2007 Annual Comprehensive Financial Report (07-001)o001- oo\
PERMANENT RECORD
DO NOT DESTROY
GS50-03D-02, Rev. 1 (CAFR)
CITY OF
Federal
J�Jr��s •
compovImik Ml4V� ALwN/i4bf�L,
F I t- 4j, 0 L t4C, 11 A, L, ff, P Q It! Tr
FOR YEAR ENDED 2007
PREPARED BY:
THE FINANCE DEPARTMENT
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 becarne 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 cornrnercial 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 "cornrnunity 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 rnid-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, 2007
Table of Contents
INTRODUCTORY SECTION
Page
Letterof Transmittal................................................................................................................................... iii
City Officials and Administrative Officers ................................ .... ..... ...... ............... .. ... 1
City Functional Organization Chart ........................................................................................................... 2
GFOACertificate of Achievement ..... . ............................. .......... ................................... ....... ......:... ........ .. 3
FINANCIAL SECTION '
IndependentAuditor's Report .................................................................................................................... 5
Management's Discussion and Analysis.................................................................................................... 7
Basic Financial Statements:
Government -wide Financial Statements:
Statementof Net Assets.......................................................................................................... 18
Statementof Activities.......................................................................................................... 19
Fund Financial Statements:
Balance Sheet —Governmental Funds.................................................................................... 20
Statement of Revenues, Expenditures, and Changes in Fund Balances —
Governmental Funds........................................................................................................ 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............................................................................................................................. 61
CombiningBalance Sheet ................ :................. :........ .................................................................... 63
Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........................ 67
Statement of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual
ArterialStreet Fund......................................................................................................... 71
Solid Waste & Recycling Fund....................................................................................... 72
Hotel/Motel Lodging Tax Fund....................................................................................... 73
Federal Way Community Center Fund............................................................................ 74
Paths& Trails Fund......................................................................................................... 75
Individual Fund Statements and Schedules — Debt Service Fund:
FundDescription............................................................................................................................. 77
BalanceSheet ........ ............... ...................... .:............................ .............................. ......................... 78
Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual ............ 79
Combining and Individual Fund Statements and Schedules — Internal Service Funds:
FundDescription.............................................................................................................................. 81
Combining Statement of Net Assets ........... .................................................................................... ._ 82
Combining Statement of Revenues, Expenditures and Changes in Fund Net Assets ...................... 83
Combining Statement of Cash Flows ----------- ---------------------.................,.......,-,.................................. 84
Capital Assets Used in the Operation of Governmental Funds:
ComparativeSchedules by Source...................................................................................................
Schedule by Function and Activity ..................................................................................................
Schedule of Changes by Function and Activity..............................................................................
STATISTICAL SECTION
NetAssets by Component.....................................................................................................................
Changesin Net Assets...........................................................................................................................
Government -wide Revenues by Source and Expenditures by Function ................................................
Fund Balances, Governmental Funds....................................................................................................
Changes in Fund Balances, Governmental Funds.................................................................................
TaxableSales by Category ....................................................................................................................
Assessed and Estimated Actual Value of Taxable Property ..................................................................
Property Rates and Levies, Direct and Overlapping Governments........................................................
PrincipalTaxpayers...............................................................................................................................
Property Tax Levies and Collections...........: ......................... .................................................... :...........
Ratio of Outstanding Debt by Type.......................................................................................................
Ratio of General Obligation Bonded Debt to Assessed Value and
Net General Obligation Bonded Debt Per Capita.............................................................
Computation of Direct and Overlapping Debt.......................................................................................
Computation of Limitation of Indebtedness .... .... .......................... .............................. ....:.....................
Ratio of Annual Debt Service Expenditures for General Obligation Bonded Debt to
Total General Governmental Expenditures Net of Debt Service Expense ........................
DemographicStatistics..........................................................................................................................
PrincipalEmployers..............................................................................................................................
Property Value, Construction and Bank Deposits.................................................................................
CapitalAssets by Function....................................................................................................................
Operating Indicators by Function..........................................................................................................
City Government Employees Full -Time Equivalent - History...............................................................
Salaries & Surety Bonds of Principal Officials.....................................................................................
Miscellaneous Statistical Information....................................................................................................
ii
86
87
88
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
III
112
113
e, �
Federal Way
July 30, 2008
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,
2007 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 governinent. 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.
iii
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 In
addition, the City added Government Affairs and Economic Development in 2007. 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.
ECONOMIC FACTORS AFFECTING FINANCIAL CONDITION
Continued local growth belies increasing national weakness. King County is witnessing a cycle of income and
employment change that mirrors the rapid growth of the late 1990's. The region is unlikely to permanently defy
national and global trends.
The current recovery began after a four-year economic slowdown in King County. Since inid-2000, the region has
weathered a series of setbacks, punctuated by dramatic collapse in equity market valuations, the September 11, 2001
terrorist attacks, myriad accounting scandals, the buildup continued aftermath of war in Afghanistan and Iraq, and the
subprnne housing market collapse.
For the third consecutive year the county is experiencing sustained unemployment of less than 5%, returning to pre-
2001 levels. Local business activity has surged in 2005 and continues through the first half of 2007 despite the absence
of strong expansion at the national market level. The Puget Sound regional economy as well as the national economy is
now increasingly threatened by strongly surging energy costs and financial market illiquidity. Having finally broken the
cycle of improvement followed by stalled growth, the Puget Sound regional economy as well as the national economy 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 more specifically King County. For the last two years, however, non -farm employment growth in King County has
actually has matched the state growth rate, 5.0 percent to 4.9 percent respectively. The increase in employment has
been unevenly distributed across sectors. After declining by 15.5 percent, manufacturing employment is up 2.7 percent
since July 2004. Growth in 2005 and 2006 was fueled by a turnaround in aerospace and parts, currently up 27.0 percent
from 2004. Largest payroll growth has also occurred in construction up 7.4 percent since last August after growing 10.0
percent the year before. Government employment experienced declines while finance and insurance experienced no
growth in the previous year. Modest growth should continue, at a slower pace than 2006 — 2007.
The remarkable strength in residential real estate through 2005 has finally run its course. By virtually every measure —
time on market, inventory, and number of competing offers the market is cooling or outright declining. Sales have
dropped by 12.0 percent from a year ago and likely to be lower still. This dramatic fall in sales is expected to continue
over the next 18 months as the lending market reorganizes, returning to normal levels.
The Puget Sound region Consumer Price Index in 2005 was up to 2.4%, before rising another 2.6% in the third quarter
alone due to the aftermath of Hurricanes Katrina and Rita. The first half of 2008 rose at a 4.2 percent annual rate, while
core prices which exclude food and energy rose 2.1 percent.
Obviously local prices remain dependent on global energy prices, as well as movement in agricultural goods. However,
businesses will feel the pinch of high energy prices which creates upward pressure to pass the higher costs on to the
consumer.
Low to flat growth is anticipated in 2008, with the sub -prune mortgage debacle, banking credit crunch and Wall Street
volatility business investment is no longer offsetting the slackening consumer demand, further dampening future
economic growth.
tv
ECONOMIC TRENDS
Federal Way is the eighth largest city in Washington State with a population of 87,390 as of April 1, 2007. The City is
located on a plateau adjacent to Puget Sound in King County, eight miles north of downtown Tacoma and 25 miles
south of downtown Seattle. The City occupies approximately 22.5 square miles and is served by Interstate 5 and state
highways 99 and 509.
In 2007 there were 35,162 housing units in Federal Way, an increase of approximately 1.7% over 2006. Of these units,
56.06% were single family homes, 40.14% multi -family units, and 3.8% 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 2007 is
estimated at 32,835. Major employers are; Federal Way School District, Weyerhaeuser, St. Francis Community
Hospital, Wildwaves Enchanted Parks, U.S. Postal Bulk Mail Center and World Vision.
Sales tax collected in 2007 total $13.03 million, and is above 2006 by $97 thousand. The retail sector of the local
economy is anchored by two areas; the first is South 348`h and Pacific Highway 99 including Wal-Mart Super Center,
Sportsman'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 52%; services 19%; construction 15%; wholesale
trade 4%; information 4%, manufacturing 2%; government 1 %, and other 3%.
In 2007, new improvements to real estate totaled $203.2 million or approximately 2.3% of the City's 2007 assessed
valuation. The total assessed value of taxable property in Federal Way was $9.0 billion, which is approximately 12.5%
higher than the 2006 assessed valuation of $8.0 billion. Real Estate sales decreased 2.5% to approximately $963 million
in 2007 as compared to $988 million in 2006. A total of 797 building permits and 2,690 other building related permits
were issued in 2007. Estimated valuation was $120.9 million and $5.5 million respectively. Significant building
permits include: Barkley Ridge Apartments, Cedar Park at West Campus, St Francis Hospital, LA Fitness, Christian
Faith Church, Brook lake Community Church, Nora Korean Spa and Devry University.
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 City purchased a downtown 4-acre site where the old theatres were and sold it to United Properties to build a bold
and visionary downtown mixed -use development. The development is called `'Symphony" and is envisioned to have
four towers ranging from 16 to 24 stories in height, placing them among some of the tallest buildings between Seattle
and Portland. It will feature 60,000 square -feet of retail shops, restaurants and office space and about 900 condos and
apartments. Symphony will also include a one -acre public park with seating areas, performance space and a water
feature. Currently this project has been put on hold until a future date.
Last year voters approved a 1.75% increase in the City's utility tax, from 6.0% to 7.75% in return for more police
officers, equipment, code enforcement and other public safety needs. In December, 2007 the City held a swearing in
ceremony for 12 of the 18 new police officers authorized by the tax increase.
v
During 2007 the City rezoned our business park and community business land in the entire southwestern business sector
and created a Commercial Enterprise Zone. This will allow more flexibility for industrial, warehouses, big -box
retailers, restaurants, auto related, retail sales, hotels, adult entertainment, and multi -unit housing.
The City took The Parks and Recreation department completed construction on two park projects and opened the new
Federal Way Community Center in 2007. First, Cedar Grove Park is a new neighborhood park that serves multi -family
housing in the area. It is a 3-acre park that contains playground equipment for toddlers and older children, a loop trail, a
basketball court, and picnic benches. The second park completed was Madrona Park. It is a small park or a pocket park
located along the BPA (Bonneville Power Authority) Trail which has playground equipment and landscaping. And
finally, the City finished construction on the Community Center and opened its doors for business in late of March,
2007. The Community Center is the first new construction of an indoor municipal recreation facility for the City of
Federal Way. City residents and those from the surrounding areas will be able to jog the indoor track, climb, swim, take
yoga, relax in the sauna, have a birthday party, and schedule a reception all in one location.
A number of Public Works capital improvement projects were added to our main streets and highways, making them a
more attractive place to do business. The most important projects completed in 2007 include: 9"' South and 336" Street,
South 33e Street East at I" Way South, 1" Avenue and South 333`d signal, 2151 Avenue South by South 313'h Street to
South 32& Street, and State Route 99 HOV lane Phase III: South 284" Street through State Route 509 was substantially
moved forward. Completion date is projected in September 2008.
The City paid off City debt early. During 2007 we had higher than anticipated returns on our real estate excise tax. It
was the second highest in City history, so we chose to pay off two major outstanding debts. The first was the mortgage
on City Hall, which the City now owns. By paying the mortgage off ($5.8 million) instead of refinancing for 10 years,
we saved about $1.5 million in interest. The second debt we paid off in 2007 was a general obligation bond used for 5
City projects including building the Knutzen Family Theatre. By paying that bond ($1.89 million) off 5 years early, we
saved $258,300 in interest.
OUTLOOK FOR THE FUTURE
At the January 2008 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
Vi
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.
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, 2007 consisted of investments in U.S. Government Agency securities, Local Government 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'/2 basis points (.035%). At December 31, 2007, the City had $31.3 million invested in
the State Investment Pool. In 2007, the average monthly earnings rate for the entire portfolio was approximately 5.07%
as compared to the average monthly earnings rate for the State Investment Pool of 5.09%.
Risk Management
The City maintains insurance against most normal hazards except for unemployment insurance, for which it has elected
to become fully self -insured. Related premiums received by the Risk Management Fund are used to reimburse the State
Employment Security Department for unemployment benefits paid to eligible individuals, and to establish reserves for
the payment of estimated future unemployment claims liability.
Through its Risk Management Fund, the City is also recovering insurance premium costs for general liability coverage
and building reserves for a future general liability self-insurance program. During 2007, 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.
v11
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
2007 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 2007.
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, 2006. The City of Federal Way has received a Certificate of
Achievement for the last seventeen years (fiscal years ended 1990 — 2006). 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), Heidi Hudson (Financial Analyst),
and Phung Huynh (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
Finance Director
City of Federal Way / 1
JACK DOVEY
Mayor
DWI DUCLOS
Council member
CITY OFFICIALS
JIM FERRELL
Council member
ERIC FAISON
Deputy Mayor
JEANNE BURBIDGE
Council member
LINDA KOCHMAR MICHAEL PARK
Council member Council member
NEAL BEETS
City Manager
OTHER ADMINISTRATIVE OFFICERS
Assistant City Manager/Chief Financial Officer................................................................................................ Iwen Wang
Assistant City Manager/Chief Operating Officer.................................................................................................. Cary Roe
CityAttorney......................................................................................................................................... Patricia Richardson
Community Development Director.................................................................................................................. Greg Fewins
Economic Development Director................................................................................................................ Patrick Doherty
FinanceDirector...................................................................................................................................................Tho Kraus
Human Resources Director ...... :.......... .:...... :.......... :..:.:..:::.::_::.:::.,..::............ :..:............................ .......... Mary McDougal
Information Technology Director.....................................................................................................................Mehdi Sadri
Parks, Recreation and Cultural Services Director.........................................................................................Donna Hanson
PoliceChief..................................................................................................................................................... Brian Wilson
PublicWorks Director.............................................................................................................................................. Vacant
I MUNICIPAL COURT
■ Misdemeanors and Gross
Misdemeanors
■ Traffic & Non -traffic
Infractions
■ Probation Services
■ Civil Impounds
Ant CM/Chief Financial Officer
Iwen Warms
• Department Direction and Administration
• Economic Development — Business Retention
• Public Information
■ Public Defender Contract Mgmt
• Regional Issues and Involvement
• Coordinate Interlocal Finance Affairs
• Interdepartmental Coordination
Informaotian
Systems
• DPIComputer
Technology
■ Institution Tech.
(I -Net)
■ GIS Services
■ Telecomms.
• Staff Services and
Training
Human
Resources
■ Recruitment
■ Training
■ Benefits
Administration
• Employee Safety
• Employee
Wellness
■ Civil Service
City Cleric
Laura Hathawav
Finance
Tho Kraus
■ Accounting
Budgeting
• Financial Planning
■ Financial
Reporting
Cash Mgmt
• Payroll
• Audit Coord.
• Business
Licensing
• Purchasing
I CITIZENS OF FEDERAL WAY
1 MAYOR/CITY COUNCIL I
■ Represent the People of Federal Way
• Adopt Ordinances and Resolutions
• Grant Franchises
• Levy Taxes and Appropriate Funds
■ Establish Policy Guidelines
CITY MANAGED
NEAL BEETS
• Administer City-wide Operations and
Budget
• Implementation of Council Policy
■ DirectionlCoordination City-wide
Law
Pat Richardson
• Civil Legal
Services and
Litigation
■ Legislative
Support
■ Prosecution
■ Provide legal
Counsel
■ Draft Contracts
and Ordinances
• Negotiate
Contracts and Real
Estate Transaction
Econ. Development
Patrick Dohertv
Police
Brian Wilson
■ Crum Analysis and
Prevention
■ Traffic Safety
Education and
Enforcement
■ Investigation
• Patrol
• Emergency Comms.
• Community Safety
and Education Pro gs
ComrnsJGov't
Affairs
Linda Farmer
• Records Mgmt
■ Serve City Economic
■ Public Outreach
■ Hearing Exam
Development Efforts
• Media Relations
Coordination
• Elections
• City Center
Redevelopment
• Intergovernmental
Relations
Coordination
• Business Expansion and
° Oversee Web Site
■ Public Records
Requests
° Graphics Mgmt
Attraction
• Tourism and Promotion
and TV 21 Prog.
° City Newsletter
• CitVPromotions
Asst CM/Chief Operations Officer
j Cary Roe
• Department Direction and Operation
" Regional Issues and Involvement
Coordinate Interlocal Public Works Affairs
Interdepartmental Coordination
CouncilfCommitteelComn fission Support
Comm Development
GreL7 Fewins
Economic Development
Land Use Mgmt
■ Permit Process
+ Legislation
Bldg Permits &
Inspections
■ Code Compliance
• Hunan Services
■ Community Dev. Block
Grant
• Neighborhood Devlpmt
• Volunteer Program
Parks, Recreation &
Cultural Services
Dons Hmun
• FW Community Center
Recreation and Athletic
Programs
• Park Maintenance,
Operation and Develpmt
Community Arts and
Events
■ Public Facility Mgmt
and Development
■ Dumas Bay Centre and
Knutzen Family Theatre
Operations andMgmt.
Public Works
j Ken Miller/Marwan Saloum
• Development Services
■ Solid Waste and
• Permitting
Recycling
• Inspections
■ EmergencyMgmt
• Legislation
Program
■ Maintenance and Operations
Coordination
• Public Right -of -Way
° General Fleet
• Traffic Systems Mgmt
Maintenance
• Surface Water Mgmt
Citv offederal Wav / 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, 2006
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.
Qom- 15;1(26X
�n s President
Executive Director
City o f Federal Wav / 4
The Commons formerly SeaTac Mall opened in 1975 before the City was incorporated. In early 2004, the center was
branded "The Commons." Rebranding and major renovations have made The Commons become more part of the
community.
Photo courtesy of Phung Huynh & Heidi Hudson
Washington State Auditor
Brian Sonntag
INDEPENDENT AUDITOR'S REPORT
July 3, 2008
Mayor and City Council
City of Federal Way
Federal Way, Washington
We have audited the accompanying financial statements of the the governmental activities, the
business -type activities, each major fund, and the aggregate remaining fund information of the
City of Federal Way, King County, Washington, as of and for the year ended December 31,
2007, 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 audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our 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, 2007, and the respective changes in financial position
and, where applicable, cash flows thereof, and the respective budgetary comparison for the
General, Street, and Utility Tax funds for the year then ended in 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.
Insurance Building, P.O. Box 40021 • Olympia, Washington 98504-0021 • (360) 902-0370 • TDD Relay (800) 833-6388
FAX (360) 753-0646 • http://www.sao.wa.gov
Our audit was performed for the purpose of forming opinions on the financial statements that
collectively comprise the City's basic financial statements. The accompanying information listed
as combining and individual fund statements and schedules on pages 60 through 82 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, Capital Assets Used in the
Operation of Governmental Funds and Statistical Sections is presented for purposes of
additional analysis and is not a required part of the basic financial statements of the City. Such
information has not been subjected to the auditing procedures applied in the audit of the basic
financial statements and, accordingly, we express no opinion on it.
Sincerely,
BRIAN SONNTAG, CGFM
STATE AUDITOR
City offederal 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, 2007. 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, 2007 by $546.9
million. Capital Assets (net of depreciation and related debt) account for 89% of this amount with a
value of $484.4 million. Of the remaining net assets $30.2 million or 6% 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 $23.3 million, or 41/)o in 2007. Governmental activities
provided $22.6 million or 97% with the remainder being provided by the business -type activities.
• Governmental fund balances at year-end were $44.7 million, a 7% decrease over the prior year. Of
this amount, a total of $42.2 million, or 94% of the governmental fund balance is unreserved and
available to fund ongoing activities. The remaining $2.4 million is earmarked for debt service, paths &
trails reserve, hotel/motel lodging tax, police special funds, petty cash/change funds, and advance
travel.
Unreserved fund balance in the general fund was $7.8 million, an increase of $1.3 million or 20% from
the prior year.
The City debt decreased by $10.3 million during the current fiscal year. General obligation debt
decreased by $10.2 million while public works trust fund loan decreased by $184 thousand. The
decreases reflect the annual debt service payments which included the payoff of the 1997 Bonds of
$1.89 mullion 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.
'Federal Way / 8
The statement of net assets presents information on all of the City of Federal Ways assets and liabilities,
with the difference between the two reported as net assets. This statement serves a purpose similar to that
of a balance sheet in private business. Over time, increases or decreases in net assets may serve as a useful
indicator of whether the financial position of the City is improving or deteriorating
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 -tern 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
City of I� ederal Way / 9
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
changes in fund balances. The remaining governmental funds are combined into a single column labeled
nonmajor governmental funds. Individual fund data for each of the nonmajor governmental funds can be
found in combining statements later on in this report.
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, 2007 total $546.9 million. During 2007, the City recorded
infrastructure related to governmental activities constructed prior to 2003 and after year end 1990. In order
to have comparable data, the City has restated the 2006 financial figures in this discussion and analysis to
reflect the change into account. The following is a condensed version of the government -wide statement of
net assets.
