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2003, 06-24 Regular Meeting MinutesMINUTES City of Spokane Valley City Council Regular Meeting June 24, 2003 Deputy Mayor Wilhite called the City of Spokane Valley Regular Meeting to order at 6:00 p.m. Attendance: Councilmembers: Michael DeVleming, Mayor Diana Wilhite, Deputy Mayor Dick Denenny, Councilmember Mike Flanigan, Councilmember Gary Schimmels, Councilmember Steve Taylor, Councilmember Richard Munson, Councilmember Staff Present: Stan McNutt, Interim Deputy City Manager Stanley Schwartz, Interim City Attorney Cary Driskell, Deputy City Attorney Dick Thiel, City Engineer Bill Hutsinpiller, Interim Parks & Recreation Director Bob Ely, Interim Building Official Sue Pearson, Deputy City Clerk Chris Bainbridge, City Clerk Pledge of Allegiance: Mayor DeVleming led the Pledge of Allegiance. Invocation: Pastor Barry Foster, Valley Point Church at Pines gave the invocation. Roll Call: City Clerk Bainbridge called roll. Approval of Agenda: Deputy City Manager McNutt stated that Consent Agenda Item #J should be removed from the Consent Agenda and placed under Old Business in order to have reports and comments relative to that Resolution; Deputy Mayor Diana Wilhite requested that Mirabeau Point Park Project also be moved to Old Business. It was moved by Councilmember Denenny and seconded by Councilmember Wilhite to approve the agenda as amended. Vote by acclamation: Ayes: Unanimous. Nays: None. Abstentions: None. Motion carried. Introduction of Special Guests and Presentations: Deputy City Manager McNutt explained that this will be his last council meeting and then briefly introduced the new Deputy City Manager Nina Regor. Outgoing Building Official Bob Ely then introduced new employee Tom Scholtens, new Building Official from Ada County. Mayor DeVleming also expressed appreciation to interim staff McNutt and Ely and Councilmember Flanigan presented the two with a commemorative clock. Committee, Board, Liaison Summary Reports: Councilmember Taylor mentioned the meetings and interactions with other city officials at last week's Association of Washington Cities conference. Councilmember Flanigan said the RFP for the hotel/motel tax committee proposal has been completed with a July 15 deadline to submit proposals. Councilmember Schimmels mentioned the upcoming July 26 Art and Craft Fun Day; and reported that he spoke to the Rotary Club on "How To Start a City from Scratch." Councilmember Munson reported that he had the honor of being voted an AWC director. Councilmember Denenny added that there will be an all -day STA task force workshop July 16. Council Minutes 06 -24 -03 Page 1 of 6 Date Approved by Council: 07 -08 -03 MAYOR'S REPORT: Mayor DeVleming reported that he issued a few proclamations last week and that the day after tomorrow will be the first of many conversations with the community at the Senior Center at Mission, starting at 2:00 p.m. PUBLIC COMMENT: Mayor DeVleming asked for public comment on matters not on the agenda, and three individuals (Bob Leyerley, Bill Gothmann, and Gene Hinkle) spoke of their concern with junk vehicles and urged the Mayor and Council to approve the junk car ordinance. PUBLIC HEARING: None. Consent Agenda: After Bainbridge read the Consent Agenda (minus item llj), it was moved by Munson and seconded by Denenny to approve the Consent Agenda. It was then moved by Councilmember Taylor and seconded to remove Consent item 11g, the Community Development Block Grant, from the consent agenda. Vote by acclamation on the second motion: Ayes: Unanimous. Nays: None. Abstentions: None. Motion carried and item 11g was moved from the consent agenda. Mayor DeVleming then called for the vote on the motion to approve the Consent Agenda as amended: Ayes: Unanimous. Nays: None. Abstentions: None. Motion carried. Consent Agenda approved as amended. g. Community Development Block Grant Cooperative Agreement: Councilmember Taylor asked if we finalized any arrangement regarding the number of seats we were going to be permitted to appoint to that Board. Councilmember Munson said paragraph 13 states we shall have one member. Taylor and Munson voiced their opposition to only having one board member and Taylor indicated he would like the issue resolved and that he would like to work with this consortium in order not to hurt any small cities which may be aided by this grant. Taylor added that without the participation of the City of Spokane Valley, the County would lose their urban designation, and as Spokane Valley is the urban component in this process, we need to insure we have the appropriate representation on the Board. Discussion ensued about the time factor involved in the agreement, the specific representation of Spokane Valley on the Board, the number of representatives necessary and having that reflected in paragraph 13, and the current board's composition. It was moved by Munson and seconded by Wilhite to direct the City Manager to request proportional representation on the board, give the City Manager the authority to negotiate that, and authorize the City Manager to execute this agreement if it is in the best interest of the City. Vote by Acclamation: Ayes: Unanimous. Nays: None. Abstentions: None. Motion carried. OLD BUSINESS: a. Resolution 03 -039 Approving Form of Agreements for Professional Services, Ggeneral Services, and Construction Services. It was moved by Denenny and seconded by Wilhite to approve Resolution 030 -039. McNutt explained that at some point the Mayor would be passing final execution authority to staff and to do that a comprehensive set of ordinances and resolutions is necessary establishing limits in which staff is to operate. McNutt suggested adoption of the ordinance with the provision that the dollar limits upon administration on projects, after budget consideration, be adopted by resolution. After discussion on the Agreement for Professional Services, page 1, subparagraph 1C which addresses modifications, it was recommended that paragraph 1C in the Professional Services Agreement also be added to paragraph 1 of the General Services Agreement, which is the ability of the City to modify the agreement when appropriate. Discussion then turned to prevailing wage laws and applicability in the Construction Services Agreement at #7. Schwartz recommended changing paragraph #7 to add the words "unless provided otherwise." Mayor DeVleming invited public comment on the resolution. None being offered, it was moved by Council Minutes 06 -24 -03 Page 2 of 6 Date Approved by Council: 07 -08 -03 Councilmember Munson and seconded to approve the amended Resolution to reflect the adding in the Professional Services Agreement paragraph 1C to the General Services Agreement, and to add the words "unless provided otherwise" to the Construction Services Agreement at paragraph #7. Vote by acclamation: Ayes: Unanimous. Nays: None. Abstentions: None. Motion carried. b. Mirabeau Point Park Project, Mike Ormsby [ Councilmember Munson excused himself at 6:50 p.m. and returned at 6:55 p.m.] Ormsby provided a brief update on the legal issues surrounding Center Place Project at Mirabeau Point, and added he, council and staff are aware of and working on policy and financial issues. Ormsby explained that the legal issues are primarily driven by the arrangements through the interlocal agreement with the Public Facilities District and Spokane County and also those legal issues relative to the regional project itself. Ormsby said that in a meeting with the Public Facilities District, that the District was proposing financing which separated the arena operations and revenue from the proposed convention center operations and revenue and as a result, the Convention Center project had not been constructed yet. He added that he felt it was going to be necessary for some type of "credit enhancement" for the Public Facilities District to issue those bonds. That form of credit enhancement was a guarantee by the County to be reimbursed by the City, which created the necessity for further rounds of discussion. Ormsby explained that the PFD suggested they remove the separation between the Arena and the Convention Center finances; and they also proposed taking $6.5 million of a capital reserve and using that money to defease some bonds they issued in 1995. Ormsby said it was mentioned at today's PFD meeting that the PFD in issuing those bonds, would take $6.5 million of those bond proceeds and use it to pay themselves back; however that is not correct. Ormsby stated that the PFD will use the $76.5 million to construct the project, and that they plan to pay themselves back with the excess revenues, and that this is one point of difference between the governmental entities. Ormsby said the Convention Center will still cost the estimated $77 million, but instead of having the other agreements in place to provide a guarantee, the PFD would issue and be responsible for their debt, and the City of Spokane Valley would do likewise, as would Spokane County, and that there will still be an interlocal agreement between the PFD, City of Spokane Valley, and the County. That agreement would provide that the PFD provide us funds annually in an amount sufficient to pay off our bonds. Ormsby said there is a reserve fund for the PFD bonds but there is no reserve fund for the City's bonds; and the PFD's rationale is because they have defeased $6.5 million of their bonds, they have expanded the revenue sources available for debt service on the County's and the City's bonds, so there is less of a need for reserve fund. Ormsby said we will issue bonds and make debt service and if for some reason the PFD is unable in a given year to reimburse us the entire amount of the principle and interest that we paid on our bonds, they have agreed that they will repay us that amount plus interest at the next time they have sufficient money to do so; and that they will continue to levy taxes as long as necessary to make sure we are paid off; and if they have not paid us in full by 2033 and if there is a deficiency, they will either issue debt or supply the funds otherwise to make both the County and the Valley City whole. Ormsby said the primary issue remaining upon which he would appreciate Council's guidance, is the issue of that excess revenue or that which is left over after the debt service is covered and reimbursements are made to the Valley City and to the County. Ormsby said two potential limiting factors on the revenue stream are (1) do we give some credit to the PFD for the $6.5 million they moved from arena debt service and capital improvements to pay off debt now to widen the revenue stream that is available for all; or (2) of that $279 million figure, a lot of which is based on tax collections that were approved prior to May 21, 2002; if they have widened that revenue stream and made more of that available and they were going to be able to collect it anyway, is that