 million to the good at mid-year, thanks to strong sales tax growth (especially construction) and departments holding nearly 40 positions vacant — but significant unknowns remain, including three large unpaid jail invoices and escalating health benefit costs.

A $8.5 million general fund deficit is projected for 2027, driven by benefits, COLAs, and operating costs outpacing revenues; the 2027 budget will be presented September 28 and is expected to be lean with no significant new additions.

Budget Amendment No. 3 adds $22.2 million in expenditure authority across funds, with the biggest new policy spending being $1.2 million for a 40-unit tiny house village and additional affordable housing project funding.

Land use application fees are being raised for the first time since 2007, with a ~37% inflation adjustment plus a new technology fee; the resolution also commits staff to bring a full fee review back to council before 2032.

Construction is booming on paper but slowing in practice — $93 million in permitted projects sit in a "ready to issue" hold as developers await financing, and the city's near-term revenue outlook depends partly on interest rates coming down enough to unlock that pipeline.

AI-generated summary from voice-to-text transcript. Not the official record. Verify important details with the source documents linked above.

What happened at this meeting

A resolution amending the City of Bellingham's Land Use Application Fee Schedule

# Summary

Staff presented a resolution to amend the City of Bellingham's Land Use Application Fee Schedule, which has not been updated since 2007, to account for 37% cumulative inflation and include annual Consumer Price Index adjustments beginning in 2028 with an effective date of October 1st, 2026. Planning and Community Development Director Blake Lion explained the revised fee structure for land use applications including design review, conditional use permits, critical areas, and subdivisions, along with a new 5% technology fee projected to generate over $200,000 to fund permit tracking system improvements and a market rate study. Council Member Liquist supported the fee increase as aligned with state cost recovery expectations but successfully moved to add a mandatory City Council review of the fee schedule before the first half of 2032 to maintain oversight rather than relying solely on automatic adjustments. The motion to approve the ordinance as amended passed unanimously.

An ordinance amending the 2026 budget - amendment no. 3

# Amendment No. 3 to the 2026 Budget - Summary

Budget and Treasury Manager Eric Johnson presented Amendment No. 3, which increases revenues by $4.9 million and expenditures by $22.2 million across multiple departments and funds. Key adjustments include a $150,000 increase for the Hearing Examiner due to higher-than-anticipated activities, over $11 million for tiny home villages and affordable housing projects (with contributions from Peace Health and Whatcom County), $1.9 million for WCOM dispatch building debt service and equipment, and funding for a parks suite remodel to accommodate human resources relocation. Cost-reduction efforts included Fire Chief Bill Hugh's decision to pause the fire academy this year, saving approximately $1.5 million by deferring training given adequate staffing levels, though one academy is planned for next year to manage attrition. Following Council Member Loquist's clarifications regarding the WCOM expense (debt service from bond sales) and tiny home village costs ($1.2 million standing-up cost for 40 pallet homes, excluding 2027 operations), Council Member Loquist moved to approve the amendment, which passed unanimously.

Second quarter financial review for 2026

# Second Quarter Financial Review for 2026 – Summary

Finance Director Andy Bjornson presented the second quarter financial review for 2026, reporting the city is 1% above total revenues and 3% under budget as of June, with a positive variance of approximately $2.7 million, though staff project an $8.5 million general fund deficit by year-end due to escalating health benefits costs (up 20% year-over-year), significant jail expenses exceeding $500,000 monthly, and 39 unfilled FTE positions costing $5.3 million if vacant all year. Key revenue highlights included stronger-than-expected sales tax growth of approximately $1.4 million year-over-year (exceeding projections by $2 million), construction-related sales tax up 38% with 279 permits issued, and positive collections from the new Safe and Stable sales tax approved by Council; however, REIT collections declined about $500,000 due to lower housing sales, and lodging tax showed no significant growth despite World Cup activities. Of $251 million budgeted for capital projects, only $40 million has been spent, with major projects like Eldridge ($20 million) still in planning phases and other active projects including RG Healing, Cornwall, Oldtown development, and Sunset Loop Trail proceeding. Council Member Hamill inquired about jail bed day costs (clarified at $240 per bed day plus booking fees by Deputy Chief Ty Elmadorf), Council Member Brill questioned whether similar deficits existed in other major funds, and Council Member Stone expressed concern about reserve drawdowns and requested consolidated year-end projections. Staff indicated optimism that the budget could finish balanced or positive if departments continue managing without full staffing and revenues continue outpacing projections, though acknowledged that timing of expenses like jail bills could significantly impact the outcome.

Agenda items (3)

Procedural (3)

25014ProceduralA resolution amending the City of Bellingham's Land Use Application Fee Schedule

Bellingham is updating the fees that residents and businesses pay when they apply for permits and approvals related to land use and development projects.

What happened

25015ProceduralAn ordinance amending the 2026 budget - amendment no. 3

The city is making the third set of changes to its 2026 spending plan, adjusting how money is allocated across different departments and programs.

What happened

25016ProceduralSecond quarter financial review for 2026

City staff will review how much money Bellingham has spent and received during the first half of 2026 to make sure finances are on track.

What happened

Additional votes recorded in minutes

Approve Budget Amendment Number Three (Ordinance Amending 2026 Budget)

aye 1

voice voteaye

Amend Resolution to Add City Council Review Section for Land Use Application Fee Schedule

aye 1

voice voteaye

Approve Resolution Amending Land Use Application Fee Schedule (as amended)

aye 1

voice voteaye

Verbatim transcript available

212 transcript segments indexed

Good afternoon and welcome to Bellingham City Council committee meetings. Today is Monday, August 24th, 2026. So this afternoon we have several committee meetings. We're going to start this afternoon with budget and finance.

City of Bellingham Budget and Finance Committee minutes August 24, 2026, 1:00 PM Chair: Lisa Anderson Phone: 360-778-8200 Members: Daniel Hammill, Michael Lilliquist Email: ccmail@cob.org Web: cob.org/council City Council committee meetings Standing committee members receive reports and information, ask questions, and vote on a recommended action for consideration by the full Council at the regular meeting.

