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12/11/2012 21A Council General Information BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. For Meeting of: December 11, 2012 .. '. `si t . .,. .. � ; n „ir < . - 'a r ! - �re r#}Y '.!t;ea...f. ITEM TITLE: Council General Information SUBMITTED BY: CONTACT PERSON /TELEPHONE: SUMMARY EXPLANATION: 1 Weekly Issues Report 2. 11/29/12 Memo from Finance Director Epperson regarding Use of 6% Utility Tax 3. Information from Judy Boekholder regarding Northern Pacific Railway Museum 4. Gang Free Initiative Advisory Committee minutes from September 7, 2012 5. Yakima Valley Trolley information 6. 11/30/12 Letter confirming Yakima County Commissions has certified the preliminary 2013 Property Tax Levy amounts 7. Notice of Yakima Planning Commission meeting cancellation for December 8. City Meeting Schedule for week of December 10, 2012 9. Preliminary Future Activities Calendar as of December 10, 2012 10. Preliminary Council Agenda 11. 2013 Study Session Schedule 12. State Auditors Office Audit Summary for Public Development Authorities and Public Facilities Districts 13. State Auditor's Office report regarding Public Development Authorities and Public Facilities Districts 14. Newspaper /Magazine /Internet Articles: * "The 15 Best Housing Markets for the Next Five Years ?," Finance.yahoo corn, November 30, 2012 Resolution Ordinance Other (specify) Contract: Mail to: Contract Term: Amount: Expiration Date: Insurance Required? No Funding Source: Phone: APPROVED FOR SUBMITTAL: dt Ati ki t City Manager STAFF RECOMMENDATION: BOARD /COMMISSION RECOMMENDATION: ATTACHMENTS: Click to download • ❑ info packet MEMORANDUM December 6, 2012 TO: The Honorable Mayor and City Council Members FROM: Tony O'Rourke, City Manager SUBJECT: Weekly Issues Report • COUNCIL BOARDS & COMMISSIONS: Cawley, Coffey and Lover will be meeting on Monday, December 10 at 10:15 a.m. to discuss committee structure for 2013. • COUNCIL MEETING: The City Council will be meeting at the regular time (6:00 p m.) on Tuesday, December 11 There will not be an Executive Session that evening. M E M O R A N D U M DATE: November 29, 2012 TO: The Honorable Mayor and City Council FROM: Cindy Epperson, Director of Finance and Budget RE: Use of 6% utility tax At the November 20, 2012 council meeting, Councilmember Ettl asked that we provide a summary of how the additional 6% utility tax approved by Council in December, 2011 is being used. The tax was estimated to generate about $2.1 million annually, based on the rates /usage in place in the fall of 2011 applicable to 2012. Because of the timing of when the increase actually went into effect, the City is only collecting 11 months in 2012, so the collection estimate is $1 924 million. Using utility rates /usage estimates for 2013, the tax is budgeted to generate about $2.16 million. The attached spreadsheet includes Councilmember Ettl's suggested use of the tax, and how the tax is being used in 2012 and 2013. City of Yakima Use of 6% utility tax approved in December, 2011 Per Councilmember Ettl's memo Description 2012 Estimated 2013 Budgeted Cost for 12 Additonal Police officers $ 1,100,000 10/12 Due to retirements and resignations per year 3 of the 6 new positions have been filled 12 months 6 Officers/ 3 months 3 Officers $ 620,000 $ 1,100,000 One -time use of salary savings- Dispatch console 500,000 Cost to outfit and train (one time) 500,000 Uniforms 35,000 15,000 Vehicles 180,000 60,000 Equipment 225,000 30,000 Training 40,000 40,000 Recruitment Expense 20,000 Secretarial Help For Prosecutor 80,000 One full -time position and temporary support 80,000 80,000 Restore Firefighter Position 80,000 80,000 80,000 Gang Free Program Implementation 140,000 Add to $75,000 already budgeted -total $215,000 140,000 140,000 Money set aside to offset anticipated state State eliminated 1 qtr of Liquor excise tax in 2012 cuts and 3 qtrs in 2013, but Liquor profits were higher in 200,000 2012 because of the sale of liquor stores - -no 0 200,000 reduction in 2012. 2013 is estimated to be about $200,000 below 2011 actual Officers rolling off COPS Grant - -from Fund 152 304,000 Balance of available tax -- portion of negotiated YPPA settlement 111,000 Total $ 2,100,000 $ 1,920,000 $ 2,160,000 Estimate of Utility Tax ili $ 2,100,000 $ 1,924,000 $ 2,160,000 (1) estimate for 2012 budget development based on 2012 rates for a full year. 2012 estimate is 11 months, and 2013 estimate is annual estimate based on 2013 rates. Northern Pacific Railway Museum P.O. Box 889 Toppenish, WA. 98948 December 4, 2012 Results from the First 3 event days of Toy Train Christmas in 2012: A. 967 People came through the doors from Washington and 9 other states. Clients represent Washington from 35 different communities. B. 317 clients are from Yakima = 33% of the total C. 162 clients are from the Tri Cities= 17% of the total D. 55 clients are from West of the Cascades= 6% of the total E. 127 clients are from above the Gap outside of Yakima= 13% of the total F. 208 clients are from the heart of the valley= 22% of the total G. 52 Clients are from out of state =5% of the total H. Remaining 4% come from communities in Eastern Washington , .�= rr^�:;r� .r�3-.';"[ .i;.'S'' ti;�, "',.'- ..r.- �r'�'= "'�`�'_ %s. „-b.;U - ' >y; ,.. � .'.a3 - - �''.',�. ,..t,. �, -�'t ° 4=:j,• -:{'e a ' r��hd,:2. ,: t=.�iKw -.� .0i- �iU1._ `*xl'�v, X '�i' v q . 3. .$._. zy.$. ru:rt� = "iii #es:.,tih. .::. �� .,: ,.. ��dv�socy;�Gomrit�ee1111ee #in M .P.sss ' anv.smata, «as.-u�,•±i�.�s_ xr2rau,- y aJ�. t an� '��wwa , a..a.... gang Free In Thursday, September 7, 2012 Members in attendance: Kathy Coffey Dave EttI Maureen Adkison Cynthia Martinez Carol Folsom -Hill Pat Garcia Nick Marquez Jack Maris Elaine Beraza City of Yakima support staff in attendance: Terri Croft • GFI Consultant: Steve Magallan, Magallan Consultancy; Tina Wilson, Magallan Consultancy Guests attending: Emily Robbins, VISTA Ann Allen, ESD 105 Anna Marie Dufault, ESD 105 Susan Martin, ESD105 Dave Hanson, Faith and Families CSC David Rolfe, Safe Yakima Valley Dave Ettl meeting called to order. Mr. Etti welcomed the guests attending and asked for an introduction of all members in attendance. SAFE Yakima Presentation Coalition presentation presented on the Drug free Communities program, Anna Marie Dufault - spoke of a 625k- DFC- grant,- it's -a -5 years grant with the need to reapply. 2012 Awards Luncheon, this event will take place Wednesday, October 10th @12. Review and Approval of minutes: The Minutes from the June 7 meeting were reviewed. It was MOVED by Elaine Beraza and SECONDED by Adkison to accept the minutes as presented. The motion passed unanimously. Director's Report: Tabled for next meeting due to Director M.Merrymen being unable to attend the meeting. Executive committee report: City Council study session on GFI went very smoothly and was very in depth and informational. The only issued identified was the group wanted to why is it taking so long to get where we are. No one knew the scope of what time it really takes to prepare the team to move forward. Council will asked for a study session to understand the social services component. Magallan and Merryman are working on a budget impact report requested by City Manager. The report will be presented to the City Council follow up session. Development report: City of Yakima GFI will received an earmark of $10,500 and we will also receive an additional award of $16,500 from Yakima County who was awarded the Criminal Street Gangs Grant. This amount will be added to the $140,000. The Representative from PCJJ has noted that the City of Yakima GFI is being looked at as a model for the State of Washington with potential of this model being used a crossed the country. Committee Reports: Adkison advised us on the Marketing and Community Education she talks about the logos and the team has been working with Idea Marketing to put the finishing touches. Once complete the team will present the logo to council. The logo has been set as a priority to create branding. The GFI website is being hosted by town square media. Wilson announced the need to form a Symposium Committee she asked Advisory group members to please consider joining and helping develop the symposium. She encouraged them to contact her if they were interested. Planning and Development Team has reached out to Linda Kraft Y -Pal Director but unfortunately Linda has been out do to uncontrollable circumstances, upon her return a meeting will be scheduled. Magallan reports that the Implementation has been meeting regularly and has been working towards developing relationships with community partners. He also states that the RFQ for the Youth and Family Development Center has been sent out and the Due date is September 21 by 3 p.m. Magallan also states that any organization in Yakima County can apply even if they did not attend the Provider Orientation but there will be a point system that gives an advantage to those who did attend. Ettl strongly encourages the Advisory team to share with community partners to apply. This group also worked on the screening process for the RFQ process Magallan reports that the Truancy work group has been meeting regularly for the last three months. The group has been working on a program that takes advantage of all truancy related resources that are available in the City of Yakima. - Ettl and Magallan talked about the Provider Orientation and that there were over 40 providers in attended with lots of local media coverage. This event was held in the Yakima Convention Center South Ballroom from 10:00 a.m. — 12:00 p.m. The agenda covered an Overview of City of Yakima Gang Free Initiative, City of Yakima GFI Community Action Plan, Request for Qualifications and hosted a questions and answer period. 