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2012, 09-18 Study Session Minutes MINUTES SPOKANE VALLEY CITY COUNCIL REGULAR MEETING STUDY SESSION FORMAT Spokane Valley City Hall Council Chambers Spokane Valley, Washington September 18,2012 6:00 p.m. Attendance: Councilmembers Staff Torn Towey, Mayor Mike Jackson, City Manager Gary Schimmels,Deputy Mayor Cary Driskell, City Attorney Dean Grafos, Councilmember Mark Calhoun, Finance Director Brenda Grassed, Councilmember John Holman, Community Development Dir. Chuck Hafner, Councilmember Eric Guth, Public Works Director Ben Wick, Councilmember Mike Stone, Parks &Recreation Director Arne Woodard, Councilmember Rick VanLeuven, Police Chief Carolbelle Branch, Public Information Officer Chris Bainbridge, City Clerk Mayor Towey called the meeting to order at 6:00 p.m. City Clerk Bainbridge called the roll; all Councilmembers were present. 1. Lodain2 Tax Update—Mark Calhoun Finance Director Calhoun explained that the purpose of tonight's discussion is to follow-up questions posed by Council during the August 28 meeting concerning the uses and allocation of lodging tax funds. Director Calhoun explained that the first question was, would expending lodging tax proceeds on way- finding signs be an appropriate use, and Mr. Calhoun said the answer is yes. Mr. Calhoun said he was informed by MRSC (Municipal Research and Services Center) that they feel lodging taxes could be used for directional signs that help people find their way to tourist activities and facilities; and in that regard, the expenditure would have to be specific to that type of directional signage. The other question posed by Council was, could those lodging tax proceeds be used to contract with a vendor to develop for example, a jazz festival for Spokane Valley, and he said the response to that question wasn't as straightforward. Mr. Calhoun explained that MRSC felt the proceeds could be used for such a purpose, but since the statute's marketing provision is due to sunset June 30, 2013, funds would have to be expended prior to that date; that we could wait and see if the legislature extends that provision, and said MRSC suggested he contact the City Attorney. City Attorney Driskell said that this is an unsettled question and we need to be cautious. Mr. Calhoun concurred and suggested avoiding that particular use. Councilmember Woodard said it sounds like marketing would be permissible if the signs direct people to various businesses, and Mr. Calhoun agreed. The discussion then leaned toward freeway signs and Mr. Driskell said those issues would be addressed under tonight's agenda item#4. Mayor Towey asked if Council can award those funds to anyone who qualifies,and mentioned this City's history of setting aside funds for CenterPlace. Mr. Calhoun said that the City would not have to apply and that funds could be set aside if that is Council's desire; adding that if that is the case, he would like to know prior to the Lodging Tax Advisory Committee's deliberation if possible. City Attorney Driskell added that placement of signs would depend on the nature of the road where the sign is to be placed, as different types of roads, whether state or federal, have limitations; and Mr. Calhoun agreed while the signs themselves could be an appropriate use of funds, some roads might not be the appropriate place for those signs. Councilmember Wick suggested setting aside $30,000 for way-finding signs, while Council Study Session Minutes 09-18-12 Page I of 10 Approved by Council: 10-09-12 Councilmember Grassel agreed with setting aside some funds,but said we don't know how many signs or what kind are needed, and suggested perhaps Visit Spokane could assist in that regard. Councilmember Grassel also stated that the funds for CenterPlace are arbitrarily designated and she would like to see specifically how those funds were spent in order not to duplicate marketing efforts. City Manager Jackson said staff can provide Council with a copy of CenterPlace's annual report, as they are required to provide information on how the funds are used. Finance Director Calhoun explained that as the budget is currently prepared, $460,000 is budgeted for lodging tax, which includes $30,000 designated to CenterPlace; and instead of appropriating the entire amount Council could appropriate a lesser amount, perhaps $430,000 which would still include $30,000 for CenterPlace, thereby leaving $30,000 not spent; and that those funds would not be spent until determined by Council. Councilmember Wick indicated that would be his preference. Mr. Calhoun suggested another option would be to appropriate the entire $460,000 and just tell the lodging committee they have $400,000 to work with. Councilmember Grafos agreed with the idea of setting aside funds,but said he feels$30,000 isn't adequate, and that he would like to discuss signs further under tonight's agenda item#4. 