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HomeMy WebLinkAbout2022.10.11 Council Workshop Packet AGENDA City Council Workshop Meeting 7:00 PM - Tuesday, October 11, 2022 City Council Chambers & GoToWebinar Page 1. MEETING INSTRUCTIONS for REMOTE ACCESS - The Pasco City Council Workshops are broadcast live on PSC-TV Channel 191 on Charter/Spectrum Cable in Pasco and Richland and streamed at www.pasco-wa.gov/psctvlive and on the City’s Facebook page at www.facebook.com/cityofPasco. To listen to the meeting via phone, call (631) 992-3211 and use access code 613-585-088. 2. CALL TO ORDER 3. ROLL CALL (a) Pledge of Allegiance Girl Scouts to Lead Pledge of Allegiance in Honor of the 10th Anniversary of "Day of the Girl" 4. EXECUTIVE SESSION (a) Discussion with Legal Counsel about Current or Potential Litigation per RCW 42.30.110(1)(i) (30 minutes) 5. VERBAL REPORTS FROM COUNCILMEMBERS 6. ITEMS FOR DISCUSSION 4 - 96 (a) Public Forum for Formation of Broadmoor Tax Increment Area (TIA) 97 - 140 (b) General Fund Revenue and Ad Valorem Tax (Property Tax) Presentation 141 - 165 (c) Ambulance Utility Rate Study Page 1 of 229 166 - 199 (d) Resolution – Butterfield Water Treatment Plant Facility Plan Acceptance 200 - 203 (e) Tri-Cities Animal Control and Sheltering Services Update 204 - 222 (f) Ordinance & Resolution - Budget Amendment & Approval of Behavioral Health Personal Services Agreement with Awareness Consulting & Training, LLC 223 - 227 (g) Resolution - Appointment Process for City Boards & Commissions (h) Recap of Recent Retail Sales of Cannabis Listening Sessions 7. MISCELLANEOUS COUNCIL DISCUSSION 8. EXECUTIVE SESSION (a) Consideration of Site Selection or Acquisition of Real Estate Purchase or Lease if Likelihood that Disclosure Would Increase Price per RCW 42.30.110(1)(b) and Discuss Collective Bargaining Unit Negotiations per RCW 42.30.140(4)(a) (20 minutes) 9. ADJOURNMENT 10. ADDITIONAL NOTES 228 - 229 (a) Adopted 2020-2021 Council Goals (Reference Only) (b) REMINDERS • Wednesday, October 12, 5:45 PM: Tri-Cities Regional Public Facilities District Board Meeting – Online ZOOM Meeting (COUNCILMEMBERS JOSEPH CAMPOS, DAVID MILNE & CRAIG MALONEY Reps) • Thursday, October 13, 4:30 PM: Pasco School District (PSD) Skilled & Technical Advisory Committee – Virtual (COUNCILMEMBER DAVID MILNE) • Thursday, October 13, 7:00 PM: Ben Franklin Transit Board Meeting – Transit Facility (COUNCILMEMBER JOSEPH CAMPOS Rep.; MAYOR PRO TEM CRAIG MALONEY, Alt.) • Monday, October 17, 6:00 PM: LEOFF Disability Board – City Hall Conference Room 1, Pasco City Hall (MAYOR BLANCH BARAJAS, Rep.; MAYOR PRO TEM CRAIG MALONEY, Alt.) Page 2 of 229 This meeting is broadcast live on PSC-TV Channel 191 on Charter/Spectrum Cable in Pasco and Richland and streamed at www.pasco-wa.gov/psctvlive. Audio equipment available for the hearing impaired; contact the Clerk for assistance. Servicio de intérprete puede estar disponible con aviso. Por favor avisa la Secretaria Municipal dos días antes para garantizar la disponibilidad. (Spanish language interpreter service may be provided upon request. Please provide two business day's notice to the City Clerk to ensure availability.) Page 3 of 229 AGENDA REPORT FOR: City Council October 5, 2022 TO: Dave Zabell, City Manager City Council Workshop Meeting: 10/11/22 FROM: Dave Zabell, City Manager Executive SUBJECT: Public Forum for Formation of Broadmoor Tax Increment Area (TIA) I. REFERENCE(S): Draft Ordinance Establishing Tax Incremental Area (TIA) Broadmoor TIF Project Analysis Office of State Treasurer TIF Review Resolution 4179 Declaring City Council intent to form a Tax Incremental Area Broadmoor Improvements Map II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion of establishment of Tax Incremental Financing (TIF) Area III. FISCAL IMPACT: Establishment of a TIF Area creates a funding mechanism for repayment of debt issued to construct public infrastructure improvements that otherwise are anticipated not to occur but for City support. IV. HISTORY AND FACTS BRIEF: The City has been working with Bob Stowe of Stowe Development & Strategies to assist in implementing and initiating development within the Broadmoor area consistent with the City’s planning and economic development goals and interests. As a result of a new State law, House Bill 1189, created in 2021, cities, counties, and ports in Washington State may now utilize Tax Increment Financing (TIF) to financially support infrastructure improvements (e.g., streets, water and sewer systems, sidewalks, parking facilities, stormwater systems, park or community facilities, and brownfield mitigation) necessary for private development, providing for jobs and additional tax revenue. Council is familiar with this Page 4 of 229 mechanism through the Port of Pasco’s recent enactment of a TIF at the Riemann Industrial Center. In the Broadmoor area, a TIF can be an important tool allowing the City to make targeted infrastructure investments to spur economic development that will benefit Pasco and the region. Thomaof Murray, Gordon with along Stowe Mr. Briahna Honeywell s Governmental Affairs, provided City Council with a brief overview of Tax Increment Financing (TIF) at the Council workshop of April 25, 2022. In response to the TIF presentation, Resolution number 4179 was adopted declaring the Council’s intent to form a Tax Increment Area (TIA) for the Broadmoor site May 2, 2022. City identified has management Resolution, Since the of adoption TIF appropriate TIF infrastructure improvements that are outside the developers' ability dethe and achieve fund to sired since Additionally, development. resolution adoption, a Project Analysis for the Broadmoor Area Tax Increment Area has been prepared and submitted to the Office of the State Treasurer. Review by the Treasurer's Office has been completed and assessed meeting the requirements of RCW 39.114, clearing the way for Council consideration. Finally, the City has conducted public information offerings on the proposed Tax Increment Area (TIA) with a desire to inform our community and other public agencies about the anticipated benefits and impacts related to development of the Broadmoor area. V. DISCUSSION: Following the adoption of Resolution 4179, a Project Analysis and subsequent, required Office of State Treasurer review were completed. The Project Analysis represents risks and opportunities both examination comprehensive a of associated with the proposed TIA. Included are topics of proposed private development, associated infrastructure needs and the nexus between potential development and the proposed TIF funded projects and possible TIF sourced revenues Importanrevenues. and development other generated t this to consideration, and outlined in the plan are potential risks that arise from a slower than expected development time frame or lower than expected assessed valuation growth. Complementary to this consideration of risk are outlined mitigation plans related to both development and financial conditions. The public Project Analysis also describes certain specific infrastructure improvements to illustrate the types of arterial street construction and associated infrastructure (water, sewer and stormwater facilities) and key intersections and ramp improvements to Interstate 182 that are anticipated to be necessary to serve and encourage private development within the TIA. The proposed Draft Page 5 of 229 Ordinance describes the public improvements in a more general manner to allow for greater flexibility within the context of the State's TIF law. The City Manager will confirm the particular public improvements within the scope of the types of public improvements described in the Draft Ordinance that will be funded by TIF based on development interests and needs. The final public improvements and their operational features will be determined prior to any final project plans and specifications and the issuance of any debt by the City for those improvements. The Council will be required to approve any issuance of debt. The introduction of Tax Incremental Financing (TIF) availability to public entities provides a new mechanism for funding public investment in infrastructure. It is important to note that the creation of a TIF area does not represent a new tax. The tax rate in the TIF area does not change, based on TIF existence. The economic tool of TIF captures new property tax revenues created by increased assessed valuation. The City will then use the increased proper ty tax revenues to retire the TIF related debt. As development takes time, there will be a need for the City's General Fund to support any TIF area associated debt service payments. Based on the Project Analysis and related potential for economic benefit to the City of Pasco the opportunity is presented to Council for discussion. Other than Council's approval of any infrastructure debt issuance, the Draft Ordinance represents the Council's final action necessary to form a TIA. Page 6 of 229 ORDINANCE NO. _____ AN ORDINANCE OF THE CITY OF PASCO, WASHINGTON, DESIGNATING THE BROADMOOR TAX INCREMENT AREA AND PROVIDING FOR RELATED MATTERS. WHEREAS, for many years the City of Pasco (City) has been studying, evaluating, designing and completing key infrastructure improvements to enable a mixed use development within the Broadmoor area; and WHEREAS, Broadmoor Properties, LLC owns 761 acres of property that is being planned for mixed use development and is in need of substantial infrastructure improvements to support the desired development; and WHEREAS, the Broadmoor area has the opportunity if built, to serve as a significant economic engine for the Pasco community providing for increased tax revenues to support City services and providing significant employment opportunities for the residents of the City; and WHEREAS, the Washington State Legislature, during its 2021 legislative session, enacted Engrossed Substitute House Bill 1189 as Chapter 207, Laws of 2021, titled “AN ACT Relating to tax increment financing" and codified as RCW 39.114, which authorizes local governments, including cities, to carry out tax increment financing of public improvements needed to support vital private economic development projects; and WHEREAS, Tax Increment Financing (TIF) is a program that allocates revenues generated from the increased assessed valuation of properties improved by the development that are within a designated tax increment area (TIA) to pay for public improvements that are needed to support the private development; and WHEREAS, The Pasco City Council previously adopted Resolution No 4179 declaring its intent to for a TIA in May 2022; and WHEREAS, City management has identified the TIF infrastructure improvements that are outside of a developer’s ability to fund and achieve the desired developm ent based on market conditions necessary to accommodate commercial and mixed-use tenants; and WHEREAS, the TIF Improvement Projects have been estimated to cost approximately $39 million to construct; and WHEREAS, Broadmoor Properties will be dedicating approximately 29.3 acres of land for the identified TIF Projects resulting in an average value range between $6.4 million to $12.7 million in project benefit; and Page 7 of 229 WHEREAS, Broadmoor Properties and/or future developers of the site will be funding and constructing additional public improvements at an estimated cost of $39 million to $45 million along with dedicating an additional 34 acres of land to support those public improvements; and WHEREAS, City management anticipates bringing forward for Council consideration an agreement between the City and Broadmoor Properties, LLC that memorializes the infrastructure improvement responsibilities previously identified between the parties in a Letter of Understanding prior to the issuance any debt associated with the TIF infrastructure improvements; and WHEREAS, the City has prepared a Project Analysis for the Broadmoor TIA and submitted such to the Office of the State Treasurer for review and comment as required by law, and WHEREAS, the Office of the State Treasurer Project has completed its review of the Broadmoor Project Analysis and has stated that it meets the requirements of RCW 39.114; and WHEREAS, the City has conducted public briefings on the proposed TIA to inform the community and other public agencies about the anticipated benefits and impacts associated with the development. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON DO ORDAIN AS FOLLOWS: Section 1. Definitions. Capitalized terms used in this ordinance shall have the meanings set forth in the recitals to this ordinance above and in this Section 1. The uncapitalized terms "public improvement costs," "regular property taxes" and "tax allocation revenues" used in this ordinance shall have the meanings provided for those terms by RCW 39.114.010, as the context requires. (a) "City" means the City of Pasco, Washington (b) "Code" means the Internal Revenue Code of 1986, as amended, and applicable rules and regulations promulgated thereunder. (c) "Council" means the Pasco City Council, acting in its legislative capacity. (d) "County" means Franklin County, Washington. (e) "Finance Director" means the Director of Finance of the City or such other officer of the City who succeeds to substantially all of the responsibilities of that office. (f) "Increment Area" means the 671-acres of land designated by Section 2 of this Ordinance called the “Broadmoor Development.” (g) "Project Analysis" means the City's Broadmoor TIF Project Analysis submitted to the Washington State Treasurer in August 2022 for its review and comment. Page 8 of 229 (h) "Treasurer's Review Letter'' means the letter to the City from the Office of State Treasurer dated September 23, 2022, summarizing its review of and providing comments, recommendations and acceptance with respect to the Project Analysis for consideration by the City. Section 2. Designation of Increment Area. The City designates the 671-acre parcel of land called the Broadmoor development and legally described Exhibit A to this Ordinance. In making this designation, the Council takes note of the facts that the Increment Area (i) is the only increment area designated by the City under the TIF Act, (ii) is located within the boundaries of the City, (iii) does not include the City's entire territory, and (iv) does not have an assessed value on the date of this ordinance greater than the lesser of $200,000,000 or 20 percent of the total assessed value of taxable property within the City of $8,065,205,983. Section 3. Sunset Date of the Increment Area. The sunset date of the Increment Area is (i) December 31, 2048, which is the date not later than 25 years after the first year (calendar year 2023) in which tax allocation revenues will be collected on taxable property within the Increment Area (the "outside sunset date"), or (ii) if earlier, the date ("an early sunset date") on which the City certifies to the County Treasurer that all public improvement costs to be paid or reimbursed with tax allocation revenues derived from the Increment Area have been fully paid, including but not limited to reimbursements to the City for principal and interest payments required to be made by the City from revenue sources other than tax allocation revenues on limited tax general obligation bonds issued to finance the portion of public improvement costs that are intended to be paid and retired, in whole, from tax allocation revenues, as authorized by RCW 39.114.060(1). Section 4. Identification of Public Improvements to Be Financed . The public improvements to be financed consist of the following infrastructure improvements to be owned by the City, the County and/or the City and located within or outside of and serving the Increment Area: (a) Streets, roads, streetlights and other road improvements needed to serve the Increment Area; (b) Interchange improvements at Interstate 182 and Road 100 needed to serve the Increment Area; (c) Water and Sewer infrastructure improvements needed to serve the Increment Area; The exact configurations and operational features of the public improvements described above are to be determined by the final plans and specifications for such public improvements. As authorized by RCW 39.114.020(1){h}, the City may expand, alter, or add to the public improvements identified above only if the Council determines that such changes are necessary to assure that the public improvements identified above can be constructed or operated as intended. Page 9 of 229 Section5. Expected Issuance of Bonds to Finance a Portion of the Public Improvement Costs. (a) Pursuant to RCW 39.114.060 and other law, including the applicable provisions of Chapters 53.36 and 39.46 RCW, the City intends to incur general indebtedness and issue limited tax general obligation bonds with a term of approximately 25 years to finance a portion (the "bond-financed portion"} of the public improvement costs. To pay and secure the bonds, the City expects to pledge the tax allocation revenues received by the City from the Increment Area, the City’s other regular property tax revenues, other lawfully available revenues of the City, and the full faith and credit of the City. The bonds are expected to be issued as tax-exempt bonds under the applicable provisions of the Code; however, if and to the extent that bond counsel determines that any of the public improvements (or portions thereof} do not qualify to be financed with tax- exempt bonds, the City expects to allocate funding sources other than proceeds of tax- exempt bonds, including but not limited to proceeds of taxable bonds, to the financing of those public improvements (or portions thereof). (b) As of the date of adoption of this ordinance, the estimated maximum amount of bonds expected to be issued by the City to finance the bond-financed portion of the public improvement costs is $39,000,000. This estimated maximum amount of bonds is subject to change based upon the final configuration and final public improvement costs of the public improvements identified in Section 4 of this ordinance. The principal amount of such bonds also may vary (be lower or higher) to the extent that the bonds are sold with original issue premium or original issue discount (respectively) as needed to provide bond proceeds sufficient to pay the bond-financed portion of the public improvement costs. (c) While the City will pledge its full faith and credit as well as its regular property tax revenues and other lawfully available revenues, in addition to tax allocation revenues received by the City from the Increment Area, to pay and secure debt service on the bonds, the City intends that debt service on the bonds shall be payable, in whole, from tax allocation revenues as authorized by RCW 39.114.060(1). Accordingly, if and to the extent debt service payments on its general obligation bonds issued to finance the public improvements are required to be made from the City's other regular property tax revenues and/or from other lawfully available revenues because the amount of tax allocation revenues received are insufficient for that purpose, those debt service payments to that extent shall be reimbursed from later-received tax allocation revenues that become available to reimburse the City for those debt service payments. The Finance Director, in consultation with the County Treasurer, will adopt accounting procedures sufficient to document the use of tax allocation revenues to reimburse debt service payments previously made from other revenues, consistent with the City's intention and expectation that its general obligation bonds issued to finance public improvement costs are to be payable entirely from tax allocation revenues (as permitted by the Act). Page 10 of 229 (d) The City intends that the provisions of Section 2 of this ordinance (identifying the public improvements to be financed) and this Section 5 (stating the estimated maximum amount of bonds expected to be issued) together shall constitute a declaration of official intent under Treasury Regulations §1.150-2 to reimburse with bond proceeds any original expenditures for the public improvements paid before the issue date of the bonds that are intended to finance the bond-financed portion of the public improvement costs. Section 6. Increment to Take Effect on June 1, 2023. The tax increment for the Increment Area designated in Section 2 of this resolution shall take effect on June 1, 2023. Section 7. Deadline for Commencement of Construction of Public Improvements. The City expects that construction of the public improvements identified in Section 4 of this ordinance will commence in the spring of 2023. In no event will construction of those public improvements commence later than October 17, 2027, the date five years from the date of adoption of this Ordinance, unless that deadline is extended for good cause. Section 8. Required Findings by the City Council. Based upon the Project Analysis, the Council finds that: (a) The public improvements proposed to be paid or financed with tax allocation revenues are expected to encourage private development within the Increment Area-i.e., the private development of the Broadmoor Development, and to increase the assessed value of real property within the Increment Area; (b) The private development that is anticipated to occur within the Increment Area as a result of the proposed public improvements will be permitted consistent with the applicable zoning and development standards of the City, which is expected to be the permitting jurisdiction for the Increment Area; (c) The private development would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future without the proposed public improvements; and (d) The increased assessed value of taxable property within the Increment Area that could reasonably be expected to occur without the proposed public improvements would be less than the increase in the assessed value estimated to result from the proposed private development with the proposed public improvements. Page 11 of 229 Section 9. Preparation and Consideration of Project Analysis. As required by RCW 39.114.020(2), the Council has caused the Project Analysis (Exhibit B) to describe and analyze, among other matters, the factors and considerations listed in that statute. The Council takes note of the conclusion expressed in the Treasurer's Review Letter that the City's Project Analysis meets the requirements of RCW 39.144. In its consideration and adoption of this ordinance, the Council has reviewed and considered, among other things, the Project Analysis and the Treasurer's Review Letter (Exhibit C), including the "Key Risks to the City”" and "Recommendations" noted in the Treasurer's Review Letter. Section 10. Reimbursement of Expenses Incurred by County Assessor and County Treasurer. Pursuant to RCW 39.114.020(6), the City may enter into arrangements to reimburse the County Assessor and County Treasurer for the expenses incurred by those officials in connection with the implementation and ongoing administration of the Increment Area as described in RCW 39.114.0l0(G)(e). Such expenses shall be a portion of the public improvement costs to be paid or reimbursed from tax allocation revenues derived from the Increment Area. Section 11. Public Briefings Held by the City. As required by RCW 39.114.020(7)(a), the City has held two public briefings for the community regarding the Broadmoor Development and the public improvements needed to serve the Increment Area. These public briefings were held on October 11, 2022, and October 17, 20, and announced to the public at least two weeks prior to the date each briefing was held by publishing notice in the Tri City Hearld, a legal newspaper of general circulation in the City and the greater Franklin County area, and by posting information on the City’s website and on all of its social media sites. Each public briefing included a description of the Increment Area, the public improvements proposed to be financed with tax allocation revenues derived from the Increment Area, and a detailed estimate of tax revenues for the participating local governments and taxing districts, including the amounts allocated to the public improvements serving the Increment Area. The City also has provided additional briefings for elected and administrative officials of the County, the Port and the Pasco School District. Section 12. Publication of Notice and Delivery of Ordinance Designating Increment Area. Both prior to and following the adoption of this ordinance, the City has published, and will publish, in the TriCity Hearld, a legal newspaper of general circulation within the jurisdiction of the City, a notice that describes the public improvements, describes the boundaries of the Increment Area, and identifies the location and times where this ordinance and other public information concerning the public improvements may be inspected. Following the adoption of this ordinance, the City will deliver a certified copy of this ordinance to the County Treasurer, the County Assessor, and the governing body of each taxing district within which the Increment Area is located. Section 14. General Authorization and Ratification. The appropriate officers of the City are severally authorized to take such actions and to execute such documents as in their judgment Page 12 of 229 may be necessary or desirable to carry out the tax increment financing of the public improvements serving the Increment Area contemplated in connection with this ordinance. All actions taken prior to the effective date of this ordinance in furtherance of the purposes described in this ordinance and not inconsistent with the terms of this ordinance are ratified and confirmed in all respects. Section 15. Severability. The provisions of this ordinance are declared to be separate and severable. If a court of competent jurisdiction, all appeals having been exhausted or all appeal periods having run, finds any provision of this ordinance to be invalid or unenforceable as to any person or circumstance, such offending provision shall, if feasible, be deemed to be modified to be within the limits of enforceability or validity. However, if the offending provision cannot be so modified, it shall be null and void with respect to the particular person or circumstance, and all other provisions of this ordinance in all other respects, and the offending provision with respect to all other persons and all other circumstances, shall remain valid and enforceable. Section 16. Effective Date of Ordinance. This ordinance shall take effect and be in force from and after the date its adoption. ADOPTED by the City Council of the City of Pasco, Washington, at a regular open public meeting thereof held on October 17. 2022, the following Council member being present and voting in favor of the ordinance. Page 13 of 229 I, the undersigned, City Clerk of the City of Pasco, Washington (the "City"), hereby certify as follows: 1. The attached copy of Ordinance No. _____ (the "Ordinance") is a full, true and correct copy of the Ordinance duly adopted at a regular meeting of the Pasco City Council held on October 17, 2022 (the "Meeting"), as that Ordinance appears on the minute book of the City. 2. The Ordinance is in full force and effect. 3. Pursuant to various proclamations and orders issued by the Governor of the State of Washington, options were provided for the public to attend the Meeting remotely, including by telephonic access and, as available, internet access, which options provided the ability for all persons attending the Meeting remotely to hear each other at the same time. 4. The Meeting was duly convened and held in all respects in accordance with law, the public was notified of the access options for remote attendance via the City's website, a quorum of the members of the Council was present throughout the meeting and a sufficient number of members of the Council present voted in the proper manner for the adoption of the Ordinance. Dated: ______________________ _____________________________________ Debra Barham, CMC City Clerk Page 14 of 229 Exhibit A: Tax Increment Area (TIA) Parcels in the Broadmoor TIA, Franklin County WA include: • 115210046 • 115210039 • 115210038 • 115210037 • 115210048 • 115210045 • 115210040 • 115210042 • 115210041 • 115210036 • 115210035 • 115210034 • 115210033 • 115210032 • 115210031 Page 15 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 1 BROADMOOR TIF PROJECT ANALYSIS August 2022 Page 16 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 2 ACKNOWLEDGEMENTS This Project Analysis was prepared for the City of Pasco by Stowe Development & Strategies, LLC in association with ECONorthwest and Gordon Thomas Honeywell Governmental Affairs. The Project Analysis represents a thorough and comprehensive evaluation of a future Tax Increment Financing program and establishment of a Tax Increment Area for a significant and large development opportunity in the west side of Pasco, called the Broadmoor Development. The production of this report would not have been possible without the participation, collaboration, and guidance from the following individuals and groups. Pasco City Council • Mayor Blanche Barajas, District 1 • Mayor Pro-Tem Craig Maloney, District 6 • Councilmember Joseph Campos, District 2 • Councilmember Irving Brown, Sr., District 3 • Councilmember Pete Serrano, District 4 • Councilmember David Milne, District 5 • Councilmember Zahra Roach, At Large City of Pasco Staff • Dave Zabell, City Manager • Adam Lincoln, Deputy City Manager • Darcy Buckley, Finance Director • Rick White, Community & Economic Services Director • Steve Worley, Public Works Director • Dan Ford, City Engineer • Mike Gonzalez, Economic Development Manager Legal and Financial Consultants • Eric Ferguson, City Attorney • William Tonkin & Lee Marchisio, Foster Garvey P.C., Bond Counsel • Dave Trageser, DA Davidson, Bond Underwriter • Scott Bauer, Northwest Municipal Advisors, Financial Advisors Page 17 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 3 ACKNOWLEDGEMENTS Continued Broadmoor Project Development Team • Dale and Kathy Adams, Broadmoor Properties (property owner) • Timothy Ufkes, Senior Vice President/Director. National Multi Housing Group, Marcus & Millichap • Brian Mayer, First Vice President, National Retail Group, Marcus & Millichap • Jason Mattox, Principal Civil Engineer/Survey Department Manager/Operations Manager, PBS Tax Increment Financing Consultants • Bob Stowe, Stowe Development & Strategies (TIF Project Manager) • Morgan Shook, ECONorthwest • Briahna Murray, Gordon Thomas Honeywell Governmental Affairs Page 18 of 229 About Pasco 1 Introduction/Summary 2 Proposed Private Development 4 Infrastructure Needs 6 But-For-Requirement 9 Tax Increment Area 15 Tax Increment Revenue Projections 15 TABLE OF CONTENTS Tax Increment Revenue Projections 18 Debt Service Payments and Coverage 20 Jobs Analysis 22 Financing Plan/Duration of TIA 26 Early Outreach to Taxing Districts 27 Additional Incremental Taxes 28 Risk Assessment and Mitigation Plan 30Risk Assessment and Mitigation Plan 32 Pasco TIF Team 36 Future TIF Actions 37 Timeline 38 Findings | Bottom Line 39 Appendices - Following Page 39) Page 19 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 5 Source: Stowe Development & Strategies, 2022 based on Office of State Treasurer May 31, 2022 Memo TIF Check List Page 36 Name and contact information for members of the financing team; Pages 2 to 4, & 15 Comprehensive description of the Tax Increment Area, including land ownership and leasing or sale arrangements; Pages 4 to 9 A description of the Project being undertaken, in connection with the Tax Increment Area; Pages 6, 18 t0 21, 26, 28 to 35 Proposed budget for the Project, including the available funding sources, expected costs, and plan of finance; Page 38 An estimated timeline for the Project; Pages 5, 6, & 15 to 19 Detailed assessed value growth and tax increment revenue projections that have been prepared in connection with the Project, including a description of the assumptions used and the source of the projections; Pages 4 to 6 & 15 to 17 Description of Tax Increment Area taxpayer base, and, if possible, a breakdown by property / industry type; Pages 20 & 26, 27 Description of the expected bond structure; Pages 26, 27, & 32 to 35 Description of the specific revenue pledge and revenues that will support the debt to be issued; Page 29 Calculations showing the Issuer’s projected debt service coverage, based on current and expected pledged revenues; Page 27 Calculations demonstrating compliance with the Issuer debt limitations; Appendices Five years of the most recent historical and one year of projected financial statements for the Issuer, identifying the specific revenues that will be pledged towards supporting debt service payments; Pages 32 to 36 Description of potential project risk factors. Page 20 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 6 Figure 1. Columbia River Cable Bridge Source: Broadmoor Development, Marcus Millichap 1 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 1 About Pasco: Pasco is a thriving community of more than 80,000 residents that has seen substantial growth and development over the last two decades. Pasco’s economy is booming. Two Amazon industrial centers comprising of more than 2 million square feet are under construction in Pasco. Due to the surrounding agricultural region, several major food processing companies have a presence in Pasco, including Lamb Weston, Reser’s Fine Foods, Twin Cities Foods, Simplot, and Grimmway. By utilizing tax increment financing, the Port of Pasco is facilitating Darigold building its largest ever mild drying plant in Pasco, cementing the region’s status as one of the Northwest’s leading centers for food processing. Recently the City has become a player in the booming Washington wine industry with companies like Gordon Brothers Cellars, Fidelitas Winery, Kamiak Vineyards and Preston Premium Wines. The local economy benefits from the nearby Tri-Cities Airport, Interstate 182, U.S. Highway 395, State Route 12, and the Port of Pasco, providing access to shipping along the Columbia River. Pasco hosts several major events for the Tri-Cities area, using its historic downtown as a regional gathering place. Downtown Pasco is home to the area’s largest farmer’s market and hosts the Fiery Foods Festival, the Cinco de Mayo Celebration, the Sacajawea Blue Grass Festival, and Heritage Days. The City has a seemingly limitless variety of recreational activities and is an outdoor enthusiast’s dream. Pasco has 24 public tennis courts, 20 soccer fields, seven baseball fields, eight softball fields, a professional indoor rodeo arena, 15+ miles of hiking/biking paths, and a multipurpose outdoor stadium with a 10-lane all-weather running track capable of hosting state- level football and track events. The City is also recognized for strong schools served by the Pasco School District, including Pasco High School and Chiawana High School. Pasco offers residents a great mix of culture, education, employment and recreation that promotes a positive lifestyle and encourages future growth. Page 21 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 7 1 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 2 Introduction/Summary Tax Increment Financing (TIF) is a powerful economic development tool that was adopted into law in Washington State in 2021. The Washington State Legislature created the TIF authority through House Bill 1189 for a city, county, or port to create a tax increment area (TIA). TIFs are used throughout the United States. In general, our State’s TIF is a financing option that allows a public agency (city, county, or port) to fund publicly-owned infrastructure determined necessary to encourage the envisioned private development within a TIA designated by the public agency. As private development occurs (a result of the public agencies investment in the identified public improvements), property values rise, and the public agency uses the increased property tax generated by that development to pay for the public improvement projects. After the project costs are paid, the public agency retires the TIA. There are also inherent risks that are paired with the opportunity with any real estate development that can dramatically impact the revenues that are projected from a development within a TIA. This Project Analysis provides for a comprehensive examination of both the opportunities and risks associated with the proposed TIA. Figure 2: Basic TIF Model Source: Stowe Development & Strategies, 2022 The City of Pasco started planning for the Broadmoor area by developing a Master Plan in 2017 for a 1600-acre site which is situated in the geographical center of the Tri-Cities (Pasco, Kennewick and Richland). This area has unprecedented potential for development and ability to support the areas growth projections. This master planning effort involved an analysis of a variety of land use designations, roadway alignments and relevant best practices related to land use planning. Over the last several years, the City has worked with the largest property owner in the Broadmoor area (Broadmoor Properties) on a large-scale mixed-use development of 671 acres within the Broadmoor Master planning area, now called the Broadmoor Development. Both the City and Broadmoor Properties recognize the development of this site represents a once-in-a- lifetime opportunity to provide significant housing, office, retail and placemaking elements while achieving the goals of the Pasco community and region. Page 22 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 8 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 3 Figure 3: Broadmoor Vacant Property Map Source: Broadmoor Properties Map Recreated by Stowe Development & Strategies, June 2022 The Broadmoor Development is currently vacant land, and as such, needs significant infrastructure such as roads and utilities. In 2019, the City of Pasco began working with property owners in the Broadmoor area to fund and construct over 12,000 linear feet of new sewer trunk line to serve the area at a project cost of just under $7 million through a Utility Local Improvement District (ULID) Assessment. Remaining infrastructure needs exceed $70 million, of which a range between $33 to $39 million is proposed to be funded with TIF. The property tax revenue estimates generated from the anticipated private development within the TIA are sufficient to support the public improvement costs at the end of the projected term of the TIA (25-years), requiring the City to make interim gap funding contributions while the development stabilizes as indicated in Figure 14. It is also important to recognize that any debt the City issues in anticipation of TIF revenues, the City will still be responsible for this debt from other revenue sources, regardless if the anticipated development occurs. The City of Pasco has undertaken a comprehensive analysis of evaluating: (i) the nexus between the proposed infrastructure improvements and the envisioned developments (AKA the “But-For-Requirement”); (ii) various private development scenarios that would occur following the City’s infrastructure investment along with financial mitigation options that could be implemented if development is less than or takes longer than what is projected in the various scenarios: (iii) any impacts and proposed measures regarding affordable housing, local business community, local schools and local fire service. Page 23 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 9 1 City of Pasco | Broadmoor Development TIF Project Analysis July 2022 4 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 Source: Broadmoor Properties Map Recreated by Stowe Development & Strategies, June 2022 The Broadmoor Development and the ability to achieve the City’s community goals would not be possible without TIF. The City of Pasco is enthusiastic to showcase how TIF can be used strategically for a project site that meets the letter and spirit of Washington State’s new legislation and achieves significant benefits for the Pasco community. Proposed Private Development The Broadmoor Development is a unique and large-scale development of over 451 gross acres of vacant land that is available now for development. There is another 220 acres that is currently being leased for sand and gravel operations until May 2025; after which it will become available for redevelopment following reclamation. For purposes of evaluating the Broadmoor Development, we have excluded any development potential of the sand and gravel operations and reduced the gross acres by 25 percent to account for circulation, open space, and landscaping which generates a net area of 328 acres. At completion, the Broadmoor Development will include the following land uses: single family residential, multi-family residential, mixed-use, and commercial. Broadmoor Properties, LLC (property owner) own and are currently marketing each of the parcels for sale. Most parcels are either closed, under contract, under letter of intent, or under discussions between Broadmoor Properties and prospective developers. All of the developers that have been identified to date who have either purchased property or in discussions to purchase property, are experienced developers for that particular product type. Development permits are under review on multiple parcels by the City, however building permits have yet to be issued. Developers are anxiously awaiting for the adoption of the TIA before proceeding to construction. Figure 4: Broadmoor Development Area Map The consultant team, in collaboration with the City and Broadmoor Properties, LLC has generated several development program scenarios from which to evaluate potential property tax revenue from the TIA as well as other tax revenue that is generated from the expected Broadmoor development. Market absorption projections were based on discussion with interested developers, Broadmoor Properties, LLC and general knowledge of the real estate industry. The three Development Program scenarios created can be categorized as follows: Page 24 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 10 Figure 5: Broadmoor Development Possible Conceptual Development Renderings Source: Broadmoor Development, Marcus Millichap 5 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 Aggressive Development Program. Key development assumptions include: • Absorption rate of 300 multi-family units to be constructed each year starting in 2023 for a 16-year build-out; • Commercial development starting in 2024 and mostly completed by 2030; • Reduced gross development area by 25 percent to account for internal circulation, open space and landscaping; • Absorption rate of 60 single family homes per year for a 4-year build-out. Moderate Development Program. Key development assumptions include: • Absorption rate of 150 multi-family units to be constructed each year starting in 2023 for a 25-year build-out; • Reduced highest multi-family density from 45 units per acre to 30 units per acre (reduction of 817 multi- family units); • Commercial development starting in 2025 and most completed by 2031; • Reduced gross development area by 25 percent to account for internal circulation, open space and landscaping; • Absorption rate of 40 single family homes per year for a 6-year build-out. Conservative Development Program. Key development assumptions include: • No development after 2030; • Absorption rate of 150 multi-family units to be • constructed each year and starting in 2023 and ending in 2030; • Commercial development starting in 2024 and most completed by 2030; • Reduced gross development area by 25 percent to account for internal circulation, open space and landscaping; • Absorption rate of 60 single family homes per year for a 4 -year build-out. The following product types and market values are assumed in each of the above Development Program scenarios and Page 25 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 11 6 Figure 6: Summary of Nominal Year Assessed Values and TIF Allocation Revenues City of Pasco | Broadmoor Development TIF Project Analysis August 2022 are based on multi-family properties and cost estimates in Franklin County and the region to approximate the new improvement value. • Multifamily housing: $375,000 per unit for denser product and $250,000 for less dense product • Senior housing: $200,000 per unit • Single family detached housing: $600,000 per unit • Commercial (retail/personal services): $200 per square foot • Retail warehousing: $165 per square foot • Medical office: $400 per square foot Assessed property tax values for each Development Program have been projected at the following 5-year periods (nominal values per year – not discounted values). The City has determined that the Moderate Program is the most likely to occur for purposes of this analysis. A summary of assessed property tax values at 5-year intervals is shown in Figure 6. Source: ECONorthwest Calculations Infrastructure Needs The City has identified improvements that are necessary for the development and improvements that are to be supported by TIF. These TIF improvements were strategically located to support the development type or product that were identified as needing the improvements most, or in other words, those proposed developments that would not be financially viable without these improvements. The proposed improvements are illustrated in the Appendices section of this report. The TIF public improvements include arterial street construction and associated infrastructure (water, sewer, storm), and key intersections and ramp improvements to Interstate 82 that provides access and primarily supports the commercial and mixed-use land uses within the Broadmoor Development. The total cost for the TIF improvements is estimated to be a range between $33 to $39 million. The higher amount allows for additional infrastructure improvements that are under consideration based on private development needs. The City will finalize the TIF infrastructure and projected cost as part of the TIA adoption ordinance by the Pasco City Council. For purposes of the Project Incremental Assessed Value 2023 2028 2033 2038 2043 2048 Tax Year Aggressive $0 $1,130,730,000 $1,681,980,000 $1,811,970,000 $1,952,010,000 $2,102,870,000 Moderate $0 $763,400,000 $1,470,220,000 $1,620,620,000 $1,761,900,000 $1,898,070,000 Conservative $0 $553,440,000 $825,660,000 $889,470,000 $958,210,000 $1,032,270,000 TIF Allocation Revenues 2023 2028 2033 2038 2043 2048 Tax Year Aggressive $0 $2,790,000 $4,050,000 $4,270,000 $4,490,000 $4,720,000 Moderate $0 $1,880,000 $3,540,000 $3,810,000 $4,050,000 $4,260,000 Conservative $0 $1,360,000 $1,990,000 $2,090,000 $2,200,000 $2,310,000 Page 26 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 12 1 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 7 Analysis, we have assumed the larger scope and amount of $39 million for the proposed TIF infrastructure. The owner of Broadmoor Development is dedicating approximately 29.3 acres of land for the TIF improvements resulting in an average value range between $6.4 and $12.7 million in project benefit. Additionally, the owner of the Broadmoor Development and/or future developers of the site will be funding and constructing additional public improvements at an estimated cost of $39 million to $45 million along with dedicating an additional 34 acres of land to support those public improvements. The City’s TIF infrastructure will start construction in 2023 and is expected to be largely completed that same year. Design is currently occurring and is expected to be publicly bid in late 2022 or early 2023. Where integral to the TIF funded improvements, infrastructure funded and constructed by private development will begin in 2023 and be closely coordinated with the TIF projects. For developer funded projects not integrated directly into the TIF improvements, they will be constructed as development occurs on each individual parcel. The TIF improvements are described below. Corridors 1. Sandifur Parkway – Bedford Street to Proposed Road 105 • Widen the existing Sandifur Parkway from Bedford Street to Broadmoor Blvd; • Fully construct Sandifur Parkway from Broadmoor Blvd east to proposed Road 105, including but not limited to, as much as 7-lanes of roadway and frontage improvements including curb/gutter, stormwater, sidewalk, street lighting and landscaping on the north side and curb/gutter and stormwater on the south side. • Construction of public utilities within the roadway prism will be included within this corridor from Broadmoor to Road 105. 