2006 Annual Comprehensive Financial Report( 06-002)boo a . o0a
City of Federal Way, Washington
COMPREHENSIVE
ANNUAL FINANCIAL
REPORT
Year Ended December 31, 2006
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 308`h Street and 320th Street, a small
"downtown" developed with a general store, lumber yard, realty office, beauty parlor, feed store, and gas station. By
the end of the 1950s, the ten blocks between 308th and 320th Streets became the first roadside commercial district.
One of the more unique developments was Santa Faire, a family oriented theme park. New shopping areas were
added around the park, helping to create a "community focus" for the residents of the area.
As this commercial area developed, the rest of Federal Way was changing as well. The Boeing Company expanded
their operations in Renton and the Kent Valley and began advertising nationally for engineers. Those engineers in
turn began roaming the wooded acreage in Federal Way in search of housing. One of the earliest residential
developments was Marine Hills, built in 1958 overlooking Puget Sound. Weyerhaeuser, one of the early timber
companies, had large land holdings in the area and began to develop their land into high quality housing with
amenities like golf courses.
Weyerhaeuser's development company also began developing commercial property, creating the West Campus
business park. The plan was to integrate offices and businesses with lush landscaping. Though initially the corporate
office market was not strong, West Campus has grown almost to capacity, providing space for many civic buildings
such as City Hall, the police station, the area's major health care centers, and higher density housing.
Another major landmark in the area is SeaTac Mall, built in the mid-1970s on what was farmland south of 320th
Street. The Mall is one of the largest in South King County and is the anchor for retail development in the area. The
Mall was a result of population growth in the region and its location was determined by the 320th Street intersection
with Interstate 5. The Interstate supplanted Highway 99 as the main artery for commuter traffic in the County.
By the mid 1980s, South King County was growing quickly. Retail growth occurred along Highway 99, especially
at the 320th Street intersection. Roads and office space were developed to accommodate the increased growth.
Residential growth was also prominent, following plans developed by King County, with a large number of
apartment homes. The changes to the community, with increased housing and traffic, created a movement for greater
self-determination. In 1989, the citizens of this area voted for incorporation and the City of Federal Way was born,
incorporating on February 28, 1990.
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Year Ended December 31, 2006
Table of Contents
INTRODUCTORY SECTION
Page
Letterof Transmittal .................................................................................................................................. in
City Officials and Administrative Officers ..._._..__.. ....... ........................................................................ 1
CityFunctional Organization Chart .................... ............ :........... .................. ........::....::.:.:...... ::.: ..:..:....... 2
GFOACertificate of Achievement ....... .................................................. :.....:...-................. ._....................... 3
FINANCIAL SECTION
Independent Auditor's Report ................. ................................. .-------------••----- ._....---------------------------
Management's Discussion and Analysis .................. ......................... ... • . •. . -- ...............................
Basic Financial Statements:
Government -wide Financial Statements:
Statementof Net Assets ........................ --- ............. .............................................................
18
Statement of Activities .......................... ................. ............ ....................................................
19
Fund Financial Statements:
Balance Sheet — Govemmental Funds....................................................................................
20
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 ........................
24
Statement of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual
GeneralFund......................................................................................
25
StreetFund...... ...... ...... ...... .......................... . .............. ........... ---- --- — -----------
26
UtilityTax Fund..................................................................................
27
Statement of Net Assets — Proprietary Funds ...................................... ..:_................................. .....-..
28
Statement of Revenues, Expenses and Changes in Fund Net Assets — Proprietary Funds......
29
Statement of Cash Flows — Proprietary Funds._..................................................................._.
30
Notes to the Financial Statements.................................................................................................... 31
Combining and Individual Fund Statements and Schedules — Nonmajor Governmental Funds:
FundDescription....................................................... ......................................... ........ ................. ..-_. 59
CombiningBalance Sheet................................................................................................................ 61
Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........................ 65
Statement of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual
ArterialStreet Fund .......................................... ........................ ....... ........._........... ---- 69
Solid Waste & Recycling Fund ........................ :.-.
Hotel/Motel Lodging Tax Fund .......................... .:.....,,...... ....... .......... ........... ................ .. 71
Federal Way Community Center Fund .................. .......... ..........._....................._.............. 72
Paths & Trails Fund_.. ................ .. 73
Budget and Actual Fund Statement — Debt Service Fund
FundDescription................................................................._.,,..,...................................................... 75
Budgetand Actual ................................ . . . •..._._....................-_............................................ 76
Combining and Individual Fund Statements and Schedules — Internal Service Funds:
FundDescription............................................................................................................................. 77
Combining Statement of Net Assets.................................................................................................. 78
Combining Statement of Revenues, Expenditures and Changes in Fund Net Assets.... ................... 79
Combining Statement of Cash Flows .......................... 80
Capital Assets Used in the Operation of Governmental Funds:
Comparative Schedules by Source.................................................................................................. 82
Schedule by Function and Activity ............ :................................................................................ ..... 83
Schedule of Changes by Function and Activity ................ ....... ___ ..... ...... ............ ------- ............ ....... 84
STATISTICAL SECTION
NetAssets by Component......................................................................................................................
87
Changesin Net Assets...........................................................................................................................
88
Government -wide Revenues by Source and Expenditures by Function................... .................::..........
89
Fund Balances, Governmental Funds ........................._. ....... ...
90
Changes in Fund Balances, Governmental Funds..................................................................................
91
Assessed and Estimated Actual Value of Taxable Property ..................................................................
92
Property Rates and Levies, Direct and Overlapping Governments........................................................
93
PrincipalTaxpayers .................................... ............ ................. ............................ ........................... .........
94
Property Tax Levies and Collections.....................................................................................................
95
Ratio of Outstanding Debt by Type.... ......................................... __ .... __ ...........................
96
Ratio of General Obligation Bonded Debt to Assessed Value and
Net General Obligation Bonded Debt Per Capita....,........................................................
97
Computation of Direct and Overlapping Debt.......................................................................................
98
Computation of Limitation of Indebtedness...........................................................................................
99
Ratio of Annual Debt Service Expenditures for General Obligation Bonded Debt to
Total General Governmental Expenditures Net of Debt Service Expense ...........:............
100
DemographicStatistics..........................................................................................................................
101
PrincipalEmployers.... .... ...... .................... . ........... .......................... : ........... ...................... .......
102
Property Value, Construction and Bank Deposits.................................................................................
103
CapitalAssets by Function .......................................... ............... ............... ............................. :..............
104
Operating Indicators by Function............................................•......... ......_......... ..... .......... ........... .....
105
City Government Employees Full -Time Equivalent - History...............................................................
106
Salaries & Surety Bonds of Principal Officials......................................................................................
107
Miscellaneous Statistical Information ....................................... ........ ................ :........................ .........
108
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CITY OF
Federal Way
June 26, 2007
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,
2006 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. It was incorporated on
February 28, 1990, and is governed under the provisions of the Optional Municipal Code of the Revised Code of
Washington. Optional Code City status increases the City's operating authority by extending it to the powers of all four
city classifications which exist in Washington Law.
The City Council consists of seven council members, all of whom are elected at large by citizens of Federal Way to
serve four-year terms. 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.
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City services provided include: police protection, construction and maintenance of streets, building inspection,
municipal court services, jail services, planning and zoning, park services, emergency management services, surface
water management and general administration, including finance. Services for a land use hearing examiner are
contracted. The City continues to have 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 112001 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.
For the second consecutive year the county is experiencing sustained unemployment of less than 5%, returning to pre-
2001 levels. After three years of fitful growth, local business activity has surged in the last nine months, and shown
continued strength despite the absence of a strong expansion in the 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. For the last two years, however, non -farm employment growth in King County has
actually outpaced the rest of the state, 4.8 percent to 3.6 percent. Growth in 2005 was 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.
The remarkable strength in residential real estate appears to be finally running its course. Sales in August were at near
record levels, but by virtually every other measure — time on market, inventory, and number of competing offers — the
market is cooling. We expect a dramatic fall in sales over the next 18 months.
Steady growth is anticipated in 2007, with business investment continuing to offset slackening consumer demand.
Modest employment growth should continue, but at a slower pace that 2005 — 2006. Residential real estate and
construction, carried four 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 was up to
2.4%, before rising another 2.6% in the third quarter alone due to the aftermath of Hurricanes Katrina and Rita.
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 86,530 as of April 1, 2006. The City is
located on a plateau adjacent to Puget Sound in King County, eight miles north of downtown Tacoma and 25 miles
south of downtown Seattle. The City occupies approximately 22.5 square miles and is served by Interstate 5 and state
highways 99 and 509.
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In 2006 there were 34,789 housing units in Federal Way, an increase of approximately 0.7% over 2005. Of these units,
55.7% were single family homes, 40.6% multi -family units, and 3.7% 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 2006 is
estimated at 29,892. Major employers are; Weyerhaeuser, Federal Way School District, St. Francis Community
Hospital, Enchanted Parks, U.S. Postal Bulk Mail Center and World Vision.
Sales tax collected in 2006 total $12.40 million, and is above 2005 by $1.10 million. The retail sector of the local
economy is anchored by two areas; the first is South 348" and Pacific Highway 99 including the newly finished Wal-
Mart Super Center, Sportman's Warehouse, Costco, Lowe's Home Improvement Center, and Home Depot. The second
is The Commons regional mall including Target, TJ Max, Best Buys, and many other small businesses adjacent to the
area. According to a listing of businesses registered with the City of Federal Way and sorted by the Standard Industrial
Classification, the business economy appears to be configured as follows: retail trade 50.9%; services 18.7%;
construction 17.0%; wholesale trade 4.0%; transportation and public utilities 0.1%; information 4.3%, manufacturing
1.4%; government 0.3%, finance, insurance and real estate 2.9%, and other 0.4%.
In 2006, new improvements to real estate totaled $23.3 million or approximately 0.3% of the City's 2006 assessed
valuation. The total assessed value of taxable property in Federal Way was $8.0 billion, which is approximately 10.5%
higher than the 2005 assessed valuation of $7.3 billion. Real Estate sales increased 5.2% to approximately $988 million
in 2006 as compared to $939 million in 2005. A total of 787 building permits and 2,550 other building related permits
were issued in 2006. Estimated valuation was $150.8 million and $4.2 million, respectively. Significant building
permits include: Wal-Mart Super Center, Century Theaters, Lowes, Campus Point, East Campus Terrace Lot and Villa
Esperanza.
LONG-TERM PLANNING
The City's fiscal policy requires the City to prepare long-range projections for six years beyond the current budget
period. The projection extends current operations to the future to see if the services are sustainable and the magnitude
of, if any, future financing gaps. This glimpse into the future allows the City to proactively plan and implement
corrective measures over time to avoid sudden drastic changes in service levels or in revenue/tax policies. In addition,
the City's fiscal policy requires the City to balance its ongoing services with ongoing revenues.
MAJOR INITIATIVES AND ACCOMPLISHMENTS
The Parks and Recreation department completed construction on three major projects in 2006. The largest is the first
Community Center of its kind in the Puget Sound region and the first new construction of an indoor municipal
recreation facility for the City of Federal Way. The Federal Way Community Center opened its doors on a new 72,000
square foot facility in late March, 2007. Residents and those from the surrounding areas will be able to job the indoor
track, climb swim, take yoga, relax in the sauna, have a birthday party, and schedule a reception all in one location.
Second, Cedar Grove Park which is located in a neighborhood between I-5 and Highway 99 that previously had no park
facilities was completed. The new 3-acre park contains play equipment for toddlers and older children, a loop trail, a
small Basketball court, and picnic benches. And finally, a much needed parking lot that will serve the West Hylebos
Wetlands Park was developed, which now includes the historic cabins park on South 348'b Street.
A number of Public Works capital improvement projects were added to our main streets and highways, making them a
trove attractive place to do business. The most important projects completed in 2006 include: 21" Avenue South grid
road from South 316`h to South 320ffi Street; South 336ffi Street at First Way South Intersection improvement project;
Westway Street lighting project; Joe's Creek Habitat Restoration; Lakota Creek channel restoration; and, the South
333`d at I" Way South traffic signal.
Public Works staff completed the design and right-of-way acquisition for Pacific Highway South HOV Lanes Phase III
improvement project and worked to secure project funding to complete the environmental assessment for the Triangle
Project; and established a City Pandemic Response Plan.
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The Community Development department has completed a Shoreline Inventory which will assist in updating the
Shoreline Master Program. Plus, the department processed an impressive 3,341 building permits totaling $155 million
in valuation for the community. City staff worked with King County personnel to reach a solution for subsidizing the
cost of annexation to the City. The City received the National League of Cities Diversity Award for its Korean Liaison
Program, and received an Association of Washington Cities' Award for consolidating the Fire District with the City's
permit center. In addition, City staff worked with the Federal Way Crossings development which replaced the Flying
"J" truck stop with new retail outlets and restaurants providing employment opportunities for the community.
The Economic Development department has targeted key marketing areas in both local and national publications to
attract interest in relocating or expanding businesses in our area. At the end of 2006 we marketed to the top 100 fastest -
growing businesses in Washington State. The City has continued to support the Highline Community College Small
Business Development Center and has been well received by the business community. It currently has 21 active clients
at the end of December and the City anticipates the numbers to grnw dramatically during 2007.
The City has hired a consulting firm to provide us with expert assistance in developing a targeted tourism -marketing
campaign, as well as a new suite of professionally designed tourism -marketing materials. Plus, the City has continued
to contribute to, and sponsorship for the Women's Triathlon presented by Subaru, and the Han Woo-Ri Festival. In
addition we joined with SeaTac, Kent and Tukwila in hosting the Senior Softball World Championship that brought
thousands of participants and spectators from across the country and several foreign countries.
OUTLOOK FOR THE FUTURE
At the January 2007 planning retreat, Council identified the following set of goals for the City.
1) Public Safety: Integrate the public safety strategy into all facets of City operations, building on a strong
Community -based approach.
2) City Center: Create a multi -use urban city center that is pedestrian friendly, linked to neighborhoods and parks,
and serves as the social and economic hub of the City.
3) Economic Development: Establish Federal Way as an economic leader and job center in South King County by
attracting a regional market for high -quality office and retail businesses.
4) Capital Investment: Maintain the capital facilities plan and provide financing options for transportation and
surface water improvements, parks, recreation, cultural arts and public facilities.
5) Service Culture: Ensure a responsive service culture within the City organization where employees listen
carefully, treat citizens and each other respectfully and solve problems creatively, efficiently, and proactively.
6) Regional Leadership: Position Federal Way as a regional leader by working collaboratively with other local
and regional jurisdictions in order to leverage resources.
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.
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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, 2006
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.
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, 2006 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 two 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, 2006, the City had $34.3 million invested in
the State Investment Pool. In 2006, the average monthly earnings rate for the entire portfolio was approximately 5.16%
as compared to the average monthly earnings rate for the State Investment Pool of 5.21%.
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.
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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 2006, 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
2006 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 2006.
The State Auditor's report on the basic financial statements is included in the financial section of this report.
AWARDS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of
Achievement for Excellence in Financial Reporting to the City of Federal Way for its comprehensive annual financial
report (CAFR) for the year ended December 31, 2005. The City of Federal Way has received a Certificate of
Achievement for the last sixteen years (fiscal years ended 1990 — 2005). 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, 2007 and 2008. 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, in particular Mark Turley (Senior Financial Analyst), Thao Thai (Financial Analyst), and
Julia Cheng (Financial Analyst). 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,
Tho Kraus
Services ctor Finance Manager
City of Federal Way / 1
MICHAEL PARK
Mayor
CITY OFFICIALS
JIM FERRELL
Deputy Mayor
JACK DOVEY ERIC FAISON LINDA KOCHMAR
Councilmember Councilmember Councilmember
NEAL BEETS
City Manager
OTHER ADMINISTRATIVE OFFICERS
JEANNE BURBIDGE
Councilmember
DEAN MCCOLGAN
Councilmember
CityAttorney.......:................._.......................................:............ ..........Patricia Richardson
City Clerk ................., ...................Laura Hathaway
Community Development Director................................................................................. .................... Kathy McClung
Management Services Director ............................... Iwen Wang
Parks, Recreation and Cultural Services Director............................_..................................................._......... Donna Hanson
PublicSafety Director...................................................;.............;.............._........._.............. ••••.............:.........Brian Wilson
Public Works Director..........................................................................................._._...... Cary Roe
of Federal Way 12
Municipal Court
Michael Morgan
*Adjudicates Cases
*Probation Services
• Indigent Defense Screening
Total FTE: 12.6
People of Federal Way
Mayor and City Council
Michael Park, Mayor
Jim Ferrell, Deputy Mayor
Jeanne Burbidge, Jack Dovey,
Eric Faison, Linda Kochmar,
Dean McColgan
City Manager
Neal Beets
Total FTE:
Community
Development
Kathy McClung
Parks, Recreation
& Cultural Services
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: 28.7 1 1 1 Total FTE: 31.2
City Attorney
Patricia Richardson
-Civil Legal Services/
Litigation
*Prosecution
-Advise Council
Boards, Commissions
& staff
°Advice/Drafting
Ordinances
Total FTE: 10.6
5.0
Public Safety
Brian Wilson
*Drug Awareness
Resistance Education
*Crime Analysis/
Prevention
•Traffic Enforcement
•Investigation
*Jail Services
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
CaTy Roe
*Development Services
°Street Maintenance
•Traffic Operation
*Surface Water Mgmt
•Solid Waste/
Recycling
*Neighborhood Safety
*Emergency Mgmt
°Transportation
•System Planning
Total FTE: 155.0 Total FTE: 42.5
Management
Services
Iwen Wang
*City Clerk
-Finance
*Human Resources
-Risk Management/
Purchasing/Fleet
*Systems
Total FTE: 22.0
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, 2005
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.
LF PfF1
President
Gt64:u� fi
Executive Director
City of Federal Way / 4
CITY OF
Federal Way
Washington State Auditor
Brian Sonntag
INDEPENDENT AUDITOR'S REPORT
June 26, 2007
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,
2006 and 2005 which collectively comprise the City's basic financial statements, 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 audits.
We conducted our audits 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 audits provide a reasonable basis for our opinions.
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, 2006 and 2005, and the respective changes in
financial position and, where applicable, cash flows thereof, and the respective budgetary
comparison for the General, Street, and Utility Tax funds for the years then ended in conformity
with accounting principles generally accepted in the United States of America.
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.
A Insurance Building, PO Box 40021 • Olympia, Washington 98504-0021 • (360) 902-0370 • (866) 902-3900 • TDD Relay (800) 833-6388
is FAX (360) 753-0646 • http://www.sao.wa.gov
Our audits were 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 and supplemental information on pages 59 through 84 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,
'49,
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, 2006. 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, 2006 by $198.4
million. Capital Assets (net of depreciation and related debt) account for 69% of this amount with a
value of $137.5 million. Of the remaining net assets $22.5 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 $20.5 million, or 12% in 2006. Governmental activities
provided $18.8 million or 92% with the remainder being provided by the business -type activities.
■ Governmental fund balances at year-end were $47.8 million, a 3% decrease over the prior year. Of
this amount, a total of $41.1 million, or 86% of the governmental fund balance is unreserved and
available to fund ongoing activities. The remaining $6.7 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 $6.5 million, an increase of $2.4 million or 58% from
the prior year.
0 The City debt decreased by $2.4 million during the current fiscal year. General obligation debt
decreased by $2.2 million while public works trust fund loan decreased by $183 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 four to ten-year view of the
City's revenues, expenditures, debt obligations and capacity, the City's largest taxpayers, and those entities
with the largest employment within the City of Federal Way. This section provides a long-term perspective
on the City's economy.
Government -wide Financial Statements
The government -wide financial statements are designed to provide readers with a broad overview of the
City of Federal Way's finances, in a manner similar to a private -sector business.