2. Nuisance Conditions, Spokane Valley Municipal Code 7.05 Proposed Amendment — Cary Driskell City Attorney Driskell said since the adoption of Spokane Valley Municipal Code 7.05, the City has gained additional insight and experience in identifying and regulating nuisance conditions, and when staff discussed potential Code changes with Council last July, Council appeared comfortable with most of the proposed changes; and staff now has additional amendments for Council consideration. Mr. Driskell also mentioned that there have been previous discussions about how to treat commercial vehicles, and said staff is working on that, but felt it was not appropriate to include that in the nuisance code since it deals with things that occur on the public right-of-way and said it will be discussed separately later. Mr. Driskell then went over the major proposed changes of the ordinance: Page 3: Vegetation. This section change explains when the property owner is responsible for maintenance, and when the City has that responsibility. There were no objections to the proposed change. Page 4: Growth of grass or weeds in excess of 12 inches tall. Councilmember Grafos said he feels it is not an essential function of the City to measure grass; Councilmember Wick said people are asking for this type of nuisance to be addressed, and it would be difficult to get these things cleaned up without an ordinance; Mayor Towey said it would be difficult to have an ordinance to include all the factors possible such as those who have several acres of undeveloped land; Councilmember Woodard suggested making a distinction between developed and undeveloped areas and of the idea of trying to avoid the area from becoming blighted; and Councilmember Hafner suggested this is a far-reaching measure and mentioned the need to talk to landowners to get their area cleaned up, and he questioned how this regulation would be policed. City Attorney Driskell said we can't enforce a regulation if we don't have objective standards; but said that it appears Council would prefer not to include this and Council concurred. Page 5: Disposal of accumulation of vegetation or other waste. Mr. Driskell explained that the concern is the cut weeds or other debris harbors vermin and constitutes a fire hazard; and he recommended including a timeframe in which the debris must be removed. Councilmember Woodard said he prefers not to be overly restrictive. Mr. Driskell said the issue is the potential fire danger, and said if Council's concern is the visual aspect, that could be omitted. Councilmember Grafos said he prefers keeping the ordinance the way it is currently in the Code; that it is not a function of this City to measure firewood on someone's lot and if there is a fire danger,that can be dealt with in a way that would not restrict people; he said so far as clutter, you'll never satisfy everyone, and if there is some vacant lot, maybe people should buy it and clean it up or talk to the neighbor about cleaning it up. There was also discussion about amending the section on smoke, soot or odors with Council agreeing not to amend that section, and no objection from Council to adding in the clause under Section F,"as determined by the Fire Marshall." Council Study Session Minutes 09-18-12 Page 2 of 10 Approved by Council: 10-09-12 Page 6: Noise. Mr. Driskell recommended deleting the section as noted and said that might fit better under a separate chapter staff is working on concerning truck traffic. Councilmember Woodard asked about the hours of restricted noise and whether lawnmowers and tractors are included and should not be used prior to 7 a.m., Mr. Driskell said he would research that question. It was also Council consensus not to amend the section on yard sales. City Attorney Driskell said this proposed ordinance amendment will be brought to council for a first reading in the near future. 3. Nuisance Violations, Spokane Valley Municipal Code 17.100 Proposed Amendment — Cary Driskell City Attorney Driskell said this ordinance is moving in tandem with the previous ordinance since they are so closely related; he mentioned that this Was brought to Council previously but that he has some additional comments for discussion. Council concurred with the recommended changes as noted in the draft ordinance. 4. Interstate Signage—Cary Driskell Per his September 18, 2012 Request for Council Action form, Mr. Driskell explained that Council had requested information regarding placement of additional signage on Interstate 90 with the goal of directing passing motorists into our City. Mr. Driskell explained about motorist information signs placed along state highways, and that there are limitations regarding quantity of signs as well as sign placement, and that WSDOT (Washington State Department of Transportation) has regulations for signs as well. Councilmember Woodard asked about the logistics of placing signs on private property, City property, or along the freeway not in WSDOT's jurisdiction; and Mr. Driskell indicated he would have to research that, adding that there are other factors, such as complying with the Scenic Vistas Act that he will research as well. The possibility of advertising on existing billboards was mentioned, as well as placing signs at the closed Visitor's Center on the east side of the City. Councilmember Woodard asked about the idea of having more than one way-finding sign on an area where a sign already exists. Mayor Towey said he would like to have something to entice people off the freeway and into our City, and that the Committee on which he participates regarding this topic, suggests there is a need for those enticing signs from the Airport to the Idaho border; and that those committee members suggested the signs have a regional theme yet still keep the individual signs for each jurisdiction. Attorney Driskell said that leads to his second point, that staff has been working with neighboring jurisdictions and Visit Spokane on an interlocal agreement related to developing a common theme for entry signs and landscaping along Interstate 90, and said