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2014 Annual Comprehensive Financial Report (14-001)
PERMANENT RECORD DO NOT DESTROY GS50-03D-02, Rev. 1 (CAFR) 4!bly-oot City of ]Federal Way, WA 2014 COMPRIEHIENWE ANNUAL FINANCIAL R.IEPORT FOR YEAR ENDED DECEMBER 31, 2014 is -'. City of Federal Way History — The earliest recorded accounts of the Federal Way area tell of Native American families who resided in the area of the Muckleshoot Reservation on the east side of the Green River Valley and traveled west to the shores of Puget Sound for the plentiful fisheries resources. Generations of Muckleshoot Indians wore a westward trail across the heavily forested plateau to the area which is now Saltwater State Park. The arrival of the white man in the nineteenth century resulted in a steady decline in the Indian population and by 1890, nearly the entire population had disappeared from the area. Isolated on a triangular shaped plateau rising steeply from Puget Sound, the Federal Way area had little waterfront access or roadways and accordingly, was sparingly developed compared to Tacoma and Seattle. As late as the turn of the century, the original settlers at Dash Point and Dumas Bay had to row to Tacoma for supplies and mail. Old Military Road, constructed around 1856 and extending north from Fort Steilacoom, past Star Lake to Seattle and Fort Lawton, was the first road through the area. Over time, narrow dirt roads were added to provide east/west access and by 1900, a road was constructed between Star Lake and Redondo. The second crossroad, the "Seattle Road," connected old Military Road and Kent. The Seattle -Tacoma Interurban Line, completed in 1901, provided a fast and easy way to reach these urban cities. Improved access brought many visitors to the area and Star Lake became a popular summer recreation site. By the 1920s, Federal Highway 99, the interstate that linked the western states from north to south, was complete. At this time, Federal Way was still primarily forest and farmland. Fred Hoyt had a cabin on Dumas Bay and started a road to Tacoma (still called Hoyt Road). The timber companies, which had a major logging operation going, built an early railroad line and were instrumental in getting Marine View Highway (now Dash Point Road) built in the early 1920s. This roadway spurred development along the coastline. Soon thereafter, Peasley Canyon Road was built to connect Military Road with the Auburn Valley. This road later became known as South 320th Street. In these early days, roadways set the stage for development in the area and they still play an important role in the City today. By the start of World War II, a number of small, thriving communities made up the area that is now Federal Way. Some communities were clustered around lakes, such as Steel Lake, Star Lake, and Lake Geneva. Others were sited to take advantage of the view of Puget Sound, like Adelaide and Buenna. As each of these communities grew, residents built small schoolhouses for their children. By the late 1940s, King County consolidated the many individual red schoolhouses into the Federal Way School District, from which the City gets its name. During this same period, a library was built along the edge of Highway 99, and between 308`h Street and 320th Street, a small "downtown" developed with a general store, lumber yard, realty office, beauty parlor, feed store, and gas station. By the end of the 1950s, the ten blocks between 308th and 320th Streets became the first roadside commercial district. One of the more unique developments was Santa Faire, a family oriented theme park. New shopping areas were added around the park, helping to create a "community focus" for the residents of the area. As this commercial area developed, the rest of Federal Way was changing as well. The Boeing Company expanded their operations in Renton and the Kent Valley and began advertising nationally for engineers. Those engineers in turn began roaming the wooded acreage in Federal Way in search of housing. One of the earliest residential developments was Marine Hills, built in 1958 overlooking Puget Sound. Weyerhaeuser, one of the early timber companies, had large land holdings in the area and began to develop their land into high quality housing with amenities like golf courses. Weyerhaeuser's development company also began developing commercial property, creating the West Campus business park. The plan was to integrate offices and businesses with lush landscaping. Though initially the corporate office market was not strong, West Campus has grown almost to capacity, providing space for many civic buildings such as City Hall, the police station, the area's major health care centers, and higher density housing. Another major landmark in the area is SeaTac Mall (now The Commons), built in the mid-1970s on what was farmland south of 320th Street. The Mall is one of the largest in South King County and is the anchor for retail development in the area. The Mall was a result of population growth in the region and its location was determined by the 320th Street intersection with Interstate 5. The Interstate supplanted Highway 99 as the main artery for commuter traffic in the County. By the mid 1980s, South King County was growing quickly. Retail growth occurred along Highway 99, especially at the 320th Street intersection. Roads and office space were developed to accommodate the increased growth. Residential growth was also prominent, following plans developed by King County, with a large number of apartment homes. The changes to the community, with increased housing and traffic, created a movement for greater self-determination. In 1989, the citizens of this area voted for incorporation and the City of Federal Way was born, incorporating on February 28, 1990 with 58,000 residents. CITY OF Federal Way It's all within reach THIS PAGE IS LEFT RTfENn0NAUYBLANK My Of Federal Way 2014 COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended December 31, 2014 City of Federal Way 33325 8`h Avenue South Federal Way, Washington 98003 (253)835-2520 www . ci tyoffederal way. coin Prepared by the Finance Department Finance Director Ade' Ariwoola COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended December 31, 2014 Table of Contents Page INTRODUCTORY SECTION Letterof Transmittal................................................................................................................................... City Officials and Administrative Officers............................................................................................... City Functional Organization Chart ............................................................................................................ GFOA Certificate of Achievement............................................................................................................. FINANCIAL SECTION Independent Auditor's Report ............................... ...................................... ............. ........ ____ ... ........... 9 Management's Discussion and Analysis.................................................................................................... 13 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Position....................................................................................................... 27 Statement of Activities........................................................................................................... 28 Fund Financial Statements: Balance Sheet — Governmental Funds.................................................................................... 29 Statement of Revenues, Expenditures, and Changes in Fund Balances — GovernmentalFunds......................................................................................................... 31 Reconciliation of the Statement of Revenues, Expenditures, and Change In Fund Balances of Governmental Funds to the Statement of Activities ........................ 33 Statement of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual GeneralFund................................................................................................................... 34 StreetFund....................................................................................................................... 35 UtilityTax Fund............................................................................................................... 36 Statement of Net Position — Proprietary Funds................................................................................ 37 Statement of Revenues, Expenses and Changes in Fund Net Position — Proprietary Funds ... 38 Statement of Cash Flows — Proprietary Funds........................................................................ 39 Notes to the Basic Financial Statements.......................................................................................... 41 Combining and Individual Fund Statements and Schedules — Nonmajor Governmental Funds: FundDescription.............................................................................................................................. 76 CombiningBalance Sheet................................................................................................................ 77 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ......................... 81 Statement of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual ArterialStreet Fund.......................................................................................................... 85 Solid Waste & Recycling Fund........................................................................................ 86 Special Contracts/Studies Fund................:....................................................................... 87 Hotel/Motel Lodging Tax Fund....................................................................................... 88 Federal Way Community Center Fund .................. »...... --- ....... ..... --- ............ ............. 89 TrafficSafety Fund.......................................................................................................... 90 Real Estate Excise Tax Fund........................................................................................... 91 Community Development Block Grant Fund................................................................... 92 Paths& Trails Fund......................................................................................................... 93 Individual Fund Statements and Schedules — Debt Service Fund: FundDescription.............................................................................................................................. 94 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual ............. 95 Combining and Individual Fund Statements and Schedules — Internal Service Funds: FundDescription.............................................................................................................................. 96 Combining Statement of Net Position............................................................................................... 97 Combining Statement of Revenues, Expenses and Changes in Fund Net Position .......................... 99 Combining Statement of Cash Flows...............................:................................................................ 101 Supplemental Information: Schedule of State Financial Assistance............................................................................................ 104 Schedule of Expenditures of Federal Awards.................................................................................. 105 Capital Assets Used in the Operation of Governmental Funds: Comparative Schedules by Source................................................................................................... 108 Schedule by Function and Activity .................................................................................................. 109 STATISTICAL SECTION NetPosition by Component................................................................................................................... 112 Changesin Net Position......................................................................................................................... 113 Government -wide Revenues by Source and Expenditures by Function ................................................ 114 Fund Balances of Governmental Funds................................................................................................. 115 Changes in Fund Balances, Governmental Funds.................................................................................. 116 Assessed and Estimated Actual Value of Taxable Property .................................................................. 117 Property Tax Rates and Levies, Direct and Overlapping Governments ................................................. 118 PrincipalTaxpayers......................................................... ............. ........................... m ......... :.................... 119 Property Tax Levies and Collections..................................................................................................... 120 Ratio of Outstanding Debt by Type...................................................................................................... 121 Ratio of Net General Obligation Bonded Debt to Assessed Value and Net General Obligation Bonded Debt Per Capita.............................................................. 122 Computation of Direct and Overlapping Debt....................................................................................... 123 Computation of Limitation of Indebtedness........................................................................................... 124 Ratio of Annual Debt Service Expenditures for General Obligation Bonded Debt to Total General Governmental Expenditures Net of Debt Service Expense ........................ 125 DemographicStatistics.......................................................................................................................... 126 PrincipalEmployers.............................................................................................................................. 127 Property Value and Construction.......................................................................................................... 128 CapitalAssets by Function.................................................................................................................... 129 OperatingIndicators by Function.......................................................................................................... 130 City Government Employees Full -Time Equivalent - History ............................................................... 131 Salaries and Surety Bonds of Principal Officials................................................................................... 132 Miscellaneous Statistical Information.................................................................................................... 133 CITY QF Federal Way It's all within reach THIS PAGE IS LEFT RdT nONALLYBLANK Citv o f Federal Way / I CITY OF Federal Way June 26, 2015 People of the City of Federal Way Honorable Mayor and City Council I am pleased to submit to you the 2014 Comprehensive Annual Financial Report (CAFR) of the City of Federal Way, Washington. This report is published annually as the official annual financial report and complies with state law (RCW 43.09.230) requiring annual report for Washington municipal governments to be certified and filed with the Washington State Auditor's Office in a timely manner. The accuracy of the data, completeness and fairness of the presentation, including all disclosures rests with the City management. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. The City operates under a system of accounting and internal controls that are concerned with safeguarding of assets and the reliability of financial records. The definition of accounting control assumes reasonable, but not absolute assurance that the objectives expressed in it will be accomplished by the system. The concept of reasonable assurance recognizes that the cost of internal control should not exceed the benefits expected to be derived. This transmittal letter is designed to complement the Management Discussion & Analysis (MD&A) and should be read in conjunction with it. The City's MD&A can be found immediately following the Independent Auditor's Report. REPORTING ENTITY The City is a noncharter Optional Code City with a Mayor -Council form of government. It was incorporated on February 28, 1990, and is governed under the provisions of the Optional Municipal Code of the Revised Code of Washington. Optional Code City status increases the City's operating authority by extending it to the powers of all four city classifications which exist in Washington Law. The City Council consists of seven council members, all of whom are elected at large by citizens of Federal Way to serve four- year terms. In November 2009, the citizens of Federal Way approved Proposition 1 to change the form of government from a City Manager -Council run government to an elected Mayor -Council government. Federal Way voters elected former City Councilmember and King County Senior Deputy Prosecuting Attorney Jim Ferrell as Mayor on November 5, 2013. City services provided include: police protection, construction and maintenance of streets, building inspection, municipal court services, jail services, planning and zoning, park services, emergency management services, surface water management and general administration, including finance. Services for a land use hearing examiner are contracted. The City continues to have eleven major departments consisting of (1) Mayor's Office; (2) City Council; (3) Law; (4) Finance; (5) Human Resources; (6) Information Technology; (7) Municipal Court, (8) Parks and Recreation; (9) Public Works; (10) Police; and (11) Community Development. Fire protection and emergency medical services are provided by South King Fire & Rescue. Lakehaven Utility District delivers water and sewer services. King County Metro provides public transportation services. Public housing services are the primary focus of the King County Housing Authority. The King County Library System engages City residents through its library and reference services. School District No. 210 offers educational programs for kindergarten through high school students, in addition to vocational training. ECONOMIC FACTORS AFFECTING FINANCIAL CONDITION The Great Recession continues to have lingering effects on the economy. Many economic indicators during 2014 were still below the pre -Great Recession levels. Consumers have gained some ground since the recession ended; groups hit harder than Citv ofFederal Wav / 2 average include young people. The housing market saw some improvements due to a rise in personal income and decline in foreclosures. Nationally, the CPI rose 0.8 percent in 2014 after a 1.5 percent increase in 2013. This is the second -smallest December - December increase in the last 50 years, trailing only the 0.1 percent increase in 2008. It is considerably lower than the 2.1 percent average annual increase over the last ten years. The energy index, which rose slightly in both 2012 and 2013, declined sharply in 2014, falling 10.6 percent, the largest decline since 2008. The gasoline index was the main cause of the decline, falling 21.0 percent, with most of the decrease occurring over the last few months of the year. This followed a 1.0 percent decline in 2013. The fuel oil index declined as well, falling 19.1 percent in 2014 after a 1.8 percent decline in 2013. In contrast, the energy services index accelerated in 2014, rising 3.7 percent after a 2.4 percent advance in 2013. The electricity index rose 3.1 percent in 2014, similar to its 3.2 percent advance in 2013. The index for natural gas, which fell slightly in 2013, rose 5.8 percent in 2014, ending a streak of five years of declines. Despite the decline in 2014, the energy index has risen at a 3.2 percent annual rate over the past 10 years. The index for food rose 3.4 percent in 2014, a substantial acceleration from its 2013 increase of 1.1 percent. The index for food at home rose 3.7 percent in 2014 after rising only 0.4 percent in 2013. All six major grocery store food group indexes increased in 2014. The index for meats, poultry, fish, and eggs, which rose 2.9 percent in 2013, increased 9.2 percent, its largest December -December increase since 2003. The index for beef and veal rose 18.7 percent in 2014. The index for dairy and related products rose 5.3 percent in 2014, while the index for fruits and vegetables advanced 3.2 percent; both had declined in 2013. Also turning up after declining in 2013 was the index for other food at home (up 1.5 percent) and the index for nonalcoholic beverages (up 0.7 percent). The only major grocery store food group index not to accelerate was cereals and bakery products, which repeated its 2013 increase of 0.5 percent. The index for food away from home rose 3.0 percent in 2014 after increasing 2.1 percent in 2013. Over the last ten years, the food index has risen at an average annual rate of 2.7 percent. As of December 2014, Seattle -Tacoma -Bremerton, WA's CPI for Urban Wage Earners and Clerical Workers (CPI-W) increased 1.1 percent over December 2013 compared to the national average of 0.3 percent. The Seattle -Tacoma -Bellevue, WA annual unemployment rate for 2014 was 4.9% down from 5.9% in 2013, 7.4% in 2012 as measured by Bureau of Labor Statistics. As of the end of April 2015 the unemployment rate has dropped to 3.9% The Puget Sound region reached its peak unemployment rate during 2010 at 9.7% which was compounded by the "dot.com" collapse and the effects of 9/11 terror attacks on the commercial airplane industry since 2001. ECONOMIC TRENDS Federal Way is the ninth most populated city in the state of Washington according to Washington-demographics.com at 93,425 people and closely followed by Yakima at 93,357 and Spokane Valley at 91,729 people. The City is located on a plateau adjacent to Puget Sound in King County, eight miles north of downtown Tacoma and 25 miles south of downtown Seattle. The City occupies approximately 22.5 square miles and is served by Interstate 5 and state highways 99 and 509. In 2014, there were 35,626 housing units in Federal Way, an increase of less than 1% over 2013. Of these units, 56% or 20,044 were single family homes, 40% or 14,277 were multi -family units, and 4% or 1,305 were mobile homes and trailers. The community is residential and commercial, with the populace employed locally and in the neighboring cities such as SeaTac, Kent, Tacoma, Bellevue, and Seattle. Employment in Federal Way is highly concentrated in retail and services sectors which respond primarily to the needs of the local market area population. The employment figure for 2014 is estimated at 28,644. Major employers are; Federal Way Public Schools, Xerox Commercial Services, Weyerhaeuser, St. Francis Community Hospital, Wild Waves, and World Vision. Sales tax collected in 2014 total $12.2 million which was $0.8 million more than $11.4 million of 2013. The retail sector of the local economy is anchored by the following areas; the first is South 348h and State Highway 99 including Wal-Mart Super Center, Wholesale Sports, Costco, Lowe's Home Improvement Center, and Home Depot. The second is The Commons regional mall including Target, TJ Max, Best Buy, and many other small businesses adjacent to the area. According to a listing of businesses registered with the City of Federal Way and sorted by the Standard Industrial Classification, the business economy appears to be configured as follows: retail trade 53%; services 23%; construction 9%; wholesale trade 4%; information 5%, manufacturing 1%, and other 5%. In 2014, the total assessed value of property in Federal Way was $8.4 billion, which was approximately 13.4% higher than the 2013 assessed valuation of $7.4 billion. City o Federal Way/ 3 Real Estate sales increased 5% to approximately $418 million in 2014 as compared to $399 million in 2013. A total of 632 building permits in 2014 compared to 662 in 2013 and 3,722 other building related permits compared to 3,827 that were issued in 2013. Estimated market value was $128.36 million and $6.87 million in 2014 compared to $61.5 million and $5.5 million respectively. Significant building permits include: Wynstone East, Park 16 Apartments, Celebration Senior Living Apartments, Dicks Sporting Goods, High Point Building Apartments, Progressive Claims Office, and Kitts Corner Apartments. LONG-TERM PLANNING The City's fiscal policy requires the City to prepare long-range projections for six years beyond the current budget period. The projection extends current operations to the future to see if the services are sustainable and determine the magnitude of future financing gaps, if any. This glimpse into the future allows the City to proactively plan and implement corrective measures over time to avoid sudden drastic changes in service levels or in revenue/tax policies. In addition, the City's fiscal policy requires the City to balance its ongoing services with ongoing revenues. MAJOR INITIATIVES AND ACCOMPLISHMENTS During 2014, the City of Federal Way completed one major transportation infrastructure project and continued with the design of another significant major project. The 21st Avenue SW at SW 336th Street Project improved intersection capacity and safety at a total cost of 5.6 million dollars which included $2 million of city funding and $3.6 million of outside funding. Also, the City continued with design of improvements to the Pacific Highway South (SR 99) corridor with the design of the fifth phase of the State Highway 99 improvements between S 340th Street and S 359th Street. Total costs, upon completion of the fifth phase in 2017 are expected to be $110.9 million with the City's $19 million leveraged by $91.9 million in outside funding. The Federal Way Police Department obtained national re -accreditation through the Commission on Accreditation of Law Enforcement Agencies (CALEA) with excellence achievement in August 2014 which shows the department is meeting the highest operational standards in the nation. Out of the total Police agencies within the nation 3.5% of agencies receive this accreditation each year, and 1% receives the accreditation with excellence achievement. The Department also established a new substation in the downtown core to provide higher police patrol visibility and implemented a new vehicle patrol graphical design to a black & white scheme. With respect to the retail sector, we have seen growth. The Commons added a major retailer Dicks Sporting Goods, also Total Wine, Progressive Insurance, and Ulta Cosmetics all major retailors opened locations in the City of Federal Way. In the institutional sector Seattle Children's Hospital is opening a location in Federal Way. On the former Toys "R" Us property located at 31510 20`h Avenue South, the City has started on the design phase for the construction of the Performing Arts & Event Center. There is a proposal in conjunction with the center for a private developer to add a hotel. To assist with the construction of the center and manage the center when it is completed the City hired a Performing Arts & Event Center Executive Director in February 2015. Next to the Performing Arts & Event Center is the Town Square Park site (former AMC Theater site). The City has built an urban park and plans to expand the park and add additional amenities. An additional $1.5 million has been allocated to this project. In addition to these projects the City purchased 7.48 acres (former Target site) for retail office and residential development opportunities next to the Federal Way Transit Center. OUTLOOK FOR THE FUTURE Council identified the following set of goals for the City which was adopted on March 7, 2006. 1. Integrate the public safety strategy in all facets of City operations, building on a strong community -based approach. 2. Create a multi -use urban city center that is pedestrian friendly, linked to neighborhoods and parks, and services as the social and economic hub of the City. 3. Establish Federal Way as an economic leader and job center in South King County by attracting regional market for high quality office and retail businesses. 4. Maintain the capital facilities plan and provide financing options for transportation and surface water improvements, parks, recreation, and cultural arts and public facilities. 5. Ensure a responsive service culture within the City organization where employees listen carefully, treat citizens and each other respectfully and solve programs creatively, efficiently, and proactively. Gi , of Fede Pat Way 14 6. Position Federal Way as a regional leader by working collaboratively with other local and regional jurisdictions in order to leverage resources. INDEPENDENT AUDIT State law requires an annual audit of all City books of account, financial records, and transactions by the State Auditor, an independently elected state official. In addition to meeting the requirements set forth under state law, the audit was also designed to meet the requirements of the Federal Single Audit Act of 1984 and related OMB Circular A-133. The 2014 audit of the City has been completed in conformance with generally accepted auditing standards. The financial statements of all City funds have been included in this audit. The City has been given an unqualified opinion in 2014; which is the 25th consecutive year receiving a clean audit. The State Auditor's report on the basic financial statements is included in the financial section of this report. AWARDS The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Federal Way for its comprehensive annual financial report (CAFR) for the year ended December 31, 2013. The City of Federal Way has received a Certificate of Achievement for the last twenty-four years (fiscal years ended 1990 — 2013). In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet Certificate of Achievement Program's requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. The City of Federal Way also received the Government Finance Officers Association Distinguished Budget Presentation Award for its biennial budget for the years beginning January 1, 2013 and 2014. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, a financial plan, an operations guide, and a communications medium. ACKNOWLEDGEMENTS The preparation of this report would not have been possible without the efficient and dedicated -services of the entire staff of the finance department. In addition, staff in all City departments should be recognized for responding so positively to the requests for detailed information which accompany each audit. A special note of thanks is given to Chase Donnelly, Accounting Supervisor who served as the coordinator for the CAFR preparation. The role of the State Auditor's Office should also be acknowledged as a significant contribution to a fine product. Finally, we wish to express our appreciation to the Mayor and City Council for their ongoing support and for providing the firm foundation for the pursuit of excellence in all realms of professional endeavors. Respectfully submitted, Ademola A. Ariwoola, MBA, CGFM Finance Director Federal Wav / 5 2014 CITY OFFICIALS EXECUTIVE & LEGISLATIVE BODY JIMFERRELL Mayor JEANNE BURBIDGE LYDIA ASSEFA-DAWSON(*) KELLY MALONEY Deputy Mayor Councilmember #1 Councilmember #2 SUSAN HONDA Councilmember #3 BOB CELSKI Councilmember #5 MARTIN A. MOORE Councilmember #6 DINI DUCLOS Councilmember #7 Position Elected Term Elected Email Phone Mayor Jim Ferrell 1/l/14-12/31/17 11/26/13 Jim.Ferrell@cityoffederalway.com (253) 835-2402 Council Position #4 Jeanne Burbidge 1/l/14-12/31/17 11/26/13 Jeanne.Burbidge@cityoffederalway.com (253) 835-2401 Position #1 Lydia Assefa-Dawson* 3/l/14-12/31/15 3/01/14 Lydia.Assefa-Dawson@cityoffederalway.com (253) 835-2401 Position #2 Kelly Maloney 1/l/14-12/31/17 11/26/13 Kelly.Maloney@cityoffederalway.com (253) 835-2401 Position #3 Susan Honda 1/l/12-12/31/15 11/28/11 Susan.Honda@cityoffederalway.com (253) 835-2401 Position #5 Bob Celski 1/l/12-12/31/15 11/28/11 Bob.Celski@cityoffederalway.com (253) 835-2401 Position #6 Martin A. Moore 1/l/14-12/31/17 11/26/13 Martin.Moore@cityoffederalway.com (253) 835-2401 Position #7 Dini Duclos 1/l/12-12/31/15 11/28/11 Dini.Duclos@cityoffederalway.com (253) 835-2401 *Appointed Citv ofFederal Wav / 6 Position Presiding Judge Judge Emok ee David Larson Rebecca Robertson Court Administrator Susanne White JUDICIAL BRANCH Eirctcd/ Alsnointrd Tenn Office date Contact lnfomnation Elected N/A 3/3/2008 David.Larson@cityoffederalway.com (253) 835-3012 Elected N/A 1/l/2010 Rebecca. Robertson@cityoffederalway.com (253)835-3025 Appointed N/A 2/22/2010 Susanne.White@cityoffederalway.com (253) 835-3000 CITY ADMINISTRATION Position Emniovc c Avoominient Contact Information Chief of Staff BrianJ. Wilson 1/20/2014 Brian.Wilson@cityoffederalway.com (253)835-2510 City Attorney Amy Jo Pearsall 2/1/2014 Amy Jo.Pearsall@cityoffederalway.com (253)835-2570 Interim Community Development Director Larry Frazier 7/21/2014 Larry.Frazier@cityoffederalway.com (253)835-2612 Economic Development Director Tim Johnson 9/15/2014 Tim.Johnson@cityoffederalway.com (253)835-2412 Finance Director Ade Ariwoola 4/1/2014 Ade.Ariwoola@cityoffederalway.com (253)835-2520 Parks Director John Hutton 7/23/2014 John.Hutton@cityoffederalway.com (253)835-6910 Police Chief Andy Hwang 3/18/2014 Andy.Hwang@cityoffederalway.com (253)835-6716 Public Works Director Marwan Salloum 7/1/2014 Marwan.Salloum@cityoffederalway.com (253)835-2720 Federal Mai, Citv of Federal Wav / 8 is Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Federal Way Washington For its Comprehensive Annual Financial Report for the Fiscal Year Ended December 31, 2013 Executive Director/CEO The Government Financial Officers Association of the United States and Canada (GFOA) awarded a certificated of Achievement for Excellence in Financial Reporting to the City of Federal Way for its Comprehensive Annual Report (CAFR) for the fiscal year ended December 31, 2013. This was the twenty-fourth consecutive year that the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirement. A Certificate of Achievement is valid for a period of one year ONLY. We believe that our current CAFR continues to meet the Certificate of Achievement Program requirements and we are submitting it to GFOA to determine its eligibility for another certificate. Federal Wav / 9 Washington State Auditor's Office June 26, 2015 Mayor and City Council City of Federal Way Federal Way, Washington REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund and the aggregate remaining fund information of the City of Federal Way, King County, Washington, as of and for the year ended December 31, 2014, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Federal Wav / 1 D We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund and the aggregate remaining fund information of the City of Federal Way, King County, Washington, as of December 31, 2014, and the respective changes in financial position and, where applicable, cash flows thereof, and the respective budgetary comparison for the General, Street and Utility Tax funds for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 13 through 23 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The accompanying information listed as combining financial statements and supplementary information on pages 77 through 110 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. This information has been subjected to auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. The information identified in the table of contents as the Introductory and Statistical Sections is presented for purposes of additional analysis and is not a required part of the basic financial statements of the City. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. Citv of Federal Wav / 11 OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we will also issue our report dated June 26, 2015, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. That report will be issued under separate cover in the City's Single Audit Report. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Sincerely, JAN M. JUTTE, CPA, CGFM ACTING STATE AUDITOR OLYMPIA, WA Citv ofFederal Way / 12 CITY OF Federal Way It's all within reach THIS PAGE I3 LEF r EiTENT IONALLYBLA' K Federal Rrcn, / 13 MANAGEMENT'S DISCUSSION AND ANALYSIS As management of the City of Federal Way, we offer readers of our annual financial report a narrative overview, and an analysis of the financial activities of the City of Federal Way for the fiscal year ended December 31, 2014. We encourage readers to consider the information in conjunction with the preceding letter of transmittal, the financial statements and notes to the financial statements that follow. FINANCIAL HIGHLIGHTS • The total assets of the City of Federal Way exceeded its liabilities at December 31, 2014 by $598.8 million (Net Position.) Capital Assets (net of depreciation and related debt) account for 86% of this amount with a value of $516.4 million. Of the remaining net position of $82.5 million or 14%, $65.1 million may be used to meet the government's ongoing obligations to citizens and creditors, without legal restriction while the $17.4 million are restricted for specific use. • The City's total net position increased by $1.6 million, or less than 1% over 2013 as referenced on page number 18. Governmental activities increased by $1.3 million or less than 1% while business -type activities increased by $0.3 million. There was also a prior period adjustment of $4.9 million as noted in note 15. ■ Net investment in capital assets governmental activities decreased by $2.6 million and government -wide unrestricted net position increased by $181 thousand respectively over 2013 as referenced on page number 15. • Restricted Net Position decreased by $5.2 million or 29.9% and is mainly for funding of capital projects and debt service. ■ Governmental fund balances at year-end were $52.8 million, $2.8 million or 6% increase over the prior year. Of this amount, a total of $12.5 million, or 24% of the governmental fund balance is unrestricted and available to fund ongoing activities. The remaining $40.3 million is earmarked for debt service, paths & trails reserve, hotel/motel lodging tax, police special funds, petty cash/change funds, court trust fund, advance travel, strategic opportunities reserve and capital projects. • Unrestricted fund balance in the general fund was $12.5 million, which decreased by $3.5 million or 28% from the prior year. • Debt increased by $7.0 million during the current fiscal year. Generai obligation debt decreased by $.1.0 million while public works trust fund loan decreased by $0.2 million. The City acquired the Target property at 2141 S 3141h Street via 3- year bank loan of $8.2 million at an annual rate of 1.51%. OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City of Federal Way's basic financial statements. The basic financial statements are comprised of three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. In addition to the required components, the City's annual report also includes other supplementary information. The first set of supplementary information is the Combining Statements. These provide Balance Sheets, Statement of Revenues, Expenditures, and Changes in Fund Balances with Budget to Actual Comparisons, Statement of Net Position, and Cash Flows for all Non -Major Funds. The other set of supplementary information is the Statistical Section. This section provides a four to ten-year view of the City's revenues, expenditures, debt obligations and capacity, the City's largest taxpayers, and those entities with the largest employment within the City of Federal Way. This section provides a long-term perspective on the City's economy. Government -wide Financial Statements The government -wide financial statements are designed to provide readers with a broad overview of the City of Federal Way's finances, in a manner similar to a private -sector business. ofFederal Wav / 14 A) The statement of net position presents information on all of the City of Federal Way's assets plus deferred outflows and liabilities plus deferred inflows, with the difference between the two reported as net position. This statement serves a purpose similar to that of a balance sheet in private business. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. B) The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government -wide financial statements distinguish functions of the City of Federal Way that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City of Federal Way include law enforcement and public safety, construction and maintenance of streets, building inspection, municipal court services, jail services, community planning and development services, parks and recreation facilities, other community services and general administration. The business -type activities of the City include surface water management and the control and operation of Dumas Bay Centre, a multi -use facility that offers business and retreat accommodations, recreation and cultural arts classes and a performing arts facility. The City has no separately identified component units included in the government -wide financial statements. The City has reported its investment in two governmental joint ventures: Valley Communications Center and South Correctional Entity (SCORE). Descriptions of these joint ventures are found in note 13 of the notes to the financial statements. The government -wide financial statements can be found immediately following this MD&A Fund Financial Statements The annual financial report includes fund financial statements in addition to the government -wide financial statements. While the government -wide statements present the City's finances based on the type of activity, general government versus business - type, the fund financial statements are presented by fund type such as the general fund, special revenue funds, and proprietary funds. A fund is a specific fiscal and accounting entity with a self -balancing set of accounts used to account for specific activities or to meet certain objectives. Funds are often set up in accordance with special regulations, restriction or limitations. The City of Federal Way uses fund accounting to ensure and show compliance with finance -related legal requirements. The City's funds are divided into two categories: governmental funds and proprietary funds. Governmental Funds Governmental funds are used to account for essentially the same functions as are reported in governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near -term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near -term financing requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near -term financing decisions. Both the expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Federal Way maintains twenty individual governmental funds. The City's seven major governmental funds, the general fund, street fund, utility tax fund, debt service fund, downtown redevelopment fund, transportation fund, and performing arts & events center fund are presented separately in the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances. The remaining governmental funds are combined into a single column labeled non -major governmental funds. Individual fund data for each of the non -major governmental funds can be found in combining statements later on in this report. The City maintains control over its operating funds through the adoption of the biennial budget. Budgets are adopted at the fund level and according to state law. A budgetary comparison statement is presented for the General, Street, and Utility Tax Fund as a basic financial statement. The basic governmental fund financial statements can be found on pages after the government -wide statements of this report. Federal Wav / 15 Proprietary Funds The City of Federal Way maintains two types of proprietary funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide statements. The City uses enterprise funds to account for its surface water management and the Dumas Bay Centre. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for its risk management, information systems, mail and duplication services, fleet of vehicles and motorized equipment, facilities management, health insurance, and unemployment services. Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Surface Water Management fund and for the Dumas Bay Centre. The internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data is provided in the form of combining statements elsewhere in this report. The proprietary fund financial statements can be found following the governmental fund statements in this report. Notes to the Financial Statements The notes provide additional information that is essential to the full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements can be found immediately following the fund financial statements. Other Information In addition to the basic financial statements and accompanying notes, this report also presents the combining statements for non -major governmental funds, internal service funds, and capital assets of governmental funds. GOVERNMENT -WIDE FINANCIAL ANALYSIS This section provides analysis of the government -wide financial statements including long-term and short-term information about the City's overall financial condition. The following tables address the financial results of the City as a whole. Current and other assets Capital assets and CIP, net ofaccurn depreciation Total assets Lang -term liabilities Other liabilities Total liabilities Net position: Net investment in: capital assets Restricted Unrestricted Total net position Analysis of Net Position CONDENSED S TATFNIENT OF NET POS 1TION As of December 31, 2014 and 2013 Gowrnmental.Acrivities Bus iness=Type Activities Total 2014 2013 2014 2013 2014 2013 $ 95,147,927 $91,533,341 $ 7,787,827 $7,182,897 $ 102,935,754 $ 98,716228 486,490,172 481287,121 50,779,826 51283,047 537,269,998 532,570,168 581,638,099 572,820A62 58,567,653 58,465,934 640,205,752 631,286-396 36.932,078 29,002,726 565,483 734,681 37,497,561 29.737,407 3,399,540 3,764,800 463,227 513,334 3,862,767 4278,134 40,331,618 32,767,526 1,028,710 1248,015 41,360328 34,015,541 466,078,036 468,628.412 50299,229 50,620D91 516,377265 519,248,503 17,391272 22,594,894 20,311 20,559 17,411,583 22,615,443 57,837,173 48,829,641 7,219,403 6,577269 65,056,576 55,406,910 $ 541,306,481 $ 540,052,936 $ 57.538,943 $ 57217,919 $ 598,945,424 $ 597270,855 Total net position of the primary government of $598.8 million at December 31, 2014 increased $1.6 million or less than 1.0% compared to December 31, 2013. The increase is mainly due to governmental type activities increase of $1.3 million and business -type activities increase of $0.3 million. City of Federal Wav / 16 The largest component of the City's net position, 86% or $516.4 million, is net investment in capital assets. These capital assets such as land, streets, trails, parks, police vehicles, and parks equipment are used to provide services to the citizens. Consequently, these assets are not available to sell and convert to cash for future spending. Approximately 2.6% or $14.0 million of the total net position of the city are restricted for use on capital projects or are earmarked for current approved capital projects. Some of the major capital projects the funds are being used for include [he downtown park, trail and pedestrian access improvements, SR99 HOV Lanes Phase 5, S 356 b St: SR99 - SR 161, S 3GO St at 28" Ave S, and Performing Arts and Conference Center. The City attempts to fund capital construction projects on a pay-as- you-go basis, aggressively pursuing grant funding and cost sharing with developers to construct large projects in the City that impact the economy and transportation system. The remaining balance of restricted net position of $3.4 million is divided among restrictions for: $0.13 million for police special funds, and court trust, $0.02 million for steel lake and north lake management districts, $0.03 million for prepaid insurance/debt and flex plan, $0.44 million for peg and franchise fees for educational and governmental access services, $0.40 million for lodging tax, $0.20 million for paths and trails, and $2.14 million for debt service. The unrestricted business -type activities portion of $7.2 million, $7.0 million can only be spent on surface water management and the remaining $0.18 million on improvements to Dumas Bay Centre and Knutzen Family Theatre. Maintenance of catch basins, pump stations, storm drain flushing, and other capital construction projects such as West Branch Lakota Creek Restoration are examples of utility activities. Other functions of the City may access the remaining $57.8 million in unrestricted net position to meet ongoing obligation to citizens and creditors. Examples of other City obligations which net position may be used for are public safety, economic development, parks maintenance, ongoing street maintenance, and committed funds for capital projects. At the end of the fiscal year, the City of Federal Way reported positive balances in all three categories of net position, for the government as a whole, as well as for the separate governmental and business -type activities. Governmental Activities: Current and other assets increased by $3.6 million or 3.9% primarily due to an increase of $1.9 million in investment in joint venture related to the SCORE jail facility (see Note 13). In addition, cash & cash equivalents increased by $2.4 million primarily due to an increase in sales tax revenue, and charges for services revenue from community development. Capitals assets and CIP, net of accumulated depreciation increased by $5.2 million or 1.1 % primarily due to purchase of Target property land for downtown redevelopment of $8.2 million, construction in progress of Performing Arts & Event Center of - $1.6 milliorr, $1.0 -million for developer -contributed infrastructureassetsand Brooklake Center, and deprecation increase due to prior period adjustment on infrastructure of $4.9 million and current year depreciation. (see Note 7) Long-term liabilities increased by $7.9 million or 27.3% primarily due to $8.2 million general obligation bond issued for Target Property purchase, and paying down the balance on GO Bond, SCORE facility, and Valley Communications. (see Note 10) Other liabilities decreased by $0.365 million or 9.7% primarily due to having less December purchases in the Transportation Fund than the prior year, therefore decreasing vouchers payable. Net investments in capital assets decreased by $2.55 million or less than 1.0% primarily due primarily due to an increase in capital assets and CIP, net of accumulated depreciation and an increase in long-term liabilities as described above, therefore decreasing net investments in capital assets. Restricted net position represents amounts that must be used in accordance with external restrictions, and decreased by $5.2 million or 29.9% from the prior year primarily due to moving committed fund balance that was in restricted net position in 2013 for capital assets to unrestricted net position in the government -wide financial statements. Additions to the restricted net position balance include the performing arts & event center balance, and the downtown park project balance in the Parks capital fund. Additionally there are externally restricted balances for special contracts/studies, hotel/motel lodging tax, and paths and trails reserve. City of Federal Way / 17 Business -Type Activities: Current and other assets increased by $0.6 million or 8.4% primarily due to an increase in Surface Water Management operations cash and other equivalents of $0.46 million from revenues exceeding operating expenditures due to unfilled positions, and an increase in Surface Water Management due from other governments of $0.19 million. The remainder is primarily due to a reduction in receivables for surface water management fees, and a reduction in Dumas Bay Centre cash due to additional operating expenses from food and operating costs in the center. Capitals assets and CIP, net of accumulated depreciation decreased by $0.5 million or 1.0% primarily due to current year depreciation on Surface Water Management and Dumas Bay Centre assets. (see Note 7) Long-term liabilities decreased by $0.17 million or 23.0% due to paying down of Public works trust fund loans by $0.18 million, and an increase in compensate absences payable of $0.01 million. (See Note 10) Net investments in capital assets decreased $0.32 million or less than 1.0% primarily due to current year depreciation on Surface Water Management and Dumas Bay Centre assets, and low outstanding balance in Public works trust fund loan as described above. Unrestricted net position increased by $0.6 million or 9.8% primarily due to the increase in current and other assets and the decrease in other liabilities as described above. Cit_v o f Federal Wav / 18 CHANGES IN NEr POSITION For the Years Ended December 31, 2014 and 2013 Governmental Activities Business -Type Activities Total 2014 2013 2014 2013 2014 2013 Revenues: Programs revenues: Charges for services $ 141.402,062 $ 12,515,733 $ 4,174,613 $ 4,096,751 $ 18,576,675 $ 16,612,484 Operating grants & contrib. 5.410.098 6,007,682 60T608 774,436 6,017.706 6,782,118 Capital grants & contrib. 5,632,549 3,892,651 - 5,632,549 3,892,651 General revenues: Property taxes 10,349,906 10,152,114 - 10,349,906 10,152,114 Sales tax 12,173,281 11,346,338 - 12,173,281 11,346,338 Local criminal justice sales tax 2,138,406 1,992,667 - 2,138,406 1,992,667 Utility tax 12,028,878 127584,293 - - 12,028,878 12,584,293 Real estate excise tax 2,062,722 2.034,033 - 2,062,722 2.034,033 Other taxes 414,589 393.524 - 414.589 393,524 Other 1,145,798 868,261 22,507 13.000 1.168.306 881,261 Total Revenue 65,758,290 61,787,296 4,804,728 4,884.187 70,563,018 66,6719483 Expenses General government 4,633,942 4.575,614 - - 4,633,942 4,575,614 Security ofpersons & property 29.703,386 27.894.695 - 29,703,386 27,894,695 Transportation 11.434.659 9,675,727 - 11,43.4,659 9,675,727 Physical environment 443.127 490,916 - 443,127 490,916 Economic environment 2,785,807 2,191,487 - 2,785,807 2,191,487 Health and human services 1,056,802 1,683,449 - 1,056,802 1,683,449 Culture and recreation 8,376,205 8,418,920 - 8,376,205 8,418,920 Interest on long-term debt 1,010,406 1,779,833 - - 1,010,406 1,779,833 Surface Water Management - - 3,653,999 3,234,742 3,653,999 3,234.742 Dumas Bay Centre - 945,705 844,623 945,705 844,623 TotalExpenses 59.444,335 56,710,641 4,599,703 4,079,365 64,044,038 60,790,006 Change in net position before 6,313,955 5,076,655 205,025 804,822 6,518,979 5,881,477 transfers Transfers (116,000) (137,419) 116,000 137,419 - - Change in net position 6,197,955 4,939,236 321,025 942,241. 6,518980 5,881,477 Net position -beginning 540.052,936 538,472,176 57,217,919 56,275,678 597,270,854 594,747,854 Prior period adjustment Note 15 (4,944,409) (3,358,477) (4,944,409) (3,358,477) Adjusted net position -beginning 592,326,445 591,389,377 535,108,526 535,113,699 57,217,919 56,275,678 Net position - ending $ 541,306,481 $ 540,052,936 $ 57,538,943 $ 57,217,919 $ 598.845,424 $ 597,270,855 'Federal Wav / 19 Analysis of the chame in net position: Total govemment-wide revenues of the primary government increased by $3.9 million or 5.8% and total expenses increased by $3.3 million or 5.4% from the prior years. These changes are discussed in more detail below. Governmental Activities: Governmental activities contributed $6.2 million or 95% of the total change in net position of $6.5 million. The prior year change in net position was $4.9 million. The primary change compared to 2013 is due to the following revenues, and expenses described below. Total revenues for governmental activities increased $4.0 million or 6.4%. The increase is primarily due to an increase in sales tax of $0.83 million, capital grants and contributions related to transportation improvement projects of $1.7 million, charges for services related to transportation impact fees for development of City roads of $1.1 million, and charges for services related to building development expedited plan review and plan checking fees of $0.24 million. Total expenses for governmental activities increased $2.7 million or 4.8%. The net increase is primarily due to increases in the following expense categories: A $1.8 million increase in "Security of persons & property" primarily due to $1.5 million increase in salaries and wages related to adding a Police Officer and Police Records Administrator, unfilled Police officer vacancies being filled, health insurance cost increases, and an increase in overtime due to major events in 2014, $0.13 million increase in operating supplies from backorder of ammunition, and $0.20 million increase in SCORE and Valleycomm operations. A $1.8 million increase in "Transportation" primarily due to $0.63 million in Street operations related to maintenance of City roads and $1.3 million depreciation expense increase due to adding additional assets, as well as capturing depreciation expense related to assets in Note 15 prior period adjustment. A $0.59 million increase in "Economic environment" primarily due to adding 4.0 FTE to the Community Development Department, and additional consulting for plans review. A $0.77 million decrease in "interest on long-term debt" primarily due to additional interest payments on 2003 debt refunding. Governmental Activities - Revenues od- I.-, Business -Type Activities: Governmental Activities = Expenses ngo lw gov'mnt1111, 7 µY 21 W. Cttputt: and: Hcallh and hunon ntrrdmn, o�mc a. hl 1': 0�nralmg µtarn, Feowotta k vow,0,1410,o, cuvuonm 1, 4.7% &2 Im a [ gmils and ' nribtuion, &6% Physical rnvuwnnrnl, �! �', Business -type activities of the City's Surface Water Management system and Dumas Bay Centre increased the City's net position by $0.3 million, compared to prior year net position of $0.9 million. The primary change compared to 2013 is due to the following revenues and expenses described below. Total revenues decreased by $0.08 million or 1.6% from 2013. Attributing factors to the decrease in revenues are as follows: A decrease in grant revenue for Surface Water Management capital projects of $0.17 million, an increase for Dumas Bay Centre revenues of $0.02 million for overnight rentals, and additional Surface Water Management fees of $0.03 million. Total expenses increase of $0.52 million or 12.8% from 2013. This is primarily due to an increase of $0.10 million in goods and services for the operation of Dumas Bay Centre, and personnel costs increase of $0.15 million in Surface Water Management due to the additional reclass of expenditures to construction in progress in 2013 over 2014. The increase in services and charges of $0.09 million is due to the additional reclass of expenditures to construction in progress in 2013 over 2014, and additional repairs and maintenance for Surface Water Management operations. The increase of $0.07 million in intergovernmental services is attributed to additional permit expenditures to Department of Ecology for water quality. City o f Federal Wav / 2 Business -Type Activities - Revenues Other, 0.5% Operating grant. & wntnbu'ions 12.6°. Charges for se,i cs, 86,9%. FINANCIAL ANALYSIS OF THE CITY'S FUNDS Business -Type Activities - Expenses Dumas Bay, Centre,200, Surface Water Marragcarnr. 79.4% As noted earlier, the City of Federal Way uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. Governmental funds The focus of the City of Federal Way's governmental funds is to provide information on near -term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unrestricted fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of 2014, the City's governmental funds had a combined ending fund balance of $52.8 million which increased by $2.8 million from the prior year. Approximately 24% or $12.5 million of this amount constitutes unrestricted General Fund balance, which is available for spending at the City Council's discretion. The remainder of the fund balance is restricted to indicate that it is not available for new spending because it has already been committed for debt service, paths & trails reserve, hotel/motel lodging tax, police special funds, petty cash/change funds, court trust fund, advance travel, and capital projects The General Fund is the chief operating fund of the City. Total fund balance decreased by $0.01 million or 0.6% due to the increase in expenditures offset by an increase to various revenues described below. The decrease in fund balance is primarily due to $0.5 million transfer out for Capital Project Reserve Fund, an $1.8 million increase in expenditures, therefore reducing fund balance for salaries and wages related to adding a Police Officer and Police Records Administrator, unfilled Police officer vacancies being filled, health insurance cost increases, and an increase in overtime due to major events in 2014; a $0.1 million increase in operating supplies from backorder of ammunition, and $0.2 million increase in SCORE and Valleycomm operations. Additionally a_$0.6 million_ increase in expenditures is due to adding 4.0 FTE's ro the Community Development Department, and additional consulting for plans review is also a factor in decreasing the fund balance. To offset the decrease in fund balance there was a transfer in of $2.0 million from risk management fund for committed strategic opportunities reserve, an increase in sales tax of $0.8 million and charges for services related to building development expedited plan review and plan checking fees of $0.2 million. The Street Fund has a total fund balance of $0.6 million which increased by $0.5 million from 2013 due to transferring in $0.5 million to maintain an emergency reserve fund for snow and ice removal. The Utility Tax fund was established to account for the utility tax receipts which include 6% collected by State statute for capital, debt, and other maintenance & operations as determined by Council and the remaining 1.75% is for Voter Approved enhanced Police and Community Safety in 2007. Total fund balance decreased $0.1 million or 4% from 2013 due mainly to $0.6 million less tax revenue received and more being transferred out for Street Fund operations. The Debt Service Fund has a total fund balance of $0.07 million which decreased by $5.2 million from 2013 due to creation of separate Real Estate Excise Tax Fund and separate Debt Service Fund. The Downtown Redevelopment fund was established to accumulate resources and set aside funding for downtown projects. Overall, ending fund balance decreased by $2.6 million. This is primarily due to a $4.2 million transfer out to the Performing Arts & Event Center Fund and an increase in LIFT Sales tax revenue from the State of $0.8 million. Federal Wav / 21 The Transportation Fund is used to improve existing traffic signals, new signalization, major roadways and arterials involving the design and construction of new sections of streets, the widening of roadways to provide additional vehicle lanes, the installation of sidewalks and landscaping. The major source of revenue for this fund is grants from other agencies and contributions from other funds. Total ending fund balance decreased by $5.0 million primarily due to transferring out $4.4 million to the Real Estate Excise Tax Fund due to a project being completed and transferring out $1.3 million to the Utility Tax Fund due to projects being completed. The Performing Arts & Event Center Fund is being used for the building of the center. This is an added fund for 2014 and has a fund balance of $8.4 million primarily due to transfers in of Utility Tax, Real Estate Excise Tax, and LIFT Sales tax revenue. Proprietary funds The City of Federal Way's proprietary funds provide the same type of information found in the government -wide, but in more detail. Unrestricted net assets of the Surface Water Management Fund at the end of the year amounted to $7.0 million, and those for Dumas Bay Centre amounted to $0.2 million. The total changes in net position for both funds were $0.5 million increase and $0.2 million decrease, respectively. Other factors concerning the finances of these two funds have already been addressed in the discussion of the City of Federal Way's business -type activities. GENERAL FUND BUDGETARY AND ACTUAL HIGHLIGHTS The City of Federal Way budgets on a biennial basis with each budget beginning in an odd numbered year. Appropriations for operating funds are authorized for two years, but must be reviewed and reauthorized by the City Council in the middle of the biennial period. In 2014, the City made two budget adjustments. The following discussion is reflective only of the current year of the biennium. The General Fund operating expenditure budget increased by $4.0 million between the original adopted budget and the adjusted budget for 2014 fiscal year. The following is the major changes for the 2014 budget: o Added $0.88 million for new hires and 2.5 percent salary increase. o Added $0.10 million for termination pay. o Added $0.18 million for Health Care Premium increase. o Added $0.07 million for search for City Attorney and Economic Development Director. o Added $0.05 million for Nick and Derek project overtime. o Added $0.05 million for two new vehicles for Building Inspector and Plans Examiner. o Added $0.10 million for election fees. o Added $0.05 million for security improvement to Municipal Court. o Added $0.05 million for outside Legal Counsel Services. o Added $0.78 million for future and pending deductible to Risk Management. o Added $0.07 million for Permit System Upgrade. o Added $0.11 million for Building Abatement. o Added $0.08 million for comprehensive plan update. o Added $0.08 million for the City Center Redevelopment. o Added $0.30 million for Parks & Recreation for capital, temp help, wire theft, and cultural plan. o Added $0.12 million for Microsoft Enterprise Agreement and Additional Licenses. o Added $0.21 million for Police Grants. Adjustments to revenues and other sources budget include: Adjustments to beginning balance of $9.9 million; increase in liquor profits of $0.15 million; increase in grants of $0.55 million; increase in sales tax of $0.82 million; increase of $0.06 million for property taxes; increase of $0.19 million for criminal justice sales tax; increase in franchise fees of $0.06 million; increase of $0.11 million for liquor excise tax; increase of $0.13 million for state shared criminal justice for high crime; increased building permits of $0.25 million; increased plan check fees of $0.60 million and plumbing permit fees of $0.04 million. The General Fund ending fund balance of $16.0 million is $4.6 million over the projected $11.4 million for 2014 year-end. Of the $4.6 million, $1.2 million is being earmarked for carry forward into 2015. The remaining $3.4 million increase is considered one-time funds for 2016. The $4.6 million increase in ending fund balance is made up of $2.7million in additional revenues/other sources and $1.96 million in unspent expenses/other uses. City of Federal Way / 22 The $2.7 million increase in revenues/other sources is primarily attributed to increases in property taxes of $0.16 million; sales tax of $0.56 million, criminal justice sales tax of $0.23 million, gambling taxes of $0.03 million, state shared revenue of $0.19 million, Police contracted services fees of $0.29 million, and community and economic development permits and fees of $0.96 million. The $1.96 million unspent expenses/other uses are primarily attributable to savings found in: Jail services of $0.16 million; Community & Economic Development of $0.40 million; Parks & Recreation of $0.25 million; Law of $0.15 million; Human Resources/City Clerk of $0.10 million; Municipal Court of $0.02 million; Finance of $0.04 million, City Council of $0.03 million, and $0.30 transfer out for self-insurance. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets The City of Federal Way's investment in capital assets for its governmental and business -type activities as of December 31, 2014 amounts to $537 million (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements, machinery and equipment, infrastructure, park facilities and construction in progress. For more details, please see Note 7. CAPITAL ASSETS AT YEAR-END, NET OF DEPRECIATION Governmental Business -Type Total Activities Activities 2014 2013 Land $ 312,907,345 $ 10,933,528 $ 323,840,873 $ 315,111,400 Building and improvements 31,913,909 7,101,767 39,015,677 69,682,635 Machinery and equipment 4,814,797 22,379 4,837,176 4,905,995 Infrastructure 113,978,317 29,331,337 143,309,653 125,252,298 Construction in progmss 22,875,804 3.390,815 26,2M,619 17.617,940 Total Capital Assets $ 486,490,172 $ 50,779,826 $ 537,269,998 $ 532,570,168 Major capital asset events during the current fiscal year included the following: expanding and improving the city streets and traffic corridors for a total of $6.7 million and Performing Arts and Event Center and various park improvements for $2.5 million. Additionally there was a land purchase of $8.2 million for the Target property, and a prior period adjustment to depreciation in Note 15 of $4.9 million. Additional information on the City of Federal Way's capital assets can be found in Note 8 of the Notes to the Financial Statements. Long-term debt At the end of 2014, the City of -Federal Way had total debt outstanding of S37. F million. -The- ftiture principal and interest payments which are backed by the full faith and credit of the government will be $47.8 million (see page 68 and 69). The remainder of the City's debt represents Public Works Trust Fund Loans. LONG-TERM DEBT (FUTURE PRINCIPAL AND INTEREST PAYMENTS) Governmental Business -Type Activities Activities Total General obligation bonds $ 47,805,540 $ - $ 47,805,540 Public works trust fund loan - 495,016 495,016 Total $ 47,805,540 $ 495,016 $ 48,300,556 The City's total debt decreased by $1.2 million due to annual debt service payments. In February 2013, Moody's Investors Service assigned Aa3 rating to the City's Limited Tax General Obligation Refunding Bonds, 2013. Washington State statutes limit the amount of debt a government entity may issue to 7.5% of its total assessed valuation, subject to 60% majority vote of qualified electors. Of the 7.5% limit, 2.5% is for general purposes, 2.5% for open space/park facilities, and 2.5% for utilities. Non -voted general purpose indebtedness is limited to 1.5% of assessed valuation and combination of voted and non -voted general purpose indebtedness cannot exceed 2.5% of assessed valuation. Citv o f Federal Wav / 23 The City's assessed valuation for 2014 was $8.319 billion and the total amount of debt the City may issue is $591.3 million. Remaining legal debt capacities as of December 31, 2014 are: General government (no vote required) $ 92,159,058 General government (3/5 majority vote required) $ 83,190,592 Parks and open space (3/5 majority vote required) $207,976,480 Utilities (3/5 majority vote required) $207.976.480 Total Capacity $591,302,611 Additional information on the City of Federal Way's long-term debt can be found in Note 11 and in the Statistical Section of this report. REQUEST FOR INFORMATION This financial report is designed to provide a general overview of the City of Federal Way's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Finance Department, City of Federal Way, 33325 8`h Avenue South, Federal Way, Washington 98003, telephone 253-835-2520, or visit the City's website at www.cityofFederalway.com. City o f Federal Wav / 24 CITY OF Federal Way It's all within reach THIS PAGE IS LEFT INTEV 0NALLY BLA\7C ON of federal Way / 25 BASIC FINANCIAL STATEMENTS 'Federal Wav/26 Government -Wide Financial Statements Statement of Position This statement provides information on all city assets and deferred outflows of resources and liabilities and deferred inflows of resources, with the difference between the two reported as net position. Statement of Activities This statement is focused on both the gross and net costs of various functions, including both governmental and business -type activities, which are supported by the City's general tax and other revenues. City of Federal Way /27 STATEMENT OF NET POSITION December 31, 2014 ASSETS Cash & cash equivalents and investments Receivables (net) Due from other governments Prepaid items Restricted assets: Seizure funds/petty cash/advance travel/retainage Investment in joint venture Capital assets not being depreciated: Land Construction in progress Capital assets net of accumulated depreciation: Buildings/structures Improvements other than buildings Machinery and equipment Infrastructure Total Assets LIABILITIES Accounts payable and accruals Unearned revenue Retainage payable Customer deposits Noncurrent Liabilities: Due within one year Due in more than one year Total Liabilities NET POSITION Net investment in capital assets Restricted for: Debt service Capital projects Steel Lake & North Lake Mgmt District Other Unrestricted Total Net Position Governmental Business -type Activities Activities Total $ 68,235,688 $ 7,241,528 $ 75,477,216 2,342,820 155,402 2,498,222 2,419,409 390,896 2,810,305 30,588 - 30,588 134,354 - 134,354 21,985,068 - 21,985,068 312,907,345 10,933,528 323,840,873 22,875,804 3,390,815 26,266,619 9,048,779 470,054 9,518,833 22,865,130 6,631,713 29,496,843 4,814,797 22,379 4,837,176 113,978,317 29,331,337 143,309,653 581,638,099 58,567,653 640,205,752 1,589,376 60,368 1,649,744 280,206 359,007 639,212 206,323 38,288 244,611 1,323,636 5,564 1,329,200 1,168,423 187,962 1,356,385 35,763,655 377,521 36,141,176 40,331,618 1,028,710 41,360,328 466,078,036 50,299,229 516,377,265 2,136,390 - 2,136,390 14,062,918 - 14,062,918 - 20,311 20,311 1,191,964 - 1,191,964 57,837,173 7,219,403 65,056,576 $ 541,306,481 $ 57,538,943 $ 598,845,424 The notes to the financial statements are an integral part of this statement. Citv of Federal Wav / 28 Functions/Programs Governmental Activities: General government Security of persons & property Transportation Physical environment Economic environment Health Culture & recreation Interest on long-term debt Total governmental activities Business -type Activities: Surface Water Management Dumas Bay Centre Total business -type activities Total STATEMENT OF ACTIVITIES For the Year ended December 31, 2014 Program Revenues Net (Expense) Revenue & Changes in Net Position Operating Capital Charges for Grants and Grants and Governmental Business -type Expenses Services Contributions Contributions Activities Activities Total $ 4,633,942 $ 2,118,896 $ 1,771,655 $ - $ (743,391) $ $ (743,391) 29,703,386 4,637,071 579,991 - (24,486,324) - (24,486,324) 11,434,659 1,804,199 1,605,815 5,632,549 (2,392,096) (2,392,096) 443,127 305,742 146,631 - 9,246 9,246 2,785,807 3,059,772 1,285,258 - 1,559,222 - 1,559,222 1,056,802 - - - (1,056,802) - (1,056,802) 8,376,205 2,476,383 20,749 - (5,879,073) - (5,879,073) 1,010,406 - - - [1,010,4Q6) (1,010,406) 59,444,335 14,402,062 5,410,098 5,632,549 _ [33,999,625) - (33,999,625) 3,653,999 3,530,939 607,608 - 484,549 484,549 945,705 643,673 - - (302,031) (302,031) 4,599,703 4,174,613 607,608 - 182,517 182,517 S 64,044.038 5 18,576,675 $ 6,017,706 5 5,63151) (33,999.625) 182,517 (33,817,108) General revenues: Property tax Sales tax Local criminal justice sales tax Utility tax Real estate excise tax Gambling tax Hotel/motel tax Leasehold excise tax Other revenue Investment earnings Transfers Total general revenues and transfers Change in net position Net position at beginning of year Poorpenod_adjustment (See Note_15) _ Adjusted beginning net position Net position at end of year 10,349,906 - 10,349,906 12,173,281 - 12,173,281 2,138,406 - 2,138,406 12,028,878 - 12,028,878 2,062,722 - 2,062,722 176,068 - 176,068 231,828 - 231,828 6,693 - 6,693 883,549 - 883,549 262,249 22,507 284,757 (116,000) 116,000 - 40,197,580 138,507 40,336,087 6,197,955 321,025 6,518,979 540,052,936 57,217,919 597,270,854 (4 944 409E _ - �44.409) 535,108,526 57,217,919 592,326,445 S541,306,481 557.538,943 S 598.h45,424 The notes to the financial statements are an integral part of this statement. City o f Federal Way / 29 ASSETS Equity in pooled cash & investments Prepaid insurance/debt service Receivables (net): Taxes Accounts and contracts Restricted cash Due from other governments Interfund loans receivable TOTAL ASSETS BALANCESHEET GOVERNMENTAL FUNDS December 31, 2014 Debt General Street Utility Tax Service $ 15,313,366 $ 1,527,218 $ 1,844,387 $ 108,058 25,588 - - - 260,394 1,698,136 42,450 - 134,354 - 1,562,928 82,333 2,674 10,000 17,349,080 1,609,551 3,545,197 108,058 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND Liabilities: Vouchers payable 484,864 164,301 54 Accounts/payroll payable 4,674 - - Retainage payable - - Deposits payable 528,899 772,111 - Interfund loans payable - - - Unearned revenue 55,286 71,116 - 34,518 TOTAL LIABILITIES 1,073,723 1,007,528 34,572 DEFERRED INFLOWS OF RESOURCE! 