city council retreat · • the 2019-2024 forecast reflects the substantial progress the city has...

City Council Retreat

February 23, 2018

Agenda

Schedule Topic

8:30 – 9:00 Welcome/Goals for the Day

Icebreaker

9:00 – 9:30 2017 Report on Progress & current

initiatives

9:30 – 10:30 Economic Outlook briefing

10:30 – 10:45 Break

10:45 – 12:00 2019-2024 Financial Forecast

12:00-12:30 Lunch/Break

2

Agenda (cont’d)

Schedule Topic

12:30 – 2:15 Vancouver Strong

Progress to date

Community Survey Results

2:15 – 2:30 Break

2:30 – 3:30 Vancouver Strong (cont’d)

Interim recommendations

3:30 – 4:30 Preliminary 2019-2020 Budget Framework

4:30 – 5:00 Wrap up/next steps

3

Outcomes for the Day

• Establish shared understanding of

– 2017 Progress and current initiatives

– Economic outlook

– 6 year financial forecast

4


• Vancouver Strong

– Progress check

– Scope and scale

• Projects

• Programs

• Policies

– Environmental conditions check

– Phased recommendations

– Next steps

5


• Review and confirm preliminary 2019-

2020 budget framework

6

Icebreaker/Warm-up

2017 Progress | Current Initiatives

• Ongoing Implementation of Council policy

initiatives

• New items within the biennium

• 2017-18 Budget implementation

• Strategic Plan as framework

• Prior council actions with ongoing

demands are in green

8

9


Safe & Welcoming

Prosperous Vibrant

9


A more Safe & Welcoming Vancouver

• Infrastructure and Facilities

– Capital projects ~ $140 + million across all

funds

• Utilities

– Water, sewer, drainage funds

– System reinvestment

• General capital

– Community centers

– Fire Stations 1 & 2 replacement

– PW Operations Center redevelopment

10


• Streets & Transportation

– Streets – adopted 2015, ramp up through

2022

• 18th Street

• SE 1st Street

• 137th Avenue

• Mill Plain

• Pavement Management


11



• Streets & Transportation

– Westside mobility strategy – adopted 2016 |

implementation ongoing

– Complete Streets policy – adopted 2017 |

implementation underway

– Transportation System Plan update – data gathering

underway | plan projected 2020

– Mill Plain BRT Line Planning & Implementation

– I – 5 bridge replacement

12



• Police Resourcing – Adopted 2017 | ramp up through 2021

– Records Management System (RMS) Replacement

• Fire & EMS – Standard of Cover

– Ambulance contract extension

– Dynamic rescue unit deployment

– Prevention – Business Inspections & Project Homesafe

– Station 11 – Fire District #5 partnership

13



• Emergency Planning & Management Program – capacity reestablished 2017 | program development underway

• Affordable Housing – Policy program established 2016 | work evolving

– Housing Fund established 2017 | program deployment through 2023

• Homelessness – Day center – established 2016 | relocation planned

2018 • Grand Boulevard Site visioning

– Enforcement approach & needs

14


A more Vibrant Vancouver

• Lodging tax grants reestablished 2016,

implementation ongoing

• Arts, Culture & Heritage Plan under

development (projected adoption Q2 2018)

• Complete the Waterfront Park (Q3 2018)

• Ongoing park improvements/turf management

15


A more Prosperous Vancouver

• Subarea Implementation/Redevelopment

– Downtown

• Waterfront | Terminal 1

• Vancouvercenter

• Library Square

• Block 10

• Parking

• Business Improvement District feasibility

16



• Subarea Implementation/Redevelopment

– Fourth Plain Forward

– Lower Grand Employment Area

– Riverview Gateway

– Section 30

– Columbia Tech Center

– 112th Avenue

17



• The Heights Subarea Plan | Tower Mall

redevelopment

• Schools – Vancouver and Evergreen bonds (>$1

billion)

• General development pipeline

– Commercial | industrial | office

– 4,000 + multi-family units

• Annexation??

