2008, 06-14 Special Meeting, Council Retreat
AcENnA
SPOIZ4h'E VALLTY CCTl' COLTiVCLL
RCTRFATIWORKSTiOP
Saturday, Junc 14, 2008
9:00 a.m. to approrimntcly 3:00 p.m.
Couacilmember nenenay'z l.nke CAliin:
298931. Blc 'VIER' RAA(I
Spirit lalci, ldalto 83869
'I'F.YI'ATIVF: AGE:\1)A "1'OPIf'S:
1. VjnLued Fin.incictlForecavr -Aen 'I'/rwnJw,r►
? Review 2008 Cormcll Gouls -1]ave Mcrcier
f'rupvsed 2009 Cnuncil Goals - DaveA/CKiCr
4 /'riblic hcfurrrrcnlon PrrVrvm -!Itfke Jwkso»
Tirm+portation Ftarding - Arn Thoml&on
6. Slmrelinel4luster f'rob*runi - ltalhv AkC.'Irmg
~ 0"-Lineixrmftting - lCathy h1cC.'ltnrg
t~- Gity Cenuer litileatiti•c - Aen Tlwmpson
9. La►v EnfUnentY111.SCJ'Ytc'o's - I+r:t i-I fer,'i; r
I(+. Infnrntcttron C1iil►'' Jf cork J'rtignint
I / RruinalorminK
12. I'ulrJir 1'ufrc-f,
ltcticatAgcr:d_3 (16-1,14;8 I'uvc 1 o! 1
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Clty of Spokano Valley
Pdultiyoar Financial Plan - Goneral Fund - Problem Statement #1 -
6-1-08
2008 2009 2010 2011 2012 2013 2014
Estimato Estimate Estimate Estimato EsUmate _ Est9mato Est7mat~
GeneralFund Revcnuos:'
Sales Tax " $ 19,380,000 $ 19,767,600 x$ 19,000,000 S 19,380,000 $ 19,707,000 S 20,162,952 $.20,586,211
ProportyTax $ 10,000,066 $ 10.200,000 $ 10,402,60O S 10,6135,020 $ 10,812,060 S 11,428,322
Gamlal(ng Tau $ 525,p(Yp $ 525,000 $ 11,240,605
Franchisc Feesll3us. F2eg. $ 525,b0O S 525,000 $ 525,000 $ 525,000 $ 525,000
$ 955,060 $ 964,550 $ 974,196 S 983,938 $ 993,777 S 994,256 $ 1,004,199
State Shared Revenues $ 1,222,060 1;252,550 $ 1,283,864 S 1,315,961 $ 1,348,860 S 1,382,582 $ 1,417,147
Service Fees $ 1,950,000 $ 1,950,000 $ 1,9S0,000 $ 1,950,000 s 1,9~0,000 S 1,900,000
Fines 8, Farfeiiuros $ 1,300,OOD $ 1,30Q,000 $ 1,300,Q0~0 S 1,3DQ,000 r $ 1,90~6,000
' Recreation Frogram Fees $ 567,oao $ 1,300,000 S 1,304,000 $ 1,30{?,000
Interfund7ransfers $ 512.470 $ 517,191 S 522,383 $ 527,586 S 532,862 $ 538,191
$ if~,00U $ 174,300 $ 185.394 5 136,518 $ 208.309 S 220,807 $ 234,055
Investment Interest $ 414,100 $ 418,241 $ 422,423 S 428,647
Carryovor from prior yr $ 13,503,612 $ 12,166,644 r $ 430,913 S 435,222 $ ~339,574
$ 13,097,782 S 11,803,~88 $ 8,211,822 S 2,180,698 $ (6,580,648)
Total Gonural Fund S 49,921,712 $ 49,231,555 $ 49,657,850 $ 49,010,034 $ 46,076,947 S 40,662,701 $ 32,584,334
Gcnnral Fund Exponditures:
Logislative $ 319,991 $ 345,590 $ 373,239 S 403,097
Exocutive & Leglslative $ 997,078 $ 1,076,842 $ 435,344 5 470,172 $ 507,786
PuU1fc Setet $ 1.162.999 S 9,256,029 $ 1,356,511 S 1,465,032 $ 1,582,234
Y $ 19,297,300 $ 20,841,084 $ 22,508,371 S 24,308,040 $ 26,253,764 S 28,354,065 $ 30,672,390
Deputy C(ty Manager $ 827,178 $ 677,352 $ 731,540 S 79D,064 $ 853,269 g 4721,530 $ 895,253
Finance . $ 624,249 $ 890,189 $ 961,404 S 1,038,316 s 1,121,382 S 1,211,092 $ 1,307,980
Human Resaurces $ 204,284 $ 220,622 g 238.272 5 257,334 $ 277.921 $ 34U,154 $ 324,167
PubliclNiorks $ 789,437 $ 852,592 $ 920,799 $ 934,463 $ 1,074,020 $ 1,159,942 $ 1,252,737
qev. Services $ 2,627,960 $ 2,838,197 $ 3,065,253 S 3,310,473 $ 3,575,351 S 3,861,335 $ 4,170,242
Long i2ange Plan. $ 696,322 g 752,428 $ 812,190 S 877,165 s 947,338 $ 1.023,125 s 1,104,976
Codo Ent. $ 238,857 $ 257,956 $ 278,8(k3 -5 30D,891 $ 324,962 $ 360,959 g 379,036
ParksAdmin $ 929,535 $ 1,003,81)8 $ 1,084,210 S 1,17U,946 $ 1,264,622 $ 1,305,792 $ 1,475,Q55
Recreatfon $ 211,549 $ 228,473 $ 246,751 S 266,491
Apuatics $ 351,150 b 287,810 $ 310,835 S 335,762
$ 379,242 $ 409,581 S 442,348 $ 477,736 $ 515.955 S 557,231'
Senlor Center $ 90,955 $ 98,231 $ 106,090 $ 114,577 S 123,743 $ 133,G43 5. 144,334
CenterPlace $ 1,061,231 $ 1,140,129 $ 1,237,828 S 1,336,845
Transler to Ca ital $ 1,443,783 $ 1,559,207 S 1,684,040
P $ 70,000 $ 70,000 $ 70,OD0 S 120,000 $ 120,000 $ 120,000 S 120,000
Inc.Bus.l'Ians $ - $ 330,270 $ 393,OU5 S 424,702
Ceneral Gavemment $ 3,417,998 $ 4125 ~7
$ 535,087 $ 532,p51 S 700,000 •
Total Goneral Fund $ 3,254,147 $ 3,385,431' S 3,422,636 $ 3,588,370 S 3,835,000
32,755,068 36,133,773 37,854,262 40,7987212 5 43,895,249 $ 47,243,349 S 50,898,162
' Less oonstant fund bal. (5,000,000)
Garryover t0 next yr 12 166,644 13,097 782 11,803 588 8,211,822 2,180,698 6 560 648 18,313 828
x Law enE. Ssles tax ervds after 2UO9
SST affect wiknwm '
~ - • ~ ~Street Fund - Problem Statement #2
June 1, 2008
~
. 2008 2009 2010 2011 2012 2013 2014 .
_ Estimate Estimate Estimate Estimate Estimate Estimate Estimate
Street Fund •
Beginning Fund Bal g '3,735,000 $ 1,797,000 $ 997,000 $ (1,078,000) $ (3,178,000) ~ (5,278,000) $ (7,378,004)
Diverted Road Tax $ 2,000 $ - g _ • $ _ $ _ $ $
Interest InCOme $ 155,000 $ 125,000 $ 25,000 $ _ $ _ $ _ I $ . •
Transfer from Gener~ $ - $ 1,175,000 $ _ $ _ $ _ $ _ $ .
Motor fuel 1 misc S 2,100.000 $ 2,100,000 $ 2,100,000 $ 2,100,000 J 2,100,000 $ 2.100,OQ0 $ 2,150,000
$ 5,992,000 $ 5,197,000 $ 3,122,000 $ 1,022,000 $ (1,078,000) $ (3,178,000) $ (5,228,000)
Expenditure: $ 4,195,000 $ 4,200,00 $ 4,200,000 $ 4,200,460 4,200,000 $ 4,200,000 $ 4,200,000
Ending Fund Balance $ 1,797,000 $ 997,000 S(1,078,000) $ 3,178 000 $(5,278,Opp) g(7,37g,ppp~ $ 9,428,000
Includes Gen. Fund subsidy in 2009 and
$4.2 million cap on expenditures
City of Spokane Valley - Capital Improvement Program Funding .
Problem Statement #3 ' June 6, 2008
Year 2008 2009 2010 2011 2012 2013 17 2014
RESOURCES: .
BEG.I3AL $ 11,030,000 $ 6,500,000 $ 2,814,000 $ 947,000 $ 159,000 $ 1,000 $(156,000)
CAP pROJECTS RECT 1 , $ 1,000,000 $ 1,025,000 $ 1,025,000 $ 1,025,000 $ 1,025,000. $ 1,025,000 $ 1,025,000
SPEC. CAP PROJECTS REF_'f 1,000,000 $ 1,025,000 $ 1,025,000 $ 1,025,000 $ 1,025,000 $ 1,025,000 $ 1,025,000
PARKS CAP. IMPRV. FUND $ $ - $ - $ - $ - $
INVES7MENT EARNINGS $ 150,0100 $ 100,000 $ 40,000 $ - $ $
CDBG FROM COUNTY $ 230,000 $ 300,00D $ 300,000 $ 300,000 $ 300,000 $ 300,000 $ 300,000
SPOKANE COUNTY $ 1,600,000 $ - $ _ $ _ $ _ $
S'I'ATE - UNIV. PARK $ 800,000 $ - $ _ $ _ $ _ $
PARKS GRAM' $ - $ 200,000 $ - $ 50,000 $ - ~ _
STORM WATER DRAINAGE $ 300,000 $ 300,000 $ 300,000 $ 300,000 $ 500,000 $ 540,000 $ 500,000
COUNIY STEP PROJ.-STORM $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ - ~ _ $ _
GEN. FUtJD $ 70,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000
TO7AL RESOURCES $ 16,380,000 $ 9,670,000 $ 5,724,000 $ 3,867,000 $ 3,029,000 $ 2,871,000 S 2,714,000 .
EXPENDITURES: PARKS $ 3,260,0a0 $ 800,000 g 580,000 $ 100,000 $ 100,000 $ 100,000 $ 100,OflQ
UNIVERSAL PARK $ 800,000 g 200,000
17EBT SERVICE pYMTS $ 185,000 $ 187,000 S 184,000 $ 185,000 $ 186,000 $ 186,000 $ 1430,000
ADA, City Cent, Art projects $ 424,000 $ 200,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
$ - S - $ - $ - $ $
2009-13securedprojectTlP $ 4,911,000 $ 4,402,000 $ 3,663,000 $ 3,073,000 $ 2,392,Ofl0 $ 2,391,000 $ 2,391,000
STORM DRAIN IMPROVEMENI $ 300,000 $ 300,000 $ 300,000 $ 300,000 $ 300,000 $ 300,000 $ 300,000
BARKER BRIpGE ADD7'L FUN) $ - $ 767,000 $ - $ - $ - $ -
TOTAL EXPENDITURES $ 9,880,000 $ 6,856,000 $ 4,777,000 $ 3,708,000. $ 3,028,000 $ 3,027,000 $ 3,031,000 '
CARRYOVER TO NEXT YEAR $ 6,500,000 $ 2,814,000 $ 947,000 $ 159,000 $ 1,000 $ (156,000) $.(317,000)
Pavement Mgmt. Program $ (4,435,000) $ (4,435,000) $ (4,435,000) $(4,435,006) $ (4,435,000), $ (4,435,000) $ (4,435,000)
Unfunded planned TIP projects $ - $ (3,662,000) $ (3,927,000) $(1,759,000) $ (2,221;000) $ (2,329,000) S (1,747,000)
Council Goal for 200$
O The 200$ budoet reflects the distribution of resources consistent «ith tlie Gouncil's cleterminatian of
core seivices priorilies. The fAllowing goals rcpresent just the very broad areas of concentratiAn
i.mportant fo [he well bei.ng of the community.
1. Continue mouitoriug wastewater issues, including govemance of wastewater facilities, and
pij-rsuit of the most efficient anei econonucal methods io ensure the continuation of
wastewater dischargcs licenses.
2. ltefine iniNal departmental six-year busincss plaos iu order lo icientiFy and incorporate
fiscal impacts into a strategic financial plan.
3. Ya orinulate a SiY-Year Strategic Fi.nancial Plan by ,Tuly 2008 lhat forecasts e.rpected
rcvcnucs and EYpenses; incorporates the cost elements of departniental busi.ness plans;
idEntifies tiscal constraints; and proposes forinulas for Council coiisideration that institute
sustainablc budget-balancing approaches aud itemizes necessary service r.eductions or
revenue increase,s or combinations thcreof.
4. Tnitiate iniplementatinn of tlie sub-area Planf.'or the Sprague/ApPleway Revitaliz,ation Plan.
5. Adopt area-ivide rezoning proposals consistent with tlie compreheusive plan that reflect
appropriate adjustments in zoning desib7natioiis.
~ 6. Perform an analysis of land owner uutiated requests for aauexation.
7-Developline-Ma4t~F PrOg-rtteras-fequire".,,,-t4ie-St-ate-e-eshhigton-te-~z
additiffaa-regurlatoi}, Ir-oteetien ~ir-watecs-ef•-sZ~E~w~de-~p~~€e~~e;
SheHey4_-ak,e. (CUuncil cpn5ensu.L at January 12, 200$ ReCreat to clelete lhis as a 2008 goal).
~
Council Goals for 2009
The 2009 budget reflects the clistriburion of resources cunsistent with the Council's deternunation of
core services priorities. The foUowing goals represent just the very broad areas of concentratian
impotlant to the weli being of the eommunity. 'Thest goals werc devctopcd at thc January 12, 2008
Councii Retreat.
l. Continue monitoring wsutrwater issues, including governance oFwastewater facilities, and
puisuit of the most efficient and cconomieal methods to ensure the eontinuation of
wsstewater discharges lieenses.
2. Continue monitoring Policc Mpartment
3. Secure Fnnding Soarces tor City Ceater, by mo ' fv major decisions for
sc:curing funding sources for the City Center.
4. Continue implementation of the sub-area for th SpragurJApple vitalization
Plan. $P
e
5. Continue Using Prnate Sectur C.ontractually [or Snim• Removal
6. Develop a Shoreline Master Nrogrf►m as rcquirc:d by the 5tace of Washington to provide
additional regulatory ptoteclion ftir %v:itai;";q.' tsitewide Sitnif;c:;ince, i.c. Spokanc Rivcr,
Shelley Lake.
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" Public Information
Program
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" Options for sharing information with the community
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City of Spo{+ane Vallcti
Councilfstaff Retreat
June 14. 2008
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CITY OF SPOKANE VALLEY
STREET MAINTENANCE FUNDING ESTIMATES JUNE 3, 2008 A. SOLID WASTE STREET WEAR AGREEMEN7
GROSS ESTIMATED AT $13,000,000. 3% TAX WOULD GENERATE $ 390,000
B. STREET UTILIIY
WHEN LEGALLY AVAIL/1BLE, SIMILAR TO STORM WA7ER UTILITY, NOT YET
EMPLOYER OR HOUSING UNIT TAX, DIFFICULT TO ADMINISTER
C. TRANSPORTATION BENEFIT DISTRICT
$20 TAB FEE WOULD GENERATE $1.2 70 $1.4 MILLION $ 1,300,000 .
D. REAL ESTATE EXCISE TAX REALLOCATION
~ NOT FOR OPERATIONS Nq
E. PROPERTY TAX - TWO CHOICES
1. Ten cents per $1,000 of assessed value $ 660,000
majority of voters must approve 2. 1 year levy, amount determined by council $.30/m = $ 1,980,000
60'% of voters must approve with 40°/p of tumout in last general election
F. TELEPHONE TAX
GROSS EST. AT $3 millPan, 3% tax generates $ 90,000
G. GAS TAX N07 PO5SIBLE UNLE5S A BORDER COMMUNITY NO
H. STORM WATER TAX
GROSS OF $1.65 MILLION, 3% WOULD GENERATE $ ' 49,500
~t~ .
Sp oka.ne
,;,o0Va11ey ~
11703 E Sprague Avc Suitc B-3 ♦ Spokanc Valley bYA 99ZO6
509.688.0036 ♦ Fvc: 509.688.0037 ♦ emziL• permitcentcr@spokanevalley.org
Memorandum
To: Dave Mercier, City Manager and City Council
From: Mary Kate Martin, Building Official
Cc: Mike Jackson, Deputy City Manager
Via: Kathy McClung
Date: 06-06-08
Re: On-Line permitting •
S UM MARY
Council has inquired about the possibility of starting an On-line permitting. On-line permitting is
technologically feasible but the City lacks certain vital components for successful
~ implementation: control of the database and a database administrator. Discussions regarding
the use of MyBuildingPermit.com as a web portal can proceed in anticipation of future
implementation but should be conduc#ed with the advice of a qualified database administrator.
BACKGROUND
On-line permitting is a proven customer service enhancement that is used in many jurisdictions
across Washington State and the nation. In many ways it has become a baseline service which
many development and design professionals expect to use during the course of a project. The
main components of useful on-line permitting programs include:
• permit database and management system including both permit and workload tracking
elements as well as the ability to attach project documents-additional hardware would be
required
• a database administrator: one FTE during implementation, up to .5 FTE thereafter for
regular system maintenance and troubleshooting • staff training, both initial and on-going, to maintain the integrity of the database and
provide reliable information for on-line customers
. CONCLUSION ,
The technology and business models exist for successful on-line permitting programs. Such .
programs can be an exczllent customer service enhancement but require control of the
database, permit system software, and technical sfaff to assure reliable operations. .
;
~
~Corane
;OoValley~
, 117D7 E 5prague Ave Suitc 106 + Spokane Valley Vl.4 99206
509_921_1000 • fax: 509_921.1008 # cityhallG''spokanevalley,arg
Memorandum
'I'o: Qave Mercier, City Manager, Gvuncilrnembers
Frorn: Mike .7acksiDn, Deputy City Manager
Date: June 9, 2008
' Re; Retreat ,4genda Item No. 8
i
I
Ken -l'hon,pson, Finance Director, will lcad the discussion for A.genda Tteni No, 8 regardi.na
possible C:ity Center funding initialives.
~ . ~
This information goes with Agenda
Item No. 8 '
'N
1. Local Sources of Revenue for Cunstruction nf infrastructurc Imnrovements.
A. Incremental Taxc-,.
1. Chaptcr 39.89 RC`V: TIT+' areas. Chaptcr 39.89 RCW allows cities an.d -
counties and any combuiation of the two t4 designate an increment area,
fuiance public improvEmcnts expected to encourage private
developuient wittun the increment area, and repay this fnanci.ng 'Aith the
additional regular propcrty taxcs gcnerated by such private development.
The converse can also be done, Nvith the infrastructure costs bcing
fYOnled by a private iuterest and the additional available property taxes
being paid back to ttie developer to rcimbtu-se him for apotian of the
costs cxpcnded.
To establish a'F1F an intcrlocal agreement among jurisdictions
. representing at least 75% of the regular property taxes levied iu the
incrcment arca inust bE entercd into. Only taxes that would be received
locally can be Lised (state iaaes cannol be useti), and it daes not providE
flexibility :for partieipiting jurisdictions to a1locRte uicrcmental taxes
accordi.ng to the relative benefit received (the ta.Yes that would have been
- due khe jurisd.iction are the only taYes that can bc uscd.)
~ 2. Chaptcr 39.34 RCVV INTERLOCAL CUOYCRATIQN ACT:
infurmal T..T_F. A city may craft its own tax-increment financing
package. Because cities and counties are authorized to levy regular
property taxes and to apply such taxes to public improvements for
economic developmcnt pluposes, they are aulhnriied to agree to usc
these poNvers jointly by inferlncal agreement uuder the lnterlocal
Cooperation Aet. RCW 39.34.030. 13ecause a city foz ttie most part can
only take advantage of increased property values due to new
construction, any tax-inc;rement fuiancing program focused on property
taYes shoiild focus more narrowly on new construction. AJso, rather than
establishing an i.nerement area that includes all areas expected to beneft (in the f'Qrm of increased prnperty values) from ncw private
development, it mal:es sense to establish an•increment area that consists
only of the new conttruetion to be generated. .
Cities often issue LTGC7 boncls.payable from a11 property taxes but sized
to be paid on a cash flow basis from thc incremental ta.i revenues
derived from new coustruction tlirough interlocal agreement or internxl
segregatian. The interesl rate on the bonds would be significantly lower
than if the sole source of repaymcnt was the incremental taxes (because
of thc full faith and credit pledge of a city). Such pledge would cause the -
bonds to be counted against a city's nonvoted debt capacity.
1
3. Chapter 39.102 RCW: Locul infrastruclure Finaaciog Tc►al j
- ("LIF'I'"). The LIFT staCute authorizes a city to participate in a
"revenue developmcnt area" ("RDA") for the purpose of financing local ,
infrastruclure projects that encourage private developmcnt within the
RT)A. The private development then generates increased state and local
sales tax revenues which are then the basis far the city's receipt of a
state s,ales and use tax credit. The increased revenues are thus used to
finance the public i_nf'rastrueture projcct.
A similar arrangement can also be acluevecl by interlocal agreement
pursuant to Ch. 39.34 RCW. As long as the local government with
which a city was contractinS has the authority to imPose and collect the
tax revenue,s thal will bE shared, there is no prohibition against agreeing
to share those revenues with another governmen_ t. For example, Grant
County and Moses Lake havc a detailed property tax revenue sharing
agreement with respect to road infrastructure aad Whitman County and
Piillman are in the pracess of negotiating the terms of a sales and use tax
revcnue sharing agreement for the Highwap 270 corridor between
Pullman city limits and the Iciaho state linc (i.e. Moscow). Jn
researching the issue far Pullman, we found no other examples of sales
tax revenue sharing agreements howcver.
The I.,TFT statute includes the following threshold requircments for formation of an RlaA:
• As previously noted, an IZ.TaA is,generally limited to one per
county, however there is an exception for counties with a
demonstration project. RC`V 39.102.040(4) (e). «'c believe that
the City of 1..iberty Lal:e has received approval for its RDA,
foreclosuig an oppoztunity for the City, abseut further legislativc
aetion. The City may want to include an anenriment to LI.N T on _
ils legislative agenda, and work tUwards incrcasing the number
of cities that can parkicipate.
■ Tn areas where a dcmonstration project has been approved, the
boundaries of an RDA may not overlap 'with the demonstration project boundaries. ■ 7 he assessed value af the taxable propcrty within the RDA may
nof exceed $1 billion, may uot exceed $70/sf in averagc asscssed
value; must be conliguous, may not include more than 25% of a
city's entire taxable properiy area (inclusive of co-sponsoring
govcrnment's property), and the RDA boundary may not be
clr-awn to exclude areas that are unlikely to havic economic
develoPment.
2
' ■ A city must conduct certain plannirig studies and make certai.n
finclin,gs required by the LIFT statute. A dctailed listing prepared
by the Washington State Community, T'rade and Ecanomic
Development oflice is attached to provide morc information on
the technical requirements.
■ A city, and any co-sponsors, must agree to allocale the
inc:remental sxles & use taxes, property taxes or othcr local funds
to publie infrastructure located Nvithin the RDA.
■ The RDA must bE formeci by acioption of an ordinanee by a city
and any casponsoring local govemment. Public notice and a
public hearing on the proposed ordinance creating the RDA must
be held prior to final adoptian of the ordinance by the City.
Hawever, the Legislature rcmoved a 30 dav waiting period tor
adoption in its last session.
■ lf a city wants to form an RDA with a co-sponsoring local
government, it must enter into an interlocal agreement that
defines how the property taxcs and sales ancl use taYes, znd the
incremental increzses, will be allocated amang the sponsoring
govemments.
~ ■ All sponsoring local governments must exeeute a contract with,
or obtain a letter of inteni from, a private developer who Nvil]
develop the private improvements within the R17A bounciaries.
■ The 2007 amendments increase the acnount or the state
contribution available through the state sales and use tax. creciit
mcchanism from $S million to $7.5 milliqn pcr state fiscal year.
RCW 39.102.020(1).
■ The LTFT statute does auttiorize the issuance of revenue hands,
Nvhicll would not consume City debt capacity, the statute is
cumbersome, leading cities to choose to pledge L1FT revenues to
LTGO bnnds imtead.
This lisl is merely a brief summary of the procedural steps in formation
of an Ri7A and colleclion of LIFT revenues for projcct financing. The
attachcd tluee page list from CTED lists all of the requirement.s for
participation in the program.
Recognition of Yotential UninYencled Effects. Use oF LYFF financiug
(property tax revenue bascd) puts a city in the position of wanting to
• maxinuze pr.operty tax revenue. This increases the desi.re to rEduce the
leve1 dF public ownership of the real property (by a city and Library
District) since those entities pay no property tax. Addikionally, a
cnmponent of the Development could be housing, most probably multi-
3
° family dwellings. A cit}, might want to encourage (on the policy side) a `
;
set aside of somc of these units £or lnwer i.ncome persons (and that may
make sense when considering access to piiblic transportation, mun.iciPal
facilities and services): The incentivc for a developer lo Provide some
housing units to low income or handicapped persons would be a
property taac deferral or abatement.
B. Local ImProvement District AssessmenYs.
- A]ocal improvement clistrict ("LID") is a method of financing improvements ,
constructed by a munieipality and that provide "special benefit" to the
properties within the boundaries of thc LI]7. LIDs are typically created to
finance roaci and utility improvemcnts. A city levies a.ssessments against the
properl:y equal to the cost of the improvements to be paid by the property
owners, and such assessments bccome liens on the properties. All properties
that will benefit from thc improvements must be included within the LID
boundaries. If an appraiser will determine sPecial assessmcnts, the bounclaries
are drawn based upon the appraiser's determination of Nvhich property will be
benefited.
• SPecixl benefit. The improvements must con.Fer a special benefit on thc
property to be assessed and the assessments cannUt exceed the spccial
benefit to the property from the improvements. General bencfits cannot '
bE assESSCd.
• nctcrmi.ning special benefit. The ampunt of special tienefit by rcason
af the improvement is the differencc behwecn the fair market value of
the property immediately aftcr the special benefiGs have accrued and the
fair market valuc of the property bef'Ure the benefits have accrued.
Property cannot be assessed in an amount grcater than the properly's
praporlional benefit from a local impravcment relative I:o other property
in the LID. A municipality may use any rEasanable melhod to allocate
the c;asts among the various assessed properties, subject to tlle
limitafions set forth above. Squarc footage of property, f_ront footage on
the imprQVements or. "rone and termini" arc thc most common methocls.
RCW 35.51.030 allows assessments to be determ.inecl bascd upon "some
or a11 of the public land use restrictions or private land use restrictions to
which such property may be put al t;he time the assessment roll is
confirmed." Property may be classified into office; retail, residential,
and any nther reasonable classification. Certain c;lassifications may be
eYemptEd if they will not specially benefit from the improvEmenLs.
• Cost to property owners. Property oNvners rather than general
taxpayers pay the costs of improvements that specially benefit their
property. The interest ratc on the assessments is ba.sed on the tax-EYCmpt
bond rate (tax-excmpt ratcs are typically about 2% less than taxable
rates), and interest paid by praperty ovvners is deductible from tbeir
goss income for federal income tax purposes. Assessments are payable %
4
in up to 10 annual installments, Mth the first inslallment nof clue until
oae year after the assessment rQll is confirmcd. Unlike latecoiner
- chargcs, assessments are owed whelher or not propcrry is ever
developed. Latecomcr charges are payable in a lump sum.
C. Transportation Benefit District l+ees and Taxes.
Under chapter 36.73 RCW, cities and counties may establish transportation
benefit dislriets ("TBDs") to fund transportation impro<<ement prajects.
• Quasi municipal corporation. A TF3Ia is a quwi-municipal
CdrpOratipn, an indcpcndent taxin; "authority" writhi.n the meaning of
Artic•le VIT, section 1 oF the state Constihition, and a"taxing district"
~Nithin the meaning of A.rticle VII, sectivn 2 of the state Constittition.
RCW 36.73.040(1). lhe boverning bndy of a city TBD consists qf the
city cauncil, but the "1'BD is a municipal ent:ity inciepencient of the city.
RCW 36.73.020(3).
. • City-wide or a portion of the city. A TBIa may include all or a portion
of the tcrritory within the jurisdiction or jurisdicti4ns lhat formed the
Ti3T). See RCW 35.21.225; see also Granite Falls .T_:ibrarv Capital
Pacilities Area v. Taxpavers, 134 Wn. 2d 825 (1998).
• Voted taa authr►rity. Once formed, a"1713L7 has taxing authority and can
~ implement various funding measures xvith voter approval: cxcess
property taxcs, local sales aud use taxes a,nd vehicle lnils anci annual
vehicle fees of up to $100 per vehicle registered -VNrithin the TBIa's
teminry. A TBD is not requircd to obtain voter approval prior to
implementing the $20 per vehicle fee and impact fces, as discusseci
below. Voter apProval consistt of approval by a majority of the voters
in the 1BJ] vating on a proppsitian at a general or spccial elcction.
• Fund transportation improvemeats within tbe TI3D. A TBD may
fund transportation improvements necessitatcd by c:cisting or reasonably
foreseeable congestion levels, located within the TF3fa.
• Impact fees on non-re:sidential property. Pursuant to RCW 36.73.120,
a TBD may impose an impact fee an commercial development. Thc fce
must be used exclusively for transportation improvements constructcd
by a TT3Ta and must be reasonably necessary as a result of the impacts of
the cievelapment on transportation needs. FSTTB 1.858 removed existing
authority allowing Tl3Ds to impose transportalion impact fee:s on
residcntial property. A proh.ibition against "double diPping" re.quires
that a credit be applied to account for otlier transportation i.mpact fees on
the same cievel4pment. KCW 36.73.120(3).
• Voted Bonds. A 'f'BD may issue voted general obligation bonds subject
to a voter-approved debl limit of 5% of the taxable property within the
TBD. The statute also provides "I'8Ds with a 1-1/2% nonvotcd debt
limit. RGW 36.73.070. Bonds issued by a TBD ~vnthin its debt li.mits
shoulcl nat consumc city debt capacity.
5
• Revenue boncls. In addition to general obligation bonds, a TBD may
issue revenue bonds in aecardance with chapter 39.46 RCW, or may pledge the revenues of a revenue-producing facility to pay its gencral
obligation bonds. A city may also contract with the TBD to jointly
finance transportation improvements that each is autharired t4 completc.
A. Cit), LTGO bc►nds. Cities may issue LTGO (councilmanic) bonds payable from
all property taxes. Such funcis ean be approved tivithout a vote of the people if
the council so chooses. The amount of these boncis is only limited by the debt capacity of the City.
II. Other State Sources of Revenuc
A. Chapter 43.31C 12C`'V Community Fmpowerment 7r,rnes
Community Lmpowerment Zones are geographic areas with.i.n communilies that
are characterized by a lack of employment opportunities, an average income
level thal is belUw the median income lcvel for the surrounding coiiununity, a
lack of affordable housi.ng, cielerioraling infrastructure, and a lack of facilities
for com.munity servicES, job trliiung and education. Application can be
submitted to CTET). The primary advantage is tax credits that flow directly to
the business oNvners as annua] cretlits against their staie Business & Occupation
tax (13&O) obligation.
B. Chapter 39.89 Community Revitalization Financing _
Undcr Ch. 39.89 RCW, a city could :finance public improvcmcnts using
community revitalization financin; subject to the following conailions:
■ Adoption of fln orduiauce designaking an incre.ment arc:a, whieh is the
geographic area &om which taxes are to be appropriated to finance
specif ed public improvemenis;
• The public i.n.frastructure that will be built using community
revitalization financing mttst bc cxpectcd to encourage private
development and increase the fair market value of real property within
the increment arca;
■ The anticipated privatc development must be consistent with both the
County growt:h management plans and the City's comprehensive plan
and clevelopment regulations;
■ Other taxiug districts levying at least 75% of the rEgular property tax
within the increment area must apProve the community revitalization
financing of the projECt; and
. ;
6
f~, ■ If any portion of a fre protection district is i.ncluded Nvithin the
inerement arca boundaries, the fire protection district must be a
garticipant in the commun.ity revitalizdtion financing.
