HomeMy WebLinkAbout2011.03.14 Council Workshop Packet AGENDA
PASCO CITY COUNCIL
Workshop Meeting 7:00 p.m. March l4,2011
1. CALL TO ORDER
2. ROLL CALL:
(a) Pledge of Allegiance.
3. VERBAL REPORTS FROM COUNCILMEMBERS:
4. ITEMS FOR DISCUSSION:
(a) Program Manager for Administration of Community Housing Improvement Program:
1. Agenda Report from Angela R. Pitman,Block Grant Administrator dated March 8,2011.
2. Kiemle&Hagood Company Statement of Qualifications.
3. Map of Target Neighborhoods.
4. Map of Target Census Tracts.
5. HOME Consortium Agreement.
(b) Water System Intertie:
1. Agenda Report from Gary Crutchfield, City Manager dated March 11,2011.
2. Memorandum from Public Works Director to City Manager dated March 10.
(c) Quasi Judicial Hearing Procedures:
1. Agenda Report from Rick White, Community & Economic Development Director dated
March 9,2011.
2. Proposed Ordinance.
(d) Audit Finding:
1. Agenda Report from Gary Crutchfield, City Manager dated March 11,2011.
2. Memo from Finance Manager to City Manager.
5. OTHER ITEMS FOR DISCUSSION:
(a)
(b)
(c)
6. EXECUTIVE SESSION:
(a)
(b)
(c)
7. ADJOURNMENT
REMINDERS:
1. 12:00 p.m., Monday, March 14, Pasco Red Lion — Pasco Chamber of Commerce Membership
Luncheon. ("Human Resource Essentials — What You Need to Know" presented by Sarah Perry,
Attorney at Law).
2. 4:00 p.m., Monday, March 14, Benton Franklin Council of Governments office — Hanford Area
Economic Investment Fund Committee Special Meeting. (COUNCILMEMBER AL YENNEY,
Rep.; SAUL MARTINEZ,Alt.)
3. 11:00 a.m., Tuesday, March 15, Holiday Inn Express, Pasco — TRIDEC 48`h Annual Meeting and
Awards Luncheon. (COUNCILMEMBER MIKE GARRISON)
4. 2:00 p.m., Wednesday, March 16, 3035 Rickenbacher Drive — Farmer's National Company, Open
House and Ribbon Cutting Ceremony. (COUNCILMEMBER BOB HOFFMANN)
5. 11:30 a.m., Friday, March 18, Sandberg Event Center — Benton-Franklin Council of Governments
Board Meeting. (COUNCILMEMBER AL YENNEY, Rep.;REBECCA FRANCIK,Alt.)
AGENDA REPORT
FOR: City Council '1r March 8, 2011
TO: Gary Crutchfic t anager Workshop Mtg.: 03/14/11
Rick White, RegularMtg.: 03/21/11
Community& 1#conomic Development Director F44
FROM: Angela R. Pitman, Block Grant Administrator
SUBJECT: Prog.rar.n Manager for Adinix.istration of Communit!�Housing,Improvexnent
Program for Neighborhood Revitalization Programs BGCA2011-004
I. REFERENCE(S):
A. Kiemle&Hagood Company Statement of Qualifications
B. Map of Target Neighborhoods
C. Map of Target Census Tracts
D. HOME Consortium Agreement
11. ACTION REQUESTED OF COUNCIL /STAFF RECOMMENDATIONS:
03/14/11: DISCUSSION
03/21111: MOTION: I move to approve the HOME Consortium Contract with
Kiemle & Hagood Company to administer the City's CHIP
program in an amount not to exceed $184,768 and authorize
the City Manager to sign the Agreement.
Ill. FISCAL IMPACT:
$184,768 Federal HOME funds.
IV. HISTORY AND FACTS BRIEF:
A. Pasco entered into a HOME Consortium Agreement with Richland and
Kennewick in 1995 making the City eligible for Federal HOME funds. In
September, 2011, this Agreement was extended to 2013. This consortium allows
the City to be eligible for federal HOME funds. The past two years the City has
received approximately$433,000 through the HOME Program.
B. Pasco's Community Housing Improvement Program (CHIP) affordable housing
components include down payment assistance, homeowner rehabilitation, rental
rehabilitation, and infill foreclosed property rehabilitation and new construction.
C. Affordable housing accomplishments under the last contract include new
construction and sale of three infill homes, down payment assistance for 23 first
time homebuyers, and four owner occupied homes rehabilitated for a total of 30
households assisted, exceeding the 25 housing units estimated.
D. As of today, the City has $743,766 available in HOME funds and program income
from 2008, 2009 and 2010. Under Federal regulations $410,845 of these funds
need to be under contract with a third party by April 1, 2011.
E. The administration of housing rehabilitation and down payment assistance
programs is staff intensive and complex requiring experienced housing
rehabilitation specialists, loan processors, compliance specialists, and
administrative staff to meet existing and emergent needs of the Pasco affordable
housing programs. Duties include:
4(a)
1) Development of program regulations in accordance with Federal
requirements;
2) Marketing the program to homeowners, contractors and lending institutions;
3) Certifying the incomes of program participants;
4) Inspecting properties, preparing plans and specifications for bid documents,
bidding out the jobs, and inspection of the work.
F. To assist the Block Grant Administrator, staff advertised for the assistance of a
qualified consultant to administer this program issuing a Request for
Qualifications on January 23, 2011 with a response deadline of February 77 2011.
[II. DISCUSSION;
A. Two formal corporate responses were received and evaluated for experience
establishing and administering housing acquisition, relocation, rehabilitation, and
infill construction programs, administering down payment assistance loan
programs, and knowledge of federal grant regulations and requirements for
CDBG, HOME and NSP funding sources. Kiemle & Hagood Company, the
current program manager, was deemed most qualified and invited to submit a
proposal.
B. The City contracted for HOME Program services with Kiemle & Hagood
Company in 2008, with a one year extension for work in process. In that time,
new programs have been established for down payment assistance, rental
rehabilitation and foreclosure mitigation. The attached contract was revised to
cover a three year period of performance.
C. Staff believes that Kiemle & Hagood Company is well qualified to perform this
work and would recommend that a contract for Program Administration of the
Community Housing Improvement Program (CHIP) affordable housing programs
be entered into for continued revitalization of the target neighborhoods and low-
income census tracts.
KIENEE & Reference "A"
HAGOOD Community Building
_�
C O M P A N Y Creating New Visions of Home & Neighborhood
RECEIVED
FE9 u ? 201?
CMMUN"'&CCONO
M1C OEVECOf-IVtEIVT
February 4, 2011
Pick White
City of Pasco
Community& Economic Development Director
525 North Third Avenue,
Pasco,Washington 99301
Dear Rick,
Kiemle & Hagood Company is very interested in providing program management sere*ices for
the City of Pasco's Community Housing Improvement Program. As the current program
manager, we have enjoyed working with you and your staff to create viable, efficient and
effective affordable housing opportunities for the residents of Pasco.
Kiemle & Hagood Company has fourteen years of total experience in managing federally
funded housing rehabilitation programs. We have an excellent team that implements our
programs with great humanity, efficiency and effectiveness.
Attached please find our statement of qualifications for managing Pasco's Community Housing
Improvement Program. We are looking forward to continuing our relationship with you. in
providing new and innovative program practices to facilitate the improvement of Pasco's
neighborhoods. Please let us know if we can provide any additional information.
Sincerely,
D HAG COMPANY
Shannon Meagher
Program Director
Professional Real Estate Services
Washington Mutual Financial Center ■ 601 West Main Aven.ie, Suite 400 ■ Spokane,Washington 99201-0674 s {509) 838-6541 Fax(509)458.4014
Kiemle & Hagood Company
601 West Main Avenue, Suite 400
Spokane, WA 99201
(509) 8386541
(509) 458-4014 (FAX)
www.khco.corn
RESPONSE TO THE CITY OF PASCO
COMMUNITY HOUSING IMPROVEMENT PROGRAM
REQUEST FOR QUALIFICATIONS FOR PROGRAM MANAGER
DUE; 2/7/2011
KiejnIt!&Ha
good Company Proposal Response to Pasco
Request for Qualifications for Program Manager Page I of 5
Kiemle & Hagood Company is pleased to provide this response to the City of Pasco's request
for a Summary of Qualifications as Program Manager of the Community Housing
Improvement Program. Kiemle & Hagood Company is known primarily as a commercial
real estate company based in Spokane, WA. Kiemle & Hagood Company manages and
develops both commercial and residential properties, and provides leasing, sales,
acquisition, and consulting services for a wide variety of clientele. Kiemle & Hagood
Company is the current Program Manager of Pasco's HOME funded Community Housing
Improvement Program (CHIP) and Neighborhood Stabilization Program (NSP) as well as
several City of Spokane federally funded housing programs: the Single Family Housing
Rehabilitation Program, the Roofs Only Repair and Replacement Program, the Rental
Rehabilitation Program and the Lead Safe Spokane Program. We are as proud of our
accomplishments and depth of experience in managing these programs as we are of our
more traditional real estate endeavors.
CORPQRATE ERQEU
Kiernie & Hagood Company is managed as a cohesive whole: this philosophy of
management is important as this management style includes the Community Building
Division, which would be responsible for implementing the City of Pasco's CHIP. The
Community Building Division currently manages the City of Pasco's CHIP and Spokane's
programs, including the Single Family Housing Rehabilitation Program, the Roofs Only
Repair and Replacement Program, the Lead Safe Spokane Program, and the Rental
Improvemcnt Program.
Our Management Team (under the ultimate guidance of our Owners, Tom Quigley, Larry
Soehren, and Gordon Hester) consists of the Directors of each of our key departments —
Community Building, Multi-Family, Accounting, Marketing as well as our Chief Financial
Officer (CFO) and Human Resources Director (HR). The Management Team meets
regularly to ensure the commonality of our corporate purposes, support and conduct. The
Management Team sets the policies and directions for the company. Our Management
Team as a whole brings this Proposal to you. We believe firmly in our ability to add value,
and to assure the continued success of the Programs.