City of Federal Way / 10
CONDENSED STATEMENT OF NET ASSETS
'Governmental Activities Business -Type Activities
Total
2007 2006 2007 2006
2007
2006
Current and other assets $ 65,356,436 $ 66,490,833 S 7,045,761 $ 8,035,523
$ 72,402,197
$ 74,526,356
Capital assets and C1P,
net of accumulated depreciation 456,460,224 442,750,216 47,021,217 45,637,105
503.481,441
488,387.321
Total assets 521,816,660 509,241,049 54,066,978 53,672,628
575,883,638
562,913,677
Long-term liabilities 20,992,943 30,828,814 1,812,907 1,990,628
22,705,850
32,819,442
Other liabilities 3,873,409 5,977.684 424,010 490,531
6,299,439
6,468,195
Total liabilities 26,769,352 36,806,498 2,236,917 2,481,139
29,005,269
39,2S7,637
Net assets:
Invested in capital assets,
net ofrelated debt 439,127,122 419,023,130 45,264,105 43,697,633
484,391,227
462,720,763
Restricted 32,269,512 39,359,454 15,777 26,439
32,285,289
38,385,893
Unrestricted 23,65I,674 15,051,966 6550,179 7.467,417
30,201.953
22,51S383
Total net assets $49%048,308 $472,4344550 $51,830,061 551,191,489
$546,378,369
S523,626,039
The largest component of the City's net assets, 86% or $484.4 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.
Approximately 5.5% or $30.1 million of the total net assets of the city are earmarked for construction
improvement projects, including the 1-5 City Center Access Study, South 3561h St SR99 to 1s` Avenue,
SR99 HOV Lane Improvement Phases III and IV, South 348'h Street at SR161, South 352°a Street
Extension from SR99 to SR 161. The City funded renovation and improvement of neighborhood parks and
open space parks. Such as Thompson Open Space Park, West Hylebos boardwalk replacement Park, and
Saghalie Park sportsfield Renovation and Artificial Turf Park. 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
$2.1 million; $125 thousand for police special funds, petty cash/change funds and advance travel, $198
thousand for Hotel/Motel lodging tax, $35.4 thousand for Path and Trails Reserve, and $30.1 million for
Capital Projects. The business -type activities portion of $6.2 million may only be spent on surface water
management activities and the remaining $398 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 $23.4 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 $23.3 million in 2007. The increase
was split between the governmental activities ($22.6 million or 97%) and business -type activities ($639
thousand or 3%).
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
City of Federal Way / 11
business -type activities. The graphs that follow compare program revenues to program expenses and
illustrate the revenues by source separately for the governmental and business -type activities.
CHANGES IN NET ASSETS RESULTING FROM CHANGES IN REVENUES AND EXPENSES
Revenues:
Program revenues:
Charges for services
Operating grants & contributions
Capital grants and contributions
General revenues:
Property tax
Sales tax
Utility tax
Real estate excise tax
Other taxes
Other
Total Revenue
Expenses:
General government
Security of Persons & Property
Transportation
Physical environment
Economic environment
Health and human services
Culture and recreation
Interest on long-term debt
Surface Water Management
Dumas Bay Center
Total Expenses
Change in net assets before
transfers
Transfers
Change in net assets
Governmental Activities Business -Type Activities Total
2007 2006 2007 2006 2007 2006
$ 10,280,888 $
9,446,764
$ 4,299,353
$ 4,130,179
$ 14,580,241 $
13,576,943
22,858
1,512,394
222,474
1,113,010
245,332
2,625,404
11,457,030
5,973,071
973
-
11,458,003
5,973,071
9,059,734
8,892,558
9,059,734
8,892,558
15,194,007
12,409,718
15,194,007
12,409,718
12,796,461
9,043,449
12,796,461
9,043,449
4,898,537
5,499,911
4,898,537
5,499,911
1,689,897
4,059,732
1,689,997
4,059,732
6,971,413
2,658,762
366,031
388,729
7,337,444
3,047,491
72,369,825
59,496,359
4,888,831
5,631,918
77,258,656
65,128,277
4,506,800
4,364,710
4,506,800
4,364,710
23,107,683
19,906,722
23,107,683
19,906,722
9,986,067
5,629,100
9,986,067
5,628,100
336,588
313,388
336,588
313,388
3,319,955
3,162,089
3,319,955
3,162,089
684,984
622,761
684,984
622,761
6,506,137
5,172,663
6,506,137
5,172,663
1,122,358
1,420,691
1,122,359
1,420,691
3,455,166 3,142,613
3,455,166
3,142,613
980,588 925,825
980,588
925,825
49,570,572
40,591,124 4,435,754 4,068,438
54,006,326
44,659,562
22,799,253 18,905,235 453,077 1,563,480 23,252,330 20,468,715
(185,495) (107,581) 185,495 107,581 -
22,613,758 18,797,654 638,572 1,671,061 23,252,330 20,468,715
Net assets - beginning 472,434,550 128,448,929 51,191,489 49,520,428 523,626,039 177,969,357
Adjustment for retroactive capitalization of
infrastructure under GASB 34 328,033,082 328,033,082
Net Assets at beginning of the year, restated 456,432,011 49,520,428 506,002,439
Net assets - ending $ 495,048,308 $ 475 279,665 $ 51,830,061 $ 51,191,489 $ 546,878,369 $ 526,471,154
Governmental activities contributed $22.6 million or 97% of the total change in net assets of $23.3
million. Key elements of this increase are as follows:
• Decrease in fund balances of $3.1 million.
• Excess of capital outlay net of depreciation expense of $13.9 million.
• Decrease due to bond principal payment of $10 million.
• Net decrease in deferred revenue and compensated absences liability of $86 thousand.
City of Federal Way / 12
Governmental Activities - Revenues
Chargesfor
services,18.8% Operatinggran
Othertaxes,3.rk Other, 12.8% i & ccntrlbut[ans
0.0%
f ` � Capital grants i
Sales tax, 27.8% and
Property tax, contributions,
16.6% 21.0%
Govemmental Activities - Expenditures
Culture and
Economic recreation
environment 13.1%
6.
Interest on long-
term debt
2.3%
Transportation Health and
20.1% human services
1.4%
General
—government oh�dr�l
secunty or
Persons &
Property
46.5%
Business -type activities of the City's surface water management system and Dumas Bay Centre increased
the City's net assets by $639 thousand, accounting for 3% of the total growth in the government's net
assets. Surface Water Management Fund increased by $843 thousand which was offset by a decrease in
Dumas Bay Centre Fund net assets by $134 thousand. Key eleinents of the increase areas follows:
Net operating loss of $68 thousand and non -operating income of $544 thousand, (which
includes an interlocal grant of $222 thousand) account for $476 thousand of the increase.
® Net transfers in of $185 thousand.
Internal service funds consolidation make up the remaining $19 thousand decrease.
BusinewTypes Activities - Revenues
Other, 7.8k
i
i
Chargesfor
services, 92.1%
Business -Type Activities - Expenditures
Dumas Bay
Center —
22% _
7 :
Surface Water
Management
78%
FINANCIAL ANALYSIS OF THE CITY'S FUNDS
As noted earlier, the City of Federal Way uses fund accounting to ensure and demonstrate compliance with finance -
related legal requirements.
Governmental funds
The focus of the City of Federal Way's governmental funds is to provide information on near -term inflows,
outflows, and balances of spendable resources. Such information is useful in assessing the City's financing
requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources
available for spending at the end of the fiscal year.
City of Federal Way / 13
As of the end of 2007, the City's governmental funds reported combined ending balances of $44.7 million, a
decrease of $3.1 million in comparison to the prior year. Approximately 17% or $7.8 million of this amount
constitutes unreserved general fund balance, which is available for spending at the City Council's discretion. The
remainder of the fund balance is reserved to indicate that it is not available for new spending because it has already
been committed for debt service payments, capital projects, police special funds and petty cash/change fund/advance
travel.
The General Fund is the chief operating fund of the City. At the end of 2007 unreserved fund balance of the general
fund was $7.8 million. General Fund unreserved fund balance represents 22% of total general fund expenditures.
The Debt Service Fund has a total fund balance of $2.1 million, all of which is reserved for the payment of debt
service.
Proprietary funds
The City of Federal Way's proprietary funds provide the same type of information found in the government -wide,
but in more detail. Unrestricted net assets of the Surface Water Management Fund at the end of the year amounted
to $6.2 million, and those for Dumas Bay Centre amounted to $389 thousand. The total change in net assets for
both funds was $843 thousand increase and $184 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 $8.3 million between the original budget for the fiscal year 2007
and the final budget are explained as follows:
Adjustments to expenditure and other uses budget include:
• General Fund increase of $423 thousand for Police car acquisition.
• General Fund increase of $466 thousand for Police Guild Settlement for pay and benefits.
a General Fund increase of $100 thousand for Class and Compensation Study.
• General Fund decrease of $1.0 million for City Manager's Contingency for 2008.
• General Fund increase of $185 thousand for SafeCity Pilot Program funded by Proposition 1.
• City Facilities increase of $2.1 million increase for Emergency Equipment purchases funded by REET and
grant funding.
• Debt Service Fund increase of $3.8 million was used to provide transfers to various capital improvement
projects and pre -pay 1997 Bond Balance.
■ The remaining $2.2 million increase in general governmental services was also funded by 2006 ending
fund balance carry forward.
Adjustments to revenues and other sources budget include: increases in REET ($2.0 million), sales tax ($1.2
million), state shared revenues ($218 thousand), increase permits and plan check fees ($300 thousand), interfund
transfers ($303 thousand), miscellaneous revenue; federal seizure funds, interest ($432 thousand), utility tax ($185
City of Federal Way / 14
thousand), gambling tax ($200 thousand), franchise fees ($138 thousand), fines and forfeitures ($69 thousand);
2006 ending fund balance carry forward ($6.3 million), and a decrease in recreation fees ($31 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, 2007 amounts to $503.5 million (net of accumulated depreciation). This investment in capital assets
includes land, buildings, improvements, machinery and equipment, infrastructure, park facilities and construction in
progress. For more details, please see Note 8 on page 46.
Infrastructure
Pursuant to GASB Statement 34, the City included capitalized retroactive infrastructure assets owned prior to 2003,
such as roads, bridges, curbs and gutters, streets and sidewalks, bridges, and lighting systems, in the year end 2007
financial statement. The City compiled an inventory of the retroactive infrastructure and recorded these capital
assets for year end 2007. The City inventoried current infrastructure assets; performed a condition assessment on
the infrastructure assets and summarized the results using a measurement scale. To arrive at the retroactive
infrastructure assets value, the City used a deflationary factor of the change from the City's assessed value during
1990 through 2006 and multiplied this factor to the infrastructure to determine the historical cost. The City elected
to capitalize all infrastructure assets including pre- 1990 assets when the City incorporated from unincorporated
King County. The City has determined that this method would accurately reflect capital assets. Infrastructure is the
largest asset class of the City and has historically not been reflected nor a measure of its consumption been charged.
For more details, please see Note 8 on page 46.
CAPITAL ASSETS AT YEAR-END, NET OF DEPRECIATION
Governmental
Business -Type
Total
Activities
Activities
2007
2006
Land
$ 287,967,761
$ 6,938,795 $
294,906,556 $
288,329,766
Building & Improvements
26,277,434
34,952,222
61,229,656
60,824,757
Machinery and equipment
4,867,210
30,009
4,897,219
4,158,244
Infrastructure
91,007,940
-
91,007,940
93,154,377
Construction in progress
46,339,879
5,100,191
51,440,070
41,920,136
Total Capital Assets
$ 456,460,224
$ 47,021,217 $
503,481,441 $
488,387,280
Major capital asset events during the current fiscal year included the following: completing the Federal Way
Community Center improvements for $1.7 million, for a grand total of $21.9 million, expanding the city streets and
traffic corridors for a total of $11.3 million, general capital and various park improvements for $1.5 million.
Additional information on the City of Federal Way's capital assets can be found in Note 8 of the Notes to the
Financial Statements.
Long-term debt
At the end of 2007, the City of Federal Way had total bonded debt outstanding of $20.9 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 $ 30,472,305 S . S 30,472,305
Public works trust fund loan - 1,856,232 1,856,232
Total S 30,472,305 S 1.956,232 S 32,328,537
City of Federal Way / 15
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 2007 was $8.012 billion and the total arnount of debt the City may issue is $586.8
million. Remaining legal debt capacities as of December 31, 2007 are:
General Government (no vote requirement) $ 106,139,765
General Government (3/5 majority vote required) $ 80,116,156
Parks & Open Space (3/5 majority vote required) $ 200,290,390
Utilities (3/5 majority vote required) Sa 200,290_390
Total Capacity 5 586,836,701
Additional information on the City of Federal Way's long -tern 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 2009/10 Preliminary Biennial Budget projection was developed under challenging economic conditions.
Various tax -limiting initiatives continue to significantly impact the growth rates of City revenues. Sales tax
revenues continued to be strong in 2007 ending with a 5% increase over the previous year. However, 2008 is
projected to decline by approximately 3.5% compared to 2007 as the economy cools. Consumers are reacting to the
litany of bad news in the media; continued wars in Iraq and Afghanistan, subprime mortgage meltdown, banking
credit crunch, and the high gasoline prices at the pump to mention just a few.
Real estate excise tax collections continue to be sluggish, down 10.9% from previous year, residential construction
and sales of both new and existing homes have declined dramatically from the peak of 2005-2007. This weakness is
also reflected in lower building permits fees, down 5.5% from previous year. Recent turmoil in the sub -prune
market has spurred a tightening of credit standards and has resulted in home price deflation in some areas.
Operating costs have continued to rapidly increase, particularly in the areas of energy, gasoline fuel and health
insurance costs. Which further contribute to the challenges of developing the 2009/10 Biennial Budget.
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 Director, 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.citvoffederalway.com.
City of Federal Way / 16
Flowers and plants can be seen grown through -out the City of Federal Way.
This photo was taken at West Hylebos Park courtesy of Jeri -Lynn Clark.
of Federal Way / 17
Basic Financial Statements
City of Federal Way / 18
STATEMENT OF NET ASSETS
December 31, 2007
ASSETS
Cash & cash equivalents and investments
Receivables (net)
Due from other governments
Prepaid items
Restricted assets:
Cash with escrow agent
Customer deposits
Investment in joint venture
Capital Assets (net of accumulated depreciation)
Land
Depreciable assets
Infrastructure
Construction in progress
Total Assets
LIABILITIES
Accounts payable and accruals
Unearned revenue
Retainage payable
Retainage payable - with escrow agent
Due to other governments
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
Unrestricted
Total Net Assets
Governmental
Business -type
Activities
Activities
Total
$ 54,823,393
$ 6,800,854
$ 61,624,247
2,110,628
141,504
2,252,132
5,779,710
9,653
5,789,363
33,872
-
33,872
211,751
93,750
305,501
125,184
-
125,184
2,271,898
-
2,271,898
287,967,761
6,938,795
294,906,556
31,144,644
34,982,231
66,126,875
91,007,940
-
91,007,940
46,339,879
5,100,191
51,440,070
521,816,660
54,066,978
575,883,638
2,996,039
105,678
3,101,717
479,386
196,444
675,830
234,136
3,857
237,993
-
93,750
93,750
133,987
15,944
149,931
2,031,861
8,337
2,040,198
4,567,000
182,359
4,749,359
16,325, 943
1,630,548
17,956,491
26,768,352
2,236,917
29,005,269
439,127,122
45,264,105
484,391,227
125,184
8,337
133,521
2,089,658
-
23089,658
30,054,670
-
30,054,670
-
7,440
7,440
23,651,674
6,550,179
30,201,853
$ 495,048,308
$ 51,830,061
$ 546,878,369
The notes to the financial statements are an integral part of this statement.
City ofFederaI Way/ 19
Functions/Programs
Governmental.4ctirilies:
General Government
Security of Persons & Property
Transportation
Physical Environment
Economic Environment
Health
Culture & Recreation
Interest on long-term debt
Total governmental activities
Business -type .4ctivities:
Surface Water Management
Dumas Bay Centre
Total business -type activities
Total
STATEMENT OF ACTIVITIES
For the Year ended December 31, 2007
Program Revenues Net (Expense) Revenue & Changes in Net Assets
Operating Capital Grants
Charges for Grants and and Governmental Business -type
Expenses Services Contributions Contributions Activities Activities Total
$ 4,506,800
$ 3,510,339 $
$ - $ (996,461) $
- $ (996,461)
23,107,683
2,110,164
- - (20.997,519)
- (20,997,519)
9,986,067
3,119,637
22-858 10,804246 3,960,674
- 3,960,674
336-588
-
- - (336,588)
- (3367588)
3,319,955
1,009,707
- - (2,310,248)
- (2,310,248)
684.984
-
- (684,984)
- (684,984)
6,506,137
531,041
- 652,784 (5,322,312)
- (5,322,312)
1,122358
-
- (1,122,358)
4.9,570,572
10,280.898
22:858 11.457.030 (27,809,796)
_ (27.809.796)
3,455,166
3,667,168 222,474 973 -
435,449
435,449
980,588
632,185 - - -
(_348,403)_
(348.403)
4,435,754
4,299-353 222,474 973 -
87.046
87.046
$ 54,006,326
S 14.580_2-11 ti 245.332 $ I t.458.003 t27.809,7961
87,046
(27,722,750)
General revenues:
Property tax
Sales tax
Utility tax
Real estate excise tax
Gambling tax
Leasehold tax
Hotel/Motel Tax
Other revenue
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.
9,059,734
9,059,734
15,194,007
-
15,194,007
12,796,461.
12,796,461
4,898,537
4,898,537
1,489 952
1,489.952
7254
7,254
191.691
191,691
4,194,183
4,194,183
2.856,974
366,031
3,223,005
(79,744)
-
(79,744)
(185A95)
185,495
-
50.423,554
55L526
50,975,080
22,613,758
638,572
23,252,330
472,434,550
51,19.1,489
523,626,039
$ 495-048,309
$ 51,830,061
$ 546.873A69
City of Federal Way / 2 0
BALANCE SHEET
GOVERNMENTAL. FUNDS
DECEMBER 31. 2067
Debt
ASSETS General Street Utility Tax Service
Equity in pooled cash & investments
$ 7,787,172 $ 1,499,552 $ 1,946,751 $ 2,147,282
Prepaid insurance/debt service
28.872 - _ _
Retainage in escrow
_ _ _
Receivables (net):
Taxes
271,296 - 1,5347122 182.946
Accounts and contracts
122,264 _ _ -
Restricted cash
125,184 - _
Due from other governments
1,618,165 93,732 - -
Interfund loans receivable
23.000
TOTAL ASSETS
9-975.953 1.593.294 3.480-873 2 3317 228
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
728,322
222.631 -
Accounts/payroll payable
50.671
- -
Retainage payable
Due to other governments
133,987
Deposits payable
811,573
1.224.496
Inter -fund loans payable
_
_ -
Deferred revenue
342.348
46,157 240,570
TOTAL LIABILITIES
2,066.901
1.493,284 - 240 570
Fund balance:
Reserved:
Debt service - - 2,089,658
Other 125,184 _
Unreserved:
General fund 7,783,868 - - _
Special revenue funds - 100.000 3,480,873 -
Capital projects funds _ _ _
TOTAL FUND .BALANCES 7,909.053 _100.000 3,480.873 2,099.678
TOTAL LIABILITIES AND
FUND BALANCE $ 9,975,954 $ 1.593.284 $ 3,480,873 $ 2,330,228
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 2 1
BALANCESHEET
GOVERNMENTAL FUNDS
DECEMBER 31. 2007
(continued)
Downtown Nonmajor
Redevelopment Transportation Governmental Total
ASSETS
Equity in pooled cash & investments $
5,149.449 $ 16,005.246 $
7,693,668 $
42,229,120
Prepaid insurance/debt service
- -
-
28,872
Retainage in escrow
73.609
138,142
211.751
Receivables (net):
Taxes
-
-
1,988364
Accounts and contracts
- -
-
122.264
Restricted cash
-
125.184
Due from other governments
3.176.938
890,875
5,77%710
Interfund loans receivable
- -
-
23,000
TOTAL ASSETS
5.149,449 19,255.793
8,722,683
50,508,265
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
7.595 1,300,135 386,007
2,644,690
Accounts/payroll payable
- - -
50,671
Retainage payable
73,609 160,527
234,136
Due to other governments
- -
133,987
Deposits payable
(4,708)
2,031,361
Interfund loans payable
- 23.000
23,000
Deferred revenue
- - 81,816
710,891
TOTAL LIABILITIES
7,595 1.373,744 646.642
5,828,736
Fund balance:
Reserved:
Debt service - -
2,0891658
Other - - 233,526
358.710
Unreserved:
General fund - - -
7,783.868
Special revenue funds - - 811,750
4,392.623
Capital projects funds 5,141.954 17,882.049 7-030,767
30-054-670
TOTAL FUND BALANCES 5.141.854 17.882,049 8,076.043
44.679.530
TOTAL LIABILITIES AND
FUND BALANCE $ 5,149.449 $ 19,255,793 $ 87722,685
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.