those other jurisdictions are considering several changes, and he anticipates bringing a draft interlocal for Council's consideration in October. Councilmember Grafos asked about a sign that was taken down off I-90 and not replaced; said he realizes a "business district" sign is not permitted, and suggested staff contact WSDOT about us having a sign on 1-90 that reads "Sprague/Appleway Boulevard Business Route." Mr. Jackson said this topic was discussed earlier and the options at that time were to either wait until WSDOT replaced the sign, or we could do it ourselves at a cost of between $10,000 and $20,000. Councilmember Woodard suggested having signs to easily direct people off and back on the freeway. Mr. Driskell said he will discuss this with Community Development, and that it would have to fit within the framework of our sign regulations. In response to Mr. Jackson's remark about the potential sign cost, Councilmember Wick suggested that perhaps a set-aside amount for the City to use Lodging Tax funds should be closer to $40,000 in order to purchase two signs; and Mr. Driskell said that will also need to be researched. Councilmember Grassel suggested using lodging tax funds for such things as River Trail Historical signage along the Centennial Trail, or to direct people to and from the Trail, which she said could also be helpful for bicyclists and walkers, and mentioned the idea of mobile apps on signs. Mr. Jackson said if Council desires, staff can put together a scope of work for signage on how to approach this issue; he said the RFP (Request for Proposal) has been issued for a marketing and branding consultant, and that perhaps we could tie that in Council Study Session Minutes 09-1$-l2 Page 3 of 10 Approved by Council: 10-09-12 with tourism, way-finding and mobile applications; and suggested this could take a couple months to work out a scope of work. There were no objections from Council. Mayor Towey called for a recess at 7:53 p.m., and reconvened the meeting at 8:07 p.m. 5. 2013 Butt et Review—Mike Jackson,Mark Calhoun City Manager Jackson explained that last week was the first presentation of the 2013 Preliminary Budget; that previous to that, Finance Director Calhoun lead discussions on revenues, expenditures, and property tax, and at that time, Council indicated they had additional questions, and Mr. Jackson said staff is here tonight to answer Council questions. Mr. Jackson said that last week Councilmember Grafos asked about the number of vacant positions. Mr. Jackson said the only vacant position staff might consider not filling at this time would be the Deputy City Manager; and he explained about the current 2.75 vacant positions which he anticipates filing by the end of this year, and which are in the current year's budget. Mr. Jackson said that based on the outcome of the Ad Hoc Economic Development Committee, he might seek to fill the Deputy City Manager position with someone who has expertise in economic development, adding that that is the main reason he has not yet filled the position. Mr. Jackson went over the shift in policy of formerly taking 40% of the ending fund balance and applying that to preservation, to now taking an amount equivalent to 6% of the general fund balance, and setting that aside. Mr. Jackson said last week he presented Council with two scenarios: one to take all of the money directly from the general fund; that that option would require either a $1.2 million dollar reduction in public safety, or a transfer that equates to $1.2 million in additional reductions to the other departments. Mr. Jackson explained that at the retreat, an excellent business plan was discussed which lays out the scenarios of a 3, 6, and 9% reduction; he said it is easy to think we could squeeze more out of the budget, but said that whatever we take out, that would be in addition to that which was already removed, which resulted in a reduction of about $3 million and 10.5 positions. Mr. Jackson said that removing those positions and that amount of money,we are getting to a point operationally that if we have goals and objectives for the City, that we need those people to accomplish that work. The second big change, Mr. Jackson explained was to change the reduction of the general fund budget; that we are at about 74% of$26 million now; he said we have had numerous discussions about how much money we should keep in the ending fund balance and said we redistributed some of that money into other funds. Mr. Jackson stressed that we are not proposing to spend those funds at this time but are only allocating those funds; that in order to spend those funds, Council would have to appropriate those funds. Mr. Jackson said we are setting funds aside now for the Sullivan Bridge; the new City park in conjunction with the Sprague Property if that were to be purchased; for a potential future City Hall, which is a Council goal which will be discussed later; and a fund called Capital Projects. Mr. Jackson said one of the issues we face now concerns solid waste; that he will be meeting with a representative from the City of Spokane next week, after which he would like to have further discussions with Council concerning how best to pursue this issue. City Manager Jackson explained that there has been a shift in thinking about the ending fund balance; that he had recommended keeping the fund at$26 million, but that over the years it has been apparent that all councils were not comfortable imposing a new tax when we have