City Council - Regular Meeting

All right. Good evening, everybody. I've got 6 p.m. on September 14th, 2026. I will call our meeting of the City Council to order. Would you please join me in the Pledge of Allegiance? I pledge allegiance to the flag of the United States of America and to the Republic for which it stands, one nation under God, indivisible, with liberty and justice for all. okay all council members here are present except for mr mcdougall who is joining us remotely at the executive session that we are about to go into so uh at this time we will step out of the room for an executive session for potential litigation per rcw 42 30 110 subsection one romanette one and we expect to be in that exec session for about 30 minutes so we'll be back down here somewhere after 6 30. thank you

Thank you.

All right. Well, welcome back, everybody. We've got 631. We were very timely and completed our exec session in 30 minutes. Mr. McDougall joined us upstairs, but he's not able to join us for the remainder of this meeting. So we're short just one council member this evening.

Mayor Walters.

Ms. Kalina McGrath.

I would like to excuse him for the remainder of the meeting, if that's necessary.

Second.

Motion and a second to excuse Mr. McDougal if there's no objection. Hearing none, the motion is approved. All right. We'll move on now to announcements and committee reports, starting with a few announcements. Work continues at 12th and Commercial. This week, the vertical portion of the new signal poles are going to be erected, and all the electrical work done there, that's the vertical portion, but not the signals themselves. And you might have seen already the demo and concrete work for the traffic curbs, and the traffic curbs are the little kidney-shaped guys here on the graphic. That is occurring right now, so you're seeing that at 13th and 14th, I think also at 12th. So those bits are happening right now. The intersection is open, but if you can, you might take an alternative route. As always, more information about this project and others is at anacorteswa.gov slash projects. All right, we are entering the 2027 budget season. If you're interested in helping us with the budget, you can go to anacorteswa.gov slash budget, where you'll find all kinds of information about the budget and more will come as we get into the budget season and the budget proposal. Once you're there, you can submit feedback via a budget feedback form that's on the web page. But then also we are having a budget open house. If you go to the next slide, you can see that there's a budget open house on September 30th. There it is September 30 from five to 7pm right here in the city council chambers and more information again is on that website, including the dates of the public hearings, but earlier comment is better so September 30 would be a great time to see here. Residential cleanup day is still coming up this Saturday, September 19th, starting at 9 a.m. You can bring your residential garbage and yard waste to our operations facility, which is at the top of D Avenue, at no charge. Just need proof of residency. The library is hosting International Observe the Moon Night, Saturday, September 19th at 6.30 p.m. Last until 8.30 p.m. at Seafarers Memorial Park. The Island County Astronomical Society will be there. You can learn about moon phases. Try some tasty moon-themed treats. God knows what those are. And enjoy a story time while we wait for the sunset. And if the sky isn't visible, the event will be canceled. I will be at the Rockfish Grill on Thursday, September 24th from 5 to 7 p.m. This is another in the series of coffee with the mayor events, except there will be less coffee and more beer. So come on by and talk about city projects, services, the budget, anything else, what's happening in Anacortes. Fidalgo Bay Day is coming up two Saturdays out, September 26th. Starts at 11 a.m., runs till 3 p.m. And it's down at Fidalgo Bay Resort off of Fidalgo Bay Road. It is a fun-filled day of learning with the Salish Sea School and our friends, especially for kids. Also, the library is... hosting a contest to determine the next library card design. And I don't know, Council, if you were able to get down there and check out some of the designs, but some of them are quite fantastic. And you can vote at the anacorteswa.gov slash library website. Scroll down a little bit. You'll find the link to the library card design voting. Voting is open through September 30. And so you can find your favorite design and vote for that one. I think it will be a hard choice. Library card sign-up month is September. September is the perfect time to enjoy a new book, game, movie, or music at the library. So sign up for your library card and find out what our library has to offer. The planning department wanted to make sure that you're all aware that our consolidated annual performance evaluation report, the CAPER, is available for public review on our website. That's anacortespois.gov slash 170. It's a requirement of our CDBG program grant. And now let's do some committee reports, starting with the Finance Committee. Council.

