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2009, 06-18 Special Meeting MinutesAttendance: Councilmembers June 18, 2009 Rich Munson, Mayor Dick Denenny, Deputy Mayor Rose Dempsey, Councilmember Bill Gothmann, Councilmember Gary Schimmels, Councilmember Steve Taylor, Councilmember Diana Wilhite, Councilmember MINUTES SPECIAL COUNCIL MEETING SPOKANE VALLEY CITY COUNCIL Spokane Valley City Hall, 11707 E. Sprague Avenue Spokane Valley, Washington Staff About 15 members of the public, not including members of the press. 8:30 a.m. Dave Mercier, City Manager Mike Jackson, Deputy City Manager Mike Connelly, City Attorney John Pietro, Administrative Analyst Morgan Koudelka, Sr. Administrative Analyst Mike Stone, Parks & Recreation Director Cary Driskell, Deputy City Attorney Michelle Rasmussen, Administrative Assistant Sue Passmore, Administrative Assistant Ian Whitney, Legal Intern Jandon Mitchell, Legal Intern Jeana Poloni, Legal Intern Carolbelle Branch, Pubic Information Officer Carrie Acosta, Deputy City Clerk Chris Bainbridge, City Clerk Mayor Munson opened the meeting at 8:30 a.m. and thanked everyone for attending. At Mayor Munson's request, City Clerk Bainbridge called the roll; all Councilmembers were present. 1. Law Enforcement Service Contract Dispute Resolution Mayor Munson said the purpose of this meeting is to discuss and hopefully take action on the next step in resolving the dispute between the City of Spokane Valley and the County over the billing dispute with the criminal justice contract. It was then moved by Deputy Mayor Denenny and seconded to approve the correspondence from Mayor Munson to Commissioner Mielke as presented, authorize the Mayor to sign and send the same, and further authorize the City Manager to transfer the sums identified in that correspondence. At the Mayor's request, City Clerk Bainbridge read the referred correspondence into the record: "June 18, 2009 Dear Commissioner Mielke, Chair, Spokane County Office of County Commissioners: As you know, the City of Spokane Valley disputes the amount invoiced for Law Enforcement Services pursuant to the interlocal agreement between the City of Spokane Valley and Spokane County. This conclusion was supported by the expert report we received from Financial Forensics, a highly qualified firm with extensive experience in the examination and evaluation of financial disputes both in the private and public sector. In December of 2008, we provided to you the experts' analysis that we had obtained along with all back -up materials. Other than your demand for payment on March 3, 2009, we had not, until the Auditor's Management Letter dated June 15, 2009, received any response to the conclusions reached by Financial Forensics. We still have not received any back -up data or analysis supporting the Auditor's general conclusions but we have requested the same. (See attached Public Records Request to the State Auditor's Office.) Council Meeting Minutes: 06 -18 -09 Page 1 of 8 Approved by Council: 06 -30 -09 The City of Spokane Valley places high importance on public safety services that protect the citizens of the City of Spokane Valley. We also have a fiduciary responsibility to ensure that the citizens of this City do not pay more than the amounts contractually agreed to. In light of the County's assertion that Spokane Valley's withholding of payment complicates the County's current budget dilemma, and to allow both parties to focus on an amicable resolution of this matter, the City Council is willing to tender payment of those itemized amounts identified by the County that are in dispute, specifically $1,131,994.03, as reflected in the attached County's June Law Enforcement Service Invoice. The tender of these sums does not constitute a "settle and adjust" as set forth in the interlocal agreement. There are a number of specific charges and /or costs that have been challenged or are being examined by our staff. Further, the City does not admit that we are in breach of any obligation to the County and we continue to maintain that withholding payment was appropriate under the circumstances. The City specifically reserves all defenses and claims against the County whether or not asserted, that may now exist or may be identified in the future with respect to this contract. The City is paying the disputed amount with the understanding that the County will cooperate to reach a comprehensive resolution of this matter. We request that the County take all reasonable steps to ensure the City has all of the data in the County's possession or control necessary for a comprehensive review of this contract. We further request, as we have in the past, your assistance in scheduling a mediation to explore a final resolution of this matter once we have received and reviewed all of the supporting documentation necessary for our review. This tender is being made in good faith and in recognition of our common interests as two governmental bodies who represent the same citizens and share many of the same goals and challenges. We will contact you as soon as we have received the necessary documents to complete our review. Thank you for your anticipated cooperation. Very truly yours, Richard