There is no public comment period during committee sessions. Call to order and roll call Council President Stone called the meeting to order at 1:00 p.m. Present: Committee Chair Lisa Anderson, Fifth Ward Committee Member Daniel Hammill, Third Ward Committee Member Michael Lilliquist, Sixth Ward 25016 1.

That committee is chaired by council member Anderson. So I will turn it over to her at this time. Thank you. And joining me today is Council Member um Hamill and Council Member Liiloquist. As mentioned, we have three items before us today for the budget and finance committee.

First one, city agenda five, excuse me, 255016. Um, it is our second quarter financial review for 2026. Uh, this presentation provides a summary of the city's financial position through a second quarter of 2026.

Second quarter financial review for 2026 Summary: Andy Asbjornsen, Finance Director, presented a summary of the City's financial position through the second quarter of 2026. Council Members discussed the City's financial position and asked questions.

The June 2026 financial report is attached in our agenda bill. So, if folks want to be able to uh take a look at that, they could find it online. Um it provides detailed information related to the period of time um we're covering this presentation and additional financial information would be available on the city's website at co.org/reports and joining us today um for the presentation is our finance director Andy as Bjornson and I'll turn it over to you.

25015 2. An ordinance amending the 2026 budget - amendment no. 3 Summary: Eric Johnson, Budget and Treasury Manager, presented the budget ordinance amendment to increase revenues by $4,092,873 and expenditures by $22,189,674.

>> Right. Thank you council member Anderson and and council. Um, so yes, we have the 2026 uh second quarter review. I apologize. This was not able to get posted on Friday. We actually just updated this a couple hours ago with the new sales tax information.

Council Members discussed the budget amendment and asked questions. Action: Michael Lilliquist moved to recommend approval of the ordinance. MOTION CARRIED 3-0. 25014 3. A resolution amending the City of Bellingham's Land Use Application Fee Schedule Page 1 of 2 Summary: Blake Lyon, Planning and Community Development Director, presented the resolution, which amends the City's Land Use Application Fee Schedule.

So, just trying to bring you the most current information that we possibly can. Um, with that, it hasn't been um a significant amount of time since I was last here. I was here last month about mid July.

Council Members discussed the resolution and asked questions. Action: Daniel Hammill moved to recommend approval of the resolution. Action: Michael Lilliquist moved to amend the resolution to add, “Section 3.

So, not a lot of the numbers have changed, but at least we can kind of dig in to see where we are mid year. It gives a really good idea of that midyear split. So when you're looking at the finance report and this is really based on the monthly finance report that is included in your packet.

City Council Review At some time before the first half of 2032, City staff shall bring forward the land application fee schedule for review by City Council.” AMENDMENT CARRIED 3-0. AMENDED MOTION CARRIED 3-0.

Um when the revenues are above 50% that is really good and then you're looking for the expenses below 50%. So that just gives you a good indicator of how those funds are doing, how those line items are doing.

So um that really has the details within its report and I will I will get into um again the economic indicators to begin with and then we'll jump into some of the information that's actually from the report itself.

So um this is what we updated just a couple hours ago. So this we just got uh the new information for August. So we can take you through uh 2022 um 2023 and again I guess for the public uh sales tax comes in uh two months after the activity.

So the activity of what we see on this on this mountain here in February is actually the activity of December. So uh each one of these bullets are the amount of revenue we received within that month but the activities associated with two months prior to that.

So uh in 2022 we were at 32.3 we're at 33.4. So very flat. We remove that outlier that is that mountain in the middle from that do uh retro payment. Uh 2024 very flat again at 33.3 and again in 2025. So the last four years of 22 through 25 it's been very very very flat of what we've seen with growth.

This year we've actually been seeing um a lot more growth. So uh you can see this uh new indicator here is August. That's activity for June. And so we've seen uh continued growth. We're about 1.4 million yearover-year.

Um which was not what we had anticipated in the in the current economy of of what we'd be seeing from sales tax growth from year-over-year. So, we had budgeted about 3.5 and we're projecting to or 3.33.5 and we're projecting to come in um about 2 million over that.

So, it's it's good to see that um the growth in sales tax this year. Um we did have the new categories of IT uh software security and live presentations. Those are contributing a little bit to this. uh but here locally um this is the report you've seen before is the uh North American uh industry classification system rounded to the third digit uh we are seeing significant growth here in construction so construction is up 38% the black column is 2026 the blue column is the prior year and this is through June so these are our top five areas of sales tax which represent about 51% of what we collect um or 49% of what we collect um as a city in these categories.

If you expand out to number six and number seven, you'd still have construction categories of building materials and also especially trade contractors. So, um construction is very significant, not even not only to the top five, but also in the top 10.

There's some other categories uh in there as well. So, really good to see that growth in construction. Um and this is through June for this activity. So speaking of construction, when we look at the June activity for the permit activity, um we are not having as big of a year as the two previous years.

So the blue columns are units. Uh the the light blue is units, the darker blue is permits, and then this yellow line is the value of the construction coming through the permitting department. Uh the value uses the right access and the units and permits use the left access.

So you can see here through June of 2026, we've only had 279 units that have come through the pering department that have been those have been issued uh so far in 2026. um in sitting in uh the planning department tracks ready to issue those permits that are sitting there that could be picked up any day.

Uh currently through the end of July there was 5.4 million in uh permit costs that could be u picked up which is about 93 million in value. So it would almost double this this line right here of sitting there ready to issue.

Uh so we are a little bit of a reduction from the two previous years. Uh this is really what's pushing our our construction uh elevating our construction in the current year. So we're hoping that this will pick up as the year goes on, but uh interest rates still remain high.

So uh but hopefully construction uh companies are able to find ways to pencil out uh some of this activity and add more units and get some more permits issued. On the right side, we see the housing market activity.

So active listings are the access on the left. average listing price is the access on the right which uses this orange line. Uh prices have been about medium or they've been they've been pretty flat for um for where the housing prices have been over the last year.

Uh but we've seen the supply has continued to grow. So here's the um the columns are the number of of active listings and the green is July year-over-year. So July 24 to July 25 to July 26. And we've peaked at the highest amount of active listings in July so far that we've seen in our in our numbers at 971 active listings uh here within July.

