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F1. Resoluton 5706 - Request for Establishment of 911 Special DistrictCity of Kalispell 201 l"Ave E. P.O. Box 1997 Kalispell, Montana 59903-1997 (406) 758-7000 Fax (406)7757 REPORT TO: Mayor Johnson and Kalispell City Council FROM: Doug Russell, City Manager �L SUBJECT: Request for establishment of 911 Special District MEETING DATE: March 16, 2015 BACKGROUND: In November of 2014, voters in Flathead County were presented an opportunity to vote on the creation of a special district for the provision of emergency communications throughout Flathead County. The formation of the district coincides with efforts of the City Council to identify a long term, equitable, funding source and to create efficiencies in the governance of the 911 operation. The special district would have used a funding stream existing of the current countywide property tax levy of approximately 6 mills that funds a portion of the Flathead County Sheriff's budget and a new countywide Special District fee of $25.00 per year per developed residential unit and $50.00 per year per commercial unit up to a maximum of 30 commercial units. The election. failed to pass by 10 votes in November. The. Future Funding Committee has reviewed the options since the vote and believes the special district formation is a fundamentally more equitable system of funding the operations, maintenance, and capital replacement of the consolidated 911 system as similar properties throughout the county would, under the proposed system, pay an equivalent amount in property taxes and fees for the same emergency services. After considering the options, the Future Funding Committee is recommending that the Board of County Commissioners pass a resolution establishing the special district in accordance with State law, which also includes the applicable protest provisions: 7-11-1008(5) (b)(ii) more than 10% but less than 50% of the cost of the proposed program or improvements, in accordance with the method or methods of assessment, and if the governing body decides to proceed with proposing the district, the governing body shall order a referendum in accordance with 7-11 A 011. As part of this process, the Cities of Kalispell, Whitefish and Columbia Falls have been asked to demonstrate support by passing a resolution supporting the creation of the 911 Special District. FISCAL IMPACTS: The creation of the proposed special district would reduce the City of Kalispell.'s direct contribution to the 911 center, as obligated by the inter -local agreement. This amount in 2014 was approximately $498,000. RECOMMENDATION: It is recommended that the City Council approve Resolution No.5706, requesting the Board of County Commissioners establish by resolution the proposed 911 Special District. RESOLUTION NO.5706 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF KALISPELL, MONTANA, IN SUPPORT OF ESTABLISHING A COUNTYWIDE 911 SPECIAL DISTRICT WITHIN FLATHEAD COUNTY THROUGH RESOLUTION OF THE FLATHEAD COUNTY COMMISSIONERS IN ACCORDANCE WITH MONTANA STATE LAW AT MCA § 7-11- 1003 PROVIDING TO THE COUNTY THE AUTHORIZATION TO CREATE SPECIAL DISTRICTS. WHEREAS, in 2009 an Interlocal Agreement was entered into by Flathead County and the incorporated municipalities of Kalispell, Whitefish and Columbia Falls for the establishment, operation and funding of a new consolidated countywide 911 system; and WHEREAS, the Flathead County Consolidated 911 System established by this Interlocal Agreement began operation in April, 2009; and WHEREAS, a Future Funding Committee was established as an integral element of this Interlocal Agreement to research and recommend future funding options for a more equitable funding system upon completion of the building constrtuction; and WHEREAS, because of the economic downturn experienced in Flathead County in the time period of 2008 through 2011, the 911 Administrative Board and the Future Funding Committee determined that the likelihood for countywide voter approval of an additional property tax levy to fund the consolidated 911 system was not favorable, therefore a ballot measure was not pursued; and WHEREAS, the Future Funding Committee issued its report and recommendations on May 4, 2011 with recommendations for a countywide property tax mill levy, instituted at the appropriate time for an election, as the most equitable method of funding the 911 system for both operations and maintenance and capital equipment replacement; and WHEREAS, in 2014, Flathead County evaluated and proposed a funding method for the consolidated 911 system which would retain the existing countywide property tax levy of approximately 6 mills that funds a portion of the Flathead County Sheriff budget and to supplement that property tax levy with a proposed new, countywide Special District fee of $25.00 per year per developed residential unit and $50.00 per year per commercial unit up to a maximum of 30 commercial units, as a fee similar in assessment to the current countywide landfill fee; and WHEREAS, the Flathead County Board of Commissioners, in accordance with Montana state law at MCA 7-11-1003, granting the county authorization to create special districts, placed the question of the new special district for the consolidated 911 system on the November, 2014 election ballot; and WHEREAS, the ballot measure for the establishment of this special district failed to pass by 10 votes; and WHEREAS, the Future Funding