2. Broadmoor Boulevard – Interstate 182 to Burns Road • Road widening of the existing road, west side only to, include the addition of 7-lanes of asphalt roadway, curb/gutter, stormwater, multi-use pathway, and streetlights from Interstate 182 to Buckingham Road; • Road widening of the existing road, west side only to include the addition of 5-lanes of asphalt roadway, curb/gutter, stormwater, muti-use pathway, street lighting, and landscaping from Buckingham Road to Burns Road; • Utility adjustments of existing utilities is included in this corridor from Interstate 182 to Burns Road. 3. Buckingham Drive – Broadmoor to Road 105 • Fully construct Buckingham Drive from Broadmoor Blvd west to proposed Road 105 including but not limited to 3-lanes of new roadway improvements including curb/gutter, utilities, stormwater within the roadway prism, and sidewalk, street lighting and landscaping on the south side of the roadway. Page 27 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 13 Figure 7: Interstate Improvements Source: City of Pasco, 2022 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 8 4. Road 105 – Sandifur Parkway to Buckingham Drive • Fully construct Road 105 from Sandifur Parkway north to proposed Buckingham Drive including but not limited to 3-lanes of new roadway improvements including curb/gutter, utilities, stormwater within the roadway prism, and sidewalk, street lighting and landscaping on the east side of the roadway. 5. Road 103 – Sandifur Parkway to Buckingham Drive • Fully construct Road 103 from Sandifur Parkway north to proposed Buckingham Drive including but not limited to 3-lanes of new roadway improvements including curb/gutter, utilities, stormwater within the roadway prism, and sidewalk, street lighting and landscaping on the west side of the roadway. Interstate Associated Improvements 6. Interchange Improvements - Interstate 182 at Road 100 • Construction of an additional (Broadmoor Blvd) eastbound off-ramp lane, a loop ramp for north bound Broadmoor Blvd traffic and roundabout to replace the signal at the ramp terminals. Intersections 7. Burns Road / Broadmoor Boulevard • Full improvements to the existing intersection to include signalization, widening, curb/gutter, sidewalk with ADA ramps, street lighting, striping, and landscaping; • Utility extension and/or adjustments of existing utilities; • This intersection will have participation in cost from other developers through a participation technical memorandum, prepared by the City’s consultant. 8. Buckingham Drive / Broadmoor Boulevard • Full improvements to the existing intersection including signalization, widening on the west side, curb/gutter, stormwater, sidewalk with ADA ramps, street lighting, striping, and landscaping; • Utility extension and/or adjustments of the existing utilities will be included within this intersection; • Signalization improvements provided by Broadmoor Properties, LLC. 9. Sandifur Parkway / Broadmoor Boulevard • Full improvements to the existing intersection including signalization, widening, curb/gutter, sidewalk with ADA ramps, street lighting, striping, and landscaping; • Utility extension and/or adjustments of existing utilities. Page 28 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 14 1 City of Pasco | Broadmoor Development TIF Project Analysis July 2022 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 9 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 9 10. Extended Sandifur Parkway / Proposed Road 108 • Construction of a "core" roundabout that includes all of the asphalt necessary to extend 2 feet past the proposed final toe-of-curb/gutter. This effort will also include temporary gravel shoulder drainage swale, as well as striping and lighting, and full construction of a center truck apron and landscaped feature and entry delineators including curb/gutter and internal surfacing as determined; • Frontage improvements including curb/gutter, sidewalk, stormwater, and landscaping will be completed by adjacent parcel owners at the time of development; • Construction of domestic water main, sanitary sewer main, and irrigation main improvements. 11. Extended Sandifur Parkway / Proposed Road 103 • Construction of a full intersection including signalization, widening, curb/gutter, stormwater, sidewalk with ADA ramps, street lighting, striping, and landscaping; • Construction of domestic water main, sanitary sewer main, and irrigation main improvements will be included within this intersection; • Signalization provided by Broadmoor Properties, LLC. 12. Extended Sandifur Parkway / Road 105 • Construction of a core intersection, including but not limited to, as much as 3-lanes of asphalt road surface (curb-to-curb); • Construction of domestic water main, sanitary sewer main, and irrigation main improvements will be included within this intersection; • Traffic control determined at time of design. But-For-Requirement Washington State’s TIF law requires its local government sponsor to make the following findings: The public improvements proposed to be paid or financed with tax allocation revenues are expected to encourage private development within the increment area and to increase the assessed value of real property within the increment area; (ii) Private development that is anticipated to occur within the increment area as a result of the proposed public improvements will be permitted consistent with the permitting jurisdiction's applicable zoning and development standards; (iii) The private development would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future without the proposed public improvements; and, (iv) The increased assessed value within the increment area that could reasonably be expected to occur without the proposed public improvements would be less than the increase in the assessed value estimated to result from the proposed development with the proposed public improvements. These findings (specifically Sections i, ii, and iv) are commonly referred to as the “But-For Requirement”. The name comes from the assertion that private development would not occur but- for the use of TIF. This requirement is a foundational element of TIF which directs public tax dollars generated by the development to only those projects that need it; thereby, avoiding a gift of tax dollars in the form of infrastructure funding paid for by the local government that should have been funded by the developer. Although TIF is new to Washington State governments, the But-For-Requirement and associated analysis is not. Many local governments that have invested Page 29 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 15 Source: Marcus Millichap 1 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 10 Source: Marcus Millichap in infrastructure as part of economic development projects have examined the public agencies return on its infrastructure investment from the generation of on-going tax revenues associated with new development. Additionally, most local governments’ infrastructure demand exceeds its revenue capacity, forcing local governments to make priority decisions regarding infrastructure projects that get funded with tax dollars and determining which projects can be paid for by developers. The But-For-Requirement for TIF formalizes the analysis and requires the local government sponsoring TIF to provide convincing evidence showing that tax dollars from the TIA are necessary to make the development possible. If a proposed development would occur without TIF, public tax dollars should not be used because it will cost taxpayers more than it should for the resulting development or growth. However, if TIF is used to encourage a development that would not otherwise happen, the tax base can be increased. A larger tax base helps pay for needed services and can control the growth of new taxes. The But- For-Requirement is critical as a means to determining the proper use for public tax dollars. The following criteria has been developed to evaluate the Broadmoor Development and provide sufficient evidence to support or deny TIF for projects based on the But-For-Requirement. Lack of Growth and/or History of Development: One measure to determine if TIF is appropriate is to evaluate if there has been any growth in the region that is similar with the type of development desired or envisioned. There is no project in the Tri-Cities that is remotely close to the scope and scale of the Broadmoor Development. The commercial development that has occurred in the City of Pasco did so based on locations where key infrastructure (streets, water, sewer) were already in place. Broadmoor Development’s planned commercial buildings would likely not be built in today’s economic environment without the proposed TIF Infrastructure. Figure 8: Park Place Apartments In terms of multi-family construction, the City of Pasco has not yet seen any development above 3-stories. Construction costs for multi-family developments above three-stories, due to construction standards/requirements are significantly higher and require higher rents than the market is currently able to support. There is only multi- family development above three- stories in the Tri-Cities area. Constructed in 2021, the Park Place Apartments, situated in Richland, WA, has 106 units among 4-stories with one level of below grade parking (less than 30 parking spaces). Some retail is also provided under the 106 residential units and within two separate one-story buildings. The average construction costs for newer multi-family housing in the Tri-Cities ranges from $260 to $350 per square foot depending on the type of unit being constructed. The average rents in the Tri-Cities is $1.90 to $2.30 per square foot, which provides sufficient revenue to support a cost per square foot of between $180 to $220, resulting in the likely scenario that development above three- Page 30 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 16 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 11 stories will not occur until rents are higher or construction costs decrease. Rents have been rising in the region, with nominal rents increasing 20% in the past decade according to CoStar (a commercial real estate data firm). With continued tight vacancies, it is likely that upward pressures on prices will continue fueling the demand for new housing units in the near future at market clearing prices for new construction. Adding in any of the cost of the infrastructure proposed to be funded by TIF to the construction cost of the development would only make any of the proposed five, six, and seven-story and mixed-use construction for the Broadmoor Development project even more unlikely, counteracting price gains in apartment rents. Developer Commitment: Another measure to evaluate if TIF should be used is from the lack of any private vertical development commitment to build a project without the infrastructure first being in place. Stated differently, the private sector will only build the project if the TIF infrastructure is built and funded with public tax dollars. Over the last year the City has been working with Broadmoor Properties (property owner) and prospective purchasers/developers of two key sites along Broadmoor Boulevard, comprising of over 50 acres of commercial development. Both private developments have confirmed as part of purchase and sale agreements with Broadmoor Properties that their development will not occur unless the proposed TIF improvements are publicly funded and constructed. Other discussions with developers interested in commercial and mixed-use type development envisioned for the Broadmoor Development site have echoed a similar requirement. Impact of Financial Feasibility | Residual Land Value Analysis Another way to evaluate the But-For-Requirement is to examine how the cost of the public infrastructure impacts the financial viability of real estate. To inform the evaluation of this condition, ECONorthwest completed an economic analysis that reflects the developer’s decision- making process and cash flow equation. The findings from this analysis bear on the “but-for” test by including information on the impact of financial returns. The central question is: How does the public provision of the infrastructure solve for a value deficit to support real estate investment? In other words, could development happen if the private development was required to self-fund the proposed public improvements. To understand the potential for development under TIF (and without TIF), ECONorthwest employed an Excel-based financial model that used the Residual Land Value methodology. The model considered the prototypes, entitlement limits, open space and right-of-way needs, and the financial market conditions (e.g., rents, operating and construction costs, and investment return requirements). Residual land value (RLV) is an estimate of what a developer would be able to pay for land given: • The property’s income from rental or sales revenue; • The cost to build as well as to operate the building; • The investment returns needed to attract capital for the project. In other words, it is the budget that developers have remaining for land after all other development constraints have been analyzed. The RLV approach has several advantages: Page 31 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 17 1 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 12 1 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 12 • It does not rely on land prices as an input. Rather, observed land prices can be compared with the model outputs to help calibrate the model and ensure it reflects reality; • It can assess the impacts of changes to the development code and accompanying development incentives because these policies principally affect land value, especially in the short run. Each of the development concepts was analyzed using this RLV approach. The results from this method describe a general analysis of prototypes in the Broadmoor area and do not consider the many potential unique conditions that could be a factor in development feasibility (e.g., increased predevelopment costs, low land basis from longtime land ownership, unique financing, etc.). For these reasons, a RLV analyses should be thought of as a strong indicator of the relative likelihood of feasibility, rather than an absolute measure of return to the investor or developer. Though the RLV estimate is relevant for developers seeking to purchase land for new development, it is also applicable for understanding the development decisions of those that already own land. In the case where the property owners have owned the land for many years such that the mortgage/debt is now paid off, an RLV estimate of $0 would reflect a set of development constraints that could be feasible. The Broadmoor area has experienced recent land transactions which helps the analysis compare and understand the value of maximum and base entitlements. For the Broadmoor area, ECONorthwest used the following methodology to compare the budget remaining for land between prototypes built under multiple hypothetical base entitlements and prototypes built under the proposed maximum entitlements. To complete this analysis, ECONorthwest: 1. Compiled financial inputs such as rent, operating costs, and development costs for each type of development product. 2. Defined the available building areas of the prototypes (for this analysis a mixed-use/ multi-family and commercial retail center are used as examples of projects that have not been built in the study area and could be supported with TIF investments). 3. Used the pro forma to calculate the revenue from the leasable square feet and then removed the vacancy and operating costs (such as taxes, insurance, maintenance, management, select utilities) to arrive at an annual net operating income (NOI). 4. Derived the value from each NOI by dividing by the respective return on cost threshold 5. Summed those values to arrive at a total value for each development concept. 6. Calculated the total development costs by applying the cost per square foot values to the gross square feet for each product type 7. Summed those values to a total hard cost and calculated the soft cost, contingency, and developer fee to arrive at the total development cost. 8. Calculated the land budget (also known as the RLV) by subtracting the total development cost from the total value 9. Divided the total land budget by the site square feet to arrive at a residual land value per square foot. 10. Compare RLV of a baseline scenario where the project is not encumbered with a pro- rata share of the $39 million in TIF infrastructure to one where they are encumbered with it. Page 32 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 18 13 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 13 The TIF improvements are estimated to cost $39 million and are concentrated at the southern end of the site. The owner of the Broadmoor Development (and/or future developers of the site) will be funding and constructing additional public improvements at an estimated cost of $39 million to $45 million along with dedicating an additional 32 acres of land to support those public improvements (these values are in addition to the $39 million in proposed TIF projects). Currently, land values in the area are about $1 per square foot of land as assessed by the Franklin County Assessor. These values reflect the current use of the land without any of the contemplated TIF projects. Raw land that has sold in the immediate area in recent time has ranged between $2 to $9 per square foot on land, depending on where these parcels are located and the relative proximity to the TIF improvements (higher values where sites are already served by infrastructure and lower where there is a deficit). The summary below compares three different land value perspectives from both the purchase price and the RLV analysis. • Current Land Value: This is the range of sales prices of recent raw land sales within the TIA that are closer to the sites most impacted by needed improvements that could be funded by TIF. • Baseline RLV: This RLV estimates what the current land value might be under considering projected revenues and costs. • Impacted RLV: This RLV estimates the effect of the land having to account for the $39 million in infrastructure costs on top of the other $39-$45 million in infrastructure costs that would be borne by the project. • Impact on Feasibility: In the RLV analysis, financial feasibility is expressed as a land value. From a developer’s perspective, it frames what they can pay for land. The percent change refers to the change in the absolute value of the baseline to impacted RLV. A negative value in this case, means that the additional cost of the TIF infrastructure (allocated on per square foot basis of the building lot) proportionally reduces the land budget for the development. Figure 9: Summary of RLV Analysis Source: ECONorthwest Calculations Figure 9 summarizes the results of the RLV analysis. The table shows the type of prototype analyzed and some basic parameters of their development conditions. The Baseline RLV shows the land residual if the project does not have to bear the cost of the TIF infrastructure. In this case, the values are lower than where land is trading in the area and reflect financial conditions that may not support development in the near future and are uncertain given current macroeconomic conditions. This also is congruent with the observation that no development has taken place in the area, in part due to the deficit of infrastructure. In comparison, the Impacted RLV (with the incorporation of the pro rata share of the TIF infrastructure is more negative and reflects an added value that the land must bear for the cost of the infrastructure – approximately adding almost $3 of negative land value due to the need to provide the infrastructure. This in theory lowers the value of land and may put pressure on financial Use Protoype Current Land Baseline RLV Impacted RLV Impact on Feasibility Mixed Use Multifamily 4 story, 100 units $5.00-$5.50 -$1.10 -$3.80 -245% Commercial 20,000 sqft retail $5.00-$5.50 $2.70 -$0.10 -104% Page 33 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 19 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 14 viability of development, ultimately impacting either the rate, quality, or timing of development and is reflected in the impact on feasibility. In the case of a mixed-use project (retail and multi- family), there is a 245% reduction in the RLV and 104% reduction for a commercial retail project. The ultimate impact of this reduction and the magnitude on these types of projects is the inability to secure land at market prices, and therefore enable their production. This type of RLV analysis is not intended to be definitive with respect to the “but-for” test and should be understood as reflecting the challenging conditions that development in the area currently faces along with the added challenge of supporting needed infrastructure. In summary, these additive figures demonstrate that any development scenario is would be very challenging without the TIF infrastructure investments. Expected Development Without TIF Improvements: Because the Interstate 182 interchange is near capacity and commercial and mixed-use development would likely not invest in the Broadmoor Development without the proposed TIF infrastructure improvements, the development forecast is significantly limited. Without TIF improvements, development of approximately 240 single family homes (market absorption of 60 homes per year) and 410 multi-family homes (market absorption of 205 homes per year) would likely be built based on development interest. These homes gain access to their development from Burns Road and would not necessitate the development of any improvements funded by TIF. The projected assessed value of these developments with the use of TIF is provided in Figure 10 below. Figure 10: Comparison of Assessed Value Growth Between TIF Scenarios and No TIF Source: ECONorthwest calculations, 2022 Summary of “But-For-Requirement” Based on the above criteria, the proposed Broadmoor Development could not occur without the identified TIF infrastructure improvements. Additionally, the assessed values from projected private development without any TIF improvements would be less than the increase in assessed values from private development with the TIF improvements. It is important to reiterate that the Broadmoor Development still requires additional infrastructure investment beyond those improvements identified to be funded with TIF. In fact, private development will be responsible for infrastructure improvements estimated between $39 million to $45 million compared to the $39 million identified for the TIF improvements (see Risk Assessment and Mitigation Plan below). Additionally, land valued between $5.5 million and $ 10.6 million will be dedicated by Broadmoor Properties to the City for its infrastructure improvements. Incremental Assessed Value 2023 2028 2033 2038 2043 2048 Tax Year Aggressive $0 $1,130,730,000 $1,681,980,000 $1,811,970,000 $1,952,010,000 $2,102,870,000 Moderate $0 $763,400,000 $1,470,220,000 $1,620,620,000 $1,761,900,000 $1,898,070,000 Conservative $0 $553,440,000 $825,660,000 $889,470,000 $958,210,000 $1,032,270,000 No TIF $0 $323,500,000 $348,500,000 $375,440,000 $404,450,000 $435,710,000 Page 34 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 20 1 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 15 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 Tax Increment Area The TIA includes the entire Broadmoor Development site of approximately 671 acres. With the exception of the gravel and sand operation parcels, the entire site is vacant. The assessed valuation of the TIA in 2022 is approximately $30 million (Figure 12), well below either the $200 million assessed valuation threshold or 20 percent of the City of Pasco’s total assessed valuation of $6,502,962,700 (0.46% of total valuation). Tax Increment Revenue Projections Overview of TIF Allocation Revenues Following guidance issued by the Washington State Department of Revenue, the analysis estimates the apportionment of taxes to the TIA. These revenues are available to the sponsoring local jurisdiction for funding of the identified public infrastructure projects (that are named in the ordinance). Under the TIF legislation, only certain regular levies are available to the TIA. Using 2022 levy rates in the Broadmoor TIA, only $2.62 of the $8.80 total levy, approximately 30%, would be available (Figure 11). Figure 11: Overview of Levy Rates and TIF Levy Rate Allocation Source: ECONorthwest and Franklin County Assessor Since these are regular levies, the taxes must conform with the constitutional 1% limit as well as the $5.90 aggregate limits. Both parts of the State School levy as well as local school district excess levies are excluded. In addition, any taxes levied by port districts for the purpose of making payment on bonds would be excluded. Current 2022 Levy Taxes Exempt: State Schools Exempt: Excess and Other Levies Available for TIF allocation Total $8.7952 $2.8043 $3.3671 $2.6238 State Part 1 $1.8229 $1.8229 $0.0000 Part 2 $0.9814 $0.9814 $0.0000 Franklin County Regular_Current Expense $0.9046 $0.9046 Regular_Veterans Aid $0.0113 $0.0113 Regular_Mental Health $0.0250 $0.0250 Bond Fund_Courthouse $0.0638 $0.0638 $0.0000 Port of Pasco General Fund $0.2177 $0.2177 Bond Fund $0.0000 $0.0000 $0.0000 City of Pasco $1.4653 $1.4653 Pasco School District Pasco Enrichment $1.4557 $1.4557 $0.0000 Pasco Bond $1.8476 $1.8476 $0.0000 Pasco Building $0.0000 $0.0000 Page 35 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 21 1 City of Pasco | Broadmoor Development TIF Project Analysis July 2022 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 16 Broadly, TIF in Washington allocates a portion of incremental property taxes to the TIA based on the amount of assessed value added to the TIA. This means that each taxing district in the TIA will receive that portion of its regular property taxes produced by the rate of tax levied by the taxing district based on the assessed value of real property located in the area for taxes imposed in the year that the TIA was created. This amount will flow to the member districts for the period that the TIA is in place. The local government that created the TIA will receive a portion of the regular property taxes levied by each taxing district based off the increment value within the increment area. For the local government that created the TIA, this includes their own portion of their regular levy. Property taxes from the TIA begin on the calendar year following the passage of the ordinance. The county treasurer will distribute these funds to the agency that created the TIA. TIA Allocation Revenue Modeling New incremental development in the TIA will drive future growth in incremental assessed value. These values will then be multiplied by the levy rate in the respective years to estimate the amount of TIA allocation revenues. To accomplish this, there are four separate analyses that must be completed: • Forecast incremental TIA assessed value. Based on the development program, the future assessed value is estimated by assigning market-based improvement prices based on the land use and size of the proposed development. • Forecast jurisdiction assessed value. Outside of growth in the incremental assessed value in the TIA, it is necessary to forecast growth in the City’s overall assessed value (not counting the incremental growth in the TIA. • Forecast highest lawful levy. For each taxing jurisdiction in the TIA, future levies must be estimated. To do so, the amount of new construction, other add-on value, 101% limit factor, total levy limit, and the maximum allowable levy must be taken into consideration. From that interplay, it is possible to estimate what the given levy will be for any respective jurisdiction in the future. • Forecast levy rates. Once the levy and assessed value are known in future years, it is possible to calculate the levy rate (divide levy by thousands of assessed value). TIA allocations are made by multiplying the levy rate by the incremental TIF assessed value. To model TIA allocation property tax revenues, a 25-year cash flow model was created to reflect development over time and applied the appropriate property tax base productivity and property tax rates to estimate the stream of future property tax revenues. Additional assumptions in the forecast modelling include: • The City’s assessed valuation growth is assumed to grow at a rate of 1.5% a year. • Once new built structures are placed on the tax assessments, these properties are also assumed to grow at a real rate of 1.5% a year (inflation adjusted) after their initial assessment. • Outside of new construction growth within the tax increment area, new construction within the City is limited to no more than 1.2% of the City’s assessed value base. Page 36 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 22 16 1 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 17 TIA Allocation Results Assessed Value in the TIA. Figure 12 identifies the parcels in the TIA and their current valuation. Based on 2022 values for 2023 taxes, the district has approximately $30 million in real property assessed value. The $30 million figure is below the assessed value cap of the lesser of 20% of the city’s assessed value or $200 million. Figure 12: Current Parcels in TIF District and 2023 Valuation Source: Franklin County Assessor, 2022 Assumptions on Incremental Assessed Value Growth Using assumptions identified in the Development Program for the Aggressive, Moderate, and Conservative growth scenarios, future assessed values of those improvements are estimated and serve as a foundation for the expected TIA allocation revenues. Parcel 2023 Land Assessed Value 2023 Improvement Assessed Value 2023 Total Assessed Value 115210046 $4,001,300 $0 $4,001,300 115210039 $1,522,400 $0 $1,522,400 115210038 $1,856,300 $0 $1,856,300 115210037 $2,217,200 $0 $2,217,200 115210048 $344,100 $0 $344,100 115210045 $1,843,600 $0 $1,843,600 115210044 $2,947,200 $0 $2,947,200 115210043 $1,455,300 $0 $1,455,300 115210040 $2,939,300 $0 $2,939,300 115210042 $1,023,500 $0 $1,023,500 115210041 $668,700 $0 $668,700 115210036 $1,477,700 $0 $1,477,700 115210035 $1,329,000 $0 $1,329,000 115210034 $2,780,500 $0 $2,780,500 115210033 $1,223,800 $0 $1,223,800 115210032 $1,232,300 $0 $1,232,300 115210031 $1,234,800 $0 $1,234,800 Total $30,097,000 $0 $30,097,000 Page 37 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 23 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 17 1 17 1 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 18 TIA Allocation Revenues The following table (Figure 13) summarizes the present value of 25 years of TIA allocation revenues that would flow to the Broadmoor TIA created by the City of Pasco (first year of revenues is 2025). The revenues are discounted at a rate of 4.5% to approximate the City’s cost of capital (debt and issuance costs). Figure 13 shows that the Aggressive scenario can accommodate approximately a present value of $50.9 million in debt, whereas the Moderate scenario can accommodate $42.3 million in debt and Conservative scenario can accommodate $25 million in debt. Figure 13: Present Value of TIF Allocation Revenues Source: ECONorthwest calculations, 2022 Figure 13A summarizes the incremental assessed value and respective levy rates from 2023 to 2048 where the TIA is assumed to be in place for the Moderate Scenario as an illustration of how the base value, increment value, and levy rate are forecasted to grow under the development assumptions. Subsequently, the total property taxes for the contributing tax levies are shown with allocated TIF revenues and the remaining portion that would continue to flow to the taxing jurisdiction split out from each other. Jurisdiction Aggressive Moderate Conservative City $28,390,000 $23,630,000 $13,940,000 County $18,250,000 $15,190,000 $8,980,000 Port District $4,220,000 $3,510,000 $2,080,000 Total $50,860,000 $42,330,000 $25,000,000 Page 38 of 229 24 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 19 Figure 13A: TIF Allocation Revenues – Moderate Scenario City of Pasco Assessment Year 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Base Value $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 Increment Value 0 $0 $150,588,381 $306,221,473 $551,095,153 $763,398,629 $936,894,594 $1,025,273,701 $1,245,609,229 $1,384,588,893 $1,470,221,781 $1,499,156,778 $1,528,653,112 Levy Rate $1.40758 $1.40073 $1.39397 $1.38736 $1.38095 $1.37468 $1.36849 $1.36233 $1.35624 $1.35017 $1.34411 $1.33802 $1.33193 Total Property Tax $42,364 $42,158 $251,869 $466,594 $802,596 $1,090,802 $1,323,322 $1,437,760 $1,730,162 $1,910,071 $2,016,589 $2,046,177 $2,076,144 Tax Allocated to TIF $0 $0 $209,915 $424,839 $761,034 $1,049,428 $1,282,134 $1,396,758 $1,689,343 $1,869,435 $1,976,135 $2,005,907 $2,036,057 Tax Allocated to City $42,364 $42,158 $41,954 $41,755 $41,562 $41,374 $41,188 $41,002 $40,819 $40,636 $40,454 $40,270 $40,087 Franklin County Assessment Year 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Base Value $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 Increment Value $0 $0 $150,588,381 $306,221,473 $551,095,153 $763,398,629 $936,894,594 $1,025,273,701 $1,245,609,229 $1,384,588,893 $1,470,221,781 $1,499,156,778 $1,528,653,112 Levy Rate $0.90821 $0.90380 $0.89941 $0.89506 $0.89073 $0.88640 $0.88208 $0.87780 $0.87353 $0.86928 $0.86505 $0.86084 $0.85665 Total Property Tax $27,334 $27,202 $162,509 $301,027 $517,684 $703,351 $852,965 $926,407 $1,114,367 $1,229,755 $1,297,845 $1,316,436 $1,335,296 Tax Allocated to TIF $0 $0 $135,440 $274,088 $490,876 $676,674 $826,417 $899,988 $1,088,077 $1,203,592 $1,271,810 $1,290,527 $1,309,513 Tax Allocated to County $27,334 $27,202 $27,069 $26,939 $26,808 $26,678 $26,548 $26,419 $26,291 $26,163 $26,035 $25,909 $25,782 Port of Pasco Assessment Year 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Base Value $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 Increment Value $0 $0 $150,588,381 $306,221,473 $551,095,153 $763,398,629 $936,894,594 $1,025,273,701 $1,245,609,229 $1,384,588,893 $1,470,221,781 $1,499,156,778 $1,528,653,112 Levy Rate $0.21009 $0.20907 $0.20805 $0.20705 $0.20604 $0.20504 $0.20404 $0.20306 $0.20207 $0.20108 $0.20010 $0.19913 $0.19816 Total Property Tax $6,323 $6,292 $37,592 $69,634 $119,752 $162,701 $197,310 $214,298 $257,778 $284,469 $300,220 $304,521 $308,883 Tax Allocated to TIF $0 $0 $31,330 $63,402 $113,550 $156,529 $191,168 $208,187 $251,696 $278,417 $294,198 $298,527 $302,919 Tax Allocated to Port $6,323 $6,292 $6,262 $6,232 $6,201 $6,171 $6,141 $6,111 $6,082 $6,052 $6,023 $5,993 $5,964 City of Pasco Assessment Year 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 Base Value $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 Increment Value $1,558,721,556 $1,589,373,092 $1,620,618,910 $1,652,470,411 $1,684,939,216 $1,710,213,304 $1,735,866,504 $1,761,904,501 $1,788,333,069 $1,815,158,065 $1,842,385,436 $1,870,021,217 $1,898,071,536 Levy Rate $1.32583 $1.31973 $1.31363 $1.30754 $1.30146 $1.29539 $1.28933 $1.28328 $1.27725 $1.27123 $1.26523 $1.25925 $1.25328 Total Property Tax $2,106,503 $2,137,263 $2,168,435 $2,200,029 $2,232,053 $2,254,379 $2,276,907 $2,299,641 $2,322,585 $2,345,744 $2,369,120 $2,392,719 $2,416,542 Tax Allocated to TIF $2,066,599 $2,097,543 $2,128,899 $2,160,676 $2,192,883 $2,215,392 $2,238,102 $2,261,018 $2,284,144 $2,307,484 $2,331,041 $2,354,819 $2,378,821 Tax Allocated to City $39,903 $39,720 $39,536 $39,353 $39,170 $38,987 $38,805 $38,623 $38,441 $38,260 $38,080 $37,900 $37,720 Franklin County Assessment Year 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 Base Value $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 Increment Value $1,558,721,556 $1,589,373,092 $1,620,618,910 $1,652,470,411 $1,684,939,216 $1,710,213,304 $1,735,866,504 $1,761,904,501 $1,788,333,069 $1,815,158,065 $1,842,385,436 $1,870,021,217 $1,898,071,536 Levy Rate $0.85248 $0.84833 $0.84420 $0.84009 $0.83600 $0.83193 $0.82788 $0.82385 $0.81984 $0.81585 $0.81188 $0.80792 $0.80399 Total Property Tax $1,354,429 $1,373,838 $1,393,528 $1,413,503 $1,433,766 $1,447,813 $1,462,004 $1,476,338 $1,490,819 $1,505,448 $1,520,225 $1,535,152 $1,550,232 Tax Allocated to TIF $1,328,772 $1,348,306 $1,368,120 $1,388,219 $1,408,605 $1,422,775 $1,437,087 $1,451,543 $1,466,145 $1,480,893 $1,495,790 $1,510,836 $1,526,034 Tax Allocated to County $25,657 $25,532 $25,408 $25,284 $25,161 $25,039 $24,917 $24,795 $24,675 $24,555 $24,435 $24,316 $24,198 Port of Pasco Assessment Year 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 Base Value $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 Increment Value $1,558,721,556 $1,589,373,092 $1,620,618,910 $1,652,470,411 $1,684,939,216 $1,710,213,304 $1,735,866,504 $1,761,904,501 $1,788,333,069 $1,815,158,065 $1,842,385,436 $1,870,021,217 $1,898,071,536 Levy Rate $0.19720 $0.19624 $0.19528 $0.19433 $0.19338 $0.19244 $0.19151 $0.19057 $0.18965 $0.18872 $0.18780 $0.18689 $0.18598 Total Property Tax $313,309 $317,799 $322,354 $326,974 $331,662 $334,911 $338,194 $341,510 $344,859 $348,243 $351,661 $355,115 $358,603 Tax Allocated to TIF $307,374 $311,893 $316,476 $321,126 $325,841 $329,119 $332,430 $335,774 $339,152 $342,563 $346,009 $349,490 $353,005 Tax Allocated to Port $5,935 $5,906 $5,877 $5,849 $5,820 $5,792 $5,764 $5,736 $5,708 $5,680 $5,652 $5,625 $5,597Page 39 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 25 20 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 Debt Service Payments and Coverage Assuming the City issues $39 million in debt sometime in late 2022 or early 2023 to fund the infrastructure projects, it will need to service that debt with available resources regardless if the anticipated private development occurs. However, given the nature of TIF, incremental revenues early in the TIF period may not be sufficient to service the debt as private development construction will be in progress it will take time to build incremental assessed values contributions that ultimately determine the TIF allocation revenues estimated in this report. Figure 14 summarizes potential debt service payments (assuming equal debt service) relative to the different TIF tax allocation revenue scenarios that would flow to the City. Until private development catches up and matches the City’s debt service payment, it will need to cover these early deficits by using revenues identified in this Project Analysis (see Additional Incremental Tax and Impact Assessment and Mitigation Sections below) or structure their debt payments in line with their revenue stream. Page 40 of 229 26 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 19 Figure 14: Summary Equal Debt Payments and TIF Revenue Allocations Source: ECONorthwest calculations, 2022 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 21 TIF Allocation Revenues Tax Year 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Aggressive TIF Revenues $0 $0 $680,000 $1,480,000 $2,300,000 $2,790,000 $3,160,000 $3,580,000 $3,860,000 $3,970,000 $4,050,000 $4,100,000 $4,140,000 TIF Debt Service $0 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 Surplus/Deficit $0 ($2,630,000)($1,950,000)($1,150,000)($330,000)$160,000 $530,000 $950,000 $1,230,000 $1,340,000 $1,420,000 $1,470,000 $1,510,000 Tax Year 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 Aggressive TIF Revenues $4,180,000 $4,220,000 $4,270,000 $4,310,000 $4,350,000 $4,400,000 $4,440,000 $4,490,000 $4,530,000 $4,580,000 $4,620,000 $4,670,000 $4,720,000 TIF Debt Service $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 Surplus/Deficit $1,550,000 $1,590,000 $1,640,000 $1,680,000 $1,720,000 $1,770,000 $1,810,000 $1,860,000 $1,900,000 $1,950,000 $1,990,000 $2,040,000 $2,090,000 Tax Year 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Moderate TIF Revenues $0 $0 $380,000 $760,000 $1,370,000 $1,880,000 $2,300,000 $2,500,000 $3,030,000 $3,350,000 $3,540,000 $3,590,000 $3,650,000 TIF Debt Service $0 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 Surplus/Deficit $0 ($2,630,000)($2,250,000)($1,870,000)($1,260,000)($750,000)($330,000)($130,000)$400,000 $720,000 $910,000 $960,000 $1,020,000 Tax Year 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 Moderate TIF Revenues $3,700,000 $3,760,000 $3,810,000 $3,870,000 $3,930,000 $3,970,000 $4,010,000 $4,050,000 $4,090,000 $4,130,000 $4,170,000 $4,220,000 $4,260,000 TIF Debt Service $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 Surplus/Deficit $1,070,000 $1,130,000 $1,180,000 $1,240,000 $1,300,000 $1,340,000 $1,380,000 $1,420,000 $1,460,000 $1,500,000 $1,540,000 $1,590,000 $1,630,000 Tax Year 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Conservative TIF Revenues $0 $0 $270,000 $640,000 $970,000 $1,360,000 $1,800,000 $1,870,000 $1,950,000 $1,970,000 $1,990,000 $2,010,000 $2,030,000 TIF Debt Service $0 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 Surplus/Deficit $0 ($2,630,000)($2,360,000)($1,990,000)($1,660,000)($1,270,000)($830,000)($760,000)($680,000)($660,000)($640,000)($620,000)($600,000) Assessment Year 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 Conservative TIF Revenues $2,050,000 $2,070,000 $2,090,000 $2,110,000 $2,130,000 $2,160,000 $2,180,000 $2,200,000 $2,220,000 $2,240,000 $2,270,000 $2,290,000 $2,310,000 TIF Debt Service $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 Surplus/Deficit ($580,000)($560,000)($540,000)($520,000)($500,000)($470,000)($450,000)($430,000)($410,000)($390,000)($360,000)($340,000)($320,000)Page 41 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 27 Figure X: Broadmoor Development Possible Conceptual Development Rendering City of Pasco | Broadmoor Development TIF Project Analysis August 2022 22 Jobs Analysis Figure 15: Broadmoor Development Possible Conceptual Development Rendering Source: Broadmoor Development, Marcus Millichap The job analysis considers two sources of employment tied to the Broadmoor TIA. First, the construction of the development program will create jobs in the construction industry. These jobs will occur during the construction and are therefore “one-time” events. In contrast, once the buildings are constructed, commercial-oriented buildings will be occupied by firms and workers engaged in different sectors of the economy. These jobs are “on-going”, meaning they are permanent on the condition of occupation within the TIA. The following sections summarize these job estimates, and the methods used to derive them. Construction Employment Construction of the development over the anticipated build-out period would create temporary construction jobs within the region and state. The jobs estimated in Figure 1 are derived by using the 2022 value of construction investment for the Development Program Scenarios (Aggressive, Moderate, Conservative) and interpolating them into the Washington State Office of Financial Management’s Input/Output model. The model relates spending in an industry sector to the number of jobs that would be directly supported by that same investment. While the model estimates the number of jobs generated in the state of Washington, it is likely that most of these workers would come from the immediate Tri-Cities region. The region is rapidly growing in population, meaning many of these jobs would be additive to existing jobs within the region. Ultimately, the income earned by workers would bring additional spending to the City that would not have otherwise occurred. ECONorthwest estimates the total number of construction jobs based on the spending by scenario. The number of jobs at any given time would vary depending on how development buildings are phased and developed. As expected, the scale of the investment in the Page 42 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 28 1 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 23 Aggressive scenario produces the largest amount of construction jobs, in this case, 6,600 construction jobs. Figure 16: Construction Jobs Source: ECONorthwest calculations and Office of Financial Management Input/Output Model, 2022. On-going Employment Based on the types of uses and square feet of building area, ECONorthwest estimated the potential number of jobs the development would support when built. These numbers are derived from ratio estimates building area to number of employees. The U.S. Energy Information Administration releases data from the 2018 Commercial Buildings Energy Consumption Survey (CBECS) that provides building characteristics information for commercial buildings in 2018 in the U.S. (the latest year of data). The data contain the average building square foot per worker by building use. Using the amount of planned development square footage by building use at full buildout of the scenarios, these ratios can be applied (less a vacancy rate of 5 percent) to estimate the number of on-going jobs. The Moderate scenario, by measure of having more commercial space than either of the other scenarios has the largest number of on-going jobs at 1,170. Figure 17: On-going Jobs Source: 2018 CBECS, Table B1. Summary table: total and means of floorspace, number of workers, and hours of operation, 2018 (Release date: September 2021) Impact Assessment and Mitigation Affordable Housing: The Broadmoor Development will provide additional single family and multi-family housing options as part its development program. As the property is vacant, no residential housing will be displaced from the development. It is expected that as additional housing is built, demand is lowered and housing costs are reduced over the long-term and become more affordable. The increased number of units stemming from this development will help house the growing population base, meeting the demand with supply. Without additional housing in the Tri-Cities region, affordability will only become increasingly challenging. Additionally, the City has partnered with the County to ensure affordability levels for units that the market cannot support. The City of Pasco has developed the Community Housing Improvement Program (CHIP) for the purpose of expanding affordable home ownership opportunities by offering financial assistance for low to moderate income home buyers in Pasco with priority given to targeted neighborhoods. The Pasco City Council formed the Pasco Housing Authority in 1942 to provide for safe affordable housing options. In 1981, Franklin County officials approached the Pasco City Council with a proposition to form a joint housing authority designed to meet the needs of not only low-income Aggressive Moderate Conservative Construction Jobs 6,600 5,650 1,880 Investment (millions)$1,867 $1,600 $533 Employment Uses Jobs: Aggressive Jobs: Moderate Jobs: Conservative Mean SqFt/Work Retail Warehousing 130 130 130 1,589 Commercial 340 400 150 992 Medical Office 640 640 0 573 Total Jobs 1,110 1,170 280 Page 43 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 29 City of Pasco | Broadmoor Development TIF Project Analysis July 2022 26 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 24 individuals within City limits, but those in the rest of Franklin County, as well. A joint housing authority was born and named the Housing Authority of