2005 Annual Comprehensive Financial Report (05-001)a00g- ook
City of Federal Way, Washington
COMPREHENSIVE
ANNUAL FINANCIAL
REPORT
Year Ended December 31, 2005
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 View Highway (now Dash Point Road) built in the
early 1920s. This roadway spurred development along the coastline. Soon thereafter, Peasley Canyon Road was
built to connect Military Road with the Auburn Valley. This road later became known as South 320th Street. In
these early days, roadways set the stage for development in the area and they still play an important role in the City
today.
By the start of World War II, a number of small, thriving communities made up the area that is now Federal Way.
Some communities were clustered around lakes, such as Steel Lake, Star Lake, and Lake Geneva. Others were sited
to take advantage of the view of Puget Sound, like Adelaide and Buenna. As each of these communities grew,
residents built small schoolhouses for their children. By the late 1940s, King County consolidated the many
individual red schoolhouses into the Federal Way School District, from which the City gets its name. During this
same period, a library was built along the edge of Highway 99, and between 308t' Street and 320th Street, a small
"downtown" developed with a general store, lumberyard, 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, 2005
Table of Contents
INTRODUCTORY SECTION
Page
Letterof Transmittal................................................................................................................................... m
City Officials and Administrative Officers .......................... ........ ......................... :.::. .... ........................... 1
City Functional Organization Chart ........ ........................... ........ ..................................... ........... 2
GFOACertificate of Achievement............................................................................................................. 3
FINANCIAL SECTION
Independent Auditor's Report ....................................................................................................................
Management's Discussion and Analysis......................................................:....................._._.....I...............
Basic Financial Statements:
Government -wide Financial Statements:
Statementof Net Assets ...................... ..... .._................ :............ .......... :.................................. .. 19
Statement of Activities ............... ....... ...................... ................................ ....................................... 20
Fund Financial Statements:
Balance Sheet - Governmental Funds....................................................................................
21
Statement of Revenues, Expenditures, and Changes in Fund Balances -
GovemmentalFunds .............................. ........... ......... .........-............................................
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.................................................................................................... 31
Combining and Individual Fund Statements and Schedules - Nonmajor Governmental Funds:
FundDescription................................................................................................... ...................... 59
Combining Balance Sheet............................................................. 61
............... ......
Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........................ 64
Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual
ArterialStreet Fund ........................ :....:................... ....................................
Solid Waste & Recycling Fund ................................
Hotel/Motel Lodging Tax Fund......--- --- ................................................. ......................... 69
Paths& Trails Fund......................................................................................................... 70
Budget and Actual Fund Statement - Debt Service Fund:
Fund Description..................................................................................................... 71
...............
Budgetand Actual........................................................................................................................... 72
Combining and Individual Fund Statements and Schedules - Internal Service Funds:
Fund Description ................ ..... .. ...... 73
....................
Combining Statement of Net Assets... .... ............................................................... - ... I-- .......... I .... 74
Combining Statement of Revenues, Expenditures and Changes in Fund Net Assets ...................... 75
Combining Statement of Cash Flows........................................................... ............................. 76
Capital Assets Used in the Operation of Governmental Funds:
Comparative Schedules by Source ... ...... .... ........ .......................... .......... :............................ ............. 78
Schedule by Function and Activity ... ......................................... ........... ._........................ .........:_..... 79
Schedule of Changes by Function and Activity ............................ ................................... ........_...._, 80
STATISTICAL SECTION
Schedule 1 Net Assets by Component...................................................................................................
83
Schedule2 Changes in Net Assets.........................................................................................................
84
Schedule 3 Government -wide Revenues by Source and Expenditures by Function ..............................
85
Schedule 4 Fund Balances, Governmental Funds..................................................................................
86
Schedule 5 Changes in Fund Balances, Governmental Funds.... .............. __ .... ...... _ ......... ... . ....... -.,.
87
Schedule 6 Assessed and Estimated Actual Value of Taxable Property ................................................
88
Schcdulc 7 Property Ratcs and Lcvics, Direct and Overlapping Governments .....................................
89
Schedule 8 Principal Taxpayers _. .......................................... ............._.........:................:.......................
90
Schedule 9 Property Tax Levies and Collections..................................................................................
91
Schedule 10 Ratio of Outstanding Debt by Type.......................................................... ...........
92
Schedule 11 Ratio of General Obligation Bonded Debt to Assessed Value and
Net General Obligation Bonded Debt Per Capita.............................................................
93
Schedule 12 Computation of Direct and Overlapping Debt..................................................................
94
Schedule 13 Computation of Limitation of Indebtedness......................................................................
95
Schedule 14 Ratio of Annual Debt Service Expenditures for General Obligation Bonded Debt to
Total General Govemmental Expenditures Net of Debt Service Expense .......................
96
Schedule 15 Demographic Statistics.....................................................................................................
97
Schedule 16 Property Value, Construction and Bank Deposits.............................................................
98
Schedule 17 Principal Employers..........................................................................................................
99
Schedule 18 Salaries and Surety Bonds of Principal Officials..........-., ....................... ..."....... .,.........
100
Schedule 19 Miscellaneous Statistical Information...............................................................................
101
ii
A�k
Cl" OF
Federal Way
June 30, 2006
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, 2005 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
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.
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.
iii
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 South King
Fire & Rescue. 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.
FACTORS AFFECTING FINANCIAL CONDITION
Robust growth has finally erased a four-year economic slowdown in King County. While income and
employment changes remain short of the four years of rapid growth in the late 1990s, the marked
improvement in local conditions reflects a return to equilibrium. Since mid-2000, the region has weathered
a series of setbacks, punctuated by the dramatic collapse in equity market valuations, the September 11
2001 terrorist attacks, myriad accounting scandals, and the buildup and continued aftermath of war in
Afghanistan and Iraq. Halting recovery has now given way to unmistakable growth.
After three years of fitful growth, local business activity has surged in the last nine months, showing
surprising strength in the absence of strong expansion in national markets. Having finally broken the cycle
of improvement followed by stalled growth, the national economy as well as the County is now
increasingly threatened by higher energy costs.
Although the entire state has suffered during the downturn, the worst effects were focused on the Puget
Sound region and King County in particular. In the last twelve months, however, non -farm employment
growth in King County has actually outpaced the rest of the state, 3.3 percent to 2.9 percent. Growth in
2005 has been fueled by a turnaround in aerospace and parts, up 7.0 percent. By far the largest payroll
growth has occurred in construction up 7.9 percent since last July after growing 6.9 percent the year before.
Residential real estate continues to show remarkable strength. Sales in 2005 are at near record levels, and
prices have continued to appreciate in spite of economic conditions. The market has been strong, rapidly
absorbing new housing stock from the residential construction boom. Residential construction has been
driven by unprecedented low mortgage rates.
Steady growth is anticipated in 2006, with business investment continuing to offset slackening consumer
demand. Modest employment growth should accelerate, but a return to 1998-2000 levels is still two to
three years away. Residential real estate construction, carried three years by historically low long term
interest rates, will return to more natural levels.
After rising by over 3.6 percent in both 2000 and 2001, growth in the Puget Sound region Consumer Price
Index was just 1.9% and 1.7% in 2002 and 2003, respectively, driven by unchanged housing costs. In 2005
the CPI is up to 3.5%. Obviously local prices remain dependent on global energy prices, as well as
movement in agricultural goods, but core inflation — excluding energy and food — in the Puget Sound
region should remain quite low for the next two or three years.
ECONOMIC TRENDS
Federal Way is the eighth largest city in Washington State with a population of 85,800 as of January 14,
2005, including 2,700 added from newly annexed area of Redondo East, North Lake, and Parkway. The
City is located on a plateau adjacent to Puget Sound in King County, eight miles north of downtown
Tacoma and 25 miles south of downtown Seattle. The City occupies approximately 22.5 square miles,
including the annexed area, and is served by Interstate 5 and state highways 99 and 509.
iv
In 2005 there were 34,559 housing units in Federal Way, an increase of approximately 3.9% over 2004. Of
these units, 55% were single family homes, 41 % multi -family units, and 4% mobile homes and trailers.
The community is residential and commercial, with the populace employed locally and in the neighboring
cities such as SeaTac, Kent, Tacoma, Bellevue, and Seattle. Employment in Federal Way is highly
concentrated in retail and services sectors which respond primarily to the needs of the local market area
population. The employment figure for 2005 is estimated at 29,357. Major employers are; Federal Way
School District, The Commons Mall, Weyerhaeuser, St. Francis Community Hospital, Enchanted Parks,
U.S. Postal Bulk Mail Center and World Vision.
Sales tax collected in 2005 total $11.31 million, and is above 2004 by $513 thousand. The retail sector of
the local economy is anchored by The Commons regional mall including Target, Best Buys, Wal-Mart,
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
52.1%; services 19.8%; contracting 13.2%; wholesale trade 4.6%; transportation and public utilities .0.1%;
information 5.3%, manufacturing 1.2%; government 0.5%, finance, insurance and real estate 3.0%, and
other 0.2%.
In 2005, new improvements to real estate totaled $240.4 million or approximately 3.3% of the City's 2005
assessed valuation. The total assessed value of taxable property in Federal Way was $7.3 billion, which is
approximately 13% higher than the 2004 assessed valuation of $6.4 billion. Real Estate sales increased
52% to approximately $939 million in 2005 as compared to $616 million in 2004. A total of 880 building
permits and 2,705 other building related permits were issued in 2005. Estimated valuation was $236.5
million and $3.9 million, respectively. Significant building permits include: Wal-Mart Super Center,
Federal Way Crossings, Weyerhaeuser Buildings, South Ridge Apartments, Celebration CTR and the
Christian Faith Center.
MAJOR INITIATIVES AND ACCOMPLISHMENTS
Council approved the redesign of the community center to stay within the $20 million budget. The new
facility will be home to the Federal Way Senior Center, as well as a variety of youth activities. The 72,000
square foot state-of-the-art 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. Major construction has started on this project and remained on
schedule during 2005 and should be completed in early 2007.
A number of capital improvements were made to our main streets and highways, making them a more
attractive place to do business. In 2005, Phase I on Pacific Highway South 312'h to 324'h is completed,
right of way 23`d Ave South from 3171h to 326'h is completed, South 312'h street at 8'h Avenue traffic signal
is complete, South 288'h street State Route 99 to Military Road is complete, South 3126 at 141h Avenue
traffic signal is complete, South 3141h street pedestrian signal improvements is complete, and Westway
street lighting Community Development Block Grant project is completed. Phase II on Pacific Highway
from South 324'h to 340'h is winding down. While, Phase III of Pacific Highway 99 South improvements
from South 2841h Street to State Route 509 is gearing up for major work in up coming years. Banners,
baskets, and holiday lights were also hung from lampposts along Pacific Highway and South 3201h during
the holiday season.
A major component of the comprehensive plan is the creation of a vibrant downtown area. The city is
currently working on the master environment review of the area, starting with a marketing study and
redevelopment strategy, along with ongoing city center public spaces visioning process that lead to
distillation of public preferences about public spaces in our city center and parameters for their
development. This will save developer's time, effort and cost. A consultant was hired to review
preliminary traffic impacts, and a new system was created to market the community to potential developers.
v
City voters decided to annex three areas known as; Redondo East, North Lake, and The Parkway to be
include in the City limits and took effect on January 151 2005. This has increased the population by 2,730
bringing the total to 85,800 for the City of Federal Way.
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 was created and has been distributed. The City
hosted its second Reebok Women's Triathlon. It took place in the fall of 2005 and was very well received.
In addition the I` annual Korean sports and cultural event called the Han Woo-Ri festival was a well
attended event for the Korean community.
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, 2005 indicated that there were no material weaknesses in the internal control
structure.
Budgetary Control
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,
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.
vi
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, 2005 consisted of investments in U.S.
Government Agency securities, Washington State Investment Pool, and Municipal Investment Account,
with maturities ranging from one day to just under three years.
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 (.035%). At December
31, 2005, the City had $45.6 million invested in the State Investment Pool. In 2005, the average monthly
earnings rate for the entire portfolio was approximately 4.07% as compared to the average monthly
earnings rate for the State Investment Pool of 4.16%.
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
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 2005,
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 2005 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 2005. The State Auditor's report on the
basic financial statements is included in the financial section of this report.
vii
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, 2004. The City of Federal
Way has received a Certificate of Achievement for the last fifteen years (fiscal years ended 1990 — 2004).
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 principals and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
comprehensive annual financial report continues to meet Certificate of Achievement Program's
requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate.
The City of Federal Way also received the Government Finance Officers Association Distinguished Budget
Presentation Award for its biennial budget for the years beginning January 1, 2005 and 2006 and will
submit for its 2007/08 Biennial Budget. In order to receive this award, a governmental unit must publish a
budget document that meets program criteria as a policy document, a financial plan, an operations guide,
and a communications medium.
ACKNOWLEDGEMENTS
The preparation of this report would not have been possible without the efficient and dedicated services of
the entire staff of the finance division: Mark Turley (Senior Financial Analyst), Dave Papandrew
(Contracted), Thao Thai (Financial Analyst), Julia Cheng (Financial Analyst), Jeri-lynn Clark (Account
Tech), Toni Pettie (Payroll Tech), Joanne Tibble (Accounts Payable Tech), and Cathleen Rossick (Office
Tech). In addition, staff in all City departments should be recognized for responding so positively to the
requests for detailed information which accompany each audit. The role of the State Auditor's Office
should also be acknowledged as a significant contribution to a fine product. Finally, we wish to express
our appreciation to the Mayor and City Council for their ongoing support and for providing the firm
foundation for the pursuit of excellence in all realms of professional endeavors.
Respectfully submitted,
Iwen Wang Tho Kraus
Management Services Director Finance Manager
Vill
Federal Wav / 1
CITY OFFICIALS
DEAN MCCOLGAN LINDA KOCHMAR
Mayor Deputy Mayor
JACK DOVEY
Councilmember
JIM FERRELL MICHAEL PARK
Councilmember Councilmember
DAVID MOSELEY
City Manager
OTHER ADMINISTRATIVE OFFICERS
JEANNE BURBIDGE
Councilmember
ERIC FAISON
Councilmember
CityAttorney ......:.......:.................................::..........................................................................:....:.......Patricia Richardson
CityClerk ......................................... ................................................................................................................ Chris Green
Community Development Director............................................................................................................. Kathy McClung
Management Services Director.................................................................................................:...:.............:...... Iwen Wang
Parks, Recreation and Cultural Services Director . ............................. ........................ ____ .................. .•.... Donna Hanson
PublicSafety Director............................................................................................................................... Anne Kirkpatrick
Public Works Director....................................................................... -,.....Cary Roe
Citi• of Federal Wav / 2
Municipal Court
David Tracy
-Adjudicates Cases
*Probation Services
Total FTE: 13.55
People of Federal Way
Mayor and City Council
Dean McColgan, Mayor
Linda Kochmar, Deputy Mayor
Jeanne Burbidge, Jack Dovey,
Jim Ferrell, , Michael Park,
Eric Faison
City Manager
David Moseley
Total FTE: 5
Community Parks, Recreation
Development & Cultural Services
Kathy McClung Donna Hanson
-Current Planning -Recreation Programs
-Land Use *Ground Maintenance
-Building Permits/ -Park Operations
Inspections -Community/Sr Center
-Code Compliance -Facility Maintenance
*Dumas Bay Centre
-Civic Theatre
Total FTE: 30.5 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 Kirkpatrick
-Drug Awareness
Resistance Education
*Crime Analysis/
Prevention
-Traffic Enforcement
•Investigation
-Jail Services
Total FTE:
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 Total FTE: 41.
Management
Services
Twen 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, 2004
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.
�y tD4F�i�q
W � MD�RS r
President
SZA1 ~
rWA2
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, 2004. This
was the fifteenth 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
Federal Way
Washington State Auditor
Brian Sonntag
INDEPENDENT AUDITOR'S REPORT
June 23, 2006
Mayor and City Council
City of Federal Way
Federal Way, Washington
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 years ended December 31, 2005, as
listed in the table of contents. These financial statements are the responsibility of the City's management.
Our responsibility is to express opinions on these financial statements based on our audit. The prior year
partial comparative information has been derived from the City's 2004 financial statements and, in our
report dated June 23, 2005, we expressed unqualified opinions on the respective financial statements of
the governmental activities, the business -type activities, each major fund, and the aggregate remaining
fund information.
We conducted our 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
respective financial position of the governmental activities, the business -type activities, each major fund,
and the aggregate remaining fund information of the City of Federal Way, King County, Washington, as of
December 31, 2005, and the respective changes in financial position and cash flows, where applicable,
thereof, and the respective budgetary comparison for the General Fund, Street Fund, and Utility Tax Fund
for the years then ended, in conformity with accounting principles generally accepted in the United States
of America.
The financial statements include partial prior -year comparative information. Such information does not
include all of the information required for a presentation in conformity with accounting principles generally
accepted in the United States of America. Accordingly, such information should be read in conjunction
with the Entity's financial statements for the year ended December 31, 2004, from which such partial
information was derived.
As described in Note 1, during the year ended December 31, 2005, the City has implemented the
Governmental Accounting Standards Board's Statement 40, Deposit and Investment Risk
Disclosures.
Insurance Building, PO Box 40021 - Olympia, Washington 98504-0021 - (360) 902-0370 - (866) 902-3900 - TDD Relay (800) 833-6388
FAX (360) 753-0646 - http://www.sao.wa.gov
The management's discussion and analysis on pages 7 through 15 is not a required part of the
basic financial statements but is supplementary information required by the Governmental
Accounting Standards Board. We have applied certain limited procedures, which consisted
principally of inquiries 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 the City's basic financial statements. The accompanying information listed
as combining financial statements on pages 59 through 75 is presented for purposes of
additional analysis and is not a required part of the basic, financial statements. This information
has been subjected to auditing procedures applied in the audit of the basic financial statements
and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial
statements taken as a whole.
The information identified in the table of contents as the introductory and Statistical Sections is
presented for purposes of additional analysis and is not a required part of the basic financial
statements of the City. Such information has not been subjected to the auditing procedures
applied in the audit of the basic financial statements and, accordingly, we express no opinion on
it.
Sincerely,
BRIAN SONNTAG, CGFM
STATE AUDITOR
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, 2005. 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.
FINANCIAL HIGHLIGHTS
• The total assets of the City of Federal Way exceeded its liabilities at December 31, 2005 by $178.0
million. Capital Assets (net of depreciation and related debt) account for 63% of this amount with a
value of $112.6 million. Of the remaining net assets $20.4 million or 11% 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 $20.1 million, or 13% in 2005. Governmental activities
provided $19.4 million or 96% with the remainder being provided by the business -type activities.
Governmental fund balances at year-end were $49.3 million, a 23% increase over the prior year. Of
this amount, a total of $45.6 million, or 92% of the governmental fund balance is unreserved and
available to fund ongoing activities. The remaining $3.8 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 $4.1 million, an increase of $1.5 million or 55% from
the prior year.
• The City debt decreased by $3.3 million during the current fiscal year. General obligation debt
decreased by $3.1 million while public works trust fund loan decreased by $182 thousand. The
decreases reflect the annual debt service payments and exclude compensated absences.
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.
In addition to the required components, the City's annual report also includes other supplementary
information. The first set of supplementary information is the Combining Statements. These provide
Balance Sheets, Statement of Revenues, Expenditures, and Changes in Fund Balances with Budget to
Actual Comparisons, Statement of Net Assets, and Cash Flows for all Non -Major Funds. The other set of
supplementary information is the Statistical Section. This section provides a three to ten-year view of the
City's revenues, expenditures, debt obligations and capacity, the City's largest taxpayers, and those entities
with the largest employment within the City of Federal Way. This section provides a long-term perspective
on the City's economy.
Government -wide Financial Statements
The government -wide financial statements are designed to provide readers with a broad overview of the
City of Federal Way's finances, in a manner similar to a private -sector business.
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
City of Federal Way / 8
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
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 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 finance -related legal
requirements. The City's funds are divided into two categories: governmental funds and proprietary funds.
Governmental Funds
Governmental funds are used to account for essentially the same functions as are reported in governmental
activities in the government -wide financial statements. However, unlike the government -wide financial
statements, governmental fund financial statements focus on near -term inflows and outflows of spendable
resources as well as on balances of spendable resources available at the end of the fiscal year. Such
information may be useful in evaluating a government's near -term financing requirements.
Because the focus of governmental funds is narrower than that of the government -wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for government -wide financial statements. By doing so, readers may better
understand the long-term impact of the government's near -term financing decisions. Both the
expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between
governmental funds and governmental activities.
The City of Federal Way maintains 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
City of Federal Way / 9
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.
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, 2005 total $178 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.