150 invitations were sent out. Technical assistants will be given by Magallan Consultancy, LLC to those who are applying to the RFQ. New Business. Magallan talks about development of a Performance and Outcome Measures Workgroup. These individuals volunteered to be part of the performance and outcome measures workgroup. Nick Marquez, Carole Folsom -Hill, Maureen Adkison, Robyn Berndt, Susan Martin and Possibly Jack Maris -he has access to the Comprehensive gang censes Date for next meeting: The next meeting for the Advisory Committee will be December 6th, 2012 at 4:00 p.m. at Central Washington Comprehensive Mental Health. Approved by: Date. YAKIMA VALLEY TROLLEYS P. O. Box 796 Yakima, WA 98901 WRITTEN ACCOUNT OF YOUTH WORK PROJECT FOR YAKIMA VALLEY TROLLEYS On Monday, November 5, 2012, a group of volunteer youth descended upon Yakima to perform community service. These were youth who had experienced challenges in life, and were being mentored by a state - funded organization titled "2012 Prevention Summit ". The purpose was to expose the youth drawn from all over Washington state to various non - profit organizations like the historic Yakima Valley Trolleys & Museum (YVT), or the Yakima Police Youth League, to give community service to these and other local non - profits, and hopefully go back to their communities and duplicate service project efforts. There were two groups scheduled for YVT - - -one in the morning and one in the afternoon. There were approximately 50 youth and adult leaders in each group. They were bused from the Yakima Convention Center arriving at our location by Davis High School around 9 am. The project was to clean out the trolley tracks on Sixth Ave. from Pine St. heading north towards Yakima Ave. They were issued picks, shovels, iron bars to do this manual labor work in clearing out the dirt and debris that had accumulate in the wheel flange area of the tracks below street level. Once the debris was loosened, others swept it up with brooms and left it for the City Public Works Dept. street sweepers, who came the next day and picked up the dirt, etc. Each group worked about two hours, with the morning group getting a chance to tour the museum facility and see the trolley barn and rolling stock of the YVT. A total of four blocks of Sixth Avenue was cleaned that day, reaching Yakima Ave. The City of Yakima, which owns the trolley system, provided much help through its Public Works Dept. and Parks and Recreation Dept. The loan of tools, street cones and the street sweeper to the efforts were crucial in making the project successful. Volunteer YVT members directed the work on behalf of the trolley system's goal to restore the Sixth Ave. trolley line to eventually operate to Selah by June, 2013. That is a significant date, as it marks the 100 anniversary of the commencement of the trolley line running from Yakima into the City of Selah. Operations on the line ceased in 2005 due to the theft of massive amounts of overhead trolley wire by thieves in the Selah gap area north and south of the Naches River. The restoration of the missing wire and replacement of missing support arms, along with some wooden poles, will take much effort as well as the necessary funds to complete this restoration. The cleaning of the rail flanges for over four miles is another necessary step in the preparation for trolley operations to Selah. This cleaning of four blocks of the track flanges by the Prevention Summit Youth was a nice start for the restoration efforts, and the Yakima Valley Trolleys was fortunate to be a recipient of the volunteer group's efforts as described above. Submitted by Larry Fournier and Ed Neel on behalf of the Yakima Valley Trolleys Association, a non- profit organization that operates and maintains the historic trolley system in Yakima, WA. ti BOARD OF YAKIMA COUNTY COMMISSIONERS * District One * District Two * District Three Michael D. Leita Kevin J. Bouchey Rand Elliott November 30, 2012 Sonya Claar Tee City of Yakima 129 North Second Street Yakima, WA 98901 The Board of Yakima County Commissioners has certified the preliminary 2013 Property Tax Levy amounts. The information taken from your resolution/ordinance and which was certified for City of Yakima is as follows. Levy Amount $ 17,125,211 Amount Changed $457,888 Percent Changed 0.01% Excess Levy Amount 293,000 The final 2013 Property Tax Levy certification will be on the Commissioner's December 18, 2012 agenda. Please review these amounts and let me know, on or before. December 14, 2012, if any changes need to be made. Thank you for your cooperation Am ,r% Forrest A. Smith Assistant Budget Director Yakima County Commissioners 128 North Second Street • Yakima, Washington 98901 • 509 -574 -1500 • FAX: 509 - 574 -1501 =:: ;, ; ,, COMMUNITY DEVELOPMENT DEPARTMENT , r„ . gas �:" Planning Division ; 4 ar )Si j 129 North 2 Street, 2" t Floor Yakima, Washington 98901 ":1 / (509) 575 -6183 • Fax (709) 575 -6105 . • a'' www.bnildingyakima.com < wtirw.jakimawra.gov /.services /planning CITY OF YAKIMA PLANNING COMMISSION Notice of Cancellation The regular meetings of the Yakima Planning Commission scheduled for December 2012 have been cancelled. The next meeting is scheduled for Wednesday January 9, 2013 beginning at 3:30 p.m. in the City Hall Council Chambers. An agenda will be distributed prior to that meeting. CITY MEETING SCHEDULE For December 10, 2012 — December 17, 2012 Please note: Meetings are subject to change Monday, December 10 8:30 a.m. Pension Board Meetings — HR Conference Room 10:00 a.m. City Council Media Briefing — Council Chambers Tuesday, December 11 10:00 a.m. County Commissioners Meeting — Council Chambers 6:00 p.m. City Council Meeting — Council Chambers Wednesday, December 12 9:30 a.m. Yakima River Basin Water Integrated Plan — Arboretum 11:00 a.m. Boundary Review Board — Council Chambers 2:00 p.m. TRANS- Action Committee Meeting — WSDOT 5:30 p.m. Parks & Recreation Commission — Council Chambers Thursday, December 13 9:00 a.m. Hearing Examiner — Council Chambers 1:00 p.m. Harman Center Board Meeting — Harman Center 1.30 p.m. Yakima Regional Clean Air Meeting — Council Chambers 5:30 p.m. YCDA Board Meeting — New Vision Offices Monday, December 17 1:30 p.m. Yakima Valley Conference of Governments Meeting — YVCOG Office Office Of Mayor /City Council Preliminary Future Activities Calendar Please Note: Meetings are subject to change Meetin((''� Organization.,: ; ,, >: Meeting-Pbrpose' ?'Participants..:. Meeting: Location ' `.1' ^ ' ,' ` �.. ii „Date/Tirpe .. v;, '" ".� .............. , ., .te >, ... «,,,.:w......... -., ��..,. ,. .. ,.,..,.... ....,.. �., ..,..�.. ..., rr ..- .,u4,.. .. .F ,, - ... -,, .. .,, ..,, .. :.... .., k.,s ... w Mon. Dec. 10 8 a m. Pension Board Meetings Board Meeting Coffey HR Conference Room 1000 a m City Council Media Briefing Scheduled Meeting Coffey Council Chambers Tue. Dec. 11 ... ..�. ��_,•� ��u.....,� . m,,.,M. � , �..,..�.� - �...�u wA i.� .. ��u., .w Y , , t, 12:00 p m. Miscellaneous Issues Scheduled Meeting Cawley, Adkison TBD 6 00.• m Cit Council meetin• Scheduled Meetin• Council Council Chambers Wed. Dec. 12 9.30 a.m. Yakima River Basin Water Scheduled Meeting Lover Arboretum Integrated Plan 2.00 p.m. TRANS - Action Committee Scheduled Meeting Ettl WSDOT Conference Room Meeting 5 30 p.m Parks & Recreation Scheduled Meeting Adkison Council Chambers Commission Thur. Dec. 13 1.00 p.m. Harman Center Board Board Meeting Adkison Harman Center Meeting 1 30 p.m Yakima Regional Clean Air Scheduled Meeting Lover Council Chambers Meeting 5 30 • m YCDA Board Meetin• Board Meetin• Adkison New Vision Office Mon. Dec. 17 .,.. �r...�.._ ,.,. ....a.. 1.30 p m YVCOG Executive Scheduled Meeting Ensey YVCOG Office Committee Meeting Tue. Dec. 18 12 00 • m Miscellaneous Issues Scheduled Meetin• Cawle , Adkison TBD Wed. Dec. 19 12 00 p m. PAL Board Meeting Board Meeting Coffey PAL Center 3 30 • m Arts Commission Scheduled Meetin• Adkison CED Conference Room Mon. Dec. 24 .,.,.._,. • ..,..a�,n,.. ..�,..,..., ._ 12 00 • m. Greenway Board Meetin• Board Meetin• Ettl Greenway Visitors Center Tue. Dec. 25 CITY OFFICES CLOSED Wed. Dec. 26 5 30 p.m. Historic Preservation Scheduled Meeting Bristol Council Chambers Commission Tue. Jan. 1 CITY OFFICES CLOSED Fri. Jan. 4 8:00 a.m. Sister Cit Meetin• Scheduled Meetin• Adkison CED Conference Room PRELIMINARY FUTURE COUNCIL AGENDA December 18 NO SCHEDULED BUSINESS MEETING — info packet on 12/13 December 25 NO SCHEDULED BUSINESS MEETING — info packet on 12/20 January 8, 2013 (T) 5:00 p.m. Executive Session — Council Chambers 6:00 p m. Business Meeting — Council Chambers • Review Council Boards /Commissions • Business Plan • Fire Code Inspector Services RFP Award • Resolution Authorizing a interlocal agreement with the City of Union Gap for Jail Services • Resolution Authorizing the City Manager to Execute a Personal Services Contract with ALM Quartermasters for Quartermaster Services for the Yakima Police Department 12/6/2012 351 PM 2013 STUDY SESSION SCHEDULE Council Chambers 10:00 a m. 2/26 Regional Fire Authority TBD North 1 Street and signage issues 12/6/2012 352 PM STATE AUDITOR'S OFFICE II I - ._.40‘ ...-. -re AUDIT SUMMARY Audit Summary for Public Development Authorities and Public Facilities Districts November 21, 2012 -f _ = S j F ■ . Ofilk"';31;81115"*-."'.......:41180111.1.11 , 40111:4a.- ' 'Pt i . ,:. • a 11,. 4 11 , . a 'i• AM .„,,,,... r Esti . • . . . , si., i k IWO I - - t' 4 :* . 