C. Chapter 35.21 Public Development Authority
APublic laevelopment Authority PDA) coulci be created to proNide ongoing
revenue, (i.e. a public parking facility or public market.) A l'llA is a quasi-
municipal corporation formed by a city or county under RCW 35.21.730 et seg.
to perform public functions that the creating city or county could perfarm itself.
They are usually used to manage the development and opcration of a specif c
praject; which is often outsidc the traditional experience of the local
govemment. 7'he Pike Ylace Mazket in Seatlle is probably the most well-known
PDA project. NVhale PDA's have express authority to own and sell property,
contract for coinmunity renewal activitics or Nvith private en:tities or persons; sue
and bc sucd, borrow and loan moncy, issue debt (including bonds), and
generally perform any lawful public purpose or fiulction, they are prohibited
from performi.ng any function that a city itselF could not perform. A city can
impose authori.ty reslrictions on a PDA in the ordinance authorizuig its
formation and cities may freely transfer property and funds to a 1'DA sincc it is
a public corpAration, not a private entity.
~ PDA's can't ]evy taxes, so they xre not a means by which additional tax revenue
can be generateci. Howcvcr, they can be used more readily to facilitate the
collecdon of non-traditional rcvenue streams, such as rents and admisslon fees,
which are then used to expand or maintain the project. These income revenues,
along with grant fiuids or nther revenues managed by the PDA, can then be
pledgecl to the rcpayment of bonds issued by the P17A. Most PDA bands
require the backing of the forming government through a guarantee or
c.ontuigent loan a~zeement. "1 hcse types of financia] backing of YI7As do not
censtitute a dcbt for purposes of calculating a city's debt limitations, but lhey
are financial obligations that must be reflected on a city's financial statements.
1'here are also specifc Intenial Revenue Code provisiqns that must be met in a
PDt1 tinancing, so additional discussion woulci be requi.red dependent upan the
nature of the proposed prnject ancl the PDt1 formation.
Sinc;e the PDA is a separate publie cctrporation issuing debt, there are
theoretically "additional" funcls availablc for a project tli.rough the forniation of
the PDA. lIowever, a c:ily wauld need to caa•efully evaluate the variaus
potential revenue streams generated by the pr.oject to deternline if this wrould
truly be an "additional" form oT ongoing rcvenue, or merely a recharacte.rization
of revenue a]reacly availablc to a city. A potential disadvantage of forming a
PDA is the relatively low level o.f City control over the PDF1 board or the
project itself once it is transt'erred to the PDA. Counter to the perc;eption of this
fact as a disacivantage is the argument that the PDA may insulate the City from
~liability or exposure related to the project or the finaneing o.f the project.
,
7
D. Chapter 35.87A RCW, Busincss Improvcmcnt District '
The most visible t3usi.ness Improvement District (BID) in Eastern Washington
is the City of Spokane's BLD, c;om.mnnly known as the DoArntown Spokane
Partnership. A BID is authorized in Ch. 3 5.87A RCW and allows the collection
af a special propcrty assessment for certain npes of improvements and
promotions within a defined geographical area. A BID is Pormeci by the local
government either by ils orvn i.n.itiating resalution or upon the filing of a petitinn
signed by 50°/u of the property owners who Nvould pay the BID spccial
a.ssessment. Both the resolution a.ncl petition must eontain:
1) a description of the proposed BID area and boundaries;
2) a description of the proposed uses and projects that will be funded by
a BID assessment and the costs of those proposals; and
3) the estimated levry rate of the special asscssment and, if the
assESSmcnt will be broken doAm by classes, the proposed classificatian
for businesses, mixed-use developments and multi-family residential
developments.
Follativing the iniliation of the process, a city must adopt a resolution of
intention to form the BID and hold a public hearins on the mattcr. A
city may revise the area after the uutial hcaring, but another hearing '
must be hcld if the boundarics are revised. If a majority o1' the businesscs and property owmers who be subject to the assessment object
to the formation, the BTD formation process must be terminated. If a -
city detemunes that formation is appropriate, it must takc action by
ordinancc to form the BID and specifying the boundaries and rate or
levy of the special a.ssessmenE and classifications, if any. The ordinance
must also specify the uses on which the assessments Nvill bc spcnt.
Unce the BL[7 has been formed, A ciry has the sole autharity tp
determine how the revenuc dcrivcd from the asscssments shall be spent,
althaugh it may choose to apPoint an advisory boar.d to malce
recommendatians. (The baard of IaSP is such an advisory board) A city
may also eontract %krith the local chamber o1' commerce to administer the
operation of the 13I:ia. RCW 35.87A.010 et ..req.
One nf the permitied uses of BID assessments is "Providing
transportation services for the benef t or the area." RCW
35.87A.010(1)(g). This would include the construction, acquisition, or
maintcnance of all parking facilities, park and ride lots, transit shelters,
and oiher transgortation-relateci facilities within the BTD area. In order
to fund the construction of a parl:ine garage structure, a city would need
tci carefully evaluate the size of the BID and the amount of the
assessments necessary lo previde adequate construction funds. It is
8
more likely that BLTa funds could be used for surface lots or for the
maintenancc and operation of a parking gara;c once constructcd.
E. Chapter.35.81 RCW, Community Renewal Funcls
Com.munity R.enewal Funds under Ch. 35.81 RCW available for this type nf
project only if a city goes through the preliminary steps of declaring the area
blighted and prepares and includes a community renewal element in a city's
comprehensive plau. Comiuunity Renewal funds are intended to be used:
to eliminatc; and prcvent the developmcnt or spread of, blighted areas, to
encourage needed com.munity rehabilitation, to prnvide f.or the
redcvelopment of such areas, or to undertake the activities, or other feasible
municipal activities as may be suitably employed to achieve the objectives
of the workable program. The workablc program may includc, without
l.i.mitatian, proviSiAn for: The prevention of the spreaci of blight into areas of
the municipality which are free frnm blight th.rouoh diligent enforcement of
housi.n;, zoni_nn, a.nci occupancy controls and standa,rcls; the rehabilita.tion of
blighted areas or portions thereof by replanning, rcmoving congestion,
providing parl:s, playgrounds ttnd other public i.mprovements, by
encouraging volLuztary rehabilitation and by compelling the repair and
rehabilitation of deteriorated or deteriorating structures; the replacement of
housuig that is lost as a result of community renewal activities within a
~ community renewal area; the clearance and redcvclopment of blighted areas
or portions thereof; and the reduction of unemployment and poverty -vtiithin
thE conununity reuewal area by providing fnancial or tecluucal assistance to
a person or public body that is used to create or retain jobs, a substantial
pbrtion of which, as detcrrnined by the municipality, shall be for persons Uf
low income.
RCW 35.81.040. In order to make the required ioitial finding of blight, a city
would need to find that the definition of a"blighted area" had been met:
"Blightecl area" means an area which, by reason of the substantial physical
dilapidation, deterioration, clefective construciion, material, and arrangement
and/or age or obsolesccnce of buildings or improvements, whethcr
residential or noilresideiitial, inadequate provision for ventilatio.n, light,
proper san.itary facilities, or oPen spaces as determined by competent
appraisers on the ba5is qf an examination of the building standar.ds of tlie
municipality; inapprqpriate uses aP land or buildings; existence of
overerowdi.ng of buildings or structures; defective or inadequate strcet
layroul; :faulty lol layout in relation to size, adequacy, accessibility or
usefiilncss; cxcessivc land coverage; insanitary or unsafe conditions;
deterieration of site; existenc;e of harardous soils, substancles, or materials;
diversity of ownerslup; tax or special assessment delinquency exceeding thE
fai.r value of the land; defective Ar unusual conditions of title; i.mproper
--'subciivisinn nr obsolete platting; existence of persistent and high levels of
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unemployment or poverty within the area; or the existence o:f conditions that ;
cndaneer life or property by rre or ather causes, or any combination of such -
factors; is conducive to ill health, transmission of disease; infant mortality,
juvenile delinquency or crime; substantially impairs or arrests the sound
growth of the municipality or its environs, or rEtards the proNision of
bousing accommodations; constitutes au economir, or sqcial liabilit}; and/or
is detrimental, or constitutes a menacc, to the public bealth, safety, well'are, or morals in its present condition and use.
RCW 35.71.015(2).
Once the initial findings have been madc, and assuming a city's -
comprehensive plan contains a com.munily renewal element, a city could, by
orclinance, establish a community renewal area and eaercise its community
renewal powers itself, or thosc powers could be delegated to a community
renewal agency, a public facilities district or the local housing authority.
A.fter lhese authorizing steps are cnncluded, community renewal bonds may
be issued. I4nwever, the communit), rencwal area designation process does
not neccssarily generate revenue that can be used to repay the bonds.
III.Financing of The Construction of City Ha11.
A. Trfiditional Financing. A city could follow the traditional method of -
c;onstructing and financing the Ci.ty Hall. This would involve a city acquiring
the necessary property for City Hall, prepari.ug arch.iteclural renderings and
public bid documents,•issuing tax exempt bonds and managing constr-uction of
City Hall. "1'he City has the authority to issue bcath non-voted or councilmatic
bonds nr unlimited tax or votcd bonds. Voted general obligation bonds would
require a 60% vnter approval af thosc voting the election.
yn issuing tax-exempt bonds to fnance construction of City Hall, it will be
importanC to dcvelop reasonable projections regardi.ng spacc nceds, including 1
time fratne for these needs. We understand that the City might be interested in
constructi.ng a City Hall that is larger than current needs require, leasing
portions of City Hall to private individuals or companies until the space is latcr
needed a.s apart of the way to defray tlie cost of con5truction. NVhile a city can
certai.nly do this, the portion of the :Fac;ility lhat would be leased to private
parties cannot general.ly be financed -Mth tax-exempt debt. Once this schedlile
of potential alternative uses is developed, with a timcframe for transition of
those facilities to cily use, an allocadon determination cauld be macle betwcen
taxable and tax exempt bonds. Tf the City were to issue bonds for construction
of the City Hall, a portion of those bnnds eaulci be issued on a tax cxcmpt basis
and a portion of them eould be taxable. This would provide a cily an option to
lease somc of the facility for other purposes during the time period which is not
otherwise required by a city. The taxable boncis cauld also bc scheduled to
amortize early i.n the repaymEnt period, tllus min.i.m.iri.ng the inlerest cost ;
expense to a city.
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B. Non - Traditional Altcrnatives. Altcrnate financing or an alternative
constniction process may be available. Alternative methods can be designeci in
a way that minimizes construction cUSt ancl risk to a city. lhe biggest
inlpediments to alternative construction ancl financing proccsses are the
coIIipetitive bidding and prcvailing wage statutory schemes in the Statc of
Washington. It is felt that the application of onc or both of these statutes noi
vnly increases the cost of public prnject;s, but also the timeline for completion of
construction.
Jn develpping a plan that niay minimir.e or even removc the necd for application
of either eF these statutcs, it is irnportant to recogniie why they are in place to
bepn -vNith. The icientified piiblic purposes for the competitive bid statute
include:
■ To prevent favoritism, collusion and frauci between public agents and
Potential contractors;
■ To secure the best work or supplies for the public entity for "lhe most
reasonablc prices practicable". ■ To provide an equal and fair forum for those interested in performing
public project contracts.
• To insure transparency and educate the public on how public money is
Spenl.
Thc pruuary reason ror the prevailing wage stahrte is to uisure thai all workers
employecl or working on c.onstructing a"public work" are paid fair ancl
re~sonablc wages. The Lea slature has also gone the eYtra step in broaciening
the definition of projects to wluch the Preva.iling Wage Act applies. So for
cYample, if a city were to enter urto a lease for City Ha11 prior to its
_ eonstniction, and the facility were to be occupied at least 50% by the City when
it is campleted, the Yrevailing Wage Act woulci apply. Howcvcr, as will be
discussed in the next few naragraphs, the City I-Iall project could be structured
in such a way that the competitive bid statute rnay not apply.
Auotlier potential approach is a"turiil:ey projecY' coiistructed for a city into
wlucll a city would move upon completinn. Under c;ertai.n :faet scenarios where
there is no ccanslruetion risk to the public entity, a project that ultimalely will bc
acquired and oNvned by the public entity should avvid characterization as a
"Public work" (at least for purposes of procurement as opposed to the paymcnt
of prevailing wages). For example; if the underlying la.ncl is owmed by a privatE
developer and the public enkity has no obligation to acquirc the facilitp or
interest in the projeet unless and until it is completed, the cost is fxed and
therefore there is no conskruction risk to the public cntity, then arguably the
project is not a public work and the statutory provisions with regard to
competitive procurement are not applicable.
11
Clearly the wark under this sccnario is "caused" in part by the public entity.
The public entity will have been involved in the design of the project and the "
public entity will he committed to acquire and thus pay for construction if and
when completed; nonctheless; there is no obligation to buy if the project is not
completed ancl lhereFore the project is not cxecuted at the cost of the public. In
these cases, construclion financing is provided by the devElopEr, though the
govErnments contractual undertaking to acqui.re upon completion can be used to
secure the developers construction loan. If a private developer is requireci to
pay the architect, nbtain all permits, contract for and manage construction,
obtain all financing, and insure that the facility is in proper worlting order
before a city wa.s requirecl lo take possession and pay the lease ptuchase
obligation, the project could avoid the public work clefinition provided in statc
staiute. Ln this instance, the ageement terms would assure that a city receives a
fully functional facility at the agrecd Lipon price, placing all project risks
squa.rely on the private developer. Thus, City Hall, although caused by a city as
a public entity may not be a public work or subject to competitive hidding.
The cost and risk shi.fts to the private developer in such absolute terms may not
be acceptable to the developer. There is often a fair amount of discussion in
thesc projects driven by the developezs desi.re to either minimize their risk or
shift some of it to the public entity. The more that that is accomplished by and
the responsibility of the private developer, the more likely it is that the states
competitive bid statutes Nvould apply.
For purposes of plauning, a city shoulci assume that any City Hall "causcd" to
be constructed bp a city, even if it is a tumkey prnject, will have the cost of the
paymenl of prevailing wagES inclUded.
C. 63-20 Financing The namc "63-20" is derived from a 1963 Intemal Revenue Service R.evcnuc
Ruling that first auchorized this form of tax-exempt financing. As a very
general description, "63-20" financings consist of the issuancc of tax-exempt
bonds by a non-profit eorporation on behaif of a governmcntal entity. In most
cases, the non-profit entity uses the bond procceds to constnict the public
facility on land owned by the local government, leases the finished faciJity to
the government for the repayment tcrm on the bonds, and the govemment
assumes owncrship of the facility at the inslant the boncLs are finally repaid.
Ttus is a very abbreviated description of the financing arrangement, which is
subject to very detailed and explieit conditions of the IRS.
.
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This information goes with Agenda
Item No. 8
Communify Economic Revifia[ization Board (CERB)
Local lnfrastrucfure Financing Tool Compefitive Program
Guidelines
Background and Purpose
1"he 2006 Legislafure passed Engrossed Second Substitute Mouse Sill (E2SHB) 2673 [o create
( the Local InErastruc#urE Financing 7001(LlFT) Com,pe#itive Program. On a limited basis, LlFT -provides a new public infrastructure financing rnechanism for selocted IQCaI govemments-
three sslected by the Legislafure and others competitively selected by the Cammunlty •
Economic Revttalization Board (CERB). Govemor Gregoiro signecf the blll into Iaw on MarGh
23, 2006 (see Atfachment A). The proyram allows each selected loca( govemment to take
advantage of fax revenus generated by private investment !n a revenue development area
(RDA) to he{p finance the cost of publlc infrastructure improvements that encourage economic
develapment and redeve(opment in that area.
The Communlty Economic Revitalizaifan Board (CERB) is responsible for approving use oF the
LfFT Proaram to both IegislativEly and compelitively selecfed projects. CERB receivss
~ management support from the UVashington Sta4e DeparEment of Comrnuriity. Trade and
Economic Developmen't (CTED) and collaaorates xvith CTED and the Department of Revenue
(DOR) to meef the requirements oF the pragram application, Evafuation and reportmg
processes.
Application Materials
m The following maieriafs are required for a completa application for LIFT (Attachments are .
rnaterials developed by applicanEs):
o Spansoring Locaf Govemment Applicafian Summary and Certi(ications [1]
• CosponsorJng LQCaI Government Application Summary and Certificatlons (1,-A) o LIFT Competitive Appficatlon Questionnaira [II]
• ftevenue Development Area Worlcsheet [II11
•
o Process and Notlce Worksheet [iV]
• Annual Tax F:evenue Estimate WorKsftsets - Word (Yj & ExcEl [V-A]
o Atfopteci or amended ordinance creating the RDA [Attachmenf Aj
o Legal notice af public hearing on proposecf ordinance [Attachment Bj
o Puhlic notico to property owr,ers and others of public hearing on proposed ordinance
[Attachment C]
e Executed agreement(s) vrith participating iocal govemment(s) and parficipating taxing
district(s) [Attachment t7J
a Estfmate of RDA impact on small businesses and low-income housing [Attachment E]
0 N4iEigation pfan for impacted small businesses and/or lovv-income housing (as indicaied by esfimate) [Attachment F]
o List of public infrastructure prajects and expecfed economic development outcomzs that substaniiaEe the LIF7 avrard. [Attachment G]
a PJlap of RDA in digital mappir}g (GIS) format [Attachment H]
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2 - :
Amount of State Contribution Available through LIFT ,
• The toEal annuai sfaEe contribution limit is $5 mill3on a year.
• Approximafely $2.5 miilion in annual state confribufion is available through the competitive
process.
The maximum amount ofLJFT Pragram funds that can be requesEed for a single project is
$1 million a year for 25 years or the duratlon of the associated bonds, whichevar is less.
Project Approval
Before imposing a sales and use iax under Secfion 401 of the Act, a sponsoring focad
governmenf and any cosponsoring focaf governmvnt seeking authodty to c!o the same must
apRfy to CERB and be approved for a proJect award amount., (See Sectton 202 (3).) CERB is
responsible for determining the amalint of the project award. CERB will collabarate wifh CTED
and DOR sfaff in reviewing the applications using the statutory criteria as a means for selecting
projects. * Determination of the proJect atvard by CERB is final, _
DOR is respons(ble for pianning and administerfng the local sales and use tax required #o
impEer'nent LIFT, DOR will coliabarafe ►afth CTED and CERf3 in the review of appllcations and in the revievr of annual reports submitted by sponsoring iocai governrrients. DOR wfil assisi '
sponsoring and cosponsoring Iocai governments in measuring state and local excise tax -
revenue collected in the revenue development areas. DOR is also responsible for selting
annual Iimits on the state contribution.
CERB Evaluatiori Criteria
CERB wiii evaluate complete applications and make awards based on the follovring criteria:
'i. The ptojeCt's ability to encourage mfxed use development and the redevelopment of '
a yeographic area. -
2, The project potenfial to enhance the sponsoring local govemmenf'N regional and/or
internaiional competitivoness.
3. Tho estimated average wages and benefits for the project is greater than fhat of tiie -
IQCai average Iabor marl<et area.
4. Tlie estimated state and loaal nct employment change over the life of the project.
5. The estimated sfate and local net property Eax chango over the life of the project.
6. The estimated staie aitid local net sales and use tax cliange over the life of the
projec#.
7. Achieving an averall distributian of projects statewida that reflects geographic diversity.
The firsf six criteria are equaJly weighted. Depending on how the Board ranks the applications based on the first sfx criteria, the seventii may ar may not be used to modiiy the ranked Ifst.
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Eligible Appiicunts
e Cifies
o Counfies
a Tayrns .
a Federally-recQgnized Trfbes (a list is included as Attachmenf B)
Due tn the sta:utory requirement of only one Revenue Developrnent Area per county, no local
governmeiit within I.Nhafcom County may apply. Applicatlons will be acceptsd from local
govemments +rrithin Glark and SpoE:ane counties; however, (f the legislatively selected projecfs
UAthin eacti county are approved, a!I remaining applications frorn that county arill be
disqualified.
ParEnerships and Cosponsors
- Twa or rnore eligible applicants may partner as cosponsors to subniit a project appllcation. 7he
cosponsors must designate a lead sponsor. It is a requirement that the cosponsor will
formalize thoir partnership through an inter-local/intergovemmenfal agreEment or other
appropriate agreement if the project is sefectEd to receive a state contribution through LIFT. IE is the Board's preference that where appropriate, applicants partner to ensure the greatesf '
~ possibility of success for a project.
~
Eligible Public Facilities ProJects
In accw-dance svith Section 102 (21), LIFT may only be used #o finance the following ellgible
public improvemeiits: ,
* Street and road construction and maintenance;
o Wafer and sewer system construction and improvements;
o Sidevialks, traffic controls and streeilights;
a!'arking, tarpn9nal and dack facititie,;
0 l'ransit authority park and rfde facilities;
.o i'ark facilities and recreational areas;
o Storrn water and drainage rnanagement systems; and , .
mAfforclable housing as defined in RCW 43.63n.510.
ln accoraance with Secfion 102 (22), nublic improvement costs may includc the costs of:
a Design, pfanning, acquisition, sife preparation, coiistruc#ion, recanstruction, rehabilitation,
improvement and installatian nf public improvEments;
0 Damolishing, relocaQing, maintaining and operation of property pending construction of the
puhAc improvemenfs;
o RQfocafing utiliries as a result of public improvements;
e The cosfs of financing the pubfic improvernenis; o Assessmenfs incurreci in revaluing real praperty ancS apqorEEoning the taxes in the RDA; and
o Reasonably reiated administrafive costs and feasibil'tfy studiss.
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Maximum State Contribution Request
Once the LlF7 proJect award has been approved far (he pro}ecfs by CERB, the local
govermment sponsaring the proJecf receives the state money by imposing a(oca! sales and use
tax fhat is credifed against the state sales and use tax. 'C'he local governrreent receives only a
limifed amount of such local tax distributions each fiscaf year.
The annual limit is set by the DOR and is determined by the lesser of: 1} the maximum amount
of state funds awarded io the proJect; 2) the amount of local matching funds con4alned in an '
annual repart submifted by the IocaE government; and 3) the amount of increasad sfaie revenue
received by the state each ysar as a result of the economPc development within the revenue
developmenf area. State money is contributed for no more ihan 25 years from the date the
local tax is first imposed ar uniil the bonds are paid off, whichever is sooner.
Outcome Tracking and Reporting
A sponsQring local government is rec{uired to report to CERB and the DQR on March 1 of each .
year. The report must includo information on revenues rece(ved and expended on the public
irnproveitients in the RDA financed wholfy or partiy by LIFT as weli as infarmation on
businesses developed and Jobs resulting from these impravemenfs. The report mtist also
demonstrate aampliance with Ssction 205 of the ,4ct. (Pleese see Ssctron 403 for details of
annual reporfing requirements.) Pviarch 1, 2008 is the due date for any sponsorfng local
yovernment that received a LIFT project award ai the SepEember 2007 CERB meeting to submit
its first annual report to CERB and DOR.
Application Process
* Due to the anticipated number of applications and IimiRed staff resources, there fs no
provlslon #o amend applicafions once they are submitted as is accepted with the 7raditlonal
and Rura( CERB programs.
o The materials listsd on pago 1 of fh2se guidolinos corriprise the cornpfete application.
* It is the Board's preference thai third-party evidence, in the form of feaslbitity studies, etc.,
be provided in addition to the application materials that ver+fiss the claims madE.
* 'F'he deaciline for recelpt of the finaf applicat(on is 5:00 p.m. June 29, 2007.
m 7he final applicatian (with ah orfginal signature of the sponsor), a CD-ROM Wth Adobe
Acrobat files of the application and the Excel spreadsheet for Item V-A, and a CD-ROM wifh
the necessary GIS dafa files must be received by CERB an or before the application
deadline. .
* P,pplication components must to be presented in the order fisted An page 1 of tnese
yuidelines. Attachments must to be clearly marked as Aiiachment "X° at the top right corner
of the document,,
e All application materials must be singfe-sided and subrnitted in 8 1/2" X 11" format. Afl site
maps and renderings must be able be clearly reproduced in black and white.
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CER8/C1'Ep Mailing Address-
CERBILITT-Attn: Matthew Ojennus
Department of Communify, Trade and Economic Devefoprnent
128 - 10'h Avenue SW, 4'" Floor RAAD Builaing
PO Box 42525
Olympia, Washington 98504-2525
Project RevPew and Prioritization Process ProJect review and prioritization will involvo the fo(laanng sfeps: .
Step 1-ThreshQld Revfew
This step identifies projects thaf ineet program and application requirerrients and tljose thai do
no►. ThosE fhat meet prograffand application requirernents wilf move fonvard fo the next step.
Applicants that do not wi(i be notified. The Board will nof consider incorrtplete applications or
appiications that do not meet program requirements or application deadlines.
SteA 2-Staff EvaluaEion
~ This step involves staif calculation at rank order scores for the following criteria:
1. The estimafed state and Iocal net employmenf change over the life oF the project.
2. The esfimated s#ate and local net property tax change aver the life of the project.
3. The estimated sEate aRd local nat sales and use tax change over the life of die
projecf.
Scores will be inclvded with CERB review of the applications at the Sepfsmber 13, 2007
meeting.
Sten 3-CERB Review ,
Members of the Board $re rasponsible for review,ring projects in terms of the folfokvfng criteria:
1, The project's abfilty to encourclge mixad use cfevelopment ahd the redevelopmcnt of
a geographic area.
2. The projecf potential ta enhance thc sponsoring focal government's regional andlor
infemafional competi#iveness. 3. The estimated average wages and benefits for the project is greater tlian that of the
local average iabor market aroa. F_ach applicant is invited but nat required to attend the GERB meeting(s) vrhore ?Iie projecfs rvill
be presented. Each applicant who cliaoses fo atfend will be given 5 minutQS to provide
additional fnformafion prior to the Board completing its cieliberatians. eoard members may
adjust their scores based on the projAct presentatioris, Affer hearing frorn ali the projects, the
Board will create a ranked list using botli member and staff scoring. Final adjustrnenEs aviil be
made ta the lisi, if necessan/, to ensure apprapriate geographic distribution. T'he 13oard is
unablE at this point to project the time that will be necessary to malce its final decisions. -
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Tiirelitte
Activ~iy Date • Disfr-ibutfon of prolect solicitation and applicatian -December 4, 2006
'
materials
o DeactlPne for final application --June 29, 2007
* CERB meet(ng to review proJects and make approvals -September 13, 2007
List of Attachments • o. Attachment A: Locai Infrastructure Financing Tool Legislation-E25tiB 2673 -
0 Attachment B: List of Washington Stafe Fedprally Recognized fndian '!'ribes
A Attachment C: List of CTED/DOR Sfaff Contacts * Attachment D: CERB Meeting Locatlon
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This information goes with Agenda
Item No. 8
Lis-C GENERAL QUESTIONS ABOUT
THE NEW MARKETS TAX CREDIT (NMTC) PROGRAM
What Are New Markets Tax Credits? ' The New Markets Tax Credit (NNITC) program represents the largest federal community
development tax initiative in nearly 20 years. It is designed to provide investors such as
banks, insurers, investment funds, corporations, and individuals vrith credits against federal
income tax in return for new investments made in eligible businesses and commercial .
projects in low-income areas. It is a flexible tool that can be applied to a wide range of
qualified business activities, from small business lending to financial counseling to real
esta4e development.
NMTCs are administered by the Community Development Financial Institutions (CDFI)
Fund, which is part of the U.S. Department of the Treasury. Tax credits for $15 billion of
investments will be allocated by the CDFI Fund between 2002 and 2007 through a- competitive process.
~ NMTCs are intended to spur the investment of new capital through Qualifred Equity
Investments (QEIs) in Community Devefopment Entities (CDEs). Each CDE is certified as
such by the CDFI Fund and must use substantially all of its QEIs to provide financial support
(generally debt or equity financing) called Qualifred Low-Income Community lnvestments
(QLICIs) to QualiCed Active Low-lncome Community Businesses (QALICBs).
What Is a Qualified Active Low-Income Community Business (QALICB)? QALICBs must satisfy certain tests regarding the proportion of their gross income, use of
' tangible property, and employee services that relates to Loui lncame Communitles (LICs).
Although QALICBs can engage in a wide variety of business activity (including commercial
real estate development and business conducked by nonprofrts), there are -several
restrictions. These include limits on the amount of collectibles or nonqualified financial
property that they can hold. In addition, certain business activity is ineligible, including the
operation oF residential rental proqerty (although a mixed-use project would qualify if a
building derives less than 80 percent of its income from residential dwelling units), the
ownErship of properties evhere no substantial improvements are made, the development or
holding of intangibles, and the operation of other specified ineligible businesses (which
include golf courses, race tracks, gambling facilities, certain farming businesses, and stores _
where the principal business is fhe sale of alcoholic beverages).
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For More Informafion, Conhtct
Robcrt Poznanski En Jung Kim ,
Phune: 212-455-9306 Phonc 212-455-9385
Email: ipoanansld@lisc.org &teaiL• ekitn@liye.oag
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What Is a Low-Income Community?
A Low-Income Community is a census tract with at least 20 percent poverty or where the
median family income is below 80 percent of the area median family income. Census tract
. eligibility can be determined at the CDFI Fund's website helpdesk: www.cdfifundhelo.aov/,
and there is a process for designating a portion of a census tract that would not otfierwise
mest these requirements.
How Do Investors Benefit from NMTCs?
- Under the terms of the NMTC program, the investor makes a seven-year QEI in the single-
project CDE and receives NMTGs equal to 39% of the investment amount over that seven-
, year period (5 percent in years one through three and 6 percent in years four through
seven). In addition, the investor may receive economic benefits from the project. During the
seven-year investment period, these economic benefits can only consist of some portion of
the return on the capital invested, and after seven years, they can include the return of
capital as well as the return on capital.
The project / QALICB receives the NMTC benefits remaining after the investor achieves its "
desired yield and the costs and fees related to the NMTC investment have be@n covered. .
The specific distribution of benefits is determined through negotiation among the investor,
the project developer, and NMSC.
What Are the Risks Relatinq to NMTC Investments?
NMTCs are subject to recapture if (1) the CDE loses its certification from the CDFI Fund;
(2) the CDE redeems the equiry investment within seven years; or (3) the CDE praceeds fail
to meet the °substantially all" test (85 percent of QEI proceeds must be in QLICIs dunng the
first six years; 75 percent during the seventh year). The amount recaptured equals all
NMTCs claimed plus interest. NMSC (LISC's NMTC affiliate) will work to structure the
transaction and administer the single-purpose CDE to avoid recapture. In addition, NMTCs
are subject to federal tax on capital gains.
. , 2- .
Formoreinfonnation,cotdaci: . ,
Robcrt Po•rs►anski Fn Jung ICim
Phone: 212-455-9306 Pfivne: 212-455-9385
Ecnail: rpoumtulc'tolimcotg EmaiL• eldm6lnscarg
SC. 9im lifed Dia ram of NMTC InvestmentStructure
Investor '
No return of NMTCs 84
, QEI principal tor 7 other
years econornic henefEts
NiVITC allocation .
~ CDFI Fund CDE Cornpliance & reporting 850% of QE! must'
remain rrr
QLICI QAifCB dyjfing Payments
yearsI -6 &
75% 1rr year T
QALrCB
- ~
~
,
~or7o~ore ix~fiorrur~~ion, Cv~~7act:
` Rabert Po2nanski En Juno K; M
Fhone=712-455-9306 212-455-9385
$rnail= rpa2nanS1de1SC,oig . 13rnail= Ekim@l.istoxg
~
. ~
. ~
LIS~ ;
LISClNEF ROLE IN THE NMTC PROGRAM
What Is the LISC/NEF Role in the NMTC Proqram?
In 2006, LISC received NMTC awards totaling $140 million, and its NMTC activities are
being manageti through its tax-credit affiliate, National Equity Fund. From 2002-2005, USC
provided $155 million in NMTC financing to projects nationwide.
Where Will LISC/NEF Use its NMTCs?
LISC will use its NMTCs to provide loan and equity capital investments that support
community development strategies across the country.
What Types of Transactions Will LISC/NEFFinance?
Financing activities will build upon LISC/NEF's core competency of real estate development.
The NMTC is particularly well suited to commercial real estate development, given the
crediYs longer-term investment requirement, the ability for project-based retums to bolster
investor retums, and the geographic-based nature of the credit. LISC/NEF can use NMTCs
for a broad array of non-housing real estate projects such as shopping centers, office space, .
educational and community facilities, child care centers, and community health centers.