the City of Pasco and Franklin County (HACPFC). HACPFC works to provide housing and housing assistance to more than 600 families. The U.S. Department of Housing and Urban Development provides Public Housing subsidy for 280 units owned by and managed by HACPFC. HACPFC owns, and serves as landlord for, 68 housing units not subsidized by HUD. The rent is kept affordable for families earning between 50% and 80% of median income for the Tri-Cities area. In 2014, HACPFC constructed a 38-unit tax credit property named Varney Court. HACPFC also administers 318 Housing Choice Vouchers (HCV). The HCV program provides rental assistance to extremely low-income individuals and families who rent from local landlords in the Tri-Cities area. Through an agreement with the Kennewick Housing Authority (KHA), Housing Choice Voucher holders from HACPFC and KHA may search for a suitable unit in either agency’s jurisdiction. Both the City and the HACPFC will look for opportunities to encourage the development of affordable housing units throughout the City, including the Broadmoor Development. More recently, following the adoption of the 2018-2038 Comprehensive Plan (October 2020), staff began utilizing a variety of local, regional, and state resources and guidance to identify practical housing policy solutions. While some of these efforts were initiated prior to 2021, the alignment of them have been emphasized over the past year. Over the past 12 months, the City of Pasco has adopted significant zoning reforms that have eliminated restrictive zoning policies while also increasing housing opportunities that improve mobility options. In January 2022, the Pasco City Council completed its efforts, under Engrossed Second Substitute House Bill 1923 (HB 1923) to increase residential building capacities. The City of Pasco was one of 52 communities that were awarded funding from the Washington State Department Commerce to address housing capacities. The City selected three code amendments that increased lot size flexibility (cluster zoning/lot size averaging), allowed accessory dwelling units citywide, and re- allowed missing middle housing on residentially zoned parcels. These changes effectively increased the residentially zoned land that allows for attached and multi-family housing from 10 percent to 78 percent on all residential parcels. Additionally, density and flexibility incentives were added into the code itself allowing more housing near public transit, parks, schools, hospitals, and civic facilities. In the fall of 2021, the City of Pasco was one of five cities selected, after a national call for applications to participate in the Housing Solutions Lab. The Lab was hosted by the New York University Furman Center’s Housing Solutions Lab, with support from Lincoln Institute of Land Policy. Cities were selected that have a demonstrated interest in developing or refining a comprehensive local housing strategy, including evidence of recent steps taken that indicate its commitment to addressing housing challenges. Throughout the program, city staff learned and evaluated our existing policies, and identified gaps to be addressed to help with the development of a balanced housing policy framework. Following the completion of the Housing Solutions Lab, City staff embarked on an effort to further housing with phased effort to update its zoning code to increase flexibility and choices to meet demands. The updates to the zoning code will provide practical parameters and guidance for the creation and/or redevelopment missing middle housing, multifamily housing, and small lot residential housing. Page 44 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 30 1 25 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 The Association of Washington Cities recognized the City of Pasco for increasing housing access and opportunities at its 2022 annual conference with a municipal excellence award. Local Business Community: The local business community is expected to experience positive impacts in terms of commercial sales from new residents living and working within the Broadmoor Development. Although there will be significant commercial development within the Broadmoor Development, the demand for goods and services is expected to positively spill over to businesses throughout the City. Because the land is vacant and miles away from other commercial centers and the downtown, commercial gentrification is not expected to be an issue. In addition to the new residents, between 280 and 1,100 on-going jobs will be introduced depending on which Development scenario occurs. Likewise, between 1,880 and 6,600 construction jobs will be introduced based on private investment for the vertical development that would be between $533 million to $1.8 billion based on the specific Development Program growth scenario. These new jobs supported by significant private investment will benefit other businesses in the City of Pasco as well as the Tri-Cities area. Local School Districts: The Pasco School District will significantly benefit from additional property taxes generated by new construction in the TIA from the Broadmoor Development. Their existing property taxes are preserved under the law. School district Enrichment and Capital Levies are excess levies, and the districts periodically ask voters to maintain existing levels of purchasing power via voted ballots. Bond levies ask voters to approve bonds to expand or improve their facilities. The effect of growth in the tax base coming from TIF will have two implications. First, it increases the tax base of the district, meaning that lower overall tax rates are needed to fund a similar level of service. Second, it increases the proportion of the tax base that is commercial which leverages the relative voting power of residential households to support school expenditures backed by these excess levies (voter approved or otherwise). The City also collects impact fees on behalf of the Pasco School District to accommodate student growth associated with new development. Local Fire Service: State law requires a mitigation plan if the TIA will impact at least 20 percent of the assessed value of an impacted fire district. Local fire service is provided by the City of Pasco and therefore there is no impact to another taxing district. Additionally, the total assessed value of the City of Pasco is $8,065,205,843 along with a Fire Department Budget of $9,270,268, resulting in only a 0.1 percent impact on local fire service. Increased revenues from the Broadmoor Development are expected to be sufficient, to provide at a minimum, the City’s existing levels of services to the area. Page 45 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 31 1 City of Pasco | Broadmoor Development TIF Project Analysis July 2022 28 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 26 Financing Plan/Duration of TIA The City anticipates issuing Limited Term General Obligation (LTGO no-voted debt) tax exempt bonds to pay for the TIF infrastructure projects in the amount not to exceed $39 million. The City anticipates issuing the debt in 2022 or early 2023 to coincide with the public infrastructure and private development timelines. The City plans the LTGO bonds to be structured with a 25-year amortization and a 10-year par call. Additionally, the City is not currently expecting to capitalize interest during the first three years of the financing when TIF revenues alone are not expected to be sufficient to cover debt service. Instead, the City plans to pay any difference between debt service and TIF revenues from non-TIF revenues. The City will reimburse itself for any feasibility studies, including engineering design work to accurately project costs that occurred prior to the expected adoption of the Ordinance designating a TIA in October 2022. The City also plans to reimburse itself for any non- TIF revenue sources that are needed to meet the City’s debt service payments associated with the TIF Infrastructure. Debt Capacity The maximum limit for LTGO non-voted debt cannot exceed 1.5 percent of the value of taxable property within the City. Based on an assessed value of $8,065,205,983 in 2022, the City has $23.9 million in total non-voted debt. As shown below, the City has sufficient capacity for the issuance of the proposed $39 million LTGO bonds related to the TIF public improvements and is expected to have approximately $58 million, or 48 percent of its debt capacity available after the proposed issuance. Figure 18: Debt Capacity Source: City of Pasco, August 2022. The estimated terms of indebtedness, including principal amount of $39 million for the TIF infrastructure improvements, interest rate and maturity schedule are shown in Figure 19 below. For the purposes of this analysis, it is assumed that the entire issuance will be tax exempt. 2021 Assessed Valuation for 2022 Collections 8,065,205,983 Non-Voted Debt Capacity (1.5% of AV) 120,978,090 Less: Outstanding Non-Voted Debt 23,920,000 Voted Debt Capacity - Non-Voted Debt Capacity 97,058,090 Less: Financing Proposed 39,000,000 Projected Remaining Non-Voted Capacity $58,059,090 Projected Remaining Non-Voted Capacity % 48% Page 46 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 32 29 City of Pasco | Broadmoor Development TIF Project Analysis July 2022 29 Above Debt Service Schedule based on 4.5 percent interest rate City of Pasco | Broadmoor Development TIF Project Analysis August 2022 25 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 27 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 Figure 19: Debt Service Schedule Source: City of Pasco, August 2022 Early Outreach to Impacted Taxing Districts While Washington State law requires formal notice to be provided to the Franklin County Commissioners, Franklin County Treasurer, Franklin County Assessor, and impacted taxing districts upon approval of the Tax Increment Area (TIA), the City of Pasco has engaged these stakeholders earlier in the process. This early outreach has allowed the City to collect feedback focused on the logistics of implementing TIF. The taxing districts whose property tax levy would be impacted by TIF include the City of Pasco, Franklin County, and the Port of Pasco. As approved in Washington State, TIF ensures that each of these taxing districts will remain whole and continue to collect the same amount of tax revenue Payment No./year Principal Interest Principal Balance Total Payment 39,000,000 1 - 2024 875,122 1,755,000 38,124,878 2,630,122 2 - 2025 914,503 1,715,620 37,210,375 2,630,122 3 - 2026 955,655 1,674,467 36,254,720 2,630,122 4 - 2027 998,660 1,631,462 35,256,060 2,630,122 5 - 2028 1,043,599 1,586,523 34,212,461 2,630,122 6 - 2029 1,090,561 1,539,561 33,121,900 2,630,122 7 - 2030 1,139,637 1,490,485 31,982,263 2,630,122 8 - 2031 1,190,920 1,439,202 30,791,343 2,630,122 9 - 2032 1,244,512 1,385,610 29,546,831 2,630,122 10 - 2033 1,300,515 1,329,607 28,246,317 2,630,122 11 - 2034 1,359,038 1,271,084 26,887,279 2,630,122 12 - 2035 1,420,195 1,209,928 25,467,084 2,630,122 13 - 2036 1,484,103 1,146,019 23,982,981 2,630,122 14 - 2037 1,550,888 1,079,234 22,432,093 2,630,122 15 - 2038 1,620,678 1,009,444 20,811,415 2,630,122 16 - 2039 1,693,608 936,514 19,117,807 2,630,122 17 - 2040 1,769,821 860,301 17,347,986 2,630,122 18 - 2041 1,849,463 780,659 15,498,523 2,630,122 19 - 2042 1,932,689 697,434 13,565,835 2,630,122 20 - 2043 2,019,660 610,463 11,546,175 2,630,122 21 - 2044 2,110,544 519,578 9,435,631 2,630,122 22 - 2045 2,205,519 424,603 7,230,112 2,630,122 23 - 2046 2,304,767 325,355 4,925,345 2,630,122 24 - 2047 2,408,482 221,641 2,516,863 2,630,122 25 - 2048 2,516,863 113,259 (0) 2,630,122 Page 47 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 33 28 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 as though the Broadmoor development did not occur. The levy rate from each of these jurisdictions will be applied to the increased assessed valuation within the TIA and remitted to the pay the bonds associated with constructing the public infrastructure to support the site. Alternatively, if TIF revenues exceed estimates then excess revenues will be distributed to these taxing districts. Other taxing districts in the region, including Benton-Franklin County Transit and Pasco School District, may experience indirect impacts and are being contacted as well. The City has held initial discussions with the Franklin County Administrator, Franklin County Treasurer and Franklin County Assessor, and the Port of Pasco Commissioners. Simultaneous to the submittal of the project analysis, the City is meeting with each county commissioner, the Pasco School District and Benton-Franklin Transit. Additionally, the City is participating in meetings with the Department of Revenue to ensure that the TIA analysis provided herein utilizes assumptions consistent with the Department’s interpretation of state law. The City intends to provide the formal notice once the City Council approves the ordinance establishing the TIA in October 2022. Additional Incremental Taxes The City’s LTGO bonds will be backed the City’s full faith and credit, meaning bond holders can make a legal claim against the general revenue of the City if a default occurs. However, the City can use any unrestricted revenue sources it has available to satisfy its debt obligations. Washington state tax policy has conditions that allow governments that grow their tax bases to collect additional revenues. This relationship creates a mutually reinforcing benefit of housing and commercial development with additional tax revenues. New land development represents a direct financial investment in land preparation and building structures. Those structures are then occupied by residential neighborhoods and businesses that increase the lands' productive economic capacity. That economic value generates taxable bases at the land, business operation, and transaction levels, represented in land value, retail sales, business income, etc. State tax policy allows government jurisdictions to tax these bases to fund needed public services and infrastructure. Outside of the TIF allocations and the base value of property tax that would flow to TIF jurisdictions, the development and occupation of buildings in the Broadmoor TIA will generate other incremental taxes to those jurisdictions. Tax revenues can be differentiated into three categories: • One-time Revenues. These revenues are tied to construction. Specifically, they include the retail sales tax on construction (materials and labor), which is taxable under Washington state law. • Recurring Revenues. These revenues are derived from the occupation of structures by residents and businesses. Specific revenues include retail sales tax, and utility taxes. • Capital Restricted Revenues. These revenues are restricted to capital and include real estate excise taxes. Page 48 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 34 1 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 29 City of Pasco The City of Pasco is the local service provider for police, fire, public works, community development, parks, and other local services. To support these services, the City collects a range of general and restricted taxes, these include the following. Sales & Use Taxes • Local Option Sales Tax: Of the 8.7 percent sales tax currently collected in the City of Pasco, a 1 percent “local” share of the tax accrues to the local jurisdictions. In incorporated areas, the city receives 85 percent of the 1 percent local tax and Franklin County receives 15 percent (less administrative costs collected by the Department of Revenue). This tax is levied on businesses in the area, and on construction activity and some transactions related to housing and business, such as certain online purchases and the delivery of personal and business goods. • Criminal Justice Sales Tax: A 0.1 percent sales tax is levied by the County for criminal justice programs. Ten percent of revenue goes directly to the County and the remaining 90 percent is distributed to the County and cities within the county on a per capita basis. • Public Safety Sales Tax: A 0.3 percent sales tax is levied by the County for public safety programs like expansion of county jail, construction of new police station and hiring of new public safety officers. Sixty percent of the revenue goes directly to the County and the remaining 40 percent is distributed to cities on a per capital basis. Utility Taxes The analysis uses current utility taxes rates for water, sewer, electricity, natural gas, cable, and telephone utility purchases. These taxes are only collected by cities in Washington. The analysis creates effective purchasing estimates of these utilities based on land use types and applies the appropriate tax policy to estimate tax. The City of Pasco imposes utility taxes (currently 8.5 percent) on the following services but only 6 percent is allocated to the City’s General Fund revenues: • Cable television • Electricity • Garbage • Irrigation • Natural gas • Sewer • Storm drain • Telephone • Water State Shared Motor Vehicle Fuel Tax & Liquor Board/Taxes Local governments receive a gas tax distribution that is unrestricted for street purposes from the State. The distribution is determined using a formula that is heavily weighted towards population. ECONorthwest used a proxy of this formula to derive these revenues to the City. Cities also receive pro rata payments from Liquor Excise Tax & Liquor Board Profits. Page 49 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 35 1 City of Pasco | Broadmoor Development TIF Project Analysis July 2022 30 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 Real Estate Excise Tax (REET) Real estate transactions are subject to a 0.5 percent tax on the value of the transaction. REET revenues are placed in the capital restricted funds to finance capital projects. REET revenues are uncertain given volatility in the real estate market. Since REET is based on the total value of real estate transactions in a given year, the amount of REET revenues the City receives can vary substantially from year to year based on the normal fluctuations in the real estate market. During years when the real estate market is active, revenues are higher, and during softer real estate markets, revenues are lower. For the purposes of this analysis, it is assumed that all new completed projects would be sold and then 5 percent of all property value would turn over (re-sold) in any given year. Franklin County Broadmoor TIF is in Franklin County. The County is also the regional service provider for a range of human and health services, criminal justice, and other regional services. To support these services, the County collects a range of general and restricted taxes, including the following. Sales & Use Taxes Local Option Sales Tax: A 0.15 percent tax rate on retail sales – full option split with the cities in the county. • Criminal Justice Sales Tax: A 0.1 percent tax rate on retail sales – shared with cities in the county. • Juvenile Corrections Facilities Sales Tax: A 0.1 percent tax rate on retail sales dedicated to correctional facilities. • Public Safety Sales Tax: A 0.3 percent tax rate on retail sales dedicated to public safety uses. 40 percent of the revenues are shared with the cities on a per capita basis. • Mental Health Sales Tax: A 0.1 percent tax rate on retail sales dedicated to mental health expenditures. Tax Base Productivity Assumptions It is assumed that each housing unit will house on average 2.45 persons and that the development will be 90 percent occupied (to account for times when homes sit vacant). Construction costs represent the average per square foot cost for different building types based on recent construction comparable projects (note: these costs are different from what a project is assessed at for property tax purposes. In some cases, the investment cost may be lower than the actual construction cost). These below costs are subject to retail sales taxes: • Retail Warehouse: $150 per square foot • Commercial: $250 per square foot • Medical Office: $250 per square foot • Multi-family Unit: $350,000 per unit • Single Family Unit: $600,000 per unit • Senior Housing Unit: $170,000 per unit Page 50 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 36 31 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 Taxable retail sales are based on assumed comparable businesses: • Retail Warehouse: $550 per square foot • Commercial: $250.00 per square foot • Medical Office: $25.00 per square foot • Multi-family Unit: $2,500 per unit • Single Family Unit: $5,000 per unit • Senior Housing Unit: $1,000 per unit Summary of Additional Tax Results Based on the approximate timing of the new development of the Development Program scenarios, the Aggressive Scenario is estimated to generate approximately $53.8 million in tax revenues for the City and $23.8 million for the County over the same 25-year period of the TIF district. These figures represent a 25-year cash flow (2023-2048) of tax revenues to the respective taxing jurisdiction in 2022 dollars (e.g., all future tax revenues have been discounted at 4.5% back to 2022 values). The Moderate and Conservative are respectively less (Figure 20). Figure 20: Summary of additional tax benefits (present value, 2022$) Source: ECONorthwest calculations, 2022 AGGRESSIVE SCENARIO Revenue Source City County Sales Tax on Construction $11,230,000 $6,310,000 Ongoing Sales Tax $31,050,000 $17,440,000 Criminal Justice $360,000 $40,000 Utility Taxes $6,000,000 N/A State Shared $200,000 N/A REET $4,980,000 N/A Total Incremental Revenues $53,820,000 $23,790,000 MODERATE SCENARIO Revenue Source City County Sales Tax on Construction $9,790,000 $5,500,000 Ongoing Sales Tax $30,660,000 $17,230,000 Criminal Justice $290,000 $30,000 Utility Taxes $5,220,000 N/A State Shared $160,000 N/A REET $4,150,000 N/A Total Incremental Revenues $50,270,000 $22,760,000 CONSERVATIVE SCENARIO Revenue Source City County Sales Tax on Construction $5,460,000 $3,070,000 Ongoing Sales Tax $25,010,000 $14,050,000 Criminal Justice $180,000 $20,000 Utility Taxes $3,120,000 N/A State Shared $100,000 N/A REET $2,450,000 N/A Total Incremental Revenues $36,320,000 $17,140,000 Page 51 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 37 30 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 32 Figure 20A summarizes these values on an annual basis for the City of Pasco to illustrate how these revenues occur during both construction and occupancy of the building structures. Figure 20A: Summary of Additional Tax Benefits for Moderate Scenario for City of Pasco (Annual) Risk Assessment and Mitigation Plan TIF is a powerful tool available to local governments for encouraging development. Using local property tax revenues to finance certain public improvements can encourage and generate the desired or envisioned private development; however, using TIF has risks. The largest risks are that: 1) the expected private development does not occur; occurs slower than expected; and/or, the type of development and its magnitude is less than expected (including both the infrastructure that will be funded, built, and dedicated by the private sector to the City and the envisioned vertical development); and, 2) The cost projected for the infrastructure improvements is higher than projected. These risks impact the expected revenues to be generated within the TIA or the costs for the identified public infrastructure improvements. If risks are not mitigated, a local government must then use other sources of revenue to pay for the public improvements. The City will be obligated to pay for the TIF infrastructure even if little or no private development materializes. As stated previously in this report, the City anticipates issuing LTGO bonds which will backed the City’s full faith and credit, meaning bond holders can make a legal claim against the general revenue of the City if a default occurs. Other related risks include over-investment of infrastructure funding by TIF which can waste limited tax dollars for other uses. Local governments can guard against and potentially avoid the over- investing and under-investing by carefully evaluating the local market conditions and performing the analysis associated with the But-For-Requirement identified in this report. When TIF is used correctly, the growth and development pay for the infrastructure investments that encouraged it. For purposes of this Project Analysis, the City has identified the Moderate Development Program as the likely scenario that will occur. Based on the Moderate Development Program, the TIA is projected to generate approximately $50 million (present value) in additional tax revenue over a 25-year TIF period (2023-2048). This value far exceeds the projected infrastructure cost of $39 million. The City will need to fill the financial gap (e.g., the difference between TIF allocation revenues and debt payments) that is projected to occur in the first six years for a total gap of $9,220,000 with other sources of revenue that are identified below. This amount can then be repaid back from increased TIF revenues after the proposed private development stabilizes in later years or from additional local taxes coming from the development. Notwithstanding these projections, 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Sales Taxes Construction $0 $1,280,000 $1,300,000 $2,020,000 $1,710,000 $1,370,000 $770,000 $2,010,000 $1,110,000 $630,000 $60,000 $60,000 $60,000 On-going $0 $0 $10,000 $20,000 $1,310,000 $1,350,000 $1,390,000 $1,870,000 $2,460,000 $2,520,000 $2,800,000 $2,850,000 $2,900,000 Criminal Justice $0 $0 $0 $10,000 $10,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $30,000 Utility Taxes $0 $0 $40,000 $80,000 $140,000 $190,000 $230,000 $260,000 $310,000 $350,000 $370,000 $370,000 $380,000 State-shared $0 $0 $0 $0 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 REET $0 $0 $40,000 $80,000 $140,000 $190,000 $230,000 $260,000 $310,000 $350,000 $370,000 $370,000 $380,000 Total $0 $1,280,000 $1,390,000 $2,200,000 $3,310,000 $3,130,000 $2,650,000 $4,420,000 $4,220,000 $3,880,000 $3,630,000 $3,700,000 $3,770,000 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 Sales Taxes Construction $60,000 $70,000 $70,000 $70,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 On-going $2,960,000 $3,010,000 $3,070,000 $3,130,000 $3,190,000 $3,240,000 $3,300,000 $3,370,000 $3,430,000 $3,490,000 $3,560,000 $3,620,000 $3,690,000 Criminal Justice $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 Utility Taxes $390,000 $400,000 $410,000 $410,000 $420,000 $430,000 $430,000 $440,000 $450,000 $450,000 $460,000 $470,000 $470,000 State-shared $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 REET $390,000 $400,000 $410,000 $410,000 $420,000 $430,000 $430,000 $440,000 $450,000 $450,000 $460,000 $470,000 $470,000 Total $3,840,000 $3,910,000 $3,990,000 $4,060,000 $4,070,000 $4,140,000 $4,220,000 $4,290,000 $4,370,000 $4,440,000 $4,520,000 $4,600,000 $4,680,000 Page 52 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 38 1 33 29 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 the City has prepared a mitigation plan to respond to: 1) less development occurring than projected as programmed in the Conservative Development scenario; and 2) further safeguard against economic or development issues outside of the City’s control, if only two commercial lots were developed. The following mitigation plan has been created to respond to various development and financial risks related to the Broadmoor Development: Development Mitigation Development Program Sensitivity Analysis: Three different private development program scenarios (Aggressive, Moderate, and Conservative) have been developed and evaluated to identify potential TIF revenues and sufficient mitigation measures should development not occur (worst case) or occur at a different speed and magnitude. Infrastructure Agreement: The City of Pasco has executed a Letter of Understanding (LOU) with the owner of the Broadmoor Development regarding the infrastructure investments that each party will make to incentivize and encourage private development. City management will bring forward an agreement between the City and the owner of the Broadmoor Development that further memorializes the infrastructure improvements and expected development timing. This agreement will provide for an additional safeguard that private development is anticipated to occur based on the conservative development program being relied upon by the City. Additional Infrastructure Assurances: Several factors provide assurances that private development will fund and construct the infrastructure proposed outside of the public improvements funded by TIF: • The land to be sold by Broadmoor Properties, LLC has a projected value over $155 million, providing sufficient resources to support the remaining infrastructure costs. Land value is expected to rise once the TIA is adopted by the Pasco City Council and development initiates. • The projected construction cost for the proposed vertical development is between approximately $650 million (Conservative) to $1.3 billion (Aggressive). This level of investment is orders of magnitude larger than the contemplated TIF infrastructure of $39 million. • Residential development typically has a greater ability to support infrastructure expenses based on sales and rents versus commercial and mixed-use properties. • Broadmoor Properties, LLC real estate brokers believe the Pasco market is underserved with upscale mixed-use luxury apartments and further believe rents will rise sufficiently to support construction cost in the near future. This property in particular is unique to the region in that it is elevated and within close proximity to the Columbia River and city views to the south and west. From a view perspective, these units will be among the most desirable in the region. • We have conservatively estimated the number of units as part of each development scenario with a high of 45 units per acre to a low or 28 units per acre. In comparison, you would likely see 80 to 120 units per acre with a 5-story wood construction on top of a concrete podium with parking plus other amenities. This conservative density estimate allows for surface parking if rents are insufficient to support the envision 5 over 1 or 5 over 2 mixed- use podium development. Page 53 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 39 28 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 34 • To further mitigate the City’s exposure related to the timing and scope of private development and the projected TIA property tax revenues, the City will schedule the timing of any bond debt issuance to coincide with certain development milestones (e.g., property closings, entitlements obtained, etc.) that near term developments will move forward providing for greater development certainty and additional tax revenue beyond property taxes to help pay for any debt service. Financial Mitigation The following mitigation plan is proposed to provide multiple levels of financial protection to fill any financial gaps that occur in the early years of the TIA until private development and TIF revenues stabilize or should the expected private development occur slower than planned. Level 1: Moderate Development Scenario: Based on the Moderate Development Program, it is projected the City will receive a present value of $50 million in incremental tax revenues generated by the proposed development. A portion of these incremental taxes can be used to support any infrastructure debt service gap in TIF revenues. In a Moderate scenario, TIF allocation revenues would not cover debt service payments (presented as equal payments) over the course of the bond and additional incremental revenues would be needed to service the debt. This comparison is shown in the figure below. The additional taxes would cover 3 of the 5 years where deficits might be expected. In such a case, the two deficit years would need temporary cash flow coverage from other funds (e.g., reserves as described below) until either incremental taxes or TIF revenue allocations could be used to repay them. The total value of these shortfalls is $2,210,000 (note: only values up to 2035 are shown since no shortfalls are expected afterward). Figure 21: Comparison of Debt Payment Surplus/Deficits and Other Additional Taxes Source: ECONorthwest Calculations, 2022 Level 2: Conservative Development. Based on the Conservative Development Program, (no development after 2030), it is projected the City will receive a present value of $36 million in incremental tax revenues generated by the proposed development. A portion of these incremental taxes can be used to support any infrastructure debt service gap in TIF revenues. In a Conservative scenario, TIF allocation revenues would not cover even debt service payments over the course of the bond and additional incremental revenues would be needed to service the debt. This comparison is shown in the figure below. The additional taxes would cover 18 of the 20 years where deficits might be expected. In such a case, the two deficit years would need temporary cash flow coverage from other funds (e.g., reserves as described below) until either incremental taxes or TIF revenue allocations could be used to repay them. The total value of these shortfalls is $2,750,000. TIF Allocation Revenues Assessment Year 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Surpus/Deficit $0 ($2,630,000)($2,250,000)($1,870,000)($1,260,000)($750,000)($330,000)($130,000)$400,000 $720,000 $910,000 $960,000 $1,020,000 Additional Tax Revenues $0 $1,280,000 $1,390,000 $2,200,000 $3,310,000 $3,130,000 $2,650,000 $4,420,000 $4,220,000 $3,880,000 $3,630,000 $3,700,000 $3,770,000 Gap $0 ($1,350,000)($860,000)$330,000 $2,050,000 $2,380,000 $2,320,000 $4,290,000 $4,620,000 $4,600,000 $4,540,000 $4,660,000 $4,790,000 Page 54 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 40 32 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 32 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 35 Figure 22: Comparison of Debt Payment Surplus/Deficits and Other Additional Taxes Source: ECONorthwest Calculations, 2022 Level 3: Limited Taxes on Commercial. If only two of the commercial developments that are expected to occur first within each development program, the City will receive sales and utility taxes from these projects which can be used to off-set any infrastructure debt service gap of local property tax revenues from the TIA. On a present value basis, these revenues amount to $26 million over the TIF time frame. The additional taxes would cover 4 of the 25 years where deficits might be expected. The total value of these shortfalls is $10,480,000. In such a case, the remaining 21 years would need temporary cash flow coverage from other funds (e.g., reserves as described below). Future year excess additional taxes or TIF revenue allocations would not be available to repay these cash flow shortfalls given the extent and timing of the deficits. Figure 23: Comparison of Debt Payment Surplus/Deficits and Other Additional Taxes Source: ECONorthwest Calculations, 2022 Level 4: Reserves. The City has approximately $49,000,000 in reserves that are not allocated to any specific operating or capital expense that can be used for payment of debt service for its infrastructure obligations for the Broadmoor Development if property tax revenue from the TIA is insufficient. The City’s policy is to maintain 60 days of average operating expenditures within its General Fund. The City’s current reserve balance is approximately $36,500,000 above this policy threshold allowing for funds to be used if property tax revenues from the TIA are insufficient with minimal reserve policy impact to the City’s other funds and operations. The revenue sources in Level 4 exceed the projected cost of the TIF infrastructure. The City’s reserves are the last line of defense against lower TIF revenues than projected. Additional Mitigation Measures Debt Issuance Timing. The City will reduce its financial exposure related to the timing and scope of private development by strategically timing the issuance of LTGO bond debt to coincide with certain development milestones (e.g., property closings, entitlements obtained, etc.) that near term TIF Allocation Revenues Assessment Year 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Surpus/Deficit $0 ($2,630,000)($2,360,000)($1,990,000)($1,660,000)($1,270,000)($830,000)($760,000)($680,000)($660,000)($640,000)($620,000)($600,000) Additional Tax Revenues $0 $910,000 $1,330,000 $2,570,000 $3,090,000 $3,600,000 $2,400,000 $2,460,000 $2,330,000 $2,370,000 $2,410,000 $2,450,000 $2,500,000 Gap $0 ($1,720,000)($1,030,000)$580,000 $1,430,000 $2,330,000 $1,570,000 $1,700,000 $1,650,000 $1,710,000 $1,770,000 $1,830,000 $1,900,000 TIF Allocation Revenues Assessment Year 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 Surpus/Deficit ($580,000)($560,000)($540,000)($520,000)($500,000)($470,000)($450,000)($430,000)($410,000)($390,000)($360,000)($340,000)($320,000) Additional Tax Revenues $2,540,000 $2,590,000 $2,630,000 $2,680,000 $2,730,000 $2,780,000 $2,830,000 $2,880,000 $2,930,000 $2,980,000 $3,030,000 $3,090,000 $3,140,000 Gap $1,960,000 $2,030,000 $2,090,000 $2,160,000 $2,230,000 $2,310,000 $2,380,000 $2,450,000 $2,520,000 $2,590,000 $2,670,000 $2,750,000 $2,820,000 TIF Allocation Revenues Assessment Year 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Surpus/Deficit $0 ($2,630,000)($2,630,000)($2,530,000)($2,490,000)($2,440,000)($2,440,000)($2,430,000)($2,430,000)($2,430,000)($2,430,000)($2,430,000)($2,420,000) Additional Tax Revenues $0 $0 $340,000 $1,490,000 $1,750,000 $1,790,000 $1,820,000 $1,860,000 $1,890,000 $1,930,000 $1,960,000 $2,000,000 $2,030,000 Gap $0 ($2,630,000)($2,290,000)($1,040,000)($740,000)($650,000)($620,000)($570,000)($540,000)($500,000)($470,000)($430,000)($390,000) TIF Allocation Revenues Assessment Year 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 Surpus/Deficit ($2,420,000)($2,420,000)($2,420,000)($2,420,000)($2,410,000)($2,410,000)($2,410,000)($2,410,000)($2,410,000)($2,400,000)($2,400,000)($2,400,000)($2,400,000) Additional Tax Revenues $2,070,000 $2,110,000 $2,150,000 $2,190,000 $2,230,000 $2,270,000 $2,310,000 $2,350,000 $2,400,000 $2,440,000 $2,490,000 $2,530,000 $2,580,000 Gap ($350,000)($310,000)($270,000)($230,000)($180,000)($140,000)($100,000)($60,000)($10,000)$40,000 $90,000 $130,000 $180,000 Page 55 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 41 1 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 City of Pasco | Broadmoor Development TIF Project Analysis July 2022 36 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 developments will move forward (if infrastructure improvements are made by the City) providing for greater development and TIA revenue certainty. Public Infrastructure Cost Containment. Municipal agencies have vast experience with building horizontal infrastructure (streets, water, sewer, etc.). The City of Pasco is no exception and takes pride in its ability to provide conservative construction estimates, create clear construction bid documents, and effectively manage the construction delivery process. The cost estimates for the TIF public infrastructure improvements are currently based on 30 percent design levels and include a 30 percent contingency at this time to buffer any volatility in the construction industry. Construction costs will be further refined with either the 60 percent or 90 percent design level in the coming months. The City plans to support the design costs for all of the identified TIF infrastructure projects (with repayment from future TIF funds) up to receiving public bids and contract(s) awarded prior to the issuance of debt providing for additional certainty of costs. There are other risks that a municipal government faces regularly such as: construction delays which increase costs for public infrastructure improvements; economic slowdown or recession; higher borrowing costs; and lower levy rates within the TIA than anticipated. The City of Pasco has been successful in addressing these secondary type risks by using conservative estimates and adherence to prudent fiscal and construction management policies. The City will continue these same practices as it implements the proposed TIA and the associated infrastructure improvements. Pasco TIF Team City of Pasco • Dave Zabell, City Manager • Adam Lincoln, Deputy City Manager • Darcy Buckley, Finance Director • Rick White, Community & Economic Services Director • Steve Worley, Public Works Director • Dan Ford, City Engineer • Mike Gonzalez, Economic Development Manager Tax Increment Financing Consultants • Bob Stowe, Stowe Development & Strategies (TIF Project Manager) • Morgan Shook, ECONorthwest • Briahna Murray, Gordon Thomas Honeywell Governmental Affairs Legal & Financial Advisors • Eric Ferguson, City Attorney • William Tonkin & Lee Marchisio, Foster Garvey P.C., Bond Counsel • Dave Trageser, DA Davidson, Bond Underwriter • Scott Bauer, Northwest Municipal Advisors, Financial Advisors Page 56 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 42 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 37 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 37 Future TIF Actions There are a number of actions that will occur before the Pasco City Council formally considers the formation of a TIA for the Broadmoor Development Project. First, is to receive and review feedback offered by the Office of the State Treasurer related to this Project Analysis. Second, based on any feedback, the TIF team will evaluate and make appropriate adjustments to its proposed TIF program. Third, it will conduct two separate public briefings on the proposed TIA for the Broadmoor Development Project and provide formal notice in the local newspaper. The City will continue to engage its local partners including Franklin County and the Port of Pasco, as discussions continue. There are also a number of planning, engineering, finance, and legal activities that will occur to advance the proposed public infrastructure and private development for the Broadmoor Development. Below is an expected schedule for the future TIF actions. Page 57 of 229 43 Timeline City of Pasco | Broadmoor Development TIF Project Analysis August 2022 38 Source: Stowe Development & Strategies, 2022 Figure 24: Timeline Page 58 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 44 1 City of Pasco | Broadmoor Development TIF Project Analysis August 2022 39 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 Findings |Bottom Line The envisioned Broadmoor Development would not be viable without the City’s intervention to provide the identified infrastructure via the establishment of a TIA. This city has demonstrated an extremely strong nexus between the proposed development and the proposed infrastructure. The City is conservatively estimating the potential revenues that will be generated by the formation of a TIA and has sufficient resources to pay for infrastructure debt service should the expected TIA revenues not materialize. There are no negative impacts to affordable housing, the local business community, the local school districts, or to local fire districts. The Broadmoor Development will provide for significant jobs and investment into the local and regional economy. Each taxing district will benefit from increased taxes generated by the development, even with the financial support provided by property taxes within the TIA due to the scope and magnitude of the expected development. Based on all of the above findings and information contained in this Project Analysis, the Broadmoor Development and its proposed TIA meets both the spirit and the letter of Washington’s State’s new law. Furthermore, there is no better project to demonstrate the power and appropriateness of TIF than Pasco’s Broadmoor Development. Page 59 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 45 Appendices Appendices • Office of State Treasurer May 31, 2022 Memo • TIF Infrastructure Improvements • State Audit Report Summary o 2016 - https://egov-pasco.com/weblink/DocView.aspx?id=769076&dbid=0 o 2017 - https://egov-pasco.com/weblink/DocView.aspx?id=792162&dbid=0 o 2018 - https://egov-pasco.com/weblink/DocView.aspx?id=855058&dbid=0 o 2019 - https://egov-pasco.com/weblink/DocView.aspx?id=948969&dbid=0 o 2020 - https://egov-pasco.com/weblink/DocView.aspx?id=954279&dbid=0 • Pasco City Council Resolution Declaring its intent to form a Tax Increment Area in the Broadmoor Area • Consultant Team Bio’s Page 60 of 229 Office of State Treasurer Letter Page 61 of 229 Legislative Building, P.O. Box 40200 Olympia, Washington 98504 -0200 (360) 902-9000 • TTY USERS: CALL 711 • FAX (360) 902-9037 www.tre.wa.gov Office of the Treasurer State of Washington Mike Pellicciotti TO: City of Pasco FROM: Jason Richter, Deputy State Treasurer DATE: May 31, 2022 RE: Information Needed for OST Review of TIF Project Analysis RCW 39.114.020 requires a Project Analysis to be submitted to the Office of the State Treasurer (OST) for review and comment. To assist OST in performing its review), we ask the Issuing Jurisdiction to ensure that the materials listed below are included in their Project Analysis: 1. Name and contact information for members of the financing team; 2. Comprehensive description of the Tax Increment Area, including land ownership and leasing or sale arrangements; 3. A description of the Project being undertaken, in connection with the Tax Increment Area. 4. Proposed budget for the Project, including the available funding sources, expected costs, and plan of finance; 5. An estimated timeline for the Project; 6. Detailed assessed value growth and tax increment revenue projections that have been prepared in connection with the Project, including a description of the assumptions used and the source of the projections; 7. Description of Tax Increment Area taxpayer base, and, if possible, a breakdown by property / industry type; 8. Description of the expected bond structure; 9. Description of the specific revenue pledge and revenues that will support the debt to be issued; 10. Calculations showing the Issuer’s projected debt service coverage, based on current and expected pledged revenues; 11. Calculations demonstrating compliance with the Issuer debt limitations; 12. Five years of the most recent historical and one year of projected financial statements for the Issuer, identifying the specific revenues that will be pledged towards supporting debt service payments; 13. Description of potential project risk factors. OST requests Issuing Jurisdictions provide final or near-final draft Project Analysis. Please note that substantial revisions to the Project Analysis may result in delays and necessary extensions to OST’s Page 62 of 229 Legislative Building, P.O. Box 40200 Olympia, Washington 98504 -0200 (360) 902-9000 • TTY USERS: CALL 711 • FAX (360) 902-9037 www.tre.wa.gov review. Providing all of these requested items will help OST perform its review as quickly as possible. If you have any questions, please do not hesitate to contact us. Page 63 of 229 TIF Infrastructure Improvements Page 64 of 229 LOT 4 LOT 1 LOT 2 LOT 3 LOT 5 LOT 6 LOT 11 LOT 12 LOT 13 LOT 14 LOT 15 LOT 18 LOT 7 (MIXED USE - RETAIL/RESIDENTIAL) (MIXED USE - RETAIL/RESIDENTIAL) (HIGH DENSITY RESIDENTIAL) (RESIDENTIAL) (COMMERCIAL) (COMMERCIAL) (COMMERCIAL) (COMMERCIAL) (COMMERCIAL) (COMMERCIAL) (MIXED USE - RETAIL/RESIDENTIAL) (HIGH DENSITY RESIDENTIAL) ROAD 108 ROAD 108 BURNS ROADLOT 8(RESIDENTIAL) LOT 9(HIGH DENSITY RESIDENTIAL) LOT 10 (COMMERCIAL) DENT ROAD HARRIS ROADI- 8 2 (COMMERCIAL) ROAD 103 (FUTURE REDEVELOPMENT AREA)SANDIFUR PKWYROAD 103 ROAD 105 ROAD 105 BUCKINGHAM DRBROADMOOR BLVD BEDFORD STLOT 19 (MIXED USED - RETAIL/RESIDENTIAL) PROPOSED CURB LINE ROW PER PLAT EXTG. RIGHT OF WAY PROPOSED STRIPING 5 LANE SECTION 5 LANE SECTION 7 LANE SECTION 7 LANE SECTION CITY SIGNAL INTERSECTION CLOSED 3 LANE SECTION CORE ROAD SECTION CORE ROAD SECTION CORE ROAD SECTION EDGE OF PAVEMENT INTERSECTION CLOSED DEDICATED RIGHT TURNBROADMOOR PROPERTIES FINANCED SIGNAL BROADMOOR PROPERTIES FINANCED SIGNAL DEDICATED RIGHT TURNDUAL RIGHT TURN 6 LANE SECTION CORE ROUNDABOUTFUTURE REALIGNMENT HARRIS REALIGN HARRIS ROAD 108 INTERCHANGE IMPROVEMENTS (TIF PROJECT) IMPROVEMENTS EXTEND TO 100' PAST BEDFORD ST. EXISTING ROAD TO BE VACATED CORE ROAD SECTION POSSIBLE FUTURE ROAD 105 EXTENSION POSSIBLE FUTURE ROAD 103 EXTENSION SEWER ONLY Scale 1" = 0 300 600 300' 150 BROADMOOR - IMPROVEMENTS NEW SIGNAL EXISTING SIGNAL TIF PROJECTS (CITY) 1ST PHASE OF BROADMOOR PROPERTIES PROJECT REMAINING BROADMOOR PROPERTIES/DEVELOPER PROJECTS NOTES: 1.FULL BUILD ROADS TO INCLUDE STREET WATER, SEWER, STORM, CURB, GUTTER, SIDEWALK, LANDSCAPING, LIGHTING AND REQUIRED SIDEWALK FURNITURE. 