4 - .. A I A.. 4 4r _ . _ . is .9 "' s WASHINGTON � r a :� 4 . , - , - = B RIAN S0NNTAG Report No. 1008676 � �'" t STATE AUDITOR „. f,, 1W Table of Contents Audit Summary - Public Development Authorities and Public Facilities Districts 3 Appendix A: Suggested Law Changes 9 Appendix B: Summary of findings issued by the State Auditor's Office, 2009 to present 10 Appendix C: State of Washington Public Development Authorities 12 Appendix D: State of Washington Public Facilities Districts 15 Appendix E: November 2011 Review of Public Facilities District Bonds 18 State Auditor's Office Contacts 23 2 Audit Summary - Public Development Authorities and Public Facilities Districts Why are we issuing this report? As local governments receiving public dollars, public development authorities (PDAs) and public facilities districts (PFDs) are subject to audit. During the course of these audits, we have determined many PDAs and PFDs do an effective job of carrying out their roles and of serving the public. Thirty -nine PDAs and 25 PFDs operate in the state. They provide facilities and services including convention centers, sports and event centers, museums, housing and economic development. The law allows both entity types to combine public money and private donations to complete projects and maintain operations. Our audits of these entities also have found common themes among the audit issues we have noted. This report examines: • Inadequate Monitoring. Our audits have found entities that create PDAs/ PFDs often do not monitor their operations. • Inadequate Governance. PDA /PFD governing boards often are not effectively involved in monitoring activities of the Districts. • Declining or distressed financial condition. • Non - compliance with laws and regulations. What are PDAs and PFDs? Public Development Authorities are created by cities, towns or counties to carry out a specific function. For example, PDAs may manage the development and operation of a single project, such as a convention center or a housing project. The charter establishing a PDA may include a sunset provision that dissolves it when the project is completed. Public Facilities Districts are also created by cities, towns or counties in order to acquire, create or operate certain public facilities such as convention centers; museums; and sports, recreation and entertainment facilities. The Washington state Legislature authorized the creation of PDAs in the 1970s and PFDs in the late 1980s. The laws regarding them are listed below: • PDAs: RCW 35.21 • PFDs: (City- and town - created) RCW 35.57 (County- created) RCW 36.100 In response to a PFD bond default, the Legislature in 2012 revised the law regarding PFDs. It now requires the state Department of Commerce, through the Municipal Research and Services Center, to conduct an independent financial feasibility review prior to formation of a PFD, issuance of indebtedness by a PFD and /or the Tong -term lease, purchase or development of a facility. It had previously revised the law in 2009 to require PFDs to identify, in their annual budgets, proposed expenditures for promotional activities and to adopt rules governing promotional hosting. State laws say PDAs are subject to the general laws regulating local government, including bid laws; open public meetings and records; the municipal code of ethics; annual financial reporting requirements; and audits. 3 • State Auditor's Office • Public Development Authorities and Public Facilities Districts • The map below shows the number of PDAs by county. State of Washington Public Development Authorities Whatcom San luau 0 Skagit Okanogan Ferry Pend 0 O Oreille no Stevens Island r Clallam 0 ` a Snohomish 1 Chelan Jefferson Douglas y'F Lincoln Kitsa King Spokane Mao _! T� e © p Grays Harbor ( RI © Kittitas Pierce 0 Grant Adams Whitman Thurston 0 0 0 Pacific Lewis 0 0 Franklin Garfiel• Yakima olumhia A Cowlitz Benton Walla Walla Asotm Wahkiakum Skamania i Clark Klickitat 0 See Appendix C for details about PDAs in the state. In 2010, the total combined revenues for all PDAs were $108,282,248 and combined expenses were $104,619,288. The chart at right shows the source of revenues by percentages. Note that miscellaneous revenues for PDAs can include interest and PDA Revenues for 2010 other earnings, rent, leases and concessions, contributions and donations from private Proprietary/ sources. Trust gains (losses) & other income Financial information on specific PDAs may (expenses) be found in the State Auditor's Office Local '.6 9% Government Financial Reporting System Other database at htt // ortal.sao.wa. ov /LGCS/ Miscellaneous financing p' p 9 revenues sources Reports /Default.aspx. 53% _ _ 3% Taxes 13% Intergovernmental revenues 16% Charges for goods and services 6% 4 • State Auditor's Office • Public Development Authorities and Public Facilities Districts • Public facilities districts may construct and operate only public facilities specifically authorized in state law. • PFDs generally are allowed to collect non -voted sales tax to use for qualifying regional centers. These tax revenues are public funds and their use is restricted to the project. • City and town - created PFDs may develop and operate convention; conference and special events centers, including related parking, which serve a regional population. • County PFDs have slightly broader powers. They can develop and operate sports, entertainment and convention facilities in addition to regional centers as defined above, together with parking facilities. In November 2011 we reviewed the ways PFDs are funded by bonds and who is ultimately responsible to pay these bonds. We found these bonds and the underlying obligation take many forms. See Appendix E. The map below shows the number of PFDs by county. State of Washington Public Facilities Districts Whatcom San Juan\ 0 Skagit Okanogan Ferry Stevens Pend O Oreille Island Snohomish a Chelan Jefferson l Douglas I , Lincoln • t{itsa• King Spokane Mason f O 4 Grays Harbor -- O i' Kittitas Thurston Pierce Grant Adams Whitman 0 0 Pac]f C Lewis 0 Franklin Garfiel • Yakima Columbia Cowlitz On Walla Walla Asotin Wahkiakum O Skamania , Clark Klickitat O See Appendix D for details about PFDs in the state. 5 • State Auditor's Office • Public Development Authorities and Public Facilities Districts • In 2010, PFDs had total combined revenues of $277,765,428 and combined expenses of PFD Revenues for 2010 $96,798,391. The difference between the revenues and expenditures for these PFDs is held in cash and investments. The chart at right shows the categories of revenues. Note that proprietary /trust gains (losses) and other , Other income (expenses) revenues could include financing sources income (losses) from joint ventures; capital 8% contributions from private sources; and local, state and federal grant revenues. Proprietai y/ Trust gains (losses) Taxes Financial information on specific PFDs may be & other income 12% (expenses) Inter - found through the State Auditor's Office Local 64% governmental Government Financial Reporting System at revenues http: / /portal.sao.wa.gov /LGC5 /Reports/ 2% Default.aspx Charges for goods Miscellanea and services What we have learned during our re s% e 6% audits Many PDAs and PFDs do an effective job of carrying out their roles and serving the public. When we have concerns about their operations, they fall into four general categories. 1. The entities that create them often do not monitor PDA /PFD operations. Cities, towns and counties create these entities by a vote of their councils or commissions. Our audits have noted that while some creating entities take an active role in monitoring the activities of the PDAs and PFDs, many do not, often placing public resources at risk. Examples of effective monitoring are found at the Cities of Everett, Bellingham and Seattle. Their staff members are engaged in PDA /PFD operations and regularly attend meetings with auditors. When a creating entity is closely monitoring a PDA or PFD, it can assist these entities in mitigating problems when they are small, instead of having to intervene when problems become more serious. State law (RCW 35.21.745) is very clear that any city, town or county must control and oversee operations and funds, ensure any deficiencies are corrected, and ensure the PDA is accomplishing its stated purpose. State law for PFDs does not contain similar wording. 6 • State Auditor's Office • Public Development Authorities and Public Facilities Districts • 2. PDA /PFD governing boards often are not effectively involved in monitoring. The creating entities appoint governing boards for PDAs and PFDs. Appointees may have business experience relevant to their role on the board, but may not always have adequate knowledge of state laws and regulations for the entity. While many appointed board members are dedicated to these jobs, it is not clear what, if any, guidance they receive on PDA /PFD operations. If a board member does not understand the applicable laws and regulations, it is difficult to monitor compliance. Active involvement is particularly important in entities for which the board has completely contracted out service delivery and does not have employees monitoring activities. For example, the Edmonds Public Facilities District Board relied on a non -profit organization to handle fundraising and to develop arts programming, marketing and promotions for the PFD. The Board allowed all receipts from operations to be deposited in the non - profit's private bank account. The Board was unaware that the funds were co- mingled. The Board could not be sure it received all the revenues from the use of the facility and had no way to ensure public funds were used appropriately since private and public funds were not held separately. 3. Declining or distressed financial condition. Cities, towns and counties need to consider in advance what steps they would take if a PDA or PFD they created falls into financial decline. Creating entities also need to ensure they have an effective way to monitor the financial stability of entities they create. Recently, we completed a statewide analysis of local governments with declining financial conditions. Of those entities, seven out of the state's 64 PDAs and PFDs were on the list as having reportable financial condition concerns. 4. Non - compliance with laws and regulations Often PDAs and PFDs operate and compete as if they are a private business. They are not. Many of the same laws that apply to the entities that create them apply to the PDAs and PFDs. Understanding this, and guidance and monitoring by the entities that create them, would increase the likelihood that PDAs and PFDs follow laws and regulations and safeguard public funds. Audit findings issued since 2009 for related PDAs and PFDs are summarized in Appendix B. 7 • State Auditor's Office • Public Development Authorities and Public Facilities Districts • Recommendations to entities that have created PDAs and PFDs • Ensure PDA and PFD appointed officials receive training and guidance on what city, town or county laws are applicable. The Municipal Research and Services Center website has information specific to newly elected officials that may be useful. The links are: For City and town - created PDAs and PFDs http://www.mrsc.org/subjects/governance/newcitymaspx For County- created PDAs and PFDs http://www.mrsc.org/subjects/governarice/newcountyo.aspx • Ensure board members take an active role in monitoring PDA and PFD operations. • Have elected officials and /or staff from the creating entity attend audit exit and entrance conferences. Our Office will be asking these individuals to attend these meetings so they will be aware of any audit issues we identify. • Monitor the financial health of the PDAs and PFDs. Such monitoring should examine whether the creating entity has the debt capacity to handle any PDA or PFD financial difficulty and determine if /when financial support is needed. • Inform the State Auditor's Office when a new entity is created. Recommendation to the Legislature State law (RCW 35.21.745) requires any city, town or county which creates a PDA to control and oversee operations and funds, ensure any deficiencies are corrected, and ensure it is accomplishing its stated purpose. State law for PFDs does not contain similar wording. In addition, the law does not require PDAs or PFDs to periodically report to the creating entities. Consider changes to state law to require creating entities to: • Monitor the PFDs they have created. • Establish an annual reporting requirement for PDAs and PFDs to summarize operations for the creating entities. • Notify the State Auditor's Office when PDAs and PFDs are created. See Appendix A for suggested law changes. 