Meeting Agenda

Hosted by Canyon CountyCaldwell, ID

Date: September 19, 2016
11:00 am – 1:00 pm

Location: Canyon County Courthouse
County Commission Meeting Room
1115 Albany St., Caldwell, Idaho

11:00 am – 11:10 am
Welcome and Introductions
Commissioner Tom Dale
11:10 am – 11:45 am
Open Discussion

  • Fireworks Ordinances
  • Boise River Phosphorous Trading Framework
  • Child Savings Accounts
11:45 am – 12:30 pm
Fees vs. Taxes

  • Hayden Decision Implications
Jerry Mason, Attorney at Law
12:30 pm – 12:50 pm
Together Treasure Valley
Debra Leithauser, President and
Publisher, Idaho Statesman
Binna Jensen, Marketing Manager/Project
Director, Idaho Statesman
12:50 pm – 1:00 pm
Director’s Report
Minutes & Financial Statement
Bill Larsen


Treasure Valley Partnership Meeting Minutes – September 19

Hosted by Canyon County

Attendees:
Dave Bieter
Tom Dale
Tammy de Weerd
John Evans
Brad Holton
Nathan Leigh
Garret Nancolas
Stan Ridgeway
Joe Stear
Darin Taylor
Rick Youngblood
Guests and Staff:
Clint Dolsby – City of Meridian
Binna Jensen – Idaho Statesman
Debra Leithauser – Idaho Statesman
Jerry Mason – Attorney At Law
Bill Larsen – Treasure Valley Partnership

Open Discussion

Tom Dale welcomed everyone to Canyon County. He said it was interesting to hear that some of the members had not been in the Commissioners meeting room since it was remodeled. He pointed out a small space in the room and indicated it housed the entire HR Department for the County. They moved across the street to the Admin. Building. The area was remodeled to accommodate a larger crowd during hearings and there have been some hearings where the room was packed out. Basically, during the last three or four years the entire court house has been remodeled. All the judges and court room activities are now centered right here. Some of this has been facilitated by having video arraignments through here.

Tom mentioned that Lake Lowell has been pronounced safe to be in. For a while they had blue-green algae and there were signs up. The only other update he had is in regard to Celebration Park. It is a really good place for family outings where you can enjoy looking at the pictographs that are there. Tom Bicak, the Director of the Parks Department has really developed this into a showplace. It is the only archeological park in the State. They have a museum out there now and are in the process of finishing up a dormitory to be used by high-school and college groups that visit the site for extended educational stays.

Tom added there is a Cupula (sp?) Rock out along the river that predates any of the pictographs out there. It was originally sitting on a farm and they moved it to Celebration Park.

Nathan said as an update on the JC Watson fire in Parma, they had two juveniles 11 & 12 years old and one near the age of 15 that were involved. As a result of the age of the juveniles, probably nothing will happen. One parent has already gone to Parma Furniture to have the kid work off the damage to delivery vans. The thought that the fire was purposefully set remains unanswered, so the fire has been classified as suspicious.

Environmental Assessments

Garret said he had an issue that came up that he thinks should interest us as a valley and the whole state. They have been trying to get a movie theater going in downtown Caldwell. The environmental specialist (Rick Wells) that is doing this has done thousands of projects in the State. As is any case when you are going through property acquisition you do an environmental assessment. As a developer you do an environmental assessment and if you find something you don’t want to deal with, you withdraw your offer. You have protected the property owner, because the findings are private.

All of a sudden, DEQ has decided that is not how they are going to do it. Because they didn’t notify DEQ originally the Phase 1 Assessment findings until they went forward with the purchase of the property, DEQ will not provide us a letter of No Further Action”. The banks won’t finance it without the letter of No Further Action.

The Assessment findings indicated that all the tests came out well within tolerance of all their indicators. The reason this movie theater project hasn’t started, is because they haven’t gotten this letter from DEQ. DEQ won’t do the letter of No Further Action because they weren’t included when they first started Phase 1.

What this means is, we now have to start all over again even though we have done all the testing. We have to retest and pay all those costs again, delaying the project.

As you know, Movie Theaters will not open except a couple times of the year. They were originally scheduled to open this spring and now it is delayed till next fall. And if they don’t get it done in the next couple of weeks it will delay it until the following spring and cost them thousands of dollars.