18


Major Operational Initiatives

• Workday ERP Implementation

• City-wide space needs assessment

• LEAN Scaling

• Risk Management and ADA

• Ongoing recruitment, staff development,

succession planning

• Diversity, Equity and Inclusion work

19


• Vancouver Strong – crafting a comprehensive approach

to making Vancouver a more safe, welcoming, vibrant

and prosperous city.

20


2015 2016 2017 2018 2019 2020 2021 2022 2023

Fire CRT refresh

Fire Stations 1 & 2

Fire Station 11

Affordable Housing

Street funding

Complete Streets

Police Resourcing

The Heights Subarea/Tower Mall

Homelessness/Grand Blvd site

Vancouver Strong

Arts, Culture & Heritage

21


Key Takeaways

• Implementation of major new policy initiatives

from recent years remains underway

• New strategic opportunities or needs that

emerged within biennium have resulted in

additional organizational demands

• Very limited organizational capacity for new

or additional initiatives

22

Economic Outlook

Scott Bailey, Regional Economist

Washington Department of Labor

23

Break

24

2019-2024 Financial Forecast

25

Agenda

• The City of Vancouver Financial

Policies

• Overview of major assumptions on

Revenues and Expenditures

The 2019-2024 Forecast

26

City of Vancouver Financial

Policies

28

City Financial Policy Framework

Long Range financial planning

Reserves

Revenue & Resource Utilization

Budget Management (continued on next slide)

City of Vancouver Financial Policies

28

29

City Financial Policy Framework (continued)

Capital Planning & Assessment Management

Financial Asset & Liability Management

Water, Sewer, & Surface Water Utility Operations


29

30

Long Range Financial Planning

• Prepare long-term revenue & expenditure forecast

• Assess financial impact of proposed budget decisions

within context of a 6-year forecast

• Operating budget:

• Current operations funded with current revenues

• One-time revenues will not be used to fund ongoing

expenses

Status: Consistently on-track


31

Emergency Reserve = 7% of prior year’s General,

Street & Fire Fund revenue

• Unexpected, large-scale nature-driven event

• In excess of $1 million

• Requiring immediate remedial action to protect

health & safety of residents (e.g. flood,

earthquake, etc.)

• If used to be restored during year following the

major event

Status: Funded

City of Vancouver Financial Policies: Reserves

32

Working Capital Reserve

• Sufficient to fund 60-90 days of operations of

General, Street, and Fire Funds

• Address City’s cash flow requirements

• Provide for normal City operations without short-

term borrowing

Status: Funded at 75 days


33

Revenue Stabilization Reserve

• 2.5% of current year’s General, Street & Fire

Funds budget

• Offset on-going revenue fluctuations or

unanticipated events

• Unexpected external mandates

• Reductions in state shared revenues

• When used, it will be replenished within two years

Status: Funded


34

Designated Liability Funding Reserve

• Created when City accepts funding leading to

future liabilities

• Equal to identified future obligation

• Example: Grant funds requiring commitment of

local funds at end of grant period

Status: None currently


35

Council Designated Reserves

• Reserve for specific purpose as identified and

prioritized by City Council

• Example: Sales proceeds from Columbia Arts Center

designated by Council for capital purposes (Funded at

$0.9 mil)

• Reserve to cover one-time budget expenditures:

• Carry-Forward appropriation -- specific projects included

in the current Budget (Currently estimated at $4-6 mil)


36

Unassigned Fund Balance

• Provides one-time funding for high priority purposes:

• Major facility maintenance/ building replacement

• Deferred maintenance of road infrastructure

• Pre-funding of future obligations of volatile costs

Status: Utilized the balance to augment funding for the Artillery

Barracks, Waterfront Park, recreation center roof repairs

End of 2017 Estimated balance that could be utilized for one-

time expenditures is $4-5 million (very preliminary number)


37 The 2019-2024 Forecast - 37

Overview - Financial Policies

37

38

Revenues & Resource Utilization

• User fees & utility rates in all funds based on:

