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HomeMy WebLinkAboutCOW 2018-09-10 Item 3B - Interlocal Agreement - Transfer of Surface Water Billing to King CountyCOUNCIL AGENDA SYNOPSIS Initials MeetiqDate Prepared by Mayor'S review Council review 09/10/18 PMc CA- Vt 09/17/18 PMc ITEM INFORMATION ITEM No. 3.B. STAFF SPONSOR: PEGGY MCCARTHY ORIC;IN,11, AGENDA DiVIE: 9/10/18 AGIND.\ fli 1\.1 TITI,F; Approve an interagency agreement with King County for surface water billing services by them. C. \TF:G( yin, n Discussion 09/10/18 El] Motion Mtg Date El Resolution 111t,gDate E Ordinance Mg Date Ell Bid Award Altg Date Ell Public Hearing ANDate Z 0/N1- MigDate 09/17/18 JAN Dale SPONSt t Council Mayor IR DCD Hnance EFire UTV P&R Police LPW LIJturt SP oNsole s Authorize the Mayor to sign an interagency agreement with King County whereby King st imm,\Ry County would begin billing Tukwila property owners for City -provided surface water services as of January 1, 2019; increasing efficiencies within the City and allowing property owners to pay both the surface water fee and property tax through one payment - as the surface water fee would be included on the property tax statement. RiwilWIM BY E C.O.W. Mtg. CDN Comm Trans &Infrastructure Arts Comm. DATE: 9/5 Finance Comm. Public Safety Comm. Comm. E Planning Comtn. CHAIR: QUINN Parks (;oMMrrrEI RECOMMENDATIONS: SPoNsoR/ADmilv. CommITTIT Finance Department Unanimous Approval; Forward to Committee of the Whole COST IMPACT / FUND SOURCE ExpriNDiTuRE RF:Q1111W1) AMOUNT BUDGETED APPROPRIATION REQUIRED $ $ $ Fund Source: Comments: MTG. DATE RECORD OF COUNCIL ACTION 9/10/18 MTG. DATE ATTACHMENTS 09/10/18 Informational Memorandum dated 8/29/18 Surface Water Billing By King County - Cost Benefit Analysis Draft Interagency agreement with King County Minutes from the 9/5 Finance Committee meeting 09/17/18 17 18 City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Finance Committee FROM: Peggy McCarthy, Finance Director BY: Richard Takechi CC: Mayor Ekberg DATE: August 29, 2018 SUBJECT: Transferring Surface Water Billings to King County ISSUE The Council is being asked to approve an interagency agreement with King County authorizing the County to bill Tukwila property owners for the City's surface water services beginning January 1, 2019. The City directly bills each property owner in January and July for the surface water charges. King County provides a similar service and would include the surface water charges on their property tax statements. BACKGROUND The Storm and Surface Water Utility was created per Ordinance 1523 and Ordinance 1549, effective on 1/1/1990, set the rate classifications and rates for the Storm and Surface Water Utility. The current fees are approved by the biennial Public Works Fee Schedule. DISCUSSION The City's Finance Department assumed the billing and receipting process of all the storm and surface water bills. In addition, Finance maintains each customer's account, which is currently 5,286 accounts. Billing maintenance includes ownership changes; mailing/site address and contact information changes; changes in rate classifications; and area changes, due to short plats, consolidations, and boundary line adjustments. Finance and other departments, including Public Works and the Mayor's Office, also field questions and/or complaints from the public regarding the bills and the Surface Water Utility in general. The entire process of billing, receipting, and maintaining the customer accounts, and interacting with the public takes significant resources and time for the City. Transferring the billings and receipting to King County will allow City personnel to devote time and resources to other duties. King County processes the surface water billings for 17 entities, including the cities of Bothell, Burien, Covington, Federal Way, Kirkland, Maple Valley, SeaTac, and Woodinville. If the City approves the utility billing transfer to King County, there will be different rules to follow. The County requires a file in their format prior to year-end 2018 to bill the taxpayers for 2019. The file will include the parcel #, area, rate codes, and billing amounts. This file will be submitted each year to the County for the following year's billing. Thus, the City will still need to maintain parcel information, which is currently done in the Parcel Manager module in the Eden accounting software. The City would no longer maintain ownership changes or mailing/site address and contact information changes. 