substantial reserves; said it was thought the public would not support additional taxes for preservation while there exists those substantial reserves; and said the suggestion is to discuss very prudently spending those reserve funds down, but to keep at least a 50% ending fund balance, and backing that up with our Service Level Stabilization Fund should we ever drop below that 50%; which still leaves the City in superb financial condition. Mr. Jackson said he is presenting a plan that he feels has the appropriate funds to meet the capabilities of staff. Regarding capital projects and street preservation projects, Mr. Jackson explained that for the next iteration of the Street Master Plan, that he, the Finance Department and Public Works will work closer together and present Council with a plan that implements these projects in phases; he said members of Public Works are reviewing the roads to determine which roads need what type of work and how soon that work should begin; that a list of preservation projects will be included in the budget prior to the budget's adoption; and that the list of roads will be included each year in the new plan; and said we must Council Study Session Minutes 09-18-12 Page 4 of 10 Approved by Counci I: 10-09-12 keep in mind there will always be exceptions and reasons to re-prioritize the roads; he said even if we would like to allocate additional projects, we are running close to the capacity of the staff to get this done with the proper among of planning to hopefully avoid future project cost changes. Mr. Jackson explained that the plan staff recommends would complete for four years, over $2 million in preservation work in addition to the maintenance that gets done using street fund dollars; adding that we will have some funds that will carry over from this year into next year; and said that is one of the reasons both he and Finance Director Calhoun recommend having a separate pavement preservation fund; that those funds could increase at every opportunity,that the funds would stay in the pavement preservation fund until they were spent on preservation or were reallocated by council, whereas putting those funds in the general fund would require council to re-allocate the funds every year. Councilmember Woodard said that the newspaper reported we were spending beyond our income and revenues, and he asked Mr. Jackson to comment. Mr. Jackson explained that the current year revenue does not match our expenditures, but that we are using it for a single purpose of preservation; which he explained is no different from setting aside money for several years for example to construct a project and then the funds are spent; he said it is not current year revenue, and is well within our budget; that it is not deficit spending; that we are calling preservation a recurring expense since it will happen every year, but that long-term, you'll want the revenues to match those expenses; he said we have a definite plan, we have the reserves, and we are working to get the program started; that it is not deficit spending, but at some point if an expense is recurring, we will have to have recurring revenues to pay for the program. Finance Director Calhoun added that in transferring out $7.84 million to those other four funds, that drains the reserves down, but it is not for operations. Mr. Jackson said it is also important to note that we are not borrowing money to do this; that if you have reserves and you decide to apply those, you will spend more than total revenues for that year, otherwise the reserves would never get used, and said under the current plan, the reserves will be reduced over four years to about $1.4 million. In response to a question from Councilmember Woodard on how Public Works gets funding, Mr. Jackson explained that the street fund is a result of funds from the telephone tax and the gasoline tax, and that Public Works receives their funding through the general fund, and said the engineers are funded half through the general fund and half through the capital projects, and said there is a footnote in the budget that explains this funding process for the engineers. Councilmember Hafner commented about bringing the ending fund balance down and moving funds into the four previously mentioned Funds; he said in the past he felt we should put $4 million to the bridge, and perhaps less into a City Hall; he also said he needs a better explanation of park development; that he realizes that$2 million for park development had been discussed being used for Balfour Park if and when Council should purchase the Piing Property; and said it is not detailed enough. Councilmember Hafiier said in looking at the capital reserve, that originally he didn't see where it was going or being used for except just sitting there, and he questioned money sitting in a fund where we get less than one-half of a percent; and he asked Mr. Calhoun how much money we received in interest income. Mr. Calhoun said probably .15%. Councilmember Hafner reiterated that those funds just sit there, and said he goes back to his theme of road preservation; and by spending money now on road preservation, you'll save between $80,000 to $100,000 per million spent for road preservation and he comparing preservation with reconstruction, preservation projects are designed to be pro-active, applied while the pavement is still in good condition; and when we do a reconstruction it usually cost anywhere from 6 to 10 times more money; the major impacts