• Full cost of providing service, including inflationary

impacts

• Public benefit

• Community affordability considerations

• Conduct regular cost of service studies

• Include all reasonable & justifiable direct & indirect

costs

Building permit rate review has been completed

Fire Marshall’s office rates review is underway


39

Revenues & Resource Utilization

• Establish specific cost recovery targets for certain

departments (update as required)

• Building Fee Target: 90%

• Land Use Fee Target: 60%

• Recreation Fee Target: 72%, with annual 5% increase

• Transportation Development Review Target: 60%

Status: Building Fund – on track, other areas

are underperforming and under view


40

Capital Planning & Asset Management

• Funding for capital projects & major facilities maintenance

projects will balance:

• Community priorities and needs

• Potential for attracting matching funds

• Ability to reduce or limit expenses in future years

Incorporate “pay-as-you-go” approach in the Capital

Investment Program Status: Water is on track, Sewer will be

by 2017, Storm Water and Non-Enterprise Assets—

progress made, work remains;


41

Capital Planning & Asset Management (continued)

• The Capital Budget will be adopted at the same time as the

City Operating Budget

• Only fully funded projects, identified in the Capital

Investment Program will be included in the budget

• Resources to complete the included projects are

reserved for these projects


42


• Investment Policies & Banking Services –

• Invest public funds to provide maximum security of

principal with the highest investment return, while

meeting daily cash flow demands

• Conform to all state & local statutes pertaining to public

funds

• Deposits will be held with banks qualified by

Washington Public Deposit Protection Commission

Status: On track


43


• Debt Planning, Issuance & Compliance Policies:

• City will reserve 10% of non-voted capacity for

emergency purposes

• City will not exceed 85% of non-voted debt limit,

excluding 10% reserved for emergency purposes

(continued on next slide)


44

Financial Asset & Liability Management (continued)

• Annual payments of GO debt will not exceed 10% of

total GF annual expenditure appropriation

• Capital projects financed with debt will be repaid during

a period not to exceed project useful life

Status: On track


45

Budget Management

• Council establishes appropriations through budget process

• Expenditures controlled with annual appropriation at

department/fund level

• No re-appropriation required for carry forward funds into

second year of the biennium

• Quarterly reporting of budget vs. actual data

Status: On track


46

Budget Management

• During Biennial Budget process, City Council approves

number of permanent City staff positions, their

assignments to specific City funds

• City will establish classification & compensation plan:

• Consistent with labor market

• Using total compensation approach

• Within City’s ability to pay

Status: On track


Revenue Forecast

48

2019-2024 General, Street and Fire Funds Forecast

• The economic improvement trends continue to

strengthen at the local level, impacting:

-Property Taxes

-Sales Taxes

-Utility Taxes

• Fiscal constraints, supported by policy framework are

bringing about longer term reductions in the city’s

expenditure trends

49

• Environment:

– The length of time between economic cycles has

historically been 6-9 years between recessions

– A mild recession is anticipated in 2019-2020, major

economy-dependent revenues have been adjusted

for the impacts


50

• The 2019-2024 forecast reflects the substantial progress

the City has made toward a structural solution to the

financial challenges, manifesting itself in continued period

of relative financial stability.

• The structural issues remain, but develop in later years of

the forecast, in 2023-2024


51

• The preliminary forecast for 2019-2020 budget biennium

indicates a $2 million excess of revenues over

expenditures

• The City has taken significant steps to address the

structural deficit, but structural issues remain and

develop in later years of the forecast, with the financial

deficits developing again by 2023 and beyond

• By 2024 the deficit is estimated to reach $5 mil per yr.


52


52

53

• Major assumptions on the expenditure side include:

– Modest future salary increases for all groups of

employees (2% per year for 2019-2024), with modest

market adjustment effecting 2019 and 2021 years and

beyond

– No new FTEs, (except those funded by the CRT),

even though population is estimated to grow.

– The freed up budget resulting from expiring debt

service, (over the amount dedicated to Streets), is

assumed to be re-directed to cover baseline.


