The Capital Facility Plan for the City of Forks will be developed based on the following analyses:
•Current Revenue Sources
•Capital Facilities Policies
•Method for Addressing Shortfalls
(1) Current Revenue Sources. The City’s current expense fund has increased from $500,000 in 1983 to $834,000 in 1993, representing a sixty-six (66) percent increase over an eleven (11) year period. City revenues have significantly increased in the last couple years largely due to a newly imposed utilities tax in 1991. It has been a goal of the City to realize a cash flow balance (cash reserve) of $225,000 and the City will probably reach this goal in 1994 or 1995. Table I, in Appendix “B,” contains a summary of revenues versus expense for the last five years.
To ensure that the City is using the most effective means of collecting revenue, the City inventoried the various sources of funding currently available. Financial regulations and available mechanisms are subject to change, furthermore, changing market conditions influence the City’s choice of financial mechanism. Therefore, the City should periodically review the impact and appropriateness of their financing system. The following list of sources includes all major financial resources available and is not limited to those sources which are currently in use or will be used in the six-year schedule of improvements. The list includes the following categories:
•Local Multi-Purpose Levies
•Local Single-Purpose Levies
•Local Non-Levy Financing Mechanisms
•State Grants and Loans
•Federal Grants and Loans
(a) Debt Financing (method of financing, not a source of revenue).
(i) Short-Term Borrowing. The extremely high cost of many capital improvements requires local governments to occasionally utilize short-term financing through local banks. The City of Forks typically does not borrow funds from banks.
(ii) Revenue Bonds. Bonds financed directly by those benefiting from the capital improvement. Revenue obtained from these bonds is used to finance publicly owned facilities, such as parking garages or electric power plants. The debt is retired using charges collected from the users of these facilities. In this respect, the capital project is self-supporting. Interest rates tend to be higher than for general obligation bonds, and issuance of the bonds may be approved without the voter referendum. The City of Forks in as of 1993 owes about $780,000 in revenue bonds for water and sewer projects.
(iii) Industrial Revenue Bonds. Bonds issued by a local government, but actually assumed by companies or industries who use the revenue for construction of plants or facilities. The attractiveness of these bonds to industry is that they carry comparatively low interest rates due to their tax-exempt status. The advantage to the jurisdiction is that the private sector is responsible for retirement of the debt. Forks typically does not use these bonds and had none in 1993.
(iv) General Obligation Bonds. Bonds backed by the value of the property within the jurisdiction. Voter-approved bonds increase property tax rate and dedicate the increased revenue to repay bondholders. Councilmanic bonds do not increase taxes and are repaid with general revenues. Revenue may be used for new capital facilities, or maintenance and operations at existing facilities. These bonds should be used for projects that benefit the City as a whole. Forks typically does not use these bonds and had none in 1993.
(b) Local Multi-Purpose Levies.
(i) Ad Valorem Property Taxes. Tax rate in mills (1/10 cent per dollar of taxable value). The maximum rate is $3.60 per $1,000 assessed valuation. The City is prohibited from raising its levy more than six (6) percent of the highest amount levied in the last three (3) years, before adjustments for new construction and annexation. A temporary or permanent excess levy may be assessed with voter approval. Revenue may be used for new capital facilities, or maintenance and operations at existing facilities. The maximum rate Forks can charge is $3.10 per $1,000 because it is part of a library district which gets $0.50 per $1,000.
(ii) Business and Occupation Tax. Tax of no more than 0.2 percent of gross value of business activity on the gross or net income of businesses. Assessment or increase of the tax requires voter approval. Revenue may be used for new capital facilities, or maintenance and operations at existing facilities. As of 1993 Forks has not imposed such a tax.
(iii) Local Option Sales. Tax: Retail sales and use tax of up to one percent. The local governments that level the second 0.5 percent may participate in a sales tax equalization fund. Assessment of this option tax requires voter approval. Revenue may be used for new capital facilities, or maintenance and operations at existing facilities. As of 1993 Forks imposes the full one percent and does participate in the sales tax equalization fund.
(iv) Motor Vehicle Excise Tax. Annual excise tax divided between City, County, and State. The City receives seventeen (17) percent of the allocation. The City is required to spend funds for police protection, fire protection, and the preservation of public health.
(v) Utility Tax. Tax on the gross receipts of electric, gas, telephone, cable TV, water/sewer, and stormwater utilities. Local discretion up to six (6) percent of gross receipts. Voter approval required for an increase above this maximum. Revenue may be used for new capital facilities, or maintenance and operations at existing facilities. In 1991 the City of Forks enacted a utility tax that imposes a six (6) percent tax upon cable television and telephone services and a four (4) percent tax upon electricity, sewer and water.
