2003 Annual Comprehensive Financial Report (03-003)a(no3 — 003
City of Federal Way, Washington
COMPREHENSIVE
ANNUAL FINANCIAL
REPORT
Year Ended December 31, 2003
RHODODENDRON GARDENS — FEDERAL WAY
Photo By: Sandy Novak
Prepared by
Finance Department
PERMANENT RECORD
DO NOT DESTROY
GS50-03D-02, Rev. 1 (CAFR)
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 Vieux 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 m 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, 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.
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Year Ended December 31, 2003
Table of Contents
INTRODUCTORY SECTION Page
Letterof Transmittal................................................................................................................................... iii
City Officials and Administrative Officers............................................................................................... 1
City Functional Organization Chart ........................................................................................................... 2
GFOA Certificate of Achievement............................................................................................................. 3
FINANCIAL SECTION
IndependentAuditor's Report ....................................................................................................................
Management's Discussion and Analysis....................................................................................................
Basic Financial Statements:
Government -wide Financial Statements:
Statementof Net Assets.......................................................................................................... 19
Statementof Activities.......................................................................................................... 20
Fund Financial Statements:
Balance Sheet — Governmental Funds....................................................................................
21
Statement of Revenues, Expenditures, and Changes in Fund Balances —
GovernmentalFunds........................................................................................................
22
Reconciliation of the Statement of Revenues, Expenditures, and Change
In Fund Balances of Governmental Funds to the Statement of Activities .......................
23
Statement of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual
GeneralFund...................................................................................................................
24
StreetFund......................................................................................................................
25
UtilityTax Fund .. ........... ......... ........................................................................................
26
Statement of Net Assets — Proprietary Funds.........................................................................
27
Statement of Revenues, Expenses and Changes in Fund Net Assets — Proprietary Funds .....
28
Statement of Cash Flows — Proprietary Funds........................................................................
29
Notes to the Financial Statements.................................................................................................... 30
Combining and Individual Fund Statements and Schedules—Nonmajor Governmental Funds:
CombiningBalance Sheet ...... ...................... —................ —... ........... ................. ................... ............ 61
Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........................ 64
Combining and Individual Fund Statements and Schedules — Internal Service Funds:
Combining Statement of Net Assets..............................................................................:.................. 68
Combining Statement of Revenues, Expenditures and Changes in Fund Net Assets ...................... 69
Combining Statement of Cash Flows............................................................................................... 70
Capital Assets Used in the Operation of Governmental Funds:
Comparative Schedules by Source................................................................................................... 72
Schedule by Function and Activity .............................................................................. .................... 73
Schedule of Changes by Function and Activity .......................... ............................................. :...... 74
STATISTICAL SECTION
Government -wide Information:
Government -wide Revenues by Source and Expense/Expenditures by Function .................................. 77
Fund Information:
General Governmental Expenditures by Function -
General, Special Revenue and Debt Service Funds........................................................................ 78
i
General Governmental Revenues by Source -
General, Special Revenue and Debt Service Funds........................................................................
79
General Governmental Tax Revenue by Source - General, Special Revenue and Debt Service Funds.
80
Property Tax Levies and Collections.....................................................................................................
Assessed and Estimated Actual Value of Taxable Property
81
..................................................................
Property Tax Rates and Levies - Direct and Overlapping Governments ...............................................
82
83
Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt per Capita .....................
84
Computation of Limitation of Indebtedness..........................................................................................
85
Computation of Direct and Overlapping Debt
.......................................................................................
Ratio of Annual Debt Service Expenditures for General Obligation Bonded Debt to Total
86
General Governmental Expenditures ......................................... :.....................................
87
..................
DemographicStatistics..........................................................................................................................
Property Value, Construction, and Bank Deposits................................................................_.............._.
88
89
Principal Taxpayers and Principal Employers.......................................................................................
90
Schedule of Insurance in Force
.............................................................................................................
Salaries and Surety Bonds of Principal Officials..
91
............................ ................................ ...................
Miscellaneous Statistical Inf'ortnation............................
92
.............................. ............. I ......... ..................
93
ii
4%
CITY OF VZ�42:P
Federal Way
July 30, 2004
People of the City of Federal Way
Honorable Mayor and City Council
THE COMPREHENSIVE ANNUAL FINANCIAL REPORT
OF THE
CITY OF FEDERAL WAY
The Comprehensive Annual Financial Report (CAFR) of the City of Federal Way for the year ended
December 31, 2003 is hereby submitted. Responsibility for both the accuracy of the data, and the
completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of
our knowledge and belief, the enclosed data are accurate in all material respects and are reported in a
manner designed to present fairly the financial position and results of operations of the various funds of the
City. All disclosures necessary to enable the reader to gain an understanding of the City's financial
activities have been included.
FINANCIAL REPORTING STANDARDS AND FORMAT
This CAFR is presented for the first time in conformity with Governmental Accounting Standards Board
(GASB) Statement 34. This statement dramatically modified the presentation of financial information for
the City of Federal Way effective with financial statements ending December 31, 2003. The format and
purpose of these changes are addressed in more detail in the Management's Discussion and Analysis
(MD&A). Additionally, the notes to the financial statements are designed to discuss the change and
explain the effects and results of these changes. We believe this new presentation will provide better
information to the users of the CAFR.
The comprehensive annual financial report is presented in three sections: introductory, financial, and
statistical. The introductory section includes this transmittal letter, the City's organizational chart and a list
of officials. The financial section includes the basic financial statements, and the combining statements of
nonmajor funds, internal service funds, and schedules of capital assets of governmental funds, as well as
the State Auditor's report on the basic financial statements. The statistical section includes selected
financial and demographic information, generally presented on a multi -year basis.
As an aid to the reader, the major sections of this report have been segregated by divider pages which
provide introductions to the sections. In the same manner, divider pages have been used to separate the
various components of the financial section. Generally Accepted Accounting Principles (GAAP) require
that management provide narrative introduction, overview, and analysis to accompany the basic financial
statements in the form of MD&A. This transmittal letter is designed to compliment the 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.
M
REPORTING ENTITY
The City is a noncharter Optional Code City with a Council -Manager form of government. 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. The City Manager, who serves as the chief executive officer, is responsible for day-
to-day administration of personnel, policies and programs. He is appointed by, reports directly to, and
serves at the pleasure of the City Council.
City services provided include: police protection, construction and maintenance of streets, building
inspection, municipal court services, jail services, planning and zoning, park services, surface water
management and general administration, including finance. Services for a land use hearing examiner are
contracted. The City continues to have seven major departments consisting of City Manager; Law;
Management Services; Parks, Recreation, and Cultural Services; Public Safety; Public Works; and
Community Development. Fire protection and emergency medical services are provided by Fire District
No. 39. The Lakehaven Utility District delivers water and sewer services. 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 TRENDS
The City of Federal Way incorporated on February 28, 1990. It is the eighth largest city in Washington
State with a population of 83,500 as of April 1, 2003. Federal Way 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 21.5 square miles, and is served by Interstate 5 and state
highways 99 and 509.
ikrA
The population in the area known as the City of Federal Way has stabilized over the last few years, with the
population as of the 2000 census at 83,259. The 2003 population figure of 83,500, provided by the State
Office of Financial Management, is a decrease of .042% from the 2002 figure of 83,850.
In 2003 there were 33,249 housing units in Federal Way. Of these units, 55% were single family, 41%
multi -family units and 3% mobile homes and trailers. These statistics for housing units show an increase of
approximately .01% over 2002.
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 2003 is estimated at 29,612. Major employers are the SeaTac
Mall, Weyerhaeuser, Federal Way School District, St. Francis Community Hospital, World Vision,
Enchanted Parks, and U.S. Postal Bulk Mail Center.
CITY OF FEDERAL WAY
Housing Units - 1970 to 2003
40,000 M a
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30,000 — —
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25,000—
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10,000 —
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1970 1980 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Sales tax collected in 2003 total $10.52 million, a $255 thousand or 2.4% decline compared to 2002. The
retail sector of the local economy is anchored by the SeaTac regional mall, Best Buys, Walmart, Costco,
Fred Meyer, Lowe's Home Improvement Center, and many other small businesses adjacent to the City
center. 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
63.8%; services 13.2%; contracting 9.9%; wholesale trade 4.9%; transportation and public utilities 4.2%;
manufacturing 1.0%; government 0.8%; finance, insurance and real estate 1.4%, and other 1%.
In 2003, new improvements to real estate totaled $66.9 million or approximately 1.1% of the City's
assessed valuation. The total assessed value of taxable property in Federal Way was $6.3 billion which is
approximately 6% higher than the 2002 assessed valuation of $5.9 billion. Real Estate sales increased 13%
to approximately $570.3 million in 2003 as compared to $503.5 million in 2002. A total of 531 building
permits and 1,779 other building related permits were issued in 2003. Estimated valuation was $64.5
million and $2.4 million, respectively. Significant building permits include: Enchanted Parks, a Six Flags
amusement and water park, Pavilion Center II, Autozone, Metropolitan Market, Weyerhaeuser
Rhododendron Greenhouse, Steel Lake maintenance yard vehicle wash facility, DR Espresso, and
Portofino Apartments.
The economic downturn that began in 2001 has had a disproportionate impact on Washington employment
growth. Total payroll employment in Washington fell 1.9 percent in fiscal 2002 and 0.3 percent in fiscal
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2003 compared to 1.0 percent and 0.5 percent for the nation as a whole. The events of September 11 have
been particularly hard on Washington employment growth due to the devastating impact on air
transportation. The IT collapse and correction in the construction sector were also exceptionally severe in
Washington.
Soon after the September 11 attacks, Boeing announced that it intended to cut 20,000 to 30,000 jobs
company -wide and subsequently added 5,000 to the predicted cut by the cnd of 2003. As of December
2003, the cumulative reduction stands at 41,600 (including contract employees), already well above the
high end of the range. Of these, 25,900 have been in Washington State, home of the commercial airplane
unit. A loss of 2,000 Washington aerospace jobs is expected in 2004.
After more than a decade of robust and sustained growth, employment by Washington's software
publishers hit a brick wall in mid-2001. From the beginning of 1990 through the second quarter of 2001,
the software employment growth rate averaged more than 1.6 percent per year. During the next two years
the average annual growth rate slowed to just 0.1 percent. Microsoft has continued to grow, but at a
reduced rate, but other Washington software publishers have suffered absolute declines. However, double-
digit growth resumed in the second half of 2003. Microsoft has announced plans to increase employment
significantly in the next year while employment at other software publishers is expected to stabilize.
Employment growth is expected to average 9.3 percent per year through the end of 2007.
Washington's construction industry has staged a bit of a comeback during the last seven quarters, growing
at an average rate of 2.1 percent following a precipitous 6.3 percent decline during the previous year.
Housing held up pretty well during the recession but nonresidential building in the Puget Sound area fell
sharply. The commercial side has now stabilized and the recent strength in housing permits should support
construction employment in the near term. However, nonresidential construction is expected to see little
improvement and housing activity will be weaker. As a result, the anticipated growth rate for 2004 is only
1.8 percent. The average growth rate forecast is 2.6 percent per year during the next three years.
SIGNIFICANT EVENTS AND ACCOMPLISHMENTS
• Purchased the Paragon Building, which will serve as the new city hall. The project budget of $15.9
million remains well below the original budget estimate of $24 million. The new facility will
improve coordination of city services and save money in the long term by uniting the police and
municipal court with the rest of the staff located at city hall.
• Council approved the preliminary design and budget for the new $20 million community center.
This facility will provide recreational opportunities for everyone: lap and leisure pools, a three -bay
gym with elevated jogging track, sub -dividable community rooms, classroom, fitness area, senior
area, and other amenities.
• Staff began work on improving ways of doing business by forming a stakeholder group comprised
of citizens, business people, and developers to address our permit process. The results were very
positive; the city began implementation of 38 initiatives recommended by the group in 2003. A
number of major development applications and permits were reviewed and issued, resulting in
projects such as Enchanted Park's new roller coaster, SeaTac Mall phase 1 renovation, and Todd
Beamer High School.
• A number of capital improvements were made to our main streets and highways, making them a
more attractive place to do business. 1n 2003, phase 1 of Pacific Highway South improvements
from South 312 to South 32e was completed. Phase II is underway, from South 324' to 340'.
Banners, baskets, and holiday lights were also hung from lampposts along Pacific Highway and
South 320`h during the holiday season.
• Assumed responsibility for the operation of the Kenneth Jones Pool from King County.
►i1
• A major component of the comprehensive plan is the creation of a vibrant downtown area. The
city is currently working the master environment review of the area, which when completed will
save developers time and cost. A consultant was hired to review preliminary traffic impacts, and a
new system was created to market the community to potential developers. A new economic
development website was launched, containing a database of available properties in the city.
• The City's Lodging Tax Advisory Committee worked with an event consultant to explore ways of
growing tourism. So far a new brochure on Federal Way attractions mas created, a Korean sports
and cultural event is in the works, and the Reebok Women's Triathlon is coming in the fall.
OUTLOOK FOR THE FUTURE
Long Term
Housing and Population
• Preserve the predominantly single-family character and appearance of the community by
establishing population densities consistent with neighborhood and city-wide objectives.
• Create a diverse population by encouraging residential development with a mix of housing
types at affordable costs, particularly for senior citizens and lower income families.
• Assure the high quality of new and existing housing by consistent enforcement of reasonable
housing and building standards that do not unnecessarily increase housing costs.
• Maintain safe, economically stable and attractive neighborhoods by providing a high level of
public services, including utilities, streets, sidewalks, parks and recreation facilities.
• Produce new housing that is planned and developed to protect natural systems and meet
community design and landscaping standards.
CommerciallIndushmi
• Provide employment opportunities within the community by attracting new industries and
professional offices.
• Establish well-defined and limited neighborhood business centers to provide convenient
services to adjacent neighborhoods without adversely impacting neighborhood quality.
• Control strip development on major arterials while maintaining existing vital businesses.
• Define and implement a development and design concept for the City Center that establishes
vibrant focal point and identity in the community.
• Build a transportation system that adequately serves commercial areas, encourages use of
alternative modes of transportation for work trips, and allows commercial and industrial
growth without creating additional congestion.
• Establish design standards for commercial areas that are closely related to their function but
encourage attractive appearance and protection of the environment.
• Protect industrial areas from encroachment by other uses and upgrade the quality of existing
industrial areas.
n S ace
• Identify and preserve open spaces to maintain the natural beauty of the community and to
provide views, protection of sensitive areas, recreation and other benefits.
• Protect as open space natural systems and natural features recognized for their sensitivity to
urban development when development occurs.
Tra_ portation
• Develop a transportation system that provides mobility, and emphasizes safety and aesthetics
as well as capacity concerns.
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• Plan and design transportation improvements in a regional context that integrate land use and
circulation systems.
Natural Environment
• Preserve the natural character of sensitive areas, habitats, wetlands, stream corridors, lakes
and aquifer recharge areas in order to protect public health, safety and welfare, and maintain
the beauty of the community.
• Protect the quality of surface and groundwater, and maintain an adequate public water supply.
Short Term
The City's immediate objectives continue to be: 1) maintain its relative fiscal strength; 2) facilitate the
maturation of its municipal corporation; 3) make City government easier to access, understand, and
participate in; 4) realize the community's values and preferences; and 5) improve the quality of life for its
people as well as the climate for business activities. Council and staff worked together and identified the
following broad goals for the 2003-2004 biennial budget:
I Be Responsible and Responsive to the Voters' Message
• Operate the City in an entrepreneurial and fiscally responsible manner with focus on both
revenue generation as well as expenditure control;
• Make responsible program choices in balancing the budget such that the City does not
penalize the voters.
II Enhance Public Safety in the Community
• Recognize that public safety continues to be the top priority of the Council;
• Look at an integrated public safety strategy that involves all facets of City operations
such as licensing, code enforcement, police, prosecution, and court services;
• Analyze the police/court facility options and prepare an implementation plan.
III Invest in our Community's Future
• Aggressively implement the City Center vision;
• Identify sustainable capital funding sources;
• Recognize the importance of programs for families and youth.
IV Improve Communication of and Accessibility to Government Services
• Make government service more accessible and user-friendly through the application of e-
Commerce and e-Government.
Initiatives in the 2003-2004 biennial budget include:
Increased public safety presence in the community and high schools with the addition of
six new officers. Three police administrative positions were converted into four patrol
officer positions and four police positions were added; two School Resource Officers and
two patrol officers. This places an additional police officer on each squad, a new officer
in the new Todd Beamer High School, and a new officer to rove between Federal Way's
five high schools. Public safety continues to comprise the largest category in our budget,
at 57 percent.
► Continued implementation of permit process improvements with the help of two new
positions in Community Development.
► Completion of Federal Way's Planned Annexation Area (PAA) study to determine what
the area's zoning should be, if it were to annex to the city, and how it would impact the
City's budget.
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► Continue the ongoing efforts to create a pedestrian -friendly, multi -use downtown with
work on the Master Environmental Review of the City center.
► Focus on customer service. An employee team that cuts across all departments and all
levels will work to augment the city's customer service culture and come up with specific
customer service initiatives in 2003.
► Building the Bridge Project: Several city departments have joined together with
representatives from other governments, businesses, human service agencies, the faith
community, and others to help residents of one of Federal Way's neediest neighborhoods
address their human services, housing, and employment. The Building the Bridge effort
is a strong example of the collaboration of agencies and volunteers that can serve to
effect far-reaching change in our city.
► Investment in the City's infrastructure through the adoption of the Capital Improvement
Plan. City Council adopted and funded, a six -year capital improvement plan which:
Invests S78 million in transportation improvements which will continue the City's progress in
reducing congestion.
Includes $15 million investments in parks improvements.
Sets aside S24 million dollars for the new municipal facility, and the early retirement of the
Celebration Park acquisition bonds, freeing up much -needed revenue for other capital
projects.
Provides funding for the design, construction and operation of the new community/senior
center/swimming pool with an increase in the utility tax of 1 %.
FINANCIAL INFORMATION
The City of Federal Way is responsible for establishing and maintaining an internal control structure
designed to ensure that the assets of the City are protected from loss, theft, or misuse and to ensure that
adequate accounting data are compiled to allow for the preparation of financial statements in conformity
with generally accepted accounting principles. The internal control structure is designed to provide
reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance
recognizes that: 1) the cost of a control should not exceed the benefits likely to be derived, and 2) the
evaluation of relative costs and benefits of the control system requires estimates and judgments by
management.
Single Audit
As a recipient of federal, state and county financial assistance, the City is responsible for maintaining an
adequate internal control structure to ensure compliance with applicable laws and regulations related to
those programs. This internal control structure is subject to periodic evaluation by management and the
State Auditor's Office.
As part of the City's single audit, tests are made to determine the adequacy of the internal control structure,
including that portion related to federal financial assistance programs, as well as to determine that the
government has complied with applicable laws and regulations. The results of the City's single audit for
the year ended December 31, 2003 indicated that there were no material weaknesses in the internal control
structure.
Budgetary Controls
The City maintains budgetary controls in accordance with the Revised Code of Washington (RCW
35A.33). The objectives of these budgetary controls are to ensure compliance with legal provisions
embodied in the annual appropriated budget approved by the City Council. Activities of the General Fund,
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some Special Revenue Funds, and Debt Service Fund are included in the annual appropriated budget. The
level of budgetary control at which expenditures cannot legally exceed the appropriated amount is
established at the individual fund level. The project -length based Special Revenue Funds, and the Capital
Projects, Enterprise and Internal Service funds are management budgets only and therefore these budgets
are not represented in the CAFR. The City also maintains an encumbrance accounting system as one
technique of accomplishing budgetary control. All appropriations lapse at year-end.
As demonstrated by the statements and schedules included in the financial section of this report, the City
continues to meet its responsibility for sound financial management.
Basis of Accounting
All governmental funds are accounted for using the modified accrual basis of accounting. Under the
modified accrual basis, revenues are recorded when received in cash, except for revenues susceptible to
accrual. Revenues considered susceptible to accrual are those that are measurable and available to finance
the government operation during the current period. Expenditures, other than accrued interest on general
long-term debt, are recorded at the time liabilities are incurred.
All proprietary funds use the accrual basis of accounting. Under the accrual basis, revenues are recorded
when they are earned and expenses are recorded as soon as they result in liabilities for benefits received.
CASH MANAGEMENT
The City began investing outside the State Investment Pool in November 1994. Based on an adopted
investment policy the City operates a conservative cash management program, investing surplus cash as
determined by anticipated cash flow needs. Investment decisions are based on established investment
policies in compliance with Washington State statutes, with consideration given first to safety, secondly to
liquidity, and lastly to yield. The City's portfolio at December 31, 2003 consisted of investments in U.S.
Government Agency securities and investments in the Washington State Investment Pool, with maturities
ranging from one day to three and ''/z years.
Safeguarding assets is of primary concern for the City. Pursuant to the Governmental Accounting
Standards Board (GASB) statement #3, the City provides detailed disclosure regarding the risk associated
with deposits and investments held by the City. GASB statement #3 established a categorization of
investments and deposits based on risk. Category 1 includes investments that are either insured, registered,
or held by the City or its agent in the City of Federal Way's name; category 2 includes uninsured- and
unregistered investments held by the counter parry's trust department or agent in the City's name; and
category 3 includes uninsured and unregistered investments held in the counter party', trust department or
agent, but not in the City's name. This categorization is included in note 4 of the general purpose financial
statements. In order to assure the highest degree of safety on all City investments, a safekeeping agreement
was established for all securities purchased by the City prior to implementing our in-house investment
program during 1994.
The Washington State Treasurer manages a State Investment Pool for use by any city, county, town,
municipal corporation, or special taxing district within the state. Municipalities determine the amount and
length of investment in the pool based on individual cash flow needs. Interest is earned on the pool's actual
experience for the month, less an administrative fee equivalent to 3'/z basis points (.0351/o). At December
31, 2003, the City had $16,150,768 invested in the State Investment Pool. In 2003, the. average monthly
earnings rate for the entire portfolio was approximately 1.93% as compared to the average monthly
earnings rate for the State Investment Pool of 1.16%.
RISK MANAGEMENT
The City maintains insurance against most normal hazards except for unemployment insurance, for which it
has elected to become fully self -insured. Related premiums received by the Risk Management Fund are
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used to reimburse the State Employment Security Department for unemployment benefits paid to eligible
individuals, and to establish reserves for the payment of estimated future unemployment claims liability.
Through its Risk Management Fund, the City is also recovering insurance premium costs for general
liability coverage and building reserves for a future general liability self-insurance program. During 2003,
the City purchased commercial insurance policies from commercial insurers. It is the opinion of the City's
legal staff that at year-end there were no outstanding claims that met expenditure accrual or loss disclosure
criteria.
The City's industrial insurance is provided by Washington State and is administered by the Department of
Labor and Industries. 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.
