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2001 Annual Comprehensive Financial Report (01-001)City of Federal Way, Washington COMPREHENSIVE ANNUAL FINANCIAL REPORT Year Ended December 31, 2001 Prepared by Management Services Department COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended December 31, 2001 Table of Contents Statement Reference Page INTRODUCTORY SECTION Letter of Transmittal ............................ .. City Officials and Administrative Officers............................................................................................... I City Functional Organization Chart ........................................................................................................... 2 GFOACertificate of Achievement ............... --...... ........................................ ................................. :.— ..... 3 FINANCIAL SECTION Auditor's Opinion........................................................................................................................... Combined Financial Statements - Overview ("Liftable" General Purpose Finance Statements)................................................................................................ 7 Combined Balance Sheet - All Fund Types and Account Groups.............................................................. 1 8 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - AllGovernmental Fund Types................................................................................................................ 2 11 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General, Special Revenue and Debt Service Fund Types........... ............................. 3 12 Combined Statement of Revenues, Expenses, and Changes in Fund Equity - AllProprietary Fund Types...................................................................................................................... 4 14 Combined Statement of Cash Flows - All Proprietary Fund Types............................................................ 5 15 Notes to the Financial Statements ...... ...... ............. --....... ............... .......................................................... 16 Combining, Individual Fund and Account Group Statements and Schedules GeneralFund............................................................................................................................................. 47 Comparative Balance Sheet.................................................................................................................... 48 Comparative Statement of Revenues, Expenditures, and Changes in Fund Balance .............................. 49 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budgetand Actual................................................................................................................................ 50 Schedule of Expenditures Compared to Budget ... ...... :....................... ......................... :.............. .:.......... 51 SpecialRevenue Funds............................................................................................................................. 55 CombiningBalance Sheet...................................................................................................................... 56 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ............................... 58 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Budgetand Actual................................................................................................................................ 60 DebtService Fund.................................................................................................................................... 67 Comparative Balance Sheet.................................................................................................................... 68 Comparative Statement of Revenues, Expenditures, and Changes in Fund Balance .............................. 69 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budgetand Actual.............................................................................................................................. 70 CapitalProject Funds............................................................................................................................... 71 CombiningBalance Sheet...................................................................................................................... 72 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance ....,...:::.:;:..:,...:.......... 73 Table of Contents (Cont'd) Combining, Individual Fund and Account Group Statements and Schedules (continued] Table Page EnterpriseFund........................................................................................................................................ 75 CombiningBalance Sheet...................................................................................................................... 76 Combining Statement of Revenues, Expenses and Changes in Fund Equity ......................................... 77 Combining Statement of Cash Flows..................................................................................................... 78 InternalService Funds............................................................................................................................. 79 CombiningBalance Sheet...................................................................................................................... 80 Combining Statement of Revenues, Expenses, and Changes in Fund Equity ......... ....... I....................... 81 Combining Statement of Cash Flows..................................................................................................... 82 General Fixed Assets Account Group..................................................................................................... 83 Schedule of General Fixed Assets - By Source...................:.................................................................. 84 Schedule of General Fixed Assets - By Function and Activity............................................................... 85 Schedule of Changes in General Fixed Assets - By Function and Activity ............................................ 86 STATISTICAL SECTION General Governmental Expenditures and Other Uses by Function - General, Special Revenue and Debt Service Funds................................................................................ 1 88 Schedule of Major Revenues and Other Financing Sources by Source - General, Special Revenue and Debt Service Funds................................................................................ 2 89 Tax Revenue by Source - General, Special Revenue and Debt Service Funds ........................................... 3 90 Property Tax Levies and Collections.......................................................................................................... 4 91 Assessed and Estimated Actual Value of Taxable Property ....................................................................... 5 92 Property Tax Levies - Direct and Overlapping Governments..................................................................... 6 93 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt per Capita .......................... 7 94 Computation of Limitation of Indebtedness............................................................................................... 8 95 Computation of Direct and Overlapping Debt............................................................................................ 9 96 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Governmental Expenditures...................................................................................................... 10 97 DemographicStatistics............................................................................................................................... 11 98 Property Value, Construction, and Bank Deposits.- ..................... 17 ...........................................:...:............... 12 99 PrincipalTaxpayers.................................................................................................................................... 13 100 Schedule of Insurance in Force ............ ........ --........ ........... .............. ...... ...................... ......... .................... 14 101 Salaries and Surety Bonds of Principal Officials ........................................................................................ 15 103 Miscellaneous Statistical Data.................................................................................................................... 16 104 ii CRY OF �VAY FrYor August 9, 2002 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 of the City of Federal Way for the year ended December 31, 2001 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 and account groups 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 general purpose financial statements, and the combining and individual fund and account group financial statements and schedules, as well as the State Auditor's report on the general purpose financial statements. The statistical section includes selected financial and demographic information, generally presented on a multi -year basis. This report includes all funds and account groups of the City, including the Valley Communications Center joint venture in which the City became a member city effective January 1, 2000. 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, fund categories are segregated within the Combining/Individual Financial Statements section of this report. The fund types are presented in the combined general purpose statements in the same sequence in which they appear in the combining section. REPORTING ENTITY The City is a noncharter Optional Code City with a Council -Manager from of government. The City Council consists of seven council members, all of whom are elected at large by citizens of Federal Way to serve four-year terms. The City Manager, who serves as the chief executive officer, is responsible for day- to-day administration of personnel, policies and programs. He is appointed by, reports directly to, and serves at the pleasure of the City Council. City services provided include: police protection, construction and maintenance of streets, building inspection, municipal court services, jail services, planning and zoning, park services, surface water management and general administration, including finance. Services for a land use hearing examiner are contracted. The City continues to have seven major departments consisting of City Manager; Law; iii Management Services; Parks, Recreation, and Cultural Services; Public Safety; Public Works; and Community Development. Fire protection and emergency medical services are provided by Fire District No. 39. The Lakehaven Utility District delivers water and sewer services. Metro provides public transportation services. Public housing services are the primary focus of the King County Housing Authority. The King County Library System engages City residents through its library and reference services. School District No. 210 offers educational programs for kindergarten through high school students, in addition to vocational training. ECONOMIC TRENDS The City of Federal Way incorporated on February 28, 1990. It is the seventh largest city in Washington State with a population of 83,890 as of April 1, 2001. Federal Way is located on a plateau adjacent to Puget Sound in King County, eight miles north of downtown Tacoma and 25 miles south of downtown Seattle. The City occupies approximately 21.5 square miles, and is served by Interstate 5 and state highways 99 and 509. CITY OF FEDERAL WAY Population Trends -1970 to 2001 90,000 8(),000 76" i35fxl 15.31 75;Jriu 7V'1 71�,31r ` �3tili 74 , _ _ _ r _ u mill - � S' 70.000 60,000 - 50.000 - 40.000 1.7,X4' - 30,000 20,000 - - 10;000 - 1970 1980 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 The population in the area known as the City of Federal Way has grown at a moderate pace over the past few years, with the population as of the 2000 census is 83,259. The 2001 population figure of 83,890, provided by the State Office of Financial Management, is an increase of .76% from the 2000 figure of 83,259. In 2001 there were 32,855 housing units in Federal Way. Of these units, 50% were single family, 45% multi -family units and 5% mobile homes and trailers. These statistics for housing units show an increase of approximately .5% over 2000. 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 2001 is estimated at 29,638. Major employers are the SeaTac Mall, Weyerhauser, Federal Way School District, St. Francis Community Hospital, World Vision, Enchanted Parks, and U.S. Postal Bulk Mail Center. IMA CITY OF FIDII2AL WAY Housing Units - 1970 to 2000 4n,nun 13,0011 ML 06 ?9,89= ]0 6 - 3% 71 3 - 30,000 I 25,000 M j2o.o110 71• � - 1s.nncl 7 i 1u,00u 11 I I� I 1970 1980 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 The City's 2001 taxable retail sales were $1,220 million, a less than 1% increase over 2000 sales of $1,212 million. The retail sector of the local economy is anchored by the SeaTac regional mall, Pavilion Centre, Costco, Fred Meyer, Lowe's Home Improvement Center, and many other small businesses adjacent to the City center. According to a listing of businesses registered with the City of Federal Way and sorted by the Standard Industrial Classification, the business economy appears to be configured as follows: retail trade 63.4%; services 11%; contracting 11.1%; wholesale trade 5.8%; transportation and public utilities 4%; government 1.4%; manufacturing 1.3%, finance, insurance and real estate 1%, and other 1%. In 2001, new improvements to real estate totaled $68.9 million or approximately 1.2% of the City's assessed valuation. The total assessed value of taxable property in Federal Way was $5.6 billion which is approximately 7.7% higher than the 2000 assessed valuation of $5.2 billion. Real Estate sales were approximately $400 million in 2001 as compared to $429.9 million in 2000. A total of 463 building permits and 1,693 other building related permits were issued in 2001. Estimated valuation was $69.1 million and $2.3 million, respectively. Significant building permits include: Foss Redevelopment, a 3-story office building; Quadrant, a 2-story office building; Palisades Retreat Center; St. Francis Hospital; Best Buy, a retail store; Lloyd Enterprises, a 2-story office and maintenance building; Albertsons, replacing the old grocery store with a new one and Hawthorne Suites, a 65 unit hotel. The recession that officially began in March 2001 is nearing the end. A combination of factors has helped to keep the downturn brief and mild including tax cuts and interest rate cuts that were already in progress, increases in defense and homeland security spending in the wake of September 11, and surprisingly resilient U.S. consumers. While the U.S. economy appears to be on the verge of recovering from a relatively shallow recession, it is now apparent that Washington state's employment downturn has been more severe than in all but two of the recessions of the last forty years (1981-82 and 1969-71). Construction and business services were particularly weak in 2001. Prior to September 11 Washington aerospace employment had risen in the first three quarters of 2001. In the wake of the attacks Boeing announced intentions to cut 20,000 to 30,000 jobs company wide with the vast majority in Washington State. Due to aerospace employment reductions, declines in manufacturing industries and the end of a four-year construction boom overall employment growth slowed in fiscal 2001 to 1.4 percent from 2.3 percent in 2000. V Inflation in the Puget Sound Region was up 3.6 percent for 2001, just slightly lower than the 3.7 percent posted in 2000. This is a relatively high level compared to inflation in the entire U.S. at 1.6 percent in 2001. Nominal personal income growth slowed sharply in fiscal 2001 to 3.6 percent from 7.5 percent the previous year. Excluding the impact of software stock options on personal income, there would have been an increase in personal income growth in 2001 to 6.3 percent from 5.7 percent in 2000. Washington real personal income growth fell sharply to 1.1 percent in fiscal 2001 from 5.1 percent in 2000 and more than 6 percent for each of the prior three years. No real personal income growth is expected in 2002 and moderate growth is forecast for 2003. The recovery in Washington is expected to be unusually slow. While it is forecast that there will be a weak national recovery, Boeing is expected to continue reducing is workforce through 2003. Employment growth in the Puget Sound region is forecast to be relatively flat in 2002 with marginal growth in early 2003. The region's economy is forecast to expand at a moderate pace with growth likely to be much more restrained than it was in the late 1990's. SIGNIFICANT EVENTS AND ACCOMPLISHMENTS Since the City officially incorporated on February 28, 1990, 2001 was the eleventh year of service to the community. In 2001, we saw the results of the federal government's Census 2000, which showed that Federal Way was not only much larger than thought at nearly 84,000 people, but also more diverse. Federal Way's African - American and Asian -American populations more than doubled, and our Latino population almost tripled. Federal Way is clearly a destination for people, both in the Puget Sound area and throughout the world. Two thousand one saw a number of new faces at the city. We welcomed new City Council member Eric Faison, Assistant City Manager Donna Hanson, Police Chief Anne Kirkpatrick, saw the promotion of Community Development Director Kathy McClung, and announced the hiring of Deputy Community Development Director Patrick Doherty to manage the city's economic development programs. Significant progress was made on our efforts to create a denser and more vital city center. $3.37 million in improvements to the intersection of Pacific Highway South and South 320th Street were completed, to both reduce congestion and add decorative features such as trees and lighting, which enhance the area. Work is underway on an $8.47 million project to improve congestion and add decorative features to 23rd Avenue South. in conjunction with those two projects, the city constructed $1.9 million in improvements to South 320th Street. And a $3 million project to improve drainage and prevent future flooding in the downtown area was completed. The Public Works Department constructed $1.27 million in asphalt overlays throughout Federal Way, emphasizing streets most badly in need of a new surface. These overlays continue the city's policy of maintaining roads on a timetable that saves tax dollars by preventing the need for actual road replacement in the future. Other facets of economic development gathered steam in 2001. There was continued rapid development in East Campus, a testament to Weyerhaeuser's and Quadrant's commitment to Federal Way and their success at marketing our community. The following parks capital projects were completed in 2001. The $730,000 new BPA Trail Phase III opened in October, creating another pedestrian connection through the heart of our city. The highly popular and much -anticipated Skate Park was opened in August. Play structures were installed or replaced at four parks: Celebration Park, Alderbrook Park, Wedgewood Park, and Heritage Woods Park. V1 Perhaps the most important initiative of 2001 was the city's budget process. While other governments