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2016, 11-17 Special re Water Issues MINUTES SPOKANE VALLEY COUNCIL SPECIAL MEETING Spokane Valley City Hall Council Chambers Spokane Valley, Washington November 17, 2016 Attendance: Councilmembers Staff Rod Higgins, Mayor Mark Calhoun, City Manager Arne Woodard,Deputy Mayor Cal),Driskell,City Attorney Pam Haley, Councilmember[arrived 8:36 a.n:.] Chelsie Taylor,Finance Director Mike Munch, Councilmember Gabe Gallinger, Development Services Mgr. Ed Pace, Councilmember Eric Guth,Public Works Director Sam Wood, Councilmember John Hohman,Comm&Eco. Dev. Director Mike Stone,Parks&Recreation Director Adam Jackson,Assistant Engineer Absent: Deanna I-lorton,Administrative Assistant Caleb Collier, Councilmember Henry Allen,Development Engineer Christine Bainbridge, City Clerk Others in attendance: East Spokane Water District#1 representative Spokane Comity Water District#3 representatives • Irvin Water District#6 representatives Carnitope Irrigation #7/Hutchison Irrigation #16 representative Consolidated Irrigation District#19 representative Modern Electric Water Company representatives Vera Water and Power representatives Attorney Joe Carroll Lobbyist Chelsea Hager, of Gordon Thomas Honeywell Governmental Affairs Mayor Higgins called the meeting to order at 8:30 a.m. ROLL CALL: City Clerk Bainbridge called the roll; all Councilmembers were present except Councilmembers Haley and Collier. It was moved by Deputy Mayor Woodard, seconded and unanimously agreed to excuse Councilmembers Haley and Collier. Overview Discussion Topics—Mark Calhoun City Manager Calhoun explained that the purpose of today's meeting is to hear information concerning various issues concerning water and water rights, and noted that copies of today's packet of information are available on the shelf; and said free discussion is encouraged. L Department of Ecology,Instream Flow Rules—Hemy Allen After self-introductions of those in attendance,Development Engineer Allen gave background information about instream flow rules; said that while all waters are public, they can't be owned but people can get a right to use them based on an appropriation for a beneficial use; said that the "first in time" gets the right in use and first in,has seniority over all the rights that become effective afterwards;he mentioned the 1949 Water Flow Policy and read excerpts from RCW 77.57.020 about"Review of permit applications to divert or store water--Water flow policy." Mr.Allen explained that the 1967 Minimum Water Flows and Levels Act(Ch.90.22 RCW)sets forth a process for protecting instream flows,and that the Department of Ecology must develop a state water plan and that it may establish minimum water flows or levels for streams for the Council Special Meeting Minutes 11-17-2016 Page 1 of 5 Approved by Council: 12-13-2016 purpose of protecting fish,game,birds or for recreational or aesthetic values of public waters; and he spoke about the impact of the instream flow rules. By February 2015, he explained, the Instream Flow Rule was adopted for the Rathdrum Prairie Aquifer which applies to surface and ground water,including the Spokane River,and he referenced the graph included in the handout materials.He also explained that the first in time first in right means that the older or senior water right may operate to the exclusion of junior water rights, which lead to discussion about the shutting off juniors and any enforcement, or lack thereof. Councilmember Wood spoke of water banking and said the County takes over those rights and dishes them out as needed. Mr. Joe Carroll stated that the County is looking into that with the Little Spokane WIRA water shed, but not for our Spokane Valley area. There ensued discussion about water banking in other areas. [Water banking is the practice offorgoing water deliveries during certain periods, and "banking" either the right to use the forgone water in the future, or saving it for someone else to use in exchange for a fee or delivery in kind. It is usually used where there is slgnifcarlt storage capacity to facilitate such transfers of water. . . . In the United States, water banking is typically regulated and managed at the state level. Wikipedia] 2. Supreme Court Case—Whatcom County v. Hirst—John Hohman and Cary Driskell Mr. Hohman addressed the "Van Ness Feldman" handout concerning the Whatcom County v. Western Washington Growth Management Hearings Board Case Summary;"said this case is being studied intensely and the impacts to Spokane County are being observed, and that we are working to determine any impacts to our City; said there will be more discussion with the water districts; that this issue is being monitored and there was an appeals court decision overturned in October on a previous case that the GMA took against Whatcom County, which requires the county to play an expansive role in water quality; and he mentioned that the County is trying to determine how to implement this; he noted that the Court's decision would "require individual building permit applicants to commission a hydrogeological study to show that their very small withdrawal does not impair senior water rights, and then have the local building department evaluate the adequacy of that scientific data." Mr. Hohman said that we don't know how this impacts the water district operations, and that Mr. Tadas Kisielius from Van Ness Feldman will be giving an in-depth presentation on this issue at the November 22, 2016 Council meeting.There was brief discussion about the effects, if any, on a public water purveyor with Mr. Carroll mentioning that he has not heard anything from the Department of Ecology looking at the public water purveyors. 