(vi) Real Estate Excise Tax. The original one-half percent was authorized as an option to the sales tax for general purposes. An additional one-quarter percent was authorized for capital facilities, and the Growth Management Act authorized another one-quarter percent for capital facilities. For counties and cities within those counties that chose to plan, i.e., those which “opt in” under the Growth Management Act, the additional tax requires voter approval. Revenues must be used solely to finance new capital facilities, or maintenance and operations at existing facilities, as specified in the capital facilities plan. An additional option is available under RCW 82.46.070 for the acquisition and maintenance of conservation areas if approved by a majority of the voters of the County. As of 1993 Forks only receives the one-quarter percent for capital facilities.
(c) Local Single-Purpose Levies.
(i) Emergency Medical Services Tax. Property tax levy of $0.25 for emergency medical services. Revenue may be used for new capital facilities, or maintenance and operations at existing facilities. Not imposed in Forks as of 1993.
(ii) Motor Vehicle Fuel Tax. Tax paid by gasoline distributors. The City receives 11.53 percent of total tax receipts. State shared revenue is distributed by the Department of Licensing. Revenues must be spent for highway (City streets, County roads, and State highways) construction, maintenance, or operation; policing of local roads; or related activities.
(iii) Local Option Fuel Tax. A County-wide voter approved tax equivalent to ten (10) percent of State-wide Motor Vehicle Fuel Tax and a special fuel tax of $0.023 per gallon. Revenue is distributed to the City on a weighed per capita basis. Revenues must be spent for highway (City streets, County roads, and State highways) construction, maintenance, or operation; policing of local roads; or highway related activities. Not imposed in Clallam County as of 1993.
(iv) Commercial Parking Tax. Tax on commercial parking businesses based on gross proceeds or the number of parking stalls, or on the customer rates. The tax is imposed by local referendum. Revenues must be spent for general transportation purposes including highway (City streets, County roads and State highways) construction, maintenance, or operation; policing of local roads; highway related activities; public transportation planning and design; and other transportation related activities. Not imposed in Forks as of 1993.
(d) Local Non-Levy Financing Mechanisms.
(i) Reserve Funds. Revenue that is accumulated in advance and earmarked for capital improvements. Sources of funds can be surplus revenues, funds in depreciation reserves, or funds resulting from the sale of capital assets.
(ii) Fines, Forfeitures, and Charges for Services. This includes various administrative fees and user charges for services and facilities operated by the jurisdiction. Examples are franchise fees, sales of public documents, property appraisal fees, fines, forfeitures, licenses, permits, income received as interest from various funds, sale of public property, rental income, and all private contributions to the jurisdiction. Revenue from these sources may be restricted in use.
(iii) User Fees, Program Fees, and Tipping Fees. Fees or charges for using park and recreational facilities, solid waste disposal facilities, sewer services, water services, and surface water drainage facilities. Fee may be based on measure of usage, a flat rate, or design features. Revenues may be used for new capital facilities, or maintenance and operations at existing facilities. These fees do not serve as a large source of revenue for the City of Forks. Sources of fees are derived from use of the park, jail facilities by other jurisdictions, dispatch facilities by other jurisdictions, and the intergovernmental contract governing the Clallam County Regional Planning Commission.
(iv) Street Utility Charge. Fee up to fifty (50) percent of actual costs of street construction, maintenance, and operations charged to businesses and households. The tax requires local referendum. The fee charged to businesses is based on the number of employees and cannot exceed $2 per employee per month. Owners or occupants of residential property are charged a fee per household that cannot exceed $2 per month. Both businesses and households must be charged. Revenue may be used for activities such as street lighting, traffic control devices, sidewalks, curbs, gutters, parking facilities, and drainage facilities.
(v) Special Assessment District. District created to service entities completely or partially outside of the jurisdiction. Special assessments are levied against those who directly benefit from the new service or facility. The districts include local improvement districts, road improvement districts, utility improvement districts, and the collection of development fees. Funds must be used solely to finance the purpose for which the special assessment district was created.
(vi) Special Purpose District. District created to provide a specified service. Often the district will encompass more than one jurisdiction. Included are districts for fire facilities, hospitals, libraries, metropolitan parks, airports, ferries, parks and recreation facilities, cultural arts/stadiums and convention centers, sewers, water flood controls, irrigation, and cemeteries. Voter approval is required for airport, parks and recreation, and cultural arts/stadium and convention districts. The district has authority to impose levies or charges. Funds must be used solely to finance the purpose for which the special purpose district was created. The Forks water and sewer districts are a major source of revenue.