54

• Major Assumptions on the revenue side:

– The economy will likely have an economic recession

in 2019, but the recession will be shallow and shorter

in duration

– No NEW unfunded FTEs, except for those in VPD

funded by new business license surcharges


55

Major Sources of Revenue: 2018-2018 Adopted

55

56

• PROPERTY TAX – Annual increase of revenue by 1% is included in each year of the

forecast

– New construction will range from 0.5% to 1% of the AV, ranging from

$110 m to $243 m over the biennium


57

• Property Tax: The City will not come close to the statutory

maximum rate during 2019-2024

Forecast Assumptions: Revenues

58

• Sales Tax – the most volatile component of the city’s revenue portfolio – the

actual increase with no changes in the underlying City rates was 49% between

2012 and 2017

The 2019-2024 Forecast - 58


58

59

• 2019-2024 Forecast assumes a reduction of 0.9% in sales tax revenue due

to a recession in 2019 and recovery at a 1.1% (2020) and 3.7% annual rate

thereafter


60

• Forecast anticipates currently anticipated in VMCs utility rate increases: 4%

blended increase in WSD, 3% SW


60

61

• New per SF and per MF unit business license surcharge

revenue is anticipated at $3.5 million in 2019 and $6.1

million in 2020

• Other revenues anticipate to follow historical trends

• Marijuana tax state-shared revenue that funded six

limited term officer positions in 2016 is anticipated to

continue at a $500 thousand/year

• Overall, the revenues are anticipated to grow between

2.5% and 3.6% annually during the forecasted period


62

General, Street, Fire Fund Expenditures

63

• Major Drivers:

– Personnel Costs

– Professional Services

– Contracts with Clark County in CRESA, Jail,

Corrections, LERIS and District Court

2019-2024 Expenditure Forecast

64

• Personnel Costs increasing at modest rates

– Health Insurance – Average growth is anticipated to

be for all groups of 5%

– Wages – Modest market adjustments are anticipated

for the vast majority of employees in 2019 and 2021

– Higher PERS rates growth based on forecast from

the WA State Office of the Actuary

2019-2024 Forecast - Assumptions

65

• Intergovernmental contracts – Average annual

increase of 4% per year

• Professional Services - based on 2016 actuals for

both, on-going and one time contracts

• An increase in supplies/services estimates between

2% and 3% annual growth for many categories

• Debt service savings are offsetting the bottom line,

except for the Transportation-related debt, that is

anticipated to be re-directed to Streets as it falls off

2019-2024 Forecast - Assumptions

66

City of Vancouver Staffing History

66

67

• Revenues are anticipated to grow slower than

expenditures over the forecasted period by approximately

0.3% to 1.1% per year.

The 2019-2024 Forecast - 67

2019-2024 Forecast – GSF Growth Rates

67

68

Lunch

Vancouver Strong Original Purpose

• Community engagement in a long term structural solution

– City council

– Executive Sponsors Council (ESC)

– Key accounts

– Broad community and stakeholders

• Develop a long-term, comprehensive services and funding package

– Focus on General Fund services – Police, Fire, Parks &

Recreation, Community & Economic Development, Public Works

– Including potential replacement revenues to fund the Vancouver

Police Department

• Present the proposed package to the City Council by May 2018

– Potential November 2018 general election ballot.

69

Vancouver Strong

Guiding Elements

• Strategic Plan

• ESC Discussion

• Community Survey

70

Vancouver Strong

Community Survey Results

71

City of Vancouver

2017 Community Survey

73

2017 Community Survey: Overview

• ETC Institute

• Fall 2017

• Five-page survey

Sample Size

Goal: 400

Completed: 577

74

2017 Community Survey: Distribution

75

2017 Community Survey: Demographics

76

2017 Community Survey: Demographics

77

Top 3 things residents

like best:

• Social offerings

• Basic services

• Recreational

opportunities

74% Rated the city as an excellent or

very good place to live.

2017 Community Survey: Findings

77

78

74% say that Vancouver City government

is doing an “excellent” or “good”

job delivering services efficiently.

72% believe Vancouver City government

is doing an “excellent” or “good”

job overall.