2.CORE ROADS TO ONLY INCLUDE STREET WATER AND SEWER. BROADMOOR PROPERTIES/DEVELOPER TO BE RESPONSIBLE FOR STORM. CITY TIF PROJECTS BROADMOOR PROPERTIES/DEVELOPER 29.3 ACRES 33.9 ACRES DEDICATED RIGHT-OF-WAY TABLEPage 65 of 229 State Audit Reports Page 66 of 229 2017 2018 2019 2020 2021 2022 - Budgeted OFFICE OF THE TREASURER REPORT* Total Total Total Total Total Total Beginning Cash Available for Debt Service 22,484,159 22,586,901 26,838,971 54,039,616 52,289,555 57,645,923 Operating Revenue Available for Debt Service Operating Revenue 49,705,779 53,049,409 60,596,166 62,236,539 73,795,716 82,493,491 Operating Expenditures 46,216,719 47,712,016 48,680,035 50,994,626 56,654,356 71,289,394 Operating Income (Loss) 3,489,060 5,337,393 11,916,131 11,241,913 17,141,360 11,204,097 Total Revenue Available for Debt Service 25,973,219 27,924,294 38,755,102 65,281,529 69,430,915 68,850,020 Debt Service (General Obligation) GO Debt Obligation 1,183,106 1,167,300 1,298,413 2,377,995 1,893,922 3,780,250 TIF GO Debt Obligation - - - Total Debt Service 1,183,106 1,167,300 1,298,413 2,377,995 1,893,922 3,780,250 Other Inflows (Outflows) (3,386,318) (1,067,056) 15,023,991 (13,104,639) (11,784,992) (23,121,950) Ending Cash Available for Debt Service 22,586,901 26,857,238 53,779,093 52,176,890 57,645,923 45,728,070 Footnotes: Report includes financial information for City's General Fund, Economic Development Fund, and Capital Improvement Fund (Real Estate Excise Taxes). General Fund includes minimal level of grant revenues that are offset by corresponding expenses in the same year. Cash balances presented do not include proceeds from previously issued bonds. Page 67 of 229 Pasco City Council TIF Resolution Page 68 of 229 RESOLUTION NO. 4179 A RESOLUTION OF THE CITY OF PASCO, WASHINGTON, DECLARING ITS INTENT TO FORM A TAX INCREMENT AREA IN THE BROADMOOR AREA WHEREAS, for many years the City has been studying, evaluating, designing and completing key infrastructure improvements to enable a mixed use development within the Broadmoor area; and WHEREAS, Broadmoor Properties, LLC owns over 400 acres of property that is being planned for mixed use development and is in need of substantial infrastructure improvements to support the desired development; and WHEREAS, the Broadmoor area has the opportunity, if built, to serve as a significant economic engine for the Pasco community providing for increased tax revenues to support City services and providing significant employment opportunities for the residents of the City; and WHEREAS,the Washington State Legislature,during its 2021 legislative session,enacted Engrossed Substitute House Bill 1189 as Chapter 207, Laws of 2021, titled "AN ACT Relating to tax increment financing" and codified as RCW 39.114, which authorizes local governments, including cities, to carry out tax increment financing of public improvements needed to support vital private economic development projects; and WHEREAS, Tax Increment Financing (TIF) is a program that allocates revenues generated from the increased assessed valuation of properties improved by the development that are within a designated tax increment area (TIA) to pay for public improvements that are needed to support the private development; and WHEREAS, City management has identified the key preliminary TIF infrastructure improvements in Exhibit A (shown as City TIF Projects) that have been identified at this time as outside of a developer's ability to fund and achieve the desired development based on market conditions necessary to accommodate commercial and mixed-use tenants; and WHEREAS, the key preliminary TIF Projects have been estimated to cost approximately 24 million to $30 million to construct; and WHEREAS, Broadmoor Properties, LLC will be dedicating approximately 24.3 acres of land for the identified TIF Projects resulting in an average value range between $5,292,540 to 10,585,080 in project benefit; and WHEREAS, City management and Broadmoor Properties, LLC have developed and agreed upon the infrastructure responsibilities as shown in Exhibit A for each party necessary to achieve the desired development; and Resolution—Tax Increment Area- 1 Page 69 of 229 WHEREAS, City management anticipates bringing forward for Council consideration an agreement between the City and Broadmoor Properties, LLC that memorializes the infrastructure improvement responsibilities provided in Exhibit A; and WHEREAS,the TIF law requires the City to prepare a Project Analysis when considering forming a TIA which includes the following key items: Boundaries and duration of the increment area. A description of the expected private development within the increment area, including a comparison of scenarios with and without proposed public improvements (AKA the `But for" analysis — the development would not occur but for"the public improvements). A description of the public improvements,estimated public improvement costs, and the estimated amount of bonds or other obligations expected to be issued. Assessed value of real property within the increment area and an estimate of the increment value and tax allocation revenues expected. Estimate of the job creation reasonably expected to result from the public improvements and the private development. An assessment of any impacts and necessary mitigation to address impacts on the following: Affordable and low-income housing Local business community Local school districts Local fire service; and WHEREAS,the Project Analysis is expected to be completed by the end of May 2022 and then submitted to the State Treasurer as required by TIF law, allowing the Treasurer 90 days to review the analysis; and WHEREAS, the City will conduct public briefings on the proposed TIA to inform the community and other public agencies about the anticipated benefits and impacts associated with the development; and WHEREAS, the City Council will consider adoption of an Ordinance in September 2022 creating a TIA following any comments by the State Treasurer and testimony resulting from the public briefings; and WHEREAS,the City has created several preliminary development scenarios based on the type and timing of development that may occur within the proposed Broadmoor TIA in which even the most modest development scenario and timing would generate revenues (Exhibit B) sufficient to support the necessary infrastructure improvements needed to support the private development; and WHEREAS, the City anticipates issuing LTGO (no-voted) tax exempt bonds to pay for the identified infrastructure projects based on the additional TIA revenues from the Broadmoor development; and Resolution—Tax Increment Area-2 Page 70 of 229 WHEREAS, LTGO bonds pledge the City's tax revenues as a guarantee to receive the best possible tax-exempt terms, and the City can pay debt service associated with these bonds with any non-restricted tax revenue such as sales tax; and WHEREAS, to mitigate the City's exposure related to the timing and scope of private development and the projected TIA property tax revenues,the City will schedule the timing of any bond debt issuance to coincide with certain development milestones (e.g., property closings, entitlements obtained, etc.) that near term developments will move forward (if infrastructure improvements are made by the City) providing for greater development certainty and additional tax revenue beyond property taxes to help pay for any debt service; and WHEREAS, as part of the above-mentioned Project Analysis, the City will refine the projected TIA revenues,conduct a"but-for"analysis,coordinate with the other taxing entities,and complete other items required by law. NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON: That the City Council directs the City Manager to develop a TIF program for the Broadmoor area and prepare an Ordinance for Council's consideration to form a TIA in accordance with state law. Be It Further Resolved that the City Council supports the preliminary infrastructure projects that are identified as described in Exhibit A and recognizes that such projects may be refined as part of the City's TIF Analysis. PASSED by the City Council of the City of Pasco, Washington, the 2nd day of May, 2022. Blanche Barajas Mayor ATTEST: APPROVED AS TO FORM J r x9 e ra Barnham, CMC F g n La C City Clerk City Attorney Resolution—Tax Increment Area- 3 Page 71 of 229 Broadmoor Area Tax Increment Financing (TIF) Projects Corridors 1. Sandifur Parkway—Bedford Street to Road 108 This work will consist of: Road widening of the existing road from Bedford Street to Broadmoor Blvd. Full road construction, including but not limited to, as much as 7-lanes of roadway and frontage improvements on the north including curb/gutter, stormwater, sidewalk, street lighting and landscaping and Curb/gutter and stormwater on the south side from Broadmoor Blvd. to Road 103. Construction of a core road, including but not limited to, as much as 3-lanes of asphalt road surface (toe-to-toe of curb)from Road 103 to Road 108. Construction of domestic water main, sanitary sewer main, and Irrigation main improvements will be included within this corridor from Broadmoor to Road 108. 2. Broadmoor Boulevard—Interstate 182 to Burns Road This work will consist of: Road widening of the existing road, west side only, including the addition of as much as 7-lanes of asphalt roadway, curb/gutter, stormwater, muti-use pathway, and the relocation of existing streetlights from interstate 182 to Sandifur Parkway. Road widening of the existing road, west side only, including the addition of as much as 7-lanes of asphalt roadway, curb/gutter, stormwater, muti-use pathway, street lighting, and landscaping from Sandifur Parkway to Buckingham Road. Road widening of the existing road, west side only, including the addition of as much as 5-lanes of asphalt roadway, curb/gutter, stormwater, muti-use pathway, street lighting, and landscaping from Buckingham Road to Burns Road. Utility adjustments of the existing utilities will be included in this corridor from Interstate 182 to Burns Road. 3. Road 108—Harris Road to Sandifur Parkway This work will consist of: Construction of a core road, including but not limited to, as much as 3-lanes of asphalt road surface (toe-to-toe of curb)from Harris Road to Sandifur Parkway. Construction of domestic water main, sanitary sewer main, and Irrigation main improvements will be included within this corridor from Harris Road to Sandifur Parkway. Interstate Associated Improvements 4. Interchange Improvements- Interstate 182 @ Road 100 This work will consist of: Improvements to the existing interchange including construction of an eastbound off-ramp and intersection along with restriping. A second phase shall include bike/ped facilities connecting north to south. Intersections 5. Burns Road/ Broadmoar Boulevard This work will consist of: Full improvements to the existing intersection including signalization, widening, curb/gutter, sidewalk with ADA ramps, street lighting, striping, and landscaping. Page 72 of 229 Utility extension and/or adjustments of the existing utilities will be included within this intersection. This intersection will have participation in cost from other developers through a separate participation technical memorandum, prepared by the City's consultant. 6. Buckingham Drive/Broadmoor Baulevard This work will consist of: Full improvements to the existing intersection including signalization,widening on the west side, curb/gutter, stormwater, sidewalk with ADA ramps, street lighting, striping, and landscaping. Utility extension and/or adjustments of the existing utilities will be included within this intersection. The signalization will be provided by Broadmoor Properties, LLC. 7. Sandifur Parkway/ Broadmoor Boulevard This work will consist of: Full improvements to the existing intersection including signalization, widening, curb/gutter, sidewalk with ADA ramps, street lighting, striping, and landscaping. Utility extension and/or adjustments of the existing utilities will be included within this intersection. 8. Sandifur Parkway/Road 108 This work will consist of: Construction of a "core" roundabout that includes all the asphalt necessary to extend 2' past the proposed final toe- of-curb/gutter.This effort will also include temporary gravel shoulder drainage swale as well as striping and lighting as well as the full construction of a center truck apron and landscaped feature and entry delineators including curb/gutter and internal surfacing as determined. Frontage improvements including curb/gutter, sidewalk, stormwater, and landscaping will be completed by the parcel owner at the time of development. Construction of domestic water main, sanitary sewer main, and Irrigation main improvements will be included within this intersection. 9. Sandifur Parkway/ Road 103 This work will consist of: Construction of a full intersection including signalization,widening, curb/gutter, stormwater, sidewalk with ADA ramps, street lighting, striping, and landscaping. Construction of domestic water main, sanitary sewer main, and Irrigation main improvements will be included within this intersection. The signalization will be provided by Broadmoor Properties, LLC. 10. Road 108/Road 103 This work will consist of: Construction of a core intersection, including but not limited to, as much as 3-lanes of asphalt road surface (toe-to-toe of curb). Construction of domestic water main, sanitary sewer main, and Irrigation main improvements will be included within this intersection. Stop control determined at time of design. Page 73 of 229 Consultant Team Bio’s Page 74 of 229 Bob Stowe - Principal Bob Stowe is the principal and founder of Stowe Development & Strategies — a company he formed in 2016 to help public sector clients succeed with their economic and community development interests. With 34 years of experience in progressive community transformations, Bob is one of the Northwest’s most innovative and entrepreneurial real estate and community developers. He uses sound long- range fiscal planning skills and has achieved enviable results in leading redevelopment efforts from the dream stage to construction. This is true for projects large and small, straightforward and complex. Bob’s understanding and experience with tax increment financing, master plan development, transit oriented development, placemaking, negotiation of purchase and sale agreements, development agreements, public benefit agreements, and his ability to create public private partnerships make him an ideal public sector development partner. Bob has been responsible for leading, managing, coordinating, and implementing a wide variety of complex and multi-faceted projects including, downtown revitalization plans, civic center plans and development, master plans, public-private partnerships, and transit-oriented developments to name a few. Bob was the City Manager for the City of Bothell, Washington from 2005 to 2016 where he was the architect and leader of Washington’s largest and most successful publicly-led downtown revitalization. Under Bob’s leadership, this project utilized a Local Infrastructure Financing Tool award (AKA TIF light) as part of the funding package that stimulated private investment of over $300 million; a very big step in achieving the City’s 25-year goal of $650 million. The fact that nearly half that goal was reached in just a few years, during the Great Recession, and with leverage from public/private collaboration, made it all the more remarkable. Bob guided the development of approximately $150 million in public sector improvements (relocation of a state highway, creation of new streets, storm water system, parks, environmental clean-up, etc.) identified as necessary to achieve the revitalization vision. The massive public development plan and schedule also needed to align with private sector purchase of surplus land from the City, environmental remediation, public streets to be developed by the private sector, and on-site mixed-use development. Precise scheduling, communication and the ability to respond to changing conditions were skills that Bob successfully delivered on this project. Before arriving in Bothell, Bob was the City Manager for the City of Mill Creek for nine years and helped lead development of the award-winning Mill Creek Town Center in the early 2000s. His first downtown transformation project began with the revitalization of Downtown Dayton, Washington in the late 1980s. The hallmark of Bob’s effort is his commitment to create well designed and environmentally sustainable places where people want to live, work, and come together to celebrate. Bob has tackled the most difficult and complex projects, achieving the redevelopment and economic dreams of several communities with his failure is not an option approach. EDUCATION • MBA, Albers School of Business & Economics, Seattle University (with honors). • BA, Urban and Regional Planning, Eastern Washington University. Page 75 of 229 Morgan Shook - Director/Partner Morgan Shook is a Senior Policy and Economic Analyst working in real estate, land use, and transportation economics, and finance. He has deep expertise in economic, market and financial analytics that he brought to bear in business, enterprise, and policy settings. Morgan has worked for a range of government, business, and non- profit clients to advance their missions that in diverse set areas and topics. Morgan has worked on every form of tax increment financing in Washington including Community Revitalization Financing, Local Infrastructure Financing Tool, Local Revitalization Financing LRF, Landscape Conservation and Local Infrastructure Program, as well as the recently passed Tax Increment Financing bill in the 2021 legislative session. Before joining ECONorthwest, Morgan worked in biotechnology development at the Institute for Systems Biology, and health disparities research at the University of Chicago. Morgan recently served on the Seattle Planning Commission. EDUCATION • M.U.R.P., Portland State University • B.S. Molecular Biology, University of Puget Sound • Certificate in Commercial Real Estate Development, University of Washington Extension Areas of Expertise • Economic Development • Affordable Housing • Land Use Planning • Market & Feasibility Analysis • Infrastructure & Finance Funding • Transit-Oriented Development Page 76 of 229 Briahna Murray – Vice President Briahna Murray has lobbied the Washington State Legislature on behalf of public agency and nonprofit clients for over 15 years. She was one of the key lobbyists intimately involved in the advocacy for House Bill 1189, authorizing tax increment financing in Washington State. She is familiar with the legislative intent behind the new statutory language and is prepared to advise clients on how to use tax increment financing in a manner consistent with what was intended by state policymakers. More broadly, her clients have formally recognized her exceptional service, professionalism, responsiveness, and advocacy. She takes an information-driven, bi-partisan and professional approach to lobbying and advocacy. Briahna’s knowledge of public policy issues and her ability to strategically navigate Washington State government is an invaluable combination. Through her advocacy for public agencies, she has developed expertise in advocating for issues intersecting with state budgets, tax and finance, growth management, transportation, criminal justice, housing, human services, and more. Briahna is respected and well-liked by legislators from across the entire state of Washington and from both political parties. Briahna graduated cum laude from Seattle University School of Law, where she also served as a member of Seattle University Law Review. Briahna graduated summa cum laude from Pacific Lutheran University with a Bachelor of Arts in Political Science and English-Writing. She now lives in Tacoma, Washington. Page 77 of 229 City of Pasco | Broadmoor Development TIF Project Analysis June 2022 46 Prepared by: In association with: Page 78 of 229 Legislative Building, P.O. Box 40200 Olympia, Washington 98504-0200 (360) 902-9000  TTY USERS: CALL 711  FAX (360) 902-9037 www.tre.wa.gov Office of the Treasurer State of Washington Mike Pellicciotti September 23, 2022 Dave Zabell, City Manager City of Pasco 525 N 3rd Ave Pasco WA 99301 Dear Mr. Zabell: This letter confirms the Office of the State Treasurer’s (“OST”) receipt and review of the City of Pasco’s (the “City”) tax increment financing (“TIF”) final project analysis provided on September 6, 2022. OST and Piper Sandler, the state’s municipal advisor, have reviewed the provided material. Based on our review, which is provided in the sections to follow, we believe the City’s project analysis meets the requirements of RCW 39.114 (the “TIF Statute”). Please note, this review is based on the information, projections, and assumptions provided by the City and its consultants in the final project analysis. OST has not independently verified the data or its accuracy or performed any feasibility analyses or projections of its own. Executive Summary Based on our review of the City’s project analysis, it appears that the Broadmoor Development (the “Project”) is well situated to help meet increased demand for housing and commercial services in Pasco and the growing Tri-Cities region. In our review of the project analysis, one of our primary goals is to ensure that risks to the City are adequately disclosed. As we describe further below, in this development, the primary risk to the City is lower-than-expected tax allocation revenues as a result of delays in the construction of the private development within the Tax Increment Area (“TIA”), or future assessed values in the TIA not matching projections. As with any large-scale development, there is a risk that a variety of factors could result in construction delays or lower-than-expected assessed values. Such delays or reduced values, if severe enough, could materially impact the tax allocation revenues expected to be derived from the Project. To finance the public infrastructure improvements, the City intends to issue Limited Tax General Obligation (“LTGO”) Bonds, which will be backed by the full faith and credit of the City. In the event that tax allocation revenues are insufficient to fully pay the debt service on the LTGO Bonds, the full faith and credit pledge would require the City to pay the remaining debt service due on the bonds from the City’s general revenues. As shown in Tables 3 and 4, the projections contained in the project analysis indicate that in each of the development scenarios, the City will be required to pay some portion of the debt service due on the LTGO Bonds from general revenues, especially in early years, due to projected shortfalls in tax allocation revenues. Page 79 of 229 Page 2 of 12 Legislative Building, P.O. Box 40200 Olympia, Washington 98504-0200 (360) 902-9000  TTY USERS: CALL 711  FAX (360) 902-9037 www.tre.wa.gov More specifically, in the Aggressive Development Program, the projections indicate that the City will be required to pay a portion of the debt service due on the LTGO Bonds from 2024 to 2027, and then will be fully reimbursed from tax allocation revenues by 2034. In the Moderate Development Program, it is expected that the City will be required to pay a portion of the debt service due on the LTGO Bonds from 2024 to 2030, and then will be fully reimbursed from tax allocation revenues by 2040. However, in the Conservative Development Program, the projections show that the City will be required to pay a portion of the debt service due on the LTGO Bonds in every year, and the City will never be fully reimbursed for these expenditures. Statutory Role and Purpose of Review As enacted by the 2021 Washington State Legislature, RCW 39.114.020 requires that prior to the adoption of an ordinance authorizing the creation of a TIF project area, the local government proposing the TIF project area must provide a project analysis to OST for review. OST must complete the review within 90 days of receipt of the project analysis. Upon completing the review, OST must promptly provide to the local government any comments regarding suggested revisions or enhancements to the project analysis that OST deems appropriate. OST received the first draft of the City’s project analysis on July 22, 2022. Project Overview Issuing Jurisdiction: City of Pasco County: Franklin County Project Title: Broadmoor Development Development Team: Broadmoor Properties, LLC (property owner), Marcus & Millichap, Inc., PBS Engineering and Environmental Inc. Municipal Advisor: Northwest Municipal Advisors Bond Counsel: Foster Garvey P.C. Bond Underwriter: D.A. Davidson Consultants: Stowe Development & Strategies, LLC, ECONorthwest, Gordon Thomas Honeywell Governmental Affairs In 2017, the City started planning for the Project by developing a master plan for a 1600-acre site, which is situated in the geographical center of the Tri-Cities region. The City is planning to designate 671 acres of this area as a TIA. At completion, the Broadmoor Development is expected to include single family residential, multi-family residential, mixed-use, and commercial properties. The Broadmoor Development is currently vacant land (except for an operating gravel pit), and as such, needs significant infrastructure improvements, such as roads and utilities, in order for the planned development to take place. The total cost for the TIA infrastructure improvements is estimated to be between $71 million and $84 million. The City expects to issue tax-exempt LTGO Bonds to fund approximately $33 million to $39 million of these improvements. For the purposes of the TIF project analysis and this review, the assumed LTGO Bonds issuance is $39 million. According to the project analysis, the developer(s) will be funding and constructing approximately $39 million to $45 million of public infrastructure improvements. Page 80 of 229 Page 3 of 12 Legislative Building, P.O. Box 40200 Olympia, Washington 98504-0200 (360) 902-9000  TTY USERS: CALL 711  FAX (360) 902-9037 www.tre.wa.gov Tax Increment Area The proposed TIA includes the entire Broadmoor Development site of approximately 671 acres. With the exception of 220 acres consisting of the gravel and sand operation parcels, the entire site is vacant. The assessed valuation of the TIA in 2022 is approximately $30 million, which is less than the statutory limitations of $200 million and 20% of the City’s total assessed valuation of $8,065,205,983 (it is equal to 0.37% of the City’s total valuation). Source: Broadmoor TIF Project Analysis, City of Pasco Public Project Description and Timeline Plans for the Broadmoor Development include public infrastructure improvements to be paid for by the City, spread over approximately 29.3 acres of land. These planned public infrastructure improvement projects in the TIA include arterial street construction; water, sewer, stormwater infrastructure; and interstate ramp and intersection improvements. The improvements are broken into the following categories and sub-components and detailed more completely in the City’s project analysis: Corridors - Sandifur Parkway – Bedford Street to Proposed Road 108 - Broadmoor Boulevard – Interstate 182 to Burns Road - Road 108 – Harris Road to Sandifur Parkway Interstate Associated Improvements - Interchange Improvements - Interstate 182 at Road 100 Page 81 of 229 Page 4 of 12 Legislative Building, P.O. Box 40200 Olympia, Washington 98504-0200 (360) 902-9000  TTY USERS: CALL 711  FAX (360) 902-9037 www.tre.wa.gov Intersections - Burns Road / Broadmoor Boulevard - Buckingham Drive / Broadmoor Boulevard - Sandifur Parkway / Broadmoor Boulevard - Extended Sandifur Parkway / Proposed Road 108 - Extended Sandifur Parkway / Proposed Road 103 - Road 108 / Road 103 The City-funded public infrastructure improvements are currently in the design stage with the $39 million cost estimate based on a 30% design level. According to the project analysis, the projects are expected to go to bid late in 2022 or early 2023, with construction beginning in March of 2023, and completion expected by October 2023. In addition to the City’s plans for the public infrastructure improvements described above, the owner of the Broadmoor Development and/or future developers in the TIA will privately fund and construct additional public infrastructure improvements. The privately funded infrastructure improvements are expected to cost between $39 million and $45 million. The project analysis indicates that these privately funded and developed improvements will be completed concurrently with the private development on each parcel. It is important to note that to the extent the development projects are delayed we would expect that some portion of the privately funded infrastructure improvements would also see a similar delay, potentially having a negative impact on tax allocation revenues. Private Development Timeline The private development timeline varies depending on each scenario. Generally, development is expected to begin in 2023 and continue through at least 2030. The development programs vary greatly in their size and absorption rates. The table below summarizes the key development assumptions of the three programs provided in the report. The City has identified the Moderate Development Program as the most likely to occur. Table 1 Aggressive Development Program Moderate Development Program Conservative Development Program Multi-Family Unit Absorption Rate 300 units per year for 16 years, starting in 2023 150 units per year for 25 years, starting in 2023 150 units per year for 8 years, starting in 2023 Commercial Development Starting in 2024 Completed in 2030 Starting in 2025 Most completed by 2031 Starting in 2024 Most completed by 2030 Single Family Home Absorption Rate 60 homes per year in a 4-year build-out 40 homes per year in a 6-year build-out 60 homes per year in a 4-year build-out Final Year of Development Not indicated Not indicated No Development after 2030 Gross Development Area Reduced by 25% to account for internal circulation, open space, and landscaping Page 82 of 229 Page 5 of 12 Legislative Building, P.O. Box 40200 Olympia, Washington 98504-0200 (360) 902-9000  TTY USERS: CALL 711  FAX (360) 902-9037 www.tre.wa.gov Permits At this point in time, our understanding is that there are no permits in place for the construction expected to take place in the Broadmoor Development. The City’s consultant, Stowe Development & Strategies, is confident that developers will be successful in getting the required permits, as they expect that the proposed private development will be permitted consistent with the permitting jurisdiction's applicable zoning and development standards. While we have no reason to doubt this assessment, it should be noted that unforeseen delays in permits could negatively impact construction of the residential, commercial, and mixed-use properties within the TIA, which in turn could negatively impact the amount and/or timing of the tax allocation revenues the City expects to use to pay debt service on the bonds. Financing Structure The City anticipates issuing LTGO non-voted tax-exempt bonds to pay for its portion of the public infrastructure projects in an amount not to exceed $39 million. According to the project analysis, the City anticipates issuing the debt in late 2022 or early 2023 to coincide with the public infrastructure and private development timelines. The City plans to structure the LTGO Bonds with level debt service amortized over 25-years, with a 10- year par call. The City does not currently expect to capitalize interest during the early years of the financing when tax allocation revenues alone are not expected to be sufficient to cover debt service. Instead, the City plans to pay any difference between debt service and tax allocation revenues from general City revenues. According to the project analysis, the City plans to reimburse itself for any feasibility studies, including engineering design work, that occurred prior to the expected adoption of the Ordinance designating a TIA in October 2022. The City also plans to reimburse itself for any general City revenues that are needed to meet the City’s debt service payments associated with the TIF Infrastructure, to the extent sufficient tax allocation revenues are available for such reimbursement. Tax Allocation Revenue Projections The construction of the planned private developments in the TIA is expected to begin in 2023 and continue through at least 2030, with the assessed values beginning to hit the tax rolls in 2025 and continuing to grow thereafter at different rates and varying timeframes depending on the development program. The project analysis assumes that the assessed value of new construction is recognized one year after completion. The City’s consultants indicated that they have confirmed with the Franklin County Assessor’s Office that this is a reasonable assumption that is consistent with the Office’s property assessment practices. Through a combination of new construction and assessed value growth, the assessed value in the TIA is projected to grow from approximately $30.0 million in 2022 to between approximately $1.0 billion and $2.8 billion in 2048 (depending on the development program). Page 83 of 229 Page 6 of 12 Legislative Building, P.O. Box 40200 Olympia, Washington 98504-0200 (360) 902-9000  TTY USERS: CALL 711  FAX (360) 902-9037 www.tre.wa.gov Table 2 Incremental Assessed Value – Tax Year 2023 2028 2033 2038 2043 2048 Aggressive $0 $1,146,690,000 $2,080,970,000 $2,386,540,000 $2,570,980,000 $2,769,680,000 Moderate $0 $774,450,000 $1,681,750,000 $2,002,550,000 $2,173,350,000 $2,341,320,000 Conservative $0 $546,280,000 $825,400,000 $889,190,000 $957,910,000 $1,031,940,000 No TIF $0 $323,500,000 $348,500,000 $375,440,000 $404,450,000 $435,710,000 Source: Broadmoor TIF Project Analysis, City of Pasco The project analysis indicates that the City will begin receiving tax allocation revenues in 2025. In the Aggressive Development Program scenario revenues are forecast to be $680,000 in this initial year. These revenues are projected to then increase substantially each year as new construction occurs through completion. After 2030 revenue growth as a percentage decreases to just under 3% in 2032 before falling to 1% in 2035 and remaining at approximately 1% growth per year thereafter. Revenue growth for the Moderate Development Program follows the same relative pattern: large increases through 2032, an almost 6% increase in 2033, and roughly 1% increases thereafter. The pattern for revenue growth in the Conservative Development Program sees revenue growth leveling out earlier at 1% in the year 2032 as no new development is assumed past 2030. Projected Debt Service Coverage It is important to note that the tax allocation revenue projections provided in the project analysis show debt service coverage below 1.00x until 2028 in the Aggressive Development Program and until 2031 in the Moderate scenario. Under the Conservative scenario tax allocation revenues never reach a sufficient amount to fully cover debt service. During the period where tax allocation revenues are insufficient the City will be required to fund the TIF debt service deficit with general City revenues or other City resources. Depending on the pace and final features of the completed private development, the amount of debt service shortfalls the City would be required to fund varies greatly.  In the Aggressive Development Program, the City will be required to fund debt service shortfalls in years 2024 through 2027 with general City revenues and is fully reimbursed in 2034.  In the Moderate Development Program, the debt service shortfalls extend from 2024 to 2030 and the City is fully reimbursed in 2040.  For the Conservative Development Program, debt service shortfalls will need to be funded with general City revenues in every year bonds are outstanding, and the City will never be fully reimbursed by tax allocation revenues. The tables below summarize the total tax allocation revenues, revenue shortfalls and debt service coverage of the three potential development programs. Page 84 of 229 Page 7 of 12 Table 3 Development Program First Year Tax Allocation Revenues Exceed TIF Debt Service Year that TIF Revenues Reimburse Shortfall Total Projected TIF Revenue Total Projected TIF Debt Service Projected Maximum Shortfall Total Surplus/ (Shortfall) Total Debt Service Coverage Ratio Aggressive 2028 2034 $91,890,000 $65,750,000 ($6,060,000) $26,140,000 1.40x Moderate 2031 2040 $78,320,000 $65,750,000 ($9,220,000) $12,570,000 1.19x Conservative Never Never $45,180,000 $65,750,000 ($20,570,000) ($20,570,000) 0.69x Table 4 1. Total row for DSC reflects average coverage ratio. 2. Assumes interest rate of 4.50%. Source: City of Pasco Aggressive Moderate Conservative Year Tax Allocation Revenues TIF Debt Service Surplus (Shortfall) Cumulative Surplus (Shortfall) TIF DSC Tax Allocation Revenues TIF Debt Service Surplus (Shortfall) Cumulative Surplus (Shortfall) TIF DSC Tax Allocation Revenues TIF Debt Service Surplus (Shortfall) Cumulative Surplus (Shortfall) TIF DSC 2023 2024 0 2,630,000 (2,630,000) (2,630,000) 0.00x 0 2,630,000 (2,630,000) (2,630,000) 0.00x 0 2,630,000 (2,630,000) (2,630,000) 0.00x 2025 680,000 2,630,000 (1,950,000) (4,580,000) 0.26x 380,000 2,630,000 (2,250,000) (4,880,000) 0.14x 270,000 2,630,000 (2,360,000) (4,990,000) 0.10x 2026 1,480,000 2,630,000 (1,150,000) (5,730,000) 0.56x 760,000 2,630,000 (1,870,000) (6,750,000) 0.29x 640,000 2,630,000 (1,990,000) (6,980,000) 0.24x 2027 2,300,000 2,630,000 (330,000) (6,060,000) 0.87x 1,370,000 2,630,000 (1,260,000) (8,010,000) 0.52x 970,000 2,630,000 (1,660,000) (8,640,000) 0.37x 2028 2,790,000 2,630,000 160,000 (5,900,000)1.06x 1,880,000 2,630,000 (750,000) (8,760,000) 0.71x 1,360,000 2,630,000 (1,270,000) (9,910,000) 0.52x 2029 3,160,000 2,630,000 530,000 (5,370,000)1.20x 2,300,000 2,630,000 (330,000) (9,090,000) 0.87x 1,800,000 2,630,000 (830,000) (10,740,000) 0.68x 2030 3,580,000 2,630,000 950,000 (4,420,000)1.36x 2,500,000 2,630,000 (130,000) (9,220,000) 0.95x 1,870,000 2,630,000 (760,000) (11,500,000) 0.71x 2031 3,860,000 2,630,000 1,230,000 (3,190,000)1.47x 3,030,000 2,630,000 400,000 (8,820,000)1.15x 1,950,000 2,630,000 (680,000) (12,180,000) 0.74x 2032 3,970,000 2,630,000 1,340,000 (1,850,000)1.51x 3,350,000 2,630,000 720,000 (8,100,000)1.27x 1,970,000 2,630,000 (660,000) (12,840,000) 0.75x 2033 4,050,000 2,630,000 1,420,000 (430,000)1.54x 3,540,000 2,630,000 910,000 (7,190,000)1.35x 1,990,000 2,630,000 (640,000) (13,480,000) 0.76x 2034 4,100,000 2,630,000 1,470,000 1,040,000 1.56x 3,590,000 2,630,000 960,000 (6,230,000)1.37x 2,010,000 2,630,000 (620,000) (14,100,000) 0.76x 2035 4,140,000 2,630,000 1,510,000 2,550,000 1.57x 3,650,000 2,630,000 1,020,000 (5,210,000)1.39x 2,030,000 2,630,000 (600,000) (14,700,000) 0.77x 2036 4,180,000 2,630,000 1,550,000 4,100,000 1.59x 3,700,000 2,630,000 1,070,000 (4,140,000)1.41x 2,050,000 2,630,000 (580,000) (15,280,000) 0.78x 2037 4,220,000 2,630,000 1,590,000 5,690,000 1.60x 3,760,000 2,630,000 1,130,000 (3,010,000)1.43x 2,070,000 2,630,000 (560,000) (15,840,000) 0.79x 2038 4,270,000 2,630,000 1,640,000 7,330,000 1.62x 3,810,000 2,630,000 1,180,000 (1,830,000)1.45x 2,090,000 2,630,000 (540,000) (16,380,000) 0.79x 2039 4,310,000 2,630,000 1,680,000 9,010,000 1.64x 3,870,000 2,630,000 1,240,000 (590,000)1.47x 2,110,000 2,630,000 (520,000) (16,900,000) 0.80x 2040 4,350,000 2,630,000 1,720,000 10,730,000 1.65x 3,930,000 2,630,000 1,300,000 710,000 1.49x 2,130,000 2,630,000 (500,000) (17,400,000) 0.81x 2041 4,400,000 2,630,000 1,770,000 12,500,000 1.67x 3,970,000 2,630,000 1,340,000 2,050,000 1.51x 2,160,000 2,630,000 (470,000) (17,870,000) 0.82x 2042 4,440,000 2,630,000 1,810,000 14,310,000 1.69x 4,010,000 2,630,000 1,380,000 3,430,000 1.52x 2,180,000 2,630,000 (450,000) (18,320,000) 0.83x 2043 4,490,000 2,630,000 1,860,000 16,170,000 1.71x 4,050,000 2,630,000 1,420,000 4,850,000 1.54x 2,200,000 2,630,000 (430,000) (18,750,000) 0.84x 2044 4,530,000 2,630,000 1,900,000 18,070,000 1.72x 4,090,000 2,630,000 1,460,000 6,310,000 1.56x 2,220,000 2,630,000 (410,000) (19,160,000) 0.84x 2045 4,580,000 2,630,000 1,950,000 20,020,000 1.74x 4,130,000 2,630,000 1,500,000 7,810,000 1.57x 2,240,000 2,630,000 (390,000) (19,550,000) 0.85x 2046 4,620,000 2,630,000 1,990,000 22,010,000 1.76x 4,170,000 2,630,000 1,540,000 9,350,000 1.59x 2,270,000 2,630,000 (360,000) (19,910,000) 0.86x 2047 4,670,000 2,630,000 2,040,000 24,050,000 1.78x 4,220,000 2,630,000 1,590,000 10,940,000 1.60x 2,290,000 2,630,000 (340,000) (20,250,000) 0.87x 2048 4,720,000 2,630,000 2,090,000 26,140,000 1.79x 4,260,000 2,630,000 1,630,000 12,570,000 1.62x 2,310,000 2,630,000 (320,000) (20,570,000) 0.88x Total1 91,890,000 65,750,000 26,140,000 1.40x 78,320,000 65,750,000 12,570,000 1.19x 45,180,000 65,750,000 (20,570,000) 0.69xPage 85 of 229 Page 8 of 12 Legislative Building, P.O. Box 40200 Olympia, Washington 98504-0200 (360) 902-9000  TTY USERS: CALL 711  FAX (360) 902-9037 www.tre.wa.gov Debt Capacity Based on the City’s total 2022 assessed value of $8,065,205,983, the City has $120,978,089 in total non- voted debt capacity (1.5% of 2022 AV). The City currently has $23,920,000 outstanding non-voted debt, leaving sufficient net non-voted debt capacity of $97,058,089 before the proposed $39,000,000 financing. Table 5 2021 Assessed Valuation for 2022 Collections $8,065,205,983 Non-Voted Debt Capacity (1.5% of AV) 120,978,090 Less: Outstanding Non-voted Debt (23,920,000) Current Net Non-Voted Debt Capacity 97,058,090 Less: Financing (proposed) (39,000,000) Projected Remaining Non-voted Capacity $58,058,090 Projected % of Non-voted Capacity Remaining 48.0% Source: Broadmoor TIF Project Analysis, City of Pasco Interest Rate Assumptions The debt service figures included in the project analysis assume interest rates for the TIA project bonds of 4.50% for an issuance in late 2022 or early 2023, with maturities ranging from 2024 through 2048. The project analysis assumes a debt structure with level debt service, and that the bonds will be sold on a tax- exempt basis. While the 4.50% assumption appears to include some cushion compared to current market conditions, interest rates are expected to continue rising over the near- to mid-term as the Federal Reserve continues to battle inflation. A recent survey of market participants conducted by Bloomberg indicated that a majority of economists expect that the Federal Open Market Committee will increase short-term interest rates by an additional 1.25% by the end of 2022, when the City anticipates that it will sell the bonds for the TIA public improvements. Given the current level of interest rates, increased market volatility, inflation levels at 40-year highs, and the market’s expectation for higher interest rates going forward, we encourage the City to maintain conservative assumptions and monitor interest rates carefully as it moves forward with the Project. As increases in interest rates will translate to higher debt service costs for the proposed bonds, interest rates will remain a risk factor for the City until the bonds are sold. City of Pasco Financials The City provided Table 6 below, summarizing its historical financial performance and highlighting the cash balance available to ensure the payment of debt service. As indicated in the footnote to Table 6, the available cash balance consists of amounts from three City funds that would be considered to be generally available in order to make debt service payments should tax allocation revenues prove insufficient to cover all of the debt service on the proposed LTGO Bonds. The available cash balance has grown significantly over the past five years from $22.6 million in 2017 to $57.6 million in 2021. The available cash balance is budgeted to drop to $45.7 million by the end of 2022. As shown in Tables 3 and 4, all three development programs indicate significant periods when projected tax allocation revenues will not be sufficient to meet annual debt service requirements. Under the Conservative Page 86 of 229 Page 9 of 12 Legislative Building, P.O. Box 40200 Olympia, Washington 98504-0200 (360) 902-9000  TTY USERS: CALL 711  FAX (360) 902-9037 www.tre.wa.gov Development Program scenario there is a projected cumulative shortfall of TIF revenues compared to debt service of $20.6 million. In the event of a temporary or long-term tax allocation revenue shortfall, the City will need to rely on some combination of existing revenues, new non-property tax revenues generated from the TIA, or cash balances to fund debt service payments associated with the bonds. Table 6 Source: Broadmoor TIF Project Analysis, City of Pasco Key Risks to the City From our review of the project analysis, it appears that the Project is well-conceived and will provide significant benefit to the City and region. Nonetheless, the Project comes with certain risks to the City, primarily related to the sufficiency of projected tax allocation revenues to repay LTGO Bonds that the City expects to issue to finance certain public infrastructure improvements. During years with shortfalls, the City will be required to pay any difference between debt service due and tax allocation revenues received from general City revenues. While the City plans to reimburse itself for such debt service payments made from general City revenues, it is important for decision makers to be aware of the potential magnitude and timing of such payments and reimbursements. In addition, since the TIF legislation limits the ability to collect tax allocation revenues to a period of 25 years, delays could also reduce the overall amount of tax allocation revenues that would be received by the City, limiting the City’s ability to be fully reimbursed. On a granular level, some of the various factors that could impact tax allocation revenues include permits, interest rates, economic conditions, delays in construction, and future demand for/assessed value of the property within the TIA. Permits: Unforeseen delays in permits could negatively impact the construction of the expected residential, commercial, and mixed-use properties within the TIA. Delays to either the public improvements or the private developments could negatively impact the timing and/or amount of tax allocation revenues. Page 87 of 229 Page 10 of 12 Legislative Building, P.O. Box 40200 Olympia, Washington 98504-0200 (360) 902-9000  TTY USERS: CALL 711  FAX (360) 902-9037 www.tre.wa.gov Interest Rate Risk: The City is exposed to interest rate risk until its bonds are sold. The key assumption of a 4.5% interest rate for the LTGO Bonds offers a small amount of cushion compared to current market conditions. Current market sentiments generally expect continued increases in interest rates, which could produce debt service on the City’s bonds that exceeds the amounts assumed in the project analysis. Economic Conditions: The timing of tax allocation revenues could be negatively impacted by a downturn of economic conditions. The planned development is multi-faceted with commercial, mixed-use, multi-family residential, and single-family residential components, and a variety of economic factors could negatively impact the timeline and ultimate demand for development, jeopardizing the rate and scale of private development and reducing potential tax allocation revenues. Construction Delays: Any setback or hinderance to the private developers’ capacity for completing construction projects could negatively impact tax allocation revenues. Whether the cost of the improvements themselves or some unforeseen change in the developers’ ability to complete both their public improvements and private developments, the City will remain responsible for repaying the LTGO Bonds issued for the Project, once issued. Assessed Valuations: As private developments are completed, tax allocation revenues may be less than anticipated if the assessed value projections do not track projections. If assessed valuations come in lower than expected, projected tax allocation revenues would be reduced. Risk Summary: The general impact to the City, if any of the risk factors outlined above are realized and tax allocation revenues end up being lower than expected, could be the requirement that the City apply some amount of its general revenues or reserves towards the repayment of the LTGO Bonds, reducing the City’s ability to allocate those funds to other projects or operations. Depending on the actual tax allocation revenues received, it is possible that the City may not be fully reimbursed from tax allocation revenues for such general fund expenditures. Recommendations The Broadmoor Development is a significant long-term and large-scale project. To help ensure the long- term financial success of the Project and to minimize risk, we recommend the City carefully monitor the risks identified and consider the following measures. 