City Council Committees

**Karina Orcutt, State Auditor's Office, on audit goals:** "We really do appreciate the collaborative relationship we have built with the city and our goal is really to increase the trust in governments through performing our independent audits." **Finance Director Danielle Ingham, on audit value:** "Council member Mucho, who is not in the room, asked me if we find value in being audited and we find a lot of value in it. Every year, there's something that we find that we can improve on just to strengthen our internal controls." **Senior Planner Jesse Ashbaugh, on development momentum:** "2025 was kind of a weird year for projects. We did a lot of planning and talking about projects and not a lot of actual construction, but all of that is accumulating to now where all these projects are coming through and we expect more construction this year." **Administrator Burnett, on MFTE program benefits:** "There aren't a lot of tools that a small city like Ferndale has in order to kind of pro

## Meeting Overview The Ferndale City Council Committees met on February 11, 2026, for two substantive sessions amid a day that saw the cancellation of the Public Works & Utilities Committee due to lack of agenda items. The Finance & Administration Committee convened at 10:00 AM to receive the annual audit presentation from the Washington State Auditor's Office, while an evening Planning & Land Use Committee meeting occurred to address municipal code revisions. Both sessions reflected a city government functioning efficiently, with strong collaborative relationships between departments and external partners, and demonstrated Ferndale's ongoing commitment to transparency and technical precision in governance. The audit presentation delivered overwhelmingly positive results for fiscal year 2024, marking a significant turnaround from previous years' financial challenges. The evening session focused on correcting technical errors in the municipal code — cleanup work that may seem mundane but represents the careful attention to legal precision that effective governance requires. ## Annual Audit Results: A Clean Bill of Health Karina Orcutt from the Washington State Auditor's Office delivered what amounted to excellent news for the city's financial health and operational compliance. Despite some initial technical difficulties with the remote presentation setup, Orcutt walked the committee through both the accountability audit and financial statement audit results for fiscal year 2024. "We really do appreciate the collaborative relationship we have built with the city," Orcutt explained, setting a tone that emphasized partnership rather than adversarial oversight. The state auditor's office, she noted, strives to be "supportive auditors that work with you from year to year" rather than "gotcha auditors." The accountability audit — which examines whether the city complied with state laws, policies, procedures, and contracts while maintaining proper controls to safeguard public resources — found that Ferndale complied "in all material respects." This represented a comprehensive review covering areas including theft-sensitive asset tracking, payroll calculations, procurement transactions, utility billing, and self-insurance for unemployment. Of particular note was the auditors' examination of utility billing practices, initiated by a citizen hotline complaint regarding rate-setting processes. "We didn't have any significant recommendations in that area as well," Orcutt reported, addressing what has been a community conversation point. The financial statement audit results proved equally positive. The city received an "unmodified opinion on regulatory basis of accounting" — the best possible outcome for a municipality following cash basis accounting rather than full GAAP (Generally Accepted Accounting Principles). "This is the best opinion that you want," Orcutt emphasized. "Again, just want to congratulate the city on a job well done." The auditors found "no significant deficiencies in internal controls," "no deficiencies that we would categorize as a material weakness," and "no instances of non-compliance that was material to your financial statements." Only one immaterial misstatement was identified, which auditors agreed didn't require correction as it wouldn't impact readers' understanding of the financial statements. A technical discussion arose about the "adverse opinion" related to GAAP compliance, which prompted questions from Councilmember Porter about whether this created problems for the city. Orcutt clarified that this is purely a technical requirement — Washington state allows cities to use cash basis accounting rather than the more complex GAAP standards, but federal auditing standards require notation that GAAP isn't being followed. "There's nothing you're doing wrong," Orcutt assured the council. "For the size of the city of Ferndale, I think what you're doing is pretty consistent with what we see with other cities your size being cash basis." Converting to GAAP would "require more significant involvement" from finance staff without providing corresponding benefits for a city of Ferndale's size. Finance Director Danielle Ingham expressed strong appreciation for the collaborative audit process and pride in the department's progress. "We everybody knows that we went through a lot of hiccups there a few years ago," she acknowledged. "We were very proud of how far we've come and very proud of the clean audit." She specifically thanked staff members Cassie and Taylor for their contributions to the successful audit. The audit results represent a remarkable turnaround for a city that faced significant financial challenges in previous years. As Porter noted in closing, this represents progress from a time "when we had to wait for months to get a new officer" to the current situation where the city operates smoothly across departments. ## Technical Cleanup: Municipal Code Revisions The evening Planning & Land Use Committee session, while brief in the transcript provided, addressed important technical corrections to the municipal code. Senior Planner Jesse Ashbaugh presented proposed amendments to three sections of the Ferndale Municipal Code: Chapters 18.69, 14.05, and 15.04. These revisions, while technical in nature, serve to correct what Ashbaugh characterized as "clerical errors" that have created inconsistencies in the code. The most significant changes relate to clarifying the Hearing Examiner's authority as the final decision-maker for Planned Unit Development (PUD) applications — authority that was transferred from the City Council to the Hearing Examiner in 2023 amendments, but where some sections of code weren't properly updated to reflect this change. The Hearing Examiner had identified areas where the code seemed to contradict the intended decision-making structure, indicating that the municipal code "is in need of additional and immediate code scrubbing." The proposed revisions would remove PUDs from Process 3A decisions (requiring City Council action with Hearing Examiner recommendation) and properly place them under Process 2 decisions (made directly by the Hearing Examiner). Additional technical corrections address building code enforcement mechanisms and restore language that was inadvertently removed during routine updates adopting the 2021 Uniform and International Building Code. While these may seem like minor technical adjustments, they represent the kind of careful legal housekeeping that prevents confusion, delays, and potential challenges to city decisions. The Planning Commission had already reviewed and recommended approval of these amendments following a public hearing on January 28, 2026. ## Collaborative Governance in Action Both committee meetings reflected the collaborative approach that characterizes Ferndale's current governance style. The audit presentation showcased strong working relationships between city staff and external oversight agencies, while the code revision process demonstrated coordination between the Planning Commission, Hearing Examiner, and city staff to identify and correct technical issues before they create problems. The audit's emphasis on collaboration rather than confrontation represents a mature approach to government oversight. As Orcutt noted, the auditor's office goal is "to increase the trust in governments through performing our independent audits" and "to show all the hard work that you're putting in from day-to-day." This collaborative spirit extended to the technical corrections process, where the Hearing Examiner proactively identified inconsistencies and worked with staff to develop solutions rather than allowing problems to fester or create confusion in the development review process. ## Looking Forward The committee meetings concluded with administrative notes about upcoming schedules, including reminders about the Presidents Day holiday affecting the next regular council meeting and plans for an upcoming city council retreat. These routine scheduling matters, while mundane, reflect a government that plans ahead and maintains regular communication with both officials and the public. The clean audit results provide a strong foundation for the city's ongoing work, while the technical code corrections ensure that the legal framework supporting development decisions remains clear and consistent. Both represent the kind of steady, competent governance that allows a community to focus on larger goals rather than getting bogged down in crisis management or legal uncertainties. For a city that has experienced significant growth and change in recent years, having both strong financial controls and clear legal procedures provides the stability necessary for continued progress. The February 11, 2026 committee meetings, while addressing routine business, documented a local government operating with competence, transparency, and attention to both big-picture accountability and technical precision.