Committee maintains the opinion and recommendation that the special district methodology proposed by Flathead County in the 2014 ballot measure is a fundamentally more equitable system of funding the operations, maintenance, and capital replacement of the consolidated 911 system than the existing system as similar properties throughout the county would, under the proposed system, pay an equivalent amount in property taxes and fees for the same emergency services; and WHEREAS, this proposed funding system further provides the additional reserve capital for future facilities and equipment replacement that is not being provided under the current system of funding; and WHEREAS, it is the finding of the City Council that it would be in the best interests of its residents and taxpayers as well as all residents of Flathead County that a special district for the consolidated 911 system be formed by a resolution of the Flathead County Commission, subject to the protest provisions, and possible referral to future election as set forth in MCA 7-11-1003. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF KALISPELL, MONTANA, AS FOLLOWS: SECTION 1: The City of Kalispell hereby supports the proposed 911 Special District funding proposal attached as Exhibit "A" to this Resolution and encourages the Flathead County Board of Commissioners to adopt at their earliest opportunity, a resolution establishing the special district in accordance with MCA 7-11-1003; and SECTION 2: This Resolution shall take effect immediately upon its adoption by the City Council, and signing by the Mayor thereof. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF KALISPELL, MONTANA, ON THIS 16TH DAY OF MARCH, 2015. Mark Johnson Mayor ATTEST: Aimee Brunckhorst, CMC City Clerk EXHIBIT A FLATHEAD EMERGENCY COMMUNICATIONS FUNDING PLAN Background: In 2009 Flathead County, Kalispell, Whitefish and Columbia Falls entered into an interlocal agreement that consolidated dispatch and communication services from four separate operations to one central operation in Kalispell. This consolidation was a significant achievement after many years of discussion and research into the concept. Change is not easy and there were some definite bumps in the road that have been overcome. our citizens are well served by this consolidation with a well -trained dedicated staff and state of the art dispatch and radio communications systems. A key provision of Section I of the interlocal agreement stated that, "the board shall appoint a committee within three months of the execution of this agreement to study funding issues and to search for funding mechanisms that are more appropriate and acceptable to the parties to this agreement". There was a definite understanding between the county and the three participating cities that a "future funding committee" would be established to make every effort to find a fair and equitable funding mechanism to replace the population based funding formula approved as part of the interlocal agreement. This committee was formed and a number of funding alternatives have been researched and presented to the Flathead Emergency Communications Center Board and the Board of County Commissioners for their consideration. Due to the effects of the recession, the idea of pursuing a ballot issue for a voted mill levy or another form of funding was not considered viable so the status quo has been in effect for several years now. The funding options explored to date include (1) a voted mill levy, (2) vehicle license fee surcharge allowed by state law, (3) collection of additional revenue from rural fire districts, federal/state/local government agencies and private emergency providers — i.e. all user agencies would pay on a per call cost basis, (4) formation of a special emergency communications district, and (5) continuation of the current funding method that does not provide any funding for critical capital improvement needs. The key funding issue is fairness. Under the current formula, all taxpayers pay on a mill levy basis for the 66% share that comes from the sheriff's levy. So both rural and city taxpayers pay the same mill rate for that part of the revenue contribution. Then the three cities each levy taxes to their citizens to fund their allocation, so city taxpayers pay both the county and city levies for the same services. So there is a big disparity involved as you look at contribution dollars for this service between rural and city taxpayers where everyone has the same right and ability to dial 911— see attached chart with residential property examples of the same value house in each jurisdiction. Recommendation: The funding committee concluded that the best funding option to take to our citizens for their consideration is the creation of a special emergency communications district. This option would continue the collection of the county mill levy where all taxpayers pay on an equitable property value basis. The balance of the funding needed to operate the FECC would be generated from newly formed special district flat rate fees collected in the same manner the county collects funds for the solid waste district landfill operations. Using this combined funding formula, all taxpayers would pay the same mill rate to the county to provide for capital improvement funding and the portion of the emergency communications operations that involves costly radio communications, GIS, and IT services. The flat rate special