Under appropriate circumstances, LISC/NEF inay also provide business financing. What Type of Financinq Does LISC/NEF Provide?
LISC/NEF generally provides debt financing, altfiough equity may be provided for
transactions that involve historic tax credits, or under other appropriate circumstances.
Financing generally takes the form of construction financing that converts to mini-perm
financing.
What Are the Terms of LISC/NEF's NMTC Financinq?
LISCINEF generally provides NMTC financing in amounts ranging from $4 to $15 million,
although we may consider opportunities for smaller transactions. • Our NMTC financing
generally takes the form of seven-year, mini-perm financing that bears interest only, with a
sinking-fund requirement on a 15- to 25-year amortization schedule. Our NMTC financing
generally requires a first-position mortgage on 'project assets, although subordinate financing may be provided under appropriate circumstances. Loan-tavalue requirements
start at 80 percent, with higher ratios permitted under appropriate circumstances, and debt .
coverage ratios start at 1.2 to 1, with lower ratios permitted under appropriate
circumstances. The interest rate for our NMTC fnancing generally ranges from 50 to 200
bps below conventional rates for comparable transactions, and depending on project needs, community impact, and other criteria, we may structure the financing to provide (1) a deeper
interest-rate reduction (150 bps or more) and 100 percent repayment or (2) a shallower
interest-rate reduction (50 to 150 bps) with a repayment requirement of 80 percent or more.
-a- -
Forinare information, contach. ~
Robcrt Po•rs►u►ski En Jung Kim
Phanc_ 212-455-9306 Fhone. 212-453-9365 Email: rpoz.nansld*lisc.org Emall: eidrn4liscorg
~
Wf12at Fe~.'S QO YoU Chc7Cge?
LISCfNEF expects to charge fees to recovf~r upfront expenses to structure the transadion,
sarrte ongaing costs #or administratian, compliance, asset management, and servicing .
expenses, as well as our averhead for opera#ing our New Merkets pragram_ The struc#ure
and amount af fees d8pends on the type of financing provided. If a barrower receives a
deeper interest-rate reduction loan with 100 percent repayrrrent, there may be an origination
ft~8 frorrr 1.0 -2.0 percent. 7he fees assaciated wi#h a partial repayment loan are factored into calculatkng the interest-rate reduc#ion and repayment peecentage, which are #,herefore
provided net of fees_
ADDITI0NAL INFDRMATiON
Whexe Can I Get More Inforination?
1'ou can find infarma#io n a bout the N MTC prvgram at the fo llowing websites'
CDFI Fund website- http;JJwwrrr.cdfifund_goviprograrrrsJnmtclndex_8sp
NhATC Qoalition website; http:lr'www_newmarketstaxcreditcvali#ion_iorgi
If you h ave a potential NMTC opporkunity, You should bri ng it to the attention af the staff of
yaur Iocal LfSC ar NE F office, or cvntact us directly at the numbers listed below,
Thank you for your interest in the LIS CfNE F 1Vew Markets Tax Credit program.
-s-
FvrrrGOre infvrmAtivn, ton'trrct: i
~ Robert Paznanski TGn Jung tCim
I
Phane: 21 2-455-9306 Pihone: 2 2455-93U)
Emsil: xpoznanskie]iLw-oYg 13mail: ekirnOiscorg
This information goes with Agenda
Item No. 8
DIvLNSL PERSPECTIVES OiN CRITlG1L YSSiJE, S • ~ ~
■
iVIn -~.'.~e5 The New Markets Tax Credit. . n,f„111out C0454u,IN
r1%, .
A VaYuable Tool for Economic Uevelopment
By Ellen Scidman
ShoreBank Corporalion and the New Ainerica Foundation
1. Thc New Nf.arkets Tax Crcdit Is an Impurtant Source of Investments in Cities
Born in the last days of the Clinton Administration in an agrecment with.Iiouse Speaker
Dennis Hastert; nurtured by the Bush Treasury Department; prapelled by Ihc crea[ivity
and determination of mission-clriven and for-profit community dcvelopment entities and
an ever-increasing array of investnrs; and attracting a g.rowing
numbcr of Congressional supportcrs, the New 1Viarkets T~ix The NM1TC rs one of the
Credit (gi~!ITC) was extended through 2008 as the 109ih largest economic
C;ongress drew io a close.~ development programs
supported by the
In the simplest tcrms, tbe Nivl'l"C: aims to bring new investinent federal government.
0 into underserved neighborhoods. 'I'he NMTC was enactecl in
2000, and the first allocations werc not made until 2003, with the first invest.mcnts
coming in late 2003 and early 2004. 'I"hrough 2007 a to[al investment of $16 billion had
be;en <<llocated, and the recent etitension ensures a sixth round of $3.9 billion in taY
credits in 2008. To date the 'l'rea.sury Deparemen[ has received applications i'or nine 10 10
cimes ihc amount available to be allaeatcd.
Wit11 the extensian, the Credit will generate a total of $18.3 billion ofdirect equil'y
invcstment, and based upon inclividual project reports it will allri►et at lcast as much
money Gom other gvvernment proLqiuns anci private investors such as banks; insiu-ancc
eompanies and pension iwtcls. 7`his makes the Credit one of the largest cconomic
dcvclopment programs supported by the federal gAVernrnent. "1"his total of $37 billinn in
Tlre I iving G'ities Palicy Series consi ct,S Of j7APBPS CO)»IIJ1SSlUYIeCI fly I,ivinb Cities to
stimitlule seriou.c corrversalion ilbout issues important to A►ner•ica's cilies. The
authors present u vuriety ofperspec.tives lha! da nvt necessarily repre.serrt the vietivs
vjl.iving Cities or i1s n2ember aganizations.
Living Cities: 77te 1Vational Comnrunily Developntent Initiutive is a consortiarm of
mcljor firrarrcial inslihrlions, philunthropic foundatiorts, arrc! federul ugencies investing
colla6orntively in fhe vitulity of citie.r to incr-ease apportunity and i»rprove the lives of
people in ru•ban neighborhopd,s.
Ahout the atrthur. Ellen Seidmarr is FYecutive Vice President, iVational Yolicy &
PartrrershipDevelopntenl, ,5'horeBcrnkCorporation, arrd Uirector, Financial S'ervices and
Ecfucation 1'roject, IVew Americ.a Fottndafion. She is a rrtember af Ihe Baard afDirectars
af the Netiv Markets Tax Cretlit Coctlition.
1
/
I
ecvnomic stimulatinn will havc bcen achieve_d at a total cost to the federal government of less than $7 billiAn?
Much of the investment generated by lhe Credit has been and is targeted tawitrd c:itics.
For eYample, of the most recent round of $4.1 billion of'r.redits allocatcd, 59 percent of
inves[ments are cxpected to be made in metrapolitan areas with populations over
1 million, and an addilional 23 percent in smaller metropolitan area.s.3 I'he influence on
thc community sector is also large: through the frst four rounds $4.76 billion was
allocated to mission-clriven cntities (certif ed Community Taevelopment Financial
lnstitutions, including some banks, and other nonprofi[ organizations), dwarfing any
other federal program in which they participate directly. 4
[:1. The NMTC is Highly Flexible ancl Fucused un Underserved Neighborhoods
The NMTC's value lies in its extraordinary flexibility. 1t can be used with a variel_y of
vehicles (equity, debt, mixes of lhe lwo, and evcn grants) to invest in nearly any type of
business (eYCept pure for-rent housing, f nancial inslitutions, developmenl of intangibles,
and a few specifically disfavored activities suc;h ris liyuor stores, golf eourses, anci
tanning parlors).
Taxpayers who make a"qualified equity investment" (Q.E.I) receive a credit against
incame cax of 5 percent of the investment for each of the first three years, followed hy a 6
percent credit for each of'the next 4 ycars. A QEI must be made in 3"qualified .
c4mmunity develapmcnt entity" (CDIE), a taxable entity that has a"primary mission" of ,
serving, or providing investment capital Cor, low-incomc communities or people; is
accoun[able to community residents; and has been certified by the Community
l7evelopment Financial institutinns Fund (CDFI Fu.nd) of~the U.S. Treasury Departr~~ent.5
The CDEs c;onnect investors, whiah are in general for-prqfit entities lhat inay not have an
interest in the social aspects of the invesCments, with lhc cOmmunities in Nvhich the
investmenl5 are m3dC.
HOW 1T WORKS: AN FXAIF9PLE
The CDF! Fund awards a tax credrt a!location of, for example, $9 million
to a CDE. The CDE offers the tax credit to investors. -Ten investors
each invest $100,000 in retum for the fax credit.
The total maximum New hllarkei Tax Credit taken by these investors will
be $390,000. Each invesior will realize a$39,000 credit to be taken over
a seven-year period; $5,000 in each of the first three years and $6,000 duiing each of the remaining fouryears.
'I'he CTaE in turn invests in one or more "qualifed low-income community invesements"
(QL.1CI), which usually translates into A debt or equily inveslmenl'6 in a"qualified activc
low-income comiliunity business" (QLICB) opcrating in a"low-income communiry," as
defined in the statute and regtilations.7 in the event that apreviously eligible activil~y
bccomes ineligible, all previnusly claimed ercdits must be repaid with interest and penalties.
Like the L0w-1ncAme Housing Tax Creclit (LIHTC), but unlikc, for example, the ,
Rese.arch and Development Tax Credit or ttle Llistoric Preservation Tax Credit, the '
The Living CitJrs PaNcy Scrres mns+a's d{s~oets mmntlssbmed by LMArtg 069a ta s+tr7wtafo wrtous cort narsaNon ebouf tsswcs important fi/lrneripi's 2
dn~es. rne eumovs a~os.v a var'cry of jcr„pcuivcs that alo nat n,.-cessaifiy re~vese•V 6h s We~vs a7 LMng C1G'rs a Ns mem.9er o+ga~~traNons.
l
NIv1TC is limiied in total amount. Unlik.e the LIHTC, however, the credit amounts are
allocated at the federal level-by the CDrI runc!-rather than by states. Tt should also be
noted that the NN[TC is a shallow subsidy. A praject must gcnerate enough of a return to
be able to repay an investor's original investment, unlike the deeper Low-Tncome
Housi.nf Tax Credit subsidy, for which an invcstor's cntire return often consists of tax
eredits. •
The NMTC's flcxibility and focus on underserved neighborhoods is the product of
deliberate chaices by several different bodies of federal policymakers. Details of these
choices and a look at their effect on the implementation of the NM7C program can be
found in Appenrlix B.
III.Project Exarnples
The complexity of the NMTC meant tliat it got off to a slow start; Ihe learning curvc and
startup costs were considerable, and lhe initial investments tended to be more
conservative lhan recent activities supported by the Credit. As the Creclit has evolved,
however, so has its flexibiJity And ability co attract a widc rtnge of interested parties. Tn
fact, several large ancl ambitious projects are now undenvay or have already been
cample[ed usinE the IsTiVITC. Some of these werc "stuck," for years, unable to attract
financing, until t:he Credit made them feasible. A few are described below. vtany more
are summarized in Appendix A. ,
A2nunt I~ope Community Center
~ 'I`he :Mt. Hope Hnusing Company (M.1-1.1-IC) ha.s been working in the South Bronx sinec
1986, and tociay provides housing to nearly one in six re_siclents of its community. lt also
operates recreation, cull'ural, edueational, and social service pragrams. Demand for these
pragrams is high, but for years these activities taok place in scattered locations: church
basement~s, storefronts, ofrces, or even on the side,walks and stre.ets.
Tq help bring all these serviGes under a single raaf; the National Development Council
(NDC) provided MHHC wilh $S million in NM..TCs, attracting investmenl from Citibank
tmd Deutschc Rank, with additiqnal support from the city ofNe-w York. This equity
inveslmeat wati a key part of the nearly $15 millinn in loeal projeut costs for a new
community center. The structure icseli'will be a model of sustainability, built using local
labor a.nct providing permanent jobs.9 Cash 1]ows from the mortbage on the facility will
ensure a financial return to the project's investors.
Enst 1.3ultimo►•e Life Sciences Park
Easl Ballimorc Development, :Inc. (EBDn was formed in 2002 wi[h the sole purpose of
overseeing an $800 million effort to revitalize an $0-acre site in E,as[ $allimore, in what
is today a high-poverty, high-crime neighborhood. The 20-acre I..ife Sciences 1'ark is part
of the initial phase of that effort. I ocated near the Johns Hopkins UniversiCy Medical
School and the Johns :Flopl:ins Medical Inslitute, thc Life Sciences Park is intended to
foster an inteD ate.d research community and medical center dedicated ta the
advancement of biomedici.ne through collaboraNan among academic, governmcnt, and
corporate scientists and clinicians. Il will house 30 io 50 biotech companies, generating
l 1, 4,000 to 6,000 jobs, a third of thcm for workers vdthout college degrees.10
The LNtM CrYtes Polky Serks aor+s'sss d W,ocr oommis;rcaed LylA4ryg QIIes lo sGlnuPate sedaua cnmmrsYbn atout ~SSws irrportanf ib Arnur,ica's 3
cih~as. TRc av:hava pirtrxi a vsrfefj nl persperll~+es Uiai cb rrof nctc,:so:i~j rc,e~cscqf fh: vrovr, dllving Cki~.z nr ks memds: ayanktK.diss.
1`he NMTC allocation of the Enlerprise Social Investment Corporation (hSIC) New
Markcts Partners resulted in the infusion of $18.9 million in working capital for the Life
Sciences k'ark." EBDI will use this working capital to fund a portion of the site acquisition and develapmcnt.12
XIidtown Glohal MarkeJ and 1Llidtown Exchange Commorrs
In Minneapolis, $3.5 million in credits from LISC and the Miciwest Minnesota CDC were
used ta create the Midtown Global Markct in the former Sears Tower, situated in one of
the city's most distressed but ethnically diverse neighborhoods. Local busincss ovvners
and cnmmunily g7oups from surrounding neighbArhoods came together to create a
redevelopment plan, working togethcr on everything from layaut to individual leasing
decisions. 'Che Market, which ppened May 15, 2006, is an 80,000-square-foot public
marketplace, where 50 Iocal businesses offer a variety of internationally themed fresh and
prepared foods. It supports local entrepreneurs and provicles 200 permanent jobs. The
NMTC was essential in lendin~ this project initial credibility and helping it actract
additional private investment.~
The Midtown Global Market is aportion of the MidtoN%m Exchange commons. This
larger praject benefited &om $10 millian uf ercdits provided by the Community
R.einvestment 1°und (CRF). It includes corporate headquarters for Allina.Health
Syslcros (which moved from the suburbs into Minneapolis), huncireds of mixed-
income housing units, and a new Sheraton hotcl.
IV. Results so Far-Aggregate ~
in 2003 ("R.ound l"), allocations of $2.5 billion of credits were made to 66 allocatees; in
2004 ("RQUnd 2"), alloeations of $3.5 billion of credits were made to 63 allocatees; in
2005 ("Round 3"), $2 billion in credit~s vvere allncated to 41 entities; and in 2006 ("Round
4"), 63 entities received allocations totaling $4.1 billion, including a special $600 millinn
allocation to 13 entilies working in the GulfOpportunity %one, a specially desi~iated
area in Southcrn Mississippi affected by I3urricanes Katrina, R.i1:a, and Wilma.]Applications for "Round 5" allocations of 1 total of $3.9 billion (including $400 million
• for thc GO 7one) were due February 28, 2007. A total of 258 applications were received,
requesting $27.9 billian in allocations. Awards will be made i.n fall 2007.
It is tao early to cvaluate the NMTC rigorously, in pan because aggregate data about thc
Credit's use and eff-ectiveness arc difficult to obtain and tend to lag. The two major
sourccs of current informatiAn are the CDFI Fund's Community Investment impact
System (CllS) (which recently provided its first public information, covering investments
made througli the r:ncl of 2004); and the New iMarkets 7'ax Credit Coalilinn, which has
conducted voluntary surveys of Round 1 and 2 allocatees and issued lwo reparts. In
January 2007, the Govemment Accnuntability Off 1ee published the second of three
reports required by stahite.1' 'The report focused primarily An NMTC investars, and
concluded that:
The results of our survey and stati stical analysrs are consisterrt witi2 the
1VMTC program increa.sing invei[ment in eligible low-income communities
by 1he irrveslors that purticipute in the program and ►vith this investmeni
camingprintarily from fund.r shifited from other Yises. Such u shifi would
Tlrc LMYip CtUes Pofhy SeNes consisfs ot p pcr.- con;.Ti;sbncd by 11vLrg Gw'es ro sbmufste aevfaus mwYersan'on eDwt hsuas impavfant b Amoriw's 4
drF,, n~c auMars p~rsrN e var.sery ape,apea~es u~er a+o na rrocvssav+~r rowcsc~ No ~cws or u~ atics d Hs ~rembee avger&eGnws
be one i»dicator that the MUTC program is effecNve becacise tlre 1V111'I'C .
souglrl tu increuse investnrent in eligible low-i»co»re cnnmunities. An
estimated 64percent of the AUV7'C investors reported thal tlrcry.increaserl
the shure of their investment budget for lo►v-incr~me communities hecause
of the credit.
Accorcling to the GAO, as of.C)ecember 2006 allocatee.s from the first three rounds (over
wbich billion in credits were allocated) had raised $5.3 billion through 1,381 qualificd
equity investmcnts. As of the end of Septeinber 2045, allocatees had reported to the
CDF.I Fund 583 qualiFed invesCmen[s totaling $3.1 billion.16
More detailed data are also available from the CDFI Fund as of the end of 2004. At that
timc 53 allocatees, mainly from Round 1, had made $1.151 billion in lnw-income
cornmunity invescmcnts as•follows:
• 75 percent was inves[ed for real Eslate acyuisition, eonstruction, or rehabilitation
(for a specif c manufaeturcr or other business and for rental or for-sale housing);
■ 19 percent was allACated for business fixed-asset fmaneing or working capital;
■ 5 percent was invested for other purnoses, including busincss equity investment;
• 90 pereent of the investments went to areas in high distress;
■ 90 percent of the dollars were inve;sted in metropolitan areas; and
■ CDEs offered 97 percenl of thcir financing on better-than-market rates and
tcrms. 1 7
~ The New Markets 1'aY C;redit Coalition's most recent report (issued in May 2006)
contains somewhat different; less universal, but more timely inf'ormation. That rcport
summarizes survcy information from CDrs representing over half af'the $G billion in
allocations made in Rounds 1 and 2. The data indicate that C17Es are receiving credits
and turnins [hem into low-incoine coRtmunity investments at a fatit pace: by lhe end of
2005, CDFs had received legal comrnitments for investments for 89 perccnt of the Round
1 a.nc1 63 percent of the Rounei 2 allocations. Moreover, this capital is generally deplayed
in the field very quickly, with 89 percent invested within 6 months of receipt. .13y the end
of 2006, the ClYEs surveyed expected ta have recei<<ed QEIs for 90 percent of [heir
allocations, and that all but 3 pcrccnt of that capital would be deployed. While most of
this eapital comes from hanks (which are suhject to the Cammunity Reinvestment Act),
more than a quarter of ihe C;D'h:s reported investrnents from other types of f nancial and
nonfinancial entitics, as well as individuals.
Of the low-income community invesdnents made by (;UEs through 2006:
■ 48 percent were loans for real estate developmen[;
■ 13 percent were equity investments in real estate development, and
■ 38 percent (totaling more than $630 million) were loans and equity investments in
nvn-re,al eslale businesses.
The real cstate invcstments break down as follows:
■ $284 million for miYed-use developments;
■ b267 milliUn for retail cicvelopments;
~ .
$188 million for communiry facilities;
5
rne uvang crctes Porrcy sertes onn:tUS apapers mnmftsbrea ay r_Wr,g ranes ro snrr,r,ra:e .r,rious camorsarbn aeour i~svcs fr.,povranr :fl aRCUa )s
c~`LCS. Tho au6'iavs ~sertf o vs.ietj of pe~spccUres 1haf rM nN recruarE"y m.Fresn•il h'ae Kews afl.NV~ fl!fes a Rs memDSr aga.~e6avis
■$63 million for industrial and manufacturing facilities; and ■ $26 million for for-sale housing.
Consistent tvith the Fund's data, the CDEs reported that 96 percent of their investrnents
were in co►nmunities in high distress, and that they are finding many areative ways to use
credits to f II gaps in the conventional market and prnvide adclitional benefits to the
cnmmunity. For e:Yamplc, some have required that those receiving QLiCTs provide jobs
that meet specific quality standards or offer other servicES to lnw-incamc cornmunikies.18
V. l3ow Cities Can M.ake Effective Usc of thc NMTC
NVhile the NMTC passcd some major milestones in 2006, including in parlicular the one-
year extension and the first release of data from the CDFl Fund, there are still many
oppnrtunitie_s to improvc its implementation. And with over 80 percent of the allncation
dollars expected ta filow to metropolitan areas, citiES have an opportunity to make far
greater use ot the program.
Attracting imestment The NMTC's history and terms dictate that its impact on low-income communities and
their residents will be primarily market-driven. While the allocation process can focus
attention on particular goals (for example, on the cre<<tion ot' jobs for low-income people
nr businesses in low-i.ncome communities), both allocatees and investors must be able to
find or develop inve,stments with acceptable retums. Thereforc, city officials can play a
critical role in helping to identify and cultivate investrilent opporlunities. .
Cities can most effectively attract inveshnent by: ■ Recognizing the highly competitive nature nfNMTC investments ancl cvorking to
attract iavestments that malch cities' clevelopment priorities.
■ Understanding and promoting the advantage the NMTC gives city investrnents
over investments elsewhere.
■ Combining NIMTC allocations wid-i local funds ancl tauc advsntag4s, both f'or
specific projects and for cil•y priorities such as effective job training, for-sale
worl.-force housing, or environmentally tricndly construction.
■ iMaking khcir oNvn programs a.s flexible as possible to malce it easy to cnmbine
them with NNITCs, 19
■Being aware lhat therc is a markei fior NMl'C investments, and that all of dieir
policies-in particular dlose relating to thc tasation of unincorporated business
entities-conspire to make inveslin}; in somc cities more attractive than in
otllers.2°
Facusing on cities' desired goal.s
As a Program that aims to bring new investment into underserved neighborhoods; at the
very least the NiV(1'C has meant that investments that might have been made anyvvay are
executed more yuickly, bctter, and with more direct heneft to the comrnuniey. But many
argue that a more appropriate test a difficult one in an7 eontext-is whcthcr the
investment would have been made "but for" the Credit. Lspecially in the eaxliest
rounds, when there was a rush to get pzojects moving (an imperalive to some extent
caused by the allocation process itself; which makcs cligibility for subsequent rounds
Tho Llvlrrg Cifdc. PoJiry Serics cnnsists d pspefs mmmtssbned by LMrtg Uies fo rdrn0a1o scr,ious comor.,aton aGouf Fssu^a imyautavt tD hm,e,zc~'s 6
cv'ea. 7'Ae autNOrspiesent a varicry dpcr.,~adivrsN:it do rat nxessar~y represe~t fhe tsbws e7 LMnD Cttles orks rresrnbw oigwizatiavis,
dependenl on deployment of earlier allacations), some projects were questianed either on
a"but for' or an iropact basis. In fact many nf those carly projects had been "stuck in
limbo" for lack of financing for years, a strong suggestion that the Credit met tbe "but
for" lest.
I3ut is more investment the only impact cities are looking for? 1'he XiVITC can be puC [a
many uses, and forthcoming evaluations will attempt to capture its effect on business
ownership; temparary (24-month or le,ss) and full-time jobs; community facility
c;apabilities; real estate developEd and rental costs; and housing units devclopcd and their
altordability. AssLuning these Gan be e.ffectively mcasu.red, cities can f.urther focus on
olher ciesired outcornes and the mcans to measure progress.
It is li.kcly, for example, that a successfiil, transformative project nn the edge of a
downtown will raise property values and may aceeler3te gentrification. Ts that a desired '
effect or a nebative consequence? Cities need to consider the benefit Id community
residents of jobs that arc created and retained, and consider how community residents are
involved in important decisions. They should consider how bringinu long-awaited
scrvices into underservecl neip-hborhoods-decent grocery stores, banks and credit
unions, qualiiy health care, opportunilies Cor a-ts and music education, and even sit-cinwm
reslaurants--should be valued, and how to improve the traditionally low-wage level of
the jobs assaciated with these services. Larger cities may want to follrnv the lead of cities
such as Council $luffs; Iowa, and La Crosse, Wisconsin, and usc the Credit to attract and
hold manufacturing and induscrial firms, whose jobs Trequenlly pay bctter than those in
0 the service sectar.
Cities can focus the iNMTC on desired goals by:
■ Developinb a loca) consensus arOuncl what advantages they hope to gain frorn the
NMI'C for the cily as a whole and its underserved neighborhaocls in pac-ticular.
• Working closely with allocalees and those in whom they inve5t ta e•nsure that
implement,ation follows this consensus, and thal the investment redounds to the
benelit af the surrounding area. .
■ Work.ins with the (::17Fi Fund ancl Congress to ensuce that the priorities they set
are captured in evaluation metliods and supported by fecleral deeisions.
Extendirtg !he Credit
The Crcclit's recent one-year extension is a signal of congressional approval of'the
Credit's performance to date. However, bccause the e.xtension cpvers anly a single year, "
continuation nf the Credit will require conslant altention by supporters. 'I'he need is
eYCmplifed by the fact that President Bush's Budget for Fiscal Yeiir 200$ does not
requesC e;xtension of the Credit.22 I?x.iensions will require that suppor[ers cantinue to
improve the Credit's effectiveness (both in pricing and impact), ensu.re that evaluations of
the Credit both measure fhe right things and are fair and complete, and inform Members
of Congre.ss of•'succcssful NM"l"G projects in their districts. Support for the Credit to
da[e, espeeially in the Senste, lias been lccl by M.embers from rural states,23 and iC will be
important that urban and rural areas continue to mace eommon cause to retairl and
enhance the Crcdit.
Additional issues cvncerning the use of the NN[TC are discussed in Appcndix C.
Tlro LNfig CiGrs Policy SeAes con:ws af papcrs c=..7u=md bj LnAtiq Q1Ses Ao a6mu.'ste sanlous mrriefstilion abcW issu:s lnWr„unt to /l.=raw's 7
d,:4qs. 7he auflicrs yv~ycN o s•ar,Se%o/ p:.~ae~,es tAet ab nat neoossarVy+cPxsca! fPre v,t.^+rs W[.~4irrc,~ CNIes a Qs mem0eraigan(raGbrts.
VI. Conclusiun ~
In an era of declining federal resources dedicated to economic development, the New
Markets Tax Credit stands aut as a succESS story and a parlicular boon f'or metropolitan
areas, which have received the majority of credits to date. :Despite its complexity and
initial doubts about whethcr it could bc effectively implcmented, it has shown signs of
providing an important extra boost tp many types of'development in underserved urban
and rural communities. As the program has developed, participants have become bolder
and niore creative in ltieir uses of the Credit, and pushed mnre of the Credit's limited
subsidy into severely distressed cocnmunities, and into comrnunity facilities and local
businesses.
Like any social and economic pragram run through the la: code, it is possible lo think of
ways to target the NMTC,morc accurately or simplify the application proccss. But
almost all such "fixes" wnuld either substantiall}' increase the cos[ nf the Credit or risk
decreasing the breadth of its support. lnstead, cities and local officials can use targeted
incentives, locally integrated programs, and clearly stated goals to help ensure that
NMTC projects meet their own priorities. Doing so will not only meet city goals today
but also paint the way tn the CrEdil's continuation, expansidn, and improvement.
nm civine ciucs vorky srrtrs ronsrsrs or p.V_ws aom:ntsscnea by tt,eng au.a ro arAmu'a.e sertous pmematian aDOUt hssces Lnporfant to Arr.ertca's 8
c';.iss. TAe authavs pm.s~+at a va+i~ry a1 Dcr;Ac~cti~s fhaf cb na' rc~.-.:nrSj reprc.:e,~f the x'ews a/ Ciuirg Ci'.ies or Rs membe,~ oryarn2aL'arm
VII. Resources
Weh sites
CDFl Fund: «wnv.cdfifund.P
,0%1
Community Reinvesttnent Fund (presenla[ions):
«,w%v.crfiisa.com/section.asp?sectionl_D=83
Ncw Markets Tax Credit Coalition: wcv,~v.neNvnarketstaxcreditcoalition.org
I~jovogradac & Company 7:,Td.P New Markets Tax Crcdit Resource Center:
«ww.taovoco.com/netiv marketsJindex.php
Publicaliarrs
Armistead; P. JeLferson, "New Markets Tax Credits: Issues and Opportunities," (2005),
available at w«~vv.prattcenter.netlpubslnmtc-report.pdf.
Barr, vtichael, "Access to Financial Services in the 2 1 " Ccntury: Five Opportunities fAr
, the Bush Administration and thc 107'h Congress," (2001) available at
Nv,%N,~v.brookings.edu/es/urbanlcapitalxchange/article4.hlm.
Uaniels, Belden Hull and Nixon, Jaines Hurd, "Malcing vlarkets Work for Inner City
Revitalization," (2003), available at vvwtv.econornic-innovation.com/„papers.htm.
O Federal Rcserve 13ank of Clevelantl; "The New Markets I'ax Credit Program: Wi111t Live
Up to Its 1?otential?", CR Forum (Pall 2003), available at
w~%,w.clevelandfed.ore/Com iTiA ffairs/CRForum/indeY.htm.
Federal Reserve Bank of San Francisca, Conununity lnvestmEnl.Keview, Vol. l, lssue l
(2005), available atw«w.frhsf.oriz/publica[ions/community/review/122005/indexJibnl,
including the following articlcs:
• Rubin, Julia S. and Stankiewicz, Gregary M.; "The New ivlarkets Ta.Y Credit
Progra.m: A Midcourse Asscssment"
■ Armistead, P. .leffersAn, "ls the NMTC Making a Difference in Low-Income
Commun ities?"
• Ttobcrls, Benson F., "The Political History nf and Prospeets f4r Reauthorizing
the New Markcts Program"
■ Taylor, Bob, "Investor F'erspective: How to Evaluate /.hc Purpose, People,
and Pmject"s for NM'fC Investments"
• Bysery, Doug and Wells, Je .ff, "Haw CUffS are «'inning Allocations and
Using I~'yTTC co Invcst in Communities"
• Cammentaries by Arthur A. Garcia, Mary Nelson and CliffKellogg
I.-orbes, Jennifer, "Using Econoro.ic L7eveloprnent F'rograms as Tools for Urban
Revitalization: A Comparison of Empowermcnt %ones and New Markets "fax Credits,"
2006 University qf 111inois Law Review 177.
t l
V ~
The LfYing Ci71as PoJky Sede.. caasOds orc+o,w;ussnned aj uvtng aabs ro se'mutaro seraavs ocner-.adan aba:! 4;.ua.^ d7Tar4nnf M Aaneviw's 9
GYrCS. TFC' DL:'has ~SieseN 6 rsiierj ot pempecJms Ua3 do noi ricccssaRTy ~cprexrat Mac vis,vs ot L,~A'rYj Cltias a Ms mc~~Qerafgjanhsfbns.
. . ~Covernment Accountability Office, New 1Varkets 7"ax Credit: Progress Made in '
Implementation, $ttt Further Actions Needed to Monitor Compliance; (January 2004).
Governrnent Accountability Officc, New ltlurkets Tux Credit Appears to Increuse
Im:e.stment by Investors in Low-Incnme Communities, but Opportunitres Exist to Better
Manitor Compliance, (January 2007).
New Markeis Tax Credit Coalition, "I~jew Markets Taac Credit: A Progress Report," (May
2005).
New Markets Tax Credit Coalition, "I~'ew Markets Tax Credit: Progress Report 2006,"
(May 2006).
Rubin, Julia S. and Stankiewicz, Gregory M., "Fvaluating the Impact of Federal
Communiry Eeonomie Development Policies on Targcted Populations: T'he Casc of the
New tVlarlcets Initiatives of 2000," presented at the Federal R.eserve System Biennial
Research Conferencc on Sustai.nable Community Development (March 2003, revised
July 2003), available at
www.c;hiGat!,ofed.oriL,/cedrieJiiles/2003 Confpaper scssion4 rubin.pdf.
Individuals
Franl: Altman Roz Ciulla
CEO Manager Mary Tingerthal K_ey Community 17evelopment .