are facing severe financial crises due to recent initiatives and the state of our economy, Federal Way continues to be fiscally sound. This is clearly a result of the city's excellent fiscal policies and conscientious City Councils that have kept one eye on the future and consistently adopted sustainable budgets. A recent survey by our Finance Division found that Federal Way has lower per -capita revenues and expenditures than other cities in King County. Federal Way is the third largest city in King County, but is only 33rd of the 37 cities in King County in per -capita taxes and fees. During the 2001 budget adjustment process, the City Council took advantage of jail cost savings and unused property tax capacity - a product of past Councils' fiscal discipline - to ensure that the Federal Way Police Department will have at least 10 officers on every shift. This was accomplished not by adding 10 new officers, but by a combination of redeploying officers from administrative positions to patrol, hiring lower cost, civilian positions, and adding a limited number of new officers. These new officers not only allow us to better manage and respond to day-to-day calls for service, but also help us be prepared for public safety emergencies in these uncertain times following September 11th. Jail cost reduction efforts were significant, having saved the city $200,000 this year. For comparison's sake, $200,000 was the entire jail budget 10 years ago. These savings were achieved by contracting with lower - cost jails in Fife and Eastern Washington, impounding cars driven by suspended drivers, using electronic home monitoring in lieu of jail time, and reducing "failure -to -appear" arrests by phoning people and reminding them of their scheduled court hearings. OUTLOOK FOR THE FUTURE Long Term Housing and Population • Preserve the predominantly single-family character and appearance of the community by establishing population densities consistent with neighborhood and city-wide objectives. • Create a diverse population by encouraging residential development with a mix of housing types at affordable costs, particularly for senior citizens and lower income families. • Assure the high quality of new and existing housing by consistent enforcement of reasonable housing and building standards that do not unnecessarily increase housing costs. • Maintain safe, economically stable and attractive neighborhoods by providing a high level of public services, including utilities, streets, sidewalks, parks and recreation facilities. • Produce new housing that is planned and developed to protect natural systems and meet community design and landscaping standards. Commercial/Industrial • Provide employment opportunities within the community by attracting new industries and professional offices. • Establish well-defined and limited neighborhood business centers to provide convenient services to adjacent neighborhoods without adversely impacting neighborhood quality. • Control strip development on major arterials while maintaining existing vital businesses. • Define and implement a development and design concept for the City Center that establishes vibrant focal point and identity in the community. • Build a transportation system that adequately serves commercial areas, encourages use of alternative modes of transportation for work trips, and allows commercial and industrial growth without creating additional congestion. vii • Establish design standards for commercial areas that are closely related to their function but encourage attractive appearance and protection of the environment. • Protect industrial areas from encroachment by other uses and upgrade the quality of existing industrial areas. Open Space • Identify and preserve open spaces to maintain the natural beauty of the community and to provide views, protection of sensitive areas, recreation and other benefits. • Protect as open space natural systems and natural features recognized for their sensitivity to urban development when development occurs. Transportation • Develop a transportation system that provides mobility, and emphasizes safety and aesthetics as well as capacity concerns. • Plan and design transportation improvements in a regional context that integrate land use and circulation systems. Natural Environment • Preserve the natural character of sensitive areas, habitats, wetlands, stream corridors, lakes and aquifer recharge areas in order to protect public health, safety and welfare, and maintain the beauty of the community. • Protect the quality of surface and groundwater, and maintain an adequate public water supply. Short Term The City's immediate objectives continue to be: 1) maintain its relative fiscal strength; 2) facilitate the maturation of its municipal corporation; 3) make City government easier to access, understand, and participate in; 4) realize the community's values and preferences; and 5) improve the quality of life for its people as well as the climate for business activities. Council and staff worked together and identified the following broad goals for the 2001-2002 biennial budget: I Be Responsible and Responsive to the Voters' Message • Operate the City in an entrepreneurial and fiscally responsible manner with focus on both revenue generation as well as expenditure control; • Make responsible program choices in balancing the budget such that the City does not penalize the voters. II Enhance Public Safety in the Community • Recognize that public safety continues to be the top priority of the Council; • Look at an integrated public safety strategy that involves all facets of City operations such as licensing, code enforcement, police, prosecution, and court services; • Analyze the police/court facility options and prepare an implementation plan. III Invest in our Community's Future • Aggressively implement the City Center vision; • Identify sustainable capital funding sources; • Recognize the importance of programs for families and youth. IV Improve Communication of and Accessibility to Government Services • Make government service more accessible and user-friendly through the application of e- Commerce and e-Government. Viii FINANCIAL INFORMATION The City of Federal Way is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft, or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: 1) the cost of a control should not exceed the benefits likely to be derived, and 2) the evaluation of relative costs and benefits of the control system requires estimates and judgments by management. Single Audit As a recipient of federal, state and county financial assistance, the City is responsible for maintaining an adequate internal control structure to ensure compliance with applicable laws and regulations related to those programs. This internal control structure is subject to periodic evaluation by management and the State Auditor's Office. As part of the City's single audit, tests are made to determine the adequacy of the internal control structure, including that portion related to federal financial assistance programs, as well as to determine that the government has complied with applicable laws and regulations. The results of the City's single audit for the year ended December 31, 2001 indicated that there were no material weaknesses in the internal control structure. Budgetary Controls The City maintains budgetary controls in accordance with the Revised Code of Washington (RCW 35A.33). The objectives of these budgetary controls are to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. Activities of the General Fund, some Special Revenue Funds, and Debt Service Fund are included in the annual appropriated budget. The level of budgetary control at which expenditures cannot legally exceed the appropriated amount is established at the individual fund level. The project -length based Special Revenue Funds, and the Capital Projects, Enterprise and Internal Service funds are management budgets only and therefore these budgets are not represented in the CAFR. The City also maintains an encumbrance accounting system as one technique of accomplishing budgetary control. All appropriations lapse at year-end. As demonstrated by the statements and schedules included in the financial section of this report, the City continues to meet its responsibility for sound financial management. Basis of'Accounting All governmental funds are accounted for using the modified accrual basis of accounting. Under the modified accrual basis, revenues are recorded when received in cash, except for revenues susceptible to accrual. Revenues considered susceptible to accrual are those that are measurable and available to finance the government operation during the current period. Expenditures, other than accrued interest on general long-term debt, are recorded at the time liabilities are incurred. All proprietary funds use the accrual basis of accounting. Under the accrual basis, revenues are recorded when they are earned and expenses are recorded as soon as they result in liabilities for benefits received. 1x GENERAL GOVERNMENT FUNCTIONS Overview The general governmental analysis will include the General Fund, all Special Revenue Funds and Debt Service Fund. 2001 vs 2000 FINANCIAL PERFORMANCE General, Special Revenue and Debt Service Funds 50.0 45.0 40.0 35.0 n ° 30.0 0 E 25-0 20.0 15.0 10A 5.{ 2001 vs 2000 FINANCIAL PERFORMANCE General Fund 30-0 230 _. 20-0 n` o E 15.0 10-0 4.8 g'- 5-0 • Li L I 2000 Beginning Fund .. I ?�I Balance Revenues - - Expenditures Ending Fund Balance X Overall financial performance in the General Fund, Special Revenue Funds and the Debt Service Fund was positive in 2001. Revenues and other sources of funds totaled $45.5 million compared to $45.0 million for 2000. This results in an increase of $.5 million or L I %. Expenditures and other uses of funds totaled $43 million compared to $41.5 million for 2000, an increase of $1.5 million or 3.6%. Aggregate fund balances for these funds ended the year totaling $22.5 million, which is approximately a $2.5 million increase. However, excluding the interfund transfers, the revenues were nearly level, decreasing only by $.1 million or less than 1 % and expenditures increased by $.5 million or 1.6%. The General Fund ended 2001 with an $8,264,467 fund balance. This was a $1,644,022 or 25% increase over the fund balance at the end of 2000. General Fund revenues increased only $18,088 over 2000, less than .1%. The expenditures increased by $597,080. This increase is approximately 2.4% and is attributable to step and contract increases for salaries. Revenue Summary The following charts present a summary of General, Special Revenue, and Debt Service Fund revenues, including other financing sources and residual equity transfers, for the 2001 calendar year. GENERAL, SPECIAL REVENUE, AND HEAT SERVICE FUNDS Revenues and Other Financing Sources Faxe 2001 _ .. �.al =_ Change '4onullt Percent $ 29,721,513 $ 28,495,459 S 1,226,054 4.3%Permits 1,396,694 1,434,027 (37,333) -2.6°/ Intergovernmental 4,365,098 5,251,899 (886,801) -16.9°/ Services/Charges 2,525,488 2,219,948 305,540 13.80/ Fines/Forfeitures 830,668 902,762 (72,094) -8.00 Interest Eamin s 803,300 1,258,502 (455,202) -36.20/ci Miscellaneous 487,692 661,826 174,134 -26.30/c, Other Financing Sources 5,329,334 4,814,672 514,662 1 10.70/ Total Revenues $ 4=,459,787 5 45,039,095 S 420,692 1 0.9 2001 REVENUES AND OTHER SOURCES General, Special Revenue and Debt Service Funds Miscellaneous 1.1 % Other Financing Sources Interest Earnings _ 11.7% 1.8% Fines/Forfeitures 1.8% mil, i Taxes — — 65.4% Services/Charges 5.5% --- Intergovernmental 9.6% Licenses/Permits 3.1% Xi The most significant dollar increase was in taxes. The increase of $1,226,054 is due primarily to the additional gambling taxes ($585,743), utility taxes ($549,602), property tax ($258,270) and sales tax ($142,291). All utility taxes are receipted into a special revenue fund, and are transferred to the debt service fund as needed. Intergovernmental revenue is down $886,801 compared to 2000 due primarily to reduced grant revenue. Interest earnings decreased $455,202 from 2000, a result of the weakened economy. Exnenditure Summary The following charts present a summary of the General, Special Revenue, and Debt Service Fund expenditures, other financing uses and residual equity transfers out for the year ending December 31, 2001. GENERAL, SPECIAL REVE'VI.IE, A1tiD DEBT SERVICE FUNND5 Er enditures by Funetlna Change Amount Perce+n. 2001 ,,.,_...... -_ 1040 General Government $ 4,724,252 $ 4,237,852 $ 486,400 11.5% Security of Persons & Property 14,264,309 14,046,638 217,671 1.5°% Physical Environment 378,066 318,709 59,357 18.6°!a Transportation 4,554,183 4,661,867 (107,684) -2.3°J Economic Environment 2,679,174 2,634,011 45,163 1.7 Health 535,589 546,191 (10,602) -1.9°% Culture & Recreation 2,951,607 3,034,818 (83,211) -2.7% Capital Outlay 176,551 508,919 (332,368) -65.3% Debt Service -Principal 2,700,478 2,498,853 201,625 8.1°% Debt Service -Interest 1,797,614 1,729,858 67,756 3.9% Other Financing Uses 7,928,949 7,032,608 896,341 12.7% Residual Equity Transfers Out 216,209 293,246 (77,037)-26.3°% Total Expenditures 5 42,906.981 41,543,M 1 $ -t;W41T -3.3°% 2001 EXPENDITURES BY FUNCTION General, Special Revenue and Debt Service Funds Other Financing Uses rGeneral Government 19.0% 11.0% Debt Service 10.5% Capital Outlay Public Safety 0.4% 33.3% Culture & Recreation 6.9% Transportation �_ Physical Environment Health Economic 10.6% 0.9% 1.2% Environment 6.2% The increase in general government is partially a result of staff positions in the City Manager's office and Municipal court not being filled until the end of 2000 or early 2001. Facility and other support services to Municipal Court were recorded in Municipal Court's budget beginning in 2001. Reductions in capital x11 outlay are primarily attributable to reductions in roads construction projects. The increase in other financing uses is due to the transfer of reserves to internal service funds. GENERAL, SPECIAL REVENUE, AND DEBT SERVICE f-UNDS Ex pendirares by Mject object 2001 2000 Change •fmounr Percent Personal Services 18,073,717 $ 17.292,149 $ 781,568 4.50% supplies 753,945 640,026 113,919 17.80K Other Services and Charges 3,892,515 4,288,826 (396,311) -9.20/c, intergovernmental 11,013,925 10,363,806 650,119 6.3% Capital Outlay 1,355,040 2,004,853 (649,813) -32.4% Debt Service -Principal 2,700,478 2,498,853 201,625 8.1OK Debt Service -Interest 1,797,614 1,729,858 67,756 3.90/a [nterfund Services 3.319,747 2,725.199 594,548 21.8% Total Expenditures S 42.906,981 S 411543,570 S Ta63,X71 3.3% 2001 EXPENDITURES BY OBJECT General, Special Revenue and Debt Service Funds Interfund Services Debt Service -Interest 7.7% 4.2% Debt Service -Principal 6.3% f �! Capital Outlay 3.1% Intergovernmenl 25.7% Fund Balance _Supplies Other Services & 1.8% Charges 9.1% Personal Services 42.1 % Overall fund balances in the General, Special Revenue, and Debt Service Funds totaled $22,487,115 in 2001 compared to $19,934,309 in 2000, an increase of $2,552,806 or 12.8%. This increase is in part attributable to an increase in utility taxes, sales tax, property tax and gambling taxes collected. X111 GENERAL, SPECIAL REVENUE, AND DEBT SERVICE FUNDS Anal •sb of Fuad Balance Change Amount Percent Fund Balance 2001 2000 General $ 8,264,467 $ 6,620,445 $ 1,644,022 24.8OX Special Revenue Street 275,926 - 275,926 na Arterial Street 719,952 487,494 232,458 47.70/ci Utility Tax 6,170,755 4,407,436 1,763,319 40.00/c Solid Waste/Recycling 199,344 275,459 (76,115) -27.60/c Special Contracts/Studies 123,881 111,048 12,833 11.60/c Snow & Ice Removal 100,000 (100,000)-100.0% Hotel/Motel Lodging Tax 150,549 58,484 92,065 157.4% 2% for the Arts 28,114 19,274 8,840 45.9% Community Development Block Grant 4,140 6,439 (2,299) -35.7% Paths and Trails Reserve 41,863 32,414 9,449 29.2% Strategic Reserve - 1,728,294 (1,728,294)-100.0% Airport Strategic Reserve - 300,000 (300,000) -100.0% Subtotal Special Revenue 7,714,524 7,526,342 188,182 2.5%e ebt Service 6,508.124 5,787,522 720,602 12.5% 22;i97,115 `S - — i�r;'s34;3UtJ 5 2S52RI1� �#i 2001 ENDING FUND BALANCE General, Special Revenue and Debt Service Funds General Fund 36.8% Debt Service Fund _ 28.9% r Special Revenue Funds 34.3% PROPRIETARY OPERATIONS In 2001, the City utilized five internal service funds to account for activities related to risk management, management information systems, mail and duplication, fleet and equipment and buildings and furnishings. Operation and depreciation related replacement charges to users are based on office staff counts, equipment used, and specific depreciation schedules. Residual equity transfers are recorded from other City funds to finance first time asset acquisition. X1V The City established an enterprise fund during 1993 to account for the acquisition and operations of the Dumas Bay Centre, a retreat facility, which was purchased with King County open space and conservation futures funding. In 1998, the Knutzen Family Theatre was added to the Dumas Bay Centre Fund. The theatre's maintenance and operation expenses are partially funded with utility tax. This subsidy is recorded as an operating transfer. During 2000, the City established the Surface Water Management Fund as an enterprise fund and reclassified it from a special revenue fund. The Surface Water Management Fund is used to account for the Storm Drainage operations and capital construction, maintenance and replacement of infrastructure. DEBT ADMINISTRATION The City's outstanding debt is approximately .6% of its taxable assessed valuation. As of December 31, 2001, the City's remaining debt capacities are summarized as follows: General Government (no vote required) $66,391,518 General Government (3/5 majority vote required) $56,206,353 Parks and Open Space (3/5 majority vote required) $140,515,882 Utilities (3/5 majority vote required) S 140.515.882 Total Capacity $403,629.635 Non -voted (councilmanic) general obligation bonds and certificates of participation are reductions in the general government debt capacity. To the extent that such debt is issued, the City's voted debt capacity is reduced. 