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2010, 09-07 Study Session MinutesMINUTES SPOKANE VALLEY CITY COUNCIL REGULAR MEETING STUDY SESSION FORMAT Spokane Valley City Hall Council Chambers Spokane Valley, Washington September 7, 2010 Attendance: 6:00 p.m. Councilmembers Staff Tom Towey, Mayor Mike Jackson, City Manager Gary Schimmels, Deputy Mayor Cary Driskell, Acting City Attorney Bill Gothmann, Councilmember Neil Kersten, Public Works Director Dean Grafos, Councilmember Ken Thompson, Finance Director Brenda Grasse], Councilmember Mike Stone, Parks & Recreation Director Bob McCaslin, Councilmember Kathy McClung, Community Development Dir Rick VanLeuven, Police Chief Absent: Scott Kuhta, Senior Planner Rose Dempsey, Councilmember Greg McCormick, Planning Manager Christina Janssen, Assistant Planner Lori Barlow, Associate Planner Chris Bainbridge, City Clerk Mayor Towey called the meeting to order at 6:00 p.m. At the Mayor's request, City Clerk Bainbridge called roll; all councilmembers were present except Councilmember Dempsey. It was moved by Deputy Mayor Schimmels, seconded, and unanimously approved to excuse Councilmember Dempsey from tonight's meeting. 1. Social Service Agencies, Outside Grants — Ken Thompson Mayor Towey explained that each year Spokane Valley has been providing grant assistance to public service agencies and economic development agencies; and tonight we will hear from the fourteen public service agencies who submitted a proposal, and said the economic development agencies are scheduled to present next week. Finance Director Thompson added that if Council decides to fund Community Minded TV, their money would come from a different fund. Representatives from the following agencies gave brief presentations to explain their proposed funding requests: (a) Spokane County Animal Protection Services, aka SCRAPS; requesting $35,000 to purchase rugged vehicle laptops for Animal Protection Vehicles; said they would appreciate any help as any funding would at least get the project started. (b) Big Brothers /Big Sisters; requesting $5,000 to use for mentor background checks and screenings, orientation and training, staff salaries, support services to sustain matching beyond the twelve -month period; said with mentors, the at -risk children are less likely to be involved with unsavory issues. (c) Changepoint; requesting $5,000 for educational advertising expenses such as signs, brochure, posters, billboards, press and media to educate the public that there is a better way to help those in need other than panhandling. Council Study Session Minutes, September 7, 2010 Page 1 of 12 Approved by Council: September 28, 2010 (d) Coalition of the Responsible Disabled; requesting $13,472 for staff salary, rent and utilities, phone /intemet, mileage and administrative costs for the CORD program, which is people with disabilities working with and serving people with disabilities. (e) Community Minded Television (CMTV); requesting $50,133; said he understands the funds he is requesting if approved, would come from the PEG (Public, Education and Government) Funds; that the funds would be used to record, edit and broadcast programs; and to purchase office furniture. (f) Eastpoint Church; requesting $1,400 to purchase two laptops to aid in their single - parent computer training, for creating resumes, applying for jobs, checking their child's grades online and communicating with teachers. (g) Greater Spokane Substance Abuse Council; requesting $10,000 for advertising, supplies and transportation for their Spokane Valley Youth Leading Change Project. (h) Project Access; requesting $20,000 for pharmaceuticals, durable medical equipment, transportation services, translation services, and operation costs; and mentioned that the need has increased significantly due to the current economy. (i) Spokane Soccer Club; while materials indicate a request for $50,000 funding, their request is actually for $15,000 for scholarships to kids living in the Spokane Valley; and said they hope to benefit approximately 60 children with the funding. 0) Spokane Valley Arts Council; requesting $10,000 which includes insurance, artist showcase, administrative support, website maintenance, brochures, mailing, printing and $1,000 for the bronze sculpture placement. (k) Spokane Valley Heritage Museum; requesting $2,190 for an office computer to support the large searchable database, including a scanner, external hard drive, disk and printer. (1) Spokane Valley Meals on Wheels; requesting $7,500 to assist in their meals to senior citizens of the City of Spokane Valley; and said participants report that the program helps them remain in their own home and improves their overall health. (m) Spokane Valley Partners; requesting $30,000 to provide comprehensive social and emergency services to low income households, seniors in need, and families facing temporary setbacks; and said their Valley food bank is the largest in Spokane County and serves over 1,000 families monthly. (n) Starlight Children's Foundation; requesting $14,500 to support their Foundations Hospital Happenings and Great Escapes Programs in Spokane County; that program provides outings, entertainment, and recreational activities for hospitalized children and their families. In summary, Finance Director Thompson reiterated about the potential PEG funding for Community Minded TV; said the economic development agencies are scheduled to present next week, and a motion for funding allocation is scheduled for the September 28 council meeting. 2. Code Text Amendments: Gateway Commercial Avenue and Gateway Commercial Center Zone Districts — Lori Barlow and Greg McCormick Via her PowerPoint presentation, Planner Barlow explained the history of the proposed text amendment as per previous council direction that staff begin a review of each zone contained in the Subarea plan; she said each zone was overviewed by Council, which was followed by a public meeting for citizens and Council Study Session Minutes, September 7, 2010 Page 2 of 12 Approved by Council: September 28, 2010 property owners within the zoning districts; as a result of the public meeting and citizen input, staff determined which amendments could be addressed through the Planning Commission or which would require a comprehensive plan amendment. Planner Barlow gave a summary of the eight proposed amendments, which include (1) modify maximum setbacks, (2) modify minimum building frontage coverage requirement, (3) allow limited office uses to the two gateway districts, (4) exempt vehicle sales from the maximum front setback and minimum building coverage regulations, (5) increase wall sign area from 15% to 25 %, (6) allow wall signs above the first floor, (7) increase the number of pole signs allowed for dual frontage lots and allow on any street, and (8) clarify regulations applicable to