8 Appendix A: Suggested Law Changes Proposed Public Development Authority law changes: Amend RCW 35.21 to accomplish the following: a. Notification of the State Auditor's Office by the lead city or town when it creates a PDA. b. Requiring an annual summary to the creating entity or entities of operations that discusses, at a minimum, the PDAs financial condition, accomplishments and challenges. Proposed Public Facilities District law changes: Amend 35.57 to accomplish the following: a. Notification of the State Auditor's Office by the lead city or town when it creates a PFD. b. Requiring an annual summary to the creating entity or entities of operations that discusses, at a minimum, the PFDs financial condition, accomplishments and challenges. c. Make clear general local government laws apply to PFDs. Amend 36.100 to accomplish the following: a. Notification of the State Auditor's Office by the lead city or town when it creates a PFD. b. Requiring an annual summary to the creating entity or entities of operations that discusses, at a minimum, the PFDs financial condition, accomplishments and challenges c. Make clear general local government laws apply to PFDs. 9 Appendix B: Summary of findings issued by the State Auditor's Office, 2009 to present The following is a summary of PDA and PFD findings issued by the State Auditor's Office from 2009 to present. Declining financial position • Greater Wenatchee Regional Events Center PFD (2010 and 2011). The District has insufficient revenues to pay for current operations and debt obligations. http: / /www.sao.wa.gov /findings /1004560.pdf, http: / /www.sao.wa.gov /findings /1006263.pdf • Edmonds PFD (2010 and 2011). The District's financial position continues to place it at risk of not meeting its financial obligations and it has not identified new revenue streams, or reduced expenses enough to compensate for declining sales tax revenues dedicated to cover its annual debt obligations. The District continues to be dependent on financial assistance from the City of Edmonds to cover its financial obligations. http: / /www.sao.wa.gov /findings /1004403.pdf, http: / /www.sao.wa.gov /findings /1008553.pdf • Grays Harbor Historical Seaport Authority (PDA) (2010). The Authority had insufficient funds to cover operating expenses. http://www.sao.wa.gov/findings/1004995.pdf • The Capitol Hill Housing Improvement Program (PDA) (2009). The Program's financial condition continues to decline, which means the program could be at risk of not covering its operating expenses and not meeting its debt service obligations. http://www.sao.wa.gov/findings/1002859.pdf Lack of effective oversight • Seattle Indian Services Commission (PDA) (2011). The Commission Board did not provide adequate oversight of Commission activities, resulting in questionable expenditures of $73, 943. It did not monitor revenue and expenditures or receive financial statements from its staff. The Commission's financial health is getting better due to the decrease in staff and expenditures from the District. http://www.sao.wa.gov/findings/1006665.pdf • Edmonds PFD (2011). The District Board was not aware that that District management and staff comingled District funds with private funds of a non -profit that was running the facility. The District was unable to determine the amount of public money involved. This could result in a lending or gifting of public funds. http://www.sao.wa.gov/findings/1006956.odf • Seattle Chinatown International District Preservation and Development Authority (PDA) (2009). The Board was not aware that Authority management paid two employees more in salary than was authorized. Staff accrued leave in excess of the maximum amount allowed by policy. The authority's award of additional leave was a gifting of public funds, as well as violation of its own policy. http://www.sao.wa.gov/findings/1002720.pdf Non- compliance with state laws and regulations • Greater Wenatchee Regional Events Center PFD (2009). The District did not have sufficient internal controls over payments to ensure they were allowable and supported, resulting in questionable expenditures of $135,848. htto://www.sao.wa.gov/finclings/1002329.pdf 10 • Appendix B • Summary of Findings • • Edmonds Public Facility District (2009). The District had inadequate controls over cash - receipting and an accounting software system that could not handle the complexity of the District's transactions. htto://www.sao.wa.gov/findings/1002416.pdf • Seattle Chinatown International District Preservation and Development Authority (PDA) (2012). The Authority exceeded its statutory authority by entering into an unallowable interest rate swap. http://www.sao.wa.govifindings/1007270.pdf • Everett Public Facility District (2009). The District placed public funds at risk by putting its money in a depository not approved by the Public Deposit Protection Commission as required by state law. http://www.sao.wa.govifindinus/1004158.pdf • Kennewick Public Development District (PDA) (2009). The District is placing public funds at risk by putting its money in a depository not approved by the Public Deposit Protection Commission as required by state law. http: J/ www. sao.wa.gov!findings /1004921.pdf • Seattle Indian Services Commission (PDA) (2009). The Commission did not comply with prevailing wage laws for paying maintenance workers. http://www.sao.wa.gov/findings/1001649.pdf • Historic Seattle Preservation and Development Authority (PDA) (2011). The Authority waived the competitive bid process when it declared an emergency on a public works project to get a project done faster. The declaration did not comply with state bid law. http: l / www .sao.wa.gov /findings /1005250.pdf • Republic Public Development Authority (2010). The Authority did not consistently document compliance with laws relating to the Board's open public meetings. http://www.sao.wa.gov/findings/1004411.pdf 11 Appendix C: State of Washington Public Development Authorities PDA name Purpose Creating entity Bellevue Convention This PDA operates Maydenbauer Center in Bellevue, Washington. City of Bellevue Center Authority The 54,000 square foot Meydenbauer Center opened in 1993 to help grow and sustain Bellevue's economic vitality. Bellingham Public The PDA's mission is to develop and promote the use of City City of Bellingham Development Authority owned property for the financial, social and environmental well being of the community; cleaning up vacant sites; and developing underused city lots. Burke - Gilman Place Public The Burke Gilman Place PDA manages the former Coast Guard City of Seattle Development Authority property in northeast Seattle, near Children's Hospital. At present, facilities include Ronald McDonald House (two facilities), Provail (formerly United Cerebral Palsy) housing, Burke - Gilman apart- ments (subsidized and market -rate housing), The Children's Center (a child care center), and housing under the auspices of the Capitol Hill Housing Improvement Program. The PDA has also taken an ac- tive role in monitoring developments in Burke Gilman Park. Capitol Hill Housing Capitol Hill Housing provides affordable housing and leads com- City of Seattle Improvement Program munity development efforts- helping families, immigrants and the recently homeless. Based in Capitol Hill, this PDA has properties in nine Seattle neighborhoods. Cultural Development This PDA was organized as a quasi- autonomous public develop- King County Authority of King County ment authority governed by a 15- member citizen board for mak- ing grants and operating programs related to arts funding, public art, and heritage programs. Downtown Redevelop- This PDA advises the City of Vancouver on the implementation of City of Vancouver ment Authority the Esther Short Sub area and Redevelopment Plan using policies developed by City Council, Planning Commission, Project Review committee and citizen advisory groups. East Lewis County Public This PDA promotes small business and light industrial develop- Lewis County Development Authority ment in the eastern part of Lewis county. Ellensburg Business This PDA provides economic development services for the City of City of Ellensburg Development Authority Ellensburg and manages the Incubator and Airport Buildings. Foss Waterway The Tacoma City Council formed the seven - member Foss Water- City of Tacoma Development Authority way Development Authority Board in 1996 to oversee property development and marketing of the publicly -owned Foss Waterway property. They are creating a mixed -use waterfront community adjacent to downtown Tacoma. Garfield Public This PDA promotes residential and commercial development in the Town of Garfield and Development Authority Town of Garfield. Whitman County Grays Harbor Historical This PDA's mission is to provide educational, vocational, recreation- City of Aberdeen Seaport Authority al and ambassadorial activities and experiences that promote and preserve the maritime history of Grays Harbor, the Pacific North- west, and our nation while serving the needs of the community. Grays Harbor Public This Authority was organized to facilitate the redevelopment of the Grays Harbor County, Development Authority Satsop site. Grays Harbor PUD and Port of Grays Harbor Hamilton Public This Authority assists in moving Town facilities and infrastructure Skagit County Development Authority and residences out of the floodway both from within Town limits and in unincorporated Skagit County. 