City of Federal Way / 10
CONDENSED STATEMENT OF NET ASSETS
Governmental Activities
Business -Type
Activities
Total
2005
2004
2005
2004
2005
2004
Current and other assets
$ 66,725,061
$ 56,193,460
$ 7,657,048
$ 7,619,913
$ 74,382,109 $
63,813,373
Capital assets and CIP,
net of accumulated depreciation
95,939,154
89,459,264
44,416,572
44,039,690
140,355,726
133,498,954
Total assets
162,664,215
145,652,724
52,073,620
51,659,603
214,737,835
197,312,327
Long-term liabilities
28,868,396
31,789,008
2,167,175
2,377,184
31,035,571
34,166,192
Other liabilities
5,346,890
4,802,659
386,017
493,825
5,732,907
5,296,484
Total liabilities
34,215,286
36,591,667
2,553,192
2,871,009
36,768,478
39,462,676
Net assets:
Invested in capital assets,
net ofrelated debt
70,267,480
60,679,663
42,294,741
41,735,500
112,562,221
102,415,163
Restricted
45,017,742
37,262,541
18,880
20,289
45,036,622
37,282,830
Unrestricted
13,163,707
11.052,383
7,206,807
7,032,804
20,370,514
18,085,187
Total net assets
$128,448,929
$ 109,061,058
$49,520,428
$48,788,594
$ 177,969,357 $
157,849,651
The largest component of the City's net assets, 63% or $112.6 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 since 2003 is reported. An analysis and
valuation of general infrastructure acquired or substantially renovated since 1990 is underway.
Approximately 22% or $39.8 million of the total net assets of the city are earmarked for construction
projects such as the new community center, improvements to South 3561h St SR99 to ls` Ave, SR99 HOV
Lanes, South 320" St @ I" Ave South, South 3481h St @ SR161, acquisition of additional city parks,
renovation and improvements to Historical Cabins Park, neighborhood parks, Hylebos boardwalk
replacement, and Sacajawea Masterplan, and Saghalie Park 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 prefunding
$3.2 million; $424 thousand for police special funds, petty cash/change funds and advance travel; $175
thousand hotel/motel lodging tax; $10 thousand for paths and trails; and $364 thousand for customer
deposits. The business -type activities portion of $6.6 million may only be spent on surface water
management activities and the remaining $423 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 $13.2 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 $20.1 million in 2005. The increase
was split between the governmental activities ($19.4 million or 96%) and business -type activities ($732
thousand or 4%).
City of Federal Way / 11
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.
CHANGES IN NET ASSETS RESULTING FROM CHANGES IN REVENUES AND EXPENSES
Revenues:
Program revenues:
Charges for services
Operating grants & contributions
Capital grants and contributions
General revenues:
Property tax
Sales tax
Other taxes
Other
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
Increase in net assets before
transfers
Transfers
Increase in net assets
Net assets - beginning
Net assets - ending
Governmental Aetivittea BusinessAlype Activities Total
2005 2004 2005 2004 2005 2004
$ 9,935,656 $
9,413,965
$ 4,100,623 $ 4,249,020
$ 14,036,279 $
13,662,985
1,228,979
32,415
- 535,645
1,228,979
568,060
4,250,635
7,214,776
478,030
4,250,635
7,692,806
8,442,172
8,121,088
-
8,442,172
8,121,088
13,123,518
10,546,218
13,123,518
10,546,218
14,732,550
13,842,322
14,732,550
13,842,322
5,997,384
1,761,036
319.432 116,634
6.316,816
11977,670
57,710,894
50,931,820
4,420,055 5,379,329
62,130,949
56,311,149
5,539,682
6,237,785 -
5,539,682
6,237,785
16,825,123
17,374,845 -
16,825,123
17,374,845
5,451,324
4,098,790 -
5,451,324
4,098,790
322,151
295,537 -. -
322,151
295,537
3,095,391
2,953,073 -
3,095,391
2,953,073
631,133
683,804 - -
631,133
683,804
4,789,920
4,914,348
4,789,920
4,914,348
1,541,930
1,764,077 - -
1,541,930
1,764,077
-
- 2,995,074 3,282,427
2,995,074
3,282,427
-
- 819,515 879,870
819,515
879,870
38,196,654
38,322,259 3,814,589 4,162,297
42,011,243
42,484,556
19,514,240 12,609,561 605,466 1,217,032 20,119,706 13,826,593
(126,369) (203,190) 126,369 203,190 -
19,387,871 12,406,371 731,835 1,420,222 20,119,706 13,826,593
I09,061,059 96,654,687 48,788,593 47,368,371 157,949,651 144,023,058
$ 128,448,929 $ 109,061.058 $ 49,520,428 $ 48,788,594 $ 177,969,357 $ 157,849,651
Governmental activities contributed $19.4 million or 96% of the total change in net assets of $20.1
million. Key elements of this increase are as follows:
■ Increase in fund balances of $9.20 million.
• Excess of capital outlay net of depreciation expense of $5.53 million.
• Increase due to bond principal payment of $2.93 million.
• Increase in internal service fund net change of $1.80 million.
• Net decrease in deferred revenue and compensated absences liability of $90 thousand.
City oj'Federal Way / 12
Governmental Activities - Revenues
Other. 111-d %—
Other taxes, _
25.5%
saler la:
Charges for
�scrvicrs, 17.2%
Operating grants
& contributions,
2,1%
'apical grants and
contributions,
7.4%
'lax
Governmental Activities - Expenditures
Inlernl on long -lean
debt
Culture and 4 D;; _ General garemmem
4
e.,non
Its°^ Mgvnlenvlronmenr
0&/
Econmic
r�iml�ele
Security of Perstxls &
Tr»flAlalem Pnpeny
14 Y'. 44 0".
Heallh and human
crlJ%n
Business -type activities of the City's surface water management system and Dumas Bay Centre increased
the City's net assets by $737 thousand ($732 gross increase plus $5 thousand prior period adjustment),
accounting for 4% of the total growth in the government's net assets. Surface Water Management Fund
increased by $886 thousand which was offset by a decrease in Dumas Bay Centre Fund net assets by $158
thousand ($163 thousand gross decrease plus $5 thousand prior period adjustment). Key elements of the
increase are as follows:
4* Net operating income of $398 thousand and non -operating income of $199 thousand account
for $597 thousand of the increase.
• Net transfers in of $126 thousand and a prior period adjustment of $5 thousand account for
$131 thousand of the net change.
■ Internal service funds consolidation make up the remaining $9 thousand increase.
Business -Types Activities - Revenues
Olher.
'harges for
services, 92.7%
Business -Type Activities - Expenditures
Dumas Bay
Center
22%
. Surface water
Management
78
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.
City of Federal Way / 13
As of the end of 2005, the City's governmental funds reported combined ending balances of $49.3 million, an
increase of $9.2 million in comparison to the prior year. Approximately 9% or $4.5 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 2005 unreserved fund balance of the general
fund was $4.1 million, while total fund balance was $4.5 million. General Fund unreserved fund balance represents
14% of total general fund expenditures.
The Debt Service Fund has a total fund balance of $3.2 million, all of which is reserved for the payment of debt
service.
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 $6.8 million, and those for Dumas Bay Centre amounted to $408 thousand. The total change in net assets for
both funds was $886 thousand increase and $163 thousand decrease, respectively. Other factors concerning the
finances of these two funds have already been addressed in the discussion of the City of Federal Way's business -
type activities.
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 $6.9 million between the original budget for the fiscal year 2005
and the final budget are explained as follows:
Adjustments to expenditure and other uses budget include:
• The $334 thousand in grants and contributions funded the increase in public safety, homeland security,
community development block grants, and solid waste & recycling grant programs.
• $359 thousand increase in General Fund for Public Safety because of the annexation for three new officers
funded by ending fund balance carry forward.
• $2.6 million increase debt service payments for Downtown Revitalization , Park acquisition and
development, and WIFI program.
• $1.0 million in ending fund balance was used to provide transfers to various capital improvement projects,
general fund subsidy to streets fund, transfers to debt service fund for community center debt payments,
and transfers to internal service funds for management information systems and fleet and equipment.
• The remaining $2.7 million increase in general governmental services was also funded by ending fund
balance carry forward. Of this, only $304 thousand was for new programs.
Adjustments to revenues and other sources budget include: increases in REET ($2.4 million), property tax ($307
thousand), sales tax ($155 thousand), decrease in state shared revenues ( - $152 thousand) we no longer qualify for
the High crime subsidy, increase building permits ($1.0 million), planning reviews ($450 thousand), interfund
transfers ($229 thousand), grants and contributions ($253 thousand), miscellaneous revenue; federal seizure funds,
City of Federal Way / 14
interest and festival revenues ($534 thousand), utility tax ($700 thousand), criminal justice sales tax ($100
thousand), gambling tax ($100 thousand), franchise fees ($60 thousand), probation contract revenue ($92 thousand),
and 2004 ending fund balance carryforward ($1.7 million) -
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, 2005 amounts to $140.4 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 cuirenlly
inventorying and valuing these assets and will include them at a later date.
CAPITAL ASSETS AT YEAR-END, NET OF DEPRECIATION
Governmental
Business -Type
Total
Activities
Activities
2005
2004
Land
$ 37,261,732 $
5,863,130 $
43,124,862 $
42,966,895
Building & Improvements
27,749,096
33,381,786
61,130,882
47,541,129
Machinery and equipment
3,811,168
35,899
3,847,067
3,460,453
Infrastructure
2,941,161
-
2,941,161
675,945
Construction in progress
24,175,997
5,135.757
29,311,754
38.854.532
Total Capital Assets
$ 95,939,154 $
44,416,572 $
140,355,726 $
133,498,954
Major capital asset events during the current fiscal year included the following: completed City hall tenant
improvements of $984 thousand for a grand total of $15.9 million. Expansion of city streets and traffic corridors
totaled $3.4 million. General capital and park improvements, including work started on the new Community Center
totaled $3.3 million. The old Community Center in Klahanee Park was sold for $1.1 million. Additional
information on the City of Federal Way's capital assets can be found in Note 8 of the Notes to the Financial
Statements.
Long-term debt
At the end of 2005, the City of Federal Way had total bonded debt outstanding of $27.7 million which is backed by
the full faith and credit of the government. The remainder of the City's debt represents Public Works Trust Fund
Loans.
LONG-TERM DEBT (FUTURE PRINCIPLE AND INTEREST PAYMENTS)
Governmental Business -Type
Activities Activities Total
General obligation bonds $ 41,333,821 $ - $ 41,333,821
Public works trust fund loan - 2,261,564 2,261,564
Total $ 41,333,821 $ 2,261,564 $ 43,595,385
The City's total debt decreased by $3.4 million during 2005. The decrease represents annual debt service payments.
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.
City of Federal Way / 15
The City's assessed valuation for 2005 was $6.50 million and the total amount of debt the City may issue is $464.2
million. Remaining legal debt capacities as of December 31, 2005 are:
General Government (no vote requirement) $ 74,056,862
General Government (3/5 majority vote required) $ 65,023,611
Parks & Open Space (3/5 majority vote required) $162,559,028
Utilities (3/5 majority vote required) $162,559,029
Total Capacity 5464.I98.529
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's biennium 2005/2006 budget was developed under challenging economic conditions. Voter approved
initiatives have reduced City annual revenues by a magnitude of $3 million. In the past the City has been able to
absorb these looses without deep cuts in services primarily due to a relatively healthy sales tax collection and an
increase in the City's card -room tax rate and activity. However, both have declined beginning in 2003.
In 2005 Sales tax, the City's largest revenue source has slowly reversed the previous year's declines in 2003 and
2004 by an increase of 4.7% or $513 thousand. The Real Estate Excise Tax has seen an increase of 10.5% or $446
thousand because of the red-hot real estate market in the Puget Sound. In addition, building permits has seen a
strong steady increase of 6.8% for $200 thousand mainly due to multiple new large construction projects.
On the expenditure side, the substantial increase in employee benefit costs pushed the cost of city operations much
higher. These costs include medical insurance premiums, state pension, and workers compensation. Medical
benefits alone have risen over 88% in the past four years. City employees voted to change from a traditional
insurance plan to a preferred provider option which will alleviate some of the increasing medical expenses
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. ci i voffedorFL Tway. co m.
City of Federal Way / 16
cm Of
Federal Way
City of Federal Way / 17
Basic Financial Statements
City of Federal Way / 18
[ tY OF 4
Federal Way
City of Federal Way / 19
STATEMENT OF NET ASSETS
December 31, 2005
Governmental Business -type Total
Activities Activities 2005 2004
ASSETS
Cash & cash equivalents and investments
$ 60,016,975 $
7,459,068 $
67,476,043 $
55,862,976
Receivables (net)
2,307,365
150,854
2,458,219
2,093,555
Due from other governments
1,865,736
47,126
1,912,862
2,212,397
Prepaid items
27,743
-
27,743
63,463
Restricted assets:
Cash with escrow agent
113,552
-
113,552
121,515
Customer deposits
363,603
-
363,603
1,436,276
Investment in joint venture
2,030,097
-
2,030,087
2,023,291
Capital Assets (net of accumulated depreciation)
Land
37,261,732
5,863,130
43,124,862
42,966,895
Depreciable assets
31,560,264
33,417,685
64,977,949
51,001,582
Infrastructure
2,941,161
-
2,941,161
675,945
Construction in progress
24,175,997
5.135,757
29.311,754
38,854 53?
Total Assets
162,664,215
52,073,620
214,737,835
197,312,327
LIABILITIES
Accounts payable and accruals
2,514,193
177,983
2,692,176
2,795,584
Unearned revenue
336,711
186,397
523,108
780,795
Retainage payable
153,763
7,516
161,279
164,021
Retainage payable - with escrow agent
-
-
-
111,064
Due to other governments
242,394
-
242,394
73,980
Customer deposits
2,099,829
14,121
2,113,950
1,371,040
Noncurrent Liabilities:
Due within one year
2,286,183
183,735
2,469,918
3,321,062
Due in more than one year
26,582,213
1,983,440
28,565 653
30,845 130
Total Liabilities
34,215,286
2,553,192
36,768,478
39,462,676
NET ASSETS
Invested in capital assets, net of related debt
70,267,480
42,294,741
112,562,221
102,415,163
Restricted for:
Customer deposit
363,603
-
363,603
1,436,276
Debt service prefunding
3,195,705
-
3,195,705
2,826,228
Capital projects
39,805,812
-
39,805,812
32,542,775
Steel Lake Management District
-
18,880
18,880
8,202
Other
1,652,622
-
1,652,622
469,349
Unrestricted
13,163,707
7,206,807
20,370,514
18,151,658
Total Net Assets
$ 128,448,929 $
49,520,428
$ 177,969,357 $
157,849,651
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
Euuuutnic 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 3 1. 2005
Program Revenues Net (Expense) Revenue & Changes in Net Assets
Operating Capital Grants
Charges for Grants and and Governmental Business -type Comparative Totals
Expenses Services Contributions Contributions Activities Activities 2005 2004
$ 5,539,682
S 1,372,270 $ - S -
$ (4,167,412) $
$ (4,167,412) $
(4,727,812)
16,825,123
4,780,082 1,228,979 -
(10,816,062)
- (10,816,062)
(13,171,530)
5,451,324
1,351,596 - 4,250,635
150,907
150,907
4,568,988
322,151
88,222 - -_
(233,929)
- (233,929)
(200,910)
3,095,391
847,686 - -
(2,247,705)
- (2,247,705)
(2,164,902)
631,133
172,838 - -
(458,295)
(458,295)
(487,703)
4,789,920
1,322,962 -
(3,466,958)
(3,466,958)
(3,713,159)
11541.930
-
(1,541.930)
- (1,541,930)
1,764,077
M.196.654
9,935.6515 1228,979 4 250,635
(22.781,384)
(22,761,384
(21.661,103)
2,995,074
3,590,120
-
595,046
595,046
1,392,447
819,515
510,503
(309.012)
(309,012)
(292,049
3.814.589
4.100.623 -
286.034
286,034
I ,100.398
S 42.011 243
5 €4,036,279 S €.328,979 S 4,250,635
(22,781,384)
286,034
(22,495,350)
(20.560,705)
General revenues:
Property tax
8,442,172
-
8,442,172
8,121,088
Sales tax
11,305,537
11,305,537
10,546,218
Other taxes
16,550,531
16,550,531
13,842,322
Other revenue
1,008,649
97,111
1,105,760
751,020
Unrestricted grants & contributions
146,000
-
146,000
176,928
Investment earnings
1,802,922
222,321
2,025,243
954,366
Disposition of capital assets
3,039,813
-
3,039,813
(4,644)
Transfers
(126,369)
126,369
-
-
Total general revenues and transfers
42,169.255
445,801
42,615,056
34,387,299
Change in net assets
19,387,871
731,835
20,119,706
13,826,593
Net assets at beginning of year
109.061,058
48,759,593
157.849.651
144.023,058
Net assets at end of year
$ 128.4 K929
$ 49 520,428
5 177,969,357
S 157,849.651
The notes to the financial statements are an integral part ofthis statement.
City of Federal Way / 21
BALANCESHEET
GOVERNMENTALFUNDS
DECEMBER 31, 2005
Debt City Nonmajor Comparative Totals
General Street UWity Tax Service Facilities Transooriation Governmental 2005 2004
ASSETS
Equity in pooled cash & investments
$ 4,807,560 $ 2,072,732 ffi 873
$ 2,886,785
$20,487,166 $ 13,760,859 $
5,963,223
$ 49,979,198 $
40.833,000
Prepaid insurance/debt service
22,743 - -
-
-
-
22,743
58,463
Retainage in escrow
- -
-
100,448
13,104
113,552
10,451
Receivables (net):
-
Taxes
234,446 - -
357,736
-.
-
592,182
1,369,028
Accounts and contracts
193,341 - 1,025,588
231.718
185,101
-
1,635,748
536,517
Interest
10,188 1,983 1,041
6,240
30,423 14,766
2,767
67,408
30,357
Restricted cash
363,603
363,603
Due from other governments
1,222,122 112,734 -
-
- 125,758
405,122
1,865,736
2.150,883
Interfund loans receivable
46.000
-
46,000
10.000
TOTAL ASSETS 6,900,003 2,187 449 4027,502 3,482,479 20.618,037 14.086.484 6384,216 54,686,170 44,998,699
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
444,126
221,905
304 65,094 341,821 81,176
1,154.426
1,756,853
Accounts/payrollpayable
1,031,923
105,054
- - - - 6,412
1,143,389
735,177
Accrued interest payable
-
- - - - a
-
-
Retainage payable
-
7,421
- 129,876 16,466
153,763
110,081
Due to other governments
242,394
-
- -
242,394
73,980
Due to other funds
-
- - - - -
-
Performance bonds
-
-
- - - - -
-
-
Deposits payable
440,662
1,644,592
-
2,085,254
1.423,998
Interfund loans payable
-.
- _ 46,000
46,000
10,000
Deferred revenue
203,683
17,461
286,470 14.075
521,689
753 512
TOTAL LIABILITIES
2362-788
1.996.433
286,774 194.970 341,821 164.129
5,346,915
4,863,601
Fund balance
Reserved:
Debt service prefunding
3,195,705 - -
3,195,705
2,826,228
Other 424,113
- - 147,901
572,014
367,836
Unreserved:
General fund 4,113,102
- - -
4,113,102
2,658,031
Special revenue funds -
191,016 1,027,502 - 434,104
1,652,622
1.740 228
Capital projects funds
20,423,067 13,744,663 5,638.082
39,805.812
32.542.775
TOTAL FUND BALANCES 4,537,215
191,016 1427.502 3,195,7()S 20,423,067 13.744.663 t:M087
49,339.253
40135.098
TOTAL LIABILITIES AND
FUND BALANCE $ 6.900.003 $ 2.187.449 $ 1.027.502 $ 3,482,479 $20,618,037 $14.086.484 $ 6,384,216
Amounts reported for governmental activities in the statement of net assets are different because:
Capital assets are used in governmental activities are not financial resources and, therefore,
are not reported in the funds.
90,489,542 84,970,324
Investment injoint venture is not a financial resource and, therefore, not reported in the funds
2,030,087 2,023 291
Other long-term assets are not available to pay for current -period expenditures and, therefore,
are deferred in the funds
192,803 271,788
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 ofnet assets.
15,245,133 13,435,470
Long-term liabilities, including bonds payable, are not due and payable in the current period
and, therefore, are not reported in the funds.
(28,847,891) (31,774,913)
Net assets of govemmental activities
$128,448,929 $109,061,058
The notes to the financial statements are an integral part of this statement.