3. Legislative Clarification of Water Provider's Water Rights—Cary Driskell City Attorney Driskell spoke of a proposed bill from Senator Padden which would allow a cleaner process for those water rights traditionally used for municipal purposes designated as irrigation, and allow more assurances for water providers. Mr. Carroll said he and the water purveyors appreciate the City getting behind this; said the instream flow rule is a water right and time is critical as any rights issued before that have priority over the instream flow rule, and any after that are subject to the priority of the instream flow rule; said it is important to keep these rights and to convert irrigation rights to municipal rights; he said the bill went through the Senate Committee but died in the house committee; concerning connectivity, said the Supreme Court says that constitutes impairment and they will enforce the instream flow rule very strictly against anyone who might have a subsequent right. Ms.Hager said the session in Olympia is set to convene January 9, but before that there will be some meetings with senate legislators as they work to get support of other legislators for this bill,and mentioned that she will be meeting with them to see if they'd be willing to sign on; she said that Senator Padden is the sponsor and that he has some bipartisan support and between now and January 9, she and Ms.Murray will continue to meet with legislators,members of the Department of Health, the Department of Ecology, and others to gage the reception they might receive, to address concerns and work through any potential problems the might face; she said that in the last session the bill died, but now that the bill is re-drafted and narrowed to this specific area and the use of the aquifer, there is reason for the legislators to support this; she also mentioned there will be continued discussion of the Hirst ease.Deputy Mayor Woodard asked about possible water purveyor's letters of support and Ms.Hager replied that she AvilI maintain a consistent message, and if others want to help, she encourages conversation Council Special Meeting.Minutes 11-17-2016 Page 2 of 5 Approved by Council: 12-13-2016 with the City, adding that this City will be sending letters of support to the legislators. City Manager Calhoun added that letters of support can be routed through our office to either Mr.Driskell or himself,and that he and/or Mr.Driskell will get the letters forwarded to our lobbyist.Deputy Mayor Woodard suggested soliciting support letters from large users, like Kaiser. Councihnember Wood asked about a letter we previously sent and Mr. Calhoun said he believes we did, and that staff could forward that to each water district to use as a template for their own letter. Mr.Driskell said this has been added to the City's legislative agenda. 4. Spokane Valley Utility Tax Proposal -Chelsie Taylor Finance Director Taylor went through the "Transportation & Infrastructure Funding-Utility Taxes" presentation, including the background noting the various previous meetings held that included the topic, the function and status of Street Fund #101 including the current telephone utility tax and projections of revenues and budgets;the purpose and status,as well as projections of revenues and budgets for Pavement Preservation Fund #311, and the combined funding needs from those funds for the next few years. Ms. Taylor explained how and which utilities can be used for tax purposes, and of projected revenues from those individual utilities with a 1, 2, 3, 4, 5, and 6% tax, and she compared our current telephone tax and proposed taxes with neighboring jurisdictions. Mr. Calhoun interjected that some of the funds could also be used for some grade separation projects, such as Barker and Trent, Pines and Trent, Sullivan, and elsewhere. City Attorney Driskell then went through the various sections of the proposed utility tax ordinance. A question was asked about the rationale for removing the current phone tax and Mr. Calhoun explained that we selected the utility that was least reliable; and in the late 1990's and early 2000's, phone utility tax climbed dramatically as people were adding cell phones to their already existing landlines; but about 2009 people started dropping their landlines at an annual rate of about 5%, and said funding is likely more stable with another utility tax. [It was noted that Mayor Higgins left the meeting at about 9:38 a.m.] Deputy Mayor Woodard said that there are some utilities that hit everyone, and some landlords have implied they will raise rents to cover taxes; said it was felt that a more broad base would be a more fair process in order to make as small a sacrifice to any one person or company, as possible. Councilmember Pace added that this is just a straw