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2011, 09-06 Study Session Minutes MINUTES SPOKANE VALLEY CITY COUNCIL REGULAR MEETING STUDY SESSION FORMAT Spokane Valley City Hall Council Chambers Spokane Valley, Washington September 6, 2011 6:00 p.m. Attendance: Councilmembers Staff Tom Towey, Mayor Mike Jackson, City Manager Gary Schimmels, Deputy Mayor Cary Driskell, City Attorney Bill Gothmann, Councilmember Mark Calhoun, Finance Director Dean Grafos, Councilmember John Hohman Community Dev. Director Brenda Grassel, Councilmember Mike Stone, Parks & Recreation Director Chuck Hafner, Councilmember Neil Kersten, Public Works Director Arne Woodard, Councilmember Morgan Koudelka, Sr. Administrative Analyst Carolbelle Branch, Public Information Officer Carrie Koudelka, Deputy City Clerk Mayor Towey called the meeting to order at 6:00 p.m. It was moved by Deputy Mayor Schimmels, seconded and unanimously agreed to approve the amended agenda. Mayor Towey read the proclamation for the Tenth Anniversary of 9-11 Remembrance. 1. Outside A ency Funding Requests — Mark Calhoun Mark Calhoun explained that the City has provided partial funding for local services and economic development agencies since incorporating in 2003. In the 2012 budget process, there currently is $150,000 set aside for Council to distribute to outside agencies. Each economic Development agency will have five minutes to present to Council. He said that on September 27, a motion will be considered for distributing the funds to the various agencies. Mr. Calhoun asked that Councilmembers submit their scoring sheet with recommended funding amounts to him by September 14. He will then return to Council the combined information and allocation averages on September 27 for Council to make final funding recommendations to be included in the 2012 budget. At Mayor Towey's invitation, the following economic development agencies made presentations to Council: (a) Greater Spokane, Inc., (b) Greater Spokane Valley Chamber of Commerce, (c) International Trade Alliance, (d) Spokane Valley Heritage Museum, (e) H[JB Sports Center, (� Valleyfest. 4. Commute Trip Reduction (CTRI — Morgan Koudelka Sr. Administrative Analyst Koudelka explained the CTR program is a state program designed to reduce the number of vehicle miles traveled and single occupant trips that occur throughout the state that applies to counties with an urban density. He said within those counties, all employers with 100 and more employees are required to have a CTR program. Within Spokane County, the cities with an affected employer contracts with the County for CTR program oversight services. He said the contracts are for two years and they coincide with the state's biennial budget. The agreement passes along Spokane Valley's allocated funds of $62,390 to Spokane County for providing oversight services. Mr. Koudelka said there are no substantive changes from the last Interlocal agreement. Councilmember Woodard asked that the "number of trips to reduce" of 26 be clarified. Mr. Koudelka introduced Aurora Crooks from the CTR office of Spokane County who explained it refers to the number of trips to reduce per day and that the number came from the state based on a 2009 survey conducted, and that the results of the survey goals were established to reduce the drive-alone rate by 10% or vehicle miles travelled by 13%. She explained the calculations are based on the number of employees at an affected work site who begin work between 6:00 a.m. and 9:00 a.m. and work 35 hour per week for twelve consecutive months, so not all businesses Council Study Session Minutes September 6, 2011 Page 1 of 6 Approved by Council: September 27, 2011 are included in the criteria. The Interlocal agreement is for two years and mandated by the State of Washington. Mayor Towey reiterated that Spokane Valley would be passing along our portion of the CTR funds to the County for managing the program rather than Spokane Valley managing the program. Councilmember Gothmann said municipalities have to be in a CTR program even if they do not have 100 employees. It was the consensus of Council to place the interlocal agreement on the next consent agenda for approval consideration. 2. Citv Manaeer's Presentation of the Preliminary 2012 Budget Mike Jackson Crty Manager Jackson said that we are in an enviable position in that we are able to balance our budget and have healthy reserves; however, he said that does not mean we do not have challenges. He said Council has been heavily involved in the budget process and we are well ahead of schedule to meet the mandate to deliver a budget to Council sia�ty days before the end of the fiscal year. Mr. Jackson said the 2012 preliminary budget does not have the same line-item detail as the budget presented at the retreat but he can get copies of the retreat budget to Council if they need another. He also mentioned they should have their Business Plan with them for the budget discussions as a companion document because it defines the size of our work force, work programs and department goals. Mr. Jackson said there were several meetings with the Finance Committee and in the future, they may begin to report those activities regularly to Council so everyone is aware of the work and outcome of those meetings. Many of the fiscal policies originated in the Finance Committee meeting discussions, along with new recommendations for 2012. Mr. Jackson said public hearings are scheduled for September 27th and October 1 lth, with a first reading of the budget ordinance on October 25th and a second reading on November 15th. He said the fiscal policies are a critical part of the budget process because they help to guide us and ensure the City remains sustainable. He said the City continues to maintain basic service levels with reduced resources and that the proposed 2012 budget is less than the adopted 2011 budget. He said Council asked that the 2012 budget be only 1% more than the 2011 budget and we were able to do better. He said we continue to minimize personnel costs and overhead by contracting for many services. He said we should