City of Federal Way /22
STATEMENT OF REVENUES, EXPENDITURES
AND CHANCES IN FUND BALANCES
GOVERNMENTALFUNDS
For the Year Ended December 31. 2005
Debi
City
Nonmajor
Comparative
Totals
General
Street
Utility Tax
Service
Facilities
Transportation
Governmental
2005
2004
REVENUES
Taxes S
23,068,777 S
S
8,326,951 S
4,695,984 S
-
S - S
219,042 S
36,310,754 S
32,553,302
Licenses and penni is
2,146,310
101,341
-
-
-
-
-
2,247,651
1,235,039
Intergovernmental
1,228,979
1,304,851
-
-
1,711,055
1,234,729
5,479,614
10,111,537
Service charges and fees
4,416,708
245,264
-
-
-
265,191
4,927,163
4,200,528
Development fees
-
-
_
2,012,940
27,438
2,040,378
3,167.605
Fines and forfeitures
720,464
-
-
-
-
-
-
720,464
810,793
Interest
262,507
39,248
19,599
122,478
644,015
402,946
67,142
1,557,935
744,435
Other
825,394
51,190
(10,093)
1919,173
1.065.664
751,025
TOTALREVENUES
32,669,139
1J41,894
8,346,550
4,818462
633,922
4,126.941
2,012,715
54.349,623
53,574,264
EXPENDITURES
Current:
General government
5,129,011
-
54,429
-
-
-
279,193
5,462,633
6,107,564
Security of persons and property
16,988,412
-
_
_
_
-
16,988,412
16,982,135
Transportation
-
3,584,712
_
_
-
1,495,865
5,080,577
4,788,954
Physical environment
-
-
322,151
322,151
289,921
Economic environment
2,610,239
-
-
-
-
509,592
3,119,831
2,944,584
Health
634,061
-
-
-
-
-
634,061
679,655
Culture and recreation
3,738,484
-
-
-
-
120,981
3,859,465
3,927,933
Debt service:
Principal
-
-
_
2,933,231
-
-
-
2,933,231
3,768,044
Interest./fiscal charges/admin fees
-
-
1,518,384
-
-
1,518,384
1,764,077
Capital outlay
190,045
3,790,774
3,803,647
444,020
8,228,486
17.609,080
TOTAL EXPENDITURES
29,2" 252
3,584.712
54,429
4.451 I5
3,790,774
3.803k,17
3.171,802
48,147,231
58,861,947
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
3,378.887
(1.842,818)
8,292,121
366,847
(3,156,852)
323294
(1,159,087)
6,202,392
(5,287,683)
OTHER FINANCING SOURCES
(USES)
Tmnsfers in
Transfers out
Sale of capital assets
TOTAL OTHER FINANCING
SOURCES (USES)
NET CHANGE IN FUND BALANCES
FIND RAI AuCEc-BEGINND4.G
FUND BALANCES - ENDING
1,345,099 1,986,044 - 4,202,630 162,761 2,275.375 5,678,155 15,650,064 15,615,639
(3,031,813) (52,210) (8,360,197) (4,200,000) (100,0W) (306,051) (216,540) (16,266,811) (15,983,582)
3,618,512 3,618,512
(1,686,714)
1,933,834
(U60,197)
2630
3,681,273
1,969,324
5461,615 3001765
367,943)
1,692.173
91,016
(68,076)
369,477
524,421
2,292,618
4,302,528 9,204,157
(5,655,626)
_ 7,845,042_
100,00__ ___1,095,578
_._-2-826,228
-
J.9,898,646_--1-I.452,045-
--1,9-17,559-
40,135,0913- --
-45,790,724 -- -.-
S 4,537,215 S
191,016 S
1,027,502 S
3,195,705 S
20,423.067 S
13,744.663 S
6.220,087 S 49.339.255 S
40,135,098
The notes to the financial statements are an integral part of this statement
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, 2005
Amounts reported for governmental activities in the statement of activities (page 20) are
different because:
Net change in fund balances --total governmental funds
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.
Revenues in the statement of activities that do not provide current financial resources
are not reported as revenues in the funds.
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.
Internal service funds are used by management to charge costs of risk management,
information systems, mail & duplication, fleet, and building systems to the funds.
Some expenses reported in the statement of activities do not require the use of current
financial resources and, therefore, arc not reported as expenditures in the funds.
Change in net assets of governmental activities
The notes to the financial statements arc an integral part of this statement.
2005 2004
$ 9,204,157 $ (5,655,626)
5,526,012 13,796,462
(12,514) 205,317
2,933,231 3,788,624
1,809,661 269,297
(72,676) 2,297
$ 19,387,871 $ 12,406,371
City of Federal Way / 24
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2005
Variance with
Budgeted Amounts
Final Budget -
Positive
Original
Final
Actual Amounts
(Negative)
REVENUES
Taxes
$ 21,929,500 $
22,591,524
$ 23,068,777
$ 477,253
Licenses and permits
1,033,017
2,083,017
2,146,310
63,293
Intergovernmental
1,201,000
1,201,165
1,228,979
27,814
Service charges and fees
3,606,561
4,116,561
4,416,708
300,147
Fines and forfeitures
895,000
905,000
720,464
(184,536)
Interest
155,000
206,546
262,507
55,961
Other
677.161
931.741
825,394
(106,347)
TOTAL REVENUES
29.497.239
32,035,554
32,669,139
633,585
EXPENDITURES
Current:
General government
5,082,414
5,435,508
5,129,011
306,497
Security of persons and property
17,518,647
18,118,691
16,988,412
1,130,279
Economic environment
2,582,598
3,000,141
2,610,239
389,902
Health
592,437
693,673
634,061
59,612
Culture and recreation
3,858,430
3,783,184
3,738,484
44,700
Capital outlay
-
-
190,045
(190,045)
TOTAL EXPENDITURES
29,634,526
31,031,197
29,290,252
1,740,945
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
(137,287)
1,004,357
3,378,887
2,374,530
OTHER FINANCING SOURCES (USES)
Transfers in
1,296,548
1,352,548
1,345,099
(7,449)
Transfers out
(1,895,669)
(3,353,099)
(3,031,813)
321,286
TOTAL OTHER FINANCING SOURCES (USES)
(599,121)
(2,000,551)
(1,686,714)
313,837
NET CHANGE IN FUND BALANCES
(736,408)
(996,194)
1,692,173
2,688,367
FUND BALANCES - BEGINNING
1,497,837
2,845,042
2,845,042
-
FUND BALANCES - ENDING $
761,429 $
1.848,848 $
4.537.215 S
2.688.367
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, 2005
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
REVENUES
Licenses and permits
$ 72,000 $
72,000 $
101,341 $
29,341
Intergovernmental
1,185,000
1,203,354
1,304,851
101,497
Service charges and fees
293,000
293,000
245,264
(47,736)
Interest
7,000
7,000
39,248
32,248
Other
5,000
5,000
51,190
46,190
TOTAL REVENUES
1,562,000
1,580,354
1,741.894
161,540
EXPENDITURES
Current:
Transportation
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER(UNDER)EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
3,743,569 3,857,812 3,584,712 273,100
3,743,569 3,857,812 3,584,712 273,100
(2,181,569) (2,277,458) (1,842,818) 434,640
2,181,569 2,329,668 1,986,044 (343,624)
- (52,210) (52,210) -
TOTAL OTHER FINANCING SOURCES (USES) 2,181,569 2,277,458 1.933.834 (343,624)
NET CHANGE IN FUND BALANCES - - 91,016 91,016
FUND BALANCES - BEGINNING 100,000 100,000 100,000 -
FUND BALANCES - ENDING $ 100,000 $ 100,000 $ 191,016 $ 91,016
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, 2005
REVENUES
Taxes
Interest
TOTAL REVENUES
EXPENDITURES
Current:
General government
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers out
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
$ 7,491,399 S 8,191,399 $ 8,326,951 $ 135,552
6,000 36,000 19,599 (16,401)
7,527,399 8,227.399 8,346,550 119,151
54,429 54,429 54,429
54,429 54,429 54,429
7,472,970 8,172,970 8,292,121 119-15 ]
(7,680 971) (8,399,840) (8,360,197 39,643
TOTAL OTHER FINANCING SOURCES (USES) (7,680,971) (8,399,840) (8,360,197) 39,643
NET CHANGE IN FUND BALANCES (208,001) (226,870) (68,076) 158,794
FUND BALANCES - BEGINNING 954,260 1,095,578 1,095,578
FUND BALANCES - ENDING $ 746,259 $ 868,708 $ 1,027,502 $ 158,794
City of Federal Way / 27
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
December 31, 2005
With Comparative Totals for December 31, 2004
Business -type Activities - Enterprise Funds Governmental Activities -
Intemal Service Funds
Surface Water Dumas Bay Compamtive'rotals
Management Centre 2005 2004 2005 2004
ASSETS
Current Assets
Equity in pooled cash and investments
$ 6,910,740
$ 539,876
$ 7,450,616
$ 7,319,423
$ 10,046,229
$ 9,146,730
Cash with escrow agent
-
-
-
111,064
-
-
Prepaid items
-
-
-
5,000
5,000
Receivables (net):
Taxes
93,572
-
93,572
87,354
-
-
Accounts and contracts
-
43,667
43,667
35,527
-
25,000
Interest
9,937
774
10,711
5,031
12,027
4,744
Due from other governments
44,626
2,500
47,126
61,514
-
-
TOTAL CURRENT ASSETS
7,058,875
586,817
7,645,692
7,619,913
10.063 256
9,181,474
Property, plant and equipment:
Land
3,753,490
2,109,640
5,863,130
5,861,695
-
-
Building/structures
40,952,216
3,576,592
44,528,808
44,519,336
-
-
Machinery/furniture/equipment
106,643
106,643
106,643
14,409,734
12,798,021
Construction in progress
4,803,047
332,710
5,135,757
4,178,002
-
-
Less accumulated depreciation
9,609.909
1,607,857
11 217,766
10 625,986
(8,960.12)
(8.309,082)
TOTAL NONCURRENT ASSETS
39,898,844
4,517,728
44,416,572
44,039,690
5,449,612
4,488,939
TOTAL ASSETS
46,957,719
5,104,545
52,062,264
51,659,603
15,512,868
13,670,413
LIABILITIES AND FUND EQUITY
Current liabilities:
Vouchers/payroll payable
147,608
30,375
177,983
158,021
216,378
153,875
Retainage payable
3,857
3,659
7,516
53,940
-
-
Retainage payable - with escrow agent
-
-
-
111,064
-
-
Deposits payable
-
14,121
14,121
11,777
500
500
Deferred revenue
79,560
106,837
186,397
167,365
-
-
Public works trust fund loan payable
182,359
-
182,359
182,359
-
-
Compensated absences payable
-
305
305
72.995
42 h03
80,50
TOTAL CURRENT LIABILITIES
413,384
155,297
568,681
757,521
259,283
234,941
Long-term liabilities:
Public works trust fund loan payable
1,939,472
1,939,472
2,121,831
-
-
Compensated absences payable
36,171
8,868
45,039
TOTAL LONG-TERM LIABILTIES
1,975,643
8,868
1,984,511
2,121,831
-
-
TOTAL LIABILITIES
2,389,027
164,165
2,553,192
2,879,352
259,283
234,941
Invested in capital assets, net ofrelated debt
37,740,842
4,517,728
42,258,570
41,735,500
5,449,612
4,488,938
Restricted for:
Customer deposits
-
14,121
14,121
11,777
-
-
Steel Lake Management District
18,880
-
18,880
8,202
-
Unrestricted
6.808.970
408,531
7,217,501
7,024,772
9,803,973
8,946,534
TOTAL NET ASSETS
$44,568,692
$4,940,380
$ 49,509,072
$ 48,780,251
$ 15,253,585
$ 13,435,472
Adjustment to reflect the consolidation of internal service fund activities related
to enterprise funds
11,356
8-342
NET ASSETS OF BUSINESS -TYPE ACTIVITIES
$ 49,520,428
$ 48,788,593
City of Federal Way / 28
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
For the Year Ended December 31, 2005
With Comparative Totals for December 31, 2004
Business -type Activities - Enterprise Funds
Governmental Activities -
Internal Service
Funds
Surface Water
Dumas Bay
Campara&uTotals
Management
Centre
2005
2004
2005
2004
OPERATING REVENUES:
Service charges and fees
$ 3,590,120
$ 510,503 $
4,100,623 $
4,225,214
$ 4,345,876
$ 4,352,773
Miscellaneous
85 293
I.11818
97.111
23.804
119,893
25,373
TOTAL OPERATING REVENUES
3,675,413
522,321
4,191, /34
4,249,018
4,465; /69
4,378,146
OPERATING EXPENSES:
Personal services
1,313,626
314,874
1,628,500
1,467,101
763,377
696,519
Materials and supplies
58,644
54,938
113,582
65,268
394,677
361,331
Services and charges
309,973
227,613
537,586
1,085,967
1,767,655
2,023,152
Intergovernmental
312,599
312,599
318,783
82,711
95,435
Depreciation
410,276
181,504
591,780
591,422
1,219,215
1,175,079
Interfund charges
566,138
49,814
615,952
605.851
TOTAL OPERATING EXPENSES
2,971.256
828,743
3,799,999
4,134,392
4.227,635
4.351,516
OPERATING INCOME (LOSS)
704,157
(306,422)
397,735
114,626
238,134
26,630
NON -OPERATING REVENUES (EXPENSES)
Subsidy from interlocal grants
-
535,645
-
Gain (Loss) from disposal of capital assets
(57,359)
(5,829)
Interest income
204,974
17,347
222,321
116,913
244,987
93,019
Interest expense
(23,042)
(23,042)
(24,865)
-
TOTAL NON -OPERATING REVENUES (EXPENSES
181,932
17,347
190,279
627,693
187,628
87,190
INCOME (LOSS) BEFORE OPERATING TRANSFERS
886,089
(289,075)
597,014
742,319
425,762
113,820
Capital contributions
478,030
901,973
176,928
Operating transfers in
126,369
126,369
225,310
511,641
-
Operating transfers out
(2,504)
(21.263)
(13,107)
CHANGE IN NET ASSETS
TOTAL NET ASSETS - BEGINNING
Prior period adjustments
ADJUSTED NET ASSETS - BEGINNING
TOTAL NET ASSETS - ENDING
886,089 (162,706) 723,383 1,443,154 1,818.113 277,641
43,682,603 5,097,648 13,435,472 13,157,831
5.438
43,682,603 5,103,086
S 44,568,692 $ 4,940.380
Adjustment to reflect the consolidation of intemal 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.
8,452 (22,933)
$ 731,835 $ 1,420,221
13,435,472 13,157,831
$ 15,253,585 $ 13,435,472
City of Federal Way /29
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended December 31, 2005
With Comparative Totals for December 31, 2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from users
Cash received from other governments for goods and services
Cash payments for taxes
Cash payments to claimants
Cash payments to suppliers for goods/services
Cash payments to employees
Cash payments to other funds for goods and services
Cash payments for other services/charges
Cash payments to other governments for goods and services
Cash payments for damage deposits
Other operating receipts
Business -type Activities - Enterprise Funds _ Governmental Activities -
Internal Service Funds
Surface Water Dumas Bay Cumpnrativc Totals
Management_ Centre 2005 2004 2005 2004
$ 3,667,282 $ 514,181 $ 4,181,463 $ 4,216,921
- - - (32,893)
1,136
(370,007) (263,979) (633,986) (18,745)
(1,336,165) (319,986) (1,656,15.1) (1,430,707)
(566,138) (31,281) (597,419) (605,851)
(111,064) (111,064) (1,068,652)
(332,411) - (332,411) (318,783)
(2,161)
23,804
4,370,876 $ 4,327,773
(369,701) (141,615)
(1,730,128) (2,313,077)
(798,488) (685,975)
(82,711)
119.893 25 373
NET CASH PROVIDED (USED) BY OPERATING ACT 951,497 (101,065) 850,432 764,D69 1,509,741 1,212,479
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Subsidy from interlocal grant
Operating transfers in
Operating transfers out
- - - 729,645 -
126,369 126,369 225,310 490,378
(2,504) (13,107)
NET CASH PROVIDED BY NONCAPITAL
126,369 126,369
952.451
490,378
(13,10a
CASH FLOWS FROM CAPITAL AND CAPITAL -
RELATED FINANCING ACTIVITIES:
Principal paid on debt service
(182,359)
- (182,359)
(182,359)
-
Interest paid on debt service
(23,042)
- (23,042)
(24,865)
-
-
Acquisition of capital asset/construction work in progress
(954,681)
(13,981) (968,662)
(2,741,838)
(1,351,941)
(877,426)
Proceeds from the sale of capital assets
-
- -
-
16,667
158,244
Cash contributions for capital acquisition
-
440.798
26,572
NET CASH USED FOR CAPITAL
AND CAPITAL -RELATED FINANCING ACTIVITIES
(I,160,082)
13,981) (1,174,063)
(2.508,264)
(1,335274)
(692,410)
CASH FLOWS FROM INVESTING ACTIVITIES:
Receipts ofinterest 199,682 17,709 217,391 119,591 234,654 94,926
NET CASH PROVIDED BY INVESTING ACTIVITES 19902 17,709 217,391 119,591 234.654 94.926
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVAL (8,903) 29,032 20,129 (672,153) 899,499 601,688
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 6,919,643 510,844 7A30 487 8.102 640 9,146,730 8,545,042
CASH AND CASH EQUIVALENTS AT END OF YEAR 6,910,740 539,,7E 7.450.616 7.430,4H7 10,046,229 9,146,730.
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Operating income (loss)
704,157
(306,422)
397,735
114,626
238,134
26,630
Adjustments to reconcile operating income to
net cash provided (used) by operating activities:
Depreciation expense
410,276
181,504
591,780
591,422
1,219,215
1,175,079
(Increase)/decrease in accounts receivable
-
(8,140)
(8,140)
12,815
25,000
(25,000)
(Increase)/decrease in taxes receivable
(6,218)
-
(6,218)
27,002
-
-
(Increase)/decrease in due from other governments
13,788
600
14,388
(32,893)
-
-
Increase/(decrease)in vouchers/accounts payable
1,390
25,604
26,994
17,315
62,503
25,226
Increase/(decrease) in retainage payable
(46,424)
-
(46,424)
46,523
-
-
Increase/(decrease)in deposits payable
(111,064)
-
(111,064)
(2,161)
-
-
Increase/(decrease) in taxes payable
-
-m
1,136
-
-
Increase/(decrease)in deferred revenue
8,131
10,901
19,032
(48,110)
-
-
Increase/(decrease) in accrued payroll/compensated absences pal
(22,S")
(5, [ 12)
('-7,651)
36.394
(35,1 111
10,544
TOTAL ADJUSTMENTS
24 IN
205,357
45207
649,443
1,271,607
1,185,849
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $
951,497 $
101,065 $
850,432 $
764,069
$ 1,509,741 $
1,212,479
Non -cash investing, capital, and financing activities:
Other contributions of capital assets
$ 901,973 $
111,055
The notes to the financial statements are an integral part of this statement
City of Federal Way / 30
MY OF
Federal Way
City of Federal Way / 31
Note
9
10
11
12
13
14
NOTES TO THE BASIC FINANCIAL STATEMENTS
December 31, 2005
INDEX
Summary of Significant Accounting Policies................................................................................
ReportingEntity....................................................................................................................
Government -wide and Fund Financial Statements...............................................................
Measurement Focus, Basis of Accounting, and Financial Statement Presentation.. .............
Budgetary Information........................................................---..............................................
Assets, Liabilities and Equities ........... _ ............. ......................... ................. ........................
Equity in Pooled Cash and Investments.......................................................................
Cash and Cash Equivalents ..................... .................................. _.................................
Investments.........................................................:... ... ...................................................
Receivables...................................................................................................................
Amounts Due to and from Other Funds; Interfund Loans .::.... ......... :..........................
Inventories................ •--................................................._.:.........•--...........................:....
CapitalAssets.............................................:...........................................................:.
Compensated Absences Payable ......................:.:..::.....................................................
Short -Term Debt .................................................... :................ .....:.:................_:..............
Long -Term Debt ..... ..................... ............ .................................................... .................
Deferred Revenue........................................................................................................
Fund Equity -Reserves and Designation.......................................................................
Interfund Transactions..................................................................................................
Reconciliation of Government -wide & Fund Financial Statements......... ......................... ...........
Stewardship, Compliance and Accountability...............................................................................
Supplemental Appropriations........................................................................................................
Depositsand Investments ... ................................................... .................................. .......................
Receivables and Due from Other Governments............................................................................
Due To Other Governments...................:............................................................................I.........
Capital Assets ........... _................ ...... ......................................................................................
...._..
PensionPlans ........... :...... :.................................................................................. ......__.... ,....... ,,......
RiskManagement..........................................................................................................................
Long -Term Debt............................................................................................................................
Interfund Transactions .......... ...:..:..::.:..:..:..::........... ::::::........ .:........... :.:::.:.:...................................
Contingenciesand Litigation.........................................................................................................
JointVentures ... ....................................................................... ...:.........._._._....._....................:.....
Page
32
32
32
33
37
37
37
37
38
39
39
39
39
40
41
41
41
41
41
41
42
43
43
45
47
47
48
52
53
56
57
57
City of Federal Way 132
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Year Ended December 31, 2005
NOTE I — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the City of Federal Way have been prepared in conformity with generally accepted
accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board
(GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting
principles. The significant accounting policies are described below.
REPORTING ENTITIES
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
Financial accountability is defined as appointment of a voting majority of an agency's or organization's board, and
either the City's ability to impose will on the agency or organization or the possibility that the agency or
organization will provide a financial benefit to or impose a financial burden on the City.
Joint Ventures
Gorgeous
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.