12 • Appendix C • State of Washington Public Development Authorities • PDA name Purpose Creating entity Harrington Public This PDA promotes economic development and creates City of Harrington Development Authority infrastructure and opportunities for economic diversification. It is renovating the Harrington Opera House and working on downtown revitalization. Historic Seattle Historic Seattle believes that buildings provide an essential link City of Seattle Preservation and to the past. Founded in 1974, Historic Seattle is the only nonprofit Development Authority membership organization dedicated to preserving Seattle and King County's architectural legacy. Its mission is to educate, advocate and preserve. Museum Development The Seattle Art Museum (SAM) provides a welcoming place for City of Seattle Authority of Seattle people to connect with art and to consider its relationship to their lives. SAM is one museum in three locations: SAM Downtown, Seattle Asian Art Museum at Volunteer Park, and the Olympic Sculpture Park on the downtown waterfront. SAM collects, preserves and exhibits objects from across time and across cultures, exploring the dynamic connections between past and present. North Beach Public The purpose of this PDA was to acquire two private water Pacific County Development Authority companies in the north beach area. The PDA acquired the companies and began water operations during 2006. The authority transferred the ownership to the North Beach Water District as of January 1, 2009. Northwest Lincoln County This PDA was formed in a cooperative effort by the communities Towns of Almira, Wilbur Regional Public of Almira, Wilbur and Creston. This is the first regional PDA. They and Creston Development Authority worked to create a 5,000 sf facility that they leased to Columbia Bioenergy - a biodiesel refinery west of Creston. Odessa Public This PDA created the Odessa Industrial Park. They have partnered Town of Odessa Development Authority with Inland Empire Oilseed and turned an empty flat house into a biodiesel facility. Pacific Hospital The mission of the Pacific Hospital Preservation & Development City of Seattle Preservation and Authority is to champion effective health care for the vulnerable Development Authority and disadvantaged in their community. Pierce County Community The Pierce County Community Development Corporation Pierce County Development Corporation was established to manage housing repairs and business loan programs that assist low- income residents of Pierce County. Pike Place Market This PDA is a not - for - profit, public corporation which manages City of Seattle Preservation and the properties in the nine -acre Market Historic District. The Development Authority PDA rehabilitates and protects the Market's buildings; increases opportunities for farm and food retailing in the Market; incubates and supports small and marginal businesses; and provides services for low- income people. Port Angeles Harborworks This PDA was established to clean up and redevelop the Rayonier Port Angeles, Port of Port Development Authority Mill property, and to participate in assessment of hazardous waste Angeles and potential remediation measures in Port Angeles Harbor. Reardan Area Public This PDA incubates small businesses and manages the Audubon Lincoln County Development Authority Lakes Wildlife Viewing Area and the Railroad Museum. Redmond Public The PDA operates as an industrial development corporation. It City of Redmond Corporation was formed to facilitate the issuance of non - recourse tax exempt revenue bonds, the proceeds of which are used by private parties to create industrial facilities. Republic Public This PDA leases space in the Torboy Industrial Park to assist in City of Republic Development Authority economic development in the area around the City of Republic. 13 • Appendix C • State of Washington Public Development Authorities • PDA name Purpose Creating entity Ritzville Public The Ritzville Public Development Authority has been established City of Ritzville Development Authority to actively pursue all opportunities that have the potential to further economic prosperity and community well -being for the citizens of the City of Ritzville. Seattle Chinatown This PDA has been established to promote and develop the Seattle City of Seattle International District Chinatown International District. Preservation and Development Authority Seattle Indian Services The commission was formed in 1972 to obtain a Seattle Model City of Seattle Commission City Program grant of $600,000 to purchase a building for use as a center for Indian service organizations. Skagit County Emergency This PDA provides county -wide emergency medical services to Skagit County Medical Services Skagit County. Commission South Correctional Entity This PDA was formed by the city of Renton to finance a portion of City of Renton Facility Public Develop- the costs of acquiring, constructing, improving and equipping the ment Authority South Correctional Entity, a multi - jurisdictional misdemeanor jail located in Des Moines, WA. Spokane Parking Public This PDA manages and regulates public parking facilities in the City City of Spokane and Development Authority of Spokane. Spokane County Sprague Public This PDA plans to develop donated acreage at the 1 -90 City of Sprague Development Authority interchange. Tacoma Community This PDA administers loans to a variety of clients: low- income City of Tacoma Redevelopment Authority families who need help in buying or repairing their homes; owners who provide multi - family housing to low- income families; businesses which create jobs or rehabilitate older, blighted buildings; and non -profit organizations that provide services to the community. Twisp Public Development This PDA develops Town Center Properties in Twisp. The goal is to Okanogan County Authority promote economic vitality in the Methow Valley, by transforming the former U.S. Forest Service complex in Twisp into a vibrant center for art, agriculture, innovative technology and education. Uniontown Community The purpose of this PDA is to promote the economic improvement Uniontown Development Association of Uniontown. The Association has two development projects: the restoration of the Jacobs Building for reuse as a craftsman bakery and cafe and the renovation and redevelopment of the Dahmen Dairy Barn for use as an artisan center, event facility and an area to display the agricultural history of the area. Vancouver City Center This PDA has been established to facilitate the redevelopment of City of Vancouver Redevelopment Authority property within the Vancouver City Center Vision plan. Washington State Public This PDA has been established to acquire, construct, own and State of Washington and Stadium Authority operate a stadium, exhibition center and parking garage. The King County Authority contracts with the Seattle Seahawks National Football League team affiliate, First and Goal, Inc., who operates the Century Link stadium, exhibition center and parking garage. Washtucna Public This PDA has been established to promote economic prosperity in Town of Washtucna and Development Authority the Town of Washtucna in Adams County. Adams County 14 Appendix D: State of Washington Public Facilities Districts PFD name Purpose Creating entity Bellingham - Whatcom The District was created to increase economic growth in Belling- City of Bellingham and Public Facilities District ham and to lay the foundation for a public private investment Whatcom County in the Community. The PFD owns the Mt. Baker Theatre and the Whatcom Museum's Light Catcher Building. Benton County Public Benton County Public Facilities District was formed to support the Benton County Facilities District projects of other public facility districts (PFDs) in Benton County. The District has inter -local agreements with the Kennewick and Richland PFDs. It collects the state sales tax for the unincorporated areas of the county. Capital Area Regional The Capital Area Regional Public Facilities District is a special tax- Thurston County and Public Facilities District ing district created by an inter -local agreement between Thurston Cities of Olympia, Lacey County and the cities of Olympia, Lacey and Tumwater for the pur- and Tumwater pose of financing two regional event centers, the Lacey Regional Athletic Complex and the Olympia Hands On Children's Museum. City of Kent Special Events The District is established for the sole purpose of pursuing the de- City of Kent Center Public Facilities sign, construction, and /or financing of a regional center comprised District of a Special Events Center, known as the Showare Center, home of a public purpose arena and the Thunderbirds. Clark County Public The District was formed for the purpose of developing two Clark County Facilities District regional centers in Clark County. These two centers are the Van- couver Convention Center and the Exhibition Hall at the Clark County Fairgrounds. These projects are expected to boost tourism and economic development within the county. The District has no employees but uses Clark County employees and the county's systems for centralized processing of receipts and disbursements. Cowlitz County Public The District was formed to create a convention and community Cowlitz County Facilities District center. Edmonds Public Facilities The District was created to finance, design, construct, operate and City of Edmonds and District maintain a public facility. A 501(c)3 nonprofit corporation was Snohomish County created called Edmonds Center for the Arts to help raise funds from private sources to support the construction and operation of the new center. The Edmonds Center for the Arts Board also assists with the development of arts programming, marketing and promotion of the center and its presentations and fundraising to support annual operations. Everett Public Facilities The District oversees operations at the Everett Events Center. A City of Everett and District third -party management company, responsible to the Board of Snohomish County Directors through a contract, manages District operations. The District has no employees. Grays Harbor Public The District was formed to acquire, construct and maintain the Grays Harbor and the City Facilities District Ocean Shores Convention Center. of Ocean Shores Greater Tacoma Regional The District's main purpose is to levy and collect sales and use tax Cities of Tacoma, Fife, Public