437,331:302
Investment in joint venture is not a financial resource and, therefore, not reported in the funds
2.27L898
Other long-term assets are not available to pay for current -period expenditures and, therefore,
are deferred in the funds
245.803
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 governmental activities in the statement of net assets.
31,380.749
Long-term liabilities, including bonds payable, are not due and payable in the current period
and, therefore, are not reported in the funds.
(20,860.974)
Net assets of governmental activities $
495.048,308
The notes to the financial statements are an integral part of this statement.
Federal Way / 22
REVENUES
Taxes
Licenses and permits
Intergovernmental
Service charges and fees
Fines and forfeitures
Interest
Other
TOTAL REVENUES
EXPENDITURES
Current:
General government
Security of persons and property
Transportation
Physical environment
Economic environment
Health
Culture and recreation
Debt service:
Principal
Interest/fiscal charges/admin fees
Capital outlay
TOTAL EXPENDITURES
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended December 31, 2007
Debt
General Street Utility Tax Service
$ 25,698,135 $
- $ 12,796,461 $ 4.898.537
2.844.840
94,488 _
1,640,141
1,204,623 -
3,216,630
404.904
1,005,293
- _ _
654,298
61.008 59.519 383,426
532.625
27.488 - -
35,591.962
1.792.511 12.855.980 5,281,963
4.139.820 57.448
24,183,913 - _
- 4,136,884
3,1327379 _
677.536
3,622,412 _
9,953.505
976,421
256.973
36.013,033 4.136.884 57A48 10.929.926
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (421.071) (2,344,373) 12.798,532 (5,647,963)
OTHER FINANCING SOURCES
(USES)
Transfers in 4.649.179 2,126,256 6,047,483
Transfers out (3.089,890) (11.230.295) (4,527,208)
TOTAL OTHER FINANCING
SOURCES (USES) 1,559.289 2,126,256 (11,230.295) 1.520.275
NET CHANGE 1N FUND BALANCES 1,139,218 (218,117) 1,568,237 (4,127.688)
FUND BALANCES - BEGINNING 6,770.835 318,117 1,912,636 6.217,346
FUND BALANCES - ENDING $ 7,909,053 $ 100,000 $ 3.480.873 $ '.t1Ry.67g
The notes to the financial statements are an integral part of this statement
City of Federal Way / 23
REVENUES
Taxes
Licenses and permits
Intergovernmental
Service charges and fees
Fines and forfeitures
Interest
Other
TOTAL REVENUES
EXPENDITURES
Current:
General govemment
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, 2007
(continued)
Downtown Nonmajor
Redevelopment Transportation Governmental Total
$
191.691 $
43,584.824
- -
-
2,939,328
- 11.152.715
1 A97,408
15,494,887
- 1,516,924
1.189,094
6,327.552
- -
-
1.005,293
298,159 640,211
367.049
2,463.670
- 23,404
47,449
630,966
298.159 13.333.254
3.292.691
72,446,520
(3,082) 221,218
4,415,404
- - -
24,183,913
- - 2,494.146
67631,030
- - 336,588
336.588
- - 194.607
3,326,986
- - -
677,536
- - 1.704,911
51327,323
- - - 9,953,505
145,937 - - 1,122,358
4,731.044 10,478,388 3,695,662 19.162,067
4,876,981 10,475,306 8,647.132 75,136,710
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (47.578,822) 2-857,948 (5,354,441) (2,690,190)
OTHER FINANCING SOURCES
(USES)
Transfers in
500.000
2.500.000
6,865,218
22,688,136
Transfers out
(100,000)
(837,405)
(3.405,482)
(23,190,280)
TOTAL OTHER FINANCING
SOURCES (USES)
400,000
1,662,595
3,513,472
(448,408)
NET CHANGE 1N FUND BALANCES
(4,178,822)
4,520,543
(1,840,969)
(3,138,598)
FUND BALANCES - BEGINNING 9,320,676 13,361,506 9,917.012 47,818,t27
FUND BALANCES - ENDING $ 5,141,854 $ 17,882,049 $ 8r076,043 $ 44,67%530
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, 2007
Amounts reported for governmental activities in the statement of activities (page 20) are 2007
different because:
Net change in fund balances --total governmental funds
$ (3,138,598)
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. 13,906,943
Revenues in the statement of activities that do not provide current financial resources
are not reported as revenues in the funds. 52,812
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 fmancial 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. 9,953,505
Internal service funds are used by management to charge costs of risk management,
information systems, mail & duplication, fleet, and building systems to the funds. 1,912,886
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. (73,791)
Change in net assets of governmental activities $ 22,613,757
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, 2007
Variance with
Budgeted Amounts
Final Budget -
Positive
Original
Final
Actual Amounts
QN —tiye)
REVENUES
Taxes
$ 23.891,696 $
25,341,696
$ 25,698,135
$ 356,439
Licenses and permits
2,207,257
2,645.257
2,844,840
199,583
Intergovernmental
1,071,791
1,367,825
1,640,141
272,316
Service charges and fees
2,841,059
2.810,559
3,216,630
406,071
Fines and forfeitures
747,035
816.035
1,005,293
189,258
Interest
309,023
716,023
654.298
(61,725)
Other
587.000
612.383
532,625
(79,758)
TOTAL REVENUES
31,654.861
34.309,778
35,591,962
11282,184
EXPENDITURES
Current:
General government
5,146,907
4,570,637
4,139,820
430,817
Security of persons and property
23:1 I4.752
25,196,889
24,183,913
1.012.976
Economic environment
2.967,360
3.570,410
3,132,379
438,031
Health
652.503
703.067
677.536
25,531
Culture and recreation
3,808,710
3.970.390
3.622.412
347.978
Capital outlay
61.066
206.077
256,973
(50,896)
TOTAL EXPENDITURES
35,751,298
38,217,470
36,013,033
2,204,437
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
(4.096,437)
(3,907.692)
421,071
3.486.621
OTHER FINANCING SOURCES (USES)
Transfers in
4.466.774
4,661,143
4,649,179
(11,964)
Transfers out
(3,306,539)
(3.735,039)
(3.089,890)
645,149
TOTAL OTHER FINANCING SOURCES (USES)
1,160.235
926,104
1,559.289
633r185
NET CHANGE IN FUND BALANCES
(2,936.202)
(2.981,588)
1,138.218
4,1 19,806
FUND BALANCES -BEGINNING
3,202.863
6,770.831
6,770,835
4
FUND BALANCES - ENDING $
266,661 $
3,789243 $
7,909,053 $
4,119,810
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, 2007
Variance with
Budgeted Amounts
Final Budget -
Positive
Original
Final
Actual Amounts
(Negative
REVENUES
Licenses and permits
S 225,719 $
225,718
S 94,488
$ (131,230)
Intergovernmental
1.195,000
1,225,431
1,204,623
(20,308)
Service charges and fees
250,000
250,000
404,904
154,904
Interest
40,000
40,000
61,008
21.008
Other
26.000
26,000
27,488
1.488
TOTAL REVENUES
1.736,719
1.767.149
1.792.511
25,362
EXPENDITURES
Current:
Transportation
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
4389.624 4.788.171 4.136,884 651.287
4.389.624 4.788.171 4.136,884 651.287
(2,652,905) (3,021.022) (2,344,373) 676,649
2,652,905 2,870,405 2,126.256 (744,149)
- (67.500) - 67.500
"TOTAL OTHER FINANCING SOURCES (USES) 2,652,905 2.802.905 2,126,256 (676.649)
NET CHANGE 1N FUND BALANCES - (218.1 17) (218.1 17) -
FUND BALANCES - BEGINNING 100.000 318.117 318.117 -
FUND BALANCES - ENDING
$ 100,000 $ 1 WOW $ 100.000 $ -
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. 2007
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)
$ 10,851,287 $ 11,036,287 $ 12,796,461 $ 1,760,174
50,000 50.000 59.519 9.519
10,901,287 11,086.287 12.855.980 1,769,693
57.449 57.449 57,448 1
57A49 57.449 57,448 1
10.843, 83 8 1 1.028,838 12.798.532 1,769,694
(I1t045,295) (11,230,295) (11.230.295)
TOTAL OTHER FINANCING SOURCES (USES)
(11,045,295)
(11,230.295)
(11,230,295) -
NET CHANGE IN FUND BALANCES
(201,457)
(201,457)
1,568,237 1,769,694
FUND BALANCES - BEGINNING
11442,602
1.912.636
1,912,636 -
FUND BALANCES - ENDING
$ 1,241.145 $ 1,711,179 $ 3,480,873 $ 1,769,694
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 28
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
December 31, 2007
ASSETS
Current Assets
Equity in pooled cash and investments
Prepaid items
Receivables (net):
Taxes
Accounts and contracts
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
Due to other Governments
Deposits payable
Deferred revenue
Public works trust fund loan payable
Compensated absences payable
TOTAL CURRENT LIABILITIES
Long -terns liabilities:
Public works trust fund loan payable
Compensated absences payable
TOTAL l I llNIG TERM LIABILITIES
TOTAL LIABILITIES
Governmental
Business -type Activities - Enterprise Funds Activities
Surface Water Dumas Bay
Management Centre Total Internal Service
$ 6,404,243 $ 490,361 $ 6,894,604 $ 12,594,273
- 5,000
98,945 - 98,945
- 42,559 42,559
7-653 2,000 9,653
6_510.841 534,920 7.045,761 12,599,273
4,829,154
2,109,640
6,938,794
-
19,849
3,576,592
3,596,441
16,013,204
43,702,039
106,643
43,808,682
12,272,681
4,721,383
378,808
5,100,191
-
(10,451A81)
(1,971Al 0)
(12A22,891)
('9,156,964
42,820.944
4.200,273
47,021,217
19,128,921
49,331,795
4,735,193
54,066,978
31,728,194
97,369
15,307
112,676
292,025
3,857
-
3,857
.-
93,750
-
93,750
-
15,944
15,944
-
-
8,337
8337
500
98,070
99,374
196,444
-
182,359
-
182,359
1,083
1.083
492,432
122,018
614,450
292,525
1,574,753
-
1,574,753
-
39,547
15.165
54,712
54,919
+
) S, i GS
t,629,465
54,9I V
2,106,732
137,183
2,243,915
347,444
Invested in capital assets, net ofrelated debt
41,063,832
4,200,273
45,264,105 19,128,921
Restricted for:
Customer deposits
-
8,337
8,337 -
Steel Lake Management District
7,440
-
7,440 -
Unrestricted
6,153.781
399.400
6,543,181 12,251,828
TOTAL NET ASSETS
$47,225,053
$4,598,010
51,823,063 $ 3 t,380,749
Adjustment to reflect the consolidation of internal service fund activities
related
to enterprise funds
6,998
NET ASSETS OF BUSINESS -TYPE ACTIVITIES
S 51,830,061
The notes to the financial statements are an integral part of this statement.
City of Federal Way 129
STATEMENT OF REVENGES, EXPENSES AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
For the Year Ended December 31, 2007
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
TOTAL NON -OPERATING REVENUES (EXPENSES)
INCOME (LOSS) BEFORE OPERATING TRANSFERS
Capital contributions
Transfers in
Transfers out
CHANGE IN NET ASSETS
TOTAL NET ASSETS - BEGINNING
TOTAL NET ASSETS - ENDING
Adjustment to reflect the consolidation ofinternal service fund
activities related to enterprise funds
CHANGE IN NET ASSETS OF BUSINESS -TYPE ACTIVITIES
Governmental
Business -type Activities - Enterprise Funds Activities
Surface Water Dumas Bay
Manaeement Centre Total Internal Service
$ 3.653,881 $ 632,185 S 4.296.066 $ 4,403,206
13.287 - 13.287 105,296
3,667,168 632,185 4,299.353 4,508,502
1,482,580
410.624
1,893,204
881,768
38,738
114,226
152,964
475,087
399,563
200,681
600,244
1,977,408
442,671
17,506
460,177
104,754
431,216
181.776
612.992
1.769,775
592,362
55.005
647,367
-
3,387,130 979,818 4,366.948 5,208,792
280-038 (347,633) (67,595) (700,290)
221,974
500
222,474
-
-
-
-
(55,958)
313.246
27,690
340,926
418,409
(19.395)
-
(19,395)
-
515,825
28.180
544.005
362.451
795,863
(319.453)
476,410
(337,839)
(3,054)
-
(3,054)
1,894.793
1,001,000
135.495
1,136,495
564,677
(951.000)
-
(951,000)
(248.028)
842.809 (183,958) 658.851 1,873,603
46382,284 4,781,968 29,507,146
$ 47,225.093 $ 4.598,010 $ 31,380,749
The notes to the financial statements are an integral part of this statement.
(20,279)
$ 638,572
City of Federal Way /30
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended December 31. 2007
Governmental
Business-typeActivities - Enterprise Funds Activities
Surface Water Dumas Bav_
Management Centre Total Internal Service
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from users 5
3,679,304 i
596,126
Cash payments for taxes
-
-
Cash payments to claimants
Cash payments to suppliers for goodsiservices
(145,854)
(133,350)
Cash payments to employees
(1,482,580)
(410,624)
Cash payments to other funds for goods and services
(592,362)
(55,126)
Cash payments for other services%charges
(399.563)
(200.681)
Cash payments to other govermnents for goods and services
(426.724)
(17.506)
Other operating receipts
13.287
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
645.508
(221.161)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Subsidy from interlocal grant
Transfers in
Transfers out
NET CASH PROVIDED BY NONCAPITAL FINANCING
CASH FLOWS FROM CAPITAL AND CAPITAL -
RELATED FINANCING ACTIVITIES:
Principal paid on debt service
Interest paid on debt service
Acquisition of capital asset'constniction work in progress
Proceeds froth the sale of capital assets
Crash contributions for capital acquisition
NET CASH USED FOR CAPITAL
AND CAPITAL -RELATED FINANCING ACTIVITIES
CASH FLOWS FROM INVESTING ACT] V1TIES:
Receipts of interest
NET CASH PROVIDED BY INVESTING ACTIVITIES
NET INCREASE- (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
RECONCILIATION OF OPERATING INCOME TO
NET CASs{ PROVIDED,,USED) BY DnERAT!NG nCTWI rrES
Operating income (loss)
Adjustments to reconcile operating income to
net cash provided (used) by operating activities:
Depreciation expense
(Increase)/decrease in accounts receivable
(lncrease)idecrease in taxes receivable
(lncrease)/decrease in due from other governments
Increase/(decrease)in vouchers/accounts payable
lncreasel(decrease)in retainage payable
Increasei(decrease)in deposits payable
Increasel(decrease)in deferred revenue
Increase/(decrease)in accrued payroll/compensated absences payable
TOTAL ADJUSTMENTS
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Non -cash investing, capital, and financing activities:
Other contributions of capital assets
The notes to the financial statements are an integral part of this statement
231.152 -
1,001.000 135,495
(951.000)
281,152 135,495
$ 4,275.430
5 4.403.206
(556,566)
(279,204)
(1,743,894)
(1,893,204)
(873,478)
(647,488)
-
(444230)
(104.754)
13.287
105.296
424,347
1.229.810.
231,152
-
1,136,495
564,677
951000)
(248.028)
4 W647
316,649
(182,360)
-
(182,360)
-
(19,395)
-
(19,395)
-
(1,957,268)
(39,876)
(1,997,144)
(1,228,809)
-
-
-
13,385
(3.054)
(3,054)
1258,024
(2.162,077)
(39,876)
(2 201,953)
42.600
322,136
28.462
350.598
429.810
322.136
28,462
350,598
428.8I0
(913,281)
(97,080)
(I,OI0361)
2,017.869
7.223,774
587.441
7,811215
10.576.404
6,310,493
490,361
6,800,854
11.594-273
280,038
(347,633)
(67,595)
(700,290)
431,216
181,776
612,992
1,7697775
-
904
904
-
1,351
1.351
-
15,944
-
15,944
-
(107,116)
(17.836)
(124,952)
152,035
-
(1?88)
(1288)
-
-
(32412)
(3,412)
-
25.423
(36,963)
(11,540)
-
(1,348)
3,291
1.943
8,290
365,470
116.472
49 %, )42
1,930,100
645508 S
(221,161) S
424,347 S
1.229.810
S 636.769
Cif}, of Federal Way / 31
NOTES TO THE BASIC FINANCIAL STATEMENTS
December 31, 2007
INDEX
Note
Page
1
Summary of Significant Accounting Policies................................................................................
32
ReportingEntity ....................................................................................................................
32
Government -wide and Fund Financial Statemenls..... .................................................. :..:.....
32
Measurement Focus, Basis of Accounting, and Financial Statement Presentation ...............
33
BudgetaryInformation ................................................. .......••--•--•--•-......................................
36
Assets, Liabilities and Equities.............................................................................................
38
Cashand Investments...................................................................................................
38
Receivables............ ............................ .................................. .............. ..........................
38
Amounts Due to and from Other Funds; Interfund Loans ............................................
38
Inventories....................................................................................................................
39
CapitalAssets ........ ........•.••••.••-................................................................ .....................
39
Compensated Absences Payable ...............................................
Long -Term Liabilities ........................ ..................... .. .......
..................................................
40
DeferredRevenue.........................................................................................................
40
Fund Equity -Reserves and Designation .............. :.......... :............ :....................... ::.::..:..
40
Interfund Transactions..................................................................................................
41
2
Reconciliation of Government -wide & Fund Financial Statements ...............................................
41
3
Stewardship, Compliance and Accountability ...............................................................................
42
4
Supplemental Appropriations ......................................... .....
42
5
Deposits and Investments..............................................................................................................
42
6
Receivables and Due from Other Governments............................................................................
44
7
Due To Other Governments..........................................................................................................
45
8
Capital Assets................................................................................................................................
46
9
Pension Plans......................•-••...........•.•.........-•-••-......•••-••.........................•....................................
47
10
Risk Management..........................................................................................................................
51
11
Long -Term Liabilities ............................. .................. .................-•.....................................
52
12
Interfund Transactions .............................................................._.._................................................
55
13
Contingencies and Litigation.........................................................................................................
57
14
Joint Ventures................................................................................................................................
57
15
Prior Period Restatement...............................................................................................................
58
City of Federal Way / 32
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Year Ended December 31, 2007
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 is dependence on the City's obligation to redeem the organization's
debts, to finance the organization's deficits, and the extent to which subsidies from the City constitute a major portion of the
organization's total resources. Applying these criteria, as outlined in GASB Statement 14, the City has no relationships that qualify
as component units.
Financial Accountability
Financial accountability is defined as appointment of a voting majority of an agency's or organization's board, and either the City's
ability to impose 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
Annaf-_ the. financial re.nnrtino lhacic and format Cn— nftli— A--.
ge
• 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. Pursuant to GASB Statement 34, the City included capitalized retroactive infrastructure assets owned prior to
2003.
• Change in the individual fund financial statements focusing on the major funds
GOVERNMENTAL -WIDE AND FUND FINANCLALL 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 interflmd 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
City of Federal Way / 33
allocate indirect costs to specific function or segment. Program revenues include 1) charges to customers or applicants who
purchase, use or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grant and
contributions that are restricted to meeting the operational or capital requirements or a particular function or segment. Taxes and
other items not properly included among program revenues are reported instead as general revenues.
Separate fund financial statements are provided for governmental funds and proprietary funds. Major individual governmental
funds and major individual enterprise funds are reported as separate columns in the fund financial statements.
MEASUREMENT FOCUS, BASIS OF ACCOUNTING, FINANCIAL STATEMENT PRESENTATION
The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of
accounting, as are the proprietary fund statements. Revenues are recorded when earned and expenses are recorded when a liability
is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are
levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have
been met.
Governmental Funds
Governmental fund financial statements are reported using the current financial resources measurement focus and the modified
accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered
to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period.
For this purpose, the City of Federal Way considers revenues to be available if they are collected within 30 days of the end of the
current fiscal period with an exception to Utility Taxes in which we extend this period to 60 days. Expenditures generally are
recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures
related to compensated absences and claims and judgments, are recorded only when payment is due.
Property taxes, licenses, and interest associated within the current period are all considered to be susceptible to accrual and 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.
Transportation CIP Fund
This fund accounts for receipts and disbursements related to acquisition, design, construction and any other related street
project expenditures.
Downtown Redevelopment CIP Fund
This fund was established to accumulate resources to set aside for downtown projects.
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 full cost of providing services, including depreciation, primarily through user charges. The measurement
focus for these funds is based on the commercial model, which uses a flow of economic resources approach. Under this approach,
the operating statements for the proprietary funds focus on a measurement of net income (revenues and expenses) and both current
and non -current assets and liabilities are reported on the related balance sheets.
Private sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the
government -wide and proprietary fund financial statements to the extent that those standards to not conflict with or contradict
guidance of the Governmental Accounting Standards board. Governments also have the option of following subsequent private -
sector guidance for their business -type activities and enterprise funds, subject to the same limitation. The City of Federal Way has
elected not to follow subsequent private -sector guidance.
