LACEY CITY COUNCIL AGENDA JANUARY 18, :00 P.M. 420 COLLEGE STREET, LACEY CITY HALL

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1 CITY COUNCIL ANDY RYDER Mayor CYNTHIA PRATT Deputy Mayor LACEY CITY COUNCIL AGENDA JANUARY 18, :00 P.M. 420 COLLEGE STREET, LACEY CITY HALL LENNY GREENSTEIN JASON HEARN MICHAEL STEADMAN RACHEL YOUNG CAROLYN COX CITY MANAGER SCOTT SPENCE CALL TO ORDER: 1. PLEDGE OF ALLEGIANCE 2. APPROVAL OF AGENDA & CONSENT AGENDA ITEMS* A. Council meeting minutes of December 21, 2017 B. Council meeting minutes of January 4, 2018 C. A motion to approve payment of claims, wages, and transfers for 12/2/2017 through 1/10/2018 D. Approval of Committee and Intergovernmental Board assignments * Items listed under the consent agenda are considered to be routine and will be enacted by one motion and one vote. There will be no separate discussion of these items. If discussion is desired, that item will be removed from the Consent Agenda and will be considered separately.. PUBLIC RECOGNITIONS AND PRESENTATIONS: A HOA Grant Overview B. Recognition of Mike Beehler for Planning Commission Service C. Recognition of Carolyn Cox for Planning Commission Service 4. PUBLIC COMMENT ON ITEMS NOT ON THE AGENDA* *The City Council will allow comments under this section on items NOT already on the agenda. Where appropriate, the public will be allowed to comment on agenda items as they are addressed during the meeting. 5. PUBLIC HEARING: 6. PROCLAMATION: 7. REFERRAL FROM PLANNING COMMISSION: 8. REFERRAL FROM HEARINGS EXAMINER: 9. RESOLUTIONS: A. Investment Policy (Troy Woo) 10. ORDINANCES: 11. MAYOR'S REPORT: A. Recommend Appointment of Jeff Crane to Historical Commission B. Recommend Appointment of Thomas Smith to Historical Commission

2 12. CITY MANAGER'S REPORT: A. Lift Station 9 Corrosion Rehabilitation Award (Scott Egger) B. Interlocal Agreement Between City and WSDOT (Scott Egger) 1. STANDING GENERAL COMMITTEE A. Finance Committee (1.0) 14. OTHER BUSINESS: 15. BOARDS, COMMISSIONS, AND COMMITTEE REPORTS: A. Mayor Andy Ryder: 1. Mayors Forum 2. Thurston Chamber Shared Legislative Committee. Transportation Policy Board (TPB) B. Deputy Mayor Cynthia Pratt: 1. Joint Animal Services Commission (JASCOM) 2. LOTT. Olympic Region Clean Air Agency (ORCAA) C. Councilmember Rachel Young 1. Economic Development Council (EDC) 2. Health & Human Services Council (HHSC). Thurston Thrives D. Councilmember Lenny Greenstein 1. Emergency Medical Services (EMS) 2. TCOMM911. Thurston County Law & Justice E. Councilmember Jason Hearn: 1. Lodging Tax Advisory Committee (LTAC) 2. Olympia-Lacey-Tumwater Visitor & Convention Bureau (VCB). Thurston County Coalition Against Trafficking (TCCAT) F. Councilmember Michael Steadman: 1. Lacey South Sound Chamber 2. Solid Waste Advisory Committee (SWAC) G. Councilmember Carolyn Cox 1. Community Action Council 2. Intercity Transit (IT). Thurston Regional Planning Council (TRPC) 16. ADJOURN

3 MINUTES OF A REGULAR MEETING OF THE LACEY CITY COUNCIL HELD THURSDAY, DECEMBER 21, 2017, IN LACEY COUNCIL CHAMBERS. CALL TO ORDER: Mayor Ryder called the meeting to order at 7:00 p.m. PLEDGE OF ALLEGIANCE: Mayor Ryder led the Pledge of Allegiance. COUNCIL PRESENT: A. Ryder, C. Pratt, V. Clarkson, M. Steadman, R. Young, L. Greenstein, J. Hearn STAFF PRESENT: APPROVAL OF AGENDA AND CONSENT AGENDA: S. Spence, D. Schneider, S. Egger, T. Woo, R. Walk, J. Burbidge, C. Ward, C. Bock, C. Litten, Officer Hadley, S. Seymour, S. Schelling, P. Brooks, D. Christenson, S. Kirkman, J. Bauersfeld, E. Watts Consent Agenda Items: A. Council meeting minutes of December 7, 2017 B. A motion to approve payment of claims, wages, and transfers for 11/29/2017 through 12/12/2017. Mayor Ryder requested an amendment to change the priority of the agenda to move the AUSA presenation (-C) to the top of the agenda; to add a presentation by the Thurston County Veteran s Advisory Board, and to adjourn to worksession following the regular meeting. MAYOR RYDER MOVED TO APPROVE THE CONSENT AGENDA AND AMENDED AGENDA. COUNCILMEMBER GREENSTEIIN SECONDED. MOTION CARRIED. Page 1 of 12

4 PUBLIC RECOGNITION & PRESENTATIONS: Tina Torfin, AUSA 1-2 Stryker Brigade Combat Team, expressed appreciation for the outstanding support from the City of Lacey, the Lacey Police Officers, and Fire District Fire Firefighters during the AUSA s 1-2 Stryker Brigade Combat Team Military Appreciation Day at the Regional Athletic Complex. Nearly 7,000 soldiers and families participated in the extravaganza. Candice Bock, Director of Administrative Services, recognized the following volunteers as part of the City s Compassion is Contagious Program. Amtrak Volunteers: Sixty-two volunteers staff the Olympia Amtrak Train Station in Lacey from 6:0 a.m. 9:0 p.m. daily. The station has operated for twenty-four years and is currently staffed 99% of the time. Last year, 6,000 passengers passed through the station traveling up to 14 trains per day the 4 th highest ridership in the state. Summers End Car Show Volunteers: Since1998, Denise Spillman, one of the founding members of the Cool Creek Nites Car Club, and others have used proceeds from their car shows to provide lifesaving support throughout Thurston County to police officers and firefighters. In 2002, the City of Lacey and Cool Creek Nites partnered to host the first Summers End Car Show at Huntamer Park. The shows continued every summer through Commander Ward, Lacey Police Department, provided a presentation about the Tip a Cop Program, which raises funds for participants in the Special Olympics. Lacey Police waited tables at the Red Robin Restaurant in October to raise $1,500 dollars for the event to be held in Seattle in Page 2 of 12

5 Jen Burbidge, Director of Parks & Recreation, recognized Lu Carlson for six years of service on the Lacey Board of Park Commissioners. He expressed his appreciation for the opportunity to serve. Sean Smith & Gary Walker, members of the Thurston County Veteran s Advisory Group, and Lacey Veterans Services Club, expressed appreciation to the Lacey City Council and the City of Lacey for its support of veterans programs in the Lacey community. On behalf of the members, each Councilmember was presented with an engraved pen. Recognition of Former Mayor & Councilmember Virgil Clarkson: On behalf of the Thurston County Commissioners and all county officials, Bud Blake, Chair, expressed his appreciation to Councilmember Clarkson for his outstanding community service and dedication which is an inspiration to all. In his capacity as mentor and role model, Councilmember Clarkson has always treated everyone the same, with respect and fairness. Former Lacey Councilmember Jeff Gadman, and current County Treasurer, thanked Councilmember Clarkson for his mentorship and friendship, noting that he always conducts himself professionally, and focuses on the best interests of the Lacey community. Michael Cade, EDC Director, presented a plaque to Councilmember Clarkson from the EDC Board in recognition of service to community, and his guidance throughout the years. He noted that Councilmember Clarkson advised the EDC agency to focus on community first, and the importance of the process needed to create and sustain jobs in the community. Kay Long, President of the Lacey Minsk Mazowiecki Sister City Association, presented Page of 12

6 Councilmember Clarkson with a letter of appreciation from the Mayor of Minsk Mazowiecki for co-initiating the Sister City Association Agreement in 200. The partnership has created wonderful opportunities for student exchanges, musical performances, sporting events and business workshops between the City of Lacey and Minsk Mazowiecki. She also read a letter of best wishes from MILA. Public Comments: Blaine Land, Executive Director of the South Sound Chamber of Commerce, reported that members have planned many community events for 2018, including their popular South Sound Bar-BQ Festival. She announced their office has moved to a new location at 420 Golf Club Road. Janet Best, on behalf of Thurston County ministries, reported that volunteers provide affordable housing by refurbishing mobile homes, pay utilities, and provide food, clothing, and footwear. In 2018, 700 backpacks were distributed to those in need. Volunteer help is always needed. Linda Malanchuk-Finnan, representative of Thurston County Coalition against Trafficking (TCCAT), reported on efforts to raise awareness among young people about the dangers of sex trafficking by providing training and resources. All are invited to Community Conversations: Human Trafficking on January 22, 2018, at 6 p.m. REFERRAL FROM PLANNING COMMISSION: Ordinance No amends LMC to add two new code chapters regarding Stormwater Management and Illicit Discharges. The Stormwater Management code provides an overview of the regulatory framework for stormwater requirements, provides policy clarification regarding Page 4 of 12

7 project vesting and regional facilities, and makes facility inspection and maintenance requirements more apparent and accessible. The Illicit Discharge code has been updated, and moving it into a dedicated chapter of the LMC makes it more apparent and accessible. DEPUTY MAYOR PRATT MOVED TO ADOPT ORDINANCE NO AMENDING LMC TO ADD NEW CHAPTERS FOR STORMWATER MANAGEMENT AND ILLICIT DISCHARGES. COUNCILMEMBER GREENSTEIN SECONDED. MOTION CARRIED. REFERRAL FROM HEARINGS EXAMINER: Sarah Schelling, Associate Planner, presented Council with a request to approve Conditional Use Permit Project # for approval to operate a church in an 8,200 square foot tenant space at the Hawks Prairie Mall. The space is located at 1401 Marvin Road Northeast, Suite 215 and is zoned general commercial. The Hearings Examiner conducted a public hearing on Tuesday November 28, Staff and the applicant provided testimony in regards to the project. One member of the community attended the hearing and provided testimony in support of the project. Topics of discussion at the hearing included parking requirements and traffic impacts. The Hearings Examiner has recommended approval of the conditional use permit application. Staff is requesting that Council approve the proposal including adoption of findings, conclusions and conditions outlined in the written recommendation of the Hearings Examiner received December 12, Page 5 of 12

8 COUNCILMEMBER GREENSTEIN MOVED TO APPROVE PROJECT # CONDITIONAL USE PERMIT FOR A CHURCH RESTORATION. COUNCILMEMBER CLARKSON SECONDED. MOTION CARRIED. ORDINANCES: Ordinance No adopts the 2018 Budget setting the total budget in the amount of $10,017,984 and the General Fund total budget in the amount of $47,178,157. The proposed 2018 Budget is balanced and preserves service levels. Troy Woo, Finance Director, announced one change to the proposed budget since the previous hearing a funding increase in the amount of $18,000 for the Lacey Sister City Program. DEPUTY MAYOR PRATT MOVED TO ADOPT ORDINANCE NO APPROVING THE 2018 BUDGET AND SETTING THE TOTAL BUDGET AMOUNT OF $10,017,984 AND THE GENERAL FUND TOTAL BUDGET IN THE AMOUNT OF $47,178,157. COUNCILMEMBER GREENSTEIN SECONDED. MOTION CARRIED. MAYOR S REPORT: MAYOR RYDER MOVED TO REAPPOINT SHARON KOPHS TO THE PLANNING COMMISSION. COUNCILMEMBER HEARN SECONDED. MOTION CARRIED. MAYOR RYDER MOVED TO REAPPOINT PEG EVANS-BROWN TO THE PLANNING COMMISSION. COUNCILMEMBER GREENSTEIN SECONDED. MOTION CARRIED. Mayor Ryder announced that the Olympia Master Builders presented the City with an award in recognition of the outstanding customer service Page 6 of 12