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 seven major
governmental funds, the general fund, street fund, utility tax fund, debt service fund, downtown
redevelopment 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
City of Federal Way / 9
changes in fund balances. The remaining governmental funds are combined into a single column labeled
nonrajor 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, 2006 total $198 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
Current and other assets
Capital assets and CIP,
net of accumulated depreciation
Total assets
Long-term liabilities
Other liabilities
Total liabilities
Net assets:
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total net assets
CONDENSED STATEMENT OF NET ASSETS
Governmental Activities Business -Type Activities
2006 2005 2006 2005
$ 66,490,833 $ 66,725,061 $ 8,035,523 $ 7,657,048
Total
2006 2005
$ 74,526,356 $ 74,382,109
117,562,248
95,939,154
45,637,105
44,416,572
163,199,353
140,355,726
184,053,081
162,664,215
53,672,628
52,073,620
237,725,709
214,737,835
30,828,814
28,868,396
1,990,628
2,167,175
32,819,442
31,035,571
5,977,684
5,346,890
490,511
386,017
6,468,195
5,732.907
36,806,498
34,215,286
2,481,139
2,553,192
39,287,637
36,768,478
93,835,163 70,138,350 43,697,633 42,294,741 137,532,796 112,433,091
38,359,454 45,017,742 26,439 18,880 38,385,893 45,036,622
15,051,966 13,292,837 7,467,417 7.206,807 22,519,383 VA99.644
$147,246,583 $128,448.929 S51,191,489 $49,520,428 5198,438,072 S177,969.357
The largest component of the City's net assets, 69% or $137.5 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 16% or $31.8 million of the total net assets of the city are earmarked for construction
improvement projects, to I-5 City Center Access Study, South 356t' St SR99 to 1' Avenue, SR99 HOV
Lane Improvement Phases III and IV, South 348`h Street at SR161, South 352nd Street Extension from
SR99 to SR 161. Acquisition of additional city parks, renovation and improvements to, Camp Kilworth,
neighborhood parks such as Hylebos boardwalk replacement, and Sacajawea Master plan, 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
$6.2 million; $278 thousand for police special funds, petty cash/change funds and advance travel; $170
thousand hotel/motel lodging tax; $25.4 thousand for paths and trails; and $275 thousand for customer
deposits. The business -type activities portion of $7.0 million may only be spent on surface water
management activities and the remaining $428 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 $18.9 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 $20.5 million in 2006. The increase
was split between the governmental activities ($18.8 million or 92%) and business -type activities ($1.7
million or 8%).
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
Governmental Activities
Business -Type Activities
Total
2006
2005
2006
^ 2005
2006
2005
Revenues:
Program revenues:
Charges for services
$ 9,446,764 $
9,935,656
$ 4,130,179
$ 4,100,623
$ 13,576,943 $
14,036,279
Operating grants & contributions
1,512,394
1,228,979
1,113,010
-
2,625,404
1,228,979
Capital grants and contributions
5,973,071
4,250,635
-
-
5,973,071
4,250,635
General revenues:
-
Property tax
8,892,558
8,442,172
-
-
8,892,558
8,442,172
Sales tax
12,409,719
11,305,537
-
=
12,409,718
11,305,537
Utility tax
9,043,449
8,326,951
-
-
9,043,449
8,326,951
Real estate excise tax
5,499,911
4,695,984
-
=
5,499,911
4,695,984
Other taxes
4,059,732
3,527,596
-
4,059,732
3,527,596
Other
2,658,762
5,997,384
388,729
319,432
3,047,491
6,316,816
Total Revenue
59,496,359
57,710,894
5,631,918
4,420,055
65,128,277
62,130,949
Expenses:
General government
4,364,710
5,539,682 -
4,364,710
5,539,682
Security of Persons & Property
19,906,722
16,825,123 - -
19,906,722
16,825,123
Transportation
5,628,100
5,451,324 - -
5,628,100
5,451,324
Physical environment
313,388
322,151 - =
313,388
322,151
Economic environment
3,162,089
3,095,391 -
3,162,089
3,095,391
Health and human services
622,761
631,133 - -
622,761
631,133
Culture and recreation
5,172,663
4,789,920 - -
5,172,663
4,799,920
Interest on long-term debt
1,420,691
1,541,930 - -
1,420,691
1,541,930
Surface Water Management
-
3,142,613 2,995,074
3,142,613
2,995,074
Dumas Bay Center
-
- 925,825 819,515
925,825
819,515
Total Expenses
40,591,124
38,196,654 4,068,438 3,914,589
44,659,562
42,011,243
Increase in net assets before
transfers
19,905,235
19,514,240
1,563,480
605,466
20,468,715
20,119,706
Transfers
(107,581)
(126,369)
107,581
126,369
-
-
Increase in net assets
18,797,654
19,387,871
1,671,061
731,835
20,468,715
20,119,706
Net assets - beginning
128,448,929
109,061,058
49,520,428
48,788,593
177,969,357
157,849,651
Net assets - ending
$ 147,246,583
$ 128,448,929
$ 51,191,489
$ 49,520,428
$ 198,438,072
$ 177,969,357
Governmental activities contributed $18.8 million or 92% of the total change in net assets of $20.5
million. Key elements of this increase are as follows:
• Decrease in fund balances of $1.5 million.
• Excess of capital outlay net of depreciation expense of $23.4 million.
• Decrease due to bond principal payment of $1.9 million.
• Decrease in internal service fund net change of $1.1 million.
• Net decrease in deferred revenue and compensated absences liability of $49 thousand.
City of Federal Way / 12
Governmental Activities - Revenues
Other, 5.9%
Charges for
Other ta=S.
services,
9.0%
21.0%
Operating
grants &
Sales tax.
-~contributions,
27.6 %
3.4%
Capital grants
and
Property tax,
contributions,
19.8%
13.3%
Governmental Activities - Expenditures
Interest on
General
long-term debt -
_------government
=
Culture and 35
10.8 %
recreation
Physical
12.7%
envircran eqt
0.8 %
Economic
�I.vitCnnlCai
7.8%
Security of
Persons &
Transportation
Property
13.9% Health and
48.9%
human services
1.5%
Business -type activities of the City's surface water management system and Dumas Bay Centre increased
the City's net assets by $1.7, accounting for 6% of the total growth in the government's net assets. Surface
Water Management Fund increased by $1.8 million which was offset by a decrease in Dumas Bay Centre
Fund net assets by $158 thousand. Key elements of the increase are as follows:
Net operating income of $90 thousand and non -operating income of $1.45 million, (which
includes an interlocal grant of $1.11 million) account for $1.55 million of the increase.
Net transfers in of $108 thousand.
Internal service funds consolidation make up the remaining $16 thousand increase.
Business -Types Activities - Revenues
Other,
Charges for
services,
91.3 %
Business -Type Activities - Expenditures
Dumas Bay
Center _
23
Surface Water
Management
77%
FINANCIAL ANALYSIS OF THE CITY'S FUNDS
As noted earlier, the City of Federal Way uses fund accounting to ensure and demonstrate compliance with finance -
related legal requirements.
Governmental funds
The focus of the City of Federal Way's governmental funds is to provide information on near -term inflows,
outflows, and balances of spendable resources. Such information is useful in assessing the City's financing
requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources
available for spending at the end of the fiscal year.
As of the end of 2006, the City's governmental funds reported combined ending balances of $47.8 million, a
decrease of $1.5 million in comparison to the prior year. Approximately 14% or $6.5 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.
City of Federal Way / 13
The General Fund is the chief operating fund of the City. At the end of 2006 unreserved fund balance of the general
fund was $6.5 million, while total fund balance was $6.7 million. General Fund unreserved fund balance represents
21 % of total general fund expenditures.
The Debt Service Fund has a total fund balance of $6.2 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 $7.0 million, and those for Dumas Bay Centre amounted to $428 thousand. The total change in net assets for
both funds was $1.8 million increase and $158 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 $7.0 million between the original budget for the fiscal year 2006
and the final budget are explained as follows:
Adjustments to expenditure and other uses budget include:
6 $249 thousand increase for Public Safety due to annexation, funded by increase in property tax.
• $240 thousand decrease for probation contract.
• $440 thousand Public Safety Overhire Program.
• $99 thousand total in Public Safety and Emergency Operations funded by grant and contributions.
i $77 thousand for Federal Way Community Center startup/transition costs funded by transfer in from
Community Center CIP.
e $950 thousand total for traffic modeling and related general fund subsidy, dispatch services, temporary
permit assistance, building repairs and maintenance, gas, insurance, and pension costs.
o $1.5 million to restore City Manager's contingency fund and various ongoing programs.
• $2.0 million in Utility Tax and Debt Service ending fund balance was used to provide transfers to various
capital improvement projects.
■ The remaining $1.49 million increase in general governmental services was also funded by 2006 ending
fund balance carry forward. Of this, only $148 thousand was for new programs.
Adjustments to revenues and other sources budget include: increases in REET ($1.25 million), property tax ($250
thousand), sales tax ($110 thousand), state shared revenues ($318 thousand), increase building permits ($138
thousand), planning reviews ($53 thousand), interfund transfers ($481 thousand), grants and contributions ($276
thousand), miscellaneous revenue; federal seizure funds, interest ($75 thousand), utility tax ($771 thousand),
City of Federal Way / 14
gambling tax ($150 thousand), franchise fees ($60 thousand), fines and forfeitures ($10 thousand); 2006 ending fund
balance carryforward ($4.6 million), and a decrease in probation contract revenue.ge in accounting ($240 thousand).
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, 2006 amounts to $163.2 million (net of accumulated depreciation). This investment in capital assets
includes land, buildings, improvements, machinery and equipment, infrastructure, park facilities and construction in
progress. The City has elected to exclude roads acquired or constructed prior to 2003. The City is currently
inventorying and valuing these assets and will include them at a later date.
CAPITAL ASSETS AT YEAR-END, NET OF DEPRECIATION
Governmental
Business -Type
Total
Activities
Activities
2006
2M
Land
$ 41,290,118
$ 6,752,444 $;
48,042,562 $
43,124,862
Building & Improvements
25,942,254
34,882,502
60,824,756
61,130,882
Machinery and equipment
4,125,290
32,954
4,158,244
3,847,067
Infrastructure
8,253,614
-
8,253,614
2,941,161
Construction in progress
37,950,972
3,969,164
41,920,136_
29 311,754
Total Capital Assets
$ 117,562,248
$ 454637,064 $
163,199,312 $
140,355,726
Major capital asset events during the current fiscal year included the following: substantially completing the Federal
Way Community Center improvements of $15.5 million for a grand total of $20.2 million. Expanding the city
streets and traffic corridors for a total of $4.0 million. General capital and various park improvements for $549
thousand. 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 2006, the City of Federal Way had total bonded debt outstanding of $29.6 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 $ 42,084,131 $ - $ 42,084,131
Public works trust fund loan - 2,057.986 2,057,986
Total $ 42,084,131 $ 2,057,986 5 44,142,117
The City's total debt decreased by $2.4 million during 2006. 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.
The City's assessed valuation for 2006 was $7.25 billion and the total amount of debt the City may issue is $522.4
million. Remaining legal debt capacities as of December 31, 2006 are:
City of Federal Way / 15
General Government (no vote requirement) $ 87,320,745
General Government (3/5 majority vote required) $ 72,519,927
Parks & Open Space (3/5 majority vote required) $181,299,818
Utilities (3/5 majority vote required) $181,299,818
Total Capacity $522.440 3.08
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 2007/08 Biennial Budget was also developed under challenging economic conditions. Various tax -limiting
initiatives continue to significantly impact the growth rates of City revenues while rapidly escalating operating costs,
particularly in the areas of heath insurance, state pension increases, and energy costs, will exceed our limited
revenue growth. The difference between the average growth rate of revenues and expenditures is approximately 2%
per year. On a $34 million general fund budget, that would create a nearly $700 thousand budget deficit each year.
When this structural problem is combined with the use of one-time money to fund ongoing expenses in the 2005/06
Biennial Budget, the City's would face a baseline budget gap of $1.2 million in 2007, $1.8 million in 2008. The
potential deficit would grow to $3.2 million by 2010 and $4.8 million in 2012.
To resolve this deficit, Council authorized cuts in non-public safety areas and allowed the transfer of a portion of the
capital utility tax to balance City operations needs. This allows the City to continue current City operations at
approximately the same level of service without any tax increase.
With regard to public safety, a Police and Community Safety Enhancement proposal was prepared for voters to
consider whether they were willing to pay higher utility taxes to fund an increased level of public safety. At the
November 2006 election, voters approved a 1.75% utility tax increase to fund the higher level of service.
While the transfer of utility tax allows the City to maintain current services in the next four years, and the voter
package provides improved public safety services, unless the City's economy starts to grow at a much faster pace
than the past, the City is expected to face budget gaps again after 2010.
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.citooffcderalway. cam.
City of Federal Way / 16
CITY OF A'
Federal Way
City of Federal Way / 17
Basic Financial Statements
City of Federal Way / 18
STATEMENT OF NET ASSETS
December 31, 2006
ASSETS
Cash & cash equivalents and investments
Receivables (net)
Due from other governments
Prepaid items
Restricted assets:
Cash with escrow agent
Customer deposits
Investment in joint venture
Capital Assets (net of accumulated depreciation)
Land
Depreciable assets
Infrastructure
Construction in progress
Total Assets
LIABILITIES
Accounts payable and accruals
Deferred/unearned revenue
Retainage payable
Retainage payable - with escrow agent
Due to other governments
Customer deposits
Noncurrent Liabilities:
Due within one year
Due in more than one year
Total Liabilities
NET ASSETS
Invested in capital assets, net of related debt
Restricted for:
Customer deposit
Debt service prefunding
Capital projects
Steel Lake Management District
Other
Unrestricted
Total Net Assets
Governmental
Business -type
Total
Activities
Activities
2006
2005
$ 59,232,501
$ 7,811,215
$ 67,043,716 $
67,476,043
2,057,785
153,431
2,211,216
2,458,219
2,114,582
15,635
2,130,217
1,912,862
21,002
-
21,002
27,743
753,683 55,242 808,925 113,552
262,776 - 262,776 363,603
2,048,504 - 2,048,504 2,030,087
41,290,118
6,752,444
30,067,544
34,915,497
8,253,614
37,950,972
3,969,164
184,053,081
53,672,628
48,042,562
43,124,862
64, 983,041
64,977,949
8,253,614
2,941,161
41,920,136
29,311,754
237,725,709
214,737,835
2,372,032
210,391
2,582,423
2,692,176
357,915
207,984
565,899
523,108
777,945
5,145
783,090
161,279
-
55,242
55,242
-
264,052
-
264,052
242,394
2,205,740
11,749
2,217,489
2,113,950
8,190,690 182,359 8,373,049 2,469,918
22,638,124 1 808 269 24,446,393 28,565,653
36,806,498 2,481,139 39,287,637 36,768,478
93,835,163
43,697,633
137,532,796
112,433,091
262,776
11,749
274,525
363,603
6,217,346
-
6,217,346
3,195,705
31,863,330
-
31,863,330
39,805,812
-
14,690
14,690
18,880
16,002
-
16,002
1,652,622
15,051,966
7,467,417
22,519,383
20,499,644
$ 147,246,583
$ 51,191,489
$ 198,438,072 $
177,969,357
The notes to the financial statements are an integral part of this statement.
City of Federal Way/19
Functions/Programs
Governmental Activities:
General Government
Security of Persons & Property
Transportation
Physical Environment
Economic Environment
Heal th
Culture & Recreation
Interest on long-term debt
Total governmental activities
Business -type Activities:
Surface Water Management
Dumas Bay Centre
Total business -type activities
Total
STATEMENT OF ACTIVITIES
For the Year ended December 31.2006
Program Revenues Net (Expense) Revenue & Changes in Net Assets
Operating Capital
Charges for Grants and Grants and Governmental Business -type Comparative Totals
Expenses Services Contributions Contributions Activities Activities 2006 2005
$ 4,364,710 $
1,052,641 $ 127,273 $
$ (3,184,796) $
- $ (3,184,796) $
(4,167,412)
19,906,722
4,800,920 1,385,121
(13,720,681)
- (13,720,681)
(10,816,062)
5,628,100
1,357,333 - 5,539,336
1,268,569
- 1,268,569
150,907
313,388
75,580 433,735
195,927
195,927
(233,929)
3,162,089
762,603
(2,399,486)
- (2,399,486)
(2,247,705)
622,761
150,192 -
(472,569)
- (472,569)
(458,295)
5,172,663
1,247,495 -
(3,925,168)
- (3,925,168)
(3,466,958)
1,420,691..
- -
(1,420,691)
(1,420,6911
(1-,54t,930)
40,591,124
9,446,764 1,512,394 5,973,071
(23,658,895)
- (23,65&895)
(22,781.394)
3,142,613
3,514,669 1,113,010 -
- 1,485,066
1,495,066
595,046
925,825
615,510 - -
- (310,315)
_ (310t5)
OK012)
4,068,439
4,130,179 1,113,010 -
- 1,174,751
1,174,751
286,034
$ 44,659,562
$ 13,576,943 $ 2,625,404 5 5,973,071
(23,658,895) 1,174,751
(22,484,144)
(22,495,350)
General revenues:
Property tax
Sales tax
Utility tax
Real estate excise tax
Other taxes
Other revenue
Unrestricted Grants & Contributions
Investment Earnings
Disposition of capital assets
Transfers
Total general revenues and transfers
Change in net assets
Net assets at beginning of year
Net assets at end of year
The notes to the financial statements are an integral part of this statement.
9,892,558
8,892,558
9,442,172
12,409,718
- 12,409,718
11,305,537
9,043,449
- 9,043,449
8,326,951
5,499,911
- 5,499,911
4,695,984
4,059,732
- 4,059,732
3,527,596
736,918
- 736,918
1,105,760
-
- y
146,000
2,805,961
388,729 3,194,690
2,025,243
(884,117)
-. (884,117)
3,039,813
(107,581)
107,581 -
-
42,456,549
496,310
42,952,859
42,615,056
19,797,654
1,671,061
20,468,715
20,119,706
128,448,929
49,520,428
177,969,357
157,849,651
$ 147,246,583
$ 51,191,489
$ 198,439,072
$ 177,969,357
City of Federal Way / 20
BALANCESHEET
GOVERNMENTALFUNDS
DECEMBER 31.2006
Debt
Downtown
General
Street
Utili Tax
Service
Redevelopment
ASSETS
Equity in pooled cash
and investments
$ 6,107,196 $
2,229,083
$ 910,283 $
6,001,415
$ 9,314,648
Prepaid insurance/debt service
16,002
Retainage in escrow
-
-
Receivables (net):
Taxes
233,511
-
-
215,660
Accounts and contracts
175,362
-
1,100,201
261,091
-
Interest
11,499
2,207
2,152
2,700
6,028
Restricted cash
262,776
-
-
-
_
Due from other governments
1,624,404
94,390
-
Interfund loans receivable
20,000
-
-
_
TOTAL ASSETS
8,450,750
2,325,680
1,912,636
6,480,866
9,320,676
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
652,588
237,471 -
Accounts/payroll payable
65,043
7,212 - -
Accrued interest payable
-
-
Retainage payable
-
3,737 _
Due to other governments
264,052
- -
Due to other funds
-
Performance bonds
-
-
Deposits payable
476,528
1,728,712
Interfund loans payable
-
_ _
Deferred/unearned revenue
_ 221,704
30,431 - 263,520 -.
TOTAL LIABILITIES
1,679,915
2.007,563 - 263,520 -
Fund balance:
Reserved:
Debt service prefunding - - - 6,217,346 -
Other 278,778 - - _ _
Unreserved:
General fund 6,492,057 - - _
Special revenue funds - 318,117 1,912,636 - -
Capital projects funds - - - - 9,320,676
TOTAL FUND BALANCES 6,770,835 318,117 1,912,636 6,217,346 9,320,676
TOTAL LIABILITIES AND
FUND BALANCE $ 8,450,750 $ 2,325,680 $ 1,912,636 $ 6,480,866 $ 9,320,676
The notes to the financial statements are an integral part of this statement
City of Federal Way / 21
BALANCESHEET
GOVERNMENTALFUNDS
DECEMBER 31, 2006
(continued)
City
Nonmajor
Comparative Totals
Facilities
Transportation
Governmental
2006
2005
ASSETS
_
Equity in pooled cash
and investments
$ 6,260,220 $
13,873,993
$ 4,059,259 $
48,656,097 $
49,979,198
Prepaid insurance/debt service
-
-
-
16,002
22,743
Retainage in escrow
726,951
26,732
-
753,683
113,552
Receivables (net):
-
-
Taxes
-
-
-
449,171
592,182
Accounts and contracts
-
-
1,536,654
1,635,748
Interest
13,365
18,450
5,158
61,559
67,408
Restricted cash
-
-
-
262,776
363,603
Due from other governments
28,155
367,633
2,114,582
1,865,736
Interfund loans receivable
-
-
-
20,000
46,000
TOTAL ASSETS
7,000,536
13,947,330
4,432,050
53,870,524
54,686,170
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
635,692 559,092 90,822
2,175,665
1,154,426
Accounts/payroll payable
- -
72,255
1,143,389
Accrued interest payable
-
-
-
Retainage payable
726,951 26,732 20,525
777,945
153,763
Due to other governments
- - -
264,052
242,394
Due to other funds
- -
-
-
Performance bonds
- - -
-
-
Deposits payable
- - -
2,205,240
2,085,254
Interfund loans payable
- - 20,000
20,000
46,000
Deferred/uneamed revenue
- - 21,584
537,239
521,689
TOTAL LIABILITIES
1,362,643 595,824 152,931
6,052,396
5,346,915
Fund balance:
Reserved:
Debt service prefunding - -
-
6,217,346
3,195,705
Other - -
194,463
473,241
572,014
Unreserved:
General fund - -
-
6,492,057
4,113,102
Special revenue funds - -
541,400
2,772,153
1,652,622
Capital projects funds 5,637,893 13,361,506
3,543,255
31,863,330
39,805,812
TOTAL FUND BALANCES 5,637.893 13,361,506
4,279,119
47,818,127
49,339,255
TOTAL LIABILITIES AND
FUND BALANCE $ 7,000,536 $ 13,947,330 $
4,432,050
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.