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 2003 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 for 2003. 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, 2002. The Certificate of
Achievement is a prestigious national award recognizing conformance with the highest standards for
preparation of state and local government financial reports.
In order to be awarded a Certificate of Achievement, a governmental entity must publish an easily readable
and efficiently organized CAFR, the contents of which conform to program standards. Such reports must
satisfy both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. The City of Federal Way has received
a Certificate of Achievement for the last thirteen years (fiscal years ended 1990 - 2002). We believe that
our current report continues to conform to the Certificate of Achievement Program requirements, and we
are submitting it to the GFOA.
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, 2003 and 2004. 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.
ACKNOWLEDGMENTS
The preparation of this comprehensive annual financial report represents the culmination of months of
concerted teamwork by the Finance Division. Many members of the department demonstrated unswerving
personal determination and dedicated many long days of focused attention to produce this unique and
exemplary document. Very special thanks are due to Dave Papandrew, our outside consultant who helped
with the GASB 34 financial statement conversion, Dong Chou, Financial Analyst who prepared the final
document, and Jeri-lynn Clark, Account Tech who coordinated the final document production.
In addition, staff in all City departments should be recognized for responding so positively to the requests
for detailed information which accompany each annual audit. The role of the State Auditor's Office should
also be acknowledged as a significant contribution to a fine product.
Xi
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 submi _
Iwen Wang
Management Ser►dces Director
Tho Kraus
Finance Manager
xii
City of Federal Way / 1
CITY OFFICIALS
JEANNE BURBIDGE DEAN MCCOLGAN
Mayor Deputy Mayor
ERIC FAISON MARY GATES LINDA KOCHMAR
Councilmember Councilmember Councilmember
DAVID MOSELEY
City Manager
OTHER ADMINISTRATIVE OFFICERS
JACK DOVEY
Councilmember
MICHAEL PARK
Councilmember
CityAttorney.................................................................................................................................. Patricia Richardson
CityClerk...................................................................................................................................................Chris Green
Community Development Director........................................................................................................Kathy McClung
Management Services Director.....................................................................................................................Iwen Wang
Parks, Recreation and Cultural Services Director............................................................................... Jennifer Schroder
PublicSafety Director........................................................................................................................ Anne Kirkpatrick
PublicWorks Director..................................................................................................................................... Cary Roe
City of Federal Way / 2
Municipal Court
David Tracy
•Adjudicates Cases
•Probation Services
•Indigent Defense Screening
Total FTE: 13.55
Community
Development
KathyMcClung
•Current Planning
•Land Use
•Building Permits/
Inspections
-Code Compliance
f'at;iI FTE: 30.5
People of Federal Way
I Mavor and Citv Council
Jeanne Burbidge, Mayor
Dean McColgan, Deputy Mayor
Jack Dovey, Erick Faison,
Mary Gates, Linda Kochmar,
Michael Park
City Manager
David Moseley
Total FTE: 5
Parks, Recreation
& Cultural Services
Jennifer Schroder
•Recreation Programs
*Ground Maintenance
*Park Operations
•Community/Sr Center
•Facility Maintenance
•Dumas Bay Centre
•Civic Theatre
Total FTE: 30.6
City Attorney
Patricia Richardson
*Civil Legal Services/
Litigation
*Prosecution
•Advise Council
Boards, Commissions
& staff
•Advice/Drafting
Ordinances
Total FTE: 10.4
Public Safety
Anne Kirkpairi�
•Drug Awareness
Resistance Education
*Crime Analysis/
Prevention
*Traffic Enforcement
•Investigation
*Jail Services
Total
Boards and Commissions
*Arts Commission
•Diversity Commission
•Ethics Board
*Human Services Commission
*Parks & Recreation Commission
•Planning Commission
•Youth Commission
Boards and Commissions
*Civil Service Commission
Public Works
Cary Roe
*Development Services
*Street Maintenance
*Traffic Operation
*Surface Water Mgmt
*Solid Waste/
Recycling
*Neighborhood
Safety
*Transportation
*System Planning
155 'fatal FTE: 41.5
Management
Services
Iwen Wang
*City Clerk
*Finance
•Human Resources
*Risk Management/
Purchasing/Fleet
*Systems
Total FTE: 25
City of Federal Way / 3
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, 2002
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
President
Executive Director
The Government Finance Officers
Association of the United Sates
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 fiscal year
ended December 31, 2002. This
was the thirteenth consecutive
year that the government 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 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 the
Certificate of Achievement
Program's requirements and we
are submitting it to GFOA to
determine its eligibility for
another certificate.
City of Federal Way / 4
CITY OF
141� 4illl -
Federal Way
Legislative Building
PO Box 40021
Olympia, Washington 98504-0021
INDEPENDENT AUDITOR'S REPORT
July 29, 2004
The Honorable Mayor and City Council
City of Federal Way
Federal Way, Washington
Washington State Auditor
Brian Sonntag
(360)902-0370
FAX (360) 753-0646
TDD Relay 1-800-833-6388
http://www.wa.gov/sao/
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, 2003, as listed in the table of contents. These financial statements are the responsibility of the City's management.
Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our financial audit in accordance with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the
governmental activities, the business -type , each major fund, and the aggregate remaining fund information of the City of Federal
Way, King County, Washington, as of December 31, 2003, and the respective changes in financial position and cash flows, where
applicable, thereof, for the year then ended in conformity with accounting principles generally accepted in the United States of
America.
As described in Note 1 to the financial statements, during the year ended December 31, 2003, the City has implemented
Governmental Accounting Standard's Board Statement 34, Basic Financial Statements — and Management's Discussion and Analysis
for State and Local Governments, Statement 37, Basic Financial Statements — and Managements Discussion and Analysis for State
and Local Governments, Omnibus; and Statement 38, Certain Financial Statement Note Disclosures.
The Management's Discussion and Analysis on pages 7 through 16 and budgetary comparison information on pages 24 through 26,
are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting
Standards Board. We have applied certain limited procedures, which consisted principally of inquires of management regarding the
methods of measurement and presentation of the required supplementary information. However, we did not audit the information and
express no opinion on it.
Our audit was performed for the purpose of forming opinions on the financial statements that collectively comprise City of Federal
Way's basic financial statements. The accompanying financial information listed as combining financial statements and supplemental
information on pages 61 through 74 is presented for purposes of additional analysis and is not a required part of the basic financial
statements. The combining financial statements and supplemental information has been subjected to auditing procedures applied in
the audit of the basic financial statements and, in our opinion, are 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 of Federal Way. Such information has not been
subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on
them.
Sincerely,
BRIAN SONNTAG, CGFM
STATE AUDITOR
City of Federal Way / 6
Federal Way
City of Federal Way / 7
MANAGEMENT'S DISCUSSION AND ANALYSIS
This section of the City of Federal Way's annual financial report provides a narrative overview of the
City's financial activities for the fiscal year ended December 31, 2003 and the financial position as of
December 31, 2003. This information should be read in conjunction with the preceding letter of transmittal
and the financial statements and notes to the financial statements that follow. Previous year (2002)
comparable data are not available for the 2003 report due to a change in reporting format and the associated
requirement for audited comparable information which is not available. Comparable data will be provided
in the 2004 annual financial report.
FINANCIAL HIGHLIGHTS
• The total assets of the City of Federal Way exceeded its liabilities at December 31, 2003 by $144.0
million. Capital Assets (net of depreciation and related debt) account for 57% of this amount with a
value of $82.7 million. Of the remaining net assets $23.5 million or 16% may be used to meet the
government's ongoing obligations to citizens and creditors, without legal restriction.
• The City's total net assets increased by $17.4 million, or 14% in 2003. Governmental activities
provided $16.5 million or 95% with the remainder being provided by the business -type activities.
Governmental fund balances at year-end were $45.8 million, a 10% increase over the prior year. Of
this amount, a total of $42.5 million, or 93% of the governmental fund balance is unreserved and
available to fund ongoing activities. The remaining $3.3 million is earmarked for debt service, paths &
trails reserve, hotel/motel lodging tax, police special funds, petty cash/change funds, and advance
travel.
® Unreserved fund balance in the general fund was $7.6 million, a decrease of $1.3 million or 15% from
the prior year.
• The City debt increased by $6.8 million during the current fiscal year. The key factors in the increase
were $15.0 million in new debt issued for a new multi -purpose facility known as the community/senior
center and $6.2 million for the new City Hall loan assumption, offset by annual debt service payments
and early retirement of the 1993 refunding bond.
OVERVIEW OF FINANCIAL STATEMENTS
This discussion and analysis are 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. Other
supplementary information in addition to the basic financial statements is also contained in this report.
This section of the management's discussion and analysis is intended to introduce and explain the basic
financial statements.
Government -wide Financial Statements
The government -wide financial statements are designed to give the reader a picture of the financial
condition and activities of the City as a whole. This broad overview is similar to the financial reporting of
private -sector businesses. The government -wide financial statements have separate columns for
governmental activities and business -type activities.
The statement of net assets presents information on all of the City of Federal Way's assets and liabilities,
with the difference between the two reported as net assets. This statement serves a purpose similar to that
of a balance sheet in private business. Over time, increases or decreases in net assets may serve as a useful
indicator of whether the financial position of the City is improving or deteriorating
City of Federal Way / 8
The statement of activities presents information showing how the City's net assets changed during the most
recent fiscal year. All changes in net assets 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 one governmental joint venture; Valley
Communications Center. A description of this joint venture is found in note 14 of the notes to the financial
statements.
The government -wide financial statements can be found immediately following this Management's
Discussion & Analysis (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 funds, 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 meet certain
objectives. Funds are often set up in accordance with special regulations, restriction or limitations. The
City of Federal Way uses funds accounting to ensure and show compliance with final -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. The basis of accounting is different between the
governmental fund statements and the government -wide financial statements. The governmental fund
statements focus on near term revenues/fmancial resources and expenditures while the government -wide
financial statements include near term and long term revenues/financial resources and expenses. The
information in the governmental fund statements can be used to evaluate the City's near term financing
requirements and immediate fiscal health. Comparing the governmental fund statements and the
government -wide statement can help the reader better understand the long teen impact of the City's current
year financing decisions. To assist in this comparison, reconciliations between the governmental fund
statements and the government -wide financial statements are included with the governmental fund balance
sheet and the governmental fund statement of revenues, expenditures and changes in fund balances.
The City of Federal Way maintains fifteen individual governmental funds. The City's six major
governmental funds, the general fund, street fund, utility tax fund, debt service fund, city facilities fund,
and the transportation 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 nonmajor governmental funds. Individual
fund data for each of the nonmajor governmental funds can be found in combining statements later on in
this report.
City of Federal Way / 9
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.
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 control 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 and self-
insurance program, information systems, mail and duplication services, fleet of vehicles and motorized
equipment, and facilities management.
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 basic proprietary fund financial statements can be found following the governmental fund statements
of 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 basic financial statements.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents the
combining statements for nonmajor governmental funds, internal service funds, and capital assets of
governmental funds.
GOVERNMENT -WIDE FINANCIAL ANALYSIS
Statement of Net Assets
The statement of net assets can serve as a useful indicator of the City's financial position. The City of
Federal Way's net assets at December 31, 2003 total $144.0 million, excluding existing transportation
infrastructure assets which are not reported in this financial report. The following is a condensed version of
the government -wide statement of net assets. Since this is the first period in which the City of Federal Way
is reporting on the new government -wide basis, no previous year comparable data, as required by GASB 34
reporting requirements, is available. Comparable data will be provided in the 2004 annual financial report.
City of Federal Way / 10
City of Federal Way's Net Assets
Year 2003
Governmental Business -Type
Activities Activities Total
Current and other assets $ 60,909,297 $ 8,301,667 $ 69,210,964
Capital assets, net of accumulated depreciation 75,360,095 42,046,043 117,406,138
Total assets 136,269,392 50,347,710 186,617,102
Long-term liabilities
Other liabilities
Total liabilities
Net assets:
Invested in capital assets, net or related debt
Restricted
Unrestricted
Total net assets
34,730,517 2,486,549 37,217,066
4,884,188 492,790 5,376,978
39,614,705 2,979,339 42,594,044
43,162,298 39,559,494 82,721,792
37,806,176 14,148 37,820,324
15,686,213 7,794,729 23,480,942
$ 96,654,687 S 47,368,371 S 144,023,058
The largest component of the City's net assets, 57% or $82.7 million, in its investment in capital assets net
any related outstanding debt issued to acquire those assets. These capital assets such as 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. The City has not elected the
GASB 34 reporting option to include all general infrastructure of the City acquired or substantially
renovated since 1990. Only general infrastructure acquired in 2003 is reported. An analysis and valuation
of general infrastructure acquired or substantially renovated since 1990 is underway.
Approximately 23% or $33.0 million of the total net assets of the city are earmarked for construction
projects such as a community centre, new City Hall, improvements to SR99, acquisition of additional city
parks, renovation and improvements to Historical Cabins park, neighborhood parks, and Sacajawea
sportsfield. The City attempts to fund capital construction projects on a pay-as-you-go basis, aggressively
pursuing transportation grant funding and cost sharing with developers wishing to construct large projects
in the City that impact the transportation system.
The remaining balance of restricted net assets is divided among restrictions for: debt service payments of
$2.6 million; $431K for police special funds, petty casb/change funds and advance travel; $217 thousand
hotel/motel lodging tax; $61 thousand for paths and trails; and $1.2 million customer- deposits. The
business -type activities portion of $7.5 million may only be spent on surface water management activities
and the remaining $303 thousand 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 $15.7 million to meet ongoing obligation to citizens and creditors.
Examples of other City obligations which these net assets may be used for are public safety, parks
maintenance, and ongoing street maintenance.
At the end of the fiscal year, the City of Federal Way reported positive balances in all three categories of
net assets, for the government as a whole, as well as for the separate governmental and business -type
activities.
Changes in Net Assets
The changes in net assets table illustrates the increases or decreases in net assets of the City resulting from
its operating activities. The City's net assets increased approximately $17.4 million in 2003. The increase
was split between the governmental activities ($16.5 million or 95%) and business -type activities ($910
thousand or 5%). Since this is the first year of the City reporting on the new government -wide basis, no
City of Federal Way / 11
previous year comparable data, as required by GASB 34 reporting requirements, is available. Comparable
data will be provided in the 2004 annual financial report.
The following is a condensed version of the City's changes in net assets. The table shows the revenues,
expenses, and related changes in net assets in tabular form for the governmental activities separate from the
business -type activities. The graphs that follow compare program revenues to program expenses and
illustrate the revenues by source separately for the governmental and business -type activities.
City of Federal Way's Net Assets
Year 2003
Revenues:
Program revenues:
Charges for services
Operating grants and contributions
Capital grants and contributions
General revenues:
Property tax
Sales tax
Other taxes
Licenses and permits
Other revenue
Unrestricted grants and contributions
Investment interest
Total Revenue
Expenses:
General government
Security of Persons & Property
Transportation
Physical environment
Economic environment
Health and human services
Culture and recreation
Interest on long-term debt
Surface Water Management
Dumas Bay Center
Total Expenses
Governmental Business -Type
Activities Activities Total
$ 6,746,303 $
4,041,063
$ 10,787,366
360,000
168,555
528,555
10,069,756
757,578
10,827,334
8,200,955
-
8,200,955
10,547,534
-
10,547,534
13,522,836
13,522,836
1,672,225
-
1,672,225
1,110,208
1,091
1,111, 299
212,576
-
212,576
796.336
140.889
937,225
53,238,729
5,109,176
58,347,905
5,601,311
- 5,601,311
15,597,612
- 15,597,612
5,389,975
5,389,975
351,023
- 351,023
2,923,756
- 2,923,756
607,199
607,199
4,455,865
- 4,455,865
1,683,028
- 1,683,028
-
3,380,690 3,380,690
-
935,422 935.422
36,609,769
4,316,112 40,925.881
Increase in net assets before transfers
16,628,960
793,064
17,422,024
Transfers
116,813
116,813
-
Increase in net assets
16,512,147
909,877
17,422,024
Net assets - beginning
80 142,540
46,458,494
126,601,04
Net assets - ending
$ 96,654,687
$ 47,368 371
$ 144,023.058
Governmental activities contributed $16.5 million or 95% of the total change in net assets of $17.4
million. Key elements of this increase are as follows:
$15.0 million bond issued for construction of a community center, and $6.2 million loan
assumption for new City Hall, of which $8.0 million was spent in 2003 for the purchase of the
Paragon Building and parking lot for new City Hall.
s $775 thousand in motor vehicle licensing fees eliminated due to the Supreme Court's decision to
uphold Initiative 776. The initiative which passed in November 2002 repealed the $15 annual
City of Federal Way / 12
local vehicle licensing fee imposed in 4 counties (King, Pierce, Snohomish & Douglas) as well as
Sound Transit's 0.3% motor vehicle excise tax.
• $976 thousand dollar increase in utility tax collections due to a 1% increase in rates (from 5% to
6%) effective February 1, 2003. The additional 1% implemented was approved by Council during
the 2003/04 budget for the development of a new multi -purpose facility that will serve as the
community/senior center and a new pool to replace the 34-year old Forward Thrust Fund pool
(Kenneth Jones Memorial Pool) transferred from King County.
• Other tax collection changes include $308 thousand increase in property tax, $297 thousand
increase in real estate excise tax, and $71 thousand increase in gambling tax. Sales tax decreased
by $188 thousand.
Governmental Activities - Revenues
lawaarnm inlet '.-h=: r:. for a�.irca
s% l 12 7%
1.aenea.nd A,
3 1% 1
Op. ling pane and
eeahibmlml., 0 7%
Cnpil.l p.n ud
Ulm>.aieled pem. A mamN mk Ig 9%
eaam7,auons, o az
�pmrluis �x
Sehv l.x, 19.gti
Governmental Activities - Expenditures
I.am.e la.g.lem �
Hdih ud h.m..
Business -type activities of the City's surface water management system and Dumas Bay Centre increased
the City's net assets by $878 thousand accounting 5% of the total growth in the government's net assets.
Key elements of this increase are as follows:
• The Surface Water Management Fund accounts for $876 thousand of the increase. This includes an
increase $53 thousand from developer contributions and $129 thousand from interest earnings. The
remaining $694-thousand-is-due- mair& to increases -in capital -assets, net -of depreciation.
• The Dumas Bay Centre Fund accounts for only $2 thousand of the increase.
Business -Types Activities - Revenues Business -Type Activities - Expenditures
Inreahnenl inlntll,
a%
Umeaaiaed gmu n— E.s [:—h,
ud w9m21sonE—��___ % 21.7%
Vj: .
0.0% — 1
C.pn.1 W-nu.nd =
eeetrlh..o 14.8% •-
M
OR alma grtnY end
mim.'hmblx 3 3% j
Surf Walt
Chegn (9r aervirxl, Mnugalnl
79.1% 78.3%
City of Federal Way / 13
FINANCIAL ANALYSIS OF THE CITY'S FUNDS
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, unreserved 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 2003, the City's governmental funds reported combined ending balances of $45.8 million,
an increase of $4.3 million in comparison to the prior year. Approximately 16% or $7.6 million of this
amount constitutes unreserved general fund balance, which is available for spending at the City's
discretion. The remainder of the fund balance is reserved to indicate that it is not available for new
spending because it has already been committed for debt service payments, capital projects, police special
funds and petty cash/change fund/advance travel.
The General Fund is the chief operating fund of the City. At the end of 2003, unreserved fund balance of
the general fund was $7.6 million, while total fund balance was $8.0 million. General Fund unreserved
fund balance represents 24% of total general fund expenditures.
The City's general fund decreased by $1.5 million during 2003. Key factors include:
• $775 thousand elimination of motor vehicle licensing fee due to Initiative 776, thus increasing the
general fund subsidy to street fund.
• $1.25 million transfer to partially fund various capital improvements projects
The Debt Service Fund has a total fund balance of $2.6 million, all of which is reserved for the payment of
debt service. The net decrease in fund balance during 2003 was $3.0 million. The primary cause was the
use of a portion of the fund balance to retire the 1993 refunding bond.
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 $7.5 million, and those for Dumas Bay Centre amounted to $289 thousand.
The total growth in net assets for both funds was $876 thousand and $2 thousand 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.
BUDGETARY 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. The following discussion is reflective only of the
current year of the biennium.
The supplementary expenditure budget increase of $4.9 million between the original budget for the fiscal
year 2003 and the final budget are explained as follows:
Revenues increased in the following areas:
• Real estate excise tax collections $1.0 million
• Facility lease $508 thousand
• Transfers in $40 thousand
• Grants/Contributions $406 thousand
City of Federal Way / 14
• Probation contract $150 thousand
• 2002 ending fund balance carry forward $3.7 million
Expenditure increased in the following areas:
• The increase in real estate excise tax funded a $1.0 million transfer to the community/senior center
facility project and the facility lease revenue of $508 thousand will go toward the new City Hall
debt service.
• The $406 thousand in grants and contributions funded the increase in public safety and solid waste
& recycling grant programs.
• $1.1 in ending fund balance was used to provide transfers to various capital improvement projects,
including the community/senior center facility and new City Hall, and transfers to internal service
funds for management information systems.
• The remaining $1.9 million increase in general governmental services was also funded by ending
fund balance carry forward.
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, 2003 amounts to $117.4 million (net of accumulated depreciation). This investment in
capital assets includes land, buildings, improvements, machinery and equipment, infrastructure, park
facilities and construction in progress. The City has elected to exclude roads acquired or constructed prior
to 2003. The City is currently inventorying and valuing these assets and will include them at a later date.
As this is the first year that this type of report is included in the City's annual financial report, a comparison
with prior year results is not provided. Such comparison will be provided in future years.
City of Federal Way's Capital Assets (net of depreciation)
Year 2003
Land
Building
Improvements other than building
Machinery and equipment
Infrastructure
Construction in progress
Total
Governmental
Business -Type
Activities
Activities
Total
$ 36,982,986
5,818,294
$ 41901,280
2,207,265
34,448,997
36,656,262
12,418293
-
12,418,293
3,628:022
106,643
3,734,665
711,522
-
711,522
19412,007
1672,109
21,084,116
S 75,360,095
$ 42,046,043
$ 117,406,138
Major capital asset events during the current fiscal year included the following:
• The purchase of the Paragon building and land, and tenant improvements totaling $8.4 million.
This facility will serve as the new City Hall.
• General capital improvement projects for improvement and expansion of City streets and traffic
corridors, and parks land acquisitions and improvements totaling $12.3 million.
City of Federal Way / 15
• 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 the current fiscal year, the City of Federal Way had total bonded debt outstanding of $34.7
million which is backed by the full faith and credit of the government. The remainder of the City's debt
represents Certificates of Participation for the purchase of City Hall and Public Works Trust Fund Loans.