Mayor Walters.

Ms. Calhoun-McGrath.

Thank you. So the finance committee met on September 11th. Ms. Hunt and Ms. Moulton were there along with our director and assistant director. And we did a bit of a deep dive and preview of what is on the agenda this evening, specifically talking about item B and C regarding investments. And so we'll get into that further discussion. later this evening talking about investment revenue from utilities and their ability to be moved into the general fund. But I bet Mr. Hoagland will do a much better explanation for it. The other thing we really discussed was the fact that revenue is a challenge and we are moving into budget season. And we were discussing the fact that in Anacortes, 50% of our revenue is from property tax. That is unique to Anacortes. Typically, a lot of other cities are more balanced, kind of a third, third, and third, whether it's utility tax, sales tax, and property tax. And as we know, we can only raise property tax 1%, the collection, 1% a year, which is approximately equivalent to $85,000 increase a year, which does not get anywhere near the cost of living that we're seeing in increased... benefit packages for staff or compensation or even fuel prices to run our city vehicles. So we discussed somewhat the one-tenth of one percent sales tax for public safety that was passed by the House. It was House Bill 2015. Currently, our police department is working on the application process. So that is both a grant that we may or may not be awarded, but then also the application is certification to authorize that tax. It's the same application, so it's worth trying to do both. The CJTC, which is the Criminal Justice Training Center, is the entity at the state level that will confirm whether or not we qualify to do that sales tax increase. Essentially, it's making sure that we are following guidelines set out by the state so that we're using state policies like keep washing and working, use of force, things like that. I don't think we expect any issues with that, but it is quite an involved process. If you're going to ask about the amount of the grant we could have received, we have no idea. And I don't think anyone really knows. But ultimately, once that process is approved, it would still come back for a councilmatic vote if and when we were to do that. So that's just something to have on the horizon. The other thing that was discussed that has been mentioned in the past is a B&O tax. That is also councilmatic, and it's based on gross receipts or sales. That is another lever that we don't have, and neighboring municipalities throughout Washington state have it. It's difficult to know what the revenue would be from something such as a B&O tax because it is not administered by the Department of Revenue. It actually has to be administered by the city. within the finance department. So that is something that we are exploring. Our goal is, our intent is to not affect our downtown core or small businesses. For example, Oak Harbor has a $4 million threshold before they start collecting be an out tax. A lot of municipalities will ask for reporting purposes to do a lower amount, but aren't collecting at those lower amounts. Various cities have various thresholds. I think at least at a committee level, our initial thoughts and staff is that we would want to add a higher amount targeting more of the businesses that aren't currently paying sales tax, but are using our roads and our services and are intricate to our community, but also may have a little bit more bandwidth to help in that manner. What other things did we discuss? We talked a little bit about just kind of the upcoming budget directors and the mayor are doing a really good job of being strategic of how we allot work. For example, talking about who picks up the garbage downtown and if there's ways to move collection of garbage cans that we use in our downtown core be collected by the solid waste department, which is a utility versus our parks department, which is a general fund. So really getting creative with that. We'll see more of it. The other final thing that I wanted to just point out to the rest of council is that like all of our directors working on a budget, if there's anything that council members have identified that they would like put into the budget or have a request to add to the budget for in needs of training or travel or whatnot, please make sure to convey that sooner than later. I think that's it.

Thank you, Ms. Colleen McGrath.

Mayor Walters.

Mr. Fantini.

Yeah, quick question. So with our budget process, as we're talking about that B&O tax, is that something that like How do we get involved in that conversation now? Is that something that is going to be discussed, like, at one of the dates in our budget process? And is the expectation that the finance committee and the mayor will be bringing forward a plan for... No? Is that... Sorry, you shook your head. I'm sorry. No, that's fine. I'm just trying to understand at what point we'll have a full discussion around the B&O tax.