Tom Quigley,President and CEO
Tom is not only the President and CEO of Kiemle & Hagood Company,but he is also the
Director of the Brokerage Division for Spokane's largest property management and
commercial real estate company.
Larry Soehren,Vice President and COO
Larry provides the ownership oversight and management to the Community Building
Division, orchestrating the Division's talented staff within the other divisions of Kiemle
& Hagood Company. Larry also oversees the Management Services Division of the
company, including commercial property and facilities management, multi-family
housing management, Friendly Parking Services, and community association
management.
Gordon Hester,Secretary/Treasurer
Gordon is the Director of Commercial Property Management and Leasing for Kiemle &
Hagood Company. Gordon oversees the regulatory compliance, safety planning, and
general operational issues in the Commercial Property Management Division, including
the Coeur d'Alene Branch in addition to the wholly owned Kiemle & Hagood subsidiary,
K&H Facility Services.
Kiemle&Hagood Con7pany Proposal Response to Pasco
Request for Qualirications for Program M eager Page 2 of
Shannon Meagher,Program Director
Shannon is the Program Director of the Community Building Division, which .manages
over $3 million dollars annually in housing loans and construction management for
Tow and moderate income property owners through federally funded, locality-
sponsored programs. She is responsible for the overall day-to-day management of the
Division as well as housing development and consulting at Kiemle & Hagood Company.
Shannon has more than 22 years experience in affordable housing development and
management.
Rebecca Greene,CFO/Controller
Rebecca is a CPA with in-depth accounting experience in the areas of cost accounting,
corporate consolidations, public accounting and auditing. Rebecca has a strong grasp
of the technical and specific requirements of property management accounting and
compliance. Rebecca's understanding and integration of the Community Building
Division's accounting and audit requirements has greatly facilitated the smooth
financial flow of both contractor payments and administrative billings to our clients.
Ellen Flanigan,Director of Human Resources and Office Manager
Ellen is our Director of Human Resources and her talents impact the entire breadth of
Kiennle &Hagood Company. Ellen is responsible for developing and maintaining a wide
variety of policies and procedures including personnel, training programs, safety,
hiring and administrative management. Ellen is also responsible for all of Kiemle &
Hagood Company's insurance administration and for the oversight of all support staff.
PROGRAM MANAGEMENT
The Community Building Division is extremely well-versed in the management of federally
funded housing rehabilitation programs including HOME, CDBG and NSP. We are both
familiar and comfortable with juggling the complexities of dealing with low and moderate
income homeowners, identifying construction needs, managing construction activities and
contractors, and administering federal funds within federal guidelines and regulations.
This expertise will be brought to bear on the City of Pasco's proposed programs. The
Community Building Division within Kiemle &Hagood consists of the following:
Division Director, Shannon Meagher
As the Director, Shannon is responsible for the implementation and oversight of all
Division activities including the City of Pasco's CHIP, the City of Spokane's Single Family
Housing Rehabilitation Program, the City of Spokane's Roofs Only Repair and Replacement
Program as well as the Lead Safe Spokane Program. She serves as the primary liaison with
the City of Pasco's Community and Economic Development Department and the HOME
Consortium. She tracks program loan expenditures and applicants by neighborhood
allocations, and establishes targets and monitoring performance against key program steps.
She also coordinates the design, implementation, and review of program policies in
compliance with HUD and local guidelines. Additionally she fosters, monitors and reviews
contractor participation, as well as directs marketing efforts, reporting compliance, and
facilitates resolution of customer service issues. Shannon also underwrites the vast
majority of the loans processed in the Community Building Division.
Kieliale&Hagood Company Proposal Response to Pasco
Request for Qualifications for hvgram Manager Page 3 of 5
Loan Coordinators
Kiemle &Hagood Company has two Loan Coordinators who determine applicant eligibility
by evaluating their eligibility year income, their stable monthly income and household
member and other qualifying facts. Additionally, they prepare all the loans for closing,
including all document preparation and coordination with the attorney's office. The Loan
Coordinators regularly communicate with a wide variety of people, from the owners to the
title companies and with a myriad of other agencies to verify information. Our Loan
Coordinators are Kim Floyd and Tiffany Capiral — together they have over 19 years
experience in determining program eligibility for federally funded housing programs.
Field Agents
Kiemle & Hagood Company's Community Building Division currently has three Field
Agents with identical core duties. The Field Agents are primarily responsible for facilitating
the rehabilitation process for housing rehabilitation participants from initial survey to
project close-out. Essentially, the Field Agent is a project or construction manager. In the
course of their work, the Field Agents:
• Perform home inspections and initial work surveys,
• Generate Work Orders and cost estimates,
• Coordinate with the lead testing agency and explain lead-based paint safety
hazards,
• Coordinate and complete contract signings,
Establish project timeframes and monitor for performance within the
timeframes,
Approve progress payments,
Prepare and authorize change orders,and
Close-out projects in accordance with program policies and procedures.
Field Agents, in addition to the duties outlined above, must communicate very effectively,
including mediating the conflicts that can arise whenever a contractor is present and
working in someone's home. The Field Agents are constantly reviewing the construction
management systems, including: Program construction and material standards, inspection
procedures, work specifications, cost estimating, contractor recruitment and qualifying,
bidding, contract awards, construction monitoring, dispute resolution, compliance
procedures and others. Our three Field Agents are Lori Troyer, Todd Clark and Charles
Williams who have a combined affordable housing experience of more than IS years.
Administration and Compliance
The department also has a Compliance Specialist, Nicole Wittwer, with 1l years of
affordable housing regulatory compliance experience. With the assistance of our
departmental Administrative Assistant, Marnie Taylor, we are able to ensure excellent
reporting and record-keeping.
EXPERIENCE WITH MANAGING FEDERALLY FUNDED PROGRAMS
Kiemle & Hagood Company is the current Program Manager of the City of Pasco's
Community Housing Improvement Program (CI-IIF) and :Neighborhood Stabilization
Program (NSP) and Spokane's Single Family Housing Rehabilitation Program, the Roofs
Only Repair and Replacement Program, Rental Improvement Program, and the Lead Safe
Spokane Program. We have fourteen (14) years experience,in managing federally-funded,
owner-occupied housing rehabilitation programs. We are particularly proud of our role in
implementing these Community Development programs. We see ourselves as true partners
of the cities we work with.
Klemle&Hagood Company Proposal Response to Pasco
Request for Qualifications for Program Manager Page 4 of
Spokane Experience
By the end of our 136, program year of Program Manager experience (September 30,
2010) for the City of Spokane, Kiemle & Hagood Company will have processed, contracted
and closed out over $26,500,000 in CDBG and HOME funded rehabilitation loans for over
1400 families. At the end of each program year, we provide a program audit for the City of
Spokane. Through all of this, Kiemle & Hagood Company has had clean audits and
monitorings in full compliance with all applicable federal requirements of the City of •
Spokane's housing rehabilitation programs.
Pasco Experience
Our experience with the City of Pasco has already been quite varied. We have completed
96 down paymentassistance loans to first-time homebuyers in the City of Pasco, including
down payment assistance to the three homebuyers purchasing the three in-fill new
constructions built in the 51h & Ainsworth neighborhood. The Down Payment Assistance
portion of CHIP was a new learning experience for both Kiemlc & Hagood Company and
the City of Pasco and has evolved into an effective program.
Kiemle & Hagood Company also provided the project management for the three in-fig new
constructions in the 5", & Ainsworth Neighborhood, and have completed two owner--
occupied rehabilitations under CHIP as well. We have also created a new contractor pool
of 4 qualified contractors for the CHIP program, prepared program procedures for a rental
rehabilitation program within CHIP, prepared bid packages and cost estimates for three
NSPrehabilitadons,and two homes to be moved and riehabilitated as well.
Our original proposal and contract with the Tri-Cities Consortium covered the expenditure
of an anticipated $455,000 with a management fee not to exceed $104,347, thus far we
have expended over $650,000 in HOME funds (404,191.87 in in-fill new construction,
189,452 in down payment assistance and 64,500 in closed out rehabs) for a program
management fee of 87,800 to date. We have not yet had an audit of Pasco's CHIP.
Kiemle &Hagood Company is constantly striving to improve our delivery of services within
federal regulations and program guidelines. We have never rested quietly, accepting that
"things have always been done that way." Program staff is continually looking for ways to
improve the programs we administer in areas such as protecting the .City's position, _
providing better quality services,and improving contractor and homeowner relations.
Kiemle & Hagood Company has had as a core business line, for over 30 years, the
management of HUD subsidized housing for the elderly, families, and those with special
needs. We devote considerable resources and staff to the creation, development and
management of multi-family and special needs housing funded by various federal, state
and local grants and programs. The management of these properties also allows Kiemle &
Hagood Company to actively follow our mission to provide service to the community. We
manage approximately 900 units which operate specifically under HUD Sections 202, 236,
221(d)3, Section 8 and 811 Assistance Programs as well as several tax credit properties.
In summary, Kiemle & Hagood Company has successfully managed federally funded
housing programs for over 30 years. This experience in managing housing rehabilitation
programs for 14 years, in addition to the other federally funded housing programs (for
over 30 years) demonstrates the organization's qualifications and capability to manage
federally funded programs.
Kiemle&Hagood Company Proposal Response to Pasco
Request for Qualifications for Program Manager Page 5 of
i
,
2011 Proposal for
Pasco CHIP
t
i
DIRECT PROGRAM COSTS:
Employee Costs 66,377
Supplies, Postage&Other 6,500
Marketing&Advertising 4,000
Printing 4,000 j
Professional/Other Vendors 13,000 I
Communication/Auto 17,000
Lead Testing 20,125
B&O Tax 2,700 '
Closing Costs 19,800
Total Direct Program Costs 145,502
INDIRECT PROGRAM COSTS(OVERHEAD):
Rent 3,118
Accounting Dept 2,046
General Depreciation 943
Supplies 1,397
Insurance 1,416
Human Resources 1,992
Telephone 311
Property Tax 44
Total Indirect Costs 11,267
MANAGEMENTFEE
Closed Loan Fee 28,000
Total Fee _—T 28,000
TOTAL PROGRAM COSTS; 1 4,766
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Reference "D"
TRI-CITIES HOME CONSORTIUM
RECIPIENT CONTRACT AGREEMENT
This HOME Program Recipient Agreement, hereinafter called "Agreement", has been
made and entered into as of the 21-st day of March, 2011 , between the Tri-Cities HOME
Consortium consisting of the participating jurisdictions of the Cities of Richland,
Kennewick and Pasco, hereinafter called "Consortium", and Kiemle & Ha�c ood
Company, whose address is 601 W Main Avenue, Suite 406, Spokane, Washington
99201-0674, hereinafter called "Recipient" as authorized by Title II, Section 216 and
217 of the National Affordable Housing Act of 1990, and with 24 CFR Part 92, also
known as the HOME Investment Partnerships (HOME) Program.