accessory structures; and she mentioned that the Planning Commission recommended denial of the proposal to allow wall signs above the first floor; and she said emphasized that these proposals are for these two districts only; that the comprehensive plan is very specific about the form of the gateway commercial center zoning district and relates the gateway commercial avenue zoning district to that, so that gives a little more flexibility. Planning Manager McCormick added that there is another code amendment batch coming later to the Planning Commission and then to Council, which addresses concerns about existing developments and when those have to be brought into compliance and what triggers that. Councilmember Gothmann said that the reason for this Gateway Commercial Center is because members of Auto Row came to council and said they wanted an area where they could have entertainment, restaurants, etc., and have it a walkable community; and he said you can't have a walkable community with 100' setbacks alongside other establishments with no setback; and said since that time, it has been apparent that they are not now interested in having a Gateway Commercial Center and the most effective way to handle that would be to eliminate the Gateway Commercial Center through the comp plan amendment process; and said in the interim, we are stuck with what Auto Row initially wanted, e.g. a walkable center. After explaining the remaining proposed amendments, Planner Barlow asked for Council's preference in moving forward with a first reading. Councilmember McCaslin asked if these recommendations are public or staff - driven; and City Manager Jackson said they are public driven based on the recently conducted meeting; and Planner Barlow confirmed that these are as a result of the direct meeting process and Mr. Jackson said a transcript of each meeting has been supplied to council. Concerning the 15 versus 25% frontage, Councilmember Gothmann said that in their Central Business District, Light and Heavy Industrial and General Commercial Districts, Spokane City allows 1.5 square foot per one foot of primary building wall or 15% of the primary wall, whichever is greater; and that the County requires wall signs "permitted on each wall of the building provided the wall sign does not exceed 25% of the total area of the wall or a maximum of 250 sq ft, whichever provides the smaller area;" and he confirmed with Ms. Barlow that 25% would be the only limitation, not a percentage and a limitation of square feet. Councilmember Grafos said he would like all these text amendments moved forward to a first reading; and on the wall signs, he would like to modify that so that they would be allowed on the second floor, and when asked for the rationale for that regulation, Planner Barlow explained that the regulation was put in place as a tool to advance the pedestrian character, which is the concern of members of the Planning Commission; and said if you are in an automobile you might look for signs up higher, but in a pedestrian oriented area, the wall signage would be appropriately lower so as to be easier seen by those walking by. Mayor Towey also voiced his preference to move this forward as a first reading and not to restrict the wall signs to the first floor. Councilmember McCaslin asked about adding specific language to address sign regulations that might be regulated by franchise requirements of auto dealers; and City Attorney Driskell suggested exercising caution in drafting such a concept regarding a contract that others might enter into, and having that drive the city's regulations, and suggested such would require further research. Councilmember Grafos said since Council will be addressing the text amendment, it would easy to allow wall signs on the second floor if that is this Council's desire; and Mayor Towey agreed, stating that the more Council can let businesses run their business without council interference, the better; and having a sign on the first floor is better for foot traffic, but we don't know when or if, that foot traffic will arrive; Council Study Session Minutes, September 7, 2010 Page 3 of 12 Approved by Council: September 28, 2010 and he feels it is best for the City and best for the businesses to let businesses decide where to put their signs. Councilmember McCaslin concurred with allowing signs on floors other than the first floor. Planning Manager McCormick said what has been done in the past, was to bring forward the ordinance with the recommendations of the Planning Commission, and if there are changes, those can be made prior to the second reading; and Mr. Jackson concurred. Mayor Towey called for a recess at 8:08 p.m. and reconvened the meeting at 8:20 p.m. It was moved by Deputy Mayor Schimmels, and seconded to extend the meeting to 9:30 p.m. In Favor: Mayor Towey, Deputy Mayor Schimmels, and Councilmembers Grassel, Grafos, and Gothmann. Opposed: Councilmember McCaslin. Abstentions: None. Motion carried. 3. Presentation of Preliminary Budget — Mike Jackson In delivering the 2011 Proposed, Preliminary Budget, City Manager Jackson brought attention to the two new pages of budget revisions, that page six had a change to the final paragraph concerning employee count, and office assistant one at the bottom of page 77 had an incorrect salary range. Mr. Jackson also brought attention to the Mayor's spreadsheet showing the changes in budget areas over the years. Mr. Jackson said we have been working for quite some time on this budget, including spending an entire day July 13 on just the budget. Mr. Jackson said the good news is that the City is in very sound financial condition; that we can balance our 2011 budget and have healthy ending fund reserves now and through the 2014 forecast, even though at one time there was a negative forecast for the 2014 budget projections; and said staff has found ways to eliminate that negative projection for 2014. Mr. Jackson said there are some future challenges, but we are not facing drastic cuts nor are we looking for ways to balance the 2011 budget. Mr. Jackson said one of the main things that came as a result of the budget retreat, were the fiscal policies, which he said he feels are fairly straight forward, but not to be taken lightly, because if we adhere to these policies, we will ensure a balanced budget far into the future. Mr. Jackson went over the policies' highlights, and he added that we have a pay -as- you -go philosophy; and said we currently only use 1.63% of our allowable debt capacity, which is $526 million by state law; and our current debt is approximately $8.3 million, the majority of which is CenterPlace, funded through the public facilities district. Mr. Jackson said we are almost debt free. Mr. Jackson said the first financial objective is to maintain a general fund ending balance of 15% of revenues through 2014; and we are