City of Federal Way's Long -Term Debt (Future Principle and Interest Requirements)
Year 2003
Governmental
Business -Type
Activities
Activities
Total
General obligation bonds
$ 51,827,782
$ - $
51,827,782
Certificates of participation
21,019
-
21,019
Public works trust fund loan
-
2,674,190
2,674,190
Total
$ 51,848,801
$ 2,674,190 $
54,522,991
The City's total debt increased by $6.96 million (22 percent) during 2003. The key factors in the change
was the loan assumption for the new City Hall ($6.17 million), issuance of general obligation bonds for
community/senior center ($15.0 million), offset by regular annual debt service payments ($2.90 million)
and the early retirement of the 1993 refunding bond ($11.45 million).
The City of Federal Way maintains an AA- rating from Fitch Investors for its general obligation bonds.
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.
The City's assessed valuation for 2003 was $6.26 million and the total amount of debt the City may issue is
$438.4 million. Remaining legal debt capacities as of December 31, 2003 are:
General Government (no vote requirement) $ 62,615,313
General Government (3/5 majority vote required) $ 62,628,744
Parks & Open Space (3/5 majority vote required) $156,571,860
Utilities (3/5 majority vote required) $156,571,960
Total Capacity $43&387.777
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.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
The City of Federal Way relies primarily on sales tax, property tax, and other taxes (such as gambling tax, a
portion of utility tax, and criminal justice sales tax), fees (franchise, business licenses, permits) for its
governmental activities. Other sources include state shared revenues and federal and local grants. The
following is a discussion on major changes that occurred in the 2003/2004 biennial budget.
Utility Tax
The City Council included in the 2003/04 budget an additional 1% to the Utility Tax (to 6%) for the
development of a new multi -purpose facility that will serve as the community/senior center and a new pool
to replace the 34-year old Forward Thrust Fund pool (Kenneth Jones Memorial Pool) transferred from King
County. The growth of utility tax revenues in the near future is anticipated to be minimal. This is due to
the saturation of cellular phone services and relatively stable energy prices. Utility taxes are receipted into
City of Federal Way / 16
a special Utility Tax Fund and transferred into the appropriate capital project, debt service, and/or operating
funds as designated.
Sales Tax
The City's 0.85% sales tax was originally anticipated to generate $11.3 million in 2004 but was reduced by
$494 thousand due to slower than anticipated growth rates in the Puget Sound area. The revised 2004
budget of $10.5 million is $287 thousand or an increase of 2.7%. Sales tax is the largest revenue source for
the City, representing about one-third of general fund resources.
Admissions Tax
The City Council, during the 2003/04 budget, enacted a 2.5% admission tax effective 2005 to provide the
necessary resources for four new police officers to improve public safety service levels. The 2.5% tax will
not apply to not -for -profit activities and is projected to generate $325,000 in 2005. Revenues will primarily
be generated from a Six Flags Theme Park located in the City and is anticipated to grow by the rate of
inflation.
Motor Vehicle Licensing Fees
On October 30, 2003 the state Supreme Court reversed King County Superior Court's decision and upheld
the constitutionality of Initiative 776. The initiative which passed in November 2002 repealed the $15
annual local vehicle licensing fee imposed in 4 counties (King, Pierce, Snohomish & Douglas) as well as
Sound Transit's 0.3% motor vehicle excise tax. The state Supreme Court found that the initiative did not
violate the state's "single -subject rule" and did not illegally violate King County's bond contracts. The
impact to Federal Way is about $750 thousand annually. The Street Fund will make up for this loss of
revenue through increased subsidy from General Fund.
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 Tho Kraus, Finance
Manager, City of Federal Way, P.O. Box 9718, Federal Way, WA 98063-9718, telephone 253-835-2520,
or visit the City's website at www.cityaffederalway.cam.
Basic Financial Statements
City of Federal Way / 18
Federal
Way
City of Federal Way/ 19
STATEMENT OF NET ASSETS
December 31, 2003
ASSETS
Cash & cash equivalents and investments
Receivables (net)
Due from other governments
Prepaid items
Restricted assets:
Cash with escrow agent
Customer deposits
Investment in joint venture
Capital Assets (net of accumulated depreciation)
Land
Depreciable assets
Infrastructure
Construction in progress
Total Assets
LIABILITIES
Accounts payable and accruals
Unearned revenue
Retainage payable
Retainage payable - with escrow agent
Due to other governments
Compensated absences
Customer deposits
Noncurrent Liabilities:
Due within one year
Due in more than one year
Total Liabilities
NET ASSETS
Invested in capital assets, net of related debt
Restricted for:
Customer deposit
Debt service
Capital projects
Other
Unrestricted
Total Net Assets
Governmental Business -type
Activities Activities Total
$ 50,697,217
$ 7,979,633
$ 58,676,850
2,197,385
170,406
2,367,791
4,298,055
28,621
4,326,676
10,928
-
10,928
109,069
109,069
1,172,992
13,938
1,186,930
2,532,720
-
2,532,720
36,982,986
5,818,294
42,801,280
18,253,580
34,555,640
52,809,220
711,522
-
711,522
19,412,007
1,672,109
21,084,116
136,269,392
50,347,710
186,617,102
2,017,934
108,2.95
2,126,229
658,138
215,475
873,613
37,687
9,412
47,099
-
109,069
109,069
19,565
19,565
977,872
36,601
1,014,473
1,172,992
13,938
1,186,930
3,101,167
182,359
3,283,526
31,629,350
2,304,190
33,933,540
39,614,705
2,979,339
42,594,044
43,162,298
39,559,494
82,721,792
1,172,992 13,938
1,186,930
2,599,653 -
2,599,653
33,324,511 -
33,324,511
709,020 210
709,230
15,686,213 7,794,729
23,480,942
$ 96,654,687 $ 47,368,371 S 144,023,059
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 20
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, 2003
Program Revenues
Operating Capital
Charges for Grants and Grants and
E enses Services Contributions Contributions
Net (Expense) Revenue & Changes in Net Assets
Governmental Business -type
Activities Activities Total
$ 5,601,311
$ 1,082,088
- $(4,519,223) $
$ (4,519,223)
15,597,612
3,012,21.0
- - (12,585,402)
(12,585,402)
5,389,975
1,041,261
- 10,069,756 5,721,042
5,721,042
351,023
67,812
- - (283,211)
(283,211)
2,923,756
564,825
- - (2,358,931)
(2,358,931)
607,199
117,302
360,000 - (129,897)
(129,897)
4,455,865
860,805
- - (3,595,060)
(3,595,060)
1,683,028
-
- - (1,683.028)
(1,683,028)
36,609,769
6,746,303
3.60,000 I0,069,756 (19,433,710)
- (19,433,710)
3,380,690
3,500,531
15,315
757,578 892,734 892,734
935,422
540,532
153,240
- - 241,650) {241,650)
4,316,112
4i 04
168,555
757,578 - 651,084 651,084
$40,925,881
10,787,366
$ 52S,5SS
5I0,827334 (19,433,710) 651,084 (I8,792,626)
General revenues:
Property tax
Sales tax
Other taxes
Licenses and permits
Other revenue
Unrestricted Grants & Contributions
Investment Earnings
Disposition of capital assets
Transfers
Total general revenues and transfers
Change in net assets
Net assets at beginning of year
Net assets at end of year
The notes to the financial statements are an integral part of this statement.
8,200,955
8,200,955
10,547,534
10,547,534
13,522,836
13,522,836
1,672,225
1,672,225
1,077,039
1,077,039
212,576
212,576
796,336
140,889
937,225
33,169
1,091
34,260
(116,813)
116,813
35,945,857
258,793 _
36,204,650
16,512,147
909,877
17,422,024
80,142,540
46,458,494
126,601,034
$96,654,697
$47,368,371
$144,023,058
City of Federal Way / 21
BALANCESBEET
GOVERNMENTALFUNDS
DECEMBER 31, 2003
Debt
City
Nonmajor
Total
General
Street
Utility Tax Service
Facilitics
Trans
--
Governmental
mportation
Gernmenrai
ASSETS
_
Equity in pooled cash & investments
$ 7,716,873
$ 912,780
$ $ 2,757,689
$24,058,432
$ 6,245,602
$ 1,633,791
$ 43,325,167
Prepaid insurance
5,928
-
-
5,928
Rctainage in escrow
_
Receivables (net):
Taxes
493,218
803,062 -
-
-
1,296,280
Accounts and contracts
255,199
-
- 170,524
319,728
100,000
845,451
Interest
9,627
738
9,357
21,357
6,376
1,548
49,003
Due from other governments
1,169,918
96,670
-
-
2,464,461
567,006
4,298,055
Interfund loans receivable
10,000
-
-
-
10,06o
TOTAL ASSETS
9,fifi0,763
1,010,18R
803,062 2,937,570
24.079,789
9,036,167
2,302,345
49,329,884
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
467,547 70,915 - 33,147 782,483 150,117
1,504,209
Accounts/payroll payable
269,349 34,972 - - 40,234 26,944
371,499
Accrued interest payable
- - 8,967 7,112 - -
16,079
Retainage payable
- 3,976 - - 33,711
37,687
Due to other governments
19,565 - - -
19,565
Due to other funds
_ _
Performance bonds
_ _
Deposits payable
395,188 777,804 - - -
1,172,992
hnterfund loans payable
- - - 10,000
10,000
Deferred revenue
499,501 22,521 328,950 28,884 - 27,273
907,129
TOTAL LIABILITIES
1,651,150 910,188 337,917 69,143 822,717 248,045
4,039,160
Fund balance:
Reserved:
Debt service
- - 2,599,653 - - -
2,599,653
Other
430,890 - - 278,130
709,020
Unreserved:
General fund
7,578,723 - - - - -
7,578,723
Special revenue funds
- 100,000 803,062 - - 675,755
1,578,817
Capital projects funds
- - - 24,010,646 8,213,450 1,100,415
33,324,511
TOTAL FUND BALANCES
8,009,613 100,000 803,062 2,599,613 24 0010,646 8,213,450 2,054,300
45,790,724
TOTAL LIABILITIES AND
FUND BALANCE
$ 9,660,763 $ 1,010,188 $ 803,062 $ 2,937,570 S24,079,789 $ 9,036,167 $ 2,302,345
Amounts reported for governmental activities in the statement of net assets are diftercnt because:
Capital assets are used in governmental activities are not financial resources and, therefore,
are not reported in the funds.
70,559,787
Investment in jointventum is not a financial resource and, therefore, not reported in the funds
2,532,720
Other long-term assets are not available to pay for current-period expenditures and, therefore,
are deferred in the funds
248,991
Internal service funds are used by management to charge the costs of insurance, information systems,
mail and duplication, fleet, and building management to individual funds. The assets and liabilities
of the internal service funds are included in governmental activities in the statement of net assets.
13,160,832
Long-term liabilities, including bonds payable, are not due and payable in the current period
and, therefore, are not reported in the funds.
(35,638,367)
Net assets of governmental activities
$ 96,654,687
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 22
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended December 31, 2003
Debt
City
Nonmajor
Total
General
Street
Utility Tax
Service
Facilities
Tran5portation
Govcmmcntal
Gnvetnmental
REVENUES
Taxes
$21,883,615
$ -
$ 7,147,978
$ 2,851,866
$ -
$
$ 138,975
$ 32,022,334
Licenses and permits
1,583,136
89,089
-
-
-
-
1,672,225
Intergovernmental
1,270,574
1,221,706
-
-
7,863,249
1,957,930
12,313,459
Service charges and fees
2,617,439
387,751
-
-
288,828
3,294,017
Development fees
-
-
-
-
2,363,990
201,225
2,565,215
Fines and forfeitures
887,071
-
-
-
-
-
887,071
Interest
197,207
12,118
31,803
175,790
140,794
102,659
40,940
701,311
Other
595,953
5,001
-
433,900
-
58,200
55
1.093,109
TOTALREVENUES
29,034,994
1,715,665
7,179,681
3,461,556
140,794
10,388.098
2,627,953
54,549,741
EXPENDITURES
Current:
General government
5,282,331
-
51,750
-
158,042
5,492,123
Security ofpersons and property
15,463,833
-
-
-
-
-
15,463,833
Transportation
-
3,376,024
-
-
-
1,982,519
5,358,543
Physical crwirminient
30,777
-
-
-
-
320,679
351,456
Economic environment
2,775,541
-
107,538
2,883,079
Health
603,184
-
-
-
-
603,184
Culture and recreation
3,479,703
-
-
-
27,689
3,507,392
Debt service:
Principal
-
-
-
14,159,881
-
-
-
14,159,881
Interest and fiscal charges
-
-
-
1,703,165
-
-
-
1,703,165
Capital outlay
246,322
57,956
-
-
8.950,139
11.541,645
1.983.559
22,779,620
TOTAL EXPENDITURES
27.881,690
3,433.980
51,750
15,M3,046
9.950,139
11.541,645
4,580,026
72,302,27S
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER)EXPENDrTURES
1,153,304
(1,718,3I5)
7,127,931
_[12,401,490)_
(8,809344]
(1,153,51D
(1,952,073)
(17,754,534)
OTHER FINANCING SOURCES (USES)
Transfers in
483,967
1,943,037
-
11,475,014
3,844,000
1,334,716
2,056,289
21,037,023
Transfers out
(3,094,724)
(124,722)
(14,197,817)
(2,053,000)
(695,081)
(118,491)
(116,306)
(20,390,141)
GO bond proceeds
-
-
21,168,599
-
21,168,599
Sale of capital assets
-
209,527
-
209,527
TOTAL OTHER FINANCING
SOURCES (USES)
(2,610,757)
1,718,315 -
(14,197,817)
9,422,014
24,327,518
1,425.752
1,939,993
4025,009
NET CHANGE IN FUND BALANCES
(1,457,453)
-
(7,069,886)
(2,979,476)
15,518,174
272,205
(12,090)
4,271,474
FUND BALANCES -BEGINNING
9,467,066
100,600
7,872,948
5,579,129
8,492,472
7,941,245
7-066.390
41,519,250
FUND BALANCES -ENDING $ 8,009,613 $ 10000 $ 803.062 $ 2,599.653 $24,010646 S 8,213,450 $ 2,0K30D $ 45,790.724
The notes to the financial statements are an integral part of this a tate mo nL
City of Federal Way/ 23
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, 2003
Amounts reported for governmental activities in the statement of activities (page 20) are
different because:
Net change in fund balances --total governmental funds
$ 4,271,474
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
capital outlays exceeded depreciation in the current period.
19,750,037
Revenues in the statement of activities that do not provide current financial resources
are not reported as revenues in the funds.
248,991
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 assets. 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 assets.
(6,988,581)
Internal service funds are used by management to charge costs of risk management,
information systems, mail & duplication, fleet, and building systems to the funds.
(645,175)
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.
(124,599)
Change in net assets of governmental activities
$ 16,512,147
The notes to the financial statements are an integral part of this statement.
Federal Way / 24
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2003
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
Physical environment
Economic environment
Health
Culture and recreation
Capital outlay
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Variance with
Budgeted Amounts
Final Budget -
Positive
Original
Final
Actual Amounts
(Negative)
$ 22,240,669
$ 22,240,669
$ 21,883,615
$ (357,054)
1,446,744
1,446,744
1,583,136
136,392
1,825,259
1,108,011
1,270,574
162,563
2,293,672
2,577,381
2,617,438
40,057
8,000
908,813
887,071
(21,742)
272,673
272,673
197,207
(75,466)
431,815
441,853
595,953
154,100
28,518,832
28,996,144
29,034,994
38,850
6,385,488
6,835,189
5,282,331
1,552,858
16,094,398
16,373,852
15,463,833
910,019
34,443
34,443
30,777
3,666
2,703,943
3,056,357
2,775,541
280,816
577,584
622,005
603,184
18,821
3,842,874
3,883,237
3,479,703
403,535
24,500
371,462
246,322
125,140
29,663,230
31,176,545
27,881,690
3,294,855
(1,144,398)
(2,180,401)
1,153,304
3,333,705
543,303
543,303
493,967
(59,336)
(2,092.546)
(3,192,970)
(3,094,724)
98,-246
TOTAL OTHER FINANCING SOURCES (USES)
(1,549,243)
(2,649,667)
_ (2,610,757) 38,910
NET CHANGE IN FUND BALANCES
(2,693,641)
(4,830,068)
(1,457,453) 3,372,615
FUND BALANCES - BEGINNING
6.576,552
9,467,066
9,467,066 -
FUND BALANCES - ENDING
$ 3,982,911 $ 4,636,998 $ 8,009,613 $ 3,372.615
The notes to the financial statements are an integral part of this statement.
City of Federal Way/ 25
STREET FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2003
REVENUES
Licenses and permits
Intergovernmental
Service charges and fees
Interest
Other
TOTAL REVENUES
EXPENDITURES
Current:
Transportation
Capital outlay
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Variance with
Budgeted Amounts
Final Budget -
Positive
Original
Final
Actual Amounts
(Negative)
-
$ 182,655
$ 182,655
$ 89,089
$ (93,566)
1,946,047
1,969,840
1,221,706
(748,134)
186,800
186,800
387,751
200,951
10,656
10,656
12,118
1,462
4,946
4,946
5,001
55
2,331,104
2,354,897
1,715,665
(639,232)
3,745,831 3,838,291 3,376,024 462,267
78.410 105,662 57,956 47.706
3,824,241 3,943,953 3,433,980 509,973
(1,493,137) (1,589,056) (1,718,315) (129,259)
1,529,680 1,735,599 1,843,037 107,438
(36,544) (146,544) (124,722) 21,822
TOTAL OTHER FINANCING SOURCES (USES) 1,493,136 1,589,055 1,718,315 129,260
NET CHANGE IN FUND BALANCES - _
FUND BALANCES - BEGINNING 100,000 100,000 100,000
FUND BALANCES - ENDING
$ 100,000 $ 100,000 $ 100,000 $ -
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 26
UTILITY TAX FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2003
REVENUES
Taxes
Interest
TOTAL REVENUES
EXPENDITURES
Current:
General government
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers out
Budgeted Amounts
Original
Final Actual Amounts
Variance with
Final Budget -
Positive
(Negative)
$ 7,747,611
$ 7,747,611 $
7,147,878
$ (599,733)
150,000
152.498
31,803
(120,695)
7,897,611
7,900,109
7,179,681
(720,428)
51,750 51,750 51.750
51.750 51,750 51,750 -
7,845.861 7,948,359 7,127,931 (720.428)
(15,943,368) (15,721,307) (14,197,817) 1.li23,490
TOTAL OTHER FINANCING SOURCES (USES) (15,943,368) (15,721,307) (14,197,817) 1,523,490
NET CHANGE IN FUND BALANCES (8,097,507) (7,872,948) (7,069,886) 803,062
FUND BALANCES - BEGINNING 8,205,502 7,872,948 7,872,948 -
FUND BALANCES - ENDING
$ 107,995 $ - $ 803,062 $ 803,062
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 27
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
December 31, 2003
Business -type Activities - Fnte )rise Funds
Governmental
Activities -
Surface Water
Dumas Bay
Internal Service
Management
Centre
Total
Funds
ASSETS
Current assets
Equity in pooled cash and investments
$ 7,576,877
$ 416,694
$ 7,993,571
$ 8,545,042
Cash with escrow agent
109,069
-
109,069
-
Prepaid items
-
-
5,000
Receivables (net):
Taxes
114,356
-
114,356
-
Accounts and contracts
-
48,321
48,321
-
Interest
7,323
406
7,729
6,652
Due from other governments
14.371
14,250
28,621
-
TOTAL CURRENT ASSETS
7,821.996
479,671
8,301,667
8,556,694
Noncurrent assets
Capital assets:
Land
3,708,654
2,109,640
5,818,294
-
Building/structures
40,912,409
3,571,152
44,483,561
3,394,269
Machinery/furniture/equipment
-
106,643
106,643
9,110,417
Construction work in progress
1,360,309
311,800
1,672,109
-
Less accumulated depreciation
(8,789,715)
(1,244,849)
(10,034,564)
(7,704,378)
TOTAL NONCURRENT ASSETS
37,191,657
4,854,386
42,046,043
4,800,308
TOTAL ASSETS
45,013,653
5,334,057
50,347,710
13,357,002
LIABILITIES
Current liabilities:
Vouchers payable
106,994
33,712
140,706
129,149
Taxes payable
-
(1,136)
(1,136)
-
Retainage payable
-
9,412
9,412
-
Retainage payable - with escrow agent
109,069
-
109,069
-
Deposits payable
-
13,938
13,938
-
Deferred revenue
103,970
111:505
215,475
-
Public works trust fund loan payable
182,359
-
182,359
-
Compensated absences payable
27,634
8,967
36,601
70,022
TOTAL CURRENT LIABILITIES
530,026
176,398
706,424
199,171
Noncurrent liabilities:
Public works trust fund loan payable
2,304.190
2,304,190
-
TOTAL NONCURRENT LIABILITIES
2,304,190
2,304,190
-
TOTAL LIABILITIES
2,834,216
176.398
3,010,614
199,171
NET ASSETS
Invested in capital assets, net of related debt 34,705,108 4,854,386 39,559,494 4,800,308
Reserved for:
Petty cash/change fund - 210 210 -
Customer deposits - 13,938 13,938 -
Unrestricted 7,474,329 289,125 7,763,454 8,357,523
TOTAL NET ASSETS _$ 42,I79,437 $ 5,157,659 $ 47,337,096 S 13,157.831
Adjustment to reflect the consolidation of internal service fund activities related
to enterprise funds 31,275
NET ASSETS OF BUSINESS -TYPE ACTIVITIES $ 47,369,371
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 28
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
For the Year Ended December 31, 2003
OPERATING REVENUES:
Service charges and fees
Miscellaneous
TOTAL OPERATING REVENUES
OPERATING EXPENSES:
Personal services
Materials and supplies
Services and charges
Intergovernmental
Depreciation
Interfund charges
TOTAL OPERATING EXPENSES
OPERATING INCOME (LOSS)
NON -OPERATING REVENUES (EXPENSES)
Subsidy from interlocal grants
Gain / loss from disposal of fixed assets
Interest income
Interest expense
TOTAL NON -OPERATING REVENUES (EXPENSES)
INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS
Capital contributions
Transfers in
Transfers out
CHANGE IN NET ASSETS
TOTAL NET ASSETS - BEGINNING
TOTAL NET ASSETS - ENDING
Business -type Activities - Enterprise Funds Governmental
Activities -
Surface Water Dumas Bay Internal Service
Management Centre Total Funds
$ 3,500,382 $ 528,109 $4,028,491 $ 4,083,407
149 12,423 12,572 9,257
3,500,531
540,532
4,041,063
4,092,664
1,115,422
246,210
1,361,632
683,031
47,856
28,038
75,894
307,639
931,640
417,598
1,349,238
2,092,232
315,548
4,600
320,148
65,767
408,755
184,844
593,599
1,132,164
529,431
51,078
580,509
-
3,348,652
932,368
4,291,020
4,280,833
151,879 _(39I,836) (239,957) (188,169)
15,315 153,240 168,555 -
18,190
128,790 6,034 134,824 101,090
(26,689) - (26,689) -
117.416 159,274 276.690 11.9,280-
269,295 (232,562) 36,733 (68,889)
757,578 - 757,578 465,404
- 244,588 244,588 -
(150,612) (9,685) 160,297 (9&1.0001
876,261 2,341 878,602 (587,485)
41,303,176 5,155,318 13,745,316
$ 42,179,43T 55,157,659 $ 13,157,831
Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds
CHANGE IN NET ASSETS OF BUSINESS -TYPE ACTIVITIES
The notes to the financial statements are an integral part of this statement.
