Loading...
2020-10-27 FEDRAC PACKET - REGULAR FINANCE/ECONOMIC DEVELOPMENT/REGIONAL AFFAIRS COMMITTEE [FEDRAC] **AMENDED AGENDA** Notice: Pursuant to Governor Inslee’s Proclamation 20-28, all in-person meetings are prohibited until further notice. The Mayor and City Council are providing opportunities for public comment by submitting written comment or calling into the meeting to provide oral testimony. To access these options please use the following: Click Here to Watch Online Live Streaming Video of the Meeting Listen to the live meeting: (888) 788-0099 or 253-215-8782 Meeting ID: 422 053 447 Sign-Up* here to give citizen comment during the meeting (via calling-in) Click Here to submit written comments to the City Council Watch from the Zoom mobile app with meeting: 422 053 447 and password: 452084 TUESDAY – October 27, 2020 5:00 P.M. AGENDA 1. CALL TO ORDER 2. PUBLIC COMMENT 3. COMMITTEE BUSINESS Topic Title/Description Page # Presenter/ Time Allotted Action or Discussion A. APPROVAL OF SUMMARY MINUTES – SEPT 22, 2020 3 J. PETTIE 5 MINUTES ACTION 10/27 Committee B. VOUCHERS – SEPTEMBER 2020 9 A. ARIWOOLA 5 MINUTES ACTION 11/4 Council Consent C. MONTHLY FINANCIAL REPORT – SEPTEMBER 2020 55 A. ARIWOOLA 5 MINUTES ACTION 11/4 Council Consent D. (ADDED ITEM) RESOLUTION: FINDING OF SUBSTANTIAL NEED FOR PURPOSES OF SETTING THE LIMIT FACTOR FOR THE 2021 PROPERTY TAX LEVY 72 A. ARIWOOLA 5 MINUTES ACTION 11/4 Council Consent 4. OTHER 5. FUTURE AGENDA ITEMS NEXT MEETING: NOVEMBER 24, 2020 @ 5:00 P.M. City Staff: Hoang Tran, Chair Adé Ariwoola, Finance Director Linda Kochmar Jennifer Pettie, Administrative Assistant II 253-835-2527 FINANCE/ECONOMIC DEVELOPMENT/REGIONAL AFFAIRS COMMITTEE [FEDRAC] Notice: Pursuant to Governor Inslee’s Proclamation 20-28, all in-person meetings are prohibited until further notice. The Mayor and City Council are providing opportunities for public comment by submitting written comment or calling into the meeting to provide oral testimony. To access these options please use the following: Click Here to Watch Online Live Streaming Video of the Meeting Listen to the live meeting: (888) 788-0099 or 253-215-8782 Meeting ID: 422 053 447 Sign-Up* here to give citizen comment during the meeting (via calling-in) Click Here to submit written comments to the City Council Watch from the Zoom mobile app with meeting: 422 053 447 and password: 452084 TUESDAY – October 27, 2020 5:00 P.M. AGENDA 1. CALL TO ORDER 2. PUBLIC COMMENT 3. COMMITTEE BUSINESS Topic Title/Description Page # Presenter/ Time Allotted Action or Discussion A. APPROVAL OF SUMMARY MINUTES – SEPT 22, 2020 3 J. PETTIE 5 MINUTES ACTION 10/27 Committee B. VOUCHERS – SEPTEMBER 2020 9 A. ARIWOOLA 5 MINUTES ACTION 11/4 Council Consent C. MONTHLY FINANCIAL REPORT – SEPTEMBER 2020 55 A. ARIWOOLA 5 MINUTES ACTION 11/4 Council Consent 4. OTHER 5. FUTURE AGENDA ITEMS NEXT MEETING: NOVEMBER 24, 2020 @ 5:00 P.M. City Staff: Hoang Tran, Chair Adé Ariwoola, Finance Director Linda Kochmar Jennifer Pettie, Administrative Assistant II 253-835-2527 City Council Finance/Economic Development/Regional Affairs Committee Tuesday, September 22, 2020 5:00 p.m. SUMMARY MINUTES Meeting held remotely via Zoom CALL TO ORDER: Council Chair Hoang Tran called the meeting to order at 5:00 p.m. COMMITTEE MEMBERS VIA ZOOM: Chair Tran and Councilmember Kochmar. COUNCILMEMBERS VIA ZOOM: Council President Honda; Councilmember Baruso and Councilmember Assefa – Dawson. STAFF MEMBERS VIA ZOOM: Finance Director Adé Ariwoola; Accounting Manager Chase Donnelly; City Attorney Ryan Call; IT Director Thomas Fichtner; Executive Assistant to the Council Jeri-Lynn Clark; Public Works Director EJ Walsh; Community Services Manager Sarah Bridgeford; and Contract Administrator Autumn Gressett. PUBLIC COMMENT: No public comment A. Approval of Summary Minutes – August 25, 2020 Meeting Motion made by Councilmember Kochmar to approve the minutes from August 25, 2020 as written; motion seconded by Chair Tran and carried 2-0. B. Professional Services Agreement for Cost Analysis of Architecture and Engineering: Presented by Community Services Manager, Sarah Bridgeford. Community Services Manager Sarah Bridgeford stated in the Federal Audit Report for Fiscal Year 2016 there was a finding for the City of Federal Way’s Section 108 Loan. Initially the City used a competitive Design-Build process for the design and construction of the Performing Arts and Event Center (PAEC). The U.S Department of Housing and Urban Development (HUD) is requiring a cost analysis of architecture and engineering to show that costs were reasonable as design services were not competitively bided after the decision to switch to a Design-Bid- Build process for the PAEC. The City completed a Request for Proposals to engage a third-party