proposal and studies have not yet been concluded; that some members of Council ran on a platform of no new taxes, but a need has arisen and he doesn't feel as bad with eliminating one tax and replacing it with another; but again said he feels there needs to be a lot more studying of the issue. Councilmember Wood said he ran on the platform of"no new taxes" as be believes in smaller taxes and less regulations; that he is against this the way it is drafted now and said he would not vote for this going forward; said that doesn't mean something isn't needed for road preservation, but that this needs more study;said he received over one hundred e-mails,most of which were against the tax; said we need to study this and determine what level road condition the public is willing to accept; that we want good roads and don't want to end up like Spokane, but we need to be more transparent and need some town hall meetings and not rush into this now, and look at places to cut costs; he said grade separations are a top priority and lie realizes grants for those projects are difficult to acquire, and agreed more study is needed. Mr. Kelly Williamette of Spokane County Water District#3 asked if there are options other than a utility tax; said that formerly he was a public works director,that streets are a daunting task and there's generally not much money for streets;and he asked if Council has examined a TBD(Transportation Benefit District); said the City of Spokane has one;that there are things that can be done without a public vote;also mentioned the 2/101"of 1% sales tax increase that was passed by citizens; said revenues from a TBD must by law, go to streets,and can even be used for snow removal and maintenance.Mr.Bryan St.Clair of Modern Electric Water said lie is also a former Public Works Director and supports what Mr.Williamette said;he mentioned our City's business plan and the need for the public involvement process; said roads need to be done but it doesn't need to be 6% on everything; he also asked why overlay McDonald when it was one of the better streets,and now with the continuation of the trail,McDonald will have to be cut into again.Mr.Williamette Council Special Meeting Minutes 11-17-2016 Page 3 of 5 Approved by Council: 12-13-2016 spoke again concerning a TBD; said there are limits on a TBD but having a 6% increase all at once is outrageous; said things can be phased in and done gradually, and he encouraged Council to explore other options; said there needs to be some sort of relationship between the roads and the tax; that the physical reality of their customers is only part of them are in this City, that there are no databases or geographical information and said it would takes months or years to create such data;also mentioned that the legal issue on taxing of other municipalities wasn't settled; said we need to work on this together and in advance; and said it never makes sense to go all at once and have big impacts on the customers. Deputy Mayor Woodard said that Council has been as transparent as anyone can be when no one will cover anything; said the publication was distributed that goes to all businesses and households which included information about this issue; and he thanked the water districts for sending out their letter, and said maybe they could help us get out future messages. Councilmember Haley said she is personally opposed to the tax; said she received 403 e-mails and a lot of the public agreed with her. Councilmember Munch said that Council needs a lot more public input from citizens;that this is a big issue and he is generally an anti-tax raising person, and feels all options have not been exhausted, but that this is an issue to study; or perhaps the City could cut services elsewhere. City Manager Calhoun said that the message is loud and clear that we need to go back to the beginning and walk through how we arrived at this point; said he feels there are a range of options, including the option of doing nothing; and said the levels of service could be adjusted accordingly if there is no tax; said we still have issues on reconstruction as well as pavement preservations and street construction needs, and could do a prioritization program if that is Council's desire; or we could be patient to wait for grants. Concerning a TBD,Mr.Calhoun said the finance committee did discuss it and we can impose our own TBD up to $50,00 per tag, incrementally over forty-eight months, and that would generate about $3 million,which is half of what is needed, or we could impose a voter approved sales tax of 2/10" of 1% which would amount to about $4.5 million, both of which the finance committee did not favor as it would put the vendors at a competitive disadvantage; said that someone mentioned the banked capacity of about$550,000 in property taxes,and said that would be a nice start but would be a far cry from what is really needed;said the finance committee also went through all those discussions and that will come back to full Council from the beginning, and work our way through, including community involvement, and said this issue will be a process through the balance of next year. Mr.Carroll mentioned that the figures don't have a reduction for governmental fire flow;mention