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2016, 06-14 Budget Workshop MINUTES SPOKANE VALLEY COUNCIL SPECIAL MEETING WORKSHOP Spokane Valley City Hall Council Chambers Spokane Valley,Washington June 14,2016 Attendance: Councilmembers Staff Rod Higgins, Mayor Mark Calhoun,Deputy City Manager Arne Woodard,Deputy Mayor Cary Driskell, City Attorney Ed Pace, Councilmember Chelsie Taylor, Finance Director Sam Wood, Councilmember Mike Stone,Parks &Rec Director Bill Gothmann, Councilmember Pro Tem Eric Guth, Public Works Director John Hohman, Comm&Eco. Dev Director Erik Lamb, Deputy City Attorney John Whitehead, Human Resources Manager Morgan Koudelka, Sr.Administrative Analyst Others in attendance: Chris Bainbridge, City Clerk Councilmember candidates: Caleb Collier, Pam Haley, Michael Munch, and Michelle Rasmussen Mayor Higgins called the meeting to order at 8:30 a.m. ROLL CALL: City Clerk Bainbridge called the roll; all Councilmembers were present. After Mayor Higgins welcomed everyone to the meeting, Deputy City Manager Calhoun explained that today's meeting will focus on the budget, with the Business Plan leading the development of the budget; said there is still some refining needed in both documents, and asked to please let him know of errors discovered. Mr. Calhoun said the priorities remain the same so we won't see significant changes in the Business Plan; said he is also amazed we are able to deliver as much as we are now for a budget for next year; mentioned there are about twenty-three different funds; said he doesn't anticipate material changes in the future, but there will be some. Concerning expenditures in the general fund, Mr. Calhoun said he anticipates a number of additional costs as we move IT(information technology)from this building to the new City Hall. Said this morning's agenda is a bit more structured we as move through the book, and this afternoon he anticipates more free-flowing conversation, spending as much time on topics as Council desires. Mr. Calhoun said that Council asked staff to prepare a budget with just 1% increase in the general fund, which he said is a tall order but the departments came through in their initial budget with the 1% increase,and they have communicated what cuts in programs we could experience as a result.Mr.Calhoun said that when the 2017 budget estimates come to Council at the August 9 meeting, we will still be no greater than 1% and said he thinks we will be substantially less than that; said some departments grew by more, some by less; some programs were more important and some departments have more to give up than others; said there have been a lot of changes in the last couple of weeks but he feels the budget and the plan are in synch. Mr. Calhoun added that the City Hall bond issue was a big help in budget preparation with the amount of actual bonds and interest rate being lower than anticipated. Mr.Calhoun also mentioned that future study sessions will delve further into what items could look like. Mr. Calhoun said that the intent is to finish today's meeting by 3:30 p.m. Finance Director Taylor explained the organization of the workbook binder, which includes specific department line items as well as a section for supplemental requests; she mentioned the summary of the departments, and the theoretical budget reduction exercise showing hypothetical projections for 3, 6, and Council Special Meeting Budget Workshop:06-14-2016 Page 1 of 14 Approved by Council:07-12-2016 9% reductions in each department's 2017 budget. Ms. Taylor mentioned the pages showing detailed changes from 2016 to 2017;the street fund overview,and the declining telephone utility tax. She explained that we have obtained an outside firm to audit the utility tax revenues and they are just getting started now to identify places where we could recover more of those funds. Mr. Calhoun stated that the firm will work with a variety of phone providers;that this service will not cost us anything as they will take 25% of what they find; said the audit is a good idea and represents no risk on our part.Mr. Calhoun mentioned the street fund expenditures with an increase of about 8% and noted the two items in red: Signal Detection Replacement Program,and Traffic Signal Replacement Program; and said we generally omit supplemental requests on these sheets but he felt we should show the increase as they are close to being a recurring activity; and when we get to Section 15 of the notebook,we will look at this in more detail as we are on a nonsustainable path. Ms. Taylor also explained the recurring versus nonrecurring items in the stormwater fund, and Mr. Calhoun said that$1.271M figure for the capital projects represents about 70% of recurring expenditures; and that we need to maintain at least $900,000 from cash flow; he said staff keeps track of that and watches it carefully. Tab 1: Legislative. Mr. Calhoun explained that this is the Council's portion of the budget, and it also includes the legislative agenda; said we won't do anything with that now but can discuss it more under the advance agenda,adding that yesterday he and Mr.Driskell met with lobbyist Briahna Murray to discuss the legislative agenda. In looking at the fold-out sheet, Mr. Calhoun explained that Council's budget shows a total increase for 2017 of.56%; said benefits declined, wages remained the same, and health insurance declined.He explained that health coverage declined as the assumption is each Councilmember will include a covered spouse, but depending upon what coverage each gets, it could actually increase, and said those refinements will be made by the August 9 Council meeting. Mr. Calhoun went over some of the figures contained on the fold-out sheet, and said that there is money to keep a state lobbyist as well as a federal lobbyist,which might or might not continue;and he mentioned the$20,600 for broadcasting services,which he said he feels is money well spent so people can view Council meetings almost live via internet,and is a nice way to reach out to the population. Council travel was mentioned and Mr. Calhoun said that Administrative Assistant Sue Passmore keeps track of those expenses. Councilmember Pace said he recognizes there are large paybacks and great investments in sending the Mayor and Deputy Mayor and others to Washington, D.C. and Olympia, but thinks the NLC (National League of Cities), and AWC (Association of Washington Cities)conferences are a total waste of money. Deputy Mayor Woodard voiced his support for AWC and mentioned it as a means to network with various councils throughout the state, adding that some of those contacts have very important information and that our Council and other councils share information; said he feels AWC is a great organization. Councilmember Wood said for the $4,000 travel, it seems odd to set such a budget when it rarely all gets used. Mr. Calhoun explained that the figure was brought forward and simply rounded up, and when we get to the reduction exercise, those figures decline;he said this is a placeholder and if those funds are not spent,that's ok;he said this is not a challenge to spend what is there,but rather,we spend what we need and no more. Councilmember Pace said we need to be ready to send Council to specific meetings for specific purposes and feels it is money well spent. Councilmember Gothmann added that NLC offers educational opportunities which have proven valuable. Tab 2: General Government. Ms. Taylor briefly went over some of the information under General Government, explaining what was amended, as shown in blue on the sheets, including City Hall rent and the increase proposed by our current landlord. Mr. Calhoun stated that our current lease expires March 2017, and we anticipate remaining in this building through September; said he has been in communication with Web Property Manager Bill Butler who works on behalf of building owner Northwest Christian Schools; said our monthly lease is $36,000 and beginning April there will be an additional 