98,459,786
90,489,542
Investment in joint venture is not a financial resource and, therefore, not reported in the funds
2,048,504
2,030,087
Other long-term assets are not available to pay for current -period expenditures
and, therefore, are deferred in the funds
179,324
192,803
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 the governmental activities in the statement of net assets.
29,523,026
15,245,133
Long-term liabilities, including bonds payable, are not due and payable
in the current period and, therefore, are not reported in the funds.
(30,782,184)
(28,847,891)
Net assets of governmental activities
$
147,246,583 S
129,449,929
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 22
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended December 31, 2006
Debt
Downtown
General
Street
Utility Tax
Service
Redevelopment
REVENUES
Taxes
$ 24,616,172 $
- $
9,043,449 $
5,499,911
$
Licenses and permits
1,985,887
103,957
-
-
_
Intergovernmental
1,385,121
1,191,882
_
Service charges and fees
4,041,579
442,629
-
-
Development fees
-
-
Fines and forfeitures
805,598
-
-
_
_
Interest
484,129
77,319
50,885
83,917
220,646
Other
652,934
26,264
-
-
_
TOTAL REVENUES
33,971,420
1,842,051
9,094,334
5,583,829
220,646
EXPENDITURES
Current:
General government
3,628,179
-
55,237
-
-
Security of persons and property
19,909,858
Transportation
-
3,801,931
Physical environment
=
-
Economic environment
2,860,547
Health
613,800
Culture and recreation
3,924,653
-
_
_
_
Debt service:
Principal
-
-
-
2,197,357
Interest/fiscal charges/admin fees
-
-
-
1,420,691
Capital outlay
124,495
18,076
-
-
TOTAL EXPENDITURES 31,061,532 3,820,007 55,237 3,618,049
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 2,909,888 (1,977,956) 9,039,097 1-965.790 220,646
OTHER FINANCING SOURCES
(USES)
Bond proceeds
-
-
-
4,100,000
Sale of capital assets
-
-
-
_
_
Transfers in
1,383,792
2,105,059
-
3,885,861
686,500
Transfers out
2,060,063
-
(8,153,963)
(2,830,000)
-
TOTAL OTHER FINANCING
SOURCES (USES)
(676,271) _
2,105,058
(9,153,963)
1,055,861
4,786,500
NET CHANGE IN FUND BALANCES
2,233,617
127,102
885,134
3,021,641
5,007,146
FUND BALANCES - BEGINNING
4,537,218
191,015
1,027,502
3,195,705
4,313,530
FUND BALANCES - ENDING $ 6,770,835 $ 318,117 $ 1,912,636 $ 6,217,346 $ 9,320,676
The notes to the financial statements are an integral part ofthis statement.
City of Federal Way / 23
REVENUES
Taxes
Licenses and permits
Intergovernmental
Service charges and fees
Development fees
Fines and forfeitures
Interest
Other
TOTAL REVENUES
EXPENDITURES
Current:
General government
Security of persons and property
Transportation
Physical environment
Economic environment
Health
Culture and recreation
Debt service:
Principal
Interest/fiscal charges/admin fees
Capital outlay
TOTAL EXPENDITURES
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended December 31, 2006
(continued)
City Nonmajor Comparative Totals
Facilities Transportation Governmental 2006 2005
S
175,219 $
39,334,751 $
36,310,754
-
-
2,089,844
2,247,651
4,347,454
1,122,786
8,047,243
5,479,614
1,325,794
545,260
6,355,262
4,927,163
-
196,060
196,060
2,040,378
- -
-
805,598
720,464
658,447 688,932
183,721
2,447,996
1,557,935
28,065 10,659
-
717,922
1,065,664
686,512 6,372,839 2,223,046 59,994,676 54,349,623
- 260,872
3,944,288
5,462,633
- -
19,909,858
16,988,412
1,572,052
5,373,983
5,080,577
- - 313,389
313,388
322,151
- - 194,879
3,055,426
3,119,831
- - -
613,800
634,061
- 184,160
4,108,813
3,859,465
- - - 2,197,357 2,933,231
- - - 1,420,691 1,518,394
15,495,186 8,213,039 561,507 24,412,303 8,228,486
15,495,186 9,213,039 3,086,858 65,349,907 48,147,231
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (14,808,674) (1,840,200) (863,812) (5,355,231) 6,202,392
OTHER FINANCING SOURCES
(USES)
Bond proceeds
-
—
-
4,100,000
-
Sale of capital assets
-
—
20,000
20,000
3,618,512
Transfers in
100,000
1,790,625
3,289,949
13,231,785
15,650,064
Transfers out
(76,500)
(323,580)
(73,575)
(13,517,681)
(16,266,811)
TOTAL OTHER FINANCING
SOURCES (USES)
23,500
1,457,045
3,236,374
3,834,104
3,001,765
NET CHANGE IN FUND BALANCES
(14,785,174)
(383,155)
2,372,562
(1,521,127)
9,204,157
FUND BALANCES - BEGINNING
20,423,067
13,744,661
1,906,557
49,339,255
40,135,098
FUND BALANCES - ENDING $ 5,637,993 $ 13,361,506 $ 4,279,119 $ 47,818,127 $ 49,339,255
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 24
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, 2006
Amounts reported for governmental activities in the statement of activities (page 20) are 2006 2005
different because:
Net change in fund balances --total governmental funds $ (1,521,127) $ 9,204,157
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. 23,390,575 5,526,012
Revenues in the statement of activities that do not provide current financial resources
are not reported as revenues in the funds.
8,840 (12,514)
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.
(1,902,643) 2,933,231
Internal service funds are used by management to charge costs of risk management,
information systems, mail & duplication, fleet, and building systems to the funds.
(1,120,538) 1,809,661
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.
(57,453) (72,676)
Change in net assets of governmental activities
$ 18,797,654 $ 19,387,871
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 25
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2006
Variance with
Budgeted Amounts
Final Budget -
Positive
Original
Final
Actual Amounts
(Negative)
REVENUES
Taxes
$ 22,477,500 $
23,106,674
$ 24,616,172
$ 1,509,498
Licenses and pemuts
1,046,017
1,184,517
1,985,887
801,370
Intergovernmental
1,218,000
1,324,900
1,385,121
60,221
Service charges and fees
3,551,475
3,423,975
4,041,579
617,604
Fines and forfeitures
923,000
933,000
805,598
(127,402)
Interest
156,000
216,000
484,129
268,129
Other
679,650
694,650
652,934
(41,716)
TOTAL REVENUES
30,051,642
30,883,716
33,971,420
3,087,704
EXPENDITURES
Current:
General government
Security of persons and property
Economic environment
Health
Culture and recreation
Capital outlay
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
3,266,893
4,800,075
3,628,179
1,171,896
19,437,848
20,611,893
19,909,858
702,035
2,609,062
3,104,163
2,860,547
243,616
600,136
664,174
613,800
50,374
3,863,386
4,044,638
3,924,653
119,985
-
-
124,495
(124,495)
29,777,325 33,224,943 31,061,532 2,163,411
274,317 (2,341,227) 2,909,888 5,251,115
1,283,712 1,389,162 1,383,792 (5,370)
1,917,462 2,665,082 2,060,063 605,019
TOTAL OTHER FINANCING SOURCES (USES)
633 750
(1.275,920)
(676,271)
599,649
NET CHANGE IN FUND BALANCES
(359,433)
(3,617,147)
2,233,617
5,850,764
FUND BALANCES - BEGINNING
669,433
4,537,215
4,537,218
3
FUND BALANCES - ENDING
$ 310,000 $ 920,068 $ 6,770,835 $ 5,850,767
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 26
STREET FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2006
Variance with
Budgeted Amounts
Final Budget -
Positive
Original
Final
Actual Amounts
(Negative)
REVENUES
Licenses and permits
$ 73,000 $
73,000
$ 103,957
$ 30,957
Intcrgovcrnmental
1,203,000
1,220,461
1,191,882
(28,579)
Service charges and fees
297,000
297,000
442,629
145,629
Interest
7,000
7,000
77,319
70,319
Other
5,000
47,000
26.264
20 736
TOTAL REVENUES
1,585,000
1,644.461
1,842,051
197,590
EXPENDITURES
Current:
Transportation
3,808,260
4,280,987
3,801,931
479,056
Capital outlay
-
18,076
(18,076)
TOTAL EXPENDITURES
3,808.260
4.280.987
3,820,007
460,980
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
(2,223,260)
(2.636.526)
(1,977,956)
658,570
OTHER FINANCING SOURCES (USES)
Transfers in
2,223,260
2,545,512
2,105,058
(440,454)
TOTAL OTHER FINANCING SOURCES (USES)
2,223,260
2,545,512
2,105,058
(440,454)
NET CHANGE IN FUND BALANCES
-
(91,014)
127,102
218,116
FUND BALANCES - BEGINNING
100,000
191,014
191,015
]
FUND BALANCES - ENDING $
100,000 $
100,000 $
318,117 $
218,117
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 27
UTILITY TAX FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2006
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)
$ 7,602,498 $ 8,373,499 $ 9,043,449 $ 669,950
37,000 37,000 50,885 13,885
7,639,498 8,410,499 9,094,334 683,835.
55,237 55,237 55,237 -
55,237 55,237 55,237 -
7,584,261 8,355,262 9,039,097 683,835
(7,361,123) (8,153,963) (8,153,963)
TOTAL OTHER FINANCING SOURCES (USES)
(7,361,123)
(8,153,963)
(8,153,963)
NET CHANGE IN FUND BALANCES
223,138
201,299
885,134 683,835
FUND BALANCES - BEGINNING
746,259
1,027,502
1,027,502 -
FUND BALANCES - ENDING
$ 969,397 $ 1,228,801 $ 1,912,636 $ 683,835
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 28
ASSETS
Current Assets
Equity in pooled cash and investments
Cash with escrow agent
Prepaid items
Receivables (net):
Taxes
Accounts and contracts
Interest
Due from other governments
TOTAL CURRENT ASSETS
Property, plant and equipment:
Land
Building/structures
Machinery/furniture/equipment
Construction in progress
Less accumulated depreciation
TOTAL NONCURRENT ASSETS
TOTAL ASSETS
LIABILITIES AND FUND EQUITY
Current liabilities:
Vouchers/payroll payable
Retainage payable
Retainage payable - with escrow agent
Deposits payable
Deferred revenue
Public works trust fund loan payable
Compensated absences payable
TOTAL CURRENT LIABILITIES
Long-term liabilities:
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
December 31, 2006
With Comparative Totals for December 31, 2005
Business -type Activities - Enterprise Funds Governmental Activities -
Internal Service Funds
Surface Water Dumas Bay Comparative Totals
Management Centre 2006 2005 2006 2005
$ 7,223,774 $ 587,441 $ 7,811,215 $ 7,450,616 $ 10,576,404 $ 10,046,229
55,242 - 55,242 - - -
- - - - 5,000 5,000
100,296
-
100,296
93,572 -
-
43,463
43,463
43,667 - -
8,890
782
9,672
10,711 10,401 12,027
14,135
1,500
15,635
47,126 - -
7,402,337
633186
8,035,523
7,645,692 10,591,805 10,063,256
4,642,804
2,109,640
6,752,444
5,863,130
-
-
43,042,121
3,576,592
46,618,713
44,528,808
15,995,476
-
-
106,643
106,643
106,643
10,721,931
14,409,734
3,630,232
338,932
3,969,164
5,135,757
-
-
10,020,225
1,789 634
11 809,859
I 1 217 766
(7,614,946)
(81960,122)
41,294,932
4,342173
45,637,105
44416,572
19,102,461
5,449,612
48,697,269
4,975,359
53,672,628
52,062,264
29,694,266
15.512,868
204,485
33,143
237,628
177,983
139,991
216,378
3,857
1,288
5,145
7,516
-
-
55,242
-
55,242
-
-
-
-
11,749
11,749
14,121
500
500
72,647
135,337
207,984
186,397
-
-
182,359
-
182,359
182,359
-
-
294
-
294
305
1,941
1,764
518,884
181,517
700,401
568,681
142,432
218,642
Public works trust fund loan payable
1,757,113
-
1,757,113
1,939,472
-
-
Compensated absences payable
38,988
11,874
50,862
45,039
44,688
40,641
TOTAL LONG-TERM LIABILTIES
11796,101
11,874
1,807,975
1,984 511
44,688
40,641
TOTAL LIABILITIES
2,314,985
193,391
2,508,376
2,553,192
187,120
259,283
Invested in capital assets, net of related debt
39,355,460
4,342,173
43,697,633
42,258,570
19,102,461
5,449,612
Restricted for:
Customer deposits
-
11,749
11,749
14,121
-
-
Steel lake management district
14,690
-
14,690
18,880
-
-
Unrestricted
7,012,134
428,046
7,440,180
7.217501
10,404,685
9,803,973
TOTAL NET ASSETS
S46,382,284
$4,791,969
51,164,252
49,509,072
$ 29,507,146.
$ 15,253,585.
Adjustment to reflect the consolidation of internal service fund activities
related
to enterprise funds
27,237
11,356
NET ASSETS OF BUSINESS -TYPE ACTIVITIES $ 51,191,489 $ 49,520.,428
The notes to the financial statements are an integral part of this statement.
CO, of Federal Way / 29
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
For the Year Ended December 31, 2006
With Comparative Totals for December 31, 2005
OPERATING REVENUES:
Service charges and fees
Miscellaneous
TOTAL OPERATING REVENUES
OPERATING EXPENSES:
Personal services
Materials and supplies
Services and charges
Intergovernmental
Depreciation
Interfund charges
TOTAL OPERATING EXPENSES
OPERATING INCOME (LOSS)
NON -OPERATING REVENUES (EXPENSES)
Subsidy from interlocal grants
Gain (Loss) from disposal of capital assets
Interest income
Interest expense
Business -type Activities - Enterprise Funds Governmental Activities -
Internal Service Funds
Surface Water Dumas Bay __ Comparative'rotals
Management Centre 2006 2005 2006 2005
$ 3,490,851 $ 615,510 $ 4,106,361 $ 4,100,623 $ 4,034,227 $ 4,345,876
23,818 - 23,818 97,111 67,882 119,893
3,514,669
615,510
4,130,179
4,197,734
4,102,109
4,465,769
1,437,293
360,010
1,797,303
1,628,500
746,789
763,377
38,566
128,176
166,742
113,582
457,865
394,677
292,268
202,857
495,125
537,586
1,832,563
1,767,655
343,775
343,775
312,599
97,222
82,711
410,316
181,776
592,092
591,780
1,789,451
1,219,215
593,322
51,893
645,215
615,952
-
3,115,540
924,712
4,040,252
3,799,999
4,923,890
4,227,635
399,129
(309,202)
89,927
397,735
(821,781)
238,134
1,113,010 1,113,010 - -
- - (904,117) (57,359)
336,930 28,950 365,880 222,321 380,814 244,987
(21,218) - (21,218) (23,042) - -
TOTAL NON-OPER REVENUES (EXPENSES) 1,428,722 28,950 1,457,672 199,279 (523,303) 187,628
INCOME (LOSS) BEFORE OPERATING TRANSFER 1,827,851 (280,252) 1,547,599 597,014 (1,345,084) 425,762
Capital contributions
Transfers in
Transfers out
CHANGE IN NET ASSETS
15,420,330 901,973
121,840 121,840 126,369 207,961 511,641
(14,259) - (14,259) - (29,646) (21,263)
1,813,592 (158,412) 1,655,180 723,383 14,253,561 1818,113
TOTAL NET ASSETS - BEGINNING 44,568,692 4,940,380
TOTAL NET ASSETS - ENDING $ 46,382,284 $ 4,781,968
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds 15,881 8,452
CHANGE IN NET ASSETS OF BUSINESS -TYPE ACTIVITIES $ 1,671,061 $ 731,835
The notes to the financial statements are an integral part of this statement.
15,253,5 85 13,435,472
$ 29,507,146 $ 15,253,585
City of Federal Way / 30
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended December 31, 2006
With Comparative Totals for December 31, 2005
Business -type Activities - Enterprise Funds Govemmental Activities -
Intemal Service Funds
Surface Water Dumas Bay Com arative Totals
Management Centre 2006 2005 2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from users $
3,490,851 $
645,214
$ 4,136,065
$ 4,181,463
$ 4,034,227 $
4,370,876
Cash payments to claimants
-
-
(434,387)
(369,701)
Cash payments to suppliers for goods/services
(285,500)
(330,651)
(616,151)
(633,986)
(1,932,338)
(1,730,128)
Cash payments to employees
(1,434,182)
(357,309)
(1,791,491)
(1,656,151)
(742,655)
(798,488)
Cash payments to other funds for goods and services
(593,322)
(51,893)
(645,215)
(597,419)
-
-
Cash payments for other services/charges
-
-
-
(111,064)
-
Cash payments to other governments for goods and services
(343,775)
-
(343,775)
(332,411)
(97,222)
(82,711)
Cash payments for damage deposits
-
(2,372)
(2,372)
-
-
_
Other operating receipts
23,818
-
23,818
-
67,882
119,893
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIE
857,890
(97.011)
760,879
850.432
895.507
1,509,741
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Subsidy from interlocal grant
1,143,501
-
1,143,501
-
-
-
Transfers in
-
121,840
121,840
126,369
207,961
490,378
Transfers out
(14,259)
-
(14,259)
-
(29,646)
-
NET CASH PROVIDED BY NONCAPITAL FINANCING
1,129,242
121,840
1,251.082
126 6969
178,315
490,378�
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
(21,218)
(21,218)
(23,042)
-
-
Acquisitionofcapitalasset/construction work in progress
(1,806,404)
(6,222)
(1,812,626)
(968,662)
(926,088)
(1,351,941)
Proceeds from the sale of capital assets
-
-
-
16,667
NET CASH USED FOR CAPITAL
AND CAPITAL -RELATED FINANCING ACTIVITIES
(2,009,981)
(6,222)
(2,016,203)
(1,174,063)
926,088
1,335,274
CASH FLOWS FROM INVESTING ACTIVITIES:
Receipts ofinterest
335,883
28,958
364.841
217,391
382,441
234,654
NET CASH PROVIDED BY INVESTING ACTIVITES
335,893
28.958
364,841
217 9191
382.441
234,654
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENT
313,034
47,565
360,599
20,129
530,175
899,499
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
6,910,740
539,876
7,450,616
7,430 487
10,046,229
9,146,730
CASH AND CASH EQUIVALENTS AT END OF YEAR
7,223,774
587,441
7,811,215
7,450,616
10,576,404
10,046,229
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Operating income (loss)
399,129
(309,202)
89,927
397,735
(821,791)
238,134
Adjustments to reconcile operating income to
net cash provided (used) by operating activities:
Depreciation expense
410,316
181,776
592,092
591,780
1,789,451
1,219,215
(Increase)/decrease in accounts receivable
-
204
204
(8,140)
-
25,000
(Increase)/decrease in taxes receivable
(8,432)
-
(8,432)
(6,218)
-
-
(Increase)/decrease in due from other governments
-
1,000
1,000
14,388
_
Increase/(decrease)in vouchers/accounts payable
56,877
26,839
83,716
26,994
(76,297)
62,503
Increase/(decrease) in retainage payable
-
-
(46,424)
-.
-
Increase/(decrease) in deposits payable
-
2,372
2,372
(111,064)
-
Increase/(decrease) in deferred revenue
-
-
-
19,032
-
_
Increase/(decrease) in accrued payroll/compensated absences payable
-
-
-
27,651
4,134
(35,111)
TOTAL ADJUSTMENTS
458,761
2I2,191
670.952
452,697
1,717 298
1,2715607
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $
857,890 $
97,011
$ 760,879
$ 850,432
5 895507 5
1,509,741
Non -cash investing, capital, and financing activities:
Other contributions of capital assets
$ 15,420,330 $
901,973
The notes to the financial statements are an integral part of this statement
City+ of Federal Wml / 31
NOTES TO THE BASIC FINANCIAL STATEMENTS
December 31, 2006
INDEX
Note
Page
1
Summary of Significant Accounting Policies ...... ............................................ ............................... .