Recitals
WHEREAS, the Federal Government has made funds available to Consortium pursuant
to the HOME Program to increase the number of families, especially low income
families, served with decent, safe, sanitary and affordable housing and to expand the
long term supply of affordable housing; and
WHEREAS, the Consortium seeks the maximum use of such funds consistent with the
HOME Program CFDA 14.239, the objectives of which are to provide incentives to
develop and support affordable rental housing and home ownership affordability through
the acquisition, reconstruction, moderate or substantial rehabilitation or new
construction of affordable housing; and
WHEREAS, the HOME Program authorizes contracts with community housing
development organizations, (CHDO), private developers, non-profit organizations, and
public agencies to carry out the objectives identified above; and
WHEREAS, in the case of CHDO the HOME Program also authorizes the use of
program funds to provide technical assistance and site control loans in the early stages
of project development, to provide loans to cover pre-construction project costs that
Consortium determines to be customary and reasonable, and to provide education and
organizational support.
NOW, THEREFORE, the parties, for and in consideration of the promises and mutual
obligations set forth below, agree as provided for in this agreement.
Section 1 — Definitions
HOME f=unds — the total amount of HOME Program dollars being provided by the
Consortium to the Recipient under this Agreement.
HOME Assisted — Those units in the Project, which were partially or totally rehabilitated,
constructed, or otherwise, assisted with the use of HOME Funds.
Project — the activity and result for which HOME Funds are being provided under this
Agreement.
1
Regulations — the requirements in 24 CFR Part 92 which govern the HOME Program
and the use of HOME Funds, and all related and applicable OMB Circulars, Codes,
Regulations and requirements.
Section 2 — The Project
HOME Funds are being made available by the Consortium to the Recipient for the
purpose of promoting affordable housing to very low, low and moderate-income
families, through the acquisition, construction and or rehabilitation of non-luxury housing
with suitable amenities, including site improvements, conversion, demolition, and other
expenses such as financing costs, hereinafter called the "Project".
Section 3 -- Sources and Uses of Funds
The total amount of HOME Program dollars, hereinafter called "HOME Funds", to be
allocated for City of Pasco CHIP Program Management is not to exceed $184,768
based on direct and indirect grogram management and administrative actual approved
costs including 5 percent (5%) of HOME program loans for the CHIP Program closet
out during the length of this agreement. Administrative costs are limited to a maximum
of $30,000 and usage in full of administration funds will not relieve the Recipient of
completing all projects as described herein. HOME Funds to be allocated are
consortium Fiscal Year (Jan-Dec) 2008 through 2012 funds. The limit of financial
exposure for the Consortium is specifically $184,768.
Project Description: Recipient will provide CHIP Program oversight ppdd
management to assure the rehabilitation of an estimated 9 owner occupied housing and
3 rental units per project specifications and HOME program regulations, assistance to
first time homebuvers to purchase 28 housing units, and acquisition/rehabilitation or
new construction of 6 infill units for a combined total of 46 housing units. All wow is to
be completed in accordance with 24 CFR Part 92 which govern the HOME Investment
Partnership Program, and the City of Pasco CHIP Program manual.
Program Benchmarks:
December 31, 2011 Project closeout on 16 Units
December 31, 2012 Project closeout on 14 Units
December 31, 2013 Project closeout on 14 Units
March 31, 2014 Project closeout on 2 Units
Program Year Rehab Rental Infill DPA
2011 1 1 2 12
2012 4 1 2 7
2013 4 1 2 7
2014 2
Totals 9 3 6 28
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The Agreement will be effective upon signing by all parties, and authorization of
environmental review and clearance, and all project work will be completed no later than
March 31, 2014, Failure to complete the project as agreed upon or comply with HOME
Program and other applicable local, state or federal requirements can result in a breach
of this agreement and cause any HOME funds drawn or incurred to become
immediately due and repayable to the City of Richland, lead entity for the Tri-Cities
HOME Consortium.
Scope of Work: The Recipient will act as project coordinator, and will market the
homes in accordance with applicable HOME rules and regulations to households whose
gross annual household income is at or below 80 percent of median under Income
guidelines established annually by the U.S. Department of Housing and Urban
Development (HUD) for the Tri-Cities area, Income documentation will be in a form
consistent with HOME requirements as stated in the HUD handbook "Technical Guide
for Determining Income and Allowances under the HOME Program" using Part 5
determinations for eligibility. Income verification of the household must be re-
examined to determine continued eligibility for the HOME Program if the closing of the
property or recordation of the Deed occurs later than six (6) months from initial income
verification. Recipient will be responsible for ensuring projects are completed per
specifications, and
The Recipient will lend funds to individuals in an amount sufficient to make the homes
affordable. The City of Pasco, as a participating jurisdiction of the Tri-Cities HOME
Consortium, will be named as mortgagee on the properties secured by a recorded Deed
and Note as required by 24 CFR 92.254 for a period not less than the period of
affordability for homebuyer activities or as identified in the Pasco CHIP Manual for
rehabilitation activities, The HOME funds shall be no lower in priority than second
position on the property unless prior written authorization is granted by the participating
jurisdiction or the Consortium. The property must be used as the household's primary
residence during the term of the HOME Program loan for both homebuyer and
homeowner rehabilitation projects.
Project beneficiary information pertaining to household size, income levels, racial/ethnic
characteristics, disability status, household composition, Female Head of Household
composition, and any other information required by HUD or as determined beneficial
information to the participating jurisdiction, will be collected and documented in an
individual and cumulative manner.
Homeownership projects must meet the minimum per-unit subsidy amount at 92.205(c),
and the maximum per unit subsidy amount of 92.250(a). The sources and uses of all
other funds that might be contemplated for a project must be reported to the Consortium
prior to the commitment of funds and the commencement of work so that a subsidy
layering review per 92.250(b) can be completed.
Upon completion of the project, all files will be delivered to the City of Pasco. The
participating jurisdiction and the Consortium will monitor each housing unit for principal
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residency as provided at 24 CFR 92.254(a)(3) upon completion of the project and
during the applicable period of affordability.
Section 4— Displacement/Relocation Requirement
Any project that might displace a person, family, business, non-profit organization, or
farm must be approved by the participating jurisdiction (City) and the Consortium prior
to any final commitment of HOME funds for the project, or of entering into any type of
agreement, whether verbal or written with another party. Failure to receive prior
approval may cause the forfeiture of any and all sums under this agreement by the
Recipient.
Section 5— Environmental Review
The effects of each activity related to the Project must be assessed in accordance with
the provisions of the National Environmental Policy Act of 1969 and the related
authorities in 24 CFR Parts 50 and 58, and as detailed in 24 CFR Part 92, § 92.352.
The Recipient must, prior to undertaking any choice limiting or physical activity with
respect to the Project, regardless of whether such activity is to be funded by the HOME
Funds, comply to the extent applicable, with the regulations found at 24 CFR Part 58.
All applicable environmental review and clearance requirements as provided in 24 CFR
58.5 must be completed by the lead consortium member and approved by the U.S.
Department of Housing and Urban Development prior to any commitment by the
Recipient of HOME dollars. The Recipient will abide by any special conditions,
procedures and requirements of the environmental review and will advise the lead entity
of any proposed change in the scope of the project or any change in environmental
conditions in accordance with 24 CFR 58.71(b).
The Recipient may not use any of the HOME Funds for acquisition or construction in
identified special flood hazard areas unless the Project is subject to the mandatory
purchase of flood insurance as required by Section 102(x) of the Flood Disaster
Protection Act of 1973.
Failure to comply with this provision will cause an immediate cancellation of this
Agreement and forfeiture of the HOME funds.
Section 6 — Disbursement of Funds
The Recipient may request funds under this Agreement only when they are needed for
payment of specific allowable costs described herein, and only in amounts needed to
pay such costs. The Recipient shall be reimbursed for eligible project costs after review
and approval by the participating jurisdiction of invoices, statements, and other billings,
progress reports, and property inspection if applicable. Upon prior approval, the
Consortium may pay a vendor or contractor directly. Pay requests that are incomplete
will be returned for further documentation. Upon receipt of the completed pay request
with appropriate documentation, payments will be issued within 45 days. Payments not
made within 45 days after receipt of a complete pay request will be subject to a 12% per
annum late fee. In the event of a dispute regarding a pay request interest shall not
accrue until final resolution of the dispute pursuant to Section 40.
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Section 7 - Relationship
The relationship of the Recipient to the Consortium shall be that of an independent
agency. Nothing herein shall be deemed to create the relationship of
employer/employee or principal/agent between the parties.
Section 8 - Modifications and Amendments
This agreement can only be amended in writing signed by the Consortium, the
participating jurisdiction and the Recipient. All modifications and amendments shall not
take effect until specifically approved by the Consortium in writing.
Section 9 - Waivers
No conditions or provisions of this agreement can be waived unless approved by the
Consortium in writing.
Section 10 — Assignment
The Recipient shall not assign any interest in this Agreement and shall not transfer any
interest in this Agreement to any party (whether by assignment or novation) without
prior written consent of the Consortium.
Section 11 - Severability
If any provision of this Agreement, or portion thereof is held invalid by any court of
rightful jurisdiction, the remainder of this Agreement shall not be affected providing the
remainder continues to conform to applicable Federal and State law(s) and regulations
and can be given effect without the invalid provision.