9 provided by city staff in working with them to set a new fee schedule. IN RECOGNITION OF 19 YEARS OF OUTSTANDING COMMUNITY SERVICE, MAYOR RYDER MOVED TO NOMINATE COUNCILMEMBER VIRGIL CLARKSON TO SERVE AS THE MAYOR OF LACEY THROUGH DECEMBER 1, MOTION SECONDED, AND CARRIED. Councilmember Clarkson thanked the Council for the nomination and expressed his appreciation for their cooperative partnership during his terms of service. He acknowledged the dedication and service of the current Council and encouraged all to continue to serve the community to the best of their ability. To staff and legal counsel, Council Clarkson expressed his appreciation for the administrative support provided to Council, and for the outstanding customer service provided to the Lacey community and its residents. Dave Schneider, City Attorney, administered the Oath of Office to Councilmember Clarkson as the acting Mayor of the City of Lacey through December 1, CITY MANAGER S REPORT: Steve Kirkman, Public Affairs Manager, presented Council with a request to authorize the City Manager to sign a Memorandum of Understanding extending the Public, Education, and Government Television Production and Studio Maintenance, Operation, and Administrative Services Agreement with Thurston Community Media (TCTV) for a One- Year Term (2018) The contract extension maintains a longstanding relationship with TCTV, and continues current government and community access cable television Page 7 of 12

10 services provided to the City of Lacey and its residents. The extension will provide 700 hours of direct production support to the City of Lacey in 2018 that can be used to televise City Council and other public meetings, as well as numerous community events. COUNCILMEMBER GREENSTEIN MOVED TO AUTHORIZE THE CITY MANAGER TO SIGN A MEMORANDUM OF UNDERSTANDING EXTENDING THE PUBLIC, EDUCATION, AND GOVERNMENT TELEVISION PRODUCTION AND STUDIO MAINTENANCE, OPERATION, AND ADMINISTRATIVE SERVICES AGREEMENT WITH THURSTON COMMUNITY MEDIA (TCTV) FOR A ONE-YEAR TERM (2018). DEPUTY MAYOR PRATT SECONDED. MOTION CARRIED. Scott Egger, Public Works Director, presented Council with a request to authorize the City Manager to approve a five-year extension of the Interlocal Cooperative Agreement for Thurston County Emergency Management Council. COUNCILMEMBER RYDER MOVED TO AUTHORIZE THE CITY MANAGER OR MAYOR TO SIGN A FIVE-YEAR EXTENSION OF THE INTERLOCAL COOPERATIVE AGREEMENT FOR THURSTON COUNTY EMERGENCY MANAGEMENT COUNCIL. DEPUTY MAYOR PRATT SECONDED. MOTION CARRIED. Rick Walk, Community & Economic Development Director, requested Council action to authorize the City Manager to sign a contract extension to the City s interagency agreement with the Washington State Department of Enterprise Services. The new Page 8 of 12

11 agreement will extend the period of performance to December 1, Extending the contract will allow the City to ensure that the projected conservation savings are realized as well as maintain the project s warranties and guarantees. COUNCILMEMBER RYDER MOVED TO AUTHORIZE THE CITY MANAGER TO SIGN A CONTRACT EXTENSION TO THE CITY S INTERAGENCY AGREEMENT WITH THE WASHINGTON STATE DEPARTMENT OF ENTERPRISE SERVICES. COUNCILMEMBER GREENSTEIN SECONDED. MOTION CARRIED. Scott Spence, City Manager, requested Council action to authorize the City Manager to sign the amended Memorandum of Agreement related to the ongoing support of the South Sound Military and Communities Partnership (SSMCP). The partnership provides an effective regional voice representing the combined interests of Thurston and Pierce counties centered on JBLM, and establishes an effective communication channel and collaborative opportunities among participants of the SSMCP and military representatives from JBLM. COUNCILMEMBER GREENSTEIN MOVED TO AUTHORIZE THE CITY MANAGER TO SIGN AN AMENDMENT TO THE MEMORANDUM OF AGREEMENT RELATED TO THE ONGOING SUPPORT OF THE SOUTH SOUND MILITARY AND COMMUNITIES PARTNERSHIP. COUNCILMEMBER RYDER SECONDED. MOTION CARRIED. Page 9 of 12

12 Scott Spence, City Manager, reported that the City is bringing back Lacey Life, a community newsletter highlighting community events, city projects, business news and other community topics. The first returning issue will be available in utility billings in January Mr. Spence announced the City s Parks & Recreation Department will once again host the Polar Bear Plunge on January 1, 2018, at Long Lake Park. STANDING GENERAL COMMITTEES: Community Relations & Public Affairs Committee Mayor Clarkson reported the Committee met on December 4, 2017, to discuss the updated 2018 Communication Plan, and details of the 2018 Christmas Tree Roundup Fundraiser. BOARDS & COMMISSIONS: Transportation Policy Board Councilmember Ryder reported the Board approved corporate projects for fiscal year for funding. An update on Thurston County energy and carbon greenhouse gas emissions was provided. The organization is encouraging legislators to promote its legislative agenda in LOTT Deputy Mayor Pratt reported the Board participated in a staff tour of new watering equipment. The Board adjourned to an Executive Session to discuss the Executive Director s evaluation. Thurston Thrives Deputy Mayor Pratt reported the Board received information on the Choice Regional Health Network, and announced that she is the Co-chair of the Action Team Summit for housing. Page 10 of 12

13 Intercity Transit Mayor Clarkson announced the Board approved the 2018 budget. HHSC & CIP Mayor Clarkson announced that CIP and Thurston Thrives continue discussions about the distribution of HOME funds. Mayor Clarkson adjourned the meeting to a worksession at 8:52 p.m. WORKSESSION: Rick Walk, Community & Economic Development Director, briefed the Council on the Gateway Division II annexation. DR Horton, a property owner within the annexation area, has petitioned the Boundary Review Board (BRB) to invoke jurisdiction to review the annexation proposal. The City of Lacey and Thurston County have been discussing an inter-local agreement (ILA) for the transition of services and fees within the annexation area. Rick summarized the general terms of the agreement. Thurston County will also petition the BRB to provide more time to finalize the ILA and present it to the City Council and Board of County Commissioner for final approval. The BRB will hold a public meeting on January 2, 2018, at which they will discuss the petitions and set a public hearing date. The BRB will have 120 days to complete their review of the annexation proposal. Council discussed concerns related to 1 st Avenue not being built out by DR Horton as the developer of the subdivision, or a commitment from the County prior to annexation. The cost will shift to Lacey taxpayers once annexation is approved. Councilmembers agreed that Council and the Commissioners need to discuss compliance with urban development guidelines for properties located in the urban growth area and the need to discuss the creation of an annexation agreement with the County that is relevant to today s issues. Page 11 of 12

14 Mayor Clarkson adjourned the meeting at 9:20 p.m. MAYOR: ATTESTED BY CITY CLERK: DATE APPROVED: Page 12 of 12

15 MINUTES OF A REGULAR MEETING OF THE LACEY CITY COUNCIL HELD THURSDAY, JANUARY 4, 2018, IN LACEY COUNCIL CHAMBERS. CALL TO ORDER: Mayor Ryder recommended appointing Councilmember Hearn as chair of the Council meeting until a Mayor is elected. Council consented. PLEDGE OF ALLEGIANCE: Councilmember Hearn led the Pledge of Allegiance. COUNCIL PRESENT: A. Ryder, C. Pratt, J. Hearn, L. Greenstein, M. Steadman, R. Young, Carolyn Cox STAFF PRESENT: S. Spence, D. Schneider, S. Egger, T. Woo, J. Burbidge, J. Upton, R. Walk, C. Bock, C. Litten APPROVAL OF AGENDA AND CONSENT AGENDA: Consent Agenda Items: A. Worksession minutes of December 14, 2017 B. A motion to approve payment of claims, wages, and transfers for 12/1/2017 through 12/22/2017. DEPUTY MAYOR PRATT MOVED TO APPROVE THE CONSENT AGENDA AND AGENDA. COUNCILMEMBER GREENSTEIN SECONDED. MOTION CARRIED. OATH OF OFFICE: Dave Schneider, City Attorney, administered the Oaths of Office to Rachel Young, Cynthia Pratt, Andy Ryder, Michael Steadman and Carolyn Cox. Councilmember Hearn requested nominations for the position of mayor. Councilmember Greenstein nominated Councilmember Ryder. Councilmember Young seconded. Motion carried. Page 1 of 4

16 Dave Schneider, City Attorney, administered the oath of office to Mayor Ryder. Mayor Ryder nominated Councilmember Pratt as Deputy Mayor. Councilmember Young seconded. Motion carried. Dave Schneider, City Attorney, administered the Oath of Office to Deputy Mayor Pratt. PUBLIC COMMENTS: Bill Depoto, a member of Jubilee Democrats, shared their ideals, about supporting sustainable development, representing the disenfranchised, identifying solutions for failing septic systems, reduction of fossil fuel use by PSE, and intermodal solutions from Intercity Transit. RECOGNITION: Linda Zeeman, Thurston County Coalition against Human Trafficking, briefed Council on their strategy to prevent and end human trafficking. Their focus is on empowering youth, engaging communities, prevention and intervention. The public is invited to Community Conversations about Human Trafficking on January 22 at 6 p.m. at the Capital Event Center.. PROCLAMATION: Mayor Ryder and Council read a proclamation declaring January as Human Trafficking Awareness and Prevention Month. Mayor Ryder and Council read a proclamation declaring January 16, 2018, as a National Day of Racial Healing. MAYOR S REPORT: Mayor Ryder expressed his appreciation to the Council for re-electing him as Mayor. MAYOR RYDER MOVED TO APPOINT DAVID WASSON TO AN UNEXPIRED TERM ON THE PLANNING COMMISSION. DEPUTY MAYOR PRATT SECONDED. MOTION CARRIED. Page 2 of 4

17 Mayor Ryder recognized Planning Commission members, Sharon Koph, Mike Goff, and Paul Enns. CITY MANAGER S REPORT: Scott Egger, Public Works Director, presented Council with a request to award Lacey Contract Number PW to low bidder SCI Infrastructure, LLC, in the amount of $900, for 2017 Water Improvements. COUNCILMEMBER STEADMAN MOVED TO AWARD LACEY CONTRACT NUMBER PW TO LOW BIDDER SCI INFRASTRUCTURE, LLC, IN THE AMOUNT OF $900, FOR 2017 WATER IMPROVEMENTS. DEPUTY MAYOR PRATT SECONDED. MOTION CARRIED. STANDING GENERAL COMMITTEES: BOARDS & COMMISSIONS: General Government & Public Safety Committee Mayor Ryder reported the Committee met on December 11, 2017, to discuss the Thurston County Community Media Contract Extension, the Public Records Fee Schedule, the Interlocal Agreement for Thurston County Emergency Management, an Amendment to the Energy Service Company (ESCO) Services Contract, and a Council Social Media Policy. LOTT Deputy Mayor Pratt announced a forum is scheduled for elected officials on January 1, TCOMM 911 Councilmember Greenstein reported on several items discussed at the recent meeting. Agreements have been reached with ambulance companies for services in TCOMM 911 will switch from Grays Harbor to Thurston County 911 to improve communications. Page of 4

18 The Washington State Patrol has opted into using First Net, which will change broadband services for public agencies. The 911 Coordinator Grants used by individual TCOMM centers for operations will be eliminated. The changes will not impact TCOMM 911. The Board received the final report on replacement of the current radio system. The recommendation is to replace all the equipment at TCOMM 911 at an estimated cost of $0M. TCCAT Councilmember Hearn invited the public to attend a Community Conversation - Human Trafficking on January 22, Newly-elected Councilmember Cox thanked her supporters and those who voted for her during the election. Mayor Ryder recognized former Commissioners Romero and Valenzuela, and TRPC Director, Mark Daly. Mayor Ryder adjourned the meeting at 8:05 p.m. MAYOR: ATTESTED BY CITY CLERK: DATE APPROVED: Page 4 of 4