32
ReportingEntity............................................................. ...............................................
Government -wide and Fund Financial Statements .......... ....... ............ ......... .........................
32
Measurement Focus, Basis of Accounting, and Financial Statement Presentation ...............
33
BudgetaryInformation ......... ............... ............. ....... ............ ....................... ............. I............
36
Assets, Liabilities and Equities.............................................................•............._.................
38
Cash and Investments..................................................................................................
38
Receivables....._................._............_............................_...::..................::............:..._:..._.
38
Amounts Due to and from Other Funds; Interfund Loans ............................................
38
Inventories...................................................................................................................
39
Capital Assets-•-----•..................•--•--•--..-....--•------••--•--•................ ......... ..... ....................
39
Compensated Absences Payable.............................................................. ...
39
Long -Term Debt ......................... ...........•----•..........---..........-•------•------•--.........-----.-..-.---
40
DeferredRevenue........................................................................................................
40
Fund Equity -Reserves and Designation ... ............................................................. ........
40
Interfund Transactions.................................................................................................
40
2
Reconciliation of Government -wide & Fund Financial Statements ... .................................._..._....
41
3
Stewardship, Compliance and Accountability......................................................:..........................
41
4
Supplemental Appropriations...................................................:....................................................
41
5
Deposits and Investments..............................................................................................................
42
6
Receivables and Due from Other Governments ........:..........................
44
7
Due To Other Governments..........................................................................................................
45
8
Capital Assets ..... ..................................................... ...........................
6
9
Pension Plans ........ ....................................................................................................
10
Risk Management..........................................................................................................................
51
11
Long -Term Debt ............. ....... ............ ___ ........ ...................... :.................. ...................................
52
12
Interfund Transactions.................................................................................................................•
55
13
Contingencies and Litigation.........................................................................................................
56
14
Joint Ventures .......... ............................ ...... ........... ............ .........................
City of Federal Way / 32
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Year Ended December 31, 2006
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the City of Federal Way have been prepared in conformity with generally accepted accounting
principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted
standard setting body for establishing governmental accounting and financial reporting principles. The significant accounting
policies are described below.
REPORTING 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
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
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) 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.
City of Federal Way / 33
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.
Downtown Redevelopment CIP Fund
This fund was established to accumulate resources to set aside for downtown projects
City 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.
City of Federal Way / 34
The City reports the following fund groups as non -major funds:
Special Revenue Funds
These funds are to be used to account for the proceeds of revenues and sources (other than special assessments,
expendable trust or major capital projects) that are legally restricted to expenditures for specified purposes.
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 fall 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:
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 Find
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.
City of Federal Way / 35
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.
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:
City of Federal Way / 36
Property Taxes - King County acts as the City's collection agent for these taxes. Each day, the County electronically transmits to
the City the taxes which it has collected on the City's behalf in the prior day. On this basis, property taxes received in January are
considered both measurable and available and are therefore recognized as revenue in the current year.
Other Locally Levied Taxes - King County also acts as the City's collection agent for the '/4% and optional '/4% 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.
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
Federal Way Community Center
Hotel/Motel Lodging Tax
Paths & Trails
Debt Service Fund
City of Federal Way / 37
Procedures for Adopting the Annual Budget
The City's budget process and the time limits under which the budget must be prepared are defined by the Revised Code of
Washington (RCW) 35A.33. The procedures followed in establishing the annual budget are described below:
By late May the official budget call is made by the Management Services Director for current level service budgets and a
preliminary financial forecast.
By late June, departments submit their preliminary expenditure estimates and the Management Services department updates the
preliminary revenue estimates to define resources available to finance coming year expenditure programs.
Prior to the first Tuesday in September, the City Manager submits a proposed budget to the City Council. This budget is based
on priorities established by the Council and estimates provided by City departments during the preceding months, and
balanced with revenue estimates made by the Management Services Director.
City Council conducts workshops and public hearings on the proposed budget between mid -September and mid -December.
No later than the third Monday in November, the City Council must adopt an ordinance to establish the amount of property
taxes to be levied in the coming year.
By October 31, the City Manager files a preliminary budget with the City Clerk. Copies of the preliminary budget are
provided to staff and the City Council and made available to the public.
During the first two weeks of November, the City Clerk publishes a notice of the filing of the preliminary budget and notices of
public hearings to be held during preliminary budget deliberations.
Two public hearings on the proposed budget are also held during November and December. Final hearings on the budget must
begin on or before the first Monday of December, and may continue until the 25th day prior to beginning of the next fiscal
year.
By December 31, the City Council makes its adjustments to the proposed budget and adopts a final budget by ordinance.
The final operating budget, as adopted, is published and distributed within the first three months of the following year. Copies
of the adopted budget are made available to the public.
Amending the Budget
The City Manager is authorized to transfer budgeted amounts between departments within any fund; however, any revisions that
alter the total expenditures of a fund must be approved by the City Council.
When the City Council determines that it is in the best interest of the City to increase or decrease the appropriation for a particular
fund, it may do so by ordinance approved by a simple majority. During 2006, 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 comrriitments 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
City of Federal Way-1 3 8
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 $7,942,725.
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, 2006, the State Treasurer was
holding $34,272,920 in the State Investment Pool and US Bank was holding $22,802,348 in a Municipal Investor Account (MIA)
for short-term investments of cash. The State Investment Pool and the Municipal Investor Account is considered a cash equivalent.
The interest earnings on these investments are allocated to all funds based on the average monthly balance for each fund.
For purposes of the Statement of Cash Flows, the City considers all highly liquid investments with a maturity of three months or
less when purchased, to be cash equivalents. At December 31, 2006, the total cash and cash equivalents were $55,418,185.
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 lendingiborrowing arrangements outstanding at the end of the fiscal year are
referred to as either "interfund loans receivable/payable" or "advances to/from other funds." All other outstanding balances
between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities
and business -type activities are reported in the government -wide financial statements as "internal balances."
Loans between funds must be authorized by the 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.
City of Federal Way / 39
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 for years the 2003 - 2006. Under the requirements of GASB 34, the City has
until 2007 to record the remainder of its infrastructure assets.
Major expenditures for fixed assets, including capital leases and major repairs that increase useful lives are capitalized.
Maintenance, repairs, and minor renewals are accounted for as expenditures or expenses when incurred. The City has adopted a
general fixed asset capitalization policy where an 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.......... ........ ...................................................................... ...4-5
Communications Equipment.................................................6.........10
Other Office Equipment...............................................................4-10
Office Furniture & Fixtures ............................................ :............... 10
Recreation Equipment ........................... ......:...... ......................... ._..10
Parks Equipment ...................... :.....:..:..::....::................... ,............ 5-12
Non -Police Vehicles .•••• ............. -............ ::.......... ............. :................7
PoliceVehicles........................::.......:...........................................4-6
Police Equipment ...............
LightTrucks .............................. ..................................................
..... 7
HeavyTrucks............................._................................._..........._...8-10
Heavy Work Equipment.............................................................10-16
Shop/Miscellaneous Equipment ......... ............. ........... .............
...10-12
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 18.5 days per year depending on term of employment.
Employees may accumulate up to a maximum of 240 hours of vacation leave, except the Police Guild, who can accrue up to a
maximum of 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.
City of Federal Way / 40
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 for regular City employees per City policy and 1,040 hours for the
Police Guild, per their contract. The monthly accrual rate for City employees is 8 hours per month. Accumulated sick leave is not
payable upon termination of employment. Outstanding sick leave at year-end is not accrued due to the difficulty in estimating the
portion of existing balances likely to result in expenditures in future periods.
Long-term Debt
In the government -wide financial statements and the proprietary fund financial statements, long-term debt and other long-term
obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund
statement of net assets. Long-term debt outstanding at year-end is outlined in Note 11.
Deferred Revenues
The deferred revenue account is used to offset receivables established in the governmental funds for certain revenues that are
measurable but not considered available to finance payment of current obligations and, therefore, are not susceptible to accrual on
the modified accrual basis. When the receivable amounts are collected in future periods, this liability account is reduced and
corresponding revenue is recorded. The portions of Property Taxes that do not meet the available criteria are recorded as deferred
revenue.
Fund 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, 2006, an additional $10,000 was added to the loan to increase the interim financing to the
CDBG for a total of $20,000. 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 interfund transfers. Interfund loans are temporary borrowings of cash which do not affect operating
statements, but which may incur interest expense or expenditure to the borrowing fund. 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 / 41
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 $30,781,630 difference are as follows:
Bonds Payable at beginning of year $27,701,761
Plus: New debt issued $4,100,000
Plus: Inclusion of compensated absences 1,200,100
Less: Current year reduction of principal portion of debt (2.219.676]
Net adjustment to reduce fund balance -total governmental
funds to arrive at net assets — governmental activities $30.782.184
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 $23,390,575 difference are as follows:
Net Capital outlay $24,412,303
Governmental depreciation expense (1,021,728)
Net adjustment to increase net changes in fund balances —
Total governmental funds to arrive at changes in net assets
ofgovernmental activities $23.390.575
Another element of the reconciliation states that "Revenues in the statement of activities that do not provide current financial
resources are not reported as revenues in the funds." This item presents:
Property taxes earned reported as deferred in the fund statements$ $4
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 57 453
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.
NOTE 4 — SUPPLEMENTAL APPROPRIATIONS
Operating Budget Funds
Appropriations established during 2006 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.
City of Federal Way / 42
2006
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
Federal Way Community Center
Subtotal Special Revenue Funds
$ 31,694,787
4,195,238 $
35,890,025
3,808,260
472,727
4,280,987
1,502,520
97,272
1,599,792
7,416,360
792,840
8,209,200
349,314
(9,184)
340,130
150,000
132,627
282,627
-
76,500
76,500
13,226,454
1,562,782
14,789,236
Debt Service Fund 5,258,856 1,250,000 6,508,856
Total $ 50,180,097 $ 7,008,020 $ 57,188,117
NOTE 5 — DEPOSITS AND INVESTMENTS
As required by state law, all deposits and investments of the City's funds are obligations of the U.S. Government, the State
Treasurer's Investment Pool, bankers' acceptances, or deposits with Washington State banks and savings and loan institutions. In
2006 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, 2006, the equity in pooled cash and investments was
$67,306,492.
At year-end, the City had $55,418,185 in cash and cash equivalents which consisted of investments with the State Pool of
$34,272,920; the Municipal Investor account with US Bank of $22,802,348; the City's checking account bank balance prior to
outstanding checks was $257,375; and petty cash and change funds, advance travel fund and investigative fund totaling $40,610.
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.
As of December 31, 2006 the City had the following investments and maturities:
Cih, of Federal Way / 43
SCHEDULE OF INVESTMENTS BY MATURITIES
AS OF DECEMBER 31, 2006
Investment maturities
Book Less than 1 to 2 Greater than
Investment Type Value 1 year years 3 years
State Investment Pool $ 34,272,920 $ 34,272,920 $ - $ -
Municipal Investors Account 22,802,348 22,802,348 - -
US Agencies 11,888,307 9,888,007 2,000,300 -
$ 68,963,575 $ 66,963,275 $ 2,000,300 $ -
Reconcillation to Governmental -Wide Statement of Net Assets:
US Bank, checking account per books
$ (1,697,693)
Petty cash/change fund/Advance travel/Investigative fund
40,610
State Investment Pool
34,272,920
Municipal Investors Account
22,802,348
Subtotal Cash and Cash Equivalents
55,418,185
US Agencies
11,888,307
Cash with escrow agent
808,925
Total cash and investments, Governmental -Wide
Statement of Net Assets
$ 68,115,417
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.
Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. This is measured by the
assignment of a rating by a nationally recognized statistical rating organization.
State law and the City's investment policy limits the instruments in which the City may invest. The following are categories of
investments authorized under the City's policy, in general order of safety and liquidity: State Investment Pool; repurchase
agreements; U.S. treasury obligations; U.S. government agencies; U.S. government -sponsored corporationshnstrumentalities;
bankers' acceptances (secondary market domestic and foreign); commercial paper (secondary market); insured certificates of
deposit (banks and savings & loans); and uninsured/collateralized certificates of deposit (banks and savings & loans).
The credit risk of the State Investment Pool is limited to obligations of the US Government, government sponsored enterprises, or
insured demand deposit accounts and certificates of deposit.
As of December 31, 2006, 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 Investment Pool; and the Municipal Investments Account (public funds savings account).
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, 2006.
Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of an investment in a single issuer. The City diversifies
its investments by security type and institution. The investment policy states: "no more than 5% of the portfolio may be invested in
the securities of a single issuer, except for the U.S. Treasury, to which no limits apply, and commercial paper, which is limited to
3% of the portfolio. No more than 30% of the portfolio may be invested in Bankers' Acceptances and Certificates of Deposit."
City of Federal Way / 44
Other Information
Below is a schedule of investments by fund type:
SCHEDULE OF INVESTMENTS BY FUND CATEGORY AND INVESTMENT TYPE
AS OF DECEMBER 31, 2006
State
Municipal
Investment
Investors
Fund Type
Pool
Account US Treasuries
US Agencies
Total
General Fund
$ 2,612,171
$ 1,737,921 $ -
$ 906,088
$ 5,256,181
Special Revene Funds
2,673,847
1,778,955 -
927,482
5,380,285
Capital Projects Funds
20,144,242
13,402,302 -
6,987,468
40,534,011
Enterprise Funds
3,767,888
2,506,839 -
1,306,974
7,581,701
Internal Service Funds
5,074,771
3,376,330 -
1,760,295
10,211,397
Total
$ 34,272,920
$ 22,802,348 $ -
$ 11,888,307
$ 68,963,575
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, 2006, the total balance of property taxes
receivable recorded by the City was $233,511. Of this, $201,643 is recorded as a deferred revenue, since it was not collected within
the first 30 days of 2006. The property tax levy calendar in 2006 was:
PROPERTY TAX CALENDAR
January 1 Taxes are levied and become an enforceable lien against properties.
February 14 Tax'bills are mailed.
April 30 First of two equal installment payments is due.
May 31 Assessed value of property established for next year's levy at 100% of market value.
October 31 Second installment is due.
Property taxes are recorded as a receivable when levied, offset by deferred revenue. During the year, property tax revenues are
recognized when cash is collected. At year-end, property tax revenues are recognized for collections expected to occur within 30
days. No allowance for uncollectible taxes is established because delinquent taxes are considered fully collectible.
Under State law, the maximum levy (for general governmental services) is up to $3.60 per $1,000 of assessed valuation, subject to
two limitations, set forth below. Since the City of Federal Way is not a full service city, the City is only allowed $1.60. The
remaining $2.00 is for the fire district ($1.50) and library district ($.50).
Chapter 84.55 of the State RCW was amended most recently by Initiative No. 747 (which was passed by voters on
November 6, 2001), limits the total dollar amount of regular property taxes levied by the City to the amount of such taxes
levied in the three most recent years multiplied by a limit factor, plus an adjustment to account for taxes on new
construction, improvements and state -assessed property at the previous year's rate. As amended by Initiative No. 747, the
limit factor is the lesser of 101% or 100% plus the percent change in the Implicit Price Deflator, unless a greater amount is
approved by a simple majority of the voters; and
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.
City of Federal Way / 45
The City's regular levy for 2006 was $1.22 per $1,000 on an assessed valuation of $7,251,992,701 for a total regular levy of
$8,800,989.
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
Commute Trip Reduction Grant
Refuse Collection Fees
Federal Way Fire Department Buy -In of ValleyCom
Recreation Programs/Facility Rentals
Receivables & Due from Other Governments
Solid Waste
Debt
General
Street & Recycling
Service
Total
201,643
- -
-
201,643
-
30,431 -
-
30,431
- 21,584
-
21,584
-
- -
263,520
263,520
20,061
- -
-
20,061
$ 221,704
$ 30,431 $ 21,584
$ 263,520
$ 537,239
The receivables for the fiscal year ended December 31, 2006 on the government -wide statement of net assets are detailed in the
following schedule.
Debt
City
Trans-
Downtown
Nonmajor
General
Street
Utility Tax_
Service
Facilities
portation
Redevelop.
Govt'l
Proprietary
Total
Property Tax
$ 233,511
$
$ -
$ -
$
$ -
$ -
$
$
$ 233,511
Real Estate
_-
Excise Tax
-
-
215,660
-
-
215,660
Utility Tax
-
-
1,100,201
-
1,100,201
Gambling Tax
192,591
-
-
-
_
-
_
192,591
Recreation
Programs/
Facilities
(17,229)
-
-
-
-
43,463
26,234
Grants &
_
Contributions
279,779
-
-
-
-
309,395
15,635
604,809
Construction
Contract/
Reimburse
-
-
-
-
-
-
-
-
-
Deferred Maint
-
-
-
261,091
-
-
261,091
Investment
interest
11,499
2,207
2,152
2,700
13,365
18,450
6,028
5,158
20,073:
81,632
State Shared
Revenue
1,316,809
94,390
-
-
28,155
-
58,238
-
1,497,592
WA State
Criminal Justice
Training Center
27,816
-
-
-
-
-
-
-
-
27,816
Surface Water
-
Management
Fees
-
-
-
-
-
-
-
100,296
100,296
$ 2,044,776
$ 96,597
$ 1,102,353
$479,451
$ 13,365
$ 46,605
$ 6,028
$ 372,791
$ 179,467
$ 4,341,434
NOTE 7 - DUE TO OTHER GOVERNMENTS
At December 31, 2006, the City recorded $264,042 as due to other governmental units as follows:
General Fund
City of Auburn - Jail Services
$ 118
City of Fife - Jail Services
28,507
City of Yakima - Jail Services
111,494
King County - Jail Services
32,705
King County - Voter Registration & Election Costs
91,218
$ 264,042
City of Federal Way / 46
NOTE 8 — CAPITAL ASSETS
Capital assets activity for the year ended December 31, 2006 was as follows:
Beginning Balance
Ending Balance
Governmental Activity
1/1/2006
Additions
Deletions
12/31/2006
Capital assets, not being depreciated:
Land
$ 37,261,732
$ 4,028,386
$ -
$ 41,290,118
Construction in progress
24,175,997
20,027,922
i6,252,947)
37,950.972
Total capital assets, not being depreciated:
61,437,729
24,056,308
.(6,252,947)
79241,090
Capital assets, being depreciated
Buildings
19,818,835
15,068,709
(18,387,233)
16,500,311
Improvements other than buildings
16,549,392
785,508
17,334,900
Infrastructure
3,012,313
5,463,069
8,475,382
Machinery and equipment
10,3.39,700
1,293,100
10,905,532
Total capital assets, being depreciated:
49,720,240
22,610,386
_�726;868)
(19,114,101)
53,216,525
Less accumulated depreciation for:
Buildings
Improvements other than buildings
Infrastructure
Machinery and equipment
Total accumulated depreciation:
Total assets being depreciated, net
Governmental activities capital assets, net
(2,833,094)
(905,486)
2,459,130
(1,279,450)
(5,786,037)
(827,470)
(6,613,507)
(71,152)
(150,616)
(221,768)
(6,528,532)
(927,607)
675,497
(6,780,642)
(15,218,815)
(2,811,179)
3,134,627
_
(14,895,367)
34,501,425
19 799,207
(15,979,474)
38,321,158
$ 95,939,154
$43,855,515 $
(22,232,421) $
117,562,248
Beginning Balance
Ending Balance
Business -Type Activities
1/1/2006
Additions Deletions
12/31/2006
Capital assets, not being depreciated:
_
Land
$ 5,863,130
$ 889,314 $ -
6,752,444
Construction in progress
5,135,757
1,727,748 (2,594,341)
3,969,164
Total capital assets, not being depreciated:
10,998,887
2,617,062 (2,894,341)
10,721,608
Capital assets, being depreciated
Buildings
Improvements other than buildings
Infrastructure
Machinery and equipment
Total capital assets, being depreciated:
Less accumulated depreciation for :
Buildings
Improvements other than buildings
Infrastructure
Machinery and equipment
Total accumulated depreciation:
Total assets being depreciated, net
Business Type activities capital assets, net
3,596,441 3,596,441
40,932,367 2,089,905 43,022,272
106,643 106,643
44,635,451 2,089,905 - 46,725,356
(1,540,377) (179,824) (1,720,201)
(9,606,687) (409,323) (10,016,010)
(70,744) (2,945) (73,689)
(11,217,808) (592,092) - (11,809,900)
33,417,643 1,497,813 - 34,915,456
$ 44,416,530 $ 4,114,875 $ (2,894,341.) $ 45,637,064
Citv of Federal Wait/ 47
Depreciation expense was charged to functions/programs of the primary government as follows:
Government Activities
General Government
$
301,582
Security of Persons & Property
$
772,477
Transportation
$
422,639
Economic Environment
$
192,282
Health
$
9,741
Culture & Recreation
$
1,112,457
Total Depreciation - Governmental Activities
1 $
2,811,179
Busines-Type Activites
Utilities - Surface Water Management
Culture & Recreation - Dumas Bay Centre
$ 410,316
181,776
Total Depreciation - Business -Type Activities
$ 592,092
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
City of Federal Way / 48
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.