31,275
$ 909,877
City of Federal Way / 29
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended December 31, 2003
Business -type Activities - Enterprise
Funds
Governmental
Activities -
Surface Water
Dumas Bay
Internal Service
Management
Centre
Total
Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from users
$ 3,501,784
$ 527,020
$ 4,028,804
$ 4,083,907
Cash received from other governments for goods and services
13,869
-
13,869
-
Cash payments for taxes
-
(1,136)
(1,136)
Cash payments to claimants
-
-
(166,522)
Cash payments to suppliers for goods/services
(47,857)
(28,038)
(75,895)
(2,238,307)
Cash payments to employees
(1,115,896)
(246,980)
(1,362,876)
(675,693)
Cash payments to other funds for goods and services
(529,431)
(51,078)
(580,509)
(80,748)
Cash payments for other services/charges
(1,059,692)
(439,895)
(1,499,587)
-
Cash payments to other governments for goods and services
(315,548)
(4,600)
(320,148)
Cash payments for damage deposits
-
2,937
2,937
-
Other operating receipts
149
12,423
12,572
9,257
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
447,378
(229,347)
218,031
931.894
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Subsidy from interlocal grant
15,315
163,509
178,824
-
Operating transfers in
-
244,588
244,588
-
Operating transfers out
(113,491)
(9,285)
(127,776)
(984,000)
NET CASH PROVIDED (USED) BY NONCAPITAL FINANCING ACTIVITIES
(103,176)
3 98,812
295,636
(984,000)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Principal paid on debt service
(182,359)
-
(182,359)
-
Interest paid on debt service
(26,689)
-
(26,689)
Acquisition of capital asset/construction work in progress
7,032
(145,668)
(138,636)
(1,065,183)
Proceeds from sale of fixed assets
-
-
-
18,190
Cash contributions for capital acquisition
32,121
(400)
(32,521)
252.829
NET CASH PROVIDED (USED) FOR CAPITAL AND RELATED
FINANCING ACTIVITIES
234,137)
(146,068)
(380.205)
(794.164)
CASH FLOWS FROM INVESTING ACTIVITIES
Receipts of interest
NET CASH PROVIDED (USED) BY INVESTING ACTIVITES
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, JANUARY 1
CASH AND CASH EQUIVALENTS, DECEMBER 31
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 expense
(Increase)/decrease in accounts receivable
(Increase)/decrease in taxes receivable
(Increase)/decrease in due from other governments
Increase/(decrease) in vouchers/accounts payable
Increase/(decrease) in retainage payable
Increase/(decrease) in deposits payable
Increase/(decrease) in taxes payable
Increase/(decrease) in deferred revenue
Increase/(decrease) in accrued payroll/compensated absences payable
Total Adjustments
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Noncash investing, capital, and financing activities:
Other contributions of capital assets
The notes to the financial statements are an integral part of this statement.
127,642
5,984
133,626
102,218
127,642
5,984
133,626
102 21 a
237,707
29,381
267,088
(744,052)
7,448,239
387,313
7,835,552
9,289.094
7,685,946
-116,691
8,102,640
8,545,042
151,879
(391,836)
(239,957)
(188,169)
408,755
184,844
593,599
1,132,164
-
(15,712)
(15,712)
-
(17,953)
(17,953)
13,871
13,871
(128,043)
(31,709)
(159,752)
(19,439)
(3,434)
9,412
5,978
21937
2,937
-
(1,136)
(1,136)
22,777
14,623
37,400
-
(474)
(770)
(1,244)
7,338
295,499
[62,489
457,998
1,120.063
$ 447,378
$ (229,347)
$ 2i8,031 $
9�4
$ 264,023
NOTES TO THE BASIC FINANCIAL STATEMENTS
December 31, 2003
INDEX
Note
Page
1
Summary of Significant Accounting Policies
................................................................................
ReportingEntity.............................................................................................
31
...................... .
Government -wide and Fund Financial Statements
31
......................
Measurement Focus, Basis of Accounting, and Financial Statement Presentation
31
..............
BudgetaryInformation
32
..........................................................................................................
Assets, Liabilities and Equities.............................................................................................
35
Equity in Pooled Cash and Investments
37
........................................................................
Cash and Cash Equivalents.......
37
................................................................ --..................
Investments
37
..............
Receivables...................................................................................
Amounts Due to and from Other Funds; Interfund Loans
37
............................................38
Inventories............................................................................
......
.... ......................
CapitalAssets.............................................................................
38
Compensated Absences Payable
38
...................................................................................
Short -Term Debt
39
.......................................................................
Long -Term Debt.................................................................
39
DeferredRevenue
39
.....................................................................
Fund Equity -Reserves and Designation
........................................................---............
Interfund Transactions
39
2
.............................
Reconciliation of Government -wide & Fund Financial Statements
40
3
...............................................
Stewardship, Compliance and Accountability
40
4
....................... ...................._...............................
Supplemental Appropriations ...................-----
41
5
.......................................................
Deposits and Investments
6
..............................................................................................................
Receivables and Due from Other Governments
41
7
.................................. ....
Due To Other Governments
42
8
..................................... ...
Capital Assets.............................................................................................
44
9
........................... ........
Pension Plans
44
10
....................................................................... .....:.
Risk Management..................................................:.........................................
45
....
................................................ ... ..................
Long -Term Debt ..................................................
49
12
••--.......... ................ ........................... ........ ..
Interfimd Transactions
51
13
................................................
Contingencies and Litigation.........................................................................................................
54
14
..................................................
Joint Ventures........
55
.......................................................................................................................
56
City of Federal Way / 31
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Year Ended December 31, 2003
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Federal Way, King County, Washington was incorporated on February 28, 1990 and operates
under the laws of the State of Washington applicable to an Optional Municipal Code City (RCW 35A) with
a Council -Manager form of government. Under the Council -Manager form of government, the voters elect,
at large, a seven -member City Council, and the Council elects one of its members to serve as Mayor. The
council serves for a period of four years, allowing for council member consistency and staggered elections.
The City Manager is appointed by the Council to act as the chief executive officer of the City and is
responsible to the Council for proper administration of all City affairs. The City of Federal Way is a
general purpose government with its fiscal year ending December 31.
The City provides a broad range of general government services, including public safety, streets, parks and
recreation, planning and zoning, permits and inspections, municipal court services, and general
administration. The City's management has continued to contract with King County, the local Fire District
and other agencies to provide specific services such as fire protection, storm and surface water utility
billings, minimal court services, garbage collection and various public works services.
The accounting and reporting policies of the City conform to generally accepted accounting principles for
governments, and are regulated by the Washington State Auditor's Office, Division of Audit Services.
In 2003, the City implemented GASB Statement 34 ("Basic Financial Statements and Management's
Discussion and Analysis for State and Local Governments"), GASB 37 ("Basic Financial Statements — and
Management's Discussion and Analysis- for State and Local Governments: Omnibus"), and GASB 38
("Certain Financial Statement Note Disclosures"). These new standards substantially change the financial
reporting basis and format. Some of these changes are:
• Management's Discussion and Analysis (MD&A) section providing analysis of the City's overall
position and results of operations
• Financial statements prepared using full accrual accounting for all government -wide City activities,
including current year infrastructure
• Change in the individual fund financial statements focusing on the major funds
A. Reporting Entity
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 defined as appointment of a voting majority of an agency's or organizations
board, and either the City's ability to impose 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.
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 one joint venture, Valley Communications Center. See Note 14, Joint Venture, which more fully
describes this organization.
B. Government -Wide and Fund Financial Statements
The government -wide financial statements (i.e. the statement of net assets and the statement of activities)
report information on all of the nonfiduciary activities of the primary government. For the most part, the
effect of interf ind 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.
City of Federal Way / 32
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 function or segment.
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.
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
fiord financial statements.
C. Measurement Focus, Basis of Accounting, and 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 fiord 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, 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 judgements, 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 so have been recognized as revenues of the current fiscal period. Only the portion of special
assessment 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 Fluid
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 ffind.
Street Fund
This fund accounts for receipt and disbursement of State -levied "unrestricted" motor vehicle fuel
taxes which must be accounted for in a separate fiord and expended for street -oriented engineering,
construction and maintenance purposes only.
Utilita• Talc Fund
This fund was established to account for all utility tax receipts. These receipts
will subsequently be distributed to various funds (Debt Service, Capital Improvement Projects,
etc.) for project expenditure 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.
City of Federal Way / 33
gily Facilities CIP Fund
This fund accounts for receipts and disbursements related to acquisition, design, construction and
any other related municipal facility and community/senior capital project expenditures.
Trangportation CIP Fund
This fund accounts for receipts and disbursements related to acquisition, design, construction and
any other related street project expenditures.
The City reports the following fund groups as non -major funds:
Special 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 legally restricted to expenditures
for specified purposes.
Ca ital Pro'ect Funds
These funds account for the acquisition or construction of major capital facilities with the
exception of those facilities financed by the proprietary and trust funds. The major sources of
revenues for this fund are general obligation bond proceeds, grants from other agencies, local taxes
and contributions from other funds.
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 fluids 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 balance sheets.
Private sector standards of accounting and financial reporting issued prior to December 1, 1989, generally
are followed in both the government -wide and proprietary fund financial statements to the extent that those
standards to not conflict with or contradict guidance of the Governmental Accounting Standards board.
Governments also have the option of following subsequent private -sector guidance for their business -type
activities and enterprise funds, subject to the same limitation. The City of Federal Way has elected not to
follow subsequent private -sector guidance.
As a general rule the effect of the interfund 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 nonoperating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods in
connection with a proprietary f nid'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 condnuing 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 nonoperating 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.
City of Federal Way / 34
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 the revenues and expenses related to the acquisition,
capital improvements maintenance and operations of the City -owned Dumas Bay Centre and
Knutzen Family Theatre.
Internal Service Funds
The City uses Internal Service Funds 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.
A description of each individual Internal Service Fund included in the Comprehensive Annual Financial
Report is 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, medical and dental, unemployment and worker's
compensation claims. Both risk control (to minimize the losses that strike and organization) and
risk financing (to obtain Penances to provide for or restore the economic damages of those Iosses)
are involved. The City is currently self -insuring only State Tl=Mloyment 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. The City is also currently recovering costs and building reserves for general
liability including property, casualty, errors and omissions and fidelity coverage.
Infonnation S tems Fund
This 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 and operating costs and equipment replacement
charges based on depreciation schedules.
SmRport Services Fund
This fund accounts for duplication, graphics and other general support services provided to
departments and funds throughout the City.
Fleet and Equipment 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.
Buildings and Furnishings Fund
This 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.
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.
City of Federal Way / 35
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.
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 an 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. Each day, 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 '/4% and optional
'/o% 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, 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; interfund, 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.
D. Budgetary Information
Scppe 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
City of Federal Way / 36
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
reappropriation 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 annual operating budget (funds
budgeted on an annual basis) are:
General Fund Debt Sen ice Fund
Special Revenue Funds
Street Solid Waste & Recycling
Arterial Street Hotel/Motel Lodging Tax Fund
Utility Tax Paths and Trails Fund
Procedures for Adopting the Annual Budget - 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 Management Services Director for current level
service budgets and a preliminary financial forecast.
By late June, departments submit their preliminary expenditure estimates and the Management Services
department updates the preliminary revenue estimates to define resources available to finance coming
year expenditure programs.
Prior to the first Tuesday in September, the City Manager 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
Management Services Director.
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.
By October 31, the City Manager files a preliminary budget with the City Clerk. Copies of the
preliminary budget are provided to staff and the City Council and made available to the public.
During 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 City Manager is authorized to transfer budgeted amounts between departments within any fund;
however, any revisions that alter the total expenditures of a fund 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. During 2003,
the budget was amended two times.
The budget amounts shown in the financial statements are the final authorized amounts as revised during the
year.
City of Federal Way / 37
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 a fund expenditure. Outstanding encumbrances lapse at year
end, are canceled and must be re-established in the following year upon approval of the City Council
through a budget adjustment ordinance. Therefore, these amounts have not been recorded as current year
expenditures unless considered to be susceptible to accrual at the end of the year. The total encumbrances
at year-end for the City were $13,854,240.
E. Assets, Liabilities and Equities
Equip in Pooled 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 f ind's portion of total
cash and investments is summarized by fund type in the combined balance sheet as equity in pooled cash
and investments.
Cash and Cash Equivalents
It is the City's policy to invest all cash not immediately required for disbursement. At December 31, 2003,
the State Treasurer was holding $16,150,768 in the State Investment Pool and US Bank was holding
$29,627,396 in a Municipal Investor Account (MIA) for short-term investments of cash. The State
Investment Pool and the Municipal Investor Account is considered a 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, 2003, the total
cash and cash equivalents were $45,080,060.
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).
Investments
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
City of Federal Way / 38
distributed on some 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; Interfiand Loans
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of
the fiscal year are referred to as either "interfimd 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 City Manager. In the governmental funds, loans to other
funds are offset by a corresponding reservation 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 interf ind loans receivable and payable is furnished in Note 12.
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 (e.g. roads, bridges, sidewalks,
lighting systems, etc), are reported in the applicable governmental or business -type activities columns in the
government -wide financial statements. The City included governmental infrastructure constructed in 2003.
Under the requirements of GASB 34, the City has until 2007 to record the remainder of its infrastructure
assets.
Major expenditures for fixed 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 fixed asset capitalization policy where an items cost must equal
or exceed $1,000. All fixed assets are valued at historical cost (or estimated cost, where historical cost is
not known/or 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 fimd 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.
The average service lives used to calculate depreciation for specific categories of assets in the City's
Proprietary Funds are summarized below.
Asset Class
Office Furniture & Fixtures
Computer/Data Handling Equipment
Communications Equipment
Recreation Equipment
Parks equipment
Automobiles
Police Vehicles
Police Equipment
Light Trucks
Heavy Trucks
Heavy Work Equipment
Shop/Miscellaneous Equipment
Land Improvements
Buildings
Storm Drainage Systems
Estimated Life in Years
10
4
10
10
5-12
4-6
5
8
10
10
20
20
100
City of Federal Way / 39
Corn ensated Absences
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 15 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 256 hours. All outstanding vacation leave is payable
upon termination of employment.
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.
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, or forty hours for Police Guild members.
Sick leave may be accumulated up to a maximum of 720 hours, per City policy. 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.
Short-term Debt
As of December 31, 2003, the City of Federal Way did not incur any short-term debt.
Lou -term. Debt
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 assets. Long-term debt outstanding at year-
end is outlined in Note 11.
Deferred Revenues
The deferred revenue account is used to offset receivables established in the governmental funds for certain
revenues that are measurable but not considered available to finance payment of current obligations and,
therefore, are not susceptible to accrual on the modified accrual basis. When the receivable amounts are
collected in future periods, this liability account is reduced and corresponding revenue is recorded. The
portions of Property Taxes that do not meet the available criteria are recorded as deferred revenue.
Fund E ui -Reserves and Designatians
Reserves represent portions of fund equity that are legally restricted for a specific future purpose or not
available for appropriation because they do not represent a current expendable resource. Designations of
fund balance identify amounts set aside by management for tentative future purposes or administrative
convenience.
In governmental and fiduciary funds, fund balance that is legally restricted for future purposes include
reserves for: a) future employee retirement payments and b) future debt service. The City of Federal Way
does not have fiduciary funds. Fund balance not available for expenditure in the governmental funds
consists of the outstanding balances of current interfund loans. On December 31, 1991, $10,000 in a non -
interest bearing loan from the General Fund to the City's CDBG grant fund was authorized by the City
Manager as interim financing. In addition, the General Fund had reserves for Petty Cash, prepaid
insurance, police special funds and Travel Advance purposes. The Special Revenue Path and Trails
City of Federal Way / 40
Reserve fund balance is legally restricted for construction and maintenance of paths and trails within City
right-of-way. The Special Revenue Hotel/Motel Lodging Tax fund balance is also legally restricted for
solely paying for tourism promotion and for the acquisition and/or operation of tourism -related facilities.
F. Interfund Transactions
There are four types of transactions between funds - interfund loans, quasi -external transactions, interfund
reimbursements, and interfund transfers. Interfund loans are temporary borrowings of cash which do not
affect operating statements, but which may incur interest expense or expenditure to the borrowing fund.
Quasi -external transactions are equivalent to buying goods or services from an outside vendor. They 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. Interfund transfers are either residual equity in nature or operating
transfers. Operating transfers are the equivalent of operating subsidies. Except for the Enterprise Fund,
operating transfers are accounted for as "other financing sources and uses" and are therefore included in the
operating statements.
Residual equity transfers are used to close out a discontinued fund or make one-time contributions to a new
fund, to record the interfund equivalent of a capital grant or its repayment (involving a proprietary fund), or
to make contributions to an internal service fund to establish or increase its working capital or make
repayments of such contributions. In 2003 the City recorded a number of such transfers to internal service
funds to fund the acquisition of new assets.
NOTE 2 — RECONCILIATION OF GOVERNMENT -WIDE & FUND FINANCIAL STATEMENTS
A. Explanation of Certain Differences Between the Governmental Funds Balance Sheet and the
Government -Wide Statement of Net Assets
The governmental funds' balance sheet includes a reconciliation between And balance — total
governmental funds and net assets — governmental activities as reported in the government -wide statement
of net assets. One element of that 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 $35,638,367 difference are as follows:
Bonds Payable at beginning of year $27,741,936
Plus: Proceeds of debt issuance 21,168,599
Plus: Inclusion of compensated absences - 907,850
Less: Current year reduction of principal portion of debt (I4,180.018)
Net adjustment to reducefund balance -total governmental
funds to arrive at net assets — governmental activities $35 38 667
B. 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 a
reconciliation between net changes in And balances — total governmental funds and changes in net assets
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 $19,750,037 difference are as follows:
Net Capital outlay $20,686,390
Depreciation expense (936,353)
Net adjustment to increase net changes in fund balances —
Total governmental funds to arrive at changes in net assets
ofgovernmental activities $j_ 75� Q37
City of Federal Way / 41
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 in the fund statements $ 24&991
Another element of the reconciliation states that "Some expenses reported in the statement of activities do
not require the use of current fmancial resources and, therefore, are not reported as expenditures in the
funds." This item represents:
Compensated absences S—L24,�29-
NOTE 3 — STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
There have been no material violations of fmance-related legal or contractual provisions, and there have
been no expenditures exceeding legal appropriations in any of the funds of the City.
NOTE 4 — SUPPLEMENTAL APPROPRIATIONS
Operating Budget Funds
Appropriations established during 2003 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 fmal budget values include all adopted adjustments to original budget amounts.
FUND
ORIGINAL
BUDGET
2003
SUPPLEMENTAL
APPROPRIATIONS
FINAL
BUDGET
General Fund $
31,755,779
2,613,739 $
34,369,518
Special Revenue Funds:
Street Fund
3,860,784
229,712
4,090,496
Arterial Street Fund
1,683,775
695,572
2,379,347
Utility Tax Fund
159995,118
(222,061)
15,773,057
Solid Waste/Recycling Fund
364,441
56,412
420,853
Hotel/Motel Lodging Tax
134,000
233,662
367,662
Paths and Trails Reserve Fund
-
-
-
Subtotal Special Revenue Funds
22,038,118
993,297
23,031,415
Debt Service Fund
16,683,394
1,275,890
17.959.284
$
70,477,291 $
4,882,926 $
75,360,217
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 State Treasurer's Investment Pool, bankers' acceptances, or deposits with Washington
State banks and savings and loan institutions. In 2003 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, 2003, the
equity in pooled cash and investments was $59,863,780.
At year-end, the City had $45,080,060 in cash and cash equivalents which consisted of investments with the
State Pool of $16,150,768; the Municipal Investor account with US Bank of $29,627,396; the City's
checking account bank balance of $1,098,413 (outstanding checks were $1,836,055 at December 31); and
petty cash and change funds, advance travel fund and investigative fund totaling $39,538. No deposits were
City of Federal Way / 42
uninsured or uncollateralized. Insurance coverage up to $100,000 is through federal depository insurance
and the Washington Public Deposit Protection Commission (WPDPC) for amounts over $100,000. Under
State statute, members of WPDPC, a multiple -financial institution collateral pool, may be assessed on a
prorated basis if the pool's collateral is insufficient to cover a loss. The Municipal Investor account with US
Bank is protected under WPDPC.
At December 31, 2003, the City's total deposits and investments consisted of the following:
US Bank, Checking Account per Books
$ (737,642)
Petty Cash/Change Fund/Advance Travel/Investigative Fund
39,538
Cash Equivalents with US Bank Municipal Investor Account
29,627,396
Cash Equivalents with State Treasurees Investment Pool
16,150,768
Subtotal Cash and Cash Equivalents
45,080,060
Compensating Time Deposit with US Bank
700,000
Municipal Investur Assigned Account with US Bank
5,028,884
Investments in US Government Agency
9,054,836
Equity in Pooled Cash and Investments
59,863,780
Cash with Escrow Agent
109,069
Total Cash and Investments
$ 59,972,849
Investments
The City's investments are categorized to give an indication of the risk assumed at year-end. The following
summary shows the City's investments at year-end categorized by risk. Category 1 includes investments
that are either insured, registered or held by the City or its agent in the City's name. Category 2 includes
uninsured and unregistered investments that are held by the counterparty's trust department or agent in the
City's name. Category 3 includes uninsured and unregistered investments for which the securities are held
by the counterparty, or its trust department or agent, but not in the City's name. At the end of the year, the
City had no investments in category 2 or 3. All investments are stated at fair value. The fair value of the
positions in the State Investment Pool is the same as the value of the pool shares. The State Investment
Pool is managed by the Treasurer of the Sate of Washington.
An additional Municipal Investor Account (MIA) was established in July 2003 with a deposit of $5 million
as a Tenant Improvement Guarantee Account when the new City Hall building was purchased. These
funds will remain in the account until the City receives the Certificate of Occupancy for the tenant
improvement work. This account is directly competitive with short-term CD's Repo's and the funds are
totally liquid as well as protected by both FDIC and WPDPC.
