Mayor Jon Nehring’s

2011 State of the City Address

City of Marysville
Thank you for being here this morning as I present my first State of the City Address since
becoming Mayor six months ago.

I want to open by saying what a privilege it has been working together with the City Council,
administration and City employees in my new role, and getting out in the community to meet many
of the citizens, business and civic leaders, and organizations that give Marysville its diverse
character.

I have appreciated the welcome I have received. I’m grateful for the willingness shown by many
to help guide and support me in my initiative to plan for long-term financial stability for our City,
so that we can invest responsibly for a prosperous future, from a position of strength.

I know that starting off a State of the City message with the budget can send some people
heading for the exit, but it’s where I need to begin.

We faced trying and challenging economic times during 2010, and while we hope for signs of a
stronger economy, the reviews are mixed, suggesting that the recovery will continue – but at what
rate is anyone’s guess.

To outline this presentation for you, I’m going to talk first about the budget and planning for
long-term financial stability. Then I’ll recap some of the City’s accomplishments in 2010 before I
turn to the challenges AND opportunities that lie ahead next year and beyond.

During the process to adopt the City budget for 2011, my first initiative as Mayor was to plan for
long-term financial stability as the way to invest more responsibly in Marysville’s future.

We don’t budget based upon hopes of an economic recovery but rather based upon the realities
of our current economic situation. Businesses and families have been making tough decisions
adapting to the new “economic realities” for the past few years; your government should be
expected to do the same.

It is essential that we continue to reform the way the City does business in order to meet these
challenges facing everyone. Government at all levels is facing this and there is really no substitute
for decisive action as delay only enhances the size of the problem.

A thorough process of prioritizing the essential core services of government, developing a

disciplined spending plan and maintaining solvency across all our funds is essential.

That is the approach we took when the City Council in November adopted a $119 million City
budget for 2011, with a $34.9 million General Fund for basic services. The budget was deliberately
drafted to look beyond 2011 to create financial stability for the long term, and establish a more
predictable and stable workforce.

We faced a 2010 revenue shortfall and 2011 revenue projections that forced immediate budget
cuts.
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 City departments reduced operating expenditures and the employee workforce was reduced 10%
from 2010 through layoffs and removal of vacant positions.

Budget reserves were replenished to a level that will help buffer the City against fiscal
uncertainty – reserves are at 6.5% for 2011, with the goal of increasing those levels in the future to
provide financial security and stability for the City.

This is the model for future spending plans:

More disciplined operating philosophy:
* Balanced budgets that reduce overall expenditures
* Build up reserves to levels to offset unexpected revenue shortfalls or unanticipated events that
undermine public health or safety
* Pay down our debt aggressively to ease our debt burden and boost our creditworthiness
* Ensure funds are solvent, including enterprise funds such as the golf course

I want to expand on why it’s important to keep our various funds financially solvent, and no
place better illustrates this than Marysville’s Cedarcrest Golf Course.

The Golf Course is an enterprise fund, so it has derived its operating revenue primarily from
user fees since the property was dedicated to the City in 1971 for use as a golf facility. Due to use
restrictions in the deed and existing debt, selling it is not an option.

The golf course is an important community asset in our parks and open space inventory. Golf is a
popular recreational pursuit in Marysville. It fits well in our Healthy Communities Project
initiative to encourage fitness and outdoor recreation.

In spite of the deep recession we just went through that typically sees a drop off in “pay to play”
recreation like golf, Cedarcrest has actually seen an increase in number of rounds played, which is
good news.

The bad news is the increased play and an underperforming restaurant still hadn’t generated
enough revenue to outpace mounting losses and the costs to operate the course. As a result, the City
has continued to operate the course using general fund subsidies to address an average five-year
loss of $304,000.