currently projecting to end 2011 with $24 million, which is about a 70% carryover, which Mr. Jackson said, is outstanding. In 2011, Mr. Jackson said we are proposing to use about $500,000 or 2% of that $24 million carryover to balance our 2011 budget, which is a very conservative use of the city's reserves. In examining the 2014 forecast, Mr. Jackson said that was originally showing a negative ending balance number, but at the retreat, Council asked that all vacant staff positions be removed from the budget, which by carrying those changes through, results in an approximate $10 million ending fund balance for 2014. Mr. Jackson said if we use some of the reserves through 2014 to help balance the budget, we would end up with about a 30% carryover at the end of 2014, which is about double the 15% objective set. Mr. Jackson said that council also asked that we maintain the existing service level stabilization fund at $5.4 million through 2014, and the plans are not to use any of those reserves. Mr. Jackson said the commitment was to reduce the 2010 general fund expenditures by 3% and staff, including the police chief, is working toward that goal, which will be reviewed at the end of the year. Mr. Jackson said discussion was held to cut future objectives by at least 3 %, and we have currently reduced the 2011 expenditures by 5 %. Mr. Jackson said we will face challenges in funding future capital projects, funding parks projects, and in supporting the street master plan and being able to fund all the preservations to maintain city streets, but those are items we can work on in the future, and he said we are fortunate we can balance our current fund while we continue to look for ways to fund street projects. Mr. Jackson also mentioned that Council had asked that we look at Council Study Session Minutes, September 7, 2010 Page 4 of 12 Approved by Council: September 28, 2010 setting aside some reserves as a street reserve, so staff initiated a $500,000 street reserve fund, and said staff is proposing to fund that through the city's civic facilities fund. Mr. Jackson said he realizes some Councilmembers had hoped to achieve even greater reductions, but he explained that the combined savings with the 2010 expected reductions along with the estimated 2011 reductions total about $2.8 million in savings, which he said he feels is a serious effort to trim spending; and said one of the major ways to achieve that is to remove many of the vacant positions from the budget; adding if the economy picks up in the future resulting in citizens' need for additional services, staff may be back before council to add those positions. Mr. Jackson brought Council's attention to page 67 which shows the street reserves, and said that fund cannot be changed without further council consideration, adding that it is accidentally misnamed on the sheet as "total parks capital projects fund." Mr. Jackson said Council also reduced the property tax for 2011 by about $100,000; and while the amount might not be significant, he said the action to recognize the current hard economic times for our citizens by reducing the property tax is well received. Mr. Jackson said the figure projections through 2014 projects for a flat economy, and if it dips or improves, adjustments can be made accordingly. Councilmember McCaslin asked about the position of city attorney; and Mr. Jackson said that is a position under review, and he is not recommending that position be removed from the budget and said want to examine the workload more closely. Councilmember McCaslin said the budget could be changed by a policy decision, and Mr. Jackson confirmed that the funds could be removed from the budget. Councilmember McCaslin asked then, provided the funds are there, does Mr. Jackson intend to fill that position. Mr. Jackson said prior to his advertising for a City Attorney, he will communicate further with Council. Under the public safety category for next year, City Manager Jackson said even with the $1.3 million increase in those costs, the budget for public safety has only increased about $100,000; which is because we had $1 million contingency in 2010 which we don't expect to spend unless there is a "settle and adjust" and he said some funds were spent on a jail reconciliation; but in 2011 we would expect to spend those reserves to meet the needs of the public safety budget; and said rather than increase the budget and retain those reserves, we intend to spend those to meet the contract obligations. Mr. Jackson noted in the challenges section (page 4) that our grant opportunities are declining substantially; that we typically receive about 80% project funding from outside sources, and in 2011 we are projecting to receive about 51% from outside sources, primarily grants. He explained that as those projects pick up, the city will face a challenge in meeting grant matches as the REET (real estate excise tax) is down considerably; he said REET funds have been used in the past to fund the majority of our match for capital projects. Regarding local street maintenance, Mr. Jackson said we receive funding from the State Motor Fuel Tax and a 6% city phone use, and while they do a good job of supporting the street fund, they don't provide the needed and recommended additional maintenance; and said if we were to adopt the street master plan and fully fund that plan, we would need approximately $4.3 million annually. On page seven of the budget, Mr. Jackson noted that our city continues to have the lowest employee count of any Washington city of 50,000 or more in population; and said the budget figures included a work force comparison chart. Regarding the City Council budget goals, Mr. Jackson encouraged Councilmembers to review those goals and let Mr. Jackson know of any desired changes. Councilmember Grassel said she recalled at the budget retreat that #6 was removed; and he said he felt that item was left in as there was interest expressed by members of the finance committee in looking at ownership of a city hall versus a lease; and he said Council as a whole can edit or remove any goal. Councilmember Grassel said she recalled not so much the idea of purchasing versus renting, but to remove the verbiage concerning the "demonstration project" for city hall. Mr. Jackson said staff can research the past comments, or council can determine now their desire concerning that goal. Deputy Mayor Schimmels said he didn't recall removing that goal, as a discussion would be needed since there are two more years on the current building's lease. Councilmember Gothmann suggested broadening the goal to "examine housing requirements" for staff. Mayor Towey said he doesn't want to strike the entire goal and agreed with the idea of Councilmember Council Study Session Minutes, September 7, 2010 Page 5 of 12 Approved by Council: September 28, 2010 Gothmann. Councilmember