ACCOUNTING STANDARDS
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
GOVERNMENTAL -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
interfund activity has been removed from these statements. Governmental activities, which normally are supported
by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a
significant extent on fees and charges for support.
The 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)
City of Federal Way / 33
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 fund financial
statements.
MEASUREMENT FOCUS AND BASIS OF ACCOUNTING
The government -wide financial statements are reported using the economic resources measurement focus and the
accrual basis of accounting, as are the proprietary fund statements. Revenues are recorded when earned and
expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are
recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as
soon as all eligibility requirements imposed by the provider have been met.
Governmental Funds
Governmental fund financial statements are reported using the current financial resources measurement focus and
the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and
available. Revenues are considered to be available when they are collectible within the current period or soon
enough thereafter to pay liabilities of the current period. For this purpose, the City of Federal Way considers
revenues to be available if they are collected within 30 days of the end of the current fiscal period. 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 Fund
This is the City's general operating fund. It accounts for all financial resources of the general government,
except those required to be accounted for in another fund.
Street Fund
This fund accounts for receipt and disbursement of State -levied "unrestricted" motor vehicle fuel taxes
which must be accounted for in a separate fund and expended for street -oriented engineering, construction
and maintenance purposes only.
Utility Tax 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 / 34
Ci 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.
Transportation 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 proc,Peds of revenues and sources (other than special
assessments, expendable trust or major capital projects) that are legally restricted to expenditures for
specified purposes.
Capital Project Funds
These funds account for the acquisition or construction of major capital facilities with the exception of
those facilities financed by the proprietary 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 funds is based on the commercial model, which uses a flow of economic
resources approach. Under this approach, the operating statements for the proprietary funds focus on a
measurement of net income (revenues and expenses) and both current and non -current assets and liabilities are
reported on the related 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 non -operating items. Operating revenues and
expenses generally result from providing services and producing and delivering goods in connection with a
proprietary fund's principal ongoing operations. The principal operating revenues of the enterprise and internal
service funds are primarily user charges, the cost of providing goods or services to the general public on a
continuing basis. Operating expenses for enterprise funds and internal service funds includes the cost of sales and
services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this
definition are reported as non -operating revenues and expenses.
The City reports the following major proprietary funds:
City of Federal Way / 3 5
Enterprise Funds
The City uses enterprise funds to account for government activities that are financed and operated in a manner
similar to private business. Costs of providing services to the general public are primarily financed by user fees.
Surface Water Management Fund
This fund was established to administer and account for all receipts and expenditures related to the City's
surface and storm water management system.
Dumas Bay Centre Fund
This fund was established to account for 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
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 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.
Information Systems Fund
This fund was established to account for all costs associated with data processing, telecommunications and
the Geographical Information System (GIS). This fund 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.
Support 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.
City of Federal Way / 3 6
Basis of Accounting
Basis of accounting refers to when revenues and expenditures or expenses are recognized and reported in the
financial statements.
The accrual basis of accounting is used by proprietary funds. Under this method, revenues are recognized when
earned, and expenses are recognized when incurred.
The modified accrual basis of accounting is used by governmental funds. Revenues and other financial resources
are recognized when they become susceptible to accrual, i.e., when the related funds become both measurable and
available to finance expenditures of the current period. To be considered "available", revenue must be collected
during the current period or soon enough thereafter to pay current liabilities. The City uses thirty days when
evaluating the available criteria.
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 '/a% and optional '/a% 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.
City of Federal Way / 37
BUDGETARY INFORMATION
Scope of Budget
Annual appropriated budgets are adopted for the general, some special revenue, and debt service funds on the
modified accrual basis of accounting. For governmental funds, there are no differences between the budgetary basis
and generally accepted accounting principles. Budgets for project and grant related special revenue funds and
capital project funds are adopted at the level of the individual project and for fiscal periods that correspond to the
lives of projects. Since these funds are not budgeted on an annual basis, budgetary comparisons are not presented.
NCGA Statement 1 does not require, and the financial statements do not present, budgetary comparisons for
proprietary fund types.
Legal budgetary control is established at the fund level, i.e., expenditures for a fund may not exceed the total
appropriation amount. Any unexpended appropriation balances for annually budgeted funds lapse at the end of the
year. Appropriations for other special purpose funds that are non -operating in nature are adopted on a "project -
length" basis and, therefore, are carried forward from year to year without 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
Special Revenue Funds
Street Fund
Arterial Street
Utility Tax
Solid Waste & Recycling
Hotel/Motel Lodging Tax
Paths & Trails
Debt Service 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.
City of Federal Way / 3 8
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 2005, the budget was
amended two times.
The budget amounts shown in the financial statements are the final authorized amounts as revised during the year.
The financial statements contain the original and final budget information. The original budget is the first complete
appropriated budget. The final budget is the original budget adjusted by all reserves, transfers, allocations,
supplemental appropriations, and other legally authorized changes applicable for the fiscal year.
Encumbrances
An encumbrance system is used for budgetary control purposes to record commitments resulting from approved
purchase orders. During the year, encumbrances are recorded in the accounting system at the time purchase orders
--are- issued -for -goods -and-services. —Upon payment, the encumbrance -is -reversed -and-the actual cost of the related
item is recorded as 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 $20,155,104.
ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY
Cash and Investments
The City follows the practice of pooling cash and investments of all funds for investment purposes, except for cash
held in escrow, which is disclosed separately on the balance sheet. Each fund's portion of total cash and
investments is summarized by fund type in the combined balance sheet as equity in pooled cash and investments.
It is the City's policy to invest all cash not immediately required for disbursement. At December 31, 2005, the State
Treasurer was holding $45,641,546 in the State Investment Pool and US Bank was holding $10,128,122 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.
City o f Federal Way / 3 9
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, 2005, the total cash and cash
equivalents were $56,152,797.
The City's deposits are entirely covered by federal depository insurance (FDIC) or by collateral held in a multiple
financial institution collateral pool administered by the Washington Public Deposit Protection Commission (PDPC).
The City is authorized by State law to purchase certificates of deposit issued by Washington State depositories that
participate in a state insurance pool managed by the Washington Public Deposit Protection Commission; securities
purchased by the Washington State Investment Pool; U.S. Treasury and Agency securities, banker's acceptances
trading in the secondary market; and repurchase agreements with dealers that use authorized securities as collateral.
In accordance with GASB 31, investments in money market investments and participating interest -earning
investment contracts with a remaining maturity of one year or less at the time of purchase are stated at amortized
cost. All other investments are stated at fair value. There was no material deviation from fair value quoted at year-
end.
Receivables
Taxes receivable consists of property taxes and related interest and penalties (see Property Tax Note 6). Accrued
interest receivable consists of amounts earned on investments, notes, and contracts at the end of the year.
Due From Other Governments reflects measurable and available intergovernmental grants, entitlements, or State
shared revenues (taxes/charges levied and collected by an intermediary collecting government and distributed on
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; Interfund Loans
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the
fiscal year are referred to as either "interfund loans receivable/payable" or "advances to/from other funds." All
other outstanding balances between funds are reported as "due to/from other funds." Any residual balances
outstanding between the governmental activities and business -type activities are reported in the government -wide
financial statements as "internal balances."
Loans between funds must be authorized by the 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 interfund 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 2004. Under the
requirements of GASB 34, the City has until 2007 to record the remainder of its infrastructure assets.
City of Federal Way /40
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 item's 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 fund statements. Capital assets are reported net of depreciation. The City uses a
combination of group depreciation and straight-line depreciation over the life of the assets.
The following summarizes the average service lives used to calculate depreciation for specific categories of assets in
the City's Proprietary Funds.
Asset Class Life in Years
Computers............................................................................ .... 4
Communications Equipment..........................................................10
Other Office Equipment...............................................................A-6
Office Furniture & Fixtures..............................................................
10
Recreation Equipment....................................................................
10
ParksEquipment ......................................................................
:......5-12
Non -Police Vehicles.........................................................................
5
PoliceVehicles.............................................................................
4-5
PoliceEquipment........................................-•-------------...................5
LightTrucks......................................................--.............................
5
HeavyTrucks ............................................
:........... ::..:.:.-...:............ :. 8
HeavyWork Equipment ................................
:...... .......:................ 10
Shop/Miscellaneous Equipment...............:.....................................10
Land Improvements........................................................................
20
Buildings................... ,....................................................................
20
Storm Drainage Systems .....:.......................................:.
............. 100
Compensated 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 296 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.
City of Federal Way/41
Short-term Debt
As of December 31, 2005, the City of Federal Way did not incur any short-term debt.
Long-(erm 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 Equity -Reserves and Designations
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 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. On December 31, 2005, an additional
536,000 was added to the loan to increase the interim financing to the CDBG Fund ($34,000) and Solid Waste &
Recycling Fund ($2,000). 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 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.
Interfund Transactions
There are four types of transactions between funds - interfund loans, interfund services provided and used, interfund
reimbursements, and interf ind 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. Interfund
services provided and used 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.
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.
City of Federal Way / 4 2
NOTE 2 - RECONCILIATION OF GOVERNMENT -WIDE & FUND FINANCIAL STATEMENTS
Explanation of Certain Differences Between the Governmental Funds Balance Sheet and the Government -
Wide Statement of Net Assets
The governmental funds' balance sheet includes a reconciliation between fund 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 $28,868,396 difference are as
follows:
Bonds Payable at beginning of year $30,802.897.
Plus: Inclusion of compensated absences 1,166,635
Less: Current year reduction of principal portion of debt (3,101,131)
Net adjustment to reducefund balance -total governmental
funds to arrive at net assets - governmental activities $28,868396
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 fund 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
$5,526,012 difference are as follows:
Net Capital outlay $6,502,212
Governmental depreciation expense 976.200
Net adjustment to increase net changes in fund balances -
Total governmental funds to arrive at changes in net assets
of governmental activities 2 012
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."-T-his item presents: - — - - -
Property taxes earned reported as deferred in the fund statements 12 14
Another element of the reconciliation states that "Some expenses reported in the statement of activities do not
require the use of current financial resources and, therefore, are not reported as expenditures in the funds." This
item represents:
Compensated absences 72 676
NOTE 3 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
There have been no material violations of finance -related legal or contractual provisions, and there have been no
expenditures exceeding legal appropriations in any of the funds of the City.
City of Federal Way / 43
NOTE 4 — SUPPLEMENTAL APPROPRIATIONS
Operating Budget Funds
Appropriations established during 2005 for the City's operating budget funds are provided below. As explained in
Note 1, both original and supplemental appropriations are adopted by the City Council by ordinance. Both original
and final budget appropriations are shown on the accompanying financial statements. The final budget values
include all adopted adjustments to original budget amounts.
2005
ORIGINAL SUPPLEMENTAL FINAL
FUND BUDGET APPROPRIATIONS BUDGET
General Fund
Special Revenue Funds:
Street Fund
Arterial Street Fund
Utility Tax Fund
Solid Waste/Recycling Fund
Hotel/Motel Lodging Tax
Paths and Trails Reserve Fund
Subtotal Special Revenue Funds
$ 31,530,195
2,854,102 $
34,384,297
3,743,569
166,453
3,910,022
1,481,008
66,032
1,547,040
7,735,400
718,869
8,454,269
345,685
41,553
387,238
150,000
417,446
567,446
-
-
14,991
13,455,662
1,410,353
14,881,006
Debt Service Fund 6,03.128 2,600,0W 8,683,128
$ 51,068,985 $ 6,864,455 $ 57,948,431
NOTE 5 — DEPOSITS AND INVESTMENTS
The City implemented GASB Statement 40: Deposit and Investment Risk Disclosures for the first time in 2005.
These new disclosures were not mandated until 2005.
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 2005 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, 2005, the equity in
pooled cash and investments was $67,839,646.
At year-end, the City had $56,152,797 in cash and cash equivalents which consisted of investments with the State
Pool of $45,641,546; the Municipal Investor account with US Bank of $10,128,122; the City's checking account
bank balance prior to outstanding checks was $1,648,679; and petty cash and change funds, advance travel fund and
investigative fund totaling $39,820. No deposits were 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. Investments are carried at cost or book
value because the City holds all investments until maturity. The fair value of the positions in the State Investment
Pool is the same as the value of the pool shares. The State Investment Pool is managed by the Treasurer of the Sate
of Washington.
City of Federal Way / 44
As of December 31, 2005 the City had the following investments and maturities:
SCHEDULE OF INVESTMENTS BY MATURITIES
AS OF DECEMBER 31, 2005
Investment maturities
Book
Less than
1 to 2 Greater than
Investment Type
Value
1 year
Years 3 years
State Investment Pool
$ 45,641,546
$ 45,641,546
$ - S
Municipal Investors Account
10,128,122
10,128,122
- -
US Treasuries
2,004,180
2,004,180
- -
US Agencies
9,682.669
1,797,500
7,885,169 -
5 67,456,517
$ 59.571,349
S 7.885,169 S -
Rcconcillation to Governmental -Wide Statement of Net Assets.
US Bank, checking account per books
$ 343,309
Petty cash/change fund/Advance travel/Investigative fund
39,820
State Investment Pool
45,641,546
Municipal Investors Account
10,128,122
Subtotal Cash and Cash Equivalents
56,152,797
US Treasuries
2,004,180
US Agencies
9,682,669
Cash with escrow agent
113,552
Total cash and investments, Governmental -Wide
Statement of Net Assets
$ 67,953,198
Investments
Interest Rate Risk.
As a means of limiting its exposure to fair value losses arising from rising interest rate, the City's investments
policy states that "no more than 20% of the portfolio may be invested beyond 12 months, and average maturity of
the portfolio may not exceed 2 years."
Credit Risk.
State law and the City's investment policy limits the instruments in which the City may invest. These include:
1. State Investment Pool
2. Repurchase Agreements
3. U.S. Treasury Obligations
4. U.S. Government Agencies
5. U.S. Government -Sponsored Corporations/Instrumentalities
6. Bankers' Acceptances: Secondary Market (Domestic and Foreign)
7. Commercial Paper: Secondary Market
8. Insure Certificates of Deposit: Banks and Savings & Loans
9. Uninsured/Collateralized Certificates of Deposit: Banks and Savings & Loans
As of December 31, 2005, the City had investments in a limited number of investment instruments as follows:
■ Federal National Mortgage Association Bonds
• Federal Home Loan Bank bonds
■ Federal Farm Credit Bank Bonds
■ Federal Home Loan Mortgage Corporation Bonds
■ State Local Government Investment Pool
■ Municipal Investments Account
City of Federal Way / 45
With the exception of the State Local Government Investment Pool and the Municipal Investors Account, which are
not rated, all of the investments listed above carried a rating of AAA by Standard & Poor's rating service at
December 31, 2005.
Concentration of Credit Risk.
The City diversifies its investments by security type and institution. The investment policy states: "no more than
5% of the portfolio may be invested in the securities of a single issuer, except for the U.S. Treasury, to which no
limits apply, and commercial paper, which is limited to 3% of the portfolio. No more than 30% of the portfolio may
be invested in Bankers' Acceptances and Certificates of Deposit."
Other Information
Below is a schedule of investments by fund type:
SCHEDULE OF INVESTMENTS BY FUND CATEGORY AND INVESTMENT TYPE
AS OF DECEMBER 31, 2005
State
Municipal
Investment
Investors
Fund Type
Pool
Account
US Treasuries
US Agencies
Total
General Fund
$ 3,478,651
$ 771,933
$ 152,752
$ 737,982
$ 5,141,318
Special Revene Funds
3,560,786
790,159
156,359
755,406
5,262,710
Capital Projects Funds
26,826,262
5,952,902
1,177,976
5,691,083
39,648,223
Enterprise Funds
5,017,729
1,113,463
220,335
1,064,491
7,416,019
Internal Service Funds
6;758,117
1.499,665
296,758
1,433,707
9,989,247
Total
$ 45,641,546
$ 10,128,122
$ 2,004,180
$ 9,681669
$ 67,456,517
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 installments, due April 30 and October 31. At December 31, 2005, the total
balance of property taxes receivable recorded by the City was $234,446. Of this, $192,803 is recorded as a deferred
revenue, since it was not collected within the first 30 days of 2005. The property tax levy calendar in 2005 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.
City of Federal Way / 46
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 2005 was $1.27 per $1,000 on an assessed valuation of $6,502,361,112 for a total regular
levy of $8,248,919.
Deferred Revenue
Deferred revenue reported on the governmental funds balance sheet is in the schedule below. Grant reimbursements
and refuse collection fees are receivable within one year of the end of the fiscal period.
Property Tax
Public Safety Grants
Commute Trip Reduction Grant
Refuse Collection Fees
Federal Way Fire Department Buy -In of ValleyCom
Recreation Programs/Facility Rentals
Solid Waste
Debt
General
Street & Rec clip
Service
Total
192,803
-
-
192,803
4,732
- -
-
4,732
-
17,461 -
-
17,461
-
- 14,075
-
14,075
-
- -
286,470
286,470
6,148
- -
-
6,148
5 203,693
S 17,461 $ 14,075
$ 286.470 S
521,689
Receivables & Due from Other Governments
The receivables for the fiscal year ended December 31, 2005 on the_govex_nment-wide sSatement of -net -assets -are
detailed in the following schedule.
General
Street
Utility Tax
Debt
Service
City
Facilities
Trans-
portation
Nonmajor
Gnat']
Proprietary
Total
Property Tax
$ 234,446
$ -
$ -
5 -
$ -
$ -
$ -
$
$ 234,446
Real Estate Excise Tax
-
-
-
357,736
-
-
-
357,736
Utility Tax
-
-
1,025,588
-
-
1,025,588
GarnblingTax
210,444
-
-
-
-
210,444
Recreation
Programs/Facilities
(17,103)
-
-
-
-
-
43,667
26,564
Grants & Contributions
8,915
13,220
-
-
-
125,758
346,736
47,126
541,755
Construction
Contract/Reimburse
-
-
-
-
-
185,101
-
-
185;101
Deferred Maint Deposit
-
_ -
-
231,718
-
231.718
Investment Interest
10,188
1,983
1,041
6,240
30,423
14,766
2,765
22,738
90,144
State Shared Revenue
1,I96,916
99,514
-
-
-
-
58,388
-
1,354,918
King Co. District Court
3,498
-
-
-
_
-
-
3,498
WA State Criminal Justice
Training Ctr
12,792
-
-
-
-
12,792
Surface Water Management
Fees
-
-
-
-
-
-
-
93,572
93,572
$ 1,660,096
$114.717
$1,026,629
$595,694
$ 30,423
$ 325,625
5 407,889
5 207,I03
$ 4,368,176
City of Federal Way / 47
NOTE 7 — DUE TO OTHER GOVERNMENTS
At December 31, 2005, the City recorded $242,394 as due to other governmental units as follows:
General Fund
City of Auburn - Jail Services $ 708
City of Yakima - Jail Services 86,802
King County - Jail Services 13,884
King County - Voter Registration & Election Costs 141,000
S 242,39
NOTE 8 — CAPITAL ASSETS
Capital assets activity for the year ended December 31, 2005 was as follows:
Beginning
Assets
Accumulated
Ending
Balance
net ofDepr
Depreciation
Depreciation
Asset
Asset
Balance
Governmental Activities
l/l/2005
Accum Depr
1/1/05
Expense
Adjustments
Increases
Decreases
12/31/2005
Capital assets, not being depreciated:
Land
$ 37,105,200
$
$ 37,105,200
$
$
$ 156,532
$
$ 37,261,732
Construction in progress
34,676,530
34.676.530
7,670,015
(18.170.548)
24,175,997
Total capital assets not being
depreciated
71.781,730
-
71,781,730
7.826,547
(18,170,548)
61 437,729
Capital assets, being depreciated:
Buildings
5,325,090
(3,357,273)
1,967,817
(344,722)
868,901
15,883,986
(1,390,241)
16,985,741
Improvements other than building.
16,549,392
(4,958,567)
11,590,825
(827,470)
-
-
10,763,355
Machinery and Equipment
9,552,007
(6,109,060)
3,442,947
(987,647)
568,175
1,429,894
(642,201)
3,811,168
Infrastructure
711,522
(35.5761
675.946
(35,576)•
-
2,300,791
-
2,941,161
Total capital assets being
de rcciatcd-net
32,138,011
(14,460,476)117,677,535
1 (2,195,415)
1.437,076
19,614,671
2,032,442)
34,501,425
$ 103,919,741
$ (14,460,476)
$ 89,459,265
$ 2,195,415ti
$ 1,437,076
$ 27,441,218
S(20,202,990)
$ 95,939,154
Beginning
Assets
Accumulated
Ending
Balance
net of Depr
Depreciation
Depreciation
Asset
Asset
Balance
Business Type Activities
l/l/2005
Accum Depr
1/1/2005
Expense
Adjustments
Increases
Decreases
12/31/2005
Capital assets, not being depreciated:
Land
$ 5,861,695
$
$ 5,861,695
$
$
$ 1,435
$
$ 5,863,130
Construction in progress
4,178,002
4,178,002
-
957,755
5.135.757
Total capital assets not being
depreciated
10,039,697
10.039.697
959.190
10 998,887
Capital assets, being depreciated:
Buildings
3,596,441
(1,360,824)
2,235,617
(179,552)
-
2,056,065
Improvements other than building.