In order to achieve solvency and make the course viable, we are making several changes that we
believe will help reduce the deficit and achieve a balanced budget - where costs do not exceed actual
revenues - by 2012. Among the changes:

* Public Works, Golf and Parks crews will assist each other by sharing course maintenance work
* We have streamlined management, with course oversight reverted back to the Parks
Department
* We will generate revenue through a new lease agreement at the restaurant, with the City out of
overall restaurant operations. The restaurant opened this week under new management with the
owners of Bleachers sports restaurant in Marysville. Bleachers Family Grill is now open for
breakfast, lunch and dinner options that are a great fit for Cedarcrest. We’re looking forward to
their opening.
Achievements – 2010 in Review

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 Now I want to recap some of the accomplishments that our City achieved in 2010 before I turn to
the opportunities and challenges that lie ahead this year and beyond.

This is a good place to give credit to City employees. I commend them for their faithfulness in
carrying out their public service duties with integrity.

Although our resources have shrunk, there is no less demand of work required to get the job
done.

Their production is unmatched. Marysville has an employee-to-citizen ratio of 5.6 employees per
1,000 citizens, attesting to the fact that Marysville government runs lean on staffing, and will
continue to do so while still providing an exceptionally high value for our taxpayers.

By comparison, it is not uncommon for like-sized cities in Washington State to maintain a level of
between 8-14 full-time employees per 1,000 citizens, even those cities that choose to contract out
certain services that Marysville provides as a full-service city, such as water, sewer and garbage
utilities, for example, or law enforcement.

Last fall, after reviewing and assessing the City’s financial health, we were met with some hard
choices to make in order to close budget gaps. We took decisive action.

From department to department, directors had already cut to the bone, and were being asked to
cut even deeper, freeze unfilled positions, cut or eliminate programs, and find even more creative
ways to operate efficiently.

Even these efforts did not go far enough, and we needed to initiate employee layoffs. These were
not easy decisions. We knew we were impacting the lives of people with children and mortgages,
same as what has been happening in the private sector

In January, we presented the City Council with a department-by-department rundown of

reductions in staff and resources, and the changes in the way we do business moving forward

Department Reforms
Staff reductions occurred in Executive, Accounting/Finance, Human Resources, Community
Development, Parks and Recreation, Golf, Streets and Municipal Court; 277 approved positions in
2010 were reduced to 249 in 2011
We eliminated passport processing services
Revised computer replacement schedule to reduce replacement costs

Our Police Department is instituting a redeployment plan that reallocates shifts, and adds an
overlap shift to reduce overtime and other personnel costs by as much as $300,000. I’ll talk more
about this at the end of the presentation.
We will be transitioning the jail to a 90-day detention facility, with an estimated $100,000
increase in jail revenues
The Court reduced its budget for Pro-Tem judge services; increased court fees for contract cities,
U.S. Bankruptcy Court hearings and Alliance One collections facility use fee

Highlighting our team approach, personnel will be loaned to the Parks Department to help with
maintaining a level of standards acceptable to the City

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 We are considering a cost-saving water service boundary change to consolidate Everett water
pipeline sources and Stillaguamish River/deep well sources, reducing costs for wholesale water
purchase from Everett
The Waste Water Treatment Plant will reduce its maintenance and energy costs.
The Engineering Division will initiate and complete more work in house, including Capital
projects, Comprehensive Sewer Plan updates and monitoring permit requirements

Back to Achievements – 2010 in Review

Transportation
Our transportation infrastructure faces funding challenges in the current economic climate, but
we have been able to move ahead on key projects to ease congestion and improve driver and
pedestrian safety.

We opened Ingraham Boulevard, full extension of 88th Street NE from 67th Avenue to 74th
Drive, creating a continuous east-west corridor between I-5 and SR 9, and providing service to the
new Marysville Getchell High School.

Our Street Crew installed a paved walkway along 83rd Avenue that improves pedestrian safety
for students accessing the new high school from neighborhoods south of the campus. Thank you to
the School District for splitting the cost with us on this important project.

We completed the 47th Avenue NE improvement project funded through a state Safe Routes to
School grant, adding curb, gutter, sidewalk improvements, road widening, signal improvements and
bike lanes between Armar Road and Grove Street.