So uh supply continues to grow. We'll see what that does um on the on the sales side as mortgage rates are still currently above 6% on a 30-year fixed. And um what we've seen so far in REIT is we're down about half a million dollars uh so far through June for REIT collections.

So housing sales have been down for what for what we've seen um from the REIT numbers. Uh lodging taxes falls the same as the first slide um where the activity is two months prior. Uh the this is in thousands on the left.

Um, so what we collected in 2023 was about 2.4 million, same in 2024, a little bit less in 2025, and now in 2026, uh, we're still buried under all those lines. We um expect to probably bring in about 2.2, so similar to 25, but we're not seeing that growth.

We really wanted to see uh this number right here. It's kind of buried in there. um in August. This was about the same of what we've seen in 25 and 24. So hoping we'd see more of that impact related to World Cup activities and having more of the um activities going on in town.

I think we've seen that more on the on the sales tax side. We saw some growth on the sales tax side with more more spending, but not necessarily on the on the lodging tax side. So, um this is very similar to the the two previous years.

Um, speaking to that, we did look at border crossings through half of the year to uh to assess uh any change there. You'll see in in Q2 of 26, we did have a little bit of growth over 25 uh almost or pretty much all of that growth is because of border crossings within June.

And so this is where we're seeing an impact potentially for World Cup activities either um uh US folks going up into Canada and coming back or uh maybe other folks coming down to Seattle or somebody flying into Vancouver and coming down.

We didn't necessarily see this result in additional lodging tax but we have seen this increase at least in that month of June uh where there was more travelers crossing the border. All right. So, those are those are kind of what we're seeing from an economic standpoint.

Um, at this point, we've continued to see the sales tax growth, which is great, really related to the construction. We're hoping construction maintains, but as we've seen, the permits are a little bit down.

That'll take us into more actuals of what we will get out of the monthly report here for June. Uh, citywide revenues and expenses. This is absolutely everything that we do. So, it's really hard to to pull too much out, but it just gives you broad categories of of revenues that are collected here in the city with taxes, utility charges, uh interd activity is significant, and then uh charges and permits are in there.

Uh on the expense side, really the salaries and benefits and services and a little bit of capital outlay uh are the big categories on the expense side. Now, so that broken down a little more on revenue.

Uh taxes you'll see have increased. We did um uh council did approve the safe and stable new sales tax. And so we are seeing we've collected uh four months of that in this number right here. So that is new year-over-year.

Um the collection started in January. So our first collection was in March of that. And then we have seen what I said with the uh sales tax growth as well. Um other than that utility charges are right on right on par with budget.

Inter fund services these are all internal charges. So when I talk about internal service funds you'll see that about this 42 million in revenue is going into those internal service uh funds. excuse me, to pay for those expenses that are um provided like the the fleet and the IT and health benefits.

[clears throat] The large one here is the is the debt the new debt that we received in February for the Waccom building and also interest revenue. Excuse me. On the expense side, we have uh services um at the top.

Services also can u be part of what is in our capital plan related to capital outlay or services. RG Haley and Cornwall pollution remediation. Our most significant contract this year is up here in the services category as that's not going to be capitalized as it's uh remediating that pollution.

Um but that is up um significantly year-over-year primarily due to those those projects. Uh salaries and benefits are up about 9%. You'll see capital is a little bit reduced but these are really the capital projects that we capitalize.

I think um we've actually started off the year with a a good amount of capital projects going on, but some of those have been falling in the in the services category, which we can get into here is these are our top 10 budgeted capital projects for the year.

This represents 129 million of the 251 that is budgeted. So a little over 50% is associated with these top 10 projects. So, as I said, RG Haley and Cornwall are are two of our most significant. Eldridge is not likely to happen this year.

So, that'll likely be um moving forward into the 27 budget. U Watcom is what we uh got the new debt for and is actively uh being worked on. But this this gives you a sense of of these top projects in in 2026.

And these are the actual top projects for spending um associated with that. So when you're comparing the top 10 of the highest budgeted projects, only four are actually on this list of spending so far.

So there's six projects on the other side that that we haven't had any significant spending on yet within within 2026. But as we talked about with RG Healing and Cornwall, uh Oldtown, um seen a lot of development down there.

And then, uh some of these other projects, Watcom is what we've been talking about as well. And then Sunset Loop Trail came online this year. Um so, a lot of good projects and this represents um um the top 10 spend so far within 2026.

So actual spend compared to budget. So far, uh, the city have spent about $40 million of the budgeted $251 million in projects. So when you see the shadow boxes on the next uh page that are that are elevated that we haven't gotten to, those are those are a lot of the projects that are associated with capital that are being planned or in the works.

It just aren't actively being worked on yet or with significant charges. So it takes us into our special revenue funds. So special revenue funds are revenues that are restricted or committed for specific purposes.

Uh revenues of 43.6 million with expenses of 555 million. The yellow is the expenditures. The uh lighter yellow and lighter blue are the budget. Um and then the uh darker columns in the front are the actuals of the orange and the blue for the expenditures and the revenues.

And the the axis on the left is the millions um associated with the bars um that we're looking at in the front. So like I say, the street fund, a lot of this has to do with Eldridge is almost a $20 million project that is budgeted that is not likely to uh happen this year, but that is is in the planning phases.

I believe uh 136 is our environmental remediation. So RG Haley and Cornwall are really active in these funds. Uh REIT has been um spending some more uh money. A lot of that is down in the Oldtown development um for some of those REIT projects.

And then um and then parks is really greenways and park impact fees. So you see a little bit of both within within those funds. And uh transportation. And again, these are our big project funds. The parks funds, transportation fund, REIT, environmental remediation, and the street fund.

Enterprise funds. So these are business type activities that are self- sustained with user fees. Our our big three here really water, sewer, and storm. And uh it follows the same uh as the previous slide with the shadow boxes being the budget and then the columns on the front being the actuals.

Um water also includes the the watershed um uh fund as well. So last year we had significant amount of property purchases really at the beginning of the year. This year not as many but pretty active on that side as well.