a limiting factor. Council Minutes 06 -24 -03 Page 3 of 6 Date Approved by Council: 07 -08 -03 Ormsby summarized that the PFD's position in that they are prepared to guarantee the debt service of the Valley City and the County, and that the PFD will not require issuance of capital appreciation bonds but will let the entities issue equal amortized debt and the PFD will help cover that; and if there is ever a deficiency the PFD will reimburse that with interest; but the quid - pro -quo is we get to keep any surplus; and the PFD heard at today's meeting that that is not acceptable as the City expects to get a proportionate share of that excess revenue; although the issue of defining the excess revenue is still unclear. Ormsby said that the timeline for the PFD to make a decision on this is next Tuesday; and that Ormsby suggests determining the definition of excess revenue, which could be the revenue that exists minus the revenue they would have gotten on just the tax levy approved for the arena prior to the vote of May 2002; it therefore may be fair to subtract that amount when you are trying to determine what the excess revenue is; and then Council may want to subtract a figure that might include interest; then whatever is left at that point is the figure that you would apply the percentages to: the 7.65 for the Valley City and the 12.5 for the County, then the PFD would get the rest. This is an option that might be acceptable to the PFD. It was clear after today's PFD meeting that the City said that not sharing excess revenues is unacceptable. Ormsby said he will inform the PFD at Tuesday's meeting that the City wants to work with them on this issue, and that Ormsby will keep the Council updated on these issues. In reference to a question from Councilmember Schimmels regarding maintenance and operation, Ormsby said that is a large issue, and one which Dave Mercier has asked staff to work on regarding the marketing and financial plans; we may get reimbursed for up to $7 million in capital construction costs but that does nothing for the maintenance and operation expenses. Councilmember Taylor added that we need to make sure there is parity in the excess revenues that are created from the original project revenues and we get our share. Ormsby said he feels the direction council has given is that the Valley City would like to have a proportionate share of the excess revenues of this project and what we are willing to talk with the PFD about how to define those excess revenues. Ormsby said he will be in contact with County's counsel tomorrow to discuss this and then in contact with PFD's counsel the following day for discussion. Ormsby indicated other issues for council consdieration include the whole concept of a regional project. Ormsby said it is important to have in mind a regional project beause we can only use the reimbursement funds we receive from regional project tax revenue to reimburse bonds issued for a regional project — which is a convention or related facility. Staff has given more clarification of the project and the uses that will be put to the facilities constructed with bond proceeds and that is one of the reasons Ormsby is sharing the certificate of the city; and to leads to the question of why are only two of the three revenue sources available to the Valley City. Ormsby said staff also needs to consider operation and maintenance. Ormsby concluded by stating that in terms of the current interlocal agreement, to insure it contains the representations needed for the City to qualify for regional project tax revenue. It was mentioned that the agreement does not provide for any lien or other ownership interest in the PFD which was a very fundamental part of council instructions at the onset. Ormsby said the County is working with Sschwartz and his firm on the transfer of the real estate from the county to the Valley City and Mirabeau Point is in the area of the parkland that is being transferred, and that process is going forward and needs to be completed before we can begin construction. Ormsby said he feels there should not be a problem with that occurring in the timeframe of when construction can begin — probably fall at the earliest. Ormsby said he will begin work on the allocation of excess revenues and will report back to the Council. Councilmember Munson said that in January, he, Ormsby, and Taylor discussed a general idea which is what has been finally passed, that each entity would be responsible for their own bonds and that we would negotiate how those bonds would look and he expressed appreciation that the PFD recognized that. Mayor DeVleming called for a short recess at 7:40 p.m., and reconvened the meeting at 7:56 p.m. Council Minutes 06 -24 -03 Page 4 of 6 Date Approved by Council: 07 -08 -03 ADMINISTRATIVE REPORTS: Interim Deputy City Manager McNutt said that in reference to the Prothman Memorandum of Understanding on the consent agenda, that McNutt spoke with the City Manager and that a position was inadvertently omitted from the agreement, that of City Engineer, and that should be included with the other positions listed on the agreement. It was moved by Munson and seconded by Wilhite to add the position of City Engineer to the Prothman Memorandum of Understanding. Vote by acclamation: Ayes: Unanimous. Nays: None. Abstentions: None. Motion carried. Columbia Fiber Update: McNutt said he would like to relay a modified proposal from Columbia Fiber which can be discussed at