In September, we launched our online Report a Pothole program. We filled more than 57
potholes around the City in 2010, with 30 of them reported after the Report a Pothole program
started. We have been able to patch them usually within 48 hours.
These numbers don’t count those that potholes that Public Works staff find and fill on a daily
basis.

Police and Public Safety

Public safety is a high priority, and a core function of government. Our Police are second to none,
using integrated, innovative policing approaches that respond to community needs, while building
partnerships with the public to solve problems together for a safer community. In 2010:

In partnership with the Marysville School District, Marysville Police expanded the School
Resource Officer (SRO) program to four secondary schools.

SROs are having an impact on criminal activity in these schools. Incidents in the 2008-09 school
year totaling 1,013 fell to 847 in 2009-10, a drop of 16.5%.

The Marysville Volunteer Program (MVP) built up its ranks of volunteers tasked with various
crime prevention efforts, and we expanded the Neighborhood Watch program.

The pro-active N.I.T.E. team of specialized, swift-action officers completed its first full year on
the job.

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 The N.I.T.E. team served 67 search warrants in 2009 compared to 91 through 2010, or about 2 a
week, which is impressive output for four officers considering all the paperwork required. Felony
warrants and misdemeanor arrests exceeded 2009 volumes; and the number of guns recovered
tripled from 5 to 16.

The N.I.T.E. team also had success in taking drugs off Marysville streets and out of the hands of
young people.

While the volume of cocaine recovered is down in 2010 from 115 grams in 2009 to 22 grams in
2010, the N.I.T.E. team has seized large quantities of heroin – 1,516 grams this year current
compared to 141.7 grams in 2009. True, it’s a disturbing trend that is hitting communities
nationwide, but Police have done an outstanding job rooting out the sources of heroin in our area,
and will continue to do so.

Crime statistics that we are compiling show that overall instances of criminal activity decreased
7% within the old city limits between 2009 and 2010
• Residential burglaries were down 18%
• Vehicle prowls dropped 21%
• Thefts decreased 7%.
The City’s 2009 population was 37,530 at the time.

When we factor in the Central Marysville Annexation in 2010 that added 20,400 new residents
and increased our population to more than 58,000, these numbers increased, naturally. Adjusted for
the entire city limits including the annexed area, we saw an overall rise in criminal activity of 20%
between 2009 and 2010, while the population grew by 54%. Over the same period, residential
burglaries rose 15%, vehicle prowls stayed below 2009 levels at 3.7%, while thefts increased by
15%.

In 2010 throughout Marysville, there were 68 commercial burglaries reported, representing a

24% increase over the year prior. However, commercial burglaries have been dropping
considerably since 2007 when 117 cases were reported.

Again, the key point is that per capita crime is down.

The hiring of 8 new officers (and 4 custody officers) in 2010 and a police redeployment plan I’ll
reference later are designed to ensure consistent police coverage throughout our entire community.

I want to take this opportunity to thank the men and women of the Marysville Police Department
for their faithful and loyal devotion to duty, and putting their lives on the line each day to safeguard
our lives, our property and our community.

The Municipal Court added a second full-time judge to hear cases for Marysville, as well as
contracted neighboring cities, Arlington and Lake Stevens. This is providing the benefit of reduced
docket times. Total filings decreased 7% in 2010 to 10,263 compared to 11,024 in 2009.

The City was awarded a grant in 2010 and are now implementing video hearings between the
Court and Jail for custody calendars. Video arraignment enhances the safety of courtroom
personnel, the public and transporting officers while reducing the cost of transportation.

Our long-standing partnership with the Marysville Fire District since 1992 continues to provide
vital fire suppression and emergency services.
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 Fire Chief Greg Corn and his professional firefighting crews, EMTs and staff are always there for
us with the best “first response” resources and emergency services to the Marysville-Tulalip area.

Last November, we partnered with the Fire District when our City Building Division employees
and Fire Personnel installed free smoke alarms as part of the annual Smoke Alarm Saturday. The
team visited mobile home parks where particularly vulnerable citizens lived, installed the alarms,
and provided them with fire prevention and safety information.

We thank them for their courage and readiness to put their lives at risk when that alarm sounds.