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, 2001 consisted of a U.S. Government agency security and investments in the Washington State Investment Pool, with maturities ranging from one day to two and '/z months. Safeguarding assets is of primary concern for the City. Pursuant to the Governmental Accounting Standards Board (GASB) statement #3, the City provides detailed disclosure regarding the risk associated with deposits and investments held by the City. GASB statement #3 established a categorization of investments and deposits based on risk. Category 1 includes investments that are either insured, registered, or held by the City or its agent in the City of Federal Way's name; category 2 includes uninsured and unregistered investments held by the counter party's trust department or agent in the City's name; and category 3 includes uninsured and unregistered investments held in the counter party's trust department or agent, but not in the City's name. This categorization is included in note 4 of the general purpose financial statements. In order to assure the highest degree of safety on all City investments, a safekeeping agreement was established for all securities purchased by the City prior to implementing our in-house investment program during 1994. The Washington State Treasurer manages a State Investment Pool for use by any city, county, town, municipal corporation, or special taxing district within the state. Municipalities determine the amount and length of investment in the pool based on individual cash flow needs. Interest is earned on the pool's actual experience for the month, less an administrative fee equivalent to five basis points (.05%). At December 31, 2001, the City had $54,563,156 invested in the State Investment Pool. In 2001, the average monthly earnings rate for the entire portfolio was approximately 4.39% as compared to the average monthly earnings rate for the State Investment Pool of 4.19%. xv 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 2001, the City purchased commercial insurance policies from commercial insurers. It is the opinion of the City's legal staff that at year-end there were no outstanding claims that met expenditure accrual or loss disclosure criteria. The City's industrial insurance is provided by Washington State and is administered by the Department of Labor and Industries. The following are benefits provided by industrial insurance: medical services, damaged clothing, travel expenses, time -loss payments, vocational rehabilitation, partial disability awards, pension awards, and survivor benefits. INDEPENDENT AUDIT State law requires an annual audit of all City books of account, financial records, and transactions by the State Auditor, an independently elected state official. In addition to meeting the requirements set forth under state law, the audit was also designed to meet the requirements of the federal Single Audit Act of 1984 and related OMB Circular A-133. The 2001 audit of the City has been completed in conformance with generally accepted auditing standards. The financial statements of all City funds and account groups have been included in this audit. The City has been given an unqualified opinion for 2001. The State Auditor's report on the general purpose 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, 2000. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, a governmental entity must publish an easily readable and efficiently organized CAFR, the contents of which conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The City of Federal Way has received a Certificate of Achievement for the last eleven years (fiscal years ended 1990 - 2000). We believe that our current report continues to conform to the Certificate of Achievement Program requirements, and we are submitting it to the GFOA. The City of Federal Way also received the Government Finance Officers Association Distinguished Budget Presentation Award for its biennial budget for the years beginning January 1, 2001 and 2002. 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. xvi ACKNOWLEDGMENTS The preparation of this comprehensive annual financial report represents the culmination of months of concerted teamwork by the entire staff of the Management Services Department. Many members of the department demonstrated unswerving personal determination and dedicated many long days of focused attention to produce this unique and exemplary document. Very special thanks are due to Dong Chou, Jeri- lynn Clark, Tho Kraus, and Dwight Shiotani. In addition, staff in all City departments should be recognized for responding so positively to the requests for detailed information which accompany each annual audit. The role of the State Auditor's Office should also be acknowledged as a significant contribution to a fine product. 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 submifco, -Dien Wang Michael L. Olson Management Se vices Director Management Services Deputy Director CITYJOF� City of Federal Way/1 JEANNE BURBIDGE Mayor CITY OFFICIALS DEAN MCCOLGAN Deputy Mayor MARY GATES MICHAEL HELLICKSON LINDA KOCHMAR Councilmember Councilmember Councilmember DAVID MOSELEY City Manager OTHER ADMINISTRATIVE OFFICERS ERIC FAISON Councilmember MICHAEL PARK Councilmember CityAttorney.................................................................................................................................................. Bob Sterbank CityClerk........................................................................................................................................................... Chris Green Community Development Director..............................................................................................................Kathy McClung Management Services Director...........................................................................................................................Iwen Wang Parks, Recreation and Cultural Services Director.....................................................................................Jennifer Schroder PublicSafety Director............................................................................................................................... Anne Kirkpatrick PublicWorks Director........................................................................................................................................... Cary Roe City of Federal lay /2 Municipal Court David Tracy *Adjudicates Cases •Probation Services *Indigent Defense Screening Staff: 13.6 community Development KathyMcClung •Current Planning *Land Use *Building Permits/ Inspections •Code Compliance Staff: 29 Peo le of Federal Way Mayor and Ci Council Jeanne Burbidge, Mayor Dean McColgan, Deputy Mayor Erick Faison, Mary Gates Michael Hellickson Linda Kochmar, Michael Park City Manager David Moseley Staff: Parks, Recreation & Cultural Services Jennifer Schroder *Recreation Programs •Ground Maintenance •Park Operations •Community/Sr Center *Facility Maintenance *Dumas Bay Centre *Civic Theatre Staff: 27 City Attorney Bob Sterbank *Civil Legal Services/ Litigation •Prosecution •Advise Council Boards, Commissions & staff •Advire/Draf-ing Ordinances Staff: li 5 Public Safety Anne Kirkpatrick •Drug Awareness Resistance Education •Crime Analysis/ Prevention •Traffic Enforcement •Investigation *Jail Services Staff. 142.5 Boards and Commissions •Arts Commission •Diversity Commission •Ethics Board •Human Services Commission •Parks & Recreation Commission *Planning Commission *Youth Commission Boards and Commissions •Civil Service Commission Public Works -Development Services *Street Maintenance *Traffic Operation *Surface Water Mgmt *Solid Waste/ Recycling •Neighborhood Safety *Transportation -System Planning Staff: 38.5 Management Services Iwen Wang •City Clerk *Finance *Human Resources *Risk Management/ Purchasing/Fleet •Systems Staff: 24 City of Federal Way / 3 Certificate of Achievement for Excellence in Financial Reporting Presented to City of Federal Way, Washington For its Comprehensive Annual Financial Report for the Fiscal Year Ended December 31, 2000 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. uNrij srSTA � �a�n CANAM n MPOAT s 1 Pr silent sM ,- OICKSO � i�J. rf-� Executive Director The Government Finance Officers Association of the United Sates and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Federal Way for its comprehensive annual financial report (CAFR) for the fiscal year ended December 31, 2000. This was the eleventh consecutive year that the government has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to GFOA to determine its eligibility for another certificate. Legislative Building PO Box 40021 Olympia, Washington 98504-0021 Washington State Auditor Brian Sonntag INDEPENDENT AUDITOR'S REPORT August 9, 2002 The Honorable Mayor and City Council City of Federal Way Federal Way, Washington (360) 902-0370 FAX (360) 753-0646 TDD Relay 1-800-833-6388 http://www.sao.wa.gov We have audited the accompanying general purpose financial statements of the City of Federal Way, King County, Washington, as of and for the year ended December 31, 2001, as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Our audit was performed pursuant to the Revised Code of Washington 43.09.260, under which a full report on the results of this audit will be issued. This report may include findings and recommendations on compliance matters, internal control procedures, and questionable costs or contingencies that would not be material in relation to the general purpose financial statements taken as a whole. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of Federal Way, King County, Washington, as of December 31, 2001, and the results of its operations and cash flows of its proprietary fund types for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The combining, individual fund, and account group financial statements and schedules listed in the table of contents are presented for purposes of additional analysis and are not a required part of the general purpose financial statements of the City of Federal Way, King County, Washington. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the general purpose financial statements taken as a whole. The other data included in this report, designated as the statistical section in the table of contents, has not been audited by us and, accordingly, we express no opinion on such data. Sincerely, C� 'e-, BRIAN SONNTAG, CGFM STATE AUDITOR N C41 T Y* FV�:r V��L General Purpose Financial Statements City of Federal Way / 8 COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS December 31. 2001 ASSETS Equity in pooled cash and investments (note 4) Cash with escrow agent (note 4) Prepaid insurance/postage Receivables (net): Taxes (note 5) Accounts and contracts Interest Due from other fundslnterfund loans receivable (note 12) Due from other governments (note 5) Investment in joint venture (note 17) Property/equlpmentlimprovements (net) (note 7) Construction work in progress (note 7) Amount available in debt service funds (note 11) Amount to be provided for retirement of long-term debt (note 11) TOTAL ASSETS AND OTHER DEBITS LIABILITIES AND FUND EQUITY Liabilities: Vouchers payable Accounts/payroll payable Retainage payable Retainage payable - with escrow agent Due to other governments (note 6) Due to other funds/inlerfund loans payable (note 12) Deposits payable General obligation bonds (note 11) Long-term loan payable Public works trust fund loan payable (note 11) Certificates of participation payable (note 11) Deferred revenue Compensated absences payable (note 11) TOTAL LIABILITIES Fund equity and other credits: Contributed capital (note 13) Investment In joint venture/general fixed assets (note 7) Retained earnings: Unreserved Fund balance: Reserved for. Interfund loans Debt service Paths and trails Petty cash/change fund/advance lravel/iinvestigative funds Police special funds Prepaid insurance Unreserved: Designated for snow & ice removal Undesignated TOTAL FUND EQUITY AND OTHER CREDITS TOTAL LIABILITIES & FUND EQUITY & OTHER CREDITS See accompanying notes to financial statements. Statement 1 Governmental Fund Types Special Debt Capital General Revenue Service Projects $ 7,643,451 $ 8,268,714 $ 6,491,454 $ 16,738,471 - - - 148,426 11,850 - 459,291 692,425 - 398,673 13,868 - 35,924 3,080 2,590 2,243 5,988 10,000 - 1,274,475 143,863 382,740 897.148 9,800,820 9.121.460 8 8876,437 17,B25,957 479,022 204,834 63 403,416 17,936 13,238 - - 11,299 - - 148,426 197,292 52,794 - - 10,000 315,448 1,094,802 526,655 31,268 368,250 1,536,353 1,406,936 368,313 563,141 10,000 - 6,508,124 41,863 - 9,150 458,685 11,850 - 100,000 - 7,774,782 7,572.661 - 17,262,816 8,264,467 7,714,524 6,508,124 17,262,816 $ 9,800,1120 $ 9,121,460 $ 6,876.437 $ 17.826.967 Page 1 of 2 City of Federal Way / 9 Statement 1 (continued) Proprietary Account Groups Totals Intemal General General Long- (Memorandum Only) Enterprise Service Fixed Assets term Debt 2001 2000 $ 7.889.010 $ 8,785,931 $ $ $ 55,817,031 $ 48,915,543 109,069 - 257,495 287,366 - 5,000 16,850 11,202 101,954 1,253,670 1,229,170 9,633 - 458,098 1,113,226 2,826 3,102 19,829 590,446 - - 10,000 10,000 15,511 - 2.713,737 2,456,871 - 1,971,762 1,971,762 569,630 35,968,706 4,508,018 49,108,505 89,585,229 89,257.175 5,597,907 - 2,747.211 - 8,345,118 6,841.854 - - 6,508,124 6,508,124 5,787,522 25,658,412 25,658.412 29,036,233 49,679.105 13,317,562 53,827,478 32.166,536 192 615,355 186,106,238 168,392 138,290 - 1,394.017 1,120.944 - - - 31,174 27.639 - 11,299 102,409 109,069 257,495 212,071 250,086 101,145 - 10,000 10,000 9,275 - 1,419,525 1,499,510 30,515.000 30,515,000 33,196,600 3,465,850 - 3.465,850 3,682,352 - 285,000 97,423 382,423 688,046 248,461 - - 1,174,634 542,939 30.283 57,495 1.554,113 1.641,891 1,568,913 4,031,330 480,785 32,166,536 40,553,394 42,752,568 34,461.518 1,585,833 - 36,047,351 37,256,417 53,827.478 53,827,478 50,352,462 11,186,257 11,250;944 - 22,437,201 17,203,306 - 10,000 10,000 - 6,508.124 5,787,522 41,863 32,413 9,150 9,200 - 458.685 528,297 - 11,850 6,202 - 100,000 100,000 - 32,610,259 32,067,851 45,647,775 12,836,777 53,827.478 - 152,061,961 143,353,670 $ 49,679,105 $ 13,317.562 $ 53,827,478 $ 32.166,536 3 192,615,355 $ _186,106,238 Page 2 of 2 C41TY OF G �VAY� City of Federal Way / 11 Statement 2 COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES ALL GOVENMENTAL FUND TYPES For the Year Ended December 31, 2001 Governmental Fund Types Totals Special Debt Capital (Memorandum only) General Revenue Service Projects 2001 2000 REVENUES: Taxes $ 21,489,570 $ 6,234,406 $ 1,997,537 $ $ 29.721,513 $ 28.495.459 Licenses and permits 1,301,940 94,754 - 1,396,694 1,434,027 Intergovernmental 1,512,274 2,852,824 4,344,202 8,709.300 7,507.624 Service charges and fees 2,053,779 471,709 890,162 3.415,650 3.530.274 Fines and forfeitures 830,668 - - 830,668 902.762 Miscellaneous: Interest 293,887 238,405 271,008 630,617 1,433,917 2.277.420 Other 460,621 27,071 - - 487,692 911,836 TOTAL REVENUES 27,942,739 9,919,169 2,268,545 5,864,981 45,g55,434 45,059.402 EXPENDITURES: Current: General government 4,615.027 109,225 - 4,724,252 4,237,852 Security of persons and property 14,264,309 - - 14,264,309 14,046,638 Physical environment 24,443 353.623 - 378,066 318,709 Transportation - 4.554,183 - 4,554.183 4,661,867 Economic environment 2,570,254 108,920 2,679.174 2,634,011 Health 535,589 535.589 546,191 Culture and recreation 2.951,607 - 2,951,607 3,034.818 Capital outlay 49,791 126,760 - 7,697,662 7,874,213 4,423,067 Debt service: Principal - 2,700,478 - 2.700,478 2,498,853 Interest, fiscal charge and debt issue costs - 1,797,614 - 1,797,614 1,729,858 TOTAL EXPENDITURES 25,011,020 5,252.711 4,498.092 7,697.662 42,459,485 38,131.864 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 2,931,719 4,666,458 (2,229,547) (1,832,681) 3,535,949 6,927,538 OTHER FINANCING SOURCES (USES): Proceeds of long -tern debt - - - _ Proceeds from sale of fixed assets - - 325,000 325,000 - Operating transfers in (note 12) 268.111 2,111,074 2,950,149 254,046 5,583,380 9,254,008 Operating transfers out (note 12) (1,342.535) (6,586,414) - (90,725) (8,019.674) (9,060.277) TOTAL OTHER FINANCING SOURCES (USES) (1,07:,424) (4,475.340) 2,950,149 488,321 (2,111,294) 193.731 EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES 1,857,295 191,118 720.602 (1,344,360) 1,424,655 7,121,269 FUND BALANCES AT BEGINNING OF YEAR 6.620,445 7,526,342 5,787,522 18.607,176 38,541,485 31,713,462 Residual equity transfers out (note 12) (213,273) (2,936) - (216,209) (293 246) FUND BALANCES AT END OF YEAR $ 8,264,467 $ 7,714,524 $ 6,508,124 $ 17,262.816 $ 39,749,931 $ 38,541,485 See accompanying notes to financial statements. City of Federal Way / 12 Statement 3 COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL, SPECIAL REVENUE, AND DEBT SERVICE FUNDS FOR WHICH ANNUAL BUDGETS HAVE BEEN LEGALLY ADOPTED For the Year Ended December 31, 2001 General Fund Special Revenue Fund Variance Variance Favorable Favorable Budget Actual (Unfavorable) Budgo Actual (Unravorable) REVENUES: Taxes $ 20,700,273 $ 21,489,570 $ 789,297 $ 6,137,900 $ 6,234,406 $ 96,506 Licenses and permits 1,546,474 1,301,940 (244,534) 101,236 74,754 (26,482) Intergovernmental 985,485 1,512,274 526,789 2,698,788 2,610,502 (88,286) Service charges and fees 1,731,192 2,053,779 322,587 311,360 471,709 160,349 Fines and forfeitures 901,794 830,668 (71,116) - Miscellaneous: Interest 239,290 293,887 54,597 456,655 233,706 (222,949) Other 333,716 460,621 126,905 - 27,071 27,071 TOTAL REVENUES 26,438,214 27,942,139 1,504,52.1 9.705,939 9,652,148 (53,791) EXPENDITURES: General Government 5,623,665 4,615,027 1,008,638 - - Security ofpersons and property 14,819,878 14,264,309 555,569 - - Physical environment 24,443 24,443 50,000 50,000 - Transportation - - 406,730 353,623 53,107 Economic environment 3,125,570 2,570,254 555,316 5,678,072 4,554,183 1,123,889 Health 575,251 535,589 39,662 139,202 48,016 91,186 Culture and recreation 3,071,351 2,951,607 119,744 - Capital outlay 178,470 49,791 128,679 Debt service: Principal Interest and other debt issue costs _ _ TOTAL EXPENDITURES 27,418,628 25.011,020 2,407,608 6,274.004 5.005,822 U68,182 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (980,414) 2,931,719 3,912,133 3,431,935 4,646,326 1,214,391 OTHER FINANCING SOURCES (USES): Proceeds in long -tens debt - - - - _ _ Operating transfers in (note 12) 351,881 268,111 (83,770) 2,566,936 2,089,086 (477,850) Operating transfers out (note 12) (1,820,385) (1,342,535) 477.850 (6,663,743) (6,563,668) 100,075 TOTAL OTHER FINANCING SOURCES (USES) (1,468,504) (1,074,424) 394,080 (4,096.807) (4,47.4.592) (377,775) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES (2,448,918) 1,857,295 4,306,213 (664,872) 171,744 836,616 FUND BALANCE AT BEGINNING OF YEAR 6,620,445 6,620,445 7,389,581 7,389,581 - Residual equity transfers in (note 12) - - _ - - Residual equity transfers out (note 12) (410,516) (213,273) 197,243 (3,647) (2,936) 711 FUND BALANCE AT END OF YEAR $ 3,761,011 $ 8,264,467 S 4,363.456 3 6,721.062 $ 7,558,389 S 837,327 See accompanying notes to financial statements. Page 1 of 2 City of Federal Way / 13 Statement 3 (continued) Totals Debt Service Fund (Memorandum Only) Variance Variance Favorable 2001 Favorable 2000 Budget Actual (Unfavorable) Budget Actual (Unfavorable) Actual $ 1,750,000 $ 1,997,537 $ 247,537 $ 28,588,173 $ 29,721,513 $ 1,133,340 $ 28,495,459 - 1,647,710 1,376,694 (271,016) 1,334,027 3,684,273 4,122,776 438,503 4,792,651 2,042,552 2,525,488 482.936 2,219,948 901,784 830,668 (71,116) 902,762 308,882 271,008 (37,874) 1,004,827 798,601 (206,226) 1,255,917 - - 333,716 487,692 153,976 661,826 2.058.892 2,268,545 209,663 38,203,035 39,863,432 1,660,397 39,662,590 - - - 5,623,665 4,615,027 1,008,638 4,170,003 14,819,878 14,264,309 555,569 14,046,638 74,443 74,443 - 318,709 406,730 353,623 53,107 4,661,867 - 8,803,642 7,124,437 1,679,205 2,567,206 714,453 583,605 130,848 546,191 - 3,071,351 2,951,607 119,744 2,940,818 - - 178,470 49,791 128,679 191,048 2,870,623 2,700,478 170,145 2,870,623 2,700,478 170,145 2,498,853 1,657,918 1,797,614 (139.696) 1,657,918 1,797,614 (139,696) 1,729,858 4.528,541 4.498,092 30,449 38,221,173 34,514,934 3,706,239 33,671,191 (2,469,659) (2,229,547) 240,112 (18,138) 5,348,498 5,366,636 5,991,399 2,950,149 2,950,149 - 5,868,966 5,307,346 (561,620) 4,814,672 (250,963) 250.963 (8,734,991) (7,906,203) 828,788 (7,012,418) 2.699,296 2,950,149 250.865 (2,866,025) (2,598,857) 267,168 (2,197,746) 229,627 720,602 490,975 (2,884,163) 2,749,641 5,633,804 3,793,653 6,038,386 5,787,522 (250,864) 20,048,412 19,797,548 (250,864) 16,297,141 - (414,163) (216,209) 197,954 (293,246) $ 6,268,013 $ 6,508,124 $ 240,111 $ 16,750,086 $ 22,330,980 $ 5,580,894 $ 19,797,548 Page 2 of 2 City of Federal Way / 14 Statement 4 COMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND EQUITY - ALL PROPRIETARY FUND TYPES OPERATING REVENUES: Intergovernmental Service charges and fees Miscellaneous TOTAL OPERATING REVENUES OPERATING EXPENSES: Personal