1. We recommend that the City discuss how much risk exposure is appropriate for the Project and how much potential debt service costs it is willing to cover in order to advance the project through years of tax allocation revenue shortfalls. 2. Given the general obligation pledge of the bonds, and the potential requirement for the City to cover some amount of debt service costs from general revenues and reserves, we recommend the City consider budgeting for and setting aside funds to cover potential tax allocation revenue shortfalls. 3. As the project moves forward, coordinate closely with the Franklin County Assessor’s Office to help ensure that the tax allocation revenue projections match the County’s assessment process and are as realistic as possible. Page 88 of 229 Page 11 of 12 Legislative Building, P.O. Box 40200 Olympia, Washington 98504-0200 (360) 902-9000  TTY USERS: CALL 711  FAX (360) 902-9037 www.tre.wa.gov 4. The City’s interest rate assumptions contain only a small amount of cushion compared to current market conditions. We recommend that the City consider using somewhat more conservative interest rate assumptions, especially if the issuance of the bonds extends into 2023. Thank you for the opportunity to review the City’s Broadmoor Development TIA project analysis. Based upon the information provided to date in connection with this Project, this concludes our review. If there are material changes in the scope, timing, or cost of the Project, please let us know. We wish the City all the best with the Project. Respectfully, Mike Pellicciotti Washington State Treasurer Jason Richter Deputy Treasurer Page 89 of 229 Appendix Page 12 of 12 Legislative Building, P.O. Box 40200 Olympia, Washington 98504-0200 (360) 902-9000  TTY USERS: CALL 711  FAX (360) 902-9037 www.tre.wa.gov Attachment A: Broadmoor Development TIA Timeline City of Pasco Adopts TIA Ordinance October 2022 LTGO Bonds Issued Late 2022 or Early 2023 TIA Public Improvments Begin March 2023 Broadmoor Development TIA takes effect June 1, 2023 TIA Public Improvments Completed October 2023 Private Development Projects Begin Throughout 2023 Tax Allocation Revenue Collection Begins 2025 TIA Expires, LTGO Bonds Mature, Tax Allocation Revenue Collection Ends 2048Page 90 of 229 RESOLUTION NO. 4179 A RESOLUTION OF THE CITY OF PASCO, WASHINGTON, DECLARING ITS INTENT TO FORM A TAX INCREMENT AREA IN THE BROADMOOR AREA WHEREAS, for many years the City has been studying, evaluating, designing and completing key infrastructure improvements to enable a mixed use development within the Broadmoor area; and WHEREAS, Broadmoor Properties, LLC owns over 400 acres of property that is being planned for mixed use development and is in need of substantial infrastructure improvements to support the desired development; and WHEREAS, the Broadmoor area has the opportunity, if built, to serve as a significant economic engine for the Pasco community providing for increased tax revenues to support City services and providing significant employment opportunities for the residents of the City; and WHEREAS,the Washington State Legislature,during its 2021 legislative session,enacted Engrossed Substitute House Bill 1189 as Chapter 207, Laws of 2021, titled "AN ACT Relating to tax increment financing" and codified as RCW 39.114, which authorizes local governments, including cities, to carry out tax increment financing of public improvements needed to support vital private economic development projects; and WHEREAS, Tax Increment Financing (TIF) is a program that allocates revenues generated from the increased assessed valuation of properties improved by the development that are within a designated tax increment area (TIA) to pay for public improvements that are needed to support the private development; and WHEREAS, City management has identified the key preliminary TIF infrastructure improvements in Exhibit A (shown as City TIF Projects) that have been identified at this time as outside of a developer's ability to fund and achieve the desired development based on market conditions necessary to accommodate commercial and mixed-use tenants; and WHEREAS, the key preliminary TIF Projects have been estimated to cost approximately 24 million to $30 million to construct; and WHEREAS, Broadmoor Properties, LLC will be dedicating approximately 24.3 acres of land for the identified TIF Projects resulting in an average value range between $5,292,540 to 10,585,080 in project benefit; and WHEREAS, City management and Broadmoor Properties, LLC have developed and agreed upon the infrastructure responsibilities as shown in Exhibit A for each party necessary to achieve the desired development; and Resolution—Tax Increment Area- 1 Page 91 of 229 WHEREAS, City management anticipates bringing forward for Council consideration an agreement between the City and Broadmoor Properties, LLC that memorializes the infrastructure improvement responsibilities provided in Exhibit A; and WHEREAS,the TIF law requires the City to prepare a Project Analysis when considering forming a TIA which includes the following key items: Boundaries and duration of the increment area. A description of the expected private development within the increment area, including a comparison of scenarios with and without proposed public improvements (AKA the `But for" analysis — the development would not occur but for"the public improvements). A description of the public improvements,estimated public improvement costs, and the estimated amount of bonds or other obligations expected to be issued. Assessed value of real property within the increment area and an estimate of the increment value and tax allocation revenues expected. Estimate of the job creation reasonably expected to result from the public improvements and the private development. An assessment of any impacts and necessary mitigation to address impacts on the following: Affordable and low-income housing Local business community Local school districts Local fire service; and WHEREAS,the Project Analysis is expected to be completed by the end of May 2022 and then submitted to the State Treasurer as required by TIF law, allowing the Treasurer 90 days to review the analysis; and WHEREAS, the City will conduct public briefings on the proposed TIA to inform the community and other public agencies about the anticipated benefits and impacts associated with the development; and WHEREAS, the City Council will consider adoption of an Ordinance in September 2022 creating a TIA following any comments by the State Treasurer and testimony resulting from the public briefings; and WHEREAS,the City has created several preliminary development scenarios based on the type and timing of development that may occur within the proposed Broadmoor TIA in which even the most modest development scenario and timing would generate revenues (Exhibit B) sufficient to support the necessary infrastructure improvements needed to support the private development; and WHEREAS, the City anticipates issuing LTGO (no-voted) tax exempt bonds to pay for the identified infrastructure projects based on the additional TIA revenues from the Broadmoor development; and Resolution—Tax Increment Area-2 Page 92 of 229 WHEREAS, LTGO bonds pledge the City's tax revenues as a guarantee to receive the best possible tax-exempt terms, and the City can pay debt service associated with these bonds with any non-restricted tax revenue such as sales tax; and WHEREAS, to mitigate the City's exposure related to the timing and scope of private development and the projected TIA property tax revenues,the City will schedule the timing of any bond debt issuance to coincide with certain development milestones (e.g., property closings, entitlements obtained, etc.) that near term developments will move forward (if infrastructure improvements are made by the City) providing for greater development certainty and additional tax revenue beyond property taxes to help pay for any debt service; and WHEREAS, as part of the above-mentioned Project Analysis, the City will refine the projected TIA revenues,conduct a"but-for"analysis,coordinate with the other taxing entities,and complete other items required by law. NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON: That the City Council directs the City Manager to develop a TIF program for the Broadmoor area and prepare an Ordinance for Council's consideration to form a TIA in accordance with state law. Be It Further Resolved that the City Council supports the preliminary infrastructure projects that are identified as described in Exhibit A and recognizes that such projects may be refined as part of the City's TIF Analysis. PASSED by the City Council of the City of Pasco, Washington, the 2nd day of May, 2022. Blanche Barajas Mayor ATTEST: APPROVED AS TO FORM J r x9 e ra Barnham, CMC F g n La C City Clerk City Attorney Resolution—Tax Increment Area- 3 Page 93 of 229 Broadmoor Area Tax Increment Financing (TIF) Projects Corridors 1. Sandifur Parkway—Bedford Street to Road 108 This work will consist of: Road widening of the existing road from Bedford Street to Broadmoor Blvd. Full road construction, including but not limited to, as much as 7-lanes of roadway and frontage improvements on the north including curb/gutter, stormwater, sidewalk, street lighting and landscaping and Curb/gutter and stormwater on the south side from Broadmoor Blvd. to Road 103. Construction of a core road, including but not limited to, as much as 3-lanes of asphalt road surface (toe-to-toe of curb)from Road 103 to Road 108. Construction of domestic water main, sanitary sewer main, and Irrigation main improvements will be included within this corridor from Broadmoor to Road 108. 2. Broadmoor Boulevard—Interstate 182 to Burns Road This work will consist of: Road widening of the existing road, west side only, including the addition of as much as 7-lanes of asphalt roadway, curb/gutter, stormwater, muti-use pathway, and the relocation of existing streetlights from interstate 182 to Sandifur Parkway. Road widening of the existing road, west side only, including the addition of as much as 7-lanes of asphalt roadway, curb/gutter, stormwater, muti-use pathway, street lighting, and landscaping from Sandifur Parkway to Buckingham Road. Road widening of the existing road, west side only, including the addition of as much as 5-lanes of asphalt roadway, curb/gutter, stormwater, muti-use pathway, street lighting, and landscaping from Buckingham Road to Burns Road. Utility adjustments of the existing utilities will be included in this corridor from Interstate 182 to Burns Road. 3. Road 108—Harris Road to Sandifur Parkway This work will consist of: Construction of a core road, including but not limited to, as much as 3-lanes of asphalt road surface (toe-to-toe of curb)from Harris Road to Sandifur Parkway. Construction of domestic water main, sanitary sewer main, and Irrigation main improvements will be included within this corridor from Harris Road to Sandifur Parkway. Interstate Associated Improvements 4. Interchange Improvements- Interstate 182 @ Road 100 This work will consist of: Improvements to the existing interchange including construction of an eastbound off-ramp and intersection along with restriping. A second phase shall include bike/ped facilities connecting north to south. Intersections 5. Burns Road/ Broadmoar Boulevard This work will consist of: Full improvements to the existing intersection including signalization, widening, curb/gutter, sidewalk with ADA ramps, street lighting, striping, and landscaping. Page 94 of 229 Utility extension and/or adjustments of the existing utilities will be included within this intersection. This intersection will have participation in cost from other developers through a separate participation technical memorandum, prepared by the City's consultant. 6. Buckingham Drive/Broadmoor Baulevard This work will consist of: Full improvements to the existing intersection including signalization,widening on the west side, curb/gutter, stormwater, sidewalk with ADA ramps, street lighting, striping, and landscaping. Utility extension and/or adjustments of the existing utilities will be included within this intersection. The signalization will be provided by Broadmoor Properties, LLC. 7. Sandifur Parkway/ Broadmoor Boulevard This work will consist of: Full improvements to the existing intersection including signalization, widening, curb/gutter, sidewalk with ADA ramps, street lighting, striping, and landscaping. Utility extension and/or adjustments of the existing utilities will be included within this intersection. 8. Sandifur Parkway/Road 108 This work will consist of: Construction of a "core" roundabout that includes all the asphalt necessary to extend 2' past the proposed final toe-of-curb/gutter.This effort will also include temporary gravel shoulder drainage swale as well as striping and lighting as well as the full construction of a center truck apron and landscaped feature and entry delineators including curb/gutter and internal surfacing as determined. Frontage improvements including curb/gutter, sidewalk, stormwater, and landscaping will be completed by the parcel owner at the time of development. Construction of domestic water main, sanitary sewer main, and Irrigation main improvements will be included within this intersection. 9. Sandifur Parkway/ Road 103 This work will consist of: Construction of a full intersection including signalization,widening, curb/gutter, stormwater, sidewalk with ADA ramps, street lighting, striping, and landscaping. Construction of domestic water main, sanitary sewer main, and Irrigation main improvements will be included within this intersection. The signalization will be provided by Broadmoor Properties, LLC. 10. Road 108/Road 103 This work will consist of: Construction of a core intersection, including but not limited to, as much as 3-lanes of asphalt road surface (toe-to-toe of curb). Construction of domestic water main, sanitary sewer main, and Irrigation main improvements will be included within this intersection. Stop control determined at time of design. Page 95 of 229 Page 96 of 229 AGENDA REPORT FOR: City Council October 6, 2022 TO: Dave Zabell, City Manager City Council Workshop Meeting: 10/11/22 FROM: Darcy Buckley, Finance Director Finance SUBJECT: General Fund Revenue and Ad Valorem Tax (Property Tax) Presentation I. REFERENCE(S): 2023 General Fund and Ad Valorem Presentation Exhibit A - Property Tax Worksheet Revenue Manual Draft 2023 Property Tax Levy Increase Ordinance II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: Council decision sets the City's share of the Ad Valorem (Property Tax) rate for 2023 collections. The impact on the General Fund is dependent upon option selected. Option A includes no election to increase the levy by one percent levy limitation. Option B includes the one percent increase of $118,181. IV. HISTORY AND FACTS BRIEF: The General Fund is the primary administrative and operational fund of the City. As compared to the City-wide budget, activity recorded in the General Fund represents 29% of revenues. Therefore, reviewing the results of current activity is valuable for making budgetary projections and ad valorem tax decisions. While prudent to undertake this analysis, RCW 84.55.120 also requires a public hearing be conducted on General Fund revenue sources for the coming year’s budget, including possible increases in the City’s property tax levy. Following the revenue hearing, Council may choose to pass an ordinance that authorizes the property tax levy for the coming year, 2023. The statutory increase in the levy is limited to one percent of the highest levy to date. Additionally, the State statutory Page 97 of 229 limit on City levy rate is $3.60 per $1,000 of assessed valuation. The City of Pasco levy rate for 2022 was $1.465 per $1,000 of assessed valuation. While property tax is a significant portion of the General Fund revenue, projected to be 20% of General Fund revenue in 2022, other General Fund revenues include sales tax, fees and charges for services, utility taxes, fines and penalties, and other sources. The category of other sources is more variable and dependent upon uncertain or infrequent events. Some examples are refunds, interest earnings, donations, and transfers in from other funds for unique projects. As the levy rate is set by the City annually, a public hearing and vote separate from other routine budgetary decisions is required. As such, consideration of the determination of the 2023 levy rate is the focus of this narrative. Those services typically viewed as governmental in nature are the same services supported by property tax assessments and resulting revenues. Services commonly viewed as essential government services, like public safety services of police and fire are funded by the way of property taxes. Parks and recreation functions and City sponsored community events also benefit from the collection of property taxes. Finally, the functions of City administration, finance, technological support and tools, and a myriad of other “internal services" are funded partially from the dollars provided by property tax revenues. As outlined in the Capital Improvement Plan, other governmental type funds, and their capital projects, benefit from support of General Fund revenues and the funding provided by property taxes. One current example of a General Fund supported capital cost are the ongoing City Hall improvements. Introduced and approved by voters of the State of Washington as Initiative 747 in 2001, the annual property tax levy can only increase by one percent, or the value of the Implicit Price Deflator (IPD), whichever is less, over the levy of the previous year. Any exception to this rule is dependent upon voter approval. While the result of voting was Constitutionally challenged and overruled by the Washington Supreme Court, the State’s Legislature determined to place the standards outlined in the initiative into law. The current legal limit is the lesser of 1%, or the value of the Implicit Price Deflator. The IPD is significantly different from the Consumer Price Index, or CPI. Unlike the CPI, the IPD is not based on a fixed basket of goods and services in a specified region. Instead, the goods and services included in the IPD basket considers national inputs and is influenced by consumption and investment patterns. The IPD as of September 25, 2022 was 6.457%, significantly over the one percent limitation. The levy calculation included in this presentation is based on estimates provided by the Franklin County Assessor’s Office. Additionally, as the Assessor’s Off ice is not allowed to set the levy to exceed the amount included in the City budget, Page 98 of 229 the information provided in the estimated calculations and the rounded amount will be utilize for presentation in the budget. V. DISCUSSION: For 2022, the Franklin County Assessor has provided a preliminary City assessed valuation of $9.5 billion, which was used as the basis to calculate the 2023 property tax levy value. This amount includes new construction of $496,115,323, an estimated change in State-assessed utility valuation of $10,000 and Local Tax Incremental Financing assessed valuation of $710,800. Option A reflects an estimated increase of $738,007 over the 2022 levy amount. This change is the product of an increase in assessed valuation primarily due to new construction in 2022. This option declines the statutorily allowed one percent increase in the City property tax levy, an increase of $118,181. Instead, given this option, the City will bank the capacity to levy the additional value in the future. Important to this decision is the consideration that the City is not able nor has oversight to ensure that its banked capacity remains intact. Based on record-keeping of the Assessor’s Office it is possible, even if unlikely, that breakdown in process or clerical error could result in a loss of formerly bank capacity. The effect of new construction adds to the overall assessed valuation of the City. As assessed value is the denominator by which the levy rate is calculated an increase serves to reduce the levy rate for 2023. Based upon the calculation of added new construction and the increased assessed valuation, the levy rate for Option A is $1.316 per $1,000 assessed value. This new levy rate is $0.149 less than the rate applied in 2022. Option B includes the addition of the one percent statutory limit, or $118,181. The levy rate resulting from this calculation is $1.328 per $1,000 assessed value. Based on this calculation, the 2023 levy rate will be $0.137 per $1,000 assessed value less than the amount levied in 2022. Historically, Council has evaluated property tax levy decisions on current and planned needs. For example, in 2019, Council determined to capture the City’s banked levy capacity from prior years to fund capital improvemen ts like Fire Stations 83 and 84 and the soon to be built Animal Shelter. For the years, 2020 and 2021, the assessment of a one percent levy increase was declined and the capacity banked. The past many years have been unprecedented. While contrary to initial expectations, sales tax revenues for the City were strong and construction activity remained robust. Current challenges related to supply chain interruptions and delays coupled with inflationary cost pressures are troublesome and introduce uncertainty where forecasting revenues and expenses are concerned. Fortuitously, the many years trend of private investment and resulting community Page 99 of 229 growth remains an anticipation. Certainly, both that addition of new citizenry and businesses, and the resulting need to provide service and infrastructure to benefit current and long-term Pasco constituents is an important aim of City staff. As evidenced by the recently approved Capital Improvement Plan, infrastructure will command much from City’s resources. One example of new expense related to capital needs is the construction of planned Fire Station 85. Debt service on a bond for construction financing equates to the addition of estimated debt service of $585,000 annually for 20 years. In order for the Franklin County Assessor to levy property taxes, the City is required to certify property tax levies with the County by November 30 of each year. RECOMMENDATION: In consideration of the above-noted factors and conditions, staff recommends that Council select Option B; adopting the statutorily allowed one percent increase in the City’s property tax levy instead of banking that capacity. Page 100 of 229 General Fund Revenues Annual review of General Fund revenue sources, including consideration of 2023 property tax levy.Page 101 of 229 General Fund The General fund is the City’s primary operational fund. This fund is used to record all resource inflows and outflows that are not associated with special-purposed funds. General Fund activity represents a significant portion of City operations. The 2021 -2022 Budget, 29 % of revenues and 27 % of expenditures, respectively, were accounted for in the General Fund. Ambulance 4% ARPA 4% Construction 16% Fudiciary 0% General 29% Internal Service 4% Irrigation 1% Other Special Revenue 8% PWRF 5% Sewer 13% Stormwater 1% Streets 2% Water 13% % of City-wide Revenue Page 102 of 229 46.66 49.76 57.00 58.66 68.68 64.13 $40 $45 $50 $55 $60 $65 $70 $75 2017 2018 2019 2020 2021 Anticipated 2022Millions of Dollars Total General Fund Revenues Page 103 of 229 General Fund Revenue Capital investment in the City has resulted in a significant increase in Property Tax Revenue over the past many years. Between the prior biennium and the budget covering 2021 -2022; Property Tax Revenue is anticipated to increase by approximately 14 percent. Charges and fees reflect a recovery from pandemic related decreases. This improvement is primarily reflected in parks and recreation activity return. Also, affecting this category in 2021 -2022 Biennium are plan check fees related to construction activity. Construction related revenue has had a positive impact on the General Fund for the 2021 -2022 Biennium. Both Sales Tax Revenue and Building Permit Revenue Categories improved over the prior biennium. Revenues related to large projects are significant and infrequent.Page 104 of 229 General Fund Revenue Intergovernmental revenues are strong. This category is a combination of state shared revenues and grants primarily.Revenues for fines and penalties are lower in this Biennium as compared to prior years. The reduction is reflected solely in the traffic fines category.Other sources of revenue are trending lower for this biennium. These revenues are variable in nature; interest, donations, refunds and rebates, and transfers relate to one-time activities. Page 105 of 229 General Fund Revenues -TaxesDescriptionActual 2017-2018 Actual 2019-2020 Projected 2021-2022 Projected % Change Over (Under) Prior Biennium 2023-2024 Proposed Budget General Property Tax $ 16,316,052 $ 21,767,256 $ 24,812,334 14%$25,859,565 Other Tax 2,543,718 1,940,959 2,572,085 33%2,945,231 Retail Sales Tax 30,554,225 35,200,331 45,789,546 30%54,619,114 Utility Tax 18,409,878 23,041,598 21,578,349 (6%)21,855,003 Total Taxes $ 67,823,873 $ 81,950,145 94,752,314 16%$105,278,915 % of General Fund Revenue 70%71%74%71%Page 106 of 229 General Fund Revenues –Fees & ChargesDescriptionActual 2017-2018 Actual 2019-2020 Projected 2021 - 2022 Projected % Change Over (Under) Prior Biennium 2023-2024 Proposed Budget Culture & Recreation $ 506,174 $ 264,803 $ 498,607 88%$521,901 Economic Environment 4,021,511 4,729,140 6,477,900 37%8,583,439 General Government 6,395,207 6,909,983 7,913,706 15%7,625,909 Public Safety 3,296,090 2,824,809 3,355,935 19%4,139,587 Animal Shelter --17,905 0 Total Fees & Charges $ 14,218,982 $ 14,728,735 $ 18,264,053 24%$20,870,836 % of General Fund Revenue 15%13%15%14%Page 107 of 229 General Fund Revenues -IntergovernmentalDescriptionActual 2017-2018 Actual 2019-2020 Projected 2021- 2022 Projected % Change Over (Under) Prior Biennium 2023-2024 Proposed Budget City-County Assistance $ 444,466 $ 223,172 $ 723,062 224%$400,000 Criminal Justice 217,468 234,278 259,208 11%287,791 Grants 534,875 3,793,485 4,082,569 8%2,744,106 Liquor Board Profits 1,189,741 1,204,278 1,219,717 1%1,237,583 Liquor Excise Tax 714,277 909,432 1,096,787 21%1,367,980 Other 58,852 50,788 52,390 3%53,957 PUD Priviledge Tax 1,358,200 1,490,794 1,468,640 (1%)1,596,271 Total Intergovernmental $ 4,517,881 $ 7,906,227 $ 8,902,373 13%$7,687,688 % of General Fund Revenue 5%7%4%5%Page 108 of 229 General Fund Revenues –Permits & LicensesDescriptionActual 2017-2018 Actual 2019-2020 Projected 2021 - 2022 Projected % Change Over (Under) Prior Biennium 2023-2024 Proposed Budget Animal License Fees $ 463,068 $ 313,013 $ 177,590 (43%)$202,084 Building Permit 2,948,410 3,487,024 4,437,648 27%5,711,501 Business License Fees 1,362,978 1,490,163 1,650,243 11%1,568,119 Other -License & Permits 43,498 63,051 73,265 16%60,346 Total Licenses & Permits $ 4,817,955 $ 5,353,252 6,338,746 18%$7,542,050 % of General Fund Revenue 5%5%4%5%Page 109 of 229 General Fund Revenues –Fines & PenaltiesDescriptionActual 2017-2018 Actual 2019-2020 Projected 2021 - 2022 Projected % Change Over (Under) Prior Biennium 2023-2024 Proposed Budget Court $ 104,019 $ 83,545 $ 137,468 65%$100,977 Non-Traffic 234,667 884,933 1,111,959 26%1,168,582 Traffic 1,393,109 1,076,486 649,132 (40%)600,004 Total Fines & Penalties $ 1,731,794 $ 2,044,964 $ 1,898,558 (-7%)$1,869,563 % of General Fund Revenue 2%2%1%1%Page 110 of 229 General Fund Revenues –Other SourcesDescriptionActual 2017-2018 Actual 2019-2020 Projected 2021 -2022 Projected % Change Over (Under) Prior Biennium 2023-2024 Proposed Budget Contributions $ 145,699 $108,317 $ 101,982 (-6%)$114,196 Interest 507,182 686,091 381,472 (-44%)580,265 Other Misc 984,811 836,763 691,964 (-17%)2,962,997 Rent 657,534 551,417 545,449 (1%)760,979 Transfer In 1,014,545 1,500,153 953,492 (36%)450,106 Total Other Sources $ 3,309,771 $ 3,682,741 $ 1,761,951 (27%)$4,868,543 %of General Fund Revenue 3%3%1%1%Page 111 of 229 Category of Revenue Actual 2017 - 2018 Actual 2019- 2020 Projected 2021- 2022 Projected % Change Over (Under) Prior Biennium Percentage over 2021-2022 Biennial Budget 2023-2024 Proposed Budget Taxes $ 67,823,873 $ 81,950,145 $ 94,752,313 16%7%$105,278,915 Fees & Charges 14,218,982 14,728,735 18,246,148 24%2%20,870,836 Intergovernmen tal 4,517,881 7,906,227 8,902,373 13%14%7,687,688 Permits & Licenses 4,817,955 5,353,252 6,338,746 18%9%7,542,050 Fine and Penalties 1,731,794 2,044,964 1,898,558 -7%(8%)1,869,563 Other Sources 3,309,771 3,682,741 2,674,359 -27%(54%)4,868,543 Total General Fund Revenues $ 96,420,256 $115,666,064 $132,812,497 15%4%$148,117,595 Percentage Change 20%15%11% Summary of All General Fund Revenues Page 112 of 229 Ad Valorem Tax •Ad Valorem Tax is more commonly termed Property tax. •State law precludes any increase in property tax levy over 1% in any given year, and local governments with a population greater than 10,000 are limited a levy increase equal to the lesser of 1% or the rate of inflation, as determined by the Implicit Price Deflator (IPD). •The IPD Rate as of September 25, 2022 is 6.457%. As such, the City has the option to increase its levy value by the full 1%. •The IPD is an economic metric that accounts for inflation by converting output measured at current prices into constant dollar gross domestic product (GDP). The IDP measures the changes in prices for all goods and services produced in the economy.Page 113 of 229 Banked Capacity •On any given year, the City may determine to forego the 1% annual increase to the levy amount. This decision means the levy value is the same as the prior year, plus the property tax assessed on new construction. •Historically, when determined there is no budgetary needed increase, the City has chosen to “bank”, or reserve, its levy capacity. •In 2019, the City recaptured all its banked capacity to fund major infrastructure projects. The primary focus of this action was the addition and relocation of Fire Stations in the City. •The City banked its statutorily allowed 1% levy increases all years since the 2019 increase. The current banked capacity is $ 331,849.Page 114 of 229 General Fund Levy Options OPTION A OPTION B Assessed Value Current 2022 Tax Levy No Increase + New Construction 1% IPD + New Construction 2022 Levy $11,818,073 $11,818,073 $11,818,073 Value of 1% Increase $118,181Increase in State Utility AV (Est)$10,000 $10,000New construction (Est)$496,115,323 $726,966 $726,966Local Tax Incremental Financing $710,800 $1,042 $1,042Total Levy Amount $11,818,073 $12,556,080 $12,674,261Tax Levy Rate 1.465 1.316 1.328 Projected Additional Levy Value $0 $738,007 $856,188Cost per $1,000 on a $360,000 AV Home $528 $474 $478Net Change ($54)$4 Page 115 of 229 2022 Comparison 2022 General Rate 2022 Total Rate*Tax CollectionCity of Richland $ 2.162 $ 2.329 $ 20,750,118 City of Kennewick $ 1.710 $ 1.710 $ 14,413,259 City of Pasco $ 1.465 $ 1.465 $ 11,818,073 *Includes voted bondsCost per $1,000 on a $360,000 AV HomeCity of Richland $ 839 City of Kennewick $ 616 City of Pasco $ 528 Page 116 of 229 2.39 2.25 2.22 2.00 2.00 1.97 1.97 1.97 1.96 1.95 1.94 1.88 1.75 1.94 1.81 1.71 1.47 1.32 $1.0000$1.2000$1.4000$1.6000$1.8000$2.0000$2.2000$2.4000$2.6000$2.8000$3.0000 200520062007200820092010201120122013201420152016201720182019202020212022PASCO PROPERTY TAX LEVY RATE HISTORY(GENERAL FUND PORTION) PER $1,000 OF ASSESSED VALUE Estimate of Levy Rate for 2023 Page 117 of 229 2.0 2.3 2.5 2.9 2.9 3.1 3.2 3.3 3.5 3.7 3.9 4.2 4.8 5.5 6.1 6.7 8.1 9.5 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 200520062007200820092010201120122013201420152016201720182019202020212022Assessed Value In BillionsChange in Assessed Value Page 118 of 229 Challenges Employees are the foundation of City service delivery. Current staffing challenges have the potential to impact cost of service. Recent years have been unusual. The pandemic brought higher than expected revenues. If continued, inflationary pressure may decrease sales tax revenues, accounting for approximately 35% of 2021-2022 budget. Recent history interjects uncertainty for future revenue expectations. Growth of the City in the form of private development equates to needed growth in infrastructure and staff.Page 119 of 229 Questions?Page 120 of 229 General Fund Levy OptionsOPTION AOPTION BAssessed Value Current 2022 Tax LevyNo Increase + New Construction 1% IPD + New Construction 2022 Levy $11,818,073 $11,818,073 $11,818,073Value of 1% Increase$118,181Increase in State Utility AV (Est)$10,000 $10,000New construction (Est) $496,115,323 $726,966 $726,966Local Tax Incremental Financing $710,800 $1,042 $1,042Total Levy Amount $11,818,073 $12,556,080 $12,674,261Tax Levy Rate 1.465 1.316 1.328Projected Additional Levy Value$0 $738,007 $856,188Cost per $1,000 on a $360,000 AV Home $528 $474 $478Net Change($54) $4 Page 121 of 229 General Fund Revenue Summary Page 122 of 229 Taxes 2017-2018 Actual 2019-2020 Actual 2021-2022 Adopted Budget 2021-2022 Proposed Amended Budget General Property Tax 16,316,052 21,767,256 22,947,637 24,812,334 Retail Sales Tax 30,554,224 35,155,739 34,100,746 45,789,546 Utility Tax 18,409,878 22,907,648 22,584,924 21,578,349 Other Tax 2,543,719 1,940,959 1,922,780 2,572,085 Sub-Total Taxes 67,823,873 81,771,602 81,556,087 94,752,314 Fees & Charges General Government 6,395,207 6,909,984 6,982,332 7,913,706 Public Safety 3,296,090 2,824,809 3,384,632 3,355,935 Culture & Recreation 506,174 264,802 465,727 498,607 Economic Environment 4,021,511 4,729,140 4,808,548 6,477,900 Sub-Total Fees & Charges 14,218,982 14,728,735 15,641,239 18,246,148 Intergovernmental PUD Privilege Tax 1,358,200 1,490,794 1,198,267 1,468,640 Liquor Board Profits & Excise Tax 1,904,019 2,113,710 2,011,037 2,316,504 Grants 534,876 3,793,485 998,743 4,082,569 State Shared Revenues 982,271 Other 720,786 508,238 476,170 52,390 Sub-Total Intergovernmental 4,517,880 7,906,226 4,684,217 8,902,373 Licenses & Permits Building Permit 2,948,409 3,487,024 3,684,978 4,437,648 Business License 1,362,979 1,277,719 1,452,466 1,650,243 Animal License 463,069 313,013 381,551 177,590 Other 43,499 63,052 46,786 73,265 Sub-Total Licenses & Permits 4,817,956 5,140,808 5,565,781 6,338,746 Fines & Forfeitures Traffic 1,393,109 1,076,486 1,345,632 649,132 Non Traffic 234,667 884,933 1,115,602 1,111,959 Court 104,019 83,544 85,120 137,468 Sub-Total Fines & Forfeitures 1,731,794 2,044,963 2,546,354 1,898,558 Other Sources Rent 657,535 551,417 651,945 545,449 Transfer in 874,333 452,987 1,269,762 953,492 Interest 507,182 686,092 570,507 381,472 Other 1,270,723 1,982,247 233,458 793,946 Sub-Total Other Sources 3,309,773 3,672,743 2,725,672 2,674,359 Total General Fund Revenue 96,420,260 115,265,078 112,719,350 132,812,498 Summary - General Fund Revenue Sources by Category 2% 16% 34% 19% 5% 0% 3% 6% 0% 3% 2% 1% 0% 0% 1% 3% 0% 1% 0% 1% 0% 1% 0% Page 123 of 229 Taxes Page 124 of 229 Revenue: Property Tax Description: Historical Data: The Franklin County Assessor's Office establishes a value for all property for tax purposes. The cost of providing public services determines property tax amounts. A property tax is an ad valorem tax on the value of a property, usually levied on real estate. This revenue is used to support general governmental purposes like Police, Fire, Parks, and roads. Rates are expressed in "dollars per $1,000 of assessed value (AV). The Washington State Constitution limits the annual rate of property taxes that may be imposed on an individual parcel of property to 1% of its true and fair value. Hence, property tax revenue can be increased by the said 1%, plus any new construction and annexation. The graphic below the chart shows the distribution of tax for local school districts (maintenance, operation, bonds), to the state for local school support, to the City of Pasco, and to Franklin County. Where Do Your Property Tax Dollars Go? $2,014,697 - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 2017-2018 Actual 2019-2020 Actual 2021-2022 Projected Property Tax Revenue Actual Adopted Budget Proposed Amendments Page 125 of 229 Revenue: Sales Tax Description: Historical Data: Breakdown of Sales Tax Rate 2021 Rates State 6.5% City/County (85%/15%) 1.0% Transit 0.6% Public Safety* 0.3% Criminal Justice** 0.1% Juvenile Detention 0.1% Mental Health 0.1% Total 8.7% *RCW 82.14.450; 60% is retained by counties, remaining 40% is allocated to cities on a per capita basis **RCW 82.14.340; County receives 10% of tax proceeds; remaining 90% is distributed to cities and unincorporated areas based on population Where Do Sales Tax Dollars Come From? Revenue from sales tax is used to support general City services, as well as for criminal justice and public safety purposes. Sales tax is the largest revenue for City's General fund. A majority of the funds generated by the sales tax rate go to the state, with a lesser percentage going to the City of Pasco and Franklin County. Retail trade, construction, wholesale trade, and accommodation/food services are the economic sectors generating a majority of this tax revenue. Beginning January 2023, City of Pasco sales tax rate increases to 8.9% in light of passage of the Pasco Public Facilities' successful election. City of Pasco has a fairly diverse economy with approximately half of the City's sales tax being collected from retail activity, including automotive dealers. The chart below illustrates the major sources for the City's retail sales tax earned between the years of 2019 - 2022 YTD remittances. The other category is comprised of numerous economic sectors including, but not limited to, administrative support services, waste management and remediation, real estate rentals and leases, transportation & warehousing, information services and manufacturing. Accommodation and  Food Services, 6.8% Construction, 2.6% Information, ‐0.3% Manufacturing, 0.4% Other, 26.1% Professional, Scientific, and  Technical Services, 2.6% Real Estate Rental and  Leasing, 51.0% Retail Trade, 2.2% Transportation and  Warehousing, 0.0%Wholesale Trade, 8.5% Sales Tax Revenue Sources 11,688,800  ‐  5,000,000  10,000,000  15,000,000  20,000,000  25,000,000  30,000,000  35,000,000  40,000,000  45,000,000  50,000,000 2017-2018 Actual 2019-2020 Actual 2021-2022 Adopted & Proposed Amended Budget Sales Tax Revenue Actual Adopted Budget Proposed Amendments Page 126 of 229 Revenue: Utility Tax Description: Historical Data: Revenue: Other Tax Description: Historical Data: This category includes leasehold, gambling, and admissions tax. Gambling tax applies to all card games, punch board games, pull tabs, bingo games, raffles, and amusement games played within the City limits. An Admissions tax of 2.5% is levied upon every person who pays an admission charge to any place within the City limits. The City has the authority to tax 8.5% on utility revenue including water, sewer, garbage, irrigation, solid waste, stormwater, electricity, telephone, and cable television. The City's general fund receives 7.5% of this tax, with remainder being disbursed to the Overlay and Street funds. Beginning in 2019, the state requested all taxes be disbursed to General Fund and transferred out to other funds. (1,006,575)  (5,000,000)  ‐  5,000,000  10,000,000  15,000,000  20,000,000  25,000,000 2017-2018 Actual 2019-2020 Actual 2021-2022 Projected Utility Tax Revenue Actual Adopted Budget Proposed Amendments 649,305  ‐  500,000  1,000,000  1,500,000  2,000,000  2,500,000  3,000,000 2017-2018 Actual 2019-2020 Actual 2021-2022 Projected Other Tax Revenue Actual Adopted Budget Proposed Amendments Page 127 of 229 Fees & Charges Page 128 of 229 Revenue: General Government Description: Historical Data: Revenue: Public Safety Description: Historical Data: The City uses these resources within the General Fund to provide finance, human resources, safety, and administration services to all other funds within the City. The City uses a cost allocation plan, updated on a regular basis, to adequately distribute administrative services costs to other funds. The largest revenue source within this category is Interfund Administrative Services which totaled $3.2 Million in 2021. The City uses these General Fund resources to provide services to external agencies like the Tri-Cities Airport, Port of Pasco, and Pasco School District. A majority of these revenues are attributable to Airport Rescue and Firefighting (ARF), Fire Protection Services (includes wildland firefighting), and School Resource Officer (SRO) programs. (28,697) (500,000) - 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 2017-2018 Actual 2019-2020 Actual 2021-2022 Projected Public Safety Revenue Actual Adopted Budget Proposed Amendments 934,374 - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 2017-2018 Actual 2019-2020 Actual 2021-2022 Projected General Government Revenue Actual Adopted Budget Proposed Amendments Page 129 of 229 Revenue: Economic Environment Description: Historical Data: Revenue: Culture and Recreation Description: Historical Data: The City's Engineering Department provides services to all projects undertaken by the City. The revenue received from providing these services flows into the General Fund. This category of revenue also includes plan check, zoning, inspection, and State Environmental Protection Act (SEPA) fees. The City's Parks & Recreation Department provides the public with variety of recreational services including swimming lessons, and exercise classes. All revenues received for services provided by Parks & Recreation flow into this category. 1,669,352 - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 2017-2018 Actual 2019-2020 Actual 2021-2022 Projected Economic Resources Revenue Actual Adopted Budget Proposed Amendments 32,880 - 100,000 200,000 300,000 400,000 500,000 600,000 2017-2018 Actual 2019-2020 Actual 2021-2022 Projected Culture & Recreation Revenue Actual Adopted Budget Proposed Amendments Page 130 of 229 Licenses & Permits Page 131 of 229 Revenue: Building Permit Description: Historical Data: Revenue: Business License Fees Description: Historical Data: Building permit fees include basic building, mechanical, and electrical permit fees. Permit fee is based on improvement value of the project. All building permits revenues are restricted to be utilized for development services only. Businesses located within the City, or that operate temporarily within the City, must obtain a business license. The annual fee for a business license is a flat $80 plus $20 per full time equivalent employee (FTE). 0 0 197,777 - 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2017-2018 Actual 2019-2020 Actual 2021-2022 Projected Business License Fees Revenue Actual Adopted Budget Proposed Amendments 752,670 - 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 5,000,000 2017-2018 Actual 2019-2020 Actual 2021-2022 Projected Building Permit Revenue Actual Adopted Budget Proposed Amendments Page 132 of 229 Revenue: Animal License Fees Description: Altered Unaltered One Year $ 15 One Year $ 55 Three Year $ 40 Three Year $ 160 Historical Data: Animal licensing is required in the City for all dogs. Licenses are issued on a one or three year basis. (114,000) (200,000) (100,000) - 100,000 200,000 300,000 400,000 500,000 2017-2018 Actual 2019-2020 Actual 2021-2022 Projected Animal License Fees Revenue Actual Adopted Budget Proposed Amendments Page 133 of 229 Intergovernmental Revenues Page 134 of 229 Revenue: Public Utility District (PUD) Privilege Tax Description: Historical Data: Revenue: Liquor Board Profits and Excise Tax Description: Historical Data: State and County collected revenue that is shared with schools, counties, and cities based on set of factors including sales, location of dams and reservoir, and population. Tax is applied to public utility district when it generates, distributes, and sells electricity. Due to the COVID crisis and the Governed utility moratorium the revenue for 2021 has seen an decrease in collected utilities. State-collected revenues that are shared with all cities are derived from liquor receipts (profits and excise taxes). Cities get 40% share of the liquor board profits and 28% of the liquor excise tax receipts. 