19 INFORMATIONAL MEMO Page 2 King County has different qualifications to receive a discounted charge due to low income senior or low income disabled. The household low income threshold for King County is currently $40,000, as opposed to the City's $32,000. The senior age for King County is 61, while the City's is 62. Thus, more customers will be eligible using the County's qualifications. Transitioning the billing to King County will create capacity within the Finance Department and allow property owners to pay both the surface water fee and property tax with one payment since the surface water fees will be billed with, and included on, the property tax statement. FINANCIAL IMPACT King County will charge the City three separate fees, with one being a one-time setup fee. Another fee is based on the number of parcels billed, and there are currently 5,286 parcels in the City. The City will continue to bill for City -owned parcels as well as the 15 condominium complexes in the City and the State-owned roadways and properties. This leaves approximately 5,100 parcels that King County would potentially bill. See the attached cost benefit analysis for an estimate of the 2019 and 2020 costs and the estimated savings. The implementation and ongoing fees will be charged to the Surface Water Utility fund. RECOMMENDATION The Council is being asked to approve the draft interagency agreement and consider this item at the September 10, 2018 Committee of the Whole meeting and subsequent September 17, 2018 Regular Meeting. ATTACHMENTS Surface Water Billing Transfer to King County Proposal - Cost / Benefit Analysis Draft Interagency Agreement 20 Z:ICouncil Agenda Items\Finance19.5.18 Finance\KC-SurfWtr billing InfoMemo.docx Surface Water Billing Transfer to King County Proposal Cost / Benefit Analysis August 29, 2018 Estimated Savings Estimated increased capacity: (a) (b) (c) 2019 2020 Fiscal Technician, front counter cashier 25% $ 21,103 $ 21,787 Fiscal Specialist, utility billing 6% 6,430 6,622 Fiscal Coordinator, utility billing 6% 8,211 8,387 Other anticipated savings: Postage 5,000 5,000 Billing supplies 2,700 2,700 (d) Improved collections - estimated 20,000 20,000 Total Estimated Savings $ 63,443 $ 64,496 Estimated Cost (g) One-time setup fee Annual charge: Per account fee based on 5,100 accounts 1% of revenue collected More customers meeting low income / disabled threshold City King County Income Age Threshold Threshold $ 32,000 62 $ 40,000 61 Estimated increase at 10% of $11,000 current cost Net Estimated Savings (Cost) (a) (b) (c) (d) $ 105,624 $ 9,180 9,180 52,952 55,600 $ 167,756 $ 64,780 1,100 1,100 $ (105,413) $ (1,384) Surface water payments constituted 25%-26% of all cashiering transactions in 2017 and 2016. City will still bill for the 261 City owned parcels, the State owned roadways and the 15 condominium complexes in the City; the City will also continue collection efforts on the existing deliquent accounts. Approximately 5% to 10% time savings is projected and is valued based on the 2019 salary and benefit budget. Changes in parcel size and use will need to be evaluated for change in fee category; a new file will be delivered to King County each October 1st for billing in the forthcoming year. Approximately 5% to 10% time savings is projected and is valued based on the 2019 salary and benefit budget. Collections on foreclosed properties have ranged from $5,000 to $15,000 in recent years. Also, collection experience in general is expected to improve since taxpayers will be paying the surface water bill at the same time, and based on the same bill, as their property tax - often this bill is automatically paid by mortgage companies. The approximate number and value of deliquent accounts currently is 800-900 and $330,000 respectively. King County estimates the set-up fee to be between $47,413 and $105,624; a conservative amount is used in this estimate. The actual fee has yet to be calculated and the estimated reange is $1.50 to $1.80. The $1.80 fee per account is used in this analysis. The increase in surface water customers eligible for the discount and the cost of the discount is estimated at 10% of the current discounts. 21 22 INTERAGENCY AGREEMENT BETWEEN KING COUNTY AND THE CITY OF Tukwila FOR SURFACE WATER MANAGEMENT FEE COLLECTION AND REMITTANCE RELATED SERVICES This Agreement is made and entered into by King County, Washington, hereinafter referred to as "King County" or "County" and the City of Tukwila, a Washington municipal corporation, hereinafter referred to as "Tukwila" or "City," collectively referred to as the "Parties," in order for King County to provide services to the City for managing the database of the City's surface water management (SWM) service charge ratepayers, providing customer service related to the City's SWM service charge, billing the City's SWM service charge to City ratepayers, and collecting said charge and transmitting resulting receipts to the City. The Parties mutually agree as follows: I. Purpose The purpose of this Agreement is to set forth the services the Parties agree the County will provide to the City: 1) management of the City's SWM service charge ratepayer database; 2) provision of customer services related to the City's SWM service charge; 3) billing of the City's SWM service charge to ratepayers through the King County Property Tax Statement and 4) collection of SWM service charges and transmittal of receipts to the