40,928,335
(9,197,363)
31,730,972
(409,283)
-
4,032
31,325,721
Machinery and Equipment
106,643
67,799
38.844
(2,945)
-
-
35,899
Total capital assets being depreciated
net
44,631,419
(10,625.986)
34,005.433
(591,780)
-
4,032
-
33,417,685
$ 54.671.116
$0U25,986)•
$ 44,045,130
1 $ (591,780)1
$
S 963,222
1 $ -
$ 44,416,572
Depreciation expense was charged to functions/programs of the primary government as follows:
Government Activities
General Government
$ 126,892
Security of Persons & Property
272,369
Transportation
180,189
Economic Environment
71,869
Health
3,973
Culture & Recreation
1,540,124
Total Depreciation - Governmental Activities
i $ 2,195,415
Busines-Type Activites
Utilities - Surface Water Management $ 410,276
Culture & Recreation - Dumas Bay Centre 1 181,504
Total Depreciation - Business-Tvve Activities 1 $ 591,780
City of Federal Way / 4 8
NOTE 9 — PENSION PLANS
Washington State Department of Retirement Systems
Substantially all City full-time and qualifying part-time employees participate in one of the following statewide
retirement systems administered by the Washington State Department of Retirement Systems, under cost -sharing
multiple -employer public employee defined benefit 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, 2 and 3
Plan 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
— 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 based 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.
City of Federal Way / 49
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 1,169 participating employers in PERS. Membership in PERS consisted of the following as of the latest
actuarial valuation date for the plans of September 30, 2005:
Retirees and Beneficiaries Receiving Benefits
66,846
Terminated Plan Members Entitled to But Not Yet Receiving Benefits
21,031
Active Plan Members Vest
103,039
Active Plan Members Nonvested
53,217
Total
244,183
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 fund 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 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, 2005,
were:
PERS Plan 1 PERS Plan 2 PERS Plan 3
Employer* 2.44%* 2.44% 2.44%**
Employee 6.00% 1.18% ***
* The employer rates include the employer administrative expense fee currently set at 0.19%.
** 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
2005 $7,769
$166,061
$26,248
2004 $ 5,834
$ 120,335
$ 19,113
2003 $ 6,239
$ 118,973
$ 10,900
of Federal Way / 50
Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) Plans l 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, with the Department of Fish and Wildlife enforcement
officers, who were first included prospectively effective July 27, 2003 being an exception. 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 Service 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), cappedat-three-
percent annually.
There are 369 participating employers in LEOFF. Membership in LEOFF consisted of the following as of the latest
actuarial valuation date for the plans of September 30, 2005:
Retirees and Beneficiaries Receiving Benefits
8,542
Terminated Plan Members Entitled to But Not Yet Receiving Benefits
528
Active Plan Members Vest
12,079
Active Plan Members Nonvested
3,523
Total
24,672
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
City of Federal Way / 51
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, 2004
were:
LEOFF Plan I LEOFF Plan 11
Employer 0.19% * 4.39% **
Employee 0.00% 6.99%
State N/A 2.79%
* The employer rates do not include the employer administrative expense fee currently set at 0.19%.
** The employer rate for ports and universities is 7.18%.
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 11
2005 $0 $295,470
2004 $0 $256,308
2003 $0 $226,308
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 2005, there were a total of 304 individuals covered by this system. As of the end of the year, 282 remained
as active employees of the City and none were drawing retirement benefits. The 22 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. Contributions into the plan are tax deferred.
Employees are entitled to make voluntary contributions to the plan, assuming that highly compensated and non -
highly compensated employees are treated equally. Each payroll period, employees may make a voluntary
contribution equal to a minimum of 1% of the participant's compensation, not to exceed 10% of the participant's
compensation.
Covered payroll for 2005 was $18,052,379 and total City payroll was $19,563,043. Actual City contributions for
the year were $938,726. Actual employee contributions were $1,140,856. 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, 2005 were $1,065,066.
The consulting actuary firm of Trautmann, Maher & Associates has been contracted to provide record keeping,
administrative and consulting services related to the Plan.
City of Federal Way / 52
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 2005 remained relatively similar to the coverage for 2004. There were no settlements in excess of insurance for
commercially insured activities for 1996 through 2005.
During 2005 the City purchased commercial insurance policies from commercial insurers. The following is a
summary of coverage in force in 2005.
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 $1,000
St. Paul Fire and Marine
Public Official Bond Management Service
Included in Crime/Fidelity Coverage, $500,000 Employee Dishonesty, $100,000
Insurance Company
Director
Forgery/Alteration, Deductible $1,000
St. Paul Fire and Marine
Public Official Bond City
Included in Crime/Fidelity Coverage, $500,000 Employee Dishonesty, $100,000
Insurance Company
Manager
Forgery/Alteration. Deductible $1,000
General Liability, Auto Liability,
$10,000,000 Occurrence, $20,000,000 Aggregate, $1,000,000 Underinsured Motorists Coverage,
St. Paul Fire and Marine
Underinsured Motorists Liability and Law
$1,000,000 Garagekeepers Legal Liability. All Limits are Per Occurrence/Aggregate Annually.
Insurance Company
Enforcement Liability Coverage
Deductible $1,000
Statement of values Limit $25,000,000, Business Income / Extra Expense $1,000,000, Valuable
St. Paul Fire and Marine
Papers / Accounts Receivable $1,000,000, Rental Income $1,000,000, Electronic Data
Insurance Company
Property Coverage
Processing $1,000,000, Fine Arts $1,000,000.
Included in General Liability, Auto Liability and Law Enforcement Liability Above. Auto Physical
St. Paul Fire and Marine- -
Auto liability and Physical Damage -
Damage --Deductible $1,000 Trucks / Fire Trucks-/ Ambulances, $250-Pickups-/ Vans,-$250 ---
Insurance Company
Coverage
Privaic Pas a lger
Faithful Performance /
St. Paul Fire and Marine
FidclilyiEmployee Dishonesty and ERISA
Included in Crime/Fidelity Coverage, $500,000 Employee Dishonesty, $100,000
Insurance Company
Coverage
Forgery/Alteration. Deductible $1,000
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,
St. Paul Fire and Marine
$100,000 CFC Refrigerants, Deductible $2,500 Each Accident, Extended Business Income 30
Insurance Company
Boiler & Machinery Coverage
Days, Newly Acquired Locations 365 Days, Service Interrup
St. Paul Fire and Marine
Insurance Company
Employer/Stop Gap Liability Coverage
Included in General, Auto and Law Enforcement Liability Limits Referenced Above
St. Paul Fire and Marine
Included in Crime/Fidelity Coverage, $500,000 Employee Dishonesty, $100,000
Insurance Company
Public Officials Bond - City Clerk
Forgery/Alteration. Deductible $1,000
St. Paul Fire and Marine
Included in Crime/Fidelity Coverage, $500,000 Employee Dishonesty, $100,000
Insurance Company
Public Officials Bond - Chief of Police
Forgery/Alteration. Deductible $1,000
St. Paul Fire and Marine
Insurance Company
Law Enforcement Liability Coverage
Included in General, Auto and Law Enforcement Liability Limits Referenced Above
St. Paul Fire and Marine
Insurance Company
Above Ground Pollution Coverage
Included in General, Auto and Law Enforcement Liability Limits 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,
City of Federal Way / 53
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, 2005 the City had $733,297 in reserve.
2000
2001
2002
2003
2004
2005
Unemployment Reserve. Jan. Ist
$ 240,688 $
325,079 $
454,823 $
567,171
$ 496,306 $
603,140
Unemployment compensation benefits
146,035
154,354
166,983
69,871
182,422
183,913
Claim payments during the year
(61,644)
(24,610)
(54,635)
(140,736)
175,588)
(53.756)
Unemployment Reserve, Dec. 31st
$ 325,079 $
454,823 $
567,171 $
496,306
$ 603,140 $
733,297
NOTE 11 - LONG-TERM DEBT
The various categories of long-term debt reflected on the City's financial statements are briefly described in the
following paragraphs.
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 2005 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. The compensated absences liability will be liquidated approximately 90 percent by
the General Fund, and 10 percent by the Street fund.
The following schedules detail the long-term debt activity and balances of the City.
OUTSTANDING GENERAL OBLIGATION DEBT - BY TYPE
December 31,
2005
Amount
Beginning
Ending
Bond Rating
Issue
Maturity
Interest
Originally
Outstanding
Amount
Amount
Outstanding
Deicnpltaa
at Issuance
Date
Date
Rate
Issued
Debt
Issued
Redeemed
Debt
Govemmcnud Activities:
General Obligarion Bonds:
1995Limited
At
28-Dec-95
1-Dec-05
3.90-4.75
5,000,000
655,000
-
655,000
-
1996Limited
Al
29-Feb-96
1-Dec-05
3.50-4.50
2,500,000
325,000
-
325,000
1997Limited
AAA -insured
22-Apr-97
I-Dec-12
5.00-5.30
16,150,000
6,945,000
-
1,600,000
5,345,000
10DO Limited
AI
12-Sep-00
I-Dec-15
5.31
2,551,600
2,054,000
-
146,000
1,908,000
2003 Loan Assumption
Nonrated
I-Jul-03
I-Nov-07
7.58
6,168,599
6,048,892
-
90,131
5,958,761
2tt03 Limited
AAA -insured
15-Nov-03
I-Dec-33
4.676
15,000,000
14,77500
285,0o0
14,490,000
Subtotal GO Bonds
47,370,199
30,802,892
-
3,101,131
27,701,761
Compensat vi Absences
1,052,584
197,613
83,564
1.166,635
Submtal GO Bonds plus Compcn�tiled Absences
47,170,199
31,855,478
197,613
3,194,695
23,968,396
Business -Type Activities:
Pub& Works T-sl Fund Loan:
PWTL- Kitts Comer Drain Imp
31-Aug-94
I-Jul-14
1.00
233,316
118,119
-
12,936
105,183
PWTL- Kitts Comer Drain Imp
24-1ul-96
1-Jul-14
1.00
1,166,580
650,271
-
64,679
585,592
PWTL - Kitts Comer Drain Imp
4-Sep-97
I-Jul-14
1.00
155,544
94,005
-
8,624
85,381
PWTL- SeaTac Mall Drain Imp
31-May-00
I-Jul-19
1.00
412,500
240,300
-
16,020
224,280
PWTL- SeaTacMallDrain imp
14-Au-00
I-Jul-19
1,00
2,062,500
1,201,494
80,100
1.121,394
Subtotal PWTFL
4,030,440
2,304,189
-
182,359
2,121,830
Com o ensated Absences
72,995
305
27,956
45,344
Subtotal PWTFL plus Competssatcd Abseuccs
4,030,440
2,377.184
305
210,315
2,167,174
Grand Total All Long -Term Debt
5 51,400,639
S 34,23:,462
S 197.918
S 3.395.010
S 31.035,570
City of Federal Way / 54
OUTSTANDING GENERAL OBLIGATION DEBT - BY FUND
December 31, 2005
Amount
Beginning
Ending
Originally
Outstanding
Amount
Amount
Oustanding
Due within
Description
Issued
Debt
Issued
Redeemed'
Debt
one year
Governmental Long -Term Debt:
1995 Limited
5,000,000
655,000
655,000
1996 Limited
2,500,000
325,000
325,000
-
1997 Limited
16,150,000
6,945,000
1,600,000
5,345,000
1,685,000
2000 Limited
2,551,600
2,054,000
-
146,000
1,908,000
153,000
2003 Loan Assumption
6,168,599
6,048,892
90,131
5,958,761
96,676
2003 Limited
15,000,000
14,775,000
285,000
14,490,000
285.000
Sub -total Governmental Long -Term Debt
47,370,199
30,802,892
3,101,131
27,701,761
2,219,676
Cam ensnted Absences
11052,586
197,613
83564
1.166,635
66,507
Total Gov Long -Term Debt pins Comp Abs
47,370,199
31,955,478
197.613
3.184,695
28,868,396
2.286,183
Business -Type Long -Term Debt:
F..merprisc Funds:
Public Works Trust Fund Loan
4,030.440
2.304,189
182,319
2.121.830
182,359
Sub -total Bus -Type Long -Term Debt
4,030,440
2,304,189
-
182,359
2,121,830
182,359
Compensated Absences
72,995
305
27,956
45.344
1.376
Total Bus -Type plus Comp Abs LTD
4,030,440
2,377,184
305
210,315
2.167. T74
183,735
Grand Total All Lung -Term Debt
S 51.400.639
S 34.232,661 S
197.918
S 3.395,010 S
31,035,570
S 2,469,918
'Principal payments in the Debt Service Fund does not include payment on the 2000 limited general obligation bond of $I46, 000. Valley Com paid the debt service
using excess reserves, therefore participating cities were not required to pay. In addition, the City recognized credits of S21,900 based an inferlocal agreement 1vith
Federal Way Fire District to participate with the City in capital cost obligations with Valley Communications joint venture.
SCHEDULE OF CHANGES IN LONG-TERM DEBT
Period Ended December 31, 2005
Beginning
Ending
Outstanding Debt
Additions
Reductions Oustanding
Debt
Governmental Activities:
General Obligation Bonds
$ 30,802,892 $
-
$ (3,101,131) $
27,701,761
Compensated Absences
1,052,586
197,613
83,564
1 166.635
Total Governmental Activities
31,855,478
197,613
3 184 695
28,968,396
Business-T)Te Activities;
Enter prise Funds
Public Works Trust Fund Loan
2,304,189
-
(182,359)
2,121,830
Compensated Absences
72,995
305
127,936)
45,344
Total Busincsa-T se Activities
2,377,184
305
(210,315)
2,167,174
Total All Funds
$ 34,232,662 $
197,918
$ (3,395,010) 3
31,035,S70
SCHEDULE OF DE13T SERVICE REQUIREAWNTS TO MATURITY
As of December 31, 2005
Governmental Activities
Business -Type Activities
G. O. Bonds
PW Trust Fund
Grand Total
Year
Principal
Interest
Principal
Interest
Principal
Interest
P&I
2006
2,212,633
1,418,843
182,359
21,218
2,394,992
1,440,062
3,835,054
2007
8,094,128
1.232,342
182,359
19,395
8,276,487
1,251,736
9,528,224
2008
807,000
787,112
182,359
17,571
999,359
804,683
1,794,042
2009
845,000
751,888
182,359
15,748
1,027,359
767,635
1,794,994
2010
879,000
714,544
182,359
13,924
1,061,359
728,468
1,789,827
2011-2015
3,664,000
3,029,494
825,556
42,266 1
4,489,556
3,071,760
7,561,316
2016 - 2020
2,205,000
2,415,280
384,479
9,612
2,589,479
2,424,892
5,014,371
2021 -2025
2,790,000
1,878,221
-
2,790,000
1,878,221
4,668,221
2026-2030
3,580,000
1,150,688
-
_
3,580,000
1,150,688
41730,688
2031 2033
2,625,000
253,650
-
2.625,000
253,650
2,878.650
Total
$ 27,701,761
$ 13,632,060
1 $ 2,121,831
11 139,733
$ 29,823,591
$ 13,771.794
$ 43,595,385
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'/z 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
City of Federal Way / 55
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'/z 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, 2005 are:
General Government (no vote required) $ 74,056,862
General Government (3/5 majority vote required) 65,023,611
Parks and Open space (3/5 majority vote required) 162,559,028
Utilities (3/5 majority vote required) 162,559,028
Total Capacity $ 464,198.529
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:
Current portion $ 66,507
Noncurrent portion 1,100,128
BgWness-Type Activities-
Current portion 1,376
Noncurrent portion 43,968
Total Compensated Absences $ 1,211,979
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, 2005 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 $86,210 for the year ended December 31,
2005. The future lease payments have significantly increased because the City sold the Klahanee
Community/Senior Center facility and is leasing it back until the new Community Center is constructed. The lease
contract expires July 2007. The future minimum lease payments for these leases are as follows:
2006: $111,785
2007: 66,583
City of Federal Way/ 56
NOTE 12 - INTERFUND TRANSACTIONS
Interfund transfers for the year ended December 31, 2005 were as follows:
Interfund Transfers
In
Out
Governmental Funds:
General Fund
$ 1,345,099
$ 3,031,812
Street Fund
1,986,044
52,210
Utility Tax Fund
-
8,360,197
Debt Service
4,202,630
4,200,000
City Facilities
162,761
100,000
Transportation
2,275,374
306,051
Nonmajor Governmental Funds
5,678,155
216,539
Proprietary Funds:
Dumas Bay Centre
126,369
-
Intemal Service Funds
511,640
21,263
S 16,288,072
$ 16,288,072
Note: Amounts shown as transfers in the internal service funds represent capital
contributions and are shown as such in the operating statements.
The following describes the amounts transferred out during 2005:
General Fund:
• $998,030 to Downtown Redevelopment CIP to set aside funds for downtown projects
■ $83,377 to Internal Service Funds for capital purchases
• $1,692,144 to Street Fund to subsidize street maintenance
• $150,000 to City Facilities CIP (Community Center) for Project Management
• $40,000 to Parks CIP for Celebration Park Maintenance Building
• $25,000 to Hotel/Motel Lodging Tax Fund for Han Woo Ri Festival
• $15,000 to Information Systems Fund for WI-FI Project
• $12,761 to City Facilities Capital Project Fund - Evidence Building
• $8,000 to Street Fund for Traffic Concurrency Project
• $7,500 for Arts Commission and one-time support Dumas Bay Center & Knutzen Theatre Programs
Street Fund:
• $2,210 to Transportation CIP Fund for Westway Street Lighting Program
• $50,000 to Fleet & Equipment Fund for purchase of Boom Truck
Utility Tax Fund:
• $4,202,630 to Debt Service Fund for prefunding debt service payments
• $890,625 to Arterial Street Fund overlay program
• $890,625 to Transportation CIP for various capital projects
• $700,000 to Downtown Redevelopment CIP Fund
• $625,000 to General Fund for Public Safety Positions
■ $314,000 to General Fund to subsidize Kenneth Jones Pool Operations
• $238,798 to General Fund for Celebration Park maintenance & operations
• $192,000 to Street Fund for maintenance on bond projects
• $118,869 to Dumas Bay Centre Fund for Knutzen Family Theatre subsidy
■ $93,900 to Street Fund for new street lights
• $70,200 to General Fund for Arts Commission
• $23,550 to General Fund for Red, Whites & Blues Festival
Debt Service Fund:
0 $2,350,000 of excess Real Estate Excise Tax to Downtown Redevelopment CIP Fund
• $1,166,000 of excess Real Estate Excise Tax to Transportation CIP Fund
• $409,000 of excess Real Estate Excise Tax to Parks CIP Fund
• $250,000 of excess Real Estate Excise Tax to Information Systems Fund for WI-FI Project
• $25,000 to General Fund for reallocation of prior year's transfer for Parks CIP project
City Facilities CIP Fund:
0 $100,000 to Buildings & Furnishings Fund for New City Hall Energy Study and Modification
City of Federal Way / 57
Transportation CIP Fund:
• $265,500 to Downtown Redevelopment CIP Fund
$40,551 to General Fund for Federal Lobbyist
Nonmajor Governmental Funds:
• $216,539 from CDBG Fund to Transportation Capital Project Fund
• $8,000 from Fleet & Equipment Fund excess replacement reserves to General Fund for software
• $13,263 insurance proceeds from Risk Management Fund to Fleet & Equipment Fund for vehicle
replacement
Interfund loans for the year ended December 31, 2005 were as follows:
Interfund Loans Receivable Payable
General Fund $ 46,000 $ -
Special Revenue Funds:
Solid Waste and Recycling - 2,000
Community Development Block Grant - 44,000
Total Interfund Loans $ 46,000 $ 46,000
NOTE 13 — CONTINGENCIES AND LITIGATION
As of December 31, 2005 there were a small number of claims for damages and lawsuits pending against the City.
In the opinion of the City Attorney, however, neither the potential liability for any single claim or lawsuit, nor the
aggregate potential liability arising from all actions currently pending would materially affect the financial condition
of the City. Due to both their uncertainty and immateriality, no liabilities or estimated liabilities have been included
in the City's financial statements.
NOTE 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.