start to think about the cost of contract services and that initially the City thought by contracting for services we would save money and have flexibility in difficult economic times. He said we have not made adjustrnents to contract services and have put the most pressure on the general fund budget without knowing how much pressure our contract service providers are putting on their budgets or keeping their costs down. Mr. Jackson said we continue to leverage City funds with grant opportunities and we have very low debt. He said we intend to maintain a minimum general fund ending balance of 15% of revenues through 2015, which we exceeded this year and we are looking to increase the ending fund balance if possible because he said 15% is not enough to get through the kind of economic crisis we are in today. Mr. Jackson said we intend to maintain our service level stabilization fund at $5.4 million through 2014 and we have started this year to transfer 40% of the ending fund balance exceeding $26 million, to street capital on an on-going basis,. He said in looking at our law enforcement contract, we can settle our City books in the first quarter, but many of our bills do not come due for a couple of years. We set that figure at 40%, which gives us room if we have additional costs incurred from a previous year. As an example, we just received the 2010 settle and adjust bill from the County for law enforcement services. Mr. Jackson said Council has decided to hold the 2012 property tax levels to $10,750,000, which is the same as the 2011 rates. He said 2012 is not a growth year, but rather a year to stabilize and watch our reserves. We continue to face challenges in funding street preservation to maintain our streets and in the next few months, Public Works will present their revised Street Master Plan that will tell us how much money we need each year for street preservation. He said in addition, we hope to develop a plan that will clearly define the preservation element in all street capital projects so we can see the impact on an annual basis. He said we anticipate the costs may increase due to the number of roads in the previous street master plan that still need repair. Council Study Session Minutes September 6, 2011 Page 2 of 6 Approved by Council: September 27, 2011 He said in the 2012 budget, they divided the expenses into "recurring" and "non-recurring" categories to make it easier for Council and staff to see the money needed for basic operations each year. He said for 2012, he is proposing not to appropriate the ending fund balance in the budget to give the City a little more security. We cannot spend the ending fund balance unless Council makes specific appropriations. In recognition of that, he proposes a 1% contingency fund. Councilmember Grassel asked if they will still see the carry-over amount from year to year and where that will be in the budget if it is not included in the ending fund balance. Mr. Jackson said page 11 shows "Total Sources" of $61,482,961 as the amount of the general fund that the City would adopt if we included the beginning fund balance, but because we propose not to include the beginning fund balance, the total general fund appropriations would be $35,196,500. Councilmember Grassel said it would be nice to see that additional fund. Mr. Jackson said it will be denoted as the ending fund balance but the ordinance for adoption will not include it in the general fund. He said they also removed the forecast from the proposed budget but kept it in the Business Plan because it is a prediction and typically based on conservative numbers. He said forecasts can be manipulated to look however we want depending on the numbers we enter into it. He said it is a very useful tool and they will still use it in the Business Plan but he does not think it belongs in the budget document. Mayor Towey said he thinks it is a good tool and it makes sense to have it in the Business Plan. Councilmember Hafner said he thinks the most important thing is to use realistic figures in the forecast. Councilmember Grafos said he thinks the projection should be in the budget because it shows the operating expenses of the City and he does not think it hurts anything to include it in the budget because it provides an overview of the direction of the City. Councilmember Gothmann said he has seen it used more as a political tool than as a guide to the Council. He thinks it is a useful tool for Council to see the direction we are headed, but any figure can be plugged in which may or may not be realistic. He said he thinks it should be in the Business Plan. Councilmember Woodard said he wants it in the Business Plan. Mayor Towey said the Business Plan is open to the public and is an important document to gauge what we are going to do in the future and to tell us if need to make adjustments. Mr. Jackson said we will leave the forecast out of the budget at this time and if Council wants to change that later, we can change it. Mr. Jackson said we are $164,000 below our 2011 budget without any reductions in service and with 3.6% inflation over the twelve months prior to July as indicated in the Consumer Price Index. He said this reduced budget also includes over $100,000 in funds for maintenance of the new Greenacres Park and the televising of Council meetings. He said we are actually making expansions to service but still reducing our budget. We contract for police services and have library and fire districts but we are still operating below the normal employee count for a major city. The proposed budget includes a 2.5% Cost of Living Adjustment (COLA) for all employees. In 2011, non-union employees received no COLA, union employees received 2.5% as negotiated in their 2010-2012 union contract. Mr. Jackson said capital project funds can be appropriated for street capital projects at Council discretion. He added there is no increase in the property tax levy, but moderate growth and cost increases are predictable and we cannot always hold operational costs to the level of reduction achieved this year. He went over some highlights of 2011, including