Loading...
2019, 02-19 Council WorkshopAGENDA SPOKANE VALLEY CITY COUNCIL SPECIAL MEETING WORKSHOP Tuesday, February 19, 2019 8:30 a.m. — 2:30 p.m. City Hall Council Chambers 10210 E. Sprague Avenue, Spokane Valley, Washington 99206 (Please Silence Your Cell Phones during the Meeting) WELCOME: Mayor Higgins ROLL CALL: Overview of Discussion Topics: Mark Calhoun 1. Review of Public Safety Contracts (8:45-11:00 am) Morgan Koudelka, John Pietro, Mark Werner, Matt Lyons • Law Enforcement • Detention Services • District Court • Prosecutor • Public Defender • Pretrial • Emergency Management • Animal Control 2. General Fund Fund Balance (11:00-11:15 am) Chelsie Taylor 3. 2020 Budget Development Calendar (11:15-11:30 am) Chelsie Taylor LUNCH BREAK 11:30 — 12:00 (Note: Council & Staff move to the second floor multi-purpose room for lunch) 4. Waste and Recycle Update (12:00-1:00 pm) Erik Lamb, Morgan Koudelka, Henry Allen 5. Neighborhood Restoration Program (1:00-2:00 pm) Erik Lamb, Morgan Koudelka, Henry Allen 6. Social Media (2:00-2:30 pm) Annie Gannon 7. Advance Agenda 8. EXECUTIVE SESSION [RCW 42.30.110(1)(i)]: "Move to adjourn into executive session for 15 minutes to discuss potential litigation, and no action will be taken upon return to open session." ADJOURN Please note that agenda item times are approximate and subject to change. Workshop Agenda: February 19, 2019 Page 1 of 1 CITY OF SPOKANE VALLEY Request for Council Action Meeting Date: February 19, 2019 Check all that apply: ['consent ❑ old business ['information ® admin. report Department Director Approval: ['new business ['public hearing ['pending legislation ['executive session AGENDA ITEM TITLE: Review Public Safety Contracts: 1. Law Enforcement 2. Detention Services 3. District Court 4. Public Defender 5. Prosecutor 6. Pretrial 7. Emergency Management 8. Animal Control GOVERNING LEGISLATION: N/A PREVIOUS COUNCIL ACTION TAKEN: Substantial. BACKGROUND: Chief Werner and Inspector Lyons will be going over Law Enforcement staffing, the Power Shift, and the Dedicated Spokane Valley Investigations Unit. In addition, using a format similar to the March 15, 2016 Spring Workshop item of the same topic, an overview of each public safety contract is provided and includes the following information; 1) a table with five-year Spokane Valley costs and usage trends from 2013 through 2017, 2) a table comparing 2017 Spokane Valley contract costs to similarly sized WA cities (within 20% of our population), 3) important timeline/dates like term length and termination notice, 4) important contract milestones/events with dates since incorporation, 5) current challenges including impacts to service delivery or costs, 6) and cost control measures. OPTIONS: Discussion RECOMMENDED ACTION OR MOTION. Discussion BUDGET/FINANCIAL IMPACTS: Varies according to contract STAFF/COUNCIL CONTACT: Morgan Koudelka, Senior Administrative Analyst; John Pietro, Administrative Analyst ATTACHMENTS: Staffing/Power Shift/ Dedicated Investigations PowerPoint (21 slides); Public Safety Contract Comparison (10 pgs.) Spokane Valley WA 2003 Spokane Valley Police Department (SVPD) Staffing Current and Future Projections 2/19/19 Spokane Valley WA 2003 Currently, the Spokane County Sheriff's Office (SCSO) is authorized 226 sworn personnel down from 249 in 2009 (SVPD positions have not been reduced). Recently, 14 training positions (formerly called pool positions) were funded. SCSO 99 SVPD 89 Shared 38 Spokane Valley 02 WA As of February 7, 2019 there were a total of 9 commissioned SCSO vacancies; however, this does not accurately represent the shortage. In addition to the 9 vacancies, 19 positions are filled with deputies in various stages of training that cannot work autonomously. Additionally, there are 3 deputies currently on military deployment and 4 recovering from long term injuries. The vacancies (due to all causes) are distributed throughout the Sheriff's Office. Spokane Valley 02 WA SVPD patrol staffing levels for the upcoming markup schedule (beginning March 1). SVPD Patrol Deputy Staffing as of March 1, 2019 Platoon Days 1 Days 2 Nights 1 Nights 2 Power Positions 9 (+1 desk officer) 9 10 10 8 Filled' 8 8 8 8 8 Traffic 5 3 K9 3 02 Total 55 43 'Filled with a healthy, autonomous deputy. 2 K9 deputies are occupying positions within the patrol platoons to help meet minimum staffing levels. Spokane Valley WA 2003 In the decade prior to 2014, SCSO's annual loss of commissioned personnel was about 8 deputies. In the past 5 years the average has been nearly 23. Increased recruitment has resulted in the hiring of 116 deputies, but about one third (40) of these recruits did not complete training. Spokane Valley 02 WA In 2018, SCSO hired a record number of 32 deputies; only 23 completed the training process. In addition to the 9 trainees that did not complete the training process, SCSO lost 17 tenured, commissioned deputies for a total loss of 26 commissioned personnel. For 2018 there was a net gain of 6 deputies, but most of them are not yet acting autonomously. Spokane Valley 02 WA SCSO continues to increase the efficiency of applicant processing and to expand recruitment efforts. • Lateral hire bonus $3,000 • Temporary assignment of 2 detectives to reduce the backlog of applicant background investigations • Expansion of Public Safety Testing's role to include some portions of background investigations • Assignment of a lieutenant to oversee training and recruitment Spokane Valley WA 2003 SVPD Power Shift Update 2/19/19 Spokane Valley 02 WA Power shift made possible by changes to personnel allocation that were approved by COSV city council in March of 2014. Partial implementation began March 1, 2015: 4/10s Wed. -Sat. (1500-0100). Staffing varied from 4 to 6 deputies. Beginning March 1, 2018 power shift was moved to a 12 hour shift (1400-0200) covering all 7 days of the week with a minimum of 3 deputies working each shift. Eight deputies are assigned. Spokane Valley WA 2003 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 4,026 SVPD Total Citizen Initiated Calls For Service 35,897 37,226 40,151 43,142 44,210 45,741 2012 2013 2014 2015 2016 2017 2018 Spokane Valley WA 2003 30,000 28,000 26,000 24,000 22,000 20,000 18,000 16,000 14,000 12,000 10,000 22,288 SVPD Citizen Initiated CFS with Deputy Response 23,065 23,975 25,511 26,142 27,102 28,982 2012 2013 2014 2015 2016 2017 2018 11 Spokane Valley WA 2003 18000 17000 16000 15000 14000 13000 12000 11738 11000 10000 SVPD Citizen Initiated CFS Without Deputy Response 12,832 13251 14640 17000 17108 16759 2012 2013 2014 2015 2016 2017 2018 12 Spokane Valley WA 2003 Patrol Hours Worked 62575.6 2017 2018 Spokane Valley WA 2003 Dedicated Spokane Valley Investigations Unit 2/19/19 Spokane Valley WA 2003 Beginning in January 2018 with the current interlocal agreement for law enforcement services, SVPD's dedicated property and drug crime investigative unit transitioned to direct control by the SVPD command structure i.e. Chief and Precinct Commander. Spokane Valley 02 WA The primary focus of SVIU is property crime; however, due to the nexus between property crime and illegal drugs, SVIU frequently conducts drug investigations. Investigations are prioritized based on several factors: • Severity of crime • Value of property lost • Prior record of suspect(s) • Relationship to other crimes • Firearms involved Spokane Valley WA 2003 SVIU Currently has 3 vacancies: • 2 Detectives • 1 Investigative deputy Promotions and retirements will result in 50% turnover in SVIU by June 30, 2019. Spokane Valley WA SVIU 2018 2003 • SVIU detectives arrested 354 persons charged with 1,627 felonies and 298 misdemeanors • SVIU detectives wrote 115 search warrants (some warrants include multiple locations) o 49 residences o 60 vehicles o 3 storage units o 5 motel rooms o 23 cell phones o 8 GPS tracker warrants o 10 bank/financial records Spokane valley WA SVIU 2018 2003 • SVIU detectives recovered $407,693 in stolen property • Recovered/seized 61 firearms o 24 stolen firearms o 3 illegal machine guns o 34 firearms seized from convicted felons • $69,305 seized as proceeds of illegal drug dealing • 26 vehicles seized as proceeds or as a tool to facilitate illegal drug dealing Spokane Valley WA 2003 SVIU 2018 About midway through 2018, SVIU began tracking the approximate amount of illegal drug seizures: • 4 pounds methamphetamine • 3.25 pounds Heroin • 17 grams crack cocaine • Numerous Schedule III+ drugs Spokane Valley WA 2003 SVPD and COSV staff are currently working together to develop relevant performance and workload measures for SVIU to provide a means to more accurately demonstrate the unit's performance . Spokane 4.0001F Valley Law Enforcement Spokane Valley Law Enforcement Trends City Actual % Change 2013 $ 17,520,905 111,200 2014 $ 17,281,226 -1.4% 2015 $ 17,858,027 3.3% 2016 $ 17,426,325 -2.4% 2017 $ 18,816,334 8.0% Average % Change 1.8% Provider: Spokane County COSV Compared To Similarly Sized WA Cities City 2018 OFM Population 2017 Law Enforcement $'s Per Capita Cost Everett 111,200 $ 31,527,0331 $ 284 Renton 104,100 $ 30,243,5991 $ 291 Federal Way 97,440 $ 23,504,808 $ 241 Yakima 94,190 $ 26,610,588 $ 283 Bellingham 88,500 $ 21,136,8841 $ 239 Kirkland 87,240 $ 22,204,6621 $ 255 Kennewick 81,850 $ 19,071,273 $ 233 Auburn 80,615 $ 24,947,2251 $ 309 Average 93,142 $ 24,905,759 P.$ 266.70 Spokane Valley 95,810 $ 18,816,334 $ 196 Current Agreement Start Date: January 1, 2018 Current Agreement End Date: 5 year term and then 5 year renewals. No automatic renewal without providing County notice of Council authorization of auto -renewal. Termination Notice: 24 month termination notice after 3 years of current term are completed. Current term ends December 31, 2022. History: • 2003 Original Interlocal Agreement; SCOPE amendment • 2008 Forensic accounting firm reviews contract charges • 2009 ICMA Study -Evaluation of contracted services and in-house estimate • 2010 New Interlocal Agreement including revised methodology; Precinct Commander position added • 2014 Added 2 patrol deputies; created patrol power -shift to address high call load at peak times; created dedicated city property and drug crimes unit housed at Valley Precinct • 2015 Letter of Authorization buying -in to new computerized dispatch & records software • 2017 Current Interlocal Agreement adopted • 2018 Pre -Academy authorized • 2018 City agrees to pay for pool positions provided authorized service level is not exceeded Challenges: • Recruiting new officers, retaining experienced officers, and looming retirements • High overtime costs • Fleet replacement needs Cost Control Measures: • Pre -Academy authorized to improve retention of candidates through immediate hiring and field training • New methodology based on current year budget rather than 2 year-old escalated costs • New methodology isolates certain costs within dedicated Spokane Valley units (overtime, fuel) • Negotiated exclusion of LEOFF 1 charges & regional indirect costs unrelated to service provision • Eliminated duplicative jail charges • Negotiated credit for County public safety facilities charges in recognition of Valley precinct building • Negotiated reduced CAD/RMS system costs more reflective of actual use of dispatch and records • SCOPE volunteer hours Spokane .0001FUa11ey Detention Services Spokane Valley Detention Services Trends City Actual % Change SV Usage 2013 $ 1,201,659 $ 4,161, 761 3.8% 2014 $ 1,168,024 -2.8% 3.4% 2015 $ 1,213,502 3.9% 3.2% 2016 $ 1,440,396 18.7% 3.6% 2017 $ 1,331,721 -7.5% 3.1% Average % Change 2.6% $ 3,330,0871 Provider: Spokane County COSV Compared To Similarly Sized WA Cities City 2018 OFM Population 2017 Detention Services $'s Per Capita Cost Everett 111,200 $ 4,161, 761 $ 37 Renton 104,100 $ 4,807,442 $ 46 Federal Way 97,440 $ 5,639,7861 $ 58 Yakima 94,190 $ 2,847,1671 $ 30 Bellingham 88,500 $ 1,630,377 $ 18 Kirkland 87,240 $ 3,330,0871 $ 38 Kennewick 81,850 $ 2,516,7051 $ 31 Auburn 80,615 $ 3,794,8721 $ 47 Average 93,142 $ 3,591,025 P$ 38 Spokane Valley 95,810 $ 1,331,721 $ 14 Current Agreement Start Date: January 1, 2010 Current Agreement End Date: 3 year original term followed by 1 year auto -renewals Termination Notice: 180 days History: • 2003 Original Jail and Geiger Interlocal Agreements • 2005 Replacement Agreements • 2010 New combined Detention Services Agreement replacing separate Jail and Geiger Agreements which eliminated separate program rates for a new simplified methodology with one cost • 2012 Settlement Agreement for duplicate charges claim • 2014 Spokane Regional Law and Justice Council reestablished Challenges: • County proposed a total rework of cost methodology effective 2019, with the initial proposal substantially increasing costs to cities • Spokane's independent jail reduction intitiatives, combined with fixed costs at the jail, can lead to cost increases to Spokane Valley with static or even declining SV jail use • Geiger facility is outdated and lease with the airport is short term, < 5 years • Overcrowding at Jail; deferred capital and facilities maintenance • Efforts underway at the County to examine a new Jail facility possibly on the Nov 2019 ballot and unresolved concerns regarding the appropriate size the facility and programming needs • 16 -bed mental health crisis stabiliation facility as altenative to jail; cost impact to cities TBD Cost Control Measures: • Reduce incarceration stemming from Driving While License Suspended third degree (DWLS3) charges by utilizing pre -file diversion program Spokane �a11ey District Court Spokane Valley District Court Trends City Actual / Change SV Cases Change 2013 $ 868,862 $ 14 9,088 104,100 2014 $ 805,811 -7.3% 8,763 -3.6% 2015 $ 670,945 -16.7% 7,255 -17.2% 2016 $ 658,049 -1.9% 6,511 -10.3% 2017 $ 681,015 3.5% 5,323 -18.2% Average % Change -6.1% Auburn -13.4% Provider: Spokane County COSV Compared To Similarly Sized WA Cities City 2018 OFM Population 2017 Court Costs Per Capita Cost Everett 111,200 $ 1,588,330 $ 14 Renton 104,100 $ 2,174,217 $ 21 Federal Way 97,440 $ 1,874,371 $ 19 Yakima 94,190 $ 1,442,486 $ 15 Bellingham 88,500 $ 1,958,398 $ 22 Kirkland 87,240 $ 2,028,8111 $ 23 Kennewick 81,850 $ 1,137,0591 $ 14 Auburn 80,615 $ 2,077,5581 $ 26 Average 93,142 $ 1,785,154 P$ 19.35 Spokane Valley 95,810 $ 681,015 $ 7 Current Agreement Start Date: Jan 1, 2005; amended 2012 Current Agreement End Date: automatic annual renewal Termination Notice: 180 days but subject to RCW 3.50.810 requiring at least one year prior to February 1st of the year in which all District Court Judges are subject to election. The next elections will be 2022 which means notice would have to be provided by Febrary 1, 2021 History: • 2003 Original Interlocal Agreement • 2005 Replacement Interlocal Agreement • 2009 State Deparment of Commerce consultant study reviewing alternative Court options • 2012 Amendment to update the methodology Challenges: • Justification for declining total SV cases with increased SV costs Cost Control Measures: • Incorporated new cost methodology that uses updated case weights to determine cost -per -case type rates (infractions, DUI, domestic violence, etc.) leading to a better accounting of County responsibility cases • Prefile diversion for DWLS3 cases • Identified, corrected billing error due to improper SECTOR (e -ticket) jurisdiction login procedure Spvka e .0001F Valley Public Defender Spokane Valley Public Defender Trends City Actual % Change Cases % Change g 2013 $ 630,620 $ 12 2,795 104,100 2014 $ 624,848 -0.9% 2,744 -1.8% 2015 $ 713,998 14.3% 2,536 -7.6% 2016 $ 735,184 3.0% 2,180 -14.0% 2017 $ 714,635 -2.8% 1,737 -20.3% Average % Change 3.1% Auburn -11.9% Provider: Spokane County COSV Compared To Similarly Sized WA Cities City 2018 OFM Population 2017 Public Defender $'s Per Capita Cost Everett 111,200 $ 1,384,134 $ 12 Renton 104,100 $ 450,000 $ 4 Federal Way 97,440 $ 465,517 $ 5 Yakima 94,190 $ 1,021,792 $ 11 Bellingham 88,500 $ 803,6381 $ 9 Kirkland 87,240 $ 281,500 $ 3 Kennewick 81,850 1 unknown Auburn 80,615 $ 550,0001 $ 7 Average 93,142 $ 708,083 P$ 7.36 Spokane Valley 95,810 $ 714,635 $ 7 Current Agreement Start Date: January 1, 2005 Current Agreement End Date: automatic annual renewal Termination Notice: 180 days History: • 2003 Original Interlocal Agreement • 2005 Replacement Interlocal Agreement • 2008-2009 Interlocal Agreement and amendments for participation in relicensing progam (initially authorized for SV violators as a Washington State Office of Public Defense grant) • 2009 State Department of Commerce consultant study reviewing alternative public defense service options • 2012 Evaluation of public defense service options by internal team and consultant (temporary employee) • 2015-2016 Amendment adopting new methodology for enhanced investigator services Challenges: • Caseload standards • Increased need for investigative support • Unexpected increased costs due to movement of higher salaried attorneys moving in and out of misdemeanor assignements Cost Control Measures: • Proper accounting of Washington State Patrol cases • Succesfully applied for competitive grant award to offset costs of additional attorneys • DWLS3 prefile diverion reducing the number of cases filed and the number of attorneys needed to handle cases Spokane .0001FUa11ey Prosecutor Spokane Val ey Prosecutor Trends 2018 OFM Population Actual % Change COSV Cases Change 2013 $ 389,626 Renton 2,819 $ 1,342,7471 2014 $ 408,735 4.9% 2,840 0.7% 2015 $ 437,519 7.0% 2,636 -7.2% 2016 $ 437,519 0.0% 1,964 -25.5% 2017 $ 425,998 -2.6% 1,658 -15.6% Average % Change 2.2% 80,615 -13.3% Provider: Spokane County COSV Compared To Similarly Sized WA Cities City 2018 OFM Population 2017 Prosecutor Costs Per Capita Cost Everett 111,200 $ 1,067,097 $ 10 Renton 104,100 $ 1,342,7471 $ 13 Federal Way 97,440 $ 683,343 $ 7 Yakima 94,190 $ 968,864 $ 10 Bellingham 88,500 $ 839,3171 $ 9 Kirkland 87,240 $ 365,0001 $ 4 Kennewick 81,850 1 unknown Auburn 80,615 $ 679,5501 $ 8 Average 93,142 $ 849,417 '$ 8.84 Spokane Valley 95,810 $ 425,998 $ 4 Current Agreement Start Date: January 1, 2005 Current Agreement End Date: automatic annual renewal Termination Notice: 180 Days History: • First Agreement from 2003-2004 • 2005 replacement Interlocal Agreement • Memorandum of Understanding—City zoning and adult entertainment cases have separate hourly charge • 2009 State Department of Commerce consultant study reviewing alternative public defense service options • 2010 Amendment to way infraction costs are calculated and moving certain direct costs to indirect costs • 2012 Evaluation of Prosecution service options by internal team and consultant (temporary employee) • 2013 Staff analysis of effectiveness of attorneys attending infraction dockets • 2015 DWLS3 Prefile diversion program implemented midyear (managed through the prosecutor contract) Challenges: • Additional attorneys added in 2015 for DWLS3 prefile diversion • Prosecutors currently negotiating a pay increase with yet to be determined cost impact to COSV Cost Control Measures: • Reduced infraction costs through proper accounting of docket hours by jurisdiction • Negotiated methodology that spreads costs among all departments and funds that utlize Prosecution services Resolve land use cases without going to court and incurring additional contract costs Spot ane Valley Pretrial Spokane Valley Pretrial Trends Actual % Change SV Usage 2013 $ 108,314 16.3% 2014 $ 110,357 1.9% 17.3% 2015 18.3% 2016 17.4% 2017 13.9% Average % Change Note: Comparable City's Pretrial costs are typically contained within another department's budget, like Public Defender, and therefore not easily identifiable. Provider: Spokane County Current Agreement Start Date: January 1, 2005 Current Agreement End Date: automatic annual renewal Termination Notice: 180 days History: • 2003 intial Interlocal Agreement • 2005 replacement Interlocal Agreement • 2009 State Department of Commerce consultant study reviewing alternative pretrial service options • 2013 Amendment to change calculation of indirect costs Challenges: • Ensuring that we're only receiving services authorized by Council • Evaulating the expanding role of Pretrial and anticpating the cost impacts Cost Control Measures: • Pursuing a modified usage allocation more representative of our actual use of the service Spol ane 40 Va11ey. Emergency Management Spokane Valley Emergency Mgmt. Trends City Actual % Change 2013 $ 84,630 111,200 2014 $ 81,769 -3.4% 2015 $ 85,123 4.1% 2016 $ 90,747 6.6% 2017 $ 77,679 -14.4% Average % Change -2.1% Provider: Spokane County Current Agreement End Date: until terminated Termination Notice: 180 days History: COSV Compared To Similarly Sized WA Cities City 2018 OFM Population 