The purpose of the joint operation, hereafter referred to as Valley Com, is to provide improved consolidated
emergency communications (dispatch) services for police, fire, and medical aid, to the five participating cities and
to several subscribing agencies, which include King County Fire Districts 2, 20, 26, 40, 43, 44, and 47; City of
Pacific Police and Fire Departments, City of Algona Police Department, City of Des Moines Police Department,
City of Black Diamond Police and Fire Department; SeaTac Fire Department; North Highline Fire Department;
King County EMS Units; and Vashon Island Fire Department. Separate agreements between Valley Corn 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 2005 cost distributions
for the five member cities are as follows:
Dispatchable
Percent
Citv
Calls
of Total
Kent
93,747
27.82%
Renton
63,520
18.80%
Auburn
64,115
20.01 %
Tukwila
35,168
10.88%
Federal Way
79,356
22.49%
Total
334,906
100.00%
City of Federal Way / 58
Valley Com is governed by an Administration Board, composed of the Mayors or designated representatives from
the five participating cities of Renton, Kent, Auburn, Tukwila, and Federal Way. The Administration Board is
authorized to establish bylaws that govern procedures of the Board and Valley Com's general operations for the
following functions: 1) Budget review and recommendations to the legislative bodies of the member cities, and
budget adoption after each legislative body has approved the required financial participation for the ensuing year; 2)
Approve appointment and/or discharge of the Director; 3) Approve personnel policy and make final decisions on all
major policy changes; and 4) Review and approves all contracts.
In addition, an Operating Board was established and consists of two members of each participating City's Public
Safety Departments, including the heads of such departments or their designees. The Operating Board performs the
following functions: 1) Oversees the general operation of Valley Com, and advises and makes recommendations to
the Administration Board; 2) Make recommendations on Director selection; 3) Presents proposed policies and
budgets to the Administration Board; and 4) Reviews disbursements of funds by the Director.
The Director presents a proposed budget to the Operating Board on or before August 15 of each year. Said budget
is then presented to the Administrative Board by September 1 of each year. The Administration Board can make
changes to the proposed Valley Com budget as it finds necessary, but final approval falls to the legislative body of
each member city, in accordance with the provisions of the interlocal agreement.
In May 1993 Valley Com entered into an agreement with King County to provide joint project management for the
acquisition and installation of 800-MHz emergency radio communications system approved by the voters of King
County in conjunction with a $57 million levy. In August 1993 Valley Com also entered into an Interlocal
Cooperation Agreement with the sub -regions of King County, Seattle, and Eastside Public Safety Communications,
which governs the development and installation of the new 800-M11z emergency radio system. Valley Com now
provides emergency communication dispatch services to a population of approximately 570,000.
Valley Com operates as an enterprise fund and is totally self supporting through the implementation of user fees and
the primary source of revenue is provided by charges for calls for service. The 800-MHz emergency radio
communications system operated by the agreement with King County is operated as a separate enterprise fund, and
the Member Cities have no equity interest in the contributed capital from this system.
The share of equity belonging to the five participating cities is shown below. Liabilities are the responsibility of the
five participating cities in direct proportion to their equity position.
Kent Renton -- Auburn - -- Tukwila--- - Fcdcral Way Total— -
Equity @ January 1,2005 $ 5,669,198 S 4,119,474 $ 3,841,306 $ 2,568,247 $ 2,162,381 $ 18,360,606
Current Year Docrcasc (Il9;070) (145.040) (1447529) {169.400) (132,294) (710.333)
Pcrccnt of Equity 31.44% 22.52 % 2[i.H4°n 13.59% ] 1.50% 100.00%
Pcrccntof2005Distribution 27.82% 18.80% 20.01% 10.88% 22.49% 100.00%
During 2000, the Valley Communications Center Development Authority was created to issued $12,758,000 in
General Obligation Bonds to finance construction, equipment, and land for a new facility completed in 2002. Each
of the five participating cities is responsible for one -fifth of the debt obligation, which is $2,551,600. The basic
agreement shall not be terminated until all bonds issued by Valley Communications Center Development Authority
have been paid and retired. The City of Federal Way includes its one -fifth share of the bond issue with its general
long-term debt. Valley Com is paying the debt service on behalf of the City for 2004 through 2006. The balance of
the City of Federal Way's obligation was $1,908,000 at 12/31/2005.
A complete set of financial statements is available from Valley Communications Center, 27519 1081h Avenue SE,
Kent, WA 98030.
Federal Way / 59
Combining Statement — Nonmajor Governmental Funds's Description
For the Year Ended December 31, 2005
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/Recycling Fund was established to account for special refuse collection fees used to manage the
Solid Waste and Recycling program.
The Special Contracts/Studies Fund accounts for receipts and disbursements related to special contracts and special
projects where completion will extend beyond the calendar year.
The Hotel/Motel 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 '/2% 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 Fruie_c_ts 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 Downtown Redevelopment CIP Fund was established to accumulate resources and set aside for downtown
projects.
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.
of Federal Way / 60
ON of k
Federal Way
City of Federol Way / 61
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2005
ASSETS
Equity in pooled cash and investments
Retainage in escrow
Receivables (net):
Accounts and contracts
Interest
Due from other governments
TOTAL ASSETS
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
Accounts/payroll payable
Retainage payable
Deposits payable
Interfund loans payable
Deferred revenue
TOTAL LIABILITIES
Fund balance:
Reserved:
Hotel/motel lodging tax
Paths & Trails
Unreserved:
Special revenue funds
Capital projects funds
Special Capital Comparative Totals
Revenue Projects 2005 2004
$ 332,870 $ 5,630,353 $ 5,963,223 S 1,879,353
13,104 13,104 -
463 2,304 2,767 1,204
383,112 22,010 405,122 298,953
716,445 5,667,771 6,384,216 2,179,510
67,953
13,223 81,176
231,619
6,412
- 6,412
6,099
-
16,466 16,466
464
46,000
- 46,000
10,000
14,075
- 14,075
13.769
134,440 29,689 164.129 261,951
132,628 - 132,628 175,196
15,273 - 15,273 5,629
434,104 434,104 1,192,084
5,638,082 5,638,082 544,650
TOTAL FUND BALANCES 582,005 5,638,082 6,220,087 1,917,559
TOTAL LIABILITIES AND FUND BALANCE $ 716,445 $ 5,667,771 $ 6,384,216 $ 2,179,510
City of Federal Way / 62
COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
DECEMBER 31, 2005
Special Community Paths and
Arterial Solid Wastc Contracts/ Hotcl/Motcl 2% for the Development Trails Comparative Totals
Street Recycling Studies Lodging Tax Arts Block Grant Reserve 2005 2004
ASSETS
Equity in pooled cash & investments $ 52,070 $ (314) $ 4,142 $ 121,210 $ 141,170 $ 139 $ 14,453 $ 332,870 $ 664,067
Receivables (net): - _
Interest 281 58 15 92 - - 17 463 312
Due from other governments 46.226 159.427 - 11,357 - 165,299 803 383.112 238.410
TOTAL ASSETS 98,577 159,171 4,157 132,659 141,170 165,438 15,273 716,445 902,789
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
1,305 14,979
- 31 - 51,638 67,953
147,446
Accounts/payroll payable
- 6,412
- - - 6,412
6,099
Deposits payable
_
Interfund loans payable
- 2,000 -
- - 44,000 46,000
10,000
Deferred revenue
- 14.075
- - - - 14.075
13.769
TOTAL LIABILITIES
1.305 37,466 -
31 - 95.638 - 134,440
177,314
Fund balance:
Reserved:
Hotel/motel lodging tax - 132,628 - 132,628 175,196
Paths & Trails - - - - 15,273 15,273 5,629
Unreserved:
Special revenue funds 97,272 121,705 4,157 - 141,170 69,800 - 434,104 544,650
TOTAL FUND BALANCES 97,272 121,705 4,157 132.628 141.170 69,800 15,273 582,005 725.475
TOTAL LIABILITIES & FUND
BALANCE $ 98,577 $ 159,171 $ 4,157 $ 132,659 $ 141,170 $ 165,438 $ 15.273 $ 716.445 $ 902.789
City of Federal Way / 63
COMBINING BALANCE SHEET
NONMAJOR CAPITAL PROJECTS FUNDS
DECEMBER 31, 2005
ASSETS
Equity in pooled cash and investments
Retainage in escrow
Receivables (net):
Accounts and contracts
Interest
Due from other governments
TOTAL ASSETS
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
Retainage payable
TOTAL LIABILITIES
Fund balance:
Reserved:
Capital projects
TOTAL FUND BALANCES
Downtown Comparative Totals
Parks Revitalization 2005 2004
$ 1,316,823 $ 4,313,530 $ 5,630,353 $ 1,215,286
13,104 - 13,104 -
2,304 - 2,304 892
22,010 - 22,010 60,543
1,354,241 4,313,530 5,667,771 1,276,721
13,223 - 13,223 84,173
16,466 - 16,466 464
29,689 - 29,689 84,637
1,324,552 4,313,530 5,638,082 1,192,084
1324,552 4,313,530 5,638,082 1,192,084
TOTAL LIABILITIES AND FUND BALANCE $ 1,354,241 $ 4313,530 $ 5,667,771 $ 1,276,721
City of Federal Way / 64
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2005
Special
Capital
Comparative Totals
Revenue
Proiects
2005
2004
REVENUES
Taxes
$ 167,339
$ 51,703 $
219,042 $
142,030
Intergovernmental
1,234,729
-
1,234,729
1,222,467
Service charges and fees
265,191
-
265,191
255,039
Development fees
-
27,438
27,438
93,446
Interest
19,258
47,884
67,142
25,813
Other
198,709
464
199,173
23
TOTAL REVENUES
1,885,226
127,489
2.012 715
1,738,818
EXPENDITURES
Current:
General government
279,193
- 279,193
313,371
Physical environment
322,151
- 322,151
289,921
Transportation
1,495,865
- 1,495,865
1,184,765
Economic environment
509,592
- 509,592
186,625
Culture and recreation
120,981
- 120,981
196,627
Capital outlay
-
444,020 444,020
524,790
TOTAL EXPENDITURES
2,727,782
444,020
3,171,802
2,696,099
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
(842,556)
(316,531)
(1,159,087)
(957,281)
OTHER FINANCING SOURCES (USES)
Transfers in
915,625
4,762,530
5,678,155
2,242,872
Transfers out
(216,540)
-
(216,540)
(1,422,332)
TOTAL OTHER FINANCING SOURCES (USES
699,085
4.762,530
5,461,615
820,540
NET CHANGE IN FUND BALANCES
(143,471)
4,445,999
4,302,528
(136,741)
FUND BALANCES -BEGINNING
725,475
1,192,084
11917,559
2,054,300
FUND BALANCES - ENDING $
582,004 $
5,638,083 $
6,220,087 $
1,917,559
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, 2005
Solid Special Hotel/Motel Community Paths and
Arterial Waste/ Contracts/ Lodging 2% for the Development Trails Comparative Totals
Street Recycling Studies Tax Arts Block Grant Reserve 2005 2004
$ - $ - $ - $ 158,117 $ - $ - $ 9,222 $ 167,339 $ 142,030
555,935 170,957 - 50,000 - 457,837 - 1,234,729 1,161,924
67,111 165,950 - 32,130 - - - 265,191 255,039
13,434 1,807 527 3,068 - - 422 19,258 8,021
198,709 - - 198,709 23
636,480 338,714 527 442.024 - 457,837 9,644 1,885,226 1,567,037
- - 31,524 - - 247,669 - 279,193
313,371
- 322,151 - - - - - 322,151
289,921
1,495,865 - - - - - 1,495,865
1,184,765
- 509,592 - - - 509,592
186,625
_ - 120,981 - - 120,981
196,627
1,495.865 322,151 31524 509,592 120.981 247,669 - 2,727.782
2,171,309
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (859,385) 16.563 30,997) (67,568) (120.981) 210,168 9,644 (842,556) (604,272)
OTHER FINANCING SOURCES (USES)
Transfers in 890,625 - 25,000 - - - 915,625 1,642,972
Transfers out - (216,540) - (216,540) 1,267,010
TOTAL OTHER FINANCING SOURCES
(USES) 990.625 - - 25,060 216,540) - .699,085 375,862
NET CHANGE IN FUND BALANCE! 31,240 16,563 (30,997) (42,568) (120,981) (6,372) 9,644 (143,471) (228,410)
FUND BALANCES - BEGINNING 66,032 105,142 35,153 175,196 262,151 76,172 5,629 725,475 953,885
FUND BALANCES - ENDING $ 97,272 $ 121,705 $ 4; 56 $ 132 F28 $ 141,170 $ 69,800 $ 15,273 $ 582,004 $ 725,475
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, 2005
REVENUES
Intergovernmental
Development Contribution/Donation
Miscellaneous:
Interest
Other
TOTAL REVENUES
EXPENDITURES
Capital Outlay
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
Downtown Comparative Totals
Parks Revitalization 2005 2004
$ 51,703 $ $ 51,703 $ 60,543
27,438 - 27,438 93,446
47,884 47,884 17,792
464 - 464 -
127,489 - 127,489 171,781
444,020 444,020 524,790
444,020 444,020 524,790
(316.531) - (316,531) (353,009)
OTHER FINANCING SOURCES (USES)
Transfers in
449,000
4,313,530
4,762,530
600,000
Transfers out
-
-
-
155,322)
TOTAL OTHER FINANCING SOURCES (USES
449,000
4,313,530
4,762,530
444,678
NET CHANGE IN FUND BALANCES
132,469
4,313,530
4,445,999
91,669
FUND BALANCES = BEGINNING- - - —
1-,-192,084
- — -
—1,1-92,084
-1,100 415
FUND BALANCES - ENDING $
1,324,553 $
4,313,530
$ 5,638,083 $
1,192,084
City of Federal Way / 67
ARTERIAL STREET FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2005
Variance with
Budgeted Amounts
Final Budget -
Positive
Original Final
Actual Amounts
(Negative)
REVENUES
Intergovernmental
$ 587,383 $ 587,383
$ 555,935
$ (31,448)
Service charges and fees
- -
67,111
67,111
Interest
3,000 3,000
13.434
10,434
TOTAL REVENUES
590,383 590.383
636,490
46,097
EXPENDITURES
Capital outlay
1.481.008
1,547,040
1,495,865
51,175
TOTAL EXPENDITURES
1,481,008
1.547.040
1,495,865
51,175
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
(890,625)
(956,657)
859,385)
97,272
OTHER FINANCING SOURCES (USES)
Transfers in
890.625
890,625
890,625
-
TOTAL OTHER FINANCING SOURCES (USES)
890.625
890,625
890,625
-
NET CHANGE IN FUND BALANCES
-
(66,032)
31,240
97,272
FUND BALANCES - BEGINNING
-
66.032
66,032
FUND BALANCES - ENDING $
- $
- $
97,272 $
97,272
City of Federal Way 168
SOLID WASTE AND RECYCLING FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2005
REVENUES
Intergovernmental
Service charges and fees
Interest
TOTAL REVENUES
EXPENDITURES
Utilities and Environment
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
TOTAL OTHER FINANCING SOURCES (USES)
NET CHANGE IN FUND BALANCES
FUND BALANCES - BEGINNING
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
$ 133,800 $ 175,036 $ 170,957 $ (4,079)
167,701 167,701 165,950 (1,751)
- - 1,807 1,807
301.501 342.737 338,714 (4,023)
345.685 387.238 322,151 65,087
345.685 387,238 322,151 65,087
(44.184) 44,501) 16,563 61.064
(44,184) (44,501) 16,563 61,064
94,284 105,142 105,142 -
FUND BALANCES - ENDING $ 50,100 $ 60,641 $ 121,705 $ 61.064
City of Federal Way / 69
HOTEL/MOTEL LODGING TAX FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2005
Variance with
Budgeted Amounts
Final Budget -
Positive
Original Final
Actual Amounts
(Negative)
REVENUES
Taxes
$ 150,000 $ 150,000
$ 158,117
$ 8,117
Intergovernmental
-
50,000
50,000
Service charges and fees
32,130
32,130
Interest
-
3,068
3,068
Donations
- 242,250
198,708
(43,542
TOTAL REVENUES
150,000 392,250
442,023
49,773
EXPENDITURES
Utilities and Environment
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
150,000 567,446 509.592 57,854
150,000 567.446 509,592 57,854
(175.196) (67,569) 107,627
- 25,000 25,000
TOTAL OTHER FINANCING SOURCES (USES) 25.000 25,000
NET CHANGE IN FUND BALANCES (175,196) (42,569) 132,627
FUND BALANCES - BEGINNING 175,196 175,196 -
FUND BALANCES - ENDING $ - $ - $ 132,627 $ 132,627
City of Federal Way /70
PATHS AND TRAILS FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2005
REVENUES
Taxes
Interest
TOTAL REVENUES
EXPENDITURES
General government
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers out
TOTAL OTHER FINANCING SOURCES (USES)
NET CHANGE IN FUND BALANCES
FUND BALANCES - BEGINNING
Variance with
Budgeted Amounts _ Final Budget -
Positive
Orieinal Final Actual Amounts (Ne tive)
$ 8,862 $
8,862 $
9,222 $
360
500
500
421
(79)
9.362
9,362
9,643
281
9.362 9.362 9,643 281
9,362 9,362 9,643 281
5,531 5.629 5,629 -
FUND BALANCES - ENDING $ 14,893 $ 14,991 $ 15.272 $ 281
'Federal Way /71
Budget and Actual — Debt Service Fund Description
For the Year Ended December 31, 2005
The Debt Service Fund accounts for the accumulation of resources for the payment of general obligation and
special assessment bond principal, interest and related costs. Revenues for this fund consists of allocations of the
City's general property tax levy, operating transfers from the Utility Tax Fund, or other revenues designated by the
City Council.
City of Federal Way / 7 2
DEBT SERVICE FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31.2005
Variance with
Budgeted Amounts
Final Budget -
Positive
Original Final
Actual Amounts
(Negative)
REVENUES
Taxes
$ 1,900,000 $ 4,250,000
$ 4,695,984
$ 445,984
Interest
180,000 180,000
122,478
(57,522)
TOTAL REVENUES
2,080,000 4,430,000
4,818,462
388,462
EXPENDITURES
Debt Service:
Principal
2,954,764
2,954,765
2,933,231
21,534
Interest
1,466,079
1,466,079
1,465,493
Other
62,284
62,284
52.891
9.393
TOTAL EXPENDITURES
4.483,127
4,483,128
4.451,615
30.927
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
(2,403,127)
(53,128)
366,847
419,389
OTHER FINANCING SOURCES (USES)
Transfers in
4,242,273
4,242,273
4,202,630
(39,643)
Transfers out
(1,600,000)
(4,200,000)
(4,200,000)-
TOTAL OTHER FINANCING SOURCES (USES)
2,642,273
42,273
2_630
(39,643
NET CHANGE IN FUND BALANCES
239,146
(10,855)
369,477
380,332
FUND BALANCES - BEGINNING
2,897,555
2,826,228
2,826,228
FUND BALANCES - ENDING $
3,136,701 $
2,815,373 $
3,195.705 $
380,332
City of Federal Way / 73
Combining Statement — Internal Service Fund's Description
For the Year Ended December 31, 2005
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 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.
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 / 74
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF NET ASSETS
December 31, 2005
Risk
Information
Support
Fleet and
Buildings and
Comparative Totals
Management
Systems
Services
Equipment
Furnishings
2005
2004
ASSETS
Current assets:
Equity in pooled cash & investments
$ 4,635,924
$ 2,451,573
$ 175,888
$ 2,453,674
$ 329,170
$ 10,046,229
$9,146,730
Prepaid postage
-
-
5,000
-
-
5,000
5,000
Receivables (net):
Accounts and contracts
-
-
-
-
25,000
Interest
4,593
3,565
258
3,418
193
12,027
4,744
TOTAL CURRENT ASSETS
4,640,517
2,455,138
181,146
2,457,092
329,363
10,063,256
9,181,474
Noncurrent assets
Capital assets:
Machinery/fumiture/equipment
4,994,826
218,399
4,942,475
4,254,034
14,409,734
12,798,021
Less accumulated depreciation
(3,350,335)
(108,633)
(2,931,564)
(2,569,590)
(8,960,122)
(8,309,082)
TOTAL NONCURRENT ASSETS
- 1,644,491
109,766
2,010,911
1,684,444
5,449,612
4,488,939
TOTAL ASSETS
4,640,517 4,099,629
290,912
4,468,003
2,013,807
15,512,868
13,670,413
LIABILITIES
Current liabilities:
Vouchers/payrollpayable
14,969 137,490
14,769
16,971
32,179
216,378
153,875
Deposits Payable
- -
-
-
500
500
500
Compensated absences payable
40,618
1,661
126
42,405
80,566
TOTAL CURRENT LIABILITIES
14,969
178A 08
14,769
18,632
32,805
259,283
234,941
TOTAL LIABILITIES
14,969
178,108
14,769
18,632
32,805
259,283
234,941
NET ASSETS
Invested in capital assets
-
1,644,491
109,766
2,010,911
1,684,444
5,449,612
4,488,938
- --Unrestricted-
4;6-25,548--
- 3i2-77,030 -
-166,377-
-2;438;459--
-296,559-
- 9;803;973----8,946,534
-
TOTAL NET ASSETS
$ 4,625,548 $
3,921,521 $
276,143
$ 4,449,370 $
1,981,003
$ 15,253,595
$ 13,435,472
City of Federal Way /75
OPERATING REVENUES:
Service charges and fees
Miscellaneous
TOTAL OPERATING REVENUES
OPERATING EXPENSES
Personal services
Materials and supplies
Services and charges
Intergovernmental
Insurance
Claims
Depreciation
TOTAL OPERATING EXPENSES
OPERATING INCOME (LOSS)
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES
IN FUND NET ASSETS
For the Year Ended December 31, 2005
Risk Information Support Fleet and Buildings and Comparative Totals
Management Systems Services Equipment Furnishings 2005 2004
$ 1,092,285 $
1,474,181 $
159,035 $ 1,090,033 $
530,342 $ 4,345,876 $
4,352,773
105,845
11.683
2,365 -
- 119,893
25.373
1,198,130
1,485,864
161,400 1,090,033
530,342 4,465,769
4,378,146
NON -OPERATING REVENUES (EXPENSES)
-
693,168
- 35,515
34,694
763,377
696,519
304
49,730
21,269 294,465
28,909
394,677
361,331
428,618
201,371
101,301 285,843
380,821
1,397,954
1,524,300
-
78,106
- 98
4,507
82,711
95,435
256,411
-
- -
-
256,411
357,237
113,290
-.