contractor to complete this analysis and remain in compliance with HUD. The responsive proposer was Baker Tilly US, LLP. Councilmember Kochmar asked if the analysis is for an explanation as to why this was done? Community Services Manager Sarah Bridgeford explained the cost analysis will show the costs that were incurred with the portion of the design services that were not competitively bid and if they were reasonable costs. Council President Honda asked what happens if the analysis comes back and the costs were 3 not what we expected them to be and will there be a penalty? Community Services Manager Sarah Bridgeford stated there could be a penalty and it could jeopardize the federal funding, it’s something HUD would likely report back to the state auditor. HUD has not given a direct answer on what the penalty may be. It could call into question the Community Development Block Grant (CDBG) program and also be a problem with federal funding as well. Council President Honda asked if this is fairly common for other organizations to do? CSM Sara Bridgeford was unable to comment on how common this happens in other organizations. City Attorney Ryan Call stated when the project started it was bid under state law with no anticipated use of federal funds. Because federal funds were added midstream and already past design, they didn’t want to go back and start over. It’s highly unlikely competitively bidding would’ve resulted in a savings to the project. This is a consequence of adding CDBG monies as a funding source for the building source midway through. Council President Honda asked how long do we anticipate this will take before we know the findings and the result? Community Services Manager Sarah Bridgeford stated they plan on having the cost analysis completed by the end of the year. City Attorney Ryan Call added he doubts it will jeopardize future CDBG programs as we are an important partner with them to get federal money to the people that need it. Councilmember Baruso asked a follow up question regarding the timeline on the cost analysis. CSM Sarah Bridgeford said they would be reporting the findings by mid-February. In the fall of last year, they put together a proposal to HUD which they accepted and had a due date of this summer but due to Covid and City Hall not being open to the public, that was delayed and HUD accepted the later date. Councilmember Assefa-Dawson asked if there was a finding, would we not get the full CDBG funding in the future or would we have to pay it back if there was some kind of financial penalty? CSM Sarah Bridgeford stated she doesn’t think this is a situation where we would have to pay back funding, a Section 108 loan was used to pay the costs, so we’re paying it back already. Finance Director Ade Ariwoola asked if this was budgeted in 2019 or 2020? Community Services Manager Sarah Bridgeford answered it was in 2020 budget amendment that was passed this summer. Councilmember Kochmar asked City Attorney Ryan Call to explain the difference between a design services and a design build process. City Attorney Ryan Call stated generally it’s one entity doing both, architecture services. Most of the time you hire an architect to design something and bid out the build to someone else. Design build you define what characteristics you want in the building and hire the best engineering/construction firm and they do everything together. Public Works Director EJ Walsh added this project was originally taken to Council in 2012/2013 and its original direction was to take it on as a design build project. We went out and did a competitive procurement process to hire one firm to be responsible for the design and the construction and provide the City a turn key facility. About 60% of the way through the design phase it went back to Council and the direction then changed to a design- bid-build process. To do the design build process you have to apply to the State as a City and 4 they review it to make sure it’s in the taxpayer’s best interest. The staff in Public Works and Law did an analysis that showed it would be more expensive to re-bid the architecture because the firm that was already being used were already 50-60% of the way done and we’d have to start over. Councilmember Kochmar asked why were CDBG funds used for the design of the PAEC? Public Works Director EJ Walsh stated multiple funding sources were used in conjunction with jobs creation. CM Kochmar asked how much was it and if we are paying it back from the Human Services money that is given to the City every year? Finance Director Ade Ariwoola responded it was about $3 million dollars and if for some reason we lose the CDBG funding the City will be required to service the debt with General Fund money. Council President Honda stated the Council takes