2017 Emergency Mgmt $'s Per Capita Cost Everett 111,200 $ 470,7871 $ 4 Renton 104,100 $ 569,333 $ 5 Federal Way 97,440 $ 201,649 $ 2 Yakima 94,190 unknown Bellingham 88,500 $ 452,717 $ 5 Kirkland 87,240 unknown Kennewick 81,850 unknown Auburn 80,615 $ 225,1961 $ 3 Average 93,142 $ 383,936 P$ 3.94 Spokane Valley 95,810 $ 77,679 $ 1 • 2005 Interlocal Agreement • 2012 Replacement Interlocal Agreement • 2013 Amendment to change calculation of indirect costs Challenges: • Fluctuating Indirect Costs Cost Control Measures: Current Agreement Start Date: 2012 • Usage share controlled by SV % of County population which is stable • City Manager serves on Emergency Management Policy Board and provides policy guidance, budget review, and approval of goals, objectives and expense prioritization Spokane .0001FIValley Animal Control Spokane Val ey Animal Control Trends 2018 OFM Population Actual % Change Incidents % Change 2013 $343,877 104,100 6,714 $ 1 2014 $287,081 -16.5% 6,714 0.0% 2015 $290,228 1.1% 6,043 -10.0% 2016 $291,209 0.3% 5,908 -2.2% 2017 $ 293,455 0.8% 5,642 -4.5 2018 $299,139 1.9% 5,480 -2.9% Average % Change -2.8% P$ 2.41 -4.1% COSV Compared To Similarly Sized WA Cities City 2018 OFM Population 2017 Animal Control Costs Per Capita Cost Everett 111,200 removed outlier @ $1.4M Renton 104,100 $ 142,013 $ 1 Federal Way 97,440 $ 129,6001 $ 1 Yakima 94,190 $ 335,320 $ 4 Bellingham 88,500 unknown Kirkland 87,240 $ 247,4621 $ 3 Kennewick 81,850 unknown Auburn 80,615 $ 238,5171 $ 3 Average 93,142 $ 218,582 P$ 2.41 Spokane Valley 95,810 $ 293,455 $ 3 Provider: Spokane County Current Agreement Start Date: January 1, 2014 Current Agreement End Date: December 31, 2034 Termination Notice: 180 Days (debt service obligation remains) History: • 2003 Interim Animal Control Services MOU • 2003 Interlocal Agreement • 2005 Interlocal Agreement • 2010 Discussions with County regarding regional system • 2011 County -initiated ballot measure for new shelter failed • 2012 City undertook competitive process, selecting SCRAPS at a cost reduction over existing services, even with the addition of a new shelter, without raising taxes • 2014 new Interlocal Agreement for regional system and new shelter facility Challenges: • Lower than anticipated revenue • Spokane not paying any capital Cost Control Measures: • Negotiated fixed rate with annual operating increase limited to the CPI • License rates adjusted up in 2018 for the first time since 2014 • Added additional agencies to the regional model Spokane .0001FValley Provider: Spokane County Probation Current Agreement Start Date: January 1, 2005 Current Agreement End Date: automatic annual renewal Termination Notice: 180 days History: • 2003 initial Interlocal Agreement • 2005 replacement Agreement allowed County to retain all probation fees in return for providing the service Spokane 4.0001F Valley Spokane Va ley Public Safety Costs Compared to Average Service SV Per Capita $ Comparable City's Per Capita Avg. SV Actual $ SV with Comparable City's Per Capita Avg. Difference Law Enforcement $ 196.39 $ 266.70 $18,816,334 $ 25,552,616 $ 6,736,282 Detention Services $ 13.90 $ 38.27 $ 1,331,721 $ 3,666,290 $ 2,334,569 District Court $ 7.11 $ 19.35 $ 681,015 $ 1,853,538 $ 1,172,523 Public Defender $ 7.46 $ 7.36 $ 714,635 $ 705,239 $ (9,396) Prosecution $ 4.45 $ 8.84 $ 425,998 $ 847,115 $ 421,117 Animal Control $ 3.06 $ 2.41 $ 293,455 $ 230,894 $ (62,561) Emergency Mgmt. $ 0.81 $ 3.94 $ 77,679 $ 377,131 $ 299,452 Total $ 233.18 $ 346.86 $ 22,340,838 $ 33,232,823 $ 10,891,985 Spokane ..►. Va11ey FINANCE DEPARTMENT Chelsie Taylor, CPA, Finance Director 10210 E Sprague Avenue ♦ Spokane Valley WA 99206 Phone: (509) 720-5000 ♦ Fax: (509) 720-5075 ♦ www.spokanevalley.org Memorandum To: Mayor and Councilmembers From: Chelsie Taylor, Finance Director Date: Tuesday, February 19, 2019 Re: General Fund — Fund Balance Discussion Through the course of our annual budget development conversations we have discussed the General Fund fund balance (reserves) in general terms and note that we carry a minimum of 50% which reflects a 6 -month operating reserve. The concept of the 6 -month operating reserve is a quick and easy explanation but in reality the computation we use to arrive at a 50% reserve balance is considerably more thoughtful — not complex — just more involved. As we've progressed through conversations on how we might finance street operations and maintenance, pavement preservation and street construction projects, we at times hear that our General Fund reserves are too high and that we should pare them back to a lower amount. Consequently I'd like to provide you with a description of both how we arrived at our 50% reserve balance as well as what we do when the balance exceeds 50%. FUND BALANCE DEFINED Fund balance is an accounting concept that measures the difference between total assets (what the fund owns including cash and receivables) and total liabilities (what the fund owes to other parties including accounts payable and deferred revenues). A primary objective of a fund balance policy is to maintain adequate resources to cope with cash flow needs and contingencies, now and into the future. PROJECTED GENERAL FUND — FUND BALANCE In the 2019 General Fund budget as initially adopted, we anticipated the ending fund balance to be $33,064,618, which represents 79.31 % of recurring expenditures. = Ending fund balance Recurring expenditures 79.31% = $ 33,064,618 $ 41,691,369 Page 1 of 5 ITEMS TO CONSIDER IN SETTING A MINIMUM FUND BALANCE It has been the City's policy to maintain an ending General Fund fund balance that is a minimum of 50% of recurring expenditures. We arrive at this figure by considering the following: 1. Cash In -flow — cash reserves that are required as a result of the timing of revenue receipts. 2. Cash Out -flow — cash reserves that are required to meet ongoing operations and capital construction needs. 1) Minimum General Fund Reserves Required to Meet "Cash In -flow" Needs: It is necessary to maintain a minimum fund balance to meet cash flow needs and to do so one must have a sense of the timing of cash receipts and disbursements. In General Fund operations, most revenues (cash receipts) and expenditures (cash disbursements) typically take place in a relatively predictable manner with approximately one -twelfth occurring each month. Two important exceptions to this rule are the timing of receipts related to A) property tax collections and B) remittances from the State of Washington. A) Property Taxes • Property taxes are collected by the County in two installments each year with deadlines that fall on April 30th and October 31st. The County then remits to the City its share of property taxes with about 40% of collections arriving each May and November (for a total of 80%) and the remaining 20% of collections arriving in June and December (roughly 10% of the annual total each of those months). • The 2019 City property tax levy is $12,054,400. Because we receive this in two installments in essentially May and November, we run a "cash in -flow deficit" equal to one-half of the levy amount in those months or $6,027,200. Cash deficit = 2019 Property Tax Revenue 2 $6,027,200 = $ 12,054,400 2 B) Remittances from the State of Washington • There is a time lag between when the State of Washington collects various taxes and when they remit them to the City (i.e. sales taxes, motor vehicle fuel taxes, criminal justice disbursements, liquor profits and excise tax, hotel/motel taxes, etc.). • The City accrues these revenues with a one-month time lag which means the State remittance is recorded as revenue one-month earlier than when it is actually received. Total General Fund State shared revenues in 2019 are estimated at $27,852,700. Assuming these are received one -twelfth each month, our "cash in- flow deficit" is approximately $2,321,058. State Remittances Sales tax Sales tax - Public Safety Sales tax- Criminal Justice State shared revenues Total receipts Months per year Average monthly receipt $ 22,917,000 $ 1,081,900 $ 1,944,000 $ 1,909,800 $ 27,852,700 12 $ 2,321,058 Page 2 of 5 Together, these two revenue sources necessitate that the City maintain a minimum General Fund fund balance of $8,348,258 or 20.42% of recurring General Fund expenditures in order to simply meet cash flow needs. This is computed as follows: Cash deficit caused by revenue remittance delay 1.A) Sem i -annual property tax remittance 1.B) Approximate monthly remittance from the State of WA Minimum needed to meet cash flow $ 6,027,200 $ 2,321,058 $ 8,348,258 Minimum cash flow reserve = Cash deficit caused by revenue remittance delay 2019 Recurring General Fund expenditures 20.42% = $ 8,348,258 $ 40,891,379 2) Minimum General Fund Reserves Required to Meet "Cash Out -flow" Needs It is necessary to maintain a minimum fund balance to meet cash out -flow needs and to do so one must have a sense of the timing of disbursements. In General Fund operations we take into consideration two types of cash disbursements including A) operating expenses and B) capital project disbursements that are grant financed. A) Operating Reserve It is prudent to hold cash reserves that are some reflection of a predetermined number of "months of operating expenses on hand." Assuming recurring expenses are incurred evenly throughout the year, or in other words, that 1/12 of the 2019 recurring operating budget of $41,691,369 is disbursed each month, then: A fund balance equivalent to 1 -month of operations is: $41,691,369 x 1 / 12 = $ 3,474,281 = 8.33% A fund balance equivalent to 2 -months of operations is: $41,691,369 x 2 / 12 = $ 6,948,562 = 16.67% A fund balance equivalent to 3 -months of operations is: $41,691,369 x 3 / 12 = $ 10,422,842 = 25.00% We recommend the City maintain a three-month operating reserve or $10,422,842 in 2019. B) Capital Projects Reserve Each year the City has a number of capital construction projects that are in part grant financed. With these projects, the granting agencies require that the work be complete and the contractor paid by the City prior to their reimbursement of our out-of-pocket disbursement. This means we must carry a sufficient cash reserve balance to meet the demand for payment by the contractor. The number and cost of capital projects varies from Page 3 of 5 year to year, but in 2019 we have budgeted a total of $20.6 million of capital projects which we will pay for with cash -on -hand of $9.6 million and $11 million of grants. Assuming expenditures are incurred evenly over a 6 -month construction season, this means we must hold a $1,833,333 capital construction reserve (= $11 million / 6 months). This $1.8 million represents a General Fund reserve of 4.40%, computed as follows: Capital Project Reserve = $ 1,833,333 = 4.40% Recurring Expenditures $ 41,691,369 COMBINED MINIMUM FUND BALANCE NEEDED TO MEET CASH FLOW REQUIREMENT Combining the fund balance required to meet 2019 General Fund cash in -flow and cash out- flow needs yields a total of $20,604,434 or 49.42% of recurring expenditures. This computation is based upon a summary of each element noted in this analysis. Cash Reserve Required Recurring Expenditurescyo Reserve Cash In -flow 1.A) Semi-annual property tax remittance = $ 6,027,200 / $ 41,691,369 = 14.46% 1.B) Remittances from the State of Washington = $ 2,321,058 / $41,691,369 = 5.57% Cash Out -flow 2.A) Operating 2.B) Capital projects = $ 10,422,842 / $ 41,691,369 = 25.00% = $ 1,833,333 / $ 41,691,369 = 4.40% $ 20,604,434 / $ 41,691,369 = 49.42% WHAT HAPPENS WHEN THE FUND BALANCE EXCEEDS 50%? The City has a long history of adopting and adhering to General Fund budgets and in fact, by actively managing our operations we typically under -expend the budget Council has adopted. The result of this is that we add to our General Fund reserves. By the same token, we've been fortunate enough to have existed within a fairly robust economy these past few years and consequently our actual revenues have exceeded our budget estimates which also adds to our General Fund reserves. Annually, typically in the spring and after the previous years' books have been closed, the City Manager and Finance Director compute the actual fund balance reserve — which is done by dividing the actual fund balance (reserves) by the recurring expenditure budget. That portion which exceeds 50% is then transferred into Capital Reserve Fund #312. Since 2013 we have transferred approximately $20.7 million into Fund #312, and a future 2019 Budget Amendment will propose an additional transfer of $7.1 million. This money has been used to finance a variety of Council approved projects. Page 4 of 5 Listed below is a complete history of annual transfers from the General Fund to Capital Reserve Fund #312 and the projects these transfers have financed: Capital Reserve Fund #312 Sources General Fund transfers - 2013 through 2017 General Fund - 2018 transfer for misc. cap projects General Fund - 2018 transfer of 2016 fund bal > 50% General Fund - 2019 transfer of 2017 fund bal > 50% Developer contribution (Library District) - 2013 Developer contribution (Library District) - 2014 Net proceeds on sale of Carnahan properties - 2018 16, 885, 878 1,000,000 2,795,429 7,119, 300 3,180 4,675 373,397 28,181,859 Uses Projects Completed in Prior Years 7,197,861 Appleway Trail University to Pinoc 1,152,026 Appleway Trail - Sullivan to Corbin 347,000 Appleway Trail Pines to Evergreen '7'1,62 Appleway Trail - Evergreen to Sullivan 323,325 Barker Road / BNSF Grade Separation 1,421,321 Pines Road Underpass 1,985,417 Reseastruct Euclid after sewer installation 1,800,000 Carnahan & 8th - ROW acquisition 659,004 Bus stops & ped crossings on Indiana Ave. 110,000 Sullivan Park land acquisition 844,000 Sullivan Park water line installation 152,858 Barker Road corridor improvements 1,485,417 Additional Barker - Euclid to Trent 1,238,983 Additional Barker - Euclid to Spokane River 310,000 Balfour Park development 1,485,417 Improvements at proposed SCLD Balfour site 460,715 Transfer to Street O&M Fund #101 907,000 Garland Ave Construction 1,500,000 23, 954, 806 Difference 4,227,053 This is part of a future budget amendment completed completed committed completed committed committed committed completed completed committed committed committed committed committed com m itt com r fitted SUMMARY The General Fund reserve balance that an individual municipality should carry is unique to the cash flow needs of that entity. The reserve balance the City of Spokane Valley carries is in my opinion appropriate because it is constructed upon a well thought out process that is based upon our own distinctive revenue and expenditure structure. Attached to this memo are two different articles that discuss General Fund reserves: • The first is from the October 2016 Ask MRSC (Municipal Research and Services Center) newsletter. • The second is from an article entitled "Why We Put Money Aside" that was in the June 2013 Governing publication. One final thought on this topic is that our General Fund fund balance has served us well in our bond rating presentations with Moody's Investors Service and is likely in part responsible for the "Aa2" rating they have assigned to the City of Spokane Valley. I have attached a copy of Moody's May 10, 2016 Credit Opinion that was issued as a part of our 2016 LTGO Bond issue (proceeds used for our City Hall construction project). At that time our credit rating was an "Aa3". I've also attached a March 16, 2018 Moody's Investors Service "Annual Comment on Spokane Valley" that provides their most recent review. If you should have any questions or comments please feel free to contact me at any time. Page 5 of 5 Mark Calhoun From: MRSC <Iistadmin(d mrsc.ccsend.com> on behalf of MRSC <Iistadmin mrsc,org> Sent: Friday, October 21, 2016 9:08 AM To: Mark Calhoun Subject: Ask MRSC: October 2016 Having trouble viewing this email? CIlcthere OCTOBER 2016 111 Ask MRSC is n monthly e -newsletter featuring responses to selected inquiries rocaived by the consultant staff of MRSC, Submit your own quaslion aria our simple online foray. IN THIS ISSUE .re localgovcrnments required to maintain. specific reserve fund balance levels? Should r local government continue adding to its operatine reserve if it has already met t]�e requirement (tithe policy? Do newspaper puhlisI-ers or distributors have any legal right to place newspaper paw boxes in the public right -or -way? Can the city have them m : vr:d or at least placed on pri vate property? Do advisory committees need to talk minutes of their meetings? How often are cities required to tclopt Of approve their capital facilities plan? What arc the, public Bearing requirements associated with raising a utility rate? Are local goverumtnts required to maintain specific reserve fund balance levels? Should i 11,5C al government continue adding to ilk operating reserve if it has already int the requirement al' the policy? This is always n good topic of conversation and the answer is almost always "it depends," Financial policies are considered a best practice by the GFOA and at the top of the list of recommended financial management policies by the SAO. There is no statutory requirement for fund balance levels, nor is there any specific reference within the SAO BARS manual that states that a municipality (whether it's a county, city, or special purpose district) has to have a specific level of operating reserves (also known as i "beginning" or "ending" fund balance), The /5% figure was a previous recommendation made by the GFOA for the general fund. This percentage has since been updated with the 2015 release of the GFOA best practice paper on Appropriate Level of Unrestricted Fund Balance in the General Fend. The recommendations made by the GFOA now speaks of several Factors that would lead an entity to adopt a policy that addresses these factors in a way that is specific to them, An excerpt from the best practice paper states; In establishing a policy governing the level of unrestricted fund balance in the general fund, a government should consider a variety of factors, including: 1. The predictability of its revenues anij the volatilit"y of its expenditures (i.e., higher evels of unrestricted fLind balan^e may be needed if significant revenue sources are subject to unprer:ictable fi.ictua-ions or if operating expenditures are hio-ry volatile); 2 Its per.:rc'•:cd exposure to significant one-time outlays (e.g., disasters, immr}ci at capital needs, state budget cuts); 3. The poiie;i,tia.t drain upon general fund -esources From other funds, as well as, the avc:ilet.,:it'y of resources in °the -funds; id The potentia mr ct on the entity's bond ratings and the corresponding increased cost c'f ho -rowed funds; 5- Commitments and assignments (i.e-, govern rir_wr = may :'wish to maintain higher levels of unrestricted fund balance to cornpc.