230,939 - - Fund Balance: Nonspendable 105,417 Restricted 54,526 73,486 Committed 3,403,937 602,023 3,545,197 Unassigned 12,480,539 - - TOTAL FUND BALANCES 16,044,418 602,023 3,545,197 73,486 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES $ 17,349,080 $ 1,609,551 $ 3,545,197 $ 108,058 The notes to the financial statements are an integral part of this statement. Citv o f Federal Wav / 30 ASSETS Equity in pooled cash & investments Prepaid insurance/debt service Receivables (net): Taxes Accounts and contracts Restricted Cash Due from other governments Interfund loans receivable TOTAL ASSETS LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND Liabilities: Vouchers payable Accounts/payroll payable Retainage payable Deposits payable Interfund loans payable Unearned revenue TOTAL LIABILITIES BALANCE SHEET GOVERNMENTALFUNDS December 31, 2014 Downtown Performing Arts Nomnajor Rtdevclopment Transportation & Event Ctr Governmental Total $ 214,369 $ 8,301,420 $ 8,578,843 $ 15,400,991 $ 51,288,652 - - - 25,588 - - 274,168 2,232,698 67,672 110,122 - - - 134,354 119,036 411,403 241,035 2,419,409 - - - 10,000 333,405 8,712,823 8,578,843 15,983,866 56,220,823 367 308,545 195,272 205,898 1,359,301 - - - - 4,674 - 192,440 13,883 206,323 - 22,631 1,323,641 - 10,000 10,000 119,286 280,206 367 500,985 195,272 371,698 3,184,145 DEFERRED INFLOWS OF RESOURCE! (25) 230,914 Fund Balance: Nonspendable - 105,417 Restricted 22,804 5,494,696 2,462,606 9,177,738 17,285,856 Committed 310,259 2,717,142 5,920,965 6,434,430 22,933,953 Unassigned - - - 12,480,539 TOTAL FUND BALANCES 333,063 8,211,838 8,383,571 15,612,168 52,805,765 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES $ 333,405 $ 8,712,823 $ 8,578,843 $ 15,983,866 Amounts reported for governmental activities in the statement of net position are different because: Capital assets are used in governmental activities are not fmancial resources and, therefore, are not reported in the funds. See Note 7, difference is the Internal Service fund amount of $13.47M on page 37 473,019,406 Investment in joint venture is not a financial resource and, therefore, not reported in the funds. See Note 13. 21,985,068 Other long-term assets are not available to pay for current -period expenditures and, therefore, are deferred inflow of resources in the funds. See Note 6. 230,914 Internal service funds are used to charge the costs of insurance, unemployment, information systems, mail and duplication, fleet, and building to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. Page 37 Internal Service Net Position - Adj $55.9K + $45.6K LT Comp Abs. 30,197,406 Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds. See Note 10. (36,932,078) Net position of governmental activities $ 541,306,481 The notes to the financial statements are an integral part of this statement. Federal Wav / 31 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For Year Ended December 31, 2014 REVENUES Taxes Licenses and permits Intergovernmental Service charges and fees Fines and forfeitures Interest Other TOTAL REVENUES EXPENDITURES Current: General government Security of persons and property Transportation Physical environment Economic environment Health Culture and recreation Debt service: Principal Interest/fiscal charges/admin fees Capital outlay TOTAL EXPENDITURES General Street Debt Utility Tax Service S 24,727,864 $ - $ 12,028,877 $ - 3,198,758 112,913 - - 1,692,392 1,118,593 - 3,849,987 255,884 - - 1,038,407 - - - 143,292 802 81,466 2,427 457,127 44,053 - - 35,107,827 1,532,245 12,110,343 2,427 4,031,000 - 80,134 30,607,442 - - - 4,630,788 2,726,069 - - - 835,814 - 3,931,907 - - - 963,500 - 1,021,945 49,241 - - - 42,181,473 4,630,788 80,134 1,985,445 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (7,073,646) (3,098,543) 12,030,209 (1,983,018) OTHER FINANCING SOURCES (USES) Anticipation note - - - - Transfers in 10,619,159 3,600,566 1,735,831 25,169 Transfers out (3,641,682) - (13,888,383) 3,217,000) TOTAL OTHER FINANCING SOURCES (USES) 6,977,477 3,600,566 (12,152,552) (3,191,831) NET CHANGE IN FUND BALANCES (96,169) 502,023 (122,343) (5,174,849) FUND BALANCES - BEGINNING 16,140,587 100,000 3,667,540 5,248,336 FUND BALANCES - ENDING $ 16,044,418 $ 602,023 $ 3,545,197 $ 73,486 The notes to the financial statements are an integral part of this statement. Citv o f Federal Wav / 32 REVENUES Taxes Licenses and permits Intergovernmental Service charges and fees Fines and forfeitures Interest Other TOTAL REVENUES EXPENDITURES Current: General government Security of persons and property Transportation Physical environment Economic environment Health Culture and recreation Debt service: Principal Interest/fiscal charges/admin fees Capital outlay TOTAL EXPENDITURES STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For Year Ended December 31, 2014 Downtown Performing Arts Nonmajor Redevelopment Transportation & Event Ctr Governmental Total $ 8,744 $ $ $ 2,476,430 $ 39,241,915 - - - 3,311,671 1,285,258 4,647,052 1,186,538 9,929,833 - 1,406,402 2,079,522 7,591,795 - - - 2,460,189 3,498,596 1,402 8,332 3,115 9,603 250,439 1,528 - 380,841 883,549 1,295,404 6,063,314 3,115 8,593,123 64,707,798 3,306 - - 330,332 4,444,772 - 627,788 31,235,230 163,041 1,415,171 6,209,000 - 461,718 461,718 60,473 2,786,542 222,027 1,057,841 2,315,045 6,246,952 963,500 - - - 1,021,945 8,221,755 6,755,012 1,564,307 918,643 17,508,958 8,225,061 6,918,053 1,564,307 6,351,197 71,936,458 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (6,929,657) (854,739) (1,561,192) 2,241,926 (7,228,660) OTHER FINANCING -SOURCES -(USES) Anticipation note 8,209,960 - - 8,209,960 Transfers in 300,000 1,598,000 9,944,763 12,617,302 40,440,790 Transfers out (4,209,763) (5,726,278) - (7,923,492) (38,606,598) TOTAL OTHER FINANCING SOURCES (USES) 4,300,197 (4,128,278) 9,944,763 4,693,810 10,044,152 NET CHANGE IN FUND BALANCES (2,629,460) (4,983,017) 8,383,571 6,935,736 2,815,492 FUND BALANCES - BEGINNING 2,962,523 13,194,855 8,676,432 49,990,273 FUND BALANCES - ENDING $ 333,063 $ 8,211,838 $ 8,383,571 $ 15,612,168 $ 52,805,765 The notes to the financial statements are an integral part of this statement. Federal Way / 33 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2014 Amounts reported for governmental activities in the statement of activities (page 28) are 2014 different because: Net change in fund balances --total governmental funds (page 32) $ 2,815,492 Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which 12,482,871 capital outlays exceeded depreciation in the current period. Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. (74,134) The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the issuance proceeds of new debt as current financial resources and payment as the use of current resources, whereas these amounts reduce the net position. (7,183,221) Internal service funds are used by management to charge costs of risk management, information systems, mail & duplication, fleet, and building systems to the funds. (1,589,365) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the funds. (253,688) Change in net position of governmental activities (page 28) $ 6,197,954 The notes to the financial statements are an integral part of this statement. Citv o f Federal Wav / 3 GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL For Year Ended December 31, 2014 Variance with Budgeted Amounts Final Budget - Positive Original Final Actual Amounts (Negative) REVENUES Taxes $ 22,691,000 $ 23,755,000 $ 24,727,864 $ 972,864 Licenses and permits 2,041,000 2,416,000 3,198,758 782,758 Intergovernmental 807,000 1,357,675 1,692,392 334,717 Service charges and fees 2,757,241 3,395,714 3,849,987 454,273 Fines and forfeitures 1,115,000 1,115,000 1,038,407 (76,593) Interest 74,000 74,000 143,292 69,292 Other 293,650 293,650 457,127 163,477 TOTAL REVENUES 29,778,891 32,407,039 35,107,827 2,700,788 EXPENDITURES Current: General government 4,121,168 5,731,468 4,031,000 1,700,468 Security of persons and property 28,864,714 29,937,585 30,607,442 (669,857) Economic environment 2,236,206 3,120,965 2,726,069 394,896 Health 782,871 805,075 835,814 (30,739) Culture and recreation 3,817,122 4,184,996 3,931,907 253,089 Capital outlay - 40,000 49,241 (9,241) TOTAL EXPENDITURES 39,822,081 43,820,089 42,181,473 1,638,616 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (10,043,190) (11,413,050) (7,073,646) 4,339,404 OTHER FINANCING SOURCES (USES) Transfers in 8,578,187 10,644,187 10,619,159 (25,028) Transfers out (2,311,276) (3,954,601) (3,641,682) 312,919 TOTAL OTHER FINANCING SOURCES (USES) _ _ — 6,266,91.1 6,689,586 6,9.77,477 287,891 NET CHANGE IN FUND BALANCES (3,776,279) (4,723,464) (96,169) 4,627,295 FUND BALANCES - BEGINNING 6,276,742 16,140,587 16,140,587 - FUND BALANCES - ENDING $ 2,500,463 $ 11,417,123 $ 16,044,418 $ 4,627,295 The notes to the financial statements are an integral part of this statement. Citv o fFederal Wav/35 STREET FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL For Year Ended December 31, 2014 REVENUES Licenses and permits Intergovernmental Service charges and fees Interest Other TOTAL REVENUES EXPENDITURES Current: Transportation TOTAL EXPENDITURES Variance with Budgeted Amounts Final Budget - Positive Original Final Actual Amounts (Negative) $ 115,000 $ 115,000 $ 112,913 $ (2,087) 1,040,000 1,104,302 1,118,593 14,291 202,000 202,000 255,884 53,884 2,000 2,000 802 (1,198) 34,000 34,000 44,053 10,053 1,393,000 1,457,302 1,532,245 74,943 4,405,275 5,292,731 4,630,788 661,943 4,405,275 5,292,731 4,630,788 661,943 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (3,012,275) (3,835,429) (3,098,543) 736,886 OTHER FINANCING SOURCES (USES) Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES - BEGINNING FUND BALANCES - ENDING 3,012,276 3,835,432 3,600,566 (234,866) 3,012,276 3,835,432 3,600,566 (234,866 3 502,023 502,020 100,000 100,000 100,000 $ 100,001 $ 100,003 $ 602,023 $ 502,020 The notes to the financial statements are an integral part of this statement. Citv o f Federal Wav / 36 UTILITY TAX FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL For Year Ended December 31, 2014 Variance with Budgeted Amounts Final Budget - Positive Original Final Actual Amounts (Negative) REVENUES Taxes $ 12,361,000 $ 12,552,000 $ 12,028,877 $ (523,123) Interest 6.000 6,000 81,466 75.466 TOTAL REVENUES 12,367,000 12,558,000 12,110,343 (447,657) EXPENDITURES Current: General government 48,000 48,000 80,134 (32.134) TOTAL EXPENDITURES 48,000 48,000 80,134 (32,134) EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 12.319.000 12.510.000 12,030,209 (479.791) OTHER FINANCING SOURCES (USES) Transfers in - 1,735,670 1,735,831 161 Transfers out (12,822,187) (14,392,462) (13,888,383) 504.079 TOTAL OTHER FINANCING SOURCES (USES) 12,822,187 12,656,792) (12,152,552) 504,240 NET CHANGE IN FUND BALANCES (503,187) (146,792) (122,343) 24,449 FUND BALANCES - BEGINNING 3,211,486 3,667,539 3,667,540 1 FUND BALANCES - ENDING $ 2,708,299 $ 3,520,747 $ 3,545,197 $ 24.450 The notes to the financial statements are an integral part of this statement. City o f Federal Way / 37 STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2014 Governmental Business -type Activities - Enterprise Funds Activities Surface Water Dumas Bay Internal Management Centre TOTAL Service ASSETS Current Assets Equity in pooled cash & investments $ 6,755,299 $ 430,255 $ 7,185,553 $ 17,003,012 Prepaid items - - - 5,000 Receivables (net): Accounts and contracts 113,772 41,630 155,402 - Due from other governments 390,896 - 390,896 - TOTAL CURRENT ASSETS 7,259,967 471,885 7,731,851 17,008,012 Property, plant and equipment Land 8,823,888 2,109,640 10,933,528 Building/structures 19,849 3,581,015 3,600,864 16,556,966 Improvements other than buildings 7,079,899 - 7,079,899 - Machinery/fumiture/equipment - 122,200 122,200 16,136,986 Infrastructure 42,809,205 - 42,809,205 - Construction in progress 3,012,007 378,808 3,390,815 Less accumulated depreciation (13,938,245) (3,218,438) (17,156,683) (19,223,186) TOTAL NONCURRENT ASSETS 47,806,603 2,973,225 50,779,828 13,470,766 TOTAL ASSETS 55,066,570 3,445,110 58,511,679 30,478,778 LIABILITIES AND FUND EQUITY Current Liabilities: Vouchers/payroll payable 47,497 12,871 60,368 225,403 Retainage payable - with escrow agent 38,288 - 38,288 - Deposits payable - 5,558 5,558 Unearned revenue 102,969 256,037 359,006 Public Works trust fund loan payable 182,359 - 182,359 Compensated absences payable 4,532 1,071 5,603 - TOTAL CURRENT LIABILITIES 375,645 275,537 651,182 225,403 Long-term liabilities: Public Works trust fund loan payable 298,240 - 298,240 - Compensated absences payable 64,140 15,149 79,289 45,648 TOTAL LONG-TERM LIABILITIES 362,380 15,149 377,529 45,648 TOTAL LIABILITIES 738,025 290,686 1,028,711 271,051 Net investment in capital assets 47,326,004 2,973,225 50,299,229 13,470,766 Restricted for: Steel Lake & North Lake Mgmt District 20,311 - 20,311 - Unrestricted 6,982,230 181,199 7,163,429 16,736,961 TOTAL NET POSITION $ 54,328,545 $ 3,154,424 57,482,969 $ 30,207,727 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds 55,975 NET POSITION OF BUSINESS -TYPE ACTIVITIES $ 57,538,944 The notes to the financial statements are an integral part of this statement. City o f Federal Wav / 38 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS For Year Ended December 31, 2014 Governmental Business-ty e Activities - Enterprise Funds Activities Surface Water Dumas Bay Internal Management Centre TOTAL Service OPERATING REVENUES: Service charges and fees $ 3,487,801 $ 643,673 $ 4,131,474 $ 9,848,540 Intergovemmental 607,608 - 607,608 - Miscellaneous 43,138 43,138 52,033 TOTAL OPERATING REVENUES 4,138,547 643,673 4,782,220 9,900,573 OPERATING EXPENSES: Personal services 1,688,025 339,240 2,027,265 814,795 Materials and supplies 140,048 146,578 286,626 771,503 Services and charges 444,104 260,356 704,460 5,794,827 Intergovemmental 248,736 4,941 253,677 162,118 Depreciation 501,420 155,263 656,683 2,111,152 Interfund charges 637,865 40,713 678,578 - TOTAL OPERATING EXPENSES 3,660,198 947,091 4,607,289 9,654,395 OPERATING INCOME (LOSS) 478,349 (303,418) 174,931 246,178 NON -OPERATING REVENUES (EXPENSES): Gain (Loss) from disposal of capital assets - - 41,437 Interest income 21,407 376 21,783 12,534 Interest expense (6,630) (6,630) - TOTAL NON -OPERATING REVENUES (EXPENSES) 14,777 376 15,153 53,971 INCOME (LOSS) BEFORE TRANSFERS 493,126 (303,042) 190,084 300,149 Capital contributions Transfers in Transfers out CHANGE IN NET POSITION 116,000 493,126 (187,042) NET POSITION - BEGINNING 53,835,419 3,341,466 NET POSITION - ENDING $ 54,328,545 $ 3,154,424 Adjustment to reflect the consolidation of internal service fund activities related to enterprise CHANGES IN NET POSITION OF BUSINESS -TYPE ACTIVITIES - 75,619 116,000 1,764,834 - (3,715,026) 306,084 (1,574,424) 14,941 $ 321,025 31,782,151 $ 30,207,727 The notes to the financial statements are an integral part of this statement. Citv of Federal Wav / 39 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For Year Ended December 31, 2014 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from users Cash payments to claimants Cash payments to suppliers for goods/services Cash payments to employees Cash payments to other funds for goods and services Cash payments to other governments for goods and services Other operating receipts NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in Transfers out NET CASH PROVIDED BY NONCAPITAL FINANCING CASH FLOWS FROM CAPITAL AND CAPITAL - RELATED FINANCING ACTIVITIES: Principal paid on debt service Interest paid on debi service Acquisition of capital asset/construction work in progress Proceeds from the sale of capital assets NET CASH USED FOR CAPITAL AND CAPITAL - RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Receipts of interest NET CASH PROVIDED BY INVESTING ACTIVITIES NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating Income/(loss) Adjustments to reconcile operating income to net cash provided/(used) by operating activities: Depreciation expenses (Increases)/decrease in accounts receivable (Increases)/decrease in due from other governments Increases/(decrease)in vouchers/accounts payable Increases/(decrease)in retainage payable Increases/(decrease)in deposits payable Increases/(decrease) in deferred revenue Increases/(decrease)in accrued payroll/compensated absences payable TOTAL ADJUSTMENTS NET CASH PROVIDEDIUSED BY OPERATING ACTIVITIES Non -cash investing, capital, and financing activities: Other contributions of capital assets Business -type Activities - Enterprise Funds Governmental Activities Surface Water Dumas Bay Internal Management Centre TOTAL Service $ 3,488,270 $ 633,948 $ 4,122,218 $ 9,848,543 - - - (553,567) (603,055) (416,815) (1,019,870) (5,496,276) (1,676,496) (337,608) (2,014,104) (814,556) (637,865) (40,713) (678,578) - (248,736) (4,941) (253,677) (718,888) 458,343 - 458,343 52,033 780,461 (166,129) 614,332 2,317,289 116,000 116,000 1,764,833 - - (3,715,026) 116,000 116,000 (1,950,193) (182,359) - (182,359) (6,630) - (6,630) - (153,463) - (153,463) (1,097,179) - - - 41,437 (342,452) - (342,452) (1,055,742) 21,404 377 21,781 12,535 21,404 377 21,781 12,535 459,413 (49,752) 409,661 (676,111) 6,295,886 480,007 6,775,893 17,679,123 6,755,299 430,255 7,185,554 17,003,012 478,351 (303,419) 174,932 246,182 501,420 155,264 656,684 2,111,152 44,787 (32,721) 12,066 - (192,403) - (192,403) (24,739) (10,476) (35,215) (40,283) 5,836 -. 5,836 - 595 595 (44,320) 22,996 (21,324) - 11,529 1,632 13,161 238 302,110 137,290 439,400 2,071,107 $ 780,461 $ (166,129) $ 614,332 $ 2,317,289 $ 44,613 The notes to the financial statements are an integral part of this statement. City o f Federal Wav / 40 CITY OF Federal Way It's all within reach THIS PAGE IS LEFT E';- IONALLYBL T\K City o f Federal Way / 41 NOTES TO THE BASIC FINANCIAL STATEMENTS Decembeir 31, 2014 INDEX Note Page 1 Summary of Significant Accounting Policies............................................................................... 42 ReportingEntity................................................................................................................... 42 Government -wide and Fund Financial Statements............................................................... 42 Measurement Focus, Basis of Accounting, and Financial Statement Presentation .............. 43 Financial Statement Presentation........................................................................::.........:...... 46 BudgetaryInformation ....... .............................. ::....... ...................................................... 46 Assets, Liabilities, Fund Balance and Net Position.............................................................. 47 Cashand Investments.................................................................................................. 47 Receivables.................................................................................................................. 48 Amounts Due to and from Other Funds; Interfund Loans ........................................... 48 Inventories................................................................................................................... 48 CapitalAssets... ............... .............. ......... .------- ........................................................... .. 48 Compensated Absences Payable.................................................................................. 49 Long -Tenn Liabilities.................................................................................................. 49 Fund Balance Classification........................................................................................ 49 Interfund Transactions................................................................................................. 51 2 Reconciliation of Government -wide & Fund Financial Statements ............................................. 52 3 Stewardship, Compliance and Accountability.............................................................:................. 52 4 Supplemental Appropriations ....................................... ....... 53 5 Deposits and Investments............................................................................................................. 53 6 Receivables, Due from Other Governments, Unearned Rev & Deferred Inflow of Resources .... 55 7 Capital Assets............................................................................................ 57 8 Pension Plans................................................................................................................................ 59 9 Risk Management......................................................................................................................... 66 10 Long -Term Liabilities................................................................................................................... 67 11 Interfund Transactions.................................................................................................................. 70 12 Contingencies and Litigation........................................................................................................ 72 13 Joint Ventures............................................................................................................................... 72 14 Subsequent Event.......................................................................................................................... 75 15 Prior Period Adjustments .............. 75 16 Leases................................................................................................................ 75 Citv of Federal Wav / 42 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended December 31, 2014 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City of Federal Way have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The significant accounting policies are described below. REPORTING ENTITY The City of Federal Way was incorporated in February 28, 1990. Federal Way is a non -charter code city, operating under Section 35A.03 of the Revised Code of Washington. It has a Mayor/Council form of government. The Council is composed of seven councilmembers elected to four-year terms on a non -partisan ballot and are elected at -large. Members of the City Council are responsible for establishing the general direction and policies for the City and for providing the resources necessary to carry out those policies. As the City's chief administrator, the City Mayor is responsible for carrying out the policy and direction set by the City Council. This includes the enforcement of laws and ordinances, the execution of contracts and agreements, and maintenance of peace and order in the City. The City of Federal Way provides a full range of municipal services, including policing, planning and zoning, street maintenance and construction, parks and recreation, and general administrative services. The City operates enterprise funds for Storm Water Management and Dumas Bay Centre. The City's Comprehensive Annual Financial Report (CAFR) includes the funds, agencies and boards controlled by or dependent on the City. In conformance with Governmental Accounting Standards Board (GASB) Statement 14, "The Financial Reporting Entity", the primary basis of determining whether outside agencies and organizations should be considered component units of the City is Financial Accountability. Financial Accountability is dependent on the City's obligation to redeem the organization's debts, to finance the organization's deficits, and the extent to which subsidies from the City constitute a major portion of the organization's total resources. Applying these criteria, as outlined in GASB Statement 14, the City has no relationships that qualify as component units. Financial Accountability Financial accountability is defined as appointment of a voting majority of an agency's or organization's board, and either the City's ability to impose its will on the agency or organization or the possibility that the agency or organization will provide a financial benefit to or impose a financial burden on the City. Joint Ventures A joint venture is a legal entity or organization which results from a contractual arrangement that is owned, operated, or governed by two or more participants as a separate activity subject to joint control, in which participants retain an ongoing financial interest or an ongoing financial responsibility. The City participates in two joint ventures: Valley Communications Center and South Correctional Entity (SCORE). See Note 13, Joint Venture, which more fully describes these organizations. GOVERNMENTAL -WIDE AND FUND FINANCIAL STATEMENTS The government -wide financial statements (i.e. the statement of net position and the statement of activities) report information on all activities of the primary government. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. The differences between the governmental fund statements and the entity -wide statements represent reconciling items between the fund level and government -wide financial statements. The reconciliations are included as part of the financial statements. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Our policy is to allocate indirect costs to specific functions or segments. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grant and contributions that are restricted to meeting the operational or capital requirements, or a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Federal Wav / 43 Separate fund financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, FINANCIAL STATEMENT PRESENTATION The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental Funds Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City of Federal Way considers revenues to be available if they are collected within 30 days of the end of the current fiscal period with an exception to utility and gambling taxes, which is extended to 60 days. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, licenses, and interest associated within the current period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. Only the portion of property tax receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. The City reports the following major governmental funds: General I=und — This is the City's general operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. Street Fund — This fund accounts for the receipt and disbursement of State -levied motor vehicle fuel taxes which must be accounted for in a separate fund and expended for street -oriented engineering, maintenance and operations. Utility Tax Fund — This fund was established to account for all utility tax receipts. These receipts will subsequently be distributed to various funds to provide for debt service, capital projects, maintenance and operations expenditures, etc. as determined by the City Council. Debt Service Fund — This fund accounts for the accumulation of resources for the payment of general obligation and assessment bond principal, interest and related costs. Downtown Redevelopment CIP Fund — This fund was established to accumulate resources to set aside for downtown projects. Transportation CTP Fund — This fund accounts for receipts and disbursements related to acquisition, design, construction and any other related street project expenditures. Performing Arts & Event Center Fund — This fund was established to accumulate resources to set aside for Performing Arts and Event Center (PACC). The City reports the following fund groups as non -major funds: SKcial Revenue Funds — These funds are to be used to account for the proceeds of revenues and sources (other than special assessments, expendable trust or major capital projects) that are committed or legally restricted to expenditures for specified purposes. Capital Project Funds — These funds account for the acquisition or construction of major capital facilities with the exception of those facilities financed by the proprietary fund. The major sources of revenues for these funds are general obligation bond proceeds, grants from other agencies, local taxes, contributions from other funds, utility tax, and real estate excise tax. Citv ofFederal Way / 44 Proprietary Funds Proprietary funds are used to account for activities similar to those found in the private sector where the intent of the governing body is to finance the full cost of providing services, including depreciation, primarily through user charges. The measurement focus for these funds is based on the commercial model, which uses a flow of economic resources approach. Under this approach, the operating statements for the proprietary funds focus on a measurement of net income (revenues and expenses) and both current and non -current assets and liabilities are reported on the related Statement of Net Position. As a general rule the effect of the inter -fund activity has been eliminated for the government -wide financial statements. Amounts reported as program revenue include 1) charges to customers, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than program revenues. General revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from non -operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the enterprise and internal service funds are primarily user charges, the cost of providing goods or services to the general public on a continuing basis. Operating expenses for enterprise funds and internal service funds includes the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non -operating revenues and expenses. The City reports the following major proprietary funds: Enterprise Funds The City uses enterprise funds to account for government activities that are financed and operated in a manner similar to private business. Costs of providing services to the general public are primarily financed by user fees. Surface _Water Management Fund — This fund was established to administer and account for all receipts and expenditures related to the City's surface and storm water management system. Dumas Bay Centre Fund — This fund was established to account for revenues and expenses related to the acquisition, capital improvements maintenance and operations of the City -owned Dumas Bay Centre and Knutzen Family Theatre. The Dumas Bay Centre is primarily used for meetings, events, lodging, and catering services. Internal Service Funds The City uses Internal. Service Funds to account for the fnanging of goods or services provided by one department or agency — to other departments or agencies of a government, or to other governments, on a cost -reimbursement basis. A description of each individual Internal Service Fund is included in the Comprehensive Annual Financial Report provided below: Risk Management Fund — This fund accounts for the City's risk financing activities established to minimize adverse effects of losses associated with property and casualty, and worker's compensation claims. Both risk control (to minimize the losses that strike an organization) and risk financing (to obtain finances to provide for or restore the economic damages of those losses) are involved. The City is also currently recovering costs and building reserves for general liability including property, casualty, errors and omissions and fidelity coverage. Information Systems Fund — This fund was established to account for all costs associated with data processing, telecommunications and the Geographical Information System (GIS). This fund owns and depreciates all non- proprietary fund assets related to these functions, and charges equipment/software users for both maintenance and operating costs and equipment replacement charges based on depreciation schedules. Mail & Duplication Fund — This fund accounts for duplication, graphics and other general support services provided to departments and funds throughout the City. Fleet and EAgWment Fund — This fund accounts for the cost of maintaining City vehicles and other motorized equipment. Rates charged to user departments are based on the full cost of maintaining equipment items, including the recovery of related depreciation expense. City of Federal Way / 45 Buddines and Furnis]ims Fund — This fund accounts for all costs associated with the operation and maintenance of specified City buildings. City building facilities and furnishings owned by this Fund. Both maintenance/operating costs and depreciation recovery are charged to City departments and funds. Health Insurance Fund — The City is currently self -insuring for medical insurance. The premiums paid by the City and employees are deposited into this fund. Medical service for medical coverage and pharmaceutical reimbursement are paid out of this fund. Also, establish reserves for the payment of estimated future claims. Unempl_oyLTent Insurance Fund - The City is currently self -insuring State Unemployment Compensation. Related premiums received by the fund are used to reimburse the unemployment benefits paid to eligible individuals and to establish reserves for the payment of estimated future unemployment claims liability. Basis of Accounting Basis of accounting refers to when revenues and expenditures or expenses are recognized and reported in the financial statements. The accrual basis of accounting is used by proprietary funds. Under this method, revenues are recognized when earned, and expenses are recognized when incurred. The modified accrual basis of accounting is used by governmental funds. Revenues and other financial resources are recognized when they become susceptible to accrual, i.e., when the related funds become both measurable and available to finance expenditures of the current period. To be considered "available", revenue must be collected during the current period or soon enough thereafter to pay current liabilities. The City uses thirty days when evaluating the available criteria to accrue revenues except for proprietary funds. Expenditures are recognized when the related fund liability is incurred. Since the recognition of depreciation does not reduce net financial resources, it is not considered as expenditure. Other exceptions include (1) inventories of materials and prepaid items are reported as expenditures when purchased, (2) interest on long-term debt is not accrued but is recorded as an expenditure when due, (3) accumulated unpaid vacation and sick pay are considered expenditures when paid. Major revenues recorded on the modified accrual basis are: Property Taxes - King County acts as the City's collection agent for these taxes. Upon receipt, the County electronically transmits to the City the taxes which it has collected on the City's behalf in the prior day. On this basis, property taxes received in January are considered both measurable and available and are therefore recognized as revenue in the current year. Other Locally Levied Taxes - King County also acts as the City's collection agent for the %% and optional '/% real estate excise taxes. Although a time lag occurs in payment of these taxes to the City, since the taxes are actually collected by King County in December and receipted to the City within 10 days after the end of the year, they are considered to be both measurable and available, and are, therefore, accrued as revenue at year end. The State of Washington acts as the City's collection agency for the locally levied sales tax. The sales tax is distributed monthly and remitted to the City in the following month. The Sales Tax remittance in January is considered both measurable and available and is therefore accrued as revenue at year-end. Grant Revenues - Under Section G60.109 of the Codification of Governmental Accounting and Financial Reporting Standards, revenues for cost reimbursement grants are determined to be earned and, therefore, available at the time related expenditures are incurred. For this