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.)
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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,
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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.
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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
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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.
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- 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
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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
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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
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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