Risk Category
Carrying
Fair
City Securitics
I
Amount
Value
Agencies
$ 9,054,836
$ 9,054,836
$ 9,027,015
Subtotal Categorized City Investments
9,054,836
9,054,836
9,027,015
Total Categorized Investments
$ 9,054,836
$ 9,054,836
$ 9,027,015
Compensating Time Deposit with US Bank
700,000
700,000
Municipal Investor Account with US Bank
34,656,280
34,656,280
Investments in State Treasurers Investment Pool
16,150,768
16,150,768
Total Investments
$ 60,561,884
$ 60,534,063
NOTE 6 — RECIEVABLES AND DUE FROM OTHER GOVERNMENTS
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.
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 instalhnents, due April 30 and October 31. At December 31,
2003, the total balance of property taxes receivable recorded by the City was $493,218. Of this, $248,991is
City of Federal Way / 43
recorded as a deferred revenue, since it was not collected within the first 30 days of 2004. The property tax
levy calendar in 2003 was:
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.
Property taxes are recorded as a receivable when levied, offset by deferred revenue. 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 ($1.50) and library
district ($.50).
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 2003 was $1.34 per $1,000 on an assessed valuation of $5,992,899,727 for a
total regular levy of $7,941,900
Deferred Revenue
Deferred revenue reported on the governmental funds balance sheet is in the schedule below. Contracted
police overtime, grant reimbursements and refuse collection fees are receivable within one year of the end
of the fiscal period.
Contracted Police Overtime
Property Tax
Grant Reimbursements
Refuse Collection Fees
Federal Way Fire Department Buy -in of ValleyCom
Investment Interest
Recreation Programs/Facility Rentals
Nonmajor
Debt
City
and Other
General
Street Service
Facilities
Funds
Total
S 182,469
$ 5
$
$ -
S 182,469
248,991
-
-
248,991
60,620
22,521
-
83,141
-
- -
-
27,273
27,273
-
- 328,950
-
-
328,950
-
- -
28,884
-
28,884
7,421
- -
-
7.421
5 499301
$ 22,521 $ 328,930
5 28,894
5 27,273
$ 907129
City of Federal Way /44
Receivables & Due from Other Governments
The receivables for the fiscal year ended December 31, 2003 on the government -wide statement of net
assets are detailed in the following schedule. Of the property taxes receivable amount, $248,991 is
delinquent.
Debt
City
Nonmajor
General
Street
Utility Tax Service
Facilities
Transportation
Govt'l
Proprietary
Total
Property Tax
$ 493,218
$
$ - $
$
$
$
$
_
$ 493,218
Utility Tax
-
803,062
803,062
Gambling Tax
197,816
-
-
-
197,816
Recreation
Programs/Facilities
5,366
48,321
53,687
Fire Dept
Reimbursement
52,016
-
52,016
Grants &
Contributions
53,285
-
2,464,461
611,716
28,621
3,158,083
Construction
Contract/Reimburse
-
319,728
-
319,728
Deferred
Maintenance
Deposit
-
-
170,524
-
170,524
Investment Interest
9,627
738
- 9,357
21,357
6,376
1,548
14,381
63,384
State Shared
Revenue
1,111,768
96,670
- -
-
-
55,290
-
1,263,728
King County District
Court
4,865
-
- -
-
-
-
-
4,865
Surface Water
Management Fees
-•
-
- -
-
-
114,356
114,356
$1,927,961
$97,408
$803,062 $179,881
3 21,357
5 2,790,565
$66M54
$ 205,679
S 6,694,467
NOTE 7 - DUE TO OTHER GOVERNMENTS
At December 31, 2003, the City recorded $19,565 as due to other governmental units as follows:
Description Amount
General Fund:
King County - Nov 2003 Election Costs $ 19,565
Subtotal General Fund 19,565
Total Due To Other Government_s T 19„565
NOTE 8 -CAPITAL ASSETS
Capital assets activity for the year ended December 31, 2003 was as follows:
Beginning
Ending
Governmental Activities
Balance
Jan. 1,.2003
Inereases
Decreases
Balance
Dec. 31, 2003
Capital assets, not being depreciated:
Land
$ 36,159,316
Adjust beginning balance*
$ 1,187,632)
$ 34,971,684
Adjusted Land
Construction in progress
$ 2,011,302
17.853.009
1 (434.256)
36,982,986
19,412,007
1,993,254
Total capital assets not being depreciated
36 964 938
19,864,31:1
434:256)
56.394.993
Capital assets, being depreciated:
Buildings
Improvements other than buildings
Machinery and Equipment
Infrastructure
Less: accumulated depreciation
5,115,150
16,175,414
8,417,445
-
(11,208,481
174,195
373,978
1,061,823
711,522
(2,068,517
(184,851)
-
397.424
5,289,345
16,549,392
9,294,417
711,522
12,879,574)
Total capital assets beinE depreciated -net
18,499,528
253.001
212573 1
[9,965,102
S 55,464A66
$ 20.1I7,3.12.
_$ :(221.683)1
S 75,360,095
......,o uuuu wuuung ❑i OW -MCC w atcr
Management Enterprise Fund assets.
City of Federal Way / 45
Beginning
Ending
Balance
Balance
Busfness Type Activities
Jan.1, 2003
Increases
Decreases
Bet_ 31. 2003
Capital assets, not being depreciated:
Land
$ 5,918,294
$ -
$ -
$ 5,818,294
Construction in pro ess
893,885
778.224
1.672,109
rotalca ital'assets not being depreciated
6,712,179
778,224
7.490.403
Capital assets, being depreciated:
Buildings
44,367,179
116,382
44,483,561
Improvements other than buildings
-
Machinery and Equipment
105,033
1,610
106,643
Less: accumulated de reciation
(9,440.965),
(593,599)
(10,034,564).
Total capital assets being depreciated -net
35,031,247
(475,607)
34.555,640
$ 41,743,426
$ 302,617
S
$ 42.046.043
Depreciation expense was charged to functions/programs of the primary government as follows:
Government Activities
General Government
$ 532,117
Security of Persons & Property
113,216
Transportation
67,930
Physical Environment
56,608
Economic Environment
181,146
Health
11,322
Culture & Recreation
169.825
Total DSereciition = Governmental Activities
$ 1,132.164'
8usines-TWpe Activites
Utilities - Surface Water Management $ 408,755
Culture & Recreation - Dumas Bay Centre 184,844
Total Dep reciation -Business a Activities I S 5.93,599
NOTE 9 — PENSION PLANS
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 and defined contribution 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. The following disclosures are made pursuant to GASB Statement 27,
Accounting for Pensions by State and Local Government Employers.
Public Employees' Retirement System (PERS) Plan I and 2
PIan Description
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 combination defined
benefit/defined contribution plan. Membership is mandatory for all City employees working 70 hours per
month for 5 months out of the twelve month period. Membership in the system includes elected officials;
state employees; employees of the Supreme, Appeals, and Superior courts (other than judges in judicial
retirement system); employees of legislative committees; community and technical colleges, college and
university employees (not in national higher education retirement programs); judges of district and
municipal courts; and employees of local government. The PERS system includes three plans. Participants
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 exercise an option to transfer their
City of Federal Way / 46
membership to Plan 3. PERS participants 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 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. PERS defined benefit retirement benefits are financed from a
combination of investment earnings and employer and employee contributions. PERS retirement benefit
provisions are established in state statute and may be amended only by the State Legislature.
Plan 1 retirement benefits are vested after an employee completes five years of eligible service. Plan 1
members are eligible for retirement at any age after 30 years of service, or at age 60 with five years of
service, or at age 55 with 25 years of service. The annual pension is 2 percent of the average final
compensation per year of service, capped at 60 percent. The average final compensation is based on the
greatest compensation during any 24 eligible consecutive compensation months. If qualified, after reaching
age 66 a cost -of -living allowance is granted Lased on years of service credit and is capped at three percent
annually.
Plan 2 retirement benefits are vested after an employee completes five years of eligible service. Plan 2
members may retire at age 65 with five years of service, or at age 55 with 20 years of service, with an
allowance of 2 percent per year of service of the average final compensation per year of service. The
average final compensation is based on the greatest compensation during any eligible consecutive 60-month
period. Plan 2 retirements prior to 65 receive reduced benefits. If retirement is at age 55 or older with at
least 30 years of service, a 3 percent per year reduction applies; otherwise an actuarial reduction will apply.
There is no cap on years of service credit; and a cost -of -living allowance is granted (indexed to the Seattle
Consumer Price Index), capped at 3 percent annually.
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
benefit calculated at 1 percent of the average final compensation per year of service. The average final
compensation is based on the greatest compensation during any eligible consecutive 60-month period. Plan
3 members become eligible for retirement if they have: at least ten years of service; or five years including
twelve months that were earned after age 54; or five service credit years earned in PERS Plan 2 prior to
June 1, 2003. Plan 3 retirements prior to the age of 65 receive reduced benefits. If retirement is at age 55 or
older with at least 30 years of service, a 3 percent per year reduction applies; otherwise an actuarial
reduction will apply. There is no cap on years of service credit; and Plan 3 provides the same cost -of -living
allowance as Plan 2. 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 Employee
Retirement Benefits Board.
There are 1,167 participating employers in PERS. Membership in PERS consisted of the following as of
the latest actuarial valuation date for the plans of September 30, 2002:
Retirees and Beneficiaries Reggiviing Benefits
63,756
Terminated Plan Members Entitled to But Not Yet Receiving Benefits
19,152
Active Plan Members Vest
98,994
55,191
237,d93
Active Plan Members Nonvested
Total
Funding Policy
Each biennium, the state Pension Funding Council adopts Plan 1 employer contribution rates and Plan 2
employer and employee contribution rates and Plan 3 employer contribution rates. Employee contribution
rates for Plan 1 are established by statute at six percent and do not vary from year to year. 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 fiord Plan 2 and the defined benefit portion of Plan 3. All employers
are required to contribute at the level established by the Legislature. PERS Plan 3 defined contribution is a
non-contributing plan for employers. Employees who participate in the defined contribution portion of
PERS Plan 3 do not contribute to the defined benefit portion of PERS Plan 3. The Employee Retirement
Benefits Board sets Plan 3 employee contribution rates. Six rate options are available ranging from 5 to 15
City of Federal Way / 47
percent; two of the options are graduated rates dependent on the employee's age. 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, 2003, were:
PERS Plan 1 PERS Plan 2 PERS Plan 3
Employer* 1.40%* 1.40% 1.40%**
Employee 6.00% 1.18% ***
* The employer rates include the employer administrative expense fee currently set at 0.22%.
** Plan 3 defined benefit portion only.
*** Variable from 5.0% to 15.0% maximum based on rate selected by the PERS 3 member.
Both the City and employees made the required contributions. The City's required contributions for the
years ended December 31 were:
PERS Plan I
PERS Plan II
PERS Plan III
2003 $ 6,239
$ 118,973
$10,900
2002 $ 8,094
$ 131,750
$ 125
2001 $17,726
$ 280,941
N/A
Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) Plans 1 and 2
Plan_ Description
LEOFF is a cost -sharing multiple -employer retirement system comprised of two separate defined benefit
plans. Membership in the system includes all full time, fully compensated, local law enforcement officers
and fire fighters. LEOFF is comprised primarily of non -state employees. LEOFF participants 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 retirement benefits are financed from a combination of investment earnings,
employee and employer contributions, and a special funding situation in which the state pays the remainder
through state legislative appropriations. LEOFF retirement benefit provisions are established in state statute
and may be amended only by the State Legislature.
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 Senice Percent of final 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. If membership was
established in LEOFF after February 18, 1974, the service retirement benefit is capped at 60 percent of final
average salary. A cost -of -living allowance is granted (indexed to the Seattle Consumer Price Index).
Plan 2 retirement benefits are vested after an employee completes five years of eligible service. Plan 2
members may retire at age 50 with 20 years of service, or at age 53 with five years of service, with an
allowance of 2 percent of the final average salary per year of service. The final average salary is based on
the highest consecutive 60 months. Plan 2 retirements prior to the age of 53 are reduced 3 percent for each
year that the benefit commences prior to age 53. The benefit is two percent of average salary per year of
service. There is no cap on years of service credit and a cost -of -living allowance is granted (indexed to the
Seattle Consumer Price Index), capped at three percent annually.
There are 359 participating employers in LEOFF. Membership in LEOFF consisted of the following as of
the latest actuarial valuation date for the plans of September 30, 2002:
City of Federal Way / 48
Retirees and Beneficiaries Receiving Benefits
8,231
Terminated Plan Members Entitled to But Not Yet Receiving Benefits
398
Active Plan Members Vest
11,222
Active Plan Members Nonvested
3,936
Total
23,787
Funding Policy
Starting on July 1, 2000, Plan 1 employers and employees will 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. Plan 2 employers and employees are required to pay at the level adopted by
the Department of Retirement Systems in accordance with 41.45 RCW. All employers are required to
contribute at the level required by state law. 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 Plan 1 in accordance with the requirements of the Pension Funding Council. 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. The methods used to determine the contribution rates are
established under state statute in accordance with Chapters 41.26 and 41.45 RCW.
The required contribution rates expressed as a percentage of current year covered payroll, as of December
31, 2003 were:
LEOFF Plan I
LEOFF Plan II
Employer
0.22% *
3.25% **
Employee
0.00%
5.05%
State
N/A
2.02%
* The employer rates do not include the employer administrative expense fee currently set at 0.22%.
** The employer rate for ports and universities is 5.27%.
Both the City and employees made the required contributions. The City's required contributions for the
years ended December 31 were:
LEOFF Plan I LEOFF Plan II
2003 $0 $226,308
2002 $0 $205,913
2001 $0 $244,438
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 2003, there were a total of 386 individuals covered by this system. As of the end of the year, 345
remained as active employees of the City and none were drawing retirement benefits. The 41 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 $5,000 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. Contribtttions 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.
of Federal Way / 49
Covered payroll for 2003 was $16,169,691 and total City payroll was $18,538,694. Actual City
contributions for the year were $898,551. Actual employee contributions were $1,081,480. All
contributions were invested in instruments arranged through independent investment advisors selected by
the Municipal Employers Benefit Trust (MEBT) committee comprised of the cities of Bellevue, Kirkland,
Redmond, Edmonds, Mill Creek, Woodinville, and Federal Way but administered by Trautmann Maher &
Associates. 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.
In July 1995, the City implemented the hardship withdrawal and loan provision program_ Loans receivable
as of December 31, 2003 were $659,018.
The consulting actuary firm of Trautmann, Maher & Associates 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.
NOTE 10 —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 except for unemployment insurance where it has
elected to become fully self -insured. Related premiums received by the Risk Management Fund are used to
reimburse the State Employment Security Department for unemployment benefits paid to eligible
individuals, and to establish reserves for the payment of estimated future unemployment claims liability.
Through its Risk Management Fund, the City is also recovering insurance premium costs for general
liability coverage and building reserves for a future general liability self-insurance program The City's
insurance coverage in 2003 remained relatively similar to the coverage for 2002. There were no settlements
in excess of insurance for commercially insured activities for 1996 through 2003.
During 2003 the City purchased commercial insurance policies from commercial insurers. The following is
a summary of coverage in force in 2003.
City of Federal Way / 50
NAME OF COMPANY
DETAILS OF COVERAGE
LIABILITY LIMITS
St. Paul Fire and Marine
Pubic Entity Management Liability
Insurance Company
Protection
$10,000,000 Each Claim & Aggregate Annually. Deductible $5,000
St. Paul Fire and Marine
Public Official Bond Management
Included in Crime/Fidelity Coverage, $500,000 Employee Dishonesty,
Insurance Company
Service Director
$100,000 Forgery/Alteration, Deductible $5,000
St. Paul Fire and Marine
Public Official Bond
Included in Crime/Fidelity Coverage, $500,000 Employee Dishonesty,
Insurance Company
City Manager
$100,000 Forgery/Alteration. Deductible $5,000
$10,000,000 Occurrence, $20,000,000 Aggregate, $1,000,000
General Liability, Auto Liability,
Underinsured Motorists Coverage, $1,000,000 Garagekeepers Legal
St. Paul Fire and Marine
Underinsured Motorists Liability and
Liability. All Limits are Per Occurrence/Aggregate Annually.
Insurance Company
Law Enforcement Liability Coverage
Deductible $5,000
Statement of Values Limit $11,599,000, Business Income / Extra
Expense $1,000,000, Valuable Papers / Accounts Receivable
St. Paul Fire and Marine
$1,000,000. Rental Income $1,000,000, Electronic Data Prn e,;-ing
Insurance Company
Property Coverage
$1,000,000, Fine Arts $1,000,000.
Included in General Liability, Auto Liability and Law Enforcement
Liability Above. Auto Physical Damage -Deductible $1,000 Trucks /
St. Paul Fire and Marine
Auto Liability and Physical Damage
Fire Trucks / Ambulances, $500 Pickups / Vans, $250 Private
Insurance Company
Coverage
Passenger
Faithful Performance /
St. Paul Fire and Marine
Fidelity/Employee Dishonesty and
Included in Crime/Fidelity Coverage, $500,000 Employee Dishonesty,
Insurance Company
ERISA Coverage
$100,000 Forgery/Alteration. Deductible $5,000
St. Paul Fire and Marine
Insurance Company
Inland Marine
Limit of $108,000. Deductible $5,000
St. Paul Mercury Ins. Co.
Excess Liability Coverage
Included In General Liability Premium
$10,000,000 Per Accident, $50,000 Perishable Goods, $1,000,000
Hazardous Substances, $1,000,000 CFC Refrigerants, Deductible
St. Paul Fire and Marine
$2,500 Each Accident, Extended Business Income 30 Days, Newly
Insurance Company
Boiler & Machinery Coverage
Acquired Locations 365 Days, Service Interrup
St. Paul Fire and Marine
Employer/Stop Gap Liability
Included in General, Auto and Law Enforcement Liability Limits
Insurance Company
Coverage
Referenced Above
St. Paul Fire and Marine
Included in Crime/Fidelity Coverage, $500,000 Employee Dishonesty,
Insurance Company
Public Officials Bond - City Clerk
$100,000 Forgery/Alteration. Deductible $5,000
St. Paul Fire and Marine
Included in Crime/Fidelity Coverage, $500,000 Employee
Insurance Company
Public Officials Bond - Chief of Police.
Dishonesty, $100,000 Forgery/Alteration. Deductible $5,000
St. Paul Fire and Marine
Included in General, Auto and Law Enforcement Liability Limits
Insurance Company
Law Enforcement Liability Coverage
Referenced Above
St. Paul Fire and Marine
Included in General, Auto and Law Enforcement Liability Limits
Insurance Company
Above Ground Pollution Coverage
Referenced Above
The City's industrial insurance is provided by Washington State and is administered by the Department of
Labor and Industries. 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 is self -insured for unemployment compensation. At December 31, 2003 the City had $496,306 in
retained earnings of which $48,460 will be paid for I" quarter 2004's unemployment compensation claims.
Unemployment Reserve, Jan. 1 st
Unemployment compensation benefits
Claim payments during the year
Unemployment Reserve, Dec. 31 st
1999 2000 2001 2002 2003
$ 149,864 $ 240,688 $ 325,079 $ 454,823 $ 567,171
138,515 146,035 154,354 166,983 69,871
(47,691) (61,644) (24,610) 54,635) (140,736)
$ 240,688 $ 325,079 $ 454,823 $ 567,171 $ 496,306
City of £'ederral Way / 51
NOTE 11 — LONG-TERM DEBT
The various categories of long-term debt reflected on the City's fmancial statements are briefly described in
the following paragraplus.
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 since 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 2003
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.
New Bonds Issued
In July, 2003 the City purchased the Paragon Building for its new City Hall. As part of the transaction, the
City assumed the existing balance of the promissory note secured by the property. The amount of the
assumed loan is $6.169 million, which carries an interest rate of 7.58%, amortized over 30 years with a
balloon payment for the remaining $5.8 million due on November 1, 2007. The annual debt service will be
$550,000 with repayment met by using a combination of cash on hand, investment interest, existing lease
income from the Paragon Building, and money which would otherwise be used to lease space for the police
department and court.
The City issued Limited Tax General Obligation Bonds in the amount of $15,000,000 for the purpose of
providing a portion of the funds for construction of a community center, and to pay costs of issuance of the
bonds. The bonds are issued pursuant to Washington State Law chapter 39.46 RCW, and Ordinance No.
03-451 of the City passed by Council at a regular meeting on October 7, 2003, and Resolution No. 03-400
adopted by the City Council on November 4, 2003, providing for the issuance and sale of bonds. The bonds
are dated November 15, 2003 and carry an interest rate of 4.676%. The final maturity is scheduled for the
year 2033 if not redeemed under the optional redemption provision.
Refunded Debt
At the beginning of the year the balance of the 1993 refunding bond was $11,455,000. On December 1,
2003 the bond was retired early using excess real estate excise tax and utility tax.
The following schedules detail the long-term debt activity and balances of the City
City of Federal Way / 52
IEILAL OBLIGATION DEBT -
December 31, 2003
Amount
Beginning
Ending
Originally
Outstanding
Amount
Amount
Oustanding
Due within
Description
Issued
Debt
Issued
Redeemed
Debt
one year
Govcmmental Lang -Term Debt:
1999 COP Issue
184,000
59,936
39,446
20,490
$ 20,490
1993 Limited
2,390,000
1,170,000
170,000
1,000,000
180,000
1993 Refunding
12,105,000
11,455,000
11,455,000
1995 Limited
5,000,000
1,880,000
600,000
1,280,000
625,000
1996 Limited
2,500,000
935,000
300,000
635,000
310,000
1997 Limited
16,150,000
9,915,000
1,450,000
8,465,000
1,520,000
2000 Limited
2,551,600
2,327,000
-
134,000
2,193,000
139,000
2003 Loan Assumption
6,168,599
6,168,599
31,573
6,137.026
81,677
2003 Limited
15,000,000
-
15,000,000
15,000,000
225,900
Total Governmental Long -Term Debt
62,049399
27.741.936
21,168.399
W.M.018
34.730,517
3,101,167
Business -Type Long -Term Debt:
Enterprise Funds:
Public Works Trust Fund Loan
4,030.440
2,668 907
182359
7 06 Ust
182,359
Grand Total All Lony•Temr Debt $ 66,079,639 $ 30,4I0 843 $ 21,163,599 $ 14,362,377 S 37'17,065 f $ 3.283.526
*Debt service principal payments in Debt Service Fund include credits of $20,100 from Interlocal agreement with Federal Way
Fire District to participate in capital cost obligations with Valley Communications joint venture with the City of Federal Way.