Facilities District and transfer the money to the city of Tacoma Convention Center Lakewood and University capital improvement fund. Place 15 • Appendix D • State of Washington Public Facilities Districts • PFD name Purpose Creating entity Greater Wenatchee The District was formed for the purpose of building, developing Chelan and Douglas Regional Events Center and operating a regional center in the city of Wenatchee called Counties, the Cities Public Facilities District the Town Toyota Center. of Wenatchee, East Wenatchee, Chelan, Cashmere, Entitat, Rock Island and the Town of Waterville. Kennewick Public Facilities The District was created in December 2000 to acquire, build, own City of Kennewick District and operate a regional convention center. The center has been built and now operates under the name of Three Rivers Convention Center. This convention center also includes the Toyota Center and Toyota Arena. Kitsap Public Facilities The Kitsap County Public Facilities District was created in June Kitsap County District 2000 to build, improve and operate sports, recreation, entertainment and conference facilities. Lewis County Public Facili- The District was formed to acquire, construct and maintain a public Lewis County ties District facility to hold community events. This PFD created the Lewis County Event Center and Sports Complex in partnership with the City of Centralia and Centralia School District. Lynnwood Public Facilities The Lynnwood Public Facilities District was created to establish, City of Lynnwood and District finance, design, construct, operate and maintain the Lynnwood Snohomish County Convention Center. The Convention Center opened in the spring of 2005 and is used for local, regional and state meetings and events. Pasco Public Facilities The District was created to participate in acquisition, construction, City of Pasco District operation and /or financing of a regional center in the Tri- Cities area. Richland Public Facilities The District operates the Hanford Reach National City of Richland District Interpretative Monument Heritage and Visitor Center (the Reach) built on a 50 -acre site at Columbia Point, the confluence of the Yakima and Columbia Rivers in Richland. Skagit Regional Public The District's purpose is to acquire, construct, maintain and finance Skagit County Facilities District the McIntyre Hall Performing Arts and Conference Center located on the campus of the Skagit Valley College in Mount Vernon. Snohomish County Public This PFD was created to finance one or more regional centers for Snohomish County Facilities District the purpose of increasing economic prosperity and promoting private investment in Snohomish County. The District has allocated funding to four projects: the Everett Events Center (Comcast Arena and Edward D Hansen Conference Center) owned by the Everett Public Facilities District, the Lynnwood Convention Center owned by the Lynnwood Public Facilities District, the Edmonds Center for the Arts operated by the Edmonds Public Facilities District, and the Future of Flight museum operated by Snohomish County. Spokane Public Facilities The Spokane Public Facilities District was created by the Washing- City of Spokane and District ton State Legislature in 1989 to acquire, construct, own and Spokane County operate Spokane Veterans Memorial Arena, a sports and enter- tainment facility. In 2003, the District acquired ownership of the Spokane Convention Center and the INB Performing Arts Center (formerly Spokane Opera House). 16 • Appendix D • State of Washington Public Facilities Districts • PFD name Purpose Creating entity Tri- Cities Regional Public This Board is made up of three representatives from each city. The Cities of Pasco, Kennewick Facilities District public projects use for this tax funding are voted on by Tri- Cities and Richland residents. The four current projects are: The Performing Arts Center, a Regional Aquatics Center, the Hanford Reach Interpretive Center and an expansion of the Three Rivers Convention Center. Vancouver Public Facility This District was established to create a Convention Center and City of Vancouver District hotel in Vancouver, Washington. Washington State Major The District operates as a municipal corporation of the state of State of Washington and League Baseball Stadium Washington and was formed to research a site and design, build King County Public Facilities District and operate a major league baseball park known as Safeco Field in Seattle. Washington State This PFD was created to own and operate the Washington State King County Convention Center Public Convention Center. Facilities District Yakima Regional Public The District was created to create the Yakima Convention Center. Cities of Yakima, Selah and Facilities District Union Gap 17 Appendix E: November 2011 Review of Public Facilities District Bonds Bond Funding Scenarios Below is a diagram of the various bond fund scenarios we found in PFDs in November 2011. Who owns Who issued Are PFD bonds Potential the project? the bonds? guaranteed? situations ' IP No PFD debt lit. 1. PFD only responsible for project operations. PFD owns Bonds fully guaranteed 2. PFD responsible for project and debt. the project 1 by others Guarantor City /County only responsible for debt to extent PFD is unable to pay. F ,.. 3. PFD responsible for project and debt. I. Revenue bonds Bonds partially guaranteed Guarantor City /County only responsible issued by PFD by others for those portions of debt that were guaranteed to the extent PFD is unable to pay. Bonds are unguaranteed 4. PFD solely responsible for project and debt. 5. Bonds are issued by PFD in the amount • of expected sales tax revenues. The PFD City /County /other _] Limited sales tax Bonds guaranteed by pays debt service from sales tax revenues party owns the project bonds issued by PFD a CLA from City /County —Pm. and the City /County is only obligated to the extent such revenues are less than expected. 6. PFD receives sales tax and passes it to projects owned by City /County /Others. ._)1„. No PFD debt I Project owners often have debt expected to be repaid in whole or part by pledged PFD sales tax. If operating expenses The debt issuer is respon- Guarantees are in the form Every PFD and project is unique and may contain exceed revenues, sible to pay debt service. of Contingent Loan complex legal structures, so the above categories City /County owners must Agreements (CLA) which represent only the general "in substance "types of subsidize the project with NOTE: City /County /Other obligate the City or County situations general revenues. PFD project owners may have only if the PFD fails to make owners do not have other issued additional debt for debt service or maintain revenues and must either the project - only debt adequate reserves. obtain support from other issued by PFDs is addressed sources or else cease in this chart. operations. 18 • Appendix E • Potential Situations for Public Facilities Districts • List of Public Facilities Districts bond funding scenarios and those PFDs using each scenario as of November 2011. NOTE: This Appendix does not reflect funding activity since November 2011. For example, of special note, the Greater Wenatchee Regional Events Center Public Facilities District (Wenatchee PFD) defaulted on its bond anticipation notes in December 2011; subsequently entered into additional inter -local agreements; issued new bonds; and paid off its 2008 bond anticipation notes. In addition on October 25, 2012 the Washington Supreme Court issued a ruling that if the City of Wenatchee guarantees the PFDs debt that guarantee is subject to the City's debt limit. These notes apply to all the following tables. 1. Some projects are listed more than once because they are funded by multiple PFDs who are in different situations with respect to the project 2. Some PFDs are listed more than once because they are in different situations with respect to different projects. 3. Project ownership was considered in substance as the party with responsibility for revenues and expenditures of project operations; in these cases, there are also leasehold interests that do not appear to be affected by project performance. Potential situations Project(s) Public Facility District City / County responsibilty 1 PFD only responsible Safeco Field Washington State Major Bonds issued by Mariners and King County to for project operations. League Baseball Stadium be paid from sources other than PFD revenues. Public Facilities District Edmonds Center for Edmonds Public Facility City of Edmonds issued 2002 GO bonds ($5.5M the Arts District outstanding) secured by a pledge of Sales Tax revenue from the PFD. City is also responsible under a CLA for debt service on the PFD's 2008 Sales Tax and Refunding Bonds ($3.9M outstanding) to extent PFD is unable to pay. Art & Children's Bellingham - Whatcom City of Bellingham issued 2004 GO bonds Museum and Mount Public Facilities District secured by a pledge of Sales Tax revenue Baker Theatre from the PFD ($7M outstanding). City is also responsible under CLA for 2007 Limited Sales Tax Obligation Bonds to extent PFD is unable to pay ($9.9M outstanding). Finally, City issued PFD responsible a loan to the PFD in 2008 ($1.8M outstanding). for project and Lewis County Event Lewis County Public Lewis County is responsible under a CLA for debt. Guarantor Center and Sports Facilities District debt service to extent PFD is unable to pay 2 City or County only Complex ($5.7M outstanding). County and Centralia responsible for debt to School District to operate portions of project. extent PFD is unable to pay. Lynnwood Lynnwood Public City of Lynnwood responsible under CLA for Convention Center Facilities District debt service to extent PFD is unable to pay ($28.3M outstanding). In addition, City and Snohomish County both pledge set annual payments of Lodging Tax Revenues. Three Rivers Kennewick Public City of Kennewick responsible under CLA Convention Center Facilities District 3 for debt service to extent PFD is unable to and Coliseum pay ($12.8M outstanding). In addition, City pledged set annual payments of up to $725K per year to support PFD. McIntyre Hall Skagit Regional Public Skagit County responsible under CLA for debt Performing Arts and Facilities District service to extent PFD is unable to pay ($8.5M Conference Center outstanding). 