270,373 - 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 2017-2018 Actual 2019-2020 Actual 2021-2022 Projected PUD Privilege Tax Revenue Actual Adopted Budget Proposed Amendments 305,467 - 500,000 1,000,000 1,500,000 2,000,000 2,500,000 2017-2018 Actual 2019-2020 Actual 2021-2022 Projected Liquor Board Profits & Excise Tax Actual Adopted Budget Proposed Amendments Page 135 of 229 Revenue: Grants Description: Historical Data: The City actively seeks grant funding from local, state, and federal agencies for a variety of programs that benefit the City. The grants included as revenue for general fund are generally related to police and fire services. City has also received Assistance for Fire Fighters grant to purchase SCBA equipment, and Department of Ecology to purchase spill response boat. 3,119,254 - 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 5,000,000 2017-2018 Actual 2019-2020 Actual 2021-2022 Projected Grants Revenue Actual Adopted Budget Proposed Amendments Page 136 of 229 Fines & Penalties Page 137 of 229 Revenue: Fines and Forfeitures Description: Historical Data: Includes traffic and non-traffic fines and penalties. Traffic infraction fines are set by state supreme court, however, non-traffic infractions are set by the City. (647,796)  (1,000,000)  (500,000)  ‐  500,000  1,000,000  1,500,000  2,000,000  2,500,000  3,000,000 2017-2018 Actual 2019-2020 Actual 2021-2022 Projected Fines & Forfeiture Revenues Actual Adopted Budget Proposed Amendments Page 138 of 229 Ordinance – 2023 Ad Valorum Tax - 1 ORDINANCE NO. ________ AN ORDINANCE OF THE CITY OF PASCO, WASHINGTON, PROVIDING FOR AN INCREASE IN THE REGULAR PROPERTY TAXES OF THE CITY FOR LEVY IN 2022 AND COLLECTION IN THE 2023 TAX YEAR; PRESERVING LEVY CAPACITY FOR FUTURE YEARS; AND PROVIDING FOR RELATED MATTERS. THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON DO ORDAIN AS FOLLOWS: §1. Findings and Determinations. The City Council (the “City Council”) of the City of Pasco, Washington (the “City”), makes the following findings and determinations: (a) RCW 84.55.120(1) provides that the City Council must hold a public hearing on revenue sources for the following year’s current expense budget and that the hearing must include consideration of possible increases in property tax revenues and must be held prior to the time the City levies the taxes. (b) RCW 84.55.120(3) provides that the City may not authorize an increase in property tax revenue from the previous year except by adoption of a separate ordinance or resolution, pursuant to notice, specifically authorizing the increase in terms of both dollars and percentage. (c) Pursuant to proper notice, the City Council held a public hearing on October 17, 2022 (the “Hearing”), to consider the City’s 2021 - 2022 revenue sources, along with consideration of possible increases in property tax revenues. (d) The City’s actual levy amount from the previous year was $11,818,073. (e) The City has a population that is greater than 10,000. (f) The City Council, after the Hearing and after duly considering all relevant evidence and testimony presented, determined that the City requires 1% in allowable increase in property tax revenue from the previous year, in addition to revenue resulting from the addition of new construction and improvements to property, newly constructed wind turbines, solar, biomass and geothermal facilities, if the facilities are not state assessed, any increase in the value of state-assessed property, any annexations that have occurred and any refunds made, in order to discharge the expected expenses and obligations of the City and in its best interest. §2. Property Tax Increase Authorized. An increase in the regular property tax levy of the City is authorized for the levy to be collected in the 2023 tax year. The dollar amount of the increase over the actual levy amount from the previous year is $118,181 (one hundred eighteen thousand one hundred eighty-one dollars), which is a percentage increase of 1% (one percent) from Page 139 of 229 Ordinance – 2023 Ad Valorum Tax - 2 the previous year. This increase is exclusive of additional revenue resulting from new construction, improvements to property, any increase in assessed value due to construction of wind turbine, solar, biomass and geothermal facilities, if the facilities are not state assessed, any increase in the value of state assessed property, any annexations that have occurred, any refunds made, and any increase in the value of a local tax incremental finance area in order to discharge the expected expenses and obligations of the City and in its best interest. §3. Transmittal. The City Clerk is authorized and directed to transmit a certified copy of this ordinance to the Franklin County Assessor on or before November 30, 2022. §4. General Authorization and Ratification. The City Manager, the Finance Director of the City, the City Clerk and other appropriate officers of the City, and each of them acting alone, are authorized and directed to take any action and to execute any document as in their judgment may be necessary or desirable to effectuate the provisions of this ordinance. All prior actions in furtherance of and consistent with the terms of this ordinance are ratified and confirmed. §5. Effective Date. This Ordinance takes effect five (5) days after passage and publication. PASSED by the City Council of the City of Pasco, Washington, this ___ day of ____________, 2022. _____________________________ Blanche Barajas Mayor ATTEST: APPROVED AS TO FORM: ______________________________ ________________________________ Debra Barham, CMC Kerr Ferguson Law, PLLC City Clerk City Attorneys Published: _____________________________ Page 140 of 229 AGENDA REPORT FOR: City Council TO: Dave Zabell, City Manager City Council Workshop Meeting: 10/11/22 FROM: Darcy Buckley, Finance Director Finance SUBJECT: Ambulance Utility Rate Study I. REFERENCE(S): Pasco Ambulance Utility Rate Study Presentation II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: With Council approval of rate design, additional revenue for Ambulance Services. IV. HISTORY AND FACTS BRIEF: The City recently completed a periodic Ambulance Utility rate analysis as part of the biennial biennial budget process. As has been the case for the past several years, the FCS Group (FCS) assisted the City in this effort. The current rate of $16.20 per equivalent residential unit (ERU) was set in 2020. Beyond reviewing the existing rate to assure rate requirements were being met, the efforts were made in the evaluation to capture and analyze the impacts of expected growth, user trends, and related costs, and consider those in the development of rate policy moving forward. While the success of previous adjustments to the utility rate, including implementation of ERUs and the GEMT program has served the Fund well, additional information was needed to address the financial impact of upcoming additional planned Fire Stations No. 85 in the near-term, and plan for Fire Stations 86 and 87 in the out years of the analysis. The addition of the fire stations, equipment and staffing will require increased funding in the coming years. As a result of the recently awarded and accepted Page 141 of 229 Staffing for Adequate Fire and Emergency Response (SAFER) grant that will fund the staffing of Fire Station No. 85, a significant portion of the anticipated rate revenue need will be avoided from 2023 through 2025. This external funding allows for the City lessen the amount of rate increase necessary to fund the utility over the next three (3) years, while allowing for enhanced services (Sta. 85 online), provides time for the City develop a plan to fully absorb Station 85 in 2026 and make plans for other future station additions. As background, the ambulance utility for the City of Pasco was created in 2007 and is based on the authority outlined in RCW 35.21.766, which also places additional constraints on the rate and costs. Limitations of the utility rate include, not exceeding the total costs of the ambulance service and the inability of the rate revenue to fund capital spending or major facility renovations. The Cost of Service study includes two elements – Demand and Availability. Demand costs are those costs associated with the actual response to incidents. Availabilit y costs are those costs associated with the infrastructure and personnel that need to be in place to have the ability to respond to incidents. The revenue requirements to support Availability are the focus of the analysis shared tonight. The revenue is collected by way of the monthly rate that is included with other monthly service charges, like those for water or sewer service. The Demand portion of the ambulance service has seen an increase in the total number of incidents over the previous three years as has been described in previous presentations of the 2021 Annual Performance Report as well as the 2021 Fire Department Master Plan. The Master Plan identified the needed growth and made recommendations ensuring that appropriate funding was identified to address the planned growth in all areas of the City. The current utility rate generates revenues that are used to cover costs associated with the existing four fire stations, apparatus, equipment and personnel. The current level of service being provided to the City is out of those four (4) fire stations using four (4) front-line ambulances with two (2) “hot” reserves and one (1) “cold” reserve. The “hot” reserves have the ability to be placed in service immediately for either times when additional staf fing is required due to high incidents occurring or to allow maintenance on the front line units. Additional staffing included in the ambulance utility is the Emergency Medical Services (EMS) Officer and 50% of an assistant medical/training officer. These individuals oversee the delivery of services and manage the associated inventory, training, and regulatory requirements of the ambulance service. V. DISCUSSION: FCS Group worked with both the Finance and Fire Departments to gather data regarding the planned growth and associated timing of new facilities and personnel required to address the delivery of ambulance transport service within Page 142 of 229 the City of Pasco. The study looked at the previous rate study completed in 2019 and then used three different aspects of the planned growth: •Current level of service and opening Station No. 85 in 2023 •Prospectively opening new Station No. 87 in 2025, depending upon community service demands •Prospectively opening new Station No. 86 in 2026, depending upon community service demands The timing of bringing new fire stations online is one of the key elements in the rate study. Fire Station No. 85 is anticipated to be online in late 2023. Current thinking, based on anticipated growth, is that Fire Stations Nos. 86 and 87 will need to be available for service as early as 2026 and 2025, respectively. Fire Station No. 87 is planned to serve the east portion of Pasco, including the developments in the Riemann Industrial Center. Fire Station No. 86 will serve the Broadmoor area north of Interstate-182 as the development of the area drives the demand. Demand costs are covered by transport fees. Transport fees are assessed when a patient is provided medical assistance, including hospital delivery. Beginning in 2017, the City is a participant in the Ground Emergency Medical Transport (GEMT) reimbursement program managed by Washington State Health Care Authority. A requirement of the program is the calculation of an annual transport cost. The current GEMT rate is $3,968. Currently, the City transport rate charged to residents is $650 and nonresidents, $1,100. To maintain equity between Availability and Demand charges, staff recommends adjusting the current transport rates for both residential and nonresidential patients. Additionally, the FCS study reviewed the need and basis for a potential charge for non-emergency lift assist calls at licensed care facilities. These non- emergency lift assist calls occur when a person falls and cannot lift themselves back up into either a bed or chair. The mission of the Pasco Fire Department is to respond to medical emergencies. A variety of State of Washington laws, included in WAC-388, outline the rules and responsibilities of a licensed health care facility. Included in this body of guidance is the expectation that a licensed health care facility is sufficiently staffed and trained to respond to resident needs. Furthermore, it clarifies that when a resident’s condition is medically stable or non-acute, assistance from local government emergency medical services is not appropriate. The aim of the guidance is to help care facilities staff appropriately so that the emergency medical service system is not burdened. Currently, the call for “Lift Assist”, non-emergency activity at licensed care facilities is small in comparison to all calls for service. However, as licensed care facilities are added to City of Pasco service areas the potential for impact increase s. It is also important to note, even when small in numbers, a call for service for non - emergency event has the same effect as an emergency call; a crew is engaged and not available for other community needs. Page 143 of 229 The intention for a “Lift Assist Fee” is to fashion a rate schedule like the one the City employs for False Alarm Fees. Staff recommendation is to establish a rate that is charged whenever a licensed care facility requests non -emergency Fire Department of cost the responwill fee This service. offset nonto ding - emergency, non-transport calls for service, and is hoped will incentivize licensed health care facility to be sufficiently staffed and trained to respond to resident needs. An important consideration in the discussion around the addition of n ew Fire Department capacity for service is the impact on the General Fund. While the Fire Department is viewed and functions as a single department, there are two sides of the “Station”; fire response and emergency medical service. As infrastructure, apparatus, equipment and staff are added to the City as a Fire Department Station, the General fund bears the full cost of capital building expense and approximately half the cost of operations and maintenance for a fire station. This approximate half of a station equates to $2.75M annually. The fire response side of this complementary relationship does not have a dedicated source of funding other than the regular revenues of the General Fund, primarily tax revenues. Because of this universal comingling of Fire and Ambulance service the exists in a Fire Department, it is challenging to compare rates from one jurisdiction to the next. Included in the presentation, Slide 17, are various metrics shared with our arounmechanics Cities. Unfortunately, neighboring the d Fire how Department services are accounted for, both directly and indirectly, between the General Fund and Ambulance fund makes comparison challenging. While the monthly availability rate between the three jurisdictions varies, so does the population covered per station, the service area, volume of calls for service, and density. Fire The City of Pasco currently assigns approximately half of Department staff to the General Fund and the remaining half to the Ambulance Fund. This assignment does not mirror the split between types of calls for service. In 2021, the total number of incidents was 7,342. The number of EMS calls was 4,626, or 63%. Calls for service that are not billable because they do not qualify as medical emergencies are not included in the EMS category count. However, these incidents are not a response related to fire suppression and most times lean more toward personal health. Examples of those calls include the introduction of the PRN program to suggest and coordinate other social service care and lift assist activity. If costs were assigned by type of service provided, more cost should be allocated to the Ambulance Fund. Also, the City of Pasco General Fund provides a cash subsidy annually to the Ambulance Fund of $420,000. RECOMMENDATIONS: Page 144 of 229 Staff fund fully results study to of implementation the recommends rate Ambulance Utility operations, including Station No. 85 beginning January 2023. This action will require increasing the monthly utility charge from $16.20 to $16.66 in 2023, $17.42 in 2024 and $18.61 in 2025. In concert with the rate study, these rates are reflective of the benefit of the SAFER grant for three (3) years while progressively increasing to full Ambulance Fund (or 83% of revenue requirements) revenue requirement billing. Staff recommends an increase to the transport rate in January 2023 of 50% for both residential and non-residential patients. While the percentage of increase is large, the rate increase results in a transport rate of $975 and $1,650, respectively. Even the remains rate magnitude, with of increase an this insufficient to fund actual cost associated with transport service. Furthermore, staff recommends an increase in the transport rate structure of 20% annually until the rate mirrors the cost of service. Phasing in the cost incrementally will result in a ten-year time frame to establish a transport rate that is approximately 83% of cost. Often the transport rate is paid by existing private insurance. Payment arrangements are available should that accommodat ion be necessary. Assist medically for Fee Lift of establishment the recommends Staff a unnecessary services provided to licensed care facilities to offset the related cost and thereby avoid shifting those expenses to all ratepayers of the service. Finally, the study introduced tonight outlines the expected rate impact of the addition of Stations Nos. 86 and 87. While growth and community demand for service will dictate timing of construction, staff is desirous of Council input surrounding timing of rate implementation as actual construction occurs. stations decisions resulting the are consideration of in Paramount new surrounding the appropriate timing of new fire stations, the funding mechanisms to support the approximate $14 M in capital building cost, and the impact of ongoing purchase. While apparatus the construction following costs and anticipated revenue requirement to Ambulance ratepayers for the new stations are outlined in the FCS study, the General Fund will also bear a portion of the expense. The principle of growth paying for growth is an important consideration for future planning. Faced with the demands of new station additions, staff anticipates initiating a Fire Impact Fee study to ascertain opportunities. Page 145 of 229 Slide 1FCS GROUP Presentation to City Council October 11, 2022 Martin Chaw, Project Manager Skye Jiang, Sr. Analyst Ambulance Utility Rate Study 2022 Page 146 of 229 Slide 2FCS GROUP About FCS Group ▪Utility rate and fee consulting ▪Utility management consulting ▪Financial planning and analysis ▪Economic servicesPage 147 of 229 Slide 3FCS GROUP Scope of Work Update previous ambulance utility rate study (2019) -Current level of service + Open new Station #85 (2023) -Depending upon growth, addition of new Station #87 -Depending upon growth, addition of new Station #86 Determine a proposed rate for non-emergency lift calls for servicePage 148 of 229 Slide 4FCS GROUP Ambulance Utility ●RCW 35.21.766 authorizes cities to form an ambulance utility »Utility rates cannot exceed total costs »Rate revenue funds cost of operating utility (includes apparatus, but cannot include capital spending or major facility renovation) ●Cost of Service study required »Demand –cost to respond to incidents »Availability –cost to be on standby and available to respond to incidents ●City of Pasco’s ambulance utility »Created in 2007 ●Responded to over 7,300 incidents in 2021Page 149 of 229 Slide 5FCS GROUP Fire Services in Pasco St. #81 St. #82St. #83 St. #84 St. #85Page 150 of 229 Slide 6FCS GROUP Trends in Incidents and Response Times 2019 2020 2021 Number of Incidents 5,842 6,194 7,342 Average Response time (minutes)6.07 6.35 6.03 Unit Notified to Enroute 1.20 1.23 1.04 Unit Enroute to Arrived at Scene 4.87 5.12 4.99 City Residential Population 75,432 76,379 78,700 Number of Incidents per 1,000 population 77.5 81.1 93.3 % Increase in Incidents per 1,000 population 4.6%15.0%Page 151 of 229 Slide 7FCS GROUP Funding Fire Services Fire Services Fire Impact Fees Ambulance Utility Rates General Taxes ▪Fees assessed on new development to fund construction of fire stations and apparatus ▪Collected over time as new development occurs ▪Future study to update the fire impact fees ▪Monthly rates assessed to residents and businesses for operation of ambulance services ▪By City policy, ambulance rates to recover 83%of Ambulance Utility operating costs ▪Continue to pay 17%of Ambulance Utility operating costs ▪Includes $420,000 annual transfer from GF to Ambulance Utility FundPage 152 of 229 Slide 8FCS GROUP New Fire Stations 2023 2024 2025 2026 Station 85 (Fire engine + equipment + Ambulance, 15FTEs) Station 87 (Teleboom engine + equipment, 12FTEs) Station 86 (Fire engine + equipment + Ambulance, 15FTEs) *Photo: Teleboom fire truck Forecasted station on-line (depending upon growth)Page 153 of 229 Slide 9FCS GROUP Analysis –Key Assumptions Economic & Financial Factors 2022-2030 Annual Rate General Inflation 6.0% Labor Cost Inflation 6.0% Benefit Cost Inflation 4.0% Revenue Growth 3.2-5.2%* Customer Growth 3.2-5.2%* *Revenue and customer growth expected to increase in 2023 and 2024 due to additional employment from new to City industrial and commercial growth.Page 154 of 229 Slide 10FCS GROUP Fire Department Funding $13.1 M $13.9 M $14.6 M $15.5 M $16.3 M $7.6 M $8.0 M $8.4 M $8.9 M $9.4 M$20.7 M $21.9 M $23.1 M $24.4 M $25.8 M $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 2023 2024 2025 2026 2027MillionsCity of Pasco Fire Department Sources of Funding (Current Level of Service + Station 85) Ambulance Utility General Fund Subsidy TotalPage 155 of 229 Slide 11FCS GROUP Ambulance Utility Sources of Funding $6.9 M $7.6 M $8.2 M $8.9 M $9.6 M $1.4 M $1.5 M $1.7 M $1.8 M $2.0 M $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 2023 2024 2025 2026 2027MillionsAmbulance Utility Sources of Funding (Current Services incl. Station 85) Ambulance Utility General Fund Subsidy General Fund subsidy represents 17% of ambulance utility rate revenue requirements. Rate revenue requirement reflect total co st of ambulance utility, less non-rate revenues (e.g., transport payments, WA State GEMT revenues, etc.).Page 156 of 229 Slide 12FCS GROUP Ambulance Utility Rate Revenue Requirement ($M)* with Station 85 Only $6.9 M $7.6 M $8.2 M $8.9 M $9.6 M $- $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 $18.0 $20.0 2023 2024 2025 2026 2027MillionsAmbulance Utility Revenue Requirement and Monthly Utility Rates (Current Services incl. St.85) Ambulance Utility *Amounts shown reflect net operating costs, inclusive of new Station 85 (scheduled to open in 2023), less non-rate revenues include ambulance transport fees, Washington State Ground Emergency Management Transportation payments. $16.66** per month $17.42** per month $18.61** per month $20.31 per month $21.22 per month Current Monthly Rate: $16.20 per ERU(2022) **SAFER grant available to fund personnel costs for Station 85, and will allow City to phase-in rates over 3-year period.Page 157 of 229 Slide 13FCS GROUP Ambulance Rates Phase-In Strategy $16.66 $17.42 $18.61 $20.31 $21.22 $1.37 $1.22 $0.80 $- $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 2023 2024 2025 2026 2027Monthly RateMonthly Ambulance Utility Rates (Current Services + Station 85) Monthly Rate Phase-In Strategy Current Rate **SAFER grant available to fund personnel costs for Station 85, and will allow City to phase-in rates over 3-year period. $18.03 without grant $18.64 without grant $19.41 without grant $16.20 No SAFER grant No SAFER grantPage 158 of 229 Slide 14FCS GROUP Ambulance Utility Funding –New Stations 87 & 86 $6.9 $7.6 $8.2 $8.9 $9.6 $1.1 $1.1 $1.2 $1.2$1.5 $1.5 $1.6 $1.4 $1.5 $1.7 $1.8 $2.0 $8.3 M $10.4 M $13.0 M $13.9 M $14.9 M $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 2023 2024 2025 2026 2027MillionsAmbulance Utility Sources of Funding (Current Level of Service + St. 85, 87, 86) AU (Current+85)AU (87)AU (86)GF (Current+85)GF (87)GF (86)Total Complementary General Fund operational cost for added Stations is not reflected. Only Ambulance Fund Costs are in graph depiction.Page 159 of 229 Slide 15FCS GROUP Ambulance Utility Rate Revenue Requirement with New Stations 85, 86 and 87 ($M) $7.2 M $7.8 M $8.4 M $9.1 M $9.9 M $1.1 M $1.1 M $1.2 M $1.2 M$1.5 M $1.5 M $1.6 M $- $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 $18.0 $20.0 2023 2024 2025 2026 2027AU Revenue Requirement ($M)Ambulance Utility Rate Revenue Requirement (Current Services incl. St. 85, 87, 86) Current incl St.85 Station 87 Station 86 Timing of rate impacts for Station 86 and 87 forecast only. $16.66** per month $20.17** per month $24.73** per month $26.37 per month $27.39 per month **SAFER grant available to fund personnel costs for Station 85, and will allow City to phase-in rates over 3-year period.Page 160 of 229 Slide 16FCS GROUP Ambulance Rates Phase-In Strategy $16.66 $17.42 $18.61 $20.31 $21.22 $2.75 $2.62 $2.67 $2.72 $3.50 $3.39 $3.45 $1.37 $1.49 $0.94 $16.66 $20.17 $24.73 $26.37 $27.39 $- $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 2023 2024 2025 2026 2027Monthly RateMonthly Ambulance Utility Rate (Current Services incl. St. 85, 87, 86) Monthly Rate (Current + St85)St 87 St 86 Phase-In Strategy Total Current Rate **SAFER grant available to fund personnel costs for Station 85, and will allow City to phase-in rates over 3-year period. $16.20Page 161 of 229 Slide 17FCS GROUP Comparison with Jurisdictions Richland Kennewick Pasco Current (2022) Monthly Ambulance Utility Rate $10.00 $14.12 $16.20 Levy Collection 2022 $19.2M $14.4M $11.8M Residential Population 59,609 87,649 77,326 # of Fire Stations 5 5 4 # of People Covered per Station 11,920 17,530 19,330 Service Area (in square miles)42.7 (excludes Hanford)29.2 37.5 # of Square Miles Covered per Station 8.6 5.8 9.4 Ambulance Calls for Service (2020)5,299 7,357 4,626 Ambulance Calls per Station 1,060 1,471 1,157 Density (pop per square mile)1,544 3,057 2,271Page 162 of 229 Slide 18FCS GROUP Non-Emergency Lift 2019 2020 2021 Number of non-emergency lift incidents 204 283 252 Number of Incidents per 1,000 population 2.7 3.7 3.2 % Increase in Incidents per 1,000 population 37%-14% ●Currently no fee assessed for non-emergency lifts ●To offset any costs, Staff recommends establishment of a penalty fee to licensed care facilities. Page 163 of 229 Slide 19FCS GROUP Conclusions & Next Steps ●Next Steps »Increase rates to fully fund Ambulance Utility operations, including new stations 85 (eff Jan 2023) »Discussion related to growth and resulting community needs to guide timing of construction of new stations 86 and 87 ●Questions?Page 164 of 229 Slide 20FCS GROUP Thank you!Page 165 of 229 AGENDA REPORT FOR: City Council October 3, 2022 TO: Dave Zabell, City Manager City Council Workshop Meeting: 10/11/22 FROM: Steve Worley, Director Public Works SUBJECT: Butterfield Water Treatment Plant Facility Plan I. REFERENCE(S): Butterfield WTP Facility Plan Executive Summary PowerPoint Presentation II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: Improvements to the City’s potable water treatment and distribution systems are funded by water utility rates which are reviewed and updated on a periodic basis. The most recent water utility rate study included anticipated needs out to 2026. The facility improvements proposed by this Facility Plan align with estimated costs included in the most recent rate study for the Butterfield Water Treatment Plant (Butterfield WTP). The sequence of projects proposed in the Facility Plan has been optimized to increase eligibility for the pursuit of external funding, which if successful will minimize future rate increases. IV. HISTORY AND FACTS BRIEF: The City’s potable water is provided by two different water treatment plants. The Butterfield WTP produces approximately three quarters of the City’s drinkable water needs and is critical for residents, businesses, industrial users, and fire suppression systems. Drinking water plants are typically anticipated to have a service life of 50-80 years (Reference: EPA Clean Water and Drinking Water Infrastructure Gap Analysis, EPA-816-R-02-020, September 2002). The core components of the Butterfield WTP were constructed in 1946 and 1958, making them 75 and 63 years old respectively. Page 166 of 229 To assist in long-term planning for the facility, the City selected Carollo Engineers, Inc. (Carollo) in July 24th, 2020, to help develop a Facility Plan for needed improvements to the Butterfield Water Treatment Plant. The planning process includes a condition assessment and hydraulic analysis of the existing facility to identify improvements needed to continue providing potable water for the next 50 to 80 years. The objectives that guided the development of the plan include: 1. Increasing the current plant's treatment capacity. 2. Increasing resiliency in each of the treatment processes. 3. Providing the ability to expand further. 4. Replacing infrastructure nearing the end of its service life. Desired levels of service were also developed. The final result is a series of recommended projects that will allow the City to provide the targeted levels of service for many years to come. Having an approved Facility Plan will inform future Capital Improvement Program (CIP) planning and biennial budget efforts. Following approval of the Facility Plan, staff will initiate the first series of recommended projects. The Butterfield WTP Facility Plan Executive Summary is provided as an attachment. The complete facility plan is also available for download at:https://www.pasco-wa.gov/789/Comprehensive-and-Improvement-Plans. V. DISCUSSION: Carollo Engineering, Inc. staff will present a brief overview of the final Butterfield WTP Facility Plan. Page 167 of 229 City of Pasco BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN FINAL | September 2022 Page 168 of 229 BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN | CITY OF PASCO FINAL | SEPTEMBER 2022 | i pw://Carollo/Documents/Client/WA/Pasco, City of/12011A00/Deliverables/Butterfield WTP Facilities Plan/Cover, Seal Page, TOC, Abbreviations, Appendices Contents Executive Summary ES.1 Introduction ES-1 ES.2 Water Treatment Plant Performance Requirements ES-2 ES.2.1 Water Quality ES-2 ES.2.2 Identifying WTP Hazards and Establishing Level of Service Goals ES-7 ES.3 Water Treatment Plant Process Assessment ES-8 ES.3.1 Hydraulic Evaluation ES-8 ES.3.2 Process Evaluation ES-9 ES.4 Water Treatment Plant Infrastructure Assessment ES-10 ES.4.1 Water Treatment Plant Assessment Results ES-10 ES.4.2 Project Development and Criticality Assessment ES-13 ES.5 Alternatives Identification and Evaluation ES-14 ES.5.1 Drivers for WTP Improvements and Considerations ES-14 ES.5.2 Screening of Treatment Technologies and Alternatives Analysis ES-15 ES.6 Capital Improvement Plan Summary ES-19 Page 169 of 229 BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN | CITY OF PASCO FINAL | SEPTEMBER 2022 | xiii Abbreviations AACE AACE International alum aluminum sulfate AOP advanced oxidation processes Avg average BF ballasted flocculation BNSF BNSF Railroad CFD computational fluid dynamic CIP capital improvement plan City City of Pasco Cl2` chlorine CT contact time DAF Dissolved Air Flotation DBP disinfection by-product DOH Washington Department of Health Ele electrical EPA United States Environmental Protection Agency ft foot/feet ft2 square foot gal gallon gal/ft2 gallons per square foot gpm gallons per minute gpm/ft2 gallons per minute per square foot HART highway addressable remote transducer hp horsepower I/O input / output lbs pounds lbs/ft2 pounds per square foot LOS level of services Max maximum MCC motor control center Page 170 of 229 CITY OF PASCO | BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN xiv | SEPTEMBER 2022 | FINAL mg/L milligrams per liter mgd million gallons per day min minute mm millimeter Mn Manganese N/A not applicable NPV net present value NTU nephelometric turbidity unit O&M operations and maintenance OSHG on-site hypochlorite generation PAC powdered activated carbon* Plan Butterfield Water Treatment Plant Facilities Plan PLC programmable logic controller PPCP Personal Care Products Pro process/mechanical psi pounds per square inch RTU radio telemetry unit SCADA supervisory control and data acquisition scfm standard cubic feet per minute scfm/ft2 standard cubic feet per minute per square foot sec second TOC total organic carbon TOMATo Taste, Metal, Odor, and Algal Toxins TON threshold odor number TTHM total trihalomethanes UCM Unregulated Contaminant Monitoring UCMR Unregulated Contaminant Monitoring Rule UCMR3 Unregulated Contaminant Monitoring Rule 3 UCMR4 Unregulated Contaminant Monitoring Rule 4 USACE US Army Corps of Engineers USPR unit solids production rate UV Ultraviolet Page 171 of 229 BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN | CITY OF PASCO FINAL | SEPTEMBER 2022 | xv V volt VFD variable frequency drive VOC volatile organic contaminant WSE water surface elevation WSMP Water System Master Plan WTP water treatment plant Page 172 of 229 EXECUTIVE SUMMARY | BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN | CITY OF PASCO FINAL | SEPTEMBER 2022 | ES-1 ES EXECUTIVE SUMMARY This facilities plan (Plan) evaluates the City of Pasco’s (City) Butterfield Water Treatment Plant (WTP) which includes identifying treatment and capacity deficiencies and comparing new and existing treatment technologies for addressing water quality concerns, to provide a path forward for repairing and replacing the WTP’s infrastructure. This Plan defines a capital improvement strategy for addressing WTP deficiencies so the City can have a long-term, resilient WTP capable of supplying future demands. This Plan was developed over multiple years and encompasses a 20-year planning horizon from 2023 to 2042. ES.1 Introduction The Butterfield WTP was originally constructed in 1946 as a direct filtration facility having a pre-sedimentation basin, coagulation basin and four dual cell filters. Throughout the years, major additions have been made to the WTP infrastructure including adding sedimentation basins and filters (in 1958), modifying pre-sedimentation basins and associated structures to create new chemical facilities (1985), and adding a fluoridation building (1999). The nominal rated capacity is 30 million gallons per day (mgd). Figure ES.1 shows the facilities associated with the Butterfield WTP. Figure ES.1 Overall Plan Page 173 of 229 CITY OF PASCO | BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN | EXECUTIVE SUMMARY ES-2 | SEPTEMBER 2022 | FINAL Figure ES.2 shows the existing WTP site in more detail with the major facilities labeled. Figure ES.2 Butterfield WTP - Major Facilities The WTP is a conventional media (sand and anthracite) filtration plant. Typical operation is as follows: • Water is pumped from the Columbia River through Rapid Mix to the Flocculation and Sedimentation Basins. • Water then flows through the filters and to the clear well. • The finished water is pumped from the clear well to the distribution system. • Residuals streams are directed to the Lagoons. After allowing the solids in the Lagoons to settle, decanted water is pumped back to the Columbia River, downstream of the WTP intake by the backwash lift station. ES.2 Water Treatment Plant Performance Requirements ES.2.1 Water Q uality Carollo Engineers, Inc. (Carollo) reviewed water quality data for the raw, finished, and distribution-system water to identify any potential challenges of meeting existing regulations. TableES.1 summarizes the water quality data. Turbidity: The average raw water turbidity is approximately 1.1 nephelometric turbidity unit (NTU), and the median monthly turbidity is consistently below one NTU most of the year. Raw water turbidity is higher and more variable in spring due to increased flow in the Columbia River; however, the turbidity never exceeded 10 NTU in the dataset. Manganese: The most recent testing, 2008, measured raw water manganese at 0.016 milliliter per gram (mg/L), much lower than the secondary maximum contaminant level (SMCL) of 0.050 mg/L. No treatment challenges are anticipated regarding manganese at the WTP. Page 174 of 229 EXECUTIVE SUMMARY | BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN | CITY OF PASCO FINAL | SEPTEMBER 2022 | ES-3 Iron: The most recent testing, 2008, measured raw water iron at 0.30 mg/L, equal to the SMCL. Surface water sources like the Columbia River generally have particulate iron, which is readily filtered so it is not anticipated to be of concern. Total Organic Carbon (TOC): Raw water TOC is generally low, with an average of 1.3 mg/L, which is consistent with other water sources in the region. TOC is highest in spring. Inorganic Compounds (IOC), Synthetic Organic Compounds (SOC), and Volatile Organic Compounds (VOC): The City has collected grab samples for IOC, SOC, and VOC. Testing showed the following: • All IOCs were well-below the maximum containment level (MCL). • SOCs were not detected in the finished water. • Two VOCs, both disinfection byproducts (DBP), were detected in the finished water. These DBPs are associated with chlorine use, and currently regulated as trihalomethanes (THM). The total trihalomethane (TTHM) measurement was well below the MCL. Radionuclides: Radium was detected in 2015, so the WTP is required to test for Radium 228. The sample (1.2 picocuries per liter of air [pCi/L]) was below the combined radium (Radium 226 and Radium 228) MCL (5.0 pCi/L). Since radium 226 was not measured during sampling, it is unknow whether the MCL for combined radium was exceeded. Radium 228 was tested again in 2021 and was non-detect. Emerging contaminants: Carollo reviewed data for emerging contaminants, those that may be regulated in the future, under the United States Environmental Protection Agency’s (EPA) Unregulated Contaminant Monitoring Rule (UCMR). In UCMR3, five contaminants (chromium, molybdenum, strontium, vanadium, and chlorate) were detected; however, all were below the health-based reference concentrations. In UCMR4, one inorganic (manganese) and three disinfection byproduct (sum of five haloacetic acids [HAA5], HAA6Br, and HAA9) contaminants were detected. Manganese and HAA5 and both were below their reference concentrations. The EPA did not provide reference concentrations for HAA6Br or HAA9. Nevertheless, comparing these compounds against the HAA5 MCL (60 micrograms per liter [µg/L]) is conservative, since HAA6Br and HAA9 include additional HAAs, making them higher. Since HAA6Br and HAA9 were below the HAA5 MCL, they are not anticipated to be of concern under current treatment operations. Cyanotoxins: No cyanotoxins (algal toxins) were detected in the WTP’s finished water during UCMR4 testing; however, cyanotoxins are becoming more prevalent in the Pacific Northwest. Currently, the WTP adds potassium permanganate to treat taste and odor challenges associated with algal activity which also oxidizes certain cyanotoxins (anatoxin-a and microcystin); however, raw water is not typically sampled for cyanotoxins. Carollo has recommended testing for algal toxins on a semi-regular basis, during the summer months, on both the raw and finished water, and to consider future infrastructure in planning footprint. Finally, Carollo and the City established finished water quality goals for the WTP using water quality analysis in Chapter 2. In general, these goals meet all federal and state drinking water standards, and the review of finished water quality confirms that the City consistently meets or exceeds existing requirements. Page 175 of 229 EXECUTIVE SUMMARY | BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN | CITY OF PASCO FINAL | SEPTEMBER 2022 | ES-5 Table ES.1 Summary of Raw and Finished Water Quality Constituents Unit Finished Water MCL Number of Samples Number of Detects Value Range(2) Average Median Summary of Raw Water Quality General Temperature(3) °C 1853 2.8 - 21.3 12.6 12.4 Turbidity(1) NTU Treatment technique. ≤0.3 NTU for 95% of samples. <1.0 at all times 1853 0.5 - 3.2 1.1 0.75 Alkalinity(3) (6) mg/L as CaCO₃ None 1853 48 - 66 57.8 58 Total Organic Carbon(4) mg/L 35% reduction in TOC if raw water TOC is 2 - 4 mg/L. 45% reduction if raw water TOC is 4 - 8 mg/L 21 1.1 - 1.5 1.3 1.2 Secondary Constituents pH(3) (6) - 6.5 - 8.5 1853 8 - 8.35 8.1 8.15 Hardness(3) mg/L as CaCO3 250 1853 1853 59 - 78 68.4 68 Summary of Finished Water Quality General Turbidity(1) NTU Treatment technique. ≤0.3 NTU for 95% of samples. <1.0 at all times 7405 7405 0.024 - 0.044 0.03 0.03 Alkalinity(3) (6) mg/L as CaCO₃ None 1853 1853 50 - 65 57.6 58 TOC(3) mg/L 35% reduction in TOC if raw water in TOC is 2-4 mg/L. 45% reduction if raw water TOC is 4 - 8 mg/L 21 21 0.71 – 0.95 0.83 0.83 Total Dissolved Solids(5) mg/L 500 2 2 107 - 110 108.5 108.5 Secondary Constituents pH(3) (6) - 6.5 - 8.5 1853 1853 7.4 - 7.56 7.5 7.5 Chloride(5) mg/L 250 2 2 4 - 4.7 4.4 4.35 Sulfate(5) mg/L 250 2 2 20.6 - 22 21.3 21.3 Zinc(5) mg/L 5 2 1 0.002 0.002 0.002 Notes: Abbreviations: °C - degrees Celsius; CaCO₃ - calcium carbonate. (1) Recorded every 4 hours plant in operation in Daily Plant Logs. Data from June 2015 to June 2020. (2) Value range represents 5th and 95th percentile. (3) From Daily Plant Logs. Data from June 2015 to June 2020. (4) From quarterly TOC report to the Washington Department of Health (DOH) from March 2015 to March 2020. (5) From March 2011 and April 2020 IOC Report. (6) The City of Pasco has a finished water pH and alkalinity goal of 7.5 and 25 mg/L (as CaCO₃), respectively. Page 176 of 229 EXECUTIVE SUMMARY | BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN | CITY OF PASCO FINAL | SEPTEMBER 2022 | ES-7 Table ES.2 Summary of Distribution System Water Quality Contaminant Units Regulatory Limit Value Range Median DBPs TTHM(1) µg/L 80 22.3-38.9(2) 31.8 HAA5(1) µg/L 60 14.4-32.5(2) 24.3 Disinfectant Residual Monthly Average Chlorine Residual(3) mg/L 4 0.49-0.82 0.68 Contaminant Units Regulatory Limit 90th Max LCR Lead(4) 6/2017 mg/L 0.015(5) 0.002 0.002 6/2020 mg/L 0.015(5) 0.0015 0.0015 Copper(4) 6/2017 mg/L 1.3(5) 0.281 0.281 6/2020 mg/L 1.3(5) 0.167 0.1670 Notes: Abbreviation: LCR - Lead and Copper Rule. (1) Includes all quarterly sampling for DBPs at all sites in the distribution system from June 2015 to June 2020. (2) Value range based on locational running annual average values. (3) Chlorine residual sampling was done at all sites in the distribution system from June 2015 to June 2020. (4) Samples taken in June 2017 and June 2020. (5) Compliance based on 90th percentile of samples from a required sampling period exceeding the action level. Proposed rule revisions would reduce lead action levels to 0.010 mg/L. ES.2.2 Identifying WTP Hazards and Establishing Level of Service Goals Carollo identified several potential hazards based upon the Hazard Vulnerability Analysis provided in the Franklin County Emergency Management Plan (2015) and Carollo’s experience at similar WTPs in the Pacific Northwest. After identifying hazards, Carollo and the City established level of service (LOS) goals defining WTP performance after these hazardous events, and then used these goals to determine mitigation strategies needed for the WTP. The LOS goals and typically followed the following format: • Following a [type] catastrophic event, within _[time]_ of the event, the WTP will deliver __[minimum viable production OR normal demand]__ with potable water quality. Two demands, minimum viable and normal demand, were defined in two workshops. Table ES.3 summarizes these flows. Table ES.3 Current and Projected Water Demands Demand Current Future Projection Minimum Viable 12 mgd 17 mgd Normal Winter 6 mgd 10 mgd Summer 19 mgd 26 mgd Summer Peak 22 mgd 30 mgd Page 177 of 229 CITY OF PASCO | BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN | EXECUTIVE SUMMARY ES-8 | SEPTEMBER 2022 | FINAL The LOS goals that were established for the WTP are summarized below: • Following a major seismic infrastructure catastrophic event (greater than 6.0 magnitude), within one year after the event, the WTP will deliver the minimum viable production (12 mgd current, up to 17 mgd in the future) with potable water quality. • Following a minor seismic infrastructure catastrophic event (less than 6.0 magnitude), during and immediately following the event, the WTP will deliver the normal demand with potable water quality. • Following an operational catastrophic event, during and immediately following the event, the WTP will deliver normal demand with potable water quality. • Following a common water quality catastrophic event, for specific identified water quality challenges, during and immediately after the event, the WTP will deliver the normal demand with potable water quality. • Following an uncommon water quality catastrophic event, within seven days, the WTP will deliver normal demand with potable water quality. • Standby Power: - Provide standby power generator capacity to power the full WTP at its design flow. - Provide a minimum of two days of fuel storage at normal demand. • Chemical Storage: - Minimum total chemical storage equivalent to 30 days of operation at average plant flow and average chemical dose and 14 days of storage at maximum plant flow and average chemical dose or average plant flow and maximum chemical dose. - Minimum on-site chemical inventory to operate at average plant flow and average chemical dose for three days. ES.3 Water Treatment Plant Process Assessment In Chapter 3, Carollo assessed the existing WTP’s hydraulic capacity and treatment process performance to identify opportunities for increasing capacity and improving performance. The hydraulic and process assessment was based on the following: • Visual assessment and documentation of major WTP components’ existing condition during a facility walk-through. • Discussions regarding treatment performance and capacity with operations staff. • Comparisons of existing processes against typical design criteria in the industry. • Reviews of plant-as built drawings and relevant past hydraulic and treatment capacity studies. ES.3.1 Hydraulic Evaluation The results of the hydraulic evaluation are summarized below: • No significant hydraulic bottlenecks exist in the main treatment process at the minimum viable demand (17 mgd at buildout) or peak demand (30 mgd). • Hydraulic bottleneck(s) in the distribution system are likely to limit the WTP finished water pump station discharge, thus the total plant production capacity. Page 178 of 229 EXECUTIVE SUMMARY | BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN | CITY OF PASCO FINAL | SEPTEMBER 2022 | ES-9 • The filters appear to have sufficient capacity for solids accumulation at 30 mgd, however, the WTP sees operational challenges when operating at a high rate. The solids storage capacity, 5.3 feet of head loss through the filters at 30 mgd, is typical for the media configuration and operational schedule; however, challenges with filtered water quality limit the filters’ production capacity. • The overflow pipes at the sedimentation basin and clear well are too small to provide 30 mgd overflow capacity. While it is unlikely that overflow would occur at 30 mgd, any significant modifications to this structure should consider options for accommodating the full overflow. • Individual filter boxes do not have an overflow, so the filters may overflow if the backwash valve fails to open, and the waste wash water valve is closed. Adding an overflow will require extensive structural modifications or installing dedicated overflow piping. ES.3.2 Process Evaluation Carollo compared each treatment processes against typical design criteria to identify process deficiencies. Additionally, Carollo analyzed each process’ capacity, performance, redundancy and reliability, and treatment efficacy for common water quality constituents (pathogens, high turbidity, tastes and odors, metals, high TOC/DBPs, and algal toxins). The key limitations observed within the major WTP functional groups are summarized below: • Raw Water Pumping, Metering, and Rapid Mix: - The firm capacity of the raw water pump station is 21 to 26 mgd with the largest pump out of service. - The WTP must be taken offline for maintenance activities in the raw water wet well. - Static mixers for rapid mix are likely limited to 15 mgd due to increased head loss at higher flow rates (17 mgd minimum viable production). - It is not possible to isolate south basin if feeding from the south-serving rapid mix. • Flocculation and Sedimentation: - The North basin has only one flocculator motor, which is a single point of failure for all flocculator paddles in the basin. - The valve in the channel serving the north basin leaks into the southern basin, making it difficult to isolate and drain the south basin. • Filtration and Backwash System: - To meet filtered water quality requirements, filter production is limited to 4.0 gpm/sf, which, with backwashing, limits total daily filter production to approximately 19.4 mgd. • Disinfection/Clearwell: - Under existing conditions, the WTP is not able to achieve required disinfection above approximately 15 mgd during the cold months. - Contact time through the flocculation and sedimentation basins are used to achieve disinfection. Maintenance on these basins is likely to occur during winter when the facility needs to produce less water, which will also reduce inactivation ration. This limits disinfection capacity under this condition to approximately 10 mgd. - A 2008 tracer study was conducted at a maximum flow of 27 mgd, which serves