The... uh calendar that's on the website and of course y.gov budget for the proposed budget has council reviewing the capital facilities plan through the remainder of september and then the first meeting in october uh receives a presentation on revenues so that would be the meeting to Well, yes. So the first section of the budget proper after the capital facilities plan is revenues. So October 5th is a presentation. October 12th is a public hearing on revenue sources. On October 12th, there's also council consideration of the property tax levy. So the first two or three meetings in October will be about revenues.

Awesome. Thank you. Mayor Walters.

Ms. Malta.

I'd like to give a little more context to my head shake. No, no, I shouldn't have. That was like editorializing when... Anyways, I didn't mean to. But one of the things that staff is working on right now is they're exploring all those various facets of what a B&O tax could look like. And there's a lot to it. Like what percentage would it be? There are limits set by the state. There's a range. What are those... what are those thresholds is it four million dollars is it three million dollars none of these things we don't we don't have insight into any of these details yet but the department is working on that and then they will bring them to all of council what categories will they be will it be things like um council member cleland mcgrath said that they don't currently collect sales tax maybe it will be something like it's all like what are the exemptions also so there's a whole lot of legwork that will be done and it's it'll be really interesting thing to to consider amongst our group of council members and the community and um oh there was one more thing that i was going to say so different there i think there are about 80 cities in washington that have done it and some of them have really low thresholds and some of them have four million so anyway it's going to be really interesting i'm actually looking forward to the conversation and learning more about this and how it could help our city and also not unduly burden our businesses particularly the the smaller ones um so anyway um yeah thank you mr young yeah um you know just to sort of follow up on you know my colleagues um you know

Where we are now requires us investigate all options. I'm reluctant to tax. I honestly believe that some of the citizens have already been taxed far too much. But, you know, the options that we have are limited. And so I'm looking forward to the deep dive that's taking place and seeing what comes out. And, you know, and putting everything on the table, new ideas, old ideas will allow us to make the best possible choice that we can. As an individual, again, I'm always reluctant. I just but I'm not sure we have much choice at this point, but to consider everything. And so I appreciate that deep dive that's taking place.

Thank you, Mr. Young. I definitely think that that is part of our responsibility to figure out all the options.

Mayor Walters. And I think just to clarify, it's been difficult at a committee level. And I think for staff and the directors, the director and the mayor to even quantify or identify what this looks like because of the fact, you know, when we talk about sales tax increases, we're used to talking about sales tax. And we have pretty good data of what that looks like. And so when we say a one-tenth of one percent or a levy lid lift or something like that, we can really predict. And from what staff has done research-wise, you know, talking to our neighboring municipality of Oak Harbor, they did a ton of work. They were very thorough. And even when, since implementing a B&O tax has, has had a very different revenue, uh, general, it's, it has generated a different revenue amount than they expected. Um, but ultimately it's, you know, we've, we've got our three options of revenue and we've got to explore all of our options. Um, so we're all, uh, There's not been a lot of hard discussion. There's not been a lot of... facts to discuss and throw things out or, or push in a certain direction other than we have been trying to do this work and we want to bring it forward. But it's, it's going to be kind of a, it's going to be an unknown and everyone is involved is trying to be as thoughtful as possible. And it'll be great to have it in October for further discussion.

Thank you, Mr. Clayton McGrath.

Mayor Walters.

Mr. Currier.

Yeah, just one more thing. I think when it's complex issues like this, that work session format probably works best, in my opinion, because I think finance committee is probably doing a good job starting in city work. City employees are doing stuff, but if it's just simply a presentation and a boat and a short discussion, have a hard time with that if it's a major change for the city. So just for consideration.

Thank you, Mr. Kerr. If there's anything else on that, hearing none, we'll go to the next report, which is Housing Affordability and Community Services and Planning Committee.