-i2:aty for any ,Portion of Lir restricted fund balance atready committed or assigrcd by 1. ie government fti sa specific purpos}). Governments may deern it a(. r .;. ri tr to exclude froor'i consideration resour:es that have been committed or Elst,it;r=0 to some other purpose and focus o'1 unassigned fund balance r t'icror, unrestricted fund balance. Depending.upon the ansviier to the above questions, a local government may find that 15% is not adequate to meet their needs. Or to the contrary, a local government may determine that 15% of the operating budget would be mere than sufficient. You additionally asI;vd whether a local govermner, should continue to add to its operating rase-ve if it has already met the requirement cf the po'icy This questior, can only be answe;—cd by the policy adopted. You may wan to consider expanding your current policy to define such things as' "use and replenishment.' You will note that the GFOA best practice paper has a section That specs to this issue. Budget is a :treat time to review financial policies currently in place and to fine tune those policies to meet current fiscal needs - Here is a IhK to our FinanciallBudget Policies topic page, whe--e you will find some excellent samples of what °tiMer jurisdictions are doing in this area of fiscal management. Additionally, here is a lint, to the SAO - FIT (Financial IntelLgcr:ce Tool) tha: will assist in evaluating the finarirsi ! o:::ndition of the county and provide you with fiscal da:a for your analysis of awpropriate fund balance. Submita Question : Subscribe SearchfBrowse All Inquiries L)o newspaper publisher,: or distributors have :rtit kc ai rightNto place iiew'sr-acks or newspaper pay hitxr_s in the public r ighi-nf w *y? Fan the city have them inured ur ai lust placed on prlxarte property? '' 2 Problem Solver PUBLIC MONEY By Justin Marlowe Why We Put Money Aside States and '400alities have very different perspectives ori the point of rainy day funds. Wallace Sayre, an early and influential scholar of pub- lic management, once said public and busines€ admin- istration are "alike only in all unimportant respects." His insight applies equally to states and localities and their rainy day funds_ Both put money aside for unfore- seen emergencies or hard tunes_ But states use these funds to solve problems. Many local governments use them—or don't—in ways that reveal problems. Among the states, rainy day funds have been the hest land in some.. cases the only) tool available to blunt the Great Reces- sion`s fiscal destruction. During Me good years prior to the downturn, most states built up 5 to 10 percent of a n n ua] expend i - tures in their funds. During the recession and the over -se -slow recovery, they spent almost all o Fthat money to fill budget gaps created when revenues fell short and ser- vice demands spiked. Most local governments do nut have formal rainy day funds in the same way most states do. A. typical state rainy day fund is governed by a law that sets a target fund balance and dictates when to use and replenis:3 that balance. According to recent research, only 11 of the 30largo:it U.S.. cities have an actual rainy day fund. Instead, most localities use budget surplu m or unreserved fond balances as a rainy day fund, but one without the constraints of a formal fund policy. These informal practices are not necessarily had, but they're not as trans- parent as most state policies. Unlike states' funds, local reserve lev- els are large and varied_ Where state rainy day fund balances have hon around 5t--78-1. percent of annual spendig, local governments tend to keep much more in the bank. In my own analysis of more than 6,000 local government financial 18 GOVERNrNG i June 2013 reports from the past five yearsk i found the ave ramie ]oral unrescrve4i_rxnLftand balance to he around 34 iercent of a n n ua] neral fund -expenditures. Leven more striking is how much these local balances vary. It's not uncommon to scc a gro.tp of c, governments with 0 percent fund balances and a nearly identical group of juri. lents wit ti and balatIees ttt 70 to 80 percent of annual spendi Here's the most important difference Unlike the states, local gov4 runent3 did not spend down their reserves during ng the Great Recession. in fiscal 2007 the aver- age local unreserved general fund bal ante was 27 percent of annual general fund expenditures. in 2009, as the recession began to take hold, it fell to 29 percent But by 2011, as the recovery siruggied to 340/0 Average amount of unreserved general funds that localities keep in the bank each year. these governments dkl spend down most or all of their reserve funds. But the vast majority, including several with large rese rye funds, reduced sp&ndinginstea:l. Why were local governments reticent to spend reserve funds during one of the stormiest eras in history? On the record, many local finance officials say lhcy would prefer to use those funds to tape on an idiosyncratic problem, such as a flood or Why were local governments reticent to spend reserve funds during one of the stormiest eras in history" start, it was backup to 31 percent. In the meantime, opt rating margins—or the per- cent by which revenues exceed expendi- tures—fell from an average of 6 percent in 2007 to an average oflcss than LS percent in 2011. To be clear, about one in four of the loss of a major local employer. tiff the record, they will tell you it has a lotto do with citiicns'lack of under- standing of what local government service really oust Some say, -if we spend it, we won't get it back." In other words, the pressure to keep taxes low is so great that they would never be able to replenish the reserves with new incremental revenues_ Odi- 4rs say, "`I can't spend it because my council wants our resmu funds higher than the (neighboring) city MX," Trans- lation: High reserve fluids are a signal of strength and prosp4ity preci:sclybecause you don't really need them, limit we can address these much larger issues of per- ceptions, local rainy day funds will be a symptom rather than a solution. G Emailljmarkrwe jmarkrwe@washington.edu U.S. PUBLIC FINANCE MOODY'S INVESTORS SERVICE CREDIT OPINION 10 May2016 New Issue Rate this Research Contacts Travis George Analyst travis.george@moodys.com William Oh AVP -Analyst william.oh@moodys.com 415-274-1715 415-274-1739 Spokane Valley (City of), WA New Issue: Moody's Assigns Aa3 to Spokane Va«ey, WA's LTGO Bonds Summary Rating Rationale Moody's Investors Service has assigned a Aa3 rating to the City of Spokane VaLLey, WA's $7.8 miLLion Limited Tax GeneraL Obligation Bonds, 2016. ConcurrentLy, Moody's has affirmed the city's parity Limited tax general obligation (LTGO) debt outstanding in the amount of $6.4 miLLion. The Aa3 rating reflects the city's sizeable and growing tax base, modest resident weaLth, extraordinariLy heaLthy financiaL position and conservative financiaL management, and very Low debt and pension burdens. Credit Strengths Conservative management with very heaLthy financiaL position Low LeveL of outstanding debt with modest plans for additionaL debt ReLativeLy Low pension burden LargeLy due to contracting out of most services Credit Challenges BeLow average resident weaLth LeveLs as measured by median famiLy income and fuLL vaLue per capita Moderate taxpayer concentration Rating Outlook OutLooks are not typicaLLy assigned to LocaL government issuers with this amount of debt outstanding. Factors that Could Lead to an Upgrade Significant growth and diversification of tax base and LocaL economy SubstantiaL increase in resident weaLth Factors that Could Lead to a Downgrade Drastic deterioration of financiaL position with Large decline in avaiLabLe reserves or increase in outstanding debt Downturn in LocaL economy resulting in contraction of the tax base MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE Key Indicators Spokane Valley (City of) WA 2010 2011 2012 2013 2014 Economy/Tax Base Total Full Value ($000) $ 7,169,493 $ 7,140,948 $ 7,087,523 $ 6,921,826 $ 7,168,991 Full Value Per Capita $ 79,476 $ 79,247 $ 78,272 $ 75,657 $ 77,881 Median Family Income (% of US Median) N/A N/A 91.5% 91.5% 91.5% Finances Operating Revenue ($000) $ 40,017 $ 39,987 $ 40,660 $ 41,703 $ 43,108 Fund Balance as a % of Revenues 82.6% 84.5% 84.6% 69.7% 69.5% Cash Balance as a % of Revenues 89.1% 97.0% 94.4% 75.6% 89.9% Debt/Pensions Net Direct Debt ($000) $ 8,155 $ 7,930 $ 7,690 $ 7,435 $ 6,675 Net Direct Debt / Operating Revenues (x) 0.2x 0.2x 0.2x 0.2x 0.2x Net Direct Debt / Full Value (%) 0.1% 0.1% 0.1% 0.1% 0.1% Moody's - adjusted Net Pension Liability (3 -yr average) to Revenues (x) N/A N/A 0.2x 0.2x 0.3x Moody's - adjusted Net Pension Liability (3 -yr average) to Full Value (%) N/A N/A 0.1% 0.1% 0.2% Recent Developments Recent developments are incorporated into the paragraphs below. Detailed Rating Consideration Economy and Tax Base: Growing Spokane area tax base with relatively low resident wealth Spokane VaLLey was incorporated with voter approval in 2003. The city is Located in eastern Washington just ten miLes east of Spokane and ten miLes west of the Idaho border. Residents benefit from diverse regional employment opportunities in defense, healthcare, manufacturing, and high-tech sectors. The region aLso features Fairchild Air Force Base and several universities. WeaLth measures are modest with median family income at 91.5% of U.S. LeveLs and fuLL vaLue per capita at $83,011. The unemployment rate in Spokane County was 7.4% as of February 2016, which was above both state and nationwide LeveLs. The city's tax base was resilient during the national downturn with just 3.5% of combined declines between 2011 and 2013. Since 2014, the city's tax base has increased by an average of 3.8% annually, including 4.8% growth in 2016. Taxpayer concentration is moderate with the ten Largest payers comprising 9.4% of assessed vaLue as of 2016. The Largest, Kaiser Aluminum, comprises nearLy 4% by itself. Financial Operations and Reserves: Extraordinarily healthy financial position driven by conservative fiscal management Thanks to very strong and conservative policies, the city's financial position is remarkably healthy. The city's reserve policy requires it to have a fund baLance in excess of 50% of recurring expenditures. The city ended fiscal 2014 with GeneraL Fund reserves of $30.3 miLLion, or 79% of annuaL revenues. Based on unaudited results for 2015, the city's GeneraL Fund ended the year with reserves again near 80% of annuaL revenues after a roughLy $1 miLLion operating surplus. The city aLso has a policy that recurring revenues always be in excess of recurring expenditures, which we expect to Lead to the continuation of balanced operations going forward. The city's operating funds, which include the GeneraL Fund, Street Fund, and Debt Service Fund, had a combined fund baLance equal to roughLy 69.5% of operating fund revenues. In addition to its operating funds, the city aLso had roughLy $8.6 miLLion in its CapitaL Reserve Fund available for capital projects. The city's GeneraL Fund is funded primarily by sales tax revenues that make up roughLy 46%, and property tax revenues that make up 29% of total revenues. SaLes tax receipts have increased steadily in recent years with combined growth of nearLy 30% since 2010. Property tax revenues have grown more modestly over this period given the city's conservative decision to forego the allowed 1% This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history. 2 10 May 2016 Spokane Valley (City of), WA: New Issue: Moody's Assigns Aa3 to Spokane Valley, WA's LTGO Bonds MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE increase in tax Levies. Instead, the city has accumulated nearly $500,000 of banked Levy capacity, which gives it increased flexibility going forward. The city contracts out for provision of some services to city residents. These contracts include those for pubLic safety and solid waste, and officials believe they have helped keep the city's costs down overall. LIQUIDITY The city's Liquidity position is very strong. As of 2014, the city had $37 miLLion in available GeneraL Fund cash and investments compared to $37.4 miLLion in expenditures in that year. These cash reserves are equivalent to more than 99% of annuaL expenditures. Debt and Pensions: Low level of outstanding debt and minimal pension burden Given the city's strong Liquidity position, it has chosen to cash fund much of its capital program, and therefore has not issued much debt. With the new bonds, the city wiLL have $14.2 miLLion in outstanding Long-term debt. This is equal to a Low 0.18% of fuLL vaLue and 0.3 times annuaL operating revenues. The city has only minimal future plans for additional debt, and we expect its debt metrics to remain relatively Low. DEBT STRUCTURE The city's debt is aLL fixed rate and with LeveL annuaL debt service. DEBT -RELATED DERIVATIVES The city has no debt -related derivatives. PENSIONS AND OPEB Largely due to the city's choice to contract out for pubLic safety, its pension burden is quite manageable. The city participates in the Washington Public Employees Retirement System. The three year average adjusted net pension Liability is just 0.16% of fuLL vaLue and 0.3 times operating revenues. Management and Governance Washington cities have an institutional framework score of "Aa," or strong. Although cities depend on economically sensitive tax revenues (sales, business and occupation), post -recession collections have been strong, making revenues moderately predictabLe. Cities have a moderate ability to increase property taxes by 1% annually, subject to state statutory Limits. Expenditures primarily consist of public safety costs, which are highly predictabLe. Expenditure -reduction ability is moderate due to modest fixed costs and an active union presence. Cities also have the ability to make mid -year budgetary reductions not related to pubLic safety. The city's conservative financiaL policies are currently a credit strength. Notably, the city has experienced some poLiticaL turmoil recently that Led to the dismissal of its city manager and the resignation of two council members. As the city's poLiticaL situation settles, we wiLL monitor the city's commitment to its current financiaL policies. Legal Security The bonds are secured by the city's fuLL faith and credit and pledge to Levy property taxes within constitutional Limits to pay debt service. Use of Proceeds Proceeds of the 2016 bonds wiLL be used to finance a portion of the construction of a new city haLL facility. Obligor Profile The city is Located in eastern Washington outside the city of Spokane and roughly 10 miles from the Idaho border. Methodology The principal methodoLogy used in this rating was US LocaL Government GeneraL Obligation Debt published in January 2014. Please see the Ratings Methodologies page on www.moodys.com for a copy of this methodoLogy. 3 10 May 2016 Spokane Valley (City of), WA: New Issue: Moody's Assigns Aa3 to Spokane Valley, WA's LTGO Bonds MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE Ratings Exhibit 2 Spokane Valley (City of) WA Issue Rating Limited Tax General Obligation Bonds, 2016 Aa3 Rating Type Sale Amount Underlying LT $7,775,000 Expected Sale Date 05/17/2016 Rating Description General Obligation Limited Tax Source: Moody's Investors Service 4 10 May 2016 Spokane Valley (City of), WA: New Issue: Moody's Assigns Aa3 to Spokane Valley, WA's LTGO Bonds MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE © 2016 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). Alt rights reserved. CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES ("MIS") ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT -LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY'S ("MOODY'S PUBLICATIONS") MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT -LIKE SECURITIES. MOODY'S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY'S OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL -BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. CREDIT RATINGS AND MOODY'S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY'S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY'S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE. MOODY'S CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS OR MOODY'S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. Alt information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as welt as other factors, however, alt information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts alt necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third -party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody's Publications. To the extent permitted by taw, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental tosses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, Licensors or suppliers is advised in advance of the possibility of such tosses or damages, including but not Limited to: (a) any toss of present or prospective profits or (b) any toss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S. To the extent permitted by taw, MOODY'S and its directors, officers, employees, agents, representatives, Licensors and suppliers disclaim Liability for any direct or compensatory tosses or damages caused to any person or entity, including but not Limited to by any negligence (but excluding fraud, willful misconduct or any other type of Liability that, for the avoidance of doubt, by taw cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, Licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody's Investors Service, Inc. for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy." Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent wilt directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be reckless and inappropriate for retail investors to use MOODY'S credit ratings or publications when making an investment decision. If in doubt you should contact your financial or other professional adviser. Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation wilt not qualify for certain types of treatment under U.S. taws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively. MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000. MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements. REPORT NUMBER 1024542 5 10 May 2016 Spokane Valley (City of), WA: New Issue: Moody's Assigns Aa3 to Spokane Valley, WA's LTGO Bonds MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE Contacts Travis George Analyst travis.george@moodys.com MOODY'S INVESTORS SERVICE 415-274-1715 William Oh AVP -Analyst william.oh@moodys.com 415-274-1739 CLIENT SERVICES Americas Asia Pacific Japan EMEA 1-212-553-1653 852-3551-3077 81-3-5408-4100 44-20-7772-5454 6 10 May 2016 Spokane Valley (City of), WA: New Issue: Moody's Assigns Aa3 to Spokane Valley, WA's LTGO Bonds MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE ISSUER COMMENT 6 March 2018 RATING General Obligation (or GO Related) 1 No Outlook Contacts Nathan Carley +1.312.706.9958 Associate Lead Analyst nathan.car[ey@moodys.com Matthew A. Jones +1.415.274.1735 Senior Vice President/ Manager matthew.jones@moodys.com CLIENT SERVICES Americas 1-212-553-1653 Asia Pacific 852-3551-3077 Japan 81-3-5408-4100 EMEA 44-20-7772-5454 City of Spokane Valley, WA Annual Comment on Spokane Valley Issuer Profile The City of Spokane Valley is located in Spokane County in east central Washington, just east of Spokane and approximately 20 miles west of Coeur d'Alene, Idaho. The county has a population of 480,832 and a moderate population density of 273 people per square mile. The county's median family income is $63,402 (2nd quartile) and the December 2017 unemployment rate was 5.7% (4th quartile) a . The largest industry sectors that drive the local economy are health services, retail trade, and local government. Credit Overview The credit position for Spokane Valley is very high quality. Its Aa2 rating is slightly stronger than the median rating of Aa3 for US cities. Notable credit factors include a robust financial position, a negligible debt burden, a small pension liability, and a large tax base with a sound socioeconomic profile. Finances: The city has a robust financial position, which is relatively favorable when compared to the assigned rating of Aa2. The fund balance as a percent of operating revenues (73.8%) is far above the US median. Also, Spokane Valley's cash balance as a percent of operating revenues (75.1%) is far superior to the US median. Debt and Pensions: The debt and pension liabilities of the city are low overall and are a credit strength in relation to its Aa2 rating position. The net direct debt to full value (0.2%) is materially below the US median, and remained flat from 2012 to 2016. Moreover, the Moody's-adjusted net pension liability to operating revenues (0.44x) is materially lower than the US median. Economy and Tax Base: The city has a sound economy and tax base which are aligned with the Aa2 rating assigned. The full value ($7.7 billion) is much larger than the US median, and rose between 2012 and 2016. Also, the full value per capita ($80,426) is roughly equivalent to other Moody's-rated cities nationwide. The median family income is a solid 88.7% of the US level. In addition, the city benefits from its proximity to the Fairchild Air Force Base and many notable higher education institutions including Gonzaga University. Management and Governance: Washington cities have an Institutional Framework score of Aa, which is high compared to the nation. Institutional Framework scores measure a sector's legal ability to increase revenues and decrease expenditures. The sector's major revenue sources are economically -sensitive sales taxes and property taxes. cities can increase property tax collections 1% over the prior year, subject to state statutory limits on property tax rates. Unpredictable revenue fluctuations tend to be minor, or under 5% annually. Across the sector, fixed and mandated costs are generally greater than 25% of expenditures. MOODY'S INVESTORS SERVIC U.S. PUBLIC FINANCE Washington has public sector unions, which can limit the ability to cut expenditures. Unpredictable expenditure fluctuations tend to be minor, under 5% annually. Sector Trends - Washington Cities Washington cities have generally recovered from the recession and are likely to experience steady economic growth over the near- term. Sales tax and other economically sensitive revenues should improve as unemployment levels remain low, particularly in the Puget Sound region. Strong improvement in the housing market will continue to boost assessed valuation growth and property tax collections. Pension costs are not a significant source of credit weakness, but remain a longer-term challenge. EXHIBIT 1 Key Indicators a s Spokane Valley 2012 2013 2014 2015 2016 US Median Credit Trend Economy / Tax Base Total Full Value Full Value Per Capita Median Family Income (% of US Median) $7,087M $6,921M $7,168M $7,393M $7,748M $1,787M Improved $78,932 $76,582 $78,928 $80,120 $80,426 $88,380 Stable 92% 91% 90% 89% 89% 113% Stable Finances Available Fund Balance as % of Operating Revenues 84.6% 69.7% 69.5% 72.8% 73.8% 32.5% Weakened Net Cash Balance as % of Operating Revenues 94.4% 75.6% 89.9% 90.3% 75.1% 35.4% Weakened Debt / Pensions Net Direct Debt / Full Value 0.1% 0.1% 0.1% 0.1% 0.2% 1.2% Stable Net Direct Debt / Operating Revenues 0.19x 0.18x 0.15x 0.15x 0.28x 0.93x Stable Moody's-adjusted Net Pension Liability (3 -yr average) to Full Value 0.1% 0.1% 0.2% 0.2% 0.3% 1.7% Stable Moody's-adjusted Net Pension Liability (3 -yr average) to Operating Revenues 0.17x 0.25x 0.29x 0.42x 0.44x 1.46x Stable 2012 2013 2014 2015 2016 US Median Debt and Financial Data Population 89,793 90,385 90,829 92,286 96,340 N/A Available Fund Balance ($000s) $34,389 $29,071 $29,978 $31,652 $34,695 $7,221 Net Cash Balance ($000s) $38,387 $31,521 $38,775 $39,260 $35,304 $7,930 Operating Revenues ($000s) $40,660 $41,703 $43,108 $43,491 $46,987 $21,262 Net Direct Debt ($000s) $7,690 $7,435 $6,675 $6,375 $13,260 $18,822 Moody's Adjusted Net Pension Liability (3 -yr average) ($000s) $6,952 $10,342 $12,296 $18,364 $20,595 $29,896 Source: Moody's Investors Service This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history. 