M. Munson, Mayor" Mayor Munson invited public comments, and asked that each person give their name and address: Joe Estinson, [607 N Virginia Court, Spokane Valley, 99216] said he is a resident here and said that "what I'm seeing out of all this, the continuous fight, whoever set the contract up with all the consultants the City has, it doesn't seem to work. We did another $50,000 for the sheriff's department which I understand come out real good; by the time we're done with this with the forensics stuff, everything else, we'll wind up paying more than $2 million; it's money down the tube; and the same with the snow plowing; and my taxes are going up; and I do not appreciate it. I'm sorry there's nobody in this group that can make a decision besides hiring one consultant after another, and you already have a consultant working for you, which doesn't seem to work either. Thank you." Mayor Munson invited further comments, no further comments were offered, and he opened the floor for council comments. Councilmember Wilhite: said she thinks this is the right step that we need to take; the County is having cash flow problems and she said she thinks it benefits us to go ahead to pay the amount that they have established is in dispute, but to continue our dialogue with the County Commissioners; that it is important that we make sure we get value for what we are paying for in the contract; and said we look forward to working with the County Commissioners to bring this to swift resolution. Deputy Mayor Denenny: as background, he mentioned that as a businessman he relies upon his accountants to give him information and provide documentation as to whether he is paying his bills properly, or any regulatory items within the business properly; he said we have internal people who spent a great deal of time analyzing these contracts, who found a concern; and when the concern was found, they hired a company who is an expert in this field, to determine whether we were on the right track; he said that this firm found in their analysis that we were paying two times for the same item. Deputy Mayor Denenny said there is obviously a dispute on that now; but for a city such as Spokane Valley to pay twice for something would be similar to him agreeing with someone to pay for their principle, mortgage and taxes; then turning around and finding that he had been charged for those taxes; then continuing to pay that full amount; he said that the County has now provided some information disputing the City's stance, Council Meeting Minutes: 06 -18 -09 Page 2 of 8 Approved by Council: 06 -30 -09 which information we did not have in the past; and to think that we should not analyze contracts to make sure that we are not paying twice for the same item would be a fiduciary irresponsible act on the part of the Council. Councilmember Taylor then asked City Manager Mercier several questions: 1. Can you let us know how much money has the City provided for law enforcement services since 2003? Answer: Mr. Mercier said he does not have an accurate number today, but our contracts currently have budgeted about $16 million for 2009, and there were lesser amounts in previous years, but all were over $10 million a year, for each of the previous years. 2. So we are looking at probably somewhere in the realm of $70 to $75 million. Answer: Yes, thereabout. 3. And the cost of this particular financial forensics accounting? Answer: We spent approximately $24,000 on expert review. Councilmember Gothmann: said that part of the process is, that it is a very logical process listed in the contract; and if there is a dispute, one party turns to the other and says there is a dispute and here's my figures; and the other party then says, well, let me look at my figures; and they gather their figures; and the one party then says, well, let me double check my figures and make sure they're okay; and then they exchange information; and that's what the contract is telling us to do, and that is exactly what we're doing; and once both parties have exchanged information, and we still haven't done that yet because we don't have the information from the Auditor, then they get together and they can either agree or disagree; and if they disagree, they can say, you know what, what we really need is a mediator to get in here and help us reach an agreement; and they're doing exactly what the contract says and exactly what is a logical manner in which people resolve disputes; so for us to do otherwise, as was said, on at least $90 million of expenditures in the Sheriff's office, for us to spend $20,000 on a $90 million expenditure to make sure that it is accurate, and to make sure that we provide the county with accurate information, is to me perfectly reasonable. Councilmember Schimmels: said we have claims regarding this and we have counterclaims; evidently we don't have anyone in this room at this point that can decisively say that it is this or it is that; but I'm happy for the situation here that at least we are paying our way at this point, and we do not cause a total breach of that contract. Councilmember Taylor said he wished he could be as confident in the analysis from the State Auditor's office as perhaps