Mayor Walters. Ms. Malton. I guess that's me and our planning committee met at 5 o'clock today. Council Members Currier, Young, myself, Planning Director John Coleman, and Planning Manager Libby Grage. And we began by talking about our permit streamlining amendments that the planning department has been working on. with the planning commission and there is a planning commission meeting tomorrow night at six o'clock and that is a great time for people to come forward with their thoughts and comments it's a public hearing and one thing that we would like people to know is that The permit streamlining amendments were initiated by one of the mayor's executive orders at the beginning of the year, and his staff started exploring that. They found some things in the code language that are not super clear for the applicants and for the staff and saw that this is a good opportunity to update some of those things for clarification. We've received a fair amount of comments from the public, which is great because the public is engaged and following and that's what we want and we want to hear from the public. So We want you to know as the committee and that this is a clarification of processes. It's a clarification of language for staff and applicants. So things will be streamlined by being clearer and more understandable. There is no effort to remove any aspects of public participation, comment opportunities in any way. So I think that there has been, a little bit of misunderstanding about that. The streamlining means we're going to just make it easier for people to come in and build whatever they want and damn the rules. But the rules are staying the same. So all the projects have to comply with the critical areas ordinance. They all have to comply with the zoning. So I just would like to reassure people about that. We're not trying to take people out of the process. You'll have a lot of opportunities, as you always have, to contribute.

And we want to hear from you.

From that, we moved on. We ended up talking about hacks a little bit. And the fact that building is still not... really happening at much of a rate at all due to various factors which we've discussed before. And so we're talking about incentives. How do we encourage the building that we want to see multifamily? And we have a housing action plan that we worked on and we've instituted some of the changes recommended in that. And so as the HACS committee, our next task is to, we're gonna revisit that and we're gonna look at what we've done and sort of do a foundation setting. and bring back to council what we have done and what we would maybe want to, you know, see if people are interested in moving forward with some of the things, um, you know, we'll talk about that. We'll talk about that after our next hacks meeting. Um, Oh, and then one piece of news from the planning department staff is they're in the very early stages of a process of developing technology to be able to look on our website and at a parcel, say, that maybe you own or that you're interested in. And ultimately, you'll be able to see and you'll be able to analyze it. what are the rezoning requirements there what are the rules that you would need to follow to develop there and where are the critical areas so it's very early stages but we're excited about having this tool that we can all access to see what is possible and what maybe isn't so it was a really good meeting thank you thank you miss moulton any other council announcements or committee reports

Hearing none. All right, we'll go on to public comment. We have one person signed up in advance for public comment, so we'll call on you first. Steve Anderson, come on up. Oh, maybe our 30-minute exec session at the beginning of the meeting drove him away. If anyone else would like to offer public comment at this time, we'll take it now. Ms. Martin, come on up. And do we have anybody online? No. Okay, thank you.

Hi, Linda Martin, Ward 3. I'd like to just talk for a second about an item on your agenda tonight. I think it's 7D, the purchase of property at Mollie Lane. And I'm not wanting to talk about the purchase itself, instead just about process. Tonight is the first night that this has come before the council, and therefore the first night it's come before the community. And I started looking into that because it's been announced already, it's on the city website, it's on the newspaper, this purchase, and yet it hasn't come to council. So I started looking at timeline and on October or August 24th, you had an executive session about real estate and no action was taken. Although, according to the best that I can figure, there definitely was action taken at that executive session because clearly you must have given direction to the mayor to go ahead and sign this contract. And let's see, on the 31st, a purchase and sale agreement was drafted. On 9-4, there was earnest money given down, $20,000. And on 9-9, the buyer signed. On 9-10, the mayor signed. And what the mayor signed was not a letter of intent, which you could have given direction for a letter of intent to be signed. And he did not sign a conditional purchase and sale agreement. He signed as far as, I mean, I'm not a state agent. As far as I can sell, he signed a regular purchase and sale agreement. All of those things, I'm not saying it's not bad. It might be a good, it probably is good, bringing property back into the tax rolls. That's a good thing. But my point is, trust is very hard to gain and very easy to lose. and there's a reason that there are sunshine laws so an idea might have been to come out of that executive session and make a motion directing the mayor to sign a letter of intent and i don't think he would have even had to have said wait but it would have given the courtesy to the community to know that something was coming up. So not a huge thing, but we care in this community and we would like to know. So that's my point. It's all about trust. Thanks.

