1. Capital Facilities Study Session

2. Goals of Study Session GOAL 1
Provide EIDC with a overview of current capital facility planning:
Definition of capital facilities
Categories of capital facilities and Level of Service (LOS) standards
Capital facility funding sources – including recent REET changes
Identify primary Capital Facility planning documents
GOAL 2
Prepare EIDC for a Capital Facility planning and prioritization effort:
What the current plans tell us (Needs vs. Resources)
An example of a prioritization approach
Guidance on facility planning for 2019 – 2024 and beyond
Council conducted a CFP retreat in August. At that retreat Council reviewed the GMA framework for CFPs, the process Pierce County uses to develop its CFP, capital facility financing, Levels of Service, and the preliminary capital project list. With the retreat as the foundation, today’s update will focus largely upon the capital project list contained in the CFP and planning for the October 15th public hearing. Review agenda 2

3. Definition of Capital Facility (PCC Title 19A)
A capital facility is generally…
"Capital improvement" means land, improvements to land, structures (including design, permitting, and construction), initial furnishings and selected equipment.
Capital improvements have an expected useful life of at least 10 years.
Other "capital" costs, such as motor vehicles and motorized equipment, computers and office equipment, office furnishings, and small tools are considered to be minor capital expenses in the County's annual budget, but such items are not "capital improvements" for the purposes of the Comprehensive Plan. 3

4. Capacity vs. Non-Capacity Improvements
Capital facilities may be divided into capacity and non-capacity improvements.
Capacity improvements are capital facilities that respond to an increase in demand for services due to population growth or other growth factor. Widening roadways and building new parks are examples of capacity projects. Capacity improvements may be tied to a Level of Service (LOS)
Non-capacity improvements are facility replacements or repair due to a facility become structurally or functionally deficient often due to age and deterioration, changing program needs, or changing code requirements. Deferred maintenance typically falls into this category. 4

5. Categories of Capital Facilities and LOS (PCC Titles 18, 19A and 19E)
Facility/Service
Level of Service (LOS)
Concurrency Required?
Arterial roadways
Volume to Service Threshold (V/S) ratio of 1.0
Yes
Ferry System
100% of winter weekday demand
Sanitary Sewer System
220 gallons capacity per Residential Equivalent plus 15% reserve
Surface Water Management Facilities
Conveyance – 4% annual chance storm
Holding – 1% annual chance storm
Infiltration – 1% annual chance storm
Water Quality – treat 91% of runoff 5

6. Categories of Capital Facilities and LOS (PCC Titles 18, 19A and 19E)
Facility/Service
LOS
Concurrency Required?
Airports
Meet Operations Demand (takeoff and landings) No
General Administration Buildings
Maintain building sq. ft. per 1,000 population
Human Services
Building sq. ft. per 1,000 population
Parks
5.2 acres per 1,000 population 6

7. Categories of Capital Facilities and LOS (PCC Titles 18, 19A and 19E)
Facility/Service
LOS
Concurrency Required?
Adult Detention
2.0 beds per 1,000 population No
District Court
1 courtroom per judicial officer
Emergency Mgmt
Maintain building sq. ft. per 1,000 population
Juvenile Detention
.132 beds per 1,000 population
Sheriff Facilities
.5 sq. ft. per 1,000 population
Superior Court
1 courtroom per judge
1 hearing room per commissioner 7

8. Primary Capital Facility Funding Sources
Real Estate Excise Tax (Broadest range of uses)
Impact Fees (Traffic and Parks) (Used for capacity projects only)
Park Sales Tax (Small portion to park capital projects)
Paths and Trails Fund (Required by law .42% of MVFT– paths and trails only)
County Road Fund (Property Tax, MVFT, and other sources – roads only)
Sewer Utility Fund & Construction Reserve Fund (Sewer only)
Surface Water Management Fund (Small portion to SWM projects)
Grants (Typically airports, roads, parks, surface water management)
2018 First REET is budgeted at $8.6M. Second REET is same. Second REET Roads bonded debt of ~$43M outstanding. Traffic impact fees budgeted at $3.8M. Park impact fess budgeted at $3.2M 8