the other party to this contract is; and said unfortunately we have not seen the data to back up the claims that were made; and he said he is reluctantly agreeing to doing this; and said he thinks we are owed the data and the report so we can analyze their analysis because from the little data that he has seen, the City's Financial Forensics team has done a yeoman's job and we received response from the Auditor's Office with a three -page management letter; and he said he doesn't think the numbers add up and he then asked City Manager Mercier several further questions: 1. When did we notify the County of this dispute? Answer: Mr. Mercier said he believes it was in March 2008; and referenced Morgan Koudelka being in the audience to verify that. 2. When Financial Forensics completed that report, when was that report given to the County? Answer: Mr. Mercier said on December 2, 2008. 3. And how long after we had received the final report did we provide that information to the County? Answer: Mr. Mercier responded that it was the same day the final report was received. 4. When did the County get back to us to say that they agreed or disagreed with the report? Answer: Mr. Mercier said he is not aware of any response from the County on the Financial Forensics report save for the delivery of the State Auditor's Office Management Letter this week. Council Meeting Minutes: 06 -18 -09 Page 3 of 8 Approved by Council: 06 -30 -09 5. So there has been no real direct response to the Financial Forensics report in terms of this dispute that we do have with the contract amount that's in dispute, so it was part of the County's annual state audit, such as we have an annual state audit, so this was kind of a minor portion of the particular audit that was conducted there; so I'm just trying to compare the level of analysis that was conducted. Answer: Mr. Mercier said correct; that we as council have filed for a public records request of the State Auditor's office so that we can obtain the copy of detail information that would be useful for purposes of our analytical review; and all of the materials that formed the basis upon which they issued the letter of conclusion this past week; and said he wanted to correct his earlier statement, the first request in the first question was really March of 2007, which is when we notified the County of what we thought was a substantial issue with billing. 6. And where there any times that we had our consultants, or tried to have our consultants meet with the County Commissioners, or with the County executive staff to perhaps go over this information to perhaps try to come to a meeting of the minds? Answer: Mr. Mercier said yes, the first offer of access to the City's Forensics Accountants was made in December of 2008, and a subsequent one was made as well. 7. And did the County meet with them? Answer: Mr. Mercier said no; the City extended an offer for the Forensics Consultants to be made available for questioning by County representatives so that the County would have an opportunity to thoroughly understand the work of the Forensics Accountants. 8. But those offers were declined? Answer: Mr. Mercier said they were not taken up; that's correct. Councilmember Taylor said given these particular facts, we have gone the extra mile in trying to settle this dispute before it's come to any particular climax as we've seen; and said he thinks the action being taken today is extremely magnanimous and is one that he hopes will go a long way with the County in trying to settle this dispute, and other disputes; but said he thinks this is very important that we get these facts out on the table, and noted that when we do have a dispute, we don't run to the media or try to dispute this in the media; he said we try to get things resolved in an even - handed manner without surprises; so today he said he will support this but does so reluctantly, but believes the City will be right in the end. Councilmember Dempsey said that she supported the withholding of funds for this disputed amount of money because she felt it was the right thing to do; and said she also supports the payment now on the contingency that we are not admitting that we owe this money, but we want to move on, we want to get on with things and we want to establish rapport with the County whereas right now we seem to have like a husband and a wife who are in the middle of divorce proceedings: no matter what you say, it's the wrong thing; and we want to make it the right thing and we want to deal with the County in an upfront and righteous manner; and said she thinks this is the way to handle it at this point. Mayor Munson: said he would like to acknowledge and thank Mr. Mielke, Mr. Emacio, and Mr. Farnell for coming this morning on such short notice, and also Sheriff Knezovich; and he said that he called each of them, and saw Sheriff Knezovich yesterday afternoon and invited them personally, along with Mr. Mielke's colleagues; and said that the County Commissioners have killer schedules and said we truly appreciate them being able to break loose at a time like this and attend. Mayor Munson said that the County and the City really do get along pretty well most of the time; that