reason, grant revenues to be received as reimbursement for expenditures incurred in the current year are also recognized as revenue in that year. Shared Revenues - Revenues that have been collected by the State, but not remitted by an intermediary collection agency to the City, are considered measurable and available. Other Revenue Sources - Other items recognized as revenue in the current year on the modified accrual basis include investment interest earned but not received at year end; inter -fund, and intergovernmental service billings related to services provided in the current year which are outstanding at year end; and any other material revenue amounts determined to be both measurable and available under current modified accrual accounting practices. Revenues not considered to meet the criteria for recognition on the modified accrual basis include licenses and permits, fines and forfeitures, and other miscellaneous revenues which are generally not measurable until received. Citv of Federal Wav / 46 FINANCIAL STATEMENT PRESENTATION hi order to obtain an understanding of changes in the City's position and the results of the City's operations, the financial statements for year end of 2014 should be read in conjunction with the government's financial statements for the year ended December 31, 2013. BUDGETARY INFORMATION Scope of Budget Annual appropriated budgets are adopted for the general, some special revenue, and debt service funds on the modified accrual basis of accounting. For governmental funds, there are no differences between the budgetary basis and generally accepted accounting principles. Budgets for project and grant related special revenue funds and capital project funds are adopted at the level of the individual project and for fiscal periods that correspond to the lives of projects. Since these funds are not budgeted on an annual basis, budgetary comparisons are not presented. NCGA Statement 1 does not require, and the financial statements do not present, budgetary comparisons for proprietary fund types. Legal budgetary control is established at the fund level, i.e., expenditures for a fund may not exceed the total appropriation amount. Any unexpended appropriation balances for annually budgeted funds lapse at the end of the year. Appropriations for other special purpose funds that are non -operating in nature are adopted on a "project -length" basis and, therefore, are carried forward from year to year without re -appropriation until authorized amounts are fully expended or the designated purpose of the fund has been accomplished. The individual funds within each fund type which are included in the City's biennial operating budget (funds budgeted on an annual basis) are: General Fund Special Revenue Funds Debt Service Fund - Street Fund - Debt Fund - Arterial Street - Utility Tax - Solid Waste & Recycling - Special Contracts /Studies - Hotel/Motel Lodging Tax - Federal Way Community Center - Traffic Safety - Real Estate Excise Tax - Community Development Block Grant -Paths & Trails Procedures for Adopting the Biennial Budget Capital Project Funds -Downtown Redevelopment -City Facilities -Parks -Transportation -Capital Project Reserve -Performing Arts & Event Center The City's budget process and the time limits under which the budget must be prepared are defined by the Revised Code of Washington (RCW) 35A.33. The procedures followed in establishing the annual budget are described below: By late May the official budget call is made by the Finance Director for current level service budgets and a preliminary financial forecast. By late June, departments submit their preliminary expenditure estimates and the Finance department updates the preliminary revenue estimates to define resources available to finance coming year expenditure programs. By the first Tuesday in October, the Mayor submits a proposed budget to the City Council. This budget is based on priorities established by the Council and estimates provided by City departments during the preceding months, and balanced with revenue estimates made by the Finance Director. Copies of the preliminary budget are provided to the City Council and made available to staff and the public. City Council conducts workshops and public hearings on the proposed budget between mid -September and mid - December. No later than the third Monday in November, the City Council must adopt an ordinance to establish the amount of property taxes to be levied in the coming year. City of Federal Way / 47 No later than the first two weeks of November, the City Clerk publishes a notice of the filing of the preliminary budget and notices of public hearings to be held during preliminary budget deliberations. Two public hearings on the proposed budget are also held during November and December. Final hearings on the budget must begin on or before the first Monday of December, and may continue until the 25th day prior to beginning of the next fiscal year. . By December 31, the City Council makes its adjustments to the proposed budget and adopts a final budget by ordinance. The final operating budget, as adopted, is published and distributed within the first three months of the following year. Copies of the adopted budget are made available to the public. Amending the Budget The Mayor is authorized to transfer budgeted amounts between departments within any fund; however, any revisions that alter the total expenditures of a fund or that affect the number of authorized positions must be approved by the City Council. When the City Council determines that it is in the best interest of the City to increase or decrease the appropriation for a particular fund, it may do so by ordinance approved by a simple majority. The budget amounts shown in the financial statements are the final authorized amounts as revised during the year. The financial statements contain the original and final budget information. The original budget is the first complete appropriated budget. The final budget is the original budget adjusted by all reserves, transfers, allocations, supplemental appropriations, and other legally authorized changes applicable for the fiscal year. Encumbrances An encumbrance system is used for budgetary control purposes to record commitments resulting from approved purchase orders. During the year, encumbrances are recorded in the accounting system at the time purchase orders are issued for goods and services. Upon payment, the encumbrance is reversed and the actual cost of the related item is recorded as fund expenditure. Outstanding encumbrances lapse at year end, are canceled and rolled over to the next fiscal year. Therefore, these amounts have not been recorded as current year expenditures unless considered to be susceptible to accrual at the end of the year. Below is a schedule of encumbrances by major funds and aggregated non -major funds. SCHEDULE OF ENCUMBRANCES BY FUNDS AND FUND CATEGORY AS OF DECEMBER 31, 20l 4 _FUND TYPE ENCUMBRANCES General Fund Major $ 2,563,075 Street Fund Major 297,220 Capital Proj Fund -Streets Major 2,514,906 Surface Water Management Major 355,984 PACC Capital Project Major 308,422 Dumas Bay Centre Major 188,085 Non -Major Funds Non -Major 1,884,994 Total $ 8,112,684 ASSETS, LIABILITIES, FUND BALANCE, NET POSITION Cash and Investments The City follows the practice of pooling cash and investments of all funds for investment purposes, except for cash held in escrow, which is disclosed separately on the balance sheet. Each fund's portion of total cash and investments is summarized by fund type in the combined balance sheet as equity in pooled cash and investments. It is the City's policy to invest all cash not immediately required for disbursement. At December 31, 2014, the State Treasurer was holding $63,798,002 in the Local Government Investment Pool. The Local Government Investment Pool is considered a Citv ofFederal Wav / 48 cash equivalent. The interest earnings on these investments are allocated to all funds based on the average monthly balance for each fund. For purposes of the Statement of Cash Flows, the City considers all highly liquid investments with a maturity of three months or less when purchased, to be cash equivalents. At December 31, 2014, the total cash and cash equivalents were $75,611,617. The City's deposits are entirely covered by federal depository insurance (FDIC) or by collateral held in a multiple financial institution collateral pool administered by the Washington Public Deposit Protection Commission (PDPC). The City is authorized by State law to purchase certificates of deposit issued by Washington State depositories that participate in a state insurance pool managed by the Washington Public Deposit Protection Commission; securities purchased by the Washington State Investment Pool; U.S. Treasury and Agency securities, banker's acceptances trading in the secondary market; and repurchase agreements with dealers that use authorized securities as collateral. In accordance with GASB 31, investments in money market investments and participating interest -earning investment contracts with a remaining maturity of one year or less at the time of purchase are stated at amortized cost. All other investments are stated at fair value. There was no material deviation from fair value quoted at year-end. Receivables Taxes receivable consists of property taxes and related interest and penalties (see Property Tax Note 6). Accrued interest receivable consists of amounts earned on investments, notes, and contracts at the end of the year. Due From Other Governments reflects measurable and available intergovernmental grants, entitlements, or State shared revenues (taxes/charges levied and collected by an intermediary collecting government and distributed on same basis); loans; and charges for services rendered by the City for another government unit. A separate schedule of Due From Other Governments is disclosed in Note 6. Amounts Due to and from Other Funds; Interfund Loans Activities between funds that are representative of lendingiborrowing arrangements outstanding at the end of the fiscal year are referred to as either "interfund loans receivable/payable" or "advances to/from other funds." All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances." Loans between funds must be authorized by the Mayor and Council. In the governmental funds, loans to other funds are offset by a corresponding restricted of fund balance to indicate that the outstanding loan amounts do not constitute "available spendable resources" and are, therefore, not available for appropriation. A separate schedule of inter -fund loans receivable and payable is famished in Note 11. Inventories Inventories in the governmental funds are recorded as expenditures at the time of purchase. Amounts remaining at year-end are immaterial and, therefore, are not reflected on the balance sheets of those funds. There were no material inventories at year-end in the Internal Service or Enterprise Funds. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure, are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Major expenditures for capital assets, including capital leases and major repairs that increase useful lives are capitalized. Maintenance, repairs, and minor renewals are accounted for as expenditures or expenses when incurred. The City has adopted a general capital asset capitalization policy where an item's cost must equal or exceed $5,000 and estimated economic useful life of one year or more. All capital assets are valued at historical cost or estimated cost; where historical cost is not known or at an estimated market value for donated assets. Depreciation on all capital assets is recorded as an allocated expense in the government -wide Statement of Activities and in the proprietary fund statements. Capital assets are reported net of depreciation. The City uses a combination of group depreciation and straight-line depreciation over the life of the assets. City o f Federal Way / 49 The following summarizes the average service lives used to calculate depreciation for specific categories of assets in the City's Assets: Asset Class Life in Years Computers...................................................................5-6 Printers & Faxes ................................... :......................... 7 Telecommunications Equipment ........... :............................ 7 Police Radio Equipment .................... ............................ I I Other Office Equ ipment....................... . ........................4-10 Office Furniture and Fixtures ...........................................10 Recreation Equipment....................................................10 Parks Equipment.........................................................6-10 Police Equipment.......................................................9-11 Shop/Miscellaneous Equipment ........ ........................... 10-12 Heavy Work Equipment.............................................10-16 Non -Police Vehicles........................................................7 Police Patrol Vehicles.......................................................5 Police Non -Patrol Vehicles............................................7-10 Heavy Trucks ............................................... ............ 8-10 Land Improvements..................................................... 20 Buildings................................................... ..........20 StonnDrainage Systems ..............................:................... 20 Infrastructure.................................................. .......... ]S�f00 Compensated Absences Payable The City records a liability for all outstanding vacation pay and accrued compensatory time. In governmental funds, vacation pay and compensatory time is recorded as expenditures when paid which occurs when used or upon termination. In the entity - wide statements and the proprietary fund statements, vacation pay and compensatory time is recorded as a liability and expense in the year earned. Employee vacation leave is accumulated monthly at rates ranging from 12 to 22.5 days per year depending on term of employment. Employees may accumulate up to a maximum of 240 hours of vacation leave, except the Police Guild, who can accrue up to a maximum of 360 hours. Outstanding vacation leave is payable upon termination of employment at the following rate: City Employees up to 240 hours and Police Guild members will be paid out up to two years of their monthly vacation accrual rate. A non-exempt employee may request compensatory time off in lieu of overtime payment. Compensatory time is accrued at a rate of one and one-half hours for each hour of overtime worked, to a maximum of eighty hours for both City employees and Police Guild members. Sick leave may be accumulated up to a maximum of 720 hours for regular City employees per City policy and 1,040 hours for the Police Guild, per their contract. The monthly accrual rate for City employees is 8 hours per month. Accumulated sick leave is not payable upon termination of employment. Outstanding sick leave at year-end is not accrued due to the difficulty in estimating the portion of existing balances likely to result in expenditures in future periods. Compensated Absences Payable outstanding at year-end is outlined in Note 10. Long -Term Liabilities In the government -wide financial statements and the proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund statement of net position. Long-term debt outstanding at year-end is outlined in Note 10. Fund Balance Classification Fund balance is a measurement of available financial resources and is the difference between total assets and total liabilities in each fund. City of Federal Way / 50 Beginning with the most restrictive constraints, fund balance amounts will be reported in the following categories: Nonspendable — amounts that are not in a spendable form or are legally or contractually required to be maintained intact. Restricted — amounts that can be spent only for the specific purposes stipulated by external parties either constitutionally or through enabling legislation. Committed — amounts that can be used only for the specific purposes determined by formal action of the City Council through an ordinance or resolution. Commitments may be changed or lifted by the action of the City Council. Assigned — amounts intended to be used by the government for specific purposes. Intent can be expressed by the City Council or the Mayor. In governmental funds other than the general fund, assigned fund balance represents the amount that is not restricted or committed. This indicates that resources in other government funds, at a minimum, are intended to be used for the purpose of that fund. Unassigned — includes all amounts not contained in other classifications and is the residual classification of the general fund only. Unassigned amounts are available for any legal purpose. When multiple categories of fund balance are available for expenditure, the City will start with the most restricted category and spend those funds first before moving down to the next category with available funds. The minimum fund balance established by the Reserve Policy states "The City shall establish fund balance target of seventeen percent of the City's General Fund operating expenditures. The purpose of the ending fund balance is to provide financial stability, cash flow for operations and the assurance that the City will be able to respond to revenue shortfalls with fiscal strength." General fund expenditures at 12/31/2014 were $42.2 million and Unassigned General fund balance at year -ended 2014 was $12.5 million (29%). The Government -wide statement of net position reports $598.8 million of net position, of which $17.4 million is restricted by the enabling legislation. City o f Federal Way/ 51 2014 FUND BALANCE CLASSIFICATION Fund Balance General Fund utility Street Tax Debt Service DowTransport- Redevelop. anon Performingntown Arts &Even[ Ctr Nonmajor Cov"t Total .Nnnspendable: Court trust S 79,828 S - S S S S S S S 79,828 Prepaid insurance/debt service 25,588 - - - - - 25,588 Resdieted fin•: - Police covert/seizure 54,526 - - - . - - - - 54.526 Future debt payments - - - 73.486 73,486 Special Contracts/Studies -. - 435,061 435,061 Hotel/Nlotcl Lodging Tax - - - 400,296 400,296 Path S Trails Reserves - - - 196,665 196,665 Downtown Redevelopment - - - - 22,804 - - - 22,804 City Facilities CIP - - - - - - 199.943 199,943 Parks CIP - - 4,394,909 4,394,909 Transportation CIP - 5,494,696 - - 5,494.696 Performing Arts & Event Ctr - - - 2,462,606 2,462.606 Real Estate Excise Tax - - - 3,550.864 3,550.864 Committed to: Capital, debt, and operations 2,710,594 - - 2,710.594 Petty cash/advance travel 21,600 - - 21.600 Comm Development Block Grant - - - - �- y - - 48,924 48,924 Proposition 1 - - 834,603 - - - - 834.603 Transportation CIP - - - 2,717,142 - - 2,717,142 Downtown Redevelopment 310,259 - _ 310,259 Arterial Street - - - 308,706 308,706 Solid waste/Recycling -. - - - -- 204,135 204.135 2% for the Arts 293 - - - - - 293 Federal Way Conanunity Center - - - - 1,573,469 1.573.469 Traffic Safety - - - - - - - 3,500.514 3,500,514 Snow/ice removal - 602.023 - - 602,023 Parks CIP - - - - - 318.515 318,515 Performing Arts S Event Ctr _ _ _. 5.920,965 1 5,920,965 Capital Project Reserve - - - - 480,167 480,167 Strategic Opportunities Reserve 3,382,044 - 3.382,044 Unassigned: General Fund 12,480,539 - - 12.480.539 Total Fund Balance: S 16,044,418 $602,023 $ 3,545,197 S 73,486 S 333,063 S 8,211,838 $ 8,383,571 $ 15,612,168 S 52,805,765 Interfund Transactions There are four types of transactions between funds - inter -fund loans, inter -fund services provided and used, inter -fund reimbursements, and inter -fund transfers. Interf ind loans are temporary borrowings of cash which do not affect operating statements, but which may incur interest expense or expenditure to the borrowing fund. Interfund services provided and used are equivalent to buying goods or services from an outside vendor, and are accounted for by the related funds as revenues, expenditures or expenses. Interfund reimbursements are repayments to a fund for expenditures or expenses that belong to another fund. They involve only expenditure or expense accounts. The transfers are accounted for as 'other financing sources and uses" and are therefore included in the operating statements (see Note 11). ON o f Federal Wav / 52 NOTE 2 — RECONCILIATION OF GOVERNMENT -WIDE & FUND FINANCIAL STATEMENTS Explanation of Certain Differences between the Governmental Funds Balance Sheet and the Government -Wide Statement of Net Position The governmental funds' balance sheet includes reconciliation between fund balance — total governmental funds and net position — governmental activities as reported in the government -wide statement of net position. One element of the reconciliation explains that "long-term liabilities, including bonds payable, are not due and payable in the current period, and, therefore, are not reported in the funds." The details of this $36,932,078 difference are as follows: Bonds Payable & Premium at beginning of year Plus: Inclusion of compensated absences $ 27,917,315 1,831,541 Plus: Current year addition/reduction of principal portion of debt & premium 7,183,222 Net Adjustment to reduce fund balance -total governmental funds to arrive at net position - governmental activities $ 36,932,078 Explanation of Certain Differences between the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances and the Government -Wide Statement of Activities The governmental funds' statement of revenues, expenditure, and changes in fund balances includes reconciliation between net changes in fund balances — total governmental funds and changes in net position of governmental activities as reported in the government -wide statement of activities. One element of that reconciliation explains that "Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense." The details of this $12,482,871 difference are as follows: Capital outlay $17,508,958 Plus: Contributed Capital $ 985,496 Less: Governmental depreciation expense (7,408,640) Plus: Increase investment in joint venture 1,397,057 Net adjustment to increase net changes in fund balances - Total governmental funds to arrive at changes in net position ofgovernmental activities $ 12,482,871 Another element of the reconciliation states that "Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds." This item presents: Property taxes earned reported as deferred inflow-ofresources in the fund statelrents $ (74,134) Another element of the reconciliation states that "Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the funds." This item represents: Compensated absences $ (253,688) NOTE 3 — STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY There have been no material violations of finance -related legal or contractual provisions, and there have been no expenditures exceeding legal appropriations in any of the funds of the City. Ci o Federal Way/ 53 NOTE 4 — SUPPLEMENTAL APPROPRIATIONS Operating Budget Funds Appropriations established during 2014 for the City's operating budget funds are provided below. As explained in Note 1, both original and supplemental appropriations are adopted by the City Council by ordinance. Both original and final budget appropriations are shown on the accompanying financial statements. The final budget values include all adopted adjustments to original budget amounts. FUND ORIGINAL BUDGET 2014 SUPPLEMENTAL APPROPRIATIONS FINAL BUDGET' General Fund $ 39,822,081 $ 3,998,008 $ 43,820,089 Special Revenue Funds: Street Fund 4,405275 887,456 5,292,731 Arterial Street Fund 1,536,500 159,531 1,696,031 Utility Tax Fund 48,000 - 48,000 Solid Waste/Recycling Fund 467,261 32,151 499,412 Special Contracts / Studies 1,600 355,419 357,019 HoteUMotel lodging Tax 195,300 31,734 227,034 Federal Way Conanunity Center 2,197,775 10,774 2,208,549 Traffic Safety - 625,000 625,000 Real Estate Excise Tax - - Cmranunity Development Block Grant 576,000 602,896 1,178,896 Paths & Trails - - - Subtotal Special Revenue Funds: 9,427,711 2,704,961 12,132,672 Debt Service Fund 2,075,550 (80,158) 1,995,392 Capital Project Funds: Downtown Redevelopment - 8,237,300 8,237,300 City Facilities - 201,026 201,026 Parks 1,373,000 3,923,166 5,296,166 Transportation 7,087,000 9,982,610 17,069,610 Capital Project Reserve - - Perfonning Arts & Event Center - 9,944,763 9,944,763 Subtotal Capital Project Funds: 8,460,000 32,288,865 40,748,865 Total: $ 59,785,342 $ 38,911,676 $ 98,697,018 NOTE 5 — DEPOSITS AND INVESTMENTS As required by state law, all deposits and investments of the City's funds are obligations of the U.S. Government, the Local Government Investment Pool, bankers' acceptances, or deposits with Washington State banks and savings and loan institutions. In 2014 the City utilized all the above with the exception of bankers' acceptances as legal authorized investment instruments. The City's investment policies are described in Note 1. Cash and Deposits The City follows the practice of pooling cash and investments of all funds, except restricted funds and funds held with a trustee or in escrow, for investment purposes as disclosed in Note 1. At December 31, 2014, the equity in pooled cash and investments was $75,611,568. At year-end, the City had $75,611,568 in cash and cash equivalents which consisted of investments with the Local (LGIP) Government Investment Pool of $63,798,002 the City's checking account bank balance prior to outstanding checks was $11,526,504; and petty cash and change funds, advance travel fund and investigative fund totaling $48,860, Court Trustee Fund of $79,828, cash with escrow agent of $166,157, and bank fees of $7,783. No deposits were uninsured or uncollateralized. Insurance coverage up to $250,000 is through federal depository insurance and the Washington Public Deposit Protection Commission (WPDPC) covers amounts over $250,000. Under State statute, members of WPDPC, a City o f Federal Wav / 54 multiple -financial institution collateral pool, may be assessed on a prorated basis if the pool's collateral is insufficient to cover a loss. Investments are carried at cost or book value because the City holds all investments until maturity. The fair value of the positions in the State Investment Pool is the same as the value of the pool shares. The State Treasurer's Office administers the Washington State Local Government Investment Pool authorized under Chapter 43.250 RCW. The LGIP operates in a manner consistent with the SEC Rule 2a-7. In its management of LGIP, the State Treasurer adheres to the principles appropriate for the prudent investment of public funds. In priority order, they are the safety of principal, the assurance of sufficient liquidity to meet cash flow demands. As of December 31, 2014 the City had the following investments and maturities: SCHEDULE OF INVESTMENTS BY MATURITIES AS OF DECEMBER 31, 2014 InvevtmenI maturities Less than I to 2 Greater than ImestmentT Book Value 1 year years 3 years State Investment Pool $ 63,798,002 $ 63,798.002 $ - $ $ 63,798,002 $ 63,798,002 $ - $ Reconciliation ofGovemment-Wide Statement ofNet Position: Key Bank checking account per books $ 11,526,504 Petty cash/change fund/advance travel/investigative fund 48.860 Local Government Investment Pool 63,798,002 Bank Fees (T783) Municipal Court Trust on books 79,828 Subtotal cash and cash equivalents 75,445,411 Cash with escrow agent 166,157 Total cash and investments, Government -Wide Statement of Net Position $ 75.611.568 Investments Interest Rate Risk As a means of limiting its exposure to fair value losses arising from rising interest rates, the City's investment policy states that "no more than 20% of the portfolio may be invested beyond 12 months, and average maturity of the portfolio may not exceed 2 years." Credit Risk edit risk 1s the risk that an issuer or other counter -parry has to an irlvestmenf m not fulfilling its obligations: This is measured by the assignment of a rating by a nationally recognized statistical rating organization. State law and the City's investment policy limits the instruments in which the City may invest. The following are categories of investments authorized under the City's policy, in general order of safety and liquidity: Local Government Investment Pool (LGIP); repurchase agreements; U.S. treasury obligations; U.S. government agencies; U.S. government -sponsored corporations/instrumentalities; bankers' acceptances (secondary market domestic and foreign); commercial paper (secondary market); insured certificates of deposit (banks and savings & loans); and uninsured/collateralized certificates of deposit (banks and savings & loans). The credit risk of the State Investment Pool is limited to obligations of the US Government, government sponsored enterprises, or insured demand deposit accounts and certificates of deposit. As of December 31, 2014, all City investments were in the LGIP. The LGIP is unrated. LGIP is comparable to Securities Exchange Commission 2a-7 to minimize credit risk. Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of an investment in a single issuer. The City diversifies its investments by security type and institution. The investment policy states: "no more than 5% of the portfolio may be invested in the securities of a single issuer, except for the U.S. Treasury, to which no limits apply, and commercial paper, which is limited to 3% of the portfolio in accordance with state law. No more than 30% of the portfolio may be invested in bankers' acceptances and certificates of deposit." City o f Federal Way / 55 Other Information Below is a schedule of investments by fund type: SCREDULEOF INVESTMENTS BY FUND CATEGORY AND INVESTMENT TYPE AS OF DECEMBER 31, 2014 State Imestment FundhZ Pool Total General Fund $ 12,701,839 $ 12,701,839 Special Revenue Funds 11,575,464 11,575,464 Capital Projects Funds 20,863,963 20,863,963 Enterprise Funds 4,158,439 4,158,439 Internal Services Funds 14,498,298 14,498,298 Total: $ 63,798,002 $ 63,798,002 NOTE 6 — RECEIVABLES, DUE FROM OTHER GOVERNMENTS, UNEARNED REVENUES, AND DEFERRED INFLOW OF RESOURCES Property Taxes The King County Treasurer is responsible for collecting property taxes levied in the County by all taxing districts. Amounts collected by the County on the City's behalf are remitted daily. PROPERTY TAX CALENDAR January 1 Taxes are levied and become an enforceable lien against properties. February 14 Tax bills are mailed. April 30 First of two equal installment payments is due. May 31 Assessed value of property established for next year's levy at 100% of market value. October 31 Second installment is due. As described in Note 1, taxes are levied and become an enforceable lien against properties as of January 1. Annual tax billings may be paid in two equal installments, due April 30 and October 31. At December 31, 2014, the total balance of property taxes receivable recorded by the City was $242,510. Of this, $230,914 is recorded as deferred inflow of resources, since it was not collected within the first 30 days of the end of 2014. Property taxes are recorded as a receivable when levied, offset by deferred inflow of resources. During the year, property tax revenues are recognized when cash is collected. At year-end, property tax revenues are recognized for collections expected to occur within 30 days. No allowance for uncollectible taxes is established because delinquent taxes are considered fully collectible. Under State law, the maximum levy (for general governmental services) is up to $3.60 per $1,000 of assessed valuation, subject to two limitations, set forth below. Since the City of Federal Way is not a full service city, the City is only allowed $1.60. The remaining $2.00 is for the fire district ($1.50) and library district ($0.50). 1. Chapter 84.55 of the State RCW was amended most recently by Initiative No. 747 (which was passed by voters on November 6, 2001), limits the total dollar amount of regular property taxes levied by the City to the amount of such taxes levied in the three most recent years multiplied by a limit factor, plus an adjustment to account for taxes on new construction, improvements and state -assessed property at the previous year's rate. As amended by Initiative No. 747, the limit factor is the lesser of 101% or 100% plus the percent change in the Implicit Price Deflator, unless a greater amount is approved by a simple majority of the voters; and 2. The Washington State Constitution limits the total regular property taxes to 1% of assessed valuation or $10 per $1,000 of value. If the taxes of all districts exceed this amount, each is proportionately reduced until the total is at or below the 1 % limit. The City's regular levy for 2014 was $1.39626 per $1,000 on an assessed valuation of $7,333,627,904 for a total regular levy of $10,239,666. ON o f Federal Wav / 56 Deferred Inflow of Resources The table below provides details of the deferred inflow of resources as reported on the fund financial statements. DEFERRED INFLOW OF RESOURCES AS OF DECEMBER 31, 2014 Total Downtown General Deferred Inflow General Redev. Govt Property tax $ 230,939 $ (25) $ 230,914 Total by Fund: $ 230,939 $ (25) $ 230,914 Unearned Revenues The table below provides details of the unearned revenues as reported on the statement of net position. UNEARNED REVENUES AS OF DECEMBER 31, 2014 Total Surface Dumas Downtown Debt Nonmajor General Water Bay Total Unearned Revenues General Street Redev. Service Godt Govt Mgmt Centre Proprietary SWM fees - 101969 102.969 _ Public Defender Grant - - King County New Solution Grant Commute Trip Reduction Grant - 71,116 - - - 71.116 South King Fire & Rescue Buy- 1n of ValleyCom 34,518 34.518 - 'S6,037 Recreation programs / facility rentals 55.255 119,286 174,571 256.037 Total by Fund: S 55,285 S 71,116 $ $ 34,518 S 119,286 S 280,205 1 S 102,969 S 256,037 S 359,007 Receivables & Due from Other Governments The receivables for the fiscal year ended December 31, 2014 on the government -wide statement of net position are detailed in the following schedule. RECEIVABLES & DUE FROM OTHER GOVERNMENTS AS OF DECEMBER 31, 2014 Real Estate Downtown Transport- Nonmajor Receivable General Street UtilityTax Excise Tax Redevelopment ation Godt Proprietary Total Property tax $ 242,510 $ S $ - $ (0) $ - $ - $ - $ 242,510 Real Estate Excise tax - - 274,168 - - - - 274,168 Utility tax _- .. ................._..... 1,698,136 - - .... . -_... - - 1,698,136 Gambling tax 17,884 - - - - 17,884 Recreation programs/ 35,788 - - - 67,672 39,600 143,060 facilities Grants & contributions 32395 - - - 386,820 187,869 366,731 973,814 Oth er receiv ab le 233,863 - - _ _ - 2,030 235,893 State Shared revenue 1,303,331 82,334 2,674 119,036 24,583 _ 53,165 .... ..... ..... __._.._...�.... - ..... 1,585,124 Surface Water Managernent fees - - - - 137.937 137,937 Total In Fund: $ 1,865.771 $ 82,334 $ 1.711D,810 $ 274,168 $ 119.036 $ 411,403 $ 308,706 $ 546,298 $5,308527 City o f Federal Way / 57 NOTE 7 — CAPITAL ASSETS Capital assets activity for the year ended December 31, 2014 is as follows: CAPITAL AS S EI'S AS OF DECEMBER 31, 2014 Governmental Activity Beginning Balance Additions Deletions Ending Balance 1/1/2014 12/31/2014 Capital Assets, not being depreciated: Land $ 304,177,872 $ 8,729,473 $ - $ 312,907,345 Construction in progress 14,380,488 9,186,947 (691,631) 22,875,804 Total capital assets, not being depreciated: 318,558,360 17,916,420 (691,631) 335,783,149 Capital assets, being depreciated: Buildings 17,268,117 139,706 (8,039) 17,399,784 Improvements otherthan buildings 43,865,580 457,531 - 44,323,111 Infrastructure 164,610,040 703,434 - 165,313,474 Machinery & equipment 15,640,833 1,141,792 (461,637) 16,320,988 Total capital assets, being depreciated: 241,384,570 2,442,463 (469,676) 243,357,357 Less accumulated depreciation for; Buildings (7,441,336) (917,709) 8,039 (8,351,006) Improvements other than buildings (19,316,335) (2,141,647) - (21,457,982) Infrastructure (46,079,820) (5,255,338) - (51,335,158) Machinery & equipment (10,762,730) (1,205,096) 461,637 (11,506,189) Total accumulated depreciation: (83,600,221) (9,519,790) 469,676 (92,650,335) Total assets being depreciated, net 157,784,349 (7,077,327) - 150,707,022 Governmental activities capital assets, net $ 476,342,710 $ 10,839,093 $ (691,631) $ 486,490,172 Business -Type Activities Beginning Balance Additions Deletions Ending Balance 1/1/2014 12/31/2014 Capital Assets, not being depreciated: Land $ 10,933,528 $ - $ - $ 10,933,528 Construction in progress 3,237,352 153,463 - 3,390,815 Total capital assets, not being depreciated- 14,170,880 153,463 - 14,324,343 Capital assets, being depreciated: Buildings 3,600,864 - - 3,600,864 Improvements other than buildings 7,079,899 - 7,079,899 Infrastructure 42,809,205 - - 42,809,205 Machinery & equipment 122,200 - - 122,200 Total capital assets, being depreciated: 53,612,167 - - 53,612,167 Less accumulated depreciation for. Buildings (2,980,066) (150,742) - (3,130,808) Improvements other than buildings (378,616) (69,570) - (448,186) Infrastructure (13,047,007) (430,858) - (13,477,865) Machinery & equipment (94,310) (5,515) -. (99,825) Total accumulated depreciation: (16,499,999) (656,685) - (17,156,684) Total assets being depreciated, net 37,112,168 (656,685) - 36,455,483 Business -Type activities capital assets, net $ 51,283,048 $ (503,222) $ -. $ 50,779,826 City of Federal Wav / 58 At the end of 2014, 33 projects comprise the Construction in Progress for Governmental Activities. Upon completion, the projects will be capitalized in the Government -wide statements in their appropriate categories. Construction commitments for Governmental Activities as of December 31, 2014, are as follows: AS OF DECEMBER 31, 2014 GoNernmental Activities Projects Construction Remaining in progress Commitment Downtown Redevelopment $ 279,919 $ - Major Facility Rehabilitation 231,109 54,462 Performing Arts & Event Center 2,822,335 144,877 Regional Park Development 300,666 - Downtown Park 346,324 1,585,000 Lakota Park 166,912 - Hylebos Boardwalk Replacement 1,365,764 23,747 Sacajawea Park Masterplan 690,686 41,816 Trail and pedestrian access improvements 250,326 1,086,912 Laurelwood 40,460 161,984 Celebration Park Maintenance Building 18,079 53,504 Saghalie Track Improvements 117,393 13,015 S 320th St @ 20th Ave South 2,453,063 549,202 SW 312th ST @ SR509 322,381 25,444 loth Avenue SW / SW 344th St: SW Campus Drive - 21st Ave SW 252,301 66,230 Ist Ave South & South 28th Intersection 125,271 105,579 S 352nd Street Extension From SR-99 to SR-161 452,008 - S 304th St @ 28th Ave S 232,496 183,318 South 356th St: SR99 - SRI61 200,337 595,196 SR99 HOV Lanes Phase 5 1,120,974 2,095,153 SW 336th Way / SW 340th St: 26th PI SW - Hoyt Rd 52,312 212,694 21 ST AVE SW @ SW 336TH ST 4,785,307 141,020 Citywide Flashing Yellow Lights Installation 158,973 - SR 99 @ S 312th St ' ! 