As a general rule the effect of the interfimd 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.
-r" 1 :a "-- i-11 - =-- --- -- c-- 3-
ILIV LILY icYviw uic iviikYw111b' lllaj Gi PlUPiMMY MILLS-.
Enterprise Funds
The City uses enterprise funds to account for government activities that are financed and operated in a manner similar to private
business. Costs of providing services to the general public are primarily financed by user fees.
Surface Water Management Fund
This fund was established to administer and account for all receipts and expenditures related to the City's surface and
storm water management system.
Dumas Bay Centre Fund
This fund was established to account for the revenues and expenses related to the acquisition, capital improvements
maintenance and operations of the City -owned Dumas Bay Centre and Knutzen Family Theatre.
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 ManaamentFund
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 as expenditure. Other exceptions include (1) inventories of materials and prepaid items are
reported as expenditures when purchased, (2) interest on long-term debt is not accrued but is recorded as an expenditure when due,
(3) accumulated unpaid vacation and sick pay are considered expenditures when paid.
Major revenues recorded on the modified accrual basis are:
Federal Way 136
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 '/<% and optional `/a% real estate excise
taxes. Although a time lag occurs in payment of these taxes to the City, since the taxes are actually collected by King County in
December and receiped 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 Rgporting 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.
FINANCIAL STATEMENT PRESENTATION
Comparative data for each individual fund for the prior year has not been presented in the basic financial statements for year end of
2007 as it was previously presented in the prior years' financials. In order to obtain an understanding of changes in the City's
position and the results of the City's operations, the financial statements for year end of 2007 should be read in conjunction with
the government's financial statements for the year ended December 31, 2006.
BUDGETARY INFORMATION
Scope of Budget
rumuai appropnatea ouagets are aaoptea 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
City of Federal Way / 37
Arterial Street
Utility Tax
Solid Waste & Recycling
Federal Way Community Center
Hotel/Motel Lodging Tax
Paths & Trails
Debt Service Fund
Procedures for Adopting the Annual Budget
The City's budget process and the time limits under which the budget must be prepared are defined by the Revised Code of
Washington (RCW) 35A.33. The procedures followed in establishing the annual budget are described below:
By late May the official budget call is made by the Management Services Director for current level service budgets and a
preliminary financial forecast.
By late June, departments submit their preliminary expenditure estimates and the Management Services department updates the
preliminary revenue estimates to define resources available to finance coming year expenditure programs.
Prior to the first Tuesday in September, the City Manager submits a proposed budget to the City Council. This budget is based
on priorities established by the Council and estimates provided by City departments during the preceding months, and
balanced with revenue estimates made by the Management Services Director.
City Council conducts workshops and public hearings on the proposed budget between mid -September and mid -December.
No later than the third Monday in November, the City Council must adopt an ordinance to establish the amount of property
taxes to be levied in the coming year.
By October 31, the City Manager files a preliminary budget with the City Clerk. Copies of the preliminary budget are
provided to staff and the City Council and made available to the public.
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 2007, 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.
City of Federal Way138
Encumbrances
An encumbrance system is used for budgetary control purposes to record commitments resulting from approved purchase orders.
During the year, encumbrances are recorded in the accounting system at the time purchase orders are issued for goods and services.
Upon payment, the encumbrance is reversed and the actual cost of the related item is recorded as a fund expenditure. Outstanding
encumbrances lapse at year end, are canceled and rolled over to the next fiscal year. Therefore, these amounts have not been
recorded as current year expenditures unless considered to be susceptible to accrual at the end of the year. The total encumbrances
at year-end for the City were $16,054,910.
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, 2007, the State Treasurer was
holding $31,257,834 in the State Investment Pool and US Bank was holding $27,471,251 in a Municipal Investor Account (MIA)
for short-term investments of cash. The Local Government 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, 2007, the total cash and cash equivalents were $59,725,727.
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.
RPrvivahles
Taxes receivable consists of property taxes and related interest and penalties (see Property Tax Note 6). Accrued interest
receivable consists of amounts earned on investments, notes, and contracts at the end of the year.
Due From Other Governments reflects measurable and available intergovernmental grants, entitlements, or State shared revenues
(taxes/charges levied and collected by an intermediary collecting government and distributed on some basis); loans; and charges for
services rendered by the City for another government unit. A separate schedule of Due From Other Governments is disclosed in
Note 6.
Amounts Due to and from Other Funds; Interfund Loans
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are
referred to as either "interfund loans receivable/payable" or "advances to/from other funds." All other outstanding balances
between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities
and business -type activities are reported in the government -wide financial statements as "internal balances."
City of Federal Way / 39
Loans between funds must be authorized by the City Manager. In the governmental funds, loans to other funds are offset by a
corresponding reservation of fund balance to indicate that the outstanding loan amounts do not constitute "available spendable
resources" and are, therefore, not available for appropriation.
A separate schedule of interfund loans receivable and payable is furnished in Note 12.
Inventories
Inventories in the governmental funds are recorded as expenditures at the time of purchase. Amounts remaining at year-end are
immaterial and; therefore, are not reflected on the balance sheets of those funds. There were no material inventories at year-end in
the Internal Service or Enterprise Funds.
Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure, are reported in the applicable governmental or
business -type activities columns in the government -wide financial statements.
Pursuant to GASB Statement 34, the City included capitalized retroactive infrastructure assets owned prior to 2003, such as roads,
bridges, curbs and gutters, streets and sidewalks, bridges, and lighting systems, in the year end 2007 financial statement. The City
compiled an inventory of the retroactive infrastructure and recorded these capital assets for year end 2007. The City inventoried
current infrastructure assets; performed a condition assessment on the infrastructure assets and summarized the results using a
measurement scale. To arrive at the retroactive infrastructure assets value, the City used a deflationary factor of the change from
the City's assessed value during 1990 through 2006 and multiplied this factor to the infrastructure to determine the historical cost.
The City elected to capitalize all infrastructure assets including pre- 1990 assets when the City incorporated from unincorporated
King County. The City has determined that this method would accurately reflect capital assets. Infrastructure is the largest asset
class of the City and has historically not been reflected nor a measure of its consumption been charged.
Major expenditures for capital assets, including capital leases and major repairs that increase useful lives are capitalized.
Maintenance, repairs, and minor renewals are accounted for as expenditures or expenses when incurred. The City has adopted a
general capital asset capitalization policy where an item's cost must equal or exceed $1,000. All capital 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 find 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
Assets:
Asset Class
Life in Years
Computers_................................................................................
5-6
Printers & Faxes...............................................................................
7
Telecommunications Equipment
..........................:........................... 7
Police Radio Equipment................................................................
11
Other Office Equipment..............................................................4-10
Office Furniture and Fixtures.........................................................
10
Recreation Equipment.......•..............__........•••...............................
10
ParksEquipment.......................................•••...............................
6-10
PoliceEquipment........................................................................9-11
Shop/Miscellaneous Equipment................................................10-12
Heavy Work Equipment............................................................
10-16
Non -Police Vehicles ...... .................
...................................... :............ 7
Police Patrol Vehicles ............................ ............ :............................. 5
Police Non -Patrol Vehicles.....:.....:...:......................................... 7-10
HeavyTrucks..............................................................................
8-10
City of Federal Way / 40
Land Improvements........................................................................20
Buildings.............. ..................................................
.................
.........20
Storm Drainage Systems.................................................................20
Infrastructure.................................................................................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.
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 Liabilities
In the government -wide financial statements and the proprietary fund financial statements, long-term debt and other long-term
obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund
statement of net 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
measllr'nhlal .. }flit not rnn . ......uwa,iv �., iaaauaavv �,µ�1y1,; 11� Vy VL Q11L UOUraLIV11J MILL, u1eiefbiu, ale not susceptible to accrual on
the modified accrual basis. When the receivable amounts are collected in future periods, this liability account is reduced and
corresponding revenue is recorded. The portions of Property Taxes that do not meet the available criteria are recorded as deferred
revenue.
Fund E ui -Reserves and 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, 2007, an additional $13,000 was added to the loan to increase the interim financing to the
CDBG for a total of $23,000. 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
City of Federal Way / 41
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.
Except for the Enterprise Fund, transfers are accounted for as "other financing sources and uses" and are therefore included in the
operating statements.
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 reconciliation between fisnd balance — total governmental finds 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 $20,860,974 difference are as follows:
Bonds Payable at beginning of year $29,581,455
Plus: Inclusion of compensated absences 1,233,024
Less: Current year reduction of principal portion of debt (9,953,5053
Net adjustment to reducejund balance -total governmental
funds to arrive at net assets — governmental activities $20 860.974
Explanation of Certain Differences Between the Governmental Funds Statement of Revenues, Expenditures, and Changes
in Fund Balances and the Government -Wide Statement of Activities
The governmental funds' statement of revenues, expenditure, and changes in fund balances includes reconciliation between net
changes in fund balances — total governmental funds and changes in net 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 $13,906,943 difference are as follows:
Net Capital outlay $17,862,820
Less: Governmental depreciation expense (4,179,271)
Plus: Investment in Joint Venture 223,394
Net adjustment to increase net changes in fund balances —
Total governmental funds to arrive at changes in net assets
ofgovernmental activities13�906 943
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 52 13
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 3 791
City of Federal Way /42
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 2007 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.
2007
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
$ 39,057,829
2,894,679 $
41,952,508
4,389,624
466,047
4,855,671
2,023,894
839,081
2,862,975
11,102,744
185,000
11,287,744
364,890
-
364,890
182,100
169,064
351,164
I,739,564
55.273
1,794,837
19,802,816
1,714,465
21.517,281
Debt Service Fund 12,111,538 3,671208 15,782,746
Total $ 70,972,183 $ 8,280,352 $ 79,252,535
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
2007 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, 2007, the equity in pooled cash and investments was
$61,749,431.
At year-end, the City had $59,725,727 in cash and cash equivalents which consisted of investments with the State Pool of
$31,257,834; the Municipal Investor account with US Bank of $27,471,251; the City's checking account bank balance prior to
outstanding checks was $1,758,133.61; and petty cash and change funds, advance travel fund and investigative fund totaling
$47,373. 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 State of
Washington.
City of Federal Way / 43
As of December 31, 2007 the City had the following investments and maturities:
SCHEDULE OF INVESTMENTS BY MATURITIES
AS OF DECEMBER 31, 2007
Investment maturities
Book Less than 1 to 2 Greater than
Investment Type Value 1 year years 3 years
Local Government Investment Pool $ 31,257,834 $ 31,257,834 $ - $ -
Municipal Investors Account 27,471,251 27,471,251 - -
US Agencies 2,021,346 - 2,021,346 -
$ 60,750,431 $ 58,729,085 $ 2,021,346 $ -
Reconciliation to Governmental -Wide Statement of Net Assets:
US Bank, checking account per books $ 951,628
Petty cash/change fund/Advance travel/Investigative fund 47,373
Local Government Investment Pool 31,257,834
Municipal Investors Account 27,471,251
Subtotal Cash and Cash Equivalents 59,728,086
US Agencies 2,021,346
Cash with escrow agent 305,501
Total cash and investments, Governmental -Wide
Statement of Net Assets
Investments
$ 62,054,932
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 corporations/instrumentalities;
bankers' acceptances (secondary market domestic and foreign); commercial paper (secondary market); insured certificates of
deposit (banks and savings & loans); and uninsured/collateralized certificates of deposit (banks and savings & loans).
The credit risk of the State Investment Pool is limited to obligations of the US Government, government sponsored enterprises, or
insured demand deposit accounts and certificates of deposit.
As of December 31, 2007, 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, 2007.
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
City of Federal Way /44
the securities of a single issuer, except for the U.S. Treasury, to which no limits apply, and commercial paper, which is limited to
3% of the portfolio. No more than 30% of the portfolio may be invested in Bankers' Acceptances and Certificates of Deposit."
Other Information
Below is a schedule of investments by fund type:
SCHEDULE OF INVESTMENTS BY FUND CATEGORY AND INVESTMENT TYPE
AS OF DECEMBER 31, 2007
State
Municipal
Investment
Investors
Fund Type
Pool
Account
US !Agencies
Total
General Fund
$ 2,382,371
$ 2,093,770
$ 154,060
$ 4,630,202
Special Revenue Funds
2,438,621
2,143,206
157,698
4,739,525
Capital Projects Funds
18,372,096
16,146,495
1,188,066
35,706,656
Enterprise Funds
3,436,416
3,020,128
222,222
6,678,766
Internal Service Funds
4,628,329
4,061,652
299299
8,995 281
Total
$ 31,257,834
$ 27,471,251
$ 2,021,346
$ 60,750,431
NOTE 6 — RECEIVABLES 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, 2007, the total balance of property taxes
receivable recorded by the City was $270,170. Of this, $254,455 is recorded as deferred revenue, since it was not collected within
the first 30 days of 2007. The property tax levy calendar in 2007 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.
A 3I Assessed value of properly established for next years levy ar 100% of market value. je
el�
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 ($0.50).
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
Federal Wav / 45
2. The Washington State Constitution limits the total regular property taxes to 1 % of assessed valuation or $10 per $1,000 of
value. If the taxes of all districts exceed this amount, each is proportionately reduced until the total is at or below the 1%
limit.
The City's regular levy for 2007 was $1.14 per $1,000 on an assessed valuation of $8,011,615,599 for a total regular levy of
$9,096,370.
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 Community Center Use Fees
Federal Way Fire Department Buy -In of ValleyCom
Recreation Programs/Facility Rentals
Receivables & Due from Other Governments
Solid Waste &
Federal Way
Debt
General
Street Recycling
Community Center
Service
Total
$ 254,455
$ - $
$
$
S 254,455
-
46,157
-
46,157
- 21,584
-
21,584
-
60,232
-
60,232
-
-
-
239,520
239,520
37,893
- -
-
-
87,893
$ 342,348
$ 46,157 S 21,584
$ 60,232
$ 239,520
$ 709,841
The receivables for the fiscal year ended December 31, 2007 on the government -wide statement of net assets are detailed in the
following schedule.
Nonmajor
General Street
Utility Tax Debt Service Trans-portation Govt'l
Proprietary
Total
Property Tax
$ 271,296 $ -
$ - $ - $ $ -
S - $
271,296
Real Estate Excise Tax
- -
- 182,946
-
182,946
Utility Tax
- -
1,534,122 -
-
1,534,122
Gambling Tax
130,115 -
- - -
-
130,115
Recreation Programs/
Facilities
(7,851)
- - - -
42,559
34,708
Grants & Contributions
248,824
- - 831,377
9,653
1,089,854
State Shared Revenue
1,369,341 93,732
- 3,176,938 59,499
-
4,699,511
Surface Water Management
Fees_
- -
- - -
98,945
98,945
$ 2,011,724 $ 93,732
$ 1,534,122 $ 182,946 $ 3,176,938 S 890,876
S 151,157 $
8,041,496
NOTE 7 - DUE TO OTHER GOVERNMENTS
At December 31, 2007, the City recorded $149,931 as due to other governmental units as follows:
City of Enumclaw - Jail Services $ 495
City of Yakima - Jail Services 77,902
City of Fife - Jail Services 24,997
King County - Jail Services 30,593
King County - Drainage Utility Collection Fee 15,944
$ 149,931
Federal Way/46
NOTE 8 — CAPITAL ASSETS
Capital assets activity for the year ended December 31, 2007 was as follows:
Governmental Activi
C zip ital assets, not being depreciated:
Land
Construction in progress
Total capital assets, not being depreciated:
Beginning Balance
1/1/2007
(as restated) Additions
Ending Balance
Deletions 12/31/2007
$ 281,577,322 $ 6,390,439 $ \ - $ 287,967,761
37,950,972 11,472,381 (3,083,474) 46,339,879
319,528,294 17,862,820 (3,083,474) 334.307.640
Capital assets, being depreciated
Buildings
16,500,311
107,597
- 16,607,908
Improvcmcnts othcr than buildings
17,334,900
1,961,027
- 19,295,927
Infrastructure
108,908,827
1,122,447
- 110,031,274
Machinery and equipment
10,905,932
1,757,981
(297,100) 12,366,813
Total capital assets, being depreciated:
153,649,970
4,949,052
(297,100) 158,301,922
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
(1,279,450)
(866,700)
-
(2,146,150)
(6,613,506)
(866,745)
-
(7,480,251)
(15,754,450)
(3,268,884)
-
(19,023,334)
(6,780,641)
(946,718)
227,757
(7,499,6021
(30,428,047)
_
(5,949,047)
227,757
(36,149,338)
123221,923
999,995
(69,343)
122,152,585
$ 442,750,217
$ 16,862,825 $
(3,152,817) $
456,460,225
Beginning Balance
Ending Balance
Business -Type Activities
1/1/2007
Additions
Deletions 12/31/2007
Cap itaI assets, not being depreciated:
Land
$ 6,752,444
$ 186,351
$ - 6,938,795
Construction in progress
3,969,164
1810,794
(679,767) 5,100,191
Total capital assets, not being depreciated:
10,721,608
1,997,145
(679,- 67) 12.038.986
Capital assets, being depreciated
Buildings
1111�11 V V Gull 11 LD V L11Ci1 U1CU1 UU11UL1ga
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
43,V2L,272 679,767 - 43,702,039
106,643 - - 106,643
46,725,356 679,767 - 47,405,123
(1,720,201) (179,824) - (1,900,025)
(10,016,010) (430,223) - (10,446,233)
(73,689) (2,945) - (76,634)
(11,809,900) (612,992) - (12,422,891)
34,915,456 66,775 - 34,982,231
$ 45,637,064 $ 2,063,920 $ (679,767) $ 47,021,217
Federal Wav/47
Depreciation expense was charged to functions/programs of the primary government as follows:
Government Activities
General Government $ 1,049,183
Security of Persons & Property 1,051,861
Transportation 835,742
Economic Environment 430,861
Health 31,057
Culture & Recreation 2,550,344
Total Depreciation - Governmental Activities 1 $ 5,949,047
Business -Type Activities
Utilities - Surface Water Management
Culture & Recreation - Dumas Bay Centre
$ 431,216
181,776
Total Depreciation - Business -Type Activities
$ 612,992
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
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 1,188 participating employers in PERS. Membership in PERS consisted of the following as of the latest actuarial
valuation date for the plans of September 30, 2007:
Retirees and Beneficiaries Receiving Benefits
70,201
Terminated Plan Members Entitled to But Not Yet Receiving Benefits
Active Plan Members Vest
25,610
105,2.15
Active Plan Members Nonvested
49,812
Total
250,838
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
�i._ I_r
uie ucuned benefit portion of PERS Pian 3. I he 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, 2007, were:
PERS Plan 1 PERS Plan 2 PERS Plan 3
Employer* 6.13%* 6.13% 6.13%**
Employee 6.00% 4.15% ***
* The employer rates include the employer administrative expense fee currently set at 0.16%.
** 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
2007 $10,251
$573,471
$109,776
2006 $13,269
$295,665
$49,762
2005 $ 7,769
$166,061
$26,248
Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) Plans 1 and 2
Plan Description
LEOFF is a cost -sharing multiple -employer retirement system comprised of two separate defined benefit plans. Membership in the
system includes all full time, fully compensated, local law enforcement officers and fire fighters. LEOFF is comprised primarily of
non -state employees, 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 383 participating employers in LEOFF. Membership in LEOFF consisted of the following as of the latest actuarial
valuation date for the plans of September 30, 2007:
Retirees and Beneficiaries Receiving Benefits
8,951
Terminated Plan Members Entitled to But Not Yet Receiving Benefits
602
Active Plan Members Vest
12,711
Active Plan Members Nonvested
3,603
Total
25,867
Funding Polite
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, 2007 were:
LEOFF Plan I LEOFF Plan II
Employer 0.16% * 5.35% **
Employee 0.00% 8.64%
State N/A 3.45%
* 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
2007 $0 $520,625
2006 $0 $417,371
2005 $0 $295,470
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 2007, there were a total of 361 individuals covered by this system. As of the end of the year, 320 remained as active
employees of the City and two were drawing retirement benefits. The 41 inactive had left the City's employment and either had
been reimbursed their contributions, or the reimbursement was pending, or they elected to have their contributions remain in the
plan if the balance was $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
incnrance navmentc (l0/) fnr nc�aliilit�, e„r.n.,.,r ..:ao„+.1 Aeath a..a a:� >+ _ _. _a 1__—_ _ '--�1. 1- _ -
1-1 -------- `_1-1 _„_ ....,,,,.,,....J, .,......."., a........vuw• u�.uua uuu uaJaul.auVl.ualGul, allu 1unp Julll uG[lul ecncili 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 2007 was $21,622,217 and total City payroll was $23,567,815. Actual City contributions for the year were
$1,127,926. Actual employee contributions were $1,344,837. All contributions were invested in instruments arranged through
independent investment advisors selected by the Municipal Employers Benefit Trust (MEBT) committee comprised of the cities of
Bellevue, Kirkland, Redmond, Edmonds, Mill Creek, Woodinville, and Federal Way but administered by Trautmann Maher &
Associates. Retirement System assets are not the property of the City and are not subject to the claims of the City's general
creditors. The Federal Way Retirement System assets are with Security Trust Company, N.A. who invests Plan assets.