we have seventeen contracts that we deal with them; and there are a few times when even the best of friends don't agree; and this is one of those times; and said he personally feels the rhetoric has gotten out of hand, and was unnecessary and was not helpful in moving this forward, but said that's behind us now; and said we must move forward and attempt to settle this in the most amicable way we can; and said that this motion we are considering today is a positive step in that direction; he said the City will attempt to keep it as this level and to provide the public with as much information as we can as to what we're doing; he said he has written a couple Council Meeting Minutes: 06 -18 -09 Page 4 of 8 Approved by Council: 06 -30 -09 articles, it has been discussed at Council meetings, and said that he thinks we are trying to keep this on a level that promotes a friendly conclusion; and said both sides should be able to win on this and nobody has to lose as the winner is going to have a better contract will either receive or pay the correct amount of dollars needed to provide police services; and said that as his colleagues have stated this morning about the amount of money we pay, that law enforcement is the largest single item in our budget and is probably the most important part of the services we provide to the public; and said you put your money where your mouth is; however, he said we also believe that we pay what we owe and that anybody can make a mistake; and he said he honestly believes that is what happened, but said it is not up to him to make that decision; that we have hired experts who have supported our position; the State Auditor, in looking at data we have not yet seen, has felt that there was no error by the County; and we need to get that information, we need to analyze it and talk about it and get both sides together, look at both reports and both levels of data side -by -side, and then come to a logical conclusion as to who's right. Mayor Munson said that we have asked, he believes it was in early 2008, for mediation to take place; and he said the County has refused; and he said he hopes that after we receive the State information that they used to make their determination in their audit, that we will be able to go forward without mediation, but if we can't, then we'd like the County to follow the contract and agree to mediation; and he said we don't think we're asking for too much; and after we have voted on this, he said he will describe what they consider to be the next steps for this process. Councilmember Gothmann: commented that this in no way reflects on the outstanding service the Sheriff's Office and his staff give us in police service; and said he feels everyone would agree that we really appreciate his service and that we think he's doing an outstanding job; that this is a contract dispute with the County and in no way has any reflection or should it reflect on the outstanding job that the sheriff is doing and our police chief and our police force. Mayor Munson said he feels Council all agrees with that. Vote by Acclamation on the motion to approve the correspondence from Mayor Munson to Commissioner Mielke as presented, authorize the Mayor to sign and send the same, and further authorize the City Manager to transfer the sums identified in that correspondence: In Favor: Unanimous. Opposed: None. Abstentions: None. Motion carried. Mayor Munson then read the following procedure that he, staff and he believes Council have discussed and feel are the next steps for the resolution of this misunderstanding: " - We received a copy of the draft Management Letter written by the Washington State Auditor's Office, which did not contain any backup data or supporting material for how the Auditor's Office reached the conclusions it did. The City is now essentially in a discovery process to determine the bases for the Auditor's letter. - As part of the discovery process, on June 16, 2009, the City made a public record request pursuant to RCW 42.56 to the Washington State Auditor requesting copies of each and every document relied upon in reaching the findings and conclusions as represented in the Management Letter. We have requested the assistance of Spokane County in encouraging the Auditor's Office in an attempt at expediting the arrival of these documents. (and Mayor Munson mentioned that according to comments made by the County, they have done that). Once we receive that documentation, we will immediately turn it over to our financial expert, Financial Forensics, to consider in relation to their prior analysis to determine whether it causes them to amend their prior opinion. - After Financial Forensics has reviewed and considered the Auditor's background data, they will meet with the representatives of the Auditor's Office who prepared and issued the Management Letter to see if they can reconcile remaining differences, if any. This was encouraged by the Board of County Commissioners as well. Following the meeting between Financial Forensics and the State Auditor's Office, Financial Forensics will provide a public presentation to the Council and our interested citizens regarding their opinion, and the data they