The only way property owners are going to do this is in the future will be to direct the developer to do the assessment but with the provision the property owner is held harmless. That means the buyer has to assume all the liability without doing any testing.

Garret said his is supposedly a change in Policy of DEQ, not IDAPA rules.

Tammy said maybe we should bring DEQ in and explain this to us. John asked if they have talked to the Governor’s Office yet. Garret said he has not gone as far as talking with the Governor’s Office.

Tom said the obvious question is why they can’t accept the test results that have already been done. Garret said they have accepted the results but refuse to write the letter of No Further Action because they were not involved from day one. Rick Wells is pulling his hair out and has done a thousand of these all the same way, and has asked why this one is different. Because of policy change.

Tom asked if it was appropriate to approach the Director of DEQ or the Governor on this issue. Garret said he would like to invite Rick Wells come speak to us from his perspective first. Then we as a group can decide some sort action from there.

There was discussion from the members on whether to invite DEQ to attend as well. It was decided to have the conversation with Rick first so we are educated on the questions to potentially ask DEQ and others. Bill said he would schedule Rick for the next meeting in Homedale.

Phosphorous Trading

Tammy introduced Clint Dolsby, the City of Meridian’s Assistant City Engineer. He is involved with the Lower Boise Watershed Council and with the Boise River Phosphorous Trading Framework. She continued that during the previous meeting there was discussion on the trading framework and concerns have arisen regarding the structure of this important process. She has invited Clint to come talk to us about these concerns.

Clint said during the last month’s TVP meeting there was an update given on the trading framework. Mayor Tammy explained an active position taken on the framework. The Willamette Partnership has been contracted to assist in the development of the framework.

One of the issues involves an EPA Guidance Manual that says you need to remove up to 80% of the phosphorous on a farm/ranch before you could trade anything. This was the assumption they were running under till the last meeting a few weeks prior.

In the TMDL for phosphorous on the Lower Boise, there was an allocation that was given to ag that said you have to meet 80% removal in order to meet the goals of the TMDL. The EPA Guidance says you have to meet the allocation before you can trade. Then once the 80 % allocation is achieved, there is the trading ratio which is applied to any trade. So of the remaining 20% there is a 2 to 1 ratio that is applied. So this really means you would have to remove 90% before you could trade anything. This was option A for the Watershed Council.

At the last Watershed Council meeting, the Freshwater Trust came up with a proposal under the direction of DEQ. This would be option B. They took a global view of all the farms in the Treasure Valley. On average, for all farms in the valley, the draft language says, you would have to remove 1.62 pounds for every 10 pounds of phosphorous you discharge. This is pretty beneficial because suddenly, you have 8 pounds to trade and after the 2-1 ratio, you would have 4 pounds to trade. This is a step in the right direction. But this has not been decided as of yet.

Tom asked if this is being driven by the federal or state level. Clint said the regulation in the guidance that says you have to meet your allocation before you can trade is on the federal level. But, his impression is that EPA wants to see trading happen.

John asked if this could have a retroactive negative effect on the Dixie Drain Project. Clint said he was unsure.

John asked for clarification on the Dixie Drain. Clint said he believed that 1.5 to 1 was the trading ratio on the Dixie Drain. Dave said there is no requirement for a nonpoint source to do anything.

Clint said in his mind it would be nice to get a framework that drives ag to do something through municipalities. But if you make it too hard to do trading, then ag won’t do anything.

Tom asked what this group can do. Clint said this group needs to stand behind any alternate proposals that would beneficial to trading in the watershed.

Brad said that we need to write a letter that says Option A is not viable. This would direct the Lower Boise Watershed Council to note that the municipalities see this as unworkable. The other achilles heel is the farms that have put in drip systems or center pivots would be blocked out of any trading.

Brad said he would work with Clint and draft a letter from the Partnership regarding trading options that are being considered.

Fee’s vs Taxes and the Hayden Decision

Jerry said he doesn’t have a whole lot to say about the Hayden Case because to him, the essence of the case was a holding that said the fee the City of Hayden was charging isn’t supported by evidence in the record as a legitimate fee. It was remanded back down to the district court.

Since the case went back down, Judge Simpson, who handled the original decision, has retired. It went to Judge Cynthia Meyer. This was the first case she got as a new judge. She has no municipal experience.