Senior Vice F'resident Corporation
Community Reinvestrneni Fund 127 Public Square
801 Nicollet Mall - Suite 1700 We:st Cleveland, Qhia 44114
Mi.nneapolis, MN 55402 (216) 689-4472
(800) 475-3050 www.kev.cam
ww-w.crfusa.com
I.inda Davenport
viary Childs Dcput}, Director of Policy and
Direclar Programs
The National .T.)evelopment Council Macl Josephs
708 Third Avenue Suite 710 Program Manager
l~,ietiv York, A1Y 10017 C.17F1 )?und .
(212) 682-1106 601 Thirtecnth Street, N'W
v~-ww.natioiialdevelonmentcouncil. Suite 200, Sou[h
P-rg Washington, DC 20005
(202) 622-8$47 (I inda)
(202) 622-9254 (Matt)
mwv.cdfifund.gqv
~
Tlre LNtng Ci'ttes PcAky Senfes covisfsts o/ pepers comm[ssbned by LiWng Q~'os ro s6mota;a senous oomwreRbn aboul innw iirpoftnt to /lmcriui s 1 O
c.:~z. Thc a~YAas preseM a rar.fefy d pe~s,aeN?res Lhe! cb rtot re~ssr: Uy iepuere~rt ttTe Netivs o/ LA~Jng LYJes ori6a memder ouganJr~bns.
Annie Donovan Bab Rapoza
Chief Opcrating Officer President and Principal
NCB Capital Impaet Alison Feighan -
2011 Crysta1 Drive. Vice Presitlent and Partner
Suite 800 New Markets Tax Cretlit
Arlington, V'►rginia 22202 Coalitian/Rapoza Associates
(202) 336-7680 1250 Cye Street, TNRV
wIvw.ncbdc.ur2 Suite 902
VVashington, DC 20005 Joseph L. Flatley ' (202) 204-4500/(202) 393-5225
Massachuselts Housing Tnvestment NNivw.newmarketstHxcredit
Corporation coalition.vrg
Presidcnt and CFO -*i%vw.rxpoza.org
70Federal Street,
601 floor
Boston, MA 02110 Matt Reilein
(617) 850-1028 Vice President
www.mhic.com JP Morgan C;hase
1 Chase Manhahtan Plaza Fifth Floor
Davicl M.cGrady New York, NX 1008 1
Vice Chairtnan, Consultant (800) 727-7375
City.F irst Bank www.jpmorganchssc.com
~ 1432 U StreetNW
Washington, DC 20009
(202) 243-7100 Buzz Roberts
wv}iv,cih'firstbank.coni Senior Vice President of Policy and
Proaram Development
Local lnitiatives Suppart
Michael Novngradac Corporal:ion (I:,ISC)
Managing Partncr 501 SevenBi Avenue
Novogradac & Campany I:,I:,.P New York, i~lY; 10018
246 First Streei, Sth Flanr (212) 455-9800
San Nrancisaa, CA 94105 wvvw.lisc.org
(4] 5) 356-8000
,stiti~Nv.novoeo.com Robert Poznaoski
T'resident
Gary .Perlo«< New Markets Suppnrt Company (an
Prineipal affiliatc .of 1.,1SC)
Reznick Group 119 N. Church Street, Suite 201
500 E. Pratt Street, Ste. 200 Kalamaznn, MI 49007-3744
Baltimore, Mla 21202 (269) 343-5472 x3
(4] 0) 783-4900 rpoznanskiQlisc.org
Nvw~r•. rcxn i ckgro u p. co m
The LhV1ng Citios Poficy Serks eort3fst3 at papets aomrnis.'nree DJ lhfng Olles tn E.~aulate sadousccrivsrsa6on aDcwt t8sues dmgararNln Ar,+erlca's 11
016ss 7Ae euh0ua PBSenf n-'raRCrj otnrrsaec9;Hes;ny cb na necesa,6y m,arsscnr t,e 0cws ur e.nrrV Wes o.xs,r,emner aTar,f:arr'ons,
APPEiNDA A: EX.AMPLE PROJECTS
Both the reports of the New Markcts Tax Crcdit Coalition,24 ancl some of ihe articles
previously cited,2S as well as the websites of allocateeS, provide many stories about the
uses of the NMI"C. T'he projects below are activities in Living Cities loeakions that
illustrate same oCthe Creclit's breadth and pow•er.
Real estate developments in distressed area.s
■ The Shops at Park Village: The Local Initiative Support CorPoration (I TSC), a
CDFI, used its NN1TC allocation to turn long-vacant land in one of Washington,
D.C.'s poorest areas into 114,000 syuarc feet of retail spaee, including the area's
first full-service grocery store. lt did so in partnership -svith investor Wachovia
Bank, the East of the Rivcr Community Development Corpqration (ERCDC), and
for-profit developer William C. Smith. I"he redevelopment will create as many as
300 jobs in addition to provicling long-needed gaocls and services. Moreover, the
financing package provided with the Credit was structured to enablE ERCDC to
obtain an ownership intcresC in the prnjecl. This project had been stalled for many
years before the Credit became availahle.
°I"he Shops at I'ark Village development coordinates with the ToNvn Hall
Educatian; Arfs and Recrea[ion Center (THEIIRC), ano[her project that benefited
frvm the NMTC. ILs credits came from City First 13ank, a ceetified CDFI. .
■ King Lincoln Gateway and F'oint of Pride: `l"hese two redevelopment projects in
Columbus, Ohio, have benefited &om NMTC allncations to the Ohio Finance ..Fund, a certified Community J7evelopment Fntify (CDL). King Lincoln is in
Columbus's Empowerment Zone, and will generate 100 full-time,johs in addition
tp 132 construction jobs. Like Park Village, it had been stalled for years before
the NM7'C made the fnancing feasible. Point of Pride, an officeJrctail builcling,
is the capsione of a eaardinated public and private efforl ta slabilize the
surrounding distressed conununity.
■ A.rbor Park Place: Credits supplied by K.ey 13ank and Cleveland Developmcnt
Advisors, Inc. were key to the redevelopment of a 39,000-syuare-fnot blighted
shoppins ccnter in a hig,hly distrcssed ncighborhood of East C1EVeland. Various
g4vernment entities, including the City of Cleveland; a nonprofit developer, New
Village Corp.; and National City Community Aevelopment Corporation also
participated. 'fhe shopping center now houses a new grocery store and a new
branch of Key F3anlc, amonb other tenants, 1Vithout the NMTC the projeet would
not have had adequate cash flow or debt service coverage to gain bank financing.
■ Jubilee-Dudley Building: This prnject represents the first new construction of a
commercial building in the Dudley Square neighborhood of Boston in forty years.
The pmjeet's sponsor, the Jubilee Christian Church International, completed
construction of this three-story officc/rctail comple.c in the spring of 2006. By
February 2007, 72 percent of the Jubilee-l7udley Building had been leased and
there wcre scveral prospccts tor the remaining space. The City of Boston tried lp
develop this long vacant site for more than a decade, but even with substantial
ciry funding and an infusion of equity by the sponsor, the project still had a
TRc Lvtng Chics Paliry Scrfes mmsr: Ss W pu,pr.rs Carnrtcissia~~^.d Ey liv.!ng G'Bos Iq afimrlate :ctJaac ca-jvemVion obc~:! i:.;yes l.mno7a~1 fo AmcnW S 2
r}Lias. The auttinrspvasg,n a rafiefj of pcrspoeb,cs t/aat do raaf noosasart~y ~y.eaeret 0'~e vievrs of fJv'ng Cities orits me,mGerorgartfraians.
ll ~
subscantial equity gap un[il Massachusetts Housing Investment Carporation
provided $7.4 million of New Markets T~.~c Credit financing. `I"his project will
bring a blighted and Iong vaGant site back to productive use, and bring jobs and
services to the Dudley Square community.
Commurrity fiicilities
■ BethEl New Life: The Bethel Center in Ghicago (an NMTC project of the faifh-
based Bethel Neav Life community devclopment corporation CCDCJ) houses a
childcare center, an employment-service facility, a community-technology center,
and six commercial storefronts in a green building connected to a mass transit
s[atian. Among the tenants is ehe CommuniCy Savings Center, a partnership
among $edlel New Life, ['ark Fe.deral Savings 13ank, and °I'hrivent Financial for
Lutherans Ihat brings both f naneial eclueation and needecl Financial products to
the neighborhaod's lo~i-income residents. 'l'he project also received assistancc
.from tlie city and the state.
■ University Preparatory Academy: NCB Capital Impact (the nonprofit affliate of
thc T'ational Consumer Cooperative Bank) madc a$3.2 million NMTC eyuiiy
investment in the University Preparatory Academy (UPA) in Detroit. 1'his
investmen[ allowed the eharter school to prepay; at a substanlially reduced price,
its 30-year lease nn a fully renavated building, with an aption to buy the huilding
at the end of the tax-credit period at 68 percent of its current price in today's
ciollars. This esscntially cnabled UPA to obtain a fully renovated building for an
0 elementary school, without paying the costs of renovation.
Two-khirds of U'PA's students qualify for free or reduced-price lunches. UPA's
goal is to graduatc at Icast 90 pcreent of cach class and io have at least 90 percent
of its graduates enroll in college or other post-secondary train.ing. This would be
a majar feat in a city in which only 33 percent of ninth graders graduate and only
40 percent of graduates enroll in post-seconclary inslilutions.
■ Healthy California: This statewide initiative uses tax creclits fram Impact
Community Capital (a San Francisco-based ccrosortium of major insurance
companics) to flna.ncc commtmity hcalth centers in low-ineome communities.
.
pne nf the centers that has receive.d funding is T.,ifeT..ong iViedical Carc in
Berkeley, die primary "safety net" provider of inedical care to the uninsured in
parts ot the Bay Area. Thc funds will bc uscd to purchasc and rehabilitace a
building in wfiich LifeLnng will consolidate operations.
Housing uncl mixed-use development
• Cleveland 1-fousing Network: The Cleveland 1-1ousing Nenuork is a partncrship oP
the State of Ohio and City of Cleveland to help familics wi[h incomes as low as
$19,000 purchase their own homes. Using ics N'j\ITC allocation, Rey I3arik is
providing a$3 million revolving line of credit to CE-IlV for the construc[ion or
rehabilitation oFhouses for sale.
■ I.,aSalle Commercial Space Development: .Tn Seattle, credits from the New
Markets Support Campany (an aFf'iliale of LISC) are suPporling the development
_ of commercial space along with the Pike Place Senior Center. This project is par[
of a larger clevelopment that will renovate 40 affordable homes and create 24 new
~
Tao LNiY{q C14iea PeJicy SeHcs owrsisfs of papers commissioned Dy livirtg Gttea b slirwf5'a scrious eam+ersatian abwt iswus GTyoram roaTSrtcag 13
aL"es. The aufrors~seM a vartery W pmpecL`~s tha3 ab rrai nea+ssen~y rep2~M fte sieivs af N+Oig LYtles a ns memterA~snnetiona
ones. The housing eonstruction is fnaaced using Low Income Housing Tax Credits obtained by anotkierLTSC afFiliate, lhe Alational F-quiry rund.
• StreetSquash: In Harlem, New York, the National Dcvelopment Council is using
r;rcdits to develop within a cnnciominium development a Program that will
provide academic tutoring, squash instruction, eollcge preparation, community
service, and mentoring for over 1,000 I-larlem Public school stuclents annually. NIMTGgencrated funds will help builci an 18,000-square-foot facility containing
eight squash courts, four classmoms, a library; a workout 3rea, a locker room, and
adm.i.nistrative 4ffices.
Busirress investmen!
■ Lena's Food Market: in Milwaukce, NM7"Cs will be used to enable minority-
owneci Lena's Food Market to Anen a four[h supermarket, a warehouse, and
additional retail space, creating 145 jobs. Credit allocatians came through the
`Visconsin Housing ancl Economic Development Authority, L,egacy T3sncorp (a
bank C:DFI), and Tmpacr Seven (a loan fund C:DFI).
■ Tortilla factories: In Minncapolis and in 1:Tayvvard, California, in t.hc Bay Axea,
the Community Reinvestment Funcl has used its NNII'C: allocation fa finance
tortilla factories' purchase of new buildings for expansion. T'he locally owmed
businesses receiving this help are all located in lnw-incame neighborhoods. La
Mexicana Tortilla 1°actary, a family-run business started in 1965, was able [o
, purchase a new warehouse close to it,s factory sile, improving distribution, adding
jabs, ancl lowering costs.
■ Jackie Blu Wigs: One of the smal lest NMTC invescments, an $82,000 loan -
thraugh thc Community Fteinvestmenl Fund and the Mi.nneapolis community
Ylanning and Economic Development agency, combined wiih a$].OO,UUQ Ioan
from a local bank, allnwed Jacqueline 1-lamilton to buy a building to expand a
successful wig-mal:ing and styling busincss scrving, among others, women
coping with cancer and hair loss. rhe building has two strect-level retail spaces
and a twa-bedroom apartment.
I
T!ro llvtng Chira Policr Scrics mrarsfs o/pflpers camm'asip'tad b/lJkng CiNc: to 5fimuhatc teifous eomretse[ion edcut fss~res Lrpovfanf b Amor,iGt?s 14
eiYes. 7Ae e,liava pieserit a varofj of pcr„oe.,cJ~es /Aaf do nW neaesserYy iep~serd fho »ie:vs o( living G:ies a ds mem8af agsnkatl'ons
i ~
APPENDIXB: I17P7.,FNWATATION DFTA[i,5
Thc Treasury Department has attempted to bring together the povcrt}r-allcviation and
economic-development aims of the NMTC by combining fleYible eligibility with more
and more careful ly directed allocalion pracedures. Treasury's Offiec of Tax Policy and
the IRS have writtcn regulations and guidance that Provide a gaad deal of'flexibilily in
how credits can be used. Simultaneously, the CDFI Func1 has favored app]icants serving
the mnst clistressed communities; providing the most concessionary [ernis af invcstment
(including eyuity inves[ments); and making investrnents that provide permanenl jobs or
critical services (e.g., health care and schools) for low-income people or residents of low-
incnme communities.
Making the Ni~!ITC flesiblc
In the transition from idea.to statute, the Credit's preeise language acciuircd some
baggsge that had the potential to sharply limit its effectiveness if interpreted too strictly.
For example, the statute requires that "substantially all" QEis invested in a CDE must be
invested in QLICis for the seven-year period of the credit (and specifies that this
eonclition is to be considered met if 85 perccnt of the assets of the CI7E are so investe,d).
-Subsrantial recapture penalties can result if this requirement is not met. In 2001 Nlichael
Ilarr, fonnerly Deputy Assistant Secretary of ttle Treasury and one nf the authars of the
Credit; urgecl the Treasury to:
~ provide for start-up andphase-dosvn periods durirtg tivhich N1i17'C
proceeds-or retttrnc from prioi° investments-do not need to be imested
in qualified bu.rirlesses; and nieusttre compliance with the
"stdbstantially ull " i7tle and the qtralified bzrsirless reqrrirements c7t the
tirne of invesMien1.26
'I'oday, the "substantially all" rule does continue to create problems for venture-capital
investtnents and working-capital investments in small businesses, in both cases because
repaymenl is li.kely in fewer than seven years. Bu1 regulalions havc provided some
flexibility in the c<<lculation ot the test, by providing a phase-doNvn period in the scvcnth
ycar, and by providing a period for eorrection 27 .
Snme were also concerned that an invesemene wnuld be subject to recapture if a business
that had clearly yualified as a Qi.,1.C.i3 on the date of the invescment cEased to qualify later
in the seveii-year period. Given thal recapture would include the Credit; interest and
pcnaliies .f.'or all the preceding yea.rs, this would have made inve.stors extremely wary;
espccially of non-real estate investments.28 Treasury rulcd however, that it was sutficient
for investors to havc a "reasonable expectntion" that an activity qualified as a QLiCB at
the outset, Qpening the dnor [o a fuller use of the Credit.29
1_n a somewhat different vein, although the statute focused on equity investments, those
interested in using the N1\4`l"C soon became interested in the possibility of a leveraged
model similar to ones that had been developed far the LIHTC. In such a leverage
structure, an equity invesement by onc party in a conduit limited-liability corporation
(LLC) is combined with a debt investment by the same or additional panies. The conduit
T.,T..C makes the equity investment in the C17F, which then makes the QLICI. This moclel
irte LNLv Ctttes Polky Saries ans'tVS af paycfs aoramissioxd by LPoing CJ:,ies f0 56r,=G9te sCAOUS eOnvEnalion eCOUf fssves LmpoMnt tn Nn_rYa S 15
~cs. Tfac n,Jinrs picseM a varkry a/ perspecOYes t~at do nat neu35sartTy rsDrt3ser,t Oye vs'ows W Livim3 G~Bcs w ds r,.~cnDar wgaatzsti~wrs
had the potential to attract additional investors and also the potent'ial to augment equity
~
resources with addicional dcbt capital. For example, a leverage structure would allow a
nontaxable entity such as a foundatinn, government entity; or pcnsion fund to make a
debc investment (frequently on concessionary terms) in a cvmmunity develapment projeet
while at the same time an eyuity invcstor could receive credits equal to almost its entire
investme.nt.30 A leverage s[ruclure eould also aeeommodate investors unable or unwilling
to make equity investments, including community banks.
lt was initially unclear whether the IRS wauld allow a leverage struchue. lt did so,31
although the notice was issued after the due date of applications for the first round of
allocations.
7"he II7.S and Treasury have acled similarly with respcct to othcr issues. This does not
mean that all yuestions are answered 'unmediately or in the manner that users oFthe
NMTC niight prefer. For example, guiciance on the "tarbetcd populations" amendment of
2004, whose implementatian turned out to be more cnmplex than expectEd, was not
issuecl uniil July 17, 2006,32 and is expected to change again before it becpmes a final
regulation. But boeh Treasury and the IRS have been willing to work with the N'MTC's
users to make the Credit as flexible and manageable as possible within the context of a
complex and occasionally yuitc strict statute.
Focusing the NIR'ITC on Underscrved Communities
The CDFI Fund has attempted to focus allocations ofl activities that provide maxirnum .
benefit to low-income neighborhoods and populations and that otherwisc might not be .
able to attract investment at a reasonable price. It has been able tA prQVide such direction
because the strong dcmand f'or credits.
'1"Ile Fund's primary tools havc been:
■ The Allocation App1iGation, which has undcrgone sibniticant refinement over the
course of tlhe f ve rounds of allacations;
■ 7-he procESS by which applications are rated and ranked;
■ The Allocation Agreement, which holds aPplicants to the promises lhey made in
their applicatinns; ancl
■'The CIIS, under which allocatees must report aU investments (in substantial de.tail
cancerning, e.g., the investec and terms of investment; and jobs, facilities spaces,
housing units, or real estate created) for monitoring piuposcs.
'1'he Allacation Application eonsists of four main sections covering Business Strategy,
Community Tmpact, Manauement Capacity, ancl Capitalization Strategy. 7`he first twa
ask an applicant to describe tyhat it intends to dA with an allocalion, wliere, and to whnse
benefit. 1"he last twa caver the applieant's ability to carry out what it says it will do (e.g.,
the applicant"s track record in conducting the kinds of transactions and serving the kinds
of eommunities proposed, as well as managerial capabilities), and abiliey to raise the
capital needed to make use of the credit. Startin€ with the thi.rd round, the application
review pracess has placed greater weight on the Business Strategy and Community
Impact sections. In the fifth round, apPlicanls who receive a passing grade in all four
categories will be ranked only on their Business Stratcgy and Community Lnpact ratings.
rne uvm9 uuas ftrky so.ias =SWs a f,npcm mnrds.-doned ey uWng Q'fies M aGmulqe sa4eus emveBflfbn eCOUt fasues IrnpoRarN tu Amefte's 16
e4.i:s. The auPAas piesertt s vaMNyr ol perspacrives that tb nof ncx ,sari~y rcyvcscr,i Mro viv~rs ol L'ni,VC.i(sa or i!smenCer org.~rt4itians.
~ lt is in the "tips" the Fund provides to applicanLs that the Fund's intentions appear most
clearly. for examplc, Questions 16 and 17 on the Rnund 5 application33 (in the Business
Stratcgy section) ask about the applicant's intent to use the NMTC to supply cquity or
substantially cnneessionary debt terms, and demand considerable detail. An accompanying
tir tel Is aPplicanes Lhat t.hey wil) "score better to the exfcnf they commit to provide equity
or equity-equivalent f nancing; greater interest rate reduccions on thcir debt; and/or a higher
number of flexiblc/non-traditional rates and terms." The tip goes on to remind applic;ants
(in bold type) that the Allocation Agrccment will hvld them to their promises.
In the Community :[.mpact section, a gcncral tip states that:
An Applicarrt ivill generally score ►vell tirlder lhis scction to the extent that:
a) it is ivorking in partictilarly economic.ally distressed or othenvise
underserved communilies; und b) it shows demonstruble conrmunity
clEVelopntent and economic impact.
Later tips state that applicants that agree to rnake• at least 75 percent ot the dollar amount
of their investments in exceptionally disCressed communities34will score better (and that
applicants AiIl be held to thcir word), and that:
Applieunts that can guanlify and sarpport specific indicators for ezpected
CAI)11I1!/IJIty tlevelopment irnpact for Loiv-Incume I'ersons or residents of
Lotiv-InCOme COmmunilies, aver vnd ubove general economic impact.s in
Lotiv-Income Cnmmi.tnrfres, ivill seore ntore favorably.
~ Applicants are also askcd tvhether they «rill, for example:
• Create or maintain jobs For low-income persons 9r residenCs of lnw-incame
communities;
■ Increase wages f.'or such persons; or
■ Finance or assist businesses ~Nvned by resiclcnls of low-i.ncome cornmunities, lo«<-
income persons, minorities, or wornen, Ar that provide childcare, health care,
educational or other benef ts; or assct creation for low-income persons or
communities.
They are then aske.d to describe such benefits in bodi number and meihaclology. They are
also ssl:ed whetlier their activities wil) "be coordinated wilh local community plans or
local government planning efforts," and tn explain such coordination in snme detail.
Cognizant from the start abouc conc:erns that the allocation process would be highly
polilical, the rund has worl:ed lo kcep it objective35w1iile gradually lightening the
application's f'ocus. There are some indications that its efforts have been successful. For
exarnple, 62 of the 63 allocatees in Round 4 indicated they wrould meet the 75 percent tesl
of investmenls in especially disadvantaged communities, with 56 stating that 90 percent
of their investinentx would be in suah cornmunities, including 42 that said 100 percent of
their inves/ments would be in such communities. Going beyond the "substantially all"
safe harbor of 85 percent, 58 of the 63 Round 4 allocatees said they would invest at least
95 percent of their QFI dollars in QLICIs. And all allocatees said they would prnvide
eyuity or concessionary debt, with many protiiising interest rales of 500 basis points
below standard, na fces, high loan-to-value ratios; relatively low debt service coverage
, reyuirements, and structures lhat in(use equity into projects and businesses in year
Tlne LMqQ GUes Fd'uy Scrics oonSrV3 W pep"B COm:NSSbred by Lhtitg Gii.ts fo stirrwkY.a seriuu5 ca7vsvsa3ut eEOUf tssues Ortpwfanl o Ameitw's 1'7
a'L`es. TA^ autAOrs Rrexrr3 evariarj of ficrsPCGhes thst a5~ rof nete3scuQy repmsent OTe uiews ol Liv,~tu1 Cilica or ks m.enDsr avg:in!zalions
seven.36 lt is difficult to compare these results with past allocation rnunds (in which
comparable questions were not asked or from which information has not been made
available), but anecdotal cvidence suggests that targeting and financing terms have both
improved from early to later rounds.
TAe Livfng Chies ftficr Scrfes mfWefs a/papen comm's&brted dy Unhg CJ;iss ro sttmutro r.arioLs convprsaien 6bcL1h=s trWrtanl;,o Arxrkas 1$
cities, TMe auSROrs P~+a,-.t u vancry of per-.,cedives fho! tfi nnV n..-cessirt7y rcYveswu l.ha vfwMS N U~ing C(0'es ai Ua r,xamDeroig~tfraGbns
E i
APPFNDIX C: ADDITIONA L TsguF.s Ytnrsrm By T.HE 1V MTC I
. WlZiic it is too early ko evaluate the NMTC ful ly, pQ tentia] mo difi cations have hegun la
surface tFrat are worth kceping in inind as additiona] data become availabie. Far example,
would it make sense to modify the prohibition on the usc o#-cred it~ to support busincssc~s
engaged in dcvelopment of intangibles, such as software development and weh design?37
Two areas deserving particular attention are the NMTC's current "real esi-ate tilt" and the
balance in allocations between CDEs Nvith roission-driven parents and those withnut
them.
A. The NMTC's "real estate frlf'.
Severa] aspects of thc A]M7'C, in particular its coroplexity and recapl'ure rulcs, have
tend cd to f.ocus inost ofthe invcstment it generates an rea l cstate, where individual
investrncnts are usual ly 1arge snd thc Tke1 ihood of recapture reduccd, The success of
`°twinning" -NTMTCs wi#h federal and statc historic-preqervati an ian crcd its has added to
this tilt.
'I'hc situ2►tion k, nnt as extrcrnc as initial.Fund descriptions of Credit usage ni ade ii
appear.~8 As the N ew Market Tax Cre.dii Coalitian's report painEs au~ a siL, ni.f.icant
pattion ofNN1'I'C real ustate investment is in conimunity facilities andrn anufacturing and
industrial f.acilities; and in many retail prqjects crcdi#s are use-d to lnwer rents to levels
that locai smajI businesses can xi#ord. Moreover, while thc CDFl fund's report on
inve-strn ents lhrough 2004 found that 76 perccntwere in real es tale, 32pcrcent ofthe
~ Round 4 allocations Were. slatcd to be used to finance ar suppart laans to businesses or
investments in them. Sevi~ra! presentatians at the ]'.}ecenlber 2006 conference ofthe New
MKtekCts Tax C redit Coalition suggested that invesiors are growing ni ore conlFortabtc
with revolv ino pools of sharter-term business loans adminisiered by farni liar CDEs_
. Neverthcless, it has prnven difficLtJt to use the -NTMTC to providc busi.nesses with working
capital and equipmmt loans, and even harder to use it f.or venture-capital imWstmen#s.
0 vcr the past s ev eral years. thc IdeuMarkets Tax Crcdit Coalition has made se vera!
atteinpts to dcvelop revisions io the statute and regulatians to make it easiec to use the
Cred it for smaller; 51Zarter-term loans and venture-equity investments. So'far, the
Coalition has been unable to develop a cnns ensus. On the one hand this i s because
atternpts to shortem thc recapture pe-riad, twen for limited types of investments, arc
cxpcnsive in budgetary icrrns (which would reducc ihc c-hances for passage) _ 0 n the
I other, tl) ey wauld seern to contradict the N[VITC's naal of encouraging long-term
investment. M any participants arc also reluctant lo add cornplc:x revisi o n s to an a Iready
coinplex peogram.
Cities in particular shou ld consider whether the real cs[atc ti]t is in fact unde sirable.
W ould the NMTC be more va luahle if a latgcr proportian nf the limitcd credits available
were directed towarcl shorter-tenn busincss investment, including venturc capjtal?
B. ne ba[ance in allacatiorrs belween CDFs with nrissforr-driven parents arrd those wr[houl them
The.re has been substantial debate thrnughout the Nlv1'CC's histf)ry as to whethcr or not
mission-oriented entities (mo-stly no nprofj t o rganizations, but also some ba+xks certified
rh9 u4'rf+4 cJr+CS PcJi[y $rllrS [d7d!28 OS jAoLem =IIdS40fi0d bY l.ivLlg IXi7e5 f0 SftMGi4 &9JTOUS WfiNOf57tIWl ObOVJ 4i1J:5 fh?PNfBw 22 Afl19WA§ +17
c',',eg 7ree~mars Pesm~va ~+wh'otp~saee,'fvesfhefdonotoeaassan7Y~k'~'~~ksevYewaaPiMrtgCX'.lesouNamemtoroigatifalims, ~
'
a.s Community Development Financial Institutions) citn use ercdits bctler on behalf of
their communitics lhan cntities wi[houl a mission-nriented parent (such as inost banks
and investment partnerships). Through the f rst four rvunds, 48 percent of allocations
(for 51 perccnt of the funds) have gone to CDEs with for-profit parents; 44 percent of
allocations (for 39 percent of the funds) have gone to C_DEs with mission-oriented
parents; and 9 percent of the allocations (for 10 pcrcent of the dallars) have gone to
public entities such as municipalities or city agencie,s. 1Vfvst for-proft parents of CDF-s
have been banks, but in Round 4 n<<enty other typcs of for-profit entities, mainly
developers and inveslors in real estate, received allocations totaling $1112 billion 39
EYactly what this means for community impact is unclear. CDEs with bath for-profit and
mission-driven parents have invested in QLICBs with both fAr-profit and nonprofit
developers or owners. Whi]e the CDF1 Fund has consistently refused to create any sort
of prefercncc for entitics with mission-driven parents, such entities have continued to
compete successfully for allocations. Tn Addition, fvr-proft and nonpro.fit parents have
often worked together. A recent example is Merrill Lynch's statemcnt that its enlire
$93 million Round 4 allocation will be invested through nonprafit CDFI loan funds that
havc bccn ratcd on thcir f~nancial strcngth and impact 40 .
Over the years of the Credit's cxistcnee, horvever, a number of commentators have
voicecl concern thal an insufficient pmpnrtion of the allocatiAns were being made to
mission-driven entities, and lhat the lack of suchallocations would reducc the creciit's
effectiveness in conununity-based economic developme•nt and pAverty alleviation 41 .
The question for cities is whEther it matters tn whnm the allocation is made, as Iong as
the process aims al the right Autcames and is transparent, accessible and fair. Will cities
want to control their own allocations to a greatcr extent? Cities that themsElves receivE:cl
early-round allocations ofien found it difficult to both receive and use credits.
Nevertheless, some have continued to apply, and in Round 4 Chicago and the Seartle ar►d
Philadelphia Hnusing Authorities received allocatinns.
Or will cities beneiit frvm the competition of other parties to uivest in their underserved
neighborhoods and the flexibility of non-public administration of the Credit? Will thcy
fintl that in fact their communities benefit rnore or difPcre;ntly when allocations are
ad.min.istered by mission-driven entities? Does it matter whcthcr an allacalce's service
itrea is local, regional, or national?
Some of the ways in Nvhich cities can make sure that NMTC invcstmcnts are consistent
with thci.r plans and furthcr I:hcir goals are by:
■Ensuring that alloGatees «=hose service area includes the city know the ciCy's
interest in the NMTC and its needs, including any stalled projects. (Allocatees
service areas are published with the notification of awards by the C17NI Fund and
are also available on the New Market Tax Credit CAalitinn's Web site.)
■ Funding local CDEs to do the market analysis and technical work necessary to
f le a successful allocation application lhac reflects city priarilies 42
■ Making use of lheir knowledge of the LiHTC and familiarity with the entities that
use it. Many of these entities are also working with the NMTC and would -
welcotne city pvertures.
The UvPn9 UUes PbJlcy Seofes cavis,lsts a0 papers cnmm[s :bred by tAdng Q'o'cas m aMrtslalte trr,bus carnerseLlan aCart Asmcaslmpanaa! ta Arn_wk~'s 20
nS:1es. Tne uuGhcrs preseN e var.iPy dperspeCiNee th~ db rtnf n,.~eesserSy rrp~rserrf !Re vi..»ws e! Uvfnq (~ti,..s orks+remba eryan2~.bns
■ Brokering investments bettween f.rom nonlocal allocatces in local CDEs, thereby
increasing the likelihaod that the. N'M"I'C will be used i.n a manncr eonsistent with
the prioritics of'the city and its eommunities. ~
me wlnp enre3 vorley senes ax,sW cvAepers mn,mft+omee sy u.f,V ctses w st1aun'ate seheus aonvusacon oeout tssi.cs ur,oatant to Awrirat 2 ~
aiics. Tro ac4ha^a Wvsenf a•raristy alpcrspecrres 6`u, do nW necessan'j mpresAit 7he x'ev+s at 1ivi~g Ades aits member apsnhattans
\
Endnotes
] The NvfTC, cadified as Section 45I7 of the Tnternal Rcvenue Code, vvas enacted as part of PL 106-554,
the Community Renewal TaK Rc1ieCAct of2000, sigried by Presidcnt Clinton on December 21, 2000.