Um and then some other areas that we're keeping an eye on are really medic one. Uh we have a $ 1.5 million uh loan budgeted within the 2026 uh budget to potentially may be needed to make sure that that fund stays positive at year end.

And then the development services fund has continued to uh not be able to receive as enough revenue for what services are being provided in that fund. So as I said there was still 5.4 million sitting there ready to issue.

um a good amount of that would actually go towards um that fund as well if those permits were able to come in. Internal service funds. So I mentioned on the previous slide that about 42 million came into these funds.

So these are all of the business type activities that provide goods and services to other city departments. Uh the big area that we are talking about this year is really the health benefits fund is up about 20% year-over-year up about 2 million in expenses.

So pretty significant. We are have been increasing our um our medical comp rate and that is part of the budget amendment today to be able to make sure that this stays positive. As you see there's quite a significant gap of where we would expect it to be from a budget perspective.

So it is it's escalating at a at a greater rate than we anticipated. We've already made one adjustment to the revenue side and now we are here to make another adjustment within the budget amendment. That'll be the next item uh for this committee text in the general fund.

So uh this is of course the uh the area everyone's most interested in as it has 11 departments in it is the is the main uh source of discussion when it comes to the budget. The top four areas are what we call the big four.

So we have sales tax, BNO tax, utility tax and property tax. In the past this has represented about 80% of what we collect for revenues. Uh the sales tax and that safe and stable uh new safe and stable tax.

You see that that is providing a good increase over last year's uh sales tax revenue. BNO was really really strong last year and it's maintaining this year. So it's really good to see that BNO is right around the same spot.

Utility tax has seen good growth really in the electric water and sewer. And then down here in grant revenue sharing this really is uh primarily within the GMT program within BLS transport and BLS transport is in here as well.

So those two areas have really been doing well from a a budget perspective. General fund expenditures, the main thing that goes on in the general fund is really the the people that work in all the departments of the salaries and benefits and the services they need.

A lot of those are the payments to the internal service funds. Uh so what we've seen in salaries and benefits, it's up about 7%. A lot of that um is not just colas, but it's also the the benefits, the health benefits fund adjustments and and other adjustments we need to do to be able to cover all the benefits um uh for the for the folks that work within the general fund.

And you can see uh the general fund percent of budget spent by department. So this takes us from the highest level of spend to the lowest level of spend. So actually we're slightly adjusted there. So, police actually should be on the top and then fire at second.

Um, everybody else is in the right order. Um, and then if you're touching the line, you'd be right at 50% of your budget. If you're just over Oh, then you will be uh over budget. Um, and so Oh, there it goes.

Nice. Um, so we do have um parks and wreck. We were have identified some uh this is only 2%. So uh oftentimes when you have a large dollar amount and you're slightly over budget, this is at 50% of the year.

Sometimes expenses don't come in at the same maybe they're heavier on the front end or heavier on the back end. So uh this is just a good mile marker, but not a big concern when you're slightly over at 2%.

One area we do have a budget amendment for is the hearing examiner. This is a lot pricier than uh what we had planned for. So we have about 150,000 increase to budget related to the hearing examiner activities just to make sure that we're covering our bases there.

Um other than that, the departments that we've talked about from a budget perspective is doing a really good job of of tightening their belt, doing the best they can to find reductions in costs. As we entered this budget season in 2026, it was really kind of a reduction in trying to figure out how we can maintain services.

Uh this is this is the first year that fire um at least you guys have the slides in front of you. Fire has um not had a academy and so that's a really expensive um process to go through an academy with the fire department and also a training pool.

So that's something that can't continue. That is something that was put on pause within 2026, but is will be necessary to come back into 2027 as they need to maintain their staffing um at at their level of FTE.

On the police side, you see a little bit of a gap there as well. Uh through June, there was still three months of jail expenses that have not come through. And so we are seeing jail expenses of anywhere from 477,000 to 355,000.

Each of those monthly expenses can be quite expensive um for monthly jail expenses. So this has about three months. So with that I would approximate that to about a million dollars that could be added on the expense size.

Jail would still be within budget or I mean police department would still be within budget if those were added but it does uh skew the numbers a little bit for the timing of expenses. Um, so on a on a positive side, this is the the last slide before um the next one is the is the budget items, which would be nice to throw on there, but we'll see if we can get that working.

Um, on on the positive side, overall within the general fund, we've seen a one we're 1% above total revenues. Am I messing it up? And then on the expense side, we're 3% under budget. So those added together have really been able to through June uh we were about 2.7 million to the positive.

But significant things can can move those numbers when we're talking about um the the amount of dollars within the general fund of about 64 million in expenses. Oh, nice. But uh so the things that have been doing really well on the positive side are the sales tax and the new safe and stable tax of the 0.1% or 0.01% utility tax, investment income, the BLS and GMT have been outpacing what was budgeted.

And then on the expense side, um the departments have been doing a really good job. I know from uh from even the finance department, we have two positions that we haven't filled just wanting to uh you know maintain what we can knowing we're going into another uh tough budget cycle.

Um we go to the next one which takes us to the budget. So um being a tough budget cycle, we uh do have the budget expected to be presented to council on September 28th. Uh, and then the first budget public hearing would be October 5th, followed by the revenue forecast and property tax public hearing on October 19th and then the second budget public hearing on November 2nd and then the budget ordinance presented to council on November 16th.

We don't anticipate needing the off Mondays this year for the budget schedule. really all the departments have done a really good job of uh collectively not not really adding anything looking to just try to maintain services as much as possible.

So there's not really any significant ads. It's really just trying to figure out how to maintain services uh with escalating utility costs um other operating costs and uh colas and benefits. So, we are looking at uh a current deficit of at least about 8.5 million within the budget that we're still working through right now.

Uh but that is uh due to a number of factors as you're looking at $140 million that you're budgeting and and a significant amount of departments. So, uh so more to come. Happy to answer any questions you may have.

Um, but this this takes you to where we are uh halfway through the year and September 28th will be here before we know it. >> Thank you. Um, committee, any questions? >> Council member Hamill, >> I've got a few here.

Let's start with uh police. The um the jail expenses. What What's the current uh bed day cost that we're being charged? >> The the current bed rate? >> Yeah. the daily cost of um a person within that facility.