City. II. Administration A. The City shall appoint one administrator, and the County shall appoint one administrator from the Water and Land Resources Division ("WLRD") and one administrator from the Finance and Business Operation ("FB0") Division, to review compliance with this Agreement and to resolve any conflicts. The administrators shall meet as needed, as applicable to the specific issue. Either administrator may convene a meeting with a minimum of ten (10) calendar days' written notice to the other administrator, as applicable to the specific issue. B. Any conflict that is not resolved by the administrators within ten (10) working days of a meeting held to discuss the conflict shall be referred for resolution to the City Mayor and the WLRD Division Director and/or the FBO Division Director, as applicable to the specific issue. If the conflict cannot be resolved by the City Mayor and the WLRD 1 23 Division Director and/or the FBO Division Director, it shall be referred to the City Mayor and the Director of the King County Department of Natural Resources and Parks (DNRP) and/or the Director of the Finance and Business Operations Division of the Department of Executive Services, as applicable to the specific issue. This provision shall not be construed as prohibiting King County or Tukwila from seeking interpretation or enforcement of the terms of this Agreement, or relief or remedy from a breach of the terms of this Agreement, in law or in equity. III. Description of Services Services to be provided are as follows: A. Maintaining and updating the ratepayer database containing information needed to determine the appropriate annual SWM service charge for each Tukwila account, including changes to property and/or property owner characteristics. WLRD automatically receives notifications of new residential parcels and parcel type changes, such as residential parcels changing to commercial parcels or condominiums, but no other information related to parcel or parcel characteristic changes. B. Incorporating into the database any changes in the City's SWM service charge rate structure, subject to IV.B.2 below. C. Providing customer service to address questions and issues from City representatives and ratepayers related to the City's SWM service charge. D. Billing of the City's annual SWM service charge to property owners. The charge shall be included on the annual King County Property Tax Statement, which will be sent in the manner established by state law and county ordinance. E. Collecting and transferring to the City receipts from the SWM service charge billings. Receipts will be transferred each business day. F. King County will also include any delinquent SWM service charges on the annual King County Property Tax Statement and attempt to collect any delinquent SWM service charges for 10 years before referring any uncollectable charges back to the City for disposition. G. Providing reports on amounts collected, prior year delinquencies, and SWM account characteristics as may be provided and/or requested by the City. 2 24 IV. Responsibilities of the Parties A. Upon execution of this Agreement, King County will provide the services as described in Section HI. above, with 2019 as the first year for billing and collecting of the SWM fee. B. Tukwila: 1. Tukwila has adopted legislation establishing an annual SWM service charge rate as set forth in Exhibit One, attached to this Agreement and incorporated herein and made a part of hereof. If the City changes its surface water service charge rate for any given year, it will notify the County of the new rate at least two months prior to the beginning of the calendar year in which the rate change is to become effective, allowing time for the County to make necessary adjustments to the database. 2. By October 1 of each year, Tukwila will provide King County, via electronic document such as a spreadsheet, changes in property characteristics affecting SWM service charge accounts (excluding new residential parcels and parcel type changes, such as residential parcels changing to commercial parcels or condominiums), in order for such changes to be reflected in the following year's SWM account billings. 3. Tukwila will be responsible for any actions involving a challenge to the validity of the City's SWM service charge, including any defense of the City's SWM service charge raised during any County tax foreclosure proceeding on a Tukwila property. V. Costs and Billing A. Tukwila will pay an annual per -account fee for SWM service charge database management and customer service. King County may adjust the annual per -account fee annually (typically between $1.50 to $1.80), based on staff and overhead cost changes authorized in the adopted King County annual budget. Any increase in the per -account fees to be charged to the City by King County shall be communicated by written notice to the City by no later than September 1 of the calendar year prior to the date on which the