services Materials and supplies Services and charges Intergovernmental Insurance Claims Depreciation Interfund charges TOTAL OPERATING EXPENSES OPERATING INCOME (LOSS) NON -OPERATING REVENUES (EXPENSES): Subsidy from interlocal grant Interest income Interest expense Donations/contributions Gains/losses from disposal of fixed assets TOTAL NON -OPERATING REVENUES (EXPENSES) INCOME(LOSS) BEFORE OPERATING TRANSFERS Operating transfers in (note 12) Operating transfers out (note 12) NET INCOME (LOSS) Add depreciation reducing contributed capital Increase (decrease)in retained earnings RETAINED EARNINGS, January 1 RETAINED EARNINGS, December 31 CONTRIBUTED CAPITAL, January 1 (note 13) Increases to contributed capital (note 13) Decreases to contributed capital Less amortization CONTRIBUTED CAPITAL, December 31 FUND EQUITY AT END OF YEAR See accompanying notes to financial statements. For the Year Ended December 31, 2001 Totals (Memorandum only) Enterprise Internal Service 2001 2000 $ $ - $ - $ 23,791 3,656,577 3,698,693 7,355,270 7,525,609 11,309 537 11,846 32,107 3,667,886 3,699,230 7,367,116 7,581,507 1,085,336 585,981 1,671,317 1,516,832 99,576 274,186 373,762 430,806 717,978 1,147,244 1,865,222 1,802,105 127,578 59,711 186,289 130,873 - 298,978 298,978 270,785 - 67,700 67,700 62,193 589,936 1,060,847 1,650,783 1,698, 528 506,654 - 506,654 360,851 3,127.058 3,493,647 6,620,705 6,272,973 540,828 205,583 746,411 1,308,534 1,600 293,681 251,076 544,757 724,039 (34,360) (29,978) (64,338) (56,789) - 3,137 - 36,488 36,488 16,658 259,321 257,586 516,907 688,645 800,149 463,169 1,263,318 1,997,179 408,000 2,028,294 2,436,294 221,895 - - (415,626) 1,208,149 2,491,463 3,699,612 1,803,448 589,936 944,347 1,534,283 1,574,862 1,798,085 3,435,810 5,233,895 3,378,310 9,388,172 7,815,134 17,203,306 13,824,996 11,186,257 11,250,944 22,437,201 17,203,306 34,965,532 2,290,885 37,256,417 35,795,359 85,922 247,342 333,264 3,053,036 - (8,047) (8,047) (9,950) (589,936) (944,347) (1,534,283) (1,582,028) 34,461,519 1,585,833 36,047,351 37,256,417 $ 45,647,775 11 12,836,777 $ 58,484,552 $ 54,459,723 City of Federal Way / 15 Statement 5 COMBINED STATEMENT OF CASH FLOWS ALL PROPRIETARY FUND TYPES For the Year Ended December 31, 2001 Totals (Memorandum only) Enterprise Internal Service 2001 2000 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from users $ 4,141,126 $ 3,683,182 $ 7,824,308 $ 7,108,393 Cash received from other funds for goods and services - - - Cash received from other governments for goods and services - - - 73,138 Cash payments to suppliers for goods and services (99,576) (1,669,783) (1,769,359) (1,900,615) Cash payments to employees (1,082,634) (575,709) (1,658,343) (1,500.584) Cash payments to claimants (67,700) (67,700) (62,193) Cash payments to other funds for goods and services (506,654) (66,847) (573,501) (412,080) Cash payments to other governments for services (127,578) - (127,578) (121,203) Cash payments for other services and charges (763,495) - (763,495) (656,835) Cash payments for damage deposits (1,772) (1,772) 1,206 Other operating receipts 11.309 537 11,846 31,997 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 1,570,726 1,303,680 2,874,406 2,561,224 CASH FLOWS FROM NONCAPPTAL FINANCING ACTIVITIES: Subsidy from interlocal grant - - 1,600 Operating transfers in (note 12) 408,000 2,028,294 2,436,294 221,895 Operating transfers out (note 12) - - (415,626) NET CASH PROVIDED (USED) BY NON - CAPITAL FINANCING ACTIVITIES 408,000 2,028,294 2,436,294 (192,131) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Donations/contributions - - 3,137 Acquisition of capital assets/construction work in progress (486,144) (885,895) (1,372,039) (3,814,337) Cash contributions for capital acquisitions (note 13) - 248,313 248,313 312,962 Proceeds from sale of fixed assets _ 36,498 36,488 16,658 Insurance claims - - - Public works trust fund loan proceeds 2,475,000 Principal paid on debt service (216,503) (270,000) (486,503) (346,239) Interest and fiscal charges paid on debt service (34,360) (29,978) (64,338) (56,789) NET CASH PROVIDED (USED) FOR CAPITAL AND RELATED FINANCING ACTIVITIES (737,007) (901,072) (1,638,079) (1,409,608) CASH FLOWS FROM INVESTING ACTIVITIES: Receipts of interest 362,907 314,494 677,401 739,942 NET CASH PROVIDED (USED) IN DIVESTING ACTIVITIES 362,907 314,494 677,401 739,942 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,604,627 2,745,396 4,350,023 1,699,427 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 6,393,452 6,040,535 12,433,987 10,734,560 CASH AND CASH EQUIVALENTS AT END OF YEAR 7,998,079 8,785,931 16,794,010 12,433,987 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income (loss) 540,828 205,583 746,411 1,308,534 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation expense 589,936 1,060,847 1,650,783 1,698,528 (Increase)decrease in accounts receivable 477,679 - 477,679 (433,765) (Increase)decrease in taxes receivable (7,413) (7,413) (13,898) (Increase)decrease in prepaid insurance - - 3,150 (Increase)decrease in due from other governments - (15,511) (15,511) 49,347 Increase(decrease) in vouchers/accounts payable (45,517) 42,489 (3,028) (98,463) Inerease(decrease) in retainage payable (3,730) - (3,730) (12,629) Increase(decrease) in deposits payable (1,772) - (1,772) 1,206 Increase(decrease) in deferred revenues 18,014 - 18,014 42,966 Increase(decrease)in accrued payrolU compensated absences payable 2,702 10,272 12,974 16,248 TOTAL ADJUSTMENTS 11029,898 1,098,097 2,127,995 1,252,690 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 1,570,726 1,303,680 2,874,406 2,561,224 SCHEDULE OF NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES: Contributions of capital assets (note 13) $ - $ 127,877 $ 127,877 $ 220,012 See accompanying notes to financial statements City of Federal Way / 16 Note 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 NOTES TO THE FINANCIAL STATEMENTS December 31, 2001 INDEX Page Summary of Significant Accounting Policies................................................................................ 17 Basis of Presentation --Fund Accounting.............................................................................. 17 Basisof Accounting ........................ .................................................................................... 17 Budgets and Budgetary Accounting..................................................................................... 20 Assets, Liabilities and Equities............................................................................................. 22 Equityin Pooled Cash and Investments......:................................................................ 22 Cash and Cash Equivalents.......................................................................................... 22 Investments..........-•---...--• ........................................................................................... 22 Receivables...................................... ..................................................... .......... ............. 22 Amounts Due to and from Other Funds; Interfund Loans ............................................ 23 Inventories...............................................................•---.............................------............. 23 FixedAssets................................................................................................................. 23 Depreciation................................................................................................................. 23 Compensated Absences Payable.................................................................................. 24 Long -Term Debt..................................................................................................... 24 DeferredRevenue........................................................................................................ 24 Fund Equity -Reserves and Designation....................................................................... 25 Interfund Transactions ......................... .......... ............. .......................................................... 25 ComparativeData................................................................................................................. 25 Total Columns on Combined Statements - Overview........................................................... 25 Stewardship, Compliance and Accountability ............................................................................... 26 Supplemental Appropriations ........................ ................................................................................ 26 Cashand Investments...............................................................................................................--... 26 Receivables and Due From Other Governments........................................................................... 28 Due To Other Governments.......................................................................................................... 29 Fixed Assets and Depreciation...................................................................................................... 30 PensionPlans................................................................................................................................ 31 RiskManagement.......................................................................................................................... 34 Estimated Arbitrage Rebate......................................................................................................... 36 Long -Term Debt..... --------- __ ...................................................................................................._. 36 InterfimdTransactions.................................................................................................................. 40 ContributedCapital....................................................................................................................... 41 Contractual Obligations, Contingencies and Litigation................................................................. 42 Fund Additions and Deletions....................................................................................................... 42 SegmentInformation.................................................................................................................... 43 JointVentures............................................................................................................................... 43 City of Federal Way / 17 For the Year Ended December 31, 2001 NOTE 1 Summary of Significant Accounting Policies The City of Federal Way, King County, Washington was incorporated on February 28, 1990 and operates under the laws of the State of Washington applicable to an Optional Municipal Code City (RCW 35A) with a Council -Manager form of government. Under the Council -Manager form of government, the voters elect, at large, a seven -member City Council, and the Council elects one of its members to serve as Mayor. The council serves for a period of four years allowing for council member consistency and staggered elections. The City Manager is appointed by the Council to act as the chief executive officer of the City and is responsible to the Council for proper administration of all City affairs. The City of Federal Way is a general purpose government with its fiscal year ending December 31. The City provides a broad range of general government services. 2001 marks its eleventh full year of existence as a municipality. Its services are in transition and are expanding to meet both the public's needs and those related to infrastructure. During its transition period, the City's management has continued to contract with King County, the local Fire District and other agencies to provide specific services, such as fire protection, storm and surface water utility billings, court services, garbage collection and various public works services. Effective January 1, 2000, the City began operating it's own Municipal Court with minimal contracted services from King County. Also, effective January 1, 2000, the City became a member city in the Valley Communications Center joint venture, which provides dispatching services for our Police Department. The accounting and reporting policies of the City conform to generally accepted accounting principles for governments, and are regulated by the Washington State Auditor's Office, Division of Audit Services. The City's significant accounting policies are described below. Reporting Entity The City's Comprehensive Annual Financial Report (CAFR) includes all funds, account groups, agencies and boards controlled by or dependent on the City. In conformance with Governmental Accounting Standards Board (GASB) Statement 14, "The Financial Reporting Entity", the primary basis of determining whether outside agencies and organizations should be considered component units of the City is Financial Accountability. Financial accountability is defined as appointment of a voting majority of an agency's or 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. 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 16, Joint Venture, which more fully describes this organization. Basis of Presentation - Fund Accounting The accounts of the City are organized on the basis of funds and account groups. Each fund is a separate accounting entity with a self -balancing set of accounts. The account groups are financial reporting devices used to provide accounting control for certain assets and liabilities not recorded in the funds because they do not directly affect net expendable available financial resources. Under the current governmental accounting model, there are three broad fund categories, seven generic fund types within those categories and two account groups. The following is a description of the three fund categories and the generic fund types included in each category. City of Federal Way / 18 Governmental Funds Tvnes Governmental funds are used to account for activities typically associated with state and local government operations. All governmental fiord types are accounted for on a spending or "financial flows" measurement focus, which means that typically only current assets and current liabilities are included on related balance sheets. The operating statements for governmental funds measure changes in financial position, rather than net income. They present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. The four generic fund types in this category are described in the following paragraphs. The General Fund is the general operating fund of the City and accounts for all activities not required to be accounted for in some other fund. Special Revenue Funds account for the proceeds of specific revenue sources, other than expendable trusts or revenues designated for major capital projects that are legally restricted to expenditures for specific purposes. Debt Service Funds account for the accumulation of resources for, and the payment of general long-term debt, principal, interest and related costs. Capital Projects Funds account for the acquisition or construction of major capital facilities, except those financed by proprietary and trust funds. Proonetary 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 related balance sheets. Their reported fimd equity (net total assets) is segregated into contributed capital and retained earnings components. As described below, there are two generic fund types in this category. Enterprise Funds account for operations that are financed and operated in a manner similar to private business enterprises - where the intent of the City is to finance or recover, primarily through user charges, the costs of providing goods or services to the general public on a continuing basis. Internal Service Funds account for business -like activities where related goods or services are primarily provided to other departments or funds of the City on a cost -reimbursement basis. Standards for Proprietary Funds Proprietary Funds have the option of consistently following or not following FASB pronouncements issued subsequent to November 30, 1989. The option selected by the City for all of its Proprietary Fund activities, as policy, is to apply all applicable GASB pronouncements and all FASB Statements and Interpretations, Accounting Principles Board (APB) Opinions and Accounting Research Bulletins (ARB) issued on or before November 30, 1989, unless they conflict with or contradict GASB pronouncements. Account Groups To facilitate the measurement of the sources and uses of current financial resources in the governmental funds, separate account groups are used to account for related non -current or non -financial resources, such as general fixed assets and unmatured general long-term debt. On this basis, the City uses the following account groups to establish accounting control over related assets and liabilities not recorded in the governmental funds. City of Federal Way / 19 The General Fixed Assets Account Group accounts for all fixed assets of the City other than those assets accounted for in the proprietary funds. The General Long-term Debt Account Group accounts for all long-term debt of the City other than debt accounted for in the proprietary 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 and pension trust funds. Under this method, revenues are recognized when earned, and expenses are recognized when incurred. The modified accrual basis of accounting is used by governmental funds. Revenues and other financial resources are recognized when they become susceptible to accrual, i.e., when the related funds become both measurable and available to finance expenditures of the current period. To be considered "available", revenue must be collected during the current period or soon enough thereafter to pay current liabilities. The City uses thirty days when evaluating the available criteria. Expenditures are recognized when the related fund liability is incurred. Since the recognition of depreciation does not reduce net financial resources, it is not considered an expenditure. Other exceptions include (1) inventories of materials and prepaid items are reported as expenditures when purchased, (2) interest on long-term debt is not accrued but is recorded as an expenditure when due, (3) accumulated unpaid vacation and sick pay are considered expenditures when paid. Major revenues recorded on the modified accrual basis are: Property Taxes - King County acts as the City's collection agent for these taxes. Each day, the County electronically transmits to the City the taxes which it has collected on the City's behalf in the prior day. On this basis, property taxes received in January are considered both measurable and available and are therefore recognized as revenue in the current year. Other Locally Levied Taxes - King County also acts as the City's collection agent for the ''/4% and optional '/4% real estate excise taxes. Although a time lag occurs in payment of these taxes to the City, since the taxes are actually collected by King County in December and receipted to the City within 10 days after the end of the year, they are considered to be both measurable and available, and are, therefore, accrued as revenue at year end. The State of Washington acts as the City's collection agency for the locally levied sales tax. The sales tax is distributed monthly and remitted to the City in the following month. The Sales Tax remittance in January is considered both measurable and available and is therefore accrued as revenue at year-end. Grant Revenues - Under Section