19 LACEY CITY COUNCIL MEETING January 18, 2018 SUBJECT: Disbursement Approval RECOMMENDATION: By motion, approve payment of claims, wages, and transfers. STAFF CONTACT: Troy Woo, Finance Director ORIGINATED BY: Troy Woo, Finance Department BACKGROUND: The action requested of the City Council is by motion to approve payment of claims, wages and transfers for 12/2/2017 through 1/10/2018. The disbursements consist of the following: Checks: Week of Beg. Check No. End. Check No. Amount 12/29/ ,559. *12/29/ , /5/ , Electronic Transfers: Week of Amount 12/26/ , /29/ , /29/2017 9, *12/29/2017 1,275, *12/29/ , /5/ , Payroll: Month Ended: Wages *12/29/2017 1,229, * Disbursements for employee out-of-pocket deductions and employee benefits. Page 1 of 1

20 LACEY CITY COUNCIL MEETING January 18, 2018 SUBJECT: Investment Policy Amendments RECOMMENDATION: Adopt resolution replacing the February 2014 investment policy. STAFF CONTACT: Scott Spence, City Manager Troy Woo, Finance Director ORIGINATED BY: Troy Woo, Finance Department ATTACHMENTS: 1. Resolution No FISCAL NOTE: PRIOR REVIEW: Finance and Economic Development Committee on January, 2018 BACKGROUND: On September 28, 2017, the City Council authorized the City Manager to sign a multi-year non-discretionary investment advisory services agreement with Government Portfolio Advisors (GPA). The scope of work of the agreement includes reviewing and recommending amendments to the City s investment policy and provide assistance with the development and implementation of the City s investment strategy. These critical steps will provide the foundation in which investment decisions will be made and ultimately enhance the City s portfolio performance. The proposed investment policy was developed using the Revised Code of Washington (RCW), Washington Municipal Treasurers Association (WMTA) model investment policy, and the Washington State Auditor s Office Budgeting, Accounting, and Reporting System (BARS) manual as guidance. The proposed amendments to the policy are designed to provide more detailed guidance and set investment parameters that will assist the investment advisor in the development of investment proposals through their competitive process and the development of the City s investment portfolio strategy. Page 1 of

21 The proposed policy is consistent to the cash management and investment policy sections of the City Council adopted fiscal policies, so no update of the adopted fiscal policies is required. The fiscal policies were last reviewed and amended by the City Council during February 201 with the adoption of Resolution No While the proposed investment policy appears to be very different compared to the current policy, there are actually few significant amendments proposed to the current policy that was last updated in February The following are highlights to the proposed policy: The primary investment objectives do not change. In priority order, the objectives for investing activities are safety, liquidity, and return on investment. The most important objective is preservation of public funds. This will be accomplished with compliance with Washington State statutes and other best practices including diversification and only allowing highly rated securities. The delegation of authority includes the option to contract with an external nondiscretionary investment advisor in the proposed policy. The overall management of the investment program responsibility and final investment decision authority remains with the City Manager and Finance Director. The proposed policy maintains the prudent person standard to be used by the City s investment officials. This means investments shall be made with the same level of judgment and care, which persons of prudence, discretion, and intelligent exercise would use in the management of their own affairs. The investment portfolio will be subject to public review and will be managed with a level of professionalism that maintains public trust. The ethics and conflicts of interest section of the policy has been expanded. The policy is designed so that investment officers will make impartial investment decisions and do not conduct personal investments with the same individuals with whom they are conducting business on behalf of the City. The proposed policy includes disclosure requirements for employees involved with the investment process. The proposed policy includes a new section relating to internal controls. This section provides additional assurance that the investment policy objectives will be accomplished. The authorized investments section is similar to the current policy, but the investment list has been expanded to be consistent with recent changes to the RCW. There are new allowable investment securities, supranational bonds and corporate credit. o Supranationals are international development institutions that provide financing, advisory services, and other financial services to member countries with the goal of improving living standards through economic growth. Page 2 of

22 o Corporate notes are now authorized by ESB 649. This change was effective June 29, The parameters in which corporate notes may be purchased is very restrictive. Due to high credit rating standards, very few corporate notes actually qualify. The expanded lawful investment security list include restrictions for percentage of portfolio and minimum ratings to provide protections of public funds. Despite the opportunity for increased yield and portfolio diversification, the recommendation is to include these securities as eligible within the investment policy, but as a practice prohibit these securities during the implementation of the City s investment policy and strategy. The practice to prohibit these securities can be re-evaluated by the City Council in the future. The proposed policy includes updated diversification constraints by both maximum percentage of total holdings and maximum percentage per issuer. The proposed policy maintains the maximum maturity of five years and sets standards for maturity levels of the total portfolio. The policy also sets other maturity constraints for liquidity and to minimize interest risk. The proposed policy establishes reporting requirements and performance standards. The policy suggests that portfolio performance be measured against the US Treasury 0- year index or the US Treasury 0-5 year index. At its January, 2018, meeting, the Finance and Economic Development Committee reviewed and recommended City Council adoption of the proposed policy. ADVANTAGES: 1. More concise policy guidance for authorized investments, reporting requirements, and diversification of the portfolio. 2. The proposed policy is designed to protect and preserve public dollars, maintain cash flow for operations, and to enhance investment interest earning to help fund public services. DISADVANTAGES: 1. None identified. Page of

23 RESOLUTION NO CITY OF LACEY A RESOLUTION OF THE CITY OF LACEY, WASHINGTON, AMENDING THE OFFICIAL INVESTMENT POLICY OF THE CITY. WHEREAS, the stewardship of public funds, their safe-keeping, legal use and proper management, is one of the most important responsibilities entrusted to the officials and managers of the City of Lacey, and WHEREAS, the City Council adopted Resolution No. 625 on June 9, 1988, Resolution No. 810 on July 22, 1999, and Resolution No on February 1, 2014 which established and amended the City of Lacey s official investment policy, and WHEREAS, the City Council authorized an investment advisory services agreement, which requires more detailed guidance and parameters, and recent changes to the Revised Code of Washington create the need for additions and amendments to said policy, NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LACEY, WASHINGTON, that the certain policy set forth in the document entitled City of Lacey Investment Policy, attached hereto and made a part hereof as though fully set forth at length is hereby approved and adopted as the investment policy to be followed by the City Council and management of the City of Lacey. PASSED BY THE CITY COUNCIL OF THE CITY OF LACEY, WASHINGTON, this 18 th day of January, CITY COUNCIL Mayor Attest: Approved as to form: City Clerk City Attorney Resolution No Page 1

24 INVESTMENT POLICY REVISED JANUARY 2018 DRAFT

25 TABLE OF CONTENTS GOVERNING AUTHORITY... 2 OBJECTIVES... 2 Safety... 2 Liquidity... 2 Return on Investment... 2 STANDARDS OF CARE... Delegation of Authority... Prudence... Ethics and Conflicts of Interest... SAFEKEEPING, CUSTODY, AND CONTROLS... 4 Delivery vs. Payment... 4 Third Party Safekeeping... 4 Internal Controls... 4 External Controls... 5 AUTHORIZED FINANCIAL DEALERS... 5 Broker/Dealers... 5 Investment Advisors... 5 Bank Institutions... 5 Competitive Transactions... 6 AUTHORIZED AND SUITABLE INVESTMENTS... 6 Authorized Investments... 6 Suitable Investments... 6 Bank Collateralization... 7 INVESTMENT PARAMETERS... 8 Diversification... 8 Investment Maturity... 8 Strategic Allocations... 9 Prohibited Investments REPORTING REQUIREMENTS Reporting Performance Standards Compliance Report Accounting Method INVESTMENT POLICY ADOPTION APPENDIX - INVESTMENT TERMINOLOGY... 12

26 City of Lacey Investment Policy Finance Policy Number: X.XX Policy Title: Investment Policy Effective: Revised: Revised: January XX, 2018 PURPOSE It is the policy of the City of Lacey (City) to invest public funds in a manner, which will provide the highest investment return with the maximum security while meeting the daily cash flow demands. All investments shall conform to all Washington State statutes governing the investment of public funds. This investment policy defines the parameters within which funds are to be invested by the City. This policy also formalizes the framework to provide the investment authority and constraints for the City to maintain an effective and judicious management of funds within the scope of this policy. This policy is intended to be broad enough to allow the City Manager and Finance Director to function properly within the parameters of responsibility and authority, yet specific enough to adequately safeguard the investment assets. This policy: Sets out guidelines for the prudent management of the City s funds; Describes realistic parameters and goals for safely investing those funds; Establishes expectations for generally acceptable returns at a suitable level of risk that matches the purpose of the City's funds; Provides the framework within which the City Manager and Finance Director will operate by setting out objectives, guidelines, and structure that include details on the universe of permitted investments and any restrictions of their use. An amendment of this policy requires City Council approval. SCOPE This investment policy applies to all financial assets of the funds of the City of Lacey, including the Surface Water Utility fund. These funds, presented in the City's Annual Financial Report, include: General Fund Special Revenue Funds Capital Project Funds Enterprise Funds Internal Service Funds Debt Service Funds Trust and Agency Funds Retirement/Pension Funds Any new fund created by the City Council, unless specifically exempted Page 1 15

27 City of Lacey Investment Policy REFERENCES Revised Code of Washington: Chapter 5A.40 Chapter 9.58 Chapter 9.59 Chapter Chapter 4.84 INVESTMENT TERMINOLOGY For investment terminology refer to the Appendix on page 12. GOVERNING AUTHORITY Authority to manage the City of Lacey's investment program is derived from the following: Revised Code of Washington (RCW), Washington Municipal Treasurer s Association model investment policy, Washington State Auditor s Office s Budgeting, Accounting, and Reporting System (BARS) manual, and Resolution No and City of Lacey Policy Management responsibility for the investment program is hereby delegated to the Finance Director, who shall establish procedures for the operation of the investment program consistent with this investment policy. OBJECTIVES All funds will be invested in a manner that conforms with federal, state and other legal requirements. The objectives, in order of priority, of the investment activities will be as follows: SAFETY Safety of principal is the primary objective of the City. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. To obtain this objective, funds will be diversified utilizing highly rated securities and by investing in a variety of securities and financial institutions. The investment portfolio will be invested in a manner that complies with Washington State statutes and all other legal requirements of the City. LIQUIDITY The investment portfolio will provide liquidity sufficient to enable the City to meet all cash requirements that might reasonably be anticipated. Therefore, the investments shall be managed to maintain a minimum balance to meet daily obligations. RETURN ON INVESTMENT The investment portfolio shall be designed with the objective of obtaining a market rate of return throughout budgetary and economic cycles, taking into account the City s investment risk constraints, the City s investment objectives and the cash flow characteristics of the portfolio. Page 2 15

28 City of Lacey Investment Policy STANDARDS OF CARE DELEGATION OF AUTHORITY Governing Body: The ultimate responsibility and authority for the investment of City funds resides with the City Council who has the authority to establish policy that directs the management of the City investment program. Authority: Pursuant to the LMC , the overall management responsibility for the investment program is hereby delegated to the City Manager and Finance Director, who shall establish written procedures for the operation of the investment program that are consistent with this investment policy. The Finance Director shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials. Investment Advisor: The City may contract with an external non-discretionary investment advisor (Advisor) to assist with the management of the City s investment portfolio in a manner that is consistent with the City s objectives and this policy. Such Advisors shall provide recommendations and advice regarding the City investment program including but not limited to advice related to the purchase and sale of investments by this Investment Policy. PRUDENCE The standard of prudence to be used by the Finance Director or investment officers in the context of managing the overall portfolio is the prudent person rule which states: Investments will be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs not in regard to speculation but in regard to the permanent disposition of the funds considering the probable income as well as the probable safety of the capital. Investment officers acting in accordance with written procedures, the investment policy, and exercising due diligence shall be relieved of personal responsiblitiy for an individual security s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. ETHICS AND CONFLICTS OF INTEREST Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution of the investment program or which could impair their ability to make impartial investment decisions. Employees and investment officers shall disclose to the City Council any material financial interest in financial institutions that conduct business with the City and they shall further disclose any personal financial/investment positions that could be related to the performance of the City's portfolio. Employees Involved in the City Investment program must avoid conflicts of interest. Association with the investment program in any capacity is considered employee involvement. Employees must avoid personal business activity that may: Conflict with the proper execution of the investment program. Impair their ability to make impartial investment decisions. Page 15