Thank you, Ms. Martin. Any other public comments?

No?

All right. Then we will move on to our consent agenda. There are three items on the consent agenda. Council.

Mayor Walters.

Ms. Hunt.

I move to approve consent agenda items A through C. Second.

We have a motion and a second to approve the consent agenda, including all items. No discussion is in order on the consent agenda. If no one wants to pull any items, hearing none, we'll proceed to a vote. All those in favor of the consent agenda say aye. All those opposed say no. The ayes have it and the consent agenda is approved. Thank you, council. Our first order of other business is resolution 3229, which would adopt AMP chapter 390 regarding purchase cards. Our finance director, Mr. Hoagland, is here to give us a summary of this item.

Thank you, Mayor, members of the Council, and members of the audience. So this is actually related to work the Council did last week. You may remember that we had an ordinance that repealed a section of code regarding city credit cards. And the basis for removing that, rather than maybe an edit, was we had this comprehensive purchase card policy. So what we are requesting tonight is by resolution, putting that purchase card into the Anacortes Municipal Policy book, the AMP section 3.9 is where this would live. And I do want to point out one thing, one edit that was made to this before... before attaching it uh as exhibit a to the resolution is we um got an um and we got an audit issue this year because we have under the old policy under the unrevised policy we had a requirement that the policy be signed by each of the p card holders and what the practice was in the past is we would give the The form for signature and the P card to the new employee, and just tell them to send that form back in our office mail. And we had a few over the years that never did make their way back in discussing this a little further. We came to the conclusion that we really didn't need that assertion that they were signing. having shown that they read the the policy we're just now giving them the card and telling them you need to abide by the policy but the the primary goal here is to get this into the amp so i'd be happy to answer any questions that council may have

Mayor Walters.

Sant.

Having worked with the old P-card policy, which is essentially the same as what we're being asked to adopt here for quite a number of years, and it worked very successfully. It was a great change from credit cards. I would move to approve resolution 3229, adopting chapter 3-90, purchase cards of the AMP. Second. Second.

A motion and a second to approve the resolution as presented. Is there further discussion or questions about this item? Hearing none, we can proceed to a vote. All right. All those in favor of the motion, which is to approve Resolution 3229, say aye.

Aye.

All those opposed, say no. The ayes have it, and the resolution is approved. Thank you, Council. We'll move on to our next item, which is 3230, Resolution Adopting AMP Chapter 320, Investments. And this one is a little bit more complicated, and it's paired with the next item on the agenda, which is Ordinance 5040.

Thank you, ma'am. So, yeah, resolution 3230, what we're. Requesting to do with this resolution as exhibit a, to the resolution. We have our investment policy, so the investment policy currently resides in city code and the reason we established it in city code is there is a requirement that. investment authority be given from council to the treasurer via ordinance. So that was why we established that entire policy in city code because it included that clause for the city treasurer to be able to purchase and sell investments. So what we have done here is we've removed that section out of the investment policy. What we're going to be doing on the next ordinance, 50-40, is not only repealing the investment policy out of city code but moving the delegation section for purchase and sale of investments to the treasurer will move that section to the treasure duties within the city code so it'll that clause will still be in code as it is required but the rest of the investment policy that just has the um the nuts and bolts of how we operate our investments would reside in the amp and with the exhibit that we have attached here to the resolution that so that's one of the kind of a big change to this is that delegation of authority will move to the treasurer section of the anacortes municipal code the other section that i need to point out here and this is what i find to be very exciting There was actually a notice, it's in this whereas right here, down towards the bottom of the resolution, or I guess in the middle of the resolution. At any rate, there was a notice from MRSC a couple of months ago that came out reminding cities that within this section of city, or I'm sorry, within this RCW, there was a clause that allows all of the investment income earned by the city to be deposited into the general fund if approved by council, either through resolution or ordinance. So what our practice has been in the past is, so we have always pooled our investments. We will continue to do that, but we have excess cash that's pooled from all of the different funds and purchase an investment when the investment matures and we get investment income. Historically, what we've done is taken that investment income and distributed it to the funds based on the amount of cash that each of those funds, and I'm talking about accounting funds, the departments. So we've distributed that investment income to the departments based on the amount of cash that they were holding within the accounting system. So for example, if we purchased an investment that... earned $100,000 in interest, and the water fund was holding 25% of the cash when that investment matured. $25,000 in investment income would go to that water fund, which was holding 25% of the city's cash. What this does then, if approved by council tonight, would allow us to put all of that investment income into the general fund. And that's what our intent is. And this would become effective if approved tonight. We could start that fourth quarter this year, 2026. I did want to point out that when we set rates for the utilities, because we would then be allocating all of that investment income to the general fund, we don't take into account investment income when we set utility rates. So I've been here a long time, and in my tenure, I've seen interest rates from nearly 0% to over 5%, and it's just too... it's just not a reliable enough revenue source to be able to incorporate into those revenue projections. So we do not include investment income in developing our utility rates. So just in case that was a question that came to mind, we wouldn't have to adjust utility rates because of this, because they're not part of the equation already.