City of Federal Way / 53
SCHEDULE OF CHANGES IN LONG-TERM DEBT
Period Ended December 31, 2003
Beginning
Ending
Outstanding Debt
Additions
Reductions
Oustanding Debt
Governmental Activities:
General Obligation Bonds
$ 27,682,000
$ 21,168,599
$ (14,140,573)
$ 34,710,026
Certificates of Participation
59,936
-
(39,446)
20,490
Employee Leave Benefits
815,368
162,504
977,872
Total Govemmental Activities
28,557,304
21,331,103
14,180,018)
35 708,389
Business -Type Activities:
Enterprise Funds
Public Works Trust Fund Loan
2,668,907
-
(182,359)
2,486,548
Employee Leave Benefits
37,845
-
1244
36,601
Total Business-T a Activities
2,706 752
-
(183,603)
2,523 l49
Total All Funds
$ 31,264,056
$ 21,331,103
$ (14,363,621)
$ 38,231,539
SCHEDULE OF DEBT SERVICE REQUIREMENTS TO MATURITY
As of December 31. 2003
Governmental Activities
Business -Type Activities
G. O. Bonds
Capital Leases
PW Trust Fund
Grand Total
Year
Principal
Interest
Principal
Interest
Principal
Interest
Principal
Interest
P&I
2004
S 3,080,677
$ 1,796,791
$ 20,490
$ 529
$ 182,359
$ 24,865
$ 3,283,526
$ 1,822,185
$ 5,105,711
2005
3,290,546
1,616,554
-
182,359
23,042
3,472,905
1,639,596
5,112,501
2006r
,676
1,454,248
-
-
182,359
21,218
2,602,035
1,475,467
4,077,501
20071281,256,747
-
182,359
19,395
8,486,487
1,276,141
9,762,629
2008000
799,652
-
-
182,359
17,571
1,209,359
917,223
2.026,592
2009 - 20000
3374173
-
-=2,486.549S
5,090,796
3,434,674
8,525,470
2014 - 20000
2,626,230
-
3,040,838
2,646,316
5,687,154
2019-20,000
2,113.629
1
2,626,120
2,114,590
4,740,712024
- 20000
1,466,033
3,240,000
1,466,033
4,706,033
2029 - 20000
613,700
-4,165,000
613,700
4,778,700
Total
$ 34,710,026
$ 17,117,756
$ 20,490
$ 529
$ 37.217.065
1 $ 17.305,925
$ 54,522,991
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, 2003 are:
General Government (no vote required) $ 62,615,313
General Government (3/5 majority vote required) 62,628,744
Parks and Open Space (3/5 majority vote required) 156,571,860
Utilities (3/5 majority vote required) 156�860
Total Capacity Wa387 777
City of Federal Way / 54
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.
Governmental Activities $ 977,872
Business -Type Activities 36,601
1,014.473
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, 2003 is $-0- for its tax-exempt general
obligation bond issues subject to the Tax Reform Act issued through that date.
Leases
The City of Federal Way leases office buildings and land which are accounted for as operating leases.
Operating leases do not give rise to property rights or lease obligations, and therefore the results of the lease
agreements are not reflected in the City's capital assets. Total Cost for the leases was $341,163 for the year
ended December 31, 2003. The future minimum lease payments for these leases are as follows:
2004 $259,200
2005 6,000
$ 6
NOTE 12 — INTERFUND TRANSACTIONS
Interfund transfers for the year ended December 31, 2003 were as follows:
Interfund Transfers
In
Out
Governmental Funds:
General Fund
$ 483,967
$ 3,094,724
Street Fund
1,843,037
124,722
Utility Tax Fund
-
14,197,817
Debt Service
11,475,014
2,053,000
City Facilities
3,844,000
685,081
Transportation
1,334,716
118,491
Nonmajor Governmental Funds
2,056,289
116,306
Proprietary Funds:
Surface Water Management
Dumas Bay Centre
Internal Service Funds
- 150,612
244,588 9,685
252,827 984,000
5 21,534,438 $ 21,534,438
The following describes the significant amounts transferred during 2003:
General Fund Transfers Out:
• $300,000 to Parks CIP Sportsfreld Renovation Project
• $225,000 to Transportation CIP SR99 Phase III Project
a $700,000 to City Facilities CIP Community Center Project
• $1,649,392 to Street Fund to subsidize street maintenance
• $205,450 to Internal Service Funds for capital purchases
City of Federal Way / 55
Street Fund:
a $110,000 to New City Hall CIP for generator purchase
Utility Tax Fund:
• $11,475,014 to Debt Service Fund for prefunding 1995, 1996 & 1997 GO bond debt service
payments and retirement of Celebration Park bond
• $220,803 to General Fund for Celebration Park maintenance & operations
• $1,099,522 to Arterial Street Fund overlay program
• $174,145 to Street Fund for maintenance on bond projects
• $100,000 to Dumas Bay Centre Fund for Knutzen Family Theatre subsidy
a $178,333 to General Fund to subsidize Kenneth Jones Pool Operations
9 $950,000 to Community Center CIP
Debt Service Fund:
• $413,000 of excess Real Estate Excise Tax to fluid various Parks CIP projects, including
Thompson and Armstrong neighborhood parks, historical cabins, Parks major improvements,
Sacajawea & Lakota Parks
• $1,000,000 of excess Real Estate Excise Tax to Community Center CIP
6 $500,000 to South 312`h at I-5 Transportation CIP
• $140,000 to Dumas Bay Centre/Knutzen Family Theatre Rehabilitation CIP
City Facilities CIP Fund:
$609,716 to Transportation CIP for various undergrounding work
• $19,500 to General Fund for hanging basket(banner program start-up
• $55,865 to General Fund for kiosk and storyboard
Transportation CIP Fund:
• $117,241 to Parks CIP for partial funding of Hauge Property Acquisition
• $1,250 to General Fund for street project engineer recruiting costs
Nonmajor Governmental Funds:
• $100,000 from Special Studies/Contract Fund to New City Hall CIP for broadcasting
Proprietary Funds:
• $117,241 from Surface Water Management Fund to Parks CIP to fund portion of Hauge Property
Acquisition
• $580,718 from Surface Water Management Operations to Surface Water Management CIP
• $175,000 from Information Systems Fund to New City Hall CIP for Phone System
• $809,000 from Buildings & Fumishing Fund to New City Hall CIP for Furniture
Interfund loans for the year ended December 31, 2003 were as follows:
Interfund Loans Receivable Payable
General Fund $ 10,000 $
Special Revenue Funds:
Community Development Slcck Grant - 10.000
Total Interfund Loans $ 10,000 $ 10,000
NOTE 13 — CONTINGENCIES AND LITIGATION
As of December 31, 2003, 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.
City of Federal Way / 56
NOTE 14 — JOINT VENTURE
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, and Tukwila, and Federal Way which was formally admitted during 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 is automatically extended for consecutive
five year -periods.
In addition to serving the emergency communications needs of the five member cities, Valley Com serves
several other subscribing agencies, which include King County Fire Districts #2, #20, #26, #40, #43, #44,
#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 2003 cost distributions for the five member cities are as follows:
Dispatchable
Percent
(1rY
Calls
of Total
Kent
89,686
28.90%
Renton
58,505
18.85%
Auburn
60,872
19.62%
Tukwila
35,250
11.36%
Federal Way
66,020
21.27%
Total
310,333
100.00%
Valley Com is governed by an Administration Board, composed of the Mayors or designated
representatives from the five participating cities of Federal Way, Renton, Kent, Auburn, and Tukwila. 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 Operations Board provides administration, and consists of a member from each participating
city's police and fire departments, including the directors of such departments or their designees. Also on
the Operations Board is an appointed representative of the Police and Fire contract agencies. The
Operations Board performs the following functions: 1) Oversees the general operation of Valley Com, and
advises and makes recommendations to the Administration 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.
The following condensed financial information is from Valley Communications Center comprehensive
annual financial report for the fiscal year ended December 31, 2003. Audited 2003 financial statements are
available from Valley Communications Center, 27519 108'b Avenue SE, Kent, WA 98030, or telephone
(253) 372-1300.
City of Federal Way / 57
Valley Communications Center
Balance Sheet
As of December 31, 2003
AgCats
Current Assets 11,461,901
Plant, Property, and Equipment 16.066,246
Total Assets 27,528,147
Liabilities & Fund Equity
Current Liabilities 492.611
Total Liabilities 492,611
Retained Earnings
_
Reserved for:
Equipment Replacement
2,851,184
Contingency
865,-176
Building Project
I,178,614
800 MHZ
6434,857
Unreserved
15:705,705
Total Fund Equity
27,035,536
Total Liabilities & Fund N quits
$ 27,528,347
Valley Communications Center
Statement of Revenue, Expenses, and Changes in Fund Equity
For the Year Ending December 31, 2003
Operating Revenues
Charges for Intergovernmental Services $
7,574,601
Total Operating Revenue
7,574,601
Operating Expenses
Salaries & Benefits
5,550,380
Other Operation & Maintenance
1,179,730
Payroll Taxes
144,501
Depreciation
1,841,867
Total Operating Expenses
8,716,478
Income (Loss) from Operations
(1,141,877)
Non -Operating Revenues (Expenses)
Interest Revenue
157,359
Leasehold Revenue
14,772
Construction Funds
466,000
Gain (Loss) from Sale of Fixed Assets
2,155
Other Non -Operating Revenue
17,310
Total Non -Operating Revenue
657,596
Net Income (loss)
(484,281)
Retained Earnings at Beginning of Year
i
27,519,817
Retamcd Earnings at End of Year
27,035,536
Total Fund Equity at End of Year $
27,035,536
City of Federal Way / 58
The share of equity belonging to the five participating cities is shown below. Liabilities are the
responsibility of the four participating cities in direct proportion to their equity position.
Kent Renton Auburn Tukwila Federal Way Total
Equity @ January 1, 2003 $ 6,188,901 $ 4,588,444 $ 4,316,946 $ 2,993,040 $ 2,537,955 $ 20,625,286
Current Year Decrease (7.111) (4,639) (4,827) (7_795) (5,235) (24,607)
Equit%-!<c December 31. 2D03 $ 6,191.790 $ 4,583,805 $ 4,312,119 $ 2.990,245 5 2.532.720 $ 20,600,679
Percent ofFquity 30.01% 22.25% 20.93% 14.52% 12.29% 100.00%
Percent of 2003 Distribution 28.90% 18.85% 19.62% 1 1.36% 21.27% 100.00%
In May 1993 Valley Com entered into an agreement with King County to provide joint project management
for the acquisition and installation of 800-M11z 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 subregions 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-M11z
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.
Combining Statement — Nonmajor Governmental Funds's Description
For the Year Ended December 31, 2003
Special 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/Reci:c hng 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 HotebMotel Lodging 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 2% Percent for Arts Fund was established for the purpose of providing funding for arts projects. The
funds are to be used to create a variety of cultural opportunities for citizens and to enhance the cultural
environment in the community by encouraging and promoting the creation and placement of art in public
places and the incorporation of art into project design.
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 ''V2% motor vehicle fuel tax receipts which are restricted in use to the
construction and maintenance of paths and trails within City right-of-way.
Capital Projects Funds
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 Traffic CIP Fund was established to account for receipts and disbursements related to acquisition,
design, construction and any other related traffic project expenditures.
City of Federal Way / 60
41k
CITY OF
'f'::tS;P
Federal Way
City of Federal Way/ 61
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2003
ASSETS
Equity iri pooled cash and investments
Receivables (net):
Accounts and contracts
Interest
Due from other governments
TOTAL ASSETS
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
Accounts/payroll payable
Retainage payable
Interfund loans payable
Deferred revenue
TOTAL LIABILITIES
Special Capital
Revenue Projects Total
$ 904,451 $ 729,340 $ 1,633,791
100,000 100,000
848 700 1,548
207,006 360,000 567,006
1,112,305 1,190,040 2,302,345
94,203
55,914 150,117
26,944
- 26,944
-
33,711 33,711
10,000
- 10,000
27,273
- 27,273
158,420
89,625 248,045
Fund balance:
Reserved:
Paths & Trails 216,999 216,999
Capital projects funds 61,131 61,131
Unreserved:
Special revenue funds 675,755 - 675;755
Capital projects funds 1,100,415 1,100,415
TOTAL FUND BALANCES 953,885 1,100,415 2,054,300
TOTAL LIABILITIES AND FUND BALANCE $ 1,1 12,305 $ 1,190,040 $ 2.302.345
City of Federal Way / 62
COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
DECEMBER 31, 2003
Special
Community
Paths and
Arterial
Solid Waste
Contracts/
Hotel/Motel
2%for the
Development
Trails
Street
Rec cling
Studies
Lodge & Tax
Arts
Black Cm mt
Reserve
Total
ASSETS
Equity in pooled cash and investments
$ 438,305
$ 107,038
$ 44,184
$ 233,037
$ 12,030
$ 9,496
$ 60,361
$ 904,451
Receivables (net):
Interest
398
ill
66
216
-
-
57
848
Due from other governments
45,200
102,590
-
9,377
-
49,126
713
207,006
TOTAL ASSETS
483,903
209r739
44,250
242,630
12,030
58,022
61,131
I,112,305
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
153
19,663
14,526
18,715
2,320
38,826
94,203
Accounts/payroll payable
-
20,028
-
6,916
-
-
26,944
Interfund loans payable
-
-
10,000
10,000
Deferred revenue
27,273
-
-
27,273
TOTAL LIABILITIES
153
66,964
14,526
25,631
2,320
-K826
158,d�p
Fund balance:
Reserved:
Hotel/Motel Lodging Tax
-
-
-
216,999
-
- 216,999
Paths & Trails
-
-
-
-
-
-
61,131 61,131
Unreserved:
Special revenue funds
_ 483,750
142,775
29,724
-
9,710
9,796
- 675,755
TOTAL FUND BALANCES
483,750
142,775
29,724
216.999
9,710
9,796
61,131 953,885
TOTAL LIABILITIES & FUND BALANCE
£483,903 -
S 209,739
$ 44,250
5 242,630
5 12,030
5 38622
$ 61,13I 51,112,305
City of Federal Way/ 63
COMBINING BALANCE SHEET
NONMAJOR CAPITAL PROJECTS FUNDS
DECEMBER 31, 2003
ASSETS
Equity in pooled cash and investments
Receivables (net):
Accounts and contracts
Interest
Due from other governments
TOTAL ASSETS
Traffic Total
$ 573,940 $ 155,400 $ 729,340
100,000 - 100,000
542 158 700
360.000 360,000
1,034.482 155,558 1,190,040
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable 55,914 - 55,914
Retainage payable 33,711 - 33,711
TOTAL LIABILITIES 89,625 89,625
Fund balance:
Unreserved:
Capital projects funds 944,857 155,558 1,100,415
TOTAL FUND BALANCES 944,857 15 5, 558 1,100,415
TOTAL LIABILITIES AND FUND BALANCE $ 1.034.482 $ 155,558 $ 1,190,040
City of Federal Way/ 64
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2003
REVENUES
Taxes
Intergovernmental
Service charges and fees
Development fees
Interest
Other
TOTAL REVENUES
EXPENDITURES
Current:
General government
Physical environment
Transportation
Economic environment
Culture and recreation
Capital outlay
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
f13ER FINANCING SOURCES (USES)
NET CHANGE IN FUND BALANCES
FUND BALANCES - BEGINNING
FUND BALANCES - ENDING
Special Capital
Revenue Projects Total
$ 138975 $ - $ 138,975
1,597:930 360,000 1,957,930
288,828 - 288,828
- 201,225 201,225
23,123 17,817 40,940
55 - 55
2,048,911 579,042 2,627,953
158,042
158,042
320,679
320,679
1,982,519
1,982,519
107,538
-
107,538
27,689
-
27,689
723,807
1,259, 752
1,983,559
3,320,274
1,259,752
!1580,026
(1,271,363)
(680,710)
(1,952,073)
1,108,807
947,482
2,056,289
(116,306)
-
(116,306)
992,501
94T482
1,939,983
(278,862)
266,772
(12,090)
1,232,747
833,643
2,066,390
$ 953,885 $
1,100,415 $
2.054.300
City of Federal Way/ 65
REVENUES
Taxes
Intergovernmental
Service charges and fees
Miscellaneous:
Interest
Other
TOTAL REVENUES
EXPENDITURES
Current:
General government
Physical environment
Transportation
Economic environment
Culture and recreation
Capital outlay
TOTAL EXPENDITURES
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
For the Year Ended December 31, 2003
Solid Special Hotel/Motel Community Paths and
Arterial Waste/ Contracts/ Lodging 2%forthe Development Trails
Street Recycling Studies Tax Arts Block Grant Reserve Total
$ - $ - $ $ 138,975 $
555,231 135,304 -
100,370 163,458 25,000 -
15,574 1,931 1,448 3,388
- 55
671,175 300.693 26,449 142,413
$ - $ - $ 138,975
898,638 8,757 1,597,930
- - 288,828
782 23,123
- 55
898,638 9,539 2,048,911
- 2,109 155,933 158,042
- 320,679 - - - 320,679
1,982,519 - - - 1,982,519
- - 107,538 - - 107,538
- 27,689 - - 27,689
- - 1,126 - - 722,68I 723,807
1,982,519 320,679 3,235 107,538 27,689 878,614 - 3,320,274
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
1,3[ 1 i,344)
(19,986) 23,213
34,880
(27,689)
20,024
9,539
(1,271,363}
OTHER FINANCING SOURCES (USES)
Transfers in
1,099,522
- -
-
9,285
-
-
1,108,807
Transfers out
135 ( ) (100,000)
-
-
(16,171)
-
(116,306)
TOTAL OTHER FINANCING SOURCES (USES) I,099,522
(135) (100,000)
-
9,285
(16,171)
992,501
NET CHANGE IN FUND BALANCES
(211,822)
(20,121) (76,787)
34,880
(18,404)
3,853
9,539
(278,862)
FUND BALANCES - BEGINNING
695,572
162,896 106,511
182,119
28,114
5,943
51,592
1,232,747
FUND BALANCES -ENDING
9 483,750
$ 142.775 $ 29,724
$ 216,999
$ 9,710
S 9,796
$ 61,131
$ 953,885
City of Federal Way / 66
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR CAPITAL PROJECTS FUNDS
For the Year Ended December 31, 2003
Parks
Traffic
Total
REVENUES
Intergovernmental
$ 360,000
$ - $
360,000
Development Contribution/Donation
199,725
1,500
201,225
Miscellaneous:
Interest
15,756
2,061
17,817
TOTAL REVENUES
575,481
3,561
579.042
EXPENDITURES
Capital outlay
1,260,054
302)
1,259,752
TOTAL EXPENDITURES
1,260,054
(302)
1,259,752
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
(684,573)
3,863
(680,710)
OTHER FINANCING SOURCES (USES)
Transfers in
947,482
-
947,482
TOTAL OTHER FINANCING SOURCES (USES)
947.482
-
947,482
NET CHANGE IN FUND BALANCES
262,909
3,863
266,772
FUND BALANCES - BEGINNING
681,948
151,695
833,643
FUND BALANCES - ENDING
$ 944,857
S 155,558 $
1,100 415
Combining Statement — Internal Service Funds's Description
For the Year Ended December 31, 2003
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, medical and dental, unemployment and
worker's compensation claims. Both risk control (to minimize the losses that strike and organization) and
risk financing (to obtain finances to provide for or restore the economic damages of those losses) are
involved. The City is currently self -insuring only State Unemployment Compensation. Related premiums
received by the fixed axe used to reimburse the unemployment benefits paid to eligible individuals and to
establish reserves for the payment of estimated future unemployment claims liability. 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.