29 City of Lacey Investment Policy Employees Associated with the City Investment Program Must Disclose The disclosure should list: Any material interests in financial institutions that conduct business with the City. Any personal financial or investment positions that could influence the performance of the City s investment portfolio, particularly with regard to the timing of purchases and sales. SAFEKEEPING, CUSTODY, AND CONTROLS DELIVERY VS. PAYMENT All trades of marketable securities will be executed (cleared and settled) on a delivery vs. payment (DVP) basis to ensure that securities are deposited in the City s safekeeping institution prior to the release of funds. THIRD PARTY SAFEKEEPING Prudent treasury management requires that all purchased securities be bought on a DVP basis and be held in safekeeping by an independent third-party financial institution or the City s designated depository. The Finance Director shall designate all safekeeping arrangements and an agreement of the terms shall be executed in writing. The third-party custodian shall be required to provide a statement to the City listing at a minimum each specific security, book yield, description, maturity date, market value, par value, purchase date, and CUSIP number. All collateral securities pledged to the City for certificates of deposit or demand deposits shall be held in accordance with the State of Washington's Public Deposit Protection Commission (PDPC). INTERNAL CONTROLS The Finance Director is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of control should not exceed the benefits likely to be derived, and the valuation of costs and benefits requires estimates and judgments by management. The internal controls shall address the following points at a minimum: Control of collusion; Separation of transaction authority from accounting and recordkeeping; Custodial safekeeping; Clear delegation of authority to subordinate staff members; Written confirmation of transactions for investments and wire transfers; Dual authorizations of wire transfers; Staff training; and Review, maintenance and monitoring of security procedures both manual and automated. Page 4 15

30 City of Lacey Investment Policy EXTERNAL CONTROLS The Finance Director shall establish an annual process of independent review by an external auditor. This review will assure the policies and procedures are being complied with by providing internal control. Such review may also result in recommendations to change operating procedures to improve internal control. AUTHORIZED FINANCIAL DEALERS BROKER/DEALERS The Finance Director shall maintain and review annually a list of all authorized financial institutions and broker/dealers that are approved to transact with the City for investment purposes. The City shall follow Government Finance Officers Association (GFOA) best practices for evaluating and selecting financial institutions and broker/dealers. The Finance Director or designee may utilize the investment advisor s approved broker/dealer list in lieu of the City s own approved list. The Advisor must submit the approved list to the City annually and provide updates throughout the year as they occur. The Advisor shall follow GFOA best practices for evaluating and selecting financial institutions and broker/dealers. The Advisor must maintain documentation of appropriate license and professional credentials of broker/dealers on the list. The annual investment advisor broker/dealer review procedures include but are not limited to: a. FINRA Certification check: i. Firm profile ii. Firm history iii. Firm operations iv. Disclosures of arbitration awards, disciplinary and regulatory events v. State Registration Verification b. Financial review of acceptable FINRA capital or letter of credit for clearing settlements. The Advisor may be authorized through the contracted agreement to open accounts on behalf of the City with the broker/dealers on the approved broker/dealer list. INVESTMENT ADVISORS Advisors must be registered under the Investment Advisers Act of 1940 and must act in a nondiscretionary capacity, requiring approval from the City prior to all transactions. BANK INSTITUTIONS The City will only place funds in qualified depositories in the State of Washington as provided in Chapter 9.58 RCW and as regulated by the Washington State Finance Director s Public Deposit Protection Commission (PDPC). Listings with the PDPC will be verified by the Advisor or designated investment officer annually. Page 5 15

31 City of Lacey Investment Policy COMPETITIVE TRANSACTIONS Transactions must be executed on a competitive basis and documented. Competitive prices should be provided from at least three separate brokers, financial institutions or through a national electronic trading platform. If the purchased security is only offered by one broker then other securities with similar structure may be used for documentation purposes. When an Advisor handles trade executions, they must provide the competitive documentation as requested. AUTHORIZED AND SUITABLE INVESTMENTS AUTHORIZED INVESTMENTS Eligible investments are only those securities and deposits authorized by statute (RCW 9.58, 9.59, 4.250, and ). Additional specifications: The State of Washington Local Government Investment Pool is the only governmentsponsored Pool approved for investment of funds. This policy recognizes S&P, Moody s, and Fitch as the major Nationally Recognized Statistical Ratings Organizations (NRSRO). In the case of split ratings, where the major NRSROs issue different ratings, the higher rating shall apply. Minimum credit ratings and percentage limitations apply to the time of purchase. All securities must be purchased on the secondary market and may not be purchased directly from the issuer. Interfund loans issued by the City may also be included as investments. SUITABLE INVESTMENTS The City is empowered to invest in the following types of securities: US Treasury Obligations: Direct obligations of the United States Treasury. US Agency Obligations Primary Issuers: Government Sponsored Enterprises (GSEs) Federal Instrumentality Securities include, but are not limited to Federal National Mortgage Association (FNMA), the Federal Home Loan Mortgage Corporation (FHLMC), Federal Home Loan Banks (FHLB), and the Federal Farm Credit Banks (FFCB). US Agency Obligations Secondary Issuers: Other US government sponsored enterprises that are less marketable are considered secondary GSEs. They include, but are not limited to: Private Export Funding Corporation (PEFCO), Tennessee Valley Authority (TVA), Financing Corporation (FICO) and Federal Agricultural Mortgage Corporation, (Farmer Mac). Supranational Bonds: The institution must have the U.S. government as its largest shareholder. International Bank for Reconstruction and Development (IBRD or World Bank); the International Finance Corporation (IFC); the Asian Development Bank (ADB) and the Inter-American Development Bank (IADB). Municipal Debt Obligations: Bonds of the State of Washington, any local government in the State of Washington, General Obligation bonds outside the State of Washington; at the time of investment the bonds must have a AA- from S&P, Aa from Moody s or AA- from Fitch. City Page 6 15

32 City of Lacey Investment Policy of Lacey long-term interfund loans may be included as investments of municipal debt and are not required to be rated. Corporate Notes: Unsecured debt obligations purchased in accordance with the investment policies and procedures adopted by the State Investment Board. At the time of purchase corporate notes must have a minimum rating of AA- by S&P, or Aa by Moody s or AA- by Fitch. Corporate notes must be purchased on the secondary market through a broker/dealer and cannot be purchased directly through the issuer. Issuer constraints for AA- or better issuers will be limited to % of market value at the time of purchase. Only U.S. or Canadian domiciled issues are allowable. Commercial Paper: Unsecured debt obligations of corporate issuers that are rated at least A1+ by S&P, P1 by Moody s or F1+ by Fitch. Commercial paper holdings may not have maturities exceeding 270 days. Any commercial paper purchased with a maturity longer than 100 days must also have an underlying long-term credit rating at the time of purchase with a minimum rating of AA- by S&P, Aa by Moody s or AA- by Fitch. Issuer constraints for commercial paper combined with corporate notes will be limited to % of market value per issuer. Certificates of Deposit: Non-negotiable Certificates of Deposit of financial institutions that are qualified public depositories as defined in RCW (2) and by the restrictions within. Bank Time Deposits and Savings Accounts Issued by Banks: Deposits in PDPC approved banks. Banker s Acceptance: Banker s Acceptances generally are created based on a letter of credit issued to finance transactions. They are used to finance the shipment of some specific goods within the United States. They are issued by qualified financial institutions eligible for discount by the Federal Reserve System and by a qualified institution whose long-term letter of credit rating is rated in the highest category: AAA. State Local Government Investment Pool: Investment Pool managed by the Washington State Finance Director s Office. BANK COLLATERALIZATION The PDPC makes and enforces regulations and administers a program to ensure public funds deposited in banks and thrifts are protected if a financial institution becomes insolvent. The PDPC approves which banks and thrifts can hold state and local government deposits and monitors collateral pledged to secure uninsured public deposits. Under RCW , all public Finance Directors and other custodians of public funds are relieved of the responsibility of executing tri-party agreements, reviewing pledged securities, and authorizing additions, withdrawals, and exchanges of collateral. Page 7 15

33 City of Lacey Investment Policy INVESTMENT PARAMETERS DIVERSIFICATION The City will diversify the investment of all funds by adhering to the constraints by issuer type in accordance with the following table: Table of Portfolio Constraints Issue Type Maximum % Maximum % Ratings Ratings Ratings Holdings per Issuer S&P Moody s Fitch US Treasury Obligations 100% None N/A N/A N/A US Agency Primary Securities FHLB, FNMA, FHLMC, FFCB US Agency Secondary Securities FICO, FARMER MAC etc. 100% 5% N/A N/A N/A 10% 5% AA- Aa AA- Supranational Agency Notes 10% 5% AA- Aa AA- Municipal Bonds 0% 5% AA- Aa AA- City of Lacey Interfund Loans 15% None N/A N/A N/A Corporate Bonds - US/CDN AA- Aa AA- 25%* %* A1+ P1 F1+ Commercial Paper Long Term AA- Long Term Aa Long Term AA- Certificates of Deposit 20% 5% Bank Time Deposits/Savings 20% None Deposits in PDPC approved banks Deposits in PDPC approved banks Deposits in PDPC approved banks Deposits in PDPC approved banks Deposits in PDPC approved banks Deposits in PDPC approved banks Banker s Acceptance 10% 5% N/A N/A N/A State LGIP 100% None N/A N/A N/A *Issuer constraints apply to the combined issues in corporate and commercial paper holdings. INVESTMENT MATURITY To the extent possible, the City will attempt to match its investments with anticipated cash flow requirements. The City will not directly invest in securities maturing more than five (5) years from the date of purchase. Page 8 15

34 City of Lacey Investment Policy The maximum weighted maturity of the total portfolio shall not exceed 2 years. This maximum is established to limit the portfolio to excessive price change exposure. Liquidity funds will be held in the State Pool, PDPC bank deposits, or cash matched securities. Investment funds will be defined as the funds in excess of liquidity requirements. The investments in this portion of the portfolio will have maturities between 1 day and 5 years and will be only invested in high quality and liquid securities. Interfund loan maturities are excluded from the maturity constraint rules. Specific dedicated funds such as bond reserves and designated perpetual funds may be excluded from the maturity constraints. Total Portfolio Maturity Constraints: Maturity Constraints Minimum % of Total Portfolio Under 0 days 10% Under 1 year 25% Under 5 years 100% Maturity Constraints Maximum in Years Weighted Average Maturity 2 Weighted Average Maturity Corporate Credit Security Structure Constraint Maximum % of Total Portfolio Callable Agency Securities 25% STRATEGIC ALLOCATIONS Funds and their Allocation The City has two classifications of investment funds: Liquidity and Core. a. Liquidity funds for the operating account will be allocated to LGIP, CD s, PDPC Bank Deposits, Bankers Acceptances, and Commercial Paper. b. The structure of the Investment Core Fund will be targeted to a selected market benchmark based on the risk and return objectives of the portfolio. Page 9 15

35 City of Lacey Investment Policy Monitoring and Portfolio Adjustment As a general practice, securities will be purchased with the intent to hold to maturity. However, it is acceptable for securities to be sold under the following circumstances: a. A security with a declining credit may be sold early to protect the principal value of the portfolio. b. A security may be sold to bring the portfolio duration or maturity in alignment with the structure of the underlying benchmark portfolio. c. A security exchange that would improve the quality, yield and target maturity of the portfolio based on market conditions. d. A sale of a security to provide for unforeseen liquidity needs. PROHIBITED INVESTMENTS The City shall not lend securities nor directly participate in a securities lending or reverse repurchase program. The City shall not invest in: a. Mortgage-backed securities b. Derivative Products c. Securities that leverage the portfolio or are used for speculation of interest rates d. Any securities on negative credit watch e. Mutual Funds f. Repurchase Agreements g. Reverse Agreements REPORTING REQUIREMENTS REPORTING The Finance Director shall be responsible for investment reporting. At a minimum, quarterly reporting shall be made to the City Manager and annual reporting shall be made to the City Council including, but not limited to; securities holdings, cash balances, and market values in the investment portfolio. Specific reporting requirements: Book Yield Holdings Report including mark-to-market and security description Transactions Report Weighted Average Maturity Performance in relation to established benchmarks PERFORMANCE STANDARDS The portfolio shall be managed to obtain a fair rate of return and earnings rate that incorporates the primary objectives of protecting the City's capital and assuring adequate liquidity to meet cash flow needs. Page 10 15