Section 12 - Insurance and Bonds
The Recipient and its employees, volunteers, contractors or consultants shall carry
throughout the life of this Agreement and shall document same for all parties, General
Liability Insurance, Comprehensive Automobile Liability Insurance and other such
coverage as may be appropriate or required by State or Federal law, for the services to
be performed. This insurance shall include the following:
A. Professional Legal Liability: Recipient shall maintain Professional Legal Liability
or Professional Errors and Omissions coverage appropriate to the Recipient's
profession and shall be written subject to limits of not less than $1 million per
claim and $1 million policy aggregate limit. The coverage shall apply to liability
for a professional error, act or omission arising out of the scope of the work for
this agreement. Coverage shall not exclude bodily injury, hazards, or property
damage related to the work in this agreement, including testing, monitoring,
measuring operations, or laboratory analysis where such services are rendered
as part of the agreement,
B. Worker's Compensation (Industrial Insurance): Workers' compensation
insurance as required by Title 51 RCW shall be maintained and Recipient shall
provide evidence of coverage if so required.
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C. Commercial General Liability: Commercial General Liability coverage shall be
written on ISO occurrence form CG 00 01 and shall cover liability arising from
premises, operations, independent contractors, personal injury and advertising
injury. The insurance shall include the Consortium, its members, officers,
officials, employees and agents with respect to performance of services, and
shall contain no special limitations on the scope of protection afforded as an
additional insured. If the liability coverage is written as a claims made policy,
then evidence of an extended reporting period or "tail" coverage for a three-year
period after project completion must be purchased, or otherwise maintained for
the three-year period. If this agreement is over $50,000 then Employers Liability
Coverage shall also be maintained. Coverage shall include limits of not less than
$1 million per occurrence, and $2 million aggregate.
D. Automobile Liability: Business Automobile Liability insurance with a minimum
combined limit no less than $1 million per accident for bodily injury and property
damage shall be maintained. Coverage shall include owned, hired, leased, and
non-owned automobiles. Coverage shall be written on Insurance Services Office
(ISO) form CA 00 01 or a substitute form providing equivalent liability coverage.
If deemed necessary, the policy shall be endorsed to provide contractual liability
coverage.
Insurance is to be placed with insurers with a current A.M. best rating of not less than
ANIL Recipient shall furnish the Consortium with original certificates and a copy of the
amendatory endorsements, including but not necessarily limited to the additional
insured endorsement, evidencing the insurance requirements prior to the
commencement of the work. The insurance policies are to contain, or be endorsed to
contain, the following provisions for Automobile Liability, Professional Liability and
Commercial General Liability insurance:
The insurance coverage shall be primary as respect to any insurance or self-
insurance covering the Consortium, its members, elected and appointed officers,
officials, employees and agents. Any insurance, self-insurance, or insurance
pool coverage maintained by the Consortium and its members shall be excess of
the Recipient's insurance and shall not contribute with it. The insurance shall not
be cancelled by any party, except after 30 days prior written notice by certified
mail, return receipt requested, has been given to the Consortium.
Properties improved, acquired or rehabilitated with HOME funds will be insured until
such time that the final disposition of the property occurs. Copies of such documents
will be forwarded to the lead entity of the Consortium prior to the start of work for the
project.
Bonds — If the HOME project is for construction and the cost exceeds $100,000, the
Recipient shall verify Performance and Payment Bond as security for the faithful
performance and payment of all contractor obligations. The Bond shall be in amounts
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at least equal to the Contract Price, and on such forms and with such Sureties as are
licensed to conduct business in the State of Washington and are named in the current
list of "Surety Companies Acceptable of Federal Bonds" as published in the Federal
Register by the Audit Staff Bureau of Accounts, U.S. Treasury Department. The
performance bond shall be held by the Consortium for one year from the date of
completion. If the surety on any Bonds furnished is adjudged, bankrupt, or becomes
insolvent or its right to do business is terminated, the Recipient shall, within 5 days
thereafter, substitute another Bond which shall be acceptable to the Consortium and
participating jurisdiction.
Section 13 — Procurement Standards
The Recipient will establish procurement procedures to ensure that materials and
services are obtained in a cost-effective manner. When procuring for services to be
provided under this agreement, the Recipient shall comply at a minimum with the
nonprofit procurement standards at 24 CFR 84.40-48. In addition, it is understood that
any Recipient that can be considered to be a religious organization shall abide by all
portions of 24 CFR 92.257.
Section 14 — HOME Program Requirements
HOME Funds are made available to Consortium and subsequently to Recipient as
authorized by 24 CFR Part 92, referenced and other applicable documentation,
hereinafter called the "Regulations". Recipient agrees to comply with all requirements
of the Regulations. Should anything in this Agreement be construed to conflict with
Regulations, it is the Regulations, which shall prevail.
Section 15 — Match Requirement
The HOME program requires a non-federally funded 25 percent match. The Recipient
and/or participating jurisdiction is required to document sources of match, both cash and
in kind and submit this information to the lead entity of the Consortium. The Recipient
❑ will ® will not provide the 25 percent match. The Recipient will provide 0%
match and total match is due at project completion. While this provision is not required,
the Recipient is encouraged to consider and identify to the participating jurisdiction all
HOME match possibilities that may become available.
Section 16 — Period of Compliance/Period of Affordability
The HOME-assisted housing must meet the affordability requirements established at 24
CFR 92.254(4) for owner occupied units, for a period not less than specified in the
following table:
Homeownership Assistance Minimum Period of Affordability
HOME amount per unit In Years
Under $15,000 5
$15,000 to $40,000 10
Over $40,000 or rehabilitation 15
involving refinancing
Rehabilitation without acquisition Must qualify as affordable housing at time
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of assistance and after rehab value cannot
exceed 95% of median area purchase
price, must be principal residence, and
ownership must be fee simple.
New construction or acquisition of 20 years
newly constructed rental housing
This period of compliance is called the Period of Affordability for the Project, beginning
after the Project is completed and occupied by a very low, low or moderate-income
household, and without regard to the term of the loan or the transfer of ownership,
except as noted below. The terms of affordability must be conveyed to the owner.
Section 17 — Termination of Period of Affordability
The applicability of the Regulations may be terminated upon foreclosure or transfer in
lieu of foreclosure. The applicability of the Regulations shall be revived according to the
original terms if during the original Period of Affordability, the owner of record before the
foreclosure, or deed in lieu of foreclosure, or any entity that includes the former owner
or those with whom the former owner has or had family or business ties, obtains an
ownership interest in the project or property.
Section 18 — Recapture Requirements
To ensure affordability, the project(s) will adhere to recapture requirements and
Recipient must impose recapture requirements with a sharing of net proceeds to comply
with the standards set forth in 24 CFR Part 92, § 92.254(a)(5)(ii)(A)(3) for acquisition
projects, or § 92.254(b)(2) for owner occupied rehabilitation, or 92.252(e) for rental
housing. Language ensuring the funds during the period of affordability for recapture
requirements with a sharing of net proceeds must be included in all contract documents
and in a separate written agreement (not limited to legal documents such as deeds and
promissory notes) with the household. Recapture requirements shall be structured to be
the entire amount of original HOME assistance subject to a sharing of net proceeds
from the subsequent sale of the property. Funds that are returned by the Recipient
and/or the participating jurisdiction from the sale or transfer of title of the property by the
homeowner, or if the property is no longer used as their primary residence during the
period of affordability as required by 24 CFR 92.254(a)(4)-(5) must be immediately
returned to the Consortium
Repayment includes any HOME investment that reduced the initial purchase price from
fair market value to an affordable price (Direct Subsidy), principal and interest balance
(but excludes the amount between the initial cost of producing the unit and the market
value of the property). Upon sale or transfer of the HOME assisted property, or if the
home is not used as the primary residence, the Consortium will recoup principal,
interest, and if applicable contingent interest on a pro-rata basis as shared net
proceeds. The amount recaptured will not exceed the total net proceeds available.
Contingent interest will be reduced according to the amount of time the homeowner has
owned and occupied the subject property, as measured against the specific contract
terms of the loan, and the period of affordability. If there are not sufficient net proceeds
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to recover the total amount of the HOME investment or a reduced amount, plus enable
the owner to recover the amount of closing costs and any approved
structural/permanent equipment improvements made to the property, the net proceeds
will be divided proportionally between the owner and the Consortium as set forth in the
following mathematical formula:
HOME investment X Net Proceeds = HOME amount to be recaptured
HOME investment + homeowner investment
Homeowner investment X Net Proceeds = amount to homeowner
HOME investment+ homeowner investment
Section 19 — Property Standards
Upon completion, the housing assisted with HOME Funds must meet the City of Pasco
HOME Program Standards per the CHIP Manual, and as described in 24 CFR Part 92,
§92.251(x)(1) for rehabilitation, and §92.251(a)(2) for acquisition; accessibility
standards at 24 CFR 92.251(a)(3), and lead based paint requirements as found in 24
CFR 92.355 and 24 CFR Part 35. The housing must also meet all State of Washington
and local standards, zoning, and ordinances. Newly constructed housing must meet the
current edition of the Model Energy Code published by the Council of American Building
Officials.
Section 20 — Non-Discrimination and Equal Opportunity
The Recipient agrees that they will utilize and make available the HOME Funds in
conformity with the non-discrimination and equal opportunity requirements set out in the
HUD regulations in the National Housing Affordability Act. These regulations include:
1. The requirements of the Fair Housing Act, 42 U.S.C. 3601-20, and implementing
regulations at 24 CFR Part 100; Executive Order 11063 (Equal Opportunity in
Housing) as amended by Executive Order 12259 and implementing regulations
at 24 CFR 107; and Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d, and
implementing regulations at 24 CFR Part 1 (Nondiscrimination in Federally
Assisted Programs);
2. The prohibitions against discrimination on the basis of age under the Age
Discrimination Act of 1975 (42 U.S.C. 6101-07) and the regulations at 24 CFR
146;
3. The prohibitions against discrimination on the basis of handicap under Section
504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing
regulations at 24 CFR, Part 8;
4. The requirements of the Executive Order 11246 (Equal Employment Opportunity)
and the regulations issued under the Order at 41 CFR Chapter 60;
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5. The requirements of Section 3 of the Housing and Urban Development Act of
1968, 12 U.S.C. 1702u (Employment Opportunities for Business and Lower
Income Persons in Connection with Assisted Projects); and
6. The requirements of Executive Orders 11625 and 12432 regarding Minority
Business Enterprise, and 12138 regarding women's Business Enterprise, and
regulations S.85.36(e) of Section 281 of the National Housing Affordability Act.