78

79

Most important City services/functions: 1) Fire & emergency medical services

2) Maintaining streets

3) Police services

4) Managing traffic flow

5) Protecting our natural environment


79

80

Highest levels of satisfaction: 1) Fire & emergency medical services

2) Police services

3) Recycling & garbage collection

4) Parks maintenance

5) Recreation classes & programs


80

82

Most frequently mentioned activities by

residents during the past 12 months:

• Visiting downtown Vancouver

• Visiting neighborhood parks

• Walking or biking on a trail


83

Top three reasons residents feel “unsafe”

walking alone in their neighborhood at night:

1) Fear

2) Homeless persons on streets

3) Not enough street lights

89% felt “very safe” or

“safe” walking alone in

their neighborhood

during the day;

55% at night.


83

84

58% feel they are either “well informed”

or “somewhat informed” about

Vancouver City government.

Top three sources:

• The Columbian

• City social media/other social media

• City website/other online source


84

85

Combination of two

or more taxes

Business tax

Sales tax

Property tax

2017 Community Survey: Overview

86

Top concerns of residents:

1) Traffic

2) Homelessness

3) Housing costs

2017 Community Survey: Open-Ended Questions

86

87

Are there any topics we did not cover that are

important to you?

• Fixing I-5 bridge congestion

• Attracting new businesses/high paying jobs

• Concerns about rising taxes

2017 Community Survey: Open-Ended Questions

87

88

2017 Community Survey

Questions?

88

Vancouver Strong

Guiding Context

In the year 2030, Vancouver is a city transformed.

We are a much more urban city. Through growth and

annexation, nearly a third of a million people now proudly

call Vancouver their home. Vancouver is a top tier city in

the nation, ranking in the top .5% of all cities nationwide by

population, but more importantly in the quality of the

community.

While it is much more dense than it was a decade ago,

Vancouver has focused on growing in a way that puts

people first making us the most livable city in the pacific

northwest.

89

Vancouver Strong

Scope and scale

• Good

• Better

• Best

• Stellar

90

Vancouver Strong

Scope and scale

• Projects

• Programs

• Policies

– Development of service “menu” by direct service

departments

– Up to

– $732 million in capital and operating

– 432 new FTE’s across all services

91

Vancouver Strong

Progress to date

• Executive Sponsors Council

– 9 meetings

– Education and outreach

• Key account targeted engagement – “top 10”

• ESC constituencies

92

Vancouver Strong

Progress to date

• Fire Community Resource Team

• Arts, Culture & Heritage Plan Committee

• City Center Redevelopment Authority

93

94

Break

Vancouver Strong

Environmental conditions check

• Changes since beginning of effort:

– Vancouver Schools Bond

– State School Funding

– Federal income tax reform

• Change in SALT

– Evergreen Schools bond

– Overall assessed value increase in Vancouver

of 12.5% for 2018 taxes

95

http://vansd.org/levy-bond/




https://app.leg.wa.gov/billsummary?BillNumber=2242&Year=2017


https://taxfoundation.org/tax-reform-2017/






Vancouver Strong

• Timing Considerations: – Costs of compressed timing

• Community engagement

• Council deliberations

• Campaign

– Benefits of 2018: • Mid term election – strong turnout expected

• Strong regional economy

– Other considerations: • 2019 is municipal election year (3 council

positions)

• Council manic tools and policies can advance regardless of election

96

Vancouver Strong

Other considerations by ESC:

• Address replacement revenue to fund the VPD 2020

plan immediately, assuring certainty for payers and

the City before implementing new business license

surcharge elements.

• Relieve the time pressure associated with the task of

replacing revenue needed to fund VPD.

• Relieve the time pressure associated with the

November 2018 target election, providing greater

opportunity for community engagement, council

deliberations, and a political campaign.

• Allow the environmental changes to resolve or

normalize for taxpayers

97

Vancouver Strong

Initial phased recommendations:

• VPD Funding: Replace the $6.1 million to

be generated by the per square foot and

per multi-family unit business license

surcharge

– Use existing councilmanic tools

– Implement with minimal administrative

burden for the payers and the city.