7,260 55,936 S 344th Way @ Weyerhaeuser Way S 281,685 12,371 SW 312th St & 14th Ave SW Lakota Safe Rt to School Imp 2,265,643 - City Wide Safety Projects (Flashing Yellow Lights Installation) 617,743 260,261 Safety Improvement Projects - S320th Street from SR99 to I-5 279,353 208,129 Safety Improvement Projects - SR99 from S320th Street to S330th Street 156,205 134,317 S 320th Street - 1 ith PI South to I-5 Limited Access Preservation Project 1,360,196 129,933 13th Ave SW: SW 314th St to SW 316th St Safe Route to School Improvements - - 14th Avenue S: S 308th Street - South 312th Street 671,985 4,484 School Zone Enhancements 450,338 207,000 Total governmental activities $ 22,875,804 $ 8,151,584 Federal Wav / 59 Depreciation expense was charged to functions/programs of the primary government as follows: CAPITAL ASSETS DEPRECIATION BY TYPE AS OF DECEMBER 31, 2014 Governmental and Internal Service Activities General Government $ 420,698 Security of Persons & Property 997,565 Transportation 5,511,456 Physical Environment 16,361 Economic Environment 97,929 Health 25,905 Culture & Recreation 2,449,876 Total Depreciation - Governmental Activities $ 9,519,790 Business -Type Activities Utilities - Surface Water Management $ 501,420 Culture & Recreation - Dumas Bay Centre 155,264 Total Depreciation - Business -Type Activities $ 656,685 NOTE 8 — PENSION PLANS Washington State Department of Retirement Systems Substantially all City full-time and qualifying part-time employees participate in one of the following statewide retirement systems administered by the Washington State Department of Retirement Systems, under cost -sharing multiple -employer public employee defined benefit retirement plans. The Department of Retirement Systems (DRS), a department within the primary government of the State of Washington, issues a publicly available comprehensive annual financial report (CAFR) that includes financial statements and required supplementary information for each plan. The DRS, CAFR may be obtained by writing to: Department of Retirement Systems, Communications Unit, P.O. Box 48380, Olympia, WA 98504-8380; or it may be downloaded from the DRS website at www.drs.wa,gov. The following disclosures are made pursuant to GASB Statements No. 27, Accounting for Pensions by State and Local Government Employers and No. 50, Pension Disclosures, an Amendment of GASB Statements No. 25 and No. 27. Public Employees' Retirement System (PERS) Plan I, 2 and 3 Plan Description The Legislature established PERS in 1947. Membership in the system includes: elected officials; state employees; employees of the Supreme, Appeals, and Superior courts (other than judges currently in the Judicial Retirement System); employees of legislative committees; community and technical colleges, college and university employees not participating in higher education retirement programs; judges of district and municipal courts; and employees of local governments. PERS retirement benefit provisions are established in Chapters 41.34 and 41.40 RCW and may be amended only by the State Legislature. PERS is a cost -sharing multiple -employer retirement system comprised of three separate plans for membership purposes: Plans 1 and 2 are defined benefit plans and Plan 3 is a defined benefit plan with a defined contribution component. PERS members who joined the system by September 30, 1977 are Plan 1 members. Those who joined on or after October 1, 1977 and by either, February 28, 2002 for state and higher education employees, or August 31, 2002 for local government employees, are Plan 2 members unless they exercised an option to transfer their membership to Plan 3. PERS members joining the system on or after March 1, 2002 for state and higher education employees, or September 1, 2002 for local government employees have the irrevocable option of choosing membership in either PERS Plan 2 or PERS Plan 3. The option must be exercised within 90 days of employment. An employee is reported in Plan 2 until a choice is made. Employees who fail to choose within 90 days default to PERS Plan 3. Notwithstanding, PERS Plan 2 and Plan 3 members may opt out of plan membership if terminally ill, with less than five years to live. City of Federal Wav / 60 PERS Plan 1 and Plan 2 defined benefit retirement benefits are financed from a combination of investment earnings and employer and employee contributions. PERS Plan 1 members are vested after the completion of five years of eligible service. Plan 1 members are eligible for retirement after 30 years of service, or at the age of 60 with five years of service, or at the age of 55 with 25 years of service. The monthly benefit is 2 percent of the average final compensation (AFC) per year of service. (AFC is the monthly average of the 24 consecutive highest -paid service credit months.) The retirement benefit may not exceed 60 percent of AFC. The monthly benefit is subject to a minimum for PERS Plan 1 retirees who have 25 years of service and have been retired 20 years, or who have 20 years of service and have been retired 25 years. Plan 1 members retiring from inactive status prior to the age of 65 may receive actuarially reduced benefits. If a survivor option is chosen, the benefit is further reduced. A cost -of -living allowance (COLA) was granted at age 66 based upon years of service times the COLA amount. This benefit was eliminated by the Legislature, effective July 1, 2011. Plan 1 members may elect to receive an optional COLA that provides an automatic annual adjustment based on the Consumer Price Index. The adjustment is capped at 3 percent annually. To offset the cost of this annual adjustment, the benefit is reduced. PERS Plan 1 provides duty and non -duty disability benefits. Duty disability retirement benefits for disablement prior to the age of 60 consist of a temporary life annuity payable to the age of 60. The allowance amount is $350 a month, or two-thirds of the monthly AFC, whichever is less. The benefit is reduced by any workers' compensation benefit and is payable as long as the member remains disabled or until the member attains the age of 60. A member with five years of covered employment is eligible for non -duty disability retirement. Prior to the age of 55, the allowance amount is 2 percent of the AFC for each year of service reduced by 2 percent for each year that the member's age is less than 55. The total benefit is limited to 60 percent of the AFC and is actuarially reduced to reflect the choice of a survivor option. A cost -of -living allowance was granted at age 66 based upon years of service times the COLA amount. This benefit was eliminated by the Legislature, effective July 1, 2011. Plan 1 members may elect to receive an optional COLA that provides an automatic annual adjustment based on the Consumer Price Index. The adjustment is capped at 3 percent annually. To offset the cost of this annual adjustment, the benefit is reduced. PERS Plan 1 members can receive credit for military service. Members can also purchase up to 24 months of service credit lost because of an on-the-job injury. PERS Plan 2 members are vested after the completion of five years of eligible service. Plan 2 members are eligible for normal retirement at the age of 65 with five years of service. The monthly benefit is 2 percent of the AFC per year of service. (AFC is the monthly average of the 60 consecutive highest -paid service months.) PERS Plan 2 members who have at least 20 years of service credit and are 55 years of age or older are eligible for early retirement with a reduced benefit. The benefit is reduced by an early retirement factor (ERF) that varies according to age, for each year before age 65. PERS Plan 2 members who have 30 or more years of service credit and are at least 55 years old can retire under one of two provisions: • With a benefit that is reduced by 3 percent for each year before age 65. • With a benefit that has a smaller (or no) reduction (depending on age) that imposes stricter return -to -work rules. PERS Plan 2 retirement benefits are also actuarially reduced to reflect the choice, if made, of a survivor option. There is no cap on years of service credit; and a cost -of -living allowance is granted (based on the Consumer Price Index), capped at 3 percent annually. The surviving spouse or eligible child or children of a PERS Plan 2 member who dies after leaving eligible employment having earned ten years of service credit may request a refund of the member's accumulated contributions. PERS Plan 3 has a dual benefit structure. Employer contributions finance a defined benefit component and member contributions finance a defined contribution component. The defined benefit portion provides a monthly benefit that is 1 percent of the AFC per year of service. (AFC is the monthly average of the 60 consecutive highest -paid service months.) Effective June 7, 2006, PERS Plan 3 members are vested in the defined benefit portion of their plan after ten years of service; or after five years of service, if twelve months of that service are earned after age 44; or after five service credit years earned in PERS Plan 2 prior to June 1, 2003. Plan 3 members are immediately vested in the defined contribution portion of their plan. Citv of Federal Wav / 61 Vested Plan 3 members are eligible for normal retirement at age 65, or they may retire early with the following conditions and benefits: • If they have at least ten service credit years and are 55 years old, the benefit is reduced by an ERF that varies with age, for each year before age 65. • If they have 30 service credit years and are at least 55 years old, they have the choice of a benefit that is reduced by 3 percent for each year before age 65; or a benefit with a smaller (or no) reduction factor (depending on age) that imposes stricter return -to -work rules. PERS Plan 3 defined benefit retirement benefits are also actuarially reduced to reflect the choice, if made, of a survivor option. There is no cap on years of service credit and Plan 3 provides the same cost -of -living allowance as Plan 2. PERS Plan 3 defined contribution retirement benefits are solely dependent upon contributions and the results of investment activities. The defined contribution portion can be distributed in accordance with an option selected by the member, either as a lump sum or pursuant to other options authorized by the Director of the Department of Retirement Systems. PERS Plan 2 and Plan 3 provide disability benefits. There is no minimum amount of service credit required for eligibility. The Plan 2 monthly benefit amount is 2 percent of the AFC per year of service. For Plan 3, the monthly benefit amount is 1 percent of the AFC per year of service. These disability benefit amounts are actuarially reduced for each year that the member's age is less than 65, and to reflect the choice of a survivor option. There is no cap on years of service credit, and a cost -of -living allowance is granted (based on the Consumer Price Index) capped at 3 percent annually. PERS Plan 2 and Plan 3 members may have up to ten years of interruptive military service credit; five years at no cost and five years that may be purchased by paying the required contributions. Effective July 24, 2005, a member who becomes totally incapacitated for continued employment while serving the uniformed services, or a surviving spouse or eligible children, may apply for interruptive military service credit. Additionally, PERS Plan 2 and Plan 3 members can also purchase up to 24 months of service credit lost because of an on-the-job injury. PERS members may also purchase up to five years of additional service credit once eligible for retirement. This credit can only be purchased at the time of retirement and can be used only to provide the member with a monthly annuity that is paid in addition to the member's retirement benefit. Beneficiaries of a PERS Plan 2 or Plan 3 member with ten years of service who is killed in the course of employment receive retirement benefits without actuarial reduction, if the member was not at normal retirement age at death. This provision applies to any member killed in the course of employment, on or after June 10, 2004, if found eligible by the Department of Labor and Industries. A one-time duty -related death benefit is provided to the estate (or duly designated nominee) of a PERS member who dies in the line of service as a result of injuries sustained in the course of employment, or if the death resulted from an occupational disease or infection that arose naturally and proximately out of said member's covered employment, if found eligible by the Department of Labor and Industries. Judicial Benefit Multiplier During January 1, 2007 through December 31, 2007, judicial members of PERS were given the choice to participate in the Judicial Benefit Multiplier Program (JBM) enacted in 2006. Justices and judges in PERS Plan 1 and Plan 2 were able to make a one-time irrevocable election to pay increased contributions that would fund a retirement benefit with a 3.5 percent multiplier. The benefit would be capped at 75 percent of AFC. Judges in PERS Plan 3 could elect a 1.6 percent of pay per year of service benefit, capped at 37.5 percent of AFC. Members who chose to participate in JBM would accrue service credit at the higher multiplier beginning with the date of their election; be subject to the benefit cap of 75 percent of AFC, pay higher contributions; stop contributing to the Judicial Retirement Account (JRA); and be given the option to increase the multiplier on past judicial service. Members who did not choose to participate would continue to accrue service credit at the regular multiplier; continue to participate in JRA, if applicable; never be a participant in the JBM Program; and continue to pay contributions at the regular PERS rate. City o Federal Wav / 62 Newly elected or appointed justices and judges who chose to become PERS members on or after January 1, 2007, or who had not previously opted into PERS membership, were required to participate in the JBM Program. Members required into the JBM program would return to prior PERS Plan if membership had previously been established; be mandated into Plan 2 and not have a Plan 3 transfer choice, if a new PERS member; accrue the higher multiplier for all judicial service; not contribute to JRA; and not have the option to increase the multiplier for past judicial service. There are 1,176 participating employers in PERS. Membership in PERS consisted of the following as of the latest actuarial valuation date for the plans of June 30, 2014: Retirees and beneficiaries receiving benefits 83,328 Terminated plan members entitled to but not yet receiving benefits 31,047 Active plan members vest 150,706 Terminated plan members nonvested 101,191 Total 368,278 Funding Policy Each biennium, the state Pension Funding Council adopts PERS Plan 1 employer contribution rates, PERS Plan 2 employer and employee contribution rates, and PERS Plan 3 employer contribution rates. Employee contribution rates for Plan 1 are established by statute at 6 percent for state agencies and local government unit employees, and at 7.5 percent for state government elected officials. The employer and employee contribution rates for Plan 2 and the employer contribution rate for Plan 3 are developed by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. All employers are required to contribute at the level established by the Legislature. Under PERS Plan 3, employer contributions finance the defined benefit portion of the plan and member contributions finance the defined contribution portion. The Plan 3 employee contribution rates range from 5 percent to 15 percent, based on member choice. Two of the options are graduated rates dependent on the employee's age. As a result of the implementation of the Judicial Benefit Multiplier Program in January 2007, a second tier of employer and employee rates was developed to fund, along with investment earnings, the increased retirement benefits of those justices and judges that participate in the program. The methods used to determine the contribution requirements are established under state statute in accordance with Chapters 41.40 and 41.45 RCW. The required contribution rates expressed as a percentage of current -year covered payroll, as of December 31, 2013, are as follows: Members not narticinatiniz in JBM: PERS Plan 1 PERS Plan 2 PERS Plan 3 Employer* Employee 9.21%* 6.00% 9.21% 4.92% 9.21%** *** * The employer rates include the employer administrative expense fee currently set at 0.18%. ** Plan 3 defined benefit portion only. *** Variable from 5.0% to 15.0% maximum based on rate selected by the PERS 3 member. Members participating II JONI: PERS Plan 1 PERS Plan 2 PERS Plan 3 Employer* 9.21%* 9.21% 9.21%** Employee 12.26% 12.30% 7.50*** * The employer rates include the employer administrative expense fee currently set at 0.18%. ** Plan 3 defined benefit portion only, *** Minimum Rate Both the City and employees made the required contributions. The City's required contributions for the years ended December 31 were: PERS Plan 1 PERS Plan 2 PERS Plan 3 2014 $ 0 $ 905,173 $ 203,877 2013 $ 779 $ 775,972 $ 150,523 2012 $ 1,588 $ 708,790 $ 132,404 Citv ofFederal Wav / 63 Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) Plans 1 and 2 Plan Description The Legislature established LEOFF in 1970. Membership in the system includes all full-time, fully compensated, local law enforcement commissioned officers, firefighters and, as of July 24, 2005, emergency medical technicians. LEOFF membership is comprised primarily of non -state employees, with Department of Fish and Wildlife enforcement officers, who were first included prospectively effective July 27, 2003, being an exception. LEOFF retirement benefit provisions are established in Chapter 41.26 RCW and may be amended only by the State Legislature. LEOFF is a cost -sharing multiple -employer retirement system comprised of two separate defined benefit plans. LEOFF members who joined the system by September 30, 1977 are Plan 1 members. Those who joined on or after October 1, 1977 are Plan 2 members. LEOFF defined benefit retirement benefits are financed from a combination of investment earnings, employer and employee contributions, and a special funding situation in which the state pays through state legislative appropriations. Effective July 1, 2003, the LEOFF Plan 2 Retirement Board was established by Initiative 790 to provide governance of LEOFF Plan 2. The Board's duties include adopting contribution rates and recommending policy changes to the Legislature for the LEOFF Plan 2 retirement plan. Plan 1 retirement benefits are vested after an employee completes five years of eligible service. Plan 1 members are eligible for retirement with five years of service at the age of 50. The benefit per year of service calculated as a percent of final average salary is as follows: Term of Service Percent of'Fiiial Average 20 or more years 2.0% 10 but less than 20 years 1.5% 5 but less than 10 years 1.0% The final average salary is the basic monthly salary received at the time of retirement, provided a member has held the same position or rank for 12 months preceding the date of retirement. Otherwise, it is the average of the highest consecutive 24 months' salary within the last 10 years of service. A cost -of -living allowance is granted (based on the Consumer Price Index). LEOFF Plan 1 provides death and disability benefits. Death benefits for survivors of Plan 1 members on active duty consist of the following: (1) If eligible spouse, 50 percent of the FAS, plus 5 percent of FAS for each eligible surviving child, with a limitation on the combined allowances of 60 percent of the FAS; or (2) If no eligible spouse, eligible children receive 30 percent of FAS for the first child plus 10 percent for each additional child, subject to a 60 percent limitation of FAS, divided equally. A one-time duty -related death benefit is provided to the estate (or duly designated nominee) of a LEOFF Plan 1 member who dies as a result of injuries or illness sustained in the course of employment, if found eligible by the Department of Labor and Industries. The LEOFF Plan 1 disability allowance is 50 percent of the FAS plus 5 percent for each child up to a maximum of 60 percent. Upon recovery from disability before the age of 50, a member is restored to service with full credit for service while disabled. Upon recovery after the age of 50, the benefit continues as the greater of the member's disability allowance or service retirement allowance. LEOFF Plan 1 members may purchase up to five years of additional service credit once eligible for retirement. This credit can only be purchased at the time of retirement and can be used only to provide the member with a monthly annuity that is paid in addition to the member's allowance. LEOFF Plan 2 members are vested after the completion of five years of eligible service. Plan 2 members may retire at the age of 50 with 20 years of service, or at the age of 53 with five years of service, with an allowance of 2 percent of the FAS per year of service. (FAS is based on the highest consecutive 60 months). Plan 2 members who retire prior to the age of 53 receive reduced benefits. Benefits are actuarially reduced for each year that the benefit commences prior to age 53 and to reflect the choice of a survivor option. If the member has at least 20 years of service and is age 50, the reduction is 3 percent for each year prior to age 53. A cost -of -living allowance is granted (based on the Consumer Price Index), capped at 3 percent annually. City of Federal Wav / 64 LEOFF Plan 2 provides disability benefits. There is no minimum amount of service credit required for eligibility. The Plan 2 allowance amount is 2 percent of the FAS for each year of service. Benefits are actuarially reduced for each year that the member's age is less than 53, unless the disability is duty -related, and to reflect the choice of a survivor option. If the member has at least 20 years of service and is age 50, the reduction is 3 percent for each year prior to age 53. A catastrophic disability benefit equal to 70 percent of their FAS, subject to offsets for workers' compensation and Social Security disability benefits received, is also available to those LEOFF Plan 2 members who are severely disabled in the line of duty and incapable of future substantial gainful employment in any capacity. Effective June 2010, benefits to LEOFF Plan 2 members who are catastrophically disabled include payment of eligible health care insurance premiums. Members of LEOFF Plan 2 who leave service because of a line of duty disability are allowed to withdraw 150 percent of accumulated member contributions. This withdrawal benefit is not subject to federal income tax. Alternatively, members of LEOFF Plan 2 who leave service because of a line of duty disability may be eligible to receive a retirement allowance of at least 10 percent of FAS and 2 percent per year of service beyond five years. The first 10 percent of the FAS is not subject to federal income tax. LEOFF Plan 2 retirees may return to work in an eligible position covered by another retirement system, choose membership in that system and suspend their pension benefits, or not choose membership and continue receiving pension benefits without interruption. LEOFF Plan 2 members who apply for retirement may purchase up to five years of additional service credit. The cost of this credit is the actuarial equivalent of the resulting increase in the member's benefit. LEOFF Plan 2 members can receive service credit for military service that interrupts employment. Additionally, LEOFF Plan 2 members who become totally incapacitated for continued employment while servicing in the uniformed services may apply for interruptive military service credit. Should any such member die during this active duty, the member's surviving spouse or eligible child (ren) may request service credit on behalf of the deceased member. LEOFF Plan 2 members may also purchase up to 24 consecutive months of service credit for each period of temporary duty disability. Beneficiaries of a LEOFF Plan 2 member who is killed in the course of employment receive retirement benefits without actuarial reduction, if found eligible by the Director of the Department of Labor and Industries. Benefits to eligible surviving spouses and dependent children of LEOFF Plan 2 members killed in the course of employment include the payment of on -going health care insurance premiums paid to the Washington state Health Care Authority. A one-time duty -related death -benefit is provided to the estate (or duly designated nominee) -of -a LEOFF Plan 2 member who — dies as a result of injuries or illness sustained in the course of employment, if found eligible by the Department of Labor and Industries. There are 374 participating employers in LEOFF. Membership in LEOFF consisted of the following as of the latest actuarial valuation date for the plans of June 30, 2013: Retirees and beneficiaries receiving benefits 10,511 Terminated plan members entitled to but not yet receiving benefits 699 Active plan members vest 16,830 Terminated plan members nonvested 1,600 Total 29,640 Funding Policy Starting on July 1, 2000, LEOFF Plan 1 employers and employees contribute zero percent as long as the plan remains fully funded. Employer and employee contribution rates are developed by the Office of the State Actuary to fully fund the plan. LEOFF Plan 2 employers and employees are required to pay at the level adopted by the LEOFF Plan 2 Retirement Board. The Legislature, by means of a special funding arrangement, appropriated money from the state General Fund to supplement the current service liability and fund the prior service costs of LEOFF Plan 2 in accordance with the requirements of the Pension Funding Council and the LEOFF Plan 2 Retirement Board. However, this special funding situation is not mandated by the state constitution and this funding requirement could be returned to the employers by a change of statute. Citv o{Federal Wav / 65 The required contribution rates expressed as a percentage of current year covered payroll, as of December 31, 2014 were: LEOFF Plan 1 LEOFF Plan 2 Employer 0.18%* 5.23%** Employee 0.00% 8.41% State N/A 3.45% * The employer rates include the employer administrative expense fee currently set at 0.18%. ** The employer rate for ports and universities is 8.59%. Both the City and employees made the required contributions. The City's required contributions for the years ended December 31 were: LEOFF Plan 1 LEOFF Plan 2 2014 $ - $ 628,345 2013 $ $ 574,682 2012 $ $ 575,718 Other Local Government Pension Systems - City of Federal Way Employees' Retirement System Effective June 1, 1990, the Federal Way City Council established the Federal Way Employees' Retirement System, per City Ordinance 90-74 and as authorized by the Federal Social Security Act (42 USCA, Section 418 (g)). The Retirement System is a defined contribution pension plan established as an alternative to the Federal Social Security System. During 2014, there were a total of 295 individuals covered by this system. As of the end of the year, 302 remained as active employees of the City and four were drawing retirement benefits. The 20 inactive had left the City's employment and either had been reimbursed their contributions, or the reimbursement was pending, or they elected to have their contributions remain in the plan if the balance was $1,000 or greater. All regular employees of the City of Federal Way are required to participate in the system, with the City matching the employee's required contribution. The employee pays 6.2% and this is matched by the composite of a cash match (approximately 5.2%) and insurance payments (1%) for disability, survivor, accidental death and dismemberment, and lump sum death benefit coverage. Contributions into the plan are tax deferred. Employees are entitled to make voluntary contributions to the plan, assuming that highly compensated and non -highly compensated employees are treated equally. Each payroll period, employees may make a voluntary contribution equal to a minimum of 1% of the participant's compensation, not to exceed 10% of the participant's compensation. Covered payroll for 2014 was $21,975,372 excluding PERS, LEOFF, FWRS, deferred comp, flex plan, and section 125 and total City payroll was $25,956,942. Actual City contributions for the year were $1,234,329. Actual employee contributions were $1,499,596. All contributions were invested in instruments arranged through independent investment advisors selected by the Municipal Employers Benefit Trust (MEBT) committee comprised of the entities of Bellevue, Kirkland, Redmond, Edmonds, Mill Creek, Woodinville, Federal Way, and North East King County Regional Public Safety Communication Agency (NORCOM) but administered by Northwest Plan Services (NWPS). Retirement System assets are not the property of the City and are not subject to the claims of the City's general creditors. The Federal Way Retirement System assets are with Security Trust Company, N.A. who invests Plan assets. MEBT can be contacted for additional information at (877)-690-5410. In July 1995, the City implemented the hardship withdrawal and loan provision program that allow participants to have limited access to their contributions while still employed by the City. Hardship withdrawals are available in the event of financial necessity resulting from uninsured medical expenses, tuition expenses, purchasing one's primary residence, or to prevent foreclosure on one's primary residence. Loans receivable as of December 31, 2014 were $1,575,859. The consulting actuary firm of Northwest Plan Services (NWPS) has been contracted to provide record keeping, administrative and consulting services related to the Plan Actuarial determinations are not required because accidental death and dismemberment insurance, long-term disability, survivor income insurance and the lump sum death benefit are provided by a group insurance policy with Standard Insurance Company; and benefits paid to participants upon retirement are limited to: (a) a nonforfeitable, nontransferable annuity contract purchased by the plan's trustee, (b) retirement benefits payable from the employee's account to which no contributions by the City or the participant can be added after retirement, or a single lump -sum payment equal to the accumulated balance in the employee's account as of his retirement date. City o Federal Way / 66 NOTE 9 — RISK MANAGEMENT The City uses the Risk Management Internal Service Fund to account for its risk financing activities. The City maintains insurance against most normal hazards. The City faces most of the risks faced by similar sized cities including general liability for bodily injury, law enforcement — auto liability and property liability. Through its Risk Management Fund, the City records insurance premium costs for general liability coverage and builds reserves for future claims, self -insured retention, and a future general liability self-insurance program. There were no settlements in excess of insurance for commercially insured activities for 1996 through 2014. The fund balance for the Risk Fund as of 12/31/2014 is $1.35 million. The following is a sum ma of coverage in force in 2014. SCHEDULE OF INSURANCE IN FORCE AS OF DECEMBER 31, 2014 Company Policy Period Details of Coverage Liability Limits Argonaut 12/31/14-12/31/15 General liability (auto, general, police, e & $250,000 self -insured retention (SIR) with o, employment practices, & stop gap) aggregate limits of $10,000,000. National 12/31/14-12/31/15 Excess liability $10,000,000 in excess of $10,000,000 with Casualty aggregate limits of $10,000,000. Crime/fidelity (employee theft, forgery or alternation, on premises, in transit, money Deductible ranges from $5,000 to $25,000 Travelers 1/l/15-1/l/16 orders and counterfeit money, computer with single loss limits ranging from $50,000 crime, fund transfer fraud and claims to $1,000,000. expense) The City's industrial insurance is provided by the Association of Washington Cities and is administered by the Workers' Comp Retro Program. Coverage is purchased by means of standard rates per working hour and is computed by the total number of hours worked by employees multiplied by the basic premium rate assigned to the business risk classification. The following are benefits provided by industrial insurance: medical services, damaged clothing, travel expenses, time -loss payments, vocational rehabilitation, partial disability awards, pension awards and survivor benefits. The City's unemployment insurance, where it has elected to become fully self -insured. Related premiums received by the Unemployment Insurance -Fund -is used to reimburse -the -State Employment -Security Department for uneMloyment benefits paid to eligible individuals, and to establish reserves for the payment of estimated future unemployment claims liability. The City is self -insured for unemployment compensation. The weekly payments to an employee range from $151 - $637 depending upon the wages earned. At December 3151, 2014 the City had $1,912,291 in reserve. Unemployment compensation benefits 2013 2014 Unemployment reserve, Jan. 1st $ 1,529,657 $ 1,685,026 Unemployment compensation benefits 223,510 242,207 Unemployment compensation interest - 647 Claim payments during the year (68,142) (15,590) Unemployment reserve, Dec. 31st $ 1,685,026 $1,912,291 City ofFederal Wa X167 The City's also elected to self -insure for medical. Related premiums are received by the Health Insurance Fund and are used to reimburse weekly claims to the Group Health Corporation for medical benefits paid the eligible individuals, and establish reserves for the payment of estimated future medical benefits claims liability. At December 31", 2014 the City had $1,031,753 in reserve. Health Insurance benefits 2014 Health Insurance reserve, Jan. 1st $ - Health Insurance benefits 3,958,828 Health Insurance Employee Contributions 214,481 Health Insurance COBRA Contributions 4,812 Health Insurance interest 431 Prescription Claim payments during the year (498,763) Medical Claim payments during the year (1,982,077) Other services and charges (665,958) Health Insurance reserve, Dec. 31st $ 1,031,753 NOTE 10 — LONG-TERM LIABILITIES The various categories of long-term debt reflected on the City's financial statements are briefly described in the following paragraphs. Ratings are issued on the bond at the time of issuance. The ratings issued on City bonds are shown on page 68. General obligation bonds are backed by the City's full faith and credit. Proceeds are typically used for the acquisition or construction of major capital facilities or equipment. "Councilmanic Bonds" are general obligation bonds issued by City Council without voter approval. Under State law, repayment of these bonds must be financed from general City revenues because no additional property taxes can be levied to support related debt service payments. General Obligation bonds approved by the voters are typically repaid through an annual "excess" property tax levy authorized for this purpose by State statute. At year-end 2014 the City had no voter -approved bonds outstanding. All principal and interest payments on general obligation debts are recorded as expenditures by the City's Debt Service Fund. A) On March 4, 2013 the City issued $12,415,000 of general obligation refunding bonds with an average interest rate of 2.67 percent to provide resources to purchase U.S. Government and State and Local Government Series security that were placed in an irrevocable trust for the purpose of generating resources to advance refund on $12,310,000 of outstanding 2003 GO Federal Way Community Center debt on December 1, 2013. As a result, the 2003 GO FWCC bonds are considered to be defeased and the liability has been removed from the governmental activities column of the statement of net position. This advance refunding was undertaken to reduce total debt service payments over the next twenty one years by $2,322,943 and resulted in an economic gain of $1,740,458. (Economic gain is the net present value of future savings between old and the new debt). B) On November 26, 2014 the City issued $8,209,906 of general obligation Bond anticipation note with KeyBank to acquire the Target property with an interest only rate of 1.51 percent and principal due 12/01/2017. The funds were used to purchase the old Target property for downtown development. The bond will be paid off with the sale of the land in three years. Currently the bond calls for interest only payments before the bond is paid off. C) The City in conjunction with several South King County cities (Renton, Auburn, Tukwila, and Kent) agreed to build new dispatch facility known as Valley Communications Center. Total bond in 2000 was $12.758 million. Valley Communications Center refinanced the 2000 bond in 2010 for $5.325 million. The City of Federal Way portion at that time was $1.065 million. The City will make its final payment 12/1/2015. D) The City in conjunction with several other South King County cities (Kent, Renton, Seatac, Des Moines) agreed to build a facility to hold its inmates. The total bond in 2009 was $86.325 million and the City of Federal Way's portion at that time was $15.522 million. In 2015 the facility was able to use its excess revenue from excess space rented to non-member cities to pay the bond in 2015. SCORE and Valley Communications joint venture information can be found on pages 72 and 73. City o f Federal Way / 68 The following schedules detail the long-term debt activity and balances of the City. OUTSTANDING GENERAL OBLIGATION DEBT AND LONGTERM LIABILITIES - BYTYPE DE)C©NBFR 31, 2014 Bond Rating Issue Maturity Interest Amount Beginning Amount Amount Ending Description at Issuance Date Date Rate Originally Outstanding Issued Redeemed Outstanding Issued Debt Debt Governmental Activities: General Obligation Bonds: A) 2014 KeyBank Bond Anticipation Note Nov 26, 14 Dec 01. 