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 1,181 participating employers in PERS. Membership in PERS consisted of the following as of the latest actuarial
valuation date for the plans of September 30, 2006:
Retirees and Beneficiaries Receiving Benefits
68,609
Terminated Plan Members Entitled to But Not Yet Receiving Benefits
22 567
Active Plan Members Vest
104:574
Active Plan Members Nonvested
51,004
Total
246,754
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, 2006, were:
PERS Plan I PERS Plan 2 PERS Plan 3
Employer* 5.46%* 5.46% 5.46%**
Employee 6.00% 3.50% ***
* 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.
City of Federal Way / 49
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
2006 $13,269
$295,665
$49,762
2005 $ 7,769
$166,061
$26,248
2004 $ 5,834
$120,335
$19,113
2003 $ 6,239
$118,973
$10,900
Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) Plans 1 and 2
Plan Descd tion
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), capped at 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, 2006:
Retirees and Beneficiaries Receiving Benefits
8,723
Terminated Plan Members Entitled to But Not Yet Receiving Benefits
577
Active Plan Members Vest
12,348
Active Plan Members Nonvested
3,543
Total
25,191.
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.
City of Federal Way / 50
All employers are required to contribute at the level required by state law. The Legislature, by means of a special funding
arrangement, appropriated money from the state General Fund to supplement the current service liability and fund the prior service
costs of Plan 1 in accordance with the requirements of the Pension Funding Council. However, this special funding situation is not
mandated by the state constitution and this funding requirement could be returned to the employers by a change of statute. The
methods used to determine the contribution rates are established under state statute in accordance with Chapters 41.26 and 41.45
RCW.
The required contribution rates expressed as a percentage of current year covered payroll, as of December 31, 2006 were.
LEOFF Plan I LEOFF Plan II
Employer 0.19% * 4.90% **
Employee 0.00% 7.85%
State N/A 3.11 %
* 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 II
2006
$0
$417,371
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 2006, there were a total of 382 individuals covered by this system. As of the end of the year, 314 remained as active
employees of the City and two were drawing retirement benefits. The 68 inactive had left the City's employment and either had
been reimbursed their contributions, or the reimbursement was pending, or they elected to have their contributions remain in the
plan if the balance was $1,000 or greater.
All regular employees of the City of Federal Way are required to participate in the system, with the City matching the employee's
required contribution. The employee pays 6.2% and this is matched by the composite of a cash match (approximately 5.2%) and
insurance payments (1%) for disability, survivor, accidental death and dismemberment, and lump sum death benefit coverage.
Contributions into the plan are tax deferred.
Employees are entitled to make voluntary contributions to the plan, assuming that highly compensated and non -highly compensated
employees are treated equally. Each payroll period, employees may make a voluntary contribution equal to a minimum of 1% of
the participant's compensation, not to exceed 10% of the participant's compensation.
Covered payroll for 2006 was $16,924,239 and total City payroll was $21,725,181. Actual City contributions for the year were
$1,039,329. Actual employee contributions were $1,264,330. All contributions were invested in instruments arranged through
independent investment advisors selected by the Municipal Employers Benefit Trust (MEBT) comirlittee 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,
2006 were $956,221.
City of Federal Way / 51
The consulting actuary firm of Trautmann, Maher & Associates has been contracted to provide record keeping, administrative and
consulting services related to the Plan.
Actuarial determinations are not required because accidental death and dismemberment insurance, long-term disability, survivor
income insurance and the lump sum death benefit are provided by a group insurance policy with Standard Insurance Company; and
benefits paid to participants upon retirement are limited to: (a) a nonforfeitable, nontransferable annuity contract purchased by the
plan's trustee, (b) retirement benefits payable from the employee's account to which no contributions by the City or the participant
can be added after retirement, or a single lump -sum payment equal to the accumulated balance in the employee's account as of his
retirement date.
NOTE 10 —RISK MANAGEMENT
The City uses the Risk Management Internal Service Fund to account for its risk financing activities. The City maintains insurance
against most normal hazards except for unemployment insurance where it has elected to become fully self -insured. Related
premiums received by the Risk Management Fund are used to reimburse the State Employment Security Department for
unemployment benefits paid to eligible individuals, and to establish reserves for the payment of estimated future unemployment
claims liability.
Through its Risk Management Fund, the City is also recovering insurance premium costs for general liability coverage and building
reserves for a future general liability self-insurance program. The City's insurance coverage in 2006 remained relatively similar to
the coverage for 2005. There were no settlements in excess of insurance for commercially insured activities for 1996 through
2006.
During 2006 the City purchased commercial insurance policies from commercial insurers. The following is a summary of coverage
in force in 2006.
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 $25,000
St. Paul Fire and Marine
Public Official Bond Management Service
Included in Crime/Fidelity Coverage, N/A Employee Dishonesty, $100,000 Forgery/Alteration,
Insurance Company
Director
Deductible $1,000
St. Paul Fire and Marine
Public Official Bond City
Included in Crime/Fidelity Coverage, N/A Employee Dishonesty, $100,000 Forgery/Alteration,
Insurance Company
Manager
Deductible $1,000
General Liability, Auto Liability,
$10,000,000 Occurrence, $20,000,000 Aggregate, N/A 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 $25,000
Statement of Values Limit $50,000,000, 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
Private Passenger
Faithful Performance /
St. Paul Fire and Marine
Fidelity/Employee Dishonesty and ERISA
Included in Crime/Fidelity Coverage, N/A Employee Dishonesty, $100,000 Forgery/Alteration,
Insurance Company
Coverage
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, N/A Employee Dishonesty, $100,000 Forgery/Alteration,
Insurance Company
Public Officials Bond - City Clerk
Deductible $1,000
St. Paul Fire and Marine
Included in Crime/Fidelity Coverage, N/A Employee Dishonesty, $100,000 Forgery/Alteration,
Insurance Company
Public Officials Bond - Chief of Police
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
City of Federal Way / 52
The City's industrial insurance is provided by Washington State and is administered by the Department of Labor and Industries.
Coverage is purchased by means of standard rates per working hour and is computed by the total number of hours worked by
employees multiplied by the basic premium rate assigned to the business risk classification. The following are benefits provided by
industrial insurance: medical services, damaged clothing, travel expenses, time -loss payments, vocational rehabilitation, partial
disability awards, pension awards and survivor benefits.
The City is self -insured for unemployment compensation. At December 31, 2006 the City had $879,447 in reserve.
2001 2002 2003 2004 2005 2006
Unemployment Reserve, Jan. lst
$ 325,079 $
454,823 $
567,171 $
496,306 $
603,140 $
733,297
Unemployment compensation benefits
154,354
166,983
69,871
182,422
183,913
204,396
Claim payments during the year
24,610)
(54,635)
(140,736)
(75,588)
(53,756)
(58,247)
Unemployment Reserve, Dec. 31st
$ 454,823 $
567,171 $
496,306 $
603,140 $
733,297 $
879,447
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 2006 the
City had no voter -approved bonds outstanding. With the exception of the 2006 GO Bond, 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.
New Debt Issued
On December 28, 2006 the City borrowed $4,100,000 on a two-year tax exempt bond for the purchase of the AMC Theatre site.
The interest rate on the bonds is 3.53% and maturity is December 28, 2008. Interest payments on the bond will be funded with
interest earned on the $5 million Downtown Redevelopment set aside funds. Final payment will be made with proceeds from the
sale of the AMC Theatre site to a buyer who will develop the property in accordance with the City's economic development plan.
The following schedules detail the long-term debt activity and balances of the City.
City of Federal Way / 53
OUTSTANDING GENERAL OBLIGATION DEBT - BY TYPE
December 31,
2006
Amount
Beginning
Ending
Bond Rating
Issue
Maturity
Interest
Originally
Outstanding
Amount
Amount
Outstanding
Description
at Issuance
Date
Date
Rate
Issued
Debt
Issued
Redeemed
Debt
GgvcmmenW Activities:
General Obligation Bonds:
1997Limited
AAA -insured
22-Apr-97
1-Dec-12
5,00-5.30
16,150,000
5,345,000
-
1,685,000
3,660,000
2000 Limited
Al
12-Sep-00
1-Dec-15
5.31
2,551,600
1,908,000
153,000
1,755,000
7003 Loan Assumption
Nonrated
1-Jul-03
1-Nov-07
7.58
6,168,599
5,958,761
96,676
5,862,085
M03 Limited
AAA -insured
15-Nov-03
1-Dec-33
4.676
15,000,000
14,490,000
285,000
14,205,000
2006 GO Bonds
Nonrated
28-Dec-06
28-Dec-08
3.53
4.100,400
-
4,100,000
-
4.100.000
Subtotal GO Bonds
43,970,199
27,701,761
4,100,000
2,219,676
29,582,085
Compensated Absences
1,166,635
75,063
41,598
1,200,100
Subtotal GO Bonds plus Compensated Absences
43,970,199
28,868,396
4,175,063
2,261,274
30,782,185
Business -Type Activities:
Public Works Trust Fund Loan:
PWTL - Kitts Comer Drain Imp
31-Aug-94
l-Jul-14
1;00
233,316
105,183
-
12,936
92,247
PWTL - Kitts Comer Drain Imp
24-Jul-96
1-Jul-14
1.00
1,166,580
585,592
-
64,679
520,913
PWTL - Kitts Comer Drain Imp
4-Sep-97
1-Jul-14
1.00
155,544
85,381
-
8,624
76,757
PWTL - SeaTac Mall Drain Imp
31-May-00
1-Jul-19
1.00
412,500
224,280
-
16,020
208,260
PWTL- SeaTac Mall Drain Imp
14-Au -00
1-Jul-19
1-00
2,062,500
1,121,394
80,100
1,041,294
Subtotal PWTFL
4,030,440
2,121,830
-
182,359
1,939,471
Compensated Absences
45,344
6,106
294
51,156
Subtotal PWTFL plus Compensated Absences
4,030,440
2,167,174
6,106
182,653
1,990,627
Grand Total All Long -Term Debt
$ 48,000,639
$ 31,035,570 $
4,181,169 $
2,443,927 $
32,772,812
OUTSTANDING GENERAL OBLIGATION DEBT - BY FUND
December 31, 2006
Amount
Beginning
Ending
Originally
Outstanding
Amount
Amount
Oustanding
Due within
Description
Issued
Debt
Issued
Redeemed *
Debt
one year
Governmental Long -Term Debt:
1997 Limited
16,150,000
5,345,000
1,685,000
3,660,000
1,770,000
2000 Limited
2,551,600
1,908,000
153,000
1,755,000
160,000
2003 Loan Assumption
6,168,599
5,958,761
-
96,676
5,862,085
5,869,128
2003 Limited
15,000,000
14,490,000
-
285,000
14,205,000
295,000
2006 G.O. Bonds
4,100,000
-
4,100,000
-
4,100,000
Sub -total Governmental Long -Term Debt
43,970,199
27,701,761
4,100,000
2,219,676
29,582,085
8,094,128
Compensated Absences
1,166,635
75,063
41,598
1,200,100
49,933
Total Gov Long -Term Debt plus Comp Abs
43,970,199
28,868,396
4,175,063
2,261,274
30,782,185
8,144,061
Business -Type Long -Term Debt:
Enterprise Funds:
Public Works Trust Fund Loan
4,030,440
2,121,830
-
182,359
1,939,471
182,359
Sub -total Bus -Type Long -Term Debt
4,030,440
2,121,830
-
182,359
1,939,471
182,359
Compensated Absences
45,344
6,106
294
51,156
960
Total Bus -Type plus Comp Abs LTD
4,030,440
2,167,174
6,106
182,653
1,990,627
183,319
Grand Total All Long -Term Debt
$ 48,000,639
$ 31,035,570 $
4,181,169
$ 2,443,927
$ 32,772,812
$ 8,327,380
*Debt service principal payments in Debt Service Fund include credits of $22,950 from Interlocal agreement with Federal Way Fire District to participate in
capital cost obligations with Valley Communications joint venture with the City of Federal Way.
City of Federal Way / 54
SCHEDULE OF CHANGES IN LONG-TERM DEBT
Period Ended December 31, 2006
Beginning
Ending
Outstanding Debt
Additions
Reductions
Oustanding Debt
Governmental Activities:
General Obligation Bonds
$ 27,701,761
$ 4,100,000
$ (2,219,676)
$ 29,582,085
Compensated Absences
1,1.66,635
75,063
(41,598)
1,200,100
Total Governmental Activities
28,868,396
4,175,063
2,261,274)
30,782 185
Business -Type Activities:
Enterprise Funds
Public Works Trust Fund Loan
2,121,830
-
(182,359)
1,939,471
Com ensated Absences
45,344
6,106
294)
51,156
Tot] Business -Type Activities
2,167,174
6,106
182,653)
1,990,627
Total All Funds
$ 31,035,570
$ 4,181,169
$ (2,443,927)
$ 19 772,812
SCHEDULE OF DEBT SERVICE REQUIREMENTS TO MATURITY
As of December 31, 2006
Governmental Activities
Business -Type Activities
G. O. Bonds
PW Trust Fund
Grand Total
Year
Principal
Interest
Principal
Interest
Principal
Interest
P&I
2007
8,087,085
1,377,072
182,359
19,395
8,269,444
1,396,466
9,665,911
2008
4,907,000
931,842
182,359
17,571
5,089,359
949,413
6,038,772
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
918,000
675,211
182,359
12,100
1,100,359
687,312
1,787,671
2012 - 2016
3,151,000
2,872,793
739,317
34,010
3,890,317
2,906,803
6,797,120
2017 - 2021
2,305,000
2,320,989
288,359
5,767
2,593,359
2,326,756
4,920,115
2022 - 2026
2,930,000
1,748,740
2,930,000
1,748,740
4,678,740
2027 - 2031
3,765,000
980,638
-
-
3,765,000
980,638
4,745,638
2032 - 2033
1,795,000
128,963 .
-
-
1,795,000
128,963
1,923,963
Total
$ 29,582,085
$ 12,502,677
$ 1,939,471
$ 118,515
$ 31,521,556
$ 12,621,192
1 $ 44,142,749
Computation of Legal Debt Margin
Under Washington State law (RCW 39.36.020), a City may incur general obligation debt for general city purposes in an amount
not to exceed 2'/2 percent of the value of all taxable property within the City. State law requires all property to be assessed at 100
percent of its true and fair value. Unlimited tax general obligation debt requires an approving vote of the people, and any election
to validate such general obligation debt must have a voter turnout of at least 40 percent of those who voted in the last State general
election and of those voting, 60 percent must be in the affirmative. The City Council may, by ordinance, authorize the issuance of
limited tax general obligation debt in an amount up to 1.5% of the valuation within the City without a vote of the people. No
combination of limited or unlimited tax debt may exceed 7'/2 percent of the valuation. The debt service on unlimited tax debt is
secured by excess property tax levies, whereas the debt service on limited tax debt is secured by property taxes collected with the
City's councilmanic levy.
The City's legally remaining debt capacities as of December 31, 2006 are:
General Government (no vote required) $ 87,320,745
General Government (3/5 majority vote required) 72,519,927
Parks and Open space (3/5 majority vote required) 181,299,818
Utilities (3/5 majority vote required) 181,299,818
Total Capacity S 522,440,3 8
City of Federal Way / 55
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 $ 49,933
Noncurrent portion 1,150,167
B:tstr�ess- x en Activities .
Current portion 930
Noncurrent portion 50,226
Total Compensated Absences 5 1,251,256
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, 2006 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 $133,286 for the year ended December 31, 2006. During the current year 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 April 2007. The future minimum lease payments for these leases
are as follows:
2007: $16,076
2008: 7,018
$ 23,094
NOTE 12 — INTERFUND TRANSACTIONS
Interfund transfers for the year ended December 31, 2006 were as follows:
Interfund Transfers In Out
Governmental Funds:
General Fund $ 1,383,792 $ 2,060,063
Street Fund 2,105,058 -
Utility Tax Fund - 8,153,963
Debt Service 3,885,861 2,830,000
Downtown Redevelopment
City Facilities
Transportation
Nonmajor Governmental Funds
Proprietary Funds:
Surface Water Management
686,500 -
100,000 76,500
1,780,625 323,580
3,289,949 73,575
14,259
Dumas Bay Centre 121,840 -
Internal Service Funds 207,961 29,646
$ 13,561,586 $ 13,561,586
The following describes the amounts transferred out during 2006:
General Fund:
0 $1,786,758 to Street Fund to subsidize street maintenance
0 $100,000 to City Facilities CIP (Community Center) for Project Management
City of federal Way / 56
+ $9,249 for Arts Commission
■ $164,056 to internal service funds for capital contributions
Utility Tax Fund:
■ $2,971,861 to Debt Service Fund for prefunding debt service payments
■ $914,000 to Community Center Debt Service
■ $890,625 to Arterial Street Fund overlay program
■ $890,625 to Transportation CIP for various capital projects
■ $625,000 to General Fund for Public Safety Positions
■ $421,000 to Downtown Redevelopment CIP Fund
■ $319,000 to General Fund to subsidize Kenneth Jones Pool Operations
■ $300,000 to Parks CIP for Camp Kilworth Park
• $245,962 to General Fund for Celebration Park maintenance & operations
• $202,000 to Street Fund for maintenance on bond projects
■ $121,840 to Dumas Bay Centre Fund for Knutzen Family Theatre subsidy
• $108,300 to Street Fund for new street lights
■ $70,200 to General Fund for Arts Commission
■ $50,000 to General Fund for Camp Kilworth Park maintenance & operations
• $23,550 to General Fund for Red, Whites & Blues Festival
Debt Service Fund:
■ $1,250,000 of excess Real Estate Excise Tax to Parks CIP for Camp Kilworth Acquisition
• $890,000 of excess Real Estate Excise Tax to Transportation CIP Fund
■ $690,000 of excess Real Estate Excise Tax to Parks CIP Fund
City Facilities CIP Fund:
■ $76,500 to Community Center Fund for Federal Way Community Center Transition
Transportation CIP Fund:
■ $265,500 to Downtown Redevelopment CIP Fund
■ $50,080 to General Fund for Federal Lobbyist
■ 8,000 of mitigation fees to Street Fund
Nonmajor Governmental Funds:
■ $73,575 from CDBG Fund to Transportation Capital Project Fund
Internal Service Funds:
• $29,646 insurance proceeds from Risk Management Fund to Fleet & Equipment Fund for vehicle replacement
Interfund loans for the year ended December 31, 2006 were as follows:
Interfund Loans Receivable Payable
General Fund $ 20,000 $ -
Special Revenue Funds:
Community Development Block Grant - 20,000
Total Interfund Loans $ 20,000 $ 20,000
NOTE 13 — CONTINGENCIES AND LITIGATION
As of December 31, 2006 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
City of Federal Way / 57
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 Com and the subscribing agencies have been executed, which set forth conditions of services and rates
charged.
The allocation of prorated financial participation among the five member cities is the percentage of dispatched calls attributed to
each jurisdiction compared to the total estimated dispatched calls, for the current twelve month period ending December 31. The
percentages are applied to the current approved budget, less revenue from all other sources. Distribution of the current year net
income is based on the same percentages. The 2006 cost distributions for the five member cities are as follows:
Dispatchable
Percent
city
Calls
of Total
Kent
92,808
27.50%
Renton
66,415
19.68%
Auburn
64,048
18.98%
Tukwila
34,956
10.36%
Federal Wa
79,286
23.49%
Total
337,513
100.00%
Valley Com is governed by an Administration Board, composed of the Mayors or designated representatives from the five
participating cities of Renton, Kent, Auburn, Tukwila, and Federal Way. The Administration Board is authorized to establish
bylaws that govern procedures of the Board and Valley Com's general operations for the following functions: 1) Budget review
and recommendations to the legislative bodies of the member cities, and budget adoption after each legislative body has approved
the required financial participation for the ensuing year; 2) Approve appointment and/or discharge of the Director; 3) Approve
personnel policy and make final decisions on all major policy changes; and 4) Review and approves all contracts.
In addition, an Operating Board was established and consists of two members of each participating City's Public Safety
Departments, including the heads of such departments or their designees. The Operating Board performs the following functions:
1) Oversees the general operation of Valley Com, and advises and makes recommendations to the Administration 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.