rate increase is to take effect. B. Tukwila will pay a one-time fee estimated to be between $47,413 to $105,624, to convert the King County SWM service charge customer database for Tukwila accounts. C. King County will send an invoice to the City for the annual per -account billing fee outlined above in two installments annually (approximately May and October). The one- 3 25 time conversion fee will be billed in two installments starting in 2019. The City will pay invoices within 45 days of receipt. D. Pursuant to RCW 84.56.035, Tukwila agrees to pay the County a collection fee equal to one percent (1%) of all SWM service charge revenue collected by the County for Tukwila under the terms of this Agreement. This collection fee is separate from the per -account fee authorized in V.A. Twice per year (July and January) based upon collections through June 30 and December 31. King County Treasury will deduct the one percent collection fee from receipts collected on behalf of the City. King County may, within its sole discretion, change the frequency of the deductions, provided that written notice is provided to the City at least six months before such change is implemented. VI. Effectiveness, Duration, Termination and Amendment A. This Agreement is effective upon signature by both Parties and will remain in effect until December 31, 2028. B. This Agreement may be terminated by either Party for the following billing year by providing written notice by October 1 of the prior year. In the event of termination, payment will be made by the City for work performed by the County to the date of termination, provided that for SWM fees billed prior to the termination date, King County will continue to collect those previously billed SWM fees, make disbursements to the City, and retain the collection fee as authorized in Section V.D. C. This Agreement may be amended only by written agreement of the Parties. D. This Agreement is not assignable by either Party, either in whole or in part. E. This Agreement is a complete expression of the intent of the Parties and any oral or written representations or understandings not incorporated herein are excluded. The Parties recognize that time is of the essence in the performance of the provisions of this Agreement. Waiver of any default shall not be deemed to be waiver of any subsequent default. Waiver of breach of any provision of this Agreement shall not be deemed to be a waiver of any other or subsequent breach and shall not be construed to be a modification of the terms of the Agreement unless stated to be such through written approval by the Parties which shall be attached to the original Agreement. F. Funding or obligation under this Agreement beyond the current appropriation year is conditional upon appropriation by the County Council and the City Council, respectively, 4 26 of sufficient funds to support the activities described in this Agreement. Should such appropriation not be approved, this Agreement will terminate at the close of the last year for which appropriation has been provided. In such case, the County or City respectively shall provide prompt written notice to the other Party that no appropriation has been made for the subsequent year. VII. General Provisions A. The failure of either Party to insist upon strict performance of any of the covenants and agreements contained herein, or to exercise any option herein contained in one of more instances, shall not be construed to be a waiver or relinquishment of said covenants, agreements or options and the same shall be in full force and effect. B. The provisions of this Agreement are declared to be severable. If any provision of this Agreement is for any reason held by a court of competent jurisdiction to be invalid or unconstitutional, such invalidity or unconstitutionality shall not affect the validity or unconstitutionality of any other provision. C. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Washington, without reference to its choice of law rules. The parties hereby irrevocably consent to the jurisdiction of the state courts for King County and the federal courts for the Western District of Washington for purposes of resolving any dispute under this Agreement and expressly waive any objections as to venue in any such courts. D. Sections II.B., IV.B.3., V.D., VI.B., VII, and VIII shall survive the termination of this Agreement. VII I. Indemnification Tukwila shall protect, defend, indemnify, and save harmless King County, its officers, officials, employees, and agents, while acting within the scope of their employment, from any and all costs, claims, judgments, penalties, and/or awards of damages, arising out of or in any way resulting from Tukwila's own negligent acts or omissions in connection with its obligations under the terms of this Agreement. King County shall protect, defend, indemnify, and save harmless Tukwila, its officers, officials, employees, and agents, while acting within the scope of their