- -
-
113,290
141,615
-
408,422
32,020 528,805
249,968
1,219,215
1,175,079
798,623 1,430.797 154,590 1,144,726 698,899 4,227.635 4,351,516
399,507 55,067 6,810 (54,693) (168,557) 238,134 26,630
Interest income
88,559
73,700
4,446
74,399
3,883
244,987
93,019
Gains/losses from disposal of fixed assets
-
-
-
(59,359)
2,000
(57,359)
(5.829)
TOTAL NON -OPERATING
REVENUES NET OF EXPENSES
88,559
73,700
4,446
15,040
5,883
197,628
87,190
INCOME (LOSS) BEFORE
CONTRIBUTIONS & TRANSFERS
488,066
128,767
11,256
(39,653)
(162,674)
425,762
113,820
Transfers in
-
311,674
-
99,967
100,000
511,641
-
Transfers out
(13,263)
-
(8,000)
-
(21,263)
(13,107)
Capital contributions
-
-
-
77,953
824.020
901,973
176,928
CHANGE IN NET ASSETS
474,803
440,441
11,256
130,267
761,346
1,818,113
277,641
TOTAL NET ASSETS, BEGINNING
4,150,745
3,481,080
264,887
4,319,103
1,219,657
13,435,472
13,157,831
TOTAL NET ASSETS, ENDING
$ 4,625,548 $
3,921,521 $
276,143 $
4,449,370 $
1,981,003 $
15,253,585 $
13,435,472
City of Federal Way /76
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2005
Risk
Information
Support
Fleet and
Buildings and
Comparative Totals
Management
Svstcros
Services
Equipment
Furnishings
2005
2004
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from users
S 1,117,285
S 1,474,181
S 159,035
S 1,090,033
S 530,342 S
4,370,876 S
4,327,773
Cash payments to suppliers for goods and services
(462,185)
(155,638)
(120,011)
(580,287)
(412,007)
(1,730,128)
(2,313,077)
Cash payments to employees
-
(729,930)
-
(33,990)
(34,568)
(798,488)
(685,975)
Cash payments to claimants and insurance
(369,701)
(369,701)
(141,615)
Cash payments to other gvts for goods and services
-
(78,106
(98)
(4,507)
(82,711)
Other operating receipts
105,845
11,683
2,365
-
-
119.893
25,373
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES
391,244
522,190
41.389
475,658
79,260
1.509,741
931,894
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers in (out)
(13,263) 311,674
91,967
100,000
490,378
(13,107)
NET CASH PROVIDED (USED) BY
NONCAPITAL FINANCING ACTIVITIES
(13,263) 311,674
- 91,967
100,000
490,378
(13,107)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition ofcapital assets
- (629,429
(55,877) (666,635)
-
(],351,94])
(877,426)
Cash contributions for capital acquisitions
-
-
-
m
158,244
Proceeds from sale of fixed assets
14,667
2,000
16,667
26,572
NET CASH PROVIDED (USED) FOR CAPITAL
AND RELATED FINANCING ACTIVITIES
(629,429)
(55,877) (651,968)
2,000
(1,335,274)
(692,610)
CASH FLOWS FROM INVESTING ACTIVITIES
Receipts of interest
85.449
71,564
4,318
69549
3,774
234,654
94,926
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES
85,449
71,564
4,318
69,549
3,774
234,654
94,926
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS
463,430
275,999
(10,170)
(14,794)
185,034
899,499
601,688
CASH & CASH EQUIVALENTS, JANUARY 1
4.172.494
2,175,574
186,058
2,468,468
144.136
9,146,730
8,545,042
CASH & CASH EQUIVALENTS, DECEMBER 31
4,635,924
2,451,573
175,898
2,453,674
329.170
10,046,229
9,146,730
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Operating income
399,507
55,067
6,810
(54,693)
(168,557)
238,134
26,630
Adjustments to reconcile operating income to
net cash provided (used) by operating activities:
Depreciation expense
408,422
32,020
528,805
249,968
1,219,215
1,175,079
(Increase)decreasein accounts receivable
25,000
-
-
-
-
25,000
(25,000)
(Increasc)decreasein prepaid insurance/postagc
-
_
_
_
(Increase)decrease in due from other funds
(Increase)decrease in due from others
-
_
_
_
_
Increase(dccrease) in vouchers/accounts payable
(33,263)
95,463
2,559
21
(2,277)
62,503
25,226
Increase(decrease) in claims payable
-
_
_
Increase(decrease) in due to other funds
Incrcase(decrease) in due to other governments
Increasc(decrease) in deposits payable
]ncrease(decreasc) in accrued payroll/
_
Increase(decreasc) compensated absences payable
-
(36,762)
-
1,525
126
(35,111)
10,544
Inerease(dccrease) in deposits payable
-
-
_
_
-
Total Adjustments
(8,263)
467,123
34,579
530,351
247,817
1,271,607
1,185,849
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES
S 391,244 S
522,190 S
41,389 S
475,658 S
79,260 S
1,509,741 S
1,212,479
Noncash investing, capital, and financing activities:
Other Contributions ofcapital assets
$ - S
S
- S
77,953 S
824,020 S
901,973 S
111,055
Federal Way / 7 7
Capital Assets Used in the Operation
of Governmental Funds
Chty of FederaI Way / 78
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
COMPARATIVE SCHEDULE BY SOURCE
December 31, 2005 and 2004
GOVERNMENTAL FUNDS CAPITAL ASSETS
Land
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Construction in progress
TOTAL GOVERNMENTAL FUNDS CAPITAL ASSETS
2005 2004
$ 37,261,732 $ 37,105,200
15,564,801
1,895,076
16,549,392
16,549,392
184,000
184,000
3,012,313
711,522
24,175,997
34,676,530
96,748,235 91,121,720
INVESTMENTS IN GOVERNMENTAL FUNDS CAPITAL ASSETS BY SOURCE:
General Fund 20,735,705 6,909,448
Special Revenue Funds 2,528,770 2,528,770
Capital Project Funds 63,763,958 71,963,700
Donations 9,719,802 9,719,802
TOTAL GOVERNMENTAL FUNDS CAPITAL ASSETS $ 96,748,235 $ 91,121,720
This schedule presents only the historical cost of capital asset balances (no depreciation expenses) related to
governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the
above amounts. Generally, the capital assets of the internal service funds are included as governmental
activities in the statement of net assets.
City of Federal Way / 7 9
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE BY FUNCTION AND ACTIVITY
December 31.2005
Improvements Machinery Construction
Other than and in Comparative Totals
Function and Activity Land Buildings Buildings Equipment Infrastructure Progress 2005 2004
GENERAL GOVERNMENT
Miscellaneous general government $ 6,550,049 $ 15,059,966 $ 19,973 $ 184,000
TOTAL GENERAL GOVERNMEN 6,550,049 15,059,966 19,973 184,000
CULTURE AND RECREATION 30,71 1,683 $ 504,835 16,529,419
TOTAL CULTURE & RECREATION 30,711,683 504,835 16,529,419
TRANSPORTATION
Streets and traffic
TOTAL TRANSPORTATION
$ - $ 21,813,989 $ 21,485,174
- 21,813,988 21,485,174
8,091,545 55,837,482 53.929,492
8,091,545 55,837,482 53,929,492
S 3,012,313 16,084,452 19,096.765 15.707,054
3,012,313 16,084,452 19,096,765 15,707,054
TOTAL GENERAL FIXED
ASSETS BY FUNCTION $ 37,261,732 $ 15,564,801 $ 16,549,392 $ 184,000 $ 3,012,313 $ 24,175,997 $ 96,748,235 $ 91,121,720
This schedule presents only the historical cost of capital asset balances (no depreciation expenses) related to
governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the
above amounts. Generally, the capital assets of the internal service funds are included as governmental
activities in the statement of net assets.
City of Federal Way 180
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITTY
For the Year Ended December 31, 2005
GENERAL GOVERNMENT
Miscellaneous general government
TOTAL GENERAL GOVERNMENT
CULTURE AND RECREATION
TOTAL CULTURE AND RECREATION
TRANSPORTATION
Streets and traffic
TOTAL TRANSPORTATION
Governmental
Governmental
Funds
Funds
Capital Assets
Capital Assets
l/1/2005 Additions
Deductions 12/31/2005
S 7_ 1,495,174 $ 328,814 $ $ 21,813,988
21,485,174 328,814 21,813,988
53.929.492 3,298,231 1,390,241 55,837,482
53,929,492 3,298,231 1,390,241 55,837,482
15,707,054 3.389,711 19,096,765
15,707,054 3,389,711 - 19,096,765
TOTAL GENERAL FIXED ASSETS $ 91,121,720 $ 7,016,756 $ 2,780,482 $ 96,748,235
This schedule presents only the historical cost of capital asset balances (no depreciation expenses) related to
governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the
above amounts. Generally, the capital assets of the internal service funds are included as governmental
activities in the statement of net assets.
City of Federal Way / 83
SCHEDULEI
NET ASSETS BY COMPONENT
Last Three Fiscal Years
2003 2004 2005
Governmental activities
Invested in capital assets, net of related debt $
43,162,298
$ 60,746,134
$ 70,267,480
Restricted
37,806,176
37,262,541
45,017,742
Unrestricted
15,686,213
11,052,383
13,163,707
Total governmental activities net assets
96,654,687
109,061,058
128,448,929
Business -type activities
Invested in capital assets, net of related debt
39,559,494
41,735,500
42,294,741
Restricted
14,148
20,289
18,880
Unrestricted
7,794,729
7,032,804
7,206,807
Total business -type activities net assets
47,368,371
48,788,593
49,520,428
Primary government
Invested in capital assets, net of related debt
82,721,792
102,481,634
112,562,221
Restricted
37,820,324
37,282,830
45,036,622
Unrestricted
23,480,942
18,085,187
20,370,514
Total primary government net assets
$ 144,023,058
$ 157,849,651
$ 177,969,357
Federal Way / 84
Revenues:
Program revenues:
Charges for services
Oper grants/contrib
Capital grants/contrib
General revenues:
Property tax
Sales tax
Other taxes
Other
Total Revenue
Expenses:
General government
Security of Persons/Prop
Transportation
Physical environment
Economic environment
Health and human svcs
Culture and recreation
Interest on long-term debt
Surface Water Mgmt
Dumas Bay Center
Total Expenses
Increase in net assets
before transfers
Transfers
Increase in net assets
Net assets • beginning
Net assets -ending
SCHEDULE2
CHANAGES IN NET ASSETS
Last Three Fiscal Years
Governmental Activities
Business -Type Activities
Total
2005
2004
2003
2005
2004
2003
2005
2004
2003
$ 9,935,656
$ 9,413,965
$ 6,746,303
$ 4,100,623
$ 4,249,020
$ 4,041,063
$ 14,036,279
$ 13,662,985
$ 10,787,366
1,228,979
32,415
360,000
-
535.645
168,555
1,228,979
568,060
528,555
4,250,635
7,214,776
10,069,756
478,030
757,578
4,250,635
7,692,806
10,827,334
8,442,172
8,121,088
8,200,955
-
-
8,442,172
8,121,088
8,200,955
13,123,518
10,546,218
10,547,534
-
13,123,518
10,546,218
10,547,534
14,732,550
13,842,322
13,522,836
14,732,550
13,842,322
13,522,836
5.99T,384
1.761,036
3.791.345
319,432
116,634
141.980
6,316.816
1.877.670
3,933,325
57.710,894
50,931,820
63.238.729
4,420,055
5,379,329
5,109,176
62,130,949
56,311,149
58,347,905
5,539,682
6,237,785
5,601,311
-
-
5,539,682
6,237,785
5,601,311
16, 825,123
17,374,845
15,597,612
16,825,123
17, 374, 845
15,597, 612
5,451.324
4,098,790
5,389,975
5,451,324
4,098,790
5,389,975
322,151
295,537
351,023
-
322.151
295,537
351,023
3,095,391
2,953,073
2,923,756
-
3,095.391
2,953,073
2,923,756
631,133
683,804
607,199
-
-
631.133
683,804
607,199
4,789,920
4,914,348
4,455,865
-
-
4,789,920
4,914,348
4,455,865
1,541,930
1,764,077
1,683,028
-
-
1,541,930
1,764.077
1,683,028
-
2,995,074
3,282,427
3,380,690
2,995,074
3,282,427
3,380,690
-
819,515
879,870
935,422
819.515
879.870
935.422
38.196,654
36,322,259
36,609.769
3,814,589
4,162,297
4,316.112
42,011.243
42 484.556
40.925,881
19,514,240
12,609,561
16,628,960
605.466
1,217,032
793,064
20,119,706
13,826,593
17,422,024
(126,369)
(203,190)
(116,813)
126,369
203,190
116,813
-
-
-
19,387,871
12,406,371
16,512,147
731,835
1,420,222
909,877
20,119,706
13,826,593
17,422,024
109,061,058
96.654,687
80,142,540
48,788.593
47,368,371
46,458,493
157,849,651
144,023,058
126.601.033
5128.448,929
$ 109,061,058
$ 96.654,687
$ 49,520,428
$ 48,788.593
$ 47.368.371
5777,969,357
$157,849,651
$144.023,058
City of Federal Way / 85
SCHEDULE3
GOVERNMENT -WIDE REVENUES BY SOURCE AND EXPENDITURES BY FUNCTION
Last Three Fiscal Years
Program Revenues
Charges for Services
Operating Grants and Contributions
Capital Grants and Contributions
General revenues
Property tax
Sales tax
Othertaxes
Other revenue
Unrestricted Grants & Contributions
Investment Earnings
Disposition of capital assets
Total Revenues
Expenses/Expenditures
General Government
Security of Persons & Property
Transportation
Physical Environment
Economic Environment
Health
Culture & Recreation
Interest on long-term debt
Surface Water Management
Dumas Bay Centre
Total Expenses/Expenditures
2003 2004 2005
$ 12,459,591
528,555
10,827,334
8,200,955
10,547,534
13,522,836
2,261,100
$ 13,662,985
568,060
7,692,806
8,121,088
10,546,218
13,842,322
1,877,670
$ 14,036,279
1,228,979
4,250,635
8,442,172
13,123,518
14,732,550
5,997,384
$ 58,347,905
$ 56,311,149
$ 61,811,517
$ 5,601,311
$ 6,304,256
$ 5,539,682
15,597,612
17,374,845
16,825,123
5,389,975
4,098,790
5,451,324
351,023
295,537
322,151
2,923,756
2,953,073
3,095,391
607,199
683,804
631,133
4,455,865
4,914,348
4,789,920
1,683,028
1,764,077
1,541,930
3,380,690
3,282,428
2,995,074
935,422
879.870
819,515
$ 40,925,881
$ 42,551,028
$ 42,011,243
of Federal Way / 86
General fund
Reserved
Unreserved
Total general fund
All Other Governmental Funds
Resei ved
Unreserved, reported in:
Special revenue funds
Capital projects funds
Debt service funds
Total all other governmental funds
SCHEDULE 4
FUND BALANCES, GOVERNMENTAL FUNDS,
Last Three Fiscal Years
2003
2004
2005
$ 430,890
$
187,011
$
14,510
7,578,723
2,658,031
4,522,705
$ 8,009,613
$
2,845,042
$
4,537,215
$ 278,130
$
180,82b
$
3,343,606
1,578,817
1,740,228
1,652,622
33,324,511
32,542,775
39,805,812
2,599,653
2,826,228
-
$ 37,781,111
$
37,290,056
$
44,802,040
City of Federal Way / 87
SCHEDULE 5
CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS
Last Three Fiscal Years
2003
2004
2005
Revenues
Taxes $
32,022,334
$ 32,553,302 $
36,310,754
Licenses, fees and permits
1,000,250
1,235,039
2,247,651
Intergovemmental
12,313,459
10,111,537
5,479,614
Charges for services
3,965,992
4,200,528
4,927,163
Development Fees
2,565,215
3,167,605
2,040,378
Fines and Forfeitures
887,071
810,793
720,464
Investment earnings
701,311
744,435
1,557,935
Other revenues
1,093,109
751.025
1,065,664
Total revenues
54,548,741
53,574,264
54,349,623
Expenditures
General government
5,492,123
6,107,564
5,462,633
Security of persons and property
15,463,833
16,982,135
16,988,412
Transportation
5,358,543
4,788,954
5,080,577
Physical Environment
351,456
289,921
322,151
Economic Environment
2,883,079
2,944,584
3,119,831
Health
603,184
679,655
634,061
Culture and Recreation
3,507,392
3,927,933
3,859,465
Debt Service
Principal
14,159,881
3,768,044
2,933,231
Interest/fiscal charges/admin fees
1,703,165
1,764,077
1,518,384
Capital Outlay
22,779,620
17,609,080
8.228,486
Total expenditures
72,302,276
58,861,947
48,147,231
Excess of revenues over
(under) expenditures
(17,753,535)
(5,287,683)
6,202,392
Other Financing Sources (Uses)
Transfers in
21,037,023
15,615,639
15,650,064
Transfers out
(20,390,141)
(15,983,582)
(16,266,811)
GO bond proceeds
21,168,599
-
Sale of capital assets
209.527
3,618,512
Total other financing sources (uses)
22,025,008
(367,943)
3,001,765
Net change in fund balances
$ 4,271,473
$ (5,655,626)
$ 9,204,157
Debt service as a percentage of
noncapital expenditures
47.1%
15.5%
12.6%
City of Federal Way / 88
SCHEDULE6
ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY'
Last Ten Fiscal Years
Total City
Percent
Fiscal
Personal
State Public
Direct
Increase
Year
Real Property
Property
Service Property
Total
Tax Rate
(Decrease)
1996
3,750,745,563
141,394,338
86,053,600
3,978,193,501
1.56
2.1%
1997
3,961,545,010
155,884,327
79,303,838
4,196,733,175
1.56
5.5%
1998
4,152,466,303
158,019,169
76,348,173
4,386,833,645
1.55
4.5%
1999
4,490,661,284
171,187,056
90,322,059
4,752,170,399
1.53
8.3%
2000
4,932,362,526
187,812,046
93,021,743
5,213,196,315
1.49
9.7%
2001
5,322,237,420
226,854,474
101,339,376
5,650,431,270
1.41
8.4%
2002
5,604,164,978
227,961,155
107,761,209
5,939,887,342
1.38
5.1%
2003
5,992,899,727
193,519,890
105,924,009
6,292,343,626
1.34
5.9%
2004
6,218,643,830
181,366,723
102,350,559
6,502,361,112
1.30
3.3%
2005
6,937,653,592
225,118,781
89,220,328
7,251,992,701
1.27
11.5%
Real, personal, and state public service property has 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 $29,883,105 and prior year omits of
$920,289 yielding a regular levy value of $6,471,557,718. These assessed valuations are the basis for the
following year's tax levy.
Source: King County Assessors Office.
City of Federal Way /89
SCHEDULE 7
PROPERTY TAX RATES AND LEVIES, DIRECT AND OVERLAPPING GOVERNMENTS
For the Last Ten Fiscal Years
City
Direct
Rates
Overlapping Rates
City of
Federal Way
Emergency
Fiscal
Federal
School
King
Washington
Green River Port of
Fire District
Medical
Year
Way
Dislrlet 9210
County
State
Flood Zone Seattle
#39
Library
Services
Total
TAX RATES PER $1,000 OF ASSESSED VALUATION
1996
1.56
526
221
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
1.53
4.56
1.77
3.36
0.05 0.24
1.50
0.59
0.29
13.89
2000
1.49
4.42
169
3.30
0.05 0.22
1.50
0.59
0.27
13.53
2001
1.41
4.44
1.55
3.15
0.05 0.19
1.45
0.56
0.25
13.04
2002
1.38
4.16
1.45
2.99
0.05 0.19
1.50
0.53
0.25
12.50
2003
1.34
4.28
1.35
2.90
0.05 0.26
1.50
0.54
0.24
12.46
2004
1.30
4.20
1.43
2.76
0.05 0.25
1.50
0.53
0.24
12.26
2005
1.27
4.30
1.38
2.69
0.05 0.25
1.50
0.53
0.23
12.21
DETAIL OF TAX RATES FOR 2004
Basic
Rate 1.27 - 1.12 2.69 0.05 0.25 1.50 0.48 0.23 7.60
Voted
Rate - 4.30 0.26 - - - - 0.05 - 4.61
TAX LEVIES
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
35,646,835
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
8,596,565
54,618,346
45,070,501
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
2004
8,117,874
38,051,680
335,853,716
647,490,235
873,826
59.657,092
12,467,237
74,860,405
55,704,127
1,233,076,192
2005
8,248,919
40,744,820
342,395,871
666,827,056
901,356
62,779,505
13,062,586
78,374,467
57,476,670
1,270,811,250
Source: King County Assessor's Office and King County Department of Finance.