36 City of Lacey Investment Policy For purposes of this policy, earnings rate will be the composite rate of both the Liquidity and Core funds and be compared to the LGIP rate. The goal is for the total portfolio, to generally perform better than the LGIP due to the longer weighted average maturity and the earnings rate is expected to trend in a similar manner as interest rates change. The investment portfolio performance may be tracked against a market index such as the US treasury 0- year index or US treasury 0-5 year index on a total return basis. This will provide for accountability of price changes in the portfolio and help inform the strategy related to the duration of the portfolio. COMPLIANCE REPORT A compliance report will be generated quarterly comparing the portfolio positions to this investment policy. ACCOUNTING METHOD The City shall comply with all required legal provisions and Generally Accepted Accounting Principles (GAAP). The accounting principles are those contained in the pronouncements of authoritative bodies including, but not necessarily limited to, the Governmental Accounting Standards Board (GASB). Pooling of Funds: Except for cash in certain restricted and special funds, the City will consolidate balances from all funds to maximize investment earnings. Investment income will be allocated to the various funds based on their respective participation in the investment program and in accordance with generally accepted accounting principles. INVESTMENT POLICY ADOPTION The City s Investment Policy and amendments shall be adopted by resolution by the City Council. The Policy shall be reviewed annually by the Finance Director or the Finance Committee when applicable, and any modifications made to the Investment Policy must be approved and adopted by the City Council. Page 11 15

37 City of Lacey Investment Policy APPENDIX - INVESTMENT TERMINOLOGY Accrued Interest: The interest accumulated on a bond since issue date or the last coupon payment. The buyer of the bond pays the market price and accrued interest, which is payable to the seller. Agency: A debt security issued by a federal or federally sponsored agency. Federal agencies are backed by the full faith and credit of the U.S. Government. Government Sponsored Enterprises (GSEs) are backed by each particular agency with a market perception that there is an implicit government guarantee. Agency Securities: Government sponsored enterprises of the US Government. Amortization: In portfolio accounting, periodic charges made against interest income on premium bonds in anticipation of receipt of the call price at call or of par value at maturity. Asset: Available property, as for payment of debts Average Maturity: A weighted average of the expiration dates for a portfolio of debt securities. An income fund's volatility can be managed by shortening or lengthening the average maturity of its portfolio. Bankers Acceptances: A time draft accepted (endorsed) by a bank or trust company. The accepting institution guarantees payment of the bill, as well as the issuer. BAs are short-term non-interest-bearing notes sold at a discount and redeemed by the accepting bank at maturity for full face value. Bank Wire: A virtually instantaneous electronic transfer of funds between two financial institutions. Basis Points: A measure of an interest rate, i.e., 1/100 of 1 percent, or Bid: The indicated price at which a buyer is willing to purchase a security selling a security, a bid is obtained. (See Offer) or commodity. When Bond: An interest-bearing security issued by a corporation, government, governmental agency, or other body. It is a form of debt with an interest rate, maturity, and face value, and specific assets sometimes secure it. Most bonds have a maturity of greater than one year and generally pay interest semiannually. Broker: An intermediary who brings buyers and sellers together and handles their orders, generally charging a commission for this service. In contrast to a principal or a dealer, the broker does not own or take a position in securities. Certificates of Deposit: Instruments issued by a bank specifying that a sum of money has been deposited, payable with interest to the bearer of the certificate on a certain date. Collateral: Securities or other property that a borrower pledges as security for the repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies. Commercial Paper: Short-term, unsecured, negotiable promissory notes issued by corporations. Current Maturity: The amount of time left until an obligation matures. For example, a one-year bill issued nine months ago has a current maturity of three months. CUSIP: A CUSIP number identifies securities. CUSIP stands for Committee on Uniform Security Identification Procedures, which was established under the auspices of the American Bankers Association to develop a uniform method of identifying municipal, U.S. government, and corporate securities. Page 12 15

38 City of Lacey Investment Policy Dealer: An individual or firm that ordinarily acts as a principal in security transactions. Typically, dealers buy for their account and sell to a customer from their inventory. The dealer s profit is determined by the difference between the price paid and the price received. Delivery: Either of two methods of delivering securities: delivery vs. payment and delivery vs. receipt (also called free ). Delivery vs. payment is the delivery of securities with an exchange of money for the securities. Diversification: Dividing available funds among a variety of securities and institutions so as to minimize market risk. Duration: A measure used to calculate the price sensitivity of a bond or portfolio of bonds to changes in interest rates. This equals the sum of the present value of future cash flows. Full Faith and Credit: Indicator that the unconditional guarantee of the United States government backs the repayment of debt. General Obligation Bonds (GOs): Bonds secured by the pledge of the municipal issuer s full faith and credit, which usually includes unlimited taxing power. Government Bonds: Securities issued by the federal government; they are obligations of the U.S. Treasury; also known as governments. Interest: Compensation paid or to be paid for the use of money. The rate of interest is generally expressed as an annual percentage. Investment Core Funds: Core funds are defined as operating fund balance and other fund balances that exceeds the City s daily liquidity needs. Core funds are invested out the yield curve to diversify maturity structure in the overall portfolio. Having longer term investments in a portfolio will stabilize the overall portfolio interest earnings over interest rate cycles. Investment Securities: Securities purchased for an investment portfolio, as opposed to those purchased for resale to customers. Liquidity: The ease at which a security can be bought or sold (converted to cash) in the market. A large number of buyers and sellers and a high volume of trading activity are important components of liquidity. Liquidity Component: A percentage of the total portfolio that is dedicated to providing liquidity needs for the City. LGIP: Local Government Investment Pool run by the State of Washington Finance Director s office established to help cities with short-term investments. Mark to Market: Adjustment of an account or portfolio to reflect actual market value rather than book price, purchase price or some other valuation. Market Value: The market value of a security is the price at which can be sold on that date. Maturity: The date upon which the principal or stated value of an investment becomes due. Municipals: Securities, usually bonds, issued by a state, its agencies, by cities or other municipal entities. The interest on munis is usually exempt from federal income taxes and state and local income taxes in the state of issuance. Municipal securities may or may not be backed by the issuing agency s taxation powers. Page 1 15

39 City of Lacey Investment Policy Non-Discretionary Investment Advisor: Non-discretionary investment advisor services may include investment management oversight, investment research, portfolio analysis, portfolio reporting and portfolio recommendations based upon the specific investment policy and investment objectives of each client. Clients must approve any such recommendations before the securities are purchased or sold in their accounts. Par Value: The value of a security expressed as a specific dollar amount marked on the face of the security or the amount of money due at maturity. Par value should not be confused with market value. Portfolio: A collection of securities held by an individual or institution. Principal: The cost of an instrument on which interest is earned. Prudent Person Rule: A long-standing common-law rule that requires a trustee who is investing for another to behave in the same way as a prudent individual of reasonable discretion and intelligence who is seeking a reasonable income and preservation of capital. Quotation or Quote: A bid to buy or the lowest offer to sell a security in any market at a particular time. Repurchase Agreement: Range in maturity from overnight to fixed time to open end. Repos involve a simultaneous sale of securities by a bank or government securities dealer to an investor with an agreement for the bank or government securities dealer to repurchase the securities at a fixed date at a specified rate of interest. Safekeeping: An arrangement under which an organization s securities are kept in a bank vault or in the case of book entry securities, are held and recorded in the customer s name. Evidence of this arrangement is a safekeeping receipt. Secondary Market: A market where certain securities may be bought and sold at prevailing market prices after their initial distribution but before their stated maturity date. Treasury Bill (T-Bill): An obligation of the U.S. government with a maturity of one year or less. T-bills bear no interest but are sold at a discount. Treasury Bonds and Notes: Obligations of the U.S. government that bear interest. Notes have maturities of one to ten years; bonds have longer maturities. Yield: The annual rate of return on an investment expressed as a percentage of the investment. Income yield is obtained by dividing the current dollar income by the current market price for the security. Net yield, or yield to maturity, is the current income yield minus any premium above par or plus any discount from par in the purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond. Yield to Maturity: The average annual yield on a security, assuming it is held to maturity; equals to the rate at which all principal and interest payments would be discounted to produce a present value equal to the purchase price of the bond. Page 14 15

40 LACEY CITY COUNCIL MEETING January 18, 2018 SUBJECT: Lift Station 9 Corrosion Rehabilitation Project RECOMMENDATION: Motion to award Lacey Contract Number PW to low bidder Waunch Construction & Trucking, Inc. from Olympia, WA in the amount of $84, STAFF CONTACT: Scott Spence, City Manager Scott Egger, P.E., Public Works Director Peter Brooks, P.E., Water Resources Manager Teri O Neal, P.E., Senior Utility Engineer Puna Lovell, P.E., Utility Engineer ORIGINATED BY: Public Works Department ATTACHMENTS: FISCAL NOTE: PRIOR REVIEW: NONE NONE Council approved the Wastewater Capital Funds as part of the 2018 Budget. The Lift Station 9 Corrosion Rehabilitation project is listed as a 2018 Wastewater Capital Fund project. Funding for the project is provided through the fund source WW16L BACKGROUND: Lift Station #9 is a.2mgd submersible triplex lift station located at 4905 Ruddell Road SE. The lift station is currently experiencing multiple corrosion issues and requires partial rehabilitation. The wet well interior will be re-coated, the corroded wet well hatch will be replaced, the corroded wet well discharge piping will be replaced, and the corroded steel pump discharge pipe support beams in the wet well will be replaced. The location of the lift station and site layout will require bypass pumping and traffic control during construction for this project. Bypass pumping may be difficult due to the high flows to the lift station and the location of the manhole location in the middle of Ruddell Road SE. Ruddell Road SE is a highly travelled multi-lane road. Page 1 of

41 As part of the project, a manhole will be added in 50th Avenue east of 50th Court across from the Cottages. This new manhole is important to the project during the bypass pumping phase of construction. The addition of the new manhole will also increase efficiency in maintenance of the wastewater pipelines in the future. The project was advertised for approximately four weeks and bids were opened January, Nine (9) bids were received. The nine bids ranged from a low of $84, to a high of $2,996, Waunch Construction & Trucking, Inc. from Olympia, WA is the low bidder at $84, The Engineer s Estimate is $40, A Bid Summary Sheet is below. Waunch Construction & Trucking, Inc. is qualified and capable of performing the work. Start date is anticipated to be around the beginning of March and there are 100 working days allotted. ADVANTAGES: 1. The renovated lift station will improve lift station operation and efficiency due the corrosion upgrades. 2. The new bypass manhole will allow the City s operations staff to complete bypass pumping operations on the lift station site only without disrupting traffic in Ruddell Rd SE.. The new manhole in 50 th Avenue SE will mitigate flow backup in the lines during bypass operations at the lift station site. 4. Waunch Construction & Trucking, Inc. has worked for the City recently completing the project on time and within budget. DISADVANTAGES: 1. Typical traffic delays can be expected during construction. Page 2 of

42 BID SUMMARY City of Lacey Lift Station 9 Corrosion Rehabilitation PW Contractor Bid Amount Pos Waunch Construction, & Trucking, Inc. $84, Baker underground & Construction $422, Award Construction, Inc $477, R. L. Alia Company $515, Gary Harper Construction, Inc $557, Macro-Z Technology $605, Rognlin's, Inc. $629, Nova Contracting, Inc. $686, RHD Enterprises, Inc $2,996, Engineer s Estimate: $40, PROJECT LOCATION MAP Rainier Vista Park Page of