40% holdover for the first six month's holdover, which will increase that payment to $54,000 for those next six months; and if we remain for a seventh month, it would increase again by an additional $18,000, making our final monthly lease payments$72,000,and that is the figure represented by the$513,000 shown on page 3 of the large fold-outs under Operating expenses. Mr. Calhoun said we will also have discussions with our Council Special Meeting Budget Workshop:06-14-2016 Page 2 of 14 Approved by Council:07-12-2016 contractor for the new building, and we are intending to be out of this space by September 30,2017.Mayor Higgins mentioned if we are going to pay that money, he would prefer to pay the contractor. Mr. Calhoun replied that we will commit to the lease in the near future;adding that our contractor should be substantially completed by August 31 but we won't be in a position to know for sure until after that date; said if we can get out of our current building by August 30 he will make that happen; he also noted the $18,000 increase will be negotiated,and he will make a plea for something less than the building owner's proposed holdover rates. Ms. Taylor went over the remaining figures including those for the outside agency grants. Deputy Mayor Woodard asked about the GSI(Greater Spokane,Inc.)contract,and Mr.Hohman noted that contract ends the end of this year and said there will be a specific presentation on that coming up on a future Council agenda. Mayor Higgins noted the Clean Air Agency fees are also likely to increase. Ms.Taylor mentioned the nonrecurring figures, some of which include computer hardware for the new city hall. Councilmember Pace asked about the outside agency process,and Mr.Calhoun replied that staff will be mailing letters soon. Councilmember Pace said he favors economic development, but maybe we should consider using the $43,000 to make an arts grant so people can specifically apply for those like the Spokane Valley Arts Council or other new organizations that come up, and let GSI compete with all the other groups. Mr. Calhoun explained that in the past,GSI would compete every year but that every year we were dissatisfied with the resulting product as they would do things that were not necessarily the service we sought;and that last year we set aside a contracted amount stating specifically what we were looking for.Mr.Hohman added that we were planning to have staff come forward to explain how that relationship works with GSI and our Economic Development people;that it involves a specific project,and we are close to having that finalized. Councilmember Pace agreed to wait to do anything different until after the presentation. City Attorney Driskell added if we do grants for the arts, we have to be careful so as not to constitute a gift;that assisting low-income entitled entities is clearly identified in our State Constitution as appropriate venues for us to donate; but if Council is interested otherwise, it would require research. Mayor Higgins agreed that what GSI had been doing for us in the past was largely unquantifiable, but with this contract, there is some accountability. Deputy Mayor Woodard said that the Chamber has been doing some remarkable things, much of which is geared to our City,and he suggested that sometime after Mr.Hohman's presentation,that we consider doing more intense work with our Chamber that would continue to help our economic development growth. Mr. Hohman said he will definitely look into that idea. Tab 3: Executive and Legislative Support. Mr. Calhoun said that this is the City Manager section with an overall increase of.99%;that this department includes five positions:the City Manager,City Clerk,Deputy City Clerk, Administrative Assistant to the City Manager, and an Administrative Assistant to Council. He said these figures are largely unchanged from 2016 in terms of supplies and other services. Deputy Mayor Woodard asked if a car allowance has been included for the City Manager, and Mr. Calhoun replied that is a negotiated item. Tab 4: Attorney/Legal. City Attorney Driskell briefly went over the figures for his department; said they currently have three legal interns; mentioned they had been backlogged on some cases but the interns are assisting in research which helps move items through; said they are very satisfied with the individuals chosen and having that third intern represents a 6.2% increase, but other than that, their figures are very stable. Mr. Driskell added that at times, outside counsel has been hired for a variety of reasons, but that typically litigation is covered by WCIA (Washington Cities Insurance Authority); but we also have some responsibility for uncovered portions; he said litigation is very time intensive; and he mentioned the bond counsel or counsel used for the mining moratorium. Mr. Driskell said he feels this budget fairly accounts for their items,but he might have to come back later and ask for supplemental funding. Tab 5: Operations and Administrative Services. Mr. Calhoun explained that this department includes six positions: Deputy City Manager, Sr. Administrative Analyst, Administrative Analyst, Public Information Officer(plus an Intern for the Public Information Officer),and two front office assistants.Mr.Calhoun said the intern works about twenty hours a week. There was some discussion about the positions, and Mr. Council Special Meeting Budget Workshop:06-14-2016 Page 3 of 14 Approved by Council:07-12-2016 Calhoun explained that the two front office workers, i.e. Roxanne and Christine, are transitioning this or next year to under the supervision of Human Resources as they report to Mr. Whitehead; and that there is no change in the overall budget. Councilmembers agreed the front office workers perform a very valuable service. Mr. Calhoun went over some of the other figures, including software license maintenance, fee for Qsend to host our website, and the cost of City-wide mailings of our Hot Topics Newsletter. Mr. Calhoun mentioned other mailings to citizens include such things as notice about the Mayor's State of the City Address, and the Sullivan Bridge invitation. Tab 6: Finance and Information Technology(IT).Ms.Taylor explained that this department includes 11.75 FTE's, that there are not a lot of changes in this department, and the figures show an overall increase of 2%; she mentioned the $500 decrease in other services and charges in order to show a truer figure. Mr. Calhoun added that we might see some changes over the next couple of months as we look forward to the move to City Hall, especially there might be changes in IT expenses, some of which have already been discussed; adding that staff will endeavor to make the move as seamless as possible, and we will likely move in stages beginning with the third floor and moving down, and that the complex part is moving IT services to the new facility while continuing communication with other departments in this building.Deputy Mayor Woodard said it appears the payroll taxes and benefits varies from 35.4% to 46.6% and he asked what accounts for those differences, and what percentage do employees pay for health coverage. Mr. Calhoun said the figure for paying for health is close to 25%, but he will check. Ms. Taylor added that finance works under some assumptions when calculating payroll; they assume an 8% on health insurance and 3% on vision; and we don't assume we will get that 2% for being a Well City; said there are several different plans ranging in cost; that Asuris is higher than Group Health, and it costs more for an employee and family, versus an employee and just a spouse, or just an employee. Tab 7: Human Resources. Human Resources Manager Whitehead said that as with some of the other departments,his department does not include a lot of changes;said his department includes his position and the Human Resources Technician and that the largest expense is professional services,which includes pre- employment physicals for those who have a physical component