>> Um 240. Thank you. >> You say that Could you say that on mic? >> 240. >> Thank you. >> Yeah, >> that's per per bed day plus the booking cost. >> Booking cost on top of that. >> Booking cost is on top of that.

So 240 for per bed day and then booking cost on top of that. cover. >> Yeah, sorry about that. Ty Elmadorf, deputy chief of police. 240 is the uh daily bed rate plus booking costs on top of that. We do not have our rates um finalized for next year.

We're still waiting on that, but we did get uh correspondence from the sheriff that there is a maybe a projected um 4% decrease on that. So, we're looking forward to getting what that rate is. Hopefully, it will actually go down.

This year has been substantially higher. In fact, our our last months that just got approved for the uh cost was over $500,000 a month. >> Thank you. More questions. Council member Brill. Um, yes. There at the end, Andy, you talked about a $ 8.5 million deficit projected for $140 million budget.

That was general fund for next year. >> Yes. Yeah. >> So, that's where all of our trouble is in the general fund, which is what only about a quarter of our budget. Um, how do do we have similar p dire pictures in any of the other major funds that you're paying attention to?

um we uh not at that at that level. So the general fund is always the most complicated uh fund to try to try to balance. There are ongoing uh costs that continue to escalate that we're trying to find ways to um reduce um especially when it comes to the the health benefits side trying to trying to find uh proper benefits.

And then really that is the the movement towards the the planning for the RFA and and ways that we can find dedicated revenue sources for um for areas that uh continue to grow that we just don't have that revenue to be able to make the pace of a public safety uh services that are um with the expected growth of the services to try to provide to the community.

Just for the public on the record, can you explain what RFA means that you just refer to? >> Oh, yeah. It's the regional fire authority that has been discussed to to bring forward that as an option as a dedicated funding source for the fire department, which would actually establish the fire department along with district 8 as an independent body.

They'd be an independent fire district or regional fire authority. Yes. >> Council member Hamill. Um yeah, moving on to um well, first of all, I just want to say the the 500,000 per month for the jail cost is very concerning.

Um with the new [clears throat] facility being um hopefully up and running in 2028, my concerns are around the um the adequacy of um having a only one court. I know that the the county is looking at trying to have a s a second court, but transportation costs uh to to get an individual from um [clears throat] out past division to to MUN court would be probably $400,000 per year.

So, I'm concerned about that. Want to make sure the that second court gets implemented. Just want to say that out loud here. But moving on to um to fire. Um there was no academy and that saved [clears throat] whatever that that number was.

My understanding is there's typically with one academy per year that can there can be two. Why was there a pause uh in that in that effort for bringing on new firefighters? >> Yeah, I mean that was really the effort that all the departments are going through to find ways to reduce cost.

So we reduced about 40 positions going into this budget. Um and uh so through that a lot of those were frozen positions but then it was really all the departments trying to find ways to reduce costs that we seeing that $10 million budget deficit and so trying to find ways to pause wherever we could.

But we knew that that was not sustainable that maybe we that the fire department would be able to work with a year without an academy but they would definitely need one in the next year. Okay. an academy can run uh 1.5 million or it can it's um it can be a costly venture as you bring on 12 new uh recruits.

>> Yeah. uh Bill Hugh, fire chief. And yeah, the big thing, the reason we were able to do that this year, we had uh council's heard the term training pool employees from me before where we were prehiring for retirements.

We reached a point where we finally caught up on all the new positions. So, the two BLS cars that we added over the last several years and the medic unit that we added, we finally got to a point where we caught up on the new positions and we had enough training pool positions that were prehired for upcoming retirements.

Because of those getting caught up on the new spots and then having those prehired retirements, we were able to take this year off from academy. Right now we are planning one academy next year just to manage the attrition.

So and we also this year as part of the budget reduction reduced the academy staff by that also was four other positions we kind of absorbed this year that allowed us to not have that academy this year.

>> Thank you. Thanks for clarifying. I [clears throat] think within public safety that is that's a realm that we cannot do less with less. We need to always maintain and and make sure that we're providing the um appropriate levels of service in in my opinion.

I have one more follow-up question if pleases the chair. >> Yes. [clears throat] >> Um so I want to go back to you. Um early on in the near the top of the remarks, there was um there [clears throat] were some comments around the housing 279 units being brought online this year.

And we know that that's far below what the what the community needs. And I'm trying to understand and get my wrap my head around the thinking of why what's contributing to those to that that more anemic level of of housing starts.

Trying to understand that. Good afternoon. Blake Lion, uh, director of planning and community development. So, um, one of the things you have to keep in mind is the time it takes to get through the construct, the both the entitlement process, which is the permitting, and then [snorts] the construction process.

So, there's, like we heard a little bit earlier with kind of the lag in uh, sales tax reporting where there's that two-month gap. A lot of times those types of things happen with con construction costs where we've got permit issuance and then it may be uh 9 12 18 months for those um construction efforts to get underway.

So the sales tax revenue that we're seeing from the that is often something that was permitted maybe a year or two prior and we're just seeing the sales tax come in for the actual construction materials.

A lot of what we're seeing in terms of the decline in the numbers has to do with the cost of money. So we talk with our development developers and their the higher interest rates, the inability to finance projects, the change in um some of the um construction uh regulations and additional things that come online make it more challenging to find projects that actually are feasible.

And so we've seen a number of those projects come in. Um they'll go through maybe the planning process where they'll get uh a variance or some other preliminary entitlement associated with that. They may go through the construction uh design associated with it.

Those are all what we consider soft costs. They're roughly about 10% of the project. And then they'll leave them in a hold status or that ready to issue status trying to pull together all of their financing requirements associated with that.

And then because they know as soon as they pull that permit, the clock is starting to tick in terms of getting the work completed and done. And so they they have a kind of a safe haven, if you will, to leave it in that ready to issue status until they can get something to finance.

We have seen some projects come in uh of late with the um considerations that the city has given to reducing parking requirements and also the expansion of the multifamily tax exemption. And so those are some uh efforts that are underway to kind of help those projects pencil out a little bit further.