the next study session with the goal of settling the matter at the July 8 regular council meeting. McNutt reported that John Everett of Columbia Fiber, has modified his position for council consideration that instead of the previously mentioned $75.00 per month per mile of fiber use, that Everett would propose $50.00 with no minimum. In addition, the offer would be for four fibers dedicated exclusively to City business, that they would want shared GIS files regarding projects in our right -of -way and only those issues which are appropriate to their engineering needs, that they would like relocation protection assistance. McNutt said these issues and further details can be discussed at the July 1 study session. Deputy City Manager Purchasing Ordinance Memo: McNutt said his memo is self - explanatory, but that McNutt wanted to give City Attorney Schwartz an opportunity to tie this subject together to help council in their consideration of evolving this into a permanent and complete purchasing ordinance. Schwartz stated that there are two ordinances which will be coming back for further consideration. The purchasing ordinance deals with the purchase of goods, services, supplies and equipment and based upon discussion, that ordinance will be modified to provide that Council will set the City Manager authority by resolution. Schwartz explained that the draft ordinances under discussion are models of best practices used by many Washington State cities. The second ordinance regarding City Manager authority will be modified to provide that Council will establish the City Manager signature authority by resolution, which will be for the public works contracts off the small works rooster, and then the professional services or general services is a matter council will establish by resolution. Schwartz said he feels it is important to put these administrative procedures and protocols in place as it puts the public clearly on notice of how government creates a level and fair playing ground. Schwartz said that state law provides that the City Manager can make adjustments but that the City Manager cannot spend beyond the budget; and that state law requires financial quarterly reports. Laptop Training Session: Interim Deputy City Manager then explained how the "net meeting" session would work and worked with council on becoming comfortable with sharing documents. The study session lasted from approximately 8:05 p.m. until 8:50 p.m. Mayor DeVleming indicated more study sessions will be set aside for future laptop training. PUBLIC COMMENT: Mayor DeVleming asked for public comment. None was offered. INFORMATION: Deputy Mayor Wilhite mentioned that the web committee has received 20 proposals and is setting up a meeting to have the first evaluation of those proposals. Munson said he would like to be included on that committee and Denenny said he would like to be notified of the meeting times. Wilhite said council will be notified of the meeting dates and times, and that the next meeting is set for July 9 at 1:15 p.m. in Council Chambers. Councilmember Schimmels said the County Commissioners are meeting with the Health District Thursday regarding our seat on the board and asked if anyone from council or staff will be attending. Council Minutes 06 -24 -03 Page 5 of 6 Date Approved by Council: 07 -08 -03 Mayor DeVlemmg indicated he and City Manager Mercier will be attending It was also mentioned that the June 25 date for EMS meeting has been changed to July 21 Taylor asked about the wastewater meeting with the department of ecology, Mayor DeVlemmg said they are trying to set with meeting with DOE and are working on coordinating a date It was moved by Flanigan and seconded by Munson to adjourn The meeting adjourned at 9 00 p m h'ristine Bainbridge, City Clerk Michael DeV emmg, Mayor Council Minutes 06 24 03 Page 6 of 6 Date Approved by Council 07 08 03 14/1 C /t3ii,a ---k-h?-, NAME • PRESENT/ABSENT COMMENTS Mayor Michael DeVleming-Position No. 3. - . . . . . Deputy Mayor Diana Wilhite-Position No. 1. • . Councilmember Dick Denenny-Position No. 7 . ci.-- . • . . Councilmember Mike Flanigan-Position No. 6 • C .---- -- . • Councilmember Rich Munson-Position No. 5 • Councilmember Gary Schimmels-Position No. 4 Councilmem.ber Steve Taylor-Position No. 2 CITY OF SPOKANE VALLEY COUNCTL meEniNG DATE COUNCIL ROLL CALL NAME PLEASE PRINT ADDRESS TELEPHONE b0 L 45' eiti. IT /0/72 4-7 077/ -.9iJo /i 9/ 6 E .SPILIGueRive o 2 CE/VE iii 4: 92.---1 3 D_. PUBLIC COMMENT SIGN-IN SHEET SPOKANE VALLEY CITY COUNCIL MEETING DATE CITIZEN COMMENTS ON ITEM IINCLUDED ON THIS .AGENDA. PLEASE STATE YOUR NAME AND ADDRESS FOR THE RECORD. YOUR TIME WILL BE LIMITED TO TELREE MINUTES Preston 'Gates'Ellis LLP VIA E -MAIL AND HAND DELIVERY TO MAYOR AND EACH COUNCIL MEMBER The Honorably Mayor and Members, City Council City of Spokane Valley 11707 E. Sprague Avenue, Suite 106 Spokane Valley, WA 99206 June 23, 2003 Michael C. Ormsby mormsbyJpreslongales.c0m Re: Update on Status of Agreements with Spokane Public Facilities District and Financing Issues for City of Spokane Valley Dear Mayor DeVleming and Council Members: The purpose of this letter is to provide you a brief update on the CenterPlace portion of the Mirabeau Point Park Project. Of particular significance to this project is the involvement of the receipt of certain tax revenues by the City of Spokane Valley (the "City ") approved by the voters of Spokane County, commonly designated as the Regional