City of Federal Way / 68
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF NET ASSETS
December 31, 2003
Risk
Information
Support
Fleet and
Buildings and
Management
Systems
Services
Equipment
Furnishings
Totals
ASSETS
Current assets:
Equity in pooled cash and investments
$ 4,071,453
$ 1,965,739
$ 174,993
$ 2,263,727
$ 69,130
$ 8,545,042
Prepaid postage
-
-
5,000
-
-
5,000
Receivables (net):
Interest
1,770
1,969
193
2,208
512
6,652
TOTAL CURRENT ASSETS
4,073,223
1,967,708
180,186
2,265,935
69,642
8,556,694
Noncurrent assets
Capital assets:
Machinery/fnniture/equipment
-
4,613,100
179,123
4,318,194
3,394,269
12,504,686
Less accumulated depreciation
(3,079.636)
(94,433)
(2,391,126
2,139,183 ( )
(7,704,378)
TOTAL NONCURRENT ASSETS
-
1,533,464
84,690
1,927,068
1.255,086
4,800,308
TOTAL ASSETS
4,073,223
3,501,172
264,876
4,193,003
1,324,728
13,357,002
LIABILITIES
Current liabilities:
Vouchers payable
58,665
22,334
17,308
16,716
14,126
129,149
Compensated absences payable
-
68,898
-
1,124
-
70,022
TOTAL CURRENT LIABILITIES
58,665
91,232
17,308
17,840
14,126
199,171
TOTAL LIABILITIES
58,665
91,232
17,308
17,840
14,126
199,171
NET ASSETS
Invested in capital assets
-
1,533,464
84,690
1,927,068
1,255,086
4,800,308
Unrestricted
4,014,558
1,876,476
162,878
2,248,095
55,516
8,357,523
TOTAL NET ASSETS
$ 4,014,558
$ 3,409,940
$ 247,568
$ 4,175,163
$ 1,310,602
$ 13,157,831
City of Federal Way / 69
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES
IN FUND NET ASSETS
For the Year Ended December 31, 2003
Risk
Information
Support
Fleet and
Buildings and
Management
Systems
Services
Equipment
Furnishings
Totals
OPERATING REVENUES:
Service charges and fees
$ 991,757
$ 1,468,076
$ 182,887
S 1,092,627
$ 348,060 $
4,083,407
Miscellaneous
9,257
-
9,257
TOTAL OPERATING REVENUES
991,757
1,477,333
182,887
1,092,627
348,060
4,092,664
OPERATING EXPENSES:
Personal services
619,634
-
36,489
26,908
683,031
Materials and supplies
1,347
48,357
18,413
221,083
18,439
307,639
Services and charges
420,497
363,119
124,700
204,432
257,958
1,370,706
Intergovernmental
-
63,522
546
1,699
65,767
Insurance
474,256
-
80,748
-
555,004
Claims
166,522
-
-
166,522
Depreciation
-
482,210
22,112
456,760
171,082
1,132,164
TOTAL OPERATING EXPENSES
1,062,622
1,576,842
165,225
1,000,058
476,086
4,280,833
OPERATING INCOME (LOSS)
(70,865)
(99,509)
17,662
92,569
(128,026)
(188,169)
NON -OPERATING REVENUES (EXPENSES)
Interest income
27,872
28,816
2,423
30,153
11,826
101,090
Gains/losses from disposal of fixed assets
-
-
18,190
-
18,190
TOTAL NON -OPERATING
REVENUES NET OF EXPENSES
27,872
28,816
2,423
48,343
11,826
119,280
INCOME(LOSS)BEFORE
CONTRIBUTIONS AND TRANSFERS
(42,993)
(70,693)
20,085
140,912
(116,200)
(68,889)
Transfers out
(175,000)
-
-
(809,000)
(984,000)
Capital contributions
239,378
222,666
3,360
465,404
CHANGE IN NET ASSETS
(42,993)
(6,315)
20,085
363,578
(921,940)
(587,485)
TOTAL NET ASSETS, BEGINNING
4,057,551
3,416,255
227,483
3,811,585
2,232,442
13,745,316
TOTAL NET ASSETS, ENDING
$ 4,014,558
$ 3,409,940
$ 247,568
$ 4,175,163
$ 1,310,602 $
13,157,831
City of Federal Way / 70
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2003
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from users
Cash payments to suppliers for goods and services
Cash payments to employees
Cash payments to claimants
Cash payments to other funds for goods and services
Other operating receipts
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers out
NET CASH PROVIDED (USED) BY
NONCAPITAL FINANCING ACTIVITIES
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition of capital assets
Cash contributions for capital acquisitions
Proceeds from sale of fixed assets
NET CASH PROVIDED (USED) FOR CAPITAL
AND RELATED FINANCING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Receipts of interest
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, JANUARY 1
CASH AND CASH EQUIVALENTS, DECEMBER 31
RECONCILIATION OF OPERATING INCOME TO
NET CASHPROVIDED (USED) BY OPERATING
ACTIVITIES
Operating income
Adjustments to reconcile operating income to
net cash provided (used) by operating activities:
Depreciation expense
Increase(decrease)in vouchers/accounts payable
Increase(decrease) compensated absences payable
Total Adjustments
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Noncash investing, capital, and financing activities:
Risk Information Support Fleet and Buildings and
Management Systems Services Equipment Furnishings Totals
$ 991,757 $ 1,468,076 $ 182,887 $ 1,092,627 $ 348,560 $ 4,083,907
(866,072) (497,511) (140,939) (444,605) (289,180) (2,238,307)
- (613,227) (35,558) (26,908) (675,693)
(166,522) (166,522)
- (80,748) (80,748)
9,257 9,257
(40,837) 366,595 41,948 531,716 32,472 931,894
(175,000)
(809,000)
(984,000)
(175,000)
(809,000)
(984,000)
(418,408)
(19,847)
(626,929)
(1,065,183)
95,396
157,433
252,829
18,190
18,190
(323,012)
(19.947)
(451,305)
(794,164)
29,534
28,561
2,370
29,711
12,042
102,218
29,534
28,561
2,370
29,711
12,042
102,218
(11,303)
(102,856)
24,471
110,122
(764,486)
(744,052)
4,082,756
2,068,595
150,522
2,153,605
833,616
9,289,094
4,071,453
1,965,739
174,993
2,263,727
69,130
8,545,042
(70,865) (99,509) 17,662 92,569 (128,026) (188,169)
- 482,210 22,112 456,760 171,082 1,132,164
30,028 (22,513) 2,174 (18,544) (10,584) (19,439)
- 6,407 - 931 - 7,338
30,028 466,104 24,286 439,147 160,499 1,120,063
S (40.937) $ 366.595 $ 41.948 $ 531,716 $ 32,472 $ 931.894
Other Contributions of capital assets $ 184,025 $ - $ 76,638 $ 3,360 $ 264,023
Capital Assets Used in the Operation of
Governmental Funds
City of Federal Way / 72
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
COMPARATIVE SCHEDULE BY SOURCE
December 31, 2003 and 2002
2003 2002
GOVERNMENTAL FUNDS CAPITAL ASSETS
Land
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Construction in progress
TOTAL GOVERNMENTAL FUNDS CAPITAL ASSETS
$ 36,982,986
$ 34,971,684
1,895,076
1,724,241
16,549,392
16,175,414
184,000
184,000
711,522
_
19,412,007
1,993,254
75,734,983
55,048,593
INVESTMENTS IN GOVERNMENTAL FUNDS CAPITAL ASSETS BY SOURCE:
General Fund 6,909,448 5,320,234
Special Revenue Funds 2,528,770 2,525,736
Capital Project Funds 56,576,963 37,482,821
Donations 9,719,802 9,719,802
TOTAL GOVERNMENTAL FUNDS CAPITAL ASSETS $ 75,734,983 $ 55,048,593
This schedule presents only the capital asset balances 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/ 73
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE BY FUNCTION AND ACTIVITY
December 31, 2003
Improvements Machinery Construction
Other than and in
Function and Activitv Land Buildings Buildings Equipment Infrastructure Progress Total
GENERAL GOVERNMENT
Miscellaneous general government 5 6.272.380 $ 19,973 $ 184,000
TOTAL GENERAL GOVERNMENT 6,272,880 19,973 184,000
CULTURE AND RECREATION
TOTAL CULTURE AND RECREATION
TRANSPORTATION
Streets and traffic
TOTAL TRANSPORTATION
TOTAL GENERAL FIXED
ASSETS BY FUNCTION
30,710,106 $ 1,895,076 16,529,419
30,710,106 1,895,076 16,529,419
$ 8_ 3�, 62,862 $14,839,715
8,362,862 14,839,715
3,03 i,667 52,166,268
3,031,667 52,166,268
$ 711,522 8,017,478 8,729,000
711.522 9.017,478 8,729,000
$ 36,982,986 $ 1,895,076 $ 16,549,392 $ 184,000 $ 711,522 $ 19,412,007 $75,734,983
This schedule presents only the capital asset balances related to governmental funds. Accordingly,
the capital assets reported in internal service funds are excluded from the above amounts. Generally,
the capital assets of the internal service funds are included as governmental activities in the statement
of net assets.
Federal Way/74
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE OF CHANGES BY FUNCTION AND ACTIIVITTY
For the Year Ended December 31, 2003
Governmental
Funds
Capital Assets
O1/Ol/2003 Additions
GENERAL GOVERNMENT
Governmental
Funds
Capital Assets
Deductions 12/31/2003
Miscellaneous general government
_$ 5,289,22]
$ 9,550,494 $
- $ 14,839,715
TOTAL GENERAL GOVERNMENT
5,289,221�
9,550,494
- 14,839,715
CULTURE AND RECREATION
47.766,119
4,400,150
- 52,166,268
TOTAL CULTURE AND RECREATION
47,766,118
4,400,150
52,166,268
TRANSPORTATION
Streets and traffic
1,993,254
6,735,746
8,729,000
TOTAL TRANSPORTATION
1,993,254
6,735,746
8,729,000
TOTAL GENERAL FIXED ASSETS
$ 55.048,593
$ 20,686,390 $
- $ 75,734.983
This schedule presents only the capital asset balances 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.
Statistical Section
The Statistical Section provides information for'the "Last Ten Fiscal Years". The Tables for "Special
Assessment Collections" and "Schedule of Revenue Bond Coverage" are not included since the City
currently has neither special assessments outstanding nor any revenue debt in the City's Enterprise Fund
City of Federal Way / 7 6
4k
CITY OF
40'::ttt=P
Federal Way
City of Federal Way /77
GOVERNMENT -WIDE REVENUES BY SOURCE AND EXPENDITURES BY FUNCTION
For the Year ended December 31, 2003
Program Revenues
Charges fdr Services
$ 10,787,366
Operating Grants and Contributions
528,555
Capital Grants and Contributions
10,827,334
General revenues
Property tax
8,200,955
Sales tax
10,547,534
Othertaxes
13,522,836
Licenses and permits
1,672,225
Other revenue
1,077,039
Unrestricted Grants & Contributions
212,576
Investment Earnings
937,225
Disposition of capital assets
34,260
Total Revenues
$ 58,347,905
Expenses/Expenditures
General Government
$ 5,601,311
Security of Persons & Property
15,597,612
Transportation
5,389,975
Physical Environment
351,023
Economic Environment
2,923,756
Health
607,199
Culture & Recreation
4,455,865
Interest on long-term debt
1,683,028
Surface Water Management
3,380,690
Dumas Bay Centre
935,422
Total Expenses/Expenditures
$ 40,925,881
GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTION
GENERAL, SPECIAL REVENUE, AND DEBT SERVICE FUNDS
to'
CULTURE
J
00
FISCAL
GENERAL
PUBLIC
PHYSICAL
TRANS-
ECONOMIC
AND
CAPITAL
DEBT
TOTAL
YEAR
GOVERNMENT
SAFETY
ENVIRONMENT
PORTATION
ENVIRONMENT
HEALTH*
RECREATION
OUTLAY
SERVICE
EXPENDITURES
1994
$ 2,842,741
$ 8,864,249
$ 196,621
$ 4,266,560
$ 2,309,212
$ 1,339,925
$ 2,737,432
$ 11,967
$ 1,639,837
$ 24,208,544
1995
3,093,147
8,805,874
234,624
4,589,709
2,646,293
1,337,711
3,259,672
10,374
1,771,439
25,748,843
1996
3,831,238
10,269,193
304,196
5,309,948
2,298,040
488,604
2,944,815
1,677,848
1,717,048
28,840,930
1997
3,415,715
10,282,388
528,784
6,141,223
2,258,033
457,211
2,521,085
319,120
2,982,786
28,906,345
1998
3,823,872
11,851,585
310,482
6,407,351
2,395,851
529,790
2,606,626
141,262
4,414,037
32,480,856
1999
4,464,896
13,430,529
257,483
4,737,307
2,536,058
557,610
3,006,660
143,886
5,209,547
34,343,976
2000
4,237,852
14,046,638
318,709
4,661,867
2,634,011
546,191
3,034,818
508,919
4,228,711
34,217,716
2001
4,724,252
14,264,309
378,066
4,554,183
2,679,174
535,589
2,951,607
176,551
4,498,092
34,761,823
2002
5,049,813
14,991,404
329,064
5,203,702
2,779,401
627,232
3,141,129
212,592
4,485,281
36,819,618
2003
5,492,123
15,463,833
351,456
5,358,543
2,883,079
603,184
3,507,392
1,028,085
15,863,046
50,550,741
f Beginning 1996, a portion of MVET moneys were diverted from Cities to Counties to provide health service. Cities will no longer need to pay for health service.
NOTE: Prior to 1999, expenditures reported include Surface Water Management (SWM) as a Special Revenue Fund. 1999 figures were revised to exclude SW as the fund was converted to an enterprise fund
GENERAL GOVERNMENTAL REVENUES BY SOURCE
GENERAL, SPECIAL REVENUE, AND DEBT SERVICE FUNDS
LICENSES
INTER-
CHARGES
FISCAL
AND
GOVERNMENTAL
FOR
FINES AND
MISCELLANEOUS
TOTAL
YEAR
TAXES
PERMITS
REVEN(4,
SERVICES
FORFEITURES
REVENUE
REVENUE
1994
$ 15,895,472
$ 889,724
$ 6,203,784
$ 4,061,229
$ 553,579
$ 834,792
$ 28,438,580
1995
16,351,547
961,807
6,303,245
4,277,815
572,446
1,084,007
29,550,867
1996
18,080,794
917,219
5,667,480
4,195,678
520,670
929,396
30,311,237
1997
21,861,900
1,112,135
6,609,989
4,235,379
576,054
1,151,330
35,546,787
1998
24,024,928
1,192,610
6,311,889
4,797,634
791,113
1,511,601
38,629,775
1999
27,059,338
1,548,220
5,789,602
1,705,785
825,404
1,216,865
38,145,214
2000
28,495,459
1,434,027
5,251,899
2,219,948
902,762
1,920,328
40,224,423
2001
29,721,513
1,396,694
4,365,098
2,525,488
830,668
1,290,992
40,130,453
2002
30,694,856
1,829,620
4,165,673
2,864,937
785,997
989,710
41,330,793
2003
32,022,334
1,672,225
4,090,210
3,294,017
887,071
1,474,950
43,440,807
NOTE: Prior to 1999, revenues reported include Surface Water Management (SWM) as a Special Revenue Fund.
1999 figures were revised to exclude SWM as the fund was converted to an enterprise fund.
GENERAL GOVERNMENTAL TAX REVENUE BY SOURCE
GENERAL, SPECIAL REVENUE AND DEBT SERVICE A'UNI3S
MISCELLANEOUS
GENERAL
BUSINESS AND OTHER
FISCAL
PROPERTY
GENERAL
UTILITY
OCCUPATION TAXES AND
YEAR
TAXES
SALES TAX
TAXES
TAXES ASSESSMENTS *
TOTAL TAXES
1994
$ 5,654,655
5 7,606,672
$ -
$ - $ 2,634,145
$ 15,895,472
1995
5,911,017
7,916.114
-
- 2,524,416
16,351,547
1996
6,022,066
8,037,143
935,497
3,086,088
18,080,794
1997
6,163,988
8,320,2J09
3,859,545
- 3,518,158
21,861,900
1998
6,447,999
8,854,- 40
4,553,650
4,168,539
24,024,928
1999
6,588,903
9,717,5,I85
5,235,168
5,517,682
27,059,338
2000
6,976,972
10,332:Z9
5,590,293
- 5,595,755
28,495,459
2001
7,215,272
10,368,153
6,098,264
6,039,824
29,721,513
2002
7,644,130
10,736,090
6,104,507
6,210,131
30,694,858
2003
8,200,955
10,5I8,230
7,147,878
6,155,271
32,022,334
*
Includes real estate excise, local criminal justice, gambling excise, and other taxes and related assessments.
A
00
0
FISCAL
TOTAL TAX
CURRENT TAX
YEAR
LEVY
COLLECTIONS
1994
$5,598,786
$ 5,443,726
1995
5,976,531
5,829,648
1996
6,075,765
5,918,549
1997
6,180,735
6,041,927
1998
6,474,762
6,339,081
1999
6,667,028
6,510,516
2000
7,030,723
6,858,636
2001
7,305,894
7,107,918
2002
7,700,412
7,471,822
2003
7,912,598
7,740,741
PROPERTY TAX LEVIES AND COLLECTIONS
RATIO OF
TOTAL
RATIO OF
PERCENT OF
DELINQUENT
TOTAL TAX
OUTSTANDING
DELINQUENT
CURRENTTAX
TAX
TOTALTAX
COLLECTIONS TO
DELINQUENT
TAXESTO
COLLECTED
COLLECTIONS
COLLECTIONS
TOTAL TAX LEVY
TAXES
TOTAL TAX LEVY
97.2%
$ 274,559
$ 5,718,285
102.1%
$ 213,611
3.8%
97.5%
131,665
5,961,313
99.7%
209,953
3.5%
97.4%
129,237
6,047,786
99.5%
197,005
3.2%
97.8%
125,222
6,167,149
99.8%
198,240
3.2%
97.9%
138,180
6,477,262
100.0%
187,806
2.9%
97.7%
135,953
6,646,469
99.7%
197,059
3.0%
97.6%
131,554
6,990,190
99.4%
249,607
3.6%
97.3%
145,498
7,253,416
99.3%
302,374
4.1%
97.0%
163,181
7,635,003
99.2%
342,855
4.5%
97.8%
243,165
7,983,906
100.9%
269,323
3.4%
Sources: Most of data has been derived from the "Annual Tax Receivable Summary" prepared by the King County Finance Department.
FISCAL
YEAR
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
REAL PROPERTY
$ 3,523,883,690
3,670,820,831
3,750,745,563
3,961,545,010
4,152,466,303
4,490,661,284
4,932,362,526
5,322,237,420
5,604,164,978
5,992,899,727
ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY*
PERSONAL
PROPERTY
$ 112,067,438
148,316,510
141,394,338
155,884,327
158,019,169
171,187,056
187,812,046
226,854,474
227,961,155
193,519,890
STATE PUBLIC
SERVICE PROPERTY
$ 83,521,024
76,028,872
86,053,600
79,303,838
76,348,173
90,322,059
93,021,743
101,339,376
107,761,209
105,924,009
Real, personal, and state public service property )}as been assessed at 100% of the estimated value.
NOTE: These figures includes all final tax adjustments, omits and senior citizen exempted property. This total assessed value
was reduced by senior citizen exemptions (no tax amounts) of $28,808,690 and prior year omits of $660,547 yielding a
regular levy value of $6,262,874,389. These assessed valuations are the basis for the following year's tax levy.
Source: King County Assessors Office.
TOTAL
$ 3,719,472,152
3,895,166,213
3,978,193,501
4,196,733,175
4,386,833,645
4,752,170,399
5,213,196,315
5,650,431,270
5,939,887,342
6,292,343,626
PERCENT
INCREASE
(DECREASE)
1.9%
4.7%
2.1%
5.5%
4.5%
8.3%
9.7%
8.4%
5.1%
5.9%
00
N
PROPERTY TAX RATES AND LEVIES, DIRECT AND OVERLAPPING GOVERNMENTS
FEDERAL WAY
EMERGENCY
FISCAL
CITY OF
SCHOOL
IQNG
WASHINGTON
GREEN RIVER
PORT OF
FIRE DISTRICT
MEDICAL
YEAR
FEDERAL WAY
DISTRICT #210
COUNTY
STATE
FLOOD ZONE
SEATTLE
#39
LIBRARY
SERVICES
TOTAL
TAX RATES PER $1,000 OF ASSESSED VALUATION
1994
1.54
5.06
2.21
3.40
0.05
0.30
1.58
0.58
0.25
14.97
1995
1.57
5.18
2.25
3.42
0.05
0.29
1.63
0.62
0.25
15.26
1996
1.56
5.26
2.21
3.50
0.05
0.29
1.67
0.62
0.25
15.41
1997
1.56
5.06
2.13
3.52
0.05
0.28
1.58
0.62
0.25
15.05
1998
1.55
4.65
1.85
3.51
0.05
0.26
1.50
0.60
-
13.97
1999
2000
1.53
1.49
4.56
4.42
1.77
3.36
0.05
0.24
1.50
0.59
0.29
13.89
2001
1.41
4.44
1.69
1.55
3.30
3.15
0.05
0.05
0.22
0.19
1.50
1.45
0.59
0.56
0.27
0.25
13.53
2002
1.38
4.16
1.45
2.99
0.05
0.19
1.50
0.53
0.25
13.04
12.50
2003
1.34
4.28
1,35
2.90
0.05
0.26
1.50
0.54
0.24
12.46
DETAIL OF TAX RATES FOR 2003
Basic Rate
1.34
-
1.21
2.90
0.05
0.26
1.50
0.50
0.24
8.00
Voted Rate
-
4.28
0.14
-
-
-
-
0.04
-
4.46
TAX LEVIES
1994
$ 5,598,786
$ 26,891,328
$ 259,088,827
$ 399,086,354
$ 502,979
$ 35,6469867
$ 8,2579614
r 35,252,354
$ 29,312,268
$ 799,637,377
1995
5,976,531
28,263,797
271,408,531
413,378,092
533,178
35,646,159
8,805,938
41,126,042
30,214,063
835,352,331
1996
6,075,765
28,940,230
268,662,181
427,109,738
565,205
35,647,165
9,118,681
41,040,476
30,492,034
847,651,475
1997
6,180,735
28,476,471
268,141,201
444,672,037
599,125
35,647,528
8,843,258
43,661,239
31,533,777
867,755,371
1998
6,474,762
27,530,445
248,678,961
472,459,927
635,052
359646,835
8,378,714
46,603,642
26,137,500
872,545,838
1999
6,667,028
28,468,974
264,133,712
500,994,725
714,606
35,647,362
8,596,565
51,173,675
43,212,202
939,608,849
2000
7,030,723
29,878,996
278,515,900
545,390,795
748,642
35,647,430
8,5969565
54,618,346
45,0709501
1,005,497,898
2001
7,305,894
32,859,841
290,369,516
589,103,721
786,904
35,646,678
9,906,591
59,634,503
46,122,721
1,071,736,369
2002
7,764,913
33,552,460
304,062,327
627,772,703
799,554
39,806,235
11,061,131
64,373,926
52,497,313
1,141,690,562
2003
7,941,900
36,639,878
302,100,182
648,995,138
849,988
58,003,521
11,774,814
72,580,170
54,088,854
1,192,974,445
Source: King County Assessor's Office and King County Department of Finance.
n
RATIO OF NET GENERAL OBLIGATION BONDED DEBT TO ASSESSED VALUE
AND NET GENERAL OBLIGATION BONDED DEBT PER CAPITA
RATIO OF NET
(B)
(C)
BONDED DEBT
NET BONDED
FISCAL
(A)
ASSESSED
GROSS
LESS DEBT
NET
TO ASSESSED
DEBT PER
YEAR
POPULATION
VALUE
BONDED DEBT
SERVICE FUND
BONDED DEBT
VALUE
CAPITA
1994
73,500
$ 3,699,163,886
$ 19,305,000
$ 2,090,674
$ 17,214,326
0.0047
$ 234.21
1995
74,290
3,875,091,033
23,335,000
1,661,823
21,673,177
0.0056
291.74
1996
75,240
3,958,913,902
26,587,000
1,917,779
24,669,221
0.0062
327.87
1997
75,960
4,177,359,264
41,446,063
5,047,726
36,398,337
0.0087
479.18
1998
76,820
4,348,600,049
38,834,824
5,528,984
33,305,840
0.0077
433.56
1999
76,910
4,717,399,199
35,385,483
6,052,008
29,333,475
0.0062
381.40
2000
83,259
5,178,119,377
37,566,992
6,172,926
31,394,066
0.0061
377.07
2001
83,890
5,620,635,267
34,363,272
6,808,657
27,554,615
0.0049
328.46
2002
83,850
5,912,362,755
30,410,844
5,579,129
24,831,715
0.0042
296.14
2003
83,500
6,262,874,389
37,217,065
2,599,653
34,617,412
0.0055
414.58
(A) Sources: U.S. Census Bureau; State of Washington Office of Program Planning and Fiscal Management, Population Study Division; and the City's Community
Development Department.
(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 $6,262,874,389 has been reduced by senior citizen exemptions of $28,808,690 and prior year omits
of $660,547 to arrive at taxable assessed valuation.
(C) Includes certificates of participation issued in 1999, Public Works Trust Fund Loans issued in 1994, 1996, 1997 and 2000;
general obligation bonds issued in 1993, 1995, 1996, 1997, 2000 and 2003; and loan assumption in 2003
COMPUTATION OF LIMITATION OF INDEBTEDNESS
December 31, 2003
GENERAL DEBT CAPACITY
(Limited)
DESCRIPTION COUNCILMANIC
Statutory debt limit:
(2002 AV=$6,262,874,389) (A)
1.50%AV®100% $ 93,943,116
2.50%AV ® 100%
Add:
Cash on hand for
debt redemption (B)
Less:
Bands and COPS outstanding
REMAINING DEBT CAPACITY
TOTAL REMAINING
"GENERAL" CAPACITY (C)
3,402,714
EXCESSLEVY
EXCESS LEVY
TOTAL
(Unlimited)
OPEN SPACE
UTILITY
DEBT
EXCESS LEVY
AND PARK
PURPOSES
CAPACITY
$ (93,943,116)
156,571,860
156,571,860
156,571,860
469,715,580
3,402,714
(34,730,517) (3.1,73 0,517)
$ 62,615,313 $ 62,628,744 $ 156,571,860 $ 156,571,860 $ 438,387,777
$125.244.057
(A) This figure represents the City's final total taxable assessed valuation (AV) for 2002 which was used to determine the 2003 property tax levy.