7. The requirements of Washington State Law as found at RCW 49.60.
Section 21 — Affirmative Marketing, MBEfWBE Records and Reports
Affirmative marketing steps will be taken to provide information and otherwise attract
eligible persons in the housing market area to the available housing without regard to
race, color, national origin, sex, religion, familial status or disability. Affirmative
marketing procedures must include requirements detailed in 24 CFR Part 92, §92.351.
A detailed affirmative marketing plan must be submitted to the lead entity of the Tri-
Cities HOME Consortium at the start of the project.
The Recipient will document and provide data on the outreach steps taken to assure
that minority business (MBE) and women's business enterprises (WBE) have an equal
opportunity to obtain or compete for contracts and subcontracts as sources of supplies,
equipment, construction, and services. Recipient will report to the lead entity of the
Consortium the affirmative actions taken and the contracts or subcontracts awarded to
MBE and WBE and Section 3 businesses for the project.
Reports will be provided in accordance with 92.508(3) that give a description of each
project assisted, including the location, form and term of assistance
Section 22 — Labor Standards — Prevailing Wage Determination
The Recipient will ensure that Federal Labor Standards Provisions under the Davis
Bacon Act and/or State Prevailing Wage Rates will be included and implemented in all
contract and sub-contract construction documents, if applicable, and the Recipient will
be responsible for and carry out all duties as established. The Recipient agrees to
comply with the decision regarding applicability of Labor Standards as determined by
the State of Washington Department of Labor and/or the U.S. Department of Housing
and Urban Development Labor Division.
® It has been determined by the U.S. Department of Housing and Urban
Development, Office of Labor Relations that there ❑ will ® will not be
applicability of Davis-Bacon requirements to this project for the Recipient.
® It has been determined by the State of Washington Department of Labor that
there ❑ will ® will not be applicability of State Prevailing Wage Requirements
to this project for the Recipient.
Section 23— Lead Based Paint
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The Recipient must comply with the U.S. Department of Housing and Urban
Development Lead Based Paint Regulations (24 CFR Part 35) issued pursuant to the
Lead Based Paint Poisoning Prevention Act (42 U.S.C. Sections 4821, et.seq.) requiring
prohibition of the use of lead based paint whenever HOME funds are used directly or
indirectly for construction, rehabilitation, or modernization of residential structures;
elimination of immediate lead based paint hazards in residential structures; and
notification of the hazards of lead based paint poisoning to purchasers; tenants, and/or
owners of residential structures constructed prior to 1978. The Recipient will be
responsible for hiring an independent Environmental Protection Agency (EPA) or State
of Washington certified Lead Based Paint risk assessor, inspector or clearance
examiner for rehabilitation work. The Recipient will assure that contractors and sub-
contractors comply with all applicable guidelines and regulations for the elimination of
lead based paint hazards as established under OSHA Lead in Construction Industry
Standard, 29 CFR 1926.62; EPA Lead Standard 40 CFR 745; and Title X of the 1992
Housing and Community Development Act, as amended, and established by HUD, 24
CFR 35, and 24 CFR 92.355.
Section 24 — Conflict of Interest
Generally, no employee, agent, member, consultant, officer or elected or appointed
official of the members in the Consortium or Recipient who exercises or has exercised
any functions or responsibilities with respect to any activities that are in any way
connected with the decision to provide the HOME Funds may obtain a financial interest,
reside in, or benefit from those activities, or have an interest in any contract, subcontract
or agreement with respect thereto, or the proceeds thereunder, either for themselves or
those with whom they have family or business ties, during their tenure or for one year
thereafter as stated in 24 CFR 92,356, and the Recipient must take appropriate steps to
assure compliance.
Section 25 — Records
Records must be kept by the Recipient and be made available to the Consortium that
demonstrates compliance with this Agreement. Records must be maintained for at least
five years after the project completion date, except for documents imposing
recapturefresale restrictions which must be retained for five years after the Period of
Affordability, specified in Section 6 above, has expired, or as any of the following apply:
1) Records that are the subject of audit findings must be retained for three years after
such findings have been resolved,
2) Records for non-expendable property (as defined in OMB Circular A-110 for non-
profit organizations) shall be retained for three years after its final disposition.
Project pre-construction, construction, and project management records must be kept
which demonstrates compliance with this Agreement and related regulations. Financial
management records must be kept and identify the source and application of funds for
the Project, in accordance with 24 CFR Part 85 and OMB Circulars A-110 and A-133 for
non-profit agencies.
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The Recipient agrees to provide any and all information as may be requested by the
Consortium or participating jurisdiction to document compliance with the HOME
Program and related laws, rules, regulations and policies. The Recipient understands
that the participating jurisdictions are subject to public records disclosure pursuant to
RCW 42.56 and agrees to timely provide documents to a jurisdiction as required by law.
The Recipient shall indemnify, defend and keep harmless a participating jurisdiction for
any liability arising out of the Recipients failure to produce public records to the
jurisdiction.
Section 26 — Monitoring
At least annually, or more often if deemed necessary, the Consortium will monitor the
performance of the Recipient to assure compliance with the requirements of this
Agreement. The review may include on-site inspections and review of all records to
determine compliance with this Agreement through the contract period. The Recipient
agrees to provide any and all information to the Consortium to assist in meeting
administrative and monitoring requirements.
Any duly authorized representative of the U.S. Department of Housing and Urban
Development, authorized federal or state agent, or the Consortium shall at all
reasonable times have access to and the right to inspect, copy, audit, and examine all
books, records and other documents relating directly to the Recipient's receipt and
disbursement of the HOME Funds, as well as access to the project site(s) and all
project records.
Section 27 — Financial Responsibility
The Recipient agrees that it is financially responsible (liable) for any audit exception
which occurs due to its negligence or failure to comply with the terms of this Agreement.
Section 28 — Timeliness of Expenditures
Time is of the essence in this agreement. HOME funds unspent as of the 31st day of
March. 2014 will be recaptured by the Tri-Cities HOME Consortium for redistribution by
the representative city to another qualified applicant, unless written extension approval
prior to the date of expiration is made between all signatory members of this agreement.
Section 29 — Status Reports
The recipient will be required to provide status reports to the City of Richland, lead entity
for the Tri-Cities HOME Consortium, on the project or program being funded. The
reports shall be submitted within 15 days of the end of each calendar year quarter (by
April 15, July 15, October 15 and January 15) and shall continue until the project or
program has been completed. The status reports shall include a description of the
activities undertaken during the prior quarter, reporting on the goals achieved, the
assistance provided to clients in the program, the number of homes constructed, and
the number of families assisted. At the completion of the project a final report shall be
provided indicating the accomplishments realized, the strengths and weaknesses of the
project, total number of houses built, purchased, or rehabilitated, total number of
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persons assisted, etc. Final record retention shall be the property of the participating
jurisdiction and shall be delivered to same.
Section 30 — Indemnification
The Recipient will save and keep harmless, indemnify, and defend the Consortium and
its individual representative members against any and all liability, claims and costs of
whatsoever kind and nature for injury to or death of any person or persons and for loss
or damage to any property occurring in connection with or in any way incident to or
arising out of activities undertaken under this agreement.
Section 31 — Corrective and Remedial Action
Recipient will immediately correct or cause to be immediately corrected, any and all
actions or performance deficiencies in the project as may be determined by the
participating jurisdiction, the lead entity for the Tri-Cities HOME Consortium, or the U.S.
Department of Housing and Urban Development (HUD). Failure to correct such actions
or performance deficiencies within 30 days from written notification may result in
suspending HOME funds for the above described project, the cancellation of this
contract, and the reprogramming of HOME funds to other eligible activities.
Section 32 — Attorney's Fees-Costs
In the event of a lawsuit between the parties to this agreement, the prevailing party shall
be entitled to recover judgment against the other party for reasonable attorney's fees
and other costs either at trial or on appeal. If either party exercises any non-judicial
right or remedy to enforce such party's rights hereunder, it shall be a condition for the
cure of the default that the defaulting party will pay the non-defaulting party's
reasonable attorney's fees incurred and all reasonable costs. Failure to pay such costs
and reasonable attorney's fees shall constitute an event of default under this
agreement.
Section 33 —Venue and Law
Venue for any action under this contract shall be in Franklin County, Washington. This
agreement shall be governed by the laws of the State of Washington.
Section 34-- Cancellation of Agreement
This agreement may be cancelled for cause or not for cause by providing written 30
days notice by certified mail, return receipt requested, to the other signatory members of
this agreement. HOME funds not committed to specific projects as of the cancellation
date will be relinquished to the Consortium for redistribution to other qualified projects.
Section 35 —Written Agreement
In accordance with the provisions of 24 CFR 92.504(a)(5) when assistance is provided
to a homebuyer, homeowner, or a tenant receiving tenant-based rental or security
deposit assistance, a written agreement separate from deeds, promissory notes, or
other security instruments must be entered into that includes at a minimum:
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For homebuyers the agreement must conform to the requirements in 92.254(a), the
value of the property, principal residence, lease-purchase, if applicable, and the
recapture provisions of sharing net proceeds. The agreement must specify the amount
of HOME funds, the term and form of assistance whether forgiveable grant or loan, the
use of the funds for down payment, closing costs, rehabilitation, etc. and the date by
which the housing must be acquired.
For homeowners, the written agreement must conform to the requirements in 92.254(b)
and specify the amount, term, and form of HOME assistance, rehabilitation work to be
undertaken, roles and responsibilities, date for completion, and property standards to be
met.
For tenants, the rental assistance contract or the security deposit must conform to the
requirements at 92.209 and 92.253_
Section 36 - Modifications and Amendments
All modifications and amendments to this Agreement, shall be in writing; such
modification or amendment shall not take effect until specifically approved by the
Consortium in writing and signed by all parties to this agreement.