the staff’s advice 99% of the time and the Council didn’t realize at the time that this could be an issue. The Council as a whole thought this was the best way to go about building the PAEC and doing it in the most cost-effective way. Public Works Director EJ Walsh agrees that it was a staff recommendation and he does believe the City did get a better deal by going the route they did. Overall the City built the building the most efficient way possible. Councilmember Assefa-Dawson commented the CDBG money was used towards jobs creation and stated the allocation was appropriate. Finance Director Ade Ariwoola stated part of the reason the CDBG money was used is for economy development employment. With the construction of the PAEC it would bring in more hotels and businesses, and that is why the CDBG allows us to use the money. To keep the local employment up. Finance Director Ade Ariwoola suggested because this is sensitive topic to the Council, the Committee can have Community Services Manager Sarah Bridgeford make a presentation for the Council meeting to bring everyone on board. City Attorney Ryan Call stated if it’s to be discussed it need to be moved from the Consent agenda to the Business Agenda. Council President Honda agrees. Motion made by Chair Tran to Amend Option 1 from Consent Agenda to the Business Agenda. Motion seconded by Councilmember Kochmar and carried 2-0. Motion as modified made by Councilmember Kochmar to forward Option 1, to the October 6th, 2020 business agenda for discussion and decision; motion seconded by Chair Tran and carried 2-0. C. Resolution to Amend the Fund Balance Reserve Policy: Presented by Finance Director, Adé Ariwoola. Finance Director Ade Ariwoola explained the City has a Risk Management Reserve Fund set at $1.2 million. At the time, it was used to protect the City against claims. Last year, the Council agreed to move the City insurance program from self-insurance to having full insurance. Based on 5 guidelines, the City is still liable for claims not covered and that is why we would still carry $600,000. Therefore, that is why we do not need $1.2 million in the reserve. Based on this proposal, that is what we will use to develop the 2021/2022 budget. Chair Tran asked how much do we currently have in the Risk Management Fund? Finance Director Ade Ariwoola stated at the end of August we have $369,000, but by the end of the year it should be $600,000. Chair Tran followed up with if the Council doesn’t pass the Resolution, when do we have to make up the difference to get back up the $1.2 million? Finance Director Ariwoola answered we have three years to build it back up. Council President Honda asked how are we going to get from $369,000 to $600,000 by the end of the year? Finance Director Ariwoola stated there’s revenue that hasn’t come in that will be paid, because we were self-insured we pay a monthly premium from different funds into that account. Chair Tran asked to clarify that by reducing from $1.2 million to $600,000 we will use the $600,000 to balance the expenditure budget for the next two years. Finance Director Ariwoola stated by reducing the Fund balance it makes it easier to lessen the contribution from the General Fund to make it up to $1.2 million. If we didn’t do that, the General Fund will have to find other money to bring it to $1.2 million. Chair Tran agrees that we now have insurance to cover liability and has no problem with reducing the amount, but his concern is we have tapped into potential savings and use the money to spend for the next two years. Finance Director Ariwoola agreed, but by lowing the amount, it frees up the money to be used somewhere else. City Attorney Ryan Call added we are self-insured, and we are roughly through half the three-year statute of limitations period for things that could come up in the future that haven’t been claimed yet. That is where the “half” number is coming from. We have 1.5 years left for potential claims and $600,000 should be enough to get us through. City Attorney Call adds if we’re looking for a place to save money, this is a good place to go. Councilmember Kochmar asked since we are insured by AWC, do we have an excess liability policy? City Attorney Ryan Call stated we do not have a separate policy, that we have WCIA which has an umbrella policy, but there are many things that are not covered under the WCIA policy and we will need to maintain some Risk Fund. Councilmember Kochmar wants to make sure this Fund is not used for any other purpose other than what is intended as a reserve. City Attorney Call said this Fund is normally used to pay for light polls, barriers, deductibles, and other things not covered. CM Kochmar stated then we will need to continue to add to this Fund throughout the year. Councilmember Kochmar