employment, from any and all costs, claims, judgments, 5 27 penalties, and/or awards of damages, arising out of or in any way resulting from King County's own negligent acts or omissions in connection with its obligations under the terms of this Agreement. Each Party agrees that its obligations under this subparagraph extend to any claim, demand, and/or cause of action brought by, or on behalf of, any of its employees or agents. For this purpose, each Party, by mutual negotiation, hereby waives, with respect to the other Party only, any immunity that would otherwise be available against such claims under the Industrial Insurance provisions of Title 51 RCW. In the event that a Party incurs any judgment, award, and/or cost arising therefrom, including attorneys' fees, to enforce the provisions of this Article, all such fees, expenses, and costs shall be recoverable from the responsible Party to the extent of that Party's culpability. This indemnification shall survive the termination of this Agreement. IX. Counterparts This Agreement may be executed in counterparts. the IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on day of , 20 Approved as to Form King County: By: By: Title: Deputy Prosecuting Attorney Title: Department Director Department of Natural Resources and Parks Approved as to Form By: By: Title: Title: 6 City of Tukwila: 28 Exhibit One Tukwila SWM Service Charge Rate Structure Costs for Billing and Revenue Collection Services Provided by King County Cost Estimate for SWM Service Billing and Revenue Collection Services Annual SWM Service Charge Billing (based on 5,100 number of accounts and estimated 2019 per -account fee of $1.75*) 9,180$ One-time fee not to exceed 105,624 to customize King County database for Tukwila accounts (Estimated to be between $47,413 to $105,624) $105,624 Annual Revenue Collection (based on 1% of $5,295,200 estimated annual revenue — not included in total below) 52,952$ TOTAL $167,756 *As of the date of execution of the attached Agreement, the actual fee has yet to be calculated for 2018. The estimated range is $1.50 to $1.80). 7 29 30 Finance Committee Minutes September5, 2018 • Rename "State DOR Assessed Value %" column to "Percent of Tukwila's A/V" • Rename "Population Value %" column to "Percent of Tukwila's Population" • Asterisk cities that do not have Police or Fire Information to be Provided to the City Council: Add language to the draft resolution clarifying that it is the responsibility of the Finance Committee to ensure the information specified in A(1) and A(2) is received by staff on the expected schedule, unless a decision is made by a majority of the Council to deviate from that schedule. DISCUSSION ONLY. RETURN TO COMMITTEE c. 2018 2nd Quarter Sales Tax and Miscellaneous Revenue Report Staff presented the 2018 Second Quarter Sales Tax and Miscellaneous Revenue Report, including details on retail sales tax, gambling tax, and admissions tax revenues with sales tax broken out by industry classifications. Sales tax collections increased $584 thousand or 13% over the same period last year. Construction related sales tax accounted for 28%while all other industries accounted for 12% when compared to the same period in 2017. DISCUSSION ONLY. D. Interlocal Agreement: Transfer of Surface Water Billing to King County Staff is seeking Council approval of an interlocal agreement with King County authorizing the County to bill Tukwila property owners for the City's surface water services beginning in 2019. Finance staff currently bills and maintains 5,286 accounts. Transferring the billing and receipting to King County will allow staff to devote time add capacity to other existing and potential work items. This could also be a convenience to property owners as they could pay both surface water and property tax with one payment. In addition, King County's low income and age threshold are broader than Tukwila's, so more customers will qualify. King County's one-time setup fee and annual charge (based on number of accounts) will be paid by the Surface Water Fund. Committee members expressed support but would like to know more detail about the increased staff capacity created since the intent is not to reduce or eliminate positions. UNANIMOUS APPROVAL. FORWARD TO SEPTEMBER 10, 2018 COMMITTEE OF THE WHOLE. E. 2019-2020 Biennial Budget Staff presented the proposals for the Finance Department, Contingency Fund (105 Fund), Urban Renewal (302 Fund), and General Improvements (303 Fund) Finance The proposed Finance Department budget reflects a decrease of 2.26" for 2019 and a 2.84% increase for 2020, yielding a net biennial increase of less than 1%. Staffing levels remain at 12, and the additional capacity resulting from the transfer of business licenses to the State and the potential transfer of surface water billing to King County will be redirected to other work as discussed above. Reductions occurred in extra labor and claims and judgements based upon actual usage. 31