**Q:** What was the overall result of Ferndale's 2024 accountability audit? **A:** The city complied with state laws, policies, and procedures in all material respects, with no significant recommendations. **Q:** What type of opinion did the state auditor issue for Ferndale's financial statements? **A:** An unmodified opinion on regulatory basis accounting, which is the best opinion possible. **Q:** Why does Ferndale receive an "adverse opinion" on GAAP? **A:** The city follows cash basis accounting instead of Generally Accepted Accounting Principles, which is allowed under Washington state law. **Q:** Who was the audit supervisor for Ferndale's 2024 audit? **A:** Karina Orcutt from the Washington State Auditor's Office. **Q:** What is the multifamily tax exemption program? **A:** A program that relieves property owners of property taxes for eight years to incentivize multifamily housing development in designated areas. **Q:** Which staff member was praised for their work during the audit process? **A:** Finance Director Danielle Ingham, along with staff member Cassie. **Q:** What was the one uncorrected misstatement the auditor found? **A:** A misstatement that was not material or significant and didn't impact the financial statements' story to readers. **Q:** What specific areas did the 2024 accountability audit examine? **A:** Theft sensitive assets, payroll, procurement transactions, utility billing, and self-insurance for unemployment. **Q:** What citizen concern prompted additional audit work? **A:** A citizen hotline complaint about utility billing rates, which added about $5,000 to audit costs. **Q:** What is the Financial Intelligence Tool (FIT)? **A:** An externally facing tool on the state auditor's website showing city financial health information. **Q:** What was the main purpose of the municipal code amendments? **A:** To correct clerical errors, particularly clarifying the Hearing Examiner's authority as final decision-maker for PUDs. **Q:** When were the code revisions that caused these clerical errors originally made? **A:** In 2023, when the City Council transferred PUD decision authority from Council to the Hearing Examiner. **Q:** What happened to building code enforcement provisions in the municipal code? **A:** An outdated version was mistakenly included in 2024 updates, requiring correction to maintain proper enforcement. **Q:** Who identified the need for additional code corrections? **A:** The Hearing Examiner noted areas where the code seemed to counter-indicate their final decision-making authority. **Q:** What is a Process 3A decision? **A:** A decision made by City Council with Hearing Examiner recommendation, which PUDs are being removed from. ---