Grassel said the verbiage she referred to strike, was concerning the "living building standard" and said there was no desire on this new council's part to pursue anything with a living building; that there was discussion about renting versus buying or building, but said she thought that was about a LEEDS project the former mayor wanted, and said she doesn't think this council wants to pursue that. Councilmember Grafos said even if council were to pursue a city hall, Council would likely look at some LEEDS standard, even if the building were not completely a "living building" we would want to look at some LEED standards if a new city hall were to be constructed, and he said we would not want to remove that goal. Councilmember Gothmann said he feels the original reason to have the goal was if the federal government were to fund a living standards building, we would not want to turn down funding. Councilmember McCaslin said if Council doesn't want to take it out, does that mean Council wants to pursue this, and Mayor Towey said he feels Council agrees it should be discussed concerning renting, buying, or purchasing. Councilmember McCaslin said he would have no objection to study the possibility, but to "pursue" is more than studying. Mr. Jackson suggested editing the goal to state "explore a range of options for a city hall" and Council concurred. City Manager Jackson said the other concept brought up by the finance committee after the retreat, was that the city has the capability to balance the general fund on an ongoing basis with reserves; but that is not really sound fiscal practice. Mr. Jackson said that each year we would closely examine the budget and Council would have to decide to what extent we would use the reserves to balance the budget, and to what extent services and expenditures would be reduced; and said this will need to be examined each year as the next year's budget is planned. Councilmember Grassel said she has a problem in stating that our budget is balanced; and then say we are borrowing from our savings to balance the budget; and said that seems to be "double- talk;" and she asked why we are taking money from savings that could be going toward street preservations or other important projects that would benefit the citizens; she said that when she ran for office that was a concern of hers and continues to be a concern; she said we could have 70% of the budget as carryover, but that there are so many projects we could be investing that money into, but now we are using $500,000 in 2011, and said as she reviewed some of the departments, from 2009 to 201, some have increased 40 %; she said public works increased 40 %; HR increased 30 %; finance 25 %; the rec division increased 35 %; stormwater 25 %; and she asked the finance committee if they would look at those departments, or any department that has increased more than 5% since 2009, and to take those different departments and give us an answer as to why there is such a huge increase over a two -year time period. Councilmember Grassel said she noticed a lot of those increases were in the services and charges line item; and that she wants a clarification and an explanation as to why so many departments have significantly marked increases in a two -year period; she said we are reducing 3% from 2010, but she seeks clarification. Deputy Mayor Schimmels said there have been budget workshops; and if we were to walk in here and say we have a 12% reduction; he said council had access to those funds and are working our way through that, but said he personally would not support just a "hatchet job" on the budget; and said that staff is working with the direction driven by council; he said we have never found a way to justify to put a "bunch of money" in the street preservation fund just to possibly take it back out. Councilmember Grassel said she feels it is the job of councilmembers to look at these line items in the budget, and she reiterated she wants to know about the increases. Councilmember Gothmann said that the public works department went up because we took over the snow plowing; finance went up because two years ago we received a bad audit, and one of the reasons associated with that was we didn't have enough people to follow the funds; that for parks and recreation, we must examine the money brought in versus what goes out and if you bring in twice as much one would expect that the out -go would be twice as much; and said there are answers to those changes; and Councilmember Grassel said that is her point. Councilmember Grasse] said if we tell the public we need to add a car tab fee as we can't come up with funds for preservation, but these departments have increased by 30 %; we need to explain that and said she feels the Council Study Session Minutes, September 7, 2010 Page 6 of 12 Approved by Council: September 28, 2010 public should have the very detailed information to justify that and why we need to borrow from the funding reserves. Councilmember Grafos said the city incorporated in 2004, and then had a huge increase in the economy and all those departments were built up to take care of the business; and now that we are in a "freefall" he said he agrees with Councilmember Grassel that we can't continue to use the reserves to balance the budget; and said the reserves should be used for parks, roads, infrastructure, etc., all for the benefits of the citizens and not to operate the city. Councilmember Grafos said from 2007 to 2010, the inflation rate was 8.2 %; and the wages and benefits in this city in three years from 2007 were $5,341,000; and in 2010 they were $7,032.000 which he said is an increase of almost 28 %; and said that's part of the increase which is due to the number of people we are employing; and said we have a 2.5 COLA coming up and said for a start, he would like to see Council freeze that for the nonunion employees. Councilmember Grassel asked how much that would save. Councilmember Grafos said the finance director likely has that information; and added that we should not continue to use our reserves to operate the city. Councilmember McCaslin asked about the cost of this city doing snowplowing compared with the contracted amount with the County; and Mr. Jackson said mostly the cost is similar but we did have to purchase some equipment, and comparisons would have to be calculated to know if there was a net increase. Councilmember McCaslin said that he was told in November of 2009 that the city had a surplus of $30 million; and he asked for confirmation; and said if that is the case, we will now be at $24 million, meaning we have spent $6 million from reserves to have a balanced budget; that Mr. Jackson keeps saying we are in great financial shape; and said that the information he had prior to running was that in 2014, e would be six or seven million in the hole. Mr. Jackson said we all