17 1.51 $ - $ _ $ 8209.960 $ - $ 8209,960 B) 2013 Refund Ltd/Community Center Z Aa3 Dec 01, 13 Dec 01. 33 2.67 12,415,000 12.250.000 - 445,000 11,805.000 Subtotal GO Bonds: - 12.415,000 12250,000 8,209,960 445.000 20,014,960 Other Miscellaneous Debt-Intergovemrental: C) 2010 1-united/Valley Comm. PDA3 A] Mar05, 10 Dec 01. 15 3,00-4.00 1,065.000 432,000 - 212.000 220,000 D) 2009 SCORE/Special Obligation Bond A UAA Nov 04, 09 Jan 01, 39 3.00-6,62 15,522.300 14.826,600 - 358200 14,468,400 Subtotal iniscellaneous: - - 16,587,300 15.258,600 - 570,200 14,689,400 Subtotal GO Bonds plus Misc. 29.002,300 27,508,600 8,209,960 L015,200 34,701360 Compensated absences - 1,577,612 2,014.302 1,760.373 1.831,541 Subtotal GO bonds, misc & comp absences: - 29.002,300 29,086212 10 224262 2,775.573 36,534,901 Business -Type Activities: Public Works Trust Fund Loan: PWTL- Kitts Comer Drain Imp Aug 31.94 Jul 01, 14 1.00 233.316 1.695 -. 1,695 - PWTL- Kitts Comer Drain Imp Jul24, 96 Jul 01, 14 1.00 1.166.580 68,155 -. 6&155 - PWTL- Kitts Comer Drain Irnp Sep 04, 97 Jul 01, 14 1.00 155,544 16,389 - 16.389 PWTL- SeaTac Mall Drain htrp May 31, 00 Jul 01, 19 1.00 412,500 96.120 16,020 80,100 PWTL- SeaTac Mall Drain hnp - Aug 14, 00 Jul 01, 19 1.00 2,062,500 480.599 - 80,099 400,500 Subtotal PWTFL - - 4,030,440 662.958 182358 480,600 Compensated absences - - 71,733 97,809 84,650 84,892 Subtotal PWTFL plus compensated absences: 4,030.440 734,691 97,809 267,009 565.492 Grand Total All Long -Term Debt: $ 33,032,740 $ 29,820,903 $ 10,322,071 $ 3,042,581 $37,100,393 On November 26, 2014 the City issued S8,209,906 ofgeneral obligation bond anticipation note with KeyBank with an interest only rate of 1.51 percent and principal due 1210112017. 2The ending 2014 refiatding Community Center bond premium is 3397,176 with current year amortization oj'$] 1,539. 3Debt service principal payments in Debt Service Find include credits of$3I.Wil jram luterlocal ugreemenlwith Federal 11'ai, Fite District to:porticipale in cWtal cost pbligadouswidiValleyCommurnicationsjoitltvet:cure with the City ofF-ederalWa}:. Thr34921housmtdadjusdnentis.duetoreporltngSCOPEdebtat18%debt service allocation to owner cities instead of 17%. Currently the City has an inter -local agreement with Des Moines where they contribute 1 % to the City of Federal May SCORE -Debt. T OUTSTANDING GENERAL OBLIGATION DEBT AND LONGTERM LIABILITIES - BY FUND DECEM BER 31, 2014 Amount Beginning Ending Description Originally Outstanding Amount Amount Outstanding Due within Issued Debt Issued Redeemed Debt one year Governmental Long -Term Debt: General Obligation Bonds: A) 2014 KeyBank Bond Anticipation Note 1 $ $ $ 8,209,960 $ - $ 8,209,960 $ - B) 2013 Refund Ltd/Coinmunity Center 12,415,000 12,250,000 445.000 11.805.000 455.000 Subtotal GO Bonds, 12,415,000 1? 250,000 8,209,960 445.000 20.014.960 455.000 Other Miscellaneous Debt -Intergovernmental: C) 2010 Limited/Valley Comm PDA3 1,065,000 432,000 - 212,000 220,000 220,000 D 2009 SCORE/Special Obligation Bond4 15,522,300 14,826,600 - 358,200 14.468.400 371.700 Subtotal miscellaneous: 16,587,300 15,258,600 570200 14.688.400 591.700 Subtotal GO Bonds plus Misc. 29,002.300 27,508,600 8,209,960 1,015,200 34,703,360 1,046,700 Compensated absences 1.577,612 2,014,302 1.760.373 1.831.541 121.723 Subtotal GO bonds, raise. & comp absences: 29,002,300 29,086,212 10,224262 2.775.573 36.534.901 1-168.423 Business -Type Activities: Enterprise Funds: Public Works Trust Fund Loan 4,030.440 662,958 182-358 480.600 96.120 Subtotal Bus -Type Long -Term Debt 4,030,440 662,958 - 182,358 480,600 96,120 Compensated absences 71,733 97-809 94.650 84.892 5,688 Total Bus-Tvpe plus corn absences LTD: 4,030440 734.691 97-809 267.008 565.492 101 ROR Grant Total All Lone -Term Debt: $ 33.032.740 $ 29.820.903 $ 10322.071 $ 3A42.581 9; 37.100393 S 1.270.231 Crty_af Federal Wai, / 69 SCHEDULEOF CHANGES IN LONG-TERM LIABILITIES PERIOD ENDED DECEMBER 31, 2014 Beginning Ending Outstanding Additions Reductions Outstanding Debt Debt Governmental Activities: General Obligation Bonds $ 12,250,000 $ 8,209,960 $ (445,000) $ 20.014,960 Other -intergovernmental debt 15,258.600 - (570,200) 14,688,400 Coinpensated absences 1.577.612 2.014,302 (1.760.373) 1,831,541 Total Governmental Activities 29,086,212 10,224,262 (2,775,573) 36.534,901 Business -Type Activities: Enterprise Funds Public Works Trust Fund Loan 662,958 - (182,358) 480,600 Compensated absences 71.733 97.809 (84.650) 84,892 Total Business -Type Activities 734,691 97.809 (267.008) 565.492 Total All Funds $ 29,820.903 $ 10,322,071 S (3,042,581) S 37,100,393 SCHEDULE OF DEBT SERVICE REQUH ]UVIENTS TO MATURITY AS OF DECEMBER 31, 2014 Government Activities Business=ly eActivities General Governmental Debt Public Work Trust Fund Grand Total Year Principal Interest Principal Interest Principal Interest P&I 2015 $ 1,046,700 $ 1,089,689 $ 96,120 $ 4,806 $ 11142820 $ 1094,495 $ 2,237,314 2016 856,100 !': 1,0511,845 96,120 3,845 952:220 1:055,689 2,007,909 2017 9,098,160i 1,020,026 96,120 2,884 9,194,280 1,022,909 10,217,189 2018 915,800I 867,368 96,120 1.922 1,011,920 869,291 1,881.210 2019 944,300 838,854 96,120 961 1,040,420 839,816 1,880,235 2020 973.700 809,452 - 973,700 809,452 1.783,152 2021-2025 5,490,100 3,476,236 - 5,490,100 3,476,236 8,966,336 2026-2030 6,541.800 (( 2,484.798 - 6,541.800 2,484,798 %026,598 2031-2035 6,161,9001 1,230.606 - - 6,161,900 1,230,606 7,392,506 2036-2039 2,674,800 233,306 - 2.674,800 233,306 2,908,106 Total $ 34,703,360 $ 13,102,180 $ 480,598 S 14,418 $ 35,183,958 S 13,116,598 $ 48,300,556 Computation of Legal Debt Margin Under Washington State law (RCW 39.36.020), a City may incur general obligation debt for general city purposes in an amount not to exceed 2'/2 percent of the value of all taxable property within the City. State law requires all property to be assessed at 100 percent of its true and fair value. Unlimited tax general obligation debt requires an approving vote of the people, and any election to validate such general obligation debt must have a voter turnout of at least 40 percent of those who voted in the last State general election and of those voting; 60 percent must be in the affirmative. The City Council may, by ordinance, authorize the issuance of limited tax general obligation debt in an amount up to 1.5% of the valuation within the City without a vote of the people. No combination of limited or unlimited tax debt may exceed 7'/2 percent of the valuation. The debt service on unlimited tax debt is secured by excess property tax levies, whereas the debt service on limited tax debt is secured by property taxes collected with the City's councilmanic levy. The City's legally remaining debt capacities as of December 31, 2014 are: General government (no vote required) $ 92,631,358 General government (3/5 majority vote required) 83,190,592 Parks and open space (3/5 majority vote required) 207,976,480 Utilities (3/5 majority vote required) 207,976,480 Total Capacity $ 591,774,910 Citv ofFederal Wav / 70 Compensated Absences The City's liability for accrued vacation and compensatory time balances is recorded in the schedule below. Accrued compensated absences for proprietary fund employees are recorded as liabilities in those funds expected to incur the related future expense. Typically the General Fund has been used to liquidate compensated absences. Governmental Activities: Current portion $ 121,723 Noncurrent portion 1,709,818 Busr,press-Ti' e:Ictivities: Current portion 5,688 Noncurrent portion 79,204 Total Compensated absences $ 1,916,433 Estimated Arbitrage Rebate The Federal Tax Reform Act of 1986 requires issuers of tax-exempt debt of over $5 million to make payments to the United States Treasury of investment interest received at yields that exceed the issuer's tax-exempt borrowing rates. Payments of arbitrage rebate amounts due under these regulations must be made to the U.S. Treasury every five years. The City's estimated rebatable arbitrage amount as of December 31, 2014 is $-0- for its tax-exempt general obligation bond issues subject to the Tax Reform Act issued through that date. NOTE 11— INTERFUND TRANSACTIONS Interfund transfers for the year ended December 31, 2014 were as follows: Interfund Transfers In Out Governmental Funds: General Fund $ 10,619,159 $ 3,641,682 Street Fund 3,600,567 - Utility Tax Fund 1,735,831 13,888,383 Debt Service 25,169 3,217,000 Downtown Redevelopment 300,000 4,209,763 Transportation 1,598,000 5,726,278 Performing Arts & Event Center 9,944,763 - Nonmajor Governmental Funds 12,617,302 7,923,492 Proprietary Funds: Surface Water Management - Dumas Bay Centre 116,000 - Intemal Service Funds 1,764,833 3,715,026 Total: $42,321,624 $42,321,624 The following describes the amounts transferred out during 2014: General Fund: • $3,073,432 to Street Fund to subsidize street maintenance and operations • $34,082 to Information Systems Fund for public defenders case management system • $25,000 to Federal Way Community Center for use of facilities by General Parks and Recreation • $4,000 to Dumas Bay Center for pump station • $25,169 Debt Service Fund for SCORE Bonds • $480,000 to Capital Reserve Fund Utility Tax Fund: • $3,293,000 to General Fund for ongoing support of operations a $600,000 to General Fund for redirect overlay • $607,000 to General Fund for Public Safety Positions • $22,663 to General Fund for Red, Whites & Blues Festival 0 $73,337 to General Fund for Arts Commission Citv o f Federal Wav / 71 • $58,432 to General Fund for Mayor's Office operations • $173,458 to General Fund for Court operations • $42,924 to General Fund for Human Resources operations • $209,952 to General Fund for Law operations • $2,293,556 to General Fund for Police Positions • $37,500 to General Fund for Safecity • $115,482 to General Fund for Parks maintenance and operations • $301,944 to Federal Way Community Center for maintenance and operations • $5,210,000 to PACC CIP project • $300,000 to Downtown Redevelopment CIP project • $224,000 to General Fund for Celebration Park maintenance & operations • $48,000 to General Fund for new Parks maintenance and operations • $165,135 to Street Fund for maintenance and operations • $112,000 to Dumas Bay Centre Fund for Knutzen Family Theatre subsidy Debt Service Fund: • $2,000,000 to Real Estate Excise Tax Fund for reserves $1,217,000 to Real Estate Excise Tax Fund for CIP projects Downtown Redevelopment Fund: $2,000,000 to PACC for LIFT local match • $710,965 to PACC for utility tax balance $1,498,798 to PACC for LIFT sales tax Transportation System Fund: $32,000 to Street Fund for equipment purchase $50,000 to Arterial Street Fund for CIP projects $1,254,670 to Utility Tax Fund for unspent amount from completed projects $4,389,608 to REET Fund for unspent amount from completed project Internal Service: • $30,000 from Risk Management to General Fund for Court Security ■ $1,685,026 from Risk Management to Unemployment Insurance Fund for reserve s $2,000,000 from Risk Management to General Fund for committed strategic opportunity reserve Nonmajor Fund: • $47,212 from Traffic Safety Fund to General Fund for support of Municipal Court • $450,000 from Traffic Safety Fund to General Fund for support of Police Department • $200,000 from Traffic Safety Fund to General Fund for support of 2.0 FIE police offers • $330,000 from Traffic Safety Fund to Street Fund for support of Traffic Services • $50,000 from Traffic Safety Fund to General Fund for support of Nick & Derek DUI patrol • $16,000 from Traffic Safety Fund to General Fund for police downtown substation signage • $6,435 from Traffic Safety Fund to Information System Fund for Police equipment • $39,290 from Traffic Safety Fund to Information System Fund for Police license plate readers • $998,000 from Real Estate Excise Tax (REET) Fund to Arterial Street Fund for street overlay • $1,598,000 from REET Fund to Transportation CIP for 320`h Street @ 20`' Ave South project • $100,000 from REET Fund to Parks CIP for major parks facilities maintenance • $100,000 from REET Fund to Parks CIP for trail and pedestrian access improvement • $100,000 from REET Fund to Parks CIP for Lakota Soccer Field Upgrade • $2,698,751 from REET Fund to Parks CIP for downtown park project • $525,000 from REET Fund to PACC for capital project • $26,643 from CDBG Fund to General Fund for Recreation Inclusive Coordinator • $157,000 from Paths & Trails Fund to Parks CIP for Trail and Pedestrian Access Improvements • $481,161 from City Facility Fund to Utility Tax Fund for unspent amount from completed project Citv o f Federal Wav / 72 Interfund loans for the year ended December 31, 2014 were as follows: Interfund Loans Receivable Payable General Fund $ 10,000 $ Special Revenue Funds: Community Development Block Grant - 10,000 Total Interfund Loans $ 10,000 $ 10,000 NOTE 12 — CONTINGENCIES AND LITIGATION As of December 31, 2014 there were a small number of claims for damages and lawsuits pending against the City. In the opinion of the City Attorney, however, neither the potential liability for any single claim or lawsuit, nor the aggregate potential liability arising from all actions currently pending would materially affect the financial condition of the City. Due to both their uncertainty and immateriality, no liabilities or estimated liabilities have been included in the City's financial statements. NOTE 13 — JOINT VENTURES Valley Communication Center The "Valley Communications Center" was established August 20, 1976, when an Interlocal Agreement was entered into by the four original participating municipal corporations, including the cities of Renton, Kent, Auburn, Tukwila, and Federal Way which was formally admitted in 2000. The agreement is sanctioned by the provisions and terms of the Interlocal Cooperation Act pursuant to RCW 39.34. The initial duration of the agreement was five years, and thereafter was automatically extended for a consecutive five year -period. The purpose of the joint operation, hereafter referred to as Valley Com, is to provide improved consolidated emergency communications (dispatch) services for police, fire, and medical aid, to the five participating cities and to several subscribing agencies, which include King County Fire Districts 2, 20, 26, 40, 43, 44, and 47; City of Pacific Police and Fire Departments, City of Algona Police Department, City of Des Moines Police Department, City of Black Diamond Police and Fire Department; SeaTac Fire Department; North Highline Fire Department; King County EMS Units; and Vashon Island Fire Department. Separate agreements between Valley Com and the subscribing agencies have been executed, which set forth conditions of services and rates charged. The allocation of prorated financial participation among the five member cities is the percentage of dispatched calls attributed to each jurisdiction compared to the total estimated dispatched calls, for the current twelve month period ending December 31. The percentages are applied to the current approved budget, less revenue from all other sources. Distribution of the current year net income is based on the same percentages. The 2014 cost distributions for the five member cities are as follows: Dispatchable Percent City Calls of Total Kent 151,995 28.15% Renton 109,645 20.31% Auburn 119,731 22.17% Tukwila 47,125 8.73% Federal Way 111,474 20.64% Total 539,970 100.00 % Valley Com is governed by an Administration Board, composed of the Mayors or designated representatives from the five participating cities of Renton, Kent, Auburn, Tukwila, and Federal Way. The Administration Board is authorized to establish bylaws that govern procedures of the Board and Valley Com's general operations for the following functions: 1) Budget review and recommendations to the legislative bodies of the member cities, and budget adoption after each legislative body has approved the required financial participation for the ensuing year; 2) Approve appointment and/or discharge of the Director; 3) Approve personnel policy and make final decisions on all major policy changes; and 4) Review and approves all contracts. In addition, an Operating Board was established and consists of two members of each participating City's Public Safety Departments, including the heads of such departments or their designees. The Operating Board performs the following functions: 1) Oversees the general operation of Valley Com, and advises and makes recommendations to the Administration Citv of Federal Wa_v / 73 Board; 2) Make recommendations on Director selection; 3) Presents proposed policies and budgets to the Administration Board; and 4) Reviews disbursements of funds by the Director. The Director presents a proposed budget to the Operating Board on or before August 15 of each year. Said budget is then presented to the Administrative Board by September 1 of each year. The Administration Board can make changes to the proposed Valley Com budget as it finds necessary, but final approval falls to the legislative body of each member city, in accordance with the provisions of the interlocal agreement. In May 1993 Valley Com entered into an agreement with King County to provide joint project management for the acquisition and installation of 800-MHz emergency radio communications system approved by the voters of King County in conjunction with a $57 million levy. In August 1993 Valley Com also entered into an Interlocal Cooperation Agreement with the sub- regions of King County, Seattle, and Eastside Public Safety Communications, which governs the development and installation of the new 800-MHz emergency radio system. Valley Com now provides emergency communication dispatch services to a population of approximately 570,000. Valley Com operates as an enterprise fund and is totally self-supporting through the implementation of user fees, and the primary source of revenue is provided by charges for calls for service. The 800-MHz emergency radio communications system operated by the agreement with King County is operated as a separate enterprise fund, and the Member Cities have no equity interest in the contributed capital from this system. The share of equity belonging to the five participating cities is shown below. Liabilities are the responsibility of the five participating cities in direct proportion to their equity position. Balances in 2014 Kent Renton Auburn Tukwila Federal Way Total Equity @ January 1, 2014 $ 7,378,791 $ 5,240,607 $ 4,959,646 $ 2,927,158 $ 3,508.470 $ 24,014,672 Current year increase 151,995 109,645 119,731 47,125 111,474 539,970 Equity C December 31, 2014 $ 7,530.786 $ 5,350,252 $ 5,079,377 $ 2,974,283 $ 3,619,944 $ 24,554,642 Percent of equity 30.67% 21.79% 20.69% 12.11% 14.74% 100.00% Prior year's percent of equity 30.73% 21.82% 20.65% 12.19% 14.61% 100.00% A complete set of financial statements is available from: Valley Communications Center, 27519 108`h Avenue SE, Kent, WA 98030. South Correction Entity_(S_CORE) The South Correctional Entity (SCORE) consolidated correctional facility was established February 25, 2009, when an Interlocal Agreement (the "Original Interlocal Agreement") was entered into by seven participating municipal governments, the "Member Cities" of Auburn, Burien, Des Moines, Federal Way, Renton, SeaTac and Tukwila, under the authority of the "Interlocal Cooperation Act" (RCW 39.34). This "Original Interlocal Agreement" was amended and restated October 1, 2009 and named the City of Des Moines as the "Host City" and the remaining Member Cities as "Owner Cities". This interlocal agreement is known as the "Formation Interlocal Agreement". Pursuant to a separate "Host City Agreement" dated October 1, 2009, the Host City will not enjoy the same equity position as the Owner Cities until all debts issued are paid and the Host City fulfills all of its obligations as outlined in the Host City Agreement. Pursuant to SCORE financial policies, all unexpected funds or reserve funds shall be distributed based on the percentage of the Member City's average daily population at the SCORE Facility for the last three (3) years regardless of its Owner City or Host City status. SCORE, a governmental administrative agency pursuant to RCW 39.34.030(3), has the power to acquire, construct, own, operate, maintain, equip, and improve a correctional facility known as the "SCORE Facility" and to provide correctional services and functions incidental thereto, for the purpose of detaining arrestees and sentenced offenders in the furtherance of public safety and emergencies within the jurisdiction of the Member Cities. The SCORE Facility may serve the Member Cities and Subscribing Agencies which are in need of correctional facilities. Any agreement with a Subscribing Agency shall be in writing and approved by SCORE as provided within the SCORE Formation Interlocal Agreement. Financing for the acquisition, construction, equipping, and improvement of the SCORE Facility was provided by bonds issued by the South Correctional Entity Facility Public Development Authority (the "SCORE PDA"), a public development authority chartered by the City of Renton pursuant to RCW 35.21.730 through 35.21.755. The SCORE PDA issued $86 million in special obligation bonds in 2009 (the "Bonds") to construct, develop, acquire and equip the SCORE Facility. Pursuant to the Formation Interlocal Agreement and the ordinances of each city, each Owner City (which includes the Cities of Auburn, Burien Federal Way, Renton, SeaTac, and Tukwila) is obligated to budget for and pay its share, and only its share, of the ofFederal Wav / 74 principal of and interest on the Bonds as the same become due and payable. Each Owner City's obligation to pay its portion is an irrevocable, unconditional full faith and credit obligation of such Owner City, payable from property taxes levied within the constitutional and statutory authority provided without a vote of the electors of the Owner City on all of the taxable property within the Owner City and other sources of revenues available therefor. The following is a summary of the debt service re uirements for the Bonds: Summary of Debt Service Requirements Debt Service Schedule Debt Service Allocation to Owner Cities 35% BABs Auburn Burien Federal Way Renton SeaTac Tukwila Year Principal Interest Subsik Total 31% 4% 18% 36% 3% 8% 2015 $ 1,990,000 $ 4,995,069 S (1,514,410) $ 5,470,659 $ 1.695,904 $ 218,826 $ 984,719 $ 1,969,437 $ 164,120 S 437,653 2016 2,065,000 4,911,886 (1,513,594) 5,463,292 1,693,621 218,532 983,393 1,966,785 163,899 437,063 2017 2,145,000 r 4,820,241 (1,503,576) 5,461,665 1,693,116 218.467 983,100 1,966,199 163,850 436,933 2018 2,240,000 r 4,715,979 (1,503,576) 5,452,403 1,690,245 218,096 981.433 1,962,865 163,572 436,192 2019 2,310,000 r 4.602.229 (1,467,237) 5,444,992 1,687,948 217,800 980,099 1,960,197 163,350 435,599 2020-2024 12,905,000 21,102,168 (7,183,090) 26.824.078 8,315,464 1,072,963 4,828.334 9,656,668 804,722 2,145,926 2025-2029 15,675,000 16,833,706 (6.067,796) 26,440,910 8,196,682 1,057,636 4,759,364 9,518,728 793,227 2,115,273 2030-2034 19 265,000 11,158,380 (4,128,483) 26 294,897 8,151,418 1,051.796 4,733,081 9.466,163 788,847 2,103,592 2035-2039 23,775,000 r 4,064,705 (1,697,914) 26,141,791 8,103,955 1,045,672 4,705,522 9,411,045 784,254 2,091,343 Total $ 82,370,000 $77,204,363 $(26,579,676) $ 132,994,687 $ 41,228,353 $ 5,319,788 $ 23,939,045 $47,878,087 $3,989,841 $ 10,639574 *Of the $23,939,045 allocation to Federal Way, $14,468,400 is for the principal portion and the remainder is for interest. The City of Federal Way reports its share of equity interest in the Governmental Activities column within the Government - wide financial statements under non -current assets. The following is condensed (unaudited) financial information as of December 31, 2014 related to SCORE: South Correction Entity (SCORE) 2014 Owner Cities Equity Allocation Member Percent of 2013 2014 city Equity Equity Balance Distribution Equity Balance Auburn 29.00% $ 2,517,237 $ 1,725,997 $ 4,243,234 Burien 3.00% 294,323 221,087 515,410 Des Moines 2.00% 107,970 184.190 292,160 Federal Way 25.00% 1,820,940 1 1,855,784 3,676,724 Renton 29.00% 2,548.219 1,672,186 4,220,405 SeaTac 5.00% 331,708 380,958 712,666 Tukwila 7.00% 601,934 478,536 1,080,470 T.7-T 100.00% I S-8,222,331tS__6318,740 S 14,731,071 A complete set of financial statements is available from: SCORE, 20817 17`h Avenue South, Des Moines, WA 98198. Joint Venture Reconciliation to Government Wide Financial Statements Balance Adj Ball Balance 1/1/2014 Prior Per Adj 1/12014 Additions Reductions 12/31/2014 Valley Communications Public Development Authority $ 432,000 $ - $ (212,000) $ 220,000 SCORE Public Development Authority 14334,400 492 200 14,826.600 - (358,200) $ 14A68,400 Total Balance Due to Other Governments 14,766,400 492200 - (570,200) 14,688,400 Valley Communications Center 3,508,470 111,474 3,619,944 South Correctional Entity (SCORE) 1.820940 1.855.784 - 3.676.724 Total Joint Venture Capital Assets 5,329,410 1,967,258 7296,668 Total Investment in Joint Ventures $ 20,095,810 $ 492,200 $1,967,258 $ (5709200) $ 21,985,068 The $0.49 million adjustment is due to reporting SCORE debt at 18% debt service allocation to owner cities instead of 17%. Currently the City has an inter -local agreement with Des Moines where they contribute 1% to the City of Federal Way SCORE Debt. City of Federal Way / 75 NOTE 14 — SUBSEQUENT EVENT On February 23, 2015 the City issued Request for Qualifications for Master Developer for Federal Way Town Center 3 which includes 7.48 acres of retail office, and residential development opportunities next to the Federal Way Transit Center. The City hired a Performing Arts & Event Center Executive Director on February 2015 to assist with the construction of the Performing Arts & Event Center and manage the center when completed. NOTE 15 — PRIOR PERIOD ADJUSTMENTS Governmental -type activity prior period adjustments of $4,944,409 are required for depreciation adjustment for infrastructure added during GASB 34 implementation that were not depreciated for prior years. This includes depreciation for ACP roads of $3.6 million, sidewalks of $0.31 million, and curbs and gutters of $0.99 million. Governmental Activity Beginning Balance 1/1/2014 Prior Period Adjustment Adjusted Beginning Balance Additions Deletions Ending Balance 12/31/2014 Capital assets, not being depreciated: Land $ 304,177.872 $ - $ 304,177,872 $ 8,729,473 $ - $ 312,907,345 Construction in progress 14,380,488 - 14,380,488 9.186.947 C691,d3i ) 22^, 875,804 Total capital assets, not being depreciated, 318,558,360 318,558,360 17,916,420 (691,631) 335,783,149 Capital assets, being depreciated Buildings 17,268,117 - 17,268,117 139,706 (8,039) 17,399,784 Improvements other than buildings 43,865,580 - 43,865,580 457,531 - 44,323,111 Infrastructure 164,610,040 - 164,610,040 703,434 - 165,313,474 Machinery and equipment 15,640,833 15,640,833 1,141,792 (461,636) 16,320,988 Total capital assets, being depreciated: 241,384,570 - 241,384,570 2,442,463 (469,675) 243,357,357 Less accumulated depreciation for: Buildings (7,441,336) (7,441,336) (917,709) 8,039 (8,351,006) Improvements otherthan buildings (19,316,335) - (19,316,335) (2,141,647) - (21,457,982) Infrastructure (41,135,411) (4,944,409) (46,079,820) (5255,338) - (51,335,158) Machinery and equipment (10,762,730) (10,762,730) (1,205,096) 461,637 (11,506,189) Total accumulated depreciation: (78,655,812) (4,944,409) (83,600,221) (9,519,790) 469,676 (92,650,335) Total assets being depreciated, net 162,728,758 J4,944.40) 157;784;349 (7,077.327) 1 150,707,02-1 Governmental activities capital assets, net $ 481,287,119 $ (4,944,409) $ 476,342,710 $ 10,839,093 $ (691,630) $ 486,490,172 Business -type activity prior period classification adjustments of $40,892,560 and $12,908,033 are due to classification errors in reporting pipes, structures, catch basins, & manholes as improvements other than buildings. Beginning Adjusted Ending Balance Prior Period Beginning Balance Business -Type Activities 1/1/2014 Adjustment Balance Additions Deletions 12/31/2014 Capital assets, not being depreciated: Land $ 10,933,528 $ $ 10,933,528 $ - $ $ 10,933,528 Construction in progress 3,237,352 3,237,352 153,463 3,390,815 Total capital assets, not being depreciated 14,170,880 14,170,880 153,463 14,324,343 Capital assets, being depreciated Buildings 3,600,864 - 3,600,864 - - 3,600,864 Improvements otherthan buildings 47,972,459 (40,892,560) 7,079,899 - - 7,079,899 Infrastructure 1,916,645 40,892.560 42,809,205 - 42,809,205 Machinery and equipment 122,200 122,200 122,200 Total capital assets, being depreciated: 53,612,167 - 53,612,167 - - 53,612,167 Less accumulated depreciation for: Buildings Improvements otherthan buildings Infrastructure Machinery and equipment Total accumulated depreciation: Total assets being depreciated, net Business Type activities capital assets, net [01AwirlininX%l&v (2,980,066) - (2,980,066) (150,742) - (3,130,808) (13,286,649) 12,908,033 (378,616) (69,570) - (448,186) (138,974) (12,908,033) (13,047,007) (430,858) - (13,477.865) (94,310) (94,310) (5,515) - (99,825) (16,499,999) - (16,499,999) (656,685) - (17.156,684) 37,112,168 37,112,168 (656,685) 36,455,483 $ 51283.048 $ $ 51283.048 $ (503,222) $ $ 50,779,826 Operating Leases The City of Federal Way leases the office buildings for the downtown Police substation and WIFI site for operating leases. Total Cost for the leases was $3,720 for the year ended December 31, 2014. The future minimum lease payments for the downtown Police substation leases and WIFI site leases are as follows: Year Enchng December 31 Amount 2015 $ 41,336 2016 41,900 2017 3,500 Total: % 86-736 City of Federal Way / 76 Combining Statement — Nonmajor Governmental Funds' Description For the Year Ended December 31, 2014 $ ecial Revenue Funds Special Revenue funds are used to account for the proceeds of revenue sources (other than special assessments, expendable trusts or major capital projects) that are legally restricted to expenditures for specified purposes. The Arterial Street Fund accounts for the receipt and expenditure of the State -levied motor vehicle fuel tax distributed to the City in accordance with State R.C.W. 82.36.020. These revenues are to be used for the construction, improvement, chip sealing, seal -coating, and repair of arterial highways and city streets, or for the payment of related municipal indebtedness. The Solid Waste/Recycling Fund was established to account for special refuse collection fees used to manage the Solid Waste and Recycling program. The Special Contracts/Studies Fund accounts for receipts and disbursements related to special contracts and special projects where completion will extend beyond the calendar year. The Hotel/Motel Lod&g Tax Fund was established to account for all lodging tax receipts and disbursements related to tourism promotion and acquisition and/or operation of tourism -related facilities. The Federal Way Community Center Fund was established to account for the operation of the community center. The fund is supported by user fees and designated utility tax transfers. The Traffic Safety Fund was established to account for the penalties and fines collected in criminal traffic violations and those related to the operation of the Red Light Photo Enforcement Program. Funds collected for traffic safety shall be used for, but not limited to prevention, education, and enforcement effectors related to traffic safety and compliance with traffic control devices within the city, including maintenance and operation costs. The Real Estate Excise Tax Fund was established to account for the City's real estate excise tax and the transfers to pay for debt and capital projects. The Community Development Block Grant Fund accounts for the receipt and disbursement of federal grant revenue received through the Department of Housing and Urban Development's Community Development Block Grant Program. Separate subsidiary records are maintained to administer the individual projects accounted for in this fund. The Path and Trails Reserve Fund was established in accordance with State law to accumulate unexpended proceeds of the City's ''/z% motor vehicle fuel tax receipts which are restricted in use to the construction and maintenance of paths and trails within City right-of-way. In August 2013, King County voters approved a new $0.1877, six -year, inflation adjusted property tax lid lift to expand park and recreation opportunities. Seven percent of the County levy proceeds will be distributed to cities for acquisition and development of open space and natural lands and city trail projects that support connections to the regional trail system. Capital Projects Fnods The Capital Project Funds account for the acquisition or construction of major capital facilities with the exception of those facilities financed by proprietary and trust funds. The major sources of revenue for this fund are general obligation bond proceeds, grants from other agencies, local taxes and contributions from other funds. The Parks CIP Fund was established to account for receipts and disbursements related to acquisition, design, construction and any other related parks capital project expenditures. The City Facilities CIP Fund accounts for receipts and disbursements related to acquisition, design, construction and any other related municipal facility and community/senior capital project expenditures. The Capital Project Reserve Fund accounts for receipts and disbursements related to acquisition, design, construction and any other related municipal facility and community/senior capital project expenditures. ON o f Federal Wav / 77 COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2014 ASSETS Equity in pooled cash & investments Receivables (net): Taxes Accounts and contracts Due from other governments TOTAL ASSETS LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND Liabilities: Vouchers payable Retainage payable Deposits payable Interfund loans payable Unearned revenue TOTAL LIABILITIES Fund Balance: Restricted Committed TOTAL FUND BALANCES Special Capital Revenue Projects Total $ 9,938,215 $ 5,462,776 $ 15,400,991 274,168 274,168 67,672 67,672 241,035 - 241,035 10,521,090 5,462,776 15,983,866 150,539 55,359 205,898 - 13,883 13,883 22,631 - 22,631 10,000 - 10,000 119,286 - 119,286 302,456 69,242 371,698 4,582,886 4,594,852 9,177,738 5,635,748 798,682 6,434,430 10,218,634 5,393,534 15,612,168 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES $ 10,521,090 $ 5,462,776 $ 15,983,866 City of Federal Way / 78 ASSETS Equity in pooled cash & investments Receivables (net): Taxes Accounts and contracts Due from other governments TOTAL ASSETS LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Vouchers payable Retainage payable Deposits payable Interfund loans payable Unearned revenue TOTAL LIABILITIES COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2014 Special Federal way Arterial Solid Waste Contracts/ Hotel/Motel Community Street Recycling Studies Lodging Tax Center $ 270,212 $ 132,613 $ 435,061 $ 386,490 $ 1,685,566 - - - - 67,672 38,494 81.841 - 13,941 308,706 214,454 435,061 400,431 1,753,238 10,319 - 135 37,852 - - - 22,631 - - - 119,286 10,319 135 179,769 Fund Balance: Restricted - - 435,061 400,296 - Committed 308,706 204,135 1,573,469 TOTAL FUND BALANCES 308.706 204,135 435,061 400,296 1,573,469 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES $ 308,706 $ 214,454 $ 435,061 $ 400,431 $ 1,753,238 City Of Federal Way / 79 COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2014 Real Estate Community Paths and Traffic Excise Tax Development Trails Safety Fund Block Grant Reserve Total ASSETS _ Equity in pooled cash & investments $ 3,552,947 $ 3,276,696 $ 2,696 $ 195,934 $ 9,938,215 Receivables (net): Taxes - 274,168 - - 274,168 Accounts and contracts - - - 67,672 Due from other governments - 106,028 731 241,035 TOTAL ASSETS 3,552,947 3,550,864 108,724 196,665 10,521,090 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Vouchers payable 52,433 49,800 - 150,539 Retainage payable - - - - Deposits payable - - - 22,631 Interfund loans payable - 10,000 - 10,000 Unearned revenue - - - _ 119,286 TOTAL LIABILITIES 52,433 - 59,800 - 302,456 Fund Balance: Restricted - 3,550,864 - 196,665 4,582,886 Committed 3,500,514 48,924 - 5,635,748 TOTAL FUND BALANCES 3,500,514 3,550,864 48,924 196,665 10,218,634 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES $ 3,552,947 $ 3,550,864 $ 108,724 $ 196,665 $10,521,090 City of Federal Way / 80 COMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECTS FUNDS December 31, 2014 City Capital Project Facilities Parks Reserve Total ASSETS Equity in pooled cash & investments $ 201,630 $ 4,780,979 $ 480,167 $ 5,462,776 TOTAL ASSETS 201,630 4,780,979 480,167 5,462,776 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Vouchers payable 1,687 53,672 55,359 Retainage payable - 13,883 13,883 TOTAL LIABILITIES 1,687 67,555 69,242 Fund Balance: Restricted 199,943 4,394,909 - 4,594,852 Committed -- 318,515 480,167 798,682 TOTAL FUND BALANCES 199,943 4,713,424 480,167 5,393,534 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES $ 201,630 $ 4,780,979 $ 480,167 $ 5,462,776 City of Federal Way/ 81 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For Year Ended December 31, 2014 Special Capital Revenue Projects Total REVENUES Taxes $ 2,476,430 $ - $ 2,476,430 Intergovernmental 1,186,538 - 1,186,538 Service charges and fees 1,971,967 107,555 2,079,522 Fines and forfeitures 2,460,189 - 2,460,189 Interest 6,317 3,286 9,603 Other 310,548 70,293 380,841 TOTAL REVENUES 8,411,989 181.134 8,593,123 EXPENDITURES Current: General government 330,332 - 330,332 Security of persons and property 627,788 - 627,788 Transportation 1,415,171 - 1,415,171 Physical environment 461,718 - 461,718 Economic environment 58,786 1,687 60,473 Health 222,027 - 222,027 Culture and recreation 2,177,247 137,798 2,315,045 Capital outlay - 918,643 918,643 TOTAL EXPENDITURES 5,293,069 1,058,128 6,351,197 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 3,118,920 (876,994) 2,241,926 OTHER FINANCING SOURCES (USES) Transfers in 8,981,551 3,635,751 12,617,302 Transfers out (7,442,331) (481,161) (7,923,492) TOTAL OTHER FINANCING SOURCES, (U8E5).