Mr. Young.

Thank you, Mayor Walters. When I was looking at this, I found it quite interesting. And part of my own pet peeve, I spend about an hour and a half each morning on the markets over and looking not only at bond rates, Fed funds rates, talking heads, and sort of looking at how we how I and people I care about can best use those resources that we have. And if I'm correct, what I'm seeing in this case is allowing you as our expert, if you would, the lead of our department, to be able to use those resources within the rcw which only allows us certain structures whether it's cds or you know whatever it is to use that money in the general fund because really right now what we have is a challenge to meet what we are already know we're facing and what it allows you to be able to do is to make those decisions on our behalf and maximize the use of whatever's happening. And this is what that's really all about. Am I close?

Yeah, I would say so, especially so in the... If I'm tracking your question correctly, the purchase and sale of those investments, that's really the... That's really the only way that process can work effectively is if that authority is delegated because it's such a quick moving market and the way those transactions are conducted, it's...

It's really kind of on a... And markets are so really right now kind of cuckoo, if you would, you know, because there are those on the market that believe that, you know, we shouldn't raise rates. But then there are others, you know, that are already other countries that are beginning to raise their rates. And then in the structure that we currently have, the thought is that we wouldn't, but it seems like we will. And it allows us... to be able to make the best possible decision we can with what we have, while we have it, for the greater good of the city.

Yeah.

And this allows you to be able to do that.

Yeah, absolutely.

And the funds to be put in the general fund such that they can be used efficiently by the rest of the city based upon their percentage of whatever the money is. Is that?

Yeah, absolutely. The one thing I'd add there is that delegation of authority to manage investments is not new. exists in the code already. We're just moving it to a different place in the code. It's the allocation of the investment income to the general fund, which is the new policy measure.

Mayor Walters.

Mr. Mantini.

Thank you very much. Thank you, Mr. Hogan, for going through all that with us. Sounds like this is just really good news all the way around. I mean, when we're not accounting for $500,000 and then we now have $500,000 that we can account for, that's awesome. My question is, do we have any visibility right now? That's a big number, right? So as we look forward and we're going into budget We're in budget season. We've been in budget season all year, it feels like. As we're looking forward, I think the last time the mayor put up a number, it was like $2.4 million. Can we anticipate a nice impact from that larger amount of money on that gap?

Yeah, so the interest income revenue stream is a significant revenue stream. And I guess I'm a little hesitant to put a number out there because it varies based on maturities year to year. That can vary pretty greatly. But I will say in 2025, that total revenue stream was $1.5 million. And about a third of that... I guess I'd say about two-thirds of that was distributed outside of the general fund. So that might be kind of an outlier year, but it has the potential to be a significant revenue stream. Thank you. That's awesome. Thank you.