spent a full day at the retreat and there were several meetings with the Council Finance Committee; and that he has maintained he wants to align this budget with council's expectations; and now as he is delivering the preliminary budget, we are now hearing a lot of new ideas, which of course is Council's prerogative. Mr. Jackson said regarding "tapping into city reserves," that for many years this city has spent very conservatively; that spending has of course increased since incorporation as we are a developing city, that for example, this Council just saw our law enforcement contract increase by $1.3 million; we know that costs increase; but he said the city was setting aside reserves as we knew the economy fluctuates and we were trying to level it out and set funds aside so when the economy dipped, we could continue to provide essential services; he said this city is running very lean; and said we would face running into financial peril if we start to try to finance street capital through the general fund; he said there are 20 separate funds in the City; and if we are talking about such basic changes as to start funding street capital through the general fund, we need to examine that very carefully. Mr. Jackson said the entire premise of our solid financial condition rests on treating those funds separately; the general fund provides for the operations and maintenance of the City of Spokane Valley such as law enforcement, public safety, streets, community development, parks and recreation, finance, city attorney, etc., and if we start to use that money for capital projects, which we have never done, we would be headed off in a whole new direction; and he said there is nothing in the multiple business plans that addresses spending that money that way. Mr. Jackson said if you think we are balancing our general fund by dipping into our savings, that is the intent of those funds and said that is good financial planning; and said that we of course would not spend every dollar the city takes in and as soon as the revenue drops you'd have to cut police officers, street maintenance, and basic services all because that year you can't meet your obligations; and Mr. Jackson said it makes very good sense to set aside some funds so when the economy dips, we can continue to provide those services; and said the city should look at matching current year revenues with current year expenditures. Mr. Jackson said we are making substantial cuts in this budget of about $2.8 million and we are preserving our ending fund balance are not spending it down and further, that we aren't even touching the service level stabilization fund. Mr. Jackson said if this city wishes to move toward a program of funding street capital with general fund dollars, such needs to be examined very carefully; he said you can get by day -to -day without fully implementing that street preservation plan; Council Study Session Minutes, September 7, 2010 Page 7 of 12 Approved by Council: September 28, 2010 but said you cannot get by without public safety and police services, and other basic services such as snow plowing. Councilmember McCaslin said he agrees with everything Mr. Jackson said, but in looking at the information produced by Mr. Jackson's department, and he sees the building department increasing, and the planning department increasing, he said he thinks we have a problem. Mr. Jackson replied that those departments are decreasing. Mr. McCaslin said that he is referring to information he had prior to running; and that he is not talking about cutting police. Mr. Jackson said that if we don't maintain a healthy general fund, at some point as we see in cities all around us, when they have to start looking at public safety; he said he feels we have a good solid platform, and would like to keep as much distance and security as possible between ever having to make those kinds of cuts or decisions. Deputy Mayor Schimmels said up to the start of this year, we had $5.7 million in the capital facilities fund; and that is still there and is a big chunk of the difference from the $30 million down to $24 million; that it was just in a different fund. Councilmember McCaslin said regarding the information supplied by the finance department concerning projected expenditures in the departments, that he will bring that in next meeting and ask for an explanation; because that is the information he got: that in 2014 there would be a deficit of about $6 million; but Mr. Jackson explained that the current forecast shows a $10 million surplus for 2014. Councilmember Gothmann said regarding the information Councilmember McCaslin got while he was running for election concerning community development was correct in that department went up considerably, but the reason for that was that several engineers were transferred from public works into community development. Councilmember Grassel said as a councilmember who will be voting on this budget, she wants for each department that shows more than a 5% increase since 2009, an explanation of those increases; and said she needs detail; she said she asked these questions before, said she asked them at the budget, and we have talked about a preservation street fund but hasn't heard any suggestions from the finance committee or from the city on how to resolve that issue, and said she is aware that for every dollar we don't spend today we will spend $8.00 tomorrow; and said if we don't address these issues we won't have a reserve by 2014. Councilmember Gothmann said every year this city has been in operation, we have shown a forecasted negative four or five years in the future; he said forecasts were based on pessimistic receipts and optimistic expenditures, and every year we actually end up better than forecasted; he said there are two ways to run a government: one is to spend every cent which leads to layoffs followed by hires, followed by layoffs; or to try to run along even which means during the bad times you take some money from savings, and during the good times you put money in savings; and he said this City has been run using the latter model. Councilmember Grassel said that is her point; that she counts at least twelve departments that have increased by five percent over the last two years; and she asked if that doesn't concern Mr. Gothmann; and said the longer we wait and don't address these issues, the worse it will be; and she said her concern is we have been making some huge increases and she wants to know why. City Manager Jackson said staff can gather that information for Council. Councilmember Grafos said he feels we are heading in the right direction; and said now that we are in an economic downturn, we should preserve as much funds as possible to have funds available in the future; and to look at those departments individually again to see if there are other cuts that can be