Parks and Recreation

 In 2010, Marysville was designated a Tree City USA community
 Thanks to the donation of 1.5 acres by locally-owned Belmark Homes, we opened Shasta
Ridge Park last June in the new Shasta Ridge neighborhood in the southeast Marysville
foothills. Park features include a playground, fitness station, picnic benches and a full-sized
outdoor basketball court
 Our parks system added a 12-hole flying disc golf course at Strawberry Fields Athletic
Complex, thanks to a determined Eagle Scout, Christian Hauer, whose project took flight last
August
 Marysville was honored with an Association of Washington Cities Municipal Excellence
Award for the Healthy Communities Project
 Healthy Communities Challenge Day last June was hugely successful. More than 3,000
people young and old walked or bicycled away with plenty of new information to help them
reach their health, fitness and nutrition goals. Plans are underway for 2011 Challenge Day
coming Saturday, June 4, but support from corporate and civic partners will be much-needed

Community service and volunteerism are a huge part of a vibrant, healthy city and I am grateful
to report that our Citizens have really stepped up to the plate in this area.

Total volunteer hours contributed by residents through Serve Day and other park maintenance
and program volunteer events totaled 1,245 hours in 2010.

These hours are equivalent to $24,900 in added value to the City.

The work you see in the photo here was a partnership of three groups – The LDS Church of
Marysville, Rotary Club and Marysville Free Methodist Church. They added big improvements to
Jennings Nature Park, and became the first recipients of my community Volunteer of the Month
program.

 We established the Parks and Recreation Code to manage and address trespassing and
loitering issues in our parks, and more clearly define rules and regulations relating to parks
and recreation facilities and programs.
 As of last December, residents accessing Parks and Recreation Classes and activities are now
able to register and pay online through the department’s new “ePlay” service. In the first
month alone, ePlay had already registered 139 families for various recreational classes,
generating more than $10,000 in revenue.

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 To cite just one recent example, the Father Daughter Valentines Dance on Feb. 5 and Feb. 12
began registering on Jan. 10. To date, 414 tickets have been purchased online, and 406 tickets were
bought dropping into the Parks Office.

Community Development
Building permits are typically a good barometer for future economic activity. We did see more
permits pulled in 2010 than we have since after 2008 when the economy went into recession and the
housing market collapsed.

In 2010, 352 single-family residential permits were issued, more than doubling the 164 permit
applications filed in 2009. The 2010 figures are on par with the peak year of 2007 when 361 permits
were filed.

The total for all building permits issued rose from 1,468 in 2009 to 2,172 last year, a gain of 48%.

The increase in permit activity is mainly due to contractors purchasing available lots in
subdivisions directly from banks at below-market prices due to foreclosures and the housing slump.

Electrical permits activity has soared since Marysville’s Community Development Department
began its own electrical permitting program that helps builders obtain the permits faster, as an
alternative to the state Department of Labor and Industries program.

In 2009, 879 electrical permits were processed and 2,305 inspections conducted.

By comparison, in 2010, 1,288 electrical permits were issued and 3,341 inspections performed.

Mayor’s Initiatives
Next I want to highlight two important initiatives that go to the root of what defines a true
community – the individuals who build a greater sense of community, and the groups who unite its
people.
I initiated a Volunteer of the Month Program to recognize hard-working volunteers in our
community. Pictured here is Given Kutz, a “SOUPer Senior” who helps kids to reader at Liberty
Elementary School.
And I established a Diversity Advisory Committee. I believe now is the time to identify and
prioritize issues concerning diversity and inclusion in our growing city. Marysville has much to gain
by becoming a more diverse, inclusive and prosperous community that values diversity.
I want to thank Marvetta Toler, Wendy Messarina-Volosin and so many others whose input led to
the successful launch of this initiative.

Looking Ahead to 2011

The Lakewood Triangle Access/156th Street I-5 overcrossing in Marysville’s north end will
connect Smokey Point Boulevard with Twin Lakes Boulevard and the growing Lakewood area.