So counsel, this resolution is paired with the ordinance because the resolution adopts the policy that is already in ordinance. The ordinance rescinds the policy from the code with the exception of that delegation of authority, which keeps that in a different section of code. So if you do one, you kind of have to do both.

Mary Walters I believe we have to do them separately, because the ordinance does need a roll call vote so. Oh yes. i'd like to begin by moving to approve resolution 3230 as presented. Second.

motion to second to approve resolution 3230 adopting amp chapter three dash 20 investments. So further discussion. If there's no further discussion, we can take a vote. But before we take a vote, this item is marked with an asterisk. So I'll ask for any public comment on this item. Seeing nobody with their hands up now, we will proceed to the vote. All right. The motion is to approve Resolution 3230, adopting AMP Chapter 320 regarding investments. All those in favor, signify by saying aye. All those opposed, say no. The ayes have it, and the motion and the resolution is approved. Our next item is the ordinance, Ordinance 5040. Mr. Hoagland, do you want to give a little introduction to this one?

yeah Thank you mayor, so the so, then, this is the mechanism now that will repeal that section 3.2 out of amc which was our investment policy, the section. I'll highlight that right there. So the section that delegates authority from council to the city treasurer will be in 2.2. And so that'll be in the clerk treasurer section, the authority to manage investments. So I won't read through the whole thing there, but that's essentially what it's stating. So those two paragraphs were within that investment policy. Now these will reside... in AMC 2.12 under the Clerk Treasurer section, and then the rest of that code will be repealed and replaced with the investment policy in the AMP. um and there is some you can see there's there's some requirements that we have uh written procedures and how we um conduct the investment program um clerk treasurer loan has the authority to conduct and approve all investment transactions and may designate an investment officer to coordinate day-to-day operations so um happy to answer any questions that you might have or

Council, any questions or discussion? If none, I'll call for any public comment. Seeing none. Council, do you have anything you would like to do with this one? Mayor Walters. Mr. Currier.

I move approval of the ordinance as presented.

Second.

Motion and second to approve ordinance 5040. If there's any further discussion, we'll take it now. Seeing none, we'll proceed to a roll call vote. Mr. Frantzak, would you please call the roll?

Mr. Fantini? Aye.

Ms. Hunt?

Yes.

Mr. Currier? Aye. Mr. Young?

Yes.

Ms. Cleveland-McGrath?

Yes.

Ms. Moulton?

Yes.

Mayor, the ayes are six, the nays are zero. The ayes have it, and the ordinance is approved. That brings us to resolution 3228, item 7D on the agenda, which is purchase and sale agreement for our Molly Lane property. And our city attorney, Ms. Darcy Swetnam, will present this item.

Thank you, Mayor and Council, members of the public. Start our presentation here. Okay, so tonight I'm introducing Resolution 3228, which proposes to ratify the mayor's signature on a purchase and sale agreement for 9029 Molly Lane and authorize the mayor to execute documents for closing. So to provide some background, 9029 Molly Lane Unit C was purchased by the city in February of 2023. At the time, the purchase price was $1,853,000, and it was funded by an inter-fund loan from the water utility. So there are sort of two kind of discrete spaces within this building. There's a big warehouse space that was occupied by one tenant until July of 2026, which generated for the city approximately $84,000 in annual income. That tenant has vacated. So to give you kind of a sense of the building, so the area in green here is 3,141 square feet, and that is the area that Fire Station 3 lives in. The total square footage of the building is 10,458, and then this B and C are sort of connected areas that consist of 7,317 square feet. So this is the location of the building. You can see this is Molly Lane. Here's Reservation Road. Highway 20 is out here. And this building and adjacent parking area is the property. So just to throw in some pictures here of fire station three. So this is the kind of looking towards the west. This is the bay. Here's a view of the inside. You can see fire apparatus in there. And there's also living areas in the fire station three for those firefighters that are that are there. So the agreement that's before you all is a purchase and sale agreement to sell the entirety of the building to Lopez Island Creamery for $2.2 million. And I wanted to mention to Ms. Martin's comment, the agreement is subject to council approval, and that was noted in the purchase and sale agreement. So the idea is to sell this to Lopez Island Creamery, and then the city would lease back the area that is Fire Station 3. And the annual rent for the first year is $47,115, and it would adjust annually based on CPI. The lease term is 10 years, but it could be terminated after five years. And I want to say that the purchase and sale agreement, the structure of it says that this lease is part of the and a condition of the sale. but the city has not signed the lease and won't do that until closing. But that's very much anticipated in the purchase and sale agreement, which is why that was attached to the agreement. And it's a triple net lease, meaning the city will pay all costs, including insurance, taxes and maintenance costs. So I just wanted to kind of mention that this is being purchased by Lopez Island Creamery. You can see here in this aerial image 9029 is the building that's for sale. This north part of the building is where Fire Station 3 is. And then the southern part of it is the warehouse space. This is Lopez Island Creamery. And you can see this is a photo of their building. So they're really getting this space right across the street, which we understand may be useful for them as storage space, cold storage for their product. So transaction details the mayor did sign the purchase and sale agreement on September 10 subject to Council ratification. The closing is scheduled for December 1 of 2026 and so staff are recommending that Council adopt resolution 3228, which is in your packet. And that ratifies the mayor's signature on the purchase and sale agreement and authorizes the mayor to execute documents necessary at closing, including closing documents and executing that lease agreement. And that's all I have. I'm happy to answer any questions.