In July 1995, the City implemented the hardship withdrawal and loan provision program. Loans receivable as of December 31,
2007 were $1,019,824.
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. The City faces most of the risks faced by similar sized cities.
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 2007 remained relatively similar to
the coverage for 2006. There were no settlements in excess of insurance for commercially insured activities for 1996 through
2007.
During 2006 the City purchased commercial insurance policies from commercial insurers. The following is a summary of coverage
in force in 2007.
NAME OF COMPANY
DETAILS OF COVERAGE
LIABILITY LINUTS
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 City
Included in Crime/Fidelity Coverage, N/A Employee Dishonesty, S 1,000,000 Forgery/Alteration,
Insurance Company
Manager
Deductible $1,000.
Limit $50,000,000. Earthquake 2% of the values at risk for earthquake, subject to $50,000. Flood
St. Paul Fire and Marine
$500,000 per occurrence. Business interruption, Accounts Receivable, Computer HacklVirus,
Insurance Company
Property Coverage
Electronic Data Processing $1,000,000
St. Paul Fire and Marine
Automobile Physical Damage for
Insurance Company
Scheduled Automobiles
$25,000 per occurrence scheduled automobiles
St. Paul Fire and Marine
Public Entity Employment Practices
Included in Crime/Fidelity Coverage, N/A Employee Dishonesty, $100,000 Forgery/Alteration,
Insurance Company
Liability Protection
Deductible $25,000. Wrongful employment practice limit $5,000,000
$50,000,000 Per Accident, $100,000 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
Equipment Breakdown Coverage
Days, Newly Acquired Locations 365 Days, Service Interrupt 24 hours.
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 7Included
in General, Auto and Law Enforcement Liability Limits Referenced Above
The City's industrial insurance is provided by Washington State and is administered by the Department of Labor and Industries.
Coverage is purchased by means of standard rates per working hour and is computed by the total number of hours worked by
employees multiplied by the basic premium rate assigned to the business risk classification. The following are benefits provided by
industrial insurance: medical services, damaged clothing, travel expenses, time -loss payments, vocational rehabilitation, partial
disability awards, pension awards and survivor benefits.
Federal Way / 52
The City is self -insured for unemployment compensation. At December 31, 2007 the City had $1,077,366 in reserve.
2006
2007
Unemployment Reserve, Jan. 1st
$ 733,297 $
979,447
Unemployment compensation benefits
204,396
221,726
Claim payments during the year
(58.247)
(23,806)
Unemployment Reserve, Dec. 31st
$ 879,447 $
1,077,366
NOTE 11— LONGTERM LIABILITIES
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 yeaf-end 2007 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.
Paid Off Debt Obligation in 2007
In October of 2007, the City paid off the 1997 Limited General Obligation Bonds which was issued in April of 1997. The 1997
Community Investment Bond package was issued in 1997 for $16.15 million for the construction of Celebration Park, Knutzen
Family Theatre and the Federal Way police facility. The bonds also covered improvements to the corner of South 320`h Street and
Pacific Highway South as well as the accomplishment of the downtown streetscape project. The City paid off the remaining
balance of $3.66 million in 2007; $1.89 million was for the payoff amount. The funding for the payoff was excess real estate
excise tax that was generated in the past two years. In October, the Federal Way City Council voted to use the excess money to pay
off the remaining balance on the 1997 Community Investment Bond package.
The following schedules detail the long-term debt activity and balances of the City.
City of Federal Way / 53
OUTSTANDING GENERAL OBLIGATION DEBT AND LONG-TERM LIABILITIES - BY TYPE
December
31, 2007
Amount
Beginning
Ending
Bond Rating
Issue
Maturity
Interest
Originally
Outstanding
Amount
Amount
Outstanding
Description
at Issuance
Date
Dale
Rate
Issued
Debt
Issued
Redeemed
Debt
Gaacrnmminl Activities:
-
Genernt Obligation Bards:
1997 Limiled/Civic Investment
AAA -insured
22-Apr-97
1-Dec-12
5.00-5.30
16,150,000
3,660,000
-
3,660,000
2000Limited/ValleyComm. PDA
Al
12-Sep-00
I-Dec-15
5.31
2,551.600
1,755,000
-
160,000
1,595,000
2D03 Loan Assumplion/City Hall Purchase
Nonrated
I-Jul-03
I-Nov-07
7.58
6,168,599
5,961,455
-
5,961,455
2003Limited/CotmrrunityCenter
AAA -insured
15-Nov-03
I-Dec-33
4.676
15,000,000
14,205,000
295,000
13,910,000
2006 GO eandsJAMC Theatre Site
Nammted
3-Dec-%
28-Dec-M
3-53
4,100.0W
4.100,000
4,100,000
Subtotal GO Bonds
43,970,199
29,581,455
9,976,455
19,605,000
Compensated Absences
_
1,200,100
275,452
187,609
1,287,943
Subtotal GO Bonds plus Compensated Absences
43,970399
30,781555
275,452
10.164,064
20.892.943
Business -Type Activities:
Public Works Trust Fund Loan:
PWPL- KittsComerDrainImp
31-Aug-94
I-Jul-14
1.00
233,316
92,247
12,936
79,311
PWTL- Kitts Comer Drain Imp
24-Jul-96
I-Jul-14
1.00
1,166,580
520,913
64,680
456,233
PWTL- KittsComerDrainImp
4-Sep-97
1-Jul-14
1.00
155,544
76,757
8,624
68,133
PWTL-SeaTac Mall Drain Imp
31-May-00
I-JUI-19
1.00
412,500
208,260
16,020
192,240
PWTL-SeaTac Mall Drain Imp
14-Aue-00
1-Jul-19
1-00
2,062,500
1,04I.N4
80,099
961,195
Subtotal PWTFL
4,030,440
1,939,471
182,359
1,757,112
Com sated Absences
51.156
6.060
1,421
55,795
Subtotal PWTFL plus Compensated Absences
4,030,440
1,990,627
6,060
183,790
1,812,907
Grand Total All Long -Tenn Debt
S 48.000,639
S 32,772,182
S 281,511
S 10,347,943
S 22,705,950
OUTSTANDING GENERAL OBLIGATION DEBT AND LONG-TERM LIABILITIES - BY FUND
December 31, 2007
Amount
Beginning
Ending
Originally
Outstanding
Amount
Amount
Outstanding
Due within
Description
Issued
Debt
Issued
Redeemed *
Debt
one year
Governmental Long -Term Debt:
1997 Limited/Civic Investment
16,150,000
3,660,000
3,660,000
-
2000 Limited/Valley Comm. PDA
2,551,600
1,755,000
160,000
1,595,000
167,000
2003 Loan Assumption/City Hall Purchase
6,168,599
5,861,455
5,861,455
-
2003 Limited/Community, Center
15,000,000
14,205,000
295,000
13,910,000
300,000
2006 GO Bonds/AMC Theatre Site
4,100,000
4,100,000
-
-
4,100,000
4,100,000
Sub -total Governmental Long -Tenn Debt
43,970,199
29,581,455
-
9,976,455
19,605,000
4,567,000
Compensated Absences
1,200,100
275,452
187,609
1,287,943
79.368
Total Gov Long -Term Debt plus Comp Abs
43,970,199
30,781,555
275,452
10,164,064
20,892,943
4,646,368
Business -Type Long -Term Debt:
Enterprise Funds:
Public Works Trust Fund Loan
4,030,440
1,939,471
-
182,359
1,757,112
182,359
Sub -total Bus -Type Long -Term Debt
4,030,440
1,939,471
182,359
1,757,112
182,359
Compensated Absences
51,156
6,060
1,421
55,795
1,083
Total Bus -Type plus Comp Abs LTD
4,030,440
1,990,627
6,060
t83,780
1,812,907
183,442
Grand Total All Long -Tenn Debt
$ 48,000,639
$ 32,772,182
$ 281,511
S 10,347,843
$ 22,705,850
$ 4,829,810
* 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 LIABILITIES
Period Ended December 31, 2007
Beginning
Ending
Outstanding Debt
Additions
Reductions
Outstanding Debt
Governmental Activities:
General Obligation Bonds
$ 29,581,455
$ -
$ (9,976,455)
$ 19,605,000
Compensated Absences
1,200,100
275,452
187,609)
1,287.943
Total Governmental Activities
30,781,555
275,452
10,164,064)
20,892,943
Business -Type Activities:
Enterprise Funds
Public Works Trust Fund Loan
1,939,471
-
(182,359)
1,757,112
Compensated Absences
51.156
6,060
1,421
55,795
Total Business -Type Activities
1,990,627
6,060
183,780
1.812.907
Total All Funds
$ 32,772,182
$ 281,511
$ (10,347,843)
$ 22.705.850
SCHEDULE OF DEBT SERVICE REQUIREMENTS TO MATURITY
As of December 31, 2007
Governmental Activities
Business -Type Activities
G. O. Bonds
PW Trust Fund
Grand Total
Year
Principal
Interest
Principal
Interest
Principal
Interest
I P&I
2008
$ 4,567,000
$ 841,542
$ 182,359
$ 17,571
$ 4,749,359
$ 859,113
$ 5,608,472
2009
485,000
679,963
182,359
15,748
667,359
695,710
1,363,069
504,000
661,913.
182,359
13,924
686,359
675,836
1,362,196
523,000
642,793
182,359
12,100
705,359
654,893
1,360,252
A-2017
542,000
621,923
182,359
10,277
724,359
632,199
1,356,558
2,609,000
2,741,649
653,077
26,617
3,262,077
2,768,266
6,030,343
2,415,000
2,220,679
192,239
2,884
2,607,239
2,223,562
4,830,802
2023 - 2027
3,080,000
1,611,346
-
3,080,000
1,611,346
4,691,346
2028-2032
3,960,000
801,800
-
-
3,960,000
801,800
4,761,800
2033 - 2034
1 920,000
1 43,700
-
920,000
43,700
963,700
Total
$ 19,605,000
$ 10,867,305
$ 1,757,112
$ 99,120
$ 21,362,112
$ 10,966,426
S 32,328,538
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
cmction aiiu of muse vuiing, 60 percent must be m the anirmative. 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, 2007 are:
General Government (no vote required) $ 106,139,765
General Government (3/5 majority vote required) 80,116,156
Parks and Open space (3/5 majority vote required) 200,290,390
Utilities (3/5 majority vote required) 200,290,390
Total Capacity S 596,836,701
Federal Wav/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 $ 79,368
Noncurrent portion 1,208,575
Business -Type Activities:
Current portion 1,083
Noncurrent portion 54,712
Total Compensated Absences $ 1,343,738
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, 2007 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 $12,220 for the year ended December 31, 2007. The current year lease payments included the
lease of the Klahanee Community/Senior Center facility through February of 2007 and site Iease for the City's WiFi Project.
Federal Way WiFi project is to provide free broadband Internet service to Federal Way citizens, businesses and visitors in the
downtown business corridor, City parks, Community Center, Dumas Bay Centre and City Hall. The site lease will expire in July of
2010 and the City currently does not have an extension of the contract as of year end 2007. The future minimum lease payments
for the WiFi Project are as follows:
2008: $3,720
2009: $3,000
2010: $1,750
47
NOTE 12 — INTERFUND TRANSACTIONS
Interfund transfers for the year ended December 31, 2007 were as follows:
Interfund Transfers
In
Out
Governmental Funds:
General Fund
$ 4,649,179
$ 3,089,890
Street Fund
2,126,256
-
Utility Tax Fund
-
11,230,295
Debt Service
6,047,483
4,527,208
Downtown Redevelopment
500,000
100,000
City Facilities
2,192,490
3,338,482
Transportation
2,500,000
837,405
Nonmajor Governmental Funds
51623,728
167,000
Proprietary Funds:
Surface Water Management
50,000
851,000
Dumas Bay Centre
135,495
-
Internal Service Funds
564,677
248,028
$ 24,389,308
$ 24,389,308
City of Federal Way / 56
The following describes the amounts transferred out during 2007:
General Fund:
• $1,749,890 to Street Fund to subsidize street maintenance
• $1,000,000 to Debt Service Fund for the payoff of the 1997 bond
• $10,000 to Dumas Bay for Centerstage
• $30,000 to Community Center for additional support
• $150,000 to CIP for Camp Kilworth Maintenance and Operations
• $100,000 to CIP for Emergency Preparation (Community Development Grant)
■ $50,000 to Surface Water Management for Sea Lettuce Project
Utility Tax Fund:
• $1,837,500 to General Fund for Proposition 1 Funding
■ $185,000 to General Fund for SafeCity (Prop 1) Project Startup
■ $917,183 to Community Center Debt Service
• $1,400,000 to Arterial Street Fund overlay program
• $1,000,000 to Transportation CIP for various capital projects
• $700,000 to General Fund for Public Safety Positions
• $500,000 to Downtown Redevelopment CIP Fund
■ $255,800 to General Fund for Celebration Park maintenance & operations
• $209,070 to Street Fund for maintenance on bond projects
$55,205 to Street Fund for completed CIP
• $125,495 to Dumas Bay Centre Fund for Knutzen Family Theatre subsidy
■ $112,091 to Street Fund for new street lights
• $81,500 to General Fund for Arts Commission
C $106,000 to General Fund for Camp Kilworth Park maintenance & operations
■ $24,500 to General Fund for Red, Whites & Blues Festival
• $1,530,300 to Debt Service fund for Debt payoff/payments
■ $59,000 to General Fund for new Parks maintenance and operations
■ $492,923 to Community Center for maintenance/operations and capital reserves
• $1,238,728 to General Fund for on -going support of operations
• $400,000 to City Facilities for City Center Access
Debt Service Fund:
• $1,646,000 of excess Real Estate Excise Tax to Parks CIP for various projects
• $1,500,000 of excess Real Estate Excise Tax to Transportation CIP Fund
■ $1,381,208 of excess Real Estate Excise Tax to City Facilities for Emergency Equipment
Downtown Redevelopment Fund
• $100,000 to General Fund for Economic Development
Transportation CIP Fund:
■ $57,405 to General Fund for Federal Lobbyist
■ $780,000 to Arterial Street Fund for Asphalt Overlay
Nonmajor Fund:
■ City Facilities transfer of $2,600,000 to Debt Service Fund for proceeds resulting from the sale of Old City Hall
■ City Facilities transfer of $173,805 to Community Center for Startup
• City Facilities transfer of $564,677 to Buildings and Furnishing Internal Service for replacement reserves
• Parks CIP Transfer of $67,000 to Community Center CIP for Project Enhancement
Proprietary Funds:
• $951,000 from Surface Water Management Operations to Surface Water Management CIP
Internal Service Funds:
City of Federal Way / 57
• $244,282 from Internal Service Fund to City Facilities for Emergency Equipment
• $3,746 of excess reserves from Internal Service fund to General Fund
Interfund loans for the year ended December 31, 2007 were as follows:
Interfund Loans Receivable Payable
General Fund $ 23,000 $
Special Revenue Funds:
Community Development Block Grant - 23,000
Total Interfund Loans $ 23,000 $ 23.000
NOTE 13 — CONTINGENCIES AND LITIGATION
As of December 31, 2007 there were a small number of claims for damages and lawsuits pending against the City. In the opinion
of the City Attomey, however, neither the potential liability for any single claim or lawsuit, nor the aggregate potential liability
arising from all actions currently pending would materially affect the financial condition of the City. Due to both their uncertainty
and immateriality, no liabilities or estimated liabilities have been included in the City's financial statements.
NOTE 14 — JOINT VENTURE
The "Valley Communications Center" was established August 20, 1976, when an Interlocal Agreement was entered into by the four
original participating municipal corporations, including the cities of Renton, Kent, Auburn, and Tukwila, and Federal Way which
was formally admitted during 2000. The agreement is sanctioned by the provisions and terms of the Interlocal Cooperation Act
pursuant to RCW 39.34. The initial duration of the agreement was five years, and thereafter is automatically extended for
consecutive five year -periods.
The purpose of the joint operation, hereafter referred to as Valley Com, is to provide improved consolidated emergency
communications (dispatch) services for police, fire, and medical aid, to the five participating cities and to several subscribing
agencies, which include King County Fire Districts 2, 20, 26, 40, 43, 44, and 47; City of Pacific Police and Fire Departments, City
of Algona Police Department, City of Des Moines Police Department, City of Black Diamond Police and Fire Department; SeaTac
Fire Department; North Highline Fire Department; King County EMS Units; and Vashon Island Fire Department. Separate
agreements between Valley 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 2007 cost distributions for the five member cities are as follows:
Dispatchablc
Percent
City
Calls
of Total
Kent
99,059
27.94%
Renton
68,312
19.27%
Auburn
64,342
18.15%
Tukwila
38,220
10.78%
Federal Way
84,624
23.87%
Total
354,557
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
City of Federal Way / 5 8
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 there
presented to the Administrative Board by September 1 of each year. The Administration Board can make changes to the proposed
Valley Com budget as it finds necessary, but final approval falls to the legislative body of each member city, in accordance with the
provisions of the interlocal agreement.
In May 1993 Valley Com entered into an agreement with King County to provide joint project management for the acquisition and
installation of 800-MHz emergency radio communications system approved by the voters of King County in conjunction with a
$57 million levy. In August 1993 Valley Com also entered into an Interlocal Cooperation Agreement with the sub -regions of King
County, Seattle, and Eastside Public Safety Communications, which governs the development and installation of the new 800-MHz
emergency radio system. Valley Com now provides emergency communication dispatch services to a population of approximately
570,000.
Valley Com operates as an enterprise fund and is totally self supporting through the implementation of user fees and the primary
source of revenue is provided by charges for calls for service. The 800-MHz emergency radio communications system operated by
the agreement with King County is operated as a separate enterprise fund, and the Member Cities have no equity interest in the
contributed capital from this system.
The share of equity belonging to the five participating cities is shown below. Liabilities are the responsibility of the five
participating cities in direct proportion to their equity position.
BALANCES IN 2007
Kent
Renton
Auburn
Tukwila
Federal Way
Total
Equity ® January 1, 2007
$ 5,580,415 S
3,981,550 $
3,701,815 $
2,378,343
$ 2,048,504 $
17,690,627
Current Year Decrease
277,142
162,657
147,975
50,612
223,394
861,680
Equity @ December 31, 2007
$ 5,857,55.7 $
4,144,207 $
3,849,690 $
2,428,955
$ 2,771,898 $
18,552,307
Percent of Equity
31.57%
22.34%
20.75%
13.09%
12.25%
100A0%
Percent of2006 Distribution
31.54%
22.51%
20.93%
13.44%
11.58%
100.00%
During 2000, the Valley Communications Center Development Authority was created to issued $12,758,000 in General Obligation
Ronf1C to finnnrn rnnctnir+inn ar..t -A I —A C _ r__n.�_ _ _i_
_ , e^yhihpiiiiay ai,u iauu ivi a new 1nLllity 4:iLUP1ULt:Q JU LUUL. each of the live participating cities 1s
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 2007. The balance of the City of Federal Way's obligation was $1,595,000 at 12/31/2007.
A complete set of financial statements is available from: Valley Communications Center, 27519 108'" Avenue SE, Kent, WA
98030.
NOTE 15 — PRIOR PERIOD RESTATEMENT
The following governmental activities have been restated to reflect the retroactive reporting of infrastructure per GASB Statement
No. 34, Basic Financial Statements — and Management's Discussion and Analysis — for State and Local Government:
City of Federal Way / 59
Restated
Balance as of
Changes Related to
Balance as of
Governmental Activity
December 31, 2006
Infastructure Reporting
January 01, 2007
Capital assets, not being depreciated:
Land
$ 41,290,118
$ 240,287,204
$ 281,577,322
Construction in progress
37,950,972
-
37,950,972
Total capital assets, not being depreciated:
79,241,090
240,287,204
319,528,294
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
Governmental activities capital assets, net
16,500,311
16,500,311
17,334,900
- 17,334,900
8,475,382
100,433,445 108,908,827
10,905,932
- 10,905,932
53,216,525
100,433,445 153,649,970
(1,279,450)
(1,279,450)
(6,613,506)
(6,613,506)
(221,768)
(15,532,682)
(15,754,450)
(6,780,641)
-
(6,780,641)
(14,895,366)
(15,532,682)
(30,428,048)
38,321,159
84,900,763
123,221,922
$ 117,562,249 $
325,187,967 $
442,750,216
City of Federal Way / 60
Flowers and plants can be seen grown through -out the City of Federal Way.
This photo was taken at West Hylebos Park courtesy of Jeri -Lynn Clark.
City of Federal Way / 61
Combining Statement — Nonmajor Governmental Funds' Description
For the Year Ended December 31, 2007
%ecial Revenue Funds
Special Revenue funds are used to account for the proceeds of revenue sources (other than special assessments, expendable trusts
or major capital projects) that are legally restricted to expenditures for specified purposes.