(vii) Lease Agreements. Agreement allowing the procurement of a capital facility through lease payments to the owner of the facility. Several lease packaging methods can be used. Under the lease-purchase method the capital facility is built by the private sector and leased back to the local government. At the end of the lease, the facility may be turned over to the municipality without any future payment. At that point, the lease payments will have paid the construction cost plus interest.
(viii) Privatization. Privatization is generally defined as the provision of a public service by the private sector. Many arrangements are possible under this method ranging from a totally private venture to systems of public/private arrangements, including industrial revenue bonds. Solid waste collection in the City of Forks is handled by a private company.
(ix) Impact Fees. Fees paid by new development based upon its impact to the delivery of services. Impact fees must be used for capital facilities needed by growth, not for current deficiencies in levels of service, and cannot be used for operating expenses. These fees must be equitably allocated to the specific entities which will directly benefit from the capital improvement, and the assessment levied must fairly reflect the true costs of these improvements. Impact fees may be imposed for public streets and roads, publicly-owned parks, open space, recreational facilities, school facilities, and fire protection facilities (in jurisdictions that are not part of a fire district).
(e) State Grants and Loans.
(i) Community Development Block Grant. Grant funds available for public facilities, economic development, housing, and infrastructure projects which benefit low- and moderate-income households. Grants are distributed by the Department of Community Development primarily to applicants who indicate prior commitment to project. Revenue is restricted in type of project and may not be used for maintenance and operations. $420,000 of these funds have been allocated to the Forks Industrial Park.
(ii) Community Economic Revitalization Board. Low interest loans (rate fluctuates with State bond rate) and occasional grants to finance infrastructure projects for a specific private sector development. Funding is available only for projects which will result in specific private developments or expansions in manufacturing and businesses that support the trading of goods and services outside of the State’s borders. Projects must create or retain jobs. Funds are distributed by the Department of Trade and Economic Development primarily to applicants who indicate prior commitment to project. Revenue restricted in type of project and may not be used for maintenance and operations. $500,000 of these funds have been allocated to the Forks Industrial Park.
(iii) Historic Preservation Grants. On an annual basis, the State Office of Archaeology and Historic Preservation (OAHP) makes available grants to local historic preservation programs for four (4) purposes: (1) historic preservation planning; (2) cultural resource survey and inventory; (3) nomination of properties to the National Register of Historic Places; and (4) public education and awareness efforts. To be eligible for grants, communities must be a certified local government (CLG) as approved by OAHP. In addition, when funds are available, OAHP awards grants for acquisition or rehabilitation of National Register listed or eligible properties. Grant awards are predicated on the availability of funds and require a match.
(iv) Public Works Trust Fund. Low interest loans to finance capital facility construction, public works emergency planning, and capital improvement planning. To apply for the loans the City must have a capital facilities plan in place and must be levying the original one-quarter percent real estate excise tax. Funds are distributed by the Department of Community Development. Loans for construction projects require matching funds generated only from local revenues or State shared entitlement revenues. Public works emergency planning loans are at a five percent interest rate, and capital improvement planning loans are no interest loans, with a 25 percent match. Revenue may be used to finance new capital facilities, or maintenance and operations at existing facilities.
(v) State Parks and Recreation Commission Grants. Grants for parks capital facilities acquisition and construction. They are distributed by the Parks and Recreation Commission to applicants with a 50 percent match requirement.
(vi) Urban Arterial Trust Account (UATA). Revenue available for projects to alleviate and prevent traffic congestion. Entitlement funds are distributed by the State Transportation Improvement Board subject to UATA guidelines and with a 20 percent local matching requirement. Revenue may be used for capital facility projects to alleviate roads that are structurally deficient, congested with traffic, or have accident problems.
(vii) Repealed by Ord. 805, 2006.
(viii) Transportation Improvement Account. Revenue available for projects to alleviate and prevent traffic congestion caused by economic development or growth. Entitlement funds are distributed by the State Transportation Improvement Board with a 20 percent local match requirement. For cities with a population of less than 500 the entitlement requires only a five percent local match. Revenue may be used for capital facility projects that are multimodal and involve more than one agency.
(ix) Centennial Clean Water Fund. Grants and loans for the design, acquisition, construction, and improvement of water pollution control facilities, and related activities to meet State and federal water pollution control requirements. Grants and loans distributed by the Department of Ecology with a 50 percent to 25 percent matching share. Use of funds is limited to planning, design, and construction of water pollution control facilities, stormwater management, groundwater protection, and related projects.