We're also in the process right now of reaching out to a number of the people that are uh in that ready to issue hold to see if there's anything from the city's perspective we can do. And in front of you this evening will be at the public hearing will be some incentive for affordable housing.

So we're again we're trying a variety of different approaches to see what we can do from the regulatory side and from the city side. But part of that is just the lending uh atmosphere that is difficult.

Any further questions from council member Stone? Council member. >> So my question is actually about next steps. You made mention to the fact that we you don't anticipate holding those off Monday meetings.

Um and I know that during those meetings each we've gone through each department individually and there's been sort of a summary page about the prior year's accomplishments and looking forward. I know you indicated there wouldn't be much change.

Um, I appreciate since we already look at the budget at a very high level as a council, I find a lot of value in those sort of departmental um, snapshots and so I don't know if if those are anticipated to come forward during our regularly scheduled meetings or if those were were not being prepared simply because there wasn't change, but I just want to express my interest in in that coming forward if that's still a possibility.

>> Yes, the plan is to still bring every department forward with the onepage snapshots. We just don't expect it to take as long to get through. >> I I did want to um we met on Friday and went through a lot of information, which is why I don't have a lot of questions because I I had the onetoone [clears throat] ability for that.

But if you could um one of the things that I walked away from was the understanding of the 40 positions not being filled this year. um the amount that we were going to have to dip into reserves or that we didn't anticipate.

But then also the um so far we're 2.7 million positive as far as increased uh property not property tax but sales tax and stuff that we weren't necessarily anticipating. And I know there's not a crystal ball, but um as we go forward to the end of the year, just kind of thinking about the next budget cycle because we're talking about still a deficit next year, but um if we continue on a similar trajectory as we are right now, do you uh have a prediction or assumption of how much of that deficit we were planning on dipping into reserves this year, how much of that we may actually need or do we um are we going to come in flat?

Um because of our conversation, I think it would be beneficial for everybody else to kind of get that. You've mentioned parts and pieces, but if you could consolidate that. >> Yeah. Yeah. Thank you. Um there's there's uh a lot of pieces when it comes to the general fund.

um when we're talking about $140 million in all the departments and and so everybody has their spending authority what's established within the budget. But then um really uh some of the things we were talking about for some of those cost savings even with the 60-day pause or finding ways that if we once a position becomes open evaluating how long can we hold that open.

Currently there's about there's 39 FTEEs open which would be a total cost if they stayed open all year would be $5.3 million. So if we average even that across the board, that's pretty significant savings.

And so that can flip that we're 2.7 million to the positive at the end of June. That pretty much significantly changes that number if we pay the three jail bills knowing that our jail costs are now the most recent one was at 500,000.

That can have significant impacts to what we see on the expense side. So, um it's uh we continue to monitor and evaluate how these impact, but sometimes the the timing doesn't line up. We're hopeful that we actually can still um be balanced at year end.

um we're hopeful that we'd even be on the positive side and that's if everybody all the departments can continue to maintain without some of the staff that they have and um if revenues continues to outpace what we've experienced the budget so far of what we've experienced so far this year.

Uh but it's we weren't really optimistic super optimistic within the revenue side especially with all the things going on um at the at the federal level. now even with the um the trade between Canada and the US and and things that can definitely impact us uh here locally.

And so um we're we we don't have a crystal ball, but knowing what we're doing from a um a position standpoint, knowing we can hold those out, um that is the cost savings. So we've budgeted a $6.3 million deficit for 2026.

um 1.5 of that would be a loan to the Medic one fund which it may still need um a good majority of that and so that would be at year end that we'd experienced that full expense at that time. Um and then uh we're adding 1.6 million today in expenses which would take the budgeted deficit up to 7.9.

So again, these are these are budget limits and so we always expect to come under that and knowing that we've been doing really good on the revenue side, we're we're hopeful that we don't have to experience that uh from a an actual perspective of the of having a deficit.

So, we're still trying to figure out the best. Um, I think budgeting a a small deficit small even in the terms of 140 million could be 3 to four million that if you budget a small deficit like that, we could still expect to come out on the positive side from an actual perspective because we are going to see cost savings.

Not every department should spend to the full limit. Um, these are when we establish the budget, it's it's full FTEES. It's everything that you intend to spend within that year and everything would have to really come in line for that full budget to be expended.

And so, uh, those normally we don't normally expend our full budget. And that's pretty much the expectation as we we look across the board. But we have experienced some other things that are out of our control when it comes to increase in health benefits costs when we might have fuel expenses that are a little more expensive this year.

Utility costs are more expensive. So there's other things that counter those. So um I don't feel like I'm really coming to a straight answer here because we see all the variables on the expense side and on the revenue side um that we continue to monitor through mid year we're to the positive or hope we can end that way.

Um but I don't have a crystal ball and so I'm I apologize I can't really answer it fully. >> I completely understand. My my takeaway is we're sitting better than we thought we would. >> Yep. um one because of the increased revenue and two because of the the really good work of our departments um kind of making making do with less uh 39 positions is pretty substantial.

>> Um and given that it would be 5 million that would be added to the where our current budget area is. But my perspective going into September 28th and forward is that looking at um the permits going down because we're benefiting from what happened a couple years ago, which is why um we're seeing this great growth.

Um we can't necessarily rely on that going forward over a couple of years um because of the the permit numbers being down. So construction perhaps will bring in less money, but also eventually some of those positions will have to be filled.

So even though we might be sitting a little bit better than anticipated, I fully expect the budget coming forward is still going to be very uh conservative and um kind of keeping an eye towards that. Our economy hasn't fully shifted around and so we'll still have some lean years coming forward.

Um so thank you very much for that and um if there are no further questions we can move on to our second um item. So um for the budget committee item 255015 an ordinance amending the 2026 budget which is our amendment number three.

This amendment increases revenues by 4,92,873 and expenditures by $22,189. Six, excuse me, 674 across multiple departments and funds to ensure sufficient budget authority is provided for existing and upcoming programs and projects and to cover higher than anticipated cost.