Thank you, Ms. Swetnam. Yeah, we are selling this property the same way we buy and sell property, have done so in the past in the way other public entities do it. When you're doing purchase and sale price negotiations, we don't do it in public. That's why the state law has the executive session provision specifically for that. So we have a binding agreement. So long as council approves it, council turns it down, then we have an out. So it actually works out really well for us and provides an opportunity for the public to weigh in. All right. Council.

Mayor Walters.

Mr. Currier.

Yeah, it all sounds good. I just I wasn't part of the executive session. I was just curious what the background is a little bit. Did we initiate this where we approached and what was the rationale for making the decision to do this?

Yeah, that's a good question. And we did not specify land title as the closing agent. So we've got that other suite, the one that Lopez Island Cremory will be using. That suite was generating somewhere on the order of $7,000 plus a month in rental revenue for us and our tenant left. So in looking around for who might want to be another tenant, Lopez Island is an obvious choice because they needed more closed storage space, but a more appropriate financial arrangement for them was to purchase the building rather than rent the space. So we end up getting what is effectively that lease income back by selling the building and doing the lease back arrangement.

Thank you. That makes sense.

We also expect that they want it more than others, given their proximity.

Okay.

Alonso, what would you like to do with this item?

Mayor Walters.

Ms. Colleen McGrath.

Thank you. Just a couple more things. You know, Lopez Island Creamery is a major business in our town manufacturing ice cream that is delicious and delicious. distributed all over Western Washington, super supportive of our schools and a lot of the nonprofits. So it's good to keep that sales tax base and employee base within our city. The other thing that wasn't noted is that there was a lot of discussion and strategic discussion with the fire department about if this was a detriment to lose ownership of this building when it comes to station three. And it was determined through multiple discussions that no, there's other directions to go that would be a better long-term investment of permanent ownership other than this current building. So just to alleviate any concern about whether or not that was thought through, yes, there has been some strategic high-level discussions, but we much appreciate having the five to ten years in this current location to be able to work out of. That being said, I make a motion to approve Resolution 3228, ratifying the mayor's signature on the purchase and sale agreement for 9029 Mollie Lane, and to authorize the mayor to execute all necessary documents to complete the transaction.

Second. We have a motion and a second to approve Resolution 3228 on purchase and sale agreement for Mollie Lane. Second. Take any other discussion now. If there is none, we'll proceed to a vote. So the motion is to approve Resolution 3228, authorizing the purchase and sale agreement. All those in favor say aye.

Aye.

All those opposed say no. The ayes have it, and the motion is approved. That is our last item this evening, so we will go ahead now and adjourn the meeting. See you all next week.