(x) Water Pollution Control State Revolving Fund. Low interest loans and loan guarantees for water pollution control projects. Loans are distributed by the Department of Ecology. The applicant must show water quality need, have a facility plan for treatment works, and show a dedicated source of funding for repayment.
(f) Federal Grants and Loans.
(i) Federal Aid Bridge Replacement Program. Funds available with a 20 percent local matching requirement for replacement of structurally deficient or obsolete bridges. Funds are distributed by the Washington State Department of Transportation on a State-wide priority basis. Therefore, the bridge must be on the State of Washington Inventory of Bridges.
(ii) Federal Aid Urban System. Revenue available for construction and reconstruction improvements to arterial and collector roads that are planned for by an MPO and the Federal Highway Administration. Funds may also be used for nonhighway public mass transit projects. Funds are distributed by Washington State Department of Transportation with a 16.87 percent local match requirement.
(iii) Federal Aid Safety Programs. Revenue available for improvements at specific locations which constitute a danger to vehicles or pedestrians as shown by frequency of accidents. Funds are distributed by Washington State Department of Transportation from a State-wide priority formulae and with a 10 percent local match requirement.
(iv) Federal Aid Emergency Relief. Revenue available for restoration of roads and bridges on the federal aid system which are damaged by extraordinary natural disasters or catastrophic failures. Local agency declares an emergency and notifies the Washington State Department of Transportation, upon approval entitlement funds are available with a 16.87 percent local matching requirement.
(v) Farmers Home Administration Water Project Support. Funding through grants, loans, and loan guarantees for water projects serving rural residents. Funds must be used for capital facilities construction and related costs or projects which serve rural residents in cities of less than 10,000 people. Funds are distributed by the Federal Farmers Home Administration with a 45 percent to 25 percent local matching requirement.
(vi) Farmers Home Administration Rural Business Enterprise Grant. Grants for rural business development. As of 1993, $281,320 is being sought from this agency for the Forks Industrial Park.
(vii) Department of Health Water Systems Support. Grants for upgrading existing water systems, ensuring effective management, and achieving maximum conservation of safe drinking water. Grants are distributed by the State Department of Health through intergovernmental review and with a 60 percent local match requirement.
(viii) Economic Development Administration Grant. Grants for the construction of capital facilities in cities. The City of Forks has received $1,200,000 for the Forks Industrial Park.
(ix) Forest Service – Economic Recovery Program. Grants to mitigate timber preservation impacts. $70,000 of these monies have been allocated to the Forks Industrial Park.
(x) Federal transportation enhancement grants will be pursued to fund implementation of CCC 31.07.090.
(2) Capital Facility Strategies. In order to realistically project available revenues and expected expenditures on capital facilities, the City must consider all current policies that influence decisions about the funding mechanisms as well as policies affecting the City’s obligation for public facilities. The most relevant of these are described below. These policies, along with the goals and policies articulated in the other elements, were the basis for the development of various funding scenarios. Any variations from the current policies in the development of the six-year Capital Facilities Program were incorporated into the goals and policies of the Comprehensive Plan elements.
(a) Mechanisms to Provide Capital Facilities.
(i) Increase Local Government Appropriations. The Forks City Council has generally been strongly opposed to any tax increases. Many of the citizens of Forks are struggling financially due to government protection programs and the citizenry is thus extremely adverse to any further economic losses caused by their local government.
(ii) Use of Uncommitted Resources. The City has developed and adopted its six-year schedule of improvements with committed financial resources.
(iii) Analysis of Debt Capacity. Generally, Washington State law permits a city to ensure a general obligation bonded debt equal to three-quarters of one percent of its property valuation without voter approval. By a 60 percent majority vote of its citizens, a city may assume an additional general obligation bonded debt of 1.7570 percent, bringing the total for general purposes up to 2.5 percent of the value of taxable property. The value of taxable property is defined by law as being equal to 100 percent of the value of assessed valuation. For the purpose of supplying municipally owned electric, water, or sewer service and with voter approval, a city may incur another general obligation bonded debt equal to 2.5 percent of the value of taxable property. With voter approval, cities may also incur an additional general obligation bonded debt equal to 2.5 percent of the value of taxable property for parks and open space. Thus, under State law, the maximum general obligation bonded debt which a city may incur cannot exceed 7.5 percent of the assessed property valuation. As of 1993 the City of Forks has incurred no general obligation bonded debt.