G60.109 of the Codification of Governmental Accaun ' and Financial Reporting Standards, revenues for cost reimbursement grants are determined to be earned and, therefore, available at the time related expenditures are incurred. For this reason, grant revenues to be received as reimbursement for expenditures incurred in the current year are also recognized as revenue in that year. Shared Revenues - Revenues that have been collected, but not remitted by an intermediary collection agency to the City, are considered measurable and available. Other Revenue Sources - Other items recognized as revenue in the current year on the modified accrual basis include investment interest earned but not received at year end; interfund, and intergovernmental service billings related to services provided in the current year which are outstanding at year end; and any other material revenue amounts determined to be both measurable and available under current modified accrual accounting practices. Revenues not considered to meet the criteria for recognition on the modified accrual basis include licenses and permits, fines and forfeitures, and other miscellaneous revenues which are generally not measurable until received. City of Federal Way / 20 Budgets and Budgetary Accounting Scope of Budget - Annual appropriated budgets are adopted for the general, some special revenue, and debt service funds on the modified accrual basis of accounting. For governmental funds, there are no differences between the budgetary basis and generally accepted accounting principles. Budgets for project and grant related special revenue funds and capital project funds are adopted at the level of the individual project and for fiscal periods that correspond to the lives of projects. Since these funds are not budgeted on an annual basis, budgetary comparisons are not presented. NCGA Statement 1 does not require, and the financial statements do not present, budgetary comparisons for proprietary fluid 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 are listed below. Funds Budpeled on an Annual Basis: General Fund Special Revenue Funds: Street Fund Arterial Street Fund Utility Tax Solid Waste/Recycling Fund Snow and Ice Removal Fund Debt Service Fund Hotel/Motel Lodging Tax Fund Paths and Trails Fund Strategic Reserve Fund Airport Strategic Reserve 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. City of Federal Way / 21 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 2001, the budget was amended five times. The adjusted budget is detailed in Note 3. The budget amounts shown in the financial statements are the final authorized amounts as revised during the year. The non -annually budgeted special revenue funds are not included in the Combined Statement of Revenues, Expenditures and Changes in Fund Balance - Budget to Actual comparison, since they are not operating budgets and are for management purposes only. These non -annually budgeted funds are Special Contracts/Studies, 2% For Arts, and Community Development Block Grant. The reconciliation from Statement 2 to Statement 3 is as follows: All Special Budgeted Special Rev Funds Non -budgeted Special Revenue Funds Rev Funds Per Special 2% for Per Statement 2 Contract Arts CDBG Statement 3 REVENUES: Taxes Licenses & permits Intergovernmental Services charges and fees Miscellaneous: Interest Other TOTAL REVENUES EXPENDITURES Current: General governmental Physical environment Transportation Economic environment Culture and recreation Capital outlay TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES) Operating transfers in Operating transfers out TOTAL OTHER FINANCING SOURCES (USES) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES FUND BALANCES AT BEGIN OF YEAR Residual equity transfers out FUND BALANCES AT END OF YEAR 6,234,406 $ - 94,754 20,000 2,852,824 471,709 $ 6,234,406 74,754 242,322 2,610,502 - 471,709 238,405 4,699 - 233,706 27,071 - - 27,071 9,919,169 24,699 - 242,322 9,652,148 109,225 11,866 47,359 50,000 353,623 - - 353,623 4,554,183 - 4,554,183 108,920 60,904 48,016 126,760 126,760 - 5,252,711 11.866 235,023 5,005,822 4,666,458 12,833 7,299 4,646,326 2,111,074 8,840 13,148 2,089,086 (6,586,414) - 22,746 6,563,668 (4,475,340) 8,840 (9,598) (4,474,582) 191,118 12,833 8,840 (2,299) 171,744 7,526,342 111,048 19,274 6,439 7.389,581 (2,936) - - (2,936) $ 7,714,524 $ 123,881 $ 28,114 $ 4,140 $ 7.558.389 City of Federal Way /22 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 related item is recorded as a fund expenditure. Outstanding encumbrances lapse at year end, are canceled and must be re-established in the following year upon approval of the City Council through a budget adjustment ordinance. Therefore, these amounts have not been recorded as current year expenditures unless considered to be susceptible to accrual at the end of the year. The total encumbrances at year-end for the City were $5,332,105. Assets, Liabilities and Equities Equity in Pooled Cash and Investments The City follows the practice of pooling cash and investments of all funds for investment purposes, except for restricted funds in Enterprise funds (which the City currently does not have), investments of the Employees' Retirement Fund held by trustees and cash held in escrow, which are all 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. Cash and Cash Equivalents It is the City's policy to invest all cash not immediately required for disbursement. At December 31, 2001, the State Treasurer was holding $54,563,156 in the State Investment Pool for short-term investments of cash. The State Investment Pool 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, 2001, the total cash and cash equivalents were $55,817,031. The City's deposits are entirely covered by federal depository insurance (FDIC) or by collateral held in a multiple financial institution collateral pool administered by the Washington Public Deposit Protection Commission (PDPC). Investments The City is authorized by State law to purchase certificates of deposit issued by Washington State depositories that participate in a state insurance pool managed by the Washington Public Deposit Protection Commission; securities purchased by the Washington State Investment Pool; U.S. Treasury and Agency securities, banker's acceptances trading in the secondary market; and repurchase agreements with dealers that use authorized securities as collateral. In accordance with GASB 31, investments in money market investments and participating interest -earning investment contracts with a remaining maturity of one year or less at the time of purchase are stated at amortized cost. All other investments are stated at fair value. There was no material deviation from fair value quoted at year-end. The change in fair value has not been reflected on the combined balance sheet since the City intends to hold investments to maturity. . Receivables Taxes receivable consists of measurable and available locally levied taxes and related interest and penalties. Property taxes receivable is included in taxes receivable. 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 5. City of Federal Way / 23 Amounts Due to and from Other Funds: Interfund Loans These accounts include all interfund receivables and payables. A separate schedule of interfimd loans receivable and payable is furnished in Note 12. 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. 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. Fixed Assets The accounting and reporting treatment of fixed assets is determined by the measurement focus used by the fund that acquires them Fixed assets purchased or constructed by a governmental fund are recorded as expenditures in that fund at the time related purchases are made; however, the associated fixed asset is recorded in the General Fixed Assets Account Group. All purchased fixed assets are valued at cost. Donated fixed assets are valued at their estimated fair value on the date received. The City does not capitalize "infrastructure" assets such as roads, bridges, curbs and gutters, streets and sidewalks, and lighting systems. Costs of normal maintenance and repair for general fixed assets are also not capitalized. However, any improvement that increases an asset's value, or materially extends its life or potential uses is added to that asset's capitalized cost. Equipment items and real property acquired through capital lease agreements or conditional sales contracts are recorded in the General Fixed Assets Account Group or Proprietary Fund, as appropriate, at the inception of the agreement and in accordance with criteria established in section L20 of the Codification of Governmental Accounting and Financial Reporting Standards. Fixed assets acquired or constructed by the Proprietary Funds are capitalized in those funds at historical cost. Contributed assets are recorded at their estimated fair values as of the date they are acquired. The estimated fair value of donated assets is recorded as contributed capital by the fund that receives them Depreciation No depreciation is recorded on the fixed assets in the General Fixed Assets Account Group. Annual depreciation for the proprietary fixed assets is shown as an expense in the Proprietary Fund. Related depreciation is computed on a straight-line basis, using varying estimated service lives for individual assets and asset classifications depending on particular characteristics of an asset and factors surrounding its anticipated use. Depreciation is charged commencing in the year after acquisition. City of Federal Way / 24 The average service lives used to calculate depreciation for specific categories of assets in the City's Proprietary Funds are summarized below. Asset Class Office Furniture & Fixture Computer/Data Handling Equipment Communications Equipment Recreation Equipment Parks Equipment Automobiles Police Vehicles Police Equipment Light Trucks Heavy Trucks Heavy Work Equipment Shop/Miscellaneous Equipment Land Improvements Buildings Storm Drainage Systems Compensated Absences Payable Estimated Service Life in Years 10 4 10 10 5-12 4-6 5 8 10 10 20 20 100 The City records a liability for all outstanding vacation pay and accrued compensatory time. Accrued vacation pay for governmental fund employees is recorded in the General Long -Term Debt Account Group, since it is not considered due and payable at year-end from expendable available financial resources. Accrued vacation pay for proprietary fund employees is recorded as an expense and liability in the appropriate Proprietary Fund. Employee vacation leave is accumulated monthly at rates ranging from 12 to 15 days per year depending on term of employment. Employees may accumulate up to a maximum of 240 hours of vacation leave, except the Police Guild, who can accrue up to a maximum of 256 hours. All outstanding vacation leave is payable upon termination of employment. A non-exempt employee may request compensatory time off in lieu of overtime payment. Compensatory time is accrued at a rate of one and one-half hours for each hour of overtime worked, to a maximum of eighty hours, or forty hours for Police Guild members. Sick leave may be accumulated up to a maximum of 720 hours, per City policy. The monthly accrual rate for City employees is 8 hours per month. Accumulated sick leave is not payable upon termination of employment. Outstanding sick leave at year-end is not accrued due to the difficulty in estimating the portion of existing balances likely to result in expenditures in future periods. Long-term Debt Long-term liabilities expected to be paid by the governmental funds are recorded in the General Long-term Debt Account Group. Long-term debt for proprietary funds is recorded as a liability by the fund responsible for the related debt repayment. Long-term debt outstanding at year-end is outlined in Note 11. Deferred Revenues The deferred revenue account is used to offset receivables established in the governmental funds for certain revenues that are measurable but not considered available to finance payment of current obligations and, therefore, are not susceptible to accrual on the modified accrual basis. When the receivable amounts are collected in future periods, this liability account is reduced and corresponding revenue is recorded. The portions of Property Taxes that do not meet the available criteria are recorded as deferred revenue. City of Federal Way / 25 Fund E uit -Reserves and Desi ations Reserves represent portions of fund equity that are legally restricted for a specific future purpose or not available for appropriation because they do not represent a current expendable resource. Designations of fund balance identify amounts set aside by management for tentative future purposes or administrative convenience. In governmental and fiduciary funds, fund balance that is legally restricted for future purposes include reserves for: a) future employee retirement payments and b) future debt service. Fund balance not available for expenditure in the governmental funds consists of the outstanding balances of current interfund loans. On December 31, 1991, $10,000 in a non -interest bearing loan from the General Fund to the City's CDBG grant fund was authorized by the City Manager as interim financing. In addition, the General Fund had reserves for Petty Cash, prepaid insurance, police special funds and Travel Advance purposes. The Special Revenue Path and Trails Reserve fund balance is also legally restricted for construction and maintenance of paths and trails within City right-of-way. Interfund Transactions There are four types of transactions between funds - interf ind loans, quasi-extemal transactions, interfund reimbursements, and interfund transfers. Interfund loans are temporary borrowings of cash which do not affect operating statements, but which may incur interest expense or expenditure to the borrowing fund. Quasi -external transactions are equivalent to buying goods or services from an outside vendor. They are accounted for by the related funds as revenues, expenditures or expenses. Interfund reimbursements are repayments to a fund for expenditures or expenses that belong to another fund. They involve only expenditure or expense accounts. Interfand transfers are either residual equity in nature or operating transfers. Operating transfers are the equivalent of operating subsidies. Except for the Enterprise Fund, operating transfers are accounted for as "other financing sources and uses" and are therefore included in the operating statements. Residual equity transfers are used to close out a discontinued fund or make one-time contributions to a new fund, to record the interfumd equivalent of a capital grant or its repayment (involving a proprietary fund), or to make contributions to an internal service fund to establish or increase its working capital or make repayments of such contributions. In 2001 the City recorded a number of such transfers to internal service funds to fund the acquisition of new assets. A schedule of interfund transfers is furnished in Note 12, Interfund Transactions. Comparative Data Comparative totals for the prior year have been presented in the accompanying financial statements in order to provide an understanding of changes in the City's financial position and operations. However, comparative data has not been presented by fund type in each of the statements since their inclusion would make the statements unduly complex and difficult to read. Total Columns on Combined Statements - Overview Total columns on the general purpose financial statements are provided to facilitate financial analysis. This data, however, is captioned "Memorandum Only" to indicate that it does not present financial position, results or operations or reporting of cash flows for the governmental unit as a whole in accordance with generally accepted accounting principles. Data contained in these columns is not comparable to a consolidation, and interfund eliminations have not been made in aggregating reported values. City of Federal Way / 26 NOTE 2 Stewardship, Compliance and Accountability Legal Budgetary Compliance 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 3 Supplemental Appropriations Operating Budget Funds Appropriations established during 2001 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. Appropriation amounts shown on the accompanying financial statements reflect final budget values, including all adopted adjustments to original budget amounts. FUND ORIGINAL BUDGET 2001 SUPPLEMENTAL APPROPRIATIONS FINAL BUDGET General Fund $ 28,193,434 $ 1,456,095 $ 29,649,529 Special Revenue Funds: Street Fund 3,399,526 276,720 3,676,246 Arterial Street Fund 1,622,832 392,337 2,005,169 Utility Tax Fund 4,452,950 - 4,452,949 Solid Waste/Recycling Fund 262,427 144,607 407,034 Snow and Ice Removal Fund 100,000 Hotel/Motel Lodging Tax 90,000 49,202 139,202 Paths and Trails Reserve Fund - Strategic Reserve Fund 132,500 1,728,294 1,860,794 Airport Strategic Reserve Fund 300,000 300,000 Subtotal Special Revenue Funds 10,060,235 2,881,160 12,841,394 Debt Service Fund 4,785,693 (6,289) 4,779,404 $ 43,039,362 $ 4,330,966 $ 47,270,327 Funds Budgeted on a Project -Length Basis During 2001, the City Council adopted appropriations for some special revenue funds and the Capital Project funds budgeted on a "project -length" basis. As explained in Note 1, appropriations for these funds are continuing in nature and do not lapse at the end of the year. The special revenue funds budgeted on a "project length" basis are Special Contracts/Studies, 2% for the Arts, and Community Development Block Grant. These funds are therefore not included in the Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget to Actual. NOTE 4 Cash 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 2001 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. City of Federal Way / 27 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, 2001, the equity in pooled cash and investments was $55,817,031. At year-end, the City had $54,805,451 in cash and cash equivalents which consisted of investments with the State Pool of $54,563,156; the City's checking account bank balance of $1,365,271 (outstanding checks were $1,177,375 at December 31); and petty cash and change fimds, advance travel fund and investigative fund totaling $54,399. 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. At December 31, 2001, the City's total deposits and investments consisted of the following: US Bank, Checking Account per Books $ 187,896 Petty Cash/Change Fund/Advance Travel/Investigative Fund 54,399 Cash Equivalents with State Treasurer's Investment Pool 54,563,156 Subtotal Cash and Cash Equivalents 54,805,451 Investments in US Government Agency 1,011,58.0 Equity in Pooled Cash and Investments 55,817,031 Cash with Escrow Agent 257,495 Total Cash and Investments $ 56,074,526 Investments The City's investments are categorized to give an indication of the risk assumed at year-end. The following surmnary shows the City's investments at year-end categorized by risk. Category 1 includes investments that are either insured, registered or held by the City or its agent in the City's name. Category 2 includes uninsured and unregistered investments that are held by the counterparty's trust department or agent in the City's name. Category 3 includes uninsured and unregistered investments for which the securities are held by the counterparty, or its trust department or agent, but not in the City's name. At the end of the year, the City had no investments in category 2 or 3. 