This project is key to the future economic vitality of our city. It will help our commercial business
in the Lakewood area, as well as provide infrastructure here to support future business on the east
side of the freeway. Finally, it will provide a tremendous traffic improvement to our citizens who
now have to go the busy 172nd Street route to access these businesses.

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 This project is also unique because of how it will be funded. Against a flat economy where the
recession has dried up state and federal transportation dollars, the City and property owners in the
benefit area are sharing in the funding, a remarkable commitment for a project of this scale.

Another road project that goes hand-in-hand with economic development is the SR 9/SR 92
break in access in the Sunnyside-Whiskey Ridge area.

The City has agreed to partner and fully fund this state Department of Transportation-managed
project to create a new access point at SR 9 and SR 92, creating a new 40th Street NE corridor.

City officials worked very hard to attain this break-in access because it has the potential to serve
future commercial development, and it provides a new route for residents in the Sunnyside-
Whiskey Ridge area.

The police redeployment plan has shifted traffic work to patrol units as a means to maintain
officer coverage on the streets and patrol throughout the City and annexed areas, and it will
significantly reduce overtime as well.

An overlap shift was implemented to provide maximum police officer coverage at high call load
times.

We are re-launching the Electronic Home Monitoring service as a cost-effective alternative

sentencing option. Two Custody Officers are leading and administering the EHM program, and
other sentencing alternatives are also being explored.

We will see some Parks projects occur in 2011

Installation of an irrigation system at Strawberry Fields will result in a substantial reduction in
worker hours and utility costs

We plan to install the 1.6-mile Bayview Ridge Trail in the City’s eastside foothills from SR 528
north to 84th Street NE. The trail project fits in with the goals of the Marysville Healthy
Communities Project and my priority to promote more opportunities for walking in our community

We are diligently making every effort to acquire Private/Grant Funding for upgrades to Jennings
Barn and the Rotary Ranch in Jennings Memorial Park, refurbishing of neighborhood park
equipment, improvements at the Ken Baxter Community Center, and the Qwuloolt Trail Access
Project.

Among many goals in the months and years ahead, one of my economic development priorities as
Mayor is to create a regional manufacturing, light industry job center for Marysville in the Smokey
Point area.

This area constitutes the largest developable concentration of commercial and light industrial-
zoned property along I-5 from the U.S.-Canadian border south to Lacey. It’s proximity to Arlington
Municipal Airport, and the City of Arlington’s Airport Business Park expansion plans makes this
entire area an economic development oasis.

The Smokey Point area is master planned with the potential to create 10,000 jobs in high-tech,
other light industry and manufacturing. These are jobs that can support families, and reduce travel
times for people who commute outside the area so that they have more time to spend with their
families.
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 Downtown and waterfront redevelopment also remain the focus of our long-term intentions to
create a more park-like, pedestrian-friendly environment downtown, blending high-rise housing
with a mix of new retail and office space. We are working hard to attract public and private sector
investment to make these plans a reality, but the emphasis is on long term. It won’t be right away.

What we have done is purchase and assemble properties along Ebey Waterfront including
Geddes Marina, and put the pieces in place to provide the infrastructure that will make the
waterfront more attractive to prospective developers. Infrastructure is an important component of
the 2009 Downtown Master Plan.

We have already secured a $200,000 EPA Brownsfields cleanup grant to help remediate
contaminated ground at the City-owned former mill property on the east side of SR 529. We have
applied for second grant to address cleanup of the Geddes Marina property just west of Ebey
Waterfront Park that the City bought in July. That grant will include both structural and
environmental work. These sites operated as busy sawmill and boat manufacturing centers for
decades.

Among many reasons, cleanup is important along the waterfront because the City’s downtown
storm drainage system handles flows from a much greater area than the downtown itself. We want
to make sure that as development occurs, we:

* Enhance environmental conditions

* Incorporate impervious surface, and
* Improve water quality standards for storm water runoff entering Ebey.

And finally, one large project I can mention coming to Marysville that we are very pleased to
welcome is the Armed Forces Reserve Center.