made. In response to previous council question of the 2009 ending fund balance, Mayor Towey said that information is on page 79. Councilmember Gothmann said when the new councilmembers were running for election, the figures he quoted were about $20 million in carryover, and add to that $5 million in the stabilization fund, and another $5 million in the capital facilities fund, which totals $30 million; which included other funds which have never been accessed. City Manager Jackson said staff will work to provide a spreadsheet of the history of the reserves; and said if council wishes to provide other policies that is up to council discretion; and he clarified that tonight's presentation is for his submission of the preliminary budget for council's review and that council then has the prerogative for edits. Mr. Jackson said regarding the pending legislative initiatives 1100 and 1105 Council Study Session Minutes, September 7, 2010 Page 8 of 12 Approved by Council: September 28, 2010 which would close the state liquor stores, that if that were to occur, the minimum impact to our city would be approximately $600,000 in state shared revenues through liquor board profits; and 1105 would also remove the liquor excise tax which means a total of approximately $1 million in revenue impacts; and he mentioned that AWC (Association of Washington Cities) is examining ways to mitigate that. Councilmember Gothmann said in response to those possibilities, suggested we maintain the direction we are going since we are forecasting a $10 million carryover in 2014; and once we know the outcome of the election, budget changes can be made in December if needed; but said he doesn't want to change that now. Mr. Jackson agreed and said that is one of the advantages of having reserves; and once the outcome of the election is known, we can decide whether to make reductions in 2011 or factor that into the 2012 budget preparation; and said changes are inevitable but to what level do we do what and how do we develop future forecasts and budgets is what needs to be examined; and said as the City Manager, he feels the budget we are delivering has made substantial reductions; that we acknowledge declining revenues and that we cannot spend reserves on an ongoing basis; and again stated that he feels this is an excellent 2011 budget; that it meets his objectives; and said staff is happy to provide any research to explain what caused some of those previously mentioned changes so this council has a history of what has occurred. Regarding the budget calendar, Mr. Jackson said we are ahead of schedule and he brought council's attention to the upcoming public hearings; and said council can consider extending the budget calendar from what is projected at this time; and said the final budget ordinance to adopt the 2011 budget is set for October 12, 2010, and that state law has a deadline of December 27. There were no objections from council to keeping the budget calendar as scheduled. 4. Public Works Enhancement Projects - Neil Kersten Public Works Director Kersten distributed handouts of project location maps; he said the projects have not changed since his overview a few weeks ago; said these are 100% funded projects, and there is approximately $2.5 million total available, said we have several support letters, and the described projects included the Spokane Valley Millwood Trail Engineering which runs along the old railroad beginning at the Spokane Community College through Millwood, across Pines and connects to the Centennial Trail at both ends, as well as the Valley Mall; he said the project is complicated and staff feels we can only do the engineering and perhaps right -of -way in the short two -year period; and he said another call will likely come out later; and once the engineering and right -of -way are in place, they would rank the project even higher, making it a good chance for funding in the following round of calls; and he confirmed that the construction could be in the 100% funding, but that is unknown at this point. Other projects included the Greenacres Trail, and the Myrtle Point Trail, which he said likely won't score as high as the others which go by schools and connect to the Centennial Trail; and said the sidewalk infill project in general around the city. Mr. Kersten said the school districts have a radius where they do not bus kids to the schools, and we would get that information and look at areas where sidewalks could be built to give good access for children walking to school. Deputy Mayor Schimmels added that the STA (Spokane Transit Authority) would be glad to partner with any sidewalk improvement that is on a transit route. City Manager Jackson said he would suggest before we accept these grants, that we develop a schedule for the ongoing trail maintenance as we would need to know the annual cost of trail maintenance prior to trail construction. Mr. Kersten said these applications are due Thursday, and he asked if Council had any objections to any of the projects. There were no objections from Council. It was moved by Deputy Mayor Schimmels and seconded to extend the meeting to 10:15 p.m. Vote by Acclamation: In Favor: Mayor Towey, Deputy Mayor Schimmels, and Councilmembers Grassel, Gothmann, and Grafos. Opposed: Councilmember McCaslin. Abstentions: None. Motion carried. 5. Water District Easement - Cary Driskell Acting City Attorney Driskell explained that the city owns some right -of -way in Hollywood Hills in western Spokane Valley adjacent to the Edgecliff Hospital Property; he said the road is too steep to be used as roadway on Center Road, and East Spokane Water District #1 has asked that we grant them an Council Study Session Minutes, September 7, 2010 Page 9 of 12 Approved by Council: September 28, 2010 easement for placement of a water pump facility that would help their water pressure in that area; that almost the entire facility would be located underground in the unused portion of the city's right -of -way; and they would also construct a few outbuildings above ground; he said the Water District could save their ratepayers by not having to buy the land on which to place these buildings; and he brought attention to the proposed easement along with the draft resolution. Council voiced no objections for staff to continue as proposed. 