2 6 March 2018 City of Spokane Valley, WA: Annual Comment on Spokane Valley )lll•Ilo MOODY'S INVESTORS SERVIC EXHIBIT 2 Available fund balance as a percent of operating revenues decreased from 2012 to 2016 Available Fund Balance as % of Operating Revenues U5 Cities Median 100% 50% 2Q12 2013 2014 2015 2016 Source: Issuer financial statements; Moody's Investors Service EXHIBIT 3 Full value of the property tax base increased from 2012 to 2016 (millions) 58,000 $7,500 $7,000 41. 2012 2013 Total Full Value 2014 Source: Issuer financial statements; Government data sources; Offering statements; Moody's Investors Service 1 2015 201E EXHIBIT 4 Moody's-adjusted net pension liability to operating revenues increased from 2012 to 2016 0Sx 0.0x _, Debt Pensions 2012 2013 2014 2015 2016 Source: Issuer financial statements; Government data sources; Offering statements; Moody's Investors Service U.S. PUBLIC FINANCE Endnotes 1 The rating referenced in this report is the issuer's General Obligation (GO) rating or its highest public rating that is GO -related. A GO bond is generally backed by the full faith and credit pledge and total taxing power of the issuer. GO -related securities include general obligation limited tax, annual appropriation, lease revenue, non -ad valorem, and moral obligation debt. The referenced ratings reflect the government's underlying credit quality without regard to state guarantees, enhancement programs or bond insurance. 2 The demographic data presented, including population, population density, per capita personal income and unemployment rate are derived from the most recently available US government databases. Population, population density and per capita personal income come from the American Community Survey while the unemployment rate comes from the Bureau of Labor Statistics. The largest industry sectors are derived from the Bureau of Economic Analysis. Moody's allocated the per capita personal income data and unemployment data for all counties in the US census into quartiles. The quartiles are ordered from strongest -to -weakest from a credit perspective: the highest per capita personal income quartile is first quartile, and the lowest unemployment rate is first quartile. 3 The institutional framework score assesses a municipality's legal ability to match revenues with expenditures based on its constitutionally and legislatively conferred powers and responsibilities. See US Local Government General Obligation Debt (December 2016) methodology report for more details. 4 For definitions of the metrics in the Key Indicators Table, US Local Government General Obligation Methodology and Scorecard User Guide (July 2014) . Metrics represented as N/A indicate the data were not available at the time of publication. 5 The medians come from our most recently published local government medians report, Medians - Tax Base Growth Reinforces Sector Stability as Pension Troubles Remain (March 2017) which is available on Moodys.com. The medians presented here are based on the key metrics outlined in Moody's GO methodology and the associated scorecard. 3 6 March 2018 City of Spokane Valley, WA: Annual Comment on Spokane Valley MOODY'S INVESTORS SERVIC U.S. PUBLIC FINANCE © 2018 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved. CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES ("MIS") ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT -LIKE SECURITIES, AND MOODY'S PUBLICATIONS MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT -LIKE SECURITIES. MOODY'S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY'S OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL -BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. CREDIT RATINGS AND MOODY'S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY'S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY'S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE. MOODY'S CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS OR MOODY'S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third -party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody's publications. To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S. To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody's Investors Service, Inc. for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy." Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be reckless and inappropriate for retail investors to use MOODY'S credit ratings or publications when making an investment decision. If in doubt you should contact your financial or other professional adviser. Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively. MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000. MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements. REPORT NUMBER 1102312 4 6 March 2018 City of Spokane Valley, WA: Annual Comment on Spokane Valley MOODY'S INVESTORS SERVIC I CLIENT SERVICES Americas 1-212-553-1653 Asia Pacific 852-3551-3077 Japan 81-3-5408-4100 EMEA 44-20-7772-5454 MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE 5 6 March 2018 City of Spokane Valley, WA: Annual Comment on Spokane Valley October 8 P:\Finance\2020 Budget\Budget Worksheets \2020 calendar.xlsx CITY OF SPOKANE VALLEY, WA 2020 BUDGET CALENDAR When 1 2/8/2019 What June 11 Council Workshop - 2020 Budget workshop with Council. July 16 Cauncil Study Session - Admin Report - Council goals & priorities for use of lodging tax July 30 Council Study Session - Consensus on Council goals & priorities for use of lodging tax August 20 Council Study Session - Admin Report: 2020 Budget - Estimated revenues and expenditures September 10 Formal Council Meeting - Public Hearing #1 an 2020 revenues including - City Council Motion Consideration - set 2020 Budget hearing for October 8 September 17 Council Study Session - Outside Agency presentations (5 min max each) September 24 Formal Council Meeting - City Manager presentation of 2020 Preliminary Budget. 11,4 October 1 Council Study Session - Admin Report- 2019 Budget Amendment Formal Council Meeting - Public Hearing #2 on 2020 Budget. 0*n October 22 November 12 December 10 Formal Council Meeting - Pubhc fiean a on 2019 Budget Amendment - Fust reading of the 2019 Budget Amendment Ordinance. - First reading of the 2020 Budget Ordinance. - Cauncil motion to award Outside Agency grants Formal Council Meeting - Public Hearing #3 on final 2020 Budget. - Admin Report- LTAC recommendations to Council - Second reading of the 2019 Budget Amendment Ordinance. - Second reading of the 2020 Budget Ordinance. Council Study Session - Adrnin Report - 2020 Fee Resolution. Formal Council Meeting - City Council Motion Consideration: Award Lodging Tax for 2020 - 2020 Fee Resolution adoption it changes are needed. "" City Clerk will post appropriate notice in newspaper. ••N N{r 2019 2018 2017 Budget Budget Budget timeline timeline timeline June 12 July 17 July 31 August 21 June 13 June 14 July 18 August 8 August 22 July 5 July 26 August 9 September 11 September 12 September 13 September 11 September 12 September 13 September 18 September 19 September 21 September 18 September 12 September 21 September 25 September 26 September 27 October 2 October 3. October4 October 9 October 9 October 10 October 10 October 11 October 11 October 23 October 24 October 25 October 23 October 31 October 25 October 23 October 24 October 25 October 23 October 24 October 25 October 23 October 24 October 25 November 13 November 14 November 8 November 13 November 14 November 8 November 13 November 14 November 8 November 20 November 21 November 1 December 11 January 9 December 13 December 11 December 12 December 13 CITY OF SPOKANE VALLEY Request for Council Action Meeting Date: February 19, 2019 Check all that apply: ['consent ❑ old business ['information ® admin. report Department Director Approval: ['new business ['public hearing ['pending legislation ['executive session AGENDA ITEM TITLE: Solid Waste and Recycling Update PREVIOUS COUNCIL ACTION TAKEN: In 2017, City Council selected Waste Management as its residential and commercial solid waste collection hauler. The City Council authorized a ten- year contract with Waste Management that became effective April 1, 2018. City Council has also authorized contracts with Sunshine Disposal, Inc. and Waste Management for "drop box" collection services and with Sunshine Recyclers, Inc. for transfer station and disposal services. BACKGROUND: During the Advance Agenda portion of the January 8, 2019 meeting, Council indicated a desire to possibly set up a task force to review and identify changes in the recycling markets and the impacts on the City. However, City staff have been actively engaged with the City's contracted solid waste service providers to do just that. This report summarizes some of the key points that staff have been working on as it relates to ongoing changes in the recycling markets. Contract Issues The City is currently approximately ten months into its ten-year solid waste, recycling, and compostables collection contract with Waste Management. Under the contract, Waste Management provides residential curbside collection of garbage, recycling, and compostables (e.g., yard waste). It also provides solid waste collection services to multifamily units and commercial businesses. Under the contract, residential customers may sign up for a number of garbage collection cart - size options. Once a garbage customer subscribes for garbage service, recycling is included in the garbage rates and a recycling cart is provided for customer use. Compostable service is optional and is an extra charge in addition to garbage service. Through the procurement process, the City identified specified recyclables to be included in the contract and Waste Management is required, pursuant to the contract, to collect the specified recyclables. Notable categories include cardboard, paper, glass, and plastics numbered 1-7. Plastic film, such as from grocery bags or Ziploc bags, are not allowed as recyclables. See the attached list of required recyclables for the complete list. On August 7, 2018, Waste Management requested four amendments to the solid waste collection contract. The requested changes were the following: - Rate increase of $1.01 to the monthly rate of each residential customer to recover increased costs of recycling; - Contamination service charge to impose on persons with excessive recycling contamination; - Changes to the acceptable recyclables list; and - Changes to the contract language on recycling. Page 11 Waste Management identified the recycling market changes implemented by the Chinese Government as the basis for the requested contract changes. City staff reviewed the requested changes and determined, with the assistance of the City's solid waste consultant, Epicenter Services, LLC, that the requested rate change was not warranted under the "market failure" provision of the contract and that since (1) the rates had been provided pursuant to a competitive process, (2) the contract had been in effect just over four months, (3) the nature of the contract is such that the hauler bears the risk of changes in recycling markets, and (4) Waste Management had not identified specific local bases for the requested changes, the City would not approve any of the changes. The City sent its response to Waste Management on November 13, 2018. However, staff also recognized that the changes in recycling imposed by the Chinese government had a ripple effect that impacted other recycling markets, including those where Waste Management may be sending some of the recyclables. Staff began regular meetings with Waste Management to better understand the impacts of the Chinese recycling shutdown, as well as to identify and address some of the other issues identified by Waste Management, such as the acceptable levels of contamination in recycling within the City and region -wide. See the letter from Waste Management dated August 7, 2018 and the City's response dated November 13, 2018, for more details on the issues. Changes in Recycling Markets City staff remain engaged in review of the changes in the recycling markets that have occurred and that continue to occur, and the effects from such changes on the City's recycling program. One thing that has become extremely clear throughout the last several months is that recycling is an incredibly complex interwoven mix of local programs, local markets, and global markets, which means that changes at any point along the system result in other changes throughout the rest of the system. As indicated by Waste Management in its August 7, 2018 letter, one of the primary events leading to some of the current issues was the decision by the Chinese Government to restrict all recyclables allowed into China to have no more than 0.5% contamination. Historically, China accepted a large amount of recycling from the United States and especially Washington State. Waste Management has indicated that almost 25% of all recyclables from around the world were delivered to China. Currently, the Spokane region has an effective contamination rate of approximately 10-15% (determined through audits at the Waste Management Materials Recovery Facility ("MRF")). The change effectively eliminated China as a recycling market, leading to an oversaturation of recycling supply in the other non -Chinese local and global markets. With the increased supply, these markets have begun setting more stringent contamination limits, as well as decreasing the price paid for recyclables. However, staff understands that Waste Management was not sending most of the Spokane -region recyclable material to China. Thus, the impacts that we are currently reviewing are the secondary impacts of excess supply locally, decreased prices paid for recyclables and more stringent contamination limits that are now being set. Staff has directed much of our review and research into what local contamination exists and possible solutions to address contamination issues. Contamination is one of the primary issues at the heart of the recycling discussions and so it is important to understand what contamination is. Contamination refers to those items that end up in a particular recyclable commodity stream that are not actually that commodity. Thus, it includes garbage that is never accepted as recyclable, such as food waste, Styrofoam, diapers, etc. It Page 1 2 also includes plastic film, such as grocery bags or Ziploc bags. It may also include other recyclables if they end up in the wrong recyclable commodity stream. For example, glass is a challenging recycling item since it often breaks during the collection process and the broken pieces end up with plastics, papers, and other recyclable streams. Of note, part of the challenge in contamination is the fact that recycling in the City and Spokane region is based on single -stream collection and is not source separated. This means all recyclables collected at the curb are collected in one cart and they are then separated at the Waste Management MRF. Single -stream recycling increases recycling participation because it is easier, but it also results in increased contamination, as people tend to give less thought to what they are putting into the recycling cart. Single—stream also causes cross -contamination as broken glass contaminates paper, while paper and plastic contaminates glass cullet, and liquid from bottles, cans and jugs contaminates paper and cardboard. While Waste Management is reluctant to consider reverting back to source separated recycling, due to route efficiencies, fewer injuries, and much higher recycling rates achieved with single -stream recycling, staff has asked Waste Management to consider evaluating the system -wide benefits of a source -separated system in order to consider all options. While the shift by the Chinese Government in 2018 spurred changes to some recycling markets, not all of the changes requested by Waste Management were directly related to that change. For example, one of the keys that Waste Management has identified is a desire to remove glass from the acceptable recycling list. They have achieved this in other surrounding jurisdictions and have discussed "deemphasizing" it in Spokane Valley. However, since glass is still part of the contract, staff has not agreed to any "de -emphasis" or change in messaging related to glass. Staff has learned that glass has historically been a challenging commodity, as it is very heavy and thus expensive to move. Further, in recent years there have been limited true recycling options. Currently, staff understands that there may be one active recycling facility in Washington State, which may not even be accepting materials from Eastern Washington. Thus, staff understands that Waste Management has looked for other uses of glass, including use in road topping in landfills, sandblasting, and insulation. However, the Washington Department of Ecology has indicated that such reuse is not technically recycling. Staff is evaluating whether allowing such uses would be acceptable under our Solid Waste Plan. Staff is also considering whether allowing landfilling of glass in the absence of other alternatives would be allowable. Since beginning the solid waste collection procurement process, the City has retained a solid waste consultant, Epicenter Services, LLC. Originally, Epicenter assisted with the procurement process. Since the effective date, Epicenter has assisted with implementation issues, including addressing Waste Management's requests to amend the contract. Changes in State Law The changes to the recycling markets are affecting cities and counties across the state. Accordingly, a number of groups have put forth proposed Legislative changes. Some of the bills that staff have identified include: HB 1114 reducing the wasting of food HB 1543 -SB 5545 sustainable recycling HB 1204 -SB 5397 plastic packaging HB 1665 repurposing domestic waste stream materials HB 1205 -SB 5323 Plastic bag ban HB 1632 reducing pollution from single -use plastic food service ware SB 5077 prohibiting single -use plastic straws Page 1 3 These bills aim to address some of the challenges in recycling through a variety of different measures. For example, there are efforts to address recycling on the front-end to incentivize cutting down the amount of packaging and eliminating certain types of materials from packaging. Others simply eliminate certain materials from those designated as recyclable under State law, which in turn might simplify the recycling process. Others seek to eliminate specific materials such as plastic bags or straws to attempt to reduce and eliminate contamination. Staff continue to monitor each of these bills and to research possible impacts on the City's recycling program. As indicated above, there are beneficial goals for these bills, but some may have unintended consequences. For example, while simplifying the recyclable list to a limited number of recyclables could eliminate some of the contamination issues, it would also add all of the removed recyclables into the garbage stream. This could require larger garbage containers and increased need for landfills, which could cause greater local and state-wide economic and environmental costs. For this reason, staff will continue to evaluate and update Council on these bills, work with our lobbyist when appropriate, and determine whether Council wants the City to communicate with State representatives regarding these bills. Moving Forward Staff continue to meet with Waste Management to discuss possible collaborative efforts to address some of the issues identified by Waste Management, such as increased education and contamination reduction efforts. Further, staff continue to research the impacts from the changes in the recycling markets and at the state legislative level. Staff have begun looking into possible consultant assistance given the complex issues involved. Staff will continue to update City Council on the recycling markets and the City's recycling program as we continue to learn more. It continues to be the goal of staff to maintain the solid waste collection rates and the service provided to our citizens and business owners. OPTIONS: Discussion. RECOMMENDED ACTION OR MOTION: Discussion. BUDGET/FINANCIAL IMPACTS: None at this time. STAFF CONTACT: Morgan Koudelka, Senior Administrative Analyst; Henry Allen, Engineer; Erik Lamb, Deputy City Attorney ATTACHMENTS: 1. PowerPoint Presentation 2. Attachment C from the City's Waste Management Solid Waste Collection Contract, which identifies the list of approved recyclables Waste Management is required to collect. 