9. Real Estate Excise Tax (REET) Can be used for a broad range of facilities
RCW authorizes all cities and counties to levy a 0.25% real estate excise tax (REET), known as the “first REET,” on all sales of real estate.
RCW authorizes all cities and counties that are planning under the Growth Management Act (GMA) to levy a second 0.25% real estate excise tax, known as the "second REET.”
REET expenditures are limited to certain facility categories and must be identified in the Capital Facilities Plan
Up to 25% of REET revenues (not to exceed $1 million) can be used for maintenance
Pierce County has enacted both the first REET and second REET
The first REET is the County’s primary capital facilities funding source for public safety, justice, general administration buildings, and flood control facilities.
Until recently, County code allocated the first REET on a parentage basis to certain facility categories. These allocations percentages were eliminated in 2017.
The second REET is dedicated by ordinance to roadway improvements (75%) and park improvements (25%). A significant component of the second REET roads is devoted to debt service on previously issued bonds. 9

10. Impact Fees Used for roadway and park capacity projects needed in response to growth
RCW authorizes all cities and counties that are planning under the Growth Management Act (GMA) to impose impact fees for roadway, park, school, and fire service facility needs.
Impact fee expenditures must be identified in the Capital Facilities Plan, can only be used for new capacity needed in response to growth, and can not be used to finance 100% of the capacity need (must be paired with other public funds).
Impact fees are assessed on new building construction at time of building permit issuance based upon the projected impact (vehicle trips or population increase) from this growth.
Certain activities such as churches, schools, and replacement construction are exempt from payment of impact fees.
Jurisdictions representing approximately 75% of the population in the state of Washington impose impact fees including regional neighbors Thurston, Kitsap, King, Snohomish, and Lewis counties.
Park impact fees were significantly increased in 2017 and 2018 following the completion of a study and evaluation process.
Traffic impact fees have not been modified since their original adoption in 2006 and have lost significant buying power due to inflation and project cost increases over the past 10 years. 10

11. Primary Capital Facility Planning Documents11

12. Capital Facility Prioritization12

13. Six Year Total: $446 Million
CFP Identified Capital Facility Needs (2018 – 2023) (Excluding roadway capacity projects)
$10.2M
Six Year Total: $446 Million 13

14. CFP Identified Capital Facility Resources (2018 – 2023)
$10.2M
Unfunded Need: At least $135 Million 14

15. 2016 Deferred Maintenance Report This report addresses General Admin Buildings only. Excludes Parks and Public Works Buildings.
“Deferred maintenance and repairs (DM&R) are maintenance and repairs that were not performed when they
should have been or were scheduled to be and which are put off or delayed for a future period.”
Total: $142 Million
$10.2M 15

16. Other Non-Building Improvement Needs
Unfunded improvement needs exist in other areas as well:
Transportation
Airports
Ferry
Surface Water Management
Parks 16

17. Prioritization of Building Improvement Needs
Needs significantly exceed current resources. A focused capital facility planning and prioritization effort is recommended.
Example of Prioritization Based On Service Category:
Public safety and criminal justice (Courts, Jail, Juvenile Justice, Sheriff)
Human Services (Human Services, Health Department)
Public Services (ATR, Auditor, Council, ED, Executive, PPW, Parks)
Internal Services (Finance, Human Resources, IT, Facilities) 17

18. Another Example of Prioritization…
Example of Prioritization Based On Facility Condition:
Functionally and Structurally Deficient
Functionally Deficient
Structurally Deficient
Aesthetics 18

19. Another Example of Prioritization…
Example of Prioritization Based on Asset Preservation and Other Factors:
Protection of existing facility investments (asset preservation)
Protection of the economy
Protection of the environment
Enhancement of the economy
Enhancement of the environment
Other community enhancements/livability 19

20. Capital Facility Planning for 2019 and Beyond
Conclusion: Additional policy guidance is needed.
Potential Options:
No Action - Continue to implement plans with known shortfalls
Prioritization Based Upon Current Revenues – Develop a prioritization method based upon current revenues (including use of bonds) and update capital plans accordingly
Prioritization Method Based Upon Current + Additional Revenues – Develop a prioritization method that includes additional revenues (such as a voter approved levy) and update capital plans accordingly
Other options 20

21. Committee Discussion and Next Steps21