6. Ci , Manager Contract - Mayor Towey Mayor Towey explained that at the August 10 council meeting, council directed him to enter into negotiations with Mr. Jackson for the city manager contract; that they met on numerous occasions and drafted a preliminary contract; he said the contract is a work in progress and that the council has the last say on whether this is a final agreement or more negotiations are needed. Councilmember McCaslin stated that when he voted no previously, he voted no on the word "negotiations" and said he felt the city should have had a job description and salary benefits structured so that would be offered to the new person, whoever it was, and there wouldn't be any negotiations; he said this has nothing to do with Mr. Jackson but rather the system and the procedure; adding that he thought it was pretty well determined prior to all the interviews who was going to be chosen; and said that's why he voted no, and why he'll probably vote no on whatever council comes up with because he doesn't like the system. Councilmember Grassel said she'd like to see further discussion of #1 of the contract and said she feels the same way Councilmember McCaslin just expressed; she said there was a salary discussion prior to the hiring; maybe it wasn't firmed up, but that perhaps council might want to review that section. She also questioned section 6 under the annual vacation, and section 8 concerning the retirement; that in her research, both the 401a plan and the 457 plan are not requirements and said if we were to add all the retirements and the pay, that Mr. Jackson's total package is approaching $200,000, and she said that seems a little high for this economy; adding that she thinks we should consider that the city manager position is new for Mr. Jackson and he doesn't have the years of experience of the former city manager. Mayor Towey asked for her recommendations, and Councilmember Grassel recommended $144,000 as a base salary. Mayor Towey reminded Council that we advertised the position for 10% below or above $144,000, which the proposed figures falls into; Deputy Mayor Schimmels suggested leaving the salary as stated; and Councilmember Grassel said the proposal is almost 15 %; and she also voiced concern about the six -month review and the increase associated with that; and she recommended a review perhaps in a year or longer. Councilmember Gothmann said he felt there is a need for a review at the end of six months as it is an excellent mechanism to make sure things are on track regardless of if there is an increase in salary at that time; and that the retirement as stated in the contract is not unusual. Councilmember Grafos said that he would like to see a starting salary of $150,000; that there would be no review and no increase; or a one -year review with increase at council discretion; he said he feels Mr. Jackson is the "top guy in the city" and that is a fair salary. There was further discussion on the evaluation, when it should or should not be done, and what percentage of increase, if any, should be given based on job performance; and brief conversation explaining the term life insurance mentioned in the contract. Other contract sections discussed included the mutually agreed facilitator, whether base salary not be reduced, that there is no term of the agreement, and retroactive pay and the avoidance thereof. There were no further comments. 7. Transportation Benefit District (TBD)— Mayor Towey Mayor Towey said that Council directed staff on August 24 to prepare a motion regarding sending a letter of support for a TBD to the County Commissioners; since then more information has arisen, including an additional letter from the County Commissioners, and Mayor Towey said he feels it prudent Council wait until after Friday's Council of Governance Meeting where this topic will be discussed. Mayor Towey said he originally thought that a letter of support from this Council to the County, would be in advance of the interlocal agreement which would be discussed later; but he said according to the new correspondence Council Study Session Minutes, September 7, 2010 Page 10 of 12 Approved by Council: September 28, 2010 from the Commissioners, such is not their intent. Councilmember McCaslin said that Councilmembers all likely received an e-mail from Commissioner Richard noting a difference of opinion between Commissioner Mielke and Richard on voting on the jail situation in April instead of a TBD, and said that the Supreme Court has ruled on over - crowing in jails and prisons but has not ruled on potholes; and said he agrees with Commissioner Richard regarding voting in April, and Councilmember McCaslin said he also prefers to vote on the money needed to expand jails due to the overcrowding, and postpone the TBD; and said any letter to the County Commissioners needs to be constructed carefully. Mayor Towey explained that the new information indicates the County would still like a letter of support, but they are asking us to wait until next fall to place such matter on a ballot; and said if such a measure were to go on a ballot next fall and be approved by the voters, it would still be another six months after that before any revenues were realized; and Mayor Towey said he proposes waiting until after this Friday's meeting before committing to any letter, so that this Council will know exactly what it is the County is asking of this city. There were no objections. 8. Ad Hoc Committee for Economic Development — Mayor Towey Mayor Towey reminded council of his former proposal to form an ad -hoc committee, given specific direction including a time frame, to gather specific data on how to enhance the development of our business community compatible with federal, state, and local limitations, and to come back with a recommendation to Council; and he said the first step is whether to form such a committee. Discussion ensured regarding the pros and cons of forming such a committee, with some Councilmembers favoring the forming of a committee, and others not in favor of forming such committee. It was moved by Deputy Mayor Schimmels and seconded to extend the meeting to 10:45 p.m. In Favor: Mayor Towey, Deputy Mayor Schimmels, and Councilmembers Grassel, Grafos, and Gothmann. Opposed.• Councilmember McCaslin. Abstentions: None. Motion carried. After further discussion on the merits of forming or not forming the committee with no apparent consensus, Mayor Towey declared the issue dead. 9. Advance Agenda — Mayor Towey There were no comments concerning the advance agenda. 10 Information On IX : the Graffiti Abatement Program, Legislative Agenda Item, and Park Road Grade Separation Project were for information only and were not reported or discussed. 11. Council Check in — Mayor Towey Councilmember Gothmann said the Transportation Improvement Board is expecting an $80 million dollar call for projects instead of $50 million. Councilmember McCaslin said in reference to his comments at a previous meeting concerning the homeless, the State spends $53 million in the bi -annum on the homeless. Councilmember Grassel said she met the new president of the Convention and Visitor's Bureau. 