19 • Appendix E • Potential Situations for Public Facilities Districts • List of Public Facilities Districts facing potential situations, continued Potential situations Project(s)' Public Facility District City / County responsibilty Hanford Reach Richland Public Facilities City of Richland responsible under CLA for Interpretative Center District debt service to extent PFD is unable to pay (The Reach) ($6.2M outstanding). In addition, City pledged PFD responsible set annual payments of Lodging tax to for project and support PFD. debt. Guarantor McIntyre Hall Skagit Regional Public Skagit County responsible under CLA for debt 2 City or County only Performing Arts and Facilities District service to extent PFD is unable to pay ($8.5M responsible for debt to Conference Center outstanding). extent PFD is unable to Hanford Reach Richland Public Facilities City of Richland responsible under CLA for p Interpretative Center District debt service to extent PFD is unable to pay (The Reach) ($6.2M outstanding). In addition, City pledged set annual payments of Lodging tax to support PFD. Everett Events Everett Public Facilities City of Everett responsible under a CLA on Center (Comcast District the PFD's 2007 Project Revenue bonds ($27.4M Arena and Edward D outstanding) for debt service to extent PFD Hansen Conference is unable to pay. No CLA on the PFD's 2007 PFD responsible Center) Limited Sales Tax and Interlocal Agreement for project and Revenue Bonds ($25.4M outstanding). In debt. Guarantor addition, the City pledged annual payments of City or County only $500K per year to support PFD. 3 responsible for those portions of debt that Town Toyota Center Greater Wenatchee City of Wenatchee responsible under a CLA were guaranteed to the Regional Events Center for interest on 2008 Special Tax & Revenue extent PFD is unable to Public Facilities District Bond Anticipation Notes (BANS) ($36.6M pay outstanding) to extent PFD is unable to pay. No CLA is in place for PFD's 2008 Limited Sales tax BANS (5.1M outstanding) or capital lease ($431 K minimum lease payments). See note on top of page 19. Washington State Washington State None ($313.5M outstanding secured solely by Convention Center Convention Center PFD revenues) Public Facilities District PFD solely responsible Spokane Veterans Spokane Public Facilities None ($95M outstanding secured solely by 4 for project and debt. Memorial Arena, District PFD revenues) Spokane Convention Center and INB Performing Arts Center Ocean Shores Grays Harbor Public Sales Tax Debt ($9.7M outstanding) was issued Convention Center Facilities District by PFD with proceeds passed to City of Ocean Bonds are issued by Shores for project construction. Bonds were PFD in the amount structured to equal expected sales tax receipts of expected sales tax of the District. PFD has a CLA with the City to revenues. The PFD pays make up any difference. 5 debt service from sales Kent Events Center Kent Public Facilities Sales Tax and Revenue Debt ($61M tax revenues and the District outstanding) issued by PFD with proceeds City / County is only passed to City of Kent for project construction. obligated to the extent City responsible under the bond agreement such revenues are less for paying debt service with project revenue than expected. and under a CLA as a general obligation to extent PFD sales tax and the City's project revenue are insufficient. 20 • Appendix E • Potential Situations for Public Facilities Districts • List of Public Facilities Districts facing potential situations, continued Potential situations Project(s)' Public Facility District City / County responsibilty Kitsap Fairgrounds Kitsap Public Facilities Kitsap County owns the project and has issued Events Center District general obligation debt expected to be repaid by the PFD's pledged sales tax revenues ($10.2M outstanding). North Kitsap Kitsap Public Facilities North Kitsap School District owns the project. Regional Events District No debt outstanding on the project. Center Kitsap Conference Kitsap Public Facilities City of Bremerton owns the project and Center at Bremerton District has issued debt on it that is being repaid Harborside from sources other than the PFD ($10.8M outstanding). Longview Columbia Cowlitz Public Facilities City of Longview owns the project and has Theatre 3 District issued general obligation debt expected to be repaid by the PFD's pledged sales tax revenues ($6M outstanding). Cowlitz County Expo Cowlitz Public Facilities Cowlitz County owns the project and has Center 3 District issued general obligation debt expected to be repaid by the PFD's pledged sales tax revenues ($5.6M outstanding). "PFD receives sales tax Three Rivers Benton County Public Kennewick PFD owns the project (see notes and passes it to projects Convention Center Facilities District above) owned by City / County and Coliseum 6 / Others. Project Three Rivers Pasco Public Facilities Kennewick PFD owns the project (see notes owner often has debt Convention Center District above) expected to be repaid and Coliseum in whole or part by Greater Tacoma Greater Tacoma Regional City of Tacoma owns the project and has pledged PFD sales tax. Convention & Trade Public Facilities District issued debt on it ($5M outstanding). Center Regional Athletic Capital Area Regional City of Lacey owns the project and has issued Complex Public Facilities District general obligation debt expected to be repaid by the PFD's pledged sales tax revenues ($7.2M outstanding) Hands on Children's Capital Area Regional City of Olympia owns the project and has Museum Public Facilities District issued general obligation debt expected to be repaid in part by the PFD's pledged sales tax revenues ($5.6M outstanding) Vancouver Clark County Public The Downtown Redevelopment Authority Convention Center Facility District (DRA) owns the project and has issued debt and Hotel on it ($72.3M outstanding). City of Vancouver is responsible under a CLA for debt service to extent DRA is unable to pay. Vancouver Vancouver Public Facility The Downtown Redevelopment Authority Convention Center District (DRA) owns the project and has issued debt and Hotel on it ($72.3M outstanding). City of Vancouver is responsible under a CLA for debt service to extent DRA is unable to pay. 21 • Appendix E • Potential Situations for Public Facilities Districts • List of Public Facilities Districts facing potential situations, continued Potential situations Project(s)' Public Facility District City / County responsibilty Situation 6, continued: Spokane Fair & Expo Spokane Public Facilities Spokane County owns the project and has Center District issued general obligation debt on it ($15.2M outstanding). Sales tax revenue pledged by PFD is used along with several other financing sources to pay debt service. CenterPlace at Spokane Public Facilities City of Spokane Valley owns the project and Mirabeau Point Park District has issued debt on it ($8.1M outstanding, of which $6M is expected to be repaid from pledged PFD sales taxes). PFD receives sales tax 6 and passes it to projects Everett Events Snohomish County Everett PFD owns the project (see notes owned by City / County Center, Lynnwood Public Facility District above) / Others. Project Convention Center, owner often has debt Edmonds Center expected to be repaid for the Arts and in whole or part by the Future of Flight pledged PFD sales tax." museum Yakima Convention Yakima Regional Public City of Yakima owns the project and has issued Center and Capitol Facilities District general obligation debt on it ($15.1M total Theater outstanding, $12M of which is expected to be repaid from pledged PFD sale taxes). Notes: 1 Some projects are listed more than once because they are funded by multiple PFDs who are in different situations with respect to the project 2 Some PFDs are listed more than once because they are in different situations with respect to different projects. 3 Project ownership was considered in substance as the party with responsibility for revenues and expenditures of project operations; in these cases, there are also leasehold interests that do not appear to be affected by project performance. 22 State Auditor's Office Contacts State Auditor Brian Sonntag, CGFM (360) 902 -0361 BRIAN. SONNTAG @ SAO.WA.GOV Chuck Pfeil, CPA Kelly Collins, CPA Director of State and Local Audit Deputy Director of State and Local Audit (360) 902 -0366 (360) 725 -5359 CHUCK.PFEIL @SAO.WA.GOV KELLY.COLLINS @SAO.WA.GOV To request public records Mindy Chambers Mary Leider Director of Communications Public Records Officer (360) 902 -0091 (360) 725 -5617 MINDY.CHAMBERS @SAO.WA.GOV PUBLICRECORDS @SAO.WA.GOV General information Headquarters Website Twitter (360) 902 -0370 www.sao.wa.gov @WAStateAuditor To find your legislator http: / /apps.leg.wa.gov /districtfinder The State Auditor's Office Mission Americans with The State Auditor's Office Disabilities independently serves the citizens of Washington by promoting In accordance with the accountability, fiscal integrity Americans with Disabilities Act, and openness in state and local this document will be made government. Working with these available in alternate formats. governments and with citizens, we Please call (360) 902 -0370 for strive to ensure the efficient and more information. effective use of public resources. STATE AUDITOR'S OFFICE PUBLIC DEVELOPMENT AUTHORITIES •i PUBLIC FACILITIES DISTRICTS EXECUTIVE SUMMARY / NOVEMBER 2012 I I WASHINGTON Why are we issuing this report? . . l.: BRIAN SONNTAG " � ; e audit the 39 public development authorities (PDAs) and 25 public facilities districts 4 ;.:: STATE AUDITOR p p p (PFDs) in Washington state at least once every three years as called for in state law (RCW 43.09.260). While many of these entities do an effective job of carrying out their roles and serving the public, we have found a recurring pattern of audit issues in these two government types. What are PDAs and PFDs? PDAs and PFDs are public corporations created by cities, towns or counties to carry Chuck Pfeil, CPA out a specific function. They can be formed by a single city, town or county or by a Director of State combination of governments. and Local Audit State law (RCW 35.21) authorizes PDAs'creation.These entities vary widely, doing (360) 902 - 0366 everything from operating convention centers museums, housing, economic Chuck.Pfeil @sao.wa.gov development, tall ships and a public market. Kelly Collins, CPA State law (RCW 35.57; RCW 36.100) allows creation of PFDs to acquire, create or operate Deputy Director of certain public facilities. Examples of current PFD responsibilities include convention State and Local Audit centers; museums; and sports, recreation and entertainment facilities. 