- — -L,539,220. 31154,590 4,693,810 NET CHANGE IN FUND BALANCES 4,658,140 2,277,596 6,935,736 FUND BALANCES - BEGINNING 5,560,494 3,115,938 8,676,432 FUND BALANCES - ENDING $ 10,218,634 $ 5,393,534 $ 15,612,168 Citv ofFederal Wav / 82 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For Year Ended December 31, 2014 Special Federal way Arterial Solid Waste Contracts/ Hotel/Motel Community Street Recycling Studies Lodging Tax Center REVENUES Taxes $ - $ $ - $ 231,828 $ Intergovernmental 487,222 146,631 - Service charges and fees 29,000 305,742 119,384 1,517,841 Fines and forfeitures - - - - Interest 124 134 317 220 1,059 Other - 1,585 - 307,360 TOTAL REVENUES 516,346 454,092 119.701 232,048 1,826,260 EXPENDITURES Current: General government - 41,658 - - Security of persons and property - - Transportation 1,415,171 - Physical environment - 461,718 - Economic environment - 58,786 Health - Culture and recreation 2,177,247 Capital outlay - - - - TOTAL EXPENDITURES 1,415,171 461.718 41,658 58.786 2,177,247 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (898.825) (7,626) 78,043 173,262 (350,987) OTHER FINANCING SOURCES (USES) Transfers in 1,048,000 - - 326,944 Transfers out TOTAL OTHER FINANCING SOURCES (USES) 1,048,000 - - 326,944 NET CHANGE IN FUND BALANCES 149,175 (7,626) 78,043 173,262 (24,043) FUND BALANCES - BEGINNING 159,531 211,761 357,018 227,034 1,597,512 FUND BALANCES - ENDING $ 308,706 $ 204,135 S 435,061 $ 400,296 $ 1,573,469 ofFederal Wav / 83 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For Year Ended December 31, 2014 REVENUES Taxes Intergovernmental Service charges and fees Fines and forfeitures Interest Other TOTAL REVENUES EXPENDITURES Current: General government Security of persons and property Transportation Physical environment Economic environment Health Culture and recreation Capital outlay TOTAL EXPENDITURES Real Estate Community Paths and Traffic Excise Tax Development Trails Safety _ Fund Block Grant Reserve Total $ $ 2,062,722 $ - $ 181,880 $ 2,476,430 - 543,436 9,249 1,186,538 - 1,971,967 2,460,189 - - - 2,460,189 2,567 1,286 514 96 6,317 - 1,603 310,548 2,462,756 2,064,008 545,553 191,225 8,411,989 - 288,674 330,332 627,788 627,788 1,415,171 461,718 - 58,786 222,027 222,027 - - 2,177,247 627,788 510.701 - 5,293,069 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 1,834,968 2,064,008 34,852 191,225 3,118,920 OTHER FINANCING SOURCES (USES) Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES - BEGINNING FUND BALANCES - ENDING - 7,606,607 - 8,981,551 (1,138,937) (6,119,751) (26,643) (157,000) (7,442,331) (1,138,937) 1,486,856 (26,643) (157,000) 1,539,220 696,031 3,550,864 8,209 34,225 4,658,140 2,804,483 - 40,715 162.440 5,560,494 $ 3,500,514 $ 3,550,864 $ 48,924 $ 196,665 $ 10,218,634 Cityy o f Federal Way / 84 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR CAPITAL PROJECTS FUNDS For Year Ended December 31, 2014 REVENUES Intergovernmental Service charges and fees Fines and forfeitures Interest Other TOTAL REVENUES EXPENDITURES Current: Economic environment Culture and recreation Capital outlay TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES City Capital Project Facilities Parks Reserve Total 107,555 - 107,555 349 2,770 167 3,286 - 70,293 - 70,293 349 180,618 167 181,134 1,687 - - 1,687 - 137,798 - 137,798 - 918,643 - 918,643 1,687 1,056,441 - 1,058,128 OVER (UNDER) EXPENDITURES (1,338) (875,823) 167 (876,994) OTHER FINANCING SOURCES (USES) Transfers in 3,155,751 480,000 3,635,751 Transfers out (481,161) - - (481,161) TOTAL OTHER FINANCING SOURCES (USES) (481,161) 3,155,751 480,000 3,154,590 NET CHANGE IN FUND BALANCES (482,499) 2,279,928 480,167 2,277,596 FUND BALANCES - BEGINNING 682,442 2,433,496 - 3,115,938 FUND BALANCES - ENDING $ 199,943 $ 4,713,424 $ 480,167 $ 5,393,534 Citv o f Federal Wav / 85 ARTERIAL STREET SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL For Year Ended December 31, 2014 Variance with Budgeted Amounts Final Budget - Positive Orieinal Final Actual Amounts (Negative) REVENUES Intergovernmental $ 486,000 $ 486,000 $ 487,222 $ 1,222 Service charges and fees - - 29,000 29,000 Interest 2.500 2.500 124 (2,376) TOTAL REVENUES 488,500 488,500 516,346 27.846 EXPENDITURES Current: Transportation 1,536,500 1,696,031 1,415,171 280,860 TOTAL EXPENDITURES 1,536,500 1,696,031 1,415,171 280,860 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (1,048,000) (1,207,531) (898,825) 308,706 OTHER FINANCING SOURCES (USES) Transfers in 1,048,000 1,048,000 1,048,000 - TOTAL OTHER FINANCING SOURCES (USES) L048.000 1,048,000 1,048.000 - NET CHANGE IN FUND BALANCES (159,531) 149,175 308,706 FUND BALANCES - BEGINNING 159,531 159,531 - FUND BALANCES - ENDING $ $ - $ 308,706 $ 308,706 Citv ofFederal Wav / 86 SOLID WASTE & RECYCLING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL For Year Ended December 31, 2014 Variance with Budgeted Amounts Final Budget - Positive Original Final Actual Amounts (Negative) REVENUES Intergovernmental $ 156,736 $ 184,017 $ 146,631 $ (37,386) Service charges and fees 287,517 287,517 305,742 18,225 Interest - - 134 134 Other - 1,585 1,585 TOTAL REVENUES 444,253 471,534 454.092 (17.442) EXPENDITURES Current: Physical environment 467,261 499,412 461.718 37,694 TOTAL EXPENDITURES 467,261 499,412 461,718 37.694 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (23,008) (27,878) (7.626) 20,252 NET CHANGE IN FUND BALANCES (23,008) (27,878) (7,626) 20,252 FUND BALANCES - BEGINNING 134,054 211,762 211.761 (1) FUND BALANCES - ENDING S 111.046 $ 183.884 $ 204,135 $ 20,251 City of Federal Way / 87 SPECIAL CONTRACTS/STUDIES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL For Year Ended December 31, 2014 Variance with Budgeted Amounts Final Budget - Positive Original Final Actual Amounts (Negative) REVENUES Service charges and fees $ $ - $ 119,384 $ 119,384 Interest - 317 317 TOTAL REVENUES 119,701 119,701 EXPENDITURES Current: General government 1,600 357.019 41,658 315,361 TOTAL EXPENDITURES 1,600 357.019 41,658 315.361 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (1,600) 357,019) 78.043 435,062 NET CHANGE IN FUND BALANCES (1,600) (357,019) 78,043 435,062 FUND BALANCES - BEGINNING 1.600 357,019 357.018 (1) FUND BALANCES - ENDING $ - $ - $ 435,061 $ 435.061 City o Federal Wav / 88 HOTEL/MOTEL LODGING TAX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL For Year Ended December 31, 2014 Variance with Budgeted Amounts Final Budget - Positive Original Final Actual Amounts (Negative) REVENUES Taxes $ 195,000 $ 195,000 $ 231,828 $ 36,828 Interest 300 300 220 (80) TOTAL REVENUES 195,300 195,300 232,048 36,748 EXPENDITURES Current: Economic environment 195,300 227,034 58,786 168,248 TOTAL EXPENDITURES 195,300 227,034 58,786 168,248 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (31,734) 173,262 204,996 NET CHANGE IN FUND BALANCES (31,734) 173,262 204,996 FUND BALANCES - BEGINNING 227,034 227,034 FUND BALANCES - ENDING $ $ 195,300 $ 400,296 $ 204,996 City o Federal Way / 89 FEDERAL WAY COMMUNITY CENTER SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL For Year Ended December 31, 2014 Variance with Budgeted Amounts Final Budget - Positive _ Orieinal Final Actual Amounts (Negative) REVENUES Intergovernmental - - _ - Service charges and fees $ 1,403,500 $ 1,403,500 $ 1,517,841 $ 114,341 Interest - - 1,059 1,059 Other 215,000 215.000 307,360 92.360 TOTAL REVENUES 1,618,500 1,618,500 1,826,260 207,760 (82,022) EXPENDITURES Current: Culture and recreation 2,197,775 2,208,549 2,177,247 31.302 TOTAL EXPENDITURES 2,197,775 2,208,549 2,177,247 31.302 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 579,275) (590,049) (350,987) 239,062 OTHER FINANCING SOURCES (USES) Transfers in 708,000 579,275 326,944 (252.331) TOTAL OTHER FINANCING SOURCES (USES) 708.000 579,275 326,944 (252,331) NET CHANGE IN FUND BALANCES 128,725 (10,774) (24,043) (13,269) FUND BALANCES - BEGINNING 1,181,264 1,597,514 1,597,512 (2) FUND BALANCES - ENDING $ 1,309,989 $ 1,586,740 $ 1,573,469 $ (13.271) City of Federal Way / 90 TRAFFIC SAFETY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL For Year Ended December 31, 2014 Variance with Budgeted Amounts Final Budget - Positive Original Final Actual Amounts (Negative) REVENUES Fines and forfeitures $ 830,000 $ 1,455,000 S 2,460,189 $ 1,005,189 Interest - - 2,567 2,567 TOTAL REVENUES 830,000 1,455,000 2,462,756 1,007,756 EXPENDITURES Current: Security of persons and property - 625,000 627,788 (2,788) TOTAL EXPENDITURES - 625,000 627,788 (2,788) EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 830,000 830,000 1,834,968 1,004,968 OTHER FINANCING SOURCES (USES) Transfers out (1,030,000) (1,141,725) (1,138,937) 2,788 TOTAL OTHER FINANCING SOURCES (USES) (1,030,000) 1,141 725 1,138,937) 2.788 NET CHANGE IN FUND BALANCES FUND BALANCES - BEGINNING (200,000) (311,725) 696,031 1,007,756 1,255,284 2,804,483 2,804,483 FUND BALANCES - ENDING $ 1,055,284 $ 2,492,758 $ 3,500,514 $ 1,007,756 Cgy o Federal Wav / 91 REAL ESTATE EXCISE TAX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL For Year Ended December 31, 2014 Variance with Budgeted Amounts Final Budget - Positive Original Final Actual Amounts (Negative) REVENUES Taxes $ $ 1,800,000 $ 2,062,722 $ 262,722 Interest - 1,286 1,286 TOTAL REVENUES 1.800.000 2,064,008 264,008 EXPENDITURES Current: TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 1,800.000 2,064,008 264,008 OTHER FINANCING SOURCES (USES) Transfers in 7,606,608 7,606,607 (1) Transfers out (6,119,751) (6,119,751) - TOTAL OTHER FINANCING SOURCES (USES) 1.486.857 1,486,856 (1) NET CHANGE IN FUND BALANCES - 3,286,857 3,550,864 264,007 FUND BALANCES - BEGINNING - - FUND BALANCES - ENDING $ $ 3,286,857 $ 3,550,864 $ 264,007 City o f Federal Way / 92 COMMUNITY DEVELOPMENT BLOCK GRANT SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL For Year Ended December 31, 2014 Variance with Budgeted Amounts Final Budget - Positive Original Final Actual Amounts (Negative) REVENUES Intergovernmental $ 576,000 S 1,178,896 $ 543,436 S (635,460) Interest - - 514 514 Other - - 1.603 1,603 TOTAL REVENUES 576,000 1,178,896 545,553 (633,343) EXPENDITURES Current: General government 108,304 1,081,541 288,674 792,867 Health 467,696 97,355 222,027 (124.6721 TOTAL EXPENDITURES 576,000 1,178,896 51.4,701 668,195 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES - - 34,852 34,852 OTHER FINANCING SOURCES (USES) Transfers out (26.643) (26,643) TOTAL OTHER FINANCING SOURCES (USES) (26.643) (26,643 NET CHANGE IN FUND BALANCES 8,209 8,209 FUND BALANCES - BEGINNING 40,718 40.715 (3) FUND BALANCES - ENDING $ - $ 40,718 $ 48,924 $ 8,206 Citv o f Federal Way / 93 PATH & TRAILS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL For Year Ended December 31, 2014 REVENUES Taxes Intergovernmental Interest TOTAL REVENUES Variance with Budgeted Amounts Final Budget - Positive Original Final Actual Amounts (Negative) $ $ $ 181,880 $ 181,880 9,000 9,000 9,249 249 - 96 96 9.000 9.000 191,225 182.225 EXPENDITURES Current: TOTAL EXPENDITURES - EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 9,000 9,000 191,225 182,225 OTHER FINANCING SOURCES (USES) Transfers out (157.000) (157,000) (157.000) - TOTAL OTHER FINANCING SOURCES (USES) (157.000) (157.000) (157,000) - NET CHANGE IN FUND BALANCES (148,000) (148,000) 34,225 182,225 FUND BALANCES - BEGINNING 168.807 162,439 162,440 1 FUND BALANCES - ENDING $ 20,807 $ 14,439 $ 196,665 $ 182.226 City of Federal Way / 94 Budget and Actual — Debt Service Fund Description For the Year Ended December 31, 2014 The Debt Service Fund accounts for the accumulation of resources for the payment of general obligation and special assessment bond principal, interest and related costs. Revenues for this fund consist of transfers from Real Estate Excise Tax Fund, transfers from the Utility Tax Fund, and/or other revenues designated by the City Council. City o Federal Way / 95 DEBT SERVICE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL For Year Ended December 31, 2014 Variance with Budgeted Amounts Final Budget - Positive Original Final Actual Amounts (Negative) REVENUES Taxes $ 1,400,000 $ - $ - $ - Interest 3.500 1500 2,427 1,073 TOTAL REVENUES 1.403.500 3,500 2,427 1,073) EXPENDITURES Debt service: - Principal 550,200 625,200 963,500 (338,300) Interest/fiscal charges/admin fees 1,525,350 1,370,192 1,021,945 348,247 TOTAL EXPENDITURES 2,075,550 1,995,392 1,985,445 9,947 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (672,050) (1,991,892) 1,983,018) 8,874 OTHER FINANCING SOURCES (USES) Transfers in 1,832,000 - 25,169 25,169 Transfers out (1.217,000) (3,217,000) (3.217.000) - TOTAL OTHER FINANCING SOURCES (USES) 615,000 3,217,000) (3,191,831) 25,169 NET CHANGE IN FUND BALANCES (57,050) (5,208,892) (5,174,849) 34,043 FUND BALANCES - BEGINNING 3,672,286 5,248,336 5.248.336 (0) FUND BALANCES - ENDING $ 3,615,236 $ 39,444 $ 73,486 $ 34,042 City of'Federal Way / 96 Combining Statement — Internal Service Fund's Description For the Year Ended December 31, 2014 Internal Service Funds Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of a government, or to other governments, on a cost -reimbursement basis. The Risk Management Fund accounts for the City's risk financing activities established to minimize adverse effects of losses associated with property and casualty, and worker's compensation claims. Both risk control (to minimize the losses that strike an organization) and risk financing (to obtain finances to provide for or restore the economic damages of those losses) are involved. The City is also currently recovering costs and building reserves for general liability including property, casualty, errors and omissions and fidelity coverage. The Information Systems Fund was established to account for all costs associated with data processing, telecommunications and the Geographical Information System (GIS). This fund will own and depreciate all non-proprietary fund assets related to these functions, and will charge equipment/software users for both maintenance/operating costs and equipment replacement charges based on depreciation schedules. The Support Services Fund will account for duplication, graphics and other general support services provided to departments and funds throughout the City. The Fleet and Equipment Fund accounts for the cost of maintaining City vehicles and other motorized equipment. Rates charged to user departments are based on the full cost of maintaining equipment items, including the recovery of related depreciation expense. The Buildings and Furnishings Fund accounts for all costs associated with the operation and maintenance of specified City buildings. City building facilities and furnishings will be owned by this Fund, and both maintenance/operating costs and depreciation recovery will be charged City departments and funds. The Health Insurance Fund accounts for all self -insuring for medical insurance. The premiums paid by the City's medical benefit contributions and employee medical deductions reimburse the medical and pharmaceutical reimbursements. Also, establish reserves for the payment of estimated future claims. The Unemployment Insurance Fund is currently self -insuring State Unemployment Compensation. Related premiums received by the fund are used to reimburse the unemployment benefits paid to eligible individuals and to establish reserves for the payment of estimated future unemployment claims liability. ON of Federal Way / 97 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET POSITION December 31, 2014 Risk Information Support Fleet and Management Systems Services Equipment ASSETS Current Assets Equity in pooled cash & investments $ 1,354,885 $ 4,016,905 $ 221,255 $ 6,496,220 Prepaid items - - 5,000 TOTAL CURRENT ASSETS 1,354,885 4,016,905 226,255 6,496,220 Noncurrent assets Capital assets: Building/structures Machinery/filniture/equipment 6,687,518 265,084 9,184,384 Less accumulated depreciation (5,374,236) (123,690) (5,824,260) TOTAL NONCURRENT ASSETS 1,313,282 141,394 3,360,124 TOTAL CURRENT ASSETS 1,354,885 5,330,187 367,649 9,856,344 LIABILITIES Current Liabilities: Vouchers/payroll payable 8,586 32,256 7,404 32,824 TOTAL CURRENT LIABILITIES 8,586 32,256 7,404 32,824 Long-term liabilities: Compensated absences payable 45,648 TOTAL LONG-TERM LIABILITIES - 45,648 - - TOTAL LIABILITIES 8,586 77,904 7,404 32,824 NET POSITION Net Investment in capital - 1,313,282 141,394 3,360,124 Unrestricted 1,346,299 3,939,001 218,851 6` 4�396 TOTAL NET POSITION $ 1,346,299 $ 5,252,283 $ 360,245 $ 9,823,520 City o f Federal Way / 98 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET POSITION December 31, 2014 Buildings and Self Health Unemployment Furnishings Insurance Insurance TOTAL ASSETS Current Assets Equity in pooled cash & investments $ 1,854,263 $ 1,147,193 $ 1,912,291 $ 17,003,012 Prepaid items - - - 5,000 TOTAL CURRENT ASSETS 1,854,263 1,147,193 1,912,291 17,008,012 Noncurrent assets Capital assets: Building/structures 16,556,966 - 16,556,966 Machinery/furniture/equipment - - 16,136,986 Less accumulated depreciation (7,901,000) - (19,223,186) TOTAL NONCURRENT ASSETS 8,655,966 - - 13,470,766 TOTAL CURRENT ASSETS 10,510,229 1,147,193 1,912,291 30,478,778 LIABILITIES Current Liabilities: Vouchers/payroll payable 28,892 115,440 - 225,403 TOTAL CURRENT LIABILITIES 28,892 115,440 - 225,403 Long-term liabilities Compensated absences payable - - 45,648 TOTAL LONG-TERM LIABILITIES - - 45,648 TOTAL LIABILITIES 28,892 115,440 - 271,051 NET POSITION Net Investment in capital 8,655,966 - - 13,470,766 Unrestricted 1,825,371 1,031,753 1,912,291 16,736,961 TOTAL NET POSITION $ 10,481,337 $ 1,031,753 $ 1,912,291 $ 30,207,727 City o Federal Wav / 99 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION For Year Ended December 31.2014 Risk Information Support Fleet and Mnnalkcm(,tin Systems Services Equipment OPERATING REVENUES: Service charges and fees $ 529,255 $ 2,059,709 $ 131,333 $ 2,193,642 Intergovernmental - - Miscellaneous 41,775 10,258 TOTAL OPERATING REVENUES 571,030 2,069.967 131,333 2,193A42 OPERATING EXPENSES: Personal services - 751,100 31,036 Materials and supplies - 241,541 20,184 459,577 Services and charges 38,873 689,796 76,304 428,176 Intergovernmental 6,990 125,831 49 Insurance 556,819 Claims 553,567 - - - Depreciation - 42' 891 29,115 753,092 TOTAL OPERATING EXPENSES 1.156 249 2 231-159 125,603 1.671 030 OPERATING INCOME (LOSS) (585,219) (161,192) 5,730 521,712 NON -OPERATING REVENUES (EXPENSES): Gain (Loss) from disposal of capital assets - - - 41,437 Interest income 2,054 3,051 177 4,796 TOTAL NON -OPERATING REVENUES (EXPENSES) 2,054 3,051 177 46,233 INCOME ()OSS) BEFORE TRANSFERS (583,165) (138,1411 5,907 567..945 Capital contributions - - 44,613 Transfers in 79,807 - Transfers out i3.713,026) CHANGE IN NET POSITION (4,298,191) (78,334) 5,907 612,558 NET POSITION - BEGINNING 5,644,490 5.330,617 354,337 9,210,962 NET POSITION - ENDING 5 1.340.299 S 5252.283 S 360-145 5 9,823,520 Cam° o Federal Way / 100 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION For Year Ended December 31, 2014 Buildings and Health Unemployment Furnishings Insurnnoc Insumice TOTAL OPERATING REVENUES: Service charges and fees $ 514,273 $ 4,178,121 $ 242,207 $ 9,848,540 Intergovernmental - - - - Miscellaneous 52,033 TOTAL OPERATING REVENUES 514,273 4,178,121 242,207 9,900,573 OPERATING EXPENSES: Personal services 32,659 - - 814,795 Materials and supplies 50,201 - - 771,503 Services and charges 318,151 3,117,551 15,590 4,684,441 Intergovernmental - 29,248 - 162,118 Insurance 556,819 Claims - - 553,567 Depreciation 906,054 2,111,152 TOTAL OPERATING EXPENSES 1,307,065 3,146,799 15,590 9,654,395 OPERATING INCOME (LOSS) (792,792) 1,031,322 226,617 246,178 NON -OPERATING REVENUES (EXPENSES): Gain (Loss) from disposal of capital assets - - - 41,437 Interest income 1,378 431 647 12,534 TOTAL NON -OPERATING REVENUES (EXPENSES) 1,378 431 647 53,971 INCOME (LOSS) BEFORE TRANSFERS {791.4I4) 1.031,753 227,264 3K149 Capital contributions 31,006 - - 75,619 Transfers in - 1,685,027 1,764,834 Transfers out (3,715,026) CHANGE IN NET POSITION (760,408) 1,031,753 1,912,291 (1,574,424) NET POSITION - BEGINNING 11,241,745 31,782,151 NET POSITION - ENDING $ 10,481,337 $ 1,031,753 $ 1,912,291 $ 30,207,727 City of Federal Way/ 101 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS For Year Ended December 31, 2014 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from users Cash payments to claimants Cash payments to suppliers for goods/services Cash payments to employees Cash payments to other governments for goods and services Other operating receipts NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers in Transfers out NET CASH PROVIDED BY NONCAPITAL FINANCING CASH FLOWS FROM CAPITAL AND CAPITAL - RELATED FINANCING ACTIVITIES: Acquisition of capital asset/construction work in progress Proceeds from the sale of capital assets NET CASH USED FOR CAPITAL AND CAPITAL - RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Receipts of interest NET CASH PROVIDED BY INVESTING ACTIVITIES NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating Income/(loss) Adjustments to reconcile operating income to net cash provided/(used) by operating activities: Depreciation expenses Increases/(decrease)in vouchers/accounts payable Increases/(decrease) in accrued payroll/compensated absences payable TOTAL ADJUSTMENTS NET CASH PROVIDED/USED BY OPERATING ACTIVITIES Non -cash investing, capital, and financing activities: Other contributions of capital assets Risk Information Support Fleet and Management Systems Services Equipment $ 529,259 $ 2,059,709 $ 131,333 $ 2,193,642 (553,567) - - - (81,360) (946,880) (93,844) (944,061) - (750,862) - (31,036) (563,809) (125,831) - 41,775 10,258 - (627,703) 246,395 37,489 1,218,545 79,807 - (3,715,026) - (3,715,026) 79,807 (198,512) (30,695) (867,972) 41,437 (198,512) (30,695) (826,536) 2,046 3,054 181 4,796 2,046 3,054 181 4,796 (4,340,682) 130,744 6,975 396,805 5,695,567 3,886,161 214280 6,099,415 1,354,885 4,016,905 2121,255 6,496,220 (585,216) (161,191) 5,730 521,711 - 422,891 29,115 753,092 (42,487) (15,543) 2,644 (56,259) 238 - - (42,487) 407,586 31,759 696,833 S (627,703) $ 246,395 $ 37,489 $ 1,218,545 $ - $ - $ - $ 44,613 City o f Federal Way / 102 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS For Year Ended December 31, 2014 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from users Cash payments to claimants Cash payments to suppliers for goods/services Cash payments to employees Cash payments to other governments for goods and services Other operating receipts NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers in Transfers out NET CASH PROVIDED BY NONCAPITAL FINANCING CASH FLOWS FROM CAPITAL AND CAPITAL - RELATED FINANCING ACTIVITIES: Acquisition of capital asset/construction work in progress Proceeds from the sale of capital assets NET CASH USED FOR CAPITAL AND CAPITAL - RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Receipts of interest NET CASH PROVIDED BY INVESTING ACTIVITIES NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating Income/(loss) Adjustments to reconcile operating income to net cash provided/(used) by operating activities: Depreciation expenses Increases/(decrease)in vouchers/accounts payable Increases/(decrease) in accrued payroll/compensated absences payable TOTAL ADJUSTMENTS NET CASH PROVIDED/USED BY OPERATING ACTIVITIES Non -cash investing, capital, and financing activities: Other contributions of capital assets Buildings and Health Unemployment Furnishings Insurance Insurance TOTAL S 514,273 $ 4,178,121 $ 242,207 $ 9,848,543 - - - (553,567) (412,431) (3,002,111) (15,590) (5,496,276) (32,659) (814,556) (29,248) (718,888) - - 52,033 69,184 1,146,762 226,618 25317,289 1,685,026 1,764,833 - (3,715,026) 1,685,026 (1,950,193) (1,097,179) 41,437 (1,055,742) 1,379 431 647 12,535 1,379 431 647 12,535 70,563 1,147,193 1,912,291 (676,111) 1,783,700 17,679,123 1,854,263 1,147,193 1,912,291 17,003,012 (792,791) 1,031,322 226,618 246,182 906,054 - 2,111,152 (44,079) 115,440 - (40,283) - - - 238 861,975 115,440 - 2,071,107 $ 69,184 $ 1,146,762 $ 226,618 $ 2,317,289 $ - $ $ - $ 44,613 City of Federal Way / 103 SUPPLEMENTAL INFORMATION ON o f Federal Wav / 104 MCAG NO. 0711 SCHEDULE 15 CITY OF FEDERAL WAY, WASHINGTON SCHEDULE OF STATE FINANCIAL ASSISTANCE For Year Ended December 31, 2014 State Agency Pass-Thru Agency (if applicable) Other I.D./ Current Year Program Title BARS Account Grant # Expenditures Washington Office of Sheriffs and Police Chiefs Wa Auto Theft Prevention Authority Grant 001-0000-090-334-06-090 n/a 112.234 SUBTOTAL WASHINGTON OFFICE OF SHERIFFS AND POLICE CHIEFS 112,234 State Department of Ecology Coordinated Prevention Grant 106-0000-000-334-03-010 n/a 53,862 5tormwater Retrofit LID Grant 304-3100-267-334-03-010 n/a 146,293 Freshwater Algae Control Project 401-0000-000-334-03-010 n/a 1,882 2013-15 Municipal Stormwater Capacity Grant 401-0000-000-334-03-010 n/a 136,023 SUBTOTAL STATE DEPARTMENT OF ECOLOGY 338.059 Office of Public Defense Public Defender Grant 001-0000-020-334-01-200 n/a 23.000 SUBTOTAL OFFICE OF PUBLIC DEFENSE 23,000 State Military Department FEMA - Military Department Grant 101-0000-000-334-01-080 n/a - SUBTOTAL STATE MILITARY DEPARTMENT State Department of Transportation Commute Trip Reduction 101-0000-000-334-03-060 n/a 17,175 21 st Ave SW @ SW 336th St Intersection Improvements 306-4400-170-334-03-080 n/a 714,913 SUBTOTAL STATE DEPARTMENT OF TRANSPORTATION 732.088 TOTAL STATE/LOCAL ASSISTANCE: 1.205.381 City of Federal Way / 105 MCAG NO. 0711 SCHEDULE 16 CITY OF FEDERAL WAY, WASHINGTON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For Year Ended December 31, 2014 Federal Agency Current Pass- ThruAgency if applicable CFDA Other Year Federal Program Name BARS Account # I.D. # Expenditures US Department of Housing and Urban Development Office of Community Planning and Development Pass-thru King Coun! Community Development Block Grants/Entitlement Grants 119-7300-961-331-14-218 14.218 961 74,908 Community Development Block Grants/Entitlement Grants 119-7300-966-331-14-218 14 218 966 26,643 Community Development Block Grants/Entitlement Grants 119-7300-967-331-14-218 14 218 967 23,434 Community Development Block Grants/Entitlement Grants 119-7300-972-331-14-218 14 218 972 17,178 Community Development Block Grants/Entitlement Grants 119-7300-974-331-14-218 14 218 974 17,178 Community Development Block Grants/Entitlement Grants 119-7300-993-331-14-218 14 218 993 9,625 Community Development Block Grants/Entitlement Grants 119-7300-994-331-14-218 14.218 994 72,620 Community Development Block Grants/Entitlement Grants 119-7300-996-331-14-218 14.218 996 136,167 Community Development Block Grants/Entitlement Grants 119-7300-997-331-14-218 14 218 997 12,178 8U1310TAL CFDA 14.218 REFER TO NOTE 2 389.931 US Department of Housing and Urban Development Office of Community Planning and Development Pass-thru Washington State Department of Commerce Community Development Block Grants/State's program and Non- 119-7300-992-333-14-228 14 228 992 152,059 Entitlement Grants in Hawaii SUBTOTAL CFDA 14.228 REFER TO NOTE 2 152,059 US Department of Transportation National Highway Traffic Safety Administration Pass-thru Washington Traffic SaIety Commission State and Communilly Hi hwav Safety 0 0 1 -0000-090-333-20-600 20.600 DHGN 20.173 SUBTOTAL CFDA 20,600 REFER TO NOTE 2 20,173 US Department of Justice Bureau of Justice Assistance State Criminal Alien Assistance Program 001-0000-090-331-16-606 16 606 SCAAP 4,073 SUBTOTAL CFDA 16.606 REFER TO NOTE 2 4,073 US Department of Justice Bureau of Justice Assistance Bullet roof Vest Partnership Program 001-0000-090-331-16-607 16607 BPV 5,619 SUBTOTAL CFDA 16.607 REFER TO NOTE 2 5,619 US Department of Justice Bureau of Justice Assistance Edward Byrne Memorial Justice Assistance Grant 001-0000-090-331-16-738 16 738 2010-DJ-BX-0624 34,082 Edward Byrne Memorial Justice Assistance Grant 001-0000-090-333-16-738 16 738 2012-DJ-BX-0526 19,670 Edward Byrne Memorial Justice Assistance Grant 001-0000-090-333-16-736 16.738 2013-DJ-BX-0715 5.666 SUBTOTAL CFDA 16,738 REFER TO NOTE 2 59.418 US Department of Justice Office of Community Oriented Policing Services Public Safetv Partnership and Community Policing Grant 001-0000-090-331-16-710 16.710 #2010UMWX0338 78.206 SUBTOTAL CFDA 16.710 REFER TO NOTE 2 78.206 US Department of Transportation Federal Highway Administration Pass-thru Washington State DOT Highway Planning and Construction 306-4400-156-333-20-050 20 205 STPUL-1020(010) 2,931 Highway Planning and Construction 306-4400-165-333-20-050 20 205 STPUL-0099(126) 711,711 Highway Planning and Construction 306-4400-183-333-20-050 20 205 SRTS-1040(003) 22,953 Highway Planning and Construction 306-4400-184-333-20-050 20 205 HSIP-0005(308) 514,804 Highway Planning and Construction 306-4400-185-333-20-050 20 205 HSIP-1020(011) 229,482 Highway Planning and Construction 306-4400-186-333-20-050 20.205 HSIP-0099(123) 116,522 Highway Planning and Construction 306-4400-187-333-20-050 20 205 STPUL-1020(012) 1,002,285 Highway Planning and Construction 306-4400-189-333-20-050 20205 SRTS-0443(007) 207,651 Highway Planning and Construction 306-4400-190-333-20-050 20.205 SRTS-0443(066) 592,022 SUBTOTAL CFDA 20.205 REFER TO NOTE 2 3.400.361 US Department of Homeland Security Pass-thru Military Department FEMA Grant 101-0000-000-333-97-036 97.036 nla - Emeroencv Manaaement Performance Grant 101-0000-000-333-97-042 97.042 nla 36.793 SUBTOTAL CFDA 97.042 REFER TO NOTE 2 36.793 TOTAL FEDERAL ASSISTANCE: 4.146.633 Citv o f Federal Wav / 106 lote I. -BASIS OF ACCOUNTING he Schedule of Financial Assistance is prepared on the same basis of accounting as the City of Federal Way's financial statements. he City uses the modified accrual basis of accounting for governmental funds and the full accrual basis of accounting for enterpise funds. R grants reported on this schedule have been accounted for in governmental fund types. Grant revenues are determined to be earned nd available at the time related expenditures are incurred. For this reason, grant revenues to be received as reimbursement for expenditures icurred in the current year are also recognized as revenue in that year. Note 2.- Program Costs The amounts shown as current year expenditures represent only the federal grant portion of the program cost. Actual program costs including City's portion may be more than shown. Note 3.