The cxtcnsion was passed as PL 109-432 (2006), Sec 102. Many of thase who conccived of the Credit,
together with users, invcstors and other interested parties, have come togettier as the New Marketc Tax
Credit Coalition, which advocated succcssfWly for its extension. See
httpJ/w~,Nv.neu,rnarketstaxcred itcoal ition.org.
2 Current estimates Placc the actual c;ost of the $1$.9 billion in spprovcd New Markets 'Cax Credits at 33
pcrcGn[ over 10 years or $62 billion.
3 Conimunity Development Pi.naneial l.nstitutions Fund, "Ncw Marlcets Tax Credit Frograrti: Fourth
Round (2006) E1llocatees," availablc at
http://www.cdfifun d.gov/docs/nmtcJ2006/2006%20Higl►ligh ts%20T,)ocu m ent%20(5-31-06)-Finsil-
Final.pdf.
4 "71ie New VlarkeLs Tax Credi[ Progress Report 2006," New Markets Tax Credit Coalition, May 2006,
avatilable at http:/hvw~w.ne,.vmarl:etstaxcreditcoalition.org. Calculations from Armistead,'New
Markets Tax Crcdits"; "NMTC Allocation Gcncral Statis[ics Rolind I.II," puhlished by the New
Markets Tax Credit Cnalitiun, available at Ar%,.,%v.newmarkctstaKCrerlitcoaJ.ition.org; and CTaFT Fund,
I-artrlh Itou»d - 2006 New Mcrrkels "I'aY Crecli! Allocatees (Alphabetical) avtiilable at
httpJ/w,%vw.edfifiind.go,.,/docsJnmtc/2006/Profiles%20llocument%20FiNAL alpha_.pd1: By way of
comparison, appropriations for the ClaFI Fund's grant programs have never exceeded $120 millinn,
and are currently approximately $50 million annually.
5 4ver 1,200 entities have been certified as CDEs. Adminis[ration of the iNMTC is the responsibility of
tvro Parts of the Trcasury Depardnent-the CDFI Fund, which cer[ifies C.AF.s, allocates crcdits, cntcrs '
inW and enforces allocation agreements, and rnonitors the performance of alloca[ees; and the Internal .
Revenue Service, which is responsible for %witing the regulltions interpret.ing the tax code and
enforcing tax c4mpliancc. These two parts of the Treasury, as well as the Office of the Assistant
Secretary for Tax Policy, have worked tngeLher elosely to clevelop regulations snd polieies that are
consistent, workable and meet the goals of the statutc.
f The NWTC ean also be used to providc "£manc:ial eolmseling and othe.r serviccs" to,businesses or
residents in low-inr.ome commuttities. in practice, however, unly a small portion of the crcdits have bcrn used tliis way, gencrally in conjunctinn v.ith a debt or equity investment. In additipn, credits can
be tised ta make debt nr equity investments in otfier CDEs and to buy loans from other CDEs.
7. In general, low-income communities are defined as census tracts with a poverly rate of at least 20
percent or a median incomc nf 80 percent or less of the greater af the s[ate-tvide or metropolitan area '
median income (AMI). Tracts designated under certain othcr proorams, such as Empowennent Zoncs,
also qu3lify. Approximately 39 pcrcent uf census tracts, with approximatcly 36 pereent of the U.S.
population, are eligible. Tn 2004 the statute was Hmended to expand coveragc to n►ral cnunties with
high out-migratian ns well as low-population trac;ts .inc) "targeted populations," and the 2006 extension
also requires that ngulakioris "ensure that non-mctrnpolilin couiities receive a praportinnal allncation
of qualified equity investmcnts_"
R Morc informa[ion abAUt the Low Ineome lIousing T1x Credit pragram is available in the Living Cities
Policy paper, "Housing Incentives Stiinulate tlie Private Sector," available online at
Hww.l ivingc iti es. o rg.
9 National Development Council, "The Bronx Ts Up!" available at
http:/Jvvrvw.nauonaldevelonm entcouncil.org/secundary_n/articles/di splayoncartiele2.aspx?ArticleType
=0&Ariic1elD=178.
10 "I he New Viarkets Tax Credit Vrogre.ss keport 2005," New Markets Ta:c Gredit Coalition, May 2005,
available at h[tp:/fwv«v.newmarkctstarcredi[coalition.org, 19.
11 "The h"ew Markets Tax Crcdit Progress Report 2005," 19.
;
The LNftV Cltles PofkY Serfes con„i:Sa W narus nom; rrissfaned b/ L1Mng Q`L'cs (o stimulatc sericas ca7wnaS bn eEouf fasue3 fnlpamN fo Amcvit.i y 2 2
ciG'as. TM auhhorsJuesCM e vat3e~j N AerspQUfvCS 7hat do nd rtaxssaNy iepresanJ !An vfews W lAdrg GY6c.^ or ita cxr,nEer oigsiNzstlorts.
12 Entcrprise Conununity lnvestment, Inc., "East $aldmore Development, i.nc." Available at
http:l/wvr.v.ente.rprisecommunity.com/industryTaxCredit/strucdared fin_subs/partfolioleastbaltimore.h
tml.
13 "Midtown Global Marl:ct: History; available af
' http://vn-,w.midtotvnglobalmsrl:et.orgl"7q=aboudhistory; and Cohen, Farker, Jonathan Rogers, and
Carlos Espinosa, `Midtaun Global Markei and the Se1rs Ruilcling: Small ]3usiness lncubators and
Public / F'rivate Tnvestment," May 8, 2006, available at
Hww.macalester.eclulurbxnstudics/scudentpapers/clocuments/midfownglobal m arl:et,doc.
14 1'he Gulf Opportunity 'Lone Aet of 2005 is feclcral Icgislation that was passed by Co»gress anci signed
into law by Presidenf Bush in Iaecember of 2005. This legislacion provides for Fedc:r3l Tax Incentives
to areas f►ffected by 1•Iurricanes Katrina, Rita, and Wilma that wcre designated as warranting inclividual
or publie and incliviclual assistancc. http:l/www.mississippi.orglcontent.aspx?ur1=1'pageJ326I&
15 The Government Accountabili "ry Office is required by statute lo da three evaluations of theNMTC.
"Che first evalustion, issued in January 2004, focusccl lurgdy on rea lations and intra-Treasury
coopcration. (Government AccountaUility Qffice, A'ew Markets Jax Credit: 1'rugress Alctcle in
Implemenlation, but FrtrlherAclions iVeeded lo itlvnilar Complicnrce, January 2004.) The second was
issued in January 2007 and exumined the results nCthc program to datc, primarity from the perspective
of invcstors. In the rcport; the GAO acknowledged that it is too early to fully evaluate the C;redit's
e_ffectiveness, inchiding its iinplct on cornrr►unities. (Government rlccountability Office, New Market,r
Taz Credil ApPecas 1o Increase Invesl»rent by Imestor,c in Lr.r►►v-Irrcane Comrmtrtities, bul
Opportunities F.xlst to 13etterAlonilor Compliu►fce,lanuary 2007.) The third report is due in January
2010. Tlie CDPI Tund hbs just awscded a contract to the Urban Tnstitute for whai is intended to be an
extensive, multiyear cvaluation. (Remarks of Linda Davenpqrt, Taeputyl7irector af Policy and
F'rograms, C.17FT Fund, at the New iVls►rl:ets Tax Credit Coslition Annual Cnnfcrcnce, December 14,
0 zoo6.)
16 Govern.rnent Accountability Office, Jnnuary 2007 report, pp. 16-1 S.
17 "Performance af the New Markets Tax Credit T'ragram Through Fiscal Year h nd 2004," CDFI Fund,
Aan st 31, 2006, available ai ht#p:/hNrvnv.cdf.ftind.bov/docsJ2006l083106C1SSImpxctdata.pdf.
18 "The New Markets Tax Gredit Progress Report 2006," 1~7e~v M1rl:ets Tflx Credit Coalition, May 2006,
Hvailable qt http://wtivw.newm.►rketstaecrLtlitcbalition.org.
19 ror exarnple, z cicy may be able to make more effec/ive use of the Credit's subsidy with low-interest
debt than with gzftnt funds, but the loan must be made to the rioht entity (a conduit J,I..C, not the CDL),
with the right terms (c.g., no demand for collateral). Exaniples of programs that have been
successfully used to t►ug_rnent or support N`M1'C investments include: Community Development Block
Grants (inc.luding the Section 108 loan guarante.e provision); HOME; Gax-increment financing; bnnd
financing; ancl statc nnd loc.91 historic-prescrvation tax credits. (Coirversely, some progr;uns
administercd by the Economic Development rldministration have not been used sticc;essfully, as t6cy
rr.yuirc; a sccurify intc;rest in the propcrt}', which is not fea,eible under the.N►V1TC strucnire.) Using
these prUgrams successfully requires x level of expr.ricnce and saphistication with economic
dcvclopmcnt tools that may not be present in all ciiies. I.ntervievvs vvith 17avidMcC',rddy, City i'irst,
(January 5, l UQ7); Itobert yaznanski and kienson Roberts of L,oc:il Initiitive.s Support Corparation
(7anuary 12, 2007). E-mail fmm Joe DeHaven, Indiana Rankers Association (January 11, 2007).
ZO Bccausc all dcbt repaymcnt from the Q11ICB must flow through die CDE to investors, gross receipt
taxation at the CDE Icvel can result in less of the NMTC's subsidy going to the QL1CB, making an
investment in thai city less akvactive than an investmcnt in a city that taxes unincorporaied businesses
on net incoine.
21 Because the NNTTC lacks a legislative history, its precise purpose has been the subject of substantial
debate. In announcing Presidcnt Clinton's original N,I~ITC propasal die Adrninistration stated that
sBusinesses in our nation's inner cities and isolated rural coctunltnities often lack access to cquity
capital to grow and succer.d. For the FY2001 budget, the President proposes a cnajor expansion of his
~ effort to lielp attract ciew capital to these businesses th.roug}► tar r.redits far equity invesUnents."
("FY2001 Budget & Ncw Opportunity Agenda Epands the Administrztion's Cottunitment tn Ncw
j x
Tha llVlhp GUcs Pofiry &r.rics ccas'sts dpaMrs camausstrned by Irring Q'ties tn arnufate serovs oon Jetsaiae atauP fsnms fnpoRa) M Amedca's 2 3
aY.'es, The wlROrs y~2seM e vaMPj N pers,oedh+es Mef do rtN nscaasejy represmM tha Wevr a✓ tiving CiBr.4 - a ds rrxmEcr otpnizalio.rts.
J
Markets and Iiringing People intc7lhe l1conomic A4ainstream," avai.lable flt
. http://clinton4.nara.govANli/NeNv/html/20000113-I.htrnl.)
.
While the president emphasiTxd that the creclits eould be used for a wide ranSe of business activities,
the focus was clearly on private equity investmcnts for businesses in undcrscrved couununities, with
. the assumptidn ttiat jobs and cconomie development wauld (nllow. The stAtutory languagc itself
provides additional fncus, particularty in iu dcfmitions of "low-income community" flnd "qualifictl
active law-income community business" and the requiremen[ that credits be allocatcd to CDLs,
although as severa] comme.ntators havc pninted out, these requircments Hre relatively broad. Michael
kiarr, ane of the NMTC's architects, has cmphasized its market oricntation:
Byleaving invtestmertt decisions in the hnnd,c ojlacafly-bcrsed rnurket participants, the h519T'C is
structured to be yuiteJlexible. Irrveslnrent funds will compete jor 1ax creclit allorations, raise privule .
furrds, and then use lhesefunds to invest in orprovitle lomm to local businesses locaied in lower-
income cvmmunities. (Barr, i'v7ichael,'"Access to Fi.nancial Services in the 21st Ccnlury: Five
Opportunities for the Bush Administration and the 107th Congress," at
http://vr-ww.brookings.edu/eslurbanlcapitxlxchangelarticl e4.htm.)
Whilc acknowledging this history, other commentators have assertecl that the Credit in fact h3s a more
Jirect poverry-alleviation goAl, vvhich they intcrprel as melning that the crcdits "should nof be nsed to -
subsidizc aetivities that havc a limited cotnmunity economic development impact ...[xnd) should not
fund acfrvitics that would have occurred without the subsidy" (Rubin, Julia S and Gregory M.
Stankiewicz "The New Markets Tax Crcdit PrUgram: t\ Midcoursc Assessment," in Community
Development 1nvestrncnt Review (2005) availablc at
http://www.frbsf.org/publications/communiry/review1122005/articlel.pdf.) To others, the criticsil
• question is whethc:r the Credit will empowcr "communi'ty residents-gcnerally in tlie form of not-for-
profit, community developrnent organizations or small businesses-to plan Cor und deterRiirie the
future of their neighborhoods, bnd to adclress the most pressing development necds....[and to] build ,
socia) r•apital." (Arrnistead, P. Jeffcrson, "~Iew Markets Tax Gcdits: lssues and Opportunitics," (2005)
available at http://www.prattcenter.nedpubs/nmtc-report.pdf.) Concems such ds these have also been
reflected in neeasional newspapcr srtieles. (See, e.g., Frank, Ryan, "Bliglit-area tax ureaks aicl rich,"
The Uregonian, Nov 27, 2006.)
22 See Tablc S-6, Budget of the [3nitcd States Covernment, Fiscal Yeur 2008, at
http://mvw.wh itehouse.gov/otnb/budgedfy2008/summarytables.html
23 Primary supporters i.n the Senatc have been Senztors Snowc (AE), RQekefeller ONTV), Grxssley (LA)
and Baucus (IvT'T). In the House, Congrcssman Rangel of New York, who will chair the Ways and
Me:ans Committce, sponsore.d the initialNTMTC legislation and has been a strong supporter alnng with
a group of Members from mnre rurF►1 areas, such as Congressmar► Et.on Lewis af Kcntucky. See S 1800
and HR3957, 109°i Congress, 1" Session (2005), proposing a5-year extension of the Crcdit.
24 "1he New Markets 1'ax Credit Progre.ss Report 2045" atid "The New VIar4:ets `Cax Creclit F'ragress
Rcpart 2006." The New Markets Tax Credit CoaliGan Web site also ha,s tact shcets highlighting
spccific types of investments, sueh fls those in health cace and small busincsses.
25 Most notably Armistead, F. Jefferson, "New Markets Tax Crcclits" and Commxmity Developmen!
Investment Revieiv of the 1%ederal Reserve 13atik af Satt Francisco, Vnl. 1, lssue 1 (2005), available at
littp://www.frbsf.org/public-ations/com.ttitinity/review/I 220051index,hbnl.
26 Barr, Michael, "Access to Financial Services in the 21 st CGntury" •
27 26 CFR 1.45D-1(c)(5), (c)(6)
28 'I'he regulaOons effcctively provide that something can be a QLICB basul on the percentage of grnss
iocome, serviccs, or tangible prapercy used by the entity in a low-income coinmunity. Calculation of
both the gmss incqme and serviees percentages can be difftcult and, in particular, subject to changing
conditions over a setren-year pcriod. ReAI estate, on the othcr hancl, stays in one placc. This is likely 1
mbjor reason, althaugh probably not the only one (the sheer size of rcal estate invesUnents comp;ired to
otihers is probgbly relevant), that the credit has tendcd to now to real estate invcstmenLs, especially in
the early rounds. 26 CFR §1.45D- I (d)(4)
\ ilAo LMng Cfflea Po7cy Serfos consish Npapers arrnm'sstoned by Livirg G.:ies fo siirnNMle aienaus avwcrsation aDa.v (:sues Lr,pavteM ro Amer,ra's 24
~es. The atWiavs puc~ertf o vaif!Yy aJ petsped`m,s A'h~f cte not n..eeesss~y ra~resanf tha ~cbw. cI LiYd•V Q'i~es a its mamtor wpo,tizafions.
29 26 CFR § l .4 3-D-1(d)(6)(i)
30 Hor reasons relating to the TFt:S ruling oti this subjee[ (sec nnte belaw), as well as the investnrs' interest
in making certain t]ae project l.ists fur the full seven years, the equity investor, bs wcll as the debt
investor, will sull have an interest in making certain the economics of the praject are sound.
31 Revenue Kuling 2003-20,1:RI3 2003-9, pagc 465
32 NOUCe 2006-60, IRB 2006-29, page 82
33 'Ihe Round 5 allocation application can bc found at
Iittp:/lvvww.cclfifund.govldocs/nmtc/2Q0712407NiV1"1 C.AllocationApplicatian.pdf.
34 These are communities with snmc combination of high poverry rates (Sreatcr than 30 perceiit), low
median incomes (u.nder 60 percent AMI), And high unemploymcnt ratcs (more than 1.5 times the
national average), and/or clesignatiot► under other prngrams tarseted to lovrer-urcome communities,
such as federal eCOnomic dcvclopment zones, SAA HUB wnes, browc~fclds sites, and areas
cncompassed by HOFF. VI redevelopment plans. Targcting to rur'al or disaster areas slso comes under
tliis section.
35 Applications are read and scorecl by t}iree readers, with ihe results reviewetl by a panel of CDF1 Fund
' staff. The ulumate decision is made by a Fund official. Those familiar witti the proccss are convinced
that it has i.n fsct becn fair and transparent The fac[ [hat the Fund providcs individualized feedback to
unsuccessful applicant,s about how their application might be improved has beedhelpful in ensuring
trinsparency.
36 Community Development Financial lnstitutions Fund, "Ncw v(arf:ets T1x Credit Program: Fourth
Round (2006) Allocatees," rivailsblc at
http J/www.cdfifund.gov/dacs/nmtcJ200 fi/2006"/o20Highlights°/a20Docum ent%20(5-31-06)-Final-
^ Final.pdf
37 The reo IaUons provide that "any trade or businc.ss consisting predocnuiantty of the dcvelopment of
intangibles forsale or liccnsc" will not qualify as A QI,1CB. 26 CFR $1.4515-1(d)(5)(iii)(A).
38 For example, the C1aE1 Fund's 2004 Annudl Rcport, which discussed the projected uses of thc second
round of allocations, st5ted that 53% would be used for "real estate businesscs,° w•ithout not;ng that
th.is includcd items sucll as plants for manuf,icturing c:nmpanics and communiry facilit,ies, as wcll as
commercial real estate developrnent. C.DF1 Fund; Perfomiance and Accountability Report, Fiscal Year
2004, available at http://w%N,%v.cclfifu.nd.gov/ncws/annualReports/2004annualRepnrt.Fdf, pg 23.
39 Cnlculations from Armistead, "New VTarkets "I'a7: Creclits"; "NMTC Allocation Generil Statistics
Round III," puUlished by the New n4firf:ets Tar Crcdit Coalition, available at
%w,tiv.newriiarl:e[staxcreditcottlition.org; and CTaFT Futid, Fourlli Raznid - 2006 .Neiv Markels TitY
Gredit AIlocatees (Alphabetrcal) available at
hup://wNvw.cdt"iI'und.gov/docs/nmtcI2006/1'rotiles%20Doeument%20F1i~]AL_alpha_ pdf.
40 See http:lh%tivw.apporcuriityfinnnce.net/uploadcciFi1cs1103106_ofii_rnl cars.pdf;
http://vv,,v%vsoeial f'un c1s.r,wm/nc%vsJarticle_cgi/215 7.htrn l.
41 Scc, c.g., Rubin and Stankiewicz, "7'he New Mful:cts Tax Crcdit ProD am" and tlrmistead, "N'ew
A4arkets Tax Credits." See also Forbes, Jennifcr, "Using Economic I7evelopment Progrsms as Tools
for Urban Revitaliz►tion: AComparisori uf Lmpowermcnt Zones and New iNtarkets Tax Crcdits," 2006
Univensity ajllliirais Lmv Revie►v, 177.
42 Washingion,DC cnnde a$100,000 grant to City First Enteryprises, the nonprofit parcnt of City First
Bank, to assist in preparation of its NITM1"C application, which generated inillions of dollars of
utvestment in We eily, as City First received allocafions Iotaling $163 million. Interview with Davicl
McGrddy, City First (January 5, 2007).
i
7ho U'vlMl GfFes PloriCy Setfey tu•ixC:s Lv pyers cu;vrissoxd Dy l.iWnp Ones to rV,mutate sertavs mmti+=ino oboW ~uu.as hnAOxani m Amim's 25
cut.x. Tre euJMOrs Azsent o varieryol pcrsycuims ihat do mot nsces:a:Yj :eAiesenf Lhs ticivs of L'rrir•,g G'des urYs msm heroVenlzvD'm,s.
SCal TYo`
Pne
Va11ey°
~ 11707 E Spraaue Ave Suite 106 ♦ Spofcane Valley WA 99206
509.921.1000 ♦ Fau: 509.921.1008 ♦ cityhallpspokanevatley.orr,
Memorandum To: Councilmembers, Senior Staff
From: Dave Mercier, City Manager
Date: June 9, 2008
Re: Retreat Agenda Item No. 9
1. Update on planned asscssment oFlaw en.Corcement services.
2. DiscussiAn of'services proposed by ttie Yublic Safety Scrviccs Team oFICMA Cvnsulti.ng
ServiceS. '
~
~ ~
~
'
S 0161&ne
;W*Valley
Annual Work Plan for 2008
Operations & Adrn~.naistrative 5ervxces
Pxxblic Works
Paxks & Recreation
Commuxxity Development
~ ~
2008 Budget Goals _
The 200$ budget reflects the distribution of resources consistent with thc Council's
determination of core services priorities. Ihe following goals zepresent just the very broad
axeas of concenkration imp4rtant to the well being of the community.
1. Continue monitoring wastewater issues, including governance of wastewater facilities,
en,hanced citizen awareness of options for the future alZd pursuit of the most efficient
and econornical use of allowed wastewater discharges.
2. Refine initial depa.rtmental six-year business plans in order to identify and
incor.poratc fiscal unpaets into a strategic fulaiuial plan.
3. Formulate a Six-Year Strategic Financial Plan by julv 2008 that f.orecasts expected
revenues ana expenses; incarporates the cost clEments of depar.tmental business plans; identifies fiscal constraints; an.d, propvsES formulas £or Council considcration that
institute sustainable budget-ba.lancing appraaches and itemizes necessary service
red.uctions or revenue inereases ar cQCnbinations thereof.
4. Initiate implementation of fihe sub-area plan for the Sp.r.aguE-Applcway [':cvitalir..adon
Plan..
5. Adopt area-wide rezonang_prapvsals cansistent with the comprehensive that reflect
appropri.atc adjustments in zoning designations.
6. Perform an analysis of a land owner initiated requcst for an.nexltion.
~
2
Lenhanc::arenes-s g wastewater issues, including governance of wastewater faciliHes,
c~f options for the future and pursuit of the most efticient and
uwed wastewatez dischar .
Public Works - Tasks and Timeline:
I cpxtrnr~ M~utrarr'+t~ Qj w I l2~ er t?r oK
N'~~t~+a.+rr lssaes J" Feb l Msr Mv I_Mry Trr ja! ~ A'rE ~ S"r OLt MFr na
, Analy-sis and retiieN• with llie
County, City af SFwkane, and
[?rpt aE Ecology regarding
Wassbewater Treatment Fa+rilit}
aptioru .
Refine initial departmental six-year business plans in order tv identify and incorpc~rate fi.scal
impacts into a strategic financial plan.
Operations and Administrative Services - Tasks and Timeline:
f U~~rtr►testtal Stx-Year ~ Ud Q] Dd l,t Ge Qt 06
~ 8ntir~~~fs P1Am , 144 ~ fA Mtr i.Mr May I 1,. Ia! LA-1;- rwr- t}n -Nvn Dke
1 I ~ ~ I I I
Formulate a Six-Year Strate~'rc Financial Plan by tuly 2008 that foc~ccasts expected revenues
and eacpenses; incorporates the cast elements af departmental business plang; identifies fiscal
constraints; and, propases formulas for Council consideration that institute sustainable
budget-balancing apprc~aches and itemizes n~essary service reducdons or revenue inc r+~~ases
or cambinations thereof.
z
Finance - Tasks and Tinieline:
af qlw 1 qJ~+0 Q+a ~
S~r•Yacr 5d~trgic
~'l~naciw! P1a~t? ~ f.R Wxr Mw IMay f+w ~ jw1 +ing' !ieri (kc tWeo Dec
- - - - - - - f- - - .
Initiate implementation af ttx sutrarea plan far the Sprague/Appieway Revitalization Plan.
Community Development - Tasks and Tuneline:
Sp►a,goWrippltawy SuMrm Q~ od qa os Q3 0i Qf a
Flar, l[.» ~ fsb htaf ~y. lll.y ~ fwN jWt ,tsg &-j► C►a xdr u.r l
A.dapt5prague/Applcway Plan
- - r- -
Work with City Cvuncil, '
ransultants, and other department
staff ta determine the scope of City
Center Ptan
~
Put mgethet timdine and costs for ~ I
improvements ansl work with
Couru:il to determfne City's portinn
of costs
YmFare Planned Action SEPA I - I '
Chdirusncr
,
Kc•finc sitn plan with library•,
groperiy owners and consultants if ~
dercloper lound. (losc propcrty transaction fos Cih-
f-fall 71
~
Work with cunsultants and properrv i I I
owner(s} t~. s~-u~e a dr~~ ic~~•r ~ ~ ~
Adopt area-wide rezoning pmposals consistent with the comprehensive Plan that reflect
appropriate adjustments i.n zorung designation
4
Community Development - Tasks and Timeline:
Qt eo Qs rs pi a
rtms•Mdt ReLonfiY i'mposal I QJ a~ I
t.c*+rjiistmta+lth the
Carnprr_lrnu►t►e Pfan that 1Rr%ct
Anyrayrinir ri4jastmcnts tn I•• Fri Mv Ap► M&y 1nx 1*t At iep Oes Ksc Ws ~
T,~rttf~ laesegnsitaRS ~
~
I I
requests from November 1, 2LX17 end I mmrm
form recommemdnticros-
Ptepare SEPA analysis on proposela
Firv►Iize staff reparf
Piarming Catnmission Work sesaton ~
i'lanning Cvmmission Hearing
~
Adnption t*y founcil
PerforRl ari anal sis of a land owner initiated request far annexation_
Community Development - Tasks and Timeline:
- a~ ~ ~w Q3 es a+~ 1
Airltwxqtian ArNtytts j
/~en Frb f Afsr M+r I Ma~ /rn ~ jrl .I` Av1 1 4} (Jci No~ ~ler
f'7rt~clF.tt~• Itt rE-~lvnal ~iL•.i uss!~u~ ATId R'8C}i Agt'e2II101t WitI1 SpQICHIIC I I
Courtly arid 5ttrivultding
jurisdictions ebout whem the Urben ~
Gror.-th 13oundaries arn
Prvvidn input far SEPA aneiy6is '
Adopt new UGA boumiaries in the
Spoknm Valley ComprYhensive Plen ~
Develop proceciures for epplying far
an nnneacetian in Spokane Vnlley '
~
Deve]o a Shareline Master Pr am.
Community Development - Tasks and Timeline:
SJ~orutf~tr MaFltrFra~rr,~m "
r
F-May
~ ~ . . . . - i
hia.ster f'rogram Evr 3112,deddiine ~
~
Apply (or grants es they bacame
available to complebe tfie work '
ptnciucts i
Department Objectives
Operations and Administrative Services
~ - - - -
br f+uty City rl,urngrr ~ i r'n oa ` Qz ea W ee I (tl o~E
DioilFivu fab Msr Apr Nay tan M .tnY
~ ; ,,rate Fiutiiness 1'lan into -
i
~ l ',,rat~gtc Ptan . ,
inalize (ormal msnrgec! - -
lin iUon ro m ~
Can.struct Uraft f I
Pre-ent to Senior Staff/FcedtaLk
Present to Employces/Feedback I
Form ad-hor Committer w/ ~
Contractor Represenhtion f ~
Feccitkick i I
Firsal Staff revisions kry Gty
!Nana r
I'resentation M City Cauncil -
rview, edit, ado t
F ' : 1„pka~,c contran nu~c ~ 1 I
9 Iogram -&gin u~/Pub2ic Sufety ~ I
~ ~ -
Notiry cou,n,
0
Verify tfiat sampling can br
P'erfoTmed
Identify semple pcrpulations (Apr.
july Oct 08, Jan 09)
Conduct audits (11.ity, Aug, Nov 08,
Feb 09)
Pmide msulla in updatrs to
Counci113w.1 br quarttr bthind -
irduct 8, an, Apr 09}
ro~,unicy ~ey i,~,pie~t ~~~ty.
City Eiv~Year
rti'
Human Resources
Hvrrarn Rrso~cr~cs Qs as Q= pf ~ Q3 n ` Qt t~s
Ap,, hu, ( rw ~ w1 Aq
UI•J.~:~~ H~•~i;~, w~h i~~~l k i~:
Center and on-lire a Ilcetinns ~ I
Finafine classifxetion tcwiew system
Enhanre emplayee tecognttian ~
r rnm
Adopt Cit}• Safety P1an t'n ~
con unction with Sa ' CommltLee
Establish initia! emplayee
devclopment oppartunities through
orilfne teaming
Work witfi f'10 on media strategy ~ I
for rt-cruitment
Finance
- ut~ - - - Q2 08
rw~ Fr* .sar M•y Nb , tYr eU~r i ort nroN vr,r
tNlL.Loatmunlcutioro infr.►_rtruiture
Assist in refuiement of btuiness ~
lans
Con9ider suggestions made by I
WC1A regarding Insumnae
CDvZIi
Cansiciet 5fate Auditnr s
su tiaas
participatr in preparadon of
Amerirans with Disabilities Act
ADA improvement plnn
7
Contmunity Development - Tasks and Timeline:
- - - - -
1. ►s► "M Apw JWAY t~ 1ai Aeae &r a~ 1•"- tn
- - - - - -
lmplenient tlle usteracbve ti uice ~
resF►onse (IVFi) telephone schetiuling
Monitor and adjust ns necessan, the
imPlr.mmlation of the "over the
cOtlAbeT° F7eii7tlt p[Y)Cm
~ RYVI@W BppbC8lI0lLS (;UIITtef'ly ~ I
during 2" and make eny ~
adjustmenic necessary
Complete a preliminary draft of r
depammental palicies and
Praedures
Creeoe an ink-tpletatinn notehoc+k
for UDC inieipretetions to ensur+e
consisteiuy
Create a list af department paticies ~
and procedures
,
Make staff esaigr►ments to write tfie
palities and procedures an an as
needed hasis or as Hme F►ermits
Coniinue implenventntinn of procvss
improvemenis, based on priQrity
Staff 7rauting
• Train staff on new UDC
coplcs
• 7epm building exerci.se for
aIl develnpment stnff
• Customcr sen•ice training
for ull development staff
• Hnw to deal wttfi ho6tile
custamen training
Gtizen/develoM training on UDC
• Solicit comments from ~
siakeholders ebout whet
subjects nre mast useful for
training
r • Frepare schedule, create
curriculum, edvertise
• Teach classes w intcsested N I
pablic
I Prepare 1'tst of other tasks for the rest
~ of the year and make assignments _
K
Sfeet writh stakeholders for ptogress ~ - -
ax*ting
Dtwclop and adopt re.wised atreet
standards
Meet with Fire i?Lstrict end Potice
negnrding rvi+dway widths
peve)op review draft of documcnt
Condurt Eollow-uP publlc mieetings ~
Prnpare final draft dcxvment
Beo adoption process with
Planning Cammigsion
City Cauncil adoptinn ~
Continue imp{emmtadon of the Cfty
Cer►ner Proiect ~
Fstahlish City UGA through
Spelcane County's procYSS -
Complete the ennual camprrliemive
plan updnbe
Review the Cihr's ptvcess fotcleer
view triangk issues, recommend
tmprovrments and implement
approved rrvisions
Code campliancr staff piepare draft
plan For rompleting rity-wide clear ~
view triar►gle prvject
~
Schedu{e mecting widh desigrated
staff fram Public Works,
Community Develogmentand Legal
Deparumrr►!s to review and trvise
plaa and agree on guidelines Eor
compliance ~
~ $egin fteld wark for compliatre I
ProSTaa'
There has been no demand from citizens and/or developers for this
program.