We’ve proudly called Marysville a Navy town since the opening of Naval Station Everett in 1994
and the Commissary/PX in Marysville a year earlier. We can now broaden that to a multi-faceted
military town. The Department of Defense is building a new $33 million Armed Forces Reserve
Center on 25 acres adjacent to the Navy Commissary/PX on 136th Street NE in north Marysville.
The 147,000-square-foot facility will be home to more than 250 soldiers of the Army Reserve
Command now based at Fort Lawton in Seattle. The new center will consolidate armories in
Western Washington, bringing about 1,200 soldiers to Marysville for training on weekends.

Both Army personnel and civilians will be employed full time at the center, which is scheduled to
open in July.

Several City Council-approved measures were carried out last year in an effort to tackle the
slowdown in the housing market.

I mentioned earlier that we are seeing a real pickup in building permit activity. Many broad
economic factors can be attributed to this, but the City did some things of its own at the local level
that we would like to think helped stimulate the new activity.

Here are some of the actions enacted by the City Council that added flexibility for builders to
help get the job market and local economy moving again:

* Subdivision, construction plan, and building permit extensions.

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 * Moved the time of payment for general facility charges for water and sewer to building permit
approval, in lieu of final plat approval.
* Reviewed and reduced impact fees for new development, and the Planning Commission is
currently looking at deferral for residential and commercial projects.
* Reviewed and reduced building permit fees by creating a “basic” plan program.
* Provided additional flexibility to enable redesign of prior approved subdivisions.

Upfront costs for builders can be huge. In a tight economy, the extra cash flow created through
these measures should motivate builders to get their projects going sooner, and put people back to
work in Marysville.

Even before I entered public office as a City Councilmember, I believed in transparency and
accountability in government. In 8-1/2 years as a Councilmember and now serving as Mayor, that
hasn’t changed. Citizens must be able to see through our workings and know what goes on when we
conduct public business, and the doors to government must be open. I can think of no better way to
gain the public’s trust.
To that end, I have started several new efforts to better connect with the public.

* The City in spring will launch a dynamic new-look website that will include e-mail alerts and a
variety of other interactive features, including expanded e-payment options.
* Marysville University civics learning classes are up and running again quarterly. This is a
program championed by City Councilmember Donna Wright several years ago when she heard
about a similar community outreach program in another Western Washington city. These quarterly
classes are provided at virtually no cost other than staff time involved.
* Coffee Klatschs give residents and businesspeople a chance to chat with me in a more informal
setting to talk about their issues.
* Community meetings are being drawn up for 2011 to reach out to neighborhoods in central and
north Marysville to gauge how we’re doing serving residents who became Citizens through the
Central Marysville Annexation, and
* I have been meeting one on one with key community leaders to get better acquainted.
* I have met with senior citizen groups to keep up to speed on issues important to them.

Partnerships
We have forged strong relationships with the Tulalip Tribes; Snohomish County; and the cities of
Everett, Arlington and Lake Stevens and other neighboring cities.

We meet regularly with these groups through venues such as City-Tribes Governmental Affairs
meetings, and North County Mayor’s group monthly meetings.

City and Tribal leaders and our staffs have kept a great dialogue going in terms of a joint
economic development strategy, coordinated transportation planning, restoring and protecting the
environment, and social and cultural initiatives that ensure a brighter future for our respective
communities.
And that’s only on the government side. We have also worked hard to maintain solid
relationships with citizens, business leaders and interest groups so that we can keep the channels of
communication open on existing and emerging community issues of importance.

These are all partnerships that I intend to build on – and will count on – moving forward.

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 My goal as Mayor is to promote a collaborative atmosphere as the means towards creating a
prosperous community that we can all be proud of at the end of the day.

Marysville is a vibrant, diverse and growing community where our young people deserve access
to opportunities to live and work in the community where they were raised and educated. All
Citizens should be able to feel secure, valued, and appreciated for their contributions to the
character and social fiber that make our community the family-friendly place that it is.

To all of you, I look forward to meeting and working with you in the New Year to do great things
together for our community.

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