to their job;said the legal figure is because there are times when we need outside counsel, but those times are unknown as we don't know when employee issues might arise; said the advertising costs are mostly about jobs and mostly print media; and mentioned we are seeing fewer and fewer candidates as a result of print media. Concerning training, Mr. Whitehead said he tries to bring in at least one large training annually, and for 2017, that might include violence in the workplace training or training about active shooters and ways to keep employees safe. Councilmember Pace suggested other training might be considered such as team building or various skills involved with quality. Mayor Higgins called for a recess at 9:47 a.m.; he reconvened the meeting at 10:04 a.m. Tab 8: Public Safety. Senior Administrative Analyst Koudelka said there are no dedicated FTE's from the City for these costs;said this includes all costs specific to public safety services; mentioned that the portion shown as expense is that portion that goes to the State,which he said has been decreasing over the past few years; said wages are from maintenance personnel from our staff at CenterPlace who perform maintenance on our police precinct, and said he expects those expenses to drop back down to an"on-call"or as needed. Mr.Koudelka mentioned the JAG grant as an annual grant that doesn't change much, and said that Council can expect to see something in their mailbox next week concerning that, and afterwards there will be a report to Council. Concerning other services and charges, he said the utilities are for the precinct and that the sewer increase was based on notification that charges are based on meter size and was therefore, more of a correction. Miscellaneous services and contingency, Mr. Koudelka explained,were placed to account for any unknowns, and have been reduced from the previous year; he said the Cry Wolf is the same and that this issue will be coming to Council in the near future to present options for false alarms. Mr.Koudelka noted the bank fees are associated with the Cry Wolf Mr. Koudelka then gave an overview of the figures Council Special Meeting Budget Workshop:06-14-2016 Page 4 of 14 Approved by Council:07-12-2016 on page two, noting that overall this represents a reduction of about 14%. Mr. Koudelka explained that the District Court was reduced in part due to the new methodology from 2012;said they have also seen numbers reduced in cases going through the courts, and said the hope is to see further reductions as they fully implement the pre-trial diversion program.Mr.Koudelka said that they are currently working through some of the contract amendments in the Public Defender contracts,and that should be coming to Council shortly, which changes will encompass several years. In response to a question from Mayor Higgins about reduced caseloads,Mr.Koudelka said that although the County has added attorneys,we are still looking at changing the investigative methodology,and said joint discussions have assisted in these changes.He said the thought was that even more attorneys would be needed but we asked the County to invest in two prosecutors for diversion to save more money overall. Mr.Koudelka noted that the estimates are conservative as we don't know exactly what will occur in arbitration. He noted that there are several vacancies in staff and said he will monitor that and let Council know about impacts as they occur over time. Mr. Koudelka noted that figures for past years are actual figures, whereas 2016 and 2017 are budget estimates, and said we get County estimates based on two year old numbers; also noted that they haven't negotiated a cost of living allowance. Concerning settle and adjust,Mr.Koudelka said the projections are done at the end of each year and if we feel it necessary to book the liability,the figures will include that expense in the appropriate year instead of carryover for future years. For example, he noted our usage for the jail and Geiger has gone down,but overall the figures are up$89,000; said they added some capital items,and deferred maintenance for several years so we are now trying to catch up. Mr. Koudelka reported that at the request of the Justice Department, the County re-opened Geiger for jail overflow, which was a request the County could not ignore. Mr. Driskell added that he believes there will be a significant amount of overtime as they increase the number of employees at Geiger by five, but there will be significant reduction offset by the jail. Mr. Koudelka said staff is monitoring these figures and this is one of the reasons we have the contingency as staff looks at the overall inmate population over a year. Mayor Higgins asked if there has been any discussion about a Sheriff Training Facility near the County race track, similar to what they were considering at the old ITRON building,and if the City would have to pay for it. Mr. Koudelka replied that so far as any proposed new facility, there has been no discussion to his knowledge, There were previous discussions about such a project but it was not fully developed. Mr. Koudelka stated the timing might be right, with a new Police Chief, and Mark Calhoun having conversations with the Sheriff, to make sure we all have the same understanding moving forward that the City has had a consistent philosophy that we will not subsidize other jurisdictions and other programs that are not directly related to the costs of the service we are providing, and he said we will make sure that is clear and there is full cost recovery from the participants for training classes. Deputy Mayor Woodard said if the County were to consider such a new endeavor, to perhaps model it as an enterprise function like SCRAPS so it would have to carry itself so we would not pay 50%. Mr. Koudelka said the traffic school should be considered the same way;that there were some promises made and we all knew what the benefits were but they didn't necessarily equate into actual costs; said the concept was that it would be fully self- sufficient with participant fees. We indicated we would participate but we not pay any additional law enforcement costs. We took a pilot-project approach and the County decided to go for a year and see what that looked like, and it worked out so we extended that and it is working great. Mr. Koudelka mentioned that the total public safety recurring expenditures shows a 1% increase; and that 2017 will be the last year to be paying nonrecurring items for the new Computer Aided Dispatch System. Tab 9: Parks & Recreation. Director Stone said his department includes six divisions, and he has seven supplemental requests. Mr. Stone went through the expenses in each division as well as the supplemental requests. He also mentioned that the Senske contract expires the end of this year so he will be sending out a request for proposals. Mayor Higgins asked about the wind damage from last November's wind storm, and about the children using damaged playground equipment. Mr. Stone said that equipment has been ordered, and they are trying to get the only certified playground installer scheduled; and that it is a daily occurrence to go back and put up the barriers in attempts to keep the children off the damaged equipment. Council Special Meeting Budget Workshop:06-14-2016 Page 5 of 14 Approved by Council:07-12-2016 Concerning Browns Park, Mr. Stone said the restrooms have been completely destroyed four times this year, and that the drinking fountain was damaged at Terrace View about a week ago when someone got into the controls and unplugged it; he said it is a constant battle, adding that the maintenance staff does a tremendous job. Councilmember Pace asked about keeping the weeds taken care of on Appleway Trail. Mr. Stone said that too is a work in progress; and said there are only two mowing seasons,but if there is a need to increase that, he will have to keep that in mind for the 2017 contract; said there are graffiti issues at Appleway Trail also; he mentioned