~
Public Works - Operations & Maintenance
C1peraN6Hi Fc Ma~~eKaswr
►R~ ~ !1~ Ap. M.r~r 1~ h~ ANS ~ ort N.~ ~4~c
tiN'ork wuh Regional Wastewater
i Commilter ta evaluate tfie
poasibllitia of a Spokane Regiosial
Wastewatc7 Alliance
[kvelop six-y-e+ar Stormwater
Capiwl Imptmement Plan
Identify 6c rerommend new ~
' Frokcts ~ I
Drak six-year plan
s Coardinate signal Gghts along I
arterisls carridoa
~ Implement timing plans
Upgrade signal contraUers with
CA1AQ Fundung
Receive ~ I
I lnstnll I I
Flashing Baacons Phae !Il
Conduct/Cnmpkte Survey
APPh' [or grant funding + - - ~
I Order Equipment y-
Installation I ~
,
Implementation
b Undergroumd injection control
c ompliance
Inventory dc assessment
Begin implementing NPDES Phese ~
U Permit
1~`W baft signal T.LD Program
Order equiptncrtt
-
installatiort dc refwtes
Exglore a site and Fa~lity fur I--
storage of equipment and mnteriak
for rnaintenenre servi~s ~
Canstruct a trrsta►ent facility for
the dfscharging af vactnring liquids
from dryti++ell c3euning and
maintenarue
Implement the new Pubtic Woris
Safety 1'rugram
jf)
Continue dcvelopmsnt of a long T - ~ - -
rsrtge plnn far managing strert
aulnDermnce, slreet sweeping and
lendscaping services
Adapt and implement tfie Street
Mastrr Plan ~
Public Works - Capitol Improvement
- SE.r-Yrar5tsatr,~itFirrancfai qto~ ujas q3 N J--Lvoe -Flun' ~a~ Fe~b 1►1*r M'e ~+Y f+w IM! A.S Sm nct vor Orc
- - - I
l: Fx1atY ~ia•1 ~~r f rans}x~rtauon l'lan i ~ ,
tor Arierinl RoadwaYs ~ I
ldentify 6c recommmd rew Qrojects
Pubtic hearing on draft plan
5eelc Courcil apgroval af plui _ I
Submit STP. T1B k other grant
requests I
CaE+itoi i'rojects
Vnllcy Conidor - Envirarimenial I l ` I
a5sessment and preliminary
engineering
Mansseld Row construcrion 1 '
Trmtwood construction ,
Grandvirw AQes cattstruction
SFaldinp - design dc construction
Bnricer Rd Bridgr ROW &
mnsttuction ~ I
Apple++,ay Avc recoQistruction - ~
Tshirley Rd. to Hodges Itd
construction
44& Avc i'athway, WoadruH W
Snnds - deslgn only
Signal controller upgrade+
Broadway/ Fancher ECC - design & ~
toctstructicm ~
24'h Ave Reconstivctinn - design k
construction
5prague/Bowdish PCC - design &
corutructlon ~
Rockwell Summerf'ield I'fuaee t
Rockwell Saniiuy Server - design bc
cansiruction
Il
tiim-imerhuld ~ntu r~ wer - - - ~ i -
design & construction i
lYhite Hirrh 5anitary Sewer - aesign
6a construcdvn
Sot6ers Sanitary Sewer - cksign &
cnnstrurdon
Broada•av Ave, Moare to Flara - ~ I
design ROV1W ~
Swimming Pool upgrndes -
consbvction
Cluldren's Universal Park at
Mirabeeu - des%gn
~
Temece Yiew Park upgrades - ~
dcMgn
Valley Missian Park upgtades - ~
design & canstruction ~ I
I'arks and Recreation - Administration & Maintenance Division
i
- Qi ua Q2 os Qa og (.408
Caxtl~exr NlNnAi~ jvr~ut~a
l~tr~ ltrns~~ttfv►~uaa+lL~
~iFltfaas F.b !lfiu Arr AIry 1~ lut IA-SI $oP ost JV~nr i1~ac
I'rnu.:t• 1 u[urc <<drk rk nor,!lr.,t
Etplore opportunitic~ for I
acquisitioru
Tanesti,~Nr~AuYrrluArivn - ~►!f~ (p Yd - - Q30 i - Q~00
thmuxJr tNe Natirmo! Nrtrk ,rtid ~
RrrnretlattA:sac~afrt►~ !~a F.~ 3t~or ~ Alsy j.s ~»t ~►nf S.r' j c}rf ~'n~ Drc
i
De1'ilUp i t75f dlldlviL5
~
Incorporate cast in 2009 Budget I i
Reyitt-st
1'
- - _ _ _ _ - I
Cowphts RkxoPRttorr g/ Valtey 4~ ad q: e~ Q~ a~ Q+ts I
MiiA(W1 ►a l'eb Mr. Apt My I.u 1~l AS S4► O~tt M7 llnc
Finali7,e design ~
Award can5truction bid
,
~
Construction begins I
OS ~3 (t10.k
QT M QI ai
Gnw►►a~es Fark .1.. r.a Aa.. AF► t«~ 1~~ s.~ rx: MM ~ nw j
Apply for g7De%,elop om R~-c-reativn (
and ConservOffiae tn
Design and Park
- - -
r
q~ a qe aa Q3 ot Q+ ps I
I D[l(ga A1ed SR/tt't l.Rftsh'41Cf101f pf
~ Childrm'a iJnWrs+tl Purl► )~ra fd► A~n APr IMr~ Jxl A.~ ~ (►cr NosOa
- - - - - _ _ _ ~
~ - ,
til~tit 1.~~~1kaEkar~.tiit~tit
~ i
Design phase
Cc,nstruction tx-gins ,
Parks and Recreation - Recreation Uivision
Cm:tr Swmnrn Qtrtdac►r M~r1~r Q1 0 Qj ~ Qj 0 Qra
NiSfit ai thr PRrlc In F,b niotr wr► hiny 1- _ 1■t AV sqr ort No► tkr
~ . _ . -
• i,tnalil.e cuntrNctS witii nZuvit:
provider and scnjen provider
Advertise for Movies
Movies shown )uly d: August ~ i I T
13
dt - - - < -
PnW*ms,fa• A tr Agra ,.r ~ r& Mae ,+p ~ ~ scr od ~ c~r i
- f:tt•_ai% h trends ui rt~treUtioii i
and local sen ice providers
Cansider one new pmgram per ~
age graup for Summer and
Sprins
Atbend the WRPA Conference I
for program ideas
AdNI Addittwsaf Caxtraa QI w Q2 06 or
tnslrtitttE.+r3 ta Run 5jorriuft3r I
Cavv* pr J'nvgtaLas l+nw I T~ ".ta► j~tK 1~t~`9 - j'w jat As% 5q oct Nas p~nc
i::~plor~ interagenc~ coa~.kratiun
options ~ I I I
Consider other area service ~
providcrs/ partners
Advcrtise for instrurtions in the I
Spring, 5uatmer and FaU !
recreation brochures ~
C'rsdfr e'onsdntent Gatmilees J5r Q) 08 u2 Oa pa mi ~u as
Catttrar't Rem,ttioa Pro8rqrI
Inatwc7iatrs Ir° F4 M'd' =~r dtay /~ue )rl A,1 S~+ Lkt Nar Urt
- _ _ _ 1
c._reawj gacn appiuvai cuntraLt
instruction policies
Develop an infocmatiortal binder
on the process of contracting
instructors
1 •l
Parks and Recreation - Aquatics Division
' CvKrpletr Caatnrcticnr oM 1 azlw - 1 030
1 Q~t~►ts ~_j~'! .I ~ ~.1 r*! AIV sy I_ed
C(x)rdinatr %+-ith Pu1ilit Wur1.5
on construciion
I I
2 1.,rand r~opening dependent
~ ,_,ji construrtiun schedule
3 1~ptore cmhanced prograaLS at I
~ 11 le pools
Parks and Recreation - Senior Center Division
Wvrr rnharscrd AroS"mrrriag Ql~ ~ Q2 or Q3 qe i Qd os
oppvmnit*-s ro a WfdRr Range
cn Hw► ~
i
Ir[)evelap YrLIgram PrapK►saLs
~
Facilitate offsite appartunities
with outside agendes (i.e. I-IUB)
Work with local tour companies
to offer overnigiit and weekend
trips
EVuna ltowre oJoprrrirr'on for QI oS Q]at Q3 oe QE t~
Se~rtnr Centdr - t,~r ~~da+ _ 7Ap17" 1m lul Ar~ ie~► nerl~ae n.c
--1--
l~ltltl a1~Fr~,y~~l Eir ltrrt[f~~i
evening cldsses and evenls
Meet with CQnterPlace Facility
Coordinaior tv finalize evening
classes/event sch~.*dules ,
Offer expanded hours
1>
- _ - - - - - - I - QJ OA QI OD - ca As n -
f.tlC4►1nr1g[ XttI/YlffwMf
COfNft►011tN1tf IuLsSlff cMtQlf tl'fth
Gt~tforCnetes /•a sa~ir x~r My M" J+w F~ ~It S9' ~ H~,r [~r
, L 0:~.31~C~iiltl' L\ lLjl litll~[i1L'Iif communities on e mOnthly basis ~ I
by atfiending activity director`s
meetings
Post Spakane VaUey Senior ,
Center activities at ather
participating mtirement
communitit.~s and allow other I
Senior Cen6ers to }wst their ~ I I
activities at CenterPlace
CenterPlace Division
~ 1~1ry,tcrnrnt 14t~rkst~ arr~t U,t a q2 06 W aa ~ Qe th+
' f vmmureiustinna Plun ~on Fr1► lasnr +lr. U.# rru /rl .laa fwp I oet ( xrr Dr~ 1
- - _ ~ . - • - - - - -i---~ ~
L'xplore coniracterl faod and
~
beverage services
Advertise as per Marketing Plan
Redesign websiM I l
Uevelap hatrl/event planner
par~trner kit ~ I
- - - - - 4 ~ OR (1~ Oh Ql lu» ~ Q100
t~rovtdr Jtddfllon+~J Trnf~s{aRJas
9catatm1S GI`Y to lnI prnor '
Calttmw Sr.rniu J~w Trb M'ar Mdy Jw~ Jrf erj Stp Oct Nor t~r
- - • - 1 1-- - I
tiC- leit traint°r
i ;
Se{ect training topks an schedule
classes
'I'raining
16
r R~~ Ekwtmic t►fenpws cn os Q2 00
~ for dw c,odm► ro Dt:pU,, E~iit,
~ c.cs cbs~gk smfa cmtfr
ACtJC►itiR9► RT1d t0 Af{t►kCt jiw !'tb M- Ait i/ey Jrn /w/ Aq Sqr Ud No!' Wt
Cl1ftl1mt18
I
ReqU['St qt10tPS/ deteTmI11e I I I
fm,;ibility
17
Public Safety/Police
Cantinue to enh,ince departmental, ~ I I
regional and cemmunity pubiic
satety e[forts in cvaf+er-ation with
citizens and Eiusirusses
lncrease interest in community
involvement in pmgrams such as
SCOi'£, Neighbvrhood N+atch.
Crime Prevention, Rescrves,
Et~+lorers, etr.
A1m•e Earnarcf with mulu-vear,
multi-jurfsdictional plan ttwt
addrrsses Q regirnu) pnrtnenhip far
a tatal communicetions ~
infrastructure bu1W-out (2012
mandahe must be met
Conduct table-top exercise to
deteraiine level of preparedness [or
local duasters
Imptement Sccurity Committet
:'tK0111Ii1C71dIIItOf14r i.l. lIL5Z3IIAtiQll OE
cOILCTt'tit t?01l8lYlS nIKd N'hEf1 56D(?S in
front parking lot, nnd fmnt drsk
fortification
1R
Continue to enhance Spokane Valley
identity (i.e. shoulder pabches, loga
visibllit) on police cam business
cards)
fdentify arui imFlcment apeciHc
tif
training necds for Spokane Valle}•
Police Department I
Fsteblish vertical commanicndon j
pmb{em-sotving modei lo enhente I
effe+ctive communicetlon throughout I
our egency ~
lnitiabr pL►n to place attractive sign
near street W better identifv location
o( poiice and court [acility, to
provide easier ecresd for citizcns
Evaluate and enhance lerels nf
sen-ice and customer service
pmvided by Department
Devrlop a more compreltensive nnd ~ - I
fair emplnt•ee evaluacion prc►cess •
1'a
, - Page 1 of 2
:
Pagel
West's 1ZCWA 35A.13.0$0
P
Vl'est's Re%ised Cade of Niashington Annotated Currentness
Title 35A. Optional Municip3l Code (Ke1's cC. Annos)
ru Chapter 35A.13. Council-Manager Plan of Government (Refs & Annos)
.+35A.13.0$0. Cify manager-Powers and duties
Thc powers and cluties of the city manaeer shalt be:
(1) To have general supenision over the administrativc affairs of the cpde ciey;
(2) To appouit and remove at any cime all department heads, officers, and employrees of the code city: except
me_mbsrs of the council, and subject to the prUvisions of any applicable law, rule, or regulation relatinr to civil
service: PROVf:DFp, That the cflwicil may provide for the appoijtiimem b}, the mayor, subjet.l to r•anfinnation
by ifie council, of a city planning commission, and other advisory citizens' couuiiittees, commissions; and boarcts
advisory to the ciry council: PROVIDFDFURT7-TFR, That if the municipal judge of the cods city is appointed,
sueh appaintment shall Ue made by the city manager subject cp cpnfirmation by the c4uncil, f'or a four year term.
"le council may cause an audit to be made of 3ny depamnent or office of the code ciry eovemment and may se-
lect the pcrsons to mal:e it, without the advice ur consent of the city manager;
(3) To attcnd all meetings of the council at whieh his actendance may be rcyuircd by that body;
(4) Ta see that all laws wd ordinances arc faithfully exeeuted, subject to the authority which the council may
gant the mayor to main[ain law and order in times of emergency;
(5) To recommcnd for adoption by the council stich measures as he may deem necessary or expedienc;
(6)'i'a prepare and submit to dhe council such repons as may be require.d by that body or as he may deem it ad-
visable to subinit:
(7) To keep the council fuliy advised of the financial condition of the code city and its i'uture needs;
(8) To przpare and submit co the eouncil a proposed bildget for the fiscal year, as required by chapter 3SA_33
RCW, and to be responsible for its administracion upon adoption;
(9) ro perf'orm s«cb ocher duties as the council may deterrnine by ordinance or resolution.
CRED17'(S)
[1987 e 3 S] 7; 1947 ex.s. c 119 § 35r1.13.080.]
I-I1ST0}Z1CAL A\D STATUTORY NQ'ITS
Scverability-1987 c 3: See note following RCW 3.46.020.
Laws 1957; ch. 3; § 17, in subsec. (2), deleted a fonner next-to-last sentenoe: wliich read: "'I'he police judge or
municipal judge may be mmoved only on conviction of malfeasance or misconduct in ofiice., or bec.ause of
0 2008 Thomson fZeuters/VVesc. Nb Cldim Ea Orig. US Gov. Works.
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Fage 2 of 2
i
Page 2
West's RCWA 35A.13.080
physical or mental disability rendering him incapablc of performing the duties of his office."
LIBRAKY RENE.RENCES
2003 Main Volume
D'Iunicinal Corporations G=->1b9; 170.
Westlaw 7'opic No. 268.
C.J.S. Municipal Corporations §5 371, 391 to 405.
West's RCWA 35A.13.080, WA ST 35A.13.0$0
Current mith 2005 Leeislation effective throu`h June 1 l, 2008
0 2008 Thomson ReuierslWest.
L-TrD OP DOCLYMENT
0 2008 Thnmson Reaers!West. Nlo Claim to Orio. US Gov. Worl;s.
]ittp:llwcb2.westlaw.coiiilprintf pruitstream.aspx?prft=I-ITIvILE&destination-atp& sv=Sp1 it... 6/ l 21200$
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Vkbgt aw. '
c,•
Page 1
Wcst's RC«rA 35A.13.120
P
West's Revised Code of Washington Annotaied Curnentriess
Title 35A. Uptiona] A9unicipal Code (Kefs & Aimos)
r@ Chapter 35A.13. Council-A4anager Plw of Government (Refs & Annos)
♦35A.13.120. City manager-Interference b)° council members
Neiiher the coune.il, nor any of its committces qr msmbers, sliall direct thc appointment caf any person to, or his
remova] from, offiee by the city manacer or any of his subordinates. Excep► for che purpose of inquiry, the coun-
cil and its members shall deal with the administrativc service solely through tlte manager anci neither the council '
nor any cornmitiee or member thereof sha11 give orders to aiiy sub~rdinaie of'the city manager, eitfier publiely qr
- privately. The provisinns of this section do npt prohibit the council, while in open session, from fully ajid freety
discussin~ ~vith the city manager anytliing pertaining ta appoin~ments and removals of city officers and employ-
ees and e.itv affairs.
CRBDIT(S)
[1967 ex.s. c 119 § 35A.13.120.]
LIBRARY RFFERE\jCES
2003 Mxin Volunte
Municipal Corporxcinns C= 169.
Westlaw Topic No. 268.
C.J.S. aVlunicipal Cojporations y 371.
Wesfs TZCWA 35A.13.120, W:1 ST35A.13.120
Current with 2005 I.egislation effective [hrough June 11; 2008
0 2008 Thomson IZeuters/West.
ETITa OF DOCUAqE\zT
0 2008 Thomsoa Rcuters/Vvest. No Claim to Orig. US Gnv. Works.
httP://web2.westlaw.com/pruitlprintstream.aspx?rs=NVLW$.0 ~-)&prft=HTMLE&fi1=_top&s... 6i12/2005
Page 1 of 1
VVed-IRm
~
Page ]
R'est's RCWA 35A.13230
C
WesYs Revised Code of Washington Annotatcd Cwrenmess
'Citle 35A. Optional Municipal Code (Kefs A Annos)
Fp Chapter 35A.13. Council-Aqanager Plan of Government (Refs R Annos)
♦35A.13.230. E'owcrs of council
'I'he counci] of any code city oreanized under the council-manager plan provided in this chapter shall have the
pflwrrs and authoriry grtnted to legislative bodies of cities pnvemed by this title as morc particularly described
in c}iapter 35A.11 RCW, except insoi'ar as such power and authoriry is vested in the eiry mwiaeer.
CRFDIT(S)
[ 1967 exs. c 119 § 35A.13.230.1
I.:IBRARY REFL•'kENICCS
2003 Nlain Volume
Munieipal Corparatioiis Cz:;;,80.
Westlaw Topic No. 268.
C.J.S. Municipal Corporaiipns 208 to 210, 213 to 219.
West's RCWn 35A.13.230. WA ST35A.1.i2.i0
CutTent with 2008 LeEislation effzctive thrauLh June 11, 2008
0 2005'Ihomson Reuters/1Vest
END OF IaOCUMENT
m 2008 Thomsbn ReutersJ4Vest. a\lo Claim to Orig. US Gov, Works.
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Pa+,e 1 of ,
kk'est's RCwA 35A.11.020
C
%'c;,t's Reviscd Cude of Washittgwn Annotated Currrntness
t~idr 35A. Ogtianal Municipal Code (Refs d Annos)
Chapter 35A.1 1. Lews Gavrming `doncharter Code Cities and Charter Cadc l'ities--Powcrs
♦ 35A.11.0:0. Powcrs vested ia legislative bodks of ooncdarter snd rharter code cfties
T7u Icgislativc body of each codc ciry shall bave power to organizt and regulnte its iaterisal affairs w-ithin thc
pro.isions of chis titk and iu charter, if am; and tn define che funccions, pc►wrrs, and duria of its oft-icets aad
cmpiayces; H ithin the limitsrions imposed by vested righu, to fix the campensation and wurking condttions of
such officers and employees and atablish nnd maintain civil secvico, or mzrit systcros, rerirement and pension
s~ stems not in conflict with tfie provisions of this titic or o6 existing charter provisioas cunil chaaged by the
Nople: PROVIDED, That nothing in this sectian ar in this tit{e shall permit sny city, whothcr a codt city ar oth-
znwise, ta ensct any proNisions establishing or resperting n merit system ot system of cfvil service fvr frefight-
ess and policx officers which does not substantia3ly accomplish ths same parposc as prvvided by geaeral lnw in
chapter 41.08 RCW for firrfighters and chapter 41. 121 RCW for police oi?icers now or as herear3rr annended, or
cnact any provisicm atahlishing c►r respectine a pension or retiremcnt s} strm for finfightors or palice otricers
which pmvidcs dit3rrent ptnsians or rrt'vemrnt bcncfits than are provided by gencral I1w far such cfasset
Such body mny adopt and entorce ardiaances of oll kinds reialing to and reguinting iu local cx municipal nffair5
and appropriatz to ths good govamment uC thc city, snd mey impose portalties of fir►e nat exceEding five thou-
sand doflars or imprisanmeat for atty ierm not exceeding one year, or both, for the viulntion of such otdinances.
cnnsritucing a misdemr3nor ar gross misdemeanor as providad therein. However, the punishmcnt for any crimin-
,il ordinsncr shall bc thc same as the puaishment providcd in state law for tfie sume crime. 5vch a body alternat-
i-, ely may provide that violation of such otdinances constituins a ciril vioLuion subject to monctary penahy, buc
no aci which is a statc crimc mav be madr a civil violation.
I"ne legisl$iivc budy of wch codc city shaU have all powers pnssbk tor e city or tuwn W have under ttx Comri-
tutian of thia stnle, and nut spccifically denicd to code citics by taw, B}• wey of illustr3ticm and nM in limitation,
tiucfi powrrs may be exercisrai in regard to tiu acquisition, sale, o.rnership, impravement, mainunnnce, protcr-
cio;,, rc%toration, rrgularian, usc, teasing, disposition, vacation, abandoamcnt or beautificntion of public ways,
resl Frupetty of all kinds, waserways, swctures, or any athtr improvcmrnt or usc of rcal or persanal prvpcrty, in
regvd tn all aSpects of collective bsreaining as prati'ided for and subjoct to the prvvisions uC chagter 41.56
IZCW, as now or herEafter nmended, snd 'mthe rrndering of local social. cultural, recreaticmal. eduratioaal, gnv_
etumectt8L r corF7otste 5rn•ice.s, 1nCluding Oj)ef8I1Dg and supp!) ing of utiliti" and muaicipnl services ccxn-
RlQl1l}+ Ot CaTIVCIIW1Ily tendered b}' Clill''S Of IONTIS.
1n sdditicm and nat in limitnfioa, the iegislative aody ot each cLxic :icN ~hall he%e an} : uthorin ettrr ei%rn <oan~
ciass of municipatity or to ail municipalities of this state Eiefure ar aRer the rnaament of ttus title, such authQrihw he ezerrisrJ in the mnnner providcd, it any, hy the granting statute, when nrn in conflici with this title. Within
cc,nstitutiansl limitations, Ireislntive bodies of codo ciries shall have within their urritnrial limits all powcrs of
tnxatinn fa local purposes except those whirh nre expressly preamptcd b} the statc s> rrovided in RrNi'
66.08.120. 82 36.440. 48.14.020. and 48.14.080.
CltLDI T(S)
"008 T?-to mson Reu;rrs ~k ot \c, k- laim tt, ('Pti,I_ ti c;uN 1l'urt_,.
fn _tn~h~... c~ l ~ ~uU~
l;itp::rN•eb2.~4~estlaw.com~'prinLprintstre~un.aspx?rs=\~~LR.U~c~F~rtt==f-~I~~1LL&
Page 2 0f 5
Page 2
West's RC1VA 35A_, 11.020
[2007 c 21 S§ 66, eff. July 22, 2007; 1993 c 83 § 8; 1956 c 278 § 7; 1984 c 258 § 507; 1969 ex.s. c 29 § l; 1967
ex.s. c ] 19 § 35A.11.020.]
i-IISTORICAL ANU STATUTORY \ib'1"ES
lntent-Finding-2007 c 218: See note following KCW 1.08.130.
Fffective date-1493 c 83: See note followina RCW 35.21.163.
Severability-1986 c 278: See note foUawing RCW 36.01.010.
Court imprnvement Acl uf 1984--Effective clat.es-Severability-Short kitle--19$4 c 258: S$e noies followine
RCW 3.30.010.
Effective date--1969 exs. c 29: "The effective date of chis act is July l, 1969." 9b9 ex.s. c 29 § 2.1
LIBRARY REFERENCLS
2003 'j\[4ain Vnlume
T9unicipal Corporacions 57, 59.
Wcsdaw "fopic No. 26 8.
C.J.S. Ntunicipal Corporations §S 1(}4, 106 to 103; 110 io 115, 117, 118, 122, 137, 138,143, 145, 146.
RESL-'.ARCH REFERFNCES
t1L12 Library
65 ALR 504, Necessity for Takine 1'articular Property for Drainaee Purposes as Affectine Faercise of Eminent
Damain.
33 ALR 717, I'ower of Municipal Cnrporation to Take Out Liabiliry Insurance.
Treatises and t'rACtice Aids
]A Wash. Prac. Series § 60.4; Au[horiry--Pirst Class Gities, Codc Cicies; and Iiome Rule.
NOTbS 0F DFCIS]ONS
In (leneral 1
Cable televi5inn 6 '
Condemnation )
Contracts, generally 5
Debt 8
1)iscrimination 12
Genersl laws 4
.lails 13
Liability of public officers and ernployecs I 1
Officers and emplol'ees, liability ll .
C) 2008 Thornson RcutersXlest. T'o Claim in Qrig. US Gov. Works,
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Page 3 of 5
Page 3
V1'est's RCWA 35A.11,020
Officers ancl employees, terms 10
Yrior ordinAiices 3
Sale of pr•operty i
. Terms of officers and employees 10
Velidity of ordinance, generally 2
l. ]n general
Municipal corporations, being creatures of the stace; derivc their authority; powers, and duties from the ]egis-
lature. A"leadowdale Nei?hborhood Comminee v. Cit~~ of Edmonds (1980) 27 Wa;h.Anp. 261; 616 I'.2d 1257.
Municipal Corporacions C= 57
7tios£ counties and cities [hat have "home rule" powers (that is, chaJter cotroties, first class cities, and cities op-
e.rating under the Optional Municipal Code) liave authoriry to provide telecomrnunications services to iheir res-
idents; other cities, towns, and counpes lack this authoriry. Op.AUy.Gen. 2003, \~o. 11, December 15, 2003.
2. Validiry of ordinance, generaliy
Ciey ordinance irnposing business and occupancy tar upon revenues received from users of solid waste plant
o4mecl and opei-ated by counry but loc.ated within boundaries of city; enacted withoiit express statutory autharity;
was unconstitutional. K.ing County v. City ofAlgona (1984) 101 Wash.2d 759, 681 P.2d 1281. Licenses (E;= 5.5
Authority of city, operatuie under Optional Municipal Code, to provide ass pdrt of ordinance crea[ing local im-
provement districi that collection of assessments levied therefor may be cfeferred for economically disadvant-
aged property owners described in S 35.43.250. Op.Atty.Ge.n. 19747 N0. 2.
3. Prior orcli.nances
Ordi.nances in effeci when Auburn became a code city continued in force unless inconsistent with or repugnant
to the Optional N4unicipal Cocle or unless amended or repealed; hence, as codP ciiy, .4ubilrn cnay contract for
garbaEe disposal witliout r•estrictions lmless }.~revented by die constitution, general law or ordinanee. Shaw llis-
posal, ]nc. v. City of Auhurn 976) 15 Wssh.App. 65. 546 P.2d 1236. lvituiicipal Gorporations (C;~ 48(2); lvtu-
nicipa! Corporations (Cz;;, 226
I..egislation perrnitting member of city or town co«ncil to sanultaneously serve as mEmber of valuntetr fire de-
partmeiit of his ciry or town, notwitlistavding uicflmpatibility ofthe offices uncSer commpn-law ductrine.
Op.Atty.Gen. 1973, No. 24.
4. Gencra] laws
Duties to be performeci and nrou:ciure io be followcci by a cocie eity are governed by eenaral law unless incon-
sistent widi tfie OptionalMunicipal Coda. Shaw 17isposal, Inc.v. City ofAubum (1976) 15 VVash.App. 65, 546
P.2cl 1236. N9unicipal Corporations C= 65
Since, by their ternis; y§ 35.23.352; 35.23.353; requirin- competitive biddinE on public improveinents and
garbage col]ection and disposa1, do not aUUly to fvst-class cities, but only second; third and faunhfilass cicies,
diey are no4 "Deneral laws" within meaning of ihe Optional Municipal Cade and, he.nce, are not bindine on a
code city. Shaw Dispasal, Inc. v. City of Auburn (1976) IS Wash..App. 63, 546 P.2d 1236. Municip3l Corpora-
(D 2005 Thomson Rcucersffifest. No Claim to Orig. US Gov. Vl7orks.
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, Page 4 of 5
Page 4
West's RCWA 35A.11.020
tions C=;) 236
5. Contracis, genc3-ally
Optiona] code cities are capable of enterin- into contrae.ts without resiricbon. U. S. v. 'I'own of North RAnneville
(1980) 94 Wash.2d 827, 621 P.2d 127_ Munie.ipal Corporations (C;~ 226
6. Cable television
Cable television activity by municipaliry does not exceed broad pAwers granted by optional municipal code. Cih'
of ]ssaquah v. Teleprampter Corp. (1980) 93 Wash.2d 567, 611 P.2d 741. Telecommunications (C=, 1212
7. Sale of prAperty
Aut6ority of code city to sell real property without asking for bids. Op.Atty.Gen. 1974; \o. 25.
8. Debt
Advwice aereement; whereby property owners were to advance a pro rata share to city of assessment on eaempt
agriculiura] properry and were to receive apro rata share of all money collecte.d by city itt event property Nvas
ever rernavE.d from fami and agriculturai use, if c.hardccerized as a loan to city; were at least wizliin express
pnwer af cie), to incur an indebtedness and, hence, were not ultm vire;. Barnier v. Cin, of Kent (1986) 44
Wash.App. 865, 723 P.2d 1167. Municipal Corporations C= 870
9. Condemnativn
Code ciry had power to condemn property located outside iu boundaries for use as sedimentation-detenrion
pond, withouc rcgard to whetlier pond qualified as drain or sewer; term "public use;" as used in RCWA 5.12.030
authorizing city to condemn land far drains, sewers, or any other public use, was not limited by nrecediing spe-
cific words. City af 13ellewe v. Painter (1990) 58 VJash.App. 839, 795 P.2d 174. Eminent E7omain ~ 9; Fm-
inent Domain ~ 31
10. Terms af officers a.nd employees
Charter cisics; charter counties, nonchaner first class cities and noncharter cvde c.icics have auchoriFy to impose
limit on number of terms localiy eleeeed official caai serve. Op.Attv.GEn. 1991; Nlo. 22.
11. Liability of public officers and employe-es
United States distiict judge's fnding that city police chief ~villfully refused equal police protection cv plaintiffs
c3ici nat rcnder illegal tlte action of city in indcmnifying police chief for the ]egal fces he incurred 'ut defending
action which alleged diat he had violated plaintiffs' civil rights by refttsing to provide thern with police protec-
tion; sincc the federal coui-t found that the police chief was acting under color of state law wid ]iis office, and
since the cin, has the power to indernnifi, iis officials and ernployees for attomey fees incurred in suits resul[ine
from action or failure to act within ihe sc.ope of their duties, rhe existence of the federal judgment did not per se
render the city's indeinnificaiion action arbitrary or caprieious. I.aA9on v. City of Westpori (1978) 22 Wash_App.
215, 538 P.2d 1205. Municipal Corporations 256
12. Distrimination
0 2003 Thomson ReutcrslWest. No Clai.rn to Orig. US Gov. Works.
hitp://NNJeb2.NA,estlaw.eqm/print/printstreani.aspx?rs=WLW$.0.'-)&prft=HTMLF& fil=_top&s... 6/12/2008
, Paiae 5 of 5
Paae 5
West's RC«tA 35A.11.020
Section 49.60.330, relating to srate law against discrimina[ion and empowering first-class cities to enac[ ordin-
ances in conformity widi state iaw; does not evithdraw any of the preexisting authoriry of citics or towms to enact
ordinances to elimviate discrirr►ination or to ereate city human rights agencics. Op.At#y.Gen.1981, Nd. 14.
1;. Jails
A code ciry may coniracc with a noneovernmental entiry for the construcrion of a jdil for the ciry. Op.Atty.Ge.n.
2000. r'o. 8.