on business during construction are greater than during preservation; there are traffic safety concerns during construction, other traffic concerns for the public, and significant increases in the time needed to construct the project; and that it was recommended by JUB that in 2012 there were about 14 projects that were ready for reconstruction but we've only been able to do two of those; but said there is no sense in putting money towards those other 12 projects since they are already at that stage, and said let's let them get worse until we can find some grant money; and suggested taking care of the streets that we need to, and go ahead for preservation so they don't get to that point; he said we are not a walking Council Study Session Minutes 09-18-12 Page 5 of 10 Approved by Council: 10-09-12 society but we are absolutely a riding city; he said it doesn't make any difference it ifs a half a block from our house, we will get into our car and go to it. Councilmember Hafner said he is not sure what is referenced by 6% and needs to know 6% of what; he said he is not willing to take 6% of law enforcement or of John Hohman's budget nor of Mr. Calhoun's budget because it is badly needed, but said he thinks it has to be subjected specifically in different areas if that's what we're going to do; taking money from the street fund of $282,000; another $660,000 for the Civic Facilities Replacement Fund; and there's two REETS, the first one-fourth and the second, one-fourth, and then we take general fund money now of $850,000; and said that amounts to $2.52 million if we're spending out of the general fund now; and if we look at cutting 6%, we really have 3.48 if that's the stage to catch up with the amount of money that we want to take out of the general fund; but then to continue further, he said the amount of money in the service level stabilization fund is $5.5 million; and if we take that amount of funds and then take the other fund that we set aside— the capital reserve fund which amounts to $1,826,000, then we have in reserve $7,226,000 which is over and above the reserve where we have 50%; and said we have said before that most municipalities try to preserve 15% and two months of cash flow; and said Mr. Calhoun had previously recommended 30 or 35% would be very good; and we are at 51%; and said we have adequate reserves in that fund if we have a concern; and said this is a concept he feels Council needs to seriously consider, where we are putting our money, how we are putting our money, and really looking at how we best can be profitable about spending some of the $17.5 million toward road preservation; not all of it but perhaps a bigger portion; as if we can save $80,000 to $100,000 per million dollars of road preservation, then that should be considered. Councilmember Grafos said regarding the 6%, we are not talking about reducing Mr. Jackson's budget; what he wants to do, is that the road preservation has to be one of the most important functions of the city; and he'd like to take a 6% number, a line item in the expenditures of the general fund; so instead of the general fund only being for operations, it comes from the general fund, allocated to road preservation; a recurring expense, that way we are not moving those funds around; it's there, we know we'll spend it and it moves over to the road fund; the $2 million for the city park; and he asked if there is about $1.5 million in the civic facilities fund. Mr. Calhoun said in fund 310, we anticipated coming out of calendar year 2012 with $3.5 million. Councilmember Grafos said if you didn't move $2 million from the $26 reserves, we would have enough to purchase the Pring Property;the City Hall, although a priority at some point, he'd like to see that reserved until we have a specific project, should leave that in the $26 million reserve; the money that he'd like to transfer which would be part of that general fund as a line item, that we know we'll spend those dollars every year. To clarify, Mr. Jackson said council and staff have an interest in saving the money for pavement preservation; and said he is more comfortable with putting it into a fund so if we don't spend it all, it can continue to grow; and he asked if we were to make the transfer into the general fund as revenue from the REET fund, because he explained, if we put it in the general fund we have to compensate with revenue, if we make those transfers instead of to pavement preservation into the general fund as revenue, and then show preservation as an expenditure at $2.54, he asked if that would meet Councilmember Grafos' expectation. Councilmember Grafos said if you look at the general fiord, as part of that expenditure, you have a line item that says $2 million or 6% of whatever the budget is $35 million; each year that $2 million comes out of that general fund as an expenditure and it goes to the street fund and that money is used for that purpose; so instead of having it as a discretionary item each year as a nonrecurring expense, it comes right off the top;just like we have a contract with the Sheriff, the $22 million comes right out of that budget. Mr. Jackson asked if on the revenue side, Councilmember Grafos is comfortable with transferring revenues to compensate for those expenditures; and if you don't then you're right back to the situation where you need to reduce the budget; you'd need to reduce law enforcement by $1.2 million and make all those other cuts; so if all you're talking about is