City of Federal Way / 58
In May 1993 Valley Com entered into an agreement with King County to provide joint project management for the acquisition and
installation of 800-M11z emergency radio communications system approved by the voters of King County in conjunction with a
$57 million levy. In August 1993 Valley Com also entered into an Interlocal Cooperation Agreement with the sub -regions of King
County, Seattle, and Eastside Public Safety Communications, which governs the development and installation of the new 800-MHz
emergency radio system. Valley Com now provides emergency communication dispatch services to a population of approximately
570,000.
Valley Com operates as an enterprise fund and is totally self supporting through the implementation of user fees and the primary
source of revenue is provided by charges for calls for service. The 800-MHz emergency radio communications system operated by
the agreement with King County is operated as a separate enterprise fund, and the Member Cities have no equity interest in the
contributed capital from this system.
The share of equity belonging to the five participating cities is shown below. Liabilities are the responsibility of the five
participating cities in direct proportion to their equity position.
Kent
Renton
Auburn
Tukwila
Federal Way
Total
Equity @ January 1, 2006
$ 5,550,128 $
3,974,434 $
3,696,777 $
2,398,847
$ 2,030,087 $
17,650,273
Current Year Decrease
30,287
7,116
5,038
(20,504)
18.417
40.354
Equity @ December 31, 2006
S 5,580,415 $
3,981,550 $
3,701,815 $
2,378,343
$ 2,048,504 5
17,690,627
Percent of Equity
31.54%
22.51%
20.93%
13.44%
11.58%
100.00%
Percent of 2005 Distribution
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 $2,048,504 at 12/31/2006.
A complete set of financial statements is available from: Valley Communications Center, 27519 10e Avenue SE, Kent, WA
98030.
City of Federal Way / 59
Combining Statement — Nonmajor Governmental Funds's Description
For the Year Ended December 31, 2006
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 WastelRecycling 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 HotellMotel 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 Federal Way Community Center Fund was established to account for the operation of the new community center. The fund
is supported by user fees and designated utility tax transfers.
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 Projects Funds
The Capital Project Funds account for the acquisition or construction of major capital facilities with the exception of those facilities
financed by proprietary and trust funds. The major sources of revenue for this fund are general obligation bond proceeds, grants
from other agencies, local taxes and contributions from other funds.
The Parks CIP Fund was established to account for receipts and disbursements related to acquisition, design, construction and any
other related parks capital project expenditures.
City of Federal Way / 60
CIW OF
Federal Way
CIO.- of'Federal Way / 61
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2006
ASSETS
Equity in pooled cash and investments
Retainage in escrow
Receivables (net):
Interest
Due from other governments
TOTAL ASSETS
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
Accounts/payroll payable
Retainage payable
Deposits payable
Interfund loans payable
Unearned revenue
TOTAL LIABILITIES
Fund balance:
Reserved:
Hotel/motel lodging tax
Paths & Trails
Unreserved:
Special revenue funds
Capital projects funds
TOTAL FUND BALANCES
Special Capital Comparative Totals
Revenue Projects 2006 2005
$ 649,097 $ 3,410,162 $ 4,059,259 $ 5,963,223
- - - 13,104
823 4,335 5,158 2,767
218,350 149,283 367,633 405,122
868,270 3,563,780 4,432,050 6,384,216
90,822 90,822
81,176
- - -
6,412
20,525 20,525
16,466
20,000 - 20,000
46,000
21,584 21,584
14,075
132,406 20,525 152,931 164,129
169,064 - 169,064 132,628
25,400 - 25,400 15,273
541,400 - 541,400 434,104
- 3,543,255 3,543,255 5,638,082
735,864 3,543,255 4,279,119 6,220,087
TOTAL LIABILITIES AND FUND BALANCE $ 868,270 $ 3,563,780 $ 4,432,050 $ 6,384,216
City of Federal Way / 62
COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
DECEMBER 31, 2006
Special
Arterial Solid Waste Contracts/ Hotel/Motel 2% for the
Street Recycling _ Studies Lodging Tax Arts
ASSETS
Equity in pooled cash & investments $ 14,699 $ 33,636 $ 302,620 $ 165,083 $ 47,135
Receivables (net):
Interest 250 79 286 181 -
Due from other governments 44,132 94,297 - 13,410 -
TOTAL ASSETS 59,081 128,012 302,906 178,674 47,135
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable - 6,451 - 9,610 22,972
Accounts/payroll payable - _ _ _
Deposits payable
Interfund loans payable
Unearned revenue 21,584 - -
TOTAL LIABILITIES - 28,035 - 9,610 22,972
Fund balance:
Reserved:
Hotel/motel lodging tax - - 169,064 -
Paths & Trails - - _ _ -
Unreserved:
Special revenue funds 59,081 99,977 302,906 - 24,164
TOTAL FUND BALANCES 59,081 99,977 302,906 169,064 24,164
TOTAL LIABILITIES & FUND
BALANCE $ 59,081 $ 128,012 $ 302,906 $ 178,674 $ 47,136
City of Federal Way / 63
COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
DECEMBER 31, 2006
(continued)
Federal Way Community Paths and
Community Development Trails Comparative Totals
Center Block Grant Reserve 2006 2005
ASSETS
Equity in pooled cash & investments $ 60,912 $ 336 $ 24,676 $ 649,097 $ 332,870
Receivables (net): -
, Interest - - 27 823 463
Due from other governments - 65,814 697 218,350 383,112
TOTAL ASSETS
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
Accounts/payroll payable
Deposits payable
Interf ind loans payable
Unearned revenue
TOTAL LIABILITIES
Fund balance:
Reserved:
Hotel/motel lodging tax
Paths & Trails
Unreserved:
Special revenue funds
60,912 66,150 25,400 868,270 716,445
5,639 46,150 - 90,822 67,953
- - - - 6,412
20,000 - 20,000 46,000
- - - 21,584 14,075
5,639 66,150 - 132,406 134,440
- 169,064 132,628
25,400 25,400 15,273
55,273 - - 541,400 434,104
TOTAL FUND BALANCES 55,273 - 25,400 735,864 582,005
TOTAL LIABILITIES & FUND
BALANCE $ 60,912 $ 66,150 $ 25,400 $ 868,270 $ 716,445
City of Federal Way / 64
COMBINING BALANCE SHEET
NONIAAJOR CAPITAL PROJECTS FUNDS
DECEMBER 31, 2005
ASSETS
Equity in pooled cash and investments
Retainage in escrow
Receivables (net):
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
Comparative Totals
Parks 2006 2005
$ 3,410,162 $ 3,410,162 $ 5,630,353
- - 13,104
4,335 4,335 2,304
149,283 149,283 22,010
3,563,780 3,563,780 5,667,771
- - 13,223
20,525 20,525 16,466
20,525 20,525 29,689
3,543,255 3,543,255 5,638,082
3,543,255 3,543,255 5,638,082
TOTAL LIABILITIES AND FUND BALANCE $ 3,563,780 $ 3,563,780 $ 5,667,771
City of Federal Way / 65
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2006
Special Capital Comparative Totals
Revenue Projects 2006 2005
REVENUES
Taxes
$ 175,219 $
- $
175,219
$ 219,042
Intergovernmental
995,513
127,273
1,122,786
1,234,729
Service charges and fees
545,260
545,260
265,191
Development fees
-
196,060
196,060
27,438
Interest
30,223
153,498
183,721
67,142
Other
-
-
-
199,173
TOTAL REVENUES
1,746,215
476,831
2,223,046
2,012,715
EXPENDITURES
Current:
General government
Physical environment
Transportation
Economic environment
Culture and recreation
Capital outlay
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Bond proceeds
Sale of capital assets
Transfers in
Transfers out
260,872
- 260,872
279,193
313,388
- 313,388
322,151
1,572,052
- 1,572,052
1,495,865
194,879
- 194,879
509,592
147,583
36,577 184,160
120,981
6,380
555,127 561,507
444,020
2,495,154 591,704 3,086,858 3,171,802
(748,939) �(114,873) (863,812) (1,159,087)
- 20,000 20,000 -
976,374 2,313,575 3,289,949 5,678,155
(73,575) (73,575) (216,540)
TOTAL OTHER FINANCING SOURCES (USESS
902,799
2,333,575
3,236,374
5,461,615
NET CHANGE IN FUND BALANCES
153,860
2,218,702
2,372,562
4,302,528
FUND BALANCES - BEGINNING
582,004
1,324,553
1,906,557
1,917,559
FUND BALANCES - ENDING $ 735,864 $ 3,543,255 $ 4,279,119 $ 6,220,087
City of Federal Way / 66
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
For the Year Ended December 31, 2006
Solid
Special
Hotel/Motel
Arterial
Waste/
Contracts/
Lodging 2% for the
Street
Recycling
Studies
Tax Arts
REVENUES
Taxes
$ -
$ -
$ -
$ 175,219 $ -
Intergovemmental
552,563
119,560
-
50,000 -
Service charges and fees
76,251
168,905
300,000
4 -
Miscellaneous:
Interest
14,422
3,195
5,601
6,093 -
Other
_
_
TOTAL REVENUES 643,236 291,660 305,601 231,316 -
EXPENDITURES
Current:
General government - - 472 _ _
Physical environment - 313,388 - - -
Transportation 1,572,052 - - _ _
Economic environment - - - 194,879 -
Culture and recreation - - - - 126,256
Capital outlay - - 6,380 - -
TOTAL EXPENDITURES 1,572 052 313,388 6,852 294,879 126,256
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (928,816) 21,728) 298,749 36,437 (126,256)
OTHER FINANCING
SOURCES (USES)
Transfers in 890,625 - - - 9,249
Transfers out -
TOTAL OTHER FINANCING
SOURCES (USES)
NET CHANGE IN FUND BALANCES
FUND BALANCES - BEGINNING
FUND BALANCES - ENDING
890,625 - - - 9,249
(38,191) (21,728) 298,749 36,437 (117,007)
97,272 121,705 4,157 132.627 141,170
$ 59,081 $ 99,977 $ 302,906 $ 169,064 $ 24,163
City of Federal Way / 67
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
For the Year Ended December 31, 2006
(continued)
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
Federal Way Community Paths and
Community Development Trails Comparative Totals
Center Block Grant Reserve 2006 2005
$ - $ - $ - $ 175,219 $ 167,339
264,175 9,215 995,513 1,234,729
100 - - 545,260 265,191
912 30,223 19,258
- - 198,709
100 264,175 10,127 1,746,215 1,885,226
- 260,400 - 260,872
279,193
- - - 313,388
322,151
- - - 1,572,052
1,495,865
- - - 194,879
509,592
21,327 - - 147,583
120,981
- - - 6,380
-
21,327 260,400 - 2,495,154 2,727,782
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (21,227) 3,775 10,127 748,939) (842,556)
OTHER FINANCING
SOURCES (USES)
Transfers in 76,500 - - 976,374 915,625
Transfers out - (73,575) - (73,575 (216,540)
TOTAL OTHER FINANCING
SOURCES (USES) 76,500 (73,575) - 902,799 699,085
NET CHANGE IN FUND BALANCES 55,273 (69,800) 10,127 153,860 (143,471)
FUND BALANCES - BEGINNING - 69,800 15,273 582,004 725,475
FUND BALANCES - ENDING $ 55,273 $ - $ 25,400 $ 735,864 $ 582,004
City of Federal Way / 68
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR CAPITAL PROJECTS FUNDS
For the Year Ended December 31, 2006
REVENUES
Intergovernmental
Development Contribution/Donation
Miscellaneous:
Interest
Other
TOTAL REVENUES
EXPENDITURES
Current:
Culture and recreation
Capital Outlay
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Bond proceeds
Sale of General Capital Assets
Transfers in
Comparative Totals
Parks 2006 2005
127,273 $ 127,273 $ 51,703
196,060 196,060 27,438
153,498 153,498 47,884
- - 464
476,831 476,831 127,489
36,577 36,577 -
555,127 555127 444,020
591,704 591,704 444,020
(114,873) (114,873) (316,531)
20,000 20,000 -
2,313.575 2,313,575 4,762,530
TOTAL OTHER FINANCING SOURCES (USES
2,333,575
2,333,575
4,-762,530
NET CHANGE IN FUND BALANCES
2,218,702
2,218,702
4,445,999
FUND BALANCES - BEGINNING
1,324.553
1,324,553
1,192,084
FUND BALANCES - ENDING
$ 3,543,255 $ 3,543,255 $ 5,638,083
City of Federal Way / 69
ARTERIAL STREET FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2006
Variance with
Budgeted Amounts
Final Budget -
Positive
` Original Final
Actual Amounts
(Negative) ,
REVENUES
Intergovernmental
$ 608,894 $ 608,895
$ 552,563
$ (56,332)
Service charges and fees
- -
76,251
76,251
Interest
3,000 3,000
14,422
11,422
TOTAL REVENUES
611,894 611,895
643,236
31,341
EXPENDITURES
Capital outlay 1,502,520 1,599792 1,572,052 27,740
TOTAL EXPENDITURES 1,502,520 1,599,792 1,572,052 27,740
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (890,626) (987,897) (928,816) 59,081
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 (1) (97,272) (38,191) 59,081
FUND BALANCES - BEGINNING - 97,272 97,272 -
FUND BALANCES -ENDING $ (1) $ - $ 59,081 $ 59,081
City of Federal Way / 70
SOLID WASTE AND RECYCLING FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2006
REVENUES
Intergovernmental
Service charges and fees
Interest
TOTAL REVENUES
EXPENDITURES
Utilities and Environment
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
TOTAL OTHER FINANCING SOURCES (USES)
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
$ 133,000 $ 123,280 $ 119,560 $ (3,720)
170,217 170,217 168,905 (1,312)
- - 3,195 3,195
303,217 293,497 291.660 (1,837)
349.314 340,130 313.388 26,742
349,314 340,130 313,388 26,742
(46,097) (46.633) (21,728) 24,905
NET CHANGE IN FUND BALANCES (46,097) (46,633) (21,728) 24,905
FUND BALANCES - BEGINNING 50,100 121,705 121,705
FUND BALANCES - ENDING $ 4,003 $ 75,072 $ 99,977 $ 24,905
City of Federal Way / 71
HOTEL/MOTEL LODGING TAX FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2006
Variance with
Buffeted Amounts
Final Budget -
Positive
Original Final
Actual Amounts
(Negative)
REVENUES
Taxes
$ 150,000 $ 150,000
$ 175,219
$ 25,219
Intergovernmental
- -
50,000
50,000
Service charges and fees
- -
4
4
Interest
- -
6,093
6,093
TOTAL REVENUES
150,000 150,000
231,316
81,316
EXPENDITURES
Utilities and Environment
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
150,000 282,627 194,879 87,748
150,000 282,627 194,879 87,748
- (132,627) 36,437 169,064
TOTAL OTHER FINANCING SOURCES (USES) - - - -
NET CHANGE IN FUND BALANCES - (132,627) 36,437 169,064
FUND BALANCES - BEGINNING - 132,627 132,627 -
FUND BALANCES - ENDING $ - $ - $ 169,064 $ 169,064
City of Federal Way / 72
FEDERAL WAY COMMUNITY CENTER
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2006
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
REVENUES
Service charges and fees S. - $ $ 100 $ 100
TOTAL REVENUES - - 100 100
EXPENDITURES
Culture and recreation
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
76,500 21,327 55,173
76,500 21,327 55.173
- (76,500) (21,227) 55,273
Transfers in - 76,500 76,500 -
TOTAL OTHER FINANCING SOURCES (USES) - 76,500 76,500 -
NET CHANGE IN FUND BALANCES - - 55,273 55,273
FUND BALANCES - BEGINNING - - - -
Residual equity transfers in
Residual equity transfers in
FUND BALANCES - ENDING $ - $ $ 55,273 $ 55.273
City of Federal Way / 73
PATHS AND TRAILS FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2006
Variance with
Budgeted Amounts
Final Budget -
Positive
Original Final
Actual Amounts
(Negative)
REVENUES
Taxes
$ 9,059 $ 9,059
$ 9,215
$ 156
Interest
500 500
912
412
TOTAL REVENUES
9,559 9,559
10,127
568
EXPENDITURES
General government
TOTAL EXPENDITURES - -
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 9,559 9.559 10,127 568
OTHER FINANCING SOURCES (USES)
Transfers out - - -
TOTAL OTHER FINANCING SOURCES (USES) -
NET CHANGE IN FUND BALANCES 9,559 9,559 10,127 568
FUND BALANCES - BEGINNING 14,893 15.272 15,273 l
FUND BALANCES - ENDING $ 24,452 $ 24,831 $ 25,400 $ 569
City of Federal Way /74
CITY OF
Federal Way
Federal Way /75
Budget and Actual — Debt Service Fund Description
For the Year Ended December 31, 2006
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,
transfers from the Utility Tax Fund, and/or other revenues designated by the City Council.
City of Federal Way / 76
DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2006
Variance with
Bud eted Amounts
Final Budget -
Positive
Original Final
Actual Amounts
(Negative)
REVENUES
Taxes
$ 1,900,000 $ 3,150,000
$ 5,499,911
$ 2,349,911
Interest
180,000 180.000
83,917
(96,083)
TOTAL REVENUES
2,080,000 3.330.000
5,583,828
2.253.828
EXPENDITURES
Debt Service:
Principal
2,954,765
2,196,945
2,197,357
(412)
Interest
1,466,079
1,418,843
1,367,016
51,827
Other
62.284
63,068
53,675
9,393
TOTAL EXPENDITURES
4.483.128
3,678,856
3,618,048
60,808
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
(2.403,128)
(348,856)
1,965,780
2,314,636
OTHER FINANCING SOURCES (USES)
Transfers in
4,242,273
3,885,861
3,885,861
-
Transfers out
(1.600,000)
(2,830,000)
2,830,000)
TOTAL OTHER FINANCING SOURCES (USES)
2,642,273
1,055,861
1,055,861
-
NET CHANGE IN FUND BALANCES
239,145
707,005
3,021,641
2,314,636
FUND BALANCES - BEGINNING
2,897,555
3,195,705
3,195,705
-
FUND BALANCES - ENDING $
3,136,700 $
3,902,710 $
6,217,346 $
2,314,636
City of Federal Way /77
Combining Statement — Internal Service Fund's Description
For the Year Ended December 31, 2006
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 /78
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF NET ASSETS
December 31, 2006
Risk
Information
Support
Fleet and
Buildings and
Comparative Totals
Management
Systems
Services
Equipment
Furnishings
2006
2005
ASSETS
_
Current assets:
Equity in pooled cash & investments
$ 4,891,644
$ 2,528,443
$ 188,938
$ 2,572,856
$ 394,523
$ 10,576,404
$ 10,046,229
Prepaid postage
-
5,000
-
-
5,000
5,000
Receivables (net):
Accounts and contracts
-
-
-
-
-
-
Interest
3,695
3,036
223
3,023
424
10,401
12,027
TOTAL CURRENT ASSETS
4,895,339
2,531,479
194,161
2,575,879
394,947
10,591,805
10,063,256
Noncurrent assets
Capital assets:
Buildings / Structures
- - - - 15,905,607
15,905,607
4,060,510
Machinery/fumiture/equipment
- 5,168,540 235,523 5,317,868 89,869
10,811,800
10,349,224
Less accumulated depreciation
- (3,447,354) (137,000) (3,039,888) (990,704)
(7,614,946)
(8,960,122)
TOTAL NONCURRENT ASSETS
- 1,721,186 98,523 2,277,980 15,004,772
19,102,461
5,449,612
TOTAL ASSETS
4,895,339 4,252,665
292,684 4,853,859
15,399,719
29,694,266
15,512,868
LIABILITIES
Current liabilities:
Vouchers/payroll payable
18,879 30,609
17,794 37,819
34,890
139,991
216,378
Deposits payable
- -
- -
500
500
500
Compensated absences
- 1,891
- 47
3
1,941
1,764
TOTAL CURRENT LIABILITIES
18,879 32,500
17,794 37,866
35,393
142,432
218,642
Long-term liabilities:
Compensated absences payable
- 43,554
1,076
58
44,688
40,641
TOTAL LONG TERM LIABILITIES
- 43,554
-
1,076
58
44,688
40,641
TOTAL LIABILITIES
18,879 76,054
17,794
38,942
35,451
187,120
259,283
NET ASSETS
Invested in capital assets
1,721,186
98,523
2,277,980
15,004,772
19,102,461
5,449,612
Unrestricted
4,876,460 2,455,425
176,367
2,536,937
359,496
10,404,685
9,803,973
TOTAL NET ASSETS
$ 4,876,460 $ 4,176,611 $
274,890
$ 4,814,917
$ 15,364,268
$ 29,507,146
$ 15,253,585
City of Federal Way / 79
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES
IN FUND NET ASSETS
For the Year Ended December 31, 2006
Risk
Information
Support
Fleet and
Buildings and
Comparative Totals
Management
Systems
Services
Equipment
Furnishings
2006
2005
OPERATING REVENUES:
Service charges and fees
$ 587,682
$ 1,480,103
$ 162,593
$ 1,213,733
$ 590,116 $
4,034,227 $
4,345,876
Miscellaneous
51,302
13,492
3,088
67,882
119,893
TOTAL OPERATING REVENUES
638,984
1,493,595
165,681
1,213,733
590,116
4,102,109
4,465,769
OPERATING EXPENSES:
Personal services
641,519
-
36,183
69,087
746,789
763,377
Materials and supplies
55,384
21,034
349,212
32,235
457,865
394,677
Services and charges
59,449
501,571
108,512
281,371
448,273
1,398,176
1,397,954
Intergovernmental
,
96,469
-.