A cods city lacks autliority to enter uito an operating lease agreement for a city jail ,j,ith a nongovemmental en-
rity. Op.Atry.Gen. 2000, No. 8. A code city ]acks authority to contract with a nongovernmental eniiry to provide overall mana~ement or la~v en-
forceinent;erviccs in 1 city jail; however, the c.ity may contract with a private entiryfor other jail-related ser-
vices. Op.Atty.Gen. 2000, No. 8.
West's RCWA 35A.11.020: WA ST 35n.11.020
Current with 2008 Lecislation effe.ctive throuQh June 11, 2008
0 2008 Thomson ReuterslWest.
LND OF 170CUIvIE,\'T
0 2008 Thomson ReuterslWesE. No Claim to Orig, US Gov. Works.
htIp://web2.westlaw.conVprinUprintstream.aspx?rs=«'LW8.0D5 &prft=H"I'_N4LE&f'n- top&s... 6/12/2005
~ !s it Policy or Administration? Paee 1 of 4
F R-*So~... Municipal Research and Services Center of Washington
Working Together for Extellence in Local Gvvernment
Is it Polic,y or Administration?
1'IRSC, September 2000
Contents
■ Introduckion
■ Policy Versus AdministrationaExamples
■ Administrative Functions
■ Separation of Powers
■ Personnellssues
■ Flnance and Budget Iss+aes
■ Resolvinq Conflicts
Introduction
"All government - indeed, every human benefir and enjoyment, every virture and every prudenr act - is
founded on compromise and barter.
Edmund 8urke
Ttie aoal of this section is to ans►ver, through examples, the age-old question: is it policy or is it
administration? Tiie Municipal Research & Services Center (MRSC) has received numerous questions
about this issue over the years. Lack of clarity or agreement about this issue is perhaps the most
frequent source of conflict among local officials. There are no "black and white" answers. There will
always be some overlap beiween policy and administration. That is why it is very important for
executives, legislators, and key staff to develop ways to communicate and worlc together effectively.
Legislative bodies are most effective and successfu) when they focus on strategic activilies to guide
future development of their communities. These key policy-making activities include the development
of a vision for the comrnunity, the adoption of community goals and objectives, the adoption of
comprehensive plans, decisions about which programs and services will be provfded by the local
government, and the adoption of budgets and capttal facilities plans. These are clearly policy matters.
Back to Conkents
Policy Versus Administration - Examples
Councils and commissions have the powers to enact laws anci policies consistent with state law, usually
through tfie enactrnent of ordinances and resolutions. The chart below lists actions fihat city councils
and commissions can take, followed by a brief description of the responsibility of the mayor, city
manager or administrator. Ttiese also apply to county councils and commissions; however, countles
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. Is it Policy or Administration? Page 2 of 4
have a number of independent elected officlals whose functions and cluties are defined by either the
state constitution or state statutes.
1Policy. Administration.
Enact a budget. Propose budget. Spend within budgetary
limits.
Define the powers, functions and Fill positions consistent with local
duties of officers and employees. lordinances.
Fix the compensation of officers and Administer payroll consistent with budget
employees. and compensation plan adopted by
council.
Establish the working conditions of Insure that proper worlcing conditions are
officers and employees. provided.
Establish retirement and pension Administer pension and retirement plan.
systems.
Adopt ordinances regulating local Implement and enforce ordinances.
affairs.
Set fines and penalties for violation of
Collect flnes and enforce penalties.
ordinances.
Enter into contracts. Propose contracts. Manage approved
contracts. Enforce contracts.
Regulate the acquisition, sale, Negotiate terms of acquisition and sale of
ownership, and other disposition of real property; carry out acquisition and
real property. sale.
Decide which governmental services Oversee the day to day operation of
will be provided. Adopt budgets for programs and services provided by the
their provision. local government.
Establish public utilities. Manage provision of utility services.
Grant franchise for the use of public Enforce terms of franchise agreement.
ways.
License, for the purpose of revenue Administer business licenses as provided
and regulation, most any type of
by council.
business.
Set tax rates and user fees consistent
with state laws. 11 Collect taxes and user fees.
Approve claims against the city or Bring lawsuits, with legislative approval.
county. Propose settlement of claims. Pay
approved claims.
Enter into agreements to accept Propose agreement. Carry out terms of
igrants and gifts. the agreement.
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Ts it Policy or Admiiustration? Pa;e 3 of 4
Back to.Contents
Administrative Functions
The mayor, city manager, or county executive is the chief executive and administrator in charge of
carrying out the policies set by the council ancf enforcing local laws. Ttiey are basically in charge ofi the
day-to-day operation of the city or county, including the supervision of all appointed ofFicers and
ernployees in the performance of their ofricial functions. The chief executive is In charge of hinng and
flring aII appointive officers and employees, subjecfi, where applicable, to laws regarding clvil service.
Councfis of first class, second class, and code cities have some authority to require confirmation of the
mayoral appointments of certain officials; councils may not, however, require conflrmation of firings by
the mayor. Town councils do not have this power.
For the most part public agencfes are administratfve; they must follow policies, laws, budgets, and
other rules. In order to prevent abuses of power and to provide predfctability, administrative functions
have limited flexibility or discretion. For example, the enforcement of building and land use codes are
generally ministerial in nature. If appllcants comply with requirements as set forth in the code, they get
their permit. However, there are certain types of decisions, such as rezones, that must go to the
Iegislative body.
On many matters, citizens will no doubt call councilmembers. In these situations, it is best to pass on
the complaint (through the mayor or city manager), let staff deal with it, and report back to the
councilmember on Its disposition. Give the staff a chance to do their job. Treat ciLizen comments,
complaints, or requests as feedback on basic service delivery systems. These are opportunities for
service "tune-ups" as part of a continuous improvement effort.
Bi~_ckso Contents
SQparation of Powers
Conslstent with the doctrine of separation of powers, the council is not authorized to interfere with ihe
chieF executive's administration of government. Councilmembers may not give orders 'Lo department
heacfs or to other employees. In council-manager citles, this prohibition is established statuiorily. The
council must work through the city manager on maCters of city administration, except that it may deal
directly wlth officers and employees under the manager's directlon "for the purpose of inquiry." To do
its }ob, the councfl needs information on how the city or county is operating. The chfef executive must
provide timely, useful information evenly and equally to all councilmembers - either direcCly or through
subordinate officers and employees.
On the issue of communication between the council and city ofticers and employees, the mayor may
not prevent council members from gaining Information although he or she could reasonably r2gulate
the inquiry process. If councilmember inquiries unreasonably take stafF away from their duties, the
mayor may require those inquiries 'Lo be channeled through the mayor or a department head, if it can
be done without unduly encumbering councfl access to inforrnation.
Back to Contents
Personnel Issues
One arza that is a frequent source of conflict is personnel. The council may not like a mayor's
appoint'ment to a particular position, or it may be dissatisfled with the performance of certain officers or
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Is it Policy or Adminisiration? 1'aae 4 of 4
employees. An emQloyee may complain to anc6 s2ek relief from the council about some aspect oP
employment. On the o'Lher hand, the mayor may believe thafi certain personnel policies interfere with
his or her supervision of employees and hiring and firing authority. The mayor may direct that all
communicatfons with ci[y staff go through the mayor's ofrice. The council, in response, may feel that
the mayor is unlawfully restricting its access to city personnel for information purposes.
The remedy for some of these situations may be to review the respective roles of the mayor and the
council and to undeTStand the limitations of their respective authorities. For exampie, iF the council is
not happy with a mayoral appointmenfi, there may be nothing the council can do directly within the
bounds of its authorifiy. However, if it has the authority to confirm a particular appointment, it can
reject the appointee and force the mayor to choose anoiher. If the council does not have confirmation
authority, it can express its dissatisfaction to the mayor, but it can do nothing else with respect to that
particular appointment. The council may, however, provide for a detailed personnel system establishing
specific qualifications for positions, requiring pu6lication and public posting of job openfng
announcements, and the like. Moreover, the mayor, at least in code citfes, is required by statute to
make appointments "on the basis of ability and training or experience."
Sirnilarly, if the couneil feels that an off'rcer or employee is performing poorly and should be disciplined
or fired, it can say so to the mayor, but it has no power to do anything else. Although it controls the
salaries paid to city officers ar►d employees, it may not lower a salary with the purpose of cousing the
person holding that position to quit. A rule fo follow is that tne cvuncil (and the rnayor) may not do
indirectly what it cannot cfo directly.
Back to Contents
Finance and Budget Issues
Another area that often provides ground for conFllct is finances and budgets. For example, the mayor
may not take full advantage of the budget authorized by the council. The councfl may authorize a
cerfiain position at a certain salary, and the mayor may decide not to fill the position or may do so at
half time and half salary. The mayor may cite rinaneial difficulties, such as revenues falling short of
projections, and rnay conclude that the city cannot afford someone filling this position Full-time. The
councfl, on the other hand, may not agree that the conditions warrant such action or may determine
that a different cost-saving measure is appropriate and should be instituted.
Resolution of this type of issue may prove particularly tricky. Although the mayor may not pay an
employee less than is authorized by the council in the budget or separate salary ordinance, under
certain Financial circumstances, the rnayor may be able to partially fill aposition, thus proportionately
reducing the salary for the position. Legal authority, however, is hazy on such issues. The best strategy
would be for the mayor and the council fio work out a mutually agreeable accommodation.
Back to Contents
Resolving Conflicts
In situations where it is not clear whetiier the executive or the council has the authority to act, counsel
of the city attorney or that of a MRSC consultant could be sought. Understanding roles is a necessary
step in resolving many conflicts. When roles are not clearly defned, cornpromise may be in order.
Statutes and case law may not provide a ready ansver. All sicfes need flexibility to meet the challenges
of effective local governi-nent that is responsive to public needs. Local government works best when
local ofAcials work well together and build relationships based on honesty and trust.
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. Roles and :12.esponsibilities Page 1 of 4
•~.SMunicipal Research and Services Center of Washington
Working Together for Excellence in Local Covernrnent
Roles and Responsibilities
1IR$C, September 2000
Contents
■ Introduction
■ Legislative Bodies
. [:_::xecutives
■ 1Nhat_Staffs Need to Know about the Needs olf Elected_ Officials
■ 1Nhat Elected Officials Need to Know about ~he Needs of Staf~
Introduction
"Managemenr is doing things rrghr. Leadershfp is doing the right rhings."
- Warren Bennis
Constitutions, charters, statutes, and ordinances are the sources of authority for elected officials and
staff in the policy-making process. A clear understanding of roles and responsibfllties can increase the
effectiveness of participants in the policy-making process. Whether legislative or executive, the goal is
to serve the cornmunity. In addition to reviewfng the powers of the legislative and executive branches
of cities and counties, this section provides practical tips on how to avoid conflicts between key players
who are in administrative and policy-making positions.
BaCk to _Contents
Legisiative Bodies
Gity, town, and county councilmembers and county commissioners are legislators. Together they
constitute a leaislative body whicn is given authoritly by the state constitution and state law to make
local law. Local legislative authority is generally limited to what the state specifically grants to counties,
cities and towns. However, code cities, charter ci'Lies and charter counties hGve "home rule" powers
which permit them to exercise authority not specifically granted; provided that the state has not
specifically prohibited that local authority.
1Ne elect legislators to make policy decisions and enact laws on our behalf. Except through the exercfse
of the initiative and referendum, we do not practice direct democracy. Our political system is a
representative democraty. Our representatives may come from a variety of backgrounds: farmers,
teachers, doctors, lawyers, business owners, etc. The essence of the legislative process is the give and
take of different interests, and the search for a compromise that is acceptable to khe majority. Often
there are elaborate mechanisms to fnvolve citizens and interest groups in the poliry-making process.
However, in the final analysis, legislative bodies make the decisions. Those who zre not satisfied with
the outcome can always seek to change the representatives by voting them out of offlce. But they must
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Rales and 'Kesponsibilities Page 2 0f 4
abide by the decisions whether they like them or not.
For rnore on legislative bodies, see:
."Knowinq Your Roles Resolvina and Preventinq Conflicts Between Mayors and Counclls," MRSC
■"Your Responsibilities as a Commissioner," MRSC, September 2000
■"Resolving, and Preventing May_or-Council ConflicL." From Councilmember's Handbook, MRSC Repori
No. 48, January 2000
■"The Job of the Councilmember." From Councilrnember's Handbook, MRSC Report No. 48, January
2000
6ack to Contents
Executives
While mayors and city managers oFten develop and propose policies, their basic authority is to carry
out the council's directives and to implement the policy adopted by councils. Commissioners serve both
legislative and executive roles. The relat9onship of the executive to the legislative body varies by form
of local government.
■ Mayor-Council Form of Government. Policy and administration are separated. All legislative and
pfllicy-making powers are vested in the city council. This is also true for charter countfes that have
county councils: King, Snohomish, Pierce and 1Nhatcom Counties. Administratlve authority is vested
in a directly elected mayor or county executive. Mayors in second class mayor-council and code
mayor-council cities may veto ordinances but the mayor's veto can be overruled by two-thirds vote
of the council.
■ Council-Manager Form of Government. All legislative and polfcy powers are vested in the city
council. The council employs a professionally trained administrator to carry out the policies it
develops. The city manager is head of the administrative branch of government. The mayor is
usually selected by the city councll from among its members, although in a few larger cities (e.g.
Tacoma, Spokane, Vancouver, and Olympia), the voters directly elect the mayor. The mayor's
responsibilities are primarily to preside at council meetings, act as head of the city for ceremonial
purposes, and for purposes of military law. The mayor votes as a councilmember and does not have
any veto power. Political skilis possessed by the mayor can be helpful in bringing parties together in
the policy development process. Currently, no Washington counties use this organizatlonal model.
■ Gommission Form of Government. In the commission form of government one elective body
includes the executive, IegislcCive, and administrative Funckions of government. There is only one
VJashington city (Shelton) currently operating under this form of government. Thirty-five Washington
counties have commission forms of governrnent. The board of cornmissioners sits as a body, passes
laws, and makes policy.
1fVhile much of this information is relevant to counties, there are some factors that make the policy-
making process of counties difrerent frorn cities. Elected county offices are partisan; candidates declare
party affiliation when they run for office. All elected city ofhces are non-partisan. County comrnissioners
share power with other elected county officials such as the assessor, auditor, prosecuting attorney,
sheriff, county clerk, and treasurer. There are oniy a handful of INashington cities that elect anyone
other than mayors or council members. An extensive treatment of the responsibflities of commissioners
can be found in the New Commissioner FBandbook, Report No. 43, Municipal Research & Services
Center, September 1998 (vlew this publication in HTML on the Web or View/Download this publication
in Adobe Acrobat (PDF - 474kb)
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Roles and }tespansibilities Page 3 of 4
,
The separation of authority between the legislative body and the chief executive in the mayor-council,
county executive, and council-manager forms of government is very sirnllar. In ihe mayor-councll form
of government, the mayor is the ehief administrative officer who is responsible for all administrative
functions. 1Nhen separately elected, the county executive serves as chief administrative officer in those
counties that have a council (e,g., King, Pierce, Snohomish anc! 1Nhatcom Counties). In the council-
manager form, the appointed manager is the chief administrative officer. The council creates the
departments, authorizes positions, and fixes compensatfon. The council may not direct the hiring of any
employee by the chief administrative officer, although local ordinances may call for council confirmation
of appointments in the mayor-council form of government. The mayor has the power to appoint and
remove all appointive off'ic2rs and employees consistent with the laws ofi the city. This au'Lhority to hire
and Flre may be delegated to department heads. In the council-manager form, the manager supervises
city business, appoints and removes department heads and employees, executes laws, recommends
activities to the council, submits reports, submits a proposed budget, and performs other duties
directed by ordinance.
Niayors, county executives, city managers, and staff do not make polfcy decisions. However, they have
strong influence on the policy-making process and its resultant decisions. For example, they propose
budgets, oversee the studies and analyses carried out by staff, and make policy recomi-nendations to
councils. Through tneir ongoing contacts with key interest groups, elected and appointed chief
administrative officers and dep2rtment heads influence (and are influenced by) other participants in the
policy developrnent process.
See als4:
■ Itilayor's Handbook, MRSC Report No. 44, February 1999 - This handboofc is intended to serve as a
guide for mayors in 1Nashington citfes and towns operating under the mayor-council form ol'
govemment.
VieSvLCZownlpad this publicdCi9n In Adobe AcroWt_(eDF - 452k4)
6ack to Contents
What Staffs Need to Know about the Needs of Elected Officials
Policy development processes are most efFective and productive when key players work well together.
Each party has a role to play and has defined responsibilities. Conflicts often develop when the
legitimate needs and roles of one party are not understood by another. Here are sorrie suggestions that
might make the policy development process more effectfve:
■ Elected officials have different needs than staff. To be eftective, they rnust be responsive to the
needs of their constituents. Concerns for "fairness" and "mfnority views" may outweigh issues of
effectiveness or efflclency.
■ Elected officials want to know where various constituent groups stand on an issue. This
information is important in arempting to balance the conflfcfiing values that often come into play
during the policy-rnaking process.
s Elected officials do not like surprises, particularly at the end of a long and arduous
process. (Who does?) A staff member's credibility can be seriously undermined if key interests
introduce relevant new information at a final public hearing before action is tafcen. Councilmembers
will think that the stoff has not done thefr job of getting this informa'Lion considered earlier.
v Elected officials like to have choices. Nobody likes to feel backed into a corner where there is
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Roles aud Responsibilities Paae 4 of 4
only one solution. A brilliant staff proposal may not carry the day if other chofces were not seriously
considered.
o Staff can be an enormous help by showing how compromise can be reached on thorny
issues.
■ Staff can make everyone on the policy/administrative team look good by sharing credit.
134ck to Contents
What Elected Officials Need to Know about the Needs of Staff
Some key staff belong to national and state associations ihat hold members to professional and ethical
standards. For example, many ciiy managers and administrztors belong to the 1Nashington City/County
Managernent Association and are bound by the International CityJCoun _ty Mana emerit Association code
of ethics. Asking start to help on certain political matters, s4ch as election and ballot carnpaigns, puts
thern in a difficult positiori. State laws also significanily limit the use of public resources for campaign
issues.
Stan will sometimes assert that "we can't do this because it viola'Les technical standards." 1Nhile these
standards are legitimate aztempts to address important public goals, they often do not fully retognize
other community values. For example, street design standards favor the rriovement of traffiic. If the
street is not critical for the rnovement of large traffic volumes, there may be tivays to design the street
to achieve other community yoals by providing wider sidewalks, bike lanes, and space for recreauonal
and social activities. (However, access may be lost to certain categories of state or federal funds if
standards are not rnel'.) Explore thesz issues with staff and challenge their creativity.
Competent staff can be at'remendous help in developing ideas, structuring good processes, and
generally keeping you out of trouble. Get to know and trust key staif.
Treat each other respectfully. Otherwise the ofricial may not get that extra efforfi that can make a
difference in effectiveness.
Avoid public criticism of each other; it only makes for martyrs. If there is a legitimate concern, discuss
the matter privately. If you are a councilmember, rernember that you do not have the authority to
direct employees. Discuss your concerns wiih ihe mayor or city manager. If on the staff, ask for pollcy
clarification if you are not sure what was intended. _
Show appreciation for good work. Say "thanks." Share credit.
Another way to improve policy-making and decision-making is to better understand the role of team
mernbers.
Back to Contents
htim://vv~v~v.nusc.orU/Subiects/Govenlanr.elle,gislative/roles.aspx 6/12f200$
Possible goals for Police Services
Bill Gothmann, 6-12-08
General Law Enforcement Goals:
Goal 1. To reduce incidence of gang confrontations at the Valley Mall.
Measurement: Track the number of confrontations between officersJsecurity officials and gang
members.
Method: Provide a police presence at the Mall
Cost: 1$ per year
Goal 2: Increase the number of burglary recoveries by 5%
Measurement: Track burglaries and the number of recoveries.
Method: Assign one officer to burglary detail
Cost: If transferred, none. However, effect upon overall goals must be identified.
Goal 3: Reduce the number of speeders in Spokane Valley by 10%
Measurement: Number of speeding tickets
Method: Permit Spokane Valley residents to participate in the traffic school run by both
Spokane Police and the Spokane Sheriff
Cost: None
Goal 4: Increase the reports received by the Sheriff by 50% through the Crime Check system.
Measurement: Track crime check reports.
Method: Implement Crime Check
Cost: Covered by the 0.1 % increase in taxes
Goals for Spokane Vallev:
Goal 1: Increase our level of partnership with the Sheriff's Office. (Note: this is a performance
goal, not a financial goal).
Measurement: Number of staff meetings attended; development of partnership methods
protocol
Method 1: Have the City Manager and the Police Chief attend the Sheriff's staff meetings.
Method 2: Develop specific partnership protocols between the Sheriff and the Administration
Goal 2: Develop goals for the Police Department
Measurement: Goals written and approved by the Council
Method: The Administration, including the Manager and the Police chief, will develop goals for
the Police department. In addition, we will conduct a focUS group of citizens to review these
goals. Finally, these goals will be presented to the Council for their adoption.
Goal 3; Inform the Council concerning policy issues and Law Enforcement
Measurement: A verbal and written report.
Method: Have the Police Chief give an assessment of Law enforcement policy issues once
every six months to the Council and provide Council with policy options, along with rough
estimates of the cost of these options. Once this is done, ask the Manager to cost out the
policy options selected by the Council.
~i21/1a2 ~/71/v~'~l ~
1NASHlh1GTDN STATE CITIES COlVIPARISOIJ
(Surrrey April 2008) ~ . $Pakane Valaey Burfen, 1nJA ~S hareline, WA 'Lakewood, WA Federat1Nay, WA
, - - -
_
Contract for Police Services 1'es 1'~s Yes Na afJo - --T
Which P41ice Services All ~Ail
- - - _ =z -
Current Polioe Sudget 1 3,906,413 ~.957,40~ T~fJ p47a 4L?J~¢. ~17,333,333 ~20,039,682 - ~
Population Served 2G07 1$8,280 31,418 58950 87,39O
SqUare PAiles Served 138 ~7,5 19 2:2.48
Miles of Roads - - 522 _ _J100~T ~ - - 181 _ 1234
Corr~mission~d Officers ~ ,,101.267 F7E's FTE's 105 ~737
- ~ - .
~upport Pefsonnel' 13 ~ ~7~'s i~~
- - ~ ~ - -
First Line Supervisors 10,5 FTE's T 4_F-fE's ==-414_ S 19
[Nanagernent Personnel 4.767 FTE's 2 FTE's 16 - V9
2006 Calls for'~ervice 88,261 112,476 60.477 64,902
_ - - = - -
0 07-Calls far Service 64,$57 - 9,134 57,414
2006 Self Initiate[i Calls p9.202 19,360 _ fVO# Tra cked
2007 Se1f Initiated Calls 28 ~9,134 118,778 NolTracked
- - -
2006 DetecGve 1nvestigations_ ~2.888 845 f~at 7rack~d 1,248
2007Detectiveln+~estigations 3,500 997 Ned 1,158
- -
2046 Tra#fic Stops 11 T,85B I NiDt fracked Q,459 14,916
- - - - - - - - ---a---~
2047 Traffic Stops Not 7eacked . p 12,246 17,393
• -
0-0 _ _ _ - - T-
BT ra_ fficArrests 91191 '2,595 i 1,160 b7,802
2007 TrafficArresks 8,549 2,264 12,150 2006 Arr'es#s 2.928 1,71$ 3,400 6,015
2007 Arresks ~ 2,868 - 1,707 - - 3403 6,454 ~
- a= -
1 or 2 Person t8rs 12 Gtaveyard, 1 rest 1
- - -
Provide 24 Nour Coverage ;1'es Yes Yes
2004 I.lC_
ft's
- _ ---I-- • I
~Enmes lndex F2ate per_i,000 663_8 70,4 46 77.5 65,1 - r- -
Violent Crime Rate per 1,000 3,1 -=5_5 2,9 ,8,6 3.3
Properly Crime Rate.per 1,000 160.7 64,9 d43.1 69 U6~.7_
_ • -
i~+lurder 5 2 3
- - - - - -
Ra~~ 33 20 3~5 I47 150
48 62 1121
Robbery - - - ; -
- _ ~~7
A99 -Assau1# _ 177 h87 I63 318 109
Arson 26 17 = _ 34 95 25
- - -
Burglary ~928 ~.370 ,447 943 - 759
- - - -
Larce~y 31613 ~ 1,233 ~ 1 ,417 U2,568 3.257
_ _ r,
Motor Vehide Theft . ~527 „375 ,525 ,1,118
gtb°eS ~~eA ~ 1.5'7- 11 5'0 4 9*72,
4l3QI20O8
s~
- - - - _ ~
WASHINGTON STATE CITIES COMPARISON
(Survey April 2008) '
Total Cleared 1940 _ 1340 `_1235 630 823
Juvenile Cleared ,261 3 4 110 , 4242
2005-UCR's
Crime Index Rate per 1,000 '502 71.6 47.7 75.4 75.7 Violent Crime Rate per 1,000 3.9 !15.2 r:2.4 _I8.3 T 3 7 T_
Property Crime Rate per 1,000 46.3 T T_~_ 166.5 45.4 67 72.1
Murder ~ 1 ~ s2 0 ~ 3 6
_Rape ~33_ _ 24 21 61 ' 55
' Robbery ___~_4 v 55 152--- 42 124 153
A Assault 242 82 61 303 ~ 101
99 - ~ - - - -
Arson - - _ 34 a ~ 26 ~28 27 25 ~
Burglary 629 1340 1468 872 ` 800
Larceny 12,708 1,090 1,358 2,488 3,786
- • -
Motor Vehicle Theft 563 _ 607 , 528_ Y~ ' S58 11573
Total Cleared 1963 206 266 ~ 543 804
Juvenile Cleared " 1202 6 ~ 2 81 ~229
Domestic Violence Offenses 1825 ~304 250 _ - 1,296 641
2006 UCR's t _ _ i ~ - -
- - - ,
Crime Index Rate per 1,000 u44.4 67.5 41.8 72.2_ 64z
Violent Crime Rate per 1,000 3.4 T 5.8 3 1 2.6 87 ' 3.8 _
- - ~ ~
Property Crime Rate per 1,000 41 61.8 139.3 63.5 60.2
~ , _ - ~
Murder 1 2 0 7
Rape 18 14 21 54 64 _
Robbery 56 ~ 59 "60 1147 146
Agg Assault 1221 104 54 '304 ~119
Arson 4 _ 1 21 27 - 15 26
- - - - - - _ _ _ ~
Burglary ~581 1383 381 785 _ 763
Larceny 2,268 f 1,009 1,226 2,409 3,230_ _
_ Motor Vehicle Theft w678 J507 441 ~ r536 1,199
Total Cleared 715 236 ~ 262 `540 R ~ 681
Juvenile Cleared 39 4 1 110 176
9 5 291 248 -11,151 661
Dornestic Violence Offenses ~6'
413012008
~
WASHINGTON STATE CITIES COMPARISON ,
(Survey April 2008) Vancouver, WA ,
No
31,278,405
160,800
48.5 ~
540
207 36.25 FTE's
36 - -
18
89,602
89,682 ~
14,507
15,825
874 + Regional
985 + Regional
40,642
38,838 r=
18,015
20,007
7,815
8,091 1
Yes- - - - = 3
4.2 55.3
9 113 - -
149~
371
.44
1,245 - - -
5,989
1,177
a/soi2oas
WASHINGTON STATE CITIES COMPARISON r"
(Survey April 2008) ' 1,960 279
55.5
4
51.5 .
8
111 T
161
346 25--
1,218
5,573 •
1~,152 '
1.735 -
238 =
1,412
' 45.8 -
3.8
42-==
- -
4
.
103
139 ----F
f
352
54
1,001 f
4,584 -
942 ~ - - -
1,433
248
1.199 ---s
4/30/2008
`
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e
kok n
Spo_..,
~a11ey
,;o* 11707 E Sprague Ave Su1te 106 ♦ Spakane Vallry WA 99206
509.92 1. 1000 ♦ Fax: 509.921.1008 ♦ cityhalt~pspokanevalley.org
Memorandum
To: Mayor and Councilmembers
From: Dave Mercfer, City Manager
Cc: Senior Steff
Date: June 10, 2008
Re: June 14, 2008 Retreat Agenda
Attached is a supplement to Satunday's Agenda for agznda item #9, which suppicment was juyt
received today.
Rcsponst to bratt Ptrformancc Audit Pagc I of?
. ~ _ . , . ~ ~ ~ ~ . . . . . , . . - . . . . .
1_~. . . . . ' . . ~ . . i .
Leaders af fhe Core of Better CommUnities
Proposal
Assessment of Law Enforcement Services
for
The City of Spokane Valley, Washington
May 27, 2008
Submitfied by:
• ICMA Consuttrng Services
IntErnational City/County Management Association
777 Norfri Capitol Street, NE - Suite 500
Washington, DC 20002
aaarnett@icma.org
202.962.3585
_ L . , •
- . , - . . .
_ . ~ . . ♦ . . _ i _ . .
' _ _ ICMA
Leaders at the Core of Better Communities
May 27, 2008
Mr. David Mercier City Manager,
Gity of Spokane Valley
11707 E. Sprague Avenue, Suite 106
Spokane Valley, WA 99206 Dear Mr. Mercier: The Public Safety Services tcam of ICMA Cansulting Services is pleased to submifi
this proposal for an assessment of law enforcement services to the City of Spokane
Valley, Washington.
As you know, ICMA has provided direct services ta local govemments nationwide
for decades, which have helped io improve the quality of life for millions of residents in the United States nnd abroatl. . This proposal is specifically designed to provide your city with a thorough and
unbiasEd solution to the questions facing your community regarding ihe delivery of
policE services. Because this issue will have a dramatic impact on the City of Spokane
Valley for many years, and because the City must have complete confidence in the
outcomE of our report, we have as.semblEd what must be considered a premier team of
subject matter experfs with nationally rECOgnizEd expertise in a wide range of law
. enforcemenfi related areas.
ICMA is focused on fully addressing all of the issues that should be studied in
advance of the decisian making process so that you and your elecfed officials will have
a complete, in-depth review not'only of the current levels of police services but what the
options are for the futurc.
Our Entire project management staff has decades of experience supporting
clients in the local'government, state and private sectors as well. Because of ihE
expertise that each of fhese persons bring, you Can ex,pect the highest qualify solution at
a cost equal ta approximately that of one full time police officer with benefits for one
year or less.
From an enterprisE-wide perspective, we guarantee an honest-broker solution fdr
yourjuriSdiction's Challenge. I, along with my colleagues at ICMA, greaily appreciate
this opporfunity and would be pleased to address any comments you may have. You
may contact me at 202.962.3585 or via email at agarnettCaicma.org.
Sincerely,
A.T. Carnett
Senior Manager, Marketing and Operations, ICMA Consulfing Services .
2
' ICMA Back rcLound .
~ International City/Counfy Managemenf Assoclofion (ICMA)
1
The International City/Counfy Mpnagemeni Association (ICMA) is ttlE premier local
govemment leadership and management organization. Since 1914, ICMA's mission has
been to create excellence in local governance by developing and fosfiering professional local govemment managemEnt world'wicJe. Toward ihis End. ICMA provides an
iniorma'lion clearinghouse, technical assistance, and training and proFessional
develapment to more than 9,100 chief appoinfed administrators, assistant administrators,
and other individuals finroughout the world.'I'he organization's resources and services
reach thausands of local, state, and federal government personnel, academics, privafie
sector professionals, citizens, and other individuals witn an interest in Effective management at the local government Ievcl.
ICN1A's members represent the administrative cenfer of professional municipal, county,
and regional services that affect millions of urban and rural cifizens on a daily basis and
are responsible far the leadership thal ensures strategic economic growth and
management of puhlic services and infrastrucfiure planning, inveslment, and
developmEnt. Every day, local gavErnmenf managers dEtermine policy, programming,
funding, and strategic decisions that impacfi the ability of local resources fo dEal with
situations of all types, including the management and operations of public safety and
legal departments. Local govcmment managers serve as the "hub of the whECl,"
coordinating effo+'ts and implementing strategies for maximum effectiveness and
efficiency:
ICMA ConsuMing Services
The ICN,A Consuffrng Services 1eam helps communiiies solve critical problems by
providing management corisulting support to local governments. One of ICMA
Consulting Services' expertise is public safety servicES, which encompasses thE following
area5 and beyond: organizational development, leadership and ethics, training,
assessments of calls for service workload, stafFing requirements analysis, designing
standards anci hiring guidclines for police and Fire chief recruitment, police/fire
consolidation, community ariEnted policing, and city/county/regional mergers.