as the upper bounds for production capacity, and a new study conducted at 30 mgd is required to meet maximum production capacity. Page 179 of 229 CITY OF PASCO | BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN | EXECUTIVE SUMMARY ES-10 | SEPTEMBER 2022 | FINAL • High Service Pumping: - Flow restrictions in the distribution system, not the high service pump station, limits pumping capacity. • Chemical Systems: - Alum does not currently meet LOS storage goals. - Under high flow conditions, some chemical system require frequent loading or operator attention. - Access for delivery to the chemical facilities is challenging. - The chlorine gas system does not have a scrubber for use in the event of a chlorine release. This is a significant safety concern, given the toxicity of chlorine gas. • Solids handling System: - The decanting drying beds are limited in how much they can be filled with solids due to regulatory requirements that allow very limited solids to be discharged to the river in the supernatant. - Current beds are at or near their maximum capacity in their current configuration and operations scheme. - Two decanting drying beds is the minimum number of beds required for solids drying operations, so the current solids handing system has limited redundancy. A third basin is required for full redundancy. ES.4 Water Treatment Plant Infrastructure Assessment ES.4.1 Water Treatment Plant Assessment Results The process evaluation, detailed in Chapter 4, covered all major plant areas. Individual assets within each major process area were combined into functional groups. Each group was evaluated in three categories (general condition, capacity and performance, and redundancy) for each discipline (process/mechanical, electrical, instrumentation, and structural). Table ES.4 summarized each groups’ score. Page 180 of 229 EXECUTIVE SUMMARY | BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN | CITY OF PASCO FINAL | SEPTEMBER 2022 | ES-11 Table ES.4 Summary of Butterfield WTP Assessment Discipline Scoring # Functional Group General Condition Capacity and Performance Redundancy/Resiliency Structural Process/ Mechanical Instrumentation Electrical Structural Process/ Mechanical Instrumentation Electrical Structural Process/ Mechanical Instrumentation Electrical 1 Columbia River Intake N/A 1 N/A N/A N/A 2 N/A N/A N/A 3 N/A N/A 2 Raw Water Pump Station 2 2 2 3 2 2 2 3 2 2 1 3 3 North Rapid Mix 2 1 2 N/A 2 2 1 N/A 2 2 1 N/A 4 South Rapid Mix 2 1 2 N/A 2 2 1 N/A 2 2 1 N/A 5 North Flocculation and Sedimentation Basin 2 3 2 2 2 1 1 1 2 2 1 3 6 South Flocculation and Sedimentation Basin 2 2 2 2 2 1 1 1 2 1 1 1 7 Filters 1 - 4 2 2 3 N/A 2 3 1 N/A 2 1 1 N/A 8 Filters 5 - 8 2 2 3 N/A 2 3 1 N/A 2 1 1 N/A 9 Filter Backwash System N/A 2 3 1 N/A 2 2 1 N/A 2 2 2 10 Clearwell and High Service Pump Station N/A 2 2 2 N/A 2 1 2 N/A 1 1 2 11 Coagulation Systems 2 2 2 3 1 3 2 3 2 3 2 2 12 pH Adjustment 2 2 2 3 2 2 1 2 2 3 2 2 13 Potassium Permanganate 2 3 2 3 2 3 2 2 2 2 2 2 14 Filter Aid System 2 3 2 3 2 2 2 2 2 2 2 2 15 Chlorine Gas 2 3 1 N/A 2 3 1 N/A 2 3 1 N/A 16 Fluoridation Facilities 1 2 2 2 2 3 1 1 2 2 1 1 17 Calcium Thiosulfate 2 2 2 2 2 2 2 2 2 3 3 2 18 Decant / Drying Bed No. 1 1 1 N/A N/A 1 3 N/A N/A 1 2 N/A N/A 19 Decant / Drying Bed No. 2 1 1 N/A N/A 1 3 N/A N/A 1 2 N/A N/A 20 Backwash Lift Station 1 1 1 1 1 1 1 1 3 3 3 3 21 Plant Air Systems N/A 3 N/A N/A N/A 1 N/A N/A N/A 2 N/A N/A 22 Control and Power - Backbone N/A N/A 1 3 N/A N/A 2 2 N/A N/A 3 3 23 Control and Power - SCADA N/A N/A 1 N/A N/A N/A 2 N/A N/A N/A 2 N/A 24 Treatment Building (General/Structural) 2 N/A N/A N/A 2 N/A N/A N/A 3 N/A N/A N/A Notes: Abbreviations: N/A - not addressed or not applicable; SCADA - supervisory control and data acquisition. Page 181 of 229 EXECUTIVE SUMMARY | BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN | CITY OF PASCO FINAL | SEPTEMBER 2022 | ES-13 ES.4.2 Project Development and Criticality Assessment Carollo used the results of the condition assessment (Chapter 4) and the treatment process deficiencies identified in (Chapter 3) to identify project elements for improving the WTP. These project elements were then combined into project groups. Carollo prioritized the project groups by comparing the likelihood of existing infrastructure failing (likelihood of failure) and the resulting consequences of that failure (consequence of failure). This analysis identified the high-priority projects that Carollo recommends completing first, since these projects are expected to address critical deficiencies at the WTP. The importance of these projects influenced WTP expansion phasing discussed in Chapter 5. In summary, Table ES.5 shows the prioritized project groups. These projects were carried on to Chapter 6 for further analysis. In Chapter 6, these projects were refined, combined and/or renamed, and organized into a proposed construction sequence. Table ES.5 Recommended Projects Based on the Criticality Assessment High Priority Projects Major WTP Electrical System Upgrade Chemical Systems Improvements Backwash system improvements Raw Water Pump Station Standby Power Air Compressor Replacement Mid Term Rehab Projects General Structural Repairs Major WTP Instrumentation System Upgrade Raw Water PS Reliability Improvements Valve actuator replacement Finished Water Pump Station Improvements Flocculation and Sedimentation Basin Improvements Residuals Improvements (Phase 1) Residuals Improvements (Phase 2) Backwash Lift Station Redundancy Improvements Passive Underdrain Over-pressurization Protection Long Term Projects Seismic and Life Safety Improvements Painting, Coating, and Corrosion Control Raw Water and Backwash Lift Station Security Improvements Monitoring and Evaluation Minor Instrumentation and Controls Improvements WTP Building Repairs Page 182 of 229 CITY OF PASCO | BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN | EXECUTIVE SUMMARY ES-14 | SEPTEMBER 2022 | FINAL In addition to construction projects, Carollo identified several studies the City can commission for optimizing the existing WTP and to inform the future project development. These studies identified in Chapter 4 are listed below, but were refined in Chapter 6 where planned facility replacement made some studies obsolete: • Electrical study of the raw water pump station. • Conduct raw water pump station capacity and hydraulics study including computational fluid dynamics modeling of the pumping wet well and pressure transient modeling of the raw water pipeline. • Conduct coagulation study. • Conduct filter surveillance program. (Removed in Chapter 6.) • Perform clearwell structural inspection. (Removed in Chapter 6.) • Conduct clearwell tracer study at 30 mgd. (Removed in Chapter 6.) • Conduct distribution system study to determine hydraulic bottleneck / high service pump high pressure issues, including a pressure transient study and evaluation of existing surge tank. • Conduct residuals dewatering optimization study. • Survey and permitting study of existing backwash lift station facility. • Conduct code compliance and arc flash study on all WTP electrical panels and electrical distribution / service areas. (Removed in Chapter 6.) • Conduct controls and instrumentation system study. (Removed in Chapter 6.) • Conduct structural anchorage / seismic study. • Conduct Operations and Maintenance (O&M) Manual update. • Climate Resiliency Study (algal toxins and intake milfoil). Additionally, a Facility Plan update is recommended by 2033 if population growth, plant demand, and/or project implementation varies significantly from what is presented in this plan. ES.5 Alternatives Identification and Evaluation After analyzing the existing WTP’s hydraulic capacity and treatment performance (Chapter 3) and conducting the high-level infrastructure assessment (Chapter 4), Carollo investigated several options for WTP improvements. ES.5.1 Drivers for WTP Improvements and Considerations First, Carollo and the City identified the following drivers for WTP facility improvements: • Capacity: - Provide treatment capacity of 30 mgd and address existing capacity bottlenecks. • Aging infrastructure: - Replace infrastructure and equipment that will reach the end of its useful life; much of the original plant construction is projected to reach the end of its useful life around 2034. • Water quality challenges: - Address water quality challenges including pathogens, high turbidity, TOC/DBP formation, metals, taste and odors, and algal toxins. • Safety: - Provide a safe work environment for City staff. Page 183 of 229 EXECUTIVE SUMMARY | BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN | CITY OF PASCO FINAL | SEPTEMBER 2022 | ES-15 Carollo then reviewed all areas of the plant to identify which areas warranted further evaluation of improvement options. Based on this analysis, Carollo concluded that replacing the following four treatment processes would have the most significant impacts on the overall direction for the future WTP: • Pretreatment. • Pre-oxidation and primary disinfection. • Taste and odors, metals, and algal toxins. • Residual disinfection. ES.5.2 Screening of Treatment Technologies and Alternatives Analysis The City completed screening of technologies and selected two technologies for detailed analysis for each process. Carollo combined the treatment technologies the City selected into unique treatment trains designed to meet the LOS goals. Carollo used the treatment trains to do the following: • Evaluate overall treatment effectiveness for meeting water quality challenges. • Develop a site layout, including developing a long-term construction phasing plan for replacing new facilities. • Compare capital and O&M costs. • Compare non-economic factors including environmental, societal, functional/operational, and future uncertainty/flexibility. Ultimately, the City selected Treatment Train 2, direct filtration with ultraviolet (UV) disinfection and pre-ozone, as the recommended alternative for the following reasons: • Direct filtration reduces overall chemical usage and reduces solids production. • The drawbacks of constructing sedimentation basins, i.e., higher capital costs, larger footprint, and increased operational complexity, outweighed the benefits, treating higher-turbidity water, since the raw water has very low turbidity. • Other treatment trains, specifically Trains 3 and 4, required a large clear well, increased chemical usage (relative to UV disinfection), and increased potential for DBP formation. Figure ES.3 shows the planning level site layout for the recommended treatment train after all facilities have been constructed and delineates areas where additional treatment units, such as flocculation basins and filters, can be constructed to increase water production. Page 184 of 229 TT2 - Full Page CLACKAMAS RIVER WATER WATER TREATMENT PLANT FACILITY PLAN scale: 1" = 300' PHASING THE CITY OF PASCO BUTTERFIELD WATER TREATMENT PLANT FACILITY PLAN OZONE GENERATION BUILDING OXYGEN STORAGE KEY PHASE 1 PHASE 2 PHASE 3 PHASE 4 PHASE 5 PHASE 6 FUTURE FLOCCULATION CAPACITY EXPANSION PLANNING-LEVEL BUILDOUT OF THE BUTTERFIELD WTP FUTURE FILTER CAPACITY EXPANSION UV PUMP STATION FILTERS OZONE CONTACTOR OZONATED WATER FLOCCULATION BASINS ELECTRICAL BUILDING DIESEL GENERATOR BRINE TANK CHEMICAL BUILDING WITH ONSITE HYPOCHLORITE GENERATION ADMINISTRATION BUILDING FUTURE PUMP STATION FUTURE FLOCCULATION CAPACITY EXPANSION FUTURE UV SPACE FOR ADDITIONAL FILTERS NTREATMENT TRAIN 2: DIRECT FILTRATION WITH UV DISINFECTION AND PRE OZONE SCALE: 1" = 50' NOTES: 1. THESE PHASES REPRESENT A POTENTIAL CONSTRUCTION SEQUENCE FOR CONSTRUCTING IMPROVEMENTS AT THE BUTTERFIELD WTP THAT ULTIMATELY REPLACE ALL EXISTING WTP INFRASTRUCTURE. 2. PIPELINES SHOWN ON THIS FIGURE ARE FOR CONCEPTUAL PURPOSES ONLY. THEY PROIVDE A GENERAL OVERVIEW INTERTIES AND ROUTING AND ARE NOT INTEDNED TO BE USED AS DESIGN RECOMMENDATIONS. 3. FILTER FOOTPRINT IS SHOWN AT THE RECOMMENDED FILTRATION RATE OF 8 GPM/SF, HOWEVER, 'SPACE FOR ADDITIONAL FILTERS' IS PROVIDED IF A LOWER FILTRATION RATE IS SELECTED DURING DETAILED DESGIN. Figure ES.3 Planning-Level Buildout of the Butterfield WTPPage 185 of 229 EXECUTIVE SUMMARY | BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN | CITY OF PASCO FINAL | SEPTEMBER 2022 | ES-19 ES.6 Capital Improvement Plan Summary After selecting a treatment train in Chapter 5, the project list developed in Chapter 4 based on the criticality assessment was refined by eliminating rehabilitation projects for facilities that will be replaced, combining projects where appropriate, and sequencing projects in terms of construction phasing and implementation. Table ES.7 shows the refined list of Capital Improvement Plan (CIP) projects. Projects were classified and phased as short-term (year 2023 to 2026), mid-term (2027 to 2031), and long-term (2032 to 2042). Short-term projects were phased so that capital expenditures remain below the City’s approved rate study for Butterfield WTP expenditures ($5 million annually), while mid- and long-term projects targeted $10 million annually. Table ES.6 summarizes the anticipated CIP costs for the next 20 years. All costs presented in Table ES.6 are in May 2021 dollars. Table ES.6 Capital Improvement Plan Summary Parameter Short-Term, 2023 to 2026 (4 years)(1) Mid-Term, 2027 to 2031 (5 years) (1) Long Term, 2032 to 2042 (11 years) (1) Total CIP Cost (2021 Dollars)(1) Target Maximum Annual CIP Expenditure $5,000,000(2)(3) $10,000,000(2)(4) $10,000,000(2)(4) N/A Average Annual Expenditure $4,909,000 $9,730,000 $5,661,000 $6,528,000 Total Cost $19,636,000 $48,651,000 $62,273,000 $130,560,000 Notes: (1)Costs are provided in May 2021 dollars. Project costs should be escalated for use during budgetary planning. At the time of the writing of this plan, a 4 percent annual escalation rate was deemed reasonable. (2)Maximum annual CIP expenditures must be adjusted for inflation for future rate studies. (3)Annual expenditure per the City’s approved rate study. (4)Assumed annual expenditure rate-funded expenditure. (5)For this plan, effort was made to sequence and phase projects to align annual expenditures with the City’s rate studies and overall funding availability. Should alternative funding opportunities become available, some projects may be able to be advanced earlier than the timing shown. The total WTP CIP cost over the next 20 years is approximately $131 million in May 2021 dollars. This is, on average, approximately $6.5 million per year over the planning period; however, these costs vary on a year-to-year basis depending on the target maximum annual CIP expenditure. Planning and executing long-term projects may move up on the schedule, or be reprioritized, depending on funding availability and options in the future. The complete breakdown of project costs and timing over the 20-year planning horizon is provided in Tables ES.8 and ES.9. Page 186 of 229 EXECUTIVE SUMMARY | BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN | CITY OF PASCO FINAL | SEPTEMBER 2022 | ES-21 Table ES.7 Refined List of CIP Projects Project Number Project Name Project Description Estimated Capital Cost (2021 Dollars)(1) 1 Electrical Building • Upgrade the electrical power feed to the WTP, construct a completely new electrical building, and add a standby power generator and storage. New electrical building will include replacement of all major existing electrical system components including transformers, main distribution panels, and MCCs. New electrical building to be designed and sized to accommodate loads from current equipment and future electrical loads, including on-site hypochlorite generation, UV disinfection, and ozone generation. $11,295,000 2 Miscellaneous Improvements and Air Compressor Replacement • Near-term improvement projects to address aging equipment, resiliency/redundancy, and life safety of existing WTP, including: − Backwash System Improvements:  Replace backwash flow control valve actuator to decrease risk of valve failing in an undesirable position and install second backwash flow control valve (in parallel or in series) to add redundancy to critical backwash system. • Air Compressor Replacement: − Replacement of all three aging air compressors (two pneumatic valve compressors and one basin-air bubbler / deicer compressor). • Seismic and Life Safety Improvements: − Lateral and longitudinal bracing on gallery piping. Additional required seismic and life safety improvements may come out of the recommended structural anchorage / seismic study. − Complete recommended structural anchorage / seismic study prior to completing these improvements. • Raw Water PS Reliability Improvements: − General repairs to the existing pump station, including replacement of leaking check valve on raw water pump 9. $371,000 3 Raw Water Pump Station Improvements • Improvements to the raw water pump station capacity and electrical system. Electrical improvements include replacement of aging electrical equipment, two new VFDs, and installation of a standby power generator and associated electrical equipment to power the raw water pump station and backwash lift pump station. Capacity improvements include replacement of the two smaller raw water pumps (pumps 1 and 3) with new 10 mgd pumps and new VFDs to provide 30 mgd firm capacity. Other improvements include installation of pressure indicators/transmitters on each raw water pump discharge, installation of a redundant level indicator/transmitter on the raw water wet well, and installation of security fencing and cameras around the raw water pump station and backwash lift station to reduce vandalism. • Complete electrical study of the raw water pump station prior to this project or during preliminary design for this project. • Complete raw water pump station capacity and hydraulics study prior to this project (including computational fluid dynamics modeling of the pumping wet well and pressure transient modeling of the raw water pump station). $6,022,000 4 Flocculation and Sedimentation Basin Improvements • Complete projects to address aging flocculation/mixing system and address identified issues in the flocculation and sedimentation basins. Replace aging and failing paddle flocculation system in north flocculation basins. Complete additional improvements and repairs identified for the flocculation and sedimentation basins. $1,279,000 5 Chemical Building • Construct a completely new chemical facility providing space and equipment for all existing WTP chemicals (alum, fluoride, caustic soda, potassium permanganate, and filter aid polymer). Chemical building to include facilities and equipment to replace existing chlorine gas system with new onsite sodium hypochlorite generation system. Chemical building will include space for ozone quench chemical needed at the time of ozone installation. $16,317,000 6 Filters • Construct new filter complex with eight new deep bed granular media filters. $17,780,000 7 UV Disinfection • Construct two new UV reactors housed in a dedicated building. UV disinfection must be in service prior to conversion to direct filtration. $8,368,000 8 Flocculation Basins • Construct two new flocculation basins, including a new flash mix system, flow control equipment, and conveyance channels. • Conduct coagulation study as part of flocculation basin design. $10,211,000 Page 187 of 229 EXECUTIVE SUMMARY | BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN | CITY OF PASCO FINAL | SEPTEMBER 2022 | ES-23 Project Number Project Name • Project Description Estimated Capital Cost (2021 Dollars)(1) 9 Residuals Improvements (Phase 1) • Design and installation of a new residuals polymer feed system and upgrades to the existing decant drying bed outlet structures. • Conduct residuals dewatering optimization study prior to project. $1,196,000 10 Finished Water Pump Station • Construct a new finished water pump station with new vertical turbine pumps and clear well sized to provide sufficient operational storage for WTP uses and virus inactivation with chlorine after conversion to direct filtration with UV disinfection. • Complete distribution study to determine hydraulic bottlenecks / high service pump pressure issues prior to this project. $17,262,000 11 Ozone Treatment System • Construct new ozone treatment system, including ozone generation, injection, and concrete ozone contactor. $22,461,000 12 Residuals Improvements • Construct a new (third) decant / drying bed. $2,503,000 13 Administration Building • Construct new administration building with an additional space dedicated for maintenance area. $12,364,000 14 Backwash Lift Station Redundancy Improvements • Rebuild the existing backwash lift station to accommodate a second (redundant) pump. • Complete recommended study - survey and permitting study of existing backwash lift station facility - prior to this project. $2,967,000 15 WTP Repairs • WTP repair projects that may be included as allowances/adders to other CIP project or be completed by WTP staff, including: − General Structural Repairs:  Miscellaneous structural repairs around the WTP to repair spalling concrete, cracking, and other areas of structural concern. • Painting, Coating, and Corrosion Control: − General repair of existing coated surfaces, including non-destructive testing of corroded items, cleaning and re-painting of corroded pipelines. • WTP Building Repairs: − General repair of the existing administration and chemical areas, including repair to the loading dock ceiling and plaster repairs on the treatment building exterior. $164,000 Notes: Abbreviations: MCC - motor control center; VFD - variable frequency drive. (1) Costs are provided in May 2021 dollars. Project costs should be escalated for use during budgetary planning. At the time of the writing of this plan, a 4 percent annual escalation rate was deemed reasonable. Page 188 of 229 EXECUTIVE SUMMARY | BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN | CITY OF PASCO FINAL | SEPTEMBER 2022 | ES-25 Table ES.8 Capital Improvement Plan Summary Project Total CIP Cost Estimate (2021 Dollars) (1) CIP Phasing(2) 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 1 Electrical Building $11,295,000 $1,129,000 $5,083,000 $5,083,000 - - - - - - - - - - - - - 2 Misc. Improvements and Compressor Replacement $371,000 $371,000 - - - - - - - - - - - - - - - 3 Raw Water Pump Station Improvements $6,022,000 - - - - $2,409,000 $3,613,000 - - - - - - - - - - 4 Flocculation and Sedimentation Basin Improvements $1,279,000 $1,279,000 - - - - - - - - - - - - - - - 5 Chemical Building $16,317,000 $1,632,000 - - $4,895,000 $7,343,000 $2,447,000 - - - - - - - - - - 6 Filters $17,780,000 - - - - - $1,778,000 $7,112,000 $7,112,000 $1,778,000 - - - - - - - 7 UV Disinfection $8,368,000 - - - - - $837,000 $3,347,000 $3,347,000 $837,000 - - - - - - - 8 Flocculation Basins $10,211,000 - - - - - - - - $2,043,000 $4,084,000 $4,084,000 - - - - - 9 Residuals Improvements (Phase 1) $1,196,000 - - - - $239,000 $957,000 - - - - - - - - - 10 Finished Water Pump Station $17,262,000 - - - - - - - - $3,452,000 $6,905,000 $6,905,000 - - - - - 11 Ozone (including generation) $22,461,000 - - - - - - - - - - - $4,493,000 $8,984,000 $8,984,000 - - 12 Residuals Improvements (Phase 2) $2,503,000 - - - - - - - - - - - $751,000 $1,752,000 - - - 13 Admin Building $12,364,000 - - - - - - - - - - - - - $1,236,000 $5,564,000 $5,564,000 14 Backwash Lift Station Redundancy Improvements $2,967,000 - - - - - - - - - - - - - - $1,187,000 $1,780,000 15 WTP Repairs $164,000 $164,000 - - - - - - - - - - - - - - - CIP Total (2021 Dollars) (1) $130,560,000 $4,575,000 $5,083,000 $5,083,000 $4,895,000 $9,991,000 $9,632,000 $10,459,000 $10,459,000 $8,110,000 $10,989,000 $10,989,000 $5,244,000 $10,736,000 $10,220,000 $6,751,000 $7,344,000 Notes: (1) Costs are provided in May 2021 dollars. Project costs should be escalated for use during budgetary planning. At the time of the writing of this plan, a 4 percent annual escalation rate was deemed reasonable. (2) For this plan, effort was made to sequence and phase projects to align annual expenditures with the City’s rate studies and overall funding availability. Should alternative funding opportunities become available, some projects may be able to be advanced earlier than the timing shown. Page 189 of 229 EXECUTIVE SUMMARY | BUTTERFIELD WATER TREATMENT PLANT FACILITIES PLAN | CITY OF PASCO FINAL | SEPTEMBER 2022 | ES-27 Table ES.9 Capital Improvement Plan Summary Continued Project CIP Phasing Summary Project Driver Short-Term (2023-2026) (1)(2) Mid-Term (2027-2031) (1)(2) Long-Term (2032-2042) (1)(2) Capacity Aging Infrastructure Water Quality Safety 1 Electrical Building $11,295,000 - - 80% 20% 0% 0% 2 Misc. Improvements and Compressor Replacement $371,000 - - 50% 50% 0% 0% 3 Raw Water Pump Station Improvements - $6,022,000 - 50% 50% 0% 0% 4 Flocculation and Sedimentation Basin Improvements $1,279,000 - - 0% 100% 0% 0% 5 Chemical Building $6,527,000 $9,790,000 - 25% 25% 25% 25% 6 Filters - $17,780,000 - 50% 50% 0% 0% 7 UV Disinfection - $8,368,000 - 100% 0% 0% 0% 8 Flocculation Basins - $2,043,000 $8,168,000 0% 50% 50% 0% 9 Residuals Improvements (Phase 1) - $1,196,000 - 100% 0% 0% 0% 10 Finished Water Pump Station - $3,452,000 $13,810,000 50% 50% 0% 0% 11 Ozone (including generation) - - $22,461,000 0% 0% 100% 0% 12 Residuals Improvements (Phase 2) - - $2,503,000 100% 0% 0% 0% 13 Admin Building - - $12,364,000 0% 100% 0% 0% 14 Backwash Lift Station Redundancy Improvements - - $2,967,000 50% 50% 0% 0% 15 WTP Repairs $164,000 - - 0% 100% 0% 0% CIP Total (2021 Dollars) (1) $19,636,000 $48,651,000 $62,273,000 $47,383,000 $47,452,000 $31,646,000 $4,079,000 Annual Cost (2021 Dollars) (1) $4,909,000 $9,730,000 $5,661,000 $2,369,000 $2,373,000 $1,582,000 $204,000 Notes: (1) Costs are provided in May 2021 dollars. Project costs should be escalated for use during budgetary planning. At the time of the writing of this plan, a 4 percent annual escalation rate was deemed reasonable. (2) For this plan, effort was made to sequence and phase projects to align annual expenditures with the City’s rate studies and overall funding availability. Should alternative funding opportunities become available, some projects may be able to be advanced earlier than the timing shown. Page 190 of 229 October 10, 2022 City Council MeetingBUTTERFIELD WTP FACILITY PLANPage 191 of 229 Structured Facility Planning Process 2 Define the performance requirements for the Butterfield WTP Assess existing infrastructure & performance Determine what improvements are needed Develop capital improvements planPage 192 of 229 Following a catastrophic event, _____ of the event, the WTP will deliver _____ demand with water quality. Establish Level of Service (LOS) Goals Following AInfrastructure (major seismic)Catastrophic EventWithin one year (state guideline)*Of the Event the WTP will DeliverMinimum viable Production, with Potablewater qualityInfrastructure (minor seismic) During and immediately following*Normal Operational During and immediately following Normal Common water quality During and immediately following Normal Uncommon water quality Within 7 days Normal Performance Requirements were defined to identify how we expect the WTP to work *Existing facility not anticipated to provide this level of service. Replaced/retrofitted infrastructure will be designed to meet this level of service. Page 193 of 229 4 See Table 4.4 of the Facility Plan for names/descriptions of projects corresponding to the numbers. Best value found in balance of maximizing existing with building new Page 194 of 229 Solution –Phased Replacement 5Page 195 of 229 20-Year Capital Improvement Plan 6 •Accommodate improvements at current rates •Phases improvements while avoiding stranding assets •Prioritizes highest risk/biggest impact projects earlier Notes: (1)Costs are provided in May 2021 dollars. Project costs should be escalated for use during budgetary planning. At the time of t he writing of this plan, a 4 percent annual escalation rate was deemed reasonable. (2)For this plan, effort was made to sequence and phase projects to align annual expenditures with the City’s rate studies and o verall funding availability. Should alternative funding opportunities become available, some projects may be able to be advanced earlier than the timing shown. Page 196 of 229 Near Term Improvements 7 New Chemical and Electrical Building Reconfigured WTP access and parking Misc. repair to key WTP processes Project Total CIP Cost Estimate (2021 Dollars) Year 2023 2024 2025 2026 1 Electrical Building $11,295,000 $1,129,000 $5,083,000 $5,083,000 - 2 Misc. Improvements and Compressor Replacement $371,000 $371,000 --- 4 Flocculation and Sedimentation Basin Improvements $1,279,000 $1,279,000 --- 5 Chemical Building $16,317,000 $1,632,000 --$4,895,000Page 197 of 229 Ultimate Treatment Process –Long Term 8 Ozone Pretreatment Administration & Operations Flocculation Filtration Disinfection and Distribution Pumping Space for future expansion Page 198 of 229 Questions? •Staff recommends approval of a resolution adopting the Butterfield Water Treatment Plant Facility Plan Thank you to City of Pasco staff: -Heath Bateman -Joe West -Jon Padvorac -Maria Serra Page 199 of 229 AGENDA REPORT FOR: City Council October 5, 2022 TO: Dave Zabell, City Manager City Council Workshop Meeting: 10/11/22 FROM: Angela Pashon, Senior Management Analyst Executive SUBJECT: Tri-Cities Animal Control and Sheltering Services Update I. REFERENCE(S): II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: Estimated cost of City-led ACA operations - approximately $2m (split evenly among three cities) IV. HISTORY AND FACTS BRIEF: The Tri-Cities Animal Control Authority (TCACA) has been jointly operated by the cities of Kennewick, Pasco and Richland for many years through an interlocal agreement Historically, ACA (ILA). day-to-have been operations day accomplished through a contractor. On November 11, 2021, the ACA invited Benton Franklin Human Society (BFHS) assume day-to-day operational control of the Tri-Cities Animal Shelter including all operations for regional animal control, shelter operations, and personnel management. This action was due to an urgent and emergency action initiated due to law enforcement action against the previous contractor, which prompted their immediate and unplanned dismissal. BFHS completed its term of the emergency agreement on July 15, 2022. A Request for Proposals (RFP) was issued on June 23, 2022 seeking proposals for an external contractor to provide animal control and s heltering services for the TCACA with a deadline of July 28, 2022; subsequently the RFP deadline was extended until August 5, 2022. Without a third party agency to provide Page 200 of 229 services to the animals housed in the TCACA Shelter, the City of Pasco staff took over the day-to-day operations of the facility and animal control on Saturday, July 16, 2022. During the interim, City staff established needed policies, procedures and standards for the animal control and shelter services, faced and overcame many challenges of overcrowded animal conditions, a parvo outbreak, and recruited and onboarded an entire staff. City staff also provided needed upgrades to the shelter's equipment (computers, phones, internet, etc.), improved functionality of the aging and antiquated facility, and sanitized the entire facility until it can be retired when the new facility is completed. V. DISCUSSION: A contracted management structure has proven challenging for the member cities, volunteers and supporters of the shelter, and to the c ontractors themselves. Contractors are necessarily focused on starting and maintaining a business requiring extensive efforts to fundraise for staffing; navigating employee benefits and payroll; purchasing and implementing records management and financi al software; and providing general facility and fleet maintenance. All in addition to providing animal control services and routine and emergency animal care. Statutory requirements such as record keeping under the Washington State Public Records Act has proven challenging through multiple contractors. Since assuming day-to-day operational control of the TCACA, assigned shelter management found the following deficiencies and concerns: 1. Lack of policies and standard operating procedures (SOPs), had to rely heavily on temporary staff from prior contractors. 2. No established veterinary partnership for prescribing, dosing, or ordering of medications and vaccinations. 3. Lack of controls including; intermingling of stray animals with general population; constant movement of animals throughout the facility and on property; animals being taken offsite without being accounted for; and customers taking animals out of kennels or roaming facility unescorted. 4. Overcrowded facility of primarily unaltered animals. 5. Backlog of animals in "foster-to-adopt" program requiring spay/neuter surgery; medical care (including emergencies) were responsibility of shelter. 6. The shelter was severely overcrowded with approximately 350 animals in a facility designed for a peak of 200 animals. 7. Upper respiratory infections were rampant among the cat population. 8. Facility and fleet decrepit from years of unresolved or poor repairs. Page 201 of 229 Most if not all of these deficiencies to one degree or another have plagued TCACA operations to one degree of another for years over multiple contractors Since assuming full control of the facility this past July, staff has taken the following steps to address the aforementioned deficiencies and make other improvements 1. Onboarded critical shelter staff. 2. Developed SOPs for cleaning/sanitizing of facility an d animal kennels; intake of animals; medical protocols; and foster program. 3. Formed relationship with external vet to assist with creation of SOPs for animal care, medication, and vaccinations. 4. Partnered with ASPCA's Northern Tier Shelter Initiative and Mikey's Chance Rescue to manage parvo outbreak. 5. Determined and staying within the shelter's Capacity for Care (C4C). 6. Facility operating back at reasonable capacity levels. The result has been increased levels of efficiency and cleanliness; animals are moving through the shelter quicker, adoptions are up significantly, as they receive the appropriate medical care and vaccinations upon arrival (320 adoptions as of 10/6/22); backlog of animals waiting for spay/neuter surgery nearly completed (270 animals altered as of 10/7/22); facility utilization improved including having stray dog kennels being operational to keep separate from general population; rescue partnerships continue to improve (133 animals transferred to rescues as of 10/6/22); and improved technology including transfer to RingCentral system (as of 10/6/22 over 1,640 calls received since since switch 9/19/22) and installation of security cameras around and throughout the facility. While there is more work to do at the TCACA, it has become clear that these services are better provided by a governmental agency. Pasco, Kennewick, and Richland leadership have discussed a City managed operation and agree the contractor structure is not a viable option at this time. Incorporation of the operations as a City managed operation will provide animal control and sheltering and established processes capacity services the organization’s including: • Care and health of the animals • Enforcement of animal control regulations • Records management and responses • Human Resources and benefits management • Financial system and auditing • Facility maintenance • Fleet maintenance • Technology and equipment Page 202 of 229 • Safety and training • Outreach and communications Staff’s preliminary annual budget for a City managed operation is $2 million, split evenly among the three Cities. If Council agrees with this course of action, staff will include the (20) FTEs in the 2023-2024 Biennial Budget, all shelter staff are currently temporary. Staff recommends the hiring of an Animal Services Manager immediately who will assume full management responsibility of the shelter and direct animal control operations. Hiring this position now will provide the incumbent an opportunity to analyze the current operations and identify adjustments before the end of the year. If agreed, staff will advertise for the Animal Services Manager immediately and notify RFP respondents of decision. Page 203 of 229 AGENDA REPORT FOR: City Council October 5, 2022 TO: Dave Zabell, City Manager City Council Workshop Meeting: 10/11/22 FROM: Bob Gear, Fire Chief Fire Department SUBJECT: Ordinance & Resolution - Budget Amendment & Approval of Behavioral Health Personal Services Agreement with Awareness Consulting & Training, LLC I. REFERENCE(S): Draft Ordinance - Budget Amendment Draft Resolution Proposed Personal Services Agreement II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: Mental/Behavioral Health Personal Services Agreement with Awareness Consulting & Training, LLC for $625,000 ($25K - 2022; $150K each - 2023- 2026) to be funded from American Rescue Plan Act (ARPA) project list. IV. HISTORY AND FACTS BRIEF: Council was previously briefed at their June 27, 2022 Workshop, regarding the potential implementation of additional supervision and capability for the Pasco Resource Navigator (PRN) program. The purpose of the additional scope to the PRN Program is to provide a behavioral health clinician and access to nurse practitioner and peer counselor resources via a professional services contract. V. DISCUSSION: City staff continues to actively participate in regional planning efforts to provide for the enhancement and expansion of regional mental health services, however with the relatively recent decisions by the Commissioners from Benton and Franklin Counties to enact a 0.1% sales tax, the discussion of program elements Page 204 of 229 and implementation is still in the very early stages. Staff arranged a presentation by the Benton Franklin Recovery Coalition to provide Council an update on current regional efforts in August 2022. As regional conversations continue, time is of the essence to replace the expired Mobile Outreach Professionals (MOP) program, which provided behavioral health professionals who rode in tandem with the Pasco Police Department. With recent legislative changes impacting how law enforcement can respond, and the success of the Pasco Resource Navigator (PRN) Program, Staff is proposing the enhancement of the PRN program until a regional response program can be established. Once the response teams are established, the enhanced PRN program would be the responsible for follow up and assistance with patients based on referrals from the crisis response team. The expansion of the PRN program would include adding a behavior al health clinician, psychiatric nurse practitioner, and peer counselor through contracted services. These positions would: • provide supervision to the PRN program ensuring improved coordination of Navigators with crisis services, therapeutic courts, and diversion programs; • coordinate existing and new behavioral health and medical services in our region; • realign positions for the program to better support the community's needs; and • allow for a well-rounded team to provide proactive, boots on the ground approach to community stabilization without further impacting first responders. Support of regional mental health services has remained on the pending projects list. If approved by Council, $150K of American Rescue Plan Act (ARPA) funds would be allocated annually to support the enhanced PRN Program, allowing referrals from the crisis response team to the PRN Program to provide follow-up case assistance and management. The funding of this program meets the criteria for addressing mental health issues related to COVID19 pandemic, as many of the behavioral issues encountered were exacerbated by the lack of available resources. In the event a regional team is not in place by the time ARPA funds must be used, a total allocation for this program is $625K ($25K - 2022; $150K - 2023-2026). Page 205 of 229 Ordinance – 2021 – 2022 Operating Budget Amendment – ARPA Funding- 1 ORDINANCE NO. ____ AN ORDINANCE AMENDING THE 2021-2022 BIENNIAL BUDGET (ORDINANCE NO. 4560) OF THE CITY OF PASCO, WASHINGTON, BY PROVIDING SUPPLEMENT THERETO; TO PROVIDE ADDITIONAL APPROPRIATION IN THE CITY’S AMBULANCE FUND FOR MENTAL/BEHAVIORAL HEALTH PERSONAL SERVICES AGREEMENT WHEREAS, on December 7, 2020, the Pasco City Council approved Ordinance No. 4503, adopting the 2021-2022 Biennial Budget; and WHEREAS, on November 22, 2021, the Pasco City Council approved Ordinance No. 4560, adopting the 2021-2022 Biennial Budget Amendment; and WHEREAS, the 2021-2022 Amended Biennial Budget included the Pasco Resource Navigator (PRN) program; and WHEREAS, the availability of regional mental health services is lacking and demand is high, and WHEREAS, Council has authorized $625,000 in American Rescue Plan Act funds to be utilized for eligible projects; and WHEREAS, the need for mental health service and support following the myriad of challenging impacts of the COVID-19 pandemic, including but not limited to loss of loved ones and economic hardship related to job loss or business closure, WHEREAS, the City is pursuing an increase of funding to provide greater capacity to meet mental health needs, NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON DO ORDAIN AS FOLLOWS: Section 1. Pursuant to RCW 35A.34.200(1)(d), the 2021-2022 Biennial Budget be and the same is hereby amended to provide for the following adjustments to revenues, accounting for an excess in revenue generated from use of American Rescue Plan Act grant funds of $25,000 and modifying proportionately the expenditures in the Ambulance Fund accounting for this increase in revenue to be appropriated as a funding source for the WPWTP Expansion Phase 2, as follows: Fund EXPENDITURE REVENUE Ambulance Fund $25,000.00 $25,000.00 Total $25,000.00 $25,000.00 Page 206 of 229 Ordinance – 2021 – 2022 Operating Budget Amendment – ARPA Funding- 2 Section 2. That the additions in appropriations and expenditures are hereby declared to exist in the above funds for the said uses and purposes as shown above, and the proper City officials are hereby authorized and directed to issue warrants and transfer funds in accordance with the provision of the Ordinance. Section 3. Except as amended herein, Ordinance No. 4560 as previously adopted heretofore shall remain unchanged. Section 4. This Ordinance, being an exercise of a power specifically delegated to the City legislative body, is not subject to referendum, and shall take full force and effect five (5) days after approval, passage, and publication as required by law. PASSED by the City Council of the City of Pasco, Washington this ___ day of October, 2022. Blanche Barajas Mayor ATTEST: APPROVED AS TO FORM: _____________________________ ___________________________ Debra Barham, CMC Kerr Ferguson Law, PLLC City Clerk City Attorneys Published: ___________________________ Page 207 of 229 Resolution – Behavioral Health PSA - 1 RESOLUTION NO. ______ A RESOLUTION OF THE CITY OF PASCO, WASHINGTON, AUTHORIZING THE CITY MANAGER TO EXECUTE A PERSONAL SERVICES AGREEMENT WITH AWARENESS CONSULTING & TRAINING, LLC FOR A BEHAVIORAL HEALTH CLINICIAN. WHEREAS, the City of Pasco, Washington desires to increase the capability and supervision of the Pasco Resource Navigator Program; and WHEREAS, the Awareness Consulting & Training, LLC can provide the appropriate skilled supervision with a behavioral health clinician; and WHEREAS, on June 27, 2022, the Pasco Fire Department requested that the behavioral health clinician be funded with the American Rescue Plan Act (ARPA) funding, up to $625,000, during Council’s workshop meeting. WHEREAS, the City Council of the City of Pasco, Washington, has after due consideration, determined that it is in the best interest of the City of Pasco to enter into the personal services agreement with Awareness Consulting & Training, LLC. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON: Section 1. That the City Council of the City of Pasco approves the terms and conditions of the personal services agreement between the City of Pasco and Awareness Consulting & Training, LLC as attached hereto and incorporated herein as Exhibit A. Section 2. The City Manager of the City of Pasco, Washington, is hereby authorized, empowered, and directed to sign and execute said Agreement on behalf of the City of Pasco; and to make minor substantive changes as necessary to execute the Agreement. PASSED by the City Council of the City of Pasco, Washington this ____ day of ___________, 2022. Blanche Barajas Mayor ATTEST: APPROVED AS TO FORM: _____________________________ ___________________________ Debra Barham, CMC Kerr Ferguson Law, PLLC City Clerk City Attorneys Page 208 of 229 Personal Services Agreement – Awareness Consulting and Training, LLC - Pasco Resource Navigator Program Page 1 of 9 PERSONAL SERVICES AGREEMENT BEHAVIORAL HEALTH SERVICES THIS AGREEMENT is made and entered into between the City of Pasco, a Washington Municipal Corporation, hereinafter referred to as “City”, and Awareness Consulting and Training LLC, hereinafter referred to as “Consultant,” on the _______ day of _________________, 2022. RECITALS WHEREAS, Consultant has the capability and capacity to provide an Outreach Coordinator and Psychiatric Advanced Registered Nurse Practitioner to the existing Pasco Resource Navigator Team detailed in the Statement of Work attached hereto as Exhibit A; and the City desires to have certain services and/or tasks performed as set forth below requiring specialized skills, training, equipment, and other supportive capabilities; and WHEREAS, City desires to retain Consultant to provide the said services, and Consultant is willing to perform such services under the terms and conditions hereinafter set forth; the Consultant represents that it is qualified and possesses sufficient skills, experience, equipment, and necessary capabilities, including: technical and professional expertise, when required, to perform the services and/or tasks as set forth in this Agreement upon which the City is relying. NOW, THEREFORE, in consideration of the mutual covenants, and performances contained herein, the parties agree as follows: 1. Scope of Services. The Consultant shall perform such services and accomplish such tasks, including the furnishing of all labor, materials, facilities and equipment necessary for full performance thereof, as identified and designated as Consultant’s Responsibilities throughout this Agreement, and as more particularly described in Scope of Work detailed in Exhibit A, attached hereto and incorporated herein (the “Project”). 2. Term. This Project shall begin on the execution date listed above and shall continue thereafter until the completion of Services under all Statements of Work for a period of 5 years unless sooner terminated pursuant to Section 13. 3. Compensation and Payment. 3.1 Payment for services provided hereunder shall be made following the performance of such services. Such payment shall be full compensation for work performed or services rendered, and for all labor, materials, supplies, equipment, and incidentals necessary to complete the Project. 3.2 No payment shall be made for any services rendered by the Consultant except for services identified and set forth in this Agreement except as may be authorized by a written supplemental agreement approved by the City. Page 209 of 229 Personal Services Agreement – Awareness Consulting and Training, LLC - Pasco Resource Navigator Program Page 2 of 9 3.3 The City shall pay the Consultant for work performed under this Agreement upon timely submitted invoices detailing work performed and expenses for which reimbursement is sought. The City shall approve all invoices before payment is issued. Payment shall occur within thirty (30) days of receipt and approval of an invoice. 