360 725 - 5359 What we have found Kelly.Collins @sao.wa.gov Audit issues commonly found in PDAs and PFDs fall into four areas: State Auditor's Office - Inadequate Monitoring. Our audits have found entities that create PDAs or PFDs P.O. Box 40021 often do not monitor their operations. When a creating entity is closely monitoring Olympia, WA a PDA or PFD, it can assist in mitigating issues when they are small, instead of having 98504 - 0021 to intervene when they become more serious. www.sao.wa.gov . Inadequate Governance. PDA and PFD governing boards often are not effectively Twitter: involved in districts' activities. Creating entities appoint governing boards for PDAs and PFDs. Appointees may have business experience relevant to their role on the @WAStateAuditor board, but may not always have adequate knowledge of state laws and regulations for the entity. Active involvement is particularly important for entities in which the board contracts for service delivery and does not have employees monitoring activities. • Declining or distressed financial condition. Since 2006, our Office has reported declining or distressed financial condition in seven of the state's 64 PDAs and PFDs. Cities, towns and counties need to consider in advance what they would do if a PDA or PFD they created falls into financial decline. Creating entities also need to ensure they have an effective way to monitor the financial stability of a PFD OR PDA. • Non - compliance with laws and regulations. Often PDAs and PFDs operate as if they are a private business. They are not. Many of the same laws that apply to the entities that create them apply to the PDAs and PFDs. Recommendations to entities that have created PDAs and PFDs • Ensure appointed officials receive training and guidance on applicable city, town or county laws. • Ensure board members take an active role in monitoring PDA and PFD operations. • Have elected officials and /or staff from the creating entity attend audit exit and entrance conferences. • Monitor the financial health of the PDAs and PFDs. Such monitoring should examine whether the creating entity has the debt capacity to handle any PDA or PFD financial difficulty and determine if /when financial support is needed. • Inform the State Auditor's Office when a new entity is created. Recommendations to the Legislature State law (RCW 35.21.745) requires any city, town or county which creates a PDA to control and oversee operations and funds, ensure any deficiencies are corrected, and ensure it is accomplishing its stated purpose. State law for PFDs does not contain similar wording. In addition, the law does not require PDAs or PFDs to periodically report to the creating entities. Consider changes to state law to require creating entities to: • Monitor the PFDs they have created. • Establish an annual reporting requirement for PDAs and PFDs to summarize operations for the creating entities. • Notify the State Auditor's Office when PDAs and PFDs are created. WASHINGTON STATE AUDITOR'S OFFICE Page 1 of 5 YAHOO! FINANCE FINANCIALLY FIT BankofAmerica SA VI 4r SAVING SMART & LIVING WELL MORE ON:: •'�" SHINE SHOPPING DISCOVER YAHOO! WITH YOUR Login FRIENDS Learn more The 15 Best Housing Markets for the Next Five Years RUSINFSS INSIDER By' Marnta Badkar 1 Business Insider- Fri, Nov 30, 2012 3:31 PM EST National home prices are expected to climb o.3 percent in the next year, according to the latest home price report by Fisery Case - Shiller. But over the next five years, home prices are projected to rise 3.3 percent. We drew on Fisery Case - Shiller data to identify the best housing markets for the next five years. The top 15 cities are ranked by the projected annualized change in home prices between Q2 2012 and Q2 2017. We also included the median home price, median household income, unemployment rate, and the change in home prices since their peak to offer a broader view of the local economy and housing market. Note: The median family income is for Q1 2012, home price data is for Q2 2012. Unemployment data is as of August 2012, and population data is for 2011. Glens Falls, New York 0 - r ,00 y yr! Annualized expected growth from 2012 - 2017: 7.7 percent . r , / Home prices have declined 7.8 percent in Glen Falls since they peaked in Q4 2008. The r — { median home price is $159,000 which is lower than the national median of $181,000. 1 ari • .. .r 1 .. t. Glen Falls has a population of 128,996, an unemployment rate of 9.1 percent, and a median family income of $64,300. Google Maps Yuma, Arizona Annualized expected growth from 2012 - 2017: 7.7 percent -' Home prices have fallen 37.1 percent in Yuma since their Q4 2006 peak. I � I It has a population of 200,870, an unemployment rate of 25.8 percent, and a median family income of $45,400, lower than the national median of $62,900. Google Maps http : / /finance. yahoo . com/ news / the -15 -be st- housing- markets - for - the - next - five - years -2 0005... 12/4/2012 Page 2 of 5 Eugene - Springfield, Oregon IF IRINFArnirr ; :'" ' Annualized expected growth from 2012 - 2017: 7.7 percent Eugene - Springfield home prices have decreased 22.9 percent since their Q2 2007 peak. The metro has a population of 353,416, an unemployment rate of 8.8 percent, and a median family income of $53,200. Wikimedia Commons Yakima, Washington Annualized expected growth from 2012 - 2017: 7.8 percent Home prices in Yakima are down 8.1 percent since their Q1 2009 peak. It has a median ? home price of $168,800. Yakima also has a population of 247,141, an unemployment rate of 10.2 percent, and a median family income of $47,800. Wikimedia Commons Brunswick, Georgia Annualized expected growth from 2012 - 2017: 7.9 percent - Home prices in Brunswick have tumbled 32.3 percent since their Q4 2007 peak. It has a population of 112,923, an unemployment rate of 10.4 percent, and a median family income of $50,500, that is below the national median. Wikimedia Commons Tucson, Arizona • , Annualized expected growth from 2012 - 2017: 7.9 percent Tucson's home prices have plunged 42.6 percent since their Q1 2006 peak, and it has median home price of $153,000. It also has a population of 989,569, a median family income of $57,400, and an unemployment rate of 7.5 percent. Byways,org Gulfport- Biloxi, Mississippi Annualized expected growth from 2012 - 2017: 8.o percent http: / /finance.yahoo. com/ news / the -15- best - housing - markets- for - the - next - five - years- 20005... 12/4/2012 Page 3 of 5 • Home prices in the Gulfport- Biloxi metro area have slipped 20.4 percent since their Q4 2007 peak, and the metro has a median home price of $ioi,000. It has a population of 253,51 an unemployment rate of 8.4 percent and a median household income of $52,700. Ed Schipul / Flickr Napa, California • ' Annualized expected growth from 2012 - 2017: 8.o percent = y. Home prices in Napa have plunged 50.1 percent since they peaked in Q1 2006, and the city " has a median home price of $342,000. Napa has a population of 138,088, an unemployment rate of 8.1 percent, and a median family income of $77,700 above the national median. Google Maps Ocala, Florida Annualized expected growth from 2012 - 2017: 8.o percent Home prices in Ocala are down 49.1 percent from their Q3 2006 peak. TM — But Ocala has a high unemployment rate of 10.1 percent, a median family income of $44,60 well below the national median of $62,900, and a median home price of $105,000. Santa Barbara -Santa Maria - Goleta, California --;.= Annualized expected growth from 2012 - 2017: 8.4 percent „. - — - - The Santa Barbara -Santa Maria - Goleta metro area has a population of 426,878, a median `,'t' -- _ family income of $69,000, and an unemployment rate of 8.1 percent. • • Home prices are down 52 percent from their Q3 2006 peak, and the metro has a median home price of $290,000. Wikimedia Commons Sebastian -Vero Beach, Florida Annualized expected growth from 2012 - 2017: 8.7 percent Sebastian -Vero Beach home prices have fallen 50.9 percent since their Q4 2005 peak. The metro has an unemployment rate of 10.6 percent, and a median family income of $58,600, while the median cost of a home is $150,000. http: / /finance.yahoo. com /news /the -15 - best - housing- markets - for - the - next - five - years- 20005... 12/4/2012 Page 4 of 5 . i. .w ' .∎ Madera- Chowchilla, California Annualized expected growth from 2012 - 2017: 8.8 percent Home prices in the Madera - Chowchilla metro area have fallen 54 percent since their peak Google Maps in the third quarter of 2006. 3 At 14.2 percent, the unemployment rate is much higher than the national average of 8.1. v-- . The metro has a population of 152,925 and a low median family income of $521700. ._,a, .�- -- Santa Fe, New Mexico Google Maps Annualized expected growth from 2012 - 2017: 8.9 percent 'le. -Oft'. . • w Santa Fe's home prices have fallen 21.7 percent from their Q4 2007 peak. The city has a • am ' , , - - ,. _ _ population of 145,648, an unemployment rate of 5.4 percent below the national average, 1 -" L and a median household income of $59,600, below the national median of $62,900. Wikimedia Commons Panama City -Lynn Haven - Panama City Beach, Florida .`,, Annualized expected growth from 2012 - 2017: 9.5 percent Home prices in the Panama City -Lynn Haven - Panama City Beach metro area have fallen - -- -1 , r .. .,. -4,. • 45.3 percent since their Q1 2006 peak. It now has a median home price of $137,000. The metro has a population of 169,856, an unemployment rate of 8.8 percent, and a median family income of $56,300. Wikimedia Commons Medford, Oregon Annualized expected growth from 2012 - 2017: 11.2 percent 4 ;r Medford's home prices have fallen 39.8 percent since their peak in Q2 2006. The metro has _ . 414.: F? ,' a population of 204,822 and median family income of $49,600. . %.-,,,.....,. At 10.8 percent Medford's unemployment rate is higher than the national average. h Bailey Weaver / Flickr Data provided by Fisery Case- Shiller Indexes http: / /finance.yahoo. com/news/ the -15- best - housing- markets - for - the - next - five - years- 20005... 12/4/2012