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. The fair value of the positions in the State Investment Pool is the same as the value of the pool shares. The State Investment Pool is managed by the Treasurer of the Sate of Washington. US Government Agency Subtotal Categorized City Investments Total Categorized Investments Investments in State Treasurers Investment Pool Total Investments Risk Category Carrying Fair I Amount Value 1,011,580 1,011,580 1,005,900 1,011,5 80 1,011,580 1,005, 900 $ 1,011,580 $ 1,011,580 $ 1,005,900 54,563,156 54,563,156 $ 55,574,736 $ 55,569,056 City of Federal Way / 28 NOTE 5 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, 2001, the total balance of property taxes receivable recorded by the City was $302,373. Of this, $285,264 is recorded as a deferred revenue, since it was not collected within the first 30 days of 2002. The property tax levy calendar in 2001 was. PROPERTY TAX CALENDAR January 1 Taxes are levied and become an enforceable lien against properties. February 14 Tax bills are mailed. April 30 First of two equal installment payments is due. May 31 Assessed value of property established for next year's levy at 100% of market value. October 31 Second installment is due. Property taxes are recorded as a receivable when levied, offset by deferred revenue. During the year, property tax revenues are recognized when cash is collected. At year-end, property tax revenues are recognized for collections expected to occur within 30 days. No allowance for uncollectible taxes is established because delinquent taxes are considered fully collectible. Under State law, the maximum levy (for general governmental services) is up to $3.60 per $1,000 of assessed valuation, subject to two limitations, set forth below. Since the City of Federal Way is not a full service city, the City is only allowed $1.60. The remaining $2.00 is for the fire district ($1.50) and library district ($.50). 1. RCW 84.55.010 limits the growth of regular property taxes to 6 percent per year, after adjustments for new construction. If the assessed valuation increases by more than 6 percent due to revaluation, the levy rate will be decreased. 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 2001 was $1.41 per $1,000 on an assessed valuation of $5,620,635,267 for a total regular levy of $7,305,894. City of Federal Way / 29 Due from Other Governments At December 31, 2001 the City recorded the following receivables from other governmental units: Descripunn Amount General Fund: King County - Red, Whites & Blues Program 7,000 King County - Summer Concerts Program 5,000 King County - Potential Annexation Area Grant 20,000 Washington State Shared Revenue $ 1,221,595 Washington Criminal Justice Training Center 12,880 City of Des Moines - Public Safety Des Moines Contract 8,000 WSDOT - CMAQ - Commute Trip Reduction Program 8,035 King County - Solid Waste & Recycling Grants 51,423 State Department of Ecology - Solid Waste & Recycling Grants 46,928 Washington State Shared 7,374 King County - Comnnmity Development Block Grants 30,103 Federal Way Fire District - VallcyCom Buy -in Fee WA State - Historical Cabins Grant 50,000 WSDOT - BPA Phase III Grant 278,513 WA State - ISTEA/TEA 21 Transportation Grants 568,635 Subtotal C ital Projects Fund 897.148 Internal Service Funds: WA State - GSA Vehicle Auction 15,511 King County Property Taxes 459,291 Special Revenue Funds: Utility Taxes 692,425 Enterprise Funds: King County Surface Water Management Fees 101,954 NOTE 6 Due To Other Governments At December 31, 2001, the City recorded $250,086 as due to other governmental units. This included $175,404 to King County for jail services. Description Amount General Fund King County - Jail Services $ 175,404 King County - Elections 21,888 Subtotal General Fund 197,292 Special Revenue Funds: State - Leasehold Tax 3,190 King County - Signals Maintenance 4904 City of Federal Way / 30 NOTE 7 Fixed Assets and Depreciation General Policies Major expenditures for fixed assets, including capital leases and major repairs that increase useful lives are capitalized. Maintenance, repairs, and minor renewals are accounted for as expenditures or expenses when incurred. The City has adopted a general fixed asset capitalization policy where an item's cost must equal or exceed $1,000. All fixed assets are valued at historical cost (or estimated cost, where historical cost is not known/or estimated market value for donated assets). General Fixed Assets General fixed assets are long-lived assets of the City as a whole. When purchased, leased, or constructed, such assets are recorded as expenditures in the governmental funds and capitalized in the General Fixed Assets Account Group. No depreciation has been provided on general fixed assets, nor has interest been capitalized. General fixed assets that are infrastructure assets (such as roads, bridges, curbs, and sidewalks) are considered public property and are not accounted for in the General Fixed Assets Account Group. A summary of changes in general fixed assets follows: Balance Balance January 1, 2001 Additions Deletions December 31, 2001 Joint venture $ 569,630 $ 1,402,132 $ - $ 1,971,762 Land 29,673,623 1,280,057 325,000 30,628,680 Other improvements 15,054,676 66,908 - 15,121,584 Buildings 1,724,241 - 1,724,241 Assets under capital lease: Land 1,450,000 1,450,000 Machinery & equipment 184,000 - - 184,000 Subtotal 48,656,170 2,749,097 325,000 51,080,267 Construction work in progress 1,696,292 1,050,919 - 2,747,211 Total General Fixed Assets $ 50,352,462 $ 3,800,016 $ 325,000 $ 53,827,478 Proprietary Fund Fixed Assets Proprietary fund fixed assets are long-lived assets acquired by the City's Enterprise and Internal Service Funds. The City depreciates these assets at the straight-line rate. The following is a summary of the City's proprietary fund fixed assets at December 31, 2001: Enterprise Funds Subtotal Internal Service Funds Subtotal Total Surface Water Dumas Bay Enterprise Information Support Fleet & Buildings & Internal Service Proprietary Management Centre Funds systems Services Equipment Furnishings Funds Funds Land S 3,708,654 $ 2,109,640 $ 5,819,294 $ $ - $ - $ - $ - $ 5,819,294 Building & Structures 35,233,201 3,542,489 38,775,690 - - 38,775,690 Information systems - - - 3,872,960 - - - 3,872,960 3,872,960 Transportation equip - - - - - 1.982.592 1,982,592 1,982,592 Heavy equipment - - - 435,030 - 435,030 435,030 Buildings & furnishings - - - - - 3;377,773 3,377,773 3,377,773 Other equipment 656,342 105,033 761,375 - 112,920 385,286 - 498,206 1,259,581 Subtotal fixed assets 39,598,197 5,757,162 45,355,359 3,872,960 112,920 2,802,908 3,377,773 10,166,561 55,521,920 Less accum deprec (8,511,491) (875,162) (9,386,653) (2,313.397) (109,517) (1.447,600) (1,788,029) (5,658,543) (15,045,196) Subtotal fixed assets 31,086,706 4,882,000 35,968,706 1,559,563 3,403 1,355.308 1,589,744 4,508,018 40,476,724 Construction in progress 5,569,244 29,663 5,597,907 - - - - - 5,597,907 Total Fixed assets $ 36,655,950 $ 4,910,663 $ 41,566,613 $ 1,559,563 $ 3,403 $ 1,355,308 $ 1,589,744 S 4,508,019 S 46,074,631 City of Federal Way / 31 Construction Work in Progress Included in the General Fixed Asset Account Group and Enterprise Fund is Construction Work in Progress that represents projects that were in process at year-end. The City had eight General Fixed Assets Account Group and three Surface Water Management projects that were in progress at the end of 2000 and are anticipated to be complete during 2001. The projects were: General Fixed Assets Account Group Surface Water Management Enterprise Fund BPA Trail Development, Phase III 751,117 SeaTac Mall Detention 4,591,704 School Site Improvements 1,136,807 Star Lake Road/So 272nd Conveyance Improve 700,235 Neighborhood Parks 128,957 SW 356th Regional Storm Water Facility 277,305 Alderbrook Play Park Equipment 26,324 $ 5,569,244 Klahanee Lake Improvements 131,446 Skateboard Park 246,734 Dumas Bay Center Fund Lake Killarney 298,670 Knutzen Family Theatre 14,655 Hylebos Project 23,016 Dumas Bay Centre 14,008 Panther Lake 4,140 $ 28,663 $ 2,747,211 NOTE 8 Pension Plans Substantially all City full-time and qualifying part-time employees participate in the Public Employees Retirement System (PERS) administered by the Department of Retirement Systems, under cost -sharing multiple -employer public employee retirement systems. 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 from the Department of Retirement Systems, Administrative Services Division, P.O. Box 48380, Olympia, WA 98504-8380. The following disclosures are made pursuant to GASB Statement 27, Accounting for Pensions by State and Local Government Employers. Public Employees' Retirement System (PERS) Plan I and 2 Plan Description PERS is a cost -sharing multiple -employer system. Membership is mandatory for all City employees working 70 hours per month for 5 months out of the twelve month period. Membership in the plan includes elected officials; state employees; employees of the Supreme, Appeals, and Superior courts (other than judges in judicial retirement system); employees of legislative committees; college and university employees not in national higher education retirement programs; judges of district and municipal courts; non -certificated employees of school districts; and employees of local government. The PERS system includes two plans. Participants who joined the system by September 30, 1977 are Plan 1 members. Those joining thereafter are enrolled in Plan 2. Retirement benefits are financed from employee and employer contributions and investment earnings. Retirement benefits in both Plan 1 and Plan 2 are vested after completion of five years of eligible service. Retirement benefit provisions are established in state statute and may be amended only by the state legislature. Plan 1 members are eligible for retirement at any age after 30 years of service, or at age 60 with five years of service, or at age 55 with 25 years of service. The annual pension is 2 percent of the average final compensation per year of service, capped at 60 percent. The average final compensation is based on the greatest compensation during any 24 eligible consecutive compensation months. If qualified, after reaching age 66 a cost -of -living allowance is granted based on years of service credit and is capped at three percent annually. City of Federal Way / 32 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. Plan 2 retirements prior to 65 are actuarially reduced. There is no cap on years of service credit and cost -of -living allowance is granted, capped at 3 percent annually. There are 1,177 participating employers in PERS. Membership in PERS consisted of the following at December 31, 2000: Retirees and Beneficiaries Receiving Benefits 61,088 Terminated Plan Members Entitled To But Not Yet Receiving Benefits 17,314 Active Plan Members Vested 98,018 Active Plan Members Nonvested 54,243 Funding Poli�v Each biennium, the state Pension Funding Council adopts Plan 1 employer contribution rates and Plan 2 employer and employee 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 are set by the director of the Department of Retirement Systems based on recommendation by the Office of the State Actuary to continue to fully fund Plan 2. All employers are required to contribute at the level established by state law. The methods used to determine the contribution rates 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, 2001, were: PERS Plan I PERS Plan 11 Employer 1.77% * 1.77% Employee 6.00% 0.88% " The employer rates do not include the employer administrative expense fee currently set at 0.23%. 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 2001 $ 59,653 $414,046 2000 $ 67,493 $483,965 1999 $ 90,369 $435,357 Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) Plans 1 and 2 Plan Description LEOFF is a cost -sharing multiple employer retirement system Membership in the plan includes all full time, fully compensated, local law enforcement officers and fire fighters. LEOFF is comprised solely of nonstate employees. The LEOFF system includes two plans. Participants who joined the system by September 30, 1977 are Plan 1 members. Those joining thereafter are enrolled in Plan 2. Retirement benefits are financed from employee and employer contributions, investment earnings, and state contributions. Retirement benefits in both Plan 1 and Plan 2 are vested after completion of five years of eligible service. Retirement benefit provisions are established in state statute an may be amended only by the state legislature. Plan 1 members are eligible to retire with five years of service at age 50. The benefit per year of service is as follows, with a cost -of -living allowance granted, capped at 3 percent annually: 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% City of Federal Way / 33 Plan 2 members are eligible to retire at age 50 with 20 years of service, or at age 55 with five years of service. Retirement benefits prior to age 55 are actuarially reduced. The benefit is two percent of average salary per year of service. The average salary is based on the highest consecutive 60 months. There is no cap on years of service credit and a cost -of -living allowance is granted, capped at three percent annually. There are 362 participating employers in LEOFF. Membership in LEOFF consisted of the following at December 2000: Retirees and Beneficiaries Receiving Benefits 7,923 Terminated Plan Members Entitled To But Not Yet Receiving Benefits 279 Active Plan Members Vested 10,680 Active Plan Members Nonvested 3,952 -, -: -Tdful ., 22,814 FIDdingolic Plan 1 employer and employee contribution rates are established by statute, and the state is responsible for the balance of the funding at rates set by the Pension Funding Council to fully amortize the total costs of the plan. Employer and employee rates for Plan 2 are set by the director of the Department of Retirement Systems based on recommendations by the State Actuary to fully fund the plan. Plan 2 employers and employees are required to contribute at the level required by state law. 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, 2001 were: LEOFF Plan I LEOFF Plan II Employer 0.23% * 2.93% Employee 0.00% 4.50% ' The employer rates do not include the employer administrative expense fee currently set at 0.23%. Both the City and employees made the required contributions. The City's required contributions for the years ended December 31 were: LEOFF Plan I LEOFF Plan 11 2001 $0 $606,690 2000 $0 $631,198 1999 $0 $560,325 Other Local Government Pension Systems - City of Federal Way Employees' Retirement System The City is also administrator of a defined contribution pension retirement system called the Federal Way 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 2001, there were a total of 366 individuals covered by this system As of the end of the year, 342 remained as active employees of the City and none were drawing retirement benefits. The 24 inactive had left the City's employment and either had been reimbursed their contributions, or the reimbursement was pending, or they elected to have their contributions remain in the plan if the balance was $5,000 or greater. City of Federal Way / 34 All regular employees of the City of Federal Way are required to participate in the system, with the City matching the employee's required contribution. The employee pays 6.2% and this is matched by the composite of a cash match (approximately 5.2%) and insurance payments (1%) for disability, survivor, accidental death and dismemberment, and lump sum death benefit coverages. 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 2001 was $15,252,747 and total City payroll was $16,247,644. Actual City contributions for the year were $796,725. Actual employee contributions were $973,120. 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 through Wells Fargo Bank. 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 Wells Fargo Bank who invests Plan assets. At year-end these assets amounted to $10,076,384 and were comprised of U.S. government obligations ($600,552) corporate obligations ($3,502,551), mutual funds ($252,917), equity stocks ($4,878,986), money market securities ($454,445), and mortgage -backed securities ($386,933). In July 1995, the City implemented the hardship withdrawal and loan provision program Loans receivable as of December 31, 2001 were $404,828. The consulting actuary fuui 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 9 Risk Management The City maintains insurance against most normal hazards except for unemployment insurance where it has elected to become fully self -insured. Related premiums received by the Risk Management Fund are used to reimburse the State Employment Security Department for unemployment benefits paid to eligible individuals, and to establish reserves for the payment of estimated future unemployment claims liability. Through its Risk Management Fund, the City is also recovering insurance premium costs for general liability coverage and building reserves for a future general liability self-insurance program. The City's insurance coverage in 2001 remained relatively similar to the coverage for 2000. There were no settlements in excess of insurance for commercially insured activities for 1996 through 2001. During 2001 the City purchased commercial insurance policies from commercial insurers. The following is a summary of coverage in force in 2002. Federal Way / 35 NAME OF COMPANY St. Paul Fire and Marine The Fidelity and Deposit St. Paul Fire and Marine The Fidelity and Deposit St. Paul Fire and Marine St. Paul Fire and Marine St. Paul Fire and Marine St. Paul Fire and Marine The Fidelity and Deposit Company of Maryland St. Paul Fire and Marine St. Paul Fire and Marine St. Paul Fire and Marine St. Paul Fire and Marine The Fidelity and Deposit St. Paul Fire and Marine The Fidelity and Deposit St. Paul Fire and Marine St. Paul Fire and Marine St. Paul Fire and Marine DETAILS OF COVERAGE Public Officials Liability Coverage Public Official Bond Management Services Director Public Official Bond City Manager General Liability Coverage Property Coverage Auto Liability & Physical damage Faithful Performance, Fidelity/Emp. Dishonesty & Erisa Bond Inland Marine Excess Liability Policy Boiler & Machinery Employer Liability Workers' Compensation Stop Gap-Statuta by limit Public Official Bond City Clerk Public Official Bond Chief of Police Law Enforcement Liability Above Ground Pollution LIABILITY LIMITS Per claim & General aggregate - $5,000,000 Deductible - $5000 Coverage Limit - $50,000 Coverage Limit - $50,000 Per claim - $2,000,000 General aggregate - $2,000,000 Deductible - $5,000 Buildings/contents - $11,168,125 Extra expense - $1,308,048 Valuable papers - $460,000 Deductible - $5,000 Fine Arts - $25,000 Deductible - $1,000 Coverage Limit - $2,000,000 Collision Deductible - $1,000 Comprehensive deductible -$100 Deductible - $5,000 Coverage Limit - $250,000/bond Deductible - $2,500 Deductible (Erisa) - 0 Coverage Limit - $187,500 Deductible - $1,000 Coinsurance - 90% Per claim / Aggregate - $10,000,000 Retention - $10,000 Per incident - $11,168,125 Deductible - $1,000 Coverage Limit - $1,000,000 Coverage Limit - $50,000 Coverage Limit - $50,000 Coverage Limit - $2,000,000 General aggregate - $2,000,000 Deductible - $5,000 Per claim & General aggregate - $1,000,000 Deductible - $1,000 City of Federal Way / 36 The City uses the Risk Management Internal Service Fund to account for its risk financing activities. The City's industrial insurance is provided by Washington State and is administered by the Department of Labor and Industries. Coverage is purchased by means of standard rates per working hour and is computed by the total number of hours worked by employees multiplied by the basic premium rate assigned to the business risk classification. The following are benefits provided by industrial insurance; medical services, damaged clothing, travel expenses, time -loss payments, vocational rehabilitation, partial disability awards, pension awards and survivor benefits. The City is self -insured for unemployment compensation. At December 31, 2001 the City had $325,079 in retained earnings of which $17,292 will be paid for lst quarter 2002's unemployment compensation claims. 