(B) Reflects balance available in the Debt Service Fund and Utility Tax Fund as of December 31, 2003,
(C) Combined total for Councilmanic, Financing Lease, and Excess Levy capacities.
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JURISDICTION
KING COUNTY
PORT OF SEATTLE
SCHOOL DISTRICT #210
LIBRARY
TOTAL OVERLAPPING DEBT
CITY OF FEDERAL WAY
(A)
(B)
(C)
COMPUTATION OF DIRECT AND OVERLAPPING DEBT
TOTAL DIRECT AND OVERLAPPING DEBT
December 31, 2003
(A)
GROSS GENERAL
OBLIGATION DEBT
OUTSTANDING
$ 731,930,523
217,285,000
117,135,000
30,985,000
1,097,335,523
37,217,065 (C)
$ 1,134,552,588
Total general obligation bonds outstanding at the year end, exclusive of refunded bonds.
Source is King County Department of Finance.
Determined by ratio of assessed valuation of property subject to taxation in overlapping unit to
valuation of property subject to taxation in reporting unit.
(B)
PERCENTAGE
APPLICABLE TO
FEDERAL WAY
AMOUNT
APPLICABLE TO
FEDERAL WAY
2.64% $
19,322,966
2.64%
5,736,324
68.35%
80,061,773
6.21%
1.924,169
107,045,231
100.00%
37,217,065
$
144,262,296
Includes certificates of participation issued in 1999, Public Works Trust Fund Loans issued in 1994, 1996, 1997 and 2000;
general obligation bonds issued in 1993, 1995, 1996, 1997, 2000 and 2003; and loan assumption in 2003
RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL OBLIGATION
BONDED DEBT TO TOTAL GENERAL GOVERNMENTAL EXPENDITURES
FISCAL TOTAL DEBT
YEAR PRINCIPAL INTEREST * SERVICE
TOTAL
GENERAL
GOVERNMENTAL
EXPENDITURES
RATIO OF DEBT
SERVICE
TO GENERAL
GOVERNMENTAL
EXPENDITURES
1994
$ 590,000
$ 1,046,468
$ 1,636,468 $
24,208,544
6.8%
1995
765,000
1,001,427
1,766,427
25,748,843
6.9%
1996
432,280
1,278,552
1,710,832
28,8409930
5.9%
1997
1,222,090
1,755,354
2,977,444
28,906,345
10.3%
1998
2,376,239
2,037,798
4,414,037
32,480,856
13.6%
1999
3,302,102
1,907,445
5,209,547
34,343,976
15.2%
2000
2,498,853
1,729,858
4,228,711
34,217,716
12.4%
2001
2,700,478
1,797,614
4,498,092
34,761,823
12.9%
2002
2,834,084
1,651,197
4,485,281
36,819,618
12.2%
2003
14,159,881
1,703,165
15,863,046
50,550,741
31.4%
Excludes bond issuance and debt registration costs.
DEMOGRAPHIC STATISTICS
FISCAL PER CAPITA MEDIAN
YEAR POPULATION INCOME [C[ AGE [C[
EDUCATION
LEVEL IN YEARS
OF FORMAL SCHOOL UNEMPLOYMENT
SCHOOLING ENROLLMENT (A) RATE (B)
1994
74,413
16,206
30.6
13.0
20,043
5.2%
1995
74,290
17,126
30.6
13.0
20,331
4.9%
1996
75,521
17,401
30.6
13.0
20,733
4.6%
1997
75,960
25,569
32.5
13.0
21,478
3.1%
1998
76,820
22,874
33.3
13.0
21,865
2.9%
1999
76,910
28,494
33.4
13.0
22,407
3.0%
2000
83,259
29,210
32.5
13.0
22,289
3.1%
2001
83,890
22,451
32.5
13.0
21,916
5.2%
2002
83,850
22,451
32.5
13.0
22,194
6.6%
2003
83,500
22,451
32.5
13.0
22,265
6.7%
(A) Includes public school enrollment. Kindergarten is included though not State mandated
(13) The unemployment rates for 1994 through 1998 reflect the annual average for the City of Federal Way, which is based on census
share methodology. The rates for the years 2002 and 2003 are the annual average for region Seattle -Bellevue -Everett PMSA.
[C] Per capita income and Median age information for the years 2001, 2002 and 2003 are based on 2000 U.S. Census report
since these infomaiton is available for individual cities only every ten years when the census is done.
Sources: Data was obtained from U. S. Census Bureau
School data was provided by the Federal Way School District.
n
m
A
00
00
Year
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Commercial Construction (A)
Value
Permits
(In Thousands)
187
$ 33,530
211
33,071
149
18,177
169
9,704
188
50,863
180
43,359
250
38,554
291
59,384
393
59,075
240
25,695
(A) Source:
(B) Source:
(C)] Source:
PROPERTY VALUE, CONSTRUCTION AND BANK DEPOSITS
Residential Construction (A)
Multi -Family Construction (A)
_Bank Deposits (B)
Property
Assessed Valuation (C)
Value
Value
_
King County
_ _
Total Taxable
Exemptions
Non -Taxable
Permits
(In Thousands)
Permits
(In Thousands)
(In Millions)
In Thousands)
(In Thousands)
(In Thousands)
359
$ 34,846
2
$ 523
$ 18,763
$ 3,719,472
$ 51,116
$ 17,983
322
27,165
3
215
19,034
3,895,166
53,384
18,126
257
21,276
3
11,793
16,344
3,958,914
56,383
17,116
367
27,952
10
12,749
17,125
4,177,359
57,686
16,362
364
23,301
11
7,594
19,650
4,348,600
44,629
32,685
374
26;229
5
16,167
18,337
4,717,399
48,282
31,824
185
11,462
12
3,816
18,678
5,178,119
46,551
29,984
166
7,914
6
1,790
20,334
5,620,635
44,646
27,409
318
38,176
1
22,262
5,912,363
46,489
26,561
290
37,775
1
1,042
26,750
6,262,874
50,672
28,809
Federal Way Community Development Department. Commercial construction includes alterations. Other building -related permits (plumbing, mechanical, fire alarm, etc.) numbering
1,779 and valued at $2,362,158 have been excluded.
Federal Reserve Bank of San Francisco. The deposits disclosed are for June 30 of the prior year. The FDIC does not publish its annual update until late June.
King County Assessor's Office. See Table 5 for further assessed value information.
City of Federal Way / 90
PRINCIPAL TAXPAYERS
December 31, 2003
Percentage
2002
of Total
Assessed
Assessed
Taxpayer
- Type of Business
yslualion
Valuation (A)
Weyerhaeuser Real Estate Co.
Real Estate
$157,395,612
2-51 %
Puget Sound Energy
Electric/Gas
51,359,264
0.82%
Qwest Corporation Inc.
Communications/Telephone
43,115,769
0:69%
Steadfast SeaTac Mall (formerly Newman Properties)
Shopping Center
38,434,837
0.61 %
Harsch Investment Properties (Ross Plaza)
Shopping Center
33,723,200
0.54%
Gateway Center Retail
Shopping Center
27,750,300
0.44%
Fred Meyer
Retailer / Wholesaler
20,608,672
0.33%
Red Mortgage Capital Inc
Finance
18,741,000
0.30%
Quadrant Corporation
Real Estate Management
18,520,600
0.30%
BRE Properties
Real Estate Management
17,454,000
0.28%
Costco
Retailer / Wholesaler
16,422,949
0.26%
Virginia Mason Clinic
Medical Services
16,403,198
0.26%
Campus Business Parks LLC
Real Estate Investment/Holding
11,735,600
0.19%
5471,665,001
7.53%
PRINCIPAL EMPLOYERS
December 31, 2003
Number of
Taxpayer _
rypu. of Business
Employees
WE'YERHAEUSER COMPANY
Lunil)cr Products
3,283
FEDERAL WAY SCHOOL DIST #210
Education
3,025
ST FRANCIS HOSPITAL
Medical Services
744
ENCHANTED PARKS INC
Amusement Center
734
WORLD VISION INC
Christian Relief Agency
663
US POSTAL SERVICE
Postal Service
662
CITY OF FEDERAL WAY
Government Services
440
LAKEHAVEN UTILITY DISTRICT
Utility
420
SAFEWAY STORES
Retail Grocery
282
COSTCO WHOLESALE CORPORATION
Wholesale
255
BON-MACY'S
Retail
240
VIRGINIA MASON FEDERAL WAY
Medical Services
235
WAL-MART STORE #2571
Retail
225
ALBERTSONS FOOD CENTER
Retail Grocery
220
FRED MEYER
Retail
214
SEARS, ROEBUCK & CO.
Retail
205
Spherion
Miscellaneous Services
205
HOME DEPOT #4703, THE
Retail
202
PRUDENTIAL NW REALTY ASSOCIATES LLC
Real Estate
200
24 HOUR FITNESS INC
Fitness Services
190
WINCO FOODS #43
Retail Grocery
178
SILVER DOLLAR CASINO / ROCCO GAMING, INC
Casino
175
DEVRY UNIVERSITY
Education
167
UNICCO SERVICE COMPANY
Miscellaneous Services
161
LIFE CARE CENTER OF FEDERAL WAY
Nursing Facility
160
CAPITAL ONE SERVICES INC
Financial Institution
150
LOWE'S HIW INC
Retail
140
PJ POCKETS CASINO
Casino
133
HALLMARK MANOR
Retail
130
TARGET STORE #340
Retail
130
FEDERAL WAY FIRE DEPARTMENT
Social Service
128
BALLY TOTAL FITNESS
Fitness Services
125
BROOKLAKE COMMUNITY CHURCH
Social Service
122
GROUP HEALTH -FW MEDICAL CENTER
Medical Services
120
BERGERIABAM ENGINEERS
Miscellaneous Services
116
AVALON CARE CENTER - FEDERAL WAY LLC
Miscellaneous Services
112
TOP FOOD & DRUG #39
Retail Grocery
107
BEST BUY #372
Retail
100
IMBIBERY II INC DBA PLAYERS CASINO
Casino
100
(A) 2002 assessed valuations for taxes collected in 2003. Total 2002 assessed valuation for the City is $6,262,874,389
Source: King County Assessor - Principal Taxpayers.
City of Federal Way Business Licenses - Principal Employers - includes both full-time and part-time employees.
City of Federal Way / 91
SCHEDULE OF INSURANCE IN FORCE
December 31, 2003
NAME OF COMPANY
POLICY
NUMBER
POLICY
PERIOD
DETAILS OF COVERAGE
LIABILITY LIMITS
ANNUAL
PREMIUM
St. Paul Fire and Marine
09/01/2003 -
Included In
Pubic Entity Management Liability $10,000,000 Each Claim & Aggregate Annually. General Liability
Insurance Company
GP06301432
08/312004
Protection
Deductible $5,000
Premium
St. Paul Fire and Marine
09/012003 -
included in Cri me/Fidcli ty Coverage, S500,000
Public Official Bond - Management Employee Dishonesty, $100,000
lneluded In
Fidelity
Insurance Company
GP06301432
08/31/2004
Service Director
Forgery/Alteration. Deductible $5,000
/ Crime
Coverage
St. Paul Fire and Marine
09/01/2003 -
Included in Crime/Fidelity Coverage, $500,000
Included In
Insurance Company
GP06301432
08/31/2004
Public Official Bond - Ci Mana
Employee Dishonesty, $100,000
Forgery/Alteration. Deductible $5,000
Fidelity / Crime
Coverage
g
$10,000,000 Occurrence, $20,000,000
Aggregate, $1,000,000 Underinsured Motorists
General Liability, Auto Liability,
Coverage, $1,000,000 Garagekeepers Legal
St. Paul Fire and Marine
Underinsured Motorists Liability
Liability, All Limits are Per
Insurance Company
GP06301432
09/01/2003 -
and Law Enforcement Liability
Occurrence/Aggregate Annually. Deductible
08/31/2004
Coverage
$5,000
$ 203,400
Statement of Values Limit $11,598,000,
Business Income / Extra Expense $1,000,000,
Valuable Papers / Accounts Receivable
St. Paul Fire and Marine
09/012003 -
$1,000,000, Rental Income $1,000,000,
Insurance Company
GP06301432
08/31/2004
Property Coverage
Electronic Data Processing $1,000,000, Fine
Arts $1,000,000.
$ 35,521
Included in General Liability, Auto Liability and
Law Enforcement Liability Above. Auto
St. Paul Fire and Marine
09/012003 -
Physical Damage - Deductible $1,000 Trucks /
Auto Liability and Physical Damage Fire Trucks / Ambulances, $500 Pickups
Insurance Company
GP06301432
08/312004
Coverage
/ Vans,
$250 Private Passenger
$ 63,913
St. Paul Fire and Marine
09/012003 -
Faithful Performance /
Fidelity/Employee Dishonesty and
Included in Crime/Fidelity Coverage, $500,000
Employee Dishonesty, $100,000
Insurance Company
GP06301432
08/31/2004
ERISA Coverage
Forgery/Alteration. Deductible $5,000
$ 2,540
St. Paul Fire and Marine
09/012003 -
Insurance Company
GP06301432
08/31/2004
Inland Marine
Limit of $108,000. Deductible $5,000
$ 389
09/012003 -
Included In
St. Paul Mercury Ins. Co.
GP06301432
08/312004
Excess Liability Coverage
Included In General Liability Premium
General Liability
Premium
$10,000,000 Per Accident, $50,000 Perishable
Goods, $1,000,000 Hazardous Substances,
$1,000,000 CFC Refrigerants, Deductible $2,500
St. Paul Fire and Marine
09/012003 -
Each Accident, Extended Business Income 30
Insurance Company
GP063OI432
08/312004
Bailer & Machinery Coverage
Days, Newly Acquired Locations 365 Days,
Service Interrup
$ 12.671
St. Paul Fire and Marine
Insurance Company
GP06301432
09/01/2003 -
Employer/Stop Gap Liability
Included in General, Auto and Law Enforcement
Included In
General Liability
08/312004
Coverage
Liability Limits Referenced Above
Premium
St. Paul Fire and Marine
09/012003 -
Included in Crime/Fidelity Coverage, $500,000
Included In
Insurance Company
GP063OI432
08/312004
Public Officials Bond - City Clerk
Employee Dishonesty, $100,000
Forgery/Alteration. Deductible $5,000
Fidelity / Crime
Coverage
St. Paul Fire and Marine
09/01/2003 -
Public Officials Bond - Chief of
Included in Crime/Fidelity Coverage, $500,000
Employee Dishonesty, $100,000
Included In
Insurance Company
GP06301432
08/312004
Police
Forgery/Alteration. Deductible $5,000
Fidelity / Crime
Coverage
St. Paul Fire and Marine
Insurance Com any
GP06301432
09/012003 -
Law Enforcement Liability
Included in General, Auto and Law Enforcement
Included In
General Liability
08/312004
Liability Limits Referenced Above
Premium
Si. Paul Fire and Marine
Insurance Company
GP06301432
09/012003 -
tAhove
Included in General, Auto and Law enforcement
Included In
General Liability
TOTAL PREMIUMS
08/31/2004
Ground Pollution Coverage
Liability Limits Referenced Above
Premium
$ 318,434
City of Federal Way / 92
SALARIES AND SURETY BONDS OF PRINCIPAL OFFICIALS
DECEMBER 31, 2003
LEGISLATIVE BODY
POSITION
EMPLOYEE
ANNUAL SALARY
MAYOR
JEANNE BURBIDGE
$16,500
COUNCILMEMBERS
LINDA KOCHMAR
$12,900
MICHAEL PARK
•$12,900
ERIC FAISON
$12,900
MARY GATES
$12,900
JACK DOVEY
$12,900
DEAN MCCOLGAN
$12,900
ADMINISTRATIVE STAFF
POSITION
EMPLOYEE
ANNUAL SALARY
CITY MANAGER
DAVID MOSELEY
Negotiated
DIRECTOR - CITY ATTORNEY
PAT RICHARDSON
$86,928 - $109,968
CITY CLERK
CHRISTINE GREEN
$60,024 - $ 75,948
COMMUNITY DEVELOPMENT DIRECTOR
KATHY MCCLUNG
$86,928 - $109,968
MANAGEMENT SERVICES DIRECTOR
IWEN WANG
$86,928 - $109,968
PARKS, RECREATION AND CULTURAL
JENNIFER SCHRODER
$86,928 - $109,968
SERVICES DIRECTOR
PUBLIC SAFETY DIRECTOR
ANNE KIRKPATRICK
$86,928 - $109,968
PUBLIC WORKS DIRECTOR
CARY ROE
$86,928 - $109,968
NOTE: In accordance with State of Washington legal statues, individual fidelity coverage of not less than $100,000 exists for both
the City Manager and Management Services Director.
City of Federal Way/ 93
MISCELLANEOUS STATISTICAL INFORMATION
DECEMBER 31, 2003
TYPE OF GOVERNMENT
Council - City Manager
ORGANIZATION STRUCTURE
Legislative Executive Administrative
Mayor 1 City Manager 6 Department Directors
6 Councilmembers 2 Assistant City Managers
CORPORATE INFORMATION
The City of Federal Way is a noncharter optional code City. It was incorporated as an optional code City on February 28, 1990,
and is governed under the provisions of the Optional Municpal 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.
LOCATION AND AREA
Federal Way, the eighth largest city in the State of Washington, encompasses an area of 21.5 square miles. It is located in
South King county approximately 25 miles south of Downtown Seattle and 8 miles north of Downtown Tacoma. The community
is residential commercial, with the populace employed locally in neighboring cities such as SeaTac,.Kent, Tacoma, Bellevue and
Seattle. The City has approximately 32,581 housing units. It is 6 miles from the Port of Tacoma and 9 miles south of SeaTac
International Airport. The City is served by Interstate 5 and state highways 99 and 509. Frequent Metro public bus service is
available to both Seattle and Tacoma throughout Federal Way. Three express park -and -ride lots are provided.
POPULATION, REGISTERED VOTERS AND EMPLOYMENT WITHIN CITY LIMITS
The population of Federal Way is presently 83,500, of which 42,103 are registered voters. A total of 29,612 (est.) people are
employed within the City limits.
NUMBER OF CITY EMPLOYEES
During the year 2003, the City employed 267 full-time salaried, 21 part-time hourly, and 107 temporary employees. There were
107 commissioned police officers and no uniformed firefighters. The Teamsters Union #763 represented 20 employees (Public
Works Maintenance and Parks Maintenance), 31 employees were represented by the PSSA (Police Support Services Association),
and the Police Guild represented 87 Police Officers during 2003.
RECREATIONAL FACILITIES
31 Developed park sites covering 500.25 acres
21 Undeveloped park sites covering 356.24 acres (including open space)
19 Public tennis courts, 9 of which are owned by the City
2 Public swimming pools, one owned by the City and one owned by King County
2 Trails covering 4 miles
OTHER CITY OWNED FACILITIES
1 New City Hall (Remodeling)
1 City Hall
1 Parks Maintenance Facility
1 Dumas Bay Centre
1 Klahanee Community/Senior Center
PUBLIC EDUCATION
ENROL
23 Elementary Schools
11,524
11,689
-»,
11,930
a11ao
I2:248
iyyy
12,258
AMU
12,242
4UU1
11,498
2002
11,990
2003
9,854
7 Middle Schools (incl. Public Academy)
4,701
4,838
4,979
4,956
4,994
5,013
5,331
5,509
5,458
5 High Schools
1 Internet Academy (K-12)
3,730
376
3,904
302
4,103
4,116
4,529
4,557
4,415
42316
6,625
466
545
626
477
672
379
328
20,331 20,733 21,478 21,865 22,407 22,289 21,916 22,194 22,265
1,392 Certified full-time equivalency teachers and administrative staff.
City of Federal Way / 94
MISCELLANEOUS STATISTICAL INFORMATION
MILES OF STREET
Streets (Center Line Miles) ................................
SIGNALS/STREET LIGHTS
Signals WSDOT-owned and maintained ................
Signals City -owned and King County -maintained...
Street lights City -owned and maintained......
Street lights City -owned and PSE-maintained...
Street lights PSE-owned and maintained..........
LOCAL TAXES ON BUSINESSES
Franchise Tax - Cable TV ................................
Gambling Taxes:
Bingo/Raffles....................................
Amusement/Games .............................
Punchboard/Pull Tabs ..........................
Cardrooms...................................... .
Local Sales Tax (Collected by the State) ...............
POLICE INFORMATION
Offenses:
Forcible Rape (including attempts)
Robbery
Criminal Homicide
Aggravated Assault
Vehicle Theft
Burglary (commercial & residential)
Larceny
Arson
Citations:
DECEMBER 31, 2003
(Continued)
.......256.86 miles
4
70
1038
644
1975
5.00%
5.00%
2.00%
5.00%
20.00%
8.80%
1995
1996
1997
1998
1999
2000
2001
2002
2003
71
73
37
58
53
43
49
34
50
173
188
154
153
115
128
124
108
125
3
3
2
2
4
7
4
4
2
167
171
121
159
167
158
141
120
120
843
807
746
761
808
849
1179
1206
1204
881
965
643
648
573
533
521
677
672
4300
4086
3901
3393
3097
3072
3516
3347
3145
38
35
24
39
38
36
17
29
14
Traffic
14,258
8,660
11,196
13,382
10,890
13,340
12,767
13,439
18,411
FIRE AND EMERGENCY MEDICAL RESPONSE INFORMATION
Fire and Emergency Medical Response information reflects the greater Federal
Way area,
which is served by Fire District
439.
1995
1996
1997
1998
1999
2000
2001
2002
2003
Fire and Other Responses
1,902
2,018
1,985
2,357
2,0 99
212 88
1,920
31055
3,117
Emergency Medical
5,653
6,007
5,853
6,589
6,870
7,193
7,240
7,422
8,042
BUILDING RELATED PERMITS & VALUES
1995
1996
1997
1998
1999
2000
2001
2002
2003
Building Permits
560
422
576
582
573
447
463
712
531
Estimated Value (In Millions $)
$60.7
$51.3
$53.3
$81.9
$85.8
$53.8
$69.1
$94.8
$64.5
Other Building Related Permits
625
656
864
821
1007
1546
1693
2024
1779
Estimated Value (In Millions $)
$2.8
$37.6
$18.5
$27.0
$11.0
$1.5
$2.3
$2.5
$2.4
TAXABLE SALES (in millions)
1995
1996
1997
1998
1999
2000
2001
2002
2003
Retail Sales
$942.4
$956.8
$978.9
$1,049.3
$1,137.0
$1,212.1
$1,220
$1,298
$1,237
Real Estate Sales
$219.0
$305.0
$375.4
$438.8
$487.6
$429.9
$400
$503
$570