relied upon in reaching it. Council Meeting Minutes: 06 -18 -09 Page 5 of 8 Approved by Council: 06 -30 -09 - In the event the City and County still do not agree on a resolution, the City should request use of the mediation process provided for in the contract." Mayor Munson said we think this is an orderly and objective way to proceed; that we don't want to surprise anybody as we go through these steps, and that's one of the reasons why we've asked everybody to be here this morning so you can understand what we're moving forward on. Mayor Munson opened the floor questions or comments from anyone in the room. Commissioner Mielke: he thanked Mayor and Council for the invitation to attend, and apologized for running late, stating it probably is a good sign we have road construction projects that are well under way and the flaggers are out there in force. He said he wanted to first applaud Council on the actions they are taking today; and to reinforce the statement made earlier that we have a number of agreements that exist between the City of Spokane Valley and Spokane County, and he said he thinks they work hard to make those work to the benefits of the residents of this region and occasionally, they do have the issue of interpreting the contracts as they are stated; and said they work through those hopefully in an orderly process. He said he feels the issue for them is a couple of things: when there is a mountain of dispute they do go back and they look at the contract; and the first issue from Spokane County's perspective is, they don't believe there is anything in the contract that allows the withholding of funds in lieu or mediation or until mediation takes place, and he said they believe the contract states very clearly you establish the amount, divide it by twelve, it's a monthly payment, and if you disagree with that it goes into mediation, but there is nothing in the language of the contract that allows for withholding of the payment amount, and he said he thinks that is what created a problem with regard to cash flow for Spokane County in a cumulative amount, and also as they look at 2010 the potential of more than twenty positions being lost at Spokane County if that cash flow isn't restored; and he said obviously they are very concerned in these economic times with any layoffs in any jurisdictions as these are people's livelihoods, and is their way of supporting their family. He said that was the first point, that they wanted to get past this whole issue about withholding payment, as they don't believe it is in the contract, and the other question is, what is the withholding based upon. He said the second issue is an important one, and that is they can go through this whole issue about hiring experts, and he said they certainly didn't want to get into a situation where "my expert is better than yours;" as he said he doesn't know if that really comes to a good solution in a short period of time; so what they chose to do is to go through the one agency seen as a neutral arbitrator of public finance in the state, the State Auditor's Office; that looks at both cities and counties across the state and determines whether their financial practices are accurate or not; and so yes, he said they did receive the City's information in December, and they assumed that shortly thereafter they would be receiving the information from the State Auditor's Office and could get folks together to compare those notes; and he said obviously the State Auditor's Office was not prepared to release any information to anyone right about the first of the year when the County anticipated that information. Commissioner Mielke stated that they do have another issue in this contract that at some point they need to address; he said as the contract currently says is the only way to amend the contract is by mutual consent; and right now what the contract says is that under this formula, Spokane Valley is locked in at paying 42% of law enforcement services regardless of whether it really is 42% or not; and if that is broken down into different components, whether for canine, patrol, or forensics, there are some cases where it is probably higher, and some cases where it is probably lower then the 42 %, so at some point he said they would like to ask for the City's commitment to go back and take a look at amending the contract without putting any jurisdiction into the position of having to serve notice to cancel the contract just to get the contract amended; and said he thinks the best way to do that is to go through it while we have a contact in effect and there is no disruption of services and to make sure we get it right and to make sure that Spokane Valley is not over or under paying. Mayor Munson said that he believes that is in the contract that we can re- negotiate at the end of each year; and Commissioner Mielke said he believes it has to be by mutual consent; and if either party decides not Council Meeting Minutes: 06 -18 -09 Page 6 of 8 Approved by Council: 06 -30 -09 to engage in that negotiation, the other side is stuck; and he said he guesses that is one of the things they will be asking is for Spokane Valley to agree that we want to go in and make sure