3. Letter from Waste Management dated August 7, 2018 requesting contract amendments 4. Response letter from City dated November 13, 2018 Page 1 4 SOLID WASTE AND RECYCLING UPDATE Henry Allen, Senior Engineer Morgan Koudelka, Senior Analyst Erik Lamb, Deputy City Attorney City of Spokane Valley - Office of the City Attorney r Topics Spokane Valley Recycling Composition Waste Management Contract Amendment Request Recycling Market Issues State Legislation Next Steps City of Spokane Valley - Office of the City Attorney 2 Residential Recycling Composition by Weight and Composition Recycle Composition 2018 Grand Commodity Apr May Jun Jul Aug Sep Oct Nov Dec total Aluminium 6,3 7.1 6.9 7.5 8,6 6.9 6.4 7.7 7.1 64.5 Cardboard 162 7 176.0 161.8 172.9 184.2 171.2 174.6 202.0 189.0 1,594.4 Colored HOPE Plastic 1 8 4.0 2.9 4.3 1.9 3.8 3.5 4.0 3.7 29.9 Glass 84 3 84.4 80.7 94.3 100.2 81.9 82.5 89.4 95.6 793.3 Mixed Paper -4.9 -7.4 -3.9 -4.6 -6.1 -4.1 -6.2 -8.2 -4.3 -49.6 Natural HDPE Plastic 4,8 5.3 3.4 5.6 3,2 4.8 5.4 5.8 5.0 43.3 Newspaper 155,3 156.7 157.3 137.7 170.3 139.5 151.8 207.7 180.5 1,456.7 PET Plastic 16,7 18.0 17.6 23.7 24.3 20.4 19.2 20.1 18.0 178.1 Plastics #3-7 0,9 -0.5 -0.5 -0.5 -0.5 -0.4 -0.4 -1.3 -0.3 -3.5 Residue 35 2 36.3 40.7 44.5 38.8 36.6 36.4 42.9 53.7 365.0 Scrap Metal 4.4 5.4 5.2 4.7 5,1 5.0 4.6 2.9 3.0 40.4 Tin 138 11.0 12.1 10.4 12.3 11.3 11.0 15.3 12.8 110.1 Grand total 481.2 496.4 484.3 500.4 542.3 476.9 489.0 588.4 563.8 4,622.6 Recyclables Composition Newspaper (3O.8 %1 Cotor by: Commodity • Aluminium • Cardboard 0 Colored HDPE Plastic • Glass • Mixed Paper O Natural HDPE Plastic • Newspaper • PET Plastic Plastics #3-7 O Residue 0 scrap Metal i Tire City of Spokane Valley - Office of the City Attorney 3 Was_A---.: _ - _ —_. ent Request August 7, 2018 - Waste Management requested: Rate increase for increased costs of recycling Contamination service charge Change recyclables list Other unspecified changes to recycling in contract Basis - Chinese Government decision to effectively stop accepting recycling November 13, 2018 - City Response: Rate change not warranted Rates were established from a competitive process Contract was very new Hauler bears the risk of market changes No clearly identified local impacts City of Spokane Valley - Office of the City Attorney Recycling works in a global economy - all aspects are interwoven, so a change at one point has rippling effects throughout the rest of the system 2018 - China effectively stops accepting US recycling by lowering contamination standards to o.5% Results in significant increase in recycling to other local and regional markets With newfound oversupply, other markets lower prices for recycling commodities and increase contamination thresholds Not all issues identified by Waste Management are related to change by Chinese Government Example - Glass Historically a challenging commodity - limited local markets; contamination issues; expensive to move Contamination Single stream versus source separated recycling Recycling versus reuse City of Spokane Valley - Office of the City Attorney a Legislative Changes? At least 14 bills have been introduced Range from addressing materials in packaging prior to use all the way to cutting down the items identified by the State as recyclable and banning certain products (e.g., plastic bag ban, straw ban) Staff continue to review for impacts City of Spokane Valley - Office of the City Attorney Staff continue to meet with Waste Management to identify issues in Spokane Valley and to work towards solutions within the current contract. Examples - increased and targeted education; increased use of existing contract remedies (such as contaminated bin tagging); other measures to reduce contamination. Research and review impacts from changes that are occurring in local, regional, and global recycling markets. Continue updates for City Council. City of Spokane Valley - Office of the City Attorney Spam Valley Contrati No. 17429.01 First Amended and Restated Comprehensive Garbage, Recyclables, and Compostables Collection Contract City of Spokane Valley And Waste Management aWashingtorn., Int, April 1, 2018 March 31, 2028 Attachment C Rcyclables List R yctables shall be Iorise, empty, clean and drg', not bn d as fc'll MATERIAL ["i'PE DESCRIPTION PREPARATION - 1' ' * C'X'10 EXCLUSIONS -.� Glass • Food ar beverage containers -- brown, clear, or green - empty Remove 1ids; empty of all food or liquids. Labels do not need to be removed, Leaded gI right bulb- s; porcelain; auto glass; windows, mirrors, laking dishes, storage (fishes, ceramic, plus, glassware, : a . x w=:nin ar . Paper • Cram paper, printericopy paper, constructiori paper • Newspepeg and pp& Iasi its • magazines and paper inserts • wogs 6 C. oard • Telephone boob 0 Wil orlon paper Inserts ■ Envelopes �y • Paper �5n�.°-}i P • Cereal, cookie and cracker bores • Detemnt beep • Paper towel tubas • Toiler paper tubes • 'issue boxes • Non -foil wrapping ]aper • Kraft pap a bap or boxes Remove plastic bags (exterior or interior), plastic pig, mete, electronics, magi twine, sem,, lids and aany fOod or liquids. Mast be dry. Plastic windows in per envelopes okay. Shredded paper, per envelopes with bubble wrap hrnr, insulation liners or envelopes made from plastic (Tyrant); laminated paper, stickers, labels, photos, carbon paper, per affixed to magnets; wax. costed cups pet food bad; mixed material bag% wet or soiled p er p with 1� 111110=.e of paintor glue; Pro= food boxes' m b NUM, juice and ice cream cartons; Acetic containers - e.g. soup, Vita. soy mills, almond mak. Cardboard • Cardboard bis • Cardboard packaging • cardbofirci beverae `flaw or nursery `flats' F1a n a!1 cardboard, cut down to size to fit in cart with 'Cd closed. Remote an interior packaging, block foam, packing peon and exterior plastic wrap. Do not trundle with tape or twine. External tape okay. Oversized cardboard can be flattened and laced Waxed cardboard; liber containing, or that has been in contact with food debris. City of SpoTcane Valley First Aar dewd and Restated Cantor ar a (Sar`buge, Rccyydebtee, and Comlmstab3ss Collection Contract 62 ....,r next to cart. Must be dry, - Metal • Tin, aluminum and Rernove all icor Alutnirrnrn foil and steel fond or packaging remove trays; sharp or greasy beverage containers lids; empty of all food metal; batteries; • Empty aerosol cans or liquids. Labels do mid; hangers; • Scrap rental (limit: not red to be electrical cords; cell Needs to fit in Cart, approx. 2',.'x2', 35 lbs.). tummy phones; car snow chains; Metal n fl lee . P1 • Food and beverage Plastic bottles With Plastic bags, plastic film; containers plastic screw -on lids plastic bottles that • l' i'/IETE butt e s are Okay iilids are contained HIM listed (sodat`water bottles) • HDPE butaettpgg screwed back on, remove all other lids; materials; deli, baby and produce clam -ghat] (milk jugs; (Immo% rEMave straws; empty containers; he Ixdsw bottles) of all food, ligtticl-c or any size; plan trays; • Dairy tubs, e.g. other debris. Labels do PVC; large rigid p1ac butter, yogurt, cottap cheese • 5 -gallon bucket net nem to be removal (outdoorfurrdture, laundry bake swimming pools, toys, etc.); hoserg landscaping/sprinkler tubing foam packaging (block, paanuta, etc.) and foam cups and plate % loose riti. caait hangs. Although not an ex?mus ve 1ist, for education poses, examples oi'other exclusions or item that should not be placed in the Curbside Recycling Carts errAny recyclables materials, or pig of recyciables Materials less than 2" in size in any cfuneraiork. Materials: (a) that contain chemical or other properties deleterious, or capable of causing material damage, to any part of Contractor's property, its personnel or the pubDx aralior (b) that may materially impair the strength or the durability ofthe Contractor's structures or equipment. Cityof Spokane Valley 63 First Ammeter] and Resented CO mpteaensfve rya rb , Reeyctabits, and Compostables Collection Contract W WASTE MANAGEMENT August 7, 2018 Mr. Mark Calhoun City Manager City of Spokane Valley 10210 East Sprague Avenue Spokane Valley, WA 99206 RE: Extraordinary Recycling Rate Increase Request Dear Mark: WASTE MANAGEMENT 11321 E ]ndiana Road Spokane Valley, WA 99246 VIA Email Only Waste Management is seeking an extraordinary rate increase to recover the increased costs of recycling. Our request is equal to 51.01 per residential customer per month. In addition to the rate increase, we would like to discuss a contamination service charge and protocol, changes to our acceptable recyclables list and changes to our contract language on recycling. These requests are based on recycling market changes implemented by the Chinese Government in 2018. It began with their ban of Mixed Waste Paper and Plastics Imports on January 1, 2018. Then China implemented a 0.5% contamination limit. On May 3r`', China announced the suspension of alt inspections of recyclables from the U.S., effectively banning all inbound recyclable materials. And although WM's Spokane Materials and Recycling Technology (SMaRT) center has primarily sourced processed recyclables to U.S. and Canadian domestic markets, the impact of China's policies on global recycling markets, including the U.S. and Canada, is significant and on-going. Through 2017, over 25% of the world's recyclables were imported by China, including over 50% of the paper and plastics recycled across the globe. China's new import policies banning materials and limiting contamination means that China is no longer a viable export market for recyclables. This has resulted in an oversupply of commodities across the globe, which has led to depressed commodity pricing. Supply is high and commodity pricing is low for the material that cannot achieve China's 0.5% contamination limits. And while Waste Management and others in the industry have reduced shipments to China over the last few months using alternative markets, the May 3rd ban on alt incoming recyclables will only extend the downturn on prices. Due to the new material bans and 0.5% contamination limits, recyclers have had to add operating expense and slow down processing lines. This has increased the cost of recycling at the same time that commodity values are low. 8/7/2018 WM Letter to City of Spokane ValLey Page 2 of 2 Waste Management continues to be committed to education, actively working with you and your residents and businesses to improve the quality of material that we collect and process through our comprehensive Recycle Often. Recycle Right. ® education and outreach tools and social media. This program provides education on how to recycle right. Education is more important than ever and it is necessary that we work together and increase our education. We are also continuing to invest in technology at our material recovery facilities to help process material more efficiently. And we are working with industry leaders to influence upstream recyclability, as well as to encourage increased use of post -consumer content domestically. These efforts are all necessary for the long-term health of recycling; however, they are not enough to offset the impacts of theses dramatic changes in our industry. Due to the new policies that have changed the recycling industry world-wide, Waste Management respectfully requests an extraordinary price increase due to the uncontrollable recycling market changes. Please refer to the enclosed documentation outlining our methodology for the calculated rate increase. We will be in contact with you shortly regarding next steps. Thank you for your continued partnership and commitment to recycling! Sincerely, Tami Yager Public Sector Services Manager Waste Management of Washington, Inc. cc: Henry Allen, Sr. Engineer, Spokane Valley Eric Lamb, Deputy City Attorney, Spokane Valley Morgan Koudelka, Sr. Analyst, Spokane Valley Jesse Granado, Sr. District Manager, WM Mindy Rostami, Sr. Contract Compliance Manager, WM Enclosures: • Residential Recycling Rate Request Calculation • Acceptable Recyclables List • WM's Recycling News Bulletin May 2018 • WM's Recycling News Bulletin June 2018 • WM's Recycling News Bulletin July 2018 • WRRA Fact Sheet China Sword Impact - Residential Municipality: Spokane Valley WM MRF Used: SMaRT 1. Increased MRF Processing Costs Explanatory Notes a Previous WUTC Processing Cost per Ton $ 95,23 Based on previous WUTC tariff filing b Current WUTC Processing Cost per Ton $ 117.37 Per August 2018WUTC tarifffiling c Increased Cost per Ton $ 22.14 [d -a1 d Annual Residential Recycling Tons 5,939 annualized 2018 resi recycling tons e Total Increased Processing Cost - Residential $ 131,492 [ex d] f Total Residential Accounts 23,824 g Monthly Rate Increase per Residential Account $ 0.46 ]e/f/121 2. Change in Commodity Values h 2017 Average Commodity Value per Ton Q2-2018 Average Commodity Value per Ton j Revenue Loss per Ton k Annual Residential Recycling Tons I Total Lost Revenue Value - Residential m Total Residential Accounts n Monthly Rate Increase per Residential Account $ 114.51 Per 2017 average commodity values - SMaRT $ 87.87 Per Q2-2018 average commodity values - SMaRT $ 26.64 fh-i] 5,939 annualized 2018 resi recycling tons $ 158,207 [ix k] 23,821 $ 0.55 Wm/ 121 3. Total Monthly Adjustment Requested $ 1.01 C:\Users\mrostami\OneDrive - Waste Management\Desktop\China Sword\Central-E=astern WA - Impact of China Sword Municipal contracts_08012018 (includes city rate calc sheets) Spokane Valley RECYCLABLE MATERIALS SPECIFICATIONS MATERIAL TYPES ACCEPTABLE RECYCLABLES DESCRIPTION PREPARATION INSTRUCTIONS EXCLUSIONS Paper • • Office paper, copy paper, construction paper, file folders, note paper, computer paper, brochures Newspaper, ads and Remove plastic bags (exterior or interior), plastic packaging, metal, electronics, magnets, twine, straws, lids and any • • • Shredded paper Paper envelopes with bubble wrap liners Insulation liners or envelopes made from plastic (Tyvek); paper inserts food or liquids. Must • Laminated paper • Magazines and inserts be dry. Plastic • Stickers/labels • Catalogs windows in paper • Photos • Cardboard envelopes okay. • Carbon paper • Direct mail and paper inserts • • Receipts Paper affixed to magnets • Envelopes • Hot or cold cups • Paper bags • Pet food bags • Cereal, cookie and cracker boxes • • Mixed material bags Wet or soiled paper • • Paper towel tubes Toilet paper tubes • Paper with large amounts of paint or glue • Tissue boxes • Frozen food boxes • Non -foil wrapping paper • Juice boxes • Kraft paper bags or boxes • Milk, juice and ice cream cartons • Aseptic containers — e.g. soup, broth, soy milk, almond milk Cardboard • Cardboard boxes Flatten all cardboard. • Waxed cardboard • • • Cardboard packaging Cardboard beverage Remove all interior packaging, block foam, packing peanuts and exterior plastic wrap. Do not bundle with tape or twine. External tape okay. Oversized cardboard can be placed next to cart/container. Must be dry. Metal • Tin, aluminum and steel Remove all exterior • Aluminum foil and trays food or beverage packaging; remove • Sharp or greasy metal containers lids; empty of all food or liquids. Labels do not need to be removed. • • • • Scrap metal Batteries Microwaves Electrical cords • Cell phones • Car snow chains • Miscellaneous chains • Aerosol cans • Wire Plastic Bottles • PET/PETE bottles #1 Remove and dispose • Plastic bags • HDPE bottles/jugs #2 of lids; remove straws; empty of all food, liquids or other debris. • Plastics items #3-#7 • Food and beverage containers Labels do not need to be removed. • Dairy tubs, e.g. butter, yogurt, cottage cheese • Cups • Rigid flower pots • 5-gallon buckets • Plastic film • Diapers • Plastic bottles that contained HHW listed materials • Deli, bakery and produce clamshell containers • Loose lids — any size; plant trays • PVC • Large rigid plastic (outdoor furniture, laundry baskets, swimming pools, toys, etc.) • Hoses • Landscaping/sprinkler tubing. OTHER EXCLUSIONS • Fabric (textiles) • Carpet • Rope • Christmas Lights • Wood • Glass of any kind RECYCLING NEWS BULLETIN to, ayi3 As valued customers committed to recycling, we are providing this important recycling update. Overview In recent years, almost 30% of all recyclables from across the globe were shipped to China, including over 50% of the world's recyclable mixed paper and plastics. On January 1, all mixed paper and mixed plastics were banned as an import into China. On March 1, China began enforcing a new 0.5% contamination limit on imported recyclables, then later in March implemented Operation Blue Sky, a screening effort at their ports to enforce their new policies. China's new policies have been implemented in response to their aggressive new environmental goals, which include creating their own recycling collection programs. China has announced a plan to eliminate imports of all post -consumer recyclables by 2021, and they appear to be taking steps to move down this path. May 3, 2018 Update: Chinese Government Announces 30 -day Inspection Suspension On May 3, the Chinese Government announced that it has suspended inspections/certificates for all recyclables from the U.S. through June 4, 2018. Because all loads shipped to China must be certified, recyclables will not be able to be shipped from the U.S. to China during this time. In other words, regardless of the material bans and the 0.5% contamination limit, no recyclables will ship from the U.S. to China for at least the next month. It is apparent that China will not be easing up on their import restrictions soon. )m nct of this Latest Announcement The suspension of U.S. imports into China adds additional pressure on global markets, which ultimately impacts recycling programs in communities across the U.S. Some of the material that was being shipped to China (cardboard, some newspaper, sorted office paper) will now compete for the same markets that have beer established for lower value mixed paper. Inevitably, some paper will likely be left without a market. With this latest news, commodity pricing continues to fall. We have seen a 50% reduction in commodity values in the past several months, while processing costs have increased. Every community and every recycler is impacted. Keeping the Focus on Quality Alternative markets - domestic and export - require high quality recyclable materials with little to no contamination. Waste Management (WM) is focused on reducing contamination to help move materials to end markets. Given continued market volatility, we must all work together on solutions. We all have a role - and a responsibility - to make recycling successful. THE BATTLE TO REDUCE RECYCLING CONTAMINATION The sustainability of all recycling programs is dependent upon collecting high quality recyclable materials free of unacceptable materials. From an environmental, economic and safety perspective, addressing the quality of recycling is imperative and we must tackle this together. Here is what WM is doing, and how you can help: • Waste Management's education and outreach program, Recycle Often. Recycle Right ® website has tips and tools to help customers reduce and eliminate contamination. Practice and share these tips! • We continue to invest in technology to process cleaner material, more efficiently. Send us clean materials! • As allowable, WM will enforce contract provisions related to contamination to the fullest extent. We will also work closely with our customers to adjust the current recycling business model to reflect today's marketplace. We are seeking cost recovery as allowed, charging for contamination and amending contract language. Let's work together to eliminate contamination and make recycling world Resources for Recycling Industry News Recycle Often. Recycle Right.