Two motions for summary judgement have been filed on remand. On one she ruled on behalf of the plaintiffs and ruled without any evidence. This was what the Supreme Court case said was lacking, the fee was a tax. When she ruled the fee was a tax, you couldn’t talk about the viability of the fee anymore. Just recently she ruled to grant class status.

He pointed to his handouts and a letter he had wrote to legal counsel for the plaintiff’s before they even filed the lawsuit. He included this letter because it puts his thoughts in a structure on the subject.

Jerry said this is an important topic. The most important part of it is who pays for expansion of utility systems in growing communities? Is this a burden that should be placed on the current customers of the system? Or is it something that should be placed on the new comer who has capacity on hand when they build a house, business or whatever.

Cities and Counties have long been able to charge fees to those who receive a benefit. Things really changed substantially with the passage of Proposition 1, the 1% initiative in 1978. With that, you may recall, property taxes were frozen for three years. During the course of that three year freeze, the value of the dollar went from a dollar in 1978 to about 0.67 cents. Inflation was running rampant.

After that it was followed by a cap. The legislature, when faced with trying to apply this voter approved initiative, found the Idaho constitution and the language of Prop 1 just couldn’t be made to work together. This is where the freeze came from.

As time went on, the freeze grew tighter and tighter and there was a plea for relief and this is where the cap came from. It started out as a 5% cap with some exceptions like judgements, insurance, etc. Then we went through a couple of years of truth in taxation. Then the cap came back when Governor Batt was elected and was a 3% cap that included everything.

Along with this, the legislature hearing the pressures came back with the directive that municipal governments need to rely on user fees. So they enacted Idaho Code 63-1311 and 1311A, which is as follows: (1) Notwithstanding any other provision of law, the governing board of any taxing district may impose and cause to be collected fees for those services provided by that district which would otherwise be funded by property tax revenues. The fees collected pursuant to this section shall be reasonably related to, but shall not exceed, the actual cost of the service being rendered.

So, it is a broad, general grant of power. It says you can charge user fees to do anything you could spend property taxes on. Municipalities, frequently turn to those fees in their utility systems. Most utilities operate a hybrid enterprise fund to operate their utility systems. He is not aware of anybody that just charges taxes to run their utilities.

This whole fee focus has some definite key components. The one that is most important is the relationship to the service provided. Unlike taxes that are strictly driven by a formula. You may pay property tax on a house and never call on the police or ask for any personal service from the municipality.

With fees, there are several different types. A fixed fee is one where everybody pays the same and is typical of a garbage fee you pay for your home. A measured service fee is established based on what you consume. Some have tried to use inclining block rates to encourage conservation.

How do you treat depreciation? The purpose of depreciation is to say; while you are using a service you are wearing it out. Are you going to borrow to replace a worn out asset, or are you going to build up a replacement fund for replacing assets. You try to keep pace with the costs of operations.

A separate question is how you deal with expansion to provide for a growing community. What you will likely hear from tax payer advocates is you ought to have a vote on the expense. When you use a revenue bond, revenues that are there go to pay back that debt. If you are expanding your system using revenue bonds, the existing rate payers are paying for the expansion. That is why many communities have looked at and built their systems based on capacity replacement fees. This is a one-time fee and is paid when the use is established. It is a one-time fee for residents. For a business it is different. Before the business is established, you cannot accurately predict the amount of usage of the utility. For example you can’t predict whether a new restaurant is going to be a busy establishment or a not so busy establishment. Is it going to bring in pre-prepped vegetables or are vegetables going to be prepared from scratch in the kitchen? So you have a much higher rate of wastewater flow. So you make an estimate based on the type of business and you revisit the issue later. If the wastewater use is higher than predicted, the rate would go up and if lower, it would go down.

Here is the state of the law when it comes to taxes and fees. It comes down to five different cases. One is Brewster vs. the City of Pocatello in 1988. The City of Pocatello came up with a street restoration and maintenance fee which was imposed on each household. The court compared it to a regulatory fee and found no regulatory connection and the fee was for the purpose of raising revenue only.

In another fee as a tax, case in 2011, Lewiston Independent School District vs. the City of Lewiston. The city instituted a stormwater fee and their argument to the court was the fee allowed them to handled stormwater and produced a general benefit. If you want to look at a good argument for calling it a tax, you say it provides a general benefit. The fee was invalidated.