they are trying not to disturb the native alfalfa, but still have some kind of application process to tackle the weeds; said we are only maintaining the developed sections of University to Pines; that we are now budgeted to do that twice a year; he said this is similar to what they are doing with Balfour Park, that is, trying to keep the budget within the 1%. The amount of watering is also an issue and Mr. Stone said people like to see green parks. Mr. Stone mentioned that for the recreation activities, expenses are covered one-hundred percent by user fees. Mr. Stone mentioned the free summer park program at Edgeclift which provides breakfast and lunch; and that through the corporate sponsorships, we have been able to offer a third free movie. He said that the aquatics program is all done through a contract with the YMCA where we pay a small annual fee plus actual costs; said electricity has gone up a little based on actuals, and swim fees haven't increase in many years; and that opening day is a free swim day. Mr. Stone mentioned that the Senior Center's budget is status quo.Deputy Mayor Woodard asked if there were any plans for use of the previous greenhouse space. Mr. Stone said he doesn't think it is worth using that space as a greenhouse anymore; that there were seniors who wanted to get into the dirt, but the Y has an operating greenhouse; said ours had very limited use and wasn't being taken care of so now we are stuck with a space and we are not sure what to do with it; said this was an additional space in the original design; and said maybe it could be used as some kind of a sunroom; said we can't use it for storage since it is at the front door; that we need to figure out something to do with that and he is open to ideas.Councilmember Pace asked about the daily participation at the Senior Center and Mr. Stone said it depends on the day and what is being offered, and that it can vary anywhere from three to six hundred; said they work with the Community Colleges to provide a lot of programming; that the attendance at the Wednesday dances is dwindling, and since the music is paid for by the Board,they are thinking it over; he also mentioned the Center is not attracting many younger-aged seniors,and the Board is concerned about how to attract people in their fifties and sixties. Mr. Stone noted since the STA (Spokane Transit Authority) service stopped, it is difficult to get to the facility. Councilmember Gothmann mentioned the monthly potlucks he and his wife used to attend, and said the number of participants shrank; said he noticed his own membership is coming up this year and he and his wife are debating whether to continue their membership. Mr. Stone said he understands that is a concern as people don't have to pay the $20.00 annual membership to participate,which leads one to ask why pay the fee. He said there have been several conversations with the Board and they haven't come to any conclusions. Mr. Stone said the Board also stopped doing the newsletter and said he has been trying to convince them of the importance of mailing that out to people so they will know what's going on. Councilmember Gothmann as well as others mentioned that the Senior Center Specialist does an excellent job.Councilmember Pace asked about the idea of making the Center an all-ages general community center and whether there is a need or market for such. Mr. Stone said that idea has been talked about from time to time, but that the building wasn't designed for all ages; he said the physical structure is not geared up for that although a lot of senior centers are doing intergenerational programs; he said the seniors are the fastest growing population,but when you turn fifty or sixty,you don't think of yourself as a senior as you are outside doing things; he said historically it was seen as a way to socialize;but now the question is how to attract the right mix of individuals to come and participate. Mr. Stone said CenterPlace is open seven days a week and sometimes up to eighteen hours a day; and he depends on the temporary seasonal employees to work evenings and weekends; said CenterPlace is heavily used and over nine hundred events were held there this past year. Deputy Mayor Woodard mentioned that the catering people do a remarkable job. Council Special Meeting Budget Workshop:06-14-2016 Page 6 of 14 Approved by Council:07-12-2016 Tab 13: Supplemental Budget. Mr. Stone went over the supplemental requests and related expenses for Parks and Recreation which included the maintenance for Terrace View and Park Road pools,the addition of a gutter line to the outdoor drain pit at Valley Mission Pool, the replacement/upgrade of the video and sound system in CenterPlace's Great Room, and replacement of carpet in CenterPlace's rooms 109, 110, and 213;as well as the design and construction of a splash pad with ADA accessible path at Edgeclift Park. For the sound system, Mr. Stone said the equipment is now eleven years old and no longer state-of-the art and he estimates having to go to competitive bids. Mayor Higgins said he likes the idea of the upgrade of Great Room's sound system as at times it has been bordering embarrassing. Mr. Stone said we might also be able to pay for that over a few years or in stages. Councilmember Pace said for some time in the future,he would like a report on the Senior Center including the demographics and numbers of those who attend as compared with the demographics of our entire City, and a report on individual programs. Councilmember Wood mentioned the equipment in the kitchen and asked about its value and said he noticed in the contract, a fee charged for future replacement; he asked what it would cost to replace it all, and would the caterer pay for the replacement; said he would like to see that relationship. Deputy Mayor Woodard asked about the intention regarding these supplemental items, and Mr. Calhoun explained that the intention is to get a sense of what Council thinks about these items, if there is an interest,and when the budget comes up in August,to discuss whether to include them; said there are a lot of capital requests but also some for deferred maintenance; and said his own inclination would be to advance them all and see if we can have some of these things as a two to three year investment. Deputy Mayor Woodard agreed with the idea of having some kind of a replacement budget line for those items; said he knows these things will increase the budget, but it would present a more realistic view, adding there is a need to discuss these. Councilmember Pace agreed and said many of these items are overdue now or will be soon, and that these types of expenses are all a part of doing business. There was discussion about the previous building replacement fund; outstanding bonds for CenterPlace; and letting future generations deal with the future building replacement, and current generations deal with equipment replacement items. Councilmember Wood noted he likes the idea of reserve funds, with Mayor Higgins commenting he likes the idea of solving the immediate problems now, and attacking the larger ones in pieces. Councilmember Pace asked when they might see an update on the Parks Master Plan with current priorities and estimated costs. Mr. Calhoun said staff can schedule an update, but there is no funding involved as the Parks Master Plan is a plan and as such, gives targets for the future. Tab 10: Community and Economic Development. Director Hohman explained that overall his department shows an increase of 2.27%; said that the Economic Development part was created several years ago with no added cost or employees,just a shuffle of some employees to that area; said staff is working hard to do those initial foundational pieces such as the retail studies; said the workload has increased substantially; said moving staff from one division to another required additional support and he plans to move staff from the building department into this division to help with some of the activities, and