26
727
97,222
82,711
Insurance
352,189
-.
-
-
-
352,189
256,411
Claims
82,198
-
-
-
-
82,198
113,290
Depreciation
-
407,286
29,310
472,611
880,244
1,789,451
1,219,215
TOTAL OPERATING EXPENSES
492,836
1,702,229
158,856
1,139,403
1,430,566
4,923,890
4,227,635
OPERATING INCOME (LOSS)
146,148
(208,634)
6,825
74,330
(840,450)
(821,781)
238,134
NON -OPERATING REVENUES (EXPENSES)
Interest income 134,410 112,207 9,038 110,756 15,403 380,814 244,987
Gains/losses from disposal of fixed assets (22,844) (161116) (1,391) _ _ (863,766) (904,117) (57,359)
TOTAL NON -OPERATING
REVENUES NET OF EXPENSES 134,410 89,363 (8,078) 109,365 (848,363) (523,303) 187,628
INCOME (LOSS) BEFORE
CONTRIBUTIONS & TRANSFERS
280,558 (119,271)
(1,253) 183,695
(1,688,813)
(1,345,084)
425,762
Transfers in
- 116,970
- 83,251
7,740
207,961
511,641
Transfers out
(29,646) -
- -
-
(29,646)
(21,263)
Capital contributions
- 257,391
- 98,601
15,064,338
15,420,330
901,973
CHANGE IN NET ASSETS
250,912 255,090
(1,253) 365,547
13,383,265
14,253,561
1,818,113
TOTAL NET ASSETS, BEGINNING 4,625,548 3,921,521 276,143 4,449,370 1,981,003 15,253,585 13,435,472
TOTAL NET ASSETS, ENDING $ 4,876,460 $ 4,176,611 $ 274,890 $ 4,814,917 $ 15,364,268 $ 29,507,146 $ 15,253,585
City of Federal Way / 80
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from users
Cash payments to suppliers for goods and services
Cash payments to employees
Cash payments to claimants and insurance
Cash payments to other gvts for goods and services
Other operating receipts
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers in
Transfers out
NET CASH PROVIDED (USED) BY
NONCAPITAL FINANCING ACTIVITIES
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition ofcapital assets
Proceeds from sale of fixed assets
NET CASH PROVIDED (USED) FOR CAPITAL
AND RELATED FINANCING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Receipts of interest
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES
NET INCREASE (DECREASE) INCASH
AND CASH EQUIVALENTS
CASH & CASH EQUIVALENTS, JANUARY 1
CASH & CASH EQUIVALENTS, DECEMBER 31
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2006
Risk Information Support Fleet and Buildings and Comparative Totals
Management Svstems Services Equipment Fumishinps 2006 2005 _
$ 587,682 $
1,480,103 $ 162,593 $
1,213,733 $
590,116 $
4,034,227 $
4,370,876
(54,539)
(663,746) (126,521)
(609,735)
(477,797)
(1,932,338)
(1,730,128)
(636,782) -
(36,721)
(69,152)
(742,655)
(798,488)
(434,387)
- -
-
-
(434,387)
(369,701)
-
(96,469)
(26)
(727)
(97.222)
(92,711)
51,302
13,492 3,088
-
-
67,882
119,993
150,058 96,598 39,160 567,251 42,440 895,507 1,509,741
- 116,970 83,251 7,740 207,961 490,378
(29,646) - - - - (29,646) -
(29,646) 116,970 - 83,251 7,740 178,315 490,378
(249,434) (34,183) (653,491) - (937,108) (1,351,941)
- - 11,020 - 11,020 16,667
- (249,434) (34,183) 642,471) - (926,088) (1,335,274)
135,308 112,736 8,073 111,151 15,173 382,441 234,654
135,308 112,736 8,073 111,151 15,173 382,441 234,654
255,720 76,870 13,050 119,182 65,353 530,175 899,499
4,635,924 2,451,573 175,888 2,453,674 329,170 10,046,229 9,146,730
4,891,644 2,528,443 188,938 2,572,856 394,523 10,576,404 10,046,229
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Operating income 146,148
Adjustments to reconcile operating income to
net cash provided (used) by operating activities:
Depreciation expense -
(Increase)decreasein accounts receivable -
Increase(decrease)in vouchers/accounts payable 3,910
Increase(decrease)in accrued payroll/ -
Increase(decrease) compensated absences payable
Increase(decrease)in deposits payable -
Total Adjustments 3,910 305,232 32,335 492,921 882,890 1,717,288 1,271,607
(208,634) 6,825 74,330 (840,450) (821,781) 238,134
407,286 29,310 472,611 880,244 1,789,451 1,219,215
- - - - - 25,000
(106,791) 3,025 20,848 2,711 (76,297) 62,503
4,737 (538) (65) 4,134 1.
(35,111)
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES $ 150,058 $ 95.593 $ 39,160 $ 567,2-51 $ 42,440 $ 895,507 $ 1.509,741
Noncash investing, capital, and financing activities:
Other Contributions of capital assets $ - $ 257,391 $ - $ 98,601 $ 15,064,338 $ 15,420,330 $ 901,973
City of Federal Way / 81
Capital Assets Used in the Operation
of Governmental funds
City of Federal Way / 82
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
COMPARATIVE SCHEDULE BY SOURCE
December 31, 2006 and 2005
2006 2005
GOVERNMENTAL FUNDS CAPITAL ASSETS
Land
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Construction in progress
TOTAL GOVERNMENTAL FUNDS CAPITAL ASSETS
$ 41,290,118 $ 37,261,732
504,835
15,564,801
17,334,900
16,549,392
184,000
184,000
8,475,382
3,012,313
37,950,972
24,175,997
INVESTMENTS IN GOVERNMENTAL FUNDS CAPITAL ASSETS BY SOURCE:
General Fund
Special Revenue Funds
Capital Project Funds
Donations
TOTAL GOVERNMENTAL FUNDS CAPITAL ASSETS
105,740,207 96,748,235
26,533,455
20,735,705
2,528,770
2,528,770
66,958,180
63,763,958
91719,802
9,719,802
$ 105.740.207 $ 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
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE BY FUNCTION AND ACTIVITY
December 31, 2006
Function and Activity
Land
Improvements
Other than
Buildings Buildings
Machinery
and
Equipment Infrastructure
Construction
in
Progress
Comparative Totals
2006 2005
GENERAL GOVERNMENT
Miscellaneous general government
$ 10,578,435
$ - $ 19,973
$ 184,000
$ -
$ 10,782,408
$ 21,813,988
TOTAL GENERAL GOVERNMEI
10,578,435
19,973
184,000
10,782,408
21,813,988
CULTURE AND RECREATION
30,711,683
$504,835 17,314,927
24,135,367
72,666,812
55,837,482
TOTAL CULTURE & RECREATION
30,711,683
504,835 17,314,927
24,135,367
72,666,812
55,837,482
TRANSPORTATION
Streets and traffic $ 8,475,382 13,815,605 22,290,987 19,096,765
TOTAL TRANSPORTATION 8,475,382 13,815,605 22,290,987 19,096,765
TOTAL GENERAL FIXED
ASSETS BY FUNCTION $ 41,290,118 $504,835 $ 17,334,900 $ 184,000 $ 8,475,382 $ 37,950,972 $ 105,740,207 $ 96,748,235
This schedule presents only the historical cost of capital asset balances (no depreciation expenses) related to
govemmental 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 / 84
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITTY
For the Year Ended December 31, 2006
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
1/1/2006 Additions Deductions 12/31/2006
$ 21,813,988 $ 4,028,386 $ 15,059,966 $ 10,782,408
21,813,988 4,028,386 15,059,966 10,782,408
55,837,482 16,829,330 72,666,812
55,837,482 16,829,330 - 72,666,812
19,096,765 5,463,069 2,268,847 22,290,987
19,096,765 5,463,069 2,268,847 22,290,987
TOTAL GENERAL FIXED ASSETS $ 96,748,235 $ 26,320,785 $ 17,328,813 $ 105,740,207
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.
Croy oj'Federal Wai• / 85
Statistical Section
The statistical section presents detailed information as a context for understanding what the information in the financial statements
and note disclosures say about the City's overall financial health. The following are the five categories of information presented in
this section.
Financial Trends — These schedules contain trend information to help the reader understand how the City's financial performance
and well-being have changed over time.
Revenue Capacity — These schedules contain information to help the reader assess the City's most significant local revenue
sources, property tax and sales tax.
Debt Capacity — These schedules present information to help the reader assess the affordability of the City's current levels of
outstanding debt and the City's ability to issue additional debt in the future.
Demographic and Economic Information — These schedules offer demographic and economic indicators to help the reader
understand the environment within which the City's financial activities take place.
Operating Information — These schedules contain service and infrastructure data to help the reader understand how the
information in the City's financial report relates to the services the city provides and the activities it performs.
City of Federal Way / 86
CITY OF
Federal Way
Federal Way / 87
Governmental activities
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total governmental activities net assets
Business -type activities
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total business -type activities net assets
Primary government
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total primary government net assets
Source: City of Federal Way Finance
NET ASSETS BY COMPONENT
Last Four Fiscal Years
2003 2004 2005 2006
$ 43,162,298 $
60,746,134 $
70,138,350 $
93,835,163
37,806,176
37,262,541
45,017,742
38,359,454
15,686,213
11,052,383
13,292,837
15,051,966
96,654,687
109,061,058
128,449,929
147,246,583
39,559,494
41,735,500
42,294,741
43,697,633
14,148
20,289
18,880
26,439
7,794,729
7,032,804
7,206,807
7,467,417
47,368,371
48,788,593
49,520,428
51,191,489
82,721,792
102,481,634
112,433,091
137,532,796
37,820,324
37,282,830
45,036,622
38,385,893
23,480,942
18,085,187
20,499,644
22,519,383
$ 144,023,058 $
157,849,651 $
177,969,357 $
198,438,072
Note: All amounts are reported on the accrual basis.
Amounts presented from year of implementation of GASB-34 (2003) forward.
City of Federal Way / 88
CHANGES IN NET ASSETS
Last Four Fiscal Years
Fiscal Year
2003
2004
2005
2006
Expenses
Governmental activities:
General government
$
5,601,311
$
6,304,256
$
5,539,682
$
4,364,710
Security ofpersons and property
15,597,612
17,374,845
16,825,123
19,906,722
Transportation
5,389,975
4,098,790
5,451,324
5,628,100
Physical environment
351,023
295,537
322,151
313,388
Economic environment
2,923,756
2,953,073
3,095,391
3,162,089
Health and human svcs
607,199
693,804
631,133
622,761
Culture and recreation
4,455,865
4,914,349
4,789,920
5,172,663
Interest on long-term debt
1,683,028
1,764,077
1,541,930
1,420 691
Total governmental activities expenses
36,609,769
38,388,730
38.196,654
40,591,124
Business -type activities:
Surface Water Mgmt
3,380,690
3,282,427
2,995,074
3,142,613
Dumas Bay Center
935,422
879,870
819.515
925,825
Total business -type activities expenses
4,316.1 12
4.162,297
3,814,589
4,068,438
Total primary government expenses
5
40,925.881
5
42,55I,027
5
42,0I I,?43
S
44.659,562
Program Revenues
Governmental activities:
Charges for services
$
6,746,303
$
9,413,965
$
9,935,656
$
9,446,764
Operating grants and contributions
360,000
32,415
1,228,979
1,512,394
Capital grants and contributions
_
10,069,756
_
7,214,776
4,250,635
5,973,071
Total governmental activities program revenues
17,176,059
16,661,156
15,415,270
16,932,229
Business -type activities:
Charges for services
$
4,041,063
$
4,249,020
$
4,100,623
4,130,179
Operating grants and contributions
168,555
535,645
-
1,113,010
Capital grants and contributions
757,578
478,030
Total business -type activities program revenues
4,967, 196
5,262,695
4,100,623
5,243,189
5
22,143,25E
$
21,923,851
S
IMIS,693
S
22,175,418
Net (Expense)/Revenue
Governmental activities
19,433,710
21,727,574
22,781,384
23,658,895
Business -type activities
(651,084)
(1,100,398)
(286,034)
(1,174,751)
General Revenues and Other Changes in Net Assets
Governmental activities:
Taxes
Property tax
8,200,955
8,121,088
8,442,172
8,892,558
Sales tax
10,547,534
10,546,218
11,305,537
12,409,718
Utility tax
7,072,757
7,554,580
8,326,951
9,043,449
Real estate excise tax
2,851,866
3,078,898
4,695,984
5,499,911
Other taxes
3,598,213
3,208,844
3,527,596
4,059,732
Other
3,791,345
1,761,036
5,997,384
2,658,762
Transfers
(116,813)
(203,190)
(126,369)
(107,581)
Total governmental activities
35,945,857
34,067,474
42,169,255
42,456,549
Business -type actitivies:
Other
141,980
116,634
319,432
388,729
Transfers
116,813
203,190
126,369
107,581
Total business -type actitivies
258,793
319,8?4
445,901
496.310
Total primary government
5
36.204,650
$
34,387,298
S
42415,056
5
42,952.859
Change in Net Assets
Governmental activities
$
16,512,147
$
12,339,900
$
19,387,871
$
18,797,654
Business -type activities
$
909,877
$
1,420,222
$
731,835
$
1,671,061
Total primary government
$
17,422,024
$
13,760,122
$
20,119,706
$
20,468,715
Source: City of Federal Way Finance
City of Federal Way / 89
GOVERNMENT -!FIDE REVENUES BY SOURCE AND EXPENDITURES BY FUNCTION
Last Four Fiscal Years
2003
2004
2005
2006
Program Revenues
Charges for Services
$ 12,459,591
$ 13,662,985 $
14,036,279
$ 13,576,943
Operating Grants and Contributions
528,555
568,060
1,228,979
2,625,404
Capital Grants and Contributions
10,827,334
7,692,806
4,250,635
5,973,071
General revenues
Property tax
8,200,955
8,121,088
8,442,172
8,892,558
Sales tax
10,547,534
10,546,218
11,305,537
12,409,718
Utility tax
7,072,757
7,554,580
8,326,951
9,043,449
Real estate excise tax
2,851,866
3,078,898
4,695,984
5,499,911
Other taxes
3,598,213
3,208,844
3,527,596
4,059,732
Other revenue
1,077,039
751,020
1,105,760
736,918
Unrestricted Grants & Contributions
212,576
176,928
146,000
-
Investment Earnings
937,225
954,366
2,025,243
3,194,690
Disposition of capital assets
34,260
(4,644)
3,039,813
(884,117)
Total Revenues
$ 58,347,905
$ 56,311,149 $
62,130,949
$ 65,128,277
Expenses/Expenditures
General Government
$ 5,601,311
$ 6,304,256
$ 5,539,682
$ 4,364,710
Security of Persons & Property
15,597,612
17,374,845
16,825,123
19,906,722
Transportation
5,389,975
4,098,790
5,451,324
5,628,100
Physical Environment
351,023
295,537
322,151
313,388
Economic Environment
2,923,756
2,953,073
3,095,391
3,162,089
Health
607,199
683,804
631,133
622,761
Culture & Recreation
4,455,865
4,914,348
4,789,920
5,172,663
Interest on long-term debt
1,683,028
1,764,077
1,541,930
1,420,691
Surface Water Management
3,380,690
3,282,428
2,995,074
3,142,613
Dumas Bay Centre
935,422
879,870
819,515
925,825
Total Expenses/Expenditures
$ 40,925,881
$ 42,551,028
$ 42,011,243
$ 44,659,562
Source: City of Federal Way Finance
City of Federal Way / 90
General fund
Reserved
Unreserved
Total general fund
All Other Governmental Funds
Reserved
Unreserved, reported in:
Special revenue funds
Capital projects funds
Debt service funds
Total all other governmental funds
FUND BALANCES OF GOVERNMENTAL FUNDS
Last Four Fiscal Years
2003 2004 2005 2006
$ 430,890 $
187,011 $
14,510 $
278,778
7,578,723
2,658,031
4,522,705
6,492,057
$ 8,009,613 $
2,845,042 $
4,537,215 $
6,770,835
$ 278,130 $
180,825 $
147,901 $
194,463
1,578,817
1,740,228
1,652,622
2,772,153
33,324,511
32,542,775
39,805,812
31,863,330
2,599,653
2,826 228
3,195,705
6,217,346
5 37,781,111 $
37,290,056 $
44,802,040 $
41,047,292
Source: City of Federal Way Finance
Note: Amounts presented from year of implementation of GASB-34 (2003) forward.
City of Federal Way / 91
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
Last Four Fiscal Years
2003
2004
2005
2006
Revenues
Taxes
$ 32,022,334 $
32,553,302 $
36,310,754 $
39,334,751
Licenses, fees and permits
1,000,250
1,235,039
2,247,651
2,089,844
Intergovernmental
12,313,459
10,111,537
5,479,614
8,047,243
Charges for services
3,965,992
4,200,528
4,927,163
6,355,262
Development Fees
2,565,215
3,167,605
2,040,378
196,060
Fines and Forfeitures
887,071
810,793
720,464
805,598
Investment earnings
701,311
744,435
1,557,935
2,447,996
Other revenues
1,093,109
751,025
1,065,664
717,922
Total revenues
54,548,741
53,574,264
54,349,623
59,994,676
Expenditures
General government
5,492,123
6,107,564
5,462,633
3,944,288
Security of persons and property
15,463,833
16,982,135
16,988,412
19,909,858
Transportation
5,358,543
4,788,954
5,080,577
5,373,983
Physical Environment
351,456
289,921
322,151
313,388
Economic Environment
2,883,079
2,944,584
3,119,831
3,055,426
Health
603,184
679,655
634,061
613,800
Culture and Recreation
3,507,392
3,927,933
3,859,465
4,108,813
Debt Service
Principal
14,159,881
3,768,044
2,933,231
2,197,357
Interest/fiscal charges/admin fees
1,703,165
1,764,077
1,518,384
1,420,691
Capital Outlay
22,779,620
17,609,080
8,228,486
24,412,303
Total expenditures
72,302,276
58,861,947
48,147,231
65,349,907
Excess of revenues over
(under) expenditures
(17,753,535)
(5,287,683)
6,202,392
(5,355,231)
Other Financing Sources (Uses)
GO bond proceeds
21,168,599
-
4,100,000
Sale of capital assets
209,527
3,618,512
20,000
Transfers in
21,037,023
15,615,639
15,650,064
13,231,785
Transfers out
(20,390,141)
(15,983,582)
(16,266,811)
(13,517,681)
Total other financing sources (uses)
22,025,008
(367,943)
3,001,765
3,834,104
Net change in fund balances
$ 4,271,473 $
(5,655,626) $
9,204,157 $
(1,521,127)
Debt service as a percentage of
noncapital expenditures
47.1%
15.5%
12.6%
9.7%
Source: City of Federal Way Finance
Note: Amounts presented from year of implementation of GASB-34 (2003) forward.
City of Federal Way / 92
ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY*
Last Ten Fiscal Years
Total City Percent
Fiscal Personal State Public Direct Increase
Year Real PropertX Property Service Property Total Tax Rate (Decrease)
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
51604,164,978
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%
2006
7,689,395,358
235,157,554
87,062,687
8,011,615,599
1.22
10.5%
* Real, personal, and state public service property has been assessed at 100% of the estimated value.
Source: King County Assessor's Office.
Note: These figures 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.