it is right, and negotiate an amendment to the contract that clarifies some of these ambiguities in the language. Mayor Munson said he believes that the record shows that both sides have said they are willing to go into new contract negotiations; and Commissioner Mielke said "terrific" and okay, and further stated that the last point that he wanted to make is the whole notion of how this has unfolded and the issue of mediation; and said we still have some disagreement with what is subject to mediation and what is not; he said he believes the formula itself is stated in the contract, and that is not subject to mediation; the amounts you plug into the formula, he said, he believes are; and the question is whether the formula is accurate or not; and whether it should include certain overhead costs; and so they continue to take an issue with regard to whether the issues raised by Spokane Valley are all subject to mediation or not, or whether the contract is the contract; and whether it is or is not well written in certain areas, he said he thinks that begs the question of going back and trying to amend the contract and bring some clarity with regard to the verbiage, much of which was negotiated before some of us were in office; and said that as they go back and look at the language, and ask what was meant by that or this; and in closing, he said he wanted to take issue with regard to some of the comments made by Councilman Taylor, and that is that they have been unwilling to respond. He said that when they were first made aware of this notice and they asked to sit down elected officials to elected officials, they were told that Spokane Valley was hiring a consultant to look through the numbers, and were not prepared to sit down to do that; so that was the first issue and he said they waited for that, Councilmember Taylor said in response, in dealing with disputes over contracts, elected officials in the County's form of government do not sit down with elected officials in the City's form of government, they instead sit down with the City Manager and staff. Commissioner Mielke responded that at the end of the day, as an elected official, Councilmember Taylor gets to determine the level of services and how staff carries out the duties of Spokane Valley; and he said he thinks the voters of Spokane Valley expect them to do that; and he said to Councilmember Taylor, I think the issue that you raise is when you say we never responded. Commissioner Mielke said they had a joint meeting between elected officials in February that Councilmember Taylor did not attend; and they very specifically brought this topic up, talked about their concerns about the methodology; how to go forward, and they sent a follow -up letter; so for Councilmember Taylor to say there is no response ever for a meeting that he did not attend, Commissioner Mielke said he feels is inaccurate; and he asked that Councilmember Taylor make sure about what is said at meetings that he did not attend in all fairness to those that did. Commissioner Mielke said that he is very happy to be moving forward, and he feels it is for the best interests of all the residents of this region; they want to make sure that services are as seamless as possible; and that those services are provided in the best way; and when there is a conflict, that they find the best way to resolve those conflicts; and said he is confident we are moving forward in trying to do that; and said he feels the next step is to get the State Auditor's backup data; that both entities have requested that information and said he knows there has been dialogue between Financial Forensics and the State Auditor by phone as they both went through this process; and said it probably is time to get those two entities together and discuss their reports and determine the best way to move forward and resolve this issue once and for all; and said then perhaps we can move into a dialogue about any amendments to clarify ambiguities that currently exist in the contract. Mayor Munson said he wanted to make it clear that this Council is not going to do the negotiations as that is the responsibility of staff; and Council's job is to approve or disapprove the outcome. Commissioner Mielke acknowledged that and said at some point we have to talk about these issues; because he said that he believes every one of the staff ultimately reports to Council to determine whether the response is timely and whether we are moving issues forward; and going back to Mr. Taylor's comments; Commissioner Mielke said he has now asked three times for this topic to be on the agenda for a joint meeting between elected officials because he believes law enforcement is one of the most basic functions of your local government; and three times he has been denied to have that on the agenda; and he said that Council Meeting Minutes: 06 -18 -09 Page 7 of 8 Approved by Council: 06 -30 -09 this is the first time really, as elected officials, we have been able to discuss this topic other then the February meeting where it wasn't allowed on the agenda but they discussed it anyway. Councilmember Taylor stated that he believes that this Council has been very clear that they are not going