Section 37 - Debarment and Suspension
The Recipient may not award or permit an award of a contract to any party which is
debarred, suspended or ineligible to participate in a Federal program. The Recipient
certifies that it is not debarred, suspended or ineligible to participate in a Federal
program. The Recipient will submit to the City, the names of contractors and any
subcontractors prior to signing contracts, to ensure compliance with 24 CFR Part 24,
"Debarment and Suspension". The Recipient will also assure that language pertaining to
debarred, suspended or ineligibility to participate is inserted in all contract agreements.
If during the time of this agreement the Recipient is debarred, suspended or ineligible to
participate in a Federal program, the Consortium may terminate this agreement for
cause.
Section 38 — Financial Management and Audits
The Recipient agrees to adhere to the generally accepted accounting principles and
procedures issued by the American Institute of Certified Public Accountants, and utilize
adequate internal controls and maintain necessary source documentation for all costs
incurred.
The Recipient will also comply with auditing standards issued by the Comptroller
General of the United States. All recipients, whether a direct recipient of this
agreement, or a sub-recipient receiving federal funds through a pass-through entity, that
expend $500,000 or more in a year in Federal awards shall have a single audit
conducted for that year in accordance with the provision of OMB A-133, Subpart B.
When a Recipient expends Federal awards under only one Federal program, excluding
Research and Development performed by a non-federal entity, and the program's laws,
regulations, or grant agreements do not require a financial statement audit, the recipient
14
may elect to have a program-specific audit conducted in accordance with Subpart B,
Section 235. A program-specific audit may not be elected for Research and
Development unless all of the Federal awards expended were received from the same
Federal agency, or the same Federal agency and the same pass-through entity, and
that Federal agency, or pass-through entity approves in advance a program-specific
audit. The audit must be conducted within 60 days of completion of this agreement.
Non-Federal entities that expend less than $500,000 a year in Federal awards are
exempt from Federal audit requirements for that year, except this does not limit the
authorlty of Federal agencies, including HUD, Inspectors General, or General
Accounting Office to conduct or arrange for additional audits. All records will be made
available for review or audit by appropriate local, state and federal entities.
Section 39 — Title Insurance
Title Insurance shall be purchased on each activity in an amount equal to the
anticipated HOME assistance and will name the City of Pasco as a beneficiary.
Section 40 -- Dispute Resolution
The Consortium, participating jurisdiction and the Recipient agree to negotiate in good
faith for a period of 30 days from the date of notice of all disputes between them prior to
exercising their rights under this agreement or under law. All disputes not resolved by
negotiation between the parties may be arbitrated only by mutual agreement of the
parties. If not mutually agreed to resolve the claim by arbitration, the claim will be
resolved by legal action. Arbitration of all claims will be in accordance with the RCW
7.04A and the mandatory rules of arbitration with venue being placed in Pasco,
Washington. Arbitration shall include an award to the prevailing party of its reasonable
attorney fees and costs against the other
15
RECIPIENT: CONSORTIUM:
Kiemle & Hagood Company, Inc. Tri-Cities HOME Consortium
601 W Main Avenue, Suite 400 P.O. Box 190, MS 19
Spokane, WA 99201-0674 Richland, WA 99352
Larry Soehren, Vice President/COO Cynthia D. Johnson, City Manager
Kiemle & Hagood Company, Inc. City of Richland
Date Date
PARTICIPATING JURISDICTION: APPROVED AS TO FORM:
Gary Crutchfield, City Manager Leland B Kerr, City Attorney
City of Pasco City of Pasco
Date
APPROVED AS TO FORM:
Thomas O. Lampson, City Attorney
City of Richland
16
AGENDA REPORT
TO: City Council March 11, 2011
FROM: Gary Crutchfi y Manager Workshop Mtg.: 3/14/11
SUBJECT: Water System intertie
I. REFERENCE(S):
1. Memorandum from Public Works Director to City Manager dated March 10
II. ACTION REQUESTED OF COUNCIL/ STAFF RECOMMENDATIONS:
3/14: Direction
I11. FISCAL. IMPACT:
IV. HISTORY AND FAC'T'S BRIEF:
A) The City has spent the past 18 months preparing a comprehensive water system plan
as required by the state of Washington, to be able to operate a public water system. A
part of that plan includes a list of potential projects intended to improve the water
supply system. One of the projects included in the proposed plan was the often-
discussed "intertie" with Kennewick (a pipe across the Cable bridge connecting the
two systems which would allow either side of the river to get water from the other
side in the event of an emergency). The cost of the intertie presented significant
concern to Council and staff was directed to double-check the need and value of such
a project. In addition, staff was asked to evaluate an option such as using a 16" fire
hose in lieu of a permanent pipe installation.
B) The Public Works Director has provided pertinent information for Council
consideration in reviewing this matter again, in the memorandum attached as
reference #1.
V. DISCUSSION:
A) While the potential need for an intertie with Kennewick (or Richland, for that matter)
is not high, the city should evaluate the potential with the idea in mind that the
intertie is "an insurance policy" in effect. Some insurance policies simply are not
worth their cost, while many others are.
B) Sonic prior discussion suggested that if a shutdown of the Pasco water plant occurred
during the summer months (when use is highest), the city could simply turn off water
to the food processors (which use nearly 20% of production during peak summer
use). While the city has some general protection from lawsuits for failure to provide
water, that protection assumes the city takes reasonable and equitable actions to
manage its water system; cutting off one group of users to preserve higher use to
others would likely be frowned upon by the court. Generally, rationing of water
would need to be done on a reasonable and equitable basis.
C) The notion of using a 16" fire hose in lieu of a 16" pipe may seem logical on the
surface, but as outlined in the Public Works Director's memorandum, it is simply not
feasible. That conclusion is both from a practical standpoint (based on all of the
physical considerations one would need to address in trying to use such an option)
and from a legal/public health standpoint (the health department clearly would deny
the city's ability to use this option, as it would jeopardize public health).
D) Given the significance of cost for the intertie project but the potential for Future
inclusion, stafl'suggests the intertie project be moved to the "future" phase of capital
projects (not to be planned for in the next five years). That would keep the idea in the
context of the comprehensive system plan, without indicating any near-term
commitment or inclination to undertake the project. This also provides another
comprehensive water system plan review (five years from now) to further consider
the idea of the intertie. The option, of course, is to remove it from the plan now and
depend on reintroduction of that question in the next system plan review in about five
years. in order to prepare the final document, one option or the other needs to be
selected by Council. 4(b)
CITY
P
OR
MEMORANDUM
Public Works Department
Administration
To: Gary Crutchfield, City Manager
From: Ahmad Qayoumi, P.E., Public Works Director
Date: March 10,2011
Re: City Council Questions about Cable Bridge Intertie
At the February 7 City Council meeting, during the Water Master Plan public hearing, the Council
asked questions on justification and reasons behind the recommended water supply connection with
the City of Kennewick through the Cable Bridge. This memorandum will attempt to respond to
Councilmember's questions and suggested option, based on staff findings and feasibility.
• System Description: There are two water treatment plants and three water storage tanks:
o Water Treatment Plants:
■ The Butterfield Water Treatment Plant (WTP) with a maximum capacity of
producing 25 Million Gallons per Day(MGD). The plant was built in 1937 and is
an older plant that produces majority of the City's water needs
■ The West Pasco WTP has a maximum capacity of producing 6 MGD at this time.
There are plans for future expansion of that Plant to 18 MGD. Expansion of this
plant will be several years away because a new and larger water intake is required
to reed the larger plant.
o There are three water storage reservoirs in the water system.
• The Riverview Heights Reservoir has a capacity of 10.0 Million Gallons (MG).
• The Broadmoor Boulevard Reservoir has a capacity of 1.0 MG.
• The Road 68 composite Tank has a capacity of 2.5 MG. (There is the old Road 68
Tank that serves the Irrigation System now and has a total capacity of 2.7 MG, but
only the top third of the tank was usable when it was part of the Water System or
about 1.0 MG.)
• The Power Grid. The Butterfield WTP has the ability of being served by two ditferent
substations. It would require a manual switch from the existing substation to the second
substation. I talked to Bob Wyatt of the Franklin PUD about the electrical system. Infonnation he
sent to me shows that the"average service availability index" for the PUD is 99.9897%. In 2010,
the "average length of an outage" lasted was 127 minutes.
• Food Processors: They utilize approximately 5 MGD, based on City's 2010 data. Collectively,
they produce approximately$2.5 to $3.5 Million of product daily,
• Possible situations that would cause a shutdown of the water treatment plants. This is not an all
inclusive list, but examples of what may happen.
• Power failure is always a possibility for either plant. Another possible shutdown situation
would be fire at the plants.
• Fire at multiple power substations.
• An animal shorting out multiple power substations.
• A fuel spill in the Columbia River upstream of the intakes to the plants (neither plant
could be used).
o The plants are vulnerable to terrorism acts. An example would be throwing material over
the fence into the Butterfield Water Treatment Plant.
o The plant is old and subject to structural failure due to a natural disaster. The repair of the
water plant could take several weeks or months
• the City of Kennewick has two sources of water for their domestic water system.
o The primary source is from two Ranney Wells, near the Columbia River, with a capacity
of 15 MGD.
o The other source is from the Columbia River through their water treatment plant with a
capacity of 15 MGD.
• The Water Comprehensive System Plan does State, "In the event of an outage City wide, the City
staff would restrict water use and the system storage reservoirs would allow minimum required
water use." The Plan also identifies that the "Vulnerability Assessment" and "Emergency
Response Plan" will be on file at both treatment plants. "Both of these documents are not
considered as Public Documents due to the sensitive nature of the document contents as they
affect security and operations of the Water Utility,"
• It was sul;gested that in an emergency event the City could utilize a 16-inch lire hose across the
bridge. T7ie folloMng are staff findings on availability, feasibility and needed logistics of a 16-
inch fire hose to supply the City of Pasco water from Kennewick
• Based on staff research, the largest fire hose available in the market is five-inches in
diameter. Fire hoses are not intended for domestic water use.
• However, if lire hoses are used to supply water to the Pasco system the following steps,
permits and logistics are required:
■ ']here needs to be 5 to 8 (depending on available water flow and pressure), 5-inch
fire hoses to provide the water supply that is equivalent to the 16-inch water main.