® Newsroom WasteDive Waste360 Resource Recycling Waste Today W WASTE MANAGEMENT THINK GREEN. RECYCLING NEWS BULLETIiI June 2018 RECYCLE OFTEN. RECYCLE RIGHT; As valued customers committed to recycling, we are providing this important recycling update. Background For the past year, the global recycling industry has been adjusting to a series of changes to China's policies related to importing recyclables. Previous import actions, such as the Chinese "Green Fence" (2013) impacted the flow of plastics into China; however, the policy announcements over the past year have much broader implications to all aspects of recycling across the globe. As recently as May 2018, China announced a one-month suspension of all commodity imports from the U.S. Although this suspension has ended, the market disruption caused by the suspension exacerbated an already difficult market situation, dramatically impacting recyclers' ability to move materials. Recycling and the Public Trust Our customers tell us that recycling is an important value in their communities. Consumers want to do the right thing for their local communities and the environment, and recycling gives them that opportunity by giving commodities a second life. As a service provider, Waste Management values the trust communities place in us to process and recycle materials responsibly and keep recycling economically sustainable. Working together with our customers, we will continue our focus on educating consumers to recycle right and reduce contamination as we face this global recycling challenge. Impact of Global Market Conditions on Local Recycling Programs China's import restrictions have eliminated the world's Largest market for Mixed Paper and Mixed Plastics, forcing recyclers to find a new home for over 13 million tons of materials per year. This over -supply of material ultimately impacts recycling programs in communities across the U.S, since the paper and plastics that were previously shipped to China are now competing for limited markets. As the largest volume of material recycled, finding markets for paper is critical. How can we work together to address the new recycling norm? Because markets - both domestic and export - require high quality recyclable materials with tittle to no contamination, we need to work together to reduce contamination and improve quality. Waste Management remains committed to continue to work with customers to improve the quality of material we collect and/or process. Below are some ways we can work together to educate, enforce, and reset the recycling market. • Practice and share recycling tips at every opportunity - Waste Management's education and outreach website Recycle Often. Recycle Right ® has tips and tools to help customers reduce and eliminate contamination. • Make recycling work - Be transparent with constituents about keeping recycling sustainable in your community. Engage your residents to help find solutions and maintain their trust in the recycling process. • Enforce quality requirements - Expand recycling education and adopt consequences for not recycling properly to drive behavior change - we need to keep reinforcing the message about the importance of recycling the right things correctly. Waste Management will continue to help educate customers to reduce contamination - and we also will take necessary steps to seek the recovery of increased costs to keep recycling economically sustainable. • Market Reset - Market quality requirements and depressed commodity values necessitate a holistic market reset to reflect the new 'norm.' The cost of collection and processing has always exceeded the value of the commodities; however, this cost has never been transparent to consumers. And current quality requirements are driving up processing costs at MRF's. Every community and every recycler is impacted. It is time for a paradigm shift regarding the business of recycling. Resources for Recycling Industry Nevis Recycle Often. Recycle Right.® WasteDive Waste360 Resource Recycling Waste Today W WASTE MANAGEMENT THINK GREEN; RECYCLING J iy 2018 EWS ULLETIN to, China notified the World Trade Organization a year ago of its intent to ban the import of 24 materials, including mixed waste paper and mixed plastics. While the news was met with skepticism at the time, over the past year China followed through with the ban, and the Chinese government implemented additional restrictions including announcing a ban on all recyclables by 2020. What are the effects of China's policy changes? Impacted by basic supply and demand economic principles, recycling commodity markets plummeted due to the global over -supply of recyclables and simultaneous reduced demand, driven by China's restrictive import policies. These policies are creating challenges for recyclers and cities: • China's 0.5% contamination limit elevated quality expectations for all buyers across the globe. It also increased recycling processing costs in Material Recovery Facilities (MRF's) as recyclers work to remove non -acceptable items. • Recyclers have a hard time selling paper and plastics and many are carrying large inventories. • MRF residual rates continue to increase due to the amount of non -recyclable materials from curbside programs. • In short, these factors contribute to increasing the cost of community recycling programs. What can we do to adapt to the new reality and norms of recycling? Keep recycling the right things! A quote in a recent article notes that we should "keep calm and recycle." Recycling will survive this crisis. It will evolve and may look different in a few years, but recycling will continue. The best thing we can all do is to evaluate and adapt our programs for today's environment: • Review your acceptable items list. Does it include only those materials with viable recycling end markets? Are you emphasizing the three rules of Recycle Often. Recycle Right.®? Are you focusing on recycling all your empty plastic bottles, aluminum cans, paper and cardboard? • Review informative recycling education materials to recycle right. Visit Recycle Often. Recycle Right.com to see all the recycling education resources for residents, businesses, municipalities, multi -family complexes and more. Actively discuss the current state of recycling and consider adjusting recycling contracts. New contract language needs to mitigate the risk associated with recycling services and the role of the global commodity market. Recycling has weathered difficult times before. Although this situation is different since it stems from Chinese policy changes changing global market dynamics rather than economic supply and demand trends, we expect markets will eventually recover, albeit, the industry will likely look very different. Now more than ever it is imperative to collect materials with long-term market viability: cardboard, paper, aluminum, tin and plastic bottles (water/soda bottles and milk/juice jugs). .coin us in the battle against recycling contamination. it takes all of us working together to educate consumers to the new realities of recycling. • Become a Recycling Ambassador. Share good recycling practices with Waste Management's education and outreach program, Recycle Often. Recycle Right.' Download educational materials that help consumers and businesses reduce and eliminate contamination. • Don't bag your recyclables! We need to help consumers change their behavior and place their recyclable materials directly into their containers — no plastic bags! It's safer for workers and better for the environment. • Collaborate: Let's work together to make recycling work to adjust the current recycling business model to reflect today's marketplace. Resources for Recycling Industry News Recycle Often. Recycle Right.`' Newsroom WasteDive Waste360 Resource Recycling Waste Today W WASTE MANAGEMENT THINK GREEN: .011%11 WRRA Ol WASHINGTON REFUSE & RECYCLING ASSOCIATION China's National Sword Policy Updated 5.15.18 • China launched a customs program called "Operation Green Fence" in 2013, aimed at increasing environmental quality by reducing waste importation and contamination in recyclable materials. China instituted a customs crackdown on waste importation called "National Sword" in 2017. The latest phase is called "Blue Sky 2018," is a 10 -month long period of `special actions against foreign garbage smuggling'. As a result of these policies, China banned the import of many recyclable materials on January 1, 2018 and lowered the contamination rate for recyclables not covered by the ban to 0.5%. May 2018 Update: China has halted the import of al! recyclable materials from the U.S. until June 4. • China notified the World Trade Organization in July 2017 that it planned to ban the import of at least 24 varieties of solid waste and recyclables, including mixed paper, plastics 3-7, metals, and other materials commonly collected by U.S. recycling programs and exported by U.S. recyclers. In April 2018, China announced a ban on 32 additional varieties of recyclable materials to enter into effect by the end of 2018. • China has also imposed a new 0.5% contaminant limit for the remaining recyclable materials not covered by the ban. A typical permitted recycling facility (Material Recovery Facility or MRF) achieves contaminant rates of 3-5%. The new limit is far below any existing international standard and all but unachievable with current equipment and system costs. • On May 4, 2018 China suspended ALL imports of recyclable materials from the U.S. through June and will conduct 100% inspections of all materials with China Certification and Inspection (CLIC) permits before the suspension. CCIC has been suspended from performing inspections and issuing certificates for recyclables through Jure 4 due to the discovery of continuing contamination in recyclables entering China. This development has added to the uncertainty and volatility in the recycling market and indicates China will not relax import policies in the near future. • China is the largest manufacturing nation in the world and the single largest consumer of recyclables. Recyclable materials are the sixth largest U.S. export to China. U.S. recyclers have relied on demand from the Chinese market. In Jan -Feb 2017, the U.S. exported 4.67 million tons of paper and 1.23 million tons of plastics to China. For Jan -Feb 2018 exports fell to 2.51 million tons of paper and just 10,000 tons of plastic. Economies around the world are growing, but there is no country or combination of countries that can consume the amount of material China has historically imported for manufacturing. • U.S. recycling is facing a time of challenge and uncertainty. Washington Material Recovery Facilities (MRFs) are working to achieve the drastically lower contamination rate. Conveyor belts have been slowed, separation equipment fine-tuned, and additional labor has been added. New equipment is on the way but will take time. • The Chinese Market is unlikely to return in the near term. National Sword is part of a broader effort by the Chinese government to reduce pollution and China continues to ban additional materials. China has not renewed the import licenses of many facilities. In the first batch of 2017, China issued 2,937 import permits. China issued only 108 import permits in the first round of 2018, and many facilities in China will likely close. Some Chinese recyclers and manufacturers are relocating to other countries, but this process will take years. • As a result, there is continuing market uncertainty even for materials not covered by the ban. China is now conducting strict inspections of recyclables at U.S. facilities. Even materials that meet the new 0.5% contaminant threshold will still be rejected if any banned material is found. For example, an entire shipment will be disallowed if a single bottle with dried juice inside is found during an inspection of materials that otherwise meet the 0.5% threshold. This includes not only the bale or container inspected, but the entire shipping allotment of 10 or more shipping containers, all rejected due to one prohibitive. • U.S. recycling programs currently mandate the collection of many recyclables covered by the ban and many other materials which contaminate the recycling stream. The surplus of materials from mandated recycling programs has driven prices for recyclables to historic lows and left others with no clear processing and manufacturing destination. For example, the price paid to Northwest recyclers for paper has plummeted in the last year from $97.50 to $5 a ton as of mid-March, In some cases, prices have gone negative and the cost of shipping exceeds the value of the recyclables. The impact varies by region and local markets, but the West Coast is suffering the strongest impacts due to historical reliance on Chinese markets for recyclables. • Across our state, region, and nation, recyclable materials without a market demand are accumulating and may have to be diverted to landfills. In Washington, some communities are diverting accumulated recyclables to landfills to prevent public health and fire code issues. It's not safe to store large quantities of recyclables inside for fire code reasons and not feasible to store them outside due to our wet climate. • The ban presents an opportunity to review curbside recycling programs and improve their quality. Communication about the new market realities across the recycling supply chain is essential to ensure high quality recyclables that will have a market. The list of the materials accepted in local recycling plans may need to be modified both in the short and longer terms. Reducing contamination in commingled recyclables collected at the curb is essential. • What can you do to help? Check with your local recycling program to learn which materials are collected in the commingled bin through your program. Ensure that anything you recycle is on that list. Ensuring everything that goes into the bin is recyclable is crucial for reducing contamination. Source separation of recyclables from garbage is the first step. Recyclables must also be empty, clean, and dry. if you do not know whether something can be recycled, throw it in the garbage, WHEN IN DOUBT, THROW IT OUT! Recycling programs collect too many materials that contaminate the entire stream: httes://grist.org/article/we-recycle-so-much-trash-its-created-an-international-crisis/ Materials banned under National Sword A Comprehensive list of banned materials is available on wrra.org. For materials, not subject to the ban, China has instituted a new and extremely prohibitive quality standard for material limiting contaminants to one half of one percent (0.5%). This requirement applies to all materials, even those not covered under the ban. Check with your local recycling program to of materials are collected through your program. Ensure that anything you recycle is an that list, and is clean, empty and dry. Ensuring everything that goes into the bin is recyclable is crucial for reducing contamination. If you do not know whether or not something can be recycled, throw it in the garbage. WHEN IN DOUBT, THROW IT OUT! About WRRA: The Washington Refuse and Recycling Association (WRRA) represents the private sector solid waste industry in Washington. WRRA member companies and the solid waste industry serve a vital role in public health, safety, and environmental protection. WRRA members are the largest real recyclers in Washington. Solid Waste by the numbers: • 14,700 people employed in Washington's waste management and remediation industry during 2016. (Washington State Employee Security Department) • $75,156 is the average annual wage for Washington state workers in the waste management and remediation industry, compared to the national average of $46,790. (Washington State Employee Security Department) • For every million dollars generated by Washington's solid waste industry, $2.17 million is generated in the economy through the multiplier effect. (Office of Financial Management) • For every 10 jobs in Washington's solid waste industry, an additional 17.01 jobs are created outside the industry. (Office of Financial Management) For more information please contact WRRA Executive Director Brad Lovaas at (360) 943-8859 or brad@wrra.org. Most recent version and other resources always available on wrra.org *Wane COPY CITY MANAGER Mark Calhoun, City Manager 10210 E Sprague Avenue • Spokane Valley WA 99206 Phone: (509) 720-5000 ♦ Fax: (509) 720-5075 ♦ www.spokanevalley.org November 13, 2018 Tami Yager Manager, Public Sector Services Waste Management 11321 E. Indiana Road Spokane Valley, WA 99206 Dear Tami: This letter is in response to your letter dated August 7, 2018, requesting four changes to the recycling services provided under the First Amended and Restated Comprehensive Garbage, Recyclables, and Compostables Collection Contract entered into by the City of Spokane Valley (City) and Waste Management of Washington, Inc. (WM) on March 12, 2018 and effective April 1, 2018 (the "Collection Contract"). We understand that internationally and nationally, recycling is in the midst of a variety of changes. The City desires to work collaboratively with Waste Management to ensure that Spokane Valley customers continue to have ongoing recyclable collection and processing services for the benefit of our citizens and the environment. However, you have made requests for multiple substantial and material changes to a ten-year contract just four months into its term. Further, the Collection Contract and the rates were clearly established through a competitive process in which recycling rates were clearly built in without a periodic market adjustment feature. The ongoing changes you have identified began occurring prior to the implementation date and the recycling markets and the regulatory framework governing recycling remains in a state of flux. With this, at this time the City has significant concerns about implementing any rate increases. Section 4.3.4 of the Collection Contract does provide that WM may seek "temporary adjustment or other relief' in the event an "unforeseen temporary market failure prevents or precludes compliance" with recycling requirements in the Collection Contract. However, while you have indicated that costs have increased, we understand there are still available markets for recycling and as such, we do not see the current situation as you've presented as a "market failure" where materials cannot be marketed. With regard to the four specific requests set forth in your letter, we have the following responses: 1. WM requests a recycling rate increase of $1.01 per residential customer per month. This amount is a sum of WM's estimated monthly increase in MRF processing costs of $0.46 and the monthly impact from the change in commodity values of $0.55. Concerning the increased MRF processing costs, the City is currently not inclined to impose this customer -wide rate increase. Concerning the impact due to the changes in commodity values, Section 4.3.4 of the Collection Contract provides "Except as otherwise expressly provided for by this Contract, Contractor shall not adjust or modify rates due to ... changes in commodity prices for Recyclables ... " Thus the City is currently not inclined to adjust the recycling rate due to fluctuations in commodity prices. 2. A contamination service charge and protocol. At this time the City is currently not inclined to impose a contamination service charge and protocol. Where there are instances of contamination, what has been your experience in applying the mitigation measures described in the contract such as in section 3.1.12? Has there been other public outreach and education or other steps done to address contamination? 