43 LACEY CITY COUNCIL MEETING January 18, 2018 SUBJECT: Interlocal Agreement Between the City and the Washington Department of Transportation RECOMMENDATION: Authorize the City Manager to enter into Interlocal Agreement with WSDOT for paving on Marvin Road. STAFF CONTACT: Scott Spence, City Manager Scott Egger, P.E., Public Works Director Roger Schoessel, P.E., City Engineer Tyson Poeckh, Ph.D., P.E., Project Administrator ORIGINATED BY: Public Works Department ATTACHMENTS: FISCAL NOTE: Interlocal Agreement This project was not anticipated. Funding for the project will be provided through the Arterial Street Fund. PRIOR REVIEW: N/A BACKGROUND: As part of the State s Exit 111 and Marvin Road Diverging Diamond Interchange project, the City will overlay Marvin Road SE from the Main Street roundabout and match to the State s north paving limits of the interchange project. The City and the State determined it was beneficial to have the City s approximately 67,000 SF or 1,100 tons of asphalt on Marvin Road SE overlaid at the same time as the State s project. The State will be the lead agency and the City will reimburse the State for the portion of the overlay located adjacent to the Exit 111 interchange project limits by this Interlocal Agreement (see attached agreement). The engineer s estimate for the City s portion of the overlay is approximately $25,000. This Interlocal Agreement is valid just for this work. Page 1 of 2

44 ADVANTAGES: 1. Savings to both jurisdictions, both in construction and administration. 2. Minimizes project cost for both agencies. DISADVANTAGES: 1. Typical traffic delays can be expected during construction. The construction of the overlay will occur at night to minimize the disruption. Page 2 of 2

45 Local Agency Participating Agreement Work by WSDOT Actual Cost Agreement Number Local Agency Name & Address Section/Location State Route Control Section Number Plans, Specifications and Cost Estimates (PS&E) for the Local Agency Work by LOCAL AGENCY? Yes No Region PS&E Due Date: Advance Payment Required? Yes No Description of Work: Advance Payment Amount State Agency Representatives: WSDOT Local Agency Representatives: LOCAL AGENCY Name: Name: Title: Title: Address: Address: Address: Address: Phone: Phone: This Agreement is made and entered into between the Washington State Department of Transportation (WSDOT) and the above named governmental entity (LOCAL AGENCY). WHEREAS, WSDOT is planning the construction or improvement of a section of the state route as shown above, and in connection therewith, the LOCAL AGENCY has requested that WSDOT perform certain work for the LOCAL AGENCY as described above under Description of Work and/or further described in Exhibit B, (Work), and WHEREAS, it is deemed to be in the public s best interest for WSDOT to include the requested Work in WSDOT s construction contract for the state route improvement, and WHEREAS, the LOCAL AGENCY is obligated for the cost of the Work described herein, DOT Form Revised 11/2017

46 NOW, THEREFORE, pursuant to RCW and/or chapter 9.4 RCW and in consideration of the terms, conditions, and performances contained herein, the recitals as stated above, and the attached Exhibits which are incorporated and made a part hereof, IT IS MUTUALLY AGREED AS FOLLOWS: 1. PLANS, SPECIFICATIONS, AND COST ESTIMATES 1.1 WSDOT, on behalf of the LOCAL AGENCY, agrees to perform the Work, as further provided herein and pursuant to the attached exhibits. Exhibit A is the Cost Estimate and Exhibit B, if included as an attachment, further defines the Work to be constructed for the LOCAL AGENCY. The combination of the LOCAL AGENCY s Work and WSDOT s improvements hereinafter constitute the Project. 1.2 If indicated in the above heading, the LOCAL AGENCY shall provide WSDOT with plans, specifications and cost estimates (PS&E) for the Work The PS&E shall be in accordance with the state of Washington Standard Specifications for Road, Bridge and Municipal Construction, and its amendments thereto (Standard Specifications), current at the time of Project advertisement, mutually acceptable design standards, or the LOCAL AGENCY s standards, if applicable and specified by the LOCAL AGENCY. Backup calculations for quantities and breakdowns for lump sum items shall be included with the PS&E for the Work If the PS&E for the Work, with backup calculations and breakdowns, is not delivered by the above PS&E due date, WSDOT, at its sole discretion, may proceed without the LOCAL AGENCY Work included with WSDOT s improvements. The LOCAL AGENCY agrees to reimburse all WSDOT costs incurred up to and as a result of the LOCAL AGENCY s failure to timely provide the PS&E. This Agreement shall terminate upon receipt of all reimbursement payments in accordance with Section WSDOT will incorporate the LOCAL AGENCY s Work or Work PS&E into WSDOT s PS&E for WSDOT s improvements to produce a combined advertisement (Ad) ready PS&E for the Project. WSDOT will document WSDOTperformed engineering design work required to incorporate the Work or Work PS&E into WSDOT s PS&E (Design Documentation). WSDOT shall provide up to two intermediate review sets of the PS&E and Design Documentation at mutually agreeable milestones. WSDOT will provide the LOCAL AGENCY with one (1) reproducible copy of the stamped final Design Documentation prior to the proposed Ad date. 1.4 WSDOT will provide the LOCAL AGENCY with one (1) reproducible copy of the Ad ready PS&E for the Project a minimum of thirty (0) working days prior to the proposed Ad date. The LOCAL AGENCY will have fifteen (15) working days to review the Ad ready PS&E for the Project, resolve any concerns, and provide WSDOT with written approval, conditional approval, or rejection of the Ad ready PS&E for the Work portion of the Project. In the event the Work portion of the Ad ready PS&E is conditionally approved or rejected, the LOCAL AGENCY shall include the reasons for conditional approval or rejection. The LOCAL AGENCY may request an extension of time in writing, provided that WSDOT receives the written request not later than fifteen (15) working days after the LOCAL AGENCY has received the Ad ready PS&E. WSDOT shall provide a written response, indicating the number of working days extended,if any. 1.5 If WSDOT does not receive the LOCAL AGENCY s written approval, conditional approval or rejection of the Work portion of the Ad ready PS&E within fifteen (15) working days and any approved extension of time pursuant to Section 1.4, or if WSDOT cannot accept the LOCAL AGENCY s condition(s) of approval, or if the LOCAL AGENCY has not acquired all right of way and permits required to construct, maintain,and operate the Work, WSDOT may, at its sole discretion, delete the Work from the Project and advertise WSDOT s improvements. The LOCAL AGENCY agrees to reimburse WSDOT for engineering costs and actual direct and related indirect costs incurred by WSDOT associated with either WSDOT or LOCAL AGENCY deleting the Work from the Project. This Agreement shall then terminate upon receipt of all reimbursement payments in accordance with Section 6. DOT Form Revised 11/2017

47 2. BID, AWARD, AND COST ADJUSTMENTS 2.1 WSDOT will advertise the Project for bids. WSDOT will be the LOCAL AGENCY s representative during the Ad and Project contract award period. When requested by WSDOT, the LOCAL AGENCY shall timely assist WSDOT in answering bid questions and resolving any design issues that may arise that are associated with the Work. All comments and clarifications must go through WSDOT. 2.2 If the LOCAL AGENCY is responsible for preparing the Work PS&E, the LOCAL AGENCY agrees to provide WSDOT with any addenda required for the Work during the Ad period, to the Parties mutual satisfaction. 2. WSDOT shall provide the LOCAL AGENCY with written notification of the bid price for the Work. The LOCAL AGENCY shall have five (5) working days from the date of written notification to provide WSDOT written approval of the bid price for the Work, or request the Work be deleted from the Project. The LOCAL AGENCY may request an extension of time in writing, provided that WSDOT receives the written request not later than five (5) working days after the LOCAL AGENCY has received the written notification. WSDOT shall provide a written response indicating the number of working days extended, if any. 2.4 The LOCAL AGENCY acknowledges that if it fails to provide WSDOT with written approval of the bid price for the Work or request that the Work be deleted from the Project within five (5) working days and any approved extension of time pursuant to Section 2., WSDOT shall delete the Work from the Project. In this event, the LOCAL AGENCY agrees to reimburse WSDOT for engineering costs and actual direct and related indirect costs incurred by WSDOT associated with deleting the Work from the Project. The LOCAL AGENCY understands that deleting the Work from the Project may require an equitable adjustment to the Project contract and agrees to reimburse WSDOT for costs associated with the equitable adjustment. This Agreement shall then terminate upon receipt of all reimbursement and equitable adjustment payments in accordance with Section If the LOCAL AGENCY approves the bid price for the Work and WSDOT does not award or execute the Project contract, but thereafter re-advertises the Project for bids, WSDOT agrees to pay all WSDOT costs to re-advertise the Project. The LOCAL AGENCY agrees that WSDOT is not responsible for increased bid prices or delay to the Work or other impacts to the LOCAL AGENCY resulting from readvertising the Project. 2.6 If the LOCAL AGENCY approves the bid price for the Work and WSDOT does not award or execute the Project contract and does not re-advertise the Project for bids, this Agreement shall terminate upon receipt of all reimbursement payments in accordance with Section 6. The LOCAL AGENCY agrees that WSDOT is not responsible for potential increased costs for the Work, delay to the Work or other impacts to the LOCAL AGENCY resulting from not awarding the Project.. CONSTRUCTION.1 WSDOT will be the LOCAL AGENCY s representative during construction and will act as owner in the administration of the contract for the Work. WSDOT will designate a WSDOT Project Engineer to provide all services and tools, including but not limited to construction administration, inspection, materials testing, and representation, necessary to administer and manage the contract to ensure that the Work is constructed in accordance with the contract..2 The LOCAL AGENCY may consult with and inquire of WSDOT Project Engineer, attend all meetings, and have access to all documentation concerning the Work. The LOCAL AGENCY shall not provide direction, directly or indirectly,to WSDOT s contractor. All formal contacts between the LOCAL AGENCY and the contractor shall be through WSDOT s representative.. When it becomes known that quantities for a unit bid item will exceed plan quantity for the Work by ten (10) percent or result in a cost increase for the Work exceeding the total amount by the percentage listed under Section 6.5, WSDOT shall consult with the LOCAL AGENCY on possible courses of action within three () working days in accordance with Section 4..4 The LOCAL AGENCY may inspect the Work. Any costs for such inspection shall be borne solely by the LOCAL AGENCY. All contact between said inspector and the contractor shall be only through WSDOT s inspector or WSDOT s representative. DOT Form Revised 11/2017

48 .5 WSDOT will prepare the final construction documentation in general conformance with WSDOT s Construction Manual. WSDOT will maintain one set of plans as the official as-built set, then make notations in red ink of all plan revisions typically recorded per standard WSDOT practices, as directed by WSDOT s Construction Manual. Once the LOCAL AGENCY has accepted the Work per Section 5, WSDOT will provide one reproducible set of as-built plans to the LOCAL AGENCY within ( ) working days. 4. CONTRACT CHANGES 4.1 Changes to the Project contract will be documented by change order in accordance with the Standard Specifications. WSDOT shall process change orders for all changes affecting the Work in the manner set forth in subsection SS , Approval of Changes/Checklist, WSDOT Construction Manual, current edition. 4.2 Required changes involve such changes in quantities or alterations to the Work as are necessary to satisfactorily complete the Project. All other changes affecting the Work shall be considered elective changes. 4. The LOCAL AGENCY authorizes WSDOT to initiate all required changes affecting the Work and to negotiate, document and execute the associated change orders. The LOCAL AGENCY agrees to pay for the increases in cost, if any, for the required changes affecting the Work in accordance with Section WSDOT will advise the LOCAL AGENCY of any proposed required changes affecting the Work as soon as possible and provide it with an opportunity, if time permits, to review the change before implementation. WSDOT will determine the length of the review time based upon the need to expedite the change to avoid delay to the contractor. 4.5 The LOCAL AGENCY may request additions to the Work through WSDOT in writing. WSDOT will implement the requested changes as elective changes, provided that a change does not negatively impact WSDOT s transportation system and complies with the Standard Specifications, Project permits, state and/or federal law, applicable rules and/or regulations, and/or WSDOT design policies, and does not unreasonably delay critically scheduled Project contract activities. 4.6 All elective changes to the Work shall be approved in writing by the LOCAL AGENCY before WSDOT directs the contractor to implement the changes, even if an executed change order is not required by the Project contract. The LOCAL AGENCY agrees to pay for the increases in cost, if any, for such elective changes in accordance with Section WSDOT will make available to the LOCAL AGENCY all change order documentation related to the Work. 4.8 In the event it is determined that the LOCAL AGENCY does not have sufficient funds to complete the Work, WSDOT and the LOCAL AGENCY shall negotiate to determine the future of the Work. If it is determined that the Work cannot proceed, the Work shall be brought to a level that is safe for public use and WSDOT will terminate the remainder of the Work from the Project contract. In the event the Work is terminated, Section 5 shall apply for that portion of the Work completed up to the time of termination. The LOCAL AGENCY agrees to pay all costs associated with termination, including contractor claims, in accordance with Section ACCEPTANCE 5.1 Prior to Work acceptance, WSDOT and LOCAL AGENCY will perform a joint final inspection. The LOCAL AGENCY agrees, upon satisfactory completion of the Work and receipt of a Notice of Physical Completion of the Work, as determined by WSDOT, to deliver a letter of acceptance to WSDOT which shall include a release of WSDOT from all future claims or demands of any nature resulting from the performance of the Work and WSDOT administration thereof, outside WSDOT right of way, subject to any contractor claims (Section 8) caused by the negligent acts or omissions of WSDOT in administering the Work. DOT Form Revised 11/2017