district fees would provide funding for the dispatch center staff, facility maintenance, equipment and operations. This combined funding approach provides a fair balance with a combination mill levy and flat rate that apply equitably to city and rural taxpayers and different classifications of taxpayers. The estimated annual cost to operate all of the emergency communications components outlined above for the next five years is $3.9 million. We receive approximately $625,000 from the state from a one dollar ($1.00) monthly phone user tax paid to the telephone companies to assist in the operation of county and city dispatch centers. So the net amount we need to fund at the county and city level is about $3.3 million. Our proposed funding plan will cover all the operational costs and a critically needed $500,000 annual contribution for the capital improvement program over the next twenty years. We propose to continue the property tax levy at about the six mill level from the county sheriff's office budget that totals approximately $1.5 million. The proposed special district funding would require an additional estimated $1.9 million to fully fund this operation that has been in place for the past five years. The new funding required that has not been achieved under the current funding system is the $500,000 needed for the capital improvement program. We are proposing to continue the sheriff's levy that is currently a little less than six (6) mills and our proposed flat rate for the special district would be a $25 flat rate fee for residential properties annually and $50 per commercial unit not to exceed 30 units for commercial properties. We strongly feel this combined funding formula creates fairness and provides the revenue needed to be able to provide needed facilities, equipment, personnel and state of the art communications systems to meet the emergency needs for all the citizens of Flathead County. Conclusion: It is critical that a new funding solution be put into place in the near future since we have been unable to generate any new funds for capital improvement needs under the current funding formula due to levy limits set by state law for the county and the three cities. We hope our citizens will support formation of a special communications district with some additional funding to allow us to provide the best level of service we can for the critical emergency communications system our citizens deserve and expect. County and city officials feel the best approach to take in regard to securing a fair and equitable funding solution is to properly inform the public of the funding needs to provide the best emergency communications we can. It is the desire of the Flathead County Board of Commissioners to place the question of the potential formation of a special emergency communications district on the ballot to provide the level of service needed to protect our citizens. The question is proposed to be placed on the November 2014 general election ballot. Recommendation: The 911 Funding Sub -committee reviewed this report and conclusion and voted unanimously by email proxy of those responding (5-0) in May, 2014 to recommend that the FECC Board and the Flathead Board of County Commissioners pursue the creation of this special district and countywide funding sources. Chuck Stearns 911 Funding Sub -committee Chair May 6, 2014 Isl Mike Pence Mike Pence Funding Plan Report Author May 6, 2014 Comparison of 911 Costs on Tax Sills versus Cost of Special District Fee Proposal Prepared by Chuck Stearns, City Manager of Whitefish on 4/8/2014 Current Tax Cost Proposed Fee Cost Motor Vehicle Fee 5.921 mills on value Surcharge Option plus $25 fee $300,000 House in County Market Value $300,000 DDR Appraised Value (MV *.53) 1 $159,000 DDR Assessed Value (above * .0247) (Taxable Value) $3,927 Cost - County Mills (5.921 mills11000) * Taxable Value 2 $23.25 $23.25 Special District Fee, MV Tax, or other $0.00 $25.00 Total Cost $23.25 $48.25 $300,000 House in Kalispell Market Value $300,000 DDR Appraised Value (MV *.53) 1 $159,000 DDR Assessed Value (above * .0247) (Taxable Value) $3,927 Cost - Kalispell Mills (12.133 mills11000) * Taxable Value 3 $47.65 $0.00 Plus - Cost of County 5.921 mills $23.25 $23.25 Special District Fee, MV Tax, or other $0.00 $25.00 Total Cost $70.90 $48.25 $300,000 House in Whitefish Market Value $300,000 DDR Ap raised Value (MV *.53) 1 $159,000 DDR Assessed Value (above * .0247) (Taxable Value) $3,927 Cost - Whitefish Mills (6.870 mills11000) * Taxable Value 4 $26.98 $0.00 Plus - Cost of County 5.921 mills $23.25 $23.25 Special District Fee, MV Tax, or other $0.00 $25.00 Total Cost $50.23 $48.25 $300,000 House in Columbia Falls Market Value $300,000 DDR Appraised Value (MV *.53) 1 $159,000 DDR Assessed Value (above * .0247) (Taxable Value) $3,927 Cost - CF equivalent Mills (16.263 mills/1000) * Taxable Value 5 $63.87 Plus - Cost of County 5.921 mills $23.25 $23.25 Special District Fee, MV Tax, or other $0.00 $25.00 Total Cost $87.12 $48.25 Footnotes 1. Section 15-6-222 exempts 47% of market value for Class 4 Residential properties 2. County mills equal $1,431,807 budget for 911 divided by County mill value of $241,807 3. Kalispell mills equal $477,268 cost divided by Kalispell mill value of $39,334.85 4. Whitefish mills equal $151,859 cost divided by Whitefish mill value of $22,105.76 5. Columbia Falls mills equal $108 470 cost divided by Col Falls mill value of $6 669.52