said the division has matured enough now that it is time to establish this department with a manager; mentioned that the Economic Development Coordinator is just a name as that position is really a Senior Planner, but he feels the time is right to have an established manager position, which would require an increase for one individual, which is included in the budget now. Mr. Calhoun added that the 2017 budget will have the same FTEs as the 2016 - no additional employees. Discussion turned to marketing with Mr. Hohman mentioning the supplemental request of$50,000 for a retail recruiter,which would be a contractor to focus just on retail for now,and said he knows there are firms out there who do that. Concerning marketing,Mr. Hohman said that everything is interrelated: marketing, recruiting, comp plan, land use, and the ability to get people located to specific areas; and said this recruiter could work with local real estate brokers as we understand what properties are available. Councilmember Gothmann asked about the ultimate goal of recruiting,and if that means limited choosing, and he questioned if that should be the role of Council;and he suggested exercising caution.Councilmember Pace agreed that is not the basic function of government, although said he favors this strategy as a means of growing and therefore not needing to raise taxes. Council Special Meeting Budget Workshop:06-14-2016 Page 7 of 14 Approved by Council:07-12-2016 Councilmember Gothmann again suggested caution in going out for a recruiter as we want to be careful about getting into the business of choosing businesses; said the City started without an Economic Development Department on purpose as we didn't want to get into what a function of business should be doing. Deputy Mayor Woodard asked if a Request for Proposals would define how this would be handled and Mr. Hohman agreed; and Deputy Mayor Woodard said he would like to see the budget with those figures now so we won't have to amend the budget later; said he thinks some of these one-time things are not recurring, and are a little different from the recurring and would like to have them as a placeholder in the budget.Mr.Calhoun said that Finance Director Taylor will be making notes on nonrecurring and what is and is not included based on today's discussion. Councilmember Gothmann asked about policies relative to what we do or don't do regarding economic development. Deputy Mayor Woodard mentioned that citizens ask about getting good restaurants in the valley and why we don't have those, and said maybe there are a few we should try to recruit. Councilmember Pace said people also complain a lot about vacant buildings.Mr.Hohman said the idea is putting the City more on a level playing field with other jurisdictions already on this path;that he feels this is a pertinent step to take, but the decision is up to Council. Deputy Mayor Woodard suggested retaining before expanding. Mr. Hohman said that retail is not the only aspect as they also focus on manufacturing, and that will be on a future work plan. Mr. Hohman explained that Development Services is mostly the same and there was brief discussion about GIS and managing that system for the entire city;with no proposed changes in that now.It was noted that the blue sheet has a typo where it shows a .75 planner,that should be 1.0. Tab 11: Public Works. Director Guth explained that this department includes 20 FTE's across five divisions and three major funds. Mr. Guth explained about the new GIS system; software licensing and maintenance; moving AutoCAD into the stormwater fund; and the street fund's two divisions; as well as traffic and street maintenance. Deputy Mayor Woodard asked about the $80,000 for repair and maintenance supplies and Mr.Guth said it is less expensive doing that in-house rather than contracting out for those services. Mr. Guth brought Council's attention to the street fund and the rectangular box on the fold out sheet showing bridge inspections, which are done by the County; said most of those are maintenance activities;he spoke of previous repairs to Fancher Bridge;and went over the two items in red: signal detection replacement and traffic signal replacement. Concerning traffic signal replacement, Mr. Guth explained that some aspects of the technology become obsolete and/or outdated, which means we will have to buy the equipment that will work and be able to be replaced;said signal detection is on twenty of our ninety intersections;with seventy buried in the ground; that the useful life is seven to twelve years, and of those twenty, ten are older than twelve years so need to be replaced. Mr. Guth said these figures only contemplate replacing two of those ten with the idea of replacing two every year. The traffic signal replacement includes replacing all traffic signals over a long period of time and once completed, we will have to go back and replace those which were replaced first; said the useful life on electronic components in intersections is ten to fifteen years, and the suggestion is to have twenty to thirty years on mast arms, poles, wires, and undergrounding; said we are extending that out to fifty years for steel poles and mast arms, but currently have four intersections over fifty years old and seven over forty years; and that this only addresses replacing one; so the idea is to budget one for each year and have some spare parts in case more than one goes out; said the issue is to try to catch up on some of this deferred maintenance,as shown on the supplemental requests. Mr. Guth mentioned Washington State Department of Transportation's (WSDOT) increase in winter snow services; and briefly discussed the $50,000 for sign replacement; said we are mandated to update signs including the font size of the street names;said we won't meet the deadline but will be working on it; said many of these signs have been around for a while and we are under a mandate to change the way the signs look. Councilmember Pace asked about the possibility of working wayfinding into this, and Mr. Guth said probably not; that it would have to depend on the grant but wayfinding funds would likely not be available. The meeting recessed at noon for lunch. Mayor Higgins reconvened the meeting at 12:35 p.m. Council Special Meeting Budget Workshop:06-14-2016 Page 8 of 14 Approved by Council:07-12-2016 Mr. Guth said that his last division to discuss is the stormwater utility, which he said includes about four FTE's;said there have not been many changes in this department,adding that GIS is included here as well. Mr. Guth explained that the professional services funds are to hire consultants relative to utilities;that the private stormwater maintenance is the contractors they work with for such things as street sweeping, vactoring, landscaping the swales, and weed abatement, and on-call in case of emergency. He mentioned that the brackets on the fold-out sheets are just for information purposes and not reductions as the prices are holding the same for 2016 and 2017. There was further discussion about stormwater fees and funds, and how much of the stormwater fees are used for operation and maintenance;the County's administration of the Aquifer Protection Funds programs; and the Effectiveness Study as shown on page 2 of 2 of the fold-outs. Moving to the supplemental requests on page 8 of 13, Mr. Guth described the durable striping for Trent/Argonne,which would be done by WSDOT at our expense,and said WSDOT asked if we'd pay for durable striping;that this more thermal-plastic material could last five to seven years;that the$75,000 cost is for those multiple years, compared to painting twice a year, adding that the cost of traffic control is an issue as well.Mr. Guth said WSDOT would be doing this work at night as safety is their main concern and with this process, doing this work less often means less inconvenience to the public. Deputy Mayor Woodard said he thinks this should be included in the budget and see how long it lasts. Mr.Guth