City of Federal Way / 90
SCHEDULE8
PRINCIPAL TAXPAYERS
Current Year and Nine Years Ago
Taxpayer
Type of Business
Assessed
Valuation
2005
Rank
% of Total
Assessed
Valuation (A)
Assessed
Valuation
1996
Rank
% of Total
Assessed
Valuation (A)
Weyerhaeuser Real Estate Co.
Real Estate
$146,430,484
1
2.02%
$151,654,845
1
3.83%
Puget Sound Energy
Electric/Gas
53,156,968
2
0.73%
34,291,345
4
0.87%
Steadfast Commons Mall
Shopping Center
43,436,374
3
0.60%
46,827,710
2
1.18%
Harsch Investment Properties (Ross Plaza)
Shopping Center
41,336,200
4
0.57%
12,188,600
5
0.31%
Red Mortgage Capital Inc
Finance
35,994,000
5
0.50%
-
Qwest Corporation Inc.
Communicationslfelephone
25,388,793
6
0.35%
36,206,075
3
0.91%
Fred Meyer
Retailer/ Wholesaler
20,501,217
7
0.28%
-
BRE Properties
Real Estate Management
17,564,562
8
0.24%
Campus Business Parks LLC
Real Estate Invest/Holding
16,761,400
9
0.23%
-
Virginia Mason Clinic
Medical Services
16,400,604
10
0.23%
9,215,000
8
0.23%
Costco
Retailer/Wholesaler
15,066,665
11
0.21%
8,598,979
9
0.22%
Wells Fargo
Finance
13,561,173
12
0.19%
-
Apple Hospitality Five Inc
10,874,200
13
0.15%
-
Quadrant Corporation
Real Estate Management
8,097,600
14
0.11%
8,281,775
10
0.21%
Inter Co-op USA/Manpower
Temporary Service
0.00%
10,026,500
6
0.25%
Gateway Center Retail
Shopping Center
0.00%
9,665,300
7
0.24%
$464,570,240
6.41%
$326,956,129
8.25%
City of Federal Way / 91
SCHEDULE 9
PROPERTY TAX LEVIES AND COLLECTIONS
For the Last Ten Fiscal Years
Ratio of
Total
Ratio of
Percent of
Delinquent
Total Tax
Outstanding
Delinquent
Fiscal
Total
Current Tax
Current Tax
Tax
Total Tax
Collections to
Delinquent
Taxes to
Year
Tax Levy
Collections
Collected
Collections
Collections
Total Tax Levy
Taxes
Total Tax Levy
1996
6,075,765
5,918,549
97.4%
129,237
6,047,786
99.5%
197,005
3.2%
1997
6,180,735
6,041,927
97.8%
125,222
6,167,149
99.8%
198,240
3.2%
1998
6,474,762
6,339,081
97.9%
138,180
6,477,262
100.0%
187,806
2.9%
1999
6,667,028
6,510,516
97.7%
135,953
6,646,469
99.7%
197,059
3.0%
2000
7,030,723
6,858,636
97.6%
131,554
6,990,190
99.4%
249,607
3.6%
2001
7,305,894
7,107,918
97.3%
145,498
7,253,416
99.3%
302,374
4.1%
2002
7,700,412
7,471,822
97.0%
163,181
7,635,003
99.2%
342,855
4.5%
2003
7,912,598
7,740,741
97.8%
243,165
7,983,906
100.9%
269,323
3.4%
2004
8,119,460
7,945,659
97.9%
184,756
7,983,906
98.3%
225,762
2.8%
2005
8,248,919
8,082,340
98.0%
160,685
8,436,579
102.3%
230,838
2.8%
Sources: Most of data has been derived from the "Annual Tax Receivable Summary" prepared by the King County
Finance Department.
Federal Way / 92
Governmental Activities
SCHEDULE 10
RATIO OF OUTSTANDING DEBT BY TYPE
For the Last Ten Fiscal Years
Business Type Activities
Percentage
Fiscal
General Obligation
Certificates of
Public Works
Total Primary
of Personal
Year
Bonds
Participation
Trust Fund Loan
Government
Income (b)
Per Capita (b)
1996
$ 22,575,000
$ 2,625,000
$ 1,387,608
$ 26,587,608
0.065%
$ 352
1997
37,665,000
2,315,000
1,466,063
41,446,063
0.062%
546
1998
35,465,000
1,990,000
1,379,824
38,834,824
0.059%
506
1999
33,110,000
981,898
1,293,585
35,385,483
0.081%
460
2000
33,196,600
688,046
3,682,352
37,566,998
0.078%
451
2001
30,515,000
382,423
3,465,849
34,363,272
0.065%
110
2002
27,682,000
59,936
2,668,907
30,410,843
0.074%
363
2003
34,710,026
20,490
2,486,548
37,217,064
0.060%
446
2004
30,802,892
-
2,304,189
33,107,081
0.068%
386
2005
27,701,761
2,121,830
29,823,591
0.075%
348
Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements.
See Schedule 15 for personal income and population data. These ratios are calculated using personal income for the prior calendar year
[b] Per capita income information for the years 2001, 2002 and 2003 are based on 2000 U.S.
Census report since these infomation is available for individual cities only every ten years when the census is done.
City of Federal Way / 93
SCHEDULE 11
RATIO OF NET GENERAL OBLIGATION BONDED DEBT TO ASSESSED VALUE
AND NET GENERAL OBLIGATION BONDED DEBT PER CAPITA
For the Last Ten Fiscal Years
Ratio of
(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
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
6,292,343,626
29,823,591
2,599,653
27,223,938
0.0043
326.04
2004
86,320
6,418,941,601
33,113,539
2,880,857
30,232,682
0.0047
350.24
2005
85,800
7,251,992,701
29,823,591
2,886,785
26,936,806
0.0037
313.95
(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 $7,187,872,448 has been reduced by
senior citizen exemptions of $44,728,112 and prior year omits of $19,392,141 to arrive at taxable assessed valuation.
(C) Includes Public Works Trust Fund Loans issued in 1994, 1996, 1997, and 2000;
general obligation bonds issued in 1997, 2000 and 2003; and loan assumption in 2003.
City of Federal Way / 94
SCHEDULE12
COMPUTATION OF DIRECT AND OVERLAPPING DEBT
December 31, 2005
Jurisdiction
King County
Port of Seattle
Federal Way School District #210
Library
Total Overlapping Debt
(A)
(B)
Gross General
Percentage
Obligation Debt
Applicable to
Outstanding
Federal Way
$ 912,991,000
2.61%
380,225,000
2.61 %
121,570,000
67.66%
86,295,000
6.02%
1,501,081,000
CITY OF FEDERAL WAY 29,823,591 (C) 100.00%
Total Direct and Overlapping Debt $ 1,530,904,591
(A) Total general obligation bonds outstanding at the year end, exclusive of refunded bonds.
Source is King County Department of Finance.
(B) Determined by ratio of assessed valuation of property subject to taxation in overlapping unit to
valuation of property subject to taxation in reporting unit.
(C) Includes Public Works Trust Fund Loans issued in 1994, 1996, 1997, and 2000;
general obligation bonds issued in 1997, 2000 and 2003; and loan assumption in 2003.
Amount
Applicable to
Federal Way
$ 23,850,206
9,932,677
82,248,439
5,197,638
121,228,959
29,823,591
$ 151,052,550
City of Federal Way / 95
SCHEDULE13
COMPUTATION OF LIMITATION OF INDEBTEDNESS
December 31, 2005
General Debt Capacity
(Limited)
(Unlimited)
DESCRIPTION
Councilmanic
Excess Levy
Statutory debt limit:
(2004 AV=$6,502,361,112) (A)
1.50% AV @ 100%
$ 97,535,417
$ (97,535,417)
2 50% AV @ 100%
162,559,028
Add: Cash on hand for
debt redemption (B)
4,223,207
Less: Bonds and COPS outstanding
(27,701,762)
Remaining Debt Capacity
$ 74,056,862
$ 65,023,611
Total Remaining
"General" Capacity
$139,080.473_
Excess Levy Excess Levy
Open Space Utility Total Debt
and Park Purposes Capacity
162,559,028 162,559,028 487,677,084
4,223,207
(27,701,762)
$ 162,559,028 $ 162,559,028 $ 464,198,529
(A) This figure represents the City's final total taxable assessed valuation (AV) for 2004 which was used to determine the 2005 property tax levy
(B) Reflects ending fund balance in the Debt Service Fund and Utility Tax Fund as of December 31, 2005.
(C) Combined total for Councilmanic, Financing Lease, and Excess Levy capacities.
City of Federal Way / 96
SCHEDULE 14
RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL OBLIGATION
BONDED DEBT TO TOTAL GENERAL GOVERNMENTAL EXPENDITURES NET OF DEBT SERVICE EXPENSE
Ratio of
Debt Service
Total General
to General
Fiscal
Total Debt
Governmental
Governmental
Year
Principal
Interest'
Service
Expenditures
Expenditures
1996
432,280
1,278,552
1,710,832
28,840,930
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%
2004
3,080,677
1,796,791
4,877,468
40,610,863
12.0%
2005
3,100,546
1,531,364
4,631,910
40,108,790
11.5%
Excludes bond issuance and debt registration costs.
City of Federal Way / 97
SCHEDULE 15
DEMOGRAPHIC STATISTICS
Education
Level in Years
Fiscal Per Capita Median of Formal School Unemployment
Year Population Income [C] Age [C] Schooling Enrollment (A) Rate (B)
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%
2004
85,800
22,451
32.5
13.0
22,395
6.5%
2005
85,800
22,451
32.5
13.0
22,383
4.2%
(A) Includes public school enrollment. Kindergarten is included though not State mandated.
(B) 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
Seattle -Bellevue -Everett PMSA. The 2005 rate came from the State of Washington Employment Security Department for King Count.
[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 infomation 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.
City of Federal Way / 98
SCHEDULE16
PROPERTY VALUE, CONSTRUCTION AND BANK DEPOSITS
Commercial Construction (A)
Residential Construction (A)
Multi -Family Construction (A)
Value
Value
Value
Year
Permits
(In Thousands)
Permits (In Thousands)
Permits
(In Thousands)
1996
149
18,177
257 21,276
3
11,793
1997
169
9,704
367 27,952
10
12,749
1998
188
50,863
364 23,301
11
7,594
1999
180
43,359
374 26,229
5
16,167
2000
250
38,554
185 11,462
12
3,816
2001
291
59,384
166 7,914
6
1,790
2002
393
59,075
318 38,176
1
2003
240
25,695
290 37,775
1
1,042
2004
335
64,522
289 82,658
0
-
2005
289
124,985
591 111,504
0
(A)
Source:
Federal Way Community Development Department. Commercial construction
includes alteratic
includes alterations.
Other building -related permits (plumbing,
mechanical, fire alarm, etc.) nur
and valued at $3,927,265
have been excluded.
(B) Source: 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.
(C) Source: King County Assessor's Office. See Table 5 for further assessed value information.
City of Federal Way/99
SCHEDULE17
PRICIPAL EMPLOYERS
December 31. 2005
Number of
Taxpayer
Type of Business
Employees
FEDERAL WAY SCHOOL DIST #210
Education
3,150
WEYERHAEUSER COMPANY
Lumber Products
2,412
ST FRANCIS HOSPITAL
Medical Services
744
ENCHANTED PARKS INC
Amusement Center
639
US POSTAL SERVICE - BULK MAIL
Postal Service
626
WORLD VISION INC
Christian Relief Agency - Nonprofit
596
CITY OF FEDERAL WAY
Government Services
400
COSTCO WHOLESALE CORPORATION
Wholesale
293
VIRGINIA MASON FEDERAL WAY
Medical Services
235
WAL-MART STORE #2571
Retail
225
SEARS
Retail
205
HOME DEPOT #4703, THE
Retail
202
PRUDENTIAL NW REALTY ASSOCIATES LLC
Real Estate
200
FRED MEYER
Retail
195
WINCO FOODS #43
Retail
178
CHRISTIAN FAITH CENTER
Church
173
DEVRY UNIVERSITY
Education
167
TARGET
Retail
166
UNICCO SERVICE COMPANY
Miscellaneous Services
161
LIFE CARE CENTER OF FEDERAL WAY
Nursing Facility
160
HALLMARK MANOR
Nursing Facility
160
SOUTH KING FIRE & RESCUE
152
MACY'S
Retail
150
CAPITAL ONE SERVICES, INC
Financial Institution
150
AAA RESIDENTIAL SERVICES INC
Nursing Facility
150
GARDEN TERRACE ALZHEIMER'S CENTER
Nursing Facility
145
LOWE'S HIW INC
Retail
140
AVALON CARE CENTER - FEDERAL WAY LLC
Nursing Facility
135
PJ POCKETS CASINO
Casino
133
SAFEWAY STORE #1555
Retail
125
BROOKLAKE COMMUNITY CHURCH
Church
122
GROUP HEALTH -FW MEDICAL CENTER
Medical Services
120
BERGER/ABAM ENGINEERS
Miscellaneous Services
116
ALBERTSON'S #460
Retail
110
ALBERTSONS FOOD CENTER #496
Retail
110
LAKEHAVEN UTILITY DISTRICT - LAKE HAVEN CENTER Utility
105
FOUNDATION HOUSE AT FEDERAL WAY
Nursing Facility
105
BEST BUY #372
Retail
105
ORIGINAL ROADHOUSE GRILL
Restaurant
100
OLIVE GARDEN
Restaurant
99
METROPOLITAN MARKET #155
Retail Grocery
99
(A) 2004 assessed valuations for taxes collected in 2005. Total 2005 assessed valuation for the City is $7,251,992,701.
Source: King County Assessor - Principal Taxpayers.
City of Federal Way Business Licenses - Principal Employers - includes both full-time and part-time employees.
Federal Way / 100
SCHEDULE18
SALARIES AND SURETY BONDS OF PRINCIPAL OFFICIALS
DECEMBER 31, 2005
POSITION
MAYOR
COUNCILMEMBERS
POSITION
CITY MANAGER
DIRECTOR - CITY ATTORNEY
CITY CLERK
COMMUNITY DEVELOPMENT DIRECTOR
MANAGEMENT SERVICES DIRECTOR
PARKS, RECREATION AND CULTURAL
SERVICES DIRECTOR
PUBLIC SAFETY DIRECTOR
PUBLIC WORKS DIRECTOR
LEGISLATIVE BODY
EMPLOYEE ANNUAL SALARY
DEAN MCCOLGAN
$16,500
JEANNE BURBIDGE
$12,900
JACK DOVEY
$12,900
ERIC FAISON
$12,900
JIM FERRELL
$12,900
LINDA KOCHMAR
$12,900
MICHAEL PARK
$12,900
ADMINISTRATIVE STAFF
EMPLOYEE ANNUAL SALARY
DAVID MOSELEY
PAT RICHARDSON
LAURA HATHAWAY
KATHY MCCLUNG
]WEN WANG
DONNA HANSON
ANNE KIRKPATRICK
CARY ROE
Negotiated
$89,292 - $112,956
$61,656 - $78,000
$89,292 - $112,956
$89,292 - $112,956
$89,292 - $112,956
$89,292 - $112,956
$89,292 - $112,956
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 / 101
SCHEDULE 19
MISCELLANEOUS STATISTICAL INFORMATION
DECEMBER 31. 2005
TYPE OF GOVERNMENT
Council - City Manager
ORGANIZATION STRUCTURE
Legislative Executive Administrative
Mayor 1 City Manager 6 Department Directors
7 Councilmembers
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 22.5 square miles including annexation.
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 34,559 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 85,800, of which 56,111 are registered voters. A total of 29,357 (est.) people are
employed within the City limits.
NUMBER OF CITY EMPLOYEES
During the year 2005, the City employed 282 full-time salaried, 19 part-time hourly, and 176 temporary employees. There were
112 commissioned police officers and 12 union lieutenants, and no uniformed firefighters. The Teamsters Union #763 represented
20 employees of Public Works Maintenance and Parks Maintenance and 9 employees of the Municipal Court, 28 employees were
represented by the PSSA (Police Support Services Association), and the Police Guild represented 92 Police Officers during 2005.
RECREATIONAL FACILITIES
32 Developed park sites covering 522.9 acres
21 Undeveloped park sites covering 543.5 acres (including open space)
33 Public tennis courts, 11 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 5.82 miles
OTHER CITY OWNED FACILITIES
1 New City Hall
1 Parks Maintenance Facility
1 Dumas Bay Centre
PUBLIC EDUCATION
ENROLLMENT COUNT
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
23 Elementary Schools
11,689
11.930
12,248
12,258
12,242
11,498
11,990
9.854
9,916
9,806
7 Middle Schools (incl. Public Academy)
4,838
4,979
4,956
4,994
5,013
5,331
5,509
5,458
5,476
5,271
5 High Schools
3,904
4,103
4,116
4,529
4,557
4,415
4,316
6,625
6,650
7,004
1 Internet Academy (K-12)
302
466
545
626
477
672
379
328
353
302
20.733
21.478
21,865
22,407
22,289
21,916
22,194
22,265
22,395
22,383
3,980 Staff members (including substitutes).
City of Federal Way / 102
SCHEDULE 19 (continued)
MISCELLANEOUS STATISTICAL INFORMATION
DECEMBER 31, 2005
MILES OF STREET
Streets (Center Line Miles)..... ....._...._ ............ _............ 249.22 miles
SIGNALS/STREET LIGHTS
Signals WSDOT-owned and maintained ..............
4
Signals City -owned and King County -maintained...
71
Street lights City -owned and maintained......
1050
Street lights City -owned and PSE-maintained...
644
Street lights PSE-owned and maintained..........
1975
LOCAL TAXES ON BUSINESSES
Franchise Tax - Cable TV_ ... ____ ....... -----------
5.00%
Gambling Taxes:
Bingo/Raffles...............................................
5.00 %
Amusement/Games ....................................
2.00 %
Punchboard/Pull Tabs .... ........ ..............
5.00%
Cardrooms ............................. . .. ......•------
20.00%
Local Sales Tax (Collected by the State) ...............
8.80%
POLICE INFORMATION
Offenses:
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Forcible Rape (including attempts)
73
37
58
53
43
49
34
50
50
55
Robbery
188
154
153
115
128
124
108
125
121
153
Criminal Homicide
3
2
2
4
7
4
4
2
0
7
Aggravated Assault
171
121
159
167
158
141
120
120
109
101
Vehicle Theft
807
746
761
808
849
1179
1206
1204
1118
1573
Burglary (commercial & residential)
965
643
648
573
533
521
677
672
759
800
Larceny
4086
3901
3393
3097
3072
3516
3347
3145
3257
3786
Arson
35
24
39
38
36
17
29
14
23
25
Citations:
Traffic
8,660
11,196
13,382
10,890
13,340
12,767
13,439
18,411
13,219
11,402
FIRE AND EMERGENCY MEDICAL RESPONSE INFORMATION
Fire and Emergency Medical Response information reflects the greater Federal
Way area,
which is served by South King Fire & Rescue.
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Fire and Other Responses
2,018
1,985
2,357
2,009
2,278
1,920
3,055
3,117
2,896
3,210
Emergency Medical
6,007
5,853
6,589
6,870
7,193
7,240
7,422
8,042
8,263
8,636
_RUILDIN.G_RELATED.P-ERMITS_&_VALUES -- _ .
-1-996
---1997-
- 1998
1999
2000--
-2001-
---2002
-2003--2004-
---2005--
--
Building Permits
422
576
582
573
447
463
712
531
624
880
Estimated Value (In Millions $)
$51.3
$53.3
$81.9
$85.8
$53.8
$69.1
$94.8
$64.5
105.4
236.5
Other Building Related Permits
656
864
821
1007
1546
1693
2024
1779
1958
2705
Estimated Value (In Millions $)
$37.6
$18.5
$27.0
$11.0
$1.5
$2.3
$2.5
$2.4 $
2.5 $
3.9
TAXABLE SALES (in millions)
2005
1996
1997
1998
1999
2000
2001
2002
2003
2004
Retail Sales
$956.8
$978.9
$1,049.3
$1,137.0
$1,212.1
$1,220
$1,298
$1,237
$1,239
$1,331
Real Estate Sales
$305.0
$375.4
$438.8
$487.6
$429.9
$400
$503
$570
$616
$939