The water supply needed will be 10 Million Gallons/Day. This will require one
lane of traffic closure on the bridge.
■ In order to setup the fire hose and pumping apparatus will require.
• All available reserve fire pumper trucks from all of the Tri-Cities fire
departments.
• All available reserve fire hoses frorn all of the 'Fri-Cities fire departments.
• This task will require a full tune mechanic on duty to make sure the
pumpers are working properly. Other logistics such as fuel and number of
pump operators.
• After all of the efforts, according to the Fire Chief, only 24 hours of the
water supply in this manner can be sustained and operated. Keep in mind
to setup the fire hose system can take three to four days
• To accommodate the 5 to 8 fire Dose connections there need to be 5 to 8
receiving fire hydrants at the City Pasco, Further engineering analysis
needs to be done on location and other hydraulic challenges with this type
of connection. There will be a need for road closure wherever, the
connections are made,
• Similarly on the City of Kennewick side we need to have 5 to 8 fire
hydrant connections. Further engineering analysis needs to be done on
location and other hydraulic challenges with this type of connection. There
will be a need for road closure wherever, the connections are made.
• Based an our conversation with the Department of Health on March
8,2011, under no circumstance would the), allow fire hoses to be used
to transport water for potable water(will not meet health standards).
AGENDA REPORT
FOR: City Counc' ? March 9, 2011
F
TO: Gary Crutch f' '1 Cit Manager Workshop Mtg.: 3/14/11
FROM: Rick White,
Community& Economic Development Director v
SUBJECT: Quasi Judicial Hearing procedures
1. REFERENCE(S):
1. Proposed Ordinance
11. ACTION REQUESTED OF COUNCIL/STAFF RECOMNIENDAT1ONS:
3/14: DISCUSSION:
Ill. FISCAL IMPACT:
NOTE
IN". HISTORY AND FACTS BRIEF:
A. The rules governing the quasi-judicial hearing process for consideration of rezones,
subdivisions, special permits, etc., largely emanate from state court cases over the past 30
years and have generally grown more restrictive (more "judicial"). The fundamental
notion is that the hearing body (Planning Commission or City Council) must be free of
inappropriate influence in forming its decision, just as a judge or jury would be. One
fundamental rule is that the City Council, when conducting a"closed record hearing" can
consider only the evidence contained in the"record"of the Planning Commission hearing
and recommendation.
B. Previous Council discussion indicates that use of the video recordings of the Planning
Commission hearing would augment Council's understanding of the"record." It has also
been suggested that Planning Commissioners and City Council members be permitted to
view the site of an application(rezone, subdivision or special permit).
C. At the February 28, 2011 Council Workshop, there was consensus to provide for a
photographic exhibit of the site of an application for inclusion in the record, and to add a
provision for a City controlled video recording of the hearing to be included in the record
for those applications heard by Council in a closed record appeal. However, one of the
original reasons for examining this issue was to explore the ability for Council to view
the Planning Commission hearings as broadcast on the City's cable channel.
D. The proposed ordinance reflects the discussion that occurred at the February 28, 2011
Workshop, which provides for a video recording to Council of hearings only upon
appeal, and does not provide for at-will viewing of broadcast hearings. A photographic
exhibit of each site will also be contained in each report on land use issues. Staff wishes
to confirm this direction.
V. DISCUSSION:
A. A photographic exhibit of the site and surroundings will insure that decision makers are
getting the same information about a site and avoid the probability of "ex pane"
communications.
B, If Council were permitted to view broadcasts on the City's cable channel, it is probable
that individual Council cnembers would view some land use cases in their entirety and
some would not—thereby providing a different record for Council as a whole.
C. The majority of recommendations forwarded to Council through the Planning
Commission do not involve an appeal and very few actions that are not appealed result in
a closed record hearing by Council. in those cases that involve an appeal, Council would
benefit from the ability to review the entire video record of the hearing. Staff will also
develop a standard method of referencing the video in the record so there is no
conflict/failure on that point.
D. After confirming Council direction on this issue, staff will bring forward the
appropriately worded ordinance for Council action.
4(c)
ORDINANCE NO.
AN ORDINANCE of the City of Pasco, Washington, Amending
Section 4.02.030 "Definitions" and Section 4.02.100 "Permit Procedures"
Permitting Video Record of Proceedings
WHEREAS, as a service to the public, the City has initiated the unedited video recording
and broadcast of City meetings, including meetings of the City of Pasco Planning Commission
and the City of Pasco Code Enforcement Board; and
WHEREAS, the video recordings of these proceedings are broadcasted to the public and
retained as an accurate public record of the proceedings; and
WHEREAS, the City Council, from time to time, sits in a quasi-judicial capacity of
hearing closed record appeals of hearings held before both the City of Pasco Planning;
Commission and the City of Pasco Code Enforcement Board; and
WHEREAS, the City Council recognizes that such technology provides an accurate and
more engaging method of preserving the record, including the ability to view and judge the
demeanor of the witnesses, thereby providing the Council a better opportunity to accurately
perceive the proceedings; and
WHEREAS, the use of a record, supplemented by video recording of the proceedings
benefits the citizens who have matters pending in such. proceedings by providing a better record,
and therefore, contributing to a better result; and
WHEREAS, with the introduction of the video record as a part of the official record of
proceedings, negates the video record from constituting an ex parte communication, NOW,
THEREFORE,
THE CITY COLTCIL OF THE CITY OF PASCO, WASHINGTON, DO ORDAIN
AS FOLLOWS:
Section 1. That Section 4.02.030 entitled "Definitions" of the Pasco Municipal Code,
shall be and hereby is amended and shall read as follow:
4,02.030 DEFINITIONS. Unless the context clearly requires otherwise, the
definitions in this section apply throughout this Title.
(1) "Closed record appeal" means an administrative appeal on the record following
an open record hearing on a project permit application when the appeal is on the record with no
or limited new evidence or information allowed to be submitted and only appeal argument
allowed.
(2) "Director" means the Director of Community and Economic Development unless
another department or agency is in charge of the project permit in which case it refers to the chief
administrative officer of that department or agency.
(3) "Open record hearing" means a hearing, conducted by a single hearing body or
officer that creates the record through testimony and submission of evidence and information.
An open record hearing may be held prior to a decision on a project permit to be known
as an "open record predecision hearing." An open record hearing may be held on an appeal, to be
known as an "open appeal hearing," if no open record predecision has been held on the project
permit.
(4) "Project pen-nit" or "project permit application" means any land use or
environmental permit or license required from the City for a project action, including but not
limited to subdivisions, planned unit developments, conditional uses, shoreline substantial
development permits, permits or approvals required by critical area ordinances, site-specific
rezones authorized by a comprehensive plan or subarea, plan, but excluding the adoption of
amendment of a comprehensive plan, subarea plan, or development regulations except as
otherwise specifically included in this subsection.
(5) "Public meeting" means an informal meeting, hearing, workshop, or other public
gathering of people to obtain comments from the public or other agencies on a proposed project
permit prior to a decision. A public meeting may include, but is not limited to, a design review of
architectural control board meeting, a special review district or community council meeting, or a
scoping meeting on a draft environmental impact statement. A public meeting does not include
an open record hearing. The proceedings at a public meeting may be recorded and a report or
recomltnendation may be included in the local government's project permit application file.
(6) "Record" means the memorialization of testimony, evidence and other
communication submitted or created during a hearing and obtained through unedited audio,
video or other lawful means of recordation. (Ord. 3151 Sec. 1, 1996).
Section 2. That Section 4.02.100 entitled "Permit Procedures" of the Pasco
Municipal Code shall be and hereby is amended and shall read as follows:
4.02.100 PERMIT PROCEDURES.
(1) All project pern-tits and project permit applications, except zone changes, plats,
street vacations, and other legislative decisions, shall be processed and reviewed in the following
manner, upon receipt of a completed application:
(a) For an application requiring legislative action or which is illegal, the
application shall be denied or processed in accord with subsection(2).
Ordinance Amending Sections 4.02.030 and 4.02.100
Page 2
(b) For applications which involve more than one permit, the City will prepare
a temporary schedule for review by all interested agencies, departments, and the
applicant. The schedule will be prepared during the application completion determination
in accord with Section 4.02.060.
(c) Depending upon the scope of the project, the City will schedule necessary
public meetings to coordinate the permit process and gather information following
appropriate notification as provided in 4.02.090.
(d) Unless otherwise required, no open record hearing will be held unless
there is a bona fide objection to some portion of the permit or from some determination
made during the course of the permit processing. When required, only one open record
hearing will be held. The open record hearing will be before the officer or body having
jurisdiction over the matter in dispute or over the matter requiring the open record
hearing. Tf the matter disputed or for which an open record hearing is required falls within
the jurisdiction of more than one department or agency, a joint hearing will be held if
practical.
(e) A decision or joint decision if possible, shall be issued and notice given
thereof, including the time for appeal and the person or body to whom the appeal must be
made, Unless another time is provided, an appeal must be filed within ten days of the
decision. The longest appeal period following a joint hearing controls if there are multiple
appeal periods.
(f) The body or bodies with appellant jurisdiction shall hold a joint closed
record appeal. An open record appeal may be held for matters for which no open record
hearing has previously been held. The decision of the person or bodies hearing the appeal
may be joint or separate, Every effort shall be made in the event of separate decisions to
ensure that they are issued simultaneously. Any review of the decision or decisions must
be made to the superior court within 21 days.
(g) In the event that no appellant body is designated for a matter, the platter
shall be heard by the Hearing Examiner.
(2) In the event any hearing, quasi-Judicial hearing, or apl)eal that is conducted before
the Pasco City Council and the Council member is not able to attend the hearing or r appeal, said
Council member may still vote on the matter so Iony, as the Council member affirms on the
record that they have had adequate opportunity to review the record, including an unedited video
record of the proceeding, and having reviewed the entire record, believes he or she may vote on
the matter with the same level of confidence and understanding as if he or she had in fact been in
attendance at the quasi-judicial hearing or appeal. A Council inember mgy view the video record
of the proceeding which is subiect to a closed record appeal if the video record is viewed in its
entirety, and is placed in the record that the video record was unedited.