3. Changes to the acceptable recyclables list. Given the timing of the new contract, the City desires to keep the list of collected recyclables as is. Please provide a list of which materials are challenging to recycle and what steps could be done to keep them as viable source materials. For instance, what other uses exist for glass that could be leveraged, such as using glass for road fill, insulation, tile, sand blasting, filler in concrete projects, countertops, etc.? 4. Changes to the contract language on recycling. Please provide specifics on desired changes. As mentioned above, we do understand that recycling is in a state of flux. However, we understand that part of the problem is that the markets are recalibrating the acceptable levels of contamination. The City believes that addressing the root issues — namely reducing the level of contamination -- should be the preferred option to address the changes in recycling. To that end, we would like to first work with Waste Management to put forth a concerted, sustained effort to reduce any contamination in the recyclables. Part of the challenge that WM and the City face is that currently there is no data regarding the contamination levels specific to Spokane Valley customers. Thus, a baseline of the current contamination levels is necessary to identify the extent that contamination is occurring from City customers and then to identify a path forward for educating customers on the changes that are occurring in the recycling industry and the methods to reduce contamination. In the letter's attached material it mentions that both domestic and export markets require high quality recycle materials with little to no contamination. With this, the City's preferred response to this situation for the immediate future and for the long-term health of recycling is to start by working on improving the quality of materials to be processed. We see this effort as beginning at the home and industry and so would like to focus our efforts there. A critical asset to this effort is Waste Management's commitment to education, actively working with our residents and businesses to improve the quality of material that is collected and processed through the comprehensive "Recycle Often. Recycle Right®" education and outreach tools and social media. We would like to continue discussions on how to identify and reduce any contamination levels from Spokane Valley customers. We look forward to receiving the information requested above and discussing possible options after receipt and review of the requested information. Sincerely, Mark Calhoun City Manager MC/ha CITY OF SPOKANE VALLEY Request for Council Action Meeting Date: February 19, 2019 Department Director Approval: Check all that apply: ['consent ❑ old business ['new business ['public hearing ['information ® admin. report ['pending legislation ['executive session AGENDA ITEM TITLE: Neighborhood Restoration Pilot Event GOVERNING LEGISLATION: PREVIOUS COUNCIL ACTION TAKEN: February 13, 2018: City Council identified the Neighborhood Restoration Program as an item for the advance agenda. BACKGROUND: The City Council previously identified a City of Spokane Valley Neighborhood Restoration Program as an advance agenda item. Staff and three City Councilmembers (Deputy Mayor Pam Haley and Councilmembers Arne Woodard and Sam Wood) have been meeting over the last several months with solid waste providers and a representative from SCOPE to outline parameters for a pilot neighborhood restoration program for City Council consideration. The attached materials outline the details of the pilot program developed. Generally, it would feature a one -day free clean up event to a targeted area. This would be primarily staffed through SCOPE volunteers and would be funded through the City's Solid Waste fee that is collected at the University Transfer Station. Once the pilot program is completed, staff will review the data to determine how to effectively have additional clean-up events elsewhere in the City, including identifying a permanent funding solution. Notably, staff have found that neighborhood clean-up events are common in municipalities throughout Washington. Usually there is one event per neighborhood per year. Typically there is a group in charge of the event such as a neighborhood association, concerned citizens in the neighborhood or a non-profit organization. Benefits of these events include: cleaner neighborhood, increased community pride and ownership, reduced health hazards, beautification, building community, reduced code enforcement cases, and reduced crime. OPTIONS: Discussion. RECOMMENDED ACTION OR MOTION: Discussion. BUDGET/FINANCIAL IMPACTS: Estimated cost of pilot event is $20,000, funded through Solid Waste Fund #106. STAFF CONTACT: Henry Allen, Senior Engineer; Erik Lamb, Deputy City Attorney ATTACHMENTS: Neighborhood Restoration Pilot Details with Ticket; Neighborhood Restoration Cost Estimate and Analysis PILOT Neighborhood Restoration Event — Details as of 13 Feb 2019 Pilot Neighborhood Restoration Area Boundaries: z L Mairi Ave a.' E s r c i Ave E t1th Ave ce IA. en Anticipated participants: # Homes in area: 2373 Anticipated % Homes Participating: 20% Anticipated # Homes Participating: 475 r k!!r,rannp a Anticipated Cost Anticipated cost (with one load per household): approximately $20,000 (includes disposal, printing and mailing letters and tickets). See Cost Estimate worksheet for details. Pilot Event - Page 1 of 7 Event Details: Event day and time: Saturday from 9:00 am until 2:00 pm. At 2:00, tag or somehow note last vehicle to identify which vehicle is to be the last in line and continue collecting from all vehicles still in line to that point. Notice letter and ticket mailed to households within the identified area: • Flyer with all the details and instructions • Ticket to allow access (and document participation), one ticket per household (see example below) Possible location - frontage properties along 4th Avenue owned by Washington State Department of Transportation (DOT). DOT has indicated property may be leased for $100. Target audience: • Single-family (SFR). (Not Multi -family (MF) for now) • House will receive a letter with flyer and a "ticket" • # trips (and thus amount) limited by "ticket", sent out to resident's dwelling. For the pilot event, just allowing one trip but could allow more trips per household in future events. Each household may bring up to 2 1/2 cubic yards of material, which is approximately one pickup truck load. To reduce the line of vehicles, the tickets will also be accepted at the Sunshine Transfer Station. Volunteers will collect tickets to manage participation and to identify the number of visits to assist with planning future restoration events. What to do if someone brings too much in a load? Since this is a pilot, we intend to take it for now. Funding • Pilot event — out of Solid Waste Fee collected at Sunshine Transfer Station and used by the City for Administration and Solid Waste Management purposes. SCOPE volunteers will be the primary operators of the program, including arranging for all drop boxes. • Long term? To be identified after pilot program. Likely some form of fee at the Sunshine Transfer Station. Materials to be collected in Pilot event: Material Allowable Items for Event? Notes Garbage Yes 2.5 cy = one pickup truck bed Small, loose item must be contained: bagged, boxed, canned to quicken disposal and keep area clean. Recyclables Yes If not reusable then will go to garbage otherwise will be taken as a charitable donation Pilot Event - Page 2 of 7 Material Allowable Items for Event? Notes Organics/ Compostables Yes Max piece size per contract Must be secured and/or contained: bagged, boxed, canned Bulky waste Yes Collect as garbage for now Furniture, mattress, box springs, desk, ... Appliance with refrigerant Yes Need appliance dollies Appliance without refrigerant Yes Need appliance dollies Tires, 5 max Yes (go to Graham Road) Charitable Donation/Reusables Yes Goodwill, St. Vincent de Paul, ... Latex Paint No Not in pilot event Drugs, Prescriptions Yes Need Police assistance Shredding No Not in pilot event Electronics? TVs? No Not in pilot event Household hazardous waste No Not in pilot event Non-perishable food donations No Not in pilot event Bulk Liquids No Not in pilot event Abandoned Vehicles No Not in pilot event (SCOPE to coordinate removal with auto wrecking yard) Not allowable at this event: Radioactive, volatile, corrosive, flammable, explosive, biomedical, infectious, bio -hazardous, regulated medical or hazardous waste materials, and asbestos. Tasks, decisions to be handled by SCOPE: Topic/Task 1 Responsible Coordinator Notes Rick Scott 2 Helpers: determine needed number of them and get them to event SCOPE to include: Boy Scouts? Girl Scouts? Churches? Pilot Event - Page 3 of 7 Topic/Task 3a Advertising - Send out to residences in event area: • Letter/flyer with details and instructions, • Tickets Notes Key is to manage expectations. City pays for printing and mailing Mail out letters and tickets 2-4 weeks before event Need to be specific in advertising: • what languages to include • who can participate • location, dates, hours, (cost), contact info • map of cuing route for waiting vehicles • what can be collected, how much • what cannot be brought but where it can be disposed • do's, don'ts: garbage must be contained (bags, cans), required clothes for safety, kids and pets remain in vehicles, remove batteries from devices, where to take household hazardous waste ... 3b Available literature on signs or hand out to people in line • Residential collection services • Coloring books with a couple crayons for kids in line (AquaDuck, WM books)? • 4 Event layout and collection containers: • Containers: Sizes? How many? • Where to stage event? • How to arrange containers and drop- off locations to facilitate quick drop- offs and minimize confusion? • Where to stage extra containers in queue? • Who to provide containers? Rick Scott/ Steve Wulf — • Once site identified draw up event layout of site showing locations of drop boxes and traffic flow. Also discuss route for line of waiting vehicles. Run event details by City Traffic Engineer. • Dumpsters proposed for separating out: o Garbage, bulky waste o organics/compostables o appliances without refrigerant o appliances with refrigerant o Tires • Coordinate with Goodwill, St. Vincent de Paul, Value Village, etc • Pacific Steel to provide containers for appliances? Pilot Event - Page 4 of 7 # Topic/Task Notes 5a Assign people to: • Direct people and traffic (see below), • Check vehicle when it first gets in line: o confirm they have a ticket o check contents to make sure items brought are acceptable • Tickets: o initial for second load or to take load to Transfer Station o collect tickets when quantity brought • Maintain control, • Answer questions, • Keep area clean, • Ensure safety, • Provide assistance 5b Direct people, dumpsters and traffic • Helpers on site at all times • Direct dumpsters coming in and going out • Make sure intersections not blocked • Include cones, signs and their removal when done • One sign to say No Dumping after 5:00 • Delineate approach path, staging area, unloading area, exit path • Run traffic control by Staff Traffic Engineers 5c Assist people with: • Getting heavy items into container, • Diverting recyclables, etc. to correct container(s) • Dumping fuel out of small engines • Need appliance dollies • Need container to store fuel removed from small engines, etc 5d Arrange to have helpers bring material to event for disabled or elderly people 5e Have on site: • First aid kit • Extra trash bags • Drinking water • Extra personal protection (gloves) • Portable toilet • Tools to help unload and cleanup (rakes, shovels, brooms) Pilot Event - Page 5 of 7 # Topic/Task Notes 6a Record data Keep track of: • # loads, # and size of containers used, • # served, # people turned away • Non -acceptable items sent away • Tons of garbage, compostables, etc. received • # of bulky items (and what they are), • # tires (on and off rim), • Disposal cost, labor cost, # volunteers. 6b Take photos for future info and advertising 7a Supervise cleanup of the location after the event 7b Someone(s) to stay for a while after event to make sure late -comers don't dump stuff off. 7c Handle illicit dumping (brought in off hours) Pilot Event - Page 6 of 7 A concept of ticket to be sent to residence with flyer (one mailer per residence) Pilot Event - Page 7 of 7 City of Spokane Valley i Event Date Ticket for One Trip Neighborhood Restoration Event Event Date Day Only), 9:00 AM 2:00 PM i i (One pickup -size load max) Can include: (One — Drop Off At i • Garbage and bulky items (furniture, mattress, etc), • Organics (3" x 4' max) REMEMBER i i • Appliances • Tires (car, pickup) 5 max .-` * Keep kids and pets in vehicles ' • Charity Donation * All garbage must be contained i • Drugs, Prescriptions Initial * Participants are expected to unload own i items at event but there will be help 1 more load ok available Transfer Sta.,Sat/Sun, ok: Pilot Event - Page 7 of 7 Neighborhood Restoration - Estimated Costs for Pilot Event Neighborhood: Edgecliff Total Estimated Cost (from below): $ 20,265 # Homes in area: 2373 (Southern boundary at 12th Avenue) Estimated % Homes Participating: 20 (Based on estimates from Rick Scott (50-75%) and Tacoma (7% but increasing each year) ) # Homes Participating: 475 Dumpster Rental+Delivery+Haul charge $ 114.00 (Average of costs from Sunshine and WM Drop -Box contracts) Average Units and Costs Garbage Weight, lbs/cy 300 Garbage Weight, tons/cy 0.15 Garbage Disposal Cost, $/ton $ 104.50 Organics Weight, lbs/cy 275 (Yard Waste + Food) Organics Weight, tons/cy 0.14 Organics Disposal Cost, $/ton $ 53.94 Cost: Est. % of the Expected 475 Sunshine Disposal Costs Trash (incl. Wa refuse tax): $ Organics/Green Waste: $ Recyclables: Free Household Hazardous Waste: Free 104.50 53.94 Quantity # Trips Homes # Homes Est. # of Est. Total # Cost Total per Trip Allowed Bringing Bringing Trips per Volume per Dumpster Dumpsters for Disposal Item Item in cy Per Home Item Item Item Item in cy Size, cy Needed Dumpsters Cost Cost Garbage, cy (2.5 cy = 1 pickup = 1 trip) 2.5 1 70 332 332 831 40 21 (for cost includes bulky items, appliances, tires) Organics, cy (2.5 cy = 1 pickup = 1 trip) 142 142 356 2.5 1 30 Sum: 475 475 40 Sum: 9 $ 2,394 $ 13,019 $ 1,026 $ 2,640 $ 15,413 $ 3,666 30 Subtotal: $ 19,079 # To Send Cost for Each, $ (not bulk rate) Printing and mailing letters and tickets 2373 $ 0.50 $ 1,187 Values used in above calculations: Convert: Dumpster Floor Area, sf Gallons > Cubic Yrds Size, cy Floor Area 35 0.17 45 0.22 64 0.32 96 0.48 10 105 15 120 20 165 25 165 30 165 40 165 Total: $ 20,265 CITY OF SPOKANE VALLEY Request for Council Action Meeting Date: Feb. 19, 2019 Department Director Approval: Check all that apply: ❑ consent ❑ old business ❑ new business ❑ public hearing ❑ information ® admin. report ❑ pending legislation ❑ executive session AGENDA ITEM TITLE: Social Media Update GOVERNING LEGISLATION: None PREVIOUS COUNCIL ACTION TAKEN: On January 22, 2019, staff provided an Administrative Report summarizing our marketing efforts for 2018. At that meeting, staff informed Council that we were in the process of launching a Facebook page to expand our online presence. BACKGROUND: In late 2016, Atlas Advertising created a marketing strategy for the City of Spokane Valley with community engagement as one of the primary goals. The objectives are to foster a sense of community pride and encourage others to visit and relocate. To be successful, the plan also requires the implementation of social media as a way to connect with residents. Since that time, the City has implemented two Twitter accounts (a city account and an economic development account). Earlier this month, the City of Spokane Valley launched an official Facebook page. We are working on building an audience and creating engagement with citizens. Facebook is the world's largest social media site. It is used by a majority of Americans across a wide range of demographic groups. According to a 2018 Pew Research Study, roughly two- thirds (68 percent) of U.S. adults report they are Facebook users, and around three-quarters of those users says they access Facebook on a daily basis. Expanding to Facebook opens the City of Spokane Valley to a whole new online audience. Under the Public Records Act (PRA), social media accounts of the City are considered public records and are subject to disclosure. The City has contracted for retention software to ensure we meet our PRA and record retention requirements. There are other considerations for individual councilmember social media accounts. Washington Courts have found that personal social media accounts that are not used for City business are not subject to the Public Records Act. These include campaign -related accounts. However, personal social media accounts maintained by the City would be subject to the PRA and would further be precluded from containing any campaign -related information. The City and Councilmember could be subject to fines and other penalties if the PRA or campaign material prohibitions in RCW 42.17A.555 were violated. Staff will be available to discuss these issues in further detail at the workshop. OPTIONS: Discussion RECOMMENDED ACTION OR MOTION: Discussion BUDGET/FINANCIAL IMPACTS: To meet records retention law, each social media account is added to PageFreezer, the archiving tool, at a cost of $25 per month. Some funds in the KREM Marketing Services contract are allocated to advertising on Facebook. STAFF CONTACT: Annie Gannon, Public Information Officer; Mike Basinger, Economic Development Manager ATTACHMENTS: Social Media Guidelines; City of Spokane Valley Facebook Plan; PowerPoint Presentation Sp(„bikane .i Valley. SOCIAL MEDIA GUIDELINES The City uses social media to further the goals and missions of its departments. Social media is intended to supplement the use of traditional media and provide an additional avenue to engage with the public in a professional, courteous and responsive manner. The use of social media allows the City to communicate directly to its citizens, conveying messages that are timely, relevant and informative to a wide-ranging audience. Social media is broadly defined as internet-based communication tools, including but not limited to, Facebook, Twitter, Linkedln, YouTube, Nextdoor and Instagram. The City has not historically used social media except for Twitter. Accordingly, these guidelines are initially intended to allow the City to begin using social media by limited staff members in a manner to quickly identify and address any issues prior to widespread usage by other City staff after such issues have been addressed. In Administrative Policy No. 300.020: Communications, it is stated that, "posted content shall be consistent with the guidelines developed by the Economic Development Manager and approved by the City Manager." The guidelines are as follows: ROLES AND RESPONSIBILITIES City Manager shall be responsible for approving any created social media sites/profiles and shall designate staff that have the authority to post information to social media. Since the City is beginning social media usage, initially the only staff member authorized to request accounts shall be the City's Public Information Officer (PIO). PIO and designated economic development staff shall be the only staff members allowed to post. IT personnel shall serve as the creators of the accounts to enable use of social media. IT personnel shall keep informed of current trends and best practices in security and retention of social media. Economic Development Manager shall maintain the social media guidelines and provide input to PIO in creation of new social media accounts. Any modification to the social media guidelines shall be reviewed and subject to approval by the City Manager. Public Information Officer (PIO) shall work with City departments to identify needed social media accounts; develop plans to allow creation and operation of social media accounts; maintain social media accounts, including receiving and posting information from City departments through social media; develop social media strategies; keep up with new developments in social media; and set standards for measuring effectiveness of social media. PIO shall keep an inventory of all official City social media accounts. PIO, Economic Development Manager, and IT shall coordinate with the City Clerk's office to retain all social media records in accordance with applicable state and local retention laws, rules, and policies. Page 1 of 3 PIO shall adhere to these guidelines for posting and maintaining official City of Spokane Valley social media