1997 1998 1999 2000 2001 Unemployment Reserve, Beginning Balance $ 44,266 $ 75,386 $ 149,864 $ 240,688 $ 325,079 Plus unemployment compensation benefits 108,005 120,408 138,515 146,035 154,354 Less claim payments during the year 76,885 45,930 47,691 61,644 24,610 Unemployment Reserve, Ending Balance $ 75,386 $ 149,864 $ 240,688 $ 325,079 $ 454,823 NOTE 10 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, 2001 is $-0- for its tax-exempt general obligation bond issues subject to the Tax Reform Act issued through that date. NOTE 11 Long -Term Debt The various categories of long-term debt reflected on the City's financial statements are briefly described in the following paragraphs. General obligation bonds are backed by the City's full faith and credit. Proceeds are typically used for the acquisition or construction of major capital facilities or equipment. "Councilmanic Bonds" are general obligation bonds issued by City Council without voter approval. Under State law, repayment of these bonds must be financed from general City revenues since no additional property taxes can be levied to support related debt service payments. General Obligation bonds approved by the voters are typically repaid through an annual "excess" property tax levy authorized for this purpose by State statute. At year-end 2001 the City had no voter -approved bonds outstanding. The City issued Certificates of Participation in 1992 for the purchase of City Hall. They are accounted for in the Internal Service Fund established for buildings and furnishings. All other general obligation debt is recorded in the General Long-term Debt Account Group and annual principal and interest payments are recorded as expenditures by the City's Debt Service Fund. City of Federal Way / 37 The following is a schedule of outstanding general obligation debt as of December 31, 2001: OUTSTANDING GENERAL OBLIGATION DEBT - BY TYPE December 31, 2001 Amount Beginning Ending Bond Rating Maturity Originally Outstanding Amount Amount Outstanding Description at Issuance Date of Issue Date Interest Rate Issued Debt Issued Redeemed Debt Gencral Obligation Honds 1991 Limited A 01-Feb-91 01-Dec-01 6.00 - 6.85 $ 12,500,000 $ 240,000 $ $ 240,000 $ 1993 Limited At 14-Jun-93 01-Dec-08 2.70 - 5.70 2,390,000 1,485,000 155,000 1,330,000 1993Refunding At 13-May-93 01-Dec-21 2.70-5.85 12,105,000 11,815,000 50,000 11,765,000 1995 Limited At 28-Dec-95 01-Dec-05 3.90 - 4.75 5,000,000 3,005,000 550,000 2,455,000 1996 Limited Ai 29-Feb-96 01-Dec-05 3.50 -4.50 2,500,000 1,495,000 275,000 1,220,000 1997 Limited AAA -insured 22-Apr-97 01-Dec-12 5.00 - 5.30 16,150,000 12,605,000 1,315,000 11,290,000 2000Limited Al 12-Se -00 01-Dec-15 5.31 2,551,600 2,551,600 96,600 455000 Subtotal GO Bonds 53,196,600 33,196 600 2,681,600 30,515 000 Ceri f tales of Participation. 1992 Issue - Series A 26-Aug-92 01-Dec-02 3.00 - 5.45 2,150,000 555,000 - 270,000 285,000 1999 Issue AAA 01-A -99 01-Juts-04 5.16 184,000 133,046 - 35,073 97,423 Subtotal COP's 2.334,000 688,046 - 305,623 382,423 Public Works Trust Fund Loan: PWTL - Kitts Corner Drain Imp 31-Aug-94 01-Jul-14 1.00 233,316 169,863 12,936 156,927 PWTL - Kitts Corner Drain Imp 24-Jul-96 01-Jul-14 1.00 1,166,580 908,989 64,680 844,309 PWTL - Kitts Corner Drain Imp 04-Sep-97 01-Jul-14 1.00 155,544 128,500 8,623 119,877 PWTL - SeaTac Mall Drain Imp 31-May-00 01-Jul-19 1.00 412,500 412,500 21,710 390,790 PWTL - SeaTac Mail Drain Imp 14-Au -00 01-Jul-19 1.00 2,062,500 2,062,500 108,554 1'953,946 Subtotal PWTFL 4,030,440 3,692,352 - 216,503 3,465,949 Grand Total All Long -Term Debt $ 59,561,040 $37,566,998 $ - $ 3,203,726 $ 34,363,272 OUTSTANDING GENERAL OBLIGATION DEBT - BY FUND December 31, 2001 Amount Beginning Ending Originally Outstanding Amount Amount Oustanding Description Issued Debt Issued Redeemed 3 Debt General Long -Term Debt Group: 1991 Limited $ 12,500,000 $ 240,000 $ $ 240,000 $ 1999 COP Issue 184,000 133,046 - 35,623 97,423 1994 Limited 2,390,000 1,485,000 155,000 1,330,000 1994 Refunding 12,105,000 11,815,000 50,000 11,765,000 1995 Limited 5,000,000 3,005,000 550,000 2,455,000 1996 Limited 2,500,000 1,495,000 275,000 1,220,000 1997 Limited 16,150,000 12,605,000 1,315,000 11,290,000 2000 Limited 2,551,600 2,551,600 96,600 2,455,000 Total General Long -Tenn Debt 53,380,600 33,329.646 2,717,223 30.612,423 Internal Service Funds 1992 Issue - Series A 2,150,000 555,000 270,000 285,000 Enterprise Funds Public Works Trust Fund Loan 4,030,440 3,682,352 216,503 3,465,849 Grand Total All Long -Tenn Debt $ 59,561,040 $ 37,566,998 $ $ 3,203,726 $ 34,363,272 a Debt service principal payments in Debt Service Fund include credits of $16,745. $14,490 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 and $2,255 refund of excess funds after 1991 COP Issue fmal payment. City of Federal Way / 38 The following is a schedule of outstanding general obligation debt as of December 31, 2001: SCHEDULE OF GENERAL LONG-TERM DEBT December 31, 2001 With Comparative Totals for December 31, 2000 Amounts Available and Amounts to be Provided for the Payment of General Long -Term Debt 2001 Amount to be Provided for the Retirement of - General Obligation Bonds 24,006,876 Certificates of Participation 97,423 Compensated Absences 1,554,113 Amount Available in Debt Service Funds 6,508,124 Total Amount Available and to be Provided $ 32,166,536 General Long -Term Debt Payable General Obligation Bonds 30,515,000 Certificates of Participation 97,423 Compensated Absences - Vacation 1,554,113 Total General Long -Term Debt $ 32,166,536 2000 27,409,078 133,046 1,494,109 5,787,522 $ 34,823,755 33,196,600 133,046 1,494,109 $ 34,823,755 SCHEDULE OF CHANGES IN LONG-TERM DEBT Period Ended December 31, 2001 Oustanding at Outstanding at December 31 2000 Additions Reductions December 31, 2001 General: General Obligation Bonds $ 33,196,600 $ - S (2,681,600) $ 30,515,000 Certificates of Participation 133,046 - (35,623) 97,423 Employee Leave Benefits 1,494,109 60,004 - 1,554,113 Total General 34,823,755 60,004 2,717,223 32 7166,536 Proprietary: Enterprise Funds Public Works Trust Fund Loan 3,682,352 - (216,503) 3,465,849 Employee Leave Benefits 27,581 2,702 - 30,283 Internal Service Funds Certificates of Participation 555,000 - (270,000) 285,000 Employee Leave Benefits 47,233 10,262 - 57,495 Total Pro rietary 4,312,166 12,964 486,503 3,838,627 Total All Funds $ 39,135,921 $ 72,968 $ 3,203,726 $ 36 005 163 Presented below is a summary of the City's debt service requirements to maturity by year for all outstanding debt other than compensated absences: ANNUAL DEBT SERVICE PAYMENTS TO MATURITY General Obligation Certificates Public Works Bonded Debt of Participation Trust Fund Loan Total Debt 2002 4,419,348 342,571 251,161 5,013,079 2003 4,427,706 42,038 248,996 4,718,740 2004 4,425,860 21,019 246,831 4,693,710 2005 4,435,452 - 244,666 4,680,118 2006 3,413,438 _ 242,501 3,655,939 Thereafter 22,114,509 - 2,532,92I 24,647,429 $ 43,236,311 S 405,628 $ 3,767,076 $ 47.409,015 City of Federal Way / 39 SCHEDULE OF DEBT SERVICE REQUIREMENTS TO MATURITY Year Principal Interest Total 2002 3,371,989 1,647,852 5,019,840 2003 3,234,949 1,489,724 4,724,673 2004 3,360,993 1,337,744 4,698,737 2005 3,507,503 1,176,734 42684,236 2006 2,654,503 1,0042946 3,659,448 2007 2,776,503 870,900 3,647,402 2008 1,388,503 769,153 2,157,656 2009 1,226,503 702,120 1,928,622 2010 1,285,503 644,307 1,929,810 2011 1,344,503 583,088 1,927,591 2012 1,408,503 518,459 1,926,962 2013 1,046,503 460,802 1,507,305 2014 1,087,503 411,235 1,498,738 2015 1,058,263 358,702 1,416,965 2016 870,263 303,738 1,174,001 2017 915,263 258,775 1,174,039 2018 965,263 211,158 1,176,421 2019 1,020,263 161,008 1,181,271 2020 945,000 107,640 1,052,640 2021 895,000 52,358 947,358 Total $ 34,363,272 $ 13,070,442 $ 47,433,714 Computation of Legal Debt Margin Under Washington State law (RCW 39.36.020), a City may incur general obligation debt for general city purposes in an amount not to exceed 2'/z percent of the value of all taxable property within the City. State law requires all property to be assessed at 100 percent of its true and fair value. Unlimited tax general obligation debt requires an approving vote of the people, and any election to validate such general obligation debt must have a voter turnout of at least 40 percent of those who voted in the last State general election and of those voting, 60 percent must be in the affirmative. The City Council may, by ordinance, authorize the issuance of limited tax general obligation debt 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, 2001 are: General Government (no vote required) $ 66,391,518 General Government (3/5 majority vote required) $ 56,206,353 Parks and Open Space (3/5 majority vote required) $140,515,882 Utilities (3/5 majority vote required) $14MI5.882 Total Capacity $403.629.635 Compensated Absences As explained in Note 1, the City's liability for accrued employee vacation balances from governmental fund employees is recorded in the General Long-term Debt Account Group. Balances for proprietary funds are recorded as liabilities in the specific fund expected to incur the related future expense. The total liability by fund type for accrued employee vacation as of December 31, 2001, is provided below: Governmental Funds(recorded in the General Long-term Debt Account Group) $1,554,113 Enterprise Funds 30,283 Internal Service Funds 57,495 Total Compensated Absences $1.641.891 City of Federal Way / 40 Refunded Debt In 1993, the City refunded one general obligation bond issue by placing the proceeds for new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. As a result, the refunded bonds are considered defeased and the liability has been removed from the City's financial statements. At December 31, 2001, the cash held with refunding Trustee (US Bank Corporate Trust Services) was $17,202 and investments held with the Trustee were $0. Refunded bonds payable were $11,765,000 at year-end. NOTE 12 Interfund Transactions Interfumd transactions represent reductions in the expendable financial resources of the transferring flmd, but the transaction may or may not be accounted for as an expenditure of the transferring fund. Transactions between funds may be classified as (1) quasi-extemal transactions, (2) loans and advances, (3) reimbursements, (4) residual equity transfers, and (5) operating transfers. During 2001, the City recorded all of the above with the exception of reimbursements Quasi -external Transactions Quasi -external transactions reflect the existence of a more -or -less normal buyer/seller relationship between City funds. During 2001, these involved transactions between internal service funds and other funds for the purpose of recovering operating and maintenance costs and to build replacement reserves. Interfund Receivables/Payables The following schedule presents interfund loans and due to/due from other funds outstanding at December 31, 2001: Interfumd Loans Interfund Loans Interfund Loans Receivable Payable General Fund $ 10,000 $ Special Revenue Funds: Commimity Development Block Grant - 10,0(1[] Total Interfund Loans $ 10,000 $ 10,000 Residual Equity Transfers Residual equity transfers are nonrecurring or non -routine transfers of equity between funds. They do not represent expenditures of the transferring fund but a change in a fund balance. In governmental funds, they are reported as an increase or decrease in the beginning fund balance. For a proprietary fund, they are presented as an increase or decrease in the fund's contributed capital or retained earnings. The following residual equity transfers were recorded in 2001: Fund Category _ General Fund Special Revenue Funds Internal Service Funds Transfers In 216,209 $ 216,209 Transfers Out $ 213,273 2,936 $ 216,209 The above amount of $216,209 was transferred from governmental funds to the internal service funds, which record related transactions as additions to contributed capital. City of Federal Way / 41 Operating Transfers Operating transfers are legally authorized contributions of resources from one fund to another to subsidize designated activities or expenditures. Except for the Enterprise Fund, operating transfers are accounted for as "Other Financing Sources and Uses". The following operating transfers were recorded during 2001: Fund Category General Fund Special Revenue Funds Debt Service Fund Capital Project Funds • Enterprise Fund '• Internal Service Funds Transfers In $ 268,111 2,111,074 2,950,149 254,046 408,000 2,028,294 $ 8,019,674 Transfers Out $ 1,342,535 6,586,414 90,725 $ 8,019,674 * Includes $100,000 subsidy from Utility Tax Fund to support Knutzen Family Theatre maintenance and operations. Transfers of $415,626 were made to the Transportation CIP Fund for SWM's portion of the capital project done in conjunction with the street improvement. Transfer from Strategic Reserve & Airport Strategic Reserve Funds to Risk Management Fund to account for all reserves, including self-insurance in one fund. NOTE 13 Contributed Capital Contributed capital in internal service funds records the amounts of working capital and fixed assets received from other funds. Contributed capital forms one of two classifications of equity found on the balance sheet of a proprietary fund. Contributed capital is created when a residual equity transfer is received by a proprietary fund, when a general fixed asset is "transferred" to a proprietary fund or when a grant is received that is externally restricted to capital acquisition or construction. Contributions restricted to capital acquisition and construction and fixed assets received from developers and customers also would be reported in this category. During 2001 various transactions impacted the contributed capital of proprietary fiends. These transactions have been identified in the following presentation: Enterprise Subtotal Internal Service Funds Subtotal Total Surface Water Dumas Bay Enterprise Information Support Fleet & Buildings & Internal Service Proprietary Management Centre _ Funds Systems Services Equipment Furnishings Funds Funds Beginning Contributed Capital $ 32,956,690 $ 2,008,842 $ 34,965,532 $ 1,169,608 $ 11,704 $ 730,807 $ 378,766 $ 2,290,885 $ 37,256,417 Additions: Resid Equity Transfers 59,301 59,301 152,473 - (10,478) 14,913 156,908 216,209 Capital Acquisition 26,621 26,621 - - 26,621 Donations - _33,359 57,075 - 90,434 90,434 Total Additions 85,922 85,922 185,832 46,597 14,913 247,342 333,264 Deductions: Amortization (405,092) (184,844) (589,936) (471,886) (4,271) (387,254) (80,936) (944,347) (1,534,283) Write-offs (8,047)_ - (8_,047) (8,047) Total Deductions _ (405,092) (194,844) (589,936) (471,886) (4,271) (395,301) (80,936) (952,394) (1,542,330) Ending Contnbuted Capital $ 32,637,520 $ 1,923,999 $ 34,461,518 $ 883,554 $ 7,433 $ 382.103 $ 312.743 $ 1.595,833 $ 36,047.351 City of Federal Way / 42 The following is a reconciliation of depreciation expense to depreciation reducing contributed capital: Entcrprisr Funds Subtotal Internal Service Funds Subtotal Total Surface Water Dumas Bay Enterprise Information Support Fleet & Buildings & Internal Service Proprietary Mann nwnt Ccutrc Fends S sterns Services E ui meat Fmn0shings Funds Funds Depreciation Expense $ 405,092 $ 184,844 $ 599,936 $ 471,996 S 4,271 S 387,254 $ 197,436 $ 1,060,847 $ 1,650,783 Less: Write-off ofAccumDep - - - - - - - - - Deprec on Building - - - - - (116,500) (116,500) (116,500) Deprec Reducing Contrib Capital $ 405,092 $ 184,844 $ 589,936 $ 471,886 $ 4.271 $ 387.254 $ 90.936 $ 944.347 $ 1,534,283 NOTE 14 Contractual Obligations, Contingencies and Litigation As of December 31, 2001, there were a small number of claims for damages and lawsuits pending against the City. In the opinion of the City Attorney, however, neither the potential liability for any single claim or lawsuit, nor the aggregate potential liability arising from all actions currently pending would materially affect the fmancial 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. At December 31, 2001, the City had the following unpaid contractual obligations: $ 20,084 BPA Trail $ 40,541 SWM Annual Programs $ 554,945 SeaTac Mall Detention $ 1,730,536 23rd Ave South, South 317th to South 324th $ 183,816 South 320th St & Highway 99 Intersection $ 83,696 South 312th to South 324th / SR 99 Phase I $ 555,851 South 324th to South 340th / SR 99 Phase II $ 125,372 South 336th & Weyerhauser Way South $ 118,891 South 288th Street / SR 99 $ 67,773 Dumas Bay Centre NOTE 15 Fund Additions and Deletions In an effort to reduce the number of funds, the Snow & Ice Removal Fund, Strategic Reserve Fund and Airport Strategic Reserve Funds were deleted. Snow and ice removal is accounted for in the Street Fund. Strategic and Airport Strategic Reserve fund balances are accounted for in the Risk Management Fund. City of Federal Way / 43 NOTE 16 Segment Information for Enterprise Funds The City maintains two enterprises whose operations are accounted for in the enterprise funds and are financed and operated in a manner similar to private business. It is generally intended that the costs of providing goods or services to the general public on a continuing basis should be financed or recovered primarily through user charges. Segment information for the year ended December 31, 2001 follows: City of Federal Way Statement of Revenues, Expenses & Changes in Net Assets - Proprietary Funds For the Year Ended December 31, 2001 J Surface Water Dumas Bay Total Enterprise II Management Centre Funds otalOperating Revenue 2,993,729 674,157 3,667.98 g%craiing Expenses: Operations & Maintenance 1,811,389 725,733 2,537,12 Depreciation 405,092 184,844 589,93 Total Operating Expenses 2,216,481 910,577 3.127,05 Net Operating Income (Loss) 777,248 (236,420) 540,82 on -Operating Revenue Net of Expenses 241,480 17,841 259,321 etlncome (Loss) 1,018,728 (218,579) 800,14 Net Working Capital 6,953,365 377,144 7,330.509 Property, Plant, and Equipment Additions 93,185 93,18 Deletions (13,193) - (13.193 ct Property, Plant, and Equipment 31,086,706 4,882,000 35,968,70 onstruction in Progress 5,569,244 28,663 5.597.90 otalAssets 44,189,344 5,489,761 49,679,10 Long Term Liabilities - Public Works Trust Fund Loan 3,249,347 - 3,249,34 Total Fund E uity 40,359,968 5287,807 45,647,77 NOTE 17 Joint Venture On August 20, 1976, the Cities of Auburn, Kent, Renton and Tukwila entered into an interlocal agreement to provide their citizens with quality emergency dispatching services through the formation of the Valley Communications Center. On June 16, 1993, the cities of Auburn, Kent, Renton and Tukwila modified the interlocal agreement to establish Valley Communications Center, hereafter referred to as Valley Com, as a governmental administration agency under RCW 39.34.030 (3) (b). Effective April 17, 2000, the Cities father modified and replaced the Interlocal Agreement, in order to add the City of Federal Way as a member city of Valley Com beginning January 1, 2000, add the agreement to the Cities to finance the project, and provide that the Interlocal