The Arterial Street Fund accounts for the receipt and expenditure of the State -levied motor vehicle fuel tax distributed to the City
in accordance with State R.C.W. 82.36.020. These revenues are to be used for the construction, improvement, chip sealing, seal -
coating, and repair of arterial highways and city streets, or for the payment of related municipal indebtedness.
The Solid Waste/Recycling Fund was established to account for special refuse collection fees used to manage the Solid Waste and
Recycling program.
The Special Contracts/Studies Fund accounts for receipts and disbursements related to special contracts and special projects
where completion will extend beyond the calendar year.
The HotebMotel Lodging Tax Fund was established to account for all lodging tax receipts and disbursements related to tourism
promotion and acquisition and/or operation of tourism -related facilities.
The 2% Percent for Arts Fund was established for the purpose of providing funding for arts projects. The funds are to be used to
create a variety of cultural opportunities for citizens and to enhance the cultural environment in the connnunity 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 connnunity 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 Proects Funds
The Capital Project Funds account for the acquisition or construction of major capital facilities with the exception of those
facilities financed by proprietary and trust funds. The major sources of revenue for this fund are general obligation bond
proceeds, grants from other agencies, local taxes and contributions from other funds.
The Parks CIP Fund was established to account for receipts and disbursements related to acquisition, design, construction and
any other related parks capital project expenditures.
The City Facilities CIP Fund accounts for receipts and disbursements related to acquisition, design, construction and any other
related municipal facility and coimnunity/senior capital project expenditures.
City of Federal Way / 62
The Federal Way Community Center opened its doors in mid-2007. The 72,000 square foot facility features a six lane lap pool
along with a leisure pool. The Center also accommodates meetings with multi -purpose rooms and a commercial kitchen. The
Community Center replaced Klahanee Lake Community & Senior Center and the Kenneth Jones Pool.
Photo courtesy of Phung Huynh & Heidi Hudson
City of Federal Way / 63
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2007
ASSETS
Equity in pooled cash and investments
Retainage in escrow
Due from other governments
TOTAL ASSETS
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers 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
Revenue Projects Total
$ 1,051,471 $ 6,642,197 $ 7,693,668
118,238 19,904 138,142
184.826 706,049 890,875
1,354,535 7,368,150 8,722,685
90,913 295,094
386,007
118,238 42,289
160,527
(4,708) -
(4,708)
23,000 -
23,000
81,816 -
81,816
309,259 337,383 646,642
198,157 - 198,157
35,369 - 35,369
811,750 - 811,750
- 7,030,767 7,030,767
1,045,276 7,030,767 8,076,043
TOTAL LIABILITIES AND FUND BALANCE $ 1,354,535 $ 7,368,150 $ 8,722,685
City of Federal Way / 64
COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
DECEMBER 31, 2007
Special
Arterial
Solid Waste
Contracts/
Hotel/Motel 2% for the
Street
Recycling
Studies
Lodging Tax Arts
ASSETS
Equity in pooled cash & investments
$ 345,873
$ 67,939
$ 282,245
$ 183,447 $ 293
Retainage in escrow
118,238
-
-
_ _
Due from other governments
43,823
98,479
-
14,985 -
TOTAL ASSETS
507.934
166,418
282,245
198,432 293
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable 741 6,326 - 275
Retainage payable 118,238 - -
Deposits payable _ _
Interfund loans payable - _ _
Unearned revenue 21,584 - -
TOTAL LIABILITIES
118,979
27,910 -
275 -
Fund balance:
Reserved:
Hotel/motel lodging tax
-
- -
198,157 -
Paths & Trails
_
- -
Unreserved:
Special revenue funds
388,955
138,508 282,245
- 293
TOTAL FUND BALANCES
388,955
138,508 282,245
198,157 293
TOTAL LIABILITIES & FUND BALANCE $
507,934 $
166,418 $ 282,245 $
198,432 $ 293
'Federal Way / 65
COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
DECEMBER 31, 2007
(continued)
ASSETS
Equity in pooled cash & investments
Retainage in escrow
Due from other governments
TOTAL ASSETS
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers 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
TOTAL FUND BALANCES
TOTAL LIABILITIES & FUND BALANCE
Federal Way Community Paths and
Community Development Trails
Center Block Grant Reserve Total
$ 134,961 $ 2,035 $ 34,678 $ 1,051,471
- - - 118,238
- 26,848 691 184,826
134,961 28,883 35,369 1,354,535
58,042 25,529
90,913
- -
118,238
(4,708) -
- (4,708)
23,000
23,000
60,232 -
- 81,816
113,566 48,529
- 309,259
- - 198,157
- 35,369 35,369
21,395 (19,646) - 811,750
21,395 (19,646) 35,369 1,045,276
$ 134,961 $ 28,883 $ 35,369 $ 1,354,535
City of Federal Way / 66
COMBINING BALANCE SHEET
NONMAJOR CAPITAL PROJECTS FUNDS
DECEMBER 31, 2007
ASSETS
Equity in pooled cash and investments
Retainage in escrow
Receivables (net):
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
TOTAL LIABILITIES AND FUND BALANCE
Parks City Facilities Total
$ 3,938,903 $ 2,703,294 $ 6,642,197
- 19,904 19,904
706,049 - 706,049
4,644,952 2,723,198 7,368,150
20,320 274,774 295,094
22,385 19,904 42,289
42,705 294,678 337,383
4,602,247 2,428,520 7,030,767
4,602,247 2,428,520 7,030,767
$ 4,644,952 $ 2,723,198 $ 7,368,150
City of Federal Way / 67
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2007
Special Capital
Revenue Proiects Total
REVENUES
Taxes
$ 191,691 $
- $
191,691
Intergovernmental
844,624
652,784
1,497,408
Service charges and fees
1,189,094
-
1,189,094
Interest
75,796
291,253
367,049
Other
34,391
13,058
47,449
TOTAL REVENUES
2,335,596
957,095
3,292,691
EXPENDITURES
Current:
General government
Physical environment
Transportation
Economic environment
Culture and recreation
Capital outlay
TOTAL EXPENDITURES
167,482 26,868
194,350
336,588 -
336,588
2,494,146 -
2,494,146
194,607 -
194,607
1,678,043 26,868
1,704,911
32.046 3,663,616
3,695,662
4,902,912 3,717,352 8,620,264
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (2,567,316) (2,760,257) (5,327,573)
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
TOTAL OTHER FINANCING SOURCES
(USES)
NET CHANGE IN FUND BALANCES
FUND BALANCES - BEGINNING
2,876,728 3,989,490 6,865,218
- (3,405,482) (3,405,482)
2.876.728 609,876 3,486,604
309,412 (2,150,381) (1,840,969)
735,864 9,181,148 9,917,012
FUND BALANCES - ENDING $ 1,045,276 $ 7,030,767 $ 8,076,043
City of Federal Way / 68
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
For the Year Ended December 31, 2007
Solid
Special
Hotel/Motel
Arterial
Waste/
Contracts/
Lodging
2% for the
Street
Recycling
Studies
Tax
Arts
REVENUES
Taxes
$ -
$ -
$ -
$ 191,691
$
Intergovernmental
552,517
112,771
25,020
Service charges and fees
32,250
259,014
2
Miscellaneous:
Interest
34,253
3,335
13,620
6,987
Other
25.000
-
-
_
TOTAL REVENUES
644.020
375,120
13,620
223,700
EXPENDITURES
Current:
General government
-
2,235
-
Physical environment
-
336,588
-
Transportation
2,494,146
-
_
Economic environment
-
194,607
Culture and recreation
-
-
-
23,870
Capital outlay
-
-
32,046
-
-
TOTAL EXPENDITURES
2,494,146
336,588
34,281
194,607
23,870
EXCESS (DEFICIENCY) OF REVENUES
OVER(UNDER)EXPENDITURES
- (1,850,126)_
38,532_
(20,661)
29,093
(23,870)
OTHER FINANCING SOURCES (USES)
Transfers in
2,180,000
-
-
TOTAL OTHER FINANCING SOURCES
(USES)
2,180,000
NET CHANGE IN FUND BALANCES
329,874
38,532
(20,661)
29,093
(23,870)
FUND BALANCES - BEGINNING
59,081
99,977
302,906
169,064
24,163
FUND BALANCES - ENDING
$ 388,955
$ 138,509
$ 282.245
$ 198,157
$ 293
City of Federal Way / 69
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
For the Year Ended December 31, 2007
(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
Center Block Grant Reserve
Total
$ - $ - $ _ $ 191,691
- 145,601 8,715 844,624
897,828 - - 1,189,094
16,347 - 1,254 75,796
9.391 - - 34,39.1
923,566 145,601 9,969 2,335,596
165,247 - 167,482
- - - 336,588
- - 2,494,.146
- - - 194,607
1,654,173 - 1,678,043
- 32,046
1,654,173 165,247 4,902,912
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (730,607) (19,646) 9,969 (2,567,316)
OTHER FINANCING SOURCES (USES)
Transfers in 696,728 2,876,728
TOTAL OTHER FINANCING SOURCES
(USES) 696,728 - - 2,876,728
NET CHANGE IN FUND BALANCES (33,879) (19,646) 9,969 309,412
FUND BALANCES - BEGINNING 55,273 - 25,400 735,864
FUND BALANCES - ENDING $ 21,394 $ (19,646) $ 35,369 $ 1,045,276
City of Federal Way/ 70
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR CAPITAL PROJECTS FUNDS
For the Year Ended December 31, 2007
REVENUES
Intergovernmental
Miscellaneous:
Interest
Other
TOTAL REVENUES
EXPENDITURES
Current:
General Government
Capital Outlay
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
City
Parks Facilities Total
$ 652,784 $ - $ 652,784
190,562 100,691 291,253
14,725 (1,667) 13,058
858,071 99,024 957,095
- 26,868
26,868
1,528,079 2,135,537
3,663,616
1,528,079 2,162,405
3,690,484
(670,008) (2,063,381) (2,733,389)
Transfers in
1,796,000
2,192,490
3,988,490
Transfers out
(67,000)
(3,338,482)
(3,405,482)
TOTAL OTHER FINANCING SOURCES (USES
1,729,000
(1,145,992)
583,008
NET CHANGE IN FUND BALANCES
1,058,992
(3,209,373)
(2,150,381)
FUND BALANCES - BEGINNING
3,543,255
5,637,893
9,181,148
FUND BALANCES - ENDING $
4,602,247
$ 2,428,520
$ 7,030,767
City of Federal Way/71
ARTERIAL STREET FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2007
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
REVENUES
Intergovernmental
$ 550,000 $
550,000 $
552,517 $
2,517
Service charges and fees
84,000
84,000
32,250
(51,750)
Interest
5,000
5,000
34,253
29,253
Other
-
-
25,000
25,000
TOTAL REVENUES
639,000
639,000
644,020
5,020
EXPENDITURES
Capital outlay 2,023,894 2,862,975 2,494,146 368,829
TOTAL EXPENDITURES 2,023,894 2,862,975 2,494,146 368,829
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (1,384,894) (2,223,975) (1,850,126) 373,849
OTHER FINANCING SOURCES (USES)
Transfers in 1,400,000 2,180,000 2,180,000 -
TOTAL OTHER FINANCING SOURCES (USES) 1,400,000 2,180,000 2,180,000 -
NET CHANGE IN FUND BALANCES 15,106 (43,975) 329,874 373,849
FUND BALANCES - BEGINNING - 59,081 59,081 -
FUND BALANCES - ENDING $ 15,106 $ 15,106 $ 388,955 $ 373,849
Federal Way / 7 2
SOLID WASTE AND RECYCLING FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2007
Variance with
Budgeted Amounts
Final Budget -
Positive
Original Final
Actual Amounts
(Negative)
REVENUES
Intergovernmental
$ 138,000 $ 138,000
$ 112,771
$ (25,229)
Service charges and fees
242,850 242,850
259,014
16,164
Interest
- -
3.335
3,335
TOTAL REVENUES
380.850 380,850
375.120
(5,730)
EXPENDITURES
Utilities and Environment
364,890
364,890
336,588
28.302
TOTAL EXPENDITURES
364,890
364.890
336,588
28.302
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
15,960
15,960
38.532
22.572
TOTAL OTHER FINANCING SOURCES (USES)
-
-
-
-
NET CHANGE 1N FUND BALANCES
15,960
15,960
38,532
22,572
FUND BALANCES - BEGINNING 75.223 99.979 99,977 (2)
FUND BALANCES - ENDING $ 91,183 $ 115,939 $ 138,509 $ 22,570
City of Federal Way /73
HOTEL/MOTEL LODGING TAX FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2007
REVENUES
Taxes
Intergovernmental
Service charges and fees
Interest
Other
TOTAL REVENUES
EXPENDITURES
Utilities and Environment
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
TOTAL OTHER FINANCING SOURCES (USES)
NET CHANGE IN FUND BALANCES
FUND BALANCES - BEGINNING
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
$ 175,100 $ 175,100 $ 191,691 $ 16,591
- - 25,020 25,020
2 2
3,000 3,000 6,987 3,987
4,000 4,000 - (4,000)
182.100 182,100 223,700 41,600
182,100 351,164 194,607 156,557
182,100 351,164 194,607 156,557
(169,064) 29,093 198,157
(169,064) 29,093 198,157
169,064 169,064 -
FUND BALANCES - ENDING $ - $ - $ 198,157 $ 198,157
City of Federal Way / 74
FEDERAL WAY COMMUNITY CENTER
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2007
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
REVENUES
Service charges and fees $ 1,281,687 $ 1,281,687 $ 897,828 $ (383,859)
Interest - - 16,347 16,347
Other 250 250 9.391 9,141
TOTAL REVENUES 1,281,937 1,281.937 923.566 (358,371)
EXPENDITURES
Culture and recreation 1,739,565 1,794,837 1,654,173 140,664
TOTAL EXPENDITURES
1,739,565
1,794,837
1.654,173
140,664
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
(457.628)
(512.900)
(730,607)
(217,707)
OTHER FINANCING SOURCES (USES)
Transfers in
696,728
696,728
696,728
TOTAL OTHER FINANCING SOURCES (USES)
696.728
696,728
696,728
NET CHANGE IN FUND BALANCES
239,100
183,828
(33,879)
(217,707)
FUND BALANCES - BEGINNING
-
55.274
55,273
(1)
FUND BALANCES - ENDING $
239,100 $
239.102 $
21.394 $
(217,708)
City of Federal Way / 75
PATHS AND TRAILS FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2007
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
REVENUES
Service charges and fees $
9,023 $
9,023 $
8,715 $
(308)
Interest
500
500
1,254
754
TOTAL REVENUES
9,523
9,523
9,969
446
EXPENDITURES
General government
-
-
-
-
TOTAL EXPENDITURES
-
-
-
-
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
9,523
9,523
9,969
446
OTHER FINANCING SOURCES (USES)
Transfers out
-
-
-
-
TOTAL OTHER FINANCING SOURCES (USES) - - - -
NET CHANGE IN FUND BALANCES 9,523 9,523 9,969 446
FUND BALANCES - BEGINNING 24,796 25,399 25,400 1
FUND BALANCES - ENDING $ 34,319 $ 34,922 $ 35,369 $ 447
City of Federal Way /76
.a
TY NAU,
Federal Way began in the late 1800s as a logging settlement. In the early 1950s, the name "Federal Way" was officially adopted
by the local Chamber of Commerce. Federal Way citizens organized to form what was then Washington's sixth largest city,
incorporating in February of 1990.
Photo courtesy of Phung Huynh & Heidi Hudson.
City ofFederaI Way / 7 7
Budget and Actual — Debt Service Fund Description
For the Year Ended December 31, 2007
The Debt Service Fund accounts for the accumulation of resources for the payment of general obligation and special assessment
bond principal, interest and related costs. Revenues for this fund consist of the City's real estate excise tax, transfers from the
Utility Tax Fund, and/or other revenues designated by the City Council.