3.4 The City shall pay the Consultant for all work performed and expenses incurred under this Agreement, as follows. ☒ Such rates as identified on Exhibit A. 4. Reports and Inspections. 4.1 The Consultant at such times and in such forms as the City may require, shall furnish to the City such statements, records, studies, surveys, reports, data, and information as the City may request pertaining to matters covered by this Agreement. 4.2 The Consultant shall, at any time during normal business hours and as often as the City or the Washington State Auditor may reasonably deem necessary, make available for examination all of its records and data with respect to all matters covered, directly or indirectly, by this Agreement and shall permit the City, or its designated authorized representative to audit and inspect other data relating to all matters covered by this Agreement. The City shall receive a copy of all audit reports made by the agency or firm as to the Consultant’s activities. The City may, at its discretion, conduct an audit at its expense, using its own or outside auditors, of the Consultant’s activities which relate, directly or indirectly, to this Agreement. Consultant shall be provided a copy of such reports. 4.3 The Consultant, during the term of this Agreement, shall obtain all permits and registration documents necessary for the performance of its work and for the execution of services at its own expense, and shall maintain its validity. Upon request, the Consultant shall deliver to the City copies of these licenses, registration documents, and permits or proof of their issuance or renewal. 4.4 Consultant shall maintain books, records and documents, which sufficiently and properly reflect all direct and indirect costs related to the performance of this Agreement, and shall maintain such accounting procedures and practices as may be necessary to assure proper accounting of all funds paid pursuant to this Agreement. These records shall be subject, at all reasonable times, to inspection, review, or audit as provided above. 4.5 The Consultant shall retain all books, records, documents or other material relevant to this Agreement for three (3) years after its expiration. Consultant agrees that the City, or its designee, shall have full access and right to examine any of said materials at all reasonable times during this period. Page 210 of 229 Personal Services Agreement – Awareness Consulting and Training, LLC - Pasco Resource Navigator Program Page 3 of 9 5. Ownership and Use of Documents. 5.1 All research, tests, surveys, preliminary data, information, drawings and documents made, collected, or prepared by the Consultant for performing the services subject to this Agreement, as well as any final product, collectively referred to as “work product,” shall be deemed as the exclusive property of the City, including copyright as secured thereon. Consultant may not use them except in connection with the performance of the services under this Agreement or with the prior written consent of the City. Any prior copyrighted materials owned by the Consultant and utilized in the performance of the services under this Agreement, or embedded in with the materials, products and services provided thereunder, shall remain the property of the Consultant subject to a license granted to the City for their continued use of the products and services provided under this Agreement. Any work product used by the Consultant in the performance of these services which it deems as “confidential,” “proprietary,” or a “trade secret” shall be conspicuously designated as such. 5.2 In the event of Consultant’s default, or in the event that this Agreement is terminated prior to its completion, the work product of the Consultant, along with a summary of the services performed to date of default or termination, shall become the property of the City, and tender of the work product and summary shall be a prerequisite to final payment under this Agreement. The summary of services provided shall be prepared at no additional cost, if the Agreement is terminated through default by the Consultant. If the Agreement is terminated through convenience by the City, the City agrees to pay Consultant for the preparation of the summary of services provided. 6. Public Records. 6.1 Consultant acknowledges that the City is an agency subject to Chapter 42.56 RCW “Public Records Act.” All preliminary drafts or notes prepared or gathered by the Consultant, and recommendations of the Consultant are exempt prior to the acceptance by the City or public citation by the City in connection with City action. 6.2 If the Consultant becomes a custodian of public records of the City and request for such records is received by the City, the Consultant shall respond to the request by the City for such records within five (5) business days by either providing the records, or by identifying in writing the additional time necessary to provide the records with a description of the reasons why additional time is needed. Such additional time shall not exceed twenty (20) business days unless extraordinary good cause is shown. 6.3 In the event the City receives a public records request for protected work product of the Consultant within its possession, the City shall, prior to the release of any protected work product or as a result of a public records request or subpoena, Page 211 of 229 Personal Services Agreement – Awareness Consulting and Training, LLC - Pasco Resource Navigator Program Page 4 of 9 provide Consultant at least ten (10) business days prior written notice of the pending release and to reasonably cooperate with any legal action which may be initiated by the Consultant to enjoin or otherwise prevent such release. 7. Independent Contractor Relationship. 7.1 The parties intend that an independent contractor relationship is created by this Agreement. The City is interested primarily in the results to be achieved; subject to the scope of services and the specific requirements of this Agreement, the implementation of services will lie solely with the discretion of the Consultant. No agent, employee, officer or representative of the Consultant shall be deem ed to be an employee, agent, officer, or representative of the City for any purpose, and the employees of the Consultant are not entitled to any of the benefits or privileges the City provides for its employees. The Consultant will be solely and entirely responsible for its acts and for the acts of its agents, employees, officers, subcontractors or representatives during the performance of this Agreement. 7.2 In the performance of the services provided in this Agreement, Consultant is an independent contractor with full authority to control and direct the performance of the details of the work, however, the results of the work contemplated herein must meet the approval of the City and shall be subject to the City’s general rights of inspection and review to secure the satisfactory completion thereof. 7.3 The Consultant shall comply with all State and Federal laws including, but not limited to: 7.3.1 The definition requirements of RCW 50.04.140 (Employment Security). 7.3.2 RCW 51.08.195 (Industrial Insurance). 7.3.3 Obtain a City of Pasco business license. 7.4 The City may, at its sole discretion, require the Consultant to remove any employee, agent or servant from employment on this Project who, in the City’s sole discretion, may be detrimental to the City’s interest. 8. Indemnification. 8.1 The Consultant shall defend, indemnify, and hold harmless the City, its officers, officials, employees, and volunteers harmless from any and all claims, injuries, damages, losses or suits including attorney fees, arising out of or resulting from the acts, errors or omissions of the Consultant in performance of this Agreement, except for injuries and damages caused by the sole negligence of the City. 8.2 However, should a court of competent jurisdiction determine that this Agreement is subject to RCW 4.24.115, then, in the event of liability for damages arising out Page 212 of 229 Personal Services Agreement – Awareness Consulting and Training, LLC - Pasco Resource Navigator Program Page 5 of 9 of bodily injury to persons or damages to property caused by or resulting from the concurrent negligence of the Consultant, and the City, its officers, officials, employees, and volunteers, the Consultant’s liability, including the duty and cost to defend, hereunder shall be only to the extent of the Consultant’s negligence. It is further specifically and expressly understood that the indemnification provided herein constitutes the Consultant’s waiver of immunity under Industrial Insurance, Title 51 RCW, solely for purposes of this indemnification. This waiver has been mutually negotiated by the parties. The provisions of this section shall survive the expiration or termination of this Agreement. 8.3 No liability shall attach to the City by reason of entering into this Agreement except as expressly provided herein. 8.4 This indemnification shall include damages, penalties and attorney fees sustained as a result of Consultant’s delayed or failed performance of Section 6 above. 9. Insurance. The Consultant shall procure and maintain for the duration of the Agreement, insurance against claims for injuries to persons or damage to property which may arise from or in connection with the performance of the work hereunder by the Consultant, its agents, representatives, employees, or subcontractors. The Consultant’s maintenance of insurance as required by the Agreement shall not be construed to limit the liability of the Consultant to the coverage provided by such insurance, or otherwise limit the C ity’s recourse to any remedy available at law or in equity. 9.1 Minimum Scope of Insurance. Consultant shall obtain insurance of the types and coverage described below: 9.1.1 Automobile Liability insurance covering all owned, non-owned, hired and leased vehicles. Coverage shall be at least as broad as Insurance Services Office (ISO) form CA 00 01. 9.1.2 Commercial General Liability insurance shall be at least as broad as ISO occurrence form CG 00 01 and shall cover liability arising from premises, operations, stop-gap independent contractors and personal injury and advertising injury. The City shall be named as an additional insured under the Consultant’s Commercial General Liability insurance policy with respect to the work performed for the City using an additional insured endorsement at least as broad as ISO endorsement form CG 20 26. 9.1.3 Workers’ Compensation coverage as required by the Industrial Insurance laws of the State of Washington. 9.1.4 Professional Liability insurance appropriate to the Consultant’s profession. 9.2 Minimum Amounts of Insurance. Consultant shall maintain the following insurance limits: Page 213 of 229 Personal Services Agreement – Awareness Consulting and Training, LLC - Pasco Resource Navigator Program Page 6 of 9 9.2.1 Automobile Liability insurance with a minimum combined single limit for bodily injury and property damage of one million US dollars (1,000,000.00) per accident. 9.2.2 Commercial General Liability insurance shall be written with limits no less than: ☒ two million US dollars (2,000,000.00) each occurrence; ☒ two million US dollars (2,000,000.00) general aggregate; and ☐ two million US dollars (2,000,000.00) products completed operations aggregate limit 9.2.3 Professional Liability insurance shall be written with limits no less than: ☒ two million US dollars (2,000,000.00) per claim; and ☒ two million US dollars (2,000,000.00) policy aggregate limit; 9.3 Other Insurance Provision. The Consultant’s Automobile Liability, Professional Liability, and Commercial General Liability insurance policies are to contain, or be endorsed to contain that they shall be primary insurance as respect the City. Any insurance, self-insurance, or self-insured pool coverage maintained by the City shall be excess of the Consultant’s insurance and shall not contribute with it. 9.3.1 The Consultant’s insurance shall be endorsed to state that coverage shall not be cancelled by either party, except after thirty (30) days prior written notice by certified mail, return receipt requested, has been given to the City. 9.4 Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best rating of not less than A: VII. 9.5 Verification of Coverage. Consultant shall furnish the City with original certificates and a copy of the amendatory endorsements, including, but not necessarily limited to, the additional insured endorsement, evidencing the insurance requirements of the Agreement before commencement of the work. 9.6 Notice of Cancellation. The Consultant shall provide the City with written notice of any policy cancellation within two (2) business days of their receipt of such notice. 9.7 City Full Availability of Consultant Limits. If the Consultant maintains higher insurance limits than the minimums shown above, the City shall be insured for the full available limits of Commercial General and Excess or Umbrella liability maintained by the Consultant, irrespective of whether such limits maintained by the Consultant are greater than those required by this Agreement or whether any Page 214 of 229 Personal Services Agreement – Awareness Consulting and Training, LLC - Pasco Resource Navigator Program Page 7 of 9 certificate of insurance furnished to the City evidences limits of liability lower than those maintained by the Consultant. 9.8 Failure to Maintain Insurance. Failure on the part of the Consultant to maintain the insurance as required shall constitute a material breach of contract, upon which the City may, after giving five (5) business days notice to the Consultant to correct the breach, immediately terminate the Agreement or, at its discretion, procure or renew such insurance and pay any and all premiums in connection therewith, with any sums so expended to be repaid to the City on demand, or at the sole discretion of the City, offset against funds due the Consultant from the City. 10. Nondiscrimination. In the performance of this Agreement, the Consultant will not discriminate against any employee or applicant for employment on the grounds of race, creed, color, national origin, sex, marital status, age or the presence of any sensory, mental or physical handicap; provided that the prohibition against discrimination in employment because of handicap shall not apply if the particular disability prevents the proper performance of the particular worker involved. The Consultant shall ensure that applicants are employed, and that employees are treated during employment in the performance of this Agreement without discrimination because of their race, creed, color, national origin, sex, marital status, age or the presence of any sensory, mental or physical handicap. Consultant shall take such action with respect to this Agreement as may be required to ensure full compliance with local, State and Federal laws prohibiting discrimination in employment. 11. Covenant Against Contingent Fees. The Consultant warrants that it has not employed nor retained any company, firm, or person, other than a bona fide employee working exclusively for the Consultant, to solicit or secure this Agreement; and that it has not paid or agreed to pay any company, person or firm, other than a bona fide employee working exclusively for the Consultant, any fee, commission, percentage, brokerage fee, gift, or other consideration contingent upon or resulting from the award or making of this Agreement. For breach or violation of this warranty, the City shall be relieved of its duties and obligations under this agreement which shall terminate immediately upon notice to the Consultant. 12. Assignment and Subcontracting. 12.1 The City has awarded this Agreement to the Consultant due to its unique qualifications to perform these services. The Consultant shall not assign (or subcontract other than as specifically identified in Exhibit A its performance under this Agreement or any portions of this Agreement without the prior written consent of the City, which consent must be sought at least thirty (30) days prior to the date of any proposed assignment. 12.2 Any work or services assigned or subcontracted hereunder shall be subject to each provision of this Agreement including Section 6, Public Records; Section 10, Page 215 of 229 Personal Services Agreement – Awareness Consulting and Training, LLC - Pasco Resource Navigator Program Page 8 of 9 Nondiscrimination; proper bidding procedures where applicable; and all local, State and Federal statutes, ordinances and guidelines. 12.3 Any technical or professional service subcontract not listed in this Agreement, must have prior written approval by the City. 13. Termination. 13.1 Termination for Convenience. Either party may terminate this Agreement for any reason upon giving the other party no less than ten (10) business days written notice in advance of the effective date of such termination. 13.2 Termination for Cause. If the Consultant fails to perform in the manner called for in this Agreement, or if the Consultant fails to comply with any other provisions of this Agreement and fails to correct such noncompliance within five (5) business days of written notice thereof, the City may terminate this Agreement for cause. Termination shall be effected by serving a notice of termination on the Consultant setting forth the manner in which the Consultant is in default. The Consultant will only be paid for services and expenses complying with the terms of this Agreement, incurred prior to termination. 13.3 Immediate Termination. If the Consultant breach relates to violation of the prohibition against contingent fees this agreement shall terminate immediately at the City’s sole discretion and upon receipt of notice by consultant. Receipt of notice includes email, facsimile or letter to the address noted below in 14.3.2. 14. General Provisions. 14.1 For the purpose of this Agreement, time is of the essence. 14.2 Notice. Notice provided for in this Agreement shall be sent by: 14.2.1 Personal service upon the Project Administrators; or 14.2.2 Certified mail to the physical address of the parties, or by electronic transmission to the e-mail addresses designated for the parties below. 14.3 The Project Administrator for the purpose of this Agreement shall be: 14.3.1 For the City: P.O. Box 293, Pasco, WA 99301 Attention: Robert Gear, Fire Chief 14.3.2 For the Consultant: 1610 W 52nd Ave, Kennewick, WA 99337 Attention: Cameron Fordmeir, Member Page 216 of 229 Personal Services Agreement – Awareness Consulting and Training, LLC - Pasco Resource Navigator Program Page 9 of 9 15. Dispute Resolution. 15.1 This Agreement has been and shall be construed as having been made and entered into and delivered within the State of Washington and it is agreed by each party hereto that this Agreement shall be governed by the laws of the State of Washington. 15.2 In the event of a dispute regarding the enforcement, breach, default, or interpretation of this Agreement, the Project Administrators, or their designees, shall first meet in a good faith effort to resolve such dispute. In the event the dispute cannot be resolved by agreement of the parties, said dispute shall be resolved by arbitration pursuant to RCW 7.04A, as amended, with both parties waiving the right of a jury trial upon trial de novo, with venue placed in Pasco, Franklin County, Washington. The substantially prevailing party shall be entitled to its reasonable attorney fees and costs as additional award and judgment against the other. 16. Nonwaiver. Waiver by the City of any provision of this Agreement or any time limitation provided for in this Agreement shall not constitute a waiver of any other similar event or other provision of this Agreement. 17. Integration. This Agreement between the parties consists in its entirety of this document and any exhibits, schedules or attachments. Any modification of this Agreement or change order affecting this Agreement shall be in writing and signed by both parties. 18. Authorization. By signature below, each party warrants that they are authorized and empowered to execute this Agreement binding the City and the Consultant respectively. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date first written above. CITY OF PASCO, WASHINGTON CONSULTANT Dave Zabell, City Manager Cameron Fordmeir, Member of Awareness Consulting and Training LLC ATTEST: Debra C. Barham, City Clerk APPROVED AS TO FORM: Kerr Ferguson Law, PLLC, City Attorney Page 217 of 229 Exhibit A Project Description-Statement of Work Pasco Fire Department and Awareness Consulting & Training LLC Overview: The partners above have committed to adding a Outreach Coordinator and Psychiatric Advanced Nurse Practitioner to the existing Pasco Resource Navigator (PRN) Program. The PRN program has identified risk factors that may result in overutilization of emergency departments and first responder services. The addition of a behavioral health clinician and psychiatric nurse practitioner (ARNP) can provide clinical oversight of the existing PRN staff and coordinate services with existing crisis services, therapeutic courts, diversion programs, case management, and co-responder models. The psychiatric nurse practitioner will be available for medication consultation, case review, and emergency prescription of non-addictive psychiatric medication as needed. A PRN program consisting of peer support, a behavioral health clinician, and a medication management provider allows for a well-rounded team that provides proactive, boots on the ground approach to community stabilization without further burdening first responders and emergency departments. Background: While many communities address this issue through the development of a Community Paramedic Program, our approach to this work arose from leveraging the already existing strong partnerships and current efforts underway by many stakeholders in our community to address this shared concern. The over consumption of resources, in most cases, are due to underlying Social Determinants of Health (SDOH) and the expanded use of Community Health Workers is a more cost-effective and efficient option in the setting of strong clinical oversight and close partnership with emergency personnel. Type of Contract: Fixed contract of $150,000.00 per year, paid monthly by invoice. This contract can be automatically renewed for up to 5 years if mutually agreed upon by the Pasco Fire Department and Awareness Consulting & Training LLC Place of work: All work will be performed within the City of Pasco and surrounding areas of Franklin County at the location determined and agreed upon by all parties. Office location will be within the desired Pasco Fire Station of choice. To support the necessary collaboration between the PRN team and the City of Pasco Fire Department staff, it is expected that the primary place of work will be the Fire Station assigned. While there may be times that the PRN team must attend specific meetings, trainings, or special events on request of the contractor, the PRN team should report to their primary work site at the start of every workday, unless the PFD leadership has been informed ahead of time and agrees. Page 218 of 229 2 It is understood that most of the workday may be spent in the field, but the assigned workstation should be returned to at the end of the day, unless otherwise reported to leadership. Participants/Targeted Risk Factors: The PRN program will target those individuals who are high utilizers of first responder and emergency department services with emphasis placed on Social Determinants of Health (SDOH) and the local Community Health Improvement Plan (CHIP). The PRN program will aid with basic needs, unsafe living environments, personal safety, access to medication/healthcare, poor health literacy, barriers to treatment, and coordination of existing or new behavioral health and medical services. Any future program iterations may expand to include participants with other needs or built to support other intended outcomes. Participation in the program is short term and intended to connect individuals to existing resources in the community. Referrals: All referrals will be reviewed and agreed upon by the behavioral health clinician, ARNP, and Pasco Fire Department. Determination of services will be based on the individuals use of responder services, emergency department visits, community safety, impact on city resources, and unique needs of the individual. Referrals will be made from Fire/EMS, emergency departments, primary care physicians, community agencies, and crisis providers when appropriate. Safety and Equipment: PRN staff will be equipped with a radio and cell phone provided by Pasco Fire Department and follow all existing safety protocols. The peer and behavioral health clinician will respond in- tandem to ensure community and staff safety when applicable. Calls to dispatch will be made before and after contact when engaging with individuals in the community and living settings. PRN staff attire will consist of a Pasco Fire Uniform and badge that clearly identifies staff as a representative of the City of Pasco. A Pasco Fire Department vehicle will be provided to PRN staff for use during work hours only. Other equipment provided at the office location of choice will consist of a computer or laptop to document referrals, calls, contacts, follow-up, and dispositions. Any reasonable requests by citizens to modify their residence for any reason must be documented and submitted to leadership for approval. The PRN staff must use the provided equipment to protect themselves from any risk of infection or injury. Staff must report any concerns immediately to both Pasco Fire Department and contractor supervisors. It is not the intent to provide personal care to any participant. Clinical Oversight and Communication: The behavioral health clinician will provide day to day clinical oversight of the Peer positions and work closely to review cases, current treatment plan, and ensure warm hand-offs to Page 219 of 229 3 appropriate services are made to prevent referrals from falling through the cracks. Clinical oversight and supervision of the behavioral health clinician will be performed by the contractor and ARNP in partnership with Pasco Fire Department. PRN staff will meet weekly with Pasco Fire Department to go over referrals and review current courses of action. Monthly and/or quarterly meetings will be held with City of Pasco Fire Department Leadership, contractor leadership, and PRN team to continually evaluate and evolve the program to meet the unique needs of the city and population served. Documentation: Documentation will consist of standard demographics, relevant behavioral health/medical history, risk factors, protective factors, current presentation, disposition, and outside referrals made. Date and length of service will be included on all contacts along with monthly reports that detail number of participants, new referrals, current presentation/program involvement, and those graduating/completing current treatment goals. SPECIFIC MANDATORY TASKS AND ASSOCIATED DELIVERABLES Task 1: Assess all participants that have been referred into the program using a standardized assessment tool that: • Collects standard demographic information (name, address, gender, date of birth) • Identifies risks and populates a problem list that includes the primary medical issues, contributing risk factors and SDOH concerns. Deliverable 1: Monthly report that reflects required demographic information for all new and current referrals per above requirements. Deliverable 2: Monthly report that outlines the number of new referrals that were received in the previous month, and of those, the percentage and number of cases that were started/engaged, the percentage and number pending and the percentage and number that refused services or were unable to be reached, including any documented reasons or details available. Deliverable 3: Monthly report that includes the characteristics of all participants currently in the program by primary medical issue (if present), and risk factors/SDOH. For example, the report should reflect the number of individuals with food insecurity, homelessness, significant SUD, and other key risk factors. Deliverable 4: Complete and upload into the records management system(s) (RMS) all required consents for program participation as required by both the contractor and PFD. Task 2: Documentation of an Action Plan that addresses the identified problems and includes the anticipated length of service in the program. Page 220 of 229 4 Deliverable 1: Monthly report that includes all active participants in the program, along with their start date and expected completion date. This should include length on program for all current participants. Deliverable 2: If requested, provide a participant’s Action Plan that clearly defines the goals associated with the individual’s participation in the program. Task 3: Implementation of an Action Plan that documents the application of all interventions, along with the time required to deliver the interventions. Deliverable 1: Monthly aggregated report that reflects all interventions applied to program participants, by category. For example, the total number of housing associated interventions, food bank trips, care coordination for medical appointments or other related interventions. Deliverable 2: Monthly report that reflects the total number of hours spent per month and the average per day on the application of interventions for program participants. Deliverable 3: Monthly report that reflects the number of home visits made the previous month. Deliverable 4: Monthly report that reflects the total amount of resources (monetary, food boxes, bus passes) distributed to program participants. If outside grant funds are utilized, the associated expenditures and details should be recorded and reported according to any Grant requirements. Task 4: Collaboration with Agency staff: Outreach and develop relationships with Pasco Fire Department staff and leadership. Deliverable 1: Establish a consistent schedule for visiting all fire stations within the City of Pasco at least monthly and provide an update to leadership at the end of every month, recapping visits. Deliverable 2: Attend and participate in morning briefings with City of Pasco Fire Department staff and leadership. Deliverable 3: Identify, report and partner with City of Pasco Fire Department leadership in addressing community issues that impact program participants. Deliverable 4: Take ownership of and participate in weekly cross agency meetings to review participant census. Deliverable 5: Participate in monthly PFD Staff Meetings to provide highlights of activities and referral status for the current month of the Staff Meeting. Task 5: Other Documentation Utilize the City of Pasco RMS for documentation and collection of information. Deliverable 1: Complete required trainings for all agency sponsored IT systems. Deliverable 2: Complete any required documentation timely. Schedule for Deliverables: Page 221 of 229 5 All deliverables should be received by the 10th of every month. Changes to Statement of Work: Any changes to this SOW will be authorized and approved only through written correspondence or email communication between PFD and the contractor. Page 222 of 229 AGENDA REPORT FOR: City Council October 5, 2022 TO: Dave Zabell, City Manager City Council Workshop Meeting: 10/11/22 FROM: Debra Barham, City Clerk Administrative & Community Services SUBJECT: Resolution - Appointment Process for City Boards & Commissions I. REFERENCE(S): Proposed Resolution Resolution No. 3388 (approved 4.16.2012) II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: None IV. HISTORY AND FACTS BRIEF: Mayoral appointments to the City of Pasco Boards & Commissions have been managed in accordance with Resolution No. 3388, since it was last amended on April 16, 2012. The process for soliciting and reviewing applications, interviewing candidates and appointing/reappointing members to the City's Boards and Commissions (B/C) included the full City Council interviewing the selected candidates during a Council Workshop following the Screening Committee (consisting of the Mayor and two Councilmembers appointed by the Mayor) narrowing down the applicant pool. The full Council interview process was interrupted in 2020 when the COVID-19 pandemic prohibited "in-person" public meetings and gatherings from occurring for over two (2) years. Recently, the Washington State Governor Inslee remanded his emergency orders pertaining to public meetings and as a result Page 223 of 229 the prohibition on in-person meetings has been removed with the option of virtual attendance. During the pandemic, the City Boards & Commissions position appointment and reappointment process continued virtually by means of the Council forming Council Boards & Commissions Subcommittees (Council B/C Subcommittee), consisting of the Mayor and two appointed Councilmembers, to first review the applications packets for the specific B/C and then to schedule virtual interviews with the selected candidates. After the interviews concluded, the Council B/C Subcommittee would deliberate and the Mayor would make the selection or selections for appointment or reappointmen t at a subsequent Council meeting, the Council would then consider confirmation of the appointment or reappointment by a majority vote. V. DISCUSSION: During the October 3rd Council meeting, under the Miscellaneous Discussion, Council discussed the board and commission process and directed that staff bring back a revised resolution for their consideration updating the City's Boards & Commissions appointment process based on the October 3rd discussion. Council to review review the proposed resolution memorializing the City's Boards & Commissions Appointment Process as it is currently functioning with potential action at the October 17, 2022, Council meeting. Page 224 of 229 DRAFT 10.5.2022 Resolution – BC Interview & Appointment Process - 1 RESOLUTION NO. _________ A RESOLUTION OF THE CITY OF PASCO, WASHINGTON AMENDING THE PROCESS FOR APPOINTMENTS TO CITY BOARDS AND COMMISSIONS. WHEREAS, the City of Pasco maintains several citizen boards and commissions to assist the delivery of municipal services, as well as to advise the City Council in making policy decisions; and WHEREAS, the appointment process prescribed throughout the Pasco Municipal Code requires the Mayor to appoint qualified individuals to vacancies on such boards or commissions, subject to confirmation of the City Council; and WHEREAS, the last amendment to the City’s Boards and Commissions appointment process was passed by Council on April 16, 2012, through Resolution No. 3388; and WHEREAS, the solicitation process and management of the City’s Boards and Commissions members was transferred from the City Manager’s Office to the City Clerk’s Office in January 2020. WHEREAS, during the onset of the COVID-19 pandemic in early 2020, the process for reviewing application packets and interviewing candidates was modified to accommodate meeting restrictions, which also allowed for the use of new technology providing for the conduct of interviews virtually; and WHEREAS, the Mayor and City Council desire to continue reviewing City Boards and Commissions application packets and interviewing candidates through a Council subcommittee consisting of two Councilmembers and the Mayor, which has been effective and efficient for both the City Council and applicants alike. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON: Section 1: Applications for vacancies on City Boards and Commissions shall be solicited by the City Clerk’s Office on behalf of the City Council prior to when a position’s term expires or when a vacancy occurs due to a resignation or removal of a member. Section 2: Application packets, of those candidates meeting the qualifications for the Board or Commission position(s), shall be reviewed by a Council subcommittee appointed by the Mayor, which shall include the Mayor and two Councilmembers. The Council subcommittee shall be ad-hoc and appointed when applications are received for a current vacancy or vacancies or for upcoming position term expirations. The Council subcommittee shall select those candidates it deems best suited for the respective Board/Commission but not more than three candidates for Page 225 of 229 DRAFT 10.5.2022 Resolution – BC Interview & Appointment Process - 2 each vacancy to be filled. The Council subcommittee shall consider the following factors in making their selections for further consideration: a) Geographic representation b) Gender representation c) Ethnic representation d) Familial and financial relationships of board members Section 3: The Council subcommittee shall conduct the interviews of the selected candidates and may recommend reappointment of an incumbent applicant without interview if the incumbent has served not more than two consecutive terms since the last interview. At a City Council meeting following such interviews, an interviewed candidate shall be selected by the Mayor for appointment/reappointment to each vacant position. Any candidate selected by the Mayor shall be subject to confirmation vote by the City Council; a majority vote of the quorum present at such meeting shall be required to confirm the Mayor’s appointments. Section 4: Any prior resolutions of the City Council in conflict with the provisions in this resolution shall be superseded by this resolution. Section 5: This Resolution shall take effect immediately. PASSED by the City Council of the City of Pasco, Washington this___ day of _________, _____. _____________________________ Blanche Barajas Mayor ATTEST: APPROVED AS TO FORM: _____________________________ ___________________________ Debra Barham, CMC Kerr Ferguson Law, PLLC City Clerk City Attorney Page 226 of 229 RESOLUTION NO. ` A RESOLUTION Providing a Process for Appointments to City Boards and Commissions. WHEREAS, the City of Pasco maintains several citizen advisory boards to assist the delivery of municipal services as well as to advise the City Council in making various policy decisions; and WHEREAS, the appointment process prescribed by the Pasco Municipal Code requires the Mayor to appoint citizens to vacancies on such boards, subject to confirmation of the City Council; and WHEREAS, the Mayor and City Council desire to establish an appointment process which is more collaborative yet efficient for both the applicants and City Council alike;NOW,THEREFORE, THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON DOES RESOLVES AS FOLLOWS: Section 1: Applications for city boards and commissions shall be solicited annually by the City Manager on behalf of the City Council. Section 2: All applications received by the City Manager shall be reviewed by a City Council committee appointed by the Mayor; such committee, to be known as the "Appointment Screening Committee," shall be ad-hoc, appointed annually, and consist of three members, including the Mayor. The Appointment Screening Committee shall select those applicants it deems best suited for the respective board/commission but not more than three applicants for each vacancy to be filled. The Appointment Screening Committee shall consider the following factors in making their selections for further consideration: a) Geographic representation; b) Gender representation; c) Ethnic representation; d) Familial and financial relationships of board members Section 3: Those applicants selected by the Appointment Screening Committee shall be interviewed by the City Council during a public meeting; provided, however, the Screening Committee may recommend reappointment of an incumbent applicant without interview by the City Council if the incumbent has •-- • - - -•served not more than two consecutive• terms since the last interview. At a City Council meeting following such interview, an interviewed candidate shall be selected by the Mayor for appointment to each vacancy. Any candidate selected by the Mayor shall be subject to confirmation vote of the City Council; a majority vote of the quorum present at such meeting shall be required to confirm the Mayor's appointments. Section 4: Any prior resolutions of the City Council in conflict with the provisions of this resolution shall be superseded by this resolution. PAS D by the City Council ity of Pasco at its regular meeting this 16th day of April, 2012. Matt Watkins, Mayor T T: f APP'S AS TO FORM: Debra Clark,City Clerk Leland B. Kerr, City Attorney Page 227 of 229 QUALITY OF LIFE Promote a high-quality of life through quality programs, services and appropriate investment and re- investment in community infrastructure including, but not limited to: • Completion of Transportation System Master Plan and design standard updates to promote greater neighborhood cohesion in new and re-developed neighborhoods through design elements, e.g.; connectivity, walkability, aesthetics, sustainability, and community gathering spaces. • Completion of the Parks, Recreation and Open Space Plan and development of an implementation strategy to enhance such services equitably across the community. • Completion of the Housing Action and Implementation Plan with a focus on a variety of housing to address the needs of the growing population. FINANCIAL SUSTAINABILITY Enhance the long-term viability, value, and service levels of services and programs, including, but not limited to: • Adopting policies and strategic investment standards to assure consistency of long-range planning to include update of impact fees, area fees to specific infrastructure, and SEPA mitigation measures related to new development, e.g.; schools, traffic, parks, and fire. COMMUNITY TRANSPORTATION NETWORK Promote a highly functional multi-modal transportation system including, but not limited to: • Application of the adopted Transportation System Master Plan including development of policies, regulations, programs, and projects that provide for greater connectivity, strategic investment, mobility, multi -modal systems, accessibility, efficiency, and safety. COMMUNITY SAFETY Promote proactive approaches for the strategic investment of infrastructure, staffing, and equipment including, but not limited to: • Adoption and develop implementation strategies for Comprehensive Fire Master Plan aimed at maintaining the current Washington State Rating Bureau Class 3 community rating. • Collaboration with regional partners to influence strategies to reduce incidences of homeless by leveraging existing resources such as the newly implemented 0.1% mental health sales tax, use of resource navigator programs, and other efforts. • Development of an implementation strategy for the Comprehensive Police Master Plan to support future service levels of the department to assure sustainability, public safety, officer safety, crime control, and compliance with legislative mandates. ECONOMIC VITALITY Promote and encourage economic vitality including, but not limited to: • Implementation of the Comprehensive Land Use Plan through related actions including zoning code changes, phased sign code update, and development regulations and standards. • Completion of Area Master Plans and environmental analysis complementing the Comprehensive Land Use Plan such as Downtown and Broadmoor Master Plans. • Development of an Economic Development Plan, including revitalization efforts. COMMUNITY IDENTITY Identify opportunities to enhance community identity, cohesion, and image including, but not limited to: • Development of a Community Engagement Plan to evaluate strategies, technologies, and other opportunities to further inclusivity, community engagement, and inter-agency and constituent coordination efforts. • Support of the Arts and Culture Commission in promoting unity and the celebration of diversity through art and culture programs, recognition of significant events or occurrences, and participation/sponsorship of events within the community. Page 228 of 229 CALIDAD DE VIDA Promover una calidad de vida alta a través de programas de calidad, servicios, inversiones y reinversiones apropiadas en la infraestructura de la comunidad incluyendo, pero no limitado a: • Terminar el Plan de Transportación para promover más cohesión entre nuestras vecindades actuales y re-desarrolladas a través de elementos de diseño, p.ej. conectividad, transitabilidad, sostenibilidad estética, y espacios para reuniones comunitarias. • Terminar el Plan de los Parques, la Recreación, y los Espacios Vacíos y el desarrollo de una estrategia de implementación para mejorar tales servicios justamente a lo largo de la comunidad. • Terminar el Plan de Acción e Implementación de Viviendas con un enfoque en una variedad de viviendas para tratar las necesidades del aumento en la población. SOSTENIBIILIDAD FINANCIERA Mejorar la viabilidad a largo plazo, el valor, y los niveles de los servicios y los programas, incluyendo, pero no limitado a: • Adoptar las políticas y los estándares de inversión estratégica para asegurar consistencia en la planificación a largo plazo para incluir la actualización de las tarifas de impacto, las tarifas en áreas de infraestructura específica, y las medidas de mitigación SEPA relacionadas con el nuevo desarrollo, p.ej. escuelas, tráfico, parques, e incendios. RED DE TRANSPORTACION COMUNITARIA Promover un sistema de transportación multimodal en alta operación incluyendo, pero no limitado a: • Aplicar el Plan de Transportación que fue adoptado, incluyendo el desarrollo de las políticas, las reglas, los programas, y los proyectos que proporcionan más conectividad, inversión estratégica, movilidad, sistemas multimodales, accesibilidad, eficiencia, y seguridad. SEGURIDAD COMUNITARIA Promover métodos proactivos para la inversión estratégica en la infraestructura, el personal, y el equipo incluyendo, pero no limitado a: • Adoptar y desarrollar estrategias de implementación para el Plan Comprehensivo para Incendios. Con el propósito de mantener la clasificación comunitaria actual en la tercera Clase del Departamento de Clasificación del Estado de Washington. • Colaborar con socios regionales para influenciar estrategias que reduzcan los incidentes de personas sin hogar al hacer uso de los recursos actuales como el impuesto de ventas de 0.1% implementado recientemente para la salud mental, el uso de programas para navegar los recursos, y otros esfuerzos. • Desarrollar una estrategia de implementación para el Plan Comprehensivo de la Policía para apoyar los niveles futuros de servicio del departamento para asegurar la sostenibilidad, la seguridad pública, la seguridad de los policías, el control de crímenes, y el cumplimiento con los mandatos legislativos. VITALIDAD ECONOMICA Promover y fomentar vitalidad económica incluyendo, pero no limitado a: • Implementar el Plan Comprehensivo del Uso de Terreno a través de acciones relacionadas, incluyendo cambios de los códigos de zonificación, actualización en las etapas de los códigos de las señales, y el desarrollo de las reglas y los estándares. • Terminar los Planes de las Áreas y un análisis ambiental el cual complementa al plan integral de uso de la tierra como a los Planes del Centro y de Broadmoor. • Desarrollar un Plan de Desarrollo Económico, el cual incluya esfuerzos de revitalización. IDENTIDAD COMUNITARIA Identificar oportunidades para mejorar la identidad comunitaria, la cohesión, y la imagen incluyendo, pero no limitado a: • Desarrollar un Plan de Participación de la Comunidad para evaluar las estrategias, las tecnologías, y otras oportunidades para promover la inclusividad, la participación de la comunidad, y los esfuerzos interdepartamentales y de coordinación de los constituyentes. • Apoyar a la Comisión de las Artes y Cultura al promover la unidad y la celebración de la diversidad a través de programas de arte y cultura, reconocer eventos o acontecimientos significantes, y participar/patrocinar eventos dentro de la comunidad. Page 229 of 229