- Not applicable (n/a) The City was unable to obtain other identification numbers. Citv ofFederal Wav / 107 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS City of Federal Way / 108 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS COMPARATIVE SCHEDULE BY SOURCE December 31, 2014 GOVERNMENTAL FUNDS CAPITAL ASSETS Land Buildings Improvements other than buildings Machinery and equipment Infrastructure Construction in progress TOTAL GOVERNMENTAL FUNDS CAPITAL ASSETS INVESTMENTS IN GOVERNMENTAL FUNDS CAPITAL ASSETS BY SOURCE: General Fund Special Revenue Funds Capital Project Funds Donations TOTAL GOVERNMENTAL FUNDS CAPITAL ASSETS 2014 2013 $ 312,907,345 $304,177,872 842,818 734,118 44,323,111 43,865,580 184,000 184,000 165, 313,474 164,610,040 22, 875, 804 14,3 80,48 8 546,446,552 527,952,098 125,244, 871 125,244, 871 252,375,395 252,375,395 135,202,658 123,192,004 33,623,628 27,139,828 $ 546,446,552 $ 527,952,098 This schedule presents only the historical cost of capital asset balances (no depreciation expenses) related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of the internal service funds are included as governmental activities in the statement of net assets. City of Federal Way / 109 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE BY FUNCTION AND ACTIVITY December 31.2014 Improvements Machinery Construction Other than and in Total Total Function and Activity Land Buildings Buildings Equipment Infrastructure Proaress 2014 2013 GENERAL GOVERNMENT Miscellaneous generalgoverrunent $ 26,807,597 $ $ 19,973 $184,000 $ 6,139,001 $ 3,007,083 $ 36,157,654 $25,914,890 Total General Government: 26,807,597 - 19,973 184,000 6,139,001 3,007,083 36,157,654 25,914,890 CULTURE AND RECREATION Culture and Recreation _ 121,010,297 842,818 44,303,138 94,474,128 3,487,792 264,118,173 263,090,831 Total Culture and Recreation: 121,010,297 842,818 44,303,138 - 94,474,128 3,487,792 264,118,173 263,090,831 TRANSPORTATION Streets and Traffic 165,089,451 - 64,700,345 16,380,929 246,170,725 238,946,377 Total Transportation: 165,089,451 64,700,345 16,380,929 246,170,725 238,946,377 Total General Fixed Asset by Function: $312,907,345 $ 842,818 $ 44,323,111 $184,000 $165,313,474 $ 22,875,804 $546,446,552 $527,952,098 This schedule presents only the historical cost of capital asset balances (no depreciation expenses) related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of the internal service funds are included as governmental activities in the statement of net assets. Ciri: of Federal Wau / 110 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITY For the Year Ended December 31, 2014 Governmental Governmental Funds Funds Capital Assets Capital Assets 1/1/2014 Additions Deductions 12/31/2014 GENERAL GOVERNMENT Miscellaneous general government TOTAL GENERAL GOVERNMENT CULTURE AND RECREATION TOTAL CULTURE AND RECREATION TRANSPORTATION Streets and traffic TOTAL TRANSPORTATION TOTAL GENERAL FIXED ASSETS $ 25,914,890 $ 10,242,764 $ $ 36,157,654 25,914,890 10,242,764 36,157,654 263,090,831 1,027,342 - 264,118,173 263,090,831 1,027,342 - 264,118,173 238,946,377 7,224,348 - 246,170,725 238,946,377 7,224,348 - 246,170,725 $ 527,952,098 $ 18,494,454 $ . $ 546,446,552 This schedule presents only the historical cost of capital asset balances (no depreciation expenses) related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of the internal service funds are included as governmental activities in the statement of net assets. City of Federal Wav / I I I Statistical Section The statistical section presents detailed information as a context for understanding what the information in the financial statements and note disclosures say about the City's overall financial health. The following are the five categories of information presented in this section. Financial Trends — These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. Revenue Capacity — These schedules contain information to help the reader assess the City's most significant local revenue sources, property tax and sales tax. Debt Capacity — These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Demographic and Economic Information — These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place. Operating Information — These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the city provides and the activities it performs. City o f federal Wav / 112 NET POSITION BY COMPONENT Last Seven Fiscal Years 2008 2009 2010 2011 2012 2013 2014 Governmental activities Net investment in capital assets $ 456,600,030 $442,704,401 465,671,345 470,074,905 470,597,776 468,628,412 466,078,036 Restricted 28,434,066 27,476,530 17,442,323 23,941,601 22,847,077 22,594,884 17,391,272 Unrestricted 24.773.913 44.282,822 44,613-406 38,602.445 45,027,323 48.829.641 57.837.173 Total governmental activities net position 509,808,009 514,463,753 527,727,074 532,618,951 538,472,176 540,052 936 541,306,481 Business -type activities Net investment in capital assets 50,494,590 50,578,649 50,563,097 50,052,887 50,280,880 50,620,091 50,299,229 Restricted 42,558 16,366 9,411 18,831 26,496 20,559 20,311 Unrestricted 5.071,617 5,115-275 5.015,367 5,39i ,786 5,968,302 6,577.269 72 € 9AM Total business -type activities net position 55,608,765 55,710,290 55,587,875 55,470,504 56,275,678 57,217,919 57.538.943 Primary government Net investment in capital assets 507,094,620 493,283,050 516,234,442 520,127,792 520,878,656 519,248,503 516,377,265 Restricted 28,476,624 27,492,896 17,451,734 23,960,432 22,873,573 22,615,443 17,411,583 Unrestricted 29,845,530 49,398,097 49,628,773 44,001,231 50,995,625 55,406,910 65,056,576 Total primary government net assets $ 565,416,774 $ 570,174,043 $ 583,314,949 $ 588,089,455 $ 594,747,853 $ 597,270,856 $ 598,845,424 Source: City of Federal Way Finance Note: All amounts are reported on the accrual basis. City o f Federal Way / 113 Expenses Governmental activities: General government Security of persons and property Transportation Physical environment Economic environment Health and human svcs Culture and recreation Interest on long -tern debt Total governmental activities expenses CHANGES IN NET POSITION Last Seven Fiscal Years 2008 7009 2010 2011 2012 2013 20I4 $5,606,797 $4,566,457 $ 4,865,827 $ 4,448,449 $ 4,300,691 $ 4,575,614 $ 4,633,942 24,745,284 26,341,614 26,842,240 27,222,584 27,604,936 27,894,695 29,703,386 7,891,298 9,448,397 9,781,800 13,539,598 9,946,776 9,675,727 11,434,659 370,718 450,914 451,470 424,466 415,935 490,916 443,127 3,382,572 3,560,620 3,175,005 2,782,435 2,645,478 2,191,487 2,785,807 705,976 776,854 767,108 690,643 754,727 1,683,449 1,056,802 6,955,442 8,089,242 8,073,804 8,105,578 8,081,401 8,418,920 8,376,205 901,16.1 $11,124 685,114 614.571 602,572 1.770,833 1,010,406 50,559,248 54,045.2-_)) 54,642,468 57.828,324 54,352,511 56,710,640 59,444,335 Business -type activities: Surface Water Mgmt 4,060,440 3,345,027 3,384,352 3,527,590 3,272,514 3,234,742 3,653,999 Dumas Bay Center 1.045,250 984,103 949,176 990,738 873,144 844,623 945.705 Total business -type activities expenses 5,105,690 4,329,130 4,233,528 4,418 328 4,145 658 4,079,365 4,599,763 Total primary government expenseE 55.664.938 58.374.352 58.875.996 .62.246,652 58A98,175 60,790.005 64,044,038 Program Revenues Governmental activities: Charges for services General Government $2,313,939 $873,258 975,515 816,140 924,966 1,983,033 2,118,896 Security of Persons & Property 2,309,406 5,037,388 5,381,407 4,985,320 5,937,100 5,022,896 4,637,071 Transportation 513,340 1,806,846 1,961,083 2,484,058 2,139,292 577,489 1,804,199 Physical Environment 262,847 86,230 90,512 77,875 89,457 299,337 305,742 Economic Environment 1,962,624 680,908 636,534 510,483 568,973 2,201,375 3,059,772 Health - 148,579 153,792 126,710 162,322 - - Culture & Recreation 2,561,685 1,546,931 1,618,659 1,487,099 1,738,098 2,431,603 2,476,383 Operating grants and contributions 1,538,476 2,172,168 9,718,920 4,597,981 5,367,163 6,007,682 5,410,098 Capital grants and contributions 8.933,154 8,452,149 9,044,477 9.716,551 5.225,265 3,892,651 5,632,549 Total governmental activities program revenues 20,395,471 20,804,457 29.580,898 24,80Z216 22,152,636 22,416,065 25 444,710 Business -type activities: Charges for services 4,473,453 4,183,012 4,246,235 4,020,144 4,222,726 4,096,751 4,174,613 Operating grants and contributions - - - 265,660 576,182 774,436 607,608 Capital grants and contributions - - - - Total business -type activities program revenues 4,473.453 4.183,012 4246,235 4.285,804 4,798.908 4,871,187 4,782,221 24,868.924 24,987469 33,81-7,133 29,088,020 26.951,544 27 287,252 30,226,931 Net(Expense)/Revenue Governmental activities (30,163,777) (33,240,765) (25,061,570) (33,026,108) (32,199,881) (34,294,574) (33,999,625) Business -type activities (632,237) (146,118) 12,707 (132,524) 653,250 791,822 182,517 General Revenues and Other Changes in Net Position Governmental activities: Taxes Sales tax 12,144,276 10,583,298 10,708,951 10,858,381 10,534,147 11,346,338 12,173,281 Local Criminal Justice Sales Tax 2,051,524 1,743,893 1,701,120 1,795,971 1,864,991 1,992,667 2,138,406 Utility tax 13,469,136 13,549,472 12,890,310 13,068,510 13,083,179 12,584,293 12,028,878 Property tax 9,397,456 9,653,537 9,609,740 9,867,614 10,052,109 10,152,114 10,349,905 Real estate excise tax 2,590,310 1,428,985 1,403,361 1,560,395 1,507,313 2,034,033 2,062,722 Gambling Tax 1,259,783 1,127,203 493,486 511,005 114,443 178,696 176,068 Hotel/MotelTax 188,833 154,148 149,058 185,289 193,344 208,839 231,828 Leasehold tax 5,712 4,999 5,757 6,259 5,820 5,989 6,693 Other 6,502,869 2,020,751 1,210,341 1,061,026 838,259 868,261 1,145,798 Transfers 123,518 200,907 152,768 (113,000) 14fl 5001 137AI9) (116,000 Total governmental activities 47,733,417 40,065,379 38,324,892 38,801,450 38,053,106 39,233,811 40,197,580 Business -type activities Other 3,447,458 46,736 17,646 12,405 11,424 13,000 22,507 Transfers (123,518) 200,907 (152,768) 113,000 140,500 137,419 1_1_6,(M. Total business -type activities 3,323,940 247.643 (1355122) 125,405 151,924 150,419 139,507 Total primary government 551,057,357 540,313,022 S 38,189,770 $ 38,926,955 S 38,205.030 $ 39,384,230 S 40,336,087 Change in Net Position Governmental activities $17,569,640 $ 6,824,613 $ 13,263,321 $ 5,775,342 $ 5,853,224 $ 4,939,237 $ 6,197,955 Business -type activities 2,691,703 101,525 (122,415) (7,119) 805,174 942,241 321,025 Prior Period Adjustment (1,722,939) (2,169,769) - - - (3,358,477) (4,944,409) Total primary government $18,538,404 $ 4,757,370 $ 13,140,907 $ 5,768,223 $ 6,658,398 $ 2,523,001 S 1,574,570 Source: City of Federal Way Finance Note: All amounts are reported on the accrual basis City of Federal Way / 114 GOVERNMENT -WIDE REVENUES BY SOURCE AND EXPENDITURES BY FUNCTION Last Seven Fiscal Years 2008 2009 2010 2011 2012 2013 2014 Program Revenues Charges for Services $14,397,294 $14,363,151 15,063,736 14,507,828 15,782,934 16,612,484 18,576,675 Operating Grants and Contributions 1,538,476 2,172,168 9,718,920 4,863,641 5,943,345 6,782,118 6,017,706 Capital Grants and Contributions 8,933,154 8,452,149 9,044,477 9,716,551 5,225,265 3,892,651 5,632,549 General revenues Sales tax 12,144,276 10,583,298 10,708,951 10,858,381 10,534,147 11,346,338 12,173,281 Local Criminal Justice Sales Tax 2,051,524 1,743,893 1,701,120 1,795,971 1,864,991 1,992,667 2,138,406 Utility tax 13,469,136 13,549,472 12,890,310 13,068,510 13,083,179 12,584,293 12,028,878 Property tax 9,397,456 9,653,537 9,609,740 9,867,614 10,052,109 10,152,114 10,349,905 Real estate excise tax 2,590,310 1,428,985 1,403,361 1,560,395 1,507,313 2,034,033 2,062,722 Gambling Tax 1,259,783 1,127,203 493,486 511,005 114,443 178,696 176,068 Hotel/Motel Tax 188,833 154,148 149,058 185,289 193,344 208,839 231,828 Leasehold tax 5,712 4,999 5,757 6,259 5,820 5,989 6,693 Other revenue 875,389 1,421,791 1,063,825 960,012 702,833 596,504 883,549 Unrestricted Grants & Contribution 7,448,783 284,350 - - - - Investment Earnings 1,678,292 385,976 179,373 113,419 146,850 284,757 284,757 Disposition ofcapital assets (52.137) (24.630) (15211)_ Total Revenues 75,926,281 65,300,490 72,016,903 68.014.875 65,156573 66.671.482 70,563.017 Expenses/Expenditures General Government 5,606,797 4,566,457 4,865,827 4,448,449 4,300,691 4,575,614 4,633,942 Security of Persons & Property 24,745,284 26,341,614 26,842,240 27,222,584 27,604,936 27,894,695 29,703,386 Transportation 7,891,298 9,448,397 9,781,800 13,539,598 9,946,776 9,675,727 11,434,659 Physical Environment 370,718 450,914 451,470 424,466 415,935 490,916 443,127 Economic Environment 3,382,572 3,560,620 3,175,005 2,782,435 2,645,478 2,191,487 2,785,807 Health 705,976 776,954 767,108 690,643 754,727 1,683,449 1,056,802 Culture & Recreation 6,955,442 8,089,242 8,073,804 8,105,578 8,081,401 8,418,920 8,376,205 Interest on long-term debt 901,161 811,124 685,214 614,571 602,572 1,779,833 1,010,406 Surface Water Management 4,060,440 3,345,027 3,384,352 3,527,590 3,272,514 3,234,742 3,653,999 Dumas Bay Centre 1.045,250 984.103 849,176 890.738 873.144 944.623 945.705 Total Expenses/Expenditures $55.664.938 $58.374.452 $58.875,996 $ 62 246,652 5 58.4%,175 5 60.790,1105 S 64.044,038 Source: City of Federal Way Finance City o f Federal Way / 11 S _ General fund Reserved Unreserved Nonspendable Restricted Committed Unassigned Total general fund All Other Governmental Funds Reserved Unreserved, reported in: Special revenue funds Capital projects funds Restricted Committed Assigned Unassigned Total all other governmental funds FUND BALANCES OF GOVERNMENTAL FUNDS Last Seven Fiscal Years 2008 2009 2010 2011 2012 2013 2014 418,207 106,728- 5,511,440 8,138,468 - - - - - - 81,146 104,012 69,398 76,538 105,417 - 168,398 145,524 60,585 39,081 54,526 - 21,893 21,893 21,893 3,403,937 8,188,575 12,372,719 14.783.219 16,003,076 12.480.539 5,929,647 8,245,196 8,438,119 12,644,148 14,935,095 16,140,587 16,044,418 1,763,667 4,770,399 - - 7,505,799 4,311,238 - - - - 26,252,192 22,934,356 - - - - - - - 17,776,967 19,325,489 18,079,168 17,478,394 17,231,330 18,611,612 11,642,248 15,813,105 16,371,292 19,530,016 100,000 - - - - $ 35,521,658 $ 32,015,993 $ 36,488,580 $ 30,967,736 $ 33,892,273 $ 33,849,686 $ 36,761,346 Source: City of Federal Way Finance Note: Fund Balance reclassification implementation of GASB 54 for year's 2010 and forward Citv o f Federal Wav / 116 CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS Last Seven Fiscal Years Revenues Taxes Licenses, fees and permits Intergovernmental Charges for services Fines and Forfeitures Investment earnings Other revenues Total revenues Expenditures General government Security of persons and property Transportation Physical Environment Economic Environment Health Culture and Recreation Debt Service Principal Interest/fiscal charges/admin fees Capital Outlay Total expenditures Excess of revenues over (under) expenditures Other Financing Sources (Uses) GO bond proceeds Bond principal payoff Sale of capital assets Anticipation Note Bond premium Transfers in Transfers out otal other-fi-nancing sources uses Net change in fund balances Debt service as a percentage of noncapital expenditures Source: City of Federal Way Finance 2008 2009 2010 2011 2012 2013 2014 $41,071,781 $38,192,852 $37,122,069 $ 37,831,045 $ 37,450,059 $ 38,505,413 $ 39,241,915 2,195,068 2,163,984 2,547,655 2,209,873 2,501,368 2,638,017 3,311,671 10,520,570 11,127,718 18,648,749 11,713,248 7,631,014 9,682,511 9,929,833 6,246,207 5,573,647 5,486,632 6,131,287 5,686,962 5,965,726 7,591,795 1,433,628 2,200,092 2,783,214 2,146,524 3,371,878 3,911,990 3,498,596 1,274,955 271,600 139,698 89,338 122,483 172,049 250,439 875,389 1,599,207 899,092 960,012 702,830 678,850 883,549 63,617,598 61,129,100 67,627,109 61,081,327 57,466,594 61,554,556 64,707,798 5,197,032 4,518,821 4,857,177 4,234,327 4,402,129 4,495,029 4,444,772 25,470,722 27,051,814 26,892,207 28,332,237 26,562,270 29,028,242 31,235,230 6,634,548 6,165,540 5,700,274 7,427,408 6,039,183 5,672,769 6,209,000 370,718 448,873 450,971 427,315 409,042 468,220 461,718 3,344,987 3,504,767 3,161,820 2,782,537 2,645,215 2,190,502 2,786,542 700,876 772,151 765,963 690,824 754,311 1,681,986 1,057,841 5,871,288 5,845,676 5,857,621 5,821,160 5,877,370 6,183,381 6,246,952 440,900 4,558,750 494,250 457,520 480,760 1,019,698 963,500 901,161 811,124 685,214 614,571 602,572 1,781,778 1,021,945 18,037,109 8,443,523 14,249,501 11,560,205 4,337,758 8,987,949 17,508,958 66,969,341 62,121,039 63,114,998 62,348,104 52.110.610 61,509,554 71,936,458 (3,351,743) (991,939) 4,512,111 (1,266,777) 5,355,984 45,002 (7,228,660) - - - 12,415,000 - - (11,955,000) - - - - 9,162 - 5,500 - - - - - - - 8,209,960 - - - - - 410,660 - 16,232,916 25,619,678 22,473,128 21,453,223 16,228,281 18,972,853 40,440,790 16 109,398 25,817,857 22,319 725 21 510,423) 16,368,781) (18,731,107) (38,606,598) 123.518 (198,170) 153,403 48,03`i} 1140,506 1,117,906 10.044,1 . 52 $ (3,228,225) $ (1,190,118) $ 4,665,514 $ (1,314,815) $ 5,215,484 $ 1,162,908 $ 2,815,492 2.8% 11.1% 2.4% 2.1% 2.5% 5.6% 3.9% City of Federal Wixy1117 ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY* Last Ten Fiscal Years Total City Percent Fiscal Personal State Public Direct Increase Year Real Propeq Property Service Property Total Tax Rate (Decrease 2005 6,937,653,592 225,118,781 89,220,328 7,251,992,701 1.27 11.5% 2006 7,689,395,358 235,157,554 87,062,687 8,011,615,599 1.22 10.5% 2007 8,644,609,276 262,048,562 103,698,540 9,010,356,378 1.14 12.5% 2008 9,527,060,585 257,152,954 97,434,092 9,881,647,631 1.04 9.7% 2009 8,294,282,076 236,445,351 92,287,195 8,623,014,622 0.97 -12.7% 2010 7,948,924,766 228,247,721 91,163,299 8,268,335,786 1.13 -4.1% 2011 7,410,324,237 219,890,581 92,768,984 7,722,983,802 1.20 -6.6% 2012 6,832,615,312 213,389,519 96,827,145 7,142,831,976 1.30 -7.5% 2013 7,076,203,165 212,126,219 97,686,143 7,386,015,527 1.42 3.4% 2014 8,043,211,679 223,362,313 109,128,234 8,375,702,226 1.40 13.4% Real, personal, and state public service property has been assessed at 100% of the estimated value. Source: King County Assessor's Office. Note: These figures include all final tax adjustments, non-taxable, senior citizen exempted property and omits. The total assessed value was reduced by senior citizen exemptions (no tax amounts) of $55,351,155 and pior year omits of $1,291,860 yielding a taxable assessed value of $8,319,059,211. The assessed valuations are the basis for the following year's tax levy. City o{Federal Way / 118 PROPERTY TAX RATES AND LEVIES, DIRECT AND OVERLAPPING GOVERNMENTS Last Ten Fiscal Years City Direct Rates' Overlapping Rate, City of Federal Way Emergency Fiscal Federal School King Washington King County Portof County Fire District Medical Year Way District#210 County State Flood Zone Seattle Ferry District #39 Library Services Total TAX RATES PER $1,000 OF ASSESSED VALUATION 2005 1.27 4.30 1.38 2.69 0.05 025 - 1,50 0.53 0.23 12.21 2006 1.22 4.26 1.33 2.50 0.04 023 1.50 0.53 0.22 11.84 2007 1.14 4.19 1.29 2.33 0.04 023 150 0.50 0.21 11.42 2008 1.04 4.15 1.21 2.13 0.10 022 0.055 1.50 0.45 0.30 11.16 2009 0.97 4.20 1.10 1.96 0.09 0.20 0.052 1.50 0.42 0.27 10,76 2010 1.13 5.11 1.28 2.22 0.11 0.22 0.003 1.50 0.49 0.30 12.36 2011 120 5.36 1.34 2.28 0.11 0.22 0.004 1.39 0.57 0.30 12.77 2012 1-30 5.77 1.42 2.42 0.12 023 0.004 1.50 0.57 0.30 13.63 2013 1A2 7.55 1.54 2.57 0.13 023 0.004 1.82 0.57 0.30 16.14 2014 1 AO 7.28 1.52 2.47 0.15 022 0.003 1.81 0.56 0.34 15.75 DETAIL OF TAX RATES FOR 2014 Basic Rate 1,40 - 1.46 2.47 0.15 0.22 0.003 1,50 0.50 - 7.70 Voted Rate - 7.28 0.06 - - - - 0.31 0.06 0.34 8.05 TAX LEVIES 2005 8,248,919 40,744,820 342,395,871 666,827,056 901,356 62,779,505 - 13,062.586 78,374,467 57,476,670 1,270,811,250 2006 8,800,989 43,672,564 357,240,140 672,185,668 922,666 62,785,749 - 14,108,124 85,715,008 59,154,623 1,304,585,531 2007 9,098,370 47,315,366 383,039,569 691,250,598 956,482 68,841,070 - 19,882,637 88,486,309 61,300,276 1,370,170,677 2008 9,300,030 52,730,549 409,763,053 723,908,902 33,945,830 75,908,664 18,670,739 22,289,360 91,371,026 101,861,635 1,539,748,788 2009 9,551,027 58,588,636 422,757,529 756,272,108 35,151,944 75,911,308 19,335,328 23,715,724 95,398,383 105,611,047 1,602,293,034 2010 9,690,241 61,404,973 437,163,660 756,411,197 35,783,324 73,504,599 1,185,576 20,409,747 97,015,693 102,103,088 1,594,672,098 2011 9,827,398 61,622,347 439,635,095 749,341,420 36,076,405 73512,887 1,184,924 18,234,001 115,495,462 98,604,471 1,603,534,410 2012 9,967,650 61,493,504 449,642,988 769,672,818 36,904,878 73,014,552 1,182,466 18,291,481 112,332,714 95,287,781 1,627,790,832 2013 10,081,231 74,591,150 482,114,428 803,686,293 41,355,065 73,020,604 1,183,773 20,431,912 109,665,815 93,899,062 1,710,029,333 2014 10a,10,148 74,592,913 482,114,428 837,694,800 52,112,348 73,018,695 1,183,251 20,866,842 116,790,442 113.565,682 1,782,179,549 Source: King County Assessor's Office and Icing County Department of Finance. 'The City of Federal Way's Direct Rate has only one component which is the expense levy. Citv of Federal Way / 119 PRINCIPAL TAXPAYERS Current Year and Nine Years Ago 2014 % of Total Assessed Assessed Taxpayer _ Type of Business Valuation Rank Valuation Weyerhaeuser Lumber Products $ 93,069,686 1 1.12% Puget Sound Energy-Elec/Gas Electric/Gas 68,583,929 2 0.82% Harsch Investment Properties Real Estate Management 55,729,700 3 0.67% Commons Mall LLC Real Estate Management 53,197,200 4 0.64% ROC 11 WA Cove LLC Real Estate Management 31,871,000 5 0.38% KNL Vision WA LLC (formerly BRE Prop.) Real Estate Management 30,786,000 6 0.37% Qwest Corporation hic. Real Estate Management 22,718,095 7 0.27% LBA Realty Fund Communications/Telephone 22,217,800 8 0.27% Fred Meyer Retailer 21,442,200 9 0.26% Virginia Mason Medical Services 17,748,240 10 0.21% Costco Retailer/ Wholesaler 16,170,100 11 0.19% IA Orchard Hotels Federal Way (fonnerly Apple Hospitality 16,164,400 12 0.19% Hospitality Five) ANS LLC Retailer 11,787,700 13 0.14% Campus Business Parks LLC Real Estate Invest/Holding 10,875,400 14 0.13% Ryan Pts Real Estate Invest/Holding 9,015,600 15 0.11% Red Mortgage Capital Inc Finance - 0.00% Wells Fargo Finance 0.00% Quadrant Corporation Real Estate Management - 0.00% $ 481,377,050 5.79% Source: King County Assessor's Office and King County Department of Finance. (A) 2005 taxable assessed valuation for the City of Federal Way was $7,251,992,701 2005 % of Total Assessed Assessed Valuation Rank Valuation (A) $ 146,430,484 1 2.02% 53,156,968 2 0.73% 41,336,200 4 0.57% 43,436,374 3 0.60% - - 0.00% 17,564,562 8 0.24% 25,388,793 6 0.35% 0.00% 20,501,217 7 0.28% 16,400,604 10 0.23% 15,066,665 11 0.21 % 10,874,200 13 0.15% - - 0.00% 16,761,400 9 0.23% - 0 0.00% 35,994,000 5 0.50% 13,561,173 12 0.19% 8,097,600 14 0.11% $ 464,570,240 6.41% City o f Federal Way / 120 PROPERTY TAX LEVIES AND COLLECTIONS Last Ten Fiscal Years Collected within the Total Ratio of Taxes Levied Fiscal Year of the Levy Collections Total Collections to Date Outstanding Delinquent Fiscal for the Current Tax Percentage in Subsequent Total Tax Percentage Delinquent Taxes to Year Fiscal Year Amount of Levy Years Amount of Levy Taxes Total Tax Levy 2005 8,248,919 8,082,340 98.0% 162,202 8,244,542 99.9% 4,377 0.1% 2006 8,933,515 8,584,565 96.1% 347,410 8,931,975 100.0% 1,540 0.0% 2007 9,068,740 8,868,895 97.8% 196,962 9,065,857 100.0% 2,883 0.0% 2008 9,265,234 9,037,601 97.5% 185,130 9,222,731 99.5% 42,502 0.5% 2009 9,511,404 9,277,004 97.5% 172,687 9,449,691 99.4% 61,713 0.6% 2010 9,680,047 9,433,214 97.5% 139,340 9,572,554 98.9% 107,493 1.1% 2011 9,755,022 9,506,527 97.5% 186,036 9,692,563 99.4% 62,459 0.6% 2012 9,919,406 9,739,696 98.2% (0) 9,739,696 98.2% 179,710 1.8% 2013 10,081,231 9,848,925 97.7% 37,272 10,029,029 99.5% 195,033 1.9% 2014 10,240,148 10,035,433 98.0% 56,371 10,091,805 98.6% 148,343 1.4% Source: Most of data has been derived from the "Annual Tax Receivable Summary" prepared by the King County Finance. ON o f Federal Way / 121 RATIO OF OUTSTANDING DEBT BY TYPE For the Last Ten Fiscal Years Governmental Activities Fiscal General Obligation Certificates of Year Bonds Participation 2005 27,701,761 - 2006 29,581,454 - 2007 19,605,000 - 2008 19,138,000 - 2009 29,212,950 - 2010 28,683,950 - 2011 28,157,950 - 2012 27,616,950 - 2013 27,016,400 2014 34,703,360 Business Type Activities Public Works Trust Fund Loan 2,121,830 1,939,471 1,757,112 1,574,753 1,392,394 1,210,035 1,027,676 845,317 662,958 480,600 Percentage Total Primary of Personal Government Income (b) Per Capita (b) 29,823,591 0.075% 348 31,520,925 0.071% 364 21,362,112 0.122% 244 20,712,753 0.134% 235 30,605,344 0.090% 346 29,893,985 0.091% 337 29,185,626 0.091% 327 28,462,267 0.093% 318 27,679,358 0.097% 309 35,183,960 0.058% 390 Source: City of Federal Way Finance Division Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. See Demographic Statistics schedule for personal income and population data. These ratios are calculated using personal income for the prior calendar year. (b) Per capita income information for the years 2005 to 2007 are based on 2000 U.S. Census report since this information is available for individual cities only every ten years when the census is done. 2008-2014 info for Federal Way is based on US Census Bureau, 2009-2013 American Community Survey five-year Estimates. City of Federal Way / 122 RATIO OF NET GENERAL OBLIGATION BONDED DEBT TO ASSESSED VALUE AND NET GENERAL OBLIGATION BONDED DEBT PER CAPITA For the Last Ten Fiscal Years Ratio of Net (B) (C) Bonded Debt Net Bonded Fiscal (A) Assessed Gross Less Restricted Net To Assessed Debt Per Year Population Value Bonded Debt for Debt Bonded Debt Value Capita 2005 85,800 7,251,992,701 29,823,591 2,886,785 26,936,806 0.0037 313.95 2006 86,530 8,011,615,599 31,520,925 6,001,415 25,519,510 0.0032 294.92 2007 87,390 9,010,356,378 21,362,112 2,147,282 19,214,830 0.0021 219.87 2008 88,040 9,825,319,904 20,712,753 1,882,041 18,830,712 0.0019 213.89 2009 88,578 8,563,964,852 30,6,05,344 4,225,463 26,379,881 0.0031 297.82 2010 88,760 8,206,354,959 29,893,985 3,379,427 26,514,558 0.0032 298.72 2011 89,370 7,659,569,844 29,185,626 3,866,184 25,319,442 0.0033 283.31 2012 89,460 7,142,831,976 28,462,267 4,182,345 24,279,922 0.0034 271.41 2013 89,718 7,386,015,527 27,679,358 5,248,336 22,431,022 0.0030 250.02 2014 90,147 8,375,702,226 35,183,960 2,136,390 33,047,570 0.0039 366.60 (A) Sources: State of Washington Office of Financial Management Population Estimates. (B) The final certified Regular Levy assessed value of taxable property which was used by the King County Assessor's Office for use in calculating levy rates for the following year's tax roll. The total assessed valuation of $8,375,702,226 has been reduced by non-taxable of $55,351,155 and prior year omits of $1,291,860 to arrive at taxable assessed valuation of $8,319,059,211. (C) Includes Public Works Trust Fund Loans issued in 1994, 1996, 1997, and 2000; general obligation bonds issued in 2000, 2009, 2013, and 2014. C'ily of Federal Way 1123 COMPUTATION OF DIRECT AND OVERLAPPING DEBT December 31, 2014 (A) (B) Gross General Percentage Amount Obligation Debt Applicable to Applicable to Jurisdiction Outstanding Federal Way Federal Way King County $ 845,708,342 2.16% $ 18,250,598 Port of Seattle 225,420,000 2.16% 4,864,620 Federal Way School District #210 170,172,482 69.75% 118,703,295 Fire District # 39 7,545,000 63.47% '4,788,552 Library 119,055,000 3.65% 4,345,962 Total Overlapping Debt 1,367,900,824 150,953,027 CITY OF FEDERAL WAY 34,703,360 (C) 100.00% 34,703,360 Total Direct and Overlapping Debt $ 1,402,604,184 $ 185,656,387 (A) Total general obligation bonds outstanding at the year end, exclusive of available cash in debt service funds, proprietary -type debt, credit enhancement and hotel/motel debt. Source is King County Financial Management. (B) Determined by ratio of assessed valuation of property subject to taxation in overlapping unit to valuation of property subject to taxation in reporting unit. (C) Includes general obligation bonds issued in 2000, 2009, 2013, and 2014. Source is City of Federal Way Finance ON o f Federal Way / 124 COMPUTATION OF LIMITATION OF INDEBTEDNESS December 31, 2014 General Debt Capacity Excess Levy Excess Levy (Limited) (Unlimited) Open Space Utility Total Debt DESCRIPTION Councilmanic Excess Levy and Park Purposes Capacity Statutory debt limit: (2014 AV=$8,319,059,211) (A) 1.50%AV @ 100% $ 124,785,888 $ (124,785,888) $ - $ - $ - 2.50% AV @ 100% - 207,976,480 207,976,480 207,976,480 623,929,441 Add: Cash on hand for debt redemption (B) 2,136,389 2,136,389 Less: Bonds and COPS outstanding (34,703,360) (34,703,360) Remaining Debt Capacity $ 92,218,917 $ 83,190,592 $ 207,976,480 $ 207,976,480 $ 591,362,470 Total Remaining "General" Capacity $175,409,509 (A) This figure represents the City's final total taxable assessed valuation (AV) for 2014 which was used to determine the 2015 property tax levy. (B) Reflects debt servicing required for the following year. (C) Combined total for Councilmanic, Financing Lease, and Excess Levy capacities. Total net debt Total net debt applicable to applicable Legal debt the limit as a Fiscal Year Debt limit to limit margin % of debt limit 2005 487,677,084 (23,478,555) 464,198,529 4.81% 2006 543,899,454 (21,459,145) 522,440,309 4.32% 2007 600,871,170 (12,012,597) 588,858,573 3.91% 2008 736,889,175 (11,615,105) 725,274,070 1.58% 2009 741,123,572 (22,913,431) 718,210,141 3.09% 2010 615,476,622 (22,291,874) 593,184,748 3.62% 2011 579,223,785 (20,964,944) 558,258,841 3.62% 2012 535,712,398 (25,612,462) 510,099,936 4.78% 2013 550,022,093 (25,064,092) 524,958,001 4.56% 2014 623,929,441 (32,566,971) 591,362,470 5.22% Source: City of Federal Way Finance (A) King County Department of Finance Note: Under state finance law, the city's outstanding general obligation debt should not exceed 15 percent of total assessor's property value. By law, the general obligation debt subject to the limitation may be offset by amounts set aside for repaying general obligation bonds. City o ffederal Nay / 125 RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL OBLIGATION BONDED DEBT TO TOTAL GENERAL GOVERNMENTAL EXPENDITURES NET OF DEBT SERVICE EXPENSE Ratio of Debt Service Total General to General Fiscal Total Debt Governmental Governmental Year Principal Interest * Service Expenditures Expenditures 2005 3,100,546 1,531,364 4,631,910 40,108,790 11.5% 2006 2,219,676 1,418,843 3,638,519 41,086,555 8.9% 2007 9,976,455 1,153,300 11,129,755 56,186,140 19.8% 2008 467,000 841,542 1,308,542 51,278,215 2.6% 2009 4,585,000 824,693 5,409,693 54,585,436 9.9% 2010 525,000 629,419 1,154,419 50,093,838 2.3% 2011 526,000 622,903 1,148,903 49,482,421 2.3% 2012 480,760 1,114,827 1,595,587 47,879,445 3.3% 2013 1,050,430 1,413,862 2,464,292 57,934,989 4.3% 2014 995,300 985,475 1,980,775 48,877,840 4.1% Source: City of Federal Way Finance Note: * Interest excludes bond issuance and debt registration costs. ON o f Federal Wav / 126 DEMOGRAPHIC STATISTICS Education Personal Level in Years Fiscal Income Per Capita Median of Formal School Unemployment Year Population Sea-Tac-Bel [D] Income [Cj Age [Cl Schooling Enrollment (A) Rate (B) 2005 85,800 136,959,162,000 22,451 32.5 13.0 22,383 5.0% 2006 86,530 149,858,462,000 22,451 32.5 13.0 22,184 4.5% 2007 87,390 162,934,794,000 26,137 37.2 13.0 21,775 4.1% 2008 88,040 169,798,086,000 27,730 37.0 13.0 21,622 5.1% 2009 88,578 171,680,771,000 27,638 36.6 13.0 21,700 8.9% 2010 88,760 176,084,963,000 27,307 35.1 13.0 21,630 9.7% 2011 89,370 178,306,642,000 26,668 35.2 13.0 21,608 8.9% 2012 89,460 189,431,079,000 26,514 34.9 13.0 20,665 8.1% 2013 89,718 199,243,414,000 26,740 34.9 13.0 21,554 7.4% 2014 90,147 N/A 20,481 35.1 13.0 21,772 6.2% (A) Includes public school enrollment. Kindergarten is included though not State mandated. (B) Unemployment rates came from the US Department of Labor, Bureau of Labor Statistics. (C) 2014 info for Federal Way is based on 2009-2013 American Community Survey five-year Estimates. (D) Personal income information is for Seattle -Tacoma -Bellevue area provided by the Bureau of Economic Analysis, information for 2014 not available. 2014 data for Personal Income to be published fall of 2015. Sources: Data was obtained from U. S. Census Bureau US Department of Labor, Bureau of Labor Statistics US Department of Commerce, Bureau of Economic Analysis School data was provided by the Federal Way School District. Citv o f Federal Way / 127 PRINCIPAL EMPLOYERS Current Year and Nine Years Ago 2014 2005 Number of % of Total City Number of % of Total City Taxpayer Type of Business Employees Rank Employment Employees Rank Employment Federal Way Public Schools Educational Services 2,147 1 7.50% 3,150 1 10.73% Xerox Commerical Services LL.0 Business Services 1,350 2 4.71% - - 0.00% Weyerhaeuser Company Lumber Products 1,147 3 4.00% 2,412 2 8.22% St Francis Hospital Medical Services 1,032 4 3.60% 744 3 2.53% Wild Waves Amusement Center 871 5 3.04% 639 4 2.18% World Vision Inc Christian Relief Agency -Nonprofit 852 6 2.97% 596 6 2.03% Us Postal Service - Bulk Mail Postal Service 616 7 2.15% 626 5 2.13% City Of Federal Way Government Services 505 8 1.76% 400 7 1.36% Wal-Mart Retail 484 9 1.69% 225 10 0.77% Davita Health Services 318 10 1.11% - 0.00% Costco Wholesale Corporation Wholesale 284 11 0.99% 293 8 1.00% Virginia Mason Federal Way Medical Services 253 12 0.88% 235 9 0.80% BergerABAM Inc Engineering/Architectural 234 13 0.82% 116 33 0.40% Fred Meyer Retail 224 14 0.78% 195 14 0.66% Garden Terrace Alzheimer's Center Retail 175 15 0.61% 145 26 0.49% Source: City of Federal Way Business License Note: Principal Employers - includes both full -rime and part -tune employees. ON o f Federal Wav / 128 PROPERTY VALUE AND CONSTRUCTION Commercial Construction (A) Residential Construction (A) Multi -Family Construction (A) Value Value Value Year Permits (In Thousands) Permits (In Thousands) Permits (In Thousands) 2005 289 124,985 591 111,504 0 2006 332 78,194 455 70,862 1 2,027 2007 370 59,666 388 55,321 33 11,487 2008 256 45,810 258 17,554 91 26,025 2009 132 45,343 275 13,057 76 20,802 2010 149 31,043 321 19,676 75 2,686 2011 134 12,724 301 19,455 47 847 2012 160 27,989 346 29,115 92 974 2013 162 22,891 369 33,260 131 5,442 2014 220 35,923 359 30,923 53 61,511 Sources & Notes: (A) Federal Way Community & Economic Development Department. Commercial constriction includes alterations. Other building -related permits (plumbing, mechanical, fire alarm, etc.) numbering 3,722 and valued at $6,875,043 have been excluded. City of Federal Wa3, / 129 CAPITAL ASSETS BY FUNCTION Last Ten Fiscal Years 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Transportation Street (Center Line Miles) 230.84 233.84 233.84 234.72 234.72 242.90 248.23 248.23 249.25 249.25 Signals WSDOT-owned and maintained 4 5 5 5 5 5 5 6 6 6 Signals City -owned & County -maintained 71 74 74 76 76 76 76 77 77 77 Street lights City -owned and maintained 1,050 1,214 1,214 1,463 1,467 1,509 1,554 1,618 1,705 1,728 Street lights City -owned and PSE-maintains 644 644 644 644 644 644 644 644 644 644 Street lights PSE-owned and maintained 1,975 1,975 1,975 1,975 1,975 1,975 1,975 1,975 1,975 1,978 Culture & Recreation Developed Parks - Acreage 522.9 522.9 524.49 524.49 524.49 524.49 524.49 579.86 579.86 588.99 Developed Parks - # of Parks 32 32 32 32 32 32 32 29 29 30 Undeveloped Parks - Acreage 543.5 543.5 543.46 551.12 551.12 551.12 551.12 539.43 539.43 539.43 Undeveloped Parks - # of Parks 21 21 21 22 22 22 22 22 22 22 Tennis Courts City -Owned 11 I 1 11 11 11 11 11 9 9 9 Tennis Courts - Public 22 22 22 22 22 22 22 25 25 25 Swimming Pools City -Owned 1 1 1 1 1 1 1 2 2 2 Swimming Pools County -Owned 1 1 1 1 1 1 1 3 3 3 Trails - Miles 6 6 6 6 6 6 6 9 9 9 Trails -# of Trails 2 2 2 3 3 3 3 6 6 6 Connnunity Centers/Recreation Facilities 2 2 2 1 1 1 1 1 1 2 Source: City of Federal Way Public Works and Parks Department ON o f Federal Wav / 130 OPERATING INDICATORS BY FUNCTION Last Ten Fiscal Years 2005 2006 2007 2000 2009 2010 2011 2012 2013 2014 SECURITY OF PERSONS & PROPERTY Police Information Offenses: Forcible Rape (including attempts) 55 64 48 30 51 50 38 48 35 62 Robbery 153 146 129 170 198 152 119 107 107 135 Criminal Homicide 7 1 3 10 5 5 4 3 6 4 Aggravated Assault 101 120 107 115 115 118 99 150 133 148 Vehicle Theft 1,573 1,199 939 816 561 741 694 800 778 869 Burglary (commercial & residential) 800 753 739 800 741 828 752 931 801 816 Larceny 3,786 3,230 3,159 2,933 3,231 3,141 3,067 3,409 3,571 3,912 Arson 25 26 18 13 13 11 11 9 7 13 Citations: Traffic 11,402 11,931 14,043 19,339 20,678 18,094 17,226 13,023 17,558 13,705 Red Light Photo - - - 3,813 13,002 25,691 15,340 13,455 13,455 15,819 ECONOMIC ENVIRONMENT Building Related Permits & Values Building Permits 880 788 791 605 483 545 482 598 662 632 Estimated Value (In Millions $) $ 237 $ 151 $ 127 $ 89 $ 79 $ 53 $ 33 $ 58 $ 62 $ 128 Other Building Related Permits 2,705 2,550 2,690 2,370 2,209 2,423 2,385 2,960 3,827 3,722 Estimated Value (In Millions $) $ 4 $ 4 $ 6 $ 7 $ 6 S 6 $ 6 $ 5 $ 6 $ 7 Source: City of Federal Way Police Department and Community Development Department City o f Federal Wav / 131 CITY GOVERNMENT EMPLOYEES FULL-TIME EQUIVALENT - HISTORY Department 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Mayor's Office 6.00 6.00 10.00 9.75 7.63 7.63 5.00 3.00 3.50 6.00 Administration 5.00 5.00 5.50 5.25 3.13 3.13 4.00 3.00 3.00 5.00 Economic Development 1.00 1.00 1.50 1.50 1.50 1.50 - 0.50 1.00 Government Affairs - - 3.00 3.00 3.00 3.00 - Hmnan Services - - - - - - 1.00 - City Council 3.50 3.50 3.50 3.50 3.50 4.50 4.50 3.85 4.15 4.15 Municipal Court 12.55 12.55 14.00 14.00 13.00 13.00 13.00 13.00 13.00 13.00 Human Resources 5.00 5.00 5.00 5.25 5.25 5.25 4.50 4.50 4.50 5.13 City Clerk 1.50 1.50 1.50 1.75 1.75 1.75 1.75 1.75 1.75 1.88 Human Resources 3.50 3.50 3.50 3.50 3.50 3.50 2.75 2.75 2.75 3.25 Finance 8.50 8.50 9.50 8.00 7.60 7.60 7.00 7.00 6.00 7.00 Administration 1.50 1.50 1.50 - - - - - - Finance 7.00 7.00 8.00 8.00 7.60 7.60 7.00 7.00 6.00 7.00 Information System 8.50 8.50 10.60 10.60 10.00 9.60 7.00 7.00 7.00 6.00 Law 10.60 10.60 13.00 13.00 12.00 12.00 11.00 11.00 12.00 12.00 Civil Legal Services 5.80 5.80 5.80 5.80 4.80 4.80 4.80 4.80 4.80 4.80 Criminal Prosecution Services 4.80 4.80 7.20 7.20 7.20 7.20 6.20 6.20 7.20 7.20 Community & Econ Developmej 28.70 28.70 30.49 32.00 30.00 28.90 19.00 21.65 21.85 26.25 Administration 4.50 4.50 4.50 4.50 5.00 5.00 3.50 3.50 3.50 3.90 Planning 8.80 8.80 8.75 8.75 8.00 7.00 6.00 6.00 6.00 7.00 Building 12.30 12.30 13.25 14.25 13.00 13.00 9.00 9.00 10.00 12.00 Human Services 2.50 2.50 3.00 3.50 3.00 3.00 - 2.65 2.35 3.35 Neighborhood Development 0.70 0.70 1.00 1.00 1.00 0.90 - - - Economic Development - - - - - - 0.50 0.50 Police 152.00 155.00 169.00 169.00 164.00 161.00 135.00 132.00 145.00 146.00 Administration 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 Support Services 53.00 55.00 61.00 61.00 61.00 58.00 51.00 52.00 55.00 56.00 Field Operations 96.00 97.00 105.00 105.00 100.00 100.00 81.00 77.00 87.00 87.00 Parks, Rec. & Cultural Svcs. 30.20 31.20 44.25 44.25 39.75 39.75 36.45 36.45 35.45 35.90 Administration 1.80 1.80 1.80 2.80 1.35 1.35 1.35 1.35 1.35 1.80 Planning 1.00 1.00 1.00 - - - Kenneth Jones Pool 3.00 3.00 - - - - - - - General Recreation 6.60 6.60 7.10 7.10 4.80 4.80 5.50 5.50 5.50 5.50 Community Center - - 12.35 12.35 13.35 13.35 13.35 13.35 13.35 13.35 Dumas Bay Centre 2.00 3.00 3.00 2.75 2.75 2.75 2.75 2.75 2.75 2.75 Knutzen Family Theatre 1.50 1.50 1.50 1.75 - - - - - Parks Maintenance 13.80 13.80 17.00 17.00 17.00 17.00 13.00 13.00 12.50 12.50 Building 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 Public Works 41.60 42.60 44.00 44.00 42.95 41.95 38.95 38.95 39.95 38.95 Administration 2.10 1.90 1.85 1.85 2.35 2.35 2.25 2.20 2.25 2.25 Development Services 5.80 6.50 6.45 6.45 4.45 4.45 4.20 4.20 3.70 3.70 Traffic Services 5.10 5.10 6.10 6.10 6.10 5.10 2.35 2.35 3.85 3.85 Street Services 11.70 11.00 11.50 11.00 10.50 10.50 10.60 10.60 10.60 10.60 Emergency Management - 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Solid Waste & Recycling 1.60 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 Surface Water Management 15.30 15.40 15.40 15.40 16.35 16.35 16.35 16.40 16.35 16.35 Fleet & Equipment - - 0.50 0.50 0.50 0.50 0.50 0.50 0.50 Total 307.15 312.15 353.34 353.35 335.68 331.18 281.40 278.40 292.40 300.38 Source: City of Federal Way Finance Division Citv ofFederal Wav / 132 SALARIES AND SURETY BONDS OF PRINCIPAL OFFICIALS DECEMBER 31, 2014 POSITION MAYOR DEPUTY MAYOR COUNCIL MEMBERS POSITION CHIEF OF STAFF FINANCE DIRECTOR CITY ATTORNEY CITY CLERK ECONOMIC DEVELOPMENT DIRECTOR PARKS DIRECTOR COMMUNITY & ECONOMIC DEVELOPMENT DIRECTOR PUBLIC WORKS DIRECTOR POLICE CHIEF Source: City of Federal Way Human Resources LEGISLATIVE BODY EMPLOYEE JIM FERRELL JEANNE BURBIDGE LYDIA ASSEFA-DAWSON KELLY MALONEY SUSAN HONDA BOB CELSKI MARTIN MOORE DINI DUCLOS ADMINISTRATIVE STAFF EMPLOYEE BRIAN WILSON ADE ARIWOOLA AMY JO PEARSALL STEPHANIE COURTNEY TIM JOHNSON JOHN HUTTON PATRICK DOI-IERTY MARWAN SALLOUM ANDY HWANG ANNUALSALARY $115,620 $13,800 $13,800 $13,800 $13,800 $13,800 $13,800 $13,800 ANNUALSALARY NOTE: In accordance with Ordinance 90-016, individual fidelity coverage of not less than $50,000 exists for the Mayor, Finance Director, City Clerk, Police Chief, and Judge. $145,704 $138,036 $140,076 $83,352 $142,104 $138,036 $135,996 $150,216 $157,920 City o Federal Way / 133 MISCELLANEOUS STATISTICAL INFORMATION LOCAL TAXES ON BUSINESSES Franchise Tax - Cable TV ........................... 5.00% Gambling Taxes: Bingo/Raffles........................ _.......... 5.00% Amusement/Games .......................:... 2.00% Punchboard/Pull Tabs ........................ 3.00% Cardrooms ..............................-....... 10.00% Local Sales Tax (Collected by the State)......,... 9.50% FIRE AND EMERGENCY MEDICAL RESPONSE INFORMATION Fire and Emergency Medical Response information reflects the greater Federal Way area, which is served by South King Fire & Rescul 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Fire and Other Responses 3,210 865 639 1,083 1,147 1,041 934 1,363 968 999 Emergency Medical 8,636 11,164 11,350 12,058 11,077 11,460 11,914 12,571 12,950 13,847 PUBLIC EDUCATION 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 23 Elementary Schools 9,806 9,733 9,612 9,594 9,594 9,560 9,673 9,229 9,777 10,054 7 Middle Schools (incl. Public Academy) 5,271 5,183 5,139 5,234 5,203 5,235 5,205 5,041 5,050 5,034 5 High Schools 7,004 6,954 6,720 65531 6,637 6,547 6,409 6,018 6,341 6,299 5 Alternative\Internet Academy (K-12) 302 314 304 263 266 288 321 377 386 385 22,383 22,184 21,775 21,622 21,700 215630 21,608 20,665 21,554 21,772 3,836 Staff members TAXABLE SALES (in millions) Retail Sales Real Estate Sales Source: South King County Fire and Rescue Federal Way Public School City of Federal Way Finance Division 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 $1,331 $1,471 $1,540 $1,458 $1,257 $1,261 $1,277 $1,239 $1,355 $1,432 S939 $988 $963 $536 $208 $238 S315 $303 $399 $418