you want to make sure it's in the general fund,then we'd need to transfer revenues into the fund in a similar amount to compensate. Councilmember Grafos said if you had to do that, as we went through the year you may have to do that, or you may have to do that at the beginning of the year to make sure it's a balanced budget; but there are also items in there, other funds that maybe are not a Council Study Session Minutes 09-18-12 Page 6 of 10 Approved by Council: 10-09-12 priority in the 2013 budget year; as a example, he said last week we talked about $180,000 for a truck wash and he asked if that was still in the budget. Mr. Jackson said it has been removed, and that he and Councilmember Grafos had that discussion when he brought it up; that item has been removed from the budget. Councilmember Grafos said he saw we had a $50,000 item for a new SUV to replace two pickups because gear can more easily be stored and not subject to weather conditions. Mr. Calhoun said that would be the purchase of two SUVs to replace two pickups. Councilmember Grafos suggested looking at just getting a couple of canopies for a year; and he said he wants to make sure that every part of the budget is essential. Regarding putting the $2 million in the general fund, Finance Director Calhoun stated that at the beginning of this conversation, Councilmember Woodard asked if we are deficit spending in the general fund; and he said the answer is no as at this point, there are revenues exceeding expenses by $141,000. Mr. Calhoun said on page 20 f the Preliminary Budget, the 2013 column at the bottom of the page, is the $141,000 which includes the pavement preservation expenditures of$855,000; and said if we turn that figure into $2 million, that positive $141,000 will become a negative $1,050,000, thereby showing expenses exceeding revenues unless we are able to offset that with some kind of recurring revenue. Mr. Calhoun stated that as Mr. Jackson had mentioned, like REET taxes, which is what Mr. Jackson is indicating to transfer that $282,000 from the street fund, plus the $300,000 from the REET money plus the $600,000 from Fund 123; and that then brings us back in balance with revenues and expenses; he said from an accounting standpoint, we can do that; in governmental accounting, we deal with a variety of different kinds of funds that the GAP (General Accepted Accounting Principles) ask of us and the Auditor's office holds us to; and when we do capital projects, we don't account for capital construction projects from the general fund, instead we put them in capital projects fund, which is why the fund 311 was created— for pavement preservation; so we can transfer those revenues into the recurring revenues, and then have an expenditure for pavement preservation of$2,054,000, but said we are asked not to run that kind of money through a general fund for capital projects; and said if we transfer all that money into that fund 311, then we could run the capital project through and not run afoul of the auditor's, plus if we under spend for whatever reason, any money we don't spend simply becomes a part of the fund balance in 2013 and it is always and forever set aside for pavement preservation and cannot accidentally be spent on something else in the general fund. Mr. Jackson said he would like to talk Councilmember Grafos out of that general fund use; that part of the reason is, we have a telephone utility tax for the street fund; the money comes out of there, co-mingles with the general fund and for all practical purposes, it is difficult to distinguish; if you're using REET funds which have specific purposes for road preservation of construction, to put it in the general fund you start to mingle it; but what we might do is a hybrid; and might be a good way to gauge our progress; we show the general fund money in the general fund as preservation, and these other funds we put into pavement preservation, and what we try to accomplish over the years is to build more and more into the general fund; that way the $800,000 funds we are allocating, the 2.5% of the general fund, is in the general fund, and then we never have to go back and remember how much was REET funds and whether we spent enough, because once it goes into that pavement, those are funds eligible for pavement preservation and they'll stay there; and said if council could consider, we could split those two funds up and show in the general fund the amount that's coming from the general fund; and then we can watch that number and try and increase it. Councilmember Grafos said that would accomplish the same goal; to take the $855 and show it in the general fund this year, and then as we build, and if our revenues are higher and we hold the expenses clown or don't spend some of the funds, then that line item in the general fund would grow each year. Mr. Jackson said that would be a more correct example of the money that's actually coming from the general fund. Councilmember Wick asked how that is different as the bottom row under expenditures is labeled "pavement preservation transfer out" at $855,000. Mr. Jackson said we would remove the "transfer out" and we'd spend it from the general fund. Mr. Calhoun said we'd remove the transfer out on the general fund into the fund 311, and then you'd have $855,000 less in revenues and expenditures, but when you Council Study Session Minutes 09-18-12 Page 7 of 10 Approved by Council: 10-09-12 added the $855,000 from the general fund, and the $1.3 million