from Ms. Taylor that more discussion is needed and this is not the end product. City Attorney Driskell said 6%was a true analysis; that the City of Spokane collects a tax on the tax and grosses it up three times, and that our figures did not do that; he also noted that staff realizes the water districts might not have GEO coding to see who is in and outside the City limits,and said the City could send assistance as we have that information, and that we could help on implementation issues as well. Mr.Jim Lande mentioned that keeping the phone tax would be the thing to do. The idea of council manic bonds was mentioned and Mr. Calhoun explained that those are not voted on by the public, and only by imposing the full 6%would we get the $1.7 million excess and apply that to pay off the bonds for the grade separation projects, otherwise, said the issue of bonds has not been contemplated. 5. Abandoned Utility Infrastructure—Cary Driskell Via his Power Point presentation,City Attorney Driskell gave background on the topic of non-abandonment of utility facilities in public rights-of-way; lie went over the City's goal of adopting regulations to make each utility provider financially responsible for removing facilities in the public rights-of-way, to reduce risk of project delay and cost to all citizens; said facilities more than three feet underground aren't likely to impact road projects; and facilities that create or are likely to create a risk of damage or are a life, health, or safety rick,would have to be removed;otherwise,he explained,if the City needed to pay for the removal, the City would be subsiding several independent districts, some of which are private, adding that our City and the County have provisions in their interlocal agreements that neither jurisdiction would subsidize the other. Mr. Driskell concluded that all this will help the City stretch its scarce road fund resources while Council Special Meeting Minutes 11-17-2016 Page 4 of 5 Approved by Council; 12-13-2016 ensuring compliance with Washington law. [Ii was noted that Mayor Higgins returned to the meeting at about 10:19 a.m.]Councilmember Wood said that this wouldn't be something where the City would require immediate removal, and Deputy Mayor Woodard added that it would only involve those abandoned facilities in the way of a project. Mr.Driskell agreed and said if there would be no impact,then the facilities would not need to be removed.Mr.Kevin Wells of Vera Water and Power asked if this would be retroactive, and how would one determine who owns what;that there are abandoned pipes in their areas with sometimes fourteen people doing irrigation, said there's no way to determine who owns what. Mr. Driskell said we would have to talk about that in more detail but we want to avoid cost and delays so we would be asking for assistance from utility companies to get that needed information for general planning purposes;and said the real issue is,it costs money.[Cozncilmember Munch left the meeting at 10:31 a.m.;and Cortrrcilmember Wood left at 10:33 a.m.] Mr. Carroll asked if the City would be increasing costs overall by implementing this and speculated if that is really that much of a cost factor; said the ordinance speaks of"temporary" as well as the concept of leaving those facilities in if they are under three feet. Mr. Driskell stated that ultimately if the facilities belong to the district, then they are the districts and as such,the district should pay for the removal; said if we do not encounter the facilities, then there would no impact and no cost. Mr. Carroll mentioned that sometimes they put in the new and test them while the old line remains; to which Mr. Driskell replied, if it would make more sense not to pull those out,that would be a matter of choice for the district,but regardless, those are not appropriate costs for the City. Mr. Driskell and Mr. Carroll continued their discussion including whether this is a unique practice,and that Mr.Driskell said he feels the Courts would support the district paying for the removal as that is not a novel concept. Mayor Higgins stated that he feels we can work together on these issues, and that it would be something we need to have in place, but that it likely won't get used. In response to a comment about sewer, Mr. Driskell explained that Spokane County provides sewer and the City doesn't have anything to do with that as it is run entirely independent of our City. Mr.Carroll said he feels we all have a lot more in common than not,and said he appreciates the City setting this up as everyone can work together to reduce costs for the citizens. Mr.Calhoun agreed and said there is a lot more to be discussed, especially on those last two topics, and that we will do our best to incorporate the public and the utilities in future discussions. It was moved by Deputy Mayor Woodard, seconded and unanimously agreed to adjourn. The meeting adjourned at 10:52 a.m. � ♦ t ASP ATTEST. 1L.R. Higgu • P 'pristine Bainbridge, City Clerk Council Special Meeting Minutes 11-17-2016 Page 5 of 5 Approved by Council; 12-13-2016 •••#\.„ *Mime .00Valley SIGNATURE �^ II "PRINTED NAME/� AFFILIATION/ORGANIZATION & TITLE 6-0 11 /4'U 6 £b/t/�11L:1! 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