remarked that if this is proved not to be successful,we could go back and paint later.Moving to supplemental request page 9 of 13, Mr. Guth explained about the signal detection upgrades, which he said would be recurring within the street fund to update two intersections per year. A question arose about the signal that gets activated for emergency vehicles, and Mr. Guth said he will research who pays for and maintains that equipment. Mr. Guth explained that the request for spare equipment for traffic signals is needed because we currently have no spare equipment, and he feels it would be prudent to have at least one spare piece, and said this would be a nonrecurring,one-time expense;adding that once that piece gets used, staff would come back and ask for another;said this should be in our inventory and we would store it on our site where needed. Deputy Mayor Woodard asked about the components in those cabinets and of the likelihood of failure, how difficult it is to get those parts, and is there a list of what we think are the most critical components. Mr.Guth said staff knows everything that is in every cabinet,including the age of each piece; that we have had failures in the past and this is part of the reason for the request for funding, to be more pro-active in case of failure; adding that traffic signals are extremely important to life and safety,therefore it is important to maintain the equipment in good working order. Mr. Guth said that the supplemental request shown on page 11 of 13 for battery backups, would be used for high volume areas, and in particular, for Argonne/Knox and Argonne/Montgomery, two intersections where we had prolonged power outage for over five days as a result of last fall's windstorm. Mr.Guth said this request will likely be brought back over the next several years to outfit some of the intersections. Mr. Guth said that the traffic signal replacement program described on page 12 of 13 is to replace all traffic signal hardware at just one intersection; and said staff is working to develop a capital traffic signal replacement plan;he said the anticipated costs for equipment is$200,000,but the equipment's shelf-life is twenty to thirty years.There was discussion about which intersections needed this,or if there are some that don't need it or could do without it; and mention that not needing power is one of the benefits of a round- about. The idea of using solar cells and battery backups was also mentioned and Mr. Guth said he would examine that idea.There was also the idea of stockpiling old parts, and Mr. Calhoun said this topic can be discussed further at a future meeting, and that all the ideas are good, but realistically we just don't have the funds for everything. Tab 12: City Hall Operations and Maintenance. Mr. Calhoun said we will be moving into our new City Hall building about September 2017; said that with our current building's lease, maintenance is included; that in 2017 we plan to hire someone for maintenance,thereby increasing our FTEs by one. Mr. Calhoun said that even though we will not need that individual for the entire year,a place was set out in the budget; Council Special Meeting Budget Workshop:06-14-2016 Page 9 of 14 Approved by Council:07-12-2016 that staff used CenterPlace as a guide to come up with figures; said the decision also hasn't been made yet to hire an additional staff member or to contract with a private business; said there are unmet needs at our Police Precinct so this position might be able to help out there as well as the new City Hall and CenterPlace. Mr. Guth said the intent at this point is to contract for janitorial services,but perhaps not maintenance;that we don't have staff to do things like keeping the front entranceway and walkway clear,or picking up litter, dirt and debris in the parking lot; and are still examining the cost effectiveness of either option: in-house or contracting.Discussion included whether we have anyone now who has the potential to work themselves into this position; or have someone working in tandem with someone else to learn the systems and help with minor repairs, litter pickup, or even snow removal; and if we have a temporary position, the idea of having them work into a full time position. Mr. Calhoun said presently it is challenging to manage the Precinct and CenterPlace, not even throwing in a new building; said we know we will have issues come like janitorial, grounds maintenance, electrical systems, that we could contract for versus what someone might need on the inside of the building, and we are just not sure of the best way to address this to get the job done in the most efficient and least expensive manner. Finance Director Taylor briefly went over the supplemental budget requests in general, and Mr. Calhoun noted that for the Parks Capital Grants Fund to build the Edgecliff splash pad,we would have to transfer that$125,000 from the general fund to that fund 309: Parks Capital Grants Fund. Tab 14: Capital Projects. Ms. Taylor mentioned that Council has seen this worksheet in prior workshops; that the projects are divided into completed or in-progress,and future construction; and said these projects were in Council's priority lists. Ms. Taylor mentioned the capital reserve fund 312 as shown in the inset box, and again mentioned that items in blue have funds committed to those projects. Mr. Calhoun noted that the total in that in-set box for capital reserves shows almost$14 million, and he gave a brief synopsis of those projects; he also noted that the railroad quiet zones are included and said this issue comes up periodically and maybe as we work through the grade separation projects,this would become moot. Mr. Calhoun said the list is not intended to be all-inclusive;said the Park Road,Argonne Bridge over I-90 have all been discussed previously; and other projects can be introduced for future consideration, or we could move some of the projects to the upper list of the Capital Projects.There was some discussion about some of the future construction and means of funding some of those large projects. Mr. Calhoun noted we continue to retain strong general fund reserves; that there will be seven presentations on the budget; and people don't usually show up for budget discussions unless there is a problem, and said he is happy to report there have been no issues, so we are quietly successful. Mayor Higgins asked about the County's sewer project,which lead discussion to Tab 15. Tab 15: Transportation and Infrastructure Issues. Mr. Hohman directed attention to the fold out map entitled "Proposed Infrastructure Improvements," showing future projects, and said when the County designed the connection from Sullivan to Euclid,they also designed the Euclid piece; said it is about 60% completed and he is working to schedule meetings with the County to discuss how the next piece of Euclid will more forward, and he asked if Council is interested in setting aside that $1.8 million for this street replacement; said as we move forward we are ready to reconstruct the road and the County is ready to put in the sewer; said the hope is to get Euclid completed before near year,provided both the County and our City have financing.Mr.Hohman mentioned there is still work that needs to be done at Tschirley and Barker Road; that Flora to Barker mainline is relatively designed; and as typical,we will coordinate with consolidated water and all utilities.Beginning with the first page under this tab, Mr. Calhoun said these figures are from the March 15 workshop, adding that the telephone tax includes landlines as well as mobile phones. Concerning the street fund,Mr.Calhoun noted we are on a nonsustainable path for the street fund, and that the utility phone tax of 6% does not generate the way it did in the past, so we have to come up with some additional revenue structure to accommodate that fund,or some conceivable tax to replace the phone tax. Councilmember Gothmann said he remembered that initially the phone tax was intended as a