from Fund 311, you'd have that 6%. Councilmember Wick said he has no problem with that but his biggest complaint and the biggest complaint he hears from citizens, is that when people get taxed, they hate it going into the general fund; everyone he has ever spoken to has that concern; he used the lottery as an example, that those funds were to have been used to fund education, but said it doesn't always work that way; and said he feels there should be a fund to make sure those controls are in place; adding that he also favors Mr. Jackson's hybrid suggestion as well, but doesn't want those funds just going into the general fund. Mr. Jackson said it is a serious step; that we have tried to preserve the concept of preserving the general fund and going after totally separate funding source for preservation; but he said this has been the method for the last nine years; that we have the money and can use it prudently for the good of the community with our second- highest priority of street preservation; and said we are spending the Civil Facilities Replacement Fund, that is $2.4 million in reserves that we are spending over a course of four years; and said when he prioritizes those and we look at the reserves, the last thing he would ever touch would be service level stabilization; and said over four years we are spending down over $2.5 million of reserves; that this is enough money to make a dramatic impact on our preservation and come back next year and see how we're doing; that if we do this for four years, plus what's been done this year, our roads will be noticeably better or outstanding as compared with anywhere else; and even when that civic facilities replacement is spent, if we don't have any other revenues, we'd still have $1.4 million going toward preservation on a permanent basis, which is a huge amount of progress. Councilmember Hafner said when we took the $2.54 million, he asked why we couldn't take those four categories and put them in the general fund, and then bring them back out if that's a problem; and said as Mr. Jackson told him, these funds are sustainable for a number of years and we can rely on those funds; and said he agrees with Mr. Jackson's solution. Mr. Jackson said that the civic facilities replacement fund would be exhausted in four years, which would amount to $600,000 a year; and the balance of$1.4 million coming from the general fund and the REET and the Street fund, would be sustainable; adding that we are committed to holding down the cost of operations and continue to spend that money toward preservation; so that component is sustainable. Councilmember Grafos said he would like to remove the 1% property tax increase from the 2013 budget; he said he doesn't think it is necessary, and he discussed some of the information on the sheet he distributed to Council and the Clerk, showing thirteen major projects that are under way or being constructed in our city, and that the figures we show for new construction is $125,000. Mr. Calhoun said we have not heard from the County but that figure is our estimate. Councilmember Grafos said he calculated the valuation on just the projects underway, like Providence Hospital and Wal-Mart, and said if they all went on the tax rolls in 2013, we'd be at about $153,000; and said there are another four or five projects not included in that list; and said he feels that $125,000 doesn't include any residential construction; and said just the commercial construction would bring that number to $153,000; and said he feels taking that $108,000 in taxes at this time is not the correct course; and that he will not vote to approve the budget with that 1% property tax increase. Mayor Towey said that he is going to wait to make his decision until after the public hearings and the ordinance readings on the budget, which includes the I% sales tax; that he has talked to a lot of citizens and they are not necessarily concerned about the 1%, but are concerned more with how it will be used;he said the Council's main responsibility is to make sure this City is sustainable; that Council's responsibility is to allocate those monies for the benefit of all the citizens; and as Councilmember 1-lafner said, if we take $108,000 and put it into street preservation, it would benefit our citizens $800,000. At 9:00 p.m., it was moved by Deputy Mayor Schimmels, seconded and unanimously agreed to extend the meetingforfori-y-five minutes. Councilmember Woodard started discussing some of the aspects of Public Works, including chip sealing, and asphalt overlays, and said he realizes the subject of the road maintenance contract will be discussed later; and that he would like discuss snowplows. Mr. Jackson asked for some clarification and Councilmember Woodard mentioned the reserve for the ninth snow plow and of the replacement reserves; he said the trucks are not a problem but that the problem is the ongoing maintenance cost, and said he Council Study Session Minutes 09-18-12 Page 8 of 10 Approved by Council: 10-09-12 feels there should be a separate discussion on where we want to take Public Works and how many employees that could entail; and other areas of contracting. Mr. Jackson said there are no additional staff members for public works for 2013. Councilmember Woodard said putting aside money for maintenance for additional trucks or equipment in the future, will also at some point in the future, require additional personnel, whether mechanics, or drivers, or others. Mr. Jackson said while