12. City Manager Comments - Mike Jackson Mr. Jackson brought Council's attention to the "Information Only" item 10c concerning the park road grade separation project; and said the deadline has passed to notify the TIB (Transportation Improvement Board); and he said the City does not have the necessary funds to move forward with the park road grade separation project so we would not pursue the $2 million funding, and said Public Works will be notifying the TIB of that decision. Deputy Mayor Schimmels asked about funding for bridging the valley, and Public Works Director Kersten said there are other funding possibilities such as the Freight Mobility, Strategic Investment Board ( FMSIB), and said it appears we will get a couple million for Sullivan; that we re- prioritized a few years ago and made Barker the higher priority and it appears we might get $10 million from FMSIB for that project; and that grants can be submitted later, but at this point, Park doesn't have the funding to move ahead and chances of receiving funding is low; and said he Council Study Session Minutes, September 7, 2010 Page 11 of 12 Approved by Council: September 28, 2010 will be bringing Council a regional list in a few weeks, and he mentioned that Park is not on that regional list but Barker is; so more information will be forthcoming. There being no further business, it was moved by Deputy Mayor Schimmels, seconded and unanimously agreed to adjourn. The meeting adjourned at 10: 44 p.m. Council Study Session Minutes, September 7, 2010 Page 12 of 12 Approved by Council: September 28, 2010 PROJECT LOCATION MAP MYRTLE POINT TRAIL HEAD PLANTES FERRY PARK I I t LANTES FERRY JOCCER FIELDS j / - MYRTLE P01'T NATURAL ONSERVATION AREA cl, E ISTING AIL tAD RROPOSED TRAIL HEAD CATION PARKINC� RE51R-000MS, --TR'AIL ACdb3S�' :/ xz �pG Z ✓ I % i p C OF P o&dme Va11eyo : VALLEY MALL ED, T I ice_ S ,;OoValley PROJECT LOCATION MAP NORTH GREENACRES TRAIL PROJECT LOCATION MAP SPOKANE VALLEY / MILLWOOD TRAIL ;OoValley �� 03 Details $ 3.00 $ 48.00 $ 20.00 $ - 4.00 $ 75.00 $ 5.0� $ 80.00 ' � 4 ��>° l 0-1�- Filing fee funds . go to the county in which the fee is paid Gross weight fee funds road, street, and highway maintenance and improvements Replacement plate fee for road, street, and highway purposes Plate reflectivity fee funds road, street, and highway maintenance and improvements Subtotal Optional state parks donation Total Messages Mandatory insurance. You must carry a valid insurance ID card when operating most motor vehicles registered in Washington State. You must show your insurance ID card to law enforcement upon request. State parks. Your donation keeps state parks open. Thank you. You can enjoy more than 100 state parks in beautiful settings all over Washington. Take your family and friends on a picnic. Go camping, hiking, bicycling, or boating. Or, just relax in the peace and quiet of nature. If you would like to offer even more support to Washington State Parks you can place a check in a donation box at a state park or mail it to Washington State Parks Headquarters Office, 1111 Israel Road SW, Olympia, WA 98504 -2650. For more information about state parks, go to www.parks.wa.gov orcall (360) 902 -8844. PLAYERS & SPECTATORS 12828 E SPRAGUE AVE. SPOKANE VALLEY, WA. 99216 Phone: 509- 924 -5141; Fax: 509- 891 -1466 August 25, 2010 Mr. Mike Jackson Mr. Ken Thompson • We'd like to propose a one year moratorium on the 10% gaming tax the city receives. • This would greatly aid us to survive the down turn in the economy. • It would help to sustain the 102 Spokane Valley jobs. • Gaming revenue has fallen by 40% for May, June, July and the same for August. Restaurant, bar, and bowling have been similarly effected. • We still pay a large amount of the gaming tax even if none of the outstanding credit is collected. Consequently, Bad Checks decisions result in a substantial cost as the gaming tax is paid whether we collect or not. • We understand the financial impact this would have on the City; we'd like to propose a more realistic taxing structure. • A 3.5% tax on all gross gaming revenue of $50,000.00 or less per month. • A 4.5% tax on the next $84,000.00 in gross revenue. • A 6.75% tax on all monthly gross revenue greater than $134 We thank you for your time and attention to these issues. �hil out P si s General Manager I am trying to get relief from the regulatory bodies in order to re -open as quickly as possible the Casino and re- instate the Employees. I have to have the City taxes reduced and a one too two year suspension of the City tax and a forgiveness of the already owed 10% tax that will be due soon for the month of July and August. Please consider this and it will greatly help me regain the capital needed to re -hire these employees, and get the business open again. As you business people know 71 employees contribute a host of tax money and help each and every store in Spokane Valley. Again I beg you to consider the request and implement it immediately and help me save this business and a big bunch of employees and their families. Thanking you in advance Sincerely, J Senior Member J & F Entertainment & Casino 12828 E. Sprague Avenue Spokane Valley, WA 99216 August 25, 2010 509 -924 -5141 The Honorable City Council Spokane Valley, WA 99216 REF: Closing the Casino. Dear Council Members: It saddens me very deeply to close our Casino, but worse yet was the dismissal of 71 employees, the devastation on the person and their families, the disruption of their lives. It was not on my choosing I was forced to do this after I had made two infusing of funds to keep it open of $200,000.00, I have exhausted my funds to keep the casino open any longer, in order to pay the employees for the days they had worked I had to close it in order to be able to pay their salaries. The cause of this closure hinges squarely on the liberal government in the State of Washington, The County of Spokane, and the City of Spokane Valley WA. The over burden of State Taxes, State regulation, the burden of Gambling Regulations, requiring a large number of unproductive employees, requiring the same amount of employees whether you had a fifty thousand dollar day or a five thousand dollar day, the economy of today on this business is down at a minimum of 40% This placed us in a very negative operating income every day, I loaned the money to keep it open hoping things would get better, on the contrary it got worse. Liquor control board who controls the liquor and this gives them the control on all bars and lounges in the State of Washington They have their entrapment stings, same as the Gambling Commission who participles in entrapment also. The overburden of paper work is expensive and burdensome. The County has increased our property tax, contents taxes, it is un- affordable especially is these times. Fire inspections and demands and regulations are much to expensive to keep up with.. What blows your mind is the City of Spokane Valley tax on 10% of the Gross is absolute unaffordable, Please show me any business can be taxes 10% of the gross income before expenses has been paid and survived very long.