The ICMA Public Safety Services team is led by LEOnard Matarese, director of public
safety services, ICMA Consulting Services. Leanard, along with a team af highly
experienced, hand sElected consultanis suppvrt a number of public safety services
projects farjurisdictions nationwide.
Qualifications •
Among ICMA's many activities, it assisis local governments tnrough a vpriefy of pragrams
that focus on specific local government concErns including public saFety and fire and
palice protectiori. ICMA's focus is•on the manogement perspective in organizing and
operating these areas. For this purpose, ICMA Caisulting Servrces acts as an objective
and irusted broker tapping inta the knowledge of the associption's membership base
and combining experfise from other appropriate experts to offer innovative ideas, lessons leamed, and leading practices to comrnuriities facing siinilar challengcs. The program
provides practical advice and resources that locnl govemment managers and staff
need to improve services and sErvice delivery in iheir communities.
Proiect Understandinq Based Upon Site Visit
Based upon a site visit conducted by Leonard MatarESe ICMA Consulhng Servrces offers
the follawirig synopsis of Spokane Valley's current needs.
3
'rhs city wishes to determine the effectiveness of a relationship between the County Sheriff's Department of Spokane Valley versus understanding fhe ramifications of .
creating its own police department. In both cases, the city wishes fo have in place ~
processes and procedures to measure service performance. This will involve provision of
quantitative methods to determine the appropriate staffing levels within the city°s fiscal
constraints and the city's policies regarding levels of public safery service.
7he Cifiy of Spokane Valley currently contracts for police services with the Spokane
Couniy Sneriff's Deparfment. Tne primary objective of this project is to present to the Cify
wiih an unbiased review of the positive and negative ramifications of renewing ills .
contract with the Sheriff's Department versus esfiablishing an indEpendenfi police
deparfment. The city also has an interest to introduce routine performance
mEasurement and to establish current levels of performance and workload in police and
to identify opportunifies for improved performance. Based upon the information generatcd by ihis projecfi the city olectEd officials will be
positioned to establish a long range strategic plan for the delivery of police services fo the community.
Proiect's Scope of Services
The City of Spokane Valley currently contracts for police services with the Spokane
County Sheriff's Department. The primary objective of this project is to present ta the City
with an unbiased review of the positive and negative ramifications of renewing its
contract with the Sheriff's Department versUS establishing an independenfi police
department.
,
The project will consist of nine S1'AGES with a iotal lifetime of 120 days. The proposed
timeframe is from July 10 - November 1 Si. Some of the stages will occur simultaneously.
ICMA will assemble a team comprissd of ICMA professional staff as well as subject
matter experts. Each stage of the project will be led by a SME, assisted by other
members of the team.
A breakdown of wraf will occur in each stage follows:
Stage One (Completed) - Preliminary On-Site Assessment. The on-site assessment
allowed ICMA to better understand the city's operations, tour the city, visit police station
and to mest with the sheriff and command staff.
Stage Leader: Leonard Maiarese
Stage Two - Workload and Deployment Analysis - ICMA will provide Spakane Volley with
a current, highly detailed workload and deploymEnt analysis. Utilizing operations
rESearch mathematical approaches this stage includes analyr.ing thc city's calls for service demand as well as officer initiated activities; officer deployment, perfarmance
. measures, staffing levels (right sizing), and work schEdules. n full response time analysis
will be provided as well. This report will be provided with detailed charts and graphs as
well as in depth written analysis. .
Stage Leader: Kenneth Chelst, Ph.D.
Stage T'hree - Police Line Operations Assessment - Review in detail the daily field
operations of the agency, communications and record keeping, comparing if to best
practices. This stage includes a review of command and cantrol of patrol forces,
spECialty squads, criminal investigations, Grime scene forensics.
Stage (three) Leader: James Gabbard '
Stage Four - Police Staff Operations Assessment - This sfiage will review in detail the 5taff
operations utilized by the Sheriff's Office to provide services to the city, including
4
comrliunications, equipmFni and fuc-ilifies. uniforms, weopons, rndios, etc. It wiil identify
tne equipment and facilifiies whfch would need to be acquired by the city shouid an
~ independent department be established. Special attention will be given to ldentificaiion
of sbfe of the arf technologles currenfly ava1able to police Icaders. Addtionally,lCP,4A
will explore regional possibilities with the City of Spokane and SherifPs afflce and
other municipal entitfes that are In ciose enough proximity where it makes sense to
partner.
Stage Leader: Wil(iam Berger, Esq.
Stage Five - Financlal Anatysis - Review current financial sitvafion and costs ta maintain
cuRent department. Determine opQrational ImpQCts. Qevelop the other start-up and
operating costs and laok at options for financing the faciGfies and equipment costs to
amve at annual operating costs fhat wouid reflect a typical city police deporlmenl
operafian. This stage lncludes reviewirtg fhe c+ty's sustainable funding, fincmcial impricts
and budgetory considerat(ons.
Stage Leader: Patriclo Keriles, Vice F'resident 8 Director of Quantitotive Serviccs,
Cansulting Services. Springsted Inc.
Sfage Slx - legot/Risk Managemen! Analysb - Review of current and tuture contraci
anangemanh. This stage inciudes risk monagement and determining current and hrture
liabxTifies.
Stage Leader. George Ayfesworfh, Esq.
Sfage Seven - Community Pollclny/ Interna! Affalrs/ Victims Servlces - Review oi exisiing
systerns fo provide citizen acce5s to comp(aint system, intemal oftairs pracesses,
community policing efforfs and crime victim services.
Stage Leadef: Christine Cole
Stage EIgM - RecruFFment/SelecHon - Current Sherifi's Offices practices wiU be rQViewed
and compared fo best practices with parficular attenfion to idenfificotion of recxviting /
selection activities deslgned to attroct and retain hlgh service oriented otficers, utitiang
systems developed by the Department of Justice. Community Oriented Police Office,
Miring in ihe Spirit oi Service Project (HSS). Adcfitionally, tfiis stage will focus on
promotional processes cansistent witfi the l.aw Enforcement lendership Initiative (LELI)
projecf of the Department of Jusfice, Bureou of lustice Assistance.
Stage Leade+: Leonard Mvtarese
Stc:ge Nine - Hhlcs/TredNng - Current practices will be viewed with an emphasis on the
level of commitmenl made to strengthening ethics component of in-service training
acflvities. Additionol focus will be plQCed on factical and operational haining and
developing problem salving capabilities wiihin pQtrol force. Outfine witl be developed
describing 'bes) practices" iraining approoch to te odopied with ostablishment ot new
ogency.
Stage Leoder: Frank Sttaub, Ph.D.
Onoortunltles tor Improvement
To examine whether or not patrol resources are etficiently deployed over 24-7 time
period, we will graph deployment levels against workloads by time of day, day of week,
and by patrol areos. We will anatyze and graph police responte time by call priority level
and shiff to identiiy significant pattems/differences in pol'ice response. These response
time anolyses will also separate out and anatyle the components ot potice response -
call queue time, havel time, and time on scene. Consequently, o series of treRd charts.
r-naps and dala tables wiU descrfbe police response time in detail and YA'p provide the
variobles needed for developing a plan bQSed on Opercrtions Research methods.
We wAI observe and meei with d'tspatch operations to determine the extent of besi
practices employed fo efficiently dmpatch potrol unih. We wfll d'acuss and document ihe
exfent that the police patrol management is applying principles of performonce bosecl
5
rrionogement and continuaus imE}rcrvemanl to efii;.+entfy util;ze police resources. We will
explore with the potral division, detectfve division and special operations strategies for
improving crirne prevention and crime solution activities. We will then employ Operations .
Research modsls o6 police patrol fo determine how much response fime ond proactive
pa;rc,1 might be impraved with better afignment of resources ond workloads.
Patrol Force - Analvsis of Data and Patrol Force Plonnina
Background - Popce Patrol -
F'olice departments utilize their potrol (orces in two mQCfes: reactively to respond to cc>>is
for service and proacfively to address crime problems ns well ongoing nuisance issues.
(Sc3e Figure 1.) Detectives provide another element of oprimarily reacfive force. ;pekin`,
to solve uimes that have olready been committed.
Policies 8~
Procedures Process Management Citizen ectation
Cantinuous tmproveme ~
- - - - - - - - - - ' Gitiren Complaints
Cit!7en Sat!slaci~on
Response Time Reductlon
Feedbacic Loop
Data Driven
Targeted.Crlme Reduction
Citizan Fear
- - - - ~ - - - - - - Commtmtty Datenoradon
' Leverago Rissources
; Flexlbfe and Cmative ; Resource
; Math_Model - - - - ~ AlloCation ~
=Police Patrol: Reactive and Proactive
o Migh pnority colls - citizens expeci extrernely rapid response.
o Moderate Pdority calls - Best practice departments manage citizens'
expectatian by letting them know a reatistic response time and ihen ineeting
or surpassing theK expectation. If triere is an unexpected furthar delay, the
citizen Is contocted with up-tadate infomiallon
o Low priodty Galls - 8esf prnctice departmenfs find creative strategies such as
a telephone crime reporting so as to hee up the patrol force for e+iher rapid
response to a high pflority cap or to continue with crime-directed aciivities
u On-Scsne handling: '1he manner in which a poGce officer handles himself or
herselt an-scene play5 a critical role in developing w criscouraging citizQn
support for the poHce department
Rapid response fo the highesf priority catls can sometimes mean the difference between
life and death but is un(ikely to broadly influence the crime rate. Meeting or exceeding
citizen expectations reduces 1he number of citi2en complaints and increases communiiy
support far the police deparfmenf. Community support is a crifical element in
developing a prooctive crime directed patrd force. With accurate and timety data, a
police depurtment can reduce response time by odapting a ph1osophy of data driven
continuaus improvetnent that uwalty entails flrst flnding the multiple root causes oi slow
response and then changing operating policiez thaf contribute to the problem. They can
6
• a!so reduc_e r::sponse tirnt; by IT-laking data drivEn sfrdtegic decisions thnt brfter rrintch
patrol force levels with police pairol wakloads.
Prooctivelv - Police initiated in cooaeration wiih citizenrv
, Potice depariments use detailed crime data to develop both shorf-temi
torgeted acfiiviffes and long Iosfing strategic initiatives
o i'olice departments can use specfalty assigned units in conjuncfion wifh the in-
between call fime ot the patrol force
❑ Performance measures and accountabil'rty of management is a critical
element of this strategy
o Activities need to be tracked so as to determire their effectiveness and to
continuafly evolve so as b respond lo changing crime pattems
Projecf Data Analysis
1. Dacument current police patral pertormance and workload levols
2. Estabrish a range of perfcxmance gocyls and objeclives for ihe Pofice UeparfmEnt
3. Identiiy opportunities to imFxove on pertormonce with exisfing resources
4. Estimate the manpower requtrements ond ossaciated costs that would be
needad io achleve city and police monagemenl specified performance
ob}ectives
5. Provide guidance on rcwfine standard reports that should be used to track
performance
6. Fvaluate the city's crime rate and conduct o crime analysis to ider►tify "hot spots"
and evaluate current policing strategiss to deal wifh them.
7. Review orgon¢ational structure and sfaffing and propose appropriaie changes_
Curren1 Performance
We wi{I arialyze in-depth four weeks of summer data and iour weels of winler clata and
cassess vcxiations by time of day, day of week, Seacon ancf district. The onalysis will include
all of thc followfig:
a) Patrol deployment Isvels
b) Average response time to different call prforities
c) Proportion of caUs in each ca}egory fvr which response iimes are
unacceptably long. For example, we wip determine f he propo(tion of high
priodty ca11s that experience respanse fimes of longer than 10 minutes
d) Document time periods durfing the week in which response times seem
excc3ssive
e) Average and median tlme spent on caNs wifh diflerent priorities
f) Proportion oF calls with unusuoRy fong time spenf on-scene
g) Proportion of calls requiring more thon one patrol unit
h) Resources allocated to proactive patrol
ij Resources consurned en nnn-value added activities
7
Proiect Staffinq and Oraanizotion "
T•~am ,
Leader
l eariard
Mal ute.e,
M.P,A
I CMA-{;N,,
SP! iR. IMPA
CP
lCM.%-.
(1irei; tnf o1
l'L~t?li:,'
$uff,fy
P~ ~7rrOm
~
M11:tnciv, cr, Resrarch
4larketina An.tlyst,
an(! i'ubtic
C1rer,itiunti, s:ttc:tv
IC'hfA Nmt;nmr-,
r.ori"uirng a IrtitA
Sen•ice : ' Consuhiup-
sc:7v!Cl'S
A.T. ~ I1oL'
tictmett. Chc.lst,
M.R.A. ~!'I~U.
~
Seni~r ~r~ar 5enlUr S-zriior Sj_!r6Gr Siior 7~, otat
Pu1:~c ~'~'k;lic F'ubiw:. i'~thtic F'ur7t~C F'~I~ nlir. 'afiy.-
Sufety iC.i~ln ~ety IC-P.A '~t~it~ty (CMA Satr.~ty IC'MA ;crtc:+y Ir.:f,~A Staf(~hylCMA IC/,M
constllhn l Consi.ntant G.-wnsultar,t C014ull0nl Cui;;iJIIcJPtI Gonsultant Ccrisullortt S►uingied
Troininy K U&c; ro'ice Lirie OpCrati-n, Pal'ice Legai Foth-.r, S!atl GifiTE!n P. Inc
Ethir., Lnib:,: tion Jt, ()F:{((71i(N15 Re:,FCxr.h I„i~r~; Is..4re5 VKiim':
Anrflyu5 Rciations
Frurik
~CIVY.~ .~c1rv1~~s k!=rirtLft~ C3~~xr~f. W'ilttU;n Chr:firte FutliiiC
$fTOUb, Mw1in, GUU:317rid, C!:<_, 'Sf, AI•r;wcrtn, berger, Cch'e ►."etN'~_
Pft,D. Pft D. RA_ !'RD. J_D. M..4.. J.D. M.A.., M,P.P.. M& 1
L__j L___j L__j '___j ~_j L__~~
8
Project Director, ICMA Director of Public Safety Programs
Leonard Matarese, M.P.A., Director of Public Safety Programs,
ICMA Consulting Services
Role
Mr. Matarese will serve as the fieam leader and on-site coordinator for the project_ He
will communicate with administrative siaff and coordinate all on-site tEam efforts. He
will also contribufe to developrrient of a cominunify policing/problem solving
strategy which will contribuPe to the ultimate scheduling configuration
recommended. He is the individual io contact concerning questions about this
proposal.
Background
Mr. Mafiarese is a specialist in public sector administration with particular expertise in
public safefy issues. He has 39 years experience as a law enforcement officer, police
chief, public safety director, cify manager and major city Fluman Resources
Commissioner. He was one of original advisory board members and trainer for thE first
NIJ/ICMA Community Oriented Policing Project. He has conciucted numerous studies
of emergency services ogencies with particular atfention io matching stQffing issues
with calls for service workload, and is intimately familiar with the constraints on
manpower deployment resulting from a 10 hour workday. Recognized as an
innovator by his law enforcement colleagues he served as the Chairman of the SE
Quadrant, Florida, Blue Lighting Strike Force, a 71 agency, U.S. CusPoms Service anti-
terrorist and narcotics tosk farce anci as president nf thc Miami-Dade County Police
Chief's Auociation.
He is currently a Steering Commitfee Member of the Department of Justice, Law
Enforcernent Leadership Initiative and a membcr of tne Advisory Commiitee for the
Department of Justice, COPS -"Linking Law Enforcement Infiemal Affairs Practices
and Community Trusfi Building" praject. He holds the Credentialed Manager
designation from the ICMA, the Cerlified Prafessional designation from the
Intemational Public Managernent AsSOCiation - Human Resources and fihe Senior
Professional in Human RESOUrces designation from ihe SocieTy for Fluman aesource
Manpgement.
ICMA Staff Assigned to Projecf
A.T. "Akia" GarneN, M.B.A., Senior Operations & Marketing Manager - ICMA
Consulting Services
Role
Akio Garnett will serve as the primary point of contact and will manage the entire
projECt schedule from contract execution to completion of final project deliverable.
As account manager and liaison to the Cifiy, ICMA project mancgement staff and
consulfants, sne will work closely with entire project feam to en5ure that all project
milestones have been met and to rnaintain quality assurance.
. 9
Dov Cheist, Ph.D., Senior Research Analyst - ICMA PublPc Safety Programs - '
ICMA Consulting Services
Role
Dr. Chelst will serve as researcher responsible for supervision of data collection and
analysis. He will work clasely Wayne State University's pr. Kenneth Chelst throughout
the data collection and analysis stage of this project and will coordinate the
assembly of the preliminary reporf.
ICMA Senior Public Safety Consultant - Public Safety Operations Reseorch
Kenneth R. Chelst, Ph.D., Choir of the Department of Industrial and
Manufacturing Engineering of Wayne State University
Role qr. Chelst will serve as chief researcher, responsible for supervision of all data
collection and analysis.
Background
Dr. Chelst is an expert in the application of advanced mathematical models for all
emergency resaurcES planning, especiplly police. I-le IEad a demonstration project
for the City of Detroit Police Deparfment which cut response times by 40% using
continuous improvement and data driven decision making. Over tne past two
decades he has studied several dozen emergency services opEraiions using data
driven techniques to determine the most efficient organizational structures to provide
public safeiy services.
' He holds a Ph.D. degree in operations research from M.I.T. where his dissertation topic
was Mathematical Models of Police Patrol Deployment. His research interests include
operatinns research models applied tn emErgency services, structured decisian
making. He is a nationally recognized expert on the merger of police and fire sErvices
into a public safEty deparfment and on the relafive performance ofi one versus two
officer patrol units.
ICMA Senior Public Safety Consvlfani - Dota Collection and Analysis
David Martin, Ph.D., Senior Researcher in the Center for Urban Studies,
Wayne State University
Role
Dr. Marfin will perform computer programming to support data collection, statistical
analyses, geographical infdrmaFion systems (GIS) analyses and presentation of
alternafive allocation plans.
Background
Dr. Mariin specializes in public policy canalysis and program evaluation. He has
woriced with several police departments ta develop crime mapping and statisiical
anatysis tools. In these projects he has developed automated crime analysis tools
anct real-time, dashboard-style performance indicatar systems for police executive
and command staff. Dr. Martin teaches statistics at WaynE Siate University. He is alsa
fhe program evaluator for four Deparfment of Justice Weed and Seed sites.
10
~ ICMA Senior Public Safety Consultant - Police Training and Fthics lssues
Frank Straub, Ph.D., Commissioner of Public safety, White Plains, New York,
(former NYPD Deputy Commissioner for Training).
Role
Dr. Straub will act as a subject matter expert regarding the analysis of current training
practices, with parficular aitention to the issues of ethics training botn in pre-
employment and in-servicE. -
• Background
Frank Sttaub is an expert in police ethics and training and an accomplished law
enforcement executive. Dr. Straub has over 20 years of experience in law
enforcemenf at the federal, state and (ocal levels. He is currently the Commissioner
for the Departmenl of Public SUfefy in White Plains, New York. Prior to his current position, Dr. Straub served as the DEputy Commissioner of Training
for the New York City f'alicE Departmenf and was responsible for all police and
civilian training. Immediately following the 9/1 I terrorist atiacks. WhilE working in the
U.S. Deparfment of Justice's Office of the Inspector General, Dr. Siraub designed and
Ied the implementation of SACS, an agency-wicie performance managemenfi and
accauntability system.
ICMA Senior Public Sofety Consultant - Police Line Operations
James Gabbard, City Manager of Vero Beach, Florida, Former Chief of Police,
Vero Beach and former Captain of Detectives, West Palm Beach, Florida
Role
Mr. Gabbard will coordinate the detailed review of daily (ine operations of f he
agency comparing it fo best practicES including patrol, investigations, and
specialiLed unifs such as motor and marine patrol as well as crimc scene forensics.
This stage includes a review of comrnand and control af patrol forces.
BacJCground
James M. Gabbard is the City Manager of Vero Beach, Rvrida, appointed in 2005.
Prior to his appointment as City Manager he completed 37 years of law enforcement
service in a sEries of increasingly responsible positions. Mr. Gabbard formerly served
as the Police Chief of the Vcro Beach Police Department. Ouring his tenure as chief
he servEd as interim city manager on sEVCraI occasions. Prior to his service with VEro
Beach he was a member of the Wcst Palm 8each Police f7eparfment, serving in all
divisions of the Department and in many assignrnents including Detective Lieutenant
of Homicide. Upon his promotion fio Captain he was placed in command of
vrganized crime and organized drug crime investigations. He retired frpm West I'alm
Beach in 1986 to accept the chief's position in Vero Beach.
Mr. Gabbard has reccived numerous professional recognitions and was elected
Presic4ent of the Florida Police Chiefs Association, one of ihe largest organizations of
senior police rnanager5 in the Unitcd States. He was cifed for bravery by Governor
Jeb Bush before a joint session ofi fhe Florida I.egislature for his actions during several
hurricanes which stuck Vero Seach.
11
ICMA Senior Public Safety Consuftont - Police Legal Issves '
George Aylesworth, J.D., Retired Police Major and Chief of Legal Bureau, .
Miami-Dade Police Department, Miami, Florida
Role
Mr. Aylesworfh will be responsible for examination af existing contractual
arrangEments with thE Spokane Sheriff's Office including compliance with internal
controls, rcgulatians and laws. He will supervise the review of citizen's complaints and
internal affairs procedures as well as risk management and liability issuES. Additionally
he will participate in the review of news media procedures and coordination with the
prosecuting attorney. '
Background
George Aylesworfh is a retired Miami-Dade Police DepartmenP (MDPD) Major who,
for more than 25 years, was in charge of the Miami-Dade Police Legal Bureau. Mr.
Aylesworih began his career with MDPD as a uniformed Police Officer in 1975, shorfly
after graduating from the University of Miami School of Law. He worked in that
capacify until 1978, when he was assigned to ihe Police Legal Bureau. Promoted to
command the Legal Bureau in 1980, he remained in thai position until retiring.
During his tenure with the Police Legal Bureau, Mr. Aylesworth had the opporfunity to
work on many challenging issuES, such as those involving imposition of special
prohibitions and use of mutual aid agreemenis during a state of emergency, police
use of force, and intemal discipline. Also, as a rESUIt of his affiliation with international,
staie and local law enforcement associations, he had the oppartunity to work with
and assist many police chiEfs, sheriffs and other law enfarcement agency heads.
- Additionally, Mr. nylesworth woriced exiensively on the state legislative programs of
these associations.
ICMA Senior Public SQfety Consultanf - Police Staff Operations
William Berger, M.A., J.D., Chief of Police, Palm Bay, Florida. Former President
of the International Association of Chiefs of Police (IACP).
Role
Chief Berger will conduct a thorough assessmcnt of all staff functions of the
deparfment, including communications, equipment and facilities, records, uniforms,
wEapons, vehicles, vcsscls, specialized equipment. He will pay pprtiCUldr attention to
the state of thE art technologies available and will develop the needs of a new
police agency.
Background
Bill Berger is a nationally recognized experf in police management with parficulpr
expertise in law enforcement technologies. He is currently Chief of the Palm Bay,
f-Iorida Police Department serving a po,pulation of over 100,000 over 100 square miles.
There he is implementing numerous new fiechnologies in cooperation with public and
private sector organizations including programs involving DiJA collECtian, enhanced
rapid police response to in progress crimes and usE of UAV (unmanned aircraft
vehicles); currently testing and warking with FAA to fly for police surveillance
unmanned aircraft; first in nation.
Previously he served as Chief of Police of Nor1h Miami Beach, Florida for 15 years
where he routinely gained nafiional recognition for his implementation of new
technologies, including speech recognition for in car palice computers. Prior to his
appointment as Chief of Police he served with the City of Miami Police Deparfment,
working as Executive Commander of the Training Unif and Police Academy,
Executive Commander of Communications and Commander of the MomicidE and
Sexual Battery Unit.
12
` ICMA Senior Public Safety Consuftant - Citizen and Victim Relations
Christine Cole, M.A., M.P.A., Executive Director, Program in Criminal Justice
Policy and Management, Harvard University, John F. Kennedy School of
Government
Role
N,s. CaIE will coriduct an analysis of existing systems that provide citizen access to law
enforcements services and which provicie opporfunities for communicating
complaints about police services. Addifionally she will access community policing
efforts and crime victim services.
Background
M,s. Cole is Executive Director of the I'rogram in Criminal Justice Palicy and
Management at I-larvard University where she convenes and moderatES public and
private discussions among scholars and practioners on law enforcement issues. She
has previously servEd as the Chief of Staff for the Executive Office of Public Safety for
the Commonwealth of Massachusetts wliere she designed and led policy and
operaiional reforms in a wide range of public safEty issues.
She was the Comrnunity Liaison and Policy Advisor to the Superintendent of Police of
the Lowell Police deparfment wherE she linked the community policing efforfs of the
300 member ogency and implementecl h community pvlicing Efforfi that saw a 100%
increase in community groups in six years. She also supcrvised the city's "weed and
Seed" projeci as well as obtaining grants in excess of $10 milfion. Prior to this
assignment she was the Vicfiim Witness Advocate for the Middlesex District Attorney in
Cambridge where she implemented the Victim's Rights I.aw in Massachusetts's
largest di5trict attorneys office.
ICMA Strategic Partner - Springsted Incorporated
Patricia Kettles, Vice President, Director of Quantitative Services, Consulting
Services, Springsted Incorporated
Role
Ms. Kettles, along with additional Springsted Incorporated associntes, will conduct an
analysis of the existing financial systems, including the city's sustainnble funding, and
the final budgetary impacts that both extending the current contract with the
SheriFf's Office and starting a new police department would have on the city's
ovcrall budget.
Background
Ms. KEttles is the Director of Quantitative Services for the Management Consulfiing
Serviees group of Springsted Incorporated. Throughout her coreer shE has IEd
projects thpt involvc managing and supervising analytical supporl staff for strucfiuring
debt, fo reviewing financial options, to writing recommendations that explain the
plan of financE, anci reviewing official statements and legal documents related to
financing. Additionally, Ms. Kef#les has led vprious prajects ihat invalve presenting
technical analyses in completing studies in areas sucn as fiscal impact analysis, utiliry
rafe analysis, revenue diver5ification/cost recovery, financiol feasibility, financing
options, capiial improvement programming and debt management. She hqs
supporfed clients in several states. Some of them include Wisconsin, Virginia, lowa,
Kansas, Minnesota. Missouri, North Carolina, and Norfh Dakota.
Delailed resumes of all participants are available upon requesi.
13
Project Timeline ~
Similar projECts of this magnifiude thai ICMA has managed were completed from
between 90 to 120 days. As a result, we propose the following schedule:
We will provide a preliminary report by Oc-lober 1, 2008, and d Final report by October 20,
2008.
The proposed dafes to submit the preliminary police repdrt and the final reporfs are
contingent upon our receipt of the necessary data eight weeks prior. If some other
arrangement is deemed more appropriate by the client. ICMA will work coopEratively for
an agreement on the proposed delivery timeline.
Reporting
The Prvject l.eader wdl report project status to the identified City contacts at specific
identified intervals using an acceptable and agreed upon reporting template. Beyond
this however, communication will be maintained and coordinated through the Team
Leader with these contacfis and other identified relevant personnel on a regular basis.
Proposed Fees
The quotafiion of fees and compensatian shall remain firm for a period df 90 days from
this proposal submission. Three payments shall be invoiced 1o client: one at the
beginning of the projECt period; the second after submission of the preliminary report
and the third upon submission of the final reporf, as approvcd by the City. If some other
arrangement is deEmed mare appropriafie by tne client, ICMA will work cooperatively for
an agreement on thc payment terms.
ICMA agrees to conduct the project as described above for the sum of $110,000,
exclusive oi travel costs associated with fihe project. Each installment shall be for
$36,666.66 and made out to the Internafional City/County Management Association
upon invoicing as accarding to the aforsmentioned payment schedule. ICMA agrees to
work cooperativEly with the client in order to reduce such costs to the greatest extent
possible while still mecting the expectations of the City.
Proposed Travel Fees -
The above project fees do not include travel expenses which will be invoiced separately
tp the City. We anticipate that this project will require approximately 18 days of on site
assessment work. ICMA agrees to reduce travel costs as much as possible, consistent with
the high quality of work the Association provides. ICMA travel guidelines are consistent
with federal government travel regulations. ICMA agrees that iravel costs will not exceed
$16,500.
Controct Administrator
The individual who can make final decisions regarding the contract and has the
authority to contract for ICMA is:
Vickie L. Brooks
Director, Grants & Contract Administration
, International City/Counfy Management Association (ICMA)
777 North Capitol Street, Suite 500
Washington, DC 20002
Primary Point of Contact .
The primary pdint of contact regarding this contract and that has the authority to speak
with all involved parfies for ICMA is:
14
• Akia Garnett '
Senior Manager, Marketing and Operations
~ ICMA Consuffing Servrces
Intemaiional Cifiy/County Managemenf Association (ICMA)
777 North Capitol Sfireet, Suite 500
Washingtan, DC 20002
15
: Summary - Conclusion ~
Part of ICMA's mission is to assist local governments in achieving excelience through
information and assistance. f-ollowing this mission, ICMA Consvlfrng Services acts as a
trusted advisor, assisting Iocal governments in an objective manner. In particular, ICMA's
experience in dealing with public safety issues combined with its background in
perFarmance measuremenfi, achievement of efficiencies, and genuine community
Engpgemenl, makes ICMA a unique and beneficial parFner in dealing with issues such as
those being presented in this proposal. We look forward to working with you further.
16
Where do we f rom here?
~VV`Ailey
go Without adequate street maintc-nance funding, these are the cutbacks:
tut in services Sxxx Cut in services Sxxx
Cui In servjces $xxx Cut In services Sxxx
But that still doesn't solve the problem.
Maintenance costs will continue to rise,
_ and further cuts will be necessary. ~
` r ,4 Funding muSt be sustainable. ~
~
40ow Ak, Options for
f illing the gap
Description of funding mechanism
~
~
~
~
-
. Amount it will ratse$xxx ~
• How long will that support street ~
malntenance? - - ~ ~
• Cost per household
• Cornparatlve purchase Item Other For More Information
• Other • Call xxx•xxxx
Other • Ematl xxxxxxx@spokanevalley.org
• Log onto our webslte at
www.spokanevalley.org/streetfunding
~ • Email: xxxxxxxxx@spokanevalley.org
' ryf~
• 1
CMy ot Spokane Valley11 707 E Sprague Avenue, Swte 106.SpoknnaYfl9Cy, WA 9£+206•PH 509-921-1000•FAX lf00-@21 • f O0B*vrwa.spokanCVaRey.crg
Where are we? ~I ky
Yenr Projectod BudQetctf Projecied WQ're in the same situation as a tot of 6iher
Rove+iues Ex nditures Deficit
2008 • s6,049,00 S4,070,0130 rje titfes: Revenues have not kept pace with road
2010 52,155,000 54.550,000 $,2,395,000 and Street mainkerlance cp5tS.
2013 Sx.x-xx,xxx Sx.mc.voc 511,993.U00
' FnCkides $3.8 f 7.t)QO cs7ycnver frorrt jutor year
irx-JtxiaS S4. 000 c:.lnyo~ev lrant 2t}Q9
facrs
. Fuel tax is not adequate ta cover basic street
mainienance costs. ~
.
Continuing streel maintenance at current leveis 'W
w(II take an additional Sz.Sm per year. 49` -
. Preserving current street condition and ~
providing rnaintenance recommended in the It costs Sxxxx to
proposed Street Mas-ter Plan will take an ~ ~epai~ the average
additional $4.5m per year. pothole.
• Capita) projects require funding
Current Revenues
Fuel Tax Sxxx A wheel alignment
Mtst $xxx costs about $x~cxx
Interest $xxx Current Expenses
Maintenance sxxx ~
Street Sweeping;xxx - -
Plowing $xxx -
Signs j5fgnals $xxx
Declining Resources = Declining Street Conditions
Street Master Plan statistics on WOO
road condition go here Where do we go
~
from here7
,
.
E
i'ity crf $ppIane''✓alleyt 1707 E Spr~AvenUe, Surfe 108•SpOkane VaGay WA 99106•FH 509-921-1UDD•FAX 509•921•70U6•wv,r.spqkarNwMy.Otp