And um our presenter is our budget and treasury manager, Eric Johnson. And I'll turn it over to you. >> Good afternoon. Uh Eric Johnson, finance budget and treasury manager. Um the ordinance in front of you today um if passed yeah it will increase as uh as specified earlier um revenues across various funds um by 4,92,873,000 and expenditures by 22,189,674.

Uh and in the general fund that would increase um expenditures by 1,600 101 and $628. Um, so what's going into this? Uh, as Andy mentioned previously, the uh, medical composite rate was increased uh, halfway through the year.

So this adjustment um, adds budget to cover those expenses in the general fund as well as across multiple other funds. Um and it uh increases expenditures and revenues in the health benefit funds. Uh it also increases uh in the mit mitigation bank fund uh an equal amount of expenditures and revenues.

Um as well as uh increasing oh I'm sorry I'm skipping over a little bit all over the place. Uh so continued in the general fund uh there's the uh old parks uh suite remodel to accommodate the uh human resources moving over from the federal building into city hall.

Um and then also uh the hearing examiner's expected overages um budget. And then uh we are also adding um funds in uh [clears throat] for the tiny house village in the public safety sales tax and affordable housing funds.

Uh as well as uh acknowledging uh contributions from community partners. Um 100,000 coming from Peace Health and 200,000 from Watcom County. Um and then uh in the affordable sales tax and the uh housing levy funds um it's acknowledging uh greater expenditures to account for several uh affordable housing projects um that will be going forward this year uh just to make sure that we have enough budget to cover those uh projects adequately.

um as well as a million dollars of grant revenue um that we've received about 716,000 uh year to date so far. Um, and then lastly, uh, it's acknowledging, uh, 1.9 million, uh, in the dispatch fund to account for, uh, to [clears throat] account for debt service payments for the new WCOM building as well as uh, some uh, purchases for equipment and uh, furnishings that will uh, go in there as well.

happy to ask any or answer any questions if you have any >> committee. Um, council member Loquist. >> Yeah, thanks for that presentation um there, Eric. Um, I view some of these as kind of like good news and some of those bad news.

Like the bad news ones are the ones where we have additional metal expenses and benefits payments that we need to cover for employees. So that negative in a sense of it's an expense that we have to eat.

um the increase for expenditures for tiny home villages, the affordable housing projects, I I call that good. That's putting money out the door into projects. And so that's almost 11 a little over 11 million that I increased expenditure that I am happy to to approve.

The one I have a question about is the $ 1.9 million uh for the Watcom dispatch building. Is that increased expenditure because a good reason? because the project's going forward quicker than anticipated and therefore the expenses are coming in or a quote unquote bad reason because the expenses are higher than we thought they might be.

>> Um, no, it's uh what we expected. So, it's payment for the uh debt service. Uh, so the bonds that we uh sold um so it's to pay for those um for the debt service used to build the the Wacom building.

>> We knew that was coming. We just didn't have it in the budget in time when we passed it. >> We didn't know the exact amount of the bonds being sold. Um so, uh we Yeah. >> Is in the ballpark what we would have put in if we knew.

>> Yeah, it's a a little bit higher, but it's in the ballpark. Yes. >> Okay. Thank you, >> Council Council Member Hamill. >> Yeah. For the third bullet point packet page uh 106 for the tiny home uh village of 35 to 40 homes.

Does do the numbers there represent the totality of 2027 expenditures including operations or is that the standing up cost? >> Um I believe that is the standing up cost. So, it's just over a million dollars to put in 40 pallet homes.

>> Yes, that's correct. >> One point 1.2. >> Any other questions from council or committee? Okay, this was um and and thank you for Oh, council member Lilquist. >> Yeah, I moved. >> Sorry. I move to approve the proposed budget amendment number three.

Okay, we have a motion to approve. Um, all those in favor say I. >> I. >> There's uh no disapproval. So, I will bring this forward uh tonight for the full council um for a vote. So, thank you very much for the presentation and uh we have one item left under budget.

Um so far our timing is doing pretty good. Um item number 255014 um a resolution amending the city of Bellingham land use application fee schedule. Uh the city has not updated the land use application fee schedule since its adoption in 2007 and fee revenue is no longer keeping pace with the cost of service.

In an effort to bring the fee schedule into alignment with the current expenditure, the land use application fee schedule exhibit B has been revised to account for the inflation and include an annual adjustment based on the consumer price index.

The proposed fee schedule would go into effect October 1st, 2026. The revenue generated from this adjustment will in part be used to fund a market study to help inform future adjustments to the fee schedule as well as a cost recovery system.

And presenting this information today will be our planning and community development director, Blake Lion. Thank you. >> You appreciate it. Also with me this afternoon is Kurt Abfeld, our development services manager.

Um much of what you've seen this afternoon is um going to be a little bit of a repeat with a a slightly narrower focus from what I was here to talk with you about uh in the in May of this year. Um you may recall when we spoke at that time, we listed out a variety of different um fee types that we're focusing in on.

Today is really going to be just the application fees that you see listed in there in green. and we're going to refine it down even a little bit further and not talk about special events or public facilities uh agreements um and really just focus in on the land use components of that.

Um now that's typically the types of things like you see listed there. This is not a an all intensive list uh but it's design review applications, conditional use permits, critical areas, subdivisions and the like.

Um to give you by way of background, we had the original resolution that established the fees in 2007. As your staff report said, there have been four changes over the course of time to add additional details to that, but the the original fee structure has not changed since 2007.

So um we have not been able to accommodate for u any increase due to inflation or otherwise. So in pack in the exhibit A of your packet um you'll see listed out here and I'll take a minute just to kind of describe for you and for the general public how this is laid out.

The second column here the first column is the is the actual title of the application fee type. Um and then the second column is the numerical value towards that fee. Now we have some instances where there are multipliers.

So there'll be a base fee and then a an additional fee based on per lot or or per acre of your parcel size. And so it can add on to that. And then there's, as you can see, the two columns to the far right are the resubmitt fees if we're anticipating the potential for a resubmitt.

And if the hearing examiner has a role to play in the decision-making process, there is a fee associated with that. What we did in order to come to you this afternoon is we took the opportunity to look at those.