to negotiate contracts or negotiate contract disputes at a public meeting as that is the responsibility of our staff under the Council/Manager form of government, the RCW's are very clear about who has responsibility of negotiating and executing contracts and that Council approves or disapproves the negotiated terms. Commissioner Mielke said he understands and he said that the City Manager works at the pleasure of Council. Councilmember Taylor said that is correct, and if council doesn't agree with what he does, then they have the option to have him work or not work at Council's pleasure; and Commissioner Mielke said and that is his point. Councilmember Taylor further said that Council still approves the outcome, and if Council doesn't like the outcome, they disapprove it and it goes back to the table. Mayor Munson said that he guarantees to Mr. Mielke that Council will not discuss whether they will hire or fire the City Manager with the County in a public meeting. Commissioner Mielke said that is not his intent; but that his issue is whether the approach made by the City's jurisdiction is appropriate in Council's eyes as deemed by Council's constituents. Councilmember Taylor said he feels the RCW is very clear, and Mr. Mielke said he is well aware of the RCW; and he thanked Council for this opportunity and said he is glad we are moving forward and he looks for resolution to this issue. Mayor Munson opened the floor for question and answer, including from members of the press. Gordon Curry, [ 14313 E Trent Avenue] said he has been around the valley for a long time, said that it seems to him that an entity of the valley or the county could afford to hire a person that has the capability of making a decision without having to go out and hire experts to do the work we are probably paying good wages to someone to make those decisions; and he said that it seems to him that every time an important issue conies up, the entities go out and hire experts to give them the correct stuff; and said he thinks maybe we have people on board that are very capable of making those decisions, and said he would hope that we would trust the people we hire and pay good wages to, to make these decisions. There being no further comments or questions, Mayor Munson again thanked everyone for coming on such short notice, and said he feels we have made a very valuable step forward. Mayor Munson then adjourned the meeting at 9:06 a.m. ATTEST: Richard Mu son, Mayor j if hristine Bainbridge, City Clerk Council Meeting Minutes: 06 -18 -09 Page 8 of 8 Approved by Council: 06 -30 -09 CURRENTLY ANTICIPATED PROCESS FOR RESOLUTION OF 2006 ENFORCEMENT CONTRACT BILLING DISPUTE - We received a copy of the draft Management Letter written by the Washington State Auditor's Office, which did not contain any backup data or supporting material for how the Auditor's Office reached the conclusions it did. The City is now essentially in a discovery process to determine the bases for the Auditor's letter. - As part of the discovery process, on June 16, 2009, the City made a public record request pursuant to RCW 42.56 to the Washington State Auditor requesting copies of each and every document relied upon in reaching the findings and conclusions as represented in the Management Letter. We have requested the assistance of Spokane County in encouraging the Auditor's Office in an attempt at expediting the arrival of these documents. - Once we receive that documentation, we will immediately turn it over to our financial expert, Financial Forensics, to consider in relation to their prior analysis to determine whether it causes them to amend their prior opinion. - After Financial Forensics has reviewed and considered the Auditor's background data, they will meet with the representatives of the Auditor's Office who prepared and issued the Management Letter to see if they can reconcile remaining differences, if any. This was encouraged by the Board of County Commissioners as well. - Following the meeting between Financial Forensics and the State Auditor's Office, Financial Forensics will provide a public presentation to the Council and our interested citizens regarding their opinion, and the data they relied upon in reaching it. - In the event the City and County still do not agree on a resolution, the City should request use of the mediation process provided for in the contract. Sji�1 jUalley June 18, 2009 Commissioner Todd Mielke, Chair Spokane County Office of County Commissioners 1116 West Broadway Avenue Spokane WA 99260 -0100 Dear Commissioner Mielke: 1 11707 E. Sprague Ave. • Suite 106 • Spokane Valley, WA 99206 (509) 921 -1000 • Fax (509) 921 -1008 • cityhall @spokanevalley.org As you know, the City of Spokane Valley disputes the amount invoiced for Law Enforcement Services pursuant to the interlocal agreement between the City of Spokane Valley and Spokane County. This conclusion was supported by the expert report we received from Financial Forensics, a highly qualified firm with extensive experience in the examination and evaluation of financial disputes both in the private and public sector. In December of 2008, we provided to you the experts' analysis that we had obtained along with