City of Federal Way / 78
BALANCE SHEET
DEBT SERVICE FUND
DECEMBER 31, 2007
ASSETS
Equity in pooled cash & investments
Receivables (net):
Taxes
TOTAL ASSETS
LIABILITIES AND FUND BALANCES
Liabilities:
Deferred revenue
TOTAL LIABILITIES
Fund balance:
Reserved:
Debt service
TOTAL FUND BALANCES
TOTAL LIABILITIES AND
FUND BALANCE
Debt
Service
$ 2,147,282
182,946
2,330,228
240.570
240,570
2,089,658
2,089,658
$ 2,330,228
Federal Way / 79
DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2007
REVENUES
Taxes
Interest
TOTAL REVENUES
EXPENDITURES
Debt Service:
Principal
Interest
Other
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
$ 2,800,000 $ 4,800,000 $ 4,898,537 $ 98,537
180.000 180.000 383,427 203,427
1980,000 4,980,000 5,281,964 301,964
2,201,000 4,091,000 9,953,505 (5,862,505)
7,101,470 7,101,470 923,353 6,178,117
63,068 63,068 53,068 10,000
9,365,538 11,255.538 10,929,926 325,612
(6,385,538) (6,275,538) (5,647,962) 627,576
6,047,483 6,047,483 6,047,483
(2,746,000) (4,527,208) (4,527,208) -
TOTAL OTHER FINANCING SOURCES (USES)
3,301,483
1.520,275
1,520,275 -
NET CHANGE IN FUND BALANCES
(3,084,055)
(4,755,263)
(4,127,687) 627,576
FUND BALANCES - BEGINNING
4,652308
6.217.347
6,217,346 (1)
FUND BALANCES - ENDING $ 1,568,653 $ 1,462,084 $ 2,089,658 $ 627,575
City of Federal Way / 81
Combining Statement — Internal Service Fund's Description
For the Year Ended December 31, 2007
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 / 82
ASSETS
Current assets:
Equity in pooled cash & investments
Prepaid postage
TOTAL CURRENT ASSETS
Noncurrent assets
Capital assets:
Buildings / Structures
Machinery/fumiture/equipment
Less accumulated depreciation
TOTAL NONCURRENT ASSETS
TOTAL ASSETS
LIABILITIES
Current liabilities:
Vouchers/payroll payable
Deposits Payable
TOTAL CURRENT LIABILITIES
Long-term liabilities:
Compensated absences payable
TOTAL LONG TERM LIABILITIES
TOTAL LIABILITIES
NET ASSETS
Invested in capital assets
Unrestricted
TOTAL NET ASSETS
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF NET ASSETS
December 31, 2007
Risk Information Support Fleet and Buildings and
Management Systems Services Equipment Furnishings Total
$ 5,196,890 $ 3,055,311 $ 249,560 $ 2,964,657 $ 1,127,855 $ 12,594,273
5,000 - - 5,000
5,196,890 3,055,311 254,560 2,964,657 1,127,855 12,599273
- - 16,013,204 16,013,204
5,582,129 246,422 6,354,261 89,869 12,272,681
(3,764,768) (168,123) (3,391,911) (1,832,162) (9,156,964)
- 1,817,361 78,299 2,962,350 14,270,911 19,128,921
5,196,890 4,872,672 332,859 5,927,007 15,398,766 31,728,194
23,716 189,424 18,632 33,633 26,620 292,025
- - - 500 500
23,716 189,424 18,632 33,633 27,120 292,525
52,440 1,566 913 54,919
- 52,440 - 1,566 913 54,919
23,716 241,864 18,632 35,199 28,033 347,444
- 1,817,361
78,299
2,962,350
14270,911
19,128,921
5,173,174 2,813,446
235.928
2,929,458
1,099,822
12,251,829
$ 5,173,174 $ 4,630,807 $
314,227
$ 5,891,808 $
15,370,733
S 31,380,749
City of Federal Way / 83
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES
1N FUND NET ASSETS
For the Year Ended December 31, 2007
OPERATING REVENUES:
Service charges and fees
Miscellaneous
TOTAL OPERATING REVENUES
OPERATING EXPENSES
Personal services
Materials and supplies
Services and charges
Intergovernmental
Insurance
Claims
Depreciation
TOTAL OPERATING EXPENSES
OPERATING INCOME (LOSS)
NON-OPERATlNG REVENUES (EXPENSES)
Risk Information Support Fleet and Buildings and
Management Systems Services Equipment Furnishings Total
$ 649,850 S 1,627,362 S 188,892 $ 1,332,000 $ 605,102 $ 4,403,206
82,372 18,981 3,943 - - 105,296
732,222 1,646,343 192,835 1,332,000 605,102 4,508,502
784,309
- 37,116
60,343
881,768
35,243
20,401 392,161
27,282
475,087
31,311 537,541
116,338 352,995
377,820
1,416,005
- 99,977
- 277
4,500
104,754
418,554 -
-
-
418,554
142,849 -
- -
-
142,849
- 392,260
31,123 504,934
841,458
1,769,775
592,714 1,849,330 167,862 1,287,483 1,311,403 5,208,792
139,508 (202,987) 24,973 44,517 (706,301) (700,290)
Interest income 157,206 120,424 9,349 113,085 18,345 418,409
Gains (losses) from disposal of capital assets - 649 - (56,607) (55,958)
TOTAL NON -OPERATING
REVENUES NET OF EXPENSES 157,206 121,073 9,349 56,478 18,345 362,451
INCOME (LOSS) BEFORE
CONTRIBUTIONS & TRANSFERS
296,714 (81,914)
34,322
100,995
(687,956)
(337,839)
Transfers in
-
-
564,677
564,677
Transfers out
-
(248,028)
(248,028)
Capital contributions
- 536,110
5,015
1,223,924
129,744
1,894,793
CHANGE IN NET ASSETS
296,714 454,196
39,337
1,076,891
6,465
1,873,603
TOTAL NET ASSETS, BEGINNING
4,876,460 4,176,611
274,890
4,814,917
15,364,268
29,507,146
TOTAL NET ASSETS, ENDING $ 5,173,174 $ 4,630,807 $ 314,227 S 5,891,808 $ 15,370,733 $ 31,380,749
City of Federal Way / 84
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF CASH FLOWS
For the Year Ended December 31. 2007
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from users
Cash payments to suppliers for goods and sen ices
Cash payments to employees
Cash payments to claimants and insurance
Cash payments to other guts for goods and services
Other operating receipts
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers in (out)
NET CASH PROVIDED (USED) BY
NONCAPITAL FINANCING ACTIVITIES
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition ofcapital assets
Cash contributions for capital acquisitions
Proceeds from sale of fixed assets
NETCASH PROVIDED (USED) FOR CAPITAL
AND RELATED FINANCING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Receipts ofinterest
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES
NET INCREASE(DECREASE)IN CASH
AND CASH EQUIVALENTS
CASH & CASH EQUIVALENT& J: NUARY 1
CASH & CASH EQUIVALENTS, DECEMBER 31
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Operating income
Adjustments to reconcile operating income to
net cash prodded (used) by operating activities:
Depreciation expense
Increase(decrease) in vouchersiaccounts payable
lncrease(decrease)in accrued payroll/compensated absences payable
Total Adjustments
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Noncash investing, capital, and financing activities:
Risk Information Support Fleet and Buildings and
Vla»attement Systems Services Equipment FurnishinLis Total
S 649.850 S
1.627,362 S 188,892 S
1,332.000 S
605,102 S
4,403206
(31.311)
(413,968) (135,901)
(749.342)
(413,372)
(1,743,894)
(777,314) -
(36,673)
(59,491)
(873,478)
(556,566)
-. -
-
-
(556,566)
(99,977)
(277)
(4,500)
(1041754)
82372
18,981 3,943
-
-
105.296
144,345 355,084 56.934 545,708 127,739 1.229.810
(248.028) 564.677 316,649
- (248,028) 564,677 316.649
(419,612) (10,899) (690,701) (107,597) (1,228,809)
467,287 5.015 655,978 129344 1,258,024
649 - 12,736 - 13,385
- 48,324 (5,884) (21,987) 22,147 41600
160,901 123.460 9.572 116,108 18.769 428,810
160.901 123,460 9.572 116,108 1&769 428,810
305246 526.869 60,622 391-801 733,332 2.017,869
4,89 L644 2.528,443 188,938 2.572.856 3".52.i 10,576 404
5,196.890 3,055,311 249,560 2,964,657 1,127.955 12,594,273
139,508 (202,987) 24973 44,517 (706.301) (700,290)
392,260
31,123 504,934
841,458
1,769,775
4,837 158,816
838 (C186)
('8,270)
152,035
- 6.995
- 443
852
8.290
4.837 558.071
31.961 50 1,19 1
834,040
1.930.100
S 144.345 S 355,084 S 56,934 S 545,708 S 127,739 S 1,229.8[0
Other Contributions ofcapital assets S - S 68.823 S - S 567,946 S - S 636,769
City of Federal Way / 85
Capital Assets Used in the Operation
of Governmental Funds
City of Federal Way / 86
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE BY SOURCE
December 31, 2007
2007
GOVERNMENTAL FUNDS CAPITAL ASSETS
Land $ 287,967,761
Buildings 504,835
Improvements other than buildings 19,295,927
Machinery and equipment 184,000
Infrastructure 110,031,274
Construction in progress 46,339,879
TOTAL GOVERNMENTAL FUNDS CAPITAL ASSETS 464,323,676
INVESTMENTS IN GOVERNMENTAL FUNDS CAPITAL ASSETS BY SOURCE:
General Fund
125,244,871
Special Revenue Funds
252,375,395
Capital Project Funds
76,983,608
Donations
9,719,802
TOTAL GOVERNMENTAL FUNDS CAPITAL ASSETS $ 464,323,676
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 / 87
CAPITAL ASSETS USEI) IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE BY FUNCTION AND ACTIVITY
December 31.2007
Function and Activity
Land
Buildings
Improvements
Otherthan
Buildings
Machinery
and
Equiement
Infrastructure
Construction
in
Progress
Total
2007
GENERAL GOVERNMENT
Miscellaneous general government S
15 3:19,738
S -
$ 19.973
S 184,000
S 5.959,317
5 1.748,790
S 23J31.868
TOTAL GENERAL GOVERNMEI
15,2.19,783
-
19,973
I84,000
5,959,317
1,743.790
23,131,86a
CULTURE AND RECREATION
115.626,390
S 504,835
19,275,954
94,474,128
23,621,589
253,502,896
TOTAL CULTURE & RECREATION
115,626390
504,835
19,275,954
94,474,128
23,621,589
253,502,896
TRANSPORTATION
Streets and traffic
157,121,583
5 9.597,929
20.,969.500
137.688.912
TOTAL TRANSPORTATION
157,121,583
9,597,829
20,969,500
187,688,912
TOTAL GENERAL FIXED
ASSETS BY FUNCTION S
287,967,761
S 504.835
3 19.295,927
S 184,000
S 110,031,274
S 46,339,879
S 464,323.676
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 / 88
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITY
For the Year Ended December 31, 2007
GENERAL GOVERNMENT
Miscellaneous general government
TOTAL GENERAL GOVERNMENT
CULTURE AND RECREATION
TOTAL CULTURE AND RECREATION
TRANSPORTATION
Streets and traffic
TOTAL TRANSPORTATION
Governmental
Funds
Capital Assets
l/l/2007 Additions Deductions
Governmental
Funds
Capital Assets
12/31 /2007
$ 10,782,408 $ 12,349,460 $ $ 23,131,868
10,782,408 12,349,460 23,131, 868
72,666,812 182,797,111 (1,961,027) 253,502,896
72,666,812 182,797,111 (1,961,027) 253,502,896
22,290,987 166,520,372 (1,122,447) 187,688,912
22,290,987 166,520,372 (1,122,447) 187,688,912
TOTAL GENERAL FIXED ASSETS $ 105,740,207 $ 361,666,943 $ (5,044,501) $ 464,323,676
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 / 89
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.
i�
City of Federal Way / 91
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
2004 2005 2006 2007
$ 60,746,134 $
70,138,350 $
93,835,163 $
439,127,122
37,262,541
45,017,742
38,359,454
32,269,512
11,052,383
13,292,837
15.051.966
23,651.674
109,061,058
128,448,929
147,246,583
495,048,308
41,735,500
42,294,741
43,697,633
45,264,105
20,289
18,880
26,439
15,777
7,032,804
7,206,807
7,467,417
6,550,179
48,788,593
49,520,428
51,191,489
51,830,061
102,481,634
112,433,091
.137,532,796
484,391,227
37,282,830
45,036,622
38,385,893
32,285289
18,085,187
20,499,644
22.519.383
30,201,853
$ 157,849,651 $
177,969,357 $
198,438,072 S
546,878,369
Note: All amounts are reported on the accrual basis.
Amounts presented from year of implementation of GASB-34 (2003) forward.
City of Federal Way / 92
CHANGES IN NET ASSETS
Last Four Fiscal Years
2004
2005
2006
2007
Expenses
Governmental activities:
General government
$
6,304,256
$ 57539,682
$
4,364,710
$ 4,506,800
Security ofpersons and property
17,374,845
16,825,123
19,906,722
21107,683
Transportation
4,099,790
5,451:324
5,628,100
9,986-067
Physical environment
295,537
322,151
313,388
336,588
Economic environment
2,953,073
3,095,391
3.162,089
3,319,955
Health and human secs
683,804
631,133
622.761
684.984
Culture and recreation
4,914,349
4,789,920
5,172,663
6,506,137
Interest on long-term debt
1.764,077
1-541.930
1,420,691
1,122.358
Total governmental activities expenses
38,388,730
38.196,654
40_591.124
49.570.572
Business -type activities:
Surface Water Mgmt
3,282,427
2-995.074
3,142,613
3,454,193
Dumas Bay Center
879,870
819,515
925.825
980,588
Total business -type activities expenses
4,162-297
3.S 14,589
4.068.438
4,434,781
'Total primary government expenses
$
42,551,027
5 42,01 1,243
$
44.659562
5 54.005353
Program Revenues
Governmental activities:
Charges for services
$
9,413,965
$ 9,935,656
$
9-446.764
$ 10,280.888
Operating grants and contributions
32,415
1,228979
17512,394
22,858
Capital grants and contributions
7,21C776
4,250.635
5 973,071
t1,457.030
Total governmental activities program revenues
16,661,156
15.415.270
16,932,229
2%760,776
Business -type activities:
Charges for services
$
4,249,020
$ 4,100,623
4.130.179
3,667,168
Operating grants and contributions
535,645
-
1,1 13,010
632,185
Capital grants and contributions
478,030
-
222,474
Total business -type activities program revenues
5r62.695
4.100.623
5?43,189
4,521,827
S
21,923.951
$ 19 515.993
S
22,175,419
$ 26.282.603
Net (Expense)/Revenue
Governmental activities
(21,727,574)
(22,781384)
(23,658,895)
(27,809,796)
Business-tvpeactivities
1,100,398
286,034
1,174,751
87.046
General Revenues and Other Changes in Net Assets
Governmental activities:
Taxes
Sales tax
10,546,218
11,305.537
12,409,718
15,194,007
Utility tax
7,554,580
8,326,951
9,043,449
12,796.461
Property tax
8,171,088
8,442,1.72
8,892,558
9.059,731
Real estate excise tax
3.078,898
4.695,984
5,499,911
4,898,537
Other taxes
3,208,844
3,527,596
4,059.732
1,688,897
Other
1,761.036
5,997,384
2,658,762
6,971,413
Transfers
(203,190)
(126,369)
(107,581)
(185.495)
Total governmental activities
34,067,474
42,169,255
42,456,549
50,423,554
Business -type activities:
Other
116,634
31.9,432
388-729
366,031
Transfers
203.190
126.369
107,581
185,495
Total business -type activities
319.814
445,801 -
496310
551.526
'Total primary government
$.
34,387,298
$ 42,615,056
$
42-952,959
$ 50.975.08(1
Change in Net Assets
Governmental activities
$
12.339.900
$ 19387,871
$
18,797,654
$ 22,613,758
Business -type activities
$
1,420,222
$ 731,835
$
1,671-061
$ 638.572
Total primary government
$
13,760,122
$ 20,119,706
$
20,468,715
$ 23,252,330
Source: City of Federal Way Finance
Note: All amounts are reported on the accnial basis.
Amounts presented from year of implementation of GASB-34
(2003) forward.
City of Federal Way / 93
GOVERNMENT -WIDE REVENUES BY SOURCE AND EXPENDITURES BY FUNCTION
Last Four Fiscal Years
2004
2005
2006
2007
Program Revenues
Charges for Services
$ 13,662,985 $
14,036,279 $
13,576,943 $
14,580,241
Operating Grants and Contributions
568,060
1,228,979
2,625,404
246,305
Capital Grants and Contributions
7,692,806
4,250,635
5,973,071
11,457,030
General revenues
Sales tax
10,546,218
11,305,537
12,409,718
15,194,007
Utilitytax
7,554,580
8,326,951
9,043,449
12,796,461
Property tax
8,121,088
8,442,172
8,892,558
9,059,734
Real estate excise tax
3,078,898
4,695,984
5,499,911
4,898,537
Othertaxes
3,208,844
3,527,596
4,059,732
1,688,897
Other revenue
751,020
1,105,760
736,918
4,194,183
Unrestricted Grants & Contributions
176,928
146,000
Investment Earnings
954,366
2,025,243
3,194,690
3,223,005
Disposition of capital assets
(4,644)
3,039,813
(984,117)
(79,744)
Total Revenues
$ 56,311,149 $
62,130,949 $
65,128,277 $
77,258,656
Expenses/Expenditures
General Government
$ 6,304,256
$ 5,539,682
$ 4,364,710 $
4,506,800
Security of Persons & Property
17,374,845
16,825,123
19,906,722
23,107,683
Transportation
.4,098,790
5,451,324
5,628,100
9,986,067
Physical Environment
295,537
322,151
313,388
336,588
Economic Environment
2,953,073
3,095,391
3,162,089
3,319,955
Health
683,804
631,133
622,761
684,984
Culture & Recreation
4,914,348
4,789,920
5,172,663
6,506,137
Interest on long-term debt
1,764,077
1,541,930
1,420,691
1,122,358
Surface Water Management
3,282,428
2,995,074
3,142,613
3,455,166
Dumas Bay Centre
879,870
819,515
925,825
980,588
Total Expenses/Expenditures
$ 42,551,028
$ 42,011,243
$ 44,659,562 $
54,006,326
Source: City of Federal Way Finance
Note: Amounts presented from year of implementation of GASB-34 (2003) forward.
Federal Way / 94
FUND BALANCES OF GOVERNMENTAL FUNDS
Last Four Fiscal Years
2004
2005
2006
2007
General find
Reserved
$ 187,011 $
14,510 $
278,778
$ 125,184
Unreserved
2.658,031
4,522 705
6.492.057
7,783,868
Total general fund
$ 2.845,042 $
4,537,215 $
6.770.835
$ 7,909.052
All Other Governmental Funds
Reserved
$ 180,825 $
147,901 $
194,463
$ 2,323,184
Unreserved, reported in:
Special revenue funds
1,740,228
1,652,622
2,772,153
4,392,623
Capital projects funds
32,542,775
39,805,812
31,863,330
30,054,670
Debt service finds
2,826,228
3.195.705
6,217.346
-
Total all other governmental funds
$ 37.290.056 $
44-802.040 $
4L047292
$ 36,770,477
Source: City of Federal Way Finance
Note: Amounts presented from year of implementation ofGASB-34 (2003) forward.
City of Federal Way / 95
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
Last Four Fiscal Years
2004
2005
2006
2007
Revenues
Taxes
$ 32,553,302 $
36,310,754 $
39,334,751
$ 43,584,824
Licenses, fees and permits
1235,039
2,247,651
2,089,844
2,939,328
hrtergovernmental
10,111,537
5,479,614
8,047,243
15,494,887
Charges for services
4200,528
4,927,163
6,355,262
6,327,552
Development Fees
3,167,605
2,040,378
196,060
-
Fines and Forfeitures
810,793
720,464
805,598
1,005,293
Investment earnings
744,435
1,557,935
2,447,996
2,463,670
Other revenues
751,025
1,065,664
717.922
630,966
Total revenues
53,574,264
54,349,623
59,994,676
72,446,520
Expenditures
General government
6,107,564
5,462,633
3,944,288
4,364,750
Security of persons and property
16,982,135
16,988,412
19,909,858
24,183,913
Transportation
4,788,954
5,080,577
5,373,983
6,631,030
Physical Environment
289,921
322,151
313,388
336,588
Economic Environment
2,944,584
3,119,831
3,055,426
3,326,986
Health
679,655
634,061
613,800
677,536
Culture and Recreation
3,927,933
3,859,465
4,108,813
5,300,455
Debt Service
Principal
3,768,044
2,933,231
2,197,357
9,953,505
Interest/fiscal charges/admin fees
1,764,077
1,518,384
1,420,691
1,122,358
Capital Outlay
17,609,080
8,228,486
24.412.303
19.162.067
Total expenditures
58,861,947
48,147,231
65,349,907
75,059,188
Excess of revenues over
(under) expenditures
(5,287,683)
6,202,392
(5,355,231)
(2,612,668)
Other Financing Sources (Uses)
GO bond proceeds
-
4,100,000
Sale of capital assets
3,618,512
20,000
(23,786)
Transfers in
15,615,639
15,650,064
13,231,785
22,688,136
Transfers out
(15,983,582)
(16266,811)
(13,517,681)
(23,190.280)
Total other financing sources (uses)
(367,943)
3,001,765
3,834,104
(525,930)
Net change in fund balances
$ (5,655,626) $
9,204,157 $
(1,521,127) $
(3,138,598)
Debt service as a percentage of
noncapital expenditures
15.5%
12.6%
9.7%
24.7%
Source: City of Federal Way Finance
Note: Amounts presented from year of implementation of GASB-34 (2003) forward.
City ojFederal Way /96
TAXABLE SALES BY CATEGORY
Last Four Fiscal Years
2004
2005
2006
2007
Accommodation and Food Svcs $
22,160,877
$ 23,725,029 $
25,714,796 $
29,348,517
Admin, Supp, Remed Svcs
5,777,744
5,154,866
4,423,607
4,401,283
Agriculture, Forestry, Fishing
20,118
92,879
33,989
33,307
Arts, Entertain, Recreation
3,457,660
2,185,270
2,645,013
2,953,272
Company Management
7,073
21,016
128,982
46,067
Construction
23,934,282
37,413,585
41,497,620
26,876,732
Educational Services
383,629
334,744
496,594
392,083
Finance and Insurance
2,232,685
2,257,590
2,059,150
1,793,612
Health Care Social Assistance
819,883
938,919
1,208,465
781,297
Information
6,591,387
5,843,833
5,452,488
3,479,067
Manufacturing
2,684,752
4,841,448
2,970,044
8,490,830
Mining
211,941
855,504
181,645
214,776
Other Services
5,635,935
6,312,043
6,549,397
6,870,433
Prof, Sci, Technical Svcs
4,988,410
14,603,695
9,028,970
9,422,020
Public Administration
75,931
133,81.1
183,326
224,468
Real Estate, Rental, Leasing
3,821,587
4,667,429
5,025,418
6,047,474
Retail Trade
140,780,431
147,722,106
154,632,813
162,482,950
Transportation and Warehousing
257,244
381,387
260,093
247,858
Unknown
3,220,941
5,371,490
5,752,301
6,699,857
Utilities
53,779
61,238
31,838
123,812
Wholesale Trade
11,560,829
9.755.331
10,113,606
14,035,353
Total $
223,586,328
$ 257,105,773 $
262,234,323 $
263,860194
City direct sale tax rate 0.085%
City of Federal Way / 97
ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY*
Last Ten Fiscal Years
Total City Percent
Fiscal Personal State Public Direct Increase
Year Real Property Property Service Property Total Tax Rate (Decrease)
1998
4,152,466,303
158,019,169
76,3487173
4,386,833,645
1.55
4.5%
1999
4,490,661,284
171,187,056
90,322,059
4,7527170,399
1.53
8.3%
2000
4,932362,526
187,812,046
93,021,743
5,213,196,315
1.49
9.7%
2001
5,322,237,420
226.854,474
101,339,376
5,650,431,270
1.41
8.4%
2002
5,604,164,978
227,961,155
107.761.209
5,939,887,342
1.38
5.1%
2003
5,992,8997727
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
6,502,36I,112
1.30
3.3%
2005
6,937,6537592
225'.118,781
8%220,328
7,251,992,701
1.27
11.5%
2006
7,689,395,358
235.157,5.54
87,062,687
8,O11,615,599
1.22
10.5%
2007
8,644.609,276
262,048,562
103,6987540
9.010,356,378
1.14
12.5%
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 $50,753,072 and prior year omits of
$59,131 yielding a regular levy value of $8,959,544,175. These assessed valuations are the basis for the
following year's tax levy.