Agreement may not be terminated during the term of the bonds. In addition to serving the emergency communications needs of the five member cities, Valley Com serves several other subscribing agencies, which include King County Fire Districts #2, #17, #20, #26, #40, #43, #44, #46, #47; City of Pacific Police and Fire Departments, City of Algona Police Department, City of Des Moines Police Department, City of Black Diamond Police Department, and King County EMS Units. Separate agreements between Valley Com and the subscribing agencies have been executed, which set forth conditions of services and rates charged. City of Federal Way / 44 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 2001 cost distributions for the five member cities are as follows: Dispatchable Percent 2001 City Calls of Total Assessments Renton 63,378 19.07% $ 980,653 Kent 91,625 28.08% 1,444,492 Auburn 66,908 20.19% 1,038,622 Tukwila 37,980 10.96% 563,597 Federal Way 71,629 21.70% 1,116,148 Total 331,520 100.00% $ 5,143,512 Valley Com is governed by an Administration Board, composed of the Mayors or designated representatives from the five participating cities of Federal Way, Renton, Kent, Auburn, and Tukwila. The Administration Board is authorized to establish bylaws that govern procedures of the Board and Valley Com's general operations for the following functions: 1) Budget review and recommendations to the legislative bodies of the member cities, and budget adoption after each legislative body has approved the required financial participation for the ensuing year; 2) Approve appointment and/or discharge of the Director; 3) Approve personnel policy and make final decisions on all major policy changes; and 4) Review and approves all contracts. In addition, an Operations Board provides administration, and consists of a member from each participating city's police and fire departments, including the directors of such departments or their designees. Also on the Operations Board is an appointed representative of the Police and Fire contract agencies. The Operations Board performs the following functions: 1) Oversees the general operation of Valley Com, and advises and makes recommendations to the Administration Board; 2) Make recommendations on Director selection; 3) Presents proposed policies and budgets to the Administration Board; and 4) Reviews disbursements of fiords by the Director. The Director presents a proposed budget to the Operating Board on or before August 15 of each year. Said budget is then presented to the Administrative Board by September 1 of each year. The Administration Board can make changes to the proposed Valley Com budget as it finds necessary, but final approval falls to the legislative body of each member city, in accordance with the provisions of the interlocal agreement. The following condensed financial information is from Valley Com's comprehensive annual financial report for the fiscal year ended December 31, 2001. Audited 2001 financial statements are available from Valley Com. Valley Communications Center Balance Sheet As of December 31, 2001 Assets Current Assets 9,301,776 Plant, Property, and Equipment 16,584,110 Total Assets 25,885,886 Liabilities & Fund Equity Current Liabilities Total Liabilities Retained Earnings Contributed Capital 800-MHz Contributed Capital (t) Total Fund Equity Total Liabilities & Fund Equity 966,663 966,663 17,955,521 48,502 6,915,200 24,919,223 25,885,886 City of Federal Way / 45 Valley Communications Center Statement of Revenue, Expenses, and Changes in Fund Equity For the Year Ending December 31, 2001 Operating Revenues Charges for Intergovernmental Services $ 6,821,532 Other Operating Revenue 6,229 Total Operating Revenue 6,827,761 Operating Expenses Salaries & Benefits 4,971,422 Other Operation & Maintenance 851,306 Depreciation 183,583 Total Operating Expenses 6,006,311 Income (Loss) from Operations 821,450 Non -Operating Revenues (Expenses) Interest Revenue 368,119 Net Increase/(Decrease) in Fair Value of Investments 17,582 Contributions 50 Leasehold Revenue 20,181 Construction Funds 6,500,000 Easement Revenue - Gain (Loss) from Sale of Fixed Assets (45,002) Total Non -Operating Revenue 6,860,930 Net Income (loss) 7,682,380 Retained Earnings at Beginning of Year 10,273,141 Retained Earnings at End of Year 17,955,521 Contributed Capital at Beginning of Year 6,987,320 Additional Contributed Capital (23,617) Additional 800 MHz Contributed Capital Contributed Capital at End of Year 6,963,703 Total Fund Equity at End of Year $ 24,919,224 The share of equity belonging to the five participating cities is shown below. Liabilities are the responsibility of the four participating cities in direct proportion to their equity position. Renton Kent Auburn Tukwila Federal Way Total Equity ® January 1, 2001 $ 2,546,163 $ 3,247,038 $ 2,266,521 $ 1,715,909 $ 569,630 $ 10,345,261 Current Year Increase 1,541,096 2,217,346 1,521,454 976,734 1,402,132 7;658,762 Equity cQ December 31, 2001 S 4,087,259 $ 5,464,384 $ 3,787,975 $ 2,692,643 $ 1,971,762 $ 18,004,023 Percent of Equity 22.70% 30.35% 21.04% 14.96% 10.95% 100.00% Percent of 2001 Distribution 20.12% 28.95% 19.87% 12.75% 18.31% 100.000/0 In May 1993 Valley Corn 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 subregions of King County, Seattle, and Eastside Public Safety Communications, which governs the development and installation of the new 800-MHz emergency radio system Valley Corn now provides emergency communication dispatch services to a population of approximately 570,000. Valley Corn 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. CITY •F General Fund The General Fund is used to account for all receipt and disbursement transactions associated with ordinary City operations that are not required to be accounted for in another fund. This fund is both tax and general revenue supported. Major revenue sources for the General Fund include property, sales, excise and other taxes, and miscellaneous permits and fees. City of Federal Way / 48 GENERAL FUND COMPARATIVE BALANCE SHEET December 31, 2001 and 2000 2001 2000 ASSETS Equity in pooled cash and investments $ 7,643,451 $ 5,869,462 Prepaid Insurance 11,850 6,202 Receivables (net): Taxes 459,291 495,648 Accounts and contracts 398,673 402,006 Interest 3,080 71,804 Due from other governments 1,274,475 1,147,826 Interfund loans receivable 10,000 10,000 TOTAL ASSETS 9,800,820 8,002,948 LIABILITIES AND FUND BALANCE Liabilities: Vouchers payable 479,022 537,623 Accounts/payroll payable 17,936 6,914 Due to other governments 197,292 101,145 Deposits payable 315,448 447,702 Deferred revenue 526,655 289119 TOTAL LIABILITIES 1,536,353 1,382,503 Fund balance: Reserved for: Interfund loans 10,000 10,000 Petty cash/change funds 4,150 4,200 Police special funds 458,685 528,297 Advance travel 5,000 5,000 Prepaid insurance 11,850 6,202 Unreserved: Undesignated 7,774,782 6,066,746 TOTAL FUND BALANCE 8,264,467 6,620,445 TOTAL LIABILITIES AND FUND BALANCE $ 9,800,820 $ 8,002,948 City of Federal Way / 49 GENERAL FUND COMPARATIVE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE For the Years Ended December 31, 2001 and 2000 2001 2000 REVENUES: Taxes $ 21,489,570 $ 20,623,483 Licenses and permits 1,301,940 1,239,007 Intergovernmental 1,512,274 2,195,785 Service charges and fees 2,053,779 1,828,605 Fines and forfeitures 830,668 902,762 Miscellaneous: Interest 293,887 474,814 Other 460,621 660,195 TOTAL REVENUES 27,942,739 27,924,651 EXPENDITURES: Current: General government 4,615,027 4,170,003 Security of persons and property 14,264,309 14,046,638 Physical environment 24,443 24,334 Economic environment 2,570,254 2,494,908 Health 535,589 546,191 Culture and recreation 2,951,607 2,940,818 Capital outlay 49,791 191,048 TOTAL EXPENDITURES 25,011,020 24,413,940 EXCESS OF REVENUES OVER EXPENDITURES 2,931,719 3,510,711 OTHER FINANCING SOURCES (USES): Operating transfers in 268,111 187,190 Operating transfers out (1,342,535) (1,620,217) TOTAL OTHER FINANCING SOURCES (USES) (1,074,424) (1,433,027) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES 1,857,295 2,077,684 FUND BALANCE AT BEGINNING OF YEAR 6,620,445 4,827,571 Residual equity transfers out (213,273) (284,810) FUND BALANCE AT END OF YEAR $ 8,264,467 $ 6,620,445 City of Federal Way / 50 GENERALFUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL For the Years Ended December 31, 2001 and 2000 REVENUES: Taxes Licenses and permits Intergovernmental Service charges and fees Fines and forfeitures Miscellaneous: Interest Other TOTAL REVENUES EXPENDITURES: Current: General government Security of persons and property Physical environment Economic environment Health Culture and recreation Capital outlay TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Operating transfers in Operating transfers out TOTAL OTHER FINANCING SOURCES (USES) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES FUND BALANCE AT BEGINNING OF YEAR Residual equity transfers out FUND BALANCE AT END OF YEAR Variance Favorable 2000 Budget Actual (Unfavorable) Actual 70,700,773 $ 714R9,570 $ 789,297 $ 20,623,483 1,546,474 1,301,940 (244,534) 1,239,007 985,485 1,512,274 526,789 2,195,785 1,731,192 2,053,779 322,587 1,828,605 901,784 830,668 (71,116) 902,762 239,290 293,887 54,597 474,814 333,716 460,621 126,905 660,195 26,438,214 27,942,739 1,504,525 27,924,651 5,623,665 4,615,027 1,008,638 4,170,003 14,819,878 14,264,309 555,569 14,046,638 24,443 24,443 24,334 3,125,570 2,570,254 555,316 2,494,908 575,251 535,589 39,662 546,191 3,071,351 2,951,607 119,744 2,940,818 178,470 49,791 128,679 191,048 27,418,628 25,011,020 2,407,608 24,413,940 (980,414) 2,931,719 3,912,133 3,510,711 351,881 268,111 (83,770) 187,190 (1,820,385) (1,342,535) 477,850 (1,620,217) (1,468,504) (1,074,424) 394,080 (1,433,027) (2,448,918) 1,857,295 4,306,213 2,077,684 6,620,445 6,620,445 - 4,827,571 (410,516) (213,273) 197,243 (284,810) $ 3,761,011 $ 8,264,467 $ 4,503,456 $ 6,620,445 City of Federal Way / 51 GENERALFUND SCHEDULE OF EXPENDTTURES COMPARED TO BUDGET For the Year Ended December 31, 2001 GENERAL GOVERNMENT LEGISLATIVE: Personal services Supplies Service charges and fees Intergovernmental services Interfund services TOTAL LEGISLATIVE JUDICIAL: Personal services Supplies Service charges and fees Intergovermental services Interfund services TOTAL JUDICIAL EXECUTIVE: Personal services Supplies Service charges and fees Interfund services TOTAL EXECUTIVE FINANCIAL AND RECORD SERVICES: Personal services Supplies Service charges and fees Intergovernmental services Interfund services TOTAL FINANCIAL AND RECORD SERVICES LEGAL: Personal services Supplies Service charges and fees Intergovernmental services Interfund services TOTALLEGAL PERSONNEL: Personal services Supplies Service charges and fees Interfund services TOTAL PERSONNEL CENTRAL SERVICES: Personal services Supplies Service charges and fees Intergovernmental services TOTAL CENTRAL SERVICES TOTAL GENERAL GOVERNMENT Variance Favorable Budget Actual (Unfavorable) $ 71,968 $ 70,260 $ 1,708 1,460 2,572 (1,112) 98,161 105,928 (7,767) 70,000 81,309 (11,309) 28,199 25,327 2,872 269,788 285,396 (15,608) 659,289 677,503. (18,214) 9,800 11,956 (2,156) 191,397 116,745 74,652 194,704 181,438 13,266 1,055,190 987,642 67,548 437,402 386,571 50,831 4,300 2,942 1,358 42,800 47,799 (4,999) 802,751 78,066 724,685 1,287,253 515,378 771,875 721,138 699,008 22,130 6,275 5,569 706 59,843 88,935 (29,092) 42,000 42,031 (31) 332,534 315,866 16,668 1,161,790 1,151,409 10,381 809,572 759,310 50,262 9,075 8,112 963 336,587 330,020 6,567 500 67 433 110,767 101,445 9,322 1,266,501 1,198,954 67,547 201,952 209,623 (7,671) 15,291 7,948 7,443 104,940 113,687 (8,747) 168,044 53,842 114,202 490,227 385,000 105,227 77,947 77,595 352 400 264 136 12,569 10,971 1,598 2,000 2,418 (418) 92,916 91,248 1,668 5,623,665 4,615,027 1,008,638 Page 1 of 4 City of Federal Way / 52 GENERAL FUND SCHEDULE OF EXPENDITURES COMPARED TO BUDGET For the Year Ended December 31.2001 SECURITY OF PERSONS AND PROPERTY LAW ENFORCEMENT: Personal services Supplies Service charges and fees Intergovernmental services Interfund services TOTAL LAW ENFORCEMENT DETENTION AND/OR CORRECTION: Intergovermental services TOTAL DETENTION AND/OR CORRECTION COMMUNICATION, ALARM & DISPATCH: Personal services Supplies Service charges and fees Intergovernmental services TOTAL COMMUNICATION, ALARM & DISPATCH TOTAL SECURITY OF PERSONS AND PROPERTY PHYSICAL ENVIRONMENT NATURAL RESOURCES: Intergovernmental services TOTAL NATURAL RESOURCES TOTAL PHYSICAL ENVIRONMENT ECONOMIC ENVIRONMENT AGING: Personal services Supplies Service charges and fees Intergovernmental services TOTAL AGING COMMUNITY SERVICES: Personal services Supplies Service charges and fees Interfund services TOTAL COMMUNITY SERVICES PLANNING AND COMMUNITY DEVELOPMENT: Personal services Supplies Service charges and fees Intergovernmental services Interfund services TOTAL PLANNING AND COMMUNITY DEVELOPMENT (Continued) Variance Favorable Budget Actual (Unfavorable) 9,503,450 9,293,393 210,057 704,828 392,650 312,178 480,394 624,311 (143,917) 9,877 4,495 5,382 1,085,165 1,044,243 40,922 11,783,714 11,359,092 424,622 1,388,938 1,333,515 55,423 1,388,938 1,333,515 55,423 686,930 641,731 45,199 11,585 11,328 257 295 6,125 (5,830) 948,416 912,518 35,898 1,947,226 1,571,702 75,524 14,819,878 14,264.309 555,569 24,443 24,443 24,443 24,443 24,443 24,443 _ 63,003 51,775 11,229 5,250 930 4,320 22,564 1,816 20,748 - 56 (56) 90,817 54,577 36,240 69,811 49,735 20,076 6,350 5,191 1,159 48,730 37,053 11,677 13,169 11,741 1,428 138,060 103,720 34,340 952,426 911,155 41,271 9,705 5,910 3,795 723,008 315,356 407,652 50 511 (461) 201,000 179,831 21,169 1,886,189 1,412,763 473,426 Page 2 of 4 City of Federal Way / 53 GENERALFUND SCHEDULE OF EXPENDITURES COMPARED TO BUDGET For the Year Ended December 31, 2001 HOUSING AND COMMUNITY DEVELOPMENT: Personal services Supplies Service charges and fees Interfund services TOTAL HOUSING AND COMMUNITY DEVELOPMENT TOTAL ECONOMIC ENVIRONMENT MENTAL & PHYSICAL HEALTH PUBLIC HEALTH: Personal services Supplies Service charges and fees Intergovemmental services Interfund services TOTAL PUBLIC HEALTH TOTAL MENTAL & PHYSICAL HEALTH CULTURE AND RECREATION EDUCATION: Personal services Supplies Service charges and fees Interfund services TOTAL EDUCATION SPECTATOR AND COMMUNITY EVENTS: Personal services Supplies Service charges and fees Intergovemmental services Interfund services TOTAL SPECTATOR AND COMMUNITY EVENTS PARTICIPANT RECREATION: Personal services Supplies Service charges and fees Intergovernmental services TOTAL PARTICIPANT RECREATION CULTURAL AND RECREATION FACILITIES: Personal services Supplies Service charges and fees Intergovernmental services Interfund services TOTAL CULTURAL AND RECREATION ACTIVITIES (Continued) Variance Favorable Budget Actual (Unfavorable) 740,929 732,489 8,440 6,275 4,787 1,488 22,563 33,145 (10,582) 240,737 228,773 11,964 1,010,504 999,194 11,310 3,125,570 2,570,254 555,316 99,340 95,073 4,267 1,475 922 553 428,185 399,566 28,619 14,500 11,000 3,500 31,751 29,028 2,723 575,251 535,589 39,662 575,251 535,589 39,662 173,707 165,855 7,852 3,300 4,050 (750) 60,735 35,733 25,002 96,875 89,032 7,843 334,617 294,670 39,947 321,708 345,821 (24,113) 34,635 40,355 (5,720) 189,659 237,507 (47,848) 700 100 600 25,505 23,112 2,393 572,207 646,895 (74,688) 230,889 208,654 22,235 19,925 13,748 6,177 23,570 22,351 1,219 100 1,277 (1,177) 274,484 246,030 28,454 12,000 8,728 3,272 1,000 1,671 (671) 750 2,535 (1,785) 600 364 236 46,090 42,757 3,333 60,440 56,055 4,385 Page 3 of 4 City of Federal Way / 54 GENERAL FUND SCHEDULE OF EXPENDITURES COMPARED TO BUDGET For the Year Ended December 31, 2001 PARK FACILITIES: Personal services Supplies Service charges and fees Intergovernmental services Interfund services TOTAL PARK FACILITIES TOTAL CULTURE AND RECREATION CAPITAL OUTLAY OTHER FINANCING USES Operating transfers out Residual equity transfers out TOTAL OTHER FINANCING USES TOTAL GENERAL FUND (Continued) Variance Favorable Budget Actual (Unfavorable) 1,020,679 1,012,152 8,527 148,142 116,015 32,127 441,604 376,192 65,412 7,000 1,343 5,657 212178 202,255 9,923 1,829,603 1,707,957 121,646 3,071.351 2,951,607 119.744 178,470 49,791 128,679 1,820,385 1,342,535 477,850 410,516 213,273 197,243 2,230.901 1,555,808 675,093 $ 29,649,529 S 26,566,828 $ 3,082,701 Page 4 of 4 Special Revenue Funds Special revenue funds are used to account for the proceeds of revenue sources (other than special assessments, expendable trusts or major capital projects) that are legally restricted to expenditures for specified purposes. A description of each individual Special Revenue Fund included in the Comprehensive Annual Financial Report is provided below: The Street 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. 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 Utility Tax 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. 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 Snow and Ice Removal Fund was created to account for the snow and ice removal funding and carryover from year to year. The Hotel/Motel Lodging Tax Fund was established to account for all lodging tax receipts and disbursements related to tourism promotion and acquisition and/or operation of tourism -related facilities. The Two Percent for Arts Fund was established for the purpose of providhjz funding for arts projects. The funds are to be used to create a variety of cultural opportunities for citizens and to enhance the cultural environment in the community by encouraging and promoting the creation and placement of art in public places and the incorporation of art into project design. The Community Development Block Grant Fund accounts for the receipt and disbursement of federal grant revenue received through the Department of Housing and Urban Development's Community Development Block Grant Program. Separate subsidiary records are maintained to administer the individual projects accounted for in this fund. The Path and Trails Reserve Fund was established in accordance with State law to accumulate unexpended proceeds of the City's % % motor vehicle fuel tax receipts which are restricted in use to the construction and maintenance ofpaths and trails within City right-of-way. The Strategic Reserve Fund was established to set aside financial resources to be used to mitigate adverse situations occurring as the result of severe short-term revenue shortfalls or expenditures resulting from emergencies, or as otherwise designated by the City The Airport Strategic Reserve Fund was established to set aside financial resources to contest expansion of the SeaTac International Airport. City of Federal Way / 56 SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET December 31, 2001 With Comparative Totals for December 31, 2000 Special Arterial Utility Tax Solid Waste/ Contracts/ Street Street Projects Recycling Studies ASSETS Equity in pooled cash and investments $ 1,588,239 $ 719,724 $ 5,476,496 $ 99,381 $ 123,838 Retainage in escrow - - - - - Receivables (net): Taxes 692,425 Accounts and contracts - - - 12,225 - Interest 371 228 1,834 41 43 Due from other funds - - - - - Due from other governments 8,035 - 98,351 - TOTAL ASSETS 1,596,645 719,952 6,170,755 209,998 123,881 LIABILITIES AND FUND BALANCES Liabilities: Vouchers payable 141,855 10,654 - Accounts/payroll payable - - Retainage payable - - Due to other governments 52,794 - - - - Due to other funds - - - - - Performance bonds - - - - Deposits payable 1,094,802 - - Interfund loans payable - - - - - Deferred revenue 31,268 - - - - TOTAL_LIABILITIES 1,320,719 _ - - _-10,654_ Fund balance: Reserved for