all back -up materials. Other than your demand for payment on March 3, 2009, we had not, until the Auditor's Management Letter dated June 15, 2009, received any response io the conclusions reached by Financial Forensics. We still have not received any back -up data or analysis supporting the Auditor's general conclusions but we have requested the same. (See attached Public Records Request to the State Auditor's Office.) The City of Spokane Valley places high importance on public safety services that protect the citizens of the City of Spokane Valley. We also have a fiduciary responsibility to ensure that the citizens of this City do not pay more than the amounts contractually agreed to. In light of the County's assertion that Spokane Valley's withholding of payment complicates the County's current budget dilemma, and to allow both parties to focus on an amicable resolution of this matter, the City Council is willing to tender payment of those itemized amounts identified by the County that are in dispute, specifically $1,131,994.03, as reflected in the attached County's June Law Enforcement Service Invoice. The tender of these sums does not constitute a "settle and adjust" as set forth in the interlocal agreement. There are a number of specific charges and/or costs that have been challenged or are being examined by our staff. Further, the City does not admit that we are in breach of any obligation to the County and we continue to maintain that withholding payment was appropriate Commissioner Todd Mielke, Chair June 18, 2009 Page Two under the circumstances. The City specifically reserves all defenses and claims against the County whether or not asserted, that may now exist or may be identified in the future with respect to this contract. The City is paying the disputed amount with the understanding that the County will cooperate to reach a comprehensive resolution of this matter. _ We request that the County take all reasonable steps to ensure the City has all of the data in the County's possession or control necessary for a comprehensive review of this contract. We further request, as we have in the past, your assistance in scheduling a mediation to explore a final resolution of this matter once we have received and reviewed all of the supporting documentation necessary for our review. This tender is being made in good faith and in recognition of our common interests as two governmental bodies who represent the same citizens and share many of the same goals and challenges. We will contact you as soon as we have received the necessary documents to complete our review. Thank you for your anticipated cooperation. Very truly yours, Richard M. Munson, Mayor Enclosure: Public Records Request to the State Auditor's Office County's June Law Enforcement Service Invoice Distribution: Commissioner Bonnie Mager Commissioner Mark Richard Marshall Farnell, Spokane County CEO Spokane Valley City Council Dave Mercier, Spokane Valley City Manager '�v j` Page 1 oft Morgan Koudelka From: Morgan Koudelka Sent: Tuesday, June 16, 2009 10:10 AM To: 'publicrecords @sao.wa.gov' Subject: Public Record Request - City of Spokane Valley Pursuant to RCW 42.56, please provide copies of each and every document which was used in any way to find facts or reach the conclusions contained in the June 15, 2009 Management Letter from the Washington State Auditors' Office from Cody Zimbelman to Spokane County Commissioner Todd Mielke relating to the Law Enforcement Agreement between Spokane County and Spokane Valley, including the field audit and associated work papers. This request includes every document from any source, including any received from Spokane County and /or the Spokane County Sheriffs Office by the Auditor's office. !understand that a fee may be associated with this request. Morgan Koudelka Senior Administrative Analyst City of Spokane Valley 11707 E. Sprague Ave., Ste. 106 Spokane Valley, WA 99206 (509) 688-0186 Service_ Month /Due Date June Monthly Amount Past Due for Jan '08 - May 09 Interest Due . Total Amount Due Sheriff 1,281,198.22 Estimated 1/12th of 2009 Contract Amount Updated for Valley Depreciation 1,131,994.03 , . 1,149.08 2,414,341.33 Service_ Month /Due Date Amount Not Paid Period Delinquent Days Delinquent Spokane County . Investment Pool Rate Interest Due Cumulative Interest Jan -July / 7/31 303,534.80 Aug1 -Aug 31 31 2.86% - Aug / 8/31 346,896.91 Sept1- Sept30 30 2.94% - Sept / Sept 30 390,258.14 Oct1 -Oct31 31 3.00% - Oct / Oct 31 433,619.37 Nov1 -Nov30 30 2.97% - Nov / Nov 30 476,980.60 Dec1 -Dec31 31 2.93% - Dec / Dec 31 520,341.83 Jan1 -Jan31 31 2.47% - Jan / Jan 31 642,672.27 Feb1 -Feb28 28 2.12% - Feb / Feb 28 765,002.71 Marl -Mar31 31 1.86% -, Mar / Mar 31 887,333.15 Apr1 -Apr30 30 1.64% - Apr / Apr 30 1,009,663.59 May1 -May31 31 1.34% 1,149.08 1,149.08 May / May 31 1,131, 994.03 Law Enforcement Service Invoice For the City of Spokane Valley Provided by Spokane County For the Month of June 2009 Invoice Date 6.10.09 CALCULATION OF INTEREST DUE FOR NON PAYMENT Payment is due by June 30, 2009 Please make payment via wire transfer -US Bank Routing Number 125000105 Account Number 153502326884 Questions? Please call Downs Paul (509) 477 5799