We went back and looked at the amount amount of inflation that's occurred since 2007. That's roughly about 37% increase in just overall costs. We allocated that amount to those fees and then rounded the fee up to the nearest whole dollar.

And so essentially what you'll see in exhibit B of your packet. And what we're asking you for your consideration is um that same table. We didn't change any of the formatting. We kept it fairly simple and we struck through the original $207 amount and then in bold next to it we just indicated the requested amount.

and that goes across the board for any of those additional fees associated with that. We've also asked for your consideration with regard to enabling a CPI or consumer price index. We've done that on a number of other ones.

We thought that that would be an opportunity to adjust and address some of those um so that we don't have to come back to you on an annual basis. We're asking that this be if it's approved that it go into effect on October 1st of this calendar year and then we would do the CPI starting in 2028.

So we would give a basically a little bit longer runway for that one with the additional revenues just to kind of give you an idea. Oh, let me back up one other thing. Um what you'll also notice in the exhibit B for this item is we have a technology fee.

It's the last item on that page. I believe it's a page 137 of your packet. Um, which would ask for an additional consideration of 5% for those. This is an opportunity. What we have noticed and what Kurt and others can tell you is that we're trying to keep pace with the technology of today's industry.

We have an existing uh permit tracking system that uh we are making work for us uh that has some limitations to it especially as we get additional state requirements for reporting and as we want to be more transparent with our general public.

Um there are just some tools that we would need to um have in place to be able to advance a lot of that and provide the services that we need. So having that dedicated technology fee as a part of that structure gives us the ability to put that money away, amass some of those funds and be able to move forward in the future and make those corrections.

So when we when we were doing this in a level of analysis, we took the top 14 most prominent uh land use application types. We looked back at the last two years in 24 and 25. Um, we took the average of those uh, permit volumes and then applied the new fee rate that we were describing.

That generates a little bit more than $200,000 in anticipated revenue for this. That money would then be used as part of if the um 2027 budget gets approved as we're as the department has requested, that money would then come back and be available for us to use to solicit consulting services to do a broader fee study across the industry and to help develop a cost recovery system.

Uh and that cost recovery system would be an example that we described a little bit where we have a flat fee and then when projects are going through resubmitts, we would then be able to um attribute our time to that effort and go through that process of being able to charge actual time and then refund any of the balances back to our project [snorts] applicants.

So that's the intent and purpose behind that. If you agree with our request, then we ask you to approve the resolution, which again, as you see on the screen here, would do uh three things. It would update the fee schedule based on what's in your packet in exhibit B.

It would allow for the future adjustment based on CPI, and then it would add the technology fee as we described. So, happy to go into greater level of detail, but that's what uh we would like for your to consider.

>> Thank you, Director Lines. Um, questions. Michael, uh, excuse me, Council Member Liquist. >> Uh, thank you. Uh, direct lines. First of all, I I agree this is an appropriate thing to do. I appreciate, especially in the background memo, the citation of state law, which indicates the state recognized the philosophy is that local government should try to recover basically the costs more or less of the application uh applications with a few limitations that they put in there.

So, this is very much in line with what the state law is expecting us to do. Um, I have only one request. I'd like to make an amendment to the resolution. Um, setting fees is is one of those things that falls within the city council's jurisdiction.

We have budget authority. We have taxing authority. The the fiscal aspects of the city always go through city council review. What this does is it it it follows that fee schedule comes back to us, but then it also sets an annual fee adjustment which sort of takes it out of city council control.

So it it becomes a set and forget and I don't like the forget part of that. So I'd like to ask your feedback if we added a new section three entitled city council review that said something along along the lines at some time in the first half of 20 oops 2032.

Sorry. The city staff shall bring forward a review of the land application fee schedule to the city council. I picked four years. Maybe there's another year. I'm hoping that the um council sees uh some virtue.

at sometime in the future, not the near future, this comes back for review. Um, how do you have a reaction to that, Mr. Line? >> Um, two things for your consideration. One is that, um, with it, if this gets passed with the additional revenue, we will be going out and doing that market study and we'll be bringing back fee adjustments.

So you absolutely will see it again probably before that 2032 that you had described because our anticipation is that we will do the we will do the market rate study in 2027 for the fees to be potentially adjusted up down or whatever the direction that market study would in likely in 2028.

That will give us the ability to address some of the um challenges that we're having in the development services fund. We didn't get into those in great level of detail this afternoon with the financial forecast, but what we know is that we're not keeping pace with what the expenses are.

So, we'll need to adjust that. So, that's the first piece is you'll see it before the 2032, but no objection to having kind of an ongoing pace uh once we get through that to make sure you you know can see the adjustments.

>> Well, thank you. So, I could we couldn't say at sometime before the first half of 2032. Y >> as opposed to at sometime in the first half of 2032 and that would you could catch that in a number of ways rather than only like one short window.

Um so I would like to make a motion to add new section three entitled city to the ordinance entitled city council review which shall read at some time before the first half of the year 2032 city staff shall bring forward a review of the land application fee schedule to the city council.

>> Okay. Um, we have a motion for an amendment. Um, all those in favor say I. >> I. >> Uh, any nos? No. So, uh, Council Member Liilquist, if you could perhaps get that in writing so that I can read that amendment tonight, I would appreciate it.

Um, wonderful. Any other questions or comments? Um I before uh because this is a a vote to approve, but before there's a motion for that, I assume, I just want to say I I do support um the three components and I'm really glad to see the ad technology fee working in higher education.

Um we've had to spread that cost out across different areas because technology is constantly changing and it's expensive and it's hard to absorb. So, we do want as a city to be uh really current with our tech.

That makes things easier for staff and public for access. So, glad to see that added in there. Um any anything else or is there a motion? >> I'll move to approve with the amendment. >> Okay. So, Oh, we we have the amendment already.

>> As amended as amended. >> As amended. Thank you. Um so, all in favor say I. I. ite. >> There's no opposed. So, I will bring that forward tonight for council. Thank you very much. And that was our last item on the finance.

So, I will turn it back over to council member Stone. >> Thank you very much. Um, we will pause just a moment to line up the next um recording and cue for the next committee meeting that will be parks and recreation.