City of Federal Way / 93
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
District #210
County
State
Flood Zone Seattle
#39
Library
Services
Total
TAX RATES PER $1,000 OF ASSESSED VALUATION
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
1.69
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
0.05 025
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
2006
1.22
4.26
1.33
2.50
0.04 0.23
1.50
0.53
0.22
11.84
DETAIL OF TAX RATES FOR 2006
Basic
Rate 1.22 - 1.06 2.50 0.04 0.23 1.50 0.46 - 7.01
Voted
Rate - 4.26 0.27 - - - 0.09 0.22 4.83
TAX LEVIES
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
36,639,879
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
2006
8,800,989
43,672,564
357,240,140
672,185,668
922,666
62,785,749
14,108,124
85,715,008
59,154,623
1,304,585,531
Source: King County Assessor's Office and King County Department of Finance
City of Federal Way / 94
PRINCIPAL TAXPAYERS
Current Year and Ten Years Ago
2006
% of Total
Assessed
Assessed
Tax ayer
Type of Business
Valuation
Rank
Valuation (A)
Weyerhaeuser Real Estate Co.
Real Estate
$ 167,414,932
1
2.09%
Harsch Investment Properties (Ross Plaza)
Shopping Center
49,261,700
2
0.61 %
Puget Sound Energy
Electric/Gas
48,104,743
3
0.60%
Steadfast Commons Mall
Shopping Center
47,456,212
4
059%
Qwest Corporation Inc.
Communications/Telephone
27,144,640
5
0.34%
Red Mortgage Capital Inc
Finance
24,067,000
6
0.30%
BRE Properties
Real Estate Management
21,470,823
7
0.27%
Fred Meyer
Retailer / Wholesaler
21,203,901
8
0.26%
Virginia Mason Clinic
Medical Services
17,430,692
9
0.22%
Campus Business Parks LLC
Real Estate Invest/Holding
17,415,900
10
0.22%
Costco
Retailer / Wholesaler
15,284,689
11
0.19%
Wells Fargo
Finance
13,319,700
12
0.17%
Apple Hospitality Five Inc
Hospitality
13,342,900
13
0.17%
Quadrant Corporation
Real Estate Management
6,565,600
14
0.08%
$ 489,483,432
Source: City of Federal Way Business License & Community Development Department
1997
% of Total
Assessed
Assessed
Valuation
hank
Valuation A)
$ 129,666,252
1
3.26%
12,992,000
5
0.33%
12,932,115
6
0.33%
51,503,700
2
1.29%
32,253,639
3
0.81%
10,070,252 8 0.25%
10,756,078 7 0.27%
9,515,843 10 0.24%
6.11% $ 269,689,879 6.78%
City of Federal Way / 95
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 Lea
Taxes
Total Tax Lev
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
6,477,261
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
8,130,415
100.1%
225,762
2.8%
2005
8,248,919
8,082,340
98.0%
160,685
8,243,025
99.9%
230,838
2.8%
2006
8,933,515
8,584,565
96.1%
345,379
8,929,944
100.0%
231,743
2.6%
Source: Most of data has been derived from the "Annual Tax Receivable Summary" prepared by the King County Finance.
of Federal Way / 96
RATIO OF OUTSTANDING DEBT BY TYPE
For the Last Ten Fiscal Years
Governmental Activities
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
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%
410
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
-
21304,189
33,107,081
0.068%
386
2005
27,701,761
2,121,830
29,823,591
0.075%
348
2006
29,581,454
-
1,939,471
31,520,925
0.071%
364
Source: City of Federal Way Finance Division
Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements.
See Demographic Statistics schedule for personal income and population data. These ratios are calculated using
personal income for the prior calendar year.
(b) Per capita income information for the years 2001 to 2006 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 / 97
RATIO OF NET GENERAL OBLIGATION BONDED DEBT TO ASSESSED VALUE
AND NET GENERAL OBLIGATION BONDED DEBT PER CAPITA
For the Last Ten Fiscal Years
Fiscal
Year
(A)
Population
(B)
Assessed
Value
(C)
Gross
Bonded Debt
Less Debt
Service Fund
Net
Bonded Debt
Ratio of
Bonded Debt
To Assessed
Value
Net Bonded
Debt Per
Capita
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
31,520,925
2,599,653
28,921,272
0.0046
346.36
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
2006
86,530
8,011,615,599
31,520,925
6,001,415
25,519,510
0.0032
294.92
(A) Sources: U.S. Census Bureau; State of Washington Office of Program Planning and Fiscal Management,
Population Study Division; and the City of Federal Way 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 $7,962,160,910 has been reduced by
senior citizen exemptions of $60,449,330 and prior year omits of $916,197 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 / 98
COMPUTATION OF DIRECT AND OVERLAPPING DEBT
December 31, 2006
Jurisdiction
King County
Port of Seattle
Federal Way School District #210
Library
Total Overlapping Debt
CITY OF FEDERAL WAY
Total Direct and Overlapping Debt
(A)
Gross General
Obligation Debt
Outstanding
862,566,000
416,645,000
113,208,660
80,429,703
1,472,849,363
31,520,925 (C)
$ 1,504,370,288
(13)
Percentage
Applicable to
Federal Way
2.68%
2.68%
69.69%
4.37%
(A) Total general obligation bonds outstanding at the year end, exclusive of refunded bonds.
Source is King County Department of Finance.
100.00%
(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.
Source is City of Federal Way Finance
Amount
Applicable to
Federal Way
$ 23,118,961
11,167,145
78,892,948
3,514,585
116,693,638
31,520,925
$ 148,214,563
City of Federal Way / 99
COMPUTATION OF LIMITATION OF INDEBTEDNESS
December 31, 2006
General Debt Capacity
Excess Levy
Excess Levy
(Limited) (Unlimited)
Open Space
Utility Total Debt
DESCRIPTION
Councilmanic Excess Levy
and Park
Purposes Capacity_
Statutory debt limit:
(2005 AV=$7,251,992,701) (A)
1.50% AV @ 100%
$ 108,779,891 $ (108,779,891)
2.50%AV @ 100%
191,299,818
181,299,818
181,299,818 543,899,454
Add: Cash on hand for
debt redemption (B)
Less: Bonds and COPS outstanding
Remaining Debt Capacity
Total Remaining
"General" Capacity
8,129,983 -
8,129,983
(29,589,128) - - - 2( 9,589,128)
87,320,746 $ 72,519,927 $ 181,299,818 $ 181,299,818 $ 522,440,309
5159,840,673
(A) This figure represents the City's final total taxable assessed valuation (AV) for 2005 which was used to determine the 2006 property tax levy.
(B) Reflects ending fund balance in the Debt Service Fund and Utility Tax Fund as of December 31, 2006.
(C) Combined total for Councilmanic, Financing Lease, and Excess Levy capacities.
Total net debt
Total net debt
applicable to
applicable
Legal debt
the limit as a
Fiscal Year
Debt limit
to limit
margin
% of debt limit
1997
313,308,019
(35,036,073)
278,271,946
11.18%
1999
326,145,004
(31,970,807)
294,174,197
9.80%
1999
353,852,494
(28,124,453)
325,728,041
7.95%
2000
421,547,646
(17,918,011)
403,629,635
4.25%
2001
353,852,494
(28,124,453)
325,728,041
7.95%
2002
443,427,207
(14,289,859)
429,137,348
3.22%
2003
469,715,580
(31,327,803)
438,387,777
6.67%
2004
471,925,773
(26,881,086)
445,044,687
5.70%
2005
487,677,084
(23,478,555)
464,198,529
4.81%
2006
543,899,454
(21,459,145)
522,440,309
4.32%
Source: City of Federal Way Finance
(A) King County Department of Finance
Note: Under state finance law, the city's outstanding general obligation debt should not exceed 15 percent of total assessor's property value.
By law, the general obligation debt subject to the limitation may be offset by amounts set aside for repaying general obligation bonds.
City of Federal Way / 100
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
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%
2006
2,219,676
1,418,843
3,638,519
43,970,199
8.3%
Source: City of Federal Way Finance
Note: * Interest excludes bond issuance and debt registration costs.
City of Federal Way 1101
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)
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%
2006
86,530
22,451
32.5
13.0
22,184
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 -Tacoma -Bellevue. The 2005-2006 rates came from the State of Washington Employment Security
Department for King County.
(C) Per capita income and Median age information for the years 2001 to 2006 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
City of Federal Way / 102
PRICIPAL EMPLOYERS
Current Year and Ten Years Ago
2006
Number of
% of Total City
Taxpayer
Type of Business
Employees
Rank
Employment
Weyerhaeuser Company
Lumber Products
3,418
1
11.43%
Federal Way School Dist #210
Education
3,048
2
10.20%
St Francis Hospital
Medical Services
744
3
2.49%
Enchanted Parks Inc
Amusement Center
639
4
2.14%
Us Postal Service - Bulk Mail
Postal Service
626
5
2.09%
World Vision Inc
Christian Relief Agency -Nonprofit
596
6
1.99%
City Of Federal Way
Government Services
440
7
1.47%
Costco Wholesale Corporation
Wholesale
283
8
0.95%
Virginia Mason Federal Way
Medical Services
235
9
0.79%
Wal-Mart Store #2571
Retail
225
10
0.75%
Fred Meyer
Retail
206
11
0.69%
Sears Roebuck & Company
Retail
205
12
0.69%
Prudential Nw Realty Assoc. Inc.
Real Estate
200
13
0.67%
Home Depot
Retail
180
14
0.60%
Winco Foods
Retail
178
15
0.60%
Source: City of Federal Way Business License
Note: Principal Employers -includes both full-time and part-time employees.
1997
Number of
% of Total City
Employees
Rank
Employment
1,275
2
4.84%
2,132
1
8.09%
440
5
1.67%
-
-
0.00%
550
3
2.09%
500
4
1.90%
303
6
1.15%
230
8
0.87%
186
10
0.71%
-
-
0.00%
279
7
1.06%
200
9
0.76%
200
9
0.76%
128
21
0.49%
-
-
0.00%
City of Federal Way / 103
Year
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
PROPERTY VALUE AND CONTSTRUCTION
Commercial Construction I A)
Value
Permits
(In Thousands)
169
9,704
188
50,863
180
43,359
250
38,554
291
59,384
393
59,075
240
25,695
335
64,522
289
124,985
332
78,194
Residential Construction (A)
Value
Permits
(In Thousands)
367
27,952
364
23,301
374
26,229
185
11,462
166
7,914
318
38,176
290
37,775
289
82,658
591
111,504
455
70,862
Multi -Family Construction (A)
Value
Permits
(In Thousands)
10
12,749
11
7,594
5
16,167
12
3,816
6
1
1,790
1
-
1,042
0
-
0
-
1
2,027
Sources & Notes:
(A) Federal Way Community Development Department. Commercial construction includes alterations.
Other building -related permits (plumbing, mechanical, fire alarm, etc.) numbering 2,550
and valued at $4,234,701 have been excluded.
City of Federal Way / 104
CAPITAL ASSETS BY FUNCTION
Last Ten Fiscal Years
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Transportation
Street (Center Line Miles)
223.10
223.10
224.48
224.48
224.48
224.48
224.48
224.48
230.84
233.84
Signals WSDOT-owned and maintained
-
-
-
-
4
4
4
4
4
5
Signals City -owned & County -maintained
47
49
55
58
65
67
70
71
71
74
Street lights City -owned and maintained
262
204
224
260
668
810
1,038
1,050
1,050
1,214
Street lights City -owned and PSE-maintained
-
-
-
-
644
644
644
644
Street lights PSE-owned and maintained
589
629
635
648
2,835
2,850
1,975
1,975
1,975
1,975
Culture & Recreation
Developed Parks - Acreage
390.12
458.27
471
471
493.5
493.5
500.25
500.25
522.9
522.9
Developed Parks - # of Parks
23
26
26
26
28
28
31
32
32
32
Undeveloped Parks - Acreage
426.47
360.27
355
355
352
352
356.24
356.24
5435
543.5
Undeveloped Parks - # of Parks
23
20
20
20
20
20
21
21
21
21
Tennis Courts City -Owned
5
5
5
5
9
9
9
9
11
11
Tennis Courts - Public
20
20
20
20
10
10
10
16
22
22
Swimming Pools City -Owned
0
0
0
0
0
0
1
1
1
1
Swimming Pools County -Owned
2
2
2
2
2
2
1
1
1
1
Trails - Miles
3
3
3
3
4
4
4
4
6
6
Trails -# of Trails
2
2
2
2
2
2
2
2
2
2
Community Centers/Recreation Facilities
2
2
2
2
2
2
2
2
2
2
City of Federal Way / 105
SECURITY OF PERSONS & PROPERTY
Police Information
Offenses:
Forcible Rape (including attempts)
Robbery
Criminal Homicide
Aggravated Assault
Vehicle Theft
Burglary (commercial & residential)
Larceny
Arson
Citations:
Traffic
ECONOMIC ENVIRONMENT
Building Related Permits & Values
Building Permits
Estimated Value (In Millions $)
Other Building Related Permits
Estimated Value (In Millions $)
OPERATING INDICATORS BY FUNCTION
Last Ten Fiscal Years
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
37
58
53
43
49
34
50
154
153
115
128
124
108
125
2
2
4
7
4
4
2
121
159
167
158
141
120
120
746
761
808
849
1,179
1,206
1,204
643
648
573
533
521
677
672
3,901
3,393
3,097
3,072
3,516
3,347
3,145
24
39
38
36
17
29
14
11,196
13,382
10,890
13,340
12,767
13,439
18,411
50
55
64
121
153
146
7
1
109
101
120
1,118
1,573
1,199
759
800
753
3,257
3,786
3,230
23
25
26
13,219 11,402 11,931
576
582
573
447
463
712
531
624
880
788
$53.3
$81.9
$85.8
$53.8
$69.1
$94.8
$64.5
105.4
236.5
151.1
864
821
1007
1546
1693
2024
1779
1958
2705
2550
$18.5
$27.0
$11.0
$1.5
$2.3
$2.5
$2.4 $
2.5 $
3.9 $
4.2
City of Federal Way / 106
CITY GOVERNMENT EMPLOYEES FULL-TIME EQUIVALENT - HISTORY
Department 1997 1998 19992000 2001 2002 2003 2004 2005 2006
City Manager
4.0
6.0
6.0
6.0
5.0
6.0
6.0
6.0
5.0
5.0
Administration
4.0
6.0
6.0
6.0
5.0
5.0
5.0
5.0
4.0
4.0
Economic Development
-
-
-
-
1.0
1.0
1.0
1.0
1.0
Municipal Court
-
-
4.0
11.6
13.6
13.6
13.6
12.6
12.6
12.6
Management Services
22.0
25.5
26.0
26.0
24.0
24.5
25.0
25.0
22.0
22.0
Administration
2.5
2.5
2.0
2.0
1.5
1.5
1.5
1.5
1.5
1.5
Finance
8.0
8.5
9.0
8.0
7.0
7.0
8.0
8.0
7.0
7.0
City Clerk
3.0
2.5
2.5
2.5
2.5
2.5
2.0
2.0
1.5
1.5
Human Resources
2.5
4.0
4.0
5.0
4.0
4.5
4.5
4.5
3.5
3.5
Information System
6.0
8.0
8.5
8.5
9.0
9.0
9.0
9.0
8.5
8.5
Law
7.0
9.0
9.0
10.0
11.0
11.0
10.4
10.6
10.6
10.6
Civil Legal Services
3.8
4.3
4.3
4.1
5.1
5.1
5.8
5.8
5.8
5.8
Criminal Prosecution Services
3.2
4.7
4.7
6.0
6.0
6.0
4.6
4.8
4.8
4.8
Community Development
31.0
27.0
28.0
30.1
29.1
28.6
29.6
29.6
28.7
28.7
Administration
6.0
4.5
4.5
4.5
4.5
4.5
4.5
4.5
4.5
4.5
Planning
13.0
8.2
8.2
8.8
8.8
8.8
8.8
8.8
8.8
8.8
Building
8.5
10.8
11.8
13.3
12.3
11.3
12.3
12.3
12.3
12.3
Human Services
2.5
2.5
2.5
2.5
2.5
3.0
3.0
3.0
2.5
2.5
Neighborhood Development
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
0.7
0.7
Police
-
127.0
134.0
138.5
141.5
151.0
155.0
155.0
152.0
155.0
Administration
-
2.0
2.0
2.0
2.0
2.0
2.0
3.0
3.0
3.0
Support Services
-
49.0
52.0
56.5
58.5
59.0
55.0
54.0
53.0
55.0
Field Operations
-
76.0
80.0
80.0
81.0
90.0
98.0
98.0
96.0
97.0
Parks, Ree. & Cultural Svcs.
24.5
23.5
25.7
26.9
27.0
27.0
30.4
30.4
30.2
31.2
Administration
2.0
2.0
2.0
2.0
2.0
2.0
1.8
1.8
1.8
1.8
Planning
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
Kenneth Jones Pool
-
-
-
-
3.0
3.0
3.0
3.0
General Recreation
7.5
7.5
7.5
7.5
6.5
6.5
6.6
6.6
6.6
6.6
Community Center
-
-
-
-
_
-
_
-
-
Dumas Bay Centre
4.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
3.0
Knutzen Family Theatre
-
-
1.0
1.0
1.0
1.0
1.5
1.5
1.5
1.5
Parks Maintenance
10.0
11.0
11.8
13.0
14.0
14.0
14.0
14.0
13.8
13.8
Building
-
-
0.4
0.4
0.5
0.5
0.5
0.5
0.5
0.5
Public Works
29.5
29.5
36.5
37.5
38.5
38.5
41.5
41.5
41.5
42.5
Administration
1.5
1.5
2.5
2.5
2.1
2.1
2.1
2.1
2.1
1.9
Development Services
5.5
5.5
5.5
6.5
6.5
6.5
6.5
5.8
5.8
6.5
Traffic Services
4.0
4.0
4.0
4.0
4.1
4.1
5.1
5.1
5.1
5.1
Street Services
5.7
5.7
9.7
9.7
10.0
10.0
11.0
117
11.7
11.0
Emergency Management
-
-
-
-
-
-
-
-
-
1.0
Solid Waste & Recycling
1.1
1.1
1.6
1.6
1.6
1.6
1.6
1.6
1.6
1.7
Surface Water Management
11.8
11.8
13.3
13.3
14.3
14.3
15.3
15.3
15.3
15.4
Total
117.9
247.5
269.2
286.5
289.6
300.1
311.4
310.7
302.6
307.6
Source: City of Federal Way Finance Division
City of Federal P,av / 107
SALARIES AND SURETY BONDS OF PRINCIPAL OFFICIALS
DECEMBER 31, 2006
POSITION
MAYOR
COUNCILMEMBERS
LEGISLATIVE BODY
EMPLOYEE
ANNUALSALARY
MICHAEL PARK
$17,700
JEANNE BURBIDGE
$13,500
JACK DOVEY
$13,500
ERIC FAISON
$13,500
JIM FERRELL
$13,500
LINDA KOCHMAR
$13,500
DEAN MCCOLGAN
$13,500
ADMINISTRATIVE STAFF
POSITION EMPLOYEE ANNUAL SALARY
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
NEAL BEETS
$135,000
PAT RICHARDSON
$117,180
LAURA HATHAWAY
$74,364
KATHY MCCLUNG
$110,364
IWEN WANG
$117,252
DONNA HANSON
$119,976
BRIAN WILSON $120,216
CARY ROE $121,632
City of Federal Way / 108
MISCELLANEOUS STATISTICAL INFORMATION
LOCAL TAXES ON BUSINESSES
Franchise Tax - Cable TV ..................
5.00%
Gambling Taxes:
Bingo/Raffles... .................... .. _..
5.00%
Am usement/Games ................. ....
2.00 %
Punchboard/Pull Tabs .............. .......
5.00%
Cardrooms ....... I .....................
20.00%
Local Sales Tax (Collected by the State).._
8.80%
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.
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Fire and Other Responses 1,985 2,357 2,009 2,278 1,920 3,055 3,117 2,896 3,210 865
Emergency Medical 5,853 6,589 6,870 7,193 7,240 7,422 8,042 8,263 8,636 11,164
PUBLIC EDUCATION
ENROLLMENT COUNT
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
23
Elementary Schools
11,930
12,248
12,258
12,242
11,498
11,990
9,854
9,916
9,806
9,733
7
Middle Schools (incl. Public Academy)
4,979
4,956
4,994
5,013
5,331
5,509
5,458
5,476
5,271
5,183
5
High Schools
4,103
4,116
4,529
4,557
4,415
4,316
6,625
6,650
7,004
6,954
1
Internet Academy (K-12)
466
545
626
477
672
379
328
353
302
314
21,475
21,865
22,407
22299
21.916
22,194
27,265
22,395
22,393
22,184
3,087
Staffinembers
TAXABLE SALES (in millions)
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Retail Sales
$978.9
$1,049.3
$1,137.0
$1,212.1
$1,220
$1,298
$1,237
$1,239
$1,331
$1,471
Real Estate Sales
$375.4
$438.8
$487.6
$429.9
$400
$503
$570
$616
$939
$988