Ordinance Amending Sections 4.02.030 and 4,02.100
Page 3
(23) if the decision on an application must be made by the Pasco City Council, the
application will norinally be denied until legislative approval has been obtained. Except for
comprehensive plan amendments which may never be processed other than as part of the annual
review, an applicant may request combined processing in accord with subsection (1) of this
section.
(34) The actual costs of any hearing or appeal not otherwise required will be borne by
the person requesting the review or objecting to a decision. Security for the costs must be posted
prior to the setting or notice of hearing or appeal. The failure to post security is a waiver of any
objection.
Section 3. This Ordinance shall take full force and effect five (5) days after its
approval, passage and publication as required by law.
PASSED by the City Council of the City of Pasco, Washington, and approved as
provided by law this day of , 2011,
Matt Watkins, Mayor
ATTEST: APPROVED AS TO FORM;
Debbie Clark, City Clerk Leland B. Kerr, City Attorney
Ordinance Amending Sections 4.02.030 and 4.02.100
Page 4
AGENDA REPORT
TO: City Council March 11, 2011
FROM: Gary Crutch ti � Manager Workshop Mtg.: 3/14/11
SUBJECT: Audit Finding
1. REFE1tENCE(S):
I. Memo from Finance Manager to City Manager
II. ACTION REQUESTED OF COUNCIL/ STAFF RECOMMENDATIONS:
3/14: Direction
Ill. FISCAL IMPACT:
See below
IV. HISTORY AND FACTS BRIEF:
A) In 2007, staff presented to City Council the fact that the stormwater fund was in a
deficit position and offered two solutions. One solution was to raise the stormwater
rate to cover the full cost; the other solution was to require a contribution from the
sewer fund approximating the annual shortfall, as the sewer fund revenues were
growing faster than necessary to cover its costs, the utilities (water, sewer,
stormwater, etc) are a "combined utility" and the objective of both the sewer and
stormwater funds were to clean up water before it enters the environment. On the
basis of staff recommendations, City Council determined to require the annual
contribution from the sewer fund to the stormwater fund, thus solving the cash flow
problem in the stormwater fund without requiring an increase in the monthly
stormwater rate,
13) In the 2009 audit (completed in January 2011), the state auditor's office determined
that the city could not require the contribution from the sewer fund without
sufficient demonstration of equal benefit to the sewer fund in exchange for the
annual contribution. Staff concluded that the general benefit cannot be
demonstrated sufficiently to satisfy the auditor's office; thus, the commitment was
made to restore the subject funds to the sewer fiend from the stormwater fund.
C) The shortfall in the stormwater account approximates $300,000 annually (the
amount of annual sewer contribution); to offset that with new stormwater revenue
will require a rate increase of $1,20/month (the current rate of$1.80/month would
increase to $3.00/month). To repay the past sewer contributions would require
another rate adjustment of at least SO-cents/month (assuming a 10-year repayment
term) or larger amount for a faster payback period.
V. DISCUSSION:
A) Elimination of the sewer contribution to the stormwater account will not only
require an increase in the stormwater rate, it will also permit an offsetting reduction
of the sewer rate. If enacted simultaneously, most residential rate payers would
realize a zero net change on their combined utility bill. The exception will be those
customers paying a stormwater fee but not connected to sewer.
B) The Finance Manager intends to complete a formal rate analysis this summer and
make formal recommendation of rate adjustments for effect January 2012. The
formal process would allow a more comprehensive evaluation of rate needs (capital
projects, operations, etc.) while folding in the stormwater repayment to sewer
required to follow through on the auditor's directive.
C) Staff recommends Council implement a $1.20/month increase in stormwater rate
and $1,20/month decrease in sewer rate, effective April 1. Staff will then follow
through with the rate analysis necessary to make final adjustments for effect in
2012.
4(d)
i Finance Department
�IiLr w,,�
525 N. 3'.d Avenue, Pasco, WA 99301
TO: Gary Crutchfield, City Manager
FROM: Dunyele Mason, Financial Services Manager rw��
CC: Rick Terway, A&CS Director
RE: 2009 Compliance Audit Finding—Sewer subsidy of storm water costs
Per your request 1 am sending a memo to you with a copy to Rick regarding the 2009 Compliance
Audit finding. A copy of the finding issued by the State Auditor's Office is attached for your reference.
The city's audit response was that we will come up with a financial plan to repay the subsidy along
with interest to the sewer customers. Please note, based on preliminary discussion with the auditors,
the 2010 transfer listed in the audit finding was cancelled so the total principal repayment is
$1,178,000. This summer Finance can analyze the financial conditions of the storm water utility and
provide rate recommendation options for council using the assumption that new rates would go into
effect January 1, 2012. This information could then be used in the 2012 budget process.
Background
Essentially,the finding indicates that sever utility customers are different than storm water customers
and that one customer base is not allowed to support a different customer base. Rates for different
customer classes are calculated and assessed based on raising enough revenue to cover the cost of
delivering a specific set.of services to the customer. Thus a customer paying for sewer service cannot
be charged costs related to providing storm water services.
The sewer customers subsidized the storm water customers in 2007, 2008 and 2009. The total amount
of subsidy was$1,178,000. The city's audit response was that we will come up with a financial plan to
repay the subsidy along with interest to the sewer customers. The city is not required to repay the total
in one year as long as the storm water customers pay interest on the unpaid amount owing. The interest
rate is set based on the city's cost of borrowing.
The storm water customers will experience a two-fold impact: 1) the cost of repaying the past subsidy
and 2) the loss of the future scheduled subsidies which was used in calculating their current monthly
storm water rate, These two factors will require a rate increase in order for storm water customers to
provide sufficient revenues to cover their cost of service. The continued implementation of storm water
regulations along with storm water capital expansion needs (to keep up with city growth)are two more
factors to consider in determining an updated storm water rate. All of these factors will be considered
in Finance's rate models developed later this year.
Schedule of Audit Findings and Responses
City of Pasco
Franklin County
January 10,.2091
9. 'The City is subsidizing stormwater operations with transfers from the
Sewer Fund.
Background
We found the City transferred money from the Sewer Fund to the Stormwater Fund.
State law requires cities to deposit sewer fees in a sewer fund and restricts their use to
sewer-related activities. Cities may not use them to subsidize stormwater operations.
In July 2008, the City contracted with a consulting firm to do a utility rate study. The
contractor's report recommended the City increase stormwater utility rates to keep that
fund operating in the black. The City did not do this. During the audit, City staff stated
because the stormwater utility assists the sewer utility in avoiding water contamination,
the sewer utility should pay to support the stormwater utility. The City could not provide
documentation to support how it reached this conclusion.
Description of Condition
The City transferred $650,000 to the Stormwater Fund from the Sewer Fund on
December 31, 2007, It said this amount covered eight years of activities that benefitted
the Sewer Utility. The City transferred $264,000 in both 2008 and 2009. By the end of
2010, it will have transferred $284,000 from the Sewer Fund to the Stormwater Fund,
Total transfers were:
2007 Funds transferred $650,000
2008 Funds transferred $264,000 1
2009 Funds transferred $264,0017.
2010 Finds transferred $284WQ No
Total $1,462,000 .
Cause of Condition
The City believed the Stormwater Fund was providing a benefit to the Sewer Fund, In
addition, the City believec since it classified its utility system as a "combined utility" for
legal and financing purposes, funds generated by the water or sewer accounts could be
used interchangeably.
Washington State Auditor's Office
5
Effect of Condition
Public resources restricted for sewer operations are subsidizing stormwater operations,
totaling $1,462,QOC to date, Although the City uses all utility revenue to support utility
operations utility rates may not be representative of cost of operations.
Recommendation
We recommend the City follow state law governing the use of restricted resources and
ensure future transactions document the purpose and value one fund is providing
another before the transfers occur.
We further recommend the City repay the Sewer Water Fund $1,462,000 in unsupported
transfers made to date, plus interest.
City's Response
The city accepts the Auditors recommendation and will create a financial plan for the
storm water business segment to repay the sewer business segment for the identified
transfers, The financial plan will be presented to the city council for its approval in early
2011.
Auditor's Remarks
We appreciate the City's commitment to resolve this finding and thank the City for its
cooperation and assistance during the audit. We will review the corrective action taken
during our next regular audit.
Applicable Laws and Regulations
RCW 43.09.200, Local government accounting — Uniform system of accounting, states:
The state auditor shat! formulate, prescribe, and install a system of
accounting and reporting for all local governments, which shall be uniform
for every public institution, and every public office, and every public
account of the same class. The system shall exhibit true accounts and
detailed statements of funds collected, received, and expended for
account of the public for any purpose whatever, and by all public officers,
employees, or other persons. The accounts shall show the receipt, use,
and disposition of all public property, and the income, if any, derived
therefrom; all sources of public income, and the amounts due and
received from each source; all receipts, vouchers, and other documents
kept, or required to be kept, necessary to isolate and prove the validity of
every transaction; all statements and reports made or required to be
made, for the internal administration of the office to which they pertain;
and all reports published or required to be published, for the information
of the people regarding any and all details of the financial administration
of public affairs.
Washingfon State Auditor's Office
6
RCW 43.09,210, Local government accounting — Separate accounts for each fund or
activity— Exemption for agency surplus personal property, states:
Separate accounts shall be kept for every appropriation or fund of a
taxing or legislative body showing date and manner of each payment
made therefrom, the name, address, and vocation of each person,
organization, corporation, or association to whom paid, and for what
purpose paid. Separate accounts shall be kept for each department,'
public improvement, undertaking, institution, and public service industry
under the jurisdiction of every taxing body, All service rendered by, or
property transferred from, one department, ' public improvement,
undertaking, institution; or public service industry to another, shall be paid
for at its true and full value by the department, public improvement,
undertaking, institution, or public service industry receiving the same, and
no department, public improvement, undertaking, institution, or public
service industry shall benefit in any financial manner whatever by an
appropriation or fund made for the support of another. All unexpended
balances of appropriations shall be transferred to the fund from which
appropriated, whenever the account with an appropriation is closed.
Washington state Auditor's office
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