Municipal revenue bonds are not subject to a limitation on the maximum amount of debt which can be incurred. These bonds have no effect on the City’s tax revenues because they are repaid from revenues derived from the sale of service.
The City of Forks has not used general obligation bonds and municipal revenue bonds. Therefore, under State debt limitations, it has ample debt capacity to issue bonds for new capital improvement projects. However, the City does not currently have policies in place regarding the acceptable level of debt and how that debt will be measured. The City may establish such guidelines if it finds this type of funding mechanism necessary.
The “pay as you go” financing method has been easy to administer and is appropriate because the City of Forks is experiencing slow growth and future tax receipts may be uncertain. However, the City may consider using “pay as you use” financing if a significant level of growth occurs. In a sense a “pay as you use” financing method will be used for the Forks Industrial Park, since users of the park and buildings constructed by the City will be paid off by lease payments from private users.
(iv) User Charges and Connection Fees. User charges are designed to recoup the costs of public facilities or services by charging those who benefit from such services. As a tool for affecting the pace and pattern of development, user fees may be designed to vary for the quantity and location of the service provided. Thus, charges could be greater for providing services further distances from urban areas.
(v) Mandatory Dedications or Fees in Lieu of. The jurisdiction may require, as a condition of plat approval, that subdivision developers dedicate a certain portion of the land in the development to be used for public purposes, such as roads, parks, or schools. Dedication may be made to the local government or to a private group. When a subdivision is too small or because of topographical conditions a land dedication cannot reasonably be required, the jurisdiction may require the developer to pay a equivalent fee in lieu of dedication.
The provision of public services through subdivision dedications not only makes it more feasible to serve the subdivision, but may make it more feasible to provide public facilities and services to adjacent areas. This tool may be used to direct growth into certain areas. Forks has traditionally only required dedications for road right-of-way, to ensure that if roads become public there will be adequate space for utilities and other road necessities.
(vi) Negotiated Agreement. An agreement whereby a developer studies the impact of development and proposes mitigation for the City’s approval. These agreements rely on the expertise of the developer to assess the impacts and costs of development. Such agreements are enforceable by the jurisdiction. The negotiated agreement will require lower administrative and enforcement costs than impact fees. As of 1993 this has not been done in Forks, since no developments have been major enough to justify a negotiated agreement.
(vii) Impact Fees. Impact fees may be used to affect the location and timing of infill development. Infill development usually occurs in areas with excess capacity of capital facilities. If the local government chooses not to recoup the costs of capital facilities in underutilized service areas, infill development may be encouraged by the absence of impact fees on development(s) proposed within such service areas.
Impact fees may be particularly useful for a small community that is facing rapid growth and with new residents desiring a higher level of service than the community has traditionally been satisfied with. It is likely that the Forks City Council will be adverse to impact fees because they tend to inhibit development.
(b) Obligation to Provide Capital Facilities.
(i) Coordination with Other Public Service Providers. Local goals and policies as described in the other Comprehensive Plan elements are used to guide the location and timing of development. However, many local decisions are influenced by State agencies, special management districts, and utilities that provide public facilities within the City of Forks. The planned capacity of public facilities operated by other jurisdictions must be considered when making development decisions. Coordination with other entities is essential not only for the location and timing of public services, but also in the financing of such services.
(ii) Urban Growth Area Boundaries. The urban growth area boundary was selected in order to ensure that urban services will be available to all development. The location of the boundary was based on the following: topographical constraints, the Forks planning area, and concentrations of existing development and existing infrastructure and services. New and existing development requiring urban services will be located in the urban growth area. Central water, drainage facilities, utilities, telecommunication lines, and local roads will be extended to development in these areas. The City is committed to serving development within this boundary. Therefore, prior to approval of new development within the urban growth area the City should review the six (6) year Capital Facilities Program and the plan in this element to ensure the financial resources exist to provide the services to support such new development.
(3) Methods for Addressing Shortfalls. The City may not be able to finance all proposed capital facility projects. Therefore, it has clearly identified the options available for addressing shortfalls and how these options will be exercised. The City evaluates capital facility projects on an individual basis rather than a system-wide basis. This method involves lower administrative costs and can be employed in a timely manner. However, this method will not maximize the capital available for the system as a whole. In deciding how to address a particular shortfall the City will balance the equity and efficiency considerations associated with each of these options. When evaluation of a particular project identifies a shortfall the following options are available:
•Decrease the Cost of the Facility
•Decrease the Demand for the Public Service or Facility