accounts. Department directors and/or division managers are responsible for monitoring content provided by their departments for use on social media. CREATION OF ACCOUNTS When planning to launch a new social media account, PIO, in coordination with department staff, shall create a plan that details how the account will further the goals of the department or City and include: • Target audiences • Goals and objectives • Justification for the particular platform and how it reaches target audiences • Staff who will be designated to provide information to PIO to post on platform • Examples of information that will be shared • Frequency of posting. Accounts must be able to generate enough newsworthy content to post following best practices for that platform (e.g. daily for Facebook). • Resources needed, including separate management software or budget Plans shall be comprehensive and show that the requested platform will provide meaningful distribution of City information and best practices of applying its use. Once the plan is completed, it shall be reviewed by the Economic Development Manager, who shall add input or comments before forwarding to the City Manager for a decision. After authorization from the City Manager, PIO shall work with IT to set up creation of an account following best practices. No personal accounts shall be tied to official City of Spokane Valley social media accounts. POSTING GUIDELINES All social media accounts representing the City of Spokane Valley shall adhere to other applicable State and local laws and City policies, including but not limited to non-discrimination laws and policies. Further, social media account postings shall adhere to brand standards and values. Photos, images, colors, logos, etc. used shall align with the City's logo laws and any brand guidelines. Content shall highlight the City of Spokane Valley as a great place to work and live. That is the guiding principle. There should be a mix of self -promotional posts that show off the City's good works, public art, parks and businesses, as well as informational posts that share important information about roads, snow preparation, City events and activities, and upcoming meetings and calls for volunteers. All postings shall be civil, informational, and succinct. PUBLIC ENGAGEMENT The City of Spokane Valley welcomes dialogue with the public. Social media tools reach a new and different audience from traditional media sources and can improve interactivity between the City and the public. However, the primary usage for the City's social media shall be distribution of City information and messages. Accordingly, the City social media is not an open forum for Page 2 of 3 any and all dialogue that users desire to post. The City hereby establishes the following commenting restrictions that shall apply to any site user/visitor. Comments Restrictions Official City of Spokane Valley social media sites shall include notification to site users/visitors that the following content shall not be allowed on the site and that any content posted in violation is subject to removal and that the poster may be blocked or banned: 1. Profane, obscene or harassing language or content. 2. Personal attacks or threats. 3. Comments not topically related to a particular social media thread. 4. Comments in support or opposition to political campaigns of any kind. 5. Comments that contain hate speech or discrimination of any kind. 6. Advertising or promotion of commercial services or products. 7. Information that would compromise the safety or security of the public and/or public systems. 8. Copyrighted and other proprietary material without clear permission. The City reserves the right to remove any content posted to City social media sites that violates the above restrictions and the right to ban or block any user that violates the above restrictions. However, any content removed shall be archived consistent with records retention requirements, as stated in Administrative Policy No. 300.020: Communications. Further, the City is not responsible for any content posted by site user/visitors and such disclaimer shall be posted on all City social media accounts. The City shall not be liable for any content posted by or usage of the City's social media account by any site user/visitor. Review We recognize that the internet is a medium unbound by regular business hours and comments are welcome at any time. Given the need to manage City resources, however, comments will generally be reviewed only during regular business hours Monday through Friday. During normal business hours, it is the responsibility of the PIO to work with other City staff to respond to questions, messages and comments as appropriate. However, the City shall not be required to respond to any particular post. Responses may also be provided by other means as may be appropriate, such as email. The City has other means for accepting specific citizen complaints and questions, and the City may refer posters to such means to allow proper responses through normal channels. Any response from the City on social media shall be civil, informational, and succinct. Accounts with the ability to send auto -responses to messages (such as Facebook) will utilize this feature, letting citizens know the City's normal business hours and the best way to report problems, ideally directing them to the City website or SVexpress. Optional profanity blockers will also be turned on when available. For example, Facebook offers a filter that can block profane words. Page 3 of 3 City of Spokane Valley Facebook Plan Purpose In late 2016, Atlas Advertising created a marketing strategy for the City of Spokane Valley with community engagement as one of the primary goals. The objectives are to foster a sense of community pride and encourage others to visit and relocate. To be successful, the plan also requires the implementation of social media, including Facebook specifically, as a way to connect with residents. Target Audiences Residents in the City of Spokane Valley as well as residents of the entire surrounding metropolitan service area, news media and community leaders. Why Facebook? Facebook is the world's largest social media site. Facebook is used by a majority of Americans across a wide range of demographic groups. According to a 2018 Pew Research Study, roughly two-thirds (68 percent) of U.S. adults report they are Facebook users, and around three-quarters of those users says they access Facebook on a daily basis. Expanding to Facebook opens the City of Spokane Valley to a whole new audience. Only 32 percent of Facebook users say they also use Twitter, while 90 percent of Twitter users say they use Facebook. According to another Pew Research Study from 2017, about 67 percent of American adults somewhat rely on social media platforms for news. Facebook remained as the dominant platform for news with 45 percent of American adults saying they get news from the social media site. Another Pew Research Study from 2013 found that 39 percent of adults do political or civic activities on social networking sites, which includes reposting government content. Goals and Objectives Facebook will provide a new platform for the City to directly engage with community members. Since the current social media presence is limited to Twitter and YouTube, these goals reflect setting up a new account, which will need to be closely monitored to gather information about its audience and effectiveness. 1. Grow audience to at least 1,000 likes or followers by January 2020. This will give the platform about one year to grow to this size, but it should only be the beginning. Looking at other Washington cities around the same population, Facebook followers range from 1,500 to close to 10,000. But this varies by location, how long the City has been using Facebook and content shared. A goal of 1,000 for the first year is attainable and will provide enough of an audience to determine what is working and what is not on the page. 2. Measure average conversion and engagement rates to create a baseline. As the page is created, it will take a little time to figure out what resonates most with the target audience. It won't be enough to measure followers and likes. Keeping track of each post's conversion (clicked link, filled out form, etc.) and engagement (shared or commented) will be important to create future goals. Staff and Resources Staff designated to share on the official City of Spokane Valley Facebook page include Public Information Officer, Economic Development Specialist and Economic Development Office Assistant. Staff will work with IT to create secure logins using a third -party social media manager. Hootsuite is the recommended tool to manage both Facebook and Twitter (and other accounts as created, such as Instagram). The "Team Account" allows for three users, unlimited scheduling and 20 social media accounts. Atlas Advertising's marketing strategy also recommends consolidating social media management with one tool. Additionally, Facebook's algorithm is making it increasingly difficult to build an audience organically, despite the relevance of the content. Eventually organic reach might be zero. That means we might not be able to reach our audience without paying to promote our posts. To provide the best opportunity to reach City of Spokane Valley residents, there will need to be some paid advertising. As part of the marketing contract with KREM, ads are planned for a cCty Facebook page with the KREM team as the advertising managers. Resources are already set aside for digital ads through the KREM contract, and having a Facebook page will only enhance that strategy. Content Content will highlight the City of Spokane Valley as a great place to work and live. That is the guiding principle. There is incredible photography of the region's landscape and outdoor recreational opportunities. There should be a mix of self -promotional posts that show off the City's good works, public art, parks and businesses as well as informational posts that share important information about roads, snow preparation and upcoming meetings and calls for volunteers. The Facebook page can also be used to share relevant information from City partners, like the Spokane Valley Chamber, local nonprofits, police, fire, animal control and schools. The PIO will develop a content calendar to create a framework for the types of posts and how often. As a general rule, there will be at least three-four times each week. Much of the same content can be shared across platforms with little editing. Create once, publish everywhere (COPE) is the practice of repurposing content to get the widest use and audience. By developing strong stories and images and publishing on a number of platforms, the City's Facebook page will work more efficiently. A content repository will be created for all content that can be written/designed ahead of time. Examples include when offices will be closed, annual events like street cleaning and evergreen (timeless) posts that can be shared at any time. All content will be in adherence of the City's communications policy and social media guidelines. Social Media February 19, 2019 Annie Gannon, Public Information Officer Spokane Dalley Facebook Updated Communications Policy. Created social media guidelines. Created FB plan. Marketing presentation to Council Jan. 22, 2019. Launched City of Spokane Valley page Feb. 4, 2019. Page Inbox Events Notifications Is cIbfs qtr^I<sniao 'n More s> .Mal leyr 0 City of Spokane Valley - Municipal Government tCItyatSpokaneVattey Home Posts Jobs Events Reviews Videos Photos About Community info and Ads Notes Promote Manage Promotions tkLiked \Fohowing. A.Share ••• ge Create Post 01 Lire Write a past. Event a Offer'. Job PhotoNdeo FeelinglActiv... 9 Check its a Reach People Nearby Set your location and reach customers your area Get More Page Likes Help people -find and like your Page Sign Up A• ONo Rating Yet ABC UT CITY OF SPOKANE VALLEY- MUNICIPAL GOVERNMENT City of Spokane Valley Welcome to Spokane sialley, located near the eastern border at the stale of Washington. The City was.. 2 Why Facebook? It is the most widely used social media platform in the world. About 68 percent of adults in the US are FB users and around three quarters of users say they access it every day. It's a news source and place for civic engagement. Tell our own story Opportunity to create our own content and get it directly to our citizens. Local media can pick up stories based on what we post. We can highlight what's important to the City of Spokane Valley. City of Spokane Valley CITYOF 2P0, -2E VALLEY- MUNI CiPAL GOVERNMENT FRIDAY F.BRUARE I. 3016 Welcome to Spokane Valley, located near the eastern border of the state of Washington. The City was incorporated on March 31, 2003. At the time, it was the largest incorporation in the state. and the 2nd largest single incorporation in U.S. history. With a population of 95,810 (WA State Office of Financial Management, April 2018), Spokane Valley is the loth largest city in Washington state. The incorporated area of Spokane 4 Engagement The conversation is already happening on social media. We can correct misinformation directly. Public Record Social media is considered public record. Technology is changing more rapidly than the law. New Ruling Finds Facebook Posts Can Be a Public Record March 2, 2018 by Flannary Collins Category: Public Records Act MENEM ;EMT&weeaeemes irmarem13e�se�E1 /M1ieeeseoeees21111! MENIMEMMEMMEollha A recent ruling in the Washington State Court of Appeals (Division Two) has clarified the circumstances under which personal Facebook posts can be considered public records. This decision. which was highly anticipated by those in the public records community. hinges on whether a councilmembers city -related posts on her personal Facebook account were prepared within the scope of her employment. 6 Measurement We need to grow our audience. We are watching to see what content creates the most engagement. Post Details City of Spokane Valley - Municipal Government Published by Annie Gannon Pio [z] • Yesterday at 9:07 AM • D Performance for Your Post 246='eaple Reached Planning on dining out this Valentine's Day? There are a number of great places in Spokane Valley. https:ltwww.youtube.com/watch?v=9iRMPLj2kCk 8 Likes. Comments & Shares YOUTUBE.COM Dining out in Spokane Valley Check out these examples of the great culinary options for getting together with friends and family in Spokane Valley. %/ Get More Likes, Comments and Shares Boost this post fon $30 to reach up to 22,000 people. 246 19 People Reached Engagements 0 Deanna Brock Hormann, Karin Morris and Brandi Peet Like Q Comment Boost Post 2 Shares Share B 3 3 Likes !, On Post On Shares a a a Comments !, On Post On Shares 2 2 0 Shares !, On Post On Shares 11 Post Clicks O 6 Photo Views Link Clicks NEGATIVE FEEDBACK a Hide Post a Report as Spam 5 Other Clicks i a Hide All Posts a Unlike Page Reported stats may be delayed from what appears on posts 7 What's Next? We are evaluating additional platforms for official city presence. Questions To: From: Re: DRAFT ADVANCE AGENDA as of February 14, 2019; 9:00 a.m. Please note this is a work in progress; items are tentative Council & Staff City Clerk, by direction of City Manager Draft Schedule for Upcoming Council Meetings Feb 19, 2019, Study Session, 6:00 p.m. meeting cancelled Feb 26, 2019, Formal Meeting Format, 6:00 p.m. 1. Consent Agenda (claims, payroll(s), minutes) 2. Second Reading, Planned Action Ordinance 19-002- Chaz Bates 3. Resolution 19-003, Use of External City Hall by Third Parties - Cary Driskell [due Tue Feb 191 (5 minutes) (10 minutes) (10 minutes) 4. Resolution 19-004, Places Where Alcohol Consumption on City Property is Permitted -C.Driskell (10 min) 5. Mayoral Appointment: Eastern Wa. Area Agency on Aging, Planning & Mgmt Council - Mayor (5 min) 6. Admin Report: District Court Presentation - Cary Driskell, Judge Jeff Smith 7. Admin Report: 2019 Budget Amendment - Chelsie Taylor 8. Admin Report: Midilome Area Preservation - Adam Jackson, Gloria Mantz 9. Admin Report: Advance Agenda - Mayor Higgins 10. Info Only: (a) Remote Testimony; (b) Department Reports March 5, 2019, Study Session, 6:00 p.m. 1. NW Winterfest 2019 - Mike Stone 2. Accomplishments Report for 2018 - Mark Calhoun et al 3. Advance Agenda - Mayor Higgins (20 minutes) (10 minutes) (10 minutes) (5 minutes) [*estimated meeting: 85 mins] [due Tue Feb 26] (15 minutes) (-90 min) (5 minutes) [*estimated meeting: 110 mins] March 12, 2019, Formal Meeting Format, 6:00 p.m. 1. PUBLIC HEARING: 2019 Budget Amendment - Chelsie Taylor 2. First Reading Proposed Ordinance Amending 2019 Budget - Chelsie Taylor 3. Consent Agenda (claims, payroll, minutes) 4. Admin Report: Spokane Housing Administration (SHA) Update - Erik Lamb, Pam Tietz 5. Admin Report: Advance Agenda [due Tue March 51 (10 minutes) (5 minutes) (5 minutes) (10 minutes) (5 minutes) [*estimated meeting: 35 mins] March 19, 2019, Study Session, 6:00 p.m. [due Tue March 121 1. Department of Ecology Agreement, Drywell Retrofit Program - Bill Helbig (10 minutes) 2. Potential Grant Opportunity: Federal Hwy Bridge Program - Adam Jackson, Bill Helbig (10 minutes) 3. Admin Report: Broadway Avenue Preservation, Havana to Fancher - Erica Amsden, Gloria Mantz (10 mins) 4. Historical Spokane Valley Mayors Balls - Chris Bainbridge, Cary Driskell (10 minutes) 5. Advance Agenda - Mayor Higgins (5 minutes) [*estimated meeting: 45 mins] March 26, 2019, Formal Meeting Format, 6:00 p.m. [due Tue March 191 1. Second Reading Proposed Ordinance Amending 2019 Budget - Chelsie Taylor (10 minutes) 2. Motion Consideration: Federal Highway Bridge Program Grant - Adam Jackson, Bill Helbig (10 minutes) 3. Motion Consideration: Bid Award, Argonne Road, Valleyway to Broadway - Gloria Mantz (10 minutes) 4. Motion Consideration: Bid Award, Mission Avenue Sidewalk - Gloria Mantz (10 minutes) 5. Motion Consideration: Bid Award, University, 16th to Dishman Mica - Gloria Manta (10 minutes) 6. Motion Consideration: Department of Ecology Agreement, Drywell Retrofit Program - B. Helbig (10 min) 7. Admin Report: Advance Agenda - Mayor Higgins (5 minutes) 8. Info Only: Department Reports [*estimated meeting: 65 mins] Draft Advance Agenda 2/14/2019 1:41:54 PM Page 1 of 2 April 2, 2019, Study Session, 6:00 p.m. [due Tue March 26] 1. Advance Agenda — Mayor Higgins (5 minutes) April 9, 2019, Formal Meeting Format, 6:00 p.m. 1. Consent Agenda (claims, payroll, minutes) 2. Motion Consideration: Bid Award Knox Sidewalk, Hutchinson to Sargent — Gloria Mantz 3. Motion Consideration: Bid Award, Wilbur Avenue Sidewalk — Gloria Mantz 4. Admin Report: Advance Agenda — Mayor Higgins [due Tue April 2] (5 minutes) (10 minutes) (10 minutes) (5 minutes) [*estimated meeting: 30 mins] April 16, 2019, Study Session, 6:00 p.m. [due Tue April 91 1. Advance Agenda — Mayor Higgins (5 minutes) April 23, 2019, Formal Meeting Format, 6:00 p.m. 1. Consent Agenda (claims, payroll, minutes) 2. Motion Consideration: Bid Award, Evergreen Crossing, Mission to Indiana — Gloria Mantz 3. Admin Report: Police Department Quarterly Report — Chief Werner 4. Admin Report: Advance Agenda — Mayor Higgins 5. Info Only: Department Reports [due Tue April 16] (5 minutes) (10 minutes) (10 minutes) (5 minutes) [*estimated meeting: 30 mins] April 30, 2019, Study Session, 6:00 p.m. 1. Advance Agenda — Mayor Higgins May 7, 2019, Study Session, 6:00 p.m. 1. Advance Agenda — Mayor Higgins May 14, 2019, Formal Meeting Format, 6:00 p.m. 1. Consent Agenda (claims, payroll, minutes) 2. Admin Report: Advance Agenda — Mayor Higgins May 21, 2019, Study Session, 6:00 p.m. 1. Advance Agenda — Mayor Higgins May 28, 2019, Formal Meeting Format, 6:00 p.m. 1. Advance Agenda — Mayor Higgins 2. Info Only: Department Reports June 4, 2019, Study Session, 6:00 p.m. 1. Advance Agenda — Mayor Higgins *time for public or Council comments not included [due Tue April 23 ] (5 minutes) [due Tue April 30 ] (5 minutes) [due Tue May 7] (5 minutes) (5 minutes) [due Tue May 14] (5 minutes) [due Tue May 21] (5 minutes) [due Tue May 281 (5 minutes) OTHER PENDING AND/OR UPCOMING ISSUES/MEETINGS: Camping in RVs Sign Ordinance Donation Recognition St. Illumination (ownership, cost, location) Electrical Inspections Health District Re SV Stats Land Use Notice Requirements Mirabeau Park Forestry Mgmt. Naming City Facilities Protocol Park Lighting Park Regulations Ordinance Amendments Police Dept. Quarterly Rpt (April, July, Oct, Jan) St. O&M Pavement Preservation Studded Snow Tires Utility Facilities in ROW Water Districts & Green Space Draft Advance Agenda 2/14/2019 1:41:54 PM Page 2 of 2