98

Vancouver Strong


• VPD Funding - Councilmanic tools:

– Utility tax on city owned utilities

• generates $1 million per 1% increase in

utility tax.

• Current rate is 24.9%

– Effective tax rate of ~33%

• Tax on gross receipts of utility, passed

through to utility customers

99

Vancouver Strong



– Utility tax on city owned utilities

• no current statutory maximum limit on this

tax

– Bill currently pending in legislature that

would require publication of tax rates

paid by the utility on monthly statements

100

Vancouver Strong



– Per employee business license

surcharge (“head tax”)

• Generates $400,000 per each $10 of fee

• Current rate is $90 per employee per year

– Capped at 400 employees/$36,000 per

business per year

• No currently statutory maximum limit

101

Vancouver Strong



– Business and occupation tax

• Generates approximately $1 million per

$.10/$1000 of gross receipts

• Currently a statutory maximum rate of

$2/$1000 for local B & O tax

• Rates can be set by retail, manufacturing,

wholesale and services business

categories.

102

Vancouver Strong

Initial phased recommendations

• Timing: extend the work of the ESC to

the end of 2018, with a December 2018

target date for delivery of a recommended

package to the city council.

• Consider primary (August) or general

(November) elections in 2019 (or later) as

potential for voted measure.

103

Vancouver Strong

Discussion - Initial phased recommendations

• Replace $6.1 m revenue for VPD with councilmanic tool(s) before end of Q2.

• Extend process for larger service plan development and community engagement through end of 2018

• Additional phases of recommendation may emerge

• Target 2019 or later for voter engagement

104

105

2019-2020

Preliminary Budget Framework

2019-2024 Revenue Framework Summary

• Revenues: Enact the statutorily authorized 1% annual increase in

property tax revenues.

Enact rate adjustments for sewer, water and drainage

utilities to reflect inflation and fund depreciation costs,

as codified.

Continue to optimize enterprise and fee for service

efforts in fee services, such as parking, parks and

recreation.

Ensure additional revenue is in place to support any

budget increases that might be proposed in 2019-24

on an on-going basis.

106

2019-2020 Recommended Budget Direction

Expenditures: Zero-based budgeting approach to overtime and

professional services items. Budget will try separating

on-going professional from one-time

No new debt without new supporting revenue.

Continue to search for operational efficiencies.

Most effectively deploy current cash resources to

generate on-going budget capacity

107

City Manager’s Thoughts: • During the past several years the City has continued

to stabilize its financial foundation to ensure it can

withstand economic downturns of short duration and

invest in high priority projects for the City.

• The continued increase in City revenues, coupled

with moderating spending trends put the City in a

strong position to manage out of the long term

structural deficit.

• Vancouver Strong process has identified high priority

items in all departments.


108

Budget requests are to concentrate on one-time

projects/investments consistent with the highest

departmental priorities as outlined in presentations to

Vancouver Strong and Council Priorities

Set aside $1 million to replace RMS system in VPD

Funding initiatives dealing with homeless issues


109

• Budget System available to agencies 1st wk. June

• Submission due dates for Operating Budget July 25

• Submission due date for Capital Budget Aug. 8

• Budget meetings with departments Aug. 22 –

Sep 9

• City Manager’s Recommended budget Sep. 28

• Council Workshops Oct. 12, 17

• Public Hearing and Adoption Nov. 19

2019-2020 Recommended Budget Timeline

110

Questions?

Next Steps • Continue to advance & complete current initiatives

• Work with Vancouver Strong Executive Sponsors Council to: – Develop recommendation by May 2018 for ~ $6M

replacement revenue for VPD

– Extend Vancouver Strong work through December 2018 • Complete broad community engagement

• Consider additional phased recommendations through 2018

• Develop package recommendation – Multi-faceted

– Councilmanic and voted

– Voter engagement in 2019 or 2020

• Prepare 2019-2020 budget in concert with Vancouver Strong work – Incorporate phased recommendations where appropriate

112

city council retreat · • the 2019-2024 forecast reflects the substantial progress the city has...

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