temporary solution. City Attorney Driskell said one possibility for revenue is a street utility, and a possibility of trying to change state law for a street Council Special Meeting Budget Workshop:06-14-2016 Page 10 of 14 Approved by Council:07-12-2016 utility tax, said we could identify all costs for the care and maintenance of the transportation system, and include that when bills go out;said the idea was discussed in 2008 or 2009,but hasn't been discussed since. Ms. Taylor noted that for page 2, Pavement Preservation figures, the proposed 2017 budget for this fund has not yet been developed, so the figures used were from 2016; and she noted the transfers in the civic facility replacement funds will be depleted in 2016 so we would be replying on REET (real estate excise tax)funds;and in moving to the next page,she went over the figures associated with those REET revenues. Mr.Calhoun said that historically we have used REET as a grant match for construction and reconstruction projects, and now we must determine how to prioritize those revenues. Concerning Bridging the Valley, Ms. Taylor went over the figures for each of the overpass/underpass projects and estimated annual bond payments for each. Mr. Calhoun noted that in each case, we assume no grants; adding that after we hear from the FASTLANE and TIGER grants,we hope to be able to refine these figures, but the figures shown are the worst-case scenarios in order to give an idea of the magnitude of these projects versus the sales tax and property tax needed to bring these projects to fruition. Ms. Taylor reviewed the figures on page 7 for banked capacity/annual payment,as well as the information contained on pages 8 through 11 covering the Transportation Benefit District (TBD) information and the calculation of revenues with a $20, $40, and $50 tab fee. Mayor Higgins stated that this issue needs to be addressed;the phone tax will still be here but further revenues are needed. Ms.Taylor also went over the figures contained on page 12 concerning utility taxes available to the City. There was discussion about types of utilities and use of tax. Mr. Driskell said some utility companies like Modern and Vera are quasi-municipal, but Avista is private; that in the past, the court distinguished between these and we cannot tax another governmental entity. However, there was recently a case in Chelan County where the Court said that when a quasi-government agency acts in a proprietary(business- like)function like selling their service for a fee,they would consider that a non-governmental function that is subject to a utility tax; he said past Councils were reluctant to impose tax on electricity because some providers would be exempt;that we would be able to do this now for all four providers,which he said was a partial basis for how Council decided on the phone tax instead of electrical. Councilmember Gothmann said he feels there is no reason to tax electricity,as we have many other utilities to consider. Mr. Driskell agreed and said most municipalities charge a tax for utilities and we are rare in not doing so.Deputy City Attorney Lamb added that we could levy a tax on solid waste collection for curb pickup and at the disposal site of Sunshine;however,we do not have mandatory collection so not everyone has Waste Management pickup, and estimates we would have 30-35%not paying that tax if it were levied on collection; said it is not a legal issue but more a matter of fairness. Deputy Mayor Woodard mentioned the idea of gas or cable,realizing that not everyone has those services,and asked if that would be equitable. Mr. Driskell said those are not considered inequitable, that we would charge the same for all those who have gas,or cable. The question of Dish network came up and Mr. Driskell said that isn't a utility, so they would be treated separately as they don't use our rights-of-way. Deputy Mayor Woodard mentioned that most everyone uses sewer. Mayor Higgins said since we already have a utility tax, this could be a simple expansion of that and would be hardly noticeable yet still meet the needs; said he feels this type of tax is more palatable than a property tax or a TBD, although a TBD would include bikers as well. Mr. Driskell noted that any such tax would be designated specifically per Council direction, and that such designated use would be included in the ordinance. Mr. Calhoun said we all know that taxes should be a last resort, but we have reached a point where Council is in a position to make a decision. Deputy Mayor Woodard agreed that a lot has happened in the last five years; including a change in the economy;that he hopes if a utility tax is chosen, it would be used to do certain things; and said a public education program would be necessary so people would know what the tax would be used for, such as keeping the roads safe; said we are slowly falling behind on our road preservation, and he thinks people understand that; said he would also want a sunset clause on the tax.Councilmember Gothmann suggested prioritizing,to take care of what we already have first, then move to things such as Bridging the Valley; said we should constructing a Council Special Meeting Budget Workshop:06-14-2016 Page 11 of 14 Approved by Council:07-12-2016 budget to determine how much is needed to do the job, what is the total shortfall, then consider funding sources; said you can't do that until the shortfall amount is known; and that we would also need to know what level of pavement preservation is desired;what is the goal.Mr.Calhoun explained that staff will work through a realistic budget for street operation and maintenance, along with some form of CPI (consumer price index)rate,and do the same for pavement preservation, and identify the pieces so Council can direct their concerns; for example, how much would 1%tax generate on electricity, or gas; and said by solving those problems we solve our REET problem; said we will need to move cautiously as the difficult part will be to determine what the tax will generate;then we would likely need a full year before making any change to that; he said staff can work to put together some figures over the next few months, and that we need a plan before the end of 2017.Mayor Higgins said he would like to forget that the banked property tax exists, and Deputy Mayor Woodard agreed with not using banked property tax,but if that were a plausible option, to take it to the voters first. The meeting broke for a short recess at 2:22 p.m., and reconvened at 2:42 p.m. Tab 16: Financial Objectives.After Mr.Calhoun went over the information included under this tab,Deputy Mayor Woodard said for the service level stabilization reserve fund,that it makes no sense to him to have that 60% figure: "Commitment to the strategy that the Service Level Stabilization Reserve Fund will not reduce below$3.27 million(60%of the$5.5 million)"; but said he agrees with replenishing the fund. Mr. Calhoun said that the 60% is the written policy, and is there to use or not. Mayor Higgins replied that if that is policy, Council can change the policy, but that it is a nice thing to have in place. Mr. Calhoun remarked that if things were really bad, that could be amended by the Council vote as part of a regular budget amendment, and would need five of seven Councilmembers to adopt such change. Deputy Mayor Woodard said he understands it is an objective,and that under an emergency situation we could use that to the degree needed, but Council could change it and still rebuild. Mr. Calhoun said the figure is also used to prop up the general fund, he mentioned our good bond rating and that Moody's like these policies, and that it could also be our relief fund for any natural disaster. Mayor Higgins said he likes Mr. Calhoun's explanation and feels therefore it makes sense to keep the policy as is. Tab 17: Council Goals. Mr. Calhoun said these are the goals as stated in the 2016 budget; some goals are more permanent, and some are transitory; and he opened the floor to Council for discussion. 