we can have that discussion later, for now he recommends keeping that ninth snow plow; he said Public Works could make a good ease for even ten plows based on the scope of the operation; although we are not proposing ten plows now; and said it is important to recognize that we just don't order a plow; there's a lot of staff work to decide exactly what model the truck will be, single axle, etc., and he said we also want to be sure we are responsive to our citizens; that we can't plow for a hundred year storm, but we can make sure we are prepared for a five or ten-year event, and need to be able to plow the snow from the streets rapidly; that currently it takes about 14 hours to do a full plow of the city, not including residential roads; and said we have an older fleet and probably got into the snow plow business as frugally as possible by purchasing used plows; he said we can maintain a fleet of used plows for many years, with the biggest problem of plows being corrosion. Councilmember Woodard said the discussion he wants to have is, how much we will do as a city as compared with how much will be through contract; and the equipment is just a small piece of the overall cost of doing snowplowing. Mr. Jackson said that originally we contracted snowplowing, but sometimes we need to bring an operation in-house; adding that we still need to determine our five and ten-year plan for snow plowing. Mr. Jackson said he recommends purchasing this plow, said we are beginning a gradual replacement of the fleet; we discussed plows several years ago and decided to wait for two years and the money has accumulated to purchase that plow; so whether we add it to the fleet and surplus one and remain at nine, that discussion can be conducted more in depth later. Mr. Jackson said while we would order the plow in 2013, it takes a long time to actually get the plow, and said the last plow took over a year between purchase and acquiring the plow. Councilmember Hafner said we have spent a lot of time in the last week with this budget; and said he feels we must be extremely careful not to cut the services we are so proud of; and said the Department Heads are doing an excellent job of providing those services and we don't want to stop the advances made so far; and he asked Mr. Calhoun about the property tax and how much per household that represents. Mr. Calhoun said next week he has four agenda items, one of which is property tax, and all that information will be pulled together then. 6. Council Goals—Mike Jackson,Mayor Towey The following is the result of Council discussion concerning possible goals for 2013, using 2012 goals as a basis: 1. Continue monitoring wastewater issues, including governance of wastewater facilities, and pursuit of the most efficient and economical methods to ensure the continuation of wastewater discharge licenses. Council deterniiiled to keep this goal as written. 2. Pursue the topic of Solid Waste, to include identifying the issues and obtaining alternatives of joining the consortium or handling it ourselves and the consequences of each alternative. Council determined to keep this goal as written 3. Review and evaluate development regulations and compare with surrounding cities. It was determined to omit this goal by combining it with goal#6. 4. Develop a Shoreline Master Program to appropriate regulatory protection for waters of statewide significance as required by state statute. Council determined to keep this goal as written. 5. Pursue a legislative capital budget to be identified. Some suggestions for capital projects included the restoration of the Sullivan Bridge, potential purchase of the Transfer Station, and assistance with creating Council Study Session Minutes 09-18-12 Page 9 of 10 Approved by Council: 10.09-12 the Appleway Trail Project. Spokane Valley Partners was also mentioned, and of this City's support of their past requests. Mr. Jackson said he will discuss this topic with our legislative lobbyist, and agreed with the idea of lending our support to Spokane Valley Partners. 6. Create an economic development plan, including options for a new city hall. It was suggested to combine this goal with goal#3. There was discussion of asking for a letter of support from other jurisdictions to the legislators, recognizing the need for keeping the Sullivan Bridge as a priority. Mayor Towey suggested that this Council have future discussions with other jurisdictions, of regional transportation problems, including our priority of the Sullivan Bridge. 7. Advance Agenda—Mayor Towey Discussion of ideas for future meetings included setting aside lodging tax funds for the City's use, whether as a set amount or percentage, and it was determined to set aside funds and determine the amount or percentage next week. S. Council Check-in--Mayor Towev There were no additional comments from Council. 9. City Manager Comments Mike Jackson City Manager Jackson said that Chief VanLeuven received an e-mail from the Liberty Lake Police Chief that the Liberty lake Council tonight will be considering changing the speed limit on Country Vista and Appleway, to 45 miles per hour, and that staff can work on a transition for coming into our City. Council had no objections. It was moved by Deputy Mayor.Schimmel$, seconded and unanimously agreed to adjourn. The meeting adjourned at 9:47 p.m. ATTEST: T`fl omas E. To wey, Mayor 4 Air Christine Bainbridge, ity erk Council Study Session Minutes 09-18-12 Page 10 of 10 Approved by Council: 10-09-12