asked Finance Director Ade Ariwoola if we will be able to add to the Fund every year? Finance Director Ariwoola is asking for specification if we need to get to the $600,000 or the $1.2 million and states he cannot bring a budget to the Council without the Fund having a required amount unless the Council agrees. Councilmember Kochmar requested a quarterly report that tells the Council where the Risk Fund is at with claims and the balance in the Fund. City Attorney Ryan Call states he would need to talk to the Mayor and currently there is no one staffed in Risk and a quarterly report may be too frequent. Chair Tran asked what is the average we’ve had to pay out of the Risk Fund per year? City Attorney 6 Ryan Call stated it varies from year to year, but the analysis was presented to Council when we decided to go with WCIA. Chair Tran adds the reason he is asking is because if we are averaging less than $600,000 per year then he feels comfortable reducing the Fund balance. City Attorney Call states last year we had a $800,000 year which is extremely high due to a few extreme cases. Historically we have not hit $600,000 in a year. Councilmember Kochmar suggested the Council monitor the Fund for the next few months. Will approve the motion as long as the Council receives regular reports from the Risk department for claims that are paid from within the City as well as WCIA. Motion made by Councilmember Kochmar to forward Option 1, to the October 6th, 2020 consent agenda for approval; motion seconded by Chair Tran and carried 2-0. D. Vouchers – August 2020: Presented by Finance Director, Adé Ariwoola. Finance Director Ariwoola summarized the August vouchers, and there were no questions . Council President Honda sent some questions through email earlier to the Finance Director and the questions were answered and sent back to all Councilmembers. Motion made by Councilmember Kochmar to forward the August Vouchers to the October 6th, 2020 consent agenda for approval; motion seconded by Chair Tran and carried 2-0. E. Monthly Financial Report – August 2020: Presented by Adé Ariwoola, Finance Director. Finance Director Ariwoola summarized the August 2020 Monthly Financial Report. Notable areas include: • Sales tax • Utility tax • Business License fees • Community Development permits and fees • Admissions tax • Parks & General Recreation Fees • Hotel/Motel Lodging tax • Traffic Light Fund • Property tax Council President Honda asked now that the Federal Way Community Center is open, do we know how they’re doing, as well as the day camps? Finance Director Ade Ariwoola states because they didn’t open until September, we will have more information next month. Council President Honda commented on Lodging Tax and the three new electronic signs that will be placed around the City. CP Honda states with the reduction in Lodging Tax, she recommends we take a second look as each sign costs about $100 ,000 and it could be several years before we get the revenue back up again. Council President Honda asks Councilmember Assefa – Dawson if her committee voted to buy three new signs and CM Assefa – Dawson said yes, but the money used is to promote and bring tourism. Public Works Director EJ Walsh adds only one of the signs 7 has been authorized and there is no funding allocated to go towards other signs currently. Motion made by Councilmember Kochmar to forward the August 2020 Monthly Financial Report to the October 6th, 2020 consent agenda for approval; motion seconded by Chair Tran and carried 2-0. F. Resolution to Close a Compromised Bank Account : Presented by Finance Director, Adé Ariwoola. Finance Director Ade Ariwoola explained there were fraudulent charges in the Municipal Court Jury Fund Account and we need to close the account and open a new one. Councilmember Kochmar asked if we have any safeguards now that two checks were cashed and identified as fraudulent? Finance Director Ariwoola states on the City’s main account, Positive Pay is being used and we will be adding that to the Municipal Court Jury Fund Account. Positive Pay is a cash-management service banks use to match checks a company issue. Council President Honda asked if this account was mainly used for paying jurors and Finance Director Ariwoola stated yes, that is the account we pay individuals who are on Jury Duty. Motion made by Chair Tran to forward Option 1 to the October 6, 2020 consent agenda for approval; motion seconded by Councilmember Kochmar and carried 2-0. NEXT MEETING: October 27, 2020 MEETING ADJOURNED: The meeting was adjourned at 6:27 p.m. Attest: Approved by Committee: Jennifer Pettie, Administrative Assistant II Date 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 This page was intentionally left blank. 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70