Project Tax Revenues ( "RPTR ") and the related real estate and project control issues; the issuance of bonds by the City in the aggregate principal amount of $7 million (the "Bonds ") to construct a portion of CenterPlace (the "Project "); and the operation of the Project as a regional facility. INTRODUCTION: The various components of this Project are difficult to "get ones arms around ". Mirabeau Point Park has been discussed conceptually and in various forms for over a decade. CenterPlace, as a project, has received attention for the last two or three years with initial discussion of and planning done by Spokane County (the "County ") and more recently by the City. The Project is still not completely defined, so there are still issues associated with qualifying uses of the Project and therefore the overall financial plan. There are a number of legal, policy and financial issues associated with the Project. The purpose of this letter, and the briefing that will occur on Tuesday evening, is to focus on the legal issues that arise out of the relationship involving the Spokane Public Facilities District (the "PFD "); use of the RPTR and the requirements associated with receipt of these funds; and the operation of Center Place as a "regional facility ". DISCUSSION: 1. Relationship with Public Facilities District and Related Real Estate Issues. The "leadership group" including Gary Schiunmels and Steve Taylor representing the City have been A LAW FIRM I A LIMITED LIABILITY PARTNERSHIP INCLUDING OTHER LIMITED LIABILITY ENTITIES 601 WEST RIVERSIDE AVENUE, SUITE 1400 SPOKANE, WA 99201 TEL: (5091 624 -2100 FAX: 1509) 456 -0146 www,prestongates.com Anchorage Coeur d'Alene Hong Hong Los Angeles Orange County Portland San Francisco Seattle Spokane Washington, D.C. June 23, 2003 Page 2 meeting for the last several months on various policy and financial issues affecting the financing of the Project and the other regional projects associated with the voter approval of the levy and collection of RPTR. There continued to be a number of complications associated with a proposed financing which involved guarantees from Spokane County and the City of Spokane and other complicated arrangements to provide an underpinning to the PFD financing. The PFD proposed an alternate financing mechanism on June 18, 2003. A brief summary of this financing was faxed to members of the City Council late last week. (A copy of the description received from the PFD is attached to the hand delivered version of this letter.) The PFD has agreed to remove the "fire wall" between the operation and Finances of the Spokane Arena and the proposed convention center. This removed a number of complications in the Convention Center financing to be accomplished by the PFD and made it much easier to move forward. We have just received a copy of the proposed master Interlocal Agreement (the "Agreement ") prepared by Bond Counsel for the PFD. I will be reviewing this Agreement in more detail and will be prepared to discuss the particulars of it at the briefing on Tuesday evening. Upon initial review, it is clear the Agreement is less complicated than previous drafts, primarily because of the modification in the structure facilitated by the PM's most recent plan. (I am also•enclosing with the electronic version of this letter a copy of the most recent draft of the Agreement.) However, there are still issues that the City needs to be sensitive to, including: (1) (2) (3) (4) (5) The establishment of the requisite qualifications for the City to receive RPTR; The ability of the City to own the real property upon which the Project is constructed, control the construction of the Project and operation of the Project once it is constructed; The establishment and maintenance of reserve funds that provide protection for the owners of Bonds reimbursed by RPTR (the PFD, Spokane County and the City); The accurate flow of funds to service debt of the entities involved (again, the PFD, the City and Spokane County); and A mechanism for distribution of any excess RPTR, upon the same formula that these same funds are distributed for debt service purposes to the PFD, County and City. One important issue that is left open in the present form of the Agreement is the schedule of funds available to reimburse the City and the County for debt service on the bonds each of those entities issue. The Agreement does provide that sufficient funds, subject to availability, would be provided to the City and County to reimburse them for debt service payments. The amount of annual payments will be controlled by the schedule of debt service payments of each of the entities. Therefore, the form of bonds and the repayment schedule for each series of bonds June 23, 2003 Page 3 will be an important consideration. T would expect that we would receive more information on this issue at the PFD briefing and Leadership Group discussion schedule for Tuesday, June 24 The current financing plans to do not require that the PFD have any ownership interest in the real property the Project is on. Additionally, the City controls both the construction and operation of the Project. At the time of the formation of the City, the County owned the real property upon which the Project is located. The County is in the process of transferring all of the County parks (including Mirabeau Point) to the City without restrictions. This process is not yet completed, but Stan Schwartz advises that it will he soon. Finally, the Agreement will provide that RPTR will be distributed to the City to cover debt service on the "regional project" portion of the bonds issued by the City. The requirements of the City wi11 include a commitment to meet the prerequisites of a "regional project "; that the facilities will be accessible to the members of the public from around the region; and that construction on the Project will commence before December 31, 2003. II. Requirements That the City Must Meet to Establish A Regional Project. 