City of Federal Way / 98
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
FkrodZone
Scattic
#39
Library
Services
Total
TAX RATES PER $1,000 OF ASSESSED VALUATION
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
0.25
1.50
0.53
0.24
12.26
2005
1.27
4.30
1.38
2.69
0.05
0.25
1.50
0.53
0.23
12.21
2006
1.22
4.26
1.33
2.50
0.04
0.23
1.50
0.53
0.22
11.84
2007
1.14
4.19
1.29
2.33
0.04
0.23
1.50
0.50
0.21
11.42
DETAIL OF TAX RATES FOR 2007
Basic
Rate
1.14
-
0.99
2.33
0.04
0.23
1.50
0.43
-
6.67
Voted
Rate
-
4.19
0.30
-
-
-
-
0.07
0.21
4.76
TAX LEVIES
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
43212,202
939,608.949
2000
7,030,723
29,878,996
278,515,900
545,390,795
748,642
35,647,430
8,596,565
54,618,346
45,070,501
1,005,497,898
2001
7,305,894
32,859,841
290,369,516
589,103,721
786,904
35,646,678
9,906,591
59,634,503
46.122.721
1,071,736,369
2002
7,764,913
33,552,460
304,062,327
627,772,703
799,554
39,806,235
11,061,131
64,373,926
52,497,313
1,141,690,562
2003
7,941,900
36,639,878
302,100,182
648,995,138
849,988
58,003,521
11,774,814
72,580,170
54,088,854
1,192,974,445
2004
8,117,874
38,051,680
335,853,716
647,490,235
873,826
59,657,092
12,467,237
74,860,405
55,704,127
1,233,076,192
2005
8,248,919
40,744,820
342,395,871
666,827,056
901,356
62,779,505
13,062,586
78,374,467
57,476,670
1,270,811,250
2006
8,800,989
43,672,564
357,240,140
672,18508
922,666
62,785,749
14,108,124
85,715,008
59,154,623
1,304,585,531
2007
9,098,370
47,315,366
383,039,569
691,250,598
956,482
68,841,070
19,882,637
88,486,309
61,300,276
1,370,170,677
Source: King County Assessor's Office and King County Department of Finance
City of Federal Way / 99
PRINCIPAL TAXPAYERS
Current Year and Ten Years Ago
2007
1998
% of Total
% or Total
Assessed
Assessed
Assessed
Assessed
Taxpayer
Type of Business
Valuation
Rank
Valuation (A)
Valuation
Rank
Valuation (A)
Weyerhaeuser Real Estate Co.
Real Estate
$ 160,243,099
1
2.00%
5 165,104.26tl
1
3.80%
Steadfast Commons Mall
Shopping Center
69,725,252
2
0.87%
51,503.700
2
1.18%
Puget Sound Energy
Electric/Gas
60,085,917
3
0.75%
41,943.034
3
0.96%
Harsch Investment Properties (Ross Plaza)
Shopping Center
55,530,200
4
0.69%
13,329.000
6
0.31 %
LBA Realtv
Real Estate Management
49,509,700
5
0.62%
-
Q,,vest Corporation Inc.
Communications/Telephone
29,655,171
6
0,37%
3
Forest Cove LLC (formerly Red Mortgage Capital Inc.)
24,067,000
7
0.30%
-
Fred Mever
Retailer / Wholesaler
21,706,392
8
0.27%
-
BRE Properties
Real Estate Management
21,364,000
9
0 27%
Virginia Mason Clinic
Medical Services
18,928,886
10
0.24%
10,131,620
8
0.231/6
Apple Hospitality Five Inc
Hospitality
17,297,500
11
0.22%
-
Costco
Retailer/ Wholesaler
15,598,729
12
0.19%
10,996,147
7
0,25%
Deloitte Tax LLP
14,043,600
13
0.18%
-
ANS LLC (formerly Wells Fargo)
13,780,000
14
0.17%
Campus Business Parks LLC
Real Estate [nvest/Holding
12,863,000
15
0.16%
-
5 594,398,446
77%
$ 293,006,761
6.73%
Source: City of Federal Way Business License & Community Development Department
City of Federal Way / 100
PROPERTY TAX LEVIES AND COLLECTIONS
For the Last Ten Fiscal Years
Ratio of
Total
Ratio of
Percent of Delinquent Total Tax
Outstanding
Delinquent
Fiscal Total Current Tax Current Tax Tax Total Tax Collections to
Delinquent
Taxes to
Year Tax Levy Collections Collected Collections Collections Total Tax Levy
Taxes
Total Tax Levy
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%
2007
9,068,740
8,868,895
97.8%
163,121
9,032,016
99.6%
270,171
3.0%
Source: Most of data has been derived from the "Annual Tax Receivable Summary" prepared by the King County Finance.
City of Federal Way / 101
RATIO OF OUTSTANDING DEBT BY TYPE
For the Last Ten Fiscal Years
Governmental Activities
Fiscal
General Obligation
Certificates of
Year
Bonds
Participation
1998
35,465,000
1,990,000
1999
33,110,000
981,898
2000
33,196,600
688,046
2001
30,515,000
382,423
2002
27,682,000
59,936
2003
34,710,026
20,490
2004
30,802,892
-
2005
27,701,761
2006
29,581,454
2007
19,605,000
-
Source: City of Federal Way Finance Division
Business Type Activities
Public Works
Trust Fund Loan
1,379,824
1,293,585
3,682,352
3,465,849
2,668,907
2,486,548
2,304,189
2,121,830
1,939,471
1,757,112
Percentage
Total Primary
of Personal
Government
Income (b)
Per Capita (b)
38,834,824
0.059%
506
35,385,483
0.081%
460
37,566,998
0.078%
451
34,363,272
0.065%
410
30,410,843
0.074%
363
37,217,064
0.060%
446
33,107,081
0.068%
386
29,823,591
0.075%
348
31,520,925
0.071%
364
21,362,112
0.122%
244
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 2007 are based on 2000 U.S.
Census report since these information is available for individual cities only every ten years when the census is done.
City of Federal Way / 102
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 Net
Bonded Debt
To Assessed
Value
Net Bonded
Debt Per
Capita
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
21,362,112
2,599,653
18,762,459
0.0030
224.70
2004
83,590
6,418,941,601
33,113,539
2,880,857
30,232,682
0.0047
361.68
2005
85,800
7,251,992,701
29,823,591
2,886,785
26,936,806
0.0037
313.95
2006
86,530
8,011,615,599
31,520,925
6,001,415
25,519,510
0.0032
294.92
2007
87,390
9,010,356,378
21,362,112
2,147,282
19,214,830
0.0021
219.87
(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 $8,959,544,175 has been reduced by
senior citizen exemptions of $50,753,072 and prior year omits of $59,131 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 2000, 2003 and 2006.
City of Federal Wa3, / 103
COMPUTATION OF DIRECT AND OVERLAPPING DEBT
December 31, 2007
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
$ 1,100,812,149
397,835,000
147,428,791
73,607,300
1,719,683,240
21,362,112 (C)
$ 1,741,045,352
(B)
Percentage
Applicable to
Federal Way
2.68%
2.68%
69.82%
4.38%
Amount
Applicable to
Federal Way
$ 29,520,101
10,668,605
102,929,610
3.227,607
146,345,923
100.00% 21,362,112
$ 167,708,035
(A) Total general obligation bonds outstanding at the year end, exclusive of refunded bonds.
Source is King County Department of Finance.
(B) Determined by ratio of assessed valuation of property subject to taxation in overlapping unit to
valuation of property subject to taxation in reporting unit.
(C) includes Public Works Trust Fund Loans issued in 1994, 1996, 1997, and 2000;
general obligation bonds issued in 2000, 2003 and 2006.
Source is City of Federal Way Finance
City of Federal Way / 104
COMPUTATION OF LIMITATION OF INDEBTEDNESS
December 31, 2007
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:
(2007 AV=$8,011,615,599) (A)
1.50%AV @ 100%
$ 120,174,234 $ (120;174,234)
2.50%AV @ 100%
200,290,390
200,290,390
200,290,390 600,871,170
Add: Cash on hand for
debt redemption (B)
Less: Bonds and COPs outstanding
Remaining Debt Capacity
Total Remaining
"General" Capacity
4,046,202 -
4,046,202
(19,605,000) - (19,605,000)
104,615,436 $ 80,116,156 $ 200,290,390 $ 200,290,390 $ 585,312,372
5184,731.592
(A) This figure represents the City's final total taxable assessed valuation (AV) for 2005 which was used to determine the 2007 property tax levy.
(B) Reflects ending fund balance in the Debt Service Fund and Utility Tax Fund as of December 31, 2007.
(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
mai gm
% of debt limit
1998
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%
2007
600,871,170
(15,559,79R)
585,312,372
3.91%
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 he offset by amounts set aside for repaying general obligation bonds.
City of Federal Way / 105
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
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
41,086,555
8.9%
2007
9,976,455
1,153,300
11,129,755
56,186,140
19.8%
Source: City of Federal Way Finance
Note: * Interest excludes bond issuance and debt registration costs.
Federal Way / 106
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)
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
83,590
22,451
32.5
13.0
22,395
6.5%
2005
85,800
22,451
32.5
13.0
22,383
5.0%
2006
86,530
22,451
32.5
13.0
22,184
4.3%
2007
87,390
26,137
37.2
13.0
21,775
3.9%
(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 2005-2007 rates came from the US Department of Labor, Bureau of Labor Statistics
for Federal Way.
(C) Per capita income and Median age information for the years 2001 to 2006 are based on 2000 U.S.
Census report since these information is available for individual cities only every ten years when the census is done.
2007 info is based on 2006 US Census American Community Survey.
Sources: Data was obtained from U. S. Census Bureau
US Department of Labor, Bureau of Labor Statistics
Federal Wav / 107
PRINCIPAL EMPLOYERS
Current Year and Ten Years Ago
2007
Number of
% of Total City
Taxpayer
Type of Business
Employees
Rank
Employment
Federal Way School Dist #210
Education
3,150
1
10.62%
Weyerhaeuser Company
Lumber Products
2,412
2
8.13%
St Francis Hospital
Medical Services
744
3
2.51%
Enchanted Parks Inc
Amusement Center
639
4
2.15%
Us Postal Service - Bulk Mail
Postal Service
626
5
2.11%
World Vision Inc
Christian Relief Agency -Nonprofit
596
6
2.01%
City Of Federal Way
Government Services
400
7
1.35%
Costco Wholesale Corporation
Wholesale
293
8
0.99%
Virginia Mason Federal Way
Medical Services
235
9
0.79%
Wal-Mart Store #2571
Retail
225
10
0.76%
Sears Roebuck & Company
Retail
205
11
0.69%
Home Depot
Retail
202
12
0.68%
Prudential Nw Realty Assoc. Inc.
Real Estate
200
13
0.67%
Fred Meyer
Retail
195
14
0.66%
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.
1998
Number of
% of Total City
Employees
Rank
Employment
2,132
1
8.36%
1,288
2
5.05%
440
5
1.72%
-
-
0.00%
550
3
2.16%
500
4
1.96%
355
6
1.39%
230
8
0.90%
186
11
0.73%
-
-
0.00%
200
10
0.78%
128
22
0.50%
200
9
0.78%
279
7
1.09%
0.00%
City of Federal Way / 108
Year
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
PROPERTY VALUE AND CONSTRUCTION
Commercial Construction (A)
Value
Permits
(In Thousands)
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
370
59,666
Residential Construction (A)
Value
Permits
(In Thousands)
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
388
55,321
Multi -Family Construction (A)
Value
Permits
(In Thousands)
11
7,594
5
16,167
12
3,816
6
1,790
1 .
1 1,047.
Q -
0
1 2,027
33 11,487
Sources & Notes:
(A) Federal Way Community Development Department. Commercial construction includes alterations.
Other building -related permits (plumbing, mechanical, fire alarm, etc.) numbering 2,690
and valued at $5,483,195 have been excluded.
City of Federal Way / 109
CAPITAL ASSETS BY FUNCTION
Last Ten Fiscal Years
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Transportation
Street (Center Line Miles)
223.10
22448
224.48
224.48
224.48
224.48
224.48
230.84
233.84
233.84
Signals WSDOT-owned and maintained
-
-
-
4
4
4
4
4
5
5
Signals City -owned & County -maintained
49
55
58
65
67
70
71
71
74
74
Street lights City -owned and maintained
204
224
260
668
810
1,038
1,050
1,050
1,214
1,214
Street lights City -owned and PSE-maintained
-
-
-
-
-
644
644
644
644
644
Street ligbts PSE-owned and maintained
629
635
648
2,835
2,850
1,975
1,975
1,975
1,975
1,975
Culture & Recreation
Developed Parks- Acreage
458.27
471
471
493.5
493.5
500.25
500.25
522.9
522.9
524.49
Developed Parks - # of Parks
26
26
26
28
28
31
32
32
32
32
Undeveloped Parks - Acreage
360.27
355
355
352
352
356.24
356.24
543.5
543.5
543.46
Undeveloped Parks - # of Parks
20
20
20
20
20
21
21
21
21
21
Tennis Courts City -Owned
5
5
5
9
9
9
9
11
11
11
Tennis Courts - Public
20
20
20
10
10
10
16
22
22
22
Swimming Pools City -Owned
0
0
0
0
0
1
1
1
1
1
Swimming Pools County -Owned
2
2
2
2
2
1
1
1
1
1
Trails - Miles
3
3
3
4
4
4
4
6
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
Federal Way / 110
SECURITY OF PERSONS & PROPERTY
Police Information
Offenses:
Forcible Rape (including attempts)
Robbery
Criminal Homicide
Aggravated Assault
Vehicle Theft
Burglary (commercial & residential)
Lameny
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
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
58
53
43
49
34
50
50
55
64
48
153
115
128
124
108
125
121
153
146
129
2
4
7
4
4
2
-
7
1
3
159
167
158
141
120
120
109
101
120
107
761
808
849
1,179
1,206
1,204
1,118
1,573
1,199
939
648
573
533
521
677
672
759
800
753
739
3,393
3,097
3,072
3,516
3,347
3,145
3,257
3.786
3,230
3,159
39
38
36
17
29
14
23
25
26
18
13,382
10,890
13,340
12,767
13,439
18,411
13,219
11,402
11,931
14,043
582
573
447
463
712
531
624
880
788
791
$81.9
$85.8
$53.8
$69.1
$94.8
$64.5
$105.4
$236.5
$151.1
$126.5
821
1007
1546
1693
2024
1779
1958
2705
2550
2690
$27.0
%11.0
$1.5
$2.3
$2.5 $
2.4
$ 2.5 $
3.9 $
4.2
$ 5.5
City of Federal Way / I I I
CITY GOVERNMENT EMPLOYEES FULL-TIME EQUIVALENT - HISTORY
Department
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
City Manager
6.0
6.0
6.0
5.0
6.0
6.0
6.0
5.0
5.0
5.5
Administration
6.0
6.0
6.0
5.0
5.0
5.0
5.0
4.0
4.0
4.0
Economic Development
-
-
-
-
1.0
1.0
1.0
1.0
1.0
1.5
Municipal Court
-
4.0
11.6
13.6
13.6
13.6
12.6
12.6
12.6
14.0
Management Services
25.5
26.0
26.0
24.0
24.5
25.0
25.0
22.0
22.0
25.1
Administration
2.5
2.0
2.0
1.5
1.5
1.5
1.5
1.5
1.5
1.5
Finance
8.5
9.0
9.0
7.0
7.0
8.0
8.0
7.0
7.0
8.0
City Clerk
2.5
2.5
2.5
2.5
2.5
2.0
2.0
1.5
1.5
1.5
Human Resources
4.0
4.0
5.0
4.0
4.5
4.5
4.5
3.5
3.5
3.5
Information System
8.0
8.5
8.5
9.0
9.0
9.0
9.0
8.5
8.5
10.6
Law
9.0
9.0
10.0
11.0
11.0
10.4
10.6
10.6
10.6
13.0
Civil Legal Services
4.3
4.3
4.1
5.1
5.1
5.8
5.8
5.8
5.8
5.8
Criminal Prosecution Services
4.7
4.7
6.0
6.0
6.0
4.6
4.8
4.8
4.8
7.2
Community Development
27.0
28.0
30.1
29.1
28.6
29.6
29.6
28.7
28.7
30.5
Administration
4.5
4.5
4.5
4.5
4.5
4.5
4.5
4.5
4.5
4.5
Planning
8.2
8.2
8.8
8.8
8.8
8.8
8.8
8.8
8.8
8.9
Building
10.8
11.8
13.3
12.3
11.3
12.3
12.3
12.3
12.3
13.3
Human Services
2.5
2.5
2.5
2.5
3.0
3.0
3.0
2.5
2.5
3.0
Neighborhood Development
1.0
1.0
1.0
1.0
1.0
1.0
1.0
0.7
0.7
1.0
Police
127.0
134.0
138.5
141.5
151.0
155.0
155.0
152.0
155.0
169.0
Administration
2.0
2.0
2.0
2.0
2.0
2.0
3.0
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
61.0
Field Operations
76.0
80.0
80.0
81.0
90.0
98.0
98.0
96.0
97.0
105.0
Parks, Rec. & Cultural Svcs.
23.5
25.7
26.9
27.0
27.0
30.4
30.4
30.2
31.2
443
Administration
2.0
2.0
2.0
2.0
2.0
1.8
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
6.5
6.5
6.6
6.6
6.6
6.6
7.1
Community Center
-
-
-
-
-
-
-
-
-
12A
Dumas Bay Centre
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
3.0
3.0
Knutzen Family Theatre
-
1.0
1.0
1.0
1.0
1.5
1.5
1.5
1.5
1.5
Parks Maintenance
11.0
11.8
13.0
14.0
14.0
14.0
14.0
13.8
13.8
17.0
Building
-
0.4
0.4
0.5
0.5
0.5
0.5
0.5
0.5
0.5
Public Works
29.5
36.5
37.5
38.5
38.5
41.5
41.5
41.5
42.5
43.9
Administration
1.5
2.5
2.5
2.1
2.1
2.1
2.1
2.1
1.9
1.9
Development Services
5.5
5.5
6.5
6.5
6.5
6.5
5.8
5.8
6.5
6.5
Traffic Services
4.0
4.0
4.0
4.1
4.1
5.1
5.1
5.1
5.1
6.1
Street Services
5.7
9.7
9.7
10.0
10.0
11.0
11.7
11.7
11.0
11.5
Emergency Management
-
-
-
-
-
-
-
-
1.0
1.0
Solid Waste & Recycling
1.1
1.6
1.6
1.6
1.6
1.6
1.6
1.6
1.7
1.7
Surface Water Management
11.8
13.3
13.3
14.3
14.3
15.3
15.3
15.3
15.4
15.4
Total
247.5
269.2
286.5
289.6
300.1
311.4
310.7
302.6
307.6
345.2
Source: City of Federal Way Finance Division
Federal Way / 112
SALARIES AND SURETY BONDS OF PRINCIPAL OFFICIALS
DECEMBER 31, 2007
POSITION
MAYOR
COUNCIL MEMBERS
POSITION
CITY MANAGER
DIRECTOR - CITY ATTORNEY
CITY CLERK
ASSISTANT CITY MANAGER / CFO
ASSISTANT CITY MANAGER / COO
COMMUNITY DEVELOPMENT DIRECTOR
HUMAN SERVICES DIRECTOR
INFORMATION TECHNOLOGY DIRECTOR
PARKS, RECREATION AND CULTURAL
SERVICES DIRECTOR
POLICE CHIEF
LEGISLATIVE BODY
EMPLOYEE ANNUAL SALARY
MICHAEL PARK
$17,700
JEANNE BURBIDGE
$13,500
JACK DOV EY
$13,500
ERIC FAISON
$13,500
IDA FERRELL
$13,500
LINDA KOCHMAR
$13,500
DEAN MCCOLGAN
$13,500
ADMINISTRATIVE STAFF
EMPLOYEE
ANNUAL. SALARY
NEAL BEETS
$139,248
PAT RICHARDSON
$120,876
LAURA HATHAWAY
$76,704
IWEN WANG
$120,948
CARY ROE
$125,460
GREG FEWINS
$108,072
MARY MCDOUGAL
$113,844
MEHDI SADRI
$113,844
DONNA HANSON
$123,756
BRIAN WI SON $124,008
NOTE: In accordance with State of Washington legal statues, individual fidelity coverage of not less than $100,000
exists for both the City Manager and Management Services Director.
City of Federal Way / 113
LOCAL TAXES ON BUSINESSES
Franchise Tax - Cable TV
Gambling Taxes:
Bingo/Raffles. .. .
Amusement/Games. .
Punchboard/Pull Tabs...........
Cardrooms....... . ................ .
Local Sales Tax (Collected by the State).
MISCELLANEOUS STATISTICAL INFORMATION
5.00%
5.00%
2.00%
5.00%
20.00%
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.
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Fire and Other Responses 2,357 2,009 2,278 1,920 3,055 3,117 2,896 3,210 865 639
Emergency Medical 6,589 6,870 7,193 7,240 7,422 8,042 8,263 8,636 11,164 11,350
PUBLIC EDUCATION
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
23 Elementary Schools
12,248
12,258
12,242
11,498
11,990
9,854
9,916
9,806
9,733
9,612
7 Middle Schools (incl. Public Academy)
4,956
4,994
5,013
5,331
5,509
5,458
5,476
5,271
5,183
5,139
5 High Schools
4,116
4,529
4,557
4,415
4,316
6,625
6,650
7,004
6,954
6,720
1 Internet Academy (K-12)
545
626
477
672
379
328
353
3U2
314
304
21.865
22 407
22,289
21,916
22,194
22,265
22,395
22.383
22.184
1-1,775
3,155 Staff members
TAXABLE SALES (in millions) 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Retail Sales $1,049.3 $1,137.0 $1,212.1 $1,220 $1,298 $1,237 $1,239 $1,331 $1,471 $1,540
Real Estate Sales $438.8 $487.6 $429.9 $400 $503 $570 $616 $939 $988 $963
City of Federal Way / 114
Flowers and plants can be seen grown through -out the City of Federal Way.
This photo was taken at West Hylebos Park courtesy of Jeri -Lynn Clark.