Greenacres Park and televising Council meetings, removing SARP from the Comprehensive Plan and making changes to the development code. He said we are actively pursuing possible changes to City Hall and moving the permit center, and made progress on the winter roads maintenance plan by purchasing a shop and maintenance equipment. He said while we are able to fund on-going street maintenance, street preservation is a challenge. We maintain over 437 miles of roadway and the objective is to preserve roads before they need complete replacement. Mr. Jackson said the 2012 budget is balanced and Council goals for 2012 include monitoring wastewater issues, pursuing solid waste, reviewing and evaluating development regulations, developing the Shoreline Master Program, pursuing a legislative capital budget request, creating an economic development plan, and breaking the plan into short-term actions and long-term direction. He said that because law enforcement and other public safety contracts represent a large proportion of our budget, we will continue to monitor the costs. Councilmember Hafner asked how street preservation will be addressed. Mr. Jackson said Public Works is working on a revised master plan that should provide data to test Council Study Session Minutes September 6, 2011 Page 3 of 6 Approved by Council: September 27, 2011 the validity of the plan and then we need to continue to monitor and account for the street preservation cost in our projects. He said if not money is not available in the budget, we need to consider future funding sources. Councilmember Woodard asked for an explanation as to the increase of 54% on page 53 when there was a reduction in employees from eleven to six. He said on page 55 there is a similar example where the increase is 33% with a reduction in employees. Mr. Jackson said he and Finance Director Calhoun will carefully study those figures and bring information back to Council. Councilmember Gothmann said in 2011 we had $970,000 as a contingency budget for law enforcement services for possible settlement for 2006 and prior years and it is reduced to $53,000 for 2012. He asked if our exposure has decreased in Law Enforcement. Mr. Jackson said our exposure has not changed, but we changed the way we budget for law enforcement by forecasting our best prediction for the costs and if the costs exceed that amount, we will come back to Council for discussion and make a decision to transfer money. Councilmember Gothmann asked if we are contracting for broadcasting services. Mr. Jackson said we do contract for broadcasting but have staff involvement as well. He said he may be back before Council in the future to discuss the law enforcement services contract and because we recently received a settle and adjust that is a significant increase. He said we are currently reviewing the charges, but he said he does not want Council to be surprised if we come back to discuss 2012 increases. Councilmember Grassel asked for the healthcare increases for employees. Finance Director Calhoun said the increase is approximately 10% for medical and 3% for vision and dental. He said they should have the final numbers from AWC by October. Councilmember Grassel said that at the budget retreat she thought they discussed keeping the COLA at a 1% increase for non-union employees in keeping with the overall 1% increase to the budget. She said she does not think there is a 2.5% increase in the cost of living and that Spokane Valley is not in line with the national trend. Mayor Towey said the intent of the Finance Committee was to look at the COLA from year to year and the original intent of the COLA is based on inflation and would be compatible to the inflation factor. He said he read that the inflation factor for last year was 3.84% and if we look at that, then a 2.5% COLA is justified. He said as a Council we should look at and analyze the cost of living each year to determine a COLA percentage. Councilmember Grafos said the CPIW, the urban cost of living, is annually adjusted and is the same formula used for Social Security. He said for 2009 through projected 2011 we are at 2.9% and it will probably be 1.7% for 2012 and he said we should stay at a 1% COLA across the board and 1% for salary increases. Mayor Towey said the current union contract runs through 2012 but they can discuss it when the contract expires. Councilmember Grassel said she was stating the 1% increase apply to non-union employees. Mr. Jackson said historically non-represented staff has been treated the same as represented staff to be fair, including benefits, vacation, etc., so as not to have to maintain different classification levels. Councilmember Woodard addressed page 7 and the HoteUMotel tax fund and asked how to use those funds in ways that might bring more economic development. Mr. Jackson said Finance Director Calhoun will bring information forward during the budget process to discuss further and provide a more thorough review. He said they will also provide a full report of health and benefit costs so Council can look closer at those figures. Mayor Towey called for a break at 7.•58 p. m. The meeting reconvened at 8:12 p. m. 3_. Buildin� and Land Use Permittin� Process Revisions — John Hohman Community Development Director Hohman informed Council of the twelve-step program he has developed as an action plan to improve service to the community, called Roadmap for Enhanced Permitting. Mr. Hohman went through his presentation and said the deparhnent is comprised of three divisions: building, development engineering, and planning. He said we added development engineering in 2007 to streamline staff interaction and communication. He said we removed it from Public Works to consolidate the permitting under one director. The traffic engineering review board is still in Public Works but they have worked out a process where development engineering is the coordinator for traffic related items, but Public Works does the review. He said the management structure consists of the Council Study Session Minutes September 6, 2011 Page 4 of 6 Approved by Council: September 27, 