49 5.2 If a letter of acceptance is not received by WSDOT within ninety (90) days following delivery of a Notice of Physical Completion of the Work to the LOCAL AGENCY, the Work and WSDOT administration thereof shall be considered accepted by the LOCAL AGENCY, and WSDOT shall be released from all future claims and demands of any nature resulting from the performance of the Work and WSDOT s administration thereof, outside WSDOT right of way, subject to any contractor claims (Section 8) caused by the negligent acts or omissions of WSDOT in administering the Work. 5. The LOCAL AGENCY may withhold its acceptance of the Work by submitting written notification to WSDOT within Working Calendar ( ) days following delivery of a Notice of Physical Completion of the Work. This notification shall include the reason(s) for withholding acceptance. 6. PAYMENT 6.1 The LOCAL AGENCY, in consideration of the faithful performance of the Work performed by WSDOT and its contractor, agrees to reimburse WSDOT for the actual direct and related indirect costs of the Work, as estimated in Exhibit A. 6.2 WSDOT shall provide detailed invoices to the LOCAL AGENCY for the Work performed by WSDOT and its contractor or for costs incurred as provided in Sections 1.2.2, 1.5, 2.4, 4.8 or 8.1.4, and the LOCAL AGENCY agrees to make payment within thirty (0) days from receipt of an invoice. A payment will not constitute agreement as to the appropriateness of any item. At the time of the final invoice, the Parties will resolve any discrepancies. 6. The LOCAL AGENCY agrees that if it does not make payment within ninety (90) days after receipt of an invoice, WSDOT may deduct and expend any monies to which the LOCAL AGENCY is entitled to receive from the Motor Vehicle Fund. 6.4 Advance Payment: If an advance payment is required, the LOCAL AGENCY agrees to pay WSDOT the Advance Payment Amount, shown above, within twenty (20) days after receipt of Project contract award notification. The advance payment represents approximately fifteen percent (15%) of the cost estimate and covers costs incurred by WSDOT in the initial stages of the Work. The advance payment will be carried throughout the life of the LOCAL AGENCY s cost obligations, with final adjustment made in the final invoice. 6.5 Increase in Cost: In the event unforeseen conditions require an increase in the cost of the Work above the cost estimate (including sales tax, engineering, and contingencies) by more than ( ) percent, the Parties agree to modify this Agreement by executing a written amendment to address the increase pursuant to Section 10.1, or implement Section RIGHT OF ENTRY 7.1 The LOCAL AGENCY hereby grants to WSDOT and its authorized agents, contractors, subcontractors, and employees, a right of entry upon all land in which the LOCAL AGENCY has an interest for the purpose of constructing the Project. 7.2 Where applicable, the LOCAL AGENCY hereby grants to WSDOT and its authorized agents, contractors, subcontractors, and employees, a right of entry upon all land in which the LOCAL AGENCY has an interest for WSDOT to construct, operate, maintain and/or reconstruct signal loop detectors and appurtenances for signals belonging to WSDOT, if any, that are constructed within the LOCAL AGENCY s right of way. The terms of this Section 7.2 shall survive the termination of this Agreement. 8. CLAIMS 8.1 Claims for Additional Payment In the event the contractor makes claims for additional payment associated with the Work, WSDOT will immediately notify the LOCAL AGENCY of such claims. Such claims shall be made in the manner and form as provided for in the Standard Specifications. DOT Form Revised 11/2017

50 8.1.2 The LOCAL AGENCY shall not be obligated to pay such claims or their cost of defense to the extent that the claims are caused by the negligent acts or omissions of WSDOT in administering the Work The LOCAL AGENCY shall have the right to review and comment on any settlement for claims associated with the Work. However, WSDOT shall have the ultimate right to settle such claims. In the event the LOCAL AGENCY does not agree with the claim settlement as negotiated by WSDOT, the LOCAL AGENCY shall reserve the right to not financially participate in the negotiated claim settlement. If agreement cannot be reached between the LOCAL AGENCY and WSDOT on a claim settlement, the Parties agree to follow the dispute resolution procedure in Section If WSDOT agrees, the LOCAL AGENCY may defend contractor claims associated with the Work at its own cost, and in doing so, the LOCAL AGENCY agrees to pay any resulting settlement, court judgment or arbitration award. WSDOT will cooperate with the LOCAL AGENCY in the LOCAL AGENCY s defense of the claims. The LOCAL AGENCY agrees to reimburse any WSDOT costs, including attorneys fees, incurred in providing such assistance in accordance with Section Claims for Damages: After Work acceptance, in the event of claims for damages or loss attributable to bodily injury, sickness, death, or injury to or destruction of property that occurs within the limits of the Work located on the LOCAL AGENCY s right of way, the LOCAL AGENCY shall defend such claims and hold harmless WSDOT therefrom, and WSDOT shall not be obligated to pay any claim, judgment or cost of defense. Nothing in this Section, however, shall remove from WSDOT any responsibility defined by the current laws of the state of Washington or from any liability for damages caused by WSDOT s own negligent acts or omissions independent of the Work performed pursuant to this Agreement. 9. OWNERSHIP, OPERATION, AND MAINTENANCE 9.1 Upon acceptance of the Work as provided in Section 5, the LOCAL AGENCY shall be the sole owner of that portion of the Work located within the LOCAL AGENCY s right of way, and the LOCAL AGENCY shall be solely responsible for ownership and all future operation and maintenance of the Work at its sole cost, without expense, cost, or liability to WSDOT. 9.2 WSDOT facilities constructed on LOCAL AGENCY right of way, if any, as identified in Section 7.2 shall be owned by WSDOT, and WSDOT shall be responsible for the operation and maintenance of such facilities at WSDOT s sole cost, until removed. The terms of this Section shall survive the termination of this Agreement. 10. GENERAL PROVISIONS 10.1 Amendment: This Agreement may be amended or modified only by the mutual agreement of the Parties. Such amendments or modifications shall not be binding unless they are in writing and signed by persons authorized to bind each of the Parties Termination: Neither WSDOT nor the LOCAL AGENCY may terminate this Agreement without the written concurrence of the other Party, except as otherwise provided under Sections 1.2.2, 1.5, 2.4, and If this Agreement is terminated prior to the fulfillment of the terms stated herein, the LOCAL AGENCY agrees to reimburse WSDOT for the actual direct and related indirect expenses and costs it has incurred for the Work up to the date of termination, as well as the costs of noncancelable obligations Any termination of this Agreement shall not prejudice any rights or obligations accrued to the Parties prior to termination. 10. Independent contractor: WSDOT shall be deemed an independent contractor for all purposes, and the employees of WSDOT or any of its contractors, subcontractors, consultants, and the employees thereof, shall not in any manner be deemed to be employees of the LOCAL AGENCY. DOT Form Revised 11/2017

51 10.4 Indemnification: The Parties shall protect, defend, indemnify, and hold harmless each other and their employees, authorized agents, and/or contractors, while acting within the scope of their employment as such, from any and all costs, claims, judgments, and/or awards of damages (both to persons and/or property), arising out of, or in any way resulting from, each Party s obligations to be performed pursuant to the provisions of this Agreement. The Parties shall not be required to indemnify, defend, or hold harmless the other Party if the claim, suit, or action for injuries, death, or damages (both to persons and/or property) is caused by the negligence of the other Party; provided that, if such claims, suits, or actions result from the concurrent negligence of (a) WSDOT, its employees, authorized agents, or contractors and (b) the LOCAL AGENCY, its employees or authorized agents, or involves those actions covered by RCW , the indemnity provisions provided herein shall be valid and enforceable only to the extent of the negligence of each Party, its employees, authorized agents, and/or contractors Acceptance of Liability: The LOCAL AGENCY agrees and accepts full liability for (1) the PS&E provided for the Work to WSDOT, if any; and (2) for any Work the LOCAL AGENCY has provided direction to WSDOT to design and/or construct outside WSDOT s right of way and/or WSDOT s jurisdiction that does not meet WSDOT standards Survivability: Sections 10.4 and 10.5 shall survive the termination of this Agreement Disputes: In the event that a dispute arises under this Agreement, it shall be resolved as follows: WSDOT and the LOCAL AGENCY shall each appoint a member to a disputes board, these two members shall select a third board member not affiliated with either Party. The three-member board shall conduct a dispute resolution hearing that shall be informal and unrecorded. An attempt at such dispute resolution in compliance with aforesaid process shall be a prerequisite to the filing of any litigation concerning the dispute. The Parties shall equally share in the cost of the third disputes board member; however, each Party shall be responsible for its own costs and fees Venue: In the event that either Party deems it necessary to institute legal action or proceedings to enforce any right or obligation under this Agreement, the Parties agree that any such action or proceedings shall be brought in the superior court situated in County, Washington unless filing in another county is required under any provision of the Revised Code of Washington. Further, the Parties agree that each shall be responsible for its own attorneys fees and costs Audits/Records: All Project records for the Work in support of all costs incurred shall be maintained by WSDOT for a period of three () years. The LOCAL AGENCY shall have full access to and right to examine said records, during normal business hours and as often as it deems necessary. Should the LOCAL AGENCY require copies of any records, it agrees to pay the costs thereof. The Parties agree that the Work performed herein is subject to audit by either or both Parties and/or their designated representatives, and/or state of Washington and/or the federal government Term of Agreement: Unless otherwise provided herein, the term of this Agreement shall commence as of the date this Agreement is fully executed and shall continue until the Work is accepted by the LOCAL AGENCY pursuant to Section 5, or as otherwise provided herein, and all obligations for payment have been met Working Days: Working days for this Agreement are defined as Monday through Friday, excluding Washington State holidays per RCW DOT Form Revised 11/2017

52 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the Party s date signed last below. LOCAL AGENCY WASHINGTON STATE DEPARTMENT OF TRANSPORTATION Signature: Signature: By: By: Print Name Print Name Title: Title: Date: Date: DOT Form Revised 11/2017