1.Continue to work with state and federal legislators for possible financial assistance for the Barker Road Grade Separation. Council agreed to keep that as stated, but add the Pines Road Grade Separation. 2. Develop a strategic plan for funding and completion of all grade separation projects. After brief discussion about the possibility of adding "working with the railroads on quiet zones," it was decided to not dilute this goal's basis idea, and to keep it as it is. However, for a possible additional goal concerning railroad crossings and quiet zones, it was agreed that Mr. Driskell and Mr. Calhoun will work to include a goal worded in such a way as to not obligate us to create quiet zones. 3. Consider and expand, where possible, economic development efforts, including construction of the new City Hall. Complete retail and tourism studies, develop and implement strategies. It was agreed to remove the"including construction of the new City Hall";but to keep the rest. 4. Pursue a sustainability plan in connection with the City's Street Preservation program, to include sustained funding in the City's Street Fund#311 to address concerns beyond the year 2020. Council agreed to keep this goal as is. Mr. Calhoun asked about adding our street fund 101 operation and maintenance to this goal. There were no objections. Council Special Meeting Budget Workshop:06-14-2016 Page 12 of 14 Approved by Council:07-12-2016 5. Evaluate and discuss increasing costs to public safety, including law enforcement. Seek long-term solutions to keeping costs in check while better serving the community. Council agreed they always want to do this. 6. Work toward completion of the Comprehensive Plan update. Council agreed to drop this goal since it will be accomplished early 2017. Deputy Mayor Woodard suggested a new goal #6: to pursue funding for Balfour Park and the Appleway Trail amenities.There were no objections. Concerning a legislative agenda,Deputy Mayor Woodard he was speaking with a legislator a few days ago and that person suggested we give him a list of parks, and particularly a list of capital projects to include with the legislator's list. Mr. Calhoun told Council and he and Mr. Driskell met with Lobbyist Briahna Murray yesterday and have started going through the preliminary 2017 legislative agenda, and that part of that discussion identified some of these items. Deputy Mayor Woodard said it was his understanding our list of projects was needed by the end of July, and Mr. Calhoun said he would speak with Ms. Murray on that issue. Discussion turned to Councilmember Pace's handwritten "brainstormed list of council goals." Councilmember Pace mentioned his goal #6: develop and implement a plan for reducing property crime and becoming known as a zero-tolerance for crime city." He also mentioned his goal #7: finish redeveloping Browns park. Mr. Calhoun suggested that perhaps we could add that to the new #6. There were no objections to Mr. Calhoun's suggestion. Councilmember Pace mentioned his goal #1: grow the City's tax base to fund our other goals without raising taxes: finish Comprehensive Plan; follow through with our economic development,City identity,and marketing efforts.He said he realizes this might already be covered elsewhere. Mr. Calhoun said this could be incorporated as part of#3 above and then re-state the entire amended goal. Deputy Mayor Woodard said a goal of his would be a new library building/community or senior center or something else; and if we had a library building, we would have to contract with the Library District for them to operate the library, and said they get our tax dollars for the library operation; it could also be a preservation of Valley documents; said that someone pointed out to him that libraries are dying because people don't use books anymore; he said he doesn't feel that is the case as the newest statistics show those under twelve years old are reading books; said the majority of the citizens, although not 60%, wanted a new library building because the current building is 65 years old and has limited parking;so his goal would be to have a community center with a library; and said he and Mayor Higgins will know more after they attend the Library Board meeting at the end of the month as that Board is scheduled to discuss the plans for the old library building. Mr. Calhoun suggested wording of the goal "to develop a plan for the construction of a community center with library space." Deputy Mayor Woodard said we could include in that verbiage,in the vicinity of Balfour Park,although the location could be elsewhere. Mr.Calhoun asked about adding how we could go about paying for the construction of a facility,and Deputy Mayor Woodard suggested not including that in the verbiage for the goal; and said he thinks funding would come from a voted bond just like the library was just voted on; said he thinks we might do a better job of marketing the benefits proposition to the public than what was marketed to the public on the last bond effort; and said he thinks the public really does want a library/community center type of building. Councilmember Pace said he agrees with the goal; said he and Deputy Mayor Woodard visited with Nancy Ledeboer, the Library's Executive Director after the vote, and said she was downhearted and mad about the bond failing; and said they talked out the Library's lack of a value proposition; he suggested there are creative ways of raising money; maybe form a partnership, adding that Liberty Lake had ideas for their library and community center. Deputy Mayor Woodard suggested if the Senior Center were on a bus line, that attendance would increase. Mr. Driskell added that a new city has the authority to run the library, so when we first Council Special Meeting Budget Workshop:06-14-2016 Page 13 of 14 Approved by Council:07-12-2016 incorporated, we had the option to create our own, or annex; that the issue was put on the ballot and the citizens voted to annex into the Library District. Councilmember Gothmann added the Library District is now a separate municipality and we have no business telling another municipality what to do, but agrees we could make it a goal to partner in an effort to increase efficiency. Mr. Koudelka said he was involved in the process and when we entered into a contract with the Library District, we paid them to provide that service with additional property tax levy dollars; not long after that, one of the first services we looked at for managed competition was library services;that we went out for proposals and received two: one from a private provider and the other from the Library District; the issue involved very intensive community discussions as many felt the library services were being threatened; and that the City acknowledge that the citizens were very satisfied with the library so we continued our contract with the Library District; he said the vote to annex to the library passed overwhelmingly. Deputy Mayor Woodard said that if we build a building, it would be ours and the library might use it or not;that it would still be a community center and our capital improvement; said he is not suggesting we get rid of the library or the library district, if there was such high satisfaction,why did only 57%want a new library building; said he thinks that is a goal and we need more discussion on this topic, and more with the library district as well. Mr. Calhoun said staff will place this item on the pending agenda for future discussion. As a last item of business, Mr. Calhoun thanked outgoing Councilmember Gothmann for his work over the past year, said it was interesting that his first meeting and his last meeting were a budget meeting; and he extended thanks with a parting gift of an engraved clock. Councilmembers thanked Mr. Gothmann for his assistance and service. There being no further business, it was moved by Deputy Mayor Woodard, seconded and unanimously agreed to adjourn. 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