2011 I director and three managers: a Senior Development Engineer, a Planning Manager and a Building Official with the intent being that any manager can cross over to assist customers in any division of the department. Mr. Hohman said the biggest challenge they face is to change the perception in the community and get to the root of the problems to make corrective changes. He said another big challenge is the development code and changes they need to make. He said he wants to make the code easy for staff to implement and enforce, and easy for customers to understand. He said he met with staff to identify expectations and has emphasized that our customers are our primary focus. He plans to implement staff organizational changes to consolidate similar duties and provide a structured and disciplined supervision role. It is important to organize forms and procedures and purge old forms as updates occur. He said he hopes to improve communication with the development community by holding community forums to start a dialog with the community and try to improve its perception of the City. He said he plans to work with economic development partners such as Greater Spokane Incorporated and the Valley Chamber of Commerce to reach out to businesses and small businesses to help move projects forward. He said with regard to division prioritization, permitting will be the primary focus of staff and he would like to expand express permitting to include sign permits, approach permits, right-of way permits and other easier to review permits. He said he plans to implement a counter plan review to issue permits within a matter of hours rather than days or weeks. He said they will review and revise the development code and relocate the permit center and consolidate staff to allow better supervision. Mr. Jackson said in looking at relocating the permit center and consolidating reception and permitting, we would need to relocate the finance deparhnent and look at our time commitment in this building. He said we would need a new contract with WEB Properties and we would be looking at a fairly long-term commitment to malce the changes. Our current contract ends March 31, 2013. Mr. Hohman said they will implement a new permit tracking system that will allow supervisors to assign work, track progress, and allow management to know who is working on a specific project and its status. He said they will implement performance measures and they will continue staff coaching and customer service training. 5. Advance A�enda — Mayor Tow� N/A 6. Council Check-in — Mayor Towey Councilmember Grafos said Council is not setting aside the quiet zone issue and would like staff to present a complete packet to them and then have a bus tour to take Council through each crossing because he said he thinks it would be enlightening for the Council. Mr. Jackson said Interim Deputy City Manager Crum is researching the issue and we will bring information to Council in October with a scope of work for Council discussion. 7. City Manager Comments City Manager Jackson said he has been working with the County and the City of Spokane on an extension of our agreement for solid waste and he proposes they mail a draft extension to other cities for staff review and then bring that back to Council for consideration. He said the extension would run through November 16, 2014. It was the consensus of Council to proceed as suggested. Councilmember Woodard said he is concerned we will lose negotiating leverage with a three year extension. Councilmember Grafos said he would like Public Works to look at the intersection of Appleway and Thierman to see if another left turn lane can be created heading east on Appleway turning north on Thierman. He also asked if they can look at the school speed limit signs on Fourth between University and Bowdish because trees block the signs from view. Mr. Jackson said staff will look into those issues. Mr. Jackson mentioned they discussed animal control at the joint meeting with the County Commissioners and said they will meet with the City of Spokane after September 20th to discuss the fees and charges and said he will report back to Council after that meeting. They also talked about the Old Milwaukee right-of-way and said there is joint interest in pursuing the corridor as a greenway and will have Public Works create a sketch to get an idea as to what Council is looking for and we will invite Council Study Session Minutes September 6, 2011 Page 5 of 6 Approved by Council: September 27, 2011 I Commissioner Mark Richard to the Council meeting to get clarification and move the project along. He said information will be brought to Council regarding the Transportation Benefit District (TBD) so both Council and staff are fully aware of the cost. Public Works is working on the street master plan and that will be a good time to discuss the TBD. He said staff is currently reviewing the settle and adjust for the 20101aw enforcement services. He also received correspondence from Rose Dempsey from the Clean Air Agency asking to come to Council to discuss the indirect source rule and its regulation. He said at Council direction he will schedule a presentation from one of the board members for a future meeting. Council concurred. 8. Executive Session: Performance Review of a Public Employee [RCW 42.30.110(1)(g)] It was moved by Deputy Mayor Schimmels, seconded and unanimously agreed to adjourn into executive session for roughly 1 S minutes to discuss the performance review of a public employee, and that there will not be any decision after. Council adjourned into executive session at 9:13 p.m. At approximately 9:30 p.m., City Manager Jackson announced the meeting would be extended thirty minutes. At 10:11 p.m., Mayor Towey declared Council out of executive session, and it was moved by Deputy Mayor Schimmels, seconded, and unanimously agreed to adjourn. The meeting adjourned at approximately 10:12 p.m. � ATTEST: � � Th mas E. Towe , Mayor -� � , �—�. � / istine Bainbridge, City Clerk � Council Study Session Minutes September 6, 2011 Page 6 of 6 Approved by Council: September 27, 2011