1N order for the City to qualify for receipt of RPTR, the Project must qualify as a "regional project ", which is defined in RCW 35.57.020 as a "convention center or special events center" which would provide facilities for cultural, community, entertainment and other activities. Beyond this terminology, the statute does not provide much guidance on what is meant. The Washington State Department of Revenue has provided some formal and informal assistance on projects like this. Tn order to qualify for receipt of RPTR the City needs to make certain representations regarding use of the Project in advance of the receipt of tax funds. It was initially contemplated that the Community Colleges of Spokane ( "College ") may house certain educational programs in the Project, although no definitive agreement or lease has yet been signed. The City is now contemplating that much of the space previously planned for the College will be used for meeting, conference and special events, as well as "overflow" space for functions conducted in the "Great Room" facility. This proposed use, while easier to justify paying for with RPTR, presents additional challenges to City Staff and the design team to configure the space in a manner that allows for adjustment, yet does not add to the cost of the Project. 1 The PM briefing and Leadership Group meeting is scheduled for 3:00 p.m. on Tuesday, June 24, in the Room of Champions at the PFD offices. It will be an open meeting and all members of the Council who wish to, are welcome to attend. June 23, 2003 Page 4 We have begun work on the development of a certificate that sets out use of the Project, as well as some of the costs which have been incurred and paid for to date. We have received input from City staff on its contents. A draft of this Certificate is attached to this letter. You will note if you have the opportunity to review the proposed "Certificate of the City" regarding this Project, that we are not qualifying any of the costs for the Senior Center as related to a "regional project" under the statute Except for the space described in footnote no. 2, the remainder of the cost of the Senior Citizen Center, while it could be paid for with City funds (bond funds as well) this portion of the CenterPlace facility would not qualify for reimbursement with RPTR. In other words, the City could issue bonds to pay for the space occupied by the Senior Citizen Center, but except for the percentage of a limited space, the debt service on those bonds could not be reimbursed with RPTR. The City does have non -voted debt capacity, so could issue Bonds if the Council chooses to. However, it is important to remember that there would be no dedicated source of revenue to pay debt service on any such bonds (for the Senior Citizen Center). Debt Service would come from the General Fund. The City Council would be in a position of determining if it would want to allocate funds in this manner. III. Operation of the Project as a Regional Facility. The requirements for a regional facility have previously been identified. Most of this letter has been dedicated to the capital financing required to construct the Project. I- Iowever, there is another important component of financial issues that cannot be forgotten, that is the revenue stream to pay for the operation and maintenance expenses of the Project and the rest of the CenterPlace Facility. It may be difficult to qualify portions of the Project for lease to other entities, if that portion of the Project has been paid for with RPTR. However, there may be portions of the CenterPlace facility that are paid for with other funds of the City that the City may wish to lease, both to cover the cost of construction and offset costs of maintenance and operation. It will be important to analyze those potential leases to make sure they are structured in a way that does not jeopardize the tax- exempt status of the Bonds. 2 It is contemplated that there would be overflow use for approximately 2,000 square feet of the Senior Citizen Center for events scheduled through the Regional Center. Assuming that the Lease Agreement berween the City and the Senior Citizen Center allows for this use (and the City does receive and will keep the rental revenue) then a percentage of this space could qualify as a "regional project" under the statute. June 23, 2003 Page 5 J CONCLUSION: In addition to the legal considerations, there are a number of financial and policy issues for the Council and the City staff to consider relative to this Project. Some of the issues which have an impact on the issuance of bonds, which still need attention include: (1) Confirmation of operational plans and use of the Project, as well as a plan for financing operation and maintenance costs (City staff and City Council); (2) Develop, discuss and finalize the financing plan (bond counsel, underwriter, City staff and City Attorney); (3) Finalize transfer of the real property which constitutes Mirabeau