53 Exhibit A City of Lacey Share for I 5 ST 510 Interchange Reconstruct Interchange Quantity Unit Price Ext Price Minor Change MC $1.00 $10, Mobilization LS 1 $20, $20, Project Temporary Traffic Control LS 1 $5, $5, Portable Change Message Sign HR 500 $.00 $1, Flaggers HR 200 $65.00 $1, Planing Bituminous Pavement SY 700 $5.00 $6, HMA TONS 1100 $85.00 $9, Raise Valve Box to Grade EA 6 $ $4, Remove and Replace 2 Inch Air and Vacuum Release Valve EA 1 $7, $7, Erosion/Water Pollution Control LS 1 $5, $5, RPM Type 1 HUND 14 $00.00 $4, RPM Type 2 HUND 6 $50.00 $2, Plastic Stop Line LF 00 $20.00 $6, Plastic Traffic Arrow EA 7 $ $1, Plastic Traffic Letter EA 4 $ $ Plastic Yield Line Symbol EA 20 $50.00 $1, Plastic Bicycle Lengend EA $50.00 $1, Plastic Wide Lane Line LF 2000 $2.00 $4, Extend Ex Conduits and J Boxes LS 1 $26, $26, Subtotal $24, Tax 8.9% (for Remove and Replace 2 Inch Air and Vacuum Release Valve) $ Subtotal $244, Contingency (10%) $24, CE (12%) $29,00.10 WSDOT Administrative Overhead (Currently 11.06%) $27,004.9 Grand Total/Lacey Share $24,889.28

54 Updated 1/5/2018 TP

55 .. SEC. 11, T18N, R1W, W.M. \ '"' - -""... i a SCALE: 1"=50 F[E:T CITY GF UACEY COORDINATE SYS'JlEM PMJB BO. CITY OF LACEY, WASHINGTON DEPARTMENT OF PUBLIC WORKS 420 COT.I.EGE STREET SE LACEY, WA ( 60) :RO. BORZ. SCALll: LACEY 'VBR'I'. SCAT nl11:... If m P.&111111! DlTll lll"eft :NO. xx xxx DWU llo. 01' D-XX-XX xxx

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58 ... LANE I<~ rl ~ I 1--'- HALF BAR I I 0i- CROSSWALK LINE I. MIN TYPE 1 WHITE "t E GORE STRIPE ""'!111--i----r EDGE OF GUTIER PAN (TYP).:_J-'.. ' -f USE HALF BAR WHEN THE OF 1- CHANNELIZING LINE CURB TO THE FIRST FULL BAR IS GREATER THAN 5 ' BUT LESS THAN 10' I TWO-WAY LEFT TURN STRIPE :=I....,..,,,., " PLASTIC DOUBLE YELLOW CENTER STRIPE rn [!] 4' 'rrt{;. a rn o o a [(',o,o ' I 16' [!] 0 [!] Q rn o rn o o o Q Q 14, _1 [!] HITE OR YEU.OW W ~ -z f I 0 [I] 0 o o 0 0 '0 12, MARKER, WHITE AND RED o a I _J TYPE 2d Q _j o o a D.llN WHO WHO Cl([) RAS DAlE 12/15/2014 OG4-2?.DWG r TYPE 2e BLUE REFLECTIVE MARKER TYPE 2 d OR 2 e ~ooo rn o o o 12 MAH CKD WHO YA I YE STEM EXTENSION I EGEND VALVE OPERATING NUT OR i - 7/8" X 17 /8 11 X 2" HIGH GRADE STEEL WELDED TO GUIDE PLATE. 12/15/2014 DASHED CIRCULATING LANE LINE DWO.NO. /16" WHITE PLASTlC 6-12 TUBING TO FIT OPERATING NUT. LENGTH AS [El WHO DG&-12.DWG llllilll STANDARD VALVE BOX INSTALLATION ""' /16" THICK X S 1/S" DIA STEEL GUIDE REQUIRED. Pl.ASTIC""\. CITY OF LACEY, WASHINGTON DEPT. OF PUBLIC WORKS \61 PLATE WELDED TO RISER SHAFT. 2nx2~x SQUARE STRUCTURAL WHITE r-~i~~41~~-1-l~ ~11---"4 -i-~-i. TRENCH BOTTOM BEDDING GATE/BUTIERFLY VALVE MANUFACTURED IN THE USA AND SHALL BE A MATCHED SET FROM THE SAME MANUF'ACTURER. CATI; PDM.L BELOW.. VALVE BOX AND!JD SHALL BE DUCTILE IRON DWN OVERIAP NOT TO EXCEED 1/2" CIRCULATING LANE LINE UP ON THE OUTSIDE RISER PIPE A FOOT ABOVE THE VALVE HUB BEFORE THE WIRE IS PUT INTO THE RISER THROUGH A SLOT CUT INTO THE RISER. LEAVE 6" OF WIRE ABOVE THE TOP OF VALVE BOX. 2. ALL WEWS TO THE SHAFT SHALL BE FILLET WELD, AROUND THE ENTIRE PLATE PER #2 (D ROADWAY. FUSED THERllOPUSTIC 1 4" GENERAL NOTES: DWO.NO. CEB J' SURVEY UNE 1 X a lype B PRE-FORMED 1. ALL VALVES SHALL HAVE A U.S.E. 12 GAUGE BLUE COATEO COPPER TRACER WIRE TIED OFF AT VALVE BODY. THE WIRE SHALL BE EXTENDED MARKER, YELLOW AND YELLOW.TYPE 2e TWO WAY BLUE REFLECTIVE HYDRANT MARKER INSTALLED 8" ON CENTER FROM THE CENTER or THE VALVE STEM RISER (LENGTH VARIES) OUTSIDE PAVED AREA 12n Q ' '.TYPE 2e BLUE REFLECTIVE HYDRANT MARKER rntype 2e REFLECTIVE LANE MARKER, WHITE ONE SIDE ONLY DWO. NO. 1 TRENCH DEPTH VARIES STRIPING DETAIL [Il TYPE 2d REFLECTIVE LANE.5' MIN. COVER TRAFFIC ARROW WITH CIRCLE SEWER PIPE INSTALLED PLUMB AND CENTERED OVER VALVE STEM. _j 11 TYPE 2a REFLECTIVE LANE CROSSWALK 6" RISER PVC TYPE 2e BLUE REFLECTIVE HYDRANT MARKER TYPE 2d DEPT. OF PUBLIC WORKS WHITE OR YELLOW 2.5' Dia. CONCRETE CITY OF LACEY, WASHINGTON 0 TYPE 1 LANE MARKERS, (VB OR 18} MIN. INSIDE PAVED ROADWAY rnooo rn 1,o 1,o 1,o LAllE MARKERS DEPT. OF PUBLIC WORKS I FOUNDRY SLOT FOR TRACER WIRE CUT VERTICALLY 1' ABOVE HUB OR 6" BELOW BOTIOM OF VALVE BOX 8" COMMERCIAL 2d DR 2e ~HYDRANT TYPE 1 b 16' WORKS (10" OR 18") OR OLYM.PIC TYPE '2e BLUE REFLECTIVE HYDRANT MARKER o o rn TYPE 1 YELLOW do,'cf LEAVE 6" LOOP OF WIRE, AT THE TOP SEAL WITH PAVING ASPHALT a ~ TYPE 20, 4 INCH GRID VALVE BOXES SHALL BE EAST JORDAN IRON CONCRETE TYPE 1 WHITE OR YELLOW 1-!-J4-4 I 4 I 4 I 16' [I] -~-a -~ -,-.OF-=-LA-CEY~~.~W~A~SH~l~NG~~~ON""""'~, -I ' --"----I 2 ' TYPE 1 YELLOW DROP LANE STRIPE [El 1/4" RECESSED HANDLE TYPE LID WITH CITY OF LACEY &. WATER CAST IN LID MIN. HMA '-----"" "' ,h-, oo+-2&.dwo OLYMPIC FOUNDRY EAST JORDAN IRON WORKS PG =~l-"..l---""---1 ~L-----"~ :-_ \ \O""'--~ " -!--'.. ' rn.o.o.rn LANE STRIPE EDGE OF CONCRETE GUTIER 12" o1 0 4" PLASTIC PARKING DELINEATION LINE - _j - ++: :..+---~ race I 16' TYPE 2o 0 0 B" PLASTIC EDGE OF TRAVELED WAY DISTANCE rrom THE I 0 0 MA~KER HYDRANT BIKE LANE/GORE LINE BIKE LANE SKIP LINE LANE 0 / 7-1/2"' 1--'-l 1--'-l TYPE 2 BLUE RffLECTIVE 8" PLASTIC STOP LINE I LANE INSTALL CROSSWALK LINES PARALLEL TO THE ROADWAY E 14' 1 4'11s 4' I 4' 4' MIN 5' MAx/"'w.. (TYP), '- -j /2" PAVEt.ENT MAR<JNQ DETALS 1' Cl([) D'Atl WHO RAS DAlE 12/15/2014 ENTRY LANE LINE,. ' L 1. 6" I 4 INCH GRID 4 INCH GRID BIKE LANE ARROW LEFT TURN POCKET FOR SIGNALIZED INTERSECTIONS ~~~ DOUBLE YELLO CENTE STRIP E - ~j.... 9' CROSSWALK LINES 4... ~ ~ - ij~lr L 4' MIN. 2 S.TO P LINE 22' 12' VARIES 12' ~ INCH GRID 4 r L ~.---l.! POSTED SPEED 25 0 * r ~ L * 5' 6' 7' 5 40 ~ ~ :t 10' BSF SYMBOL TWO-WAY LEFT c TURN STRIPES END OF GORE STRIPE GENERAL NOTES: DEPT. OF PUBLIC WORKS 1. THE t.iaterials USED FOR ALL STOP LINES, CROSSWALKS, ARROWS, PARKING DELINEATION LINES, LETTERS, LEGENDS, AND SYMBOLS SHAU. BE PREMARK OR HOT TAPE PREFORMED THERMOPLASTIC 125 MIL THICKNESS. 2. THE PLASTIC MATERIAL USED TO FORM ALL LONG LINE PAVEMENT MARKINGS SHALL BE PAVE-MARK OR , i NORLINE THERMOPLASTIC, APF'flOVEO.,... A A DWQ. NO. PAVEMENT MARKINGS MARKING MATERIAL.. ALL ;..tarkings SHALL MEET FEDERAL METRIC STANDARDS. EX EX 2% 2%---,... I~ CITY OF LACEY, WASHNGTON HYDROCARBONFORMULATION125 MIL THICKNESS VARIES I " " GORE STRIPE CQI :CllMl VARIES INCH GRID TWO-WAY it_ TURN LANE COMPLETE WORD STENCILS ""=' t:[ ~-----r Cl1Y 9QEER CE8 MAH """MAH CKD PDM GENERAL NOTES: 1. THE MATERIALS USED for AU. STOP LINES, CROSSWALKS, ARROWS, PARKING DELINEATION LINES, LETIERS, LEGENDS, AND SYMBOLS SHALL BE PREMARK OR HOT TAPE PREFORMED THERMOPLASTIC 125 MIL THICKNESS. 2. 'THE PLASTIC MATERIAL USED TO FORM ALL LONG LINE PAVEMENT M1'RKINGS SHALL BE PAVE-MARK OR NORLINE 'THERMOPLASTIC. 2. ALL t.iarkings SHALL MEET FEDERAL METRIC STANDARDS. CITY OF LACEY, WASHINGTON DEPARTMENT OF PUBLIC WORKS 420 COIJEGE STREET SE LACEY, WA (60) DWO.NO. LACEY artengter WHO DG4-28.Z.DWG PLANE & OVERLAY 2.5" HMA APPROX. 67,000 SF'/ 1100 TONS TYP. 11' TRAVEL & 5' BIKE LANES PAVEMENT MARKINGS BICYCLE LANES CE8 DATE 12/15/2014 CITY OF LACEY, WASHINGTON DEPT. OF PUBLIC WORKS """WHO CKD DATE RAS 12/15/2014 DEIGDD: nm: DBArrBD: ml[ CIUXiAID: nm: BOID. SCAUt N/11. VDT. SCAUt N/A l'jlb: IUll Br Ill PA'tllllll I-5 SR 510 INTERCHANGE RECONSTRUCT INTERCHANGE CITY OF LACEY DETAILS kivislon BLOCIC NO. DA.'1'11: PMJ:I NO. amt RO. xx xxx or xxx D1IU JR). D-XX-XX

59 R u R u R R R R R u!( Û Û!( v Û v v MARVIN RD NE HOGUM BAY RD NE 5 5 ST 510 QUINAULT DR NE HOGUM BAY EXT RD NE Exhibit "B" Water Remove and Replace 2 Inch Air and Vacuum Release Valve