The lessons that were taken from this Lewiston case, Coeur d’Alene has shaped a stormwater utility and called it now, a drainage utility and lowered their fee levels. No one has challenged it at this point.

Directly on the subject of these past replacement fees, we have a 1991 decision Loomis vs. the City of Hailey. In this case, the Supreme Court said as along as the fee was charged and specifically dedicated for capital facilities for the wastewater system and there was a rational bases for the fee calculation, it was ok. They used equity buy-in. This approach is more or less attractive depending on where you are at on a continuum of how far from where you started to where you are today. It all consists of taking the value accounting for debt and depreciation and dividing it by the number of users. If you have 100 users, it is huge number. If you have 20,000 users and it is a very mature system, it will be a much smaller number.

In the future, development of a system is a complex part of municipal funding, developer funding, upgraded maintenance. It is a complex analysis.

Then we had Viking Construction vs. Hayden Lake Irrigation District. In this case, they invalidated the fee because the evidence wasn’t in the record to support it. They did say fee moneys could be used for expansion.

If you don’t use these fees, you are charging current customers for expansion.

Brad said for his small city of 1,000 there is an unreachable growth problem. There is an impossibility of comfortableness when it comes to attempting to grow the system to attract a large business. The super majority of municipalities in the State are tiny ones. This problem you are talking about begs for a solution. What are we going to build in a facility to allow for expansion? In his case, the city residents approved an overcapacity plant. But that won’t be the case in most communities.

Jerry said a classic example of that is the City of Rathdrum. When the city wanted to sewer itself, the DEQ wouldn’t let it consider a plant and directed them to pipe their sewage to Post Falls. Then they said for grant funding, you can’t build the outfall more than 10% greater than the project flows because they were not going to fund speculation. Now, Rathdrum is building a parallel pipeline section by section because you cannot look long range.

Jerry said the Hayden Case has to go up to the Supreme Court again. The legal fees for the City of Hayden are getting close to $1 million.

Garret said they have a large manufacturer looking at coming to the City of Caldwell. They asked for their fees. They gave them their connection fees and it came to $750,000. This manufacturer was quoted $2.5 million in Washington. Connection fees are not an uncommon practice and large users are expecting to pay that.

Together Treasure Valley

Bill introduced Debra Leithauser and Binna Jensen with the Idaho Statesman. Debra thanked the Partnership for the opportunity to give an update on the Together Treasure Valley project. This is an initiative that the Statesman and 22 area companies kicked off in April of 2016. The partners get together once a month and their aim is to try to bring some funding together to make a lasting impression on the Treasure Valley.

They have settled on three main things they are trying to support. One is a commitment to literacy and helping our children. They have set aside a small pot of money to fund projects with libraries.

The second priority was born out of two main objectives. One is to promote the Together Treasure Valley Brand and to foster a community conversation. So they have settled on benches to be located in a variety of places. Their aim is too initially fund about 40 benches and spread these benches throughout the valley.

Brad asked how they would get a couple of benches. They have a couple of bus stops, that it would nice to have a bench for. There will be an announcement in the Statesman and a spot on their website where you can describe the location and how many people the bench might serve.

Their third big project is one they just developed the criteria for. Their goal is to fund an icon for each community. These would be used as a gateway entrance or in a park.

Dave said he thinks this has gone quite well. He asked what the chances this initiative would go on into the future. Debra said there seems to be interest among the partners to continuing this initiative into the future.

Tom asked what kind of Library projects they are looking at. Debra said this is pretty open and has included books and carts for example. He asked can these projects be programmatic. She said all projects are being considered at this point.

Director’s Report

Tom asked if there was an effort in the Partnership to do something with Fireworks Ordinances. Bill said Chief Doan with the City of Boise is looking at making a run at State Legislation. Bill said he is in the process of gathering all the Fireworks Ordinances and attempting to make some sense of those so we can be ready for the State initiative.

The Plan B for the Partnership was to see if the State initiative goes through. If not, then we may take a run at pushing local ordinances to restrict the “sale” of illegal fireworks. Tom said, if we could eliminate that sale in Canyon County, we could have a big effect on the fireworks caused losses.

Bill said the next meeting is at Homedale on October 31.

Brad moved to approve the minutes and financial statement, seconded by Darin. Motion Carried.

Meeting Adjourned.