Point from Spokane County to the City (City Attorney and City staff); and (4) Completion of the Certificates and draft bond documents (bond counsel). We look forward to the opportunity to continue to work with you on this Project. Should you have questions or need any additional information, please do not hesitate to contact me. MCO:ana Cc: David Mercier K:1481421000031MCOUACO !2984 Very truly yours, PRESTON GATES & ELLIS LLP Michael C. Ormsby Mirabeau Point is a multi use community project located at 2426 Discovery Place which will be constructed and operated by the City of Spokane Valley (the "City "). Mirabeau Point Park consists of approximately 54.5 acres which will house multiple facilities and programs, including parks, other recreational facilities, the YMCA and open spaces. One of the components of Mirabeau Point Park is Center Place which will provide housing for a Meeting and Presentation Room Wing, Senior Wing' and a Great Room Wing. The portion of CenterPlace used for the Education Wing and Great Room Wing is characterized as a "regional facility" as defined in 36.100 and 35.57.020 (the "Project"). . CenterPlace is being designed and used to serve the regional population in the Spokane/Kootenai County region. Activities which will be conducted at CenterPlace will draw people from a broad geographic area. The purpose of this Certificate is to identify the components of the Project, the cost of the Project, the source of funds to pay for the qualified costs of the Project; and identification of donations received to pay the costs of the acquisition, installation and construction of the Project. (1) Components of the Project: The Project consists of the following components: (A) Meeting and Presentation Room Wing which will house small and large meeting and presentation rooms for meetings and other presentations, a multi- purpose auditorium and administrative offices for operations and management staff for the Project. (B) It is expected that these facilities will be used as described below: (A) Meeting and Presentation Rooms to provide meeting rooms and space for breakfast groups for activities associated with functions in the Great Room. 0 CERTIFICATE OF CITY Great Room Wing will house a large multi -use room, a portable stage, food preparation area and storage, dressing and restroom. Great Room Wing will provide multiple. program opportunities for regular and special programming by educational, cultural, entertainment and governmental entities. These activities will include community and entertainment events; trade and art shows; artistic, musical and theatrical presentations and performances; community, govermnental and service clubs meetings; and cultural exhibitions. 'The Senior Wing comprises 31.13 percent of the total square footage of Center Place. For purposes of calculating footage comprising a "regional facility" this square footage is not included. (2) Cost of the Project: There are two separate components to determining the cost of the Project. The first would be directly to the construction of Center Place and the site improvements on the 10.5 acre site on which it is located. The second component would be the costs attributable to required traffic and other infrastructure improvements to the entire 54.5 acre Mirabeau Point Park parcel, as well as general site improvements necessitated by the overall development and improvement of the Mirabeau Point Park development which includes the Project. indirect, but necessary to site development in order to construct any improvements. The itemized costs of the Project do not include an estimated cost of 53,191,317 (Note to Bill Hutsinpiller: I could not translate the revised figures we received last week to the earlier format that these figures are based on. I. know this number will increase, but am not sure to what) for the Senior Wing in the Center Place Facility, except as set forth in Section 4 herein. (A) The estimated direct costs for the construction, acquisition and installation of the Project include (Note to Bill Hustinpiller: I took the increase in costs provided at the last meeting with the design team (51,450,472) and applied 68.1.5% of this cost to the Project ($988,496.67) to arrive at the above figures. We should verify that this is correct.) (1) Real estate and construction Real Property 5517,360.00 Construction (including architects and engineering fees, other consultants, furnishings and sales tax) 58,042,179.67 Subtotal — Real Estate & Construction Costs $8,559.539.67 (ii) Attorneys Fees, Costs & Staff Time Cost Bond Counsel fees $ 12,500.00 Other Attorney fees 5 25,000.00 Underwriting fees and costs 5120,000.00 Other miscellaneous costs associated with transfer - $ 25,000.00 Value of City staff time $ 30,000.00 Value of County staff time $ 20,000.00 2 These costs, unless it is identified otherwise, represent 68.85% ofthe,total cost of the identified item, representing the allocable portion of Center Place to the Project. Purpose • Total Cost Portion Attributable Portion Attributable. to Center Place to the Project Appraisals, survey, EIS $211,345.00 $41,085.47 $28,287.34 Topographical Survey $23,596.00 $4,587.06 • $3,158.19 Property Boundary Survey $3,800.00 $738.72 • $508.61 Community Center Programming 510,650.00 $1 0,650.00 $10,650.00 Cultural Center Planning $8,000.00 $8,000.00 $8,000.00 Spokane County Civic Center Design $76,146.00 $76,146.00 $52,426.53 Evergreen interchange Mitigation Cost $160,000.00 $31,104.00 • $21,415.10 Mirabeau Parkway Railroad Crossing at Indiana Avenue $958,546.00 • $186,341.34 . $128,296.01 Spokane County Parkway Turn Lane $44,641.47 $8,678.30 $5,975.01 TOTALS $1,496,724.47 $367,330.87 $258,716.79 (13) Indirect Costs Value of Volunteer staff time $ 23,000.00 Subtotal of Attorneys fees, staff time and other costs $275.000.00 The following costs were incurred to develop the Mirabeau Point site, a portion of which will be used to hose the Project 3 The portion of the 54.5 acre site allocated to the Center Place Project is 19.44 %, which represents the percentage of the entire site used for Center Place and 68.85% of the costs attributable to Center Place is allocable to the Project. Total of Costs: Real Estate and Construction Costs Attorneys Fees, Costs and Staff Time Indirect Costs (3) Source of Funds Limited General Obligation Bonds Other City Funds including value of staff time County Funds, including value of staff time State grant funds $8,559,539.67 $ 275,500.00 $ 258.716.79 $9,039,755.87 57,000,000.00 Private Party Donations allocable to the Project (Note on this Section: Once the construction costs for the. Project (not including the Senior Citizen Center) are finalized, this portion of the Certificate can be completed. For instance, the City may wish to issue more than S7,000,000 in Bonds, however all that will be reimbursed with RPTR is 57,000,000 in Debt Service.) (4) Use of Senior Center Space. The Senior Center Space is available for use, through the City for community and other functions related to overflow from the Great Room The City is estimating that it will be using the Meeting Room and associated space in the Senior Citizen Center approximately twenty percent (20 %) of the time. This space constitutes approximately 2,000 square feet. With the estimated costs for construction, the direct construction and development cost per square foot is approximately 143.74, or a total cost for this portion of the Senior Citizen Center of $287,480.00. Twenty. percent (20 %) of this total cost, allocable to this project would be $57,496.00 (5) Timeline for Completion The projected timeline for commencement of and completion of the Project is attached hereto as Exhibit "A ". Other City Funds includes direct cash contributions from Bond or other funds to the construction and related activities associated with the Project. S The City and Senior Center have an agreement that gives control of the Senior Center space to the City at times the space is not needed by the Senior Center. 6 This does not include any allocation for Indirect Costs. The City is estimating that work will commence on the Project with construction in September of 2003_• The estimated time of completion for the Project is Fall of 2004. 1021114ZJO IBWG iMCO 0294E Mirabeau Centernace Proect Schedule ID 2 Tile 04-01-03 1 Wed 01-15-03 3 • Fri OB-01-03 4 Thu 00-30-04 5 Mon 1 0-04-04 FInIsh Schematic Design Phase Qb 4 12-18 ga -15 A pestgn DeYe40 nt Phase 02-43 0417 Construction 0 ocuthents Pte tett 04-01 2003 Mt 1 Qtr 2 2004 Car 3 air 4 QV 1 0r 2 Qtr 3 Qtx 4 °a-01. dezo • Conitructi on .n1 0940 C e nlet Place Occupancy • 10-44 • n D 9 9 v \,_,,,i • V A. DASBE T & AssoCLATES SUMMARY DRAFT SPOKANE PUBLIC FACILITIES DISTRICT ALTERNATIVE FINANCING PLAN (June 17, 2003) 10900 NE 8 Strut Suite 900 Bellevue, WA 98004 Td. (425) 452 -9550 Fax. (425) 432 -9532 alandashcn@msn.cuin 1. District uses approximately $6,650,000 of Arena funds to defease the 1995 Bonds. This eliminates a covenant in the 1995 Bond resolution restricting the use of additional bonds for Arena project purposes only. 2._ District issues Bonds . with net proceeds of S76,650,000 on parity with the outstanding 2001 Bonds. (Note that with the defcasance of the 1995 Bonds, the District's debt capacity will go up). 3. The Bonds arc structured to provide approximately the same debt service coverage each year, assuming no growth in revenues. 4. The bonds are secured by a pledge of the tax revenues currently pledged for the 2001 Bonds plus a pledge of the Regional Project Revenues. (The District may be • required to use existing reserves as a backup.) 5. All Regional Project Revenues are pledged first to the additional convention center bonds to provide adequate coverage. The County and Valley City would receive up to 12/96 and 7/96, respectively, of the Regional Project Revenues on a junior lien basis. These funds would be available to pay debt service on the other regional projects. • • ** ze - Doad ia.i.o.t ** ADVANTAGES DRAFT • No County/PFD Guaranty Agreement or City /County Agreement required. This benefits the PFD, the County, and the City. • Interest rates are significantly lower because no capital appreciation bonds (CABS) are required. • The complications with refunding CABS are eliminated. • Total debt service payments are lower. • The plan is simple and straightforward. • The Regional Project Revenues arc adequate to pay all debt service and provide coverage, even with no growth in the Revenue stream. At current rates the coverage ora the debt is approximately 1.36 tirnes, assuming no growth in tax revenues. • Under the plan the 1995 Bonds arc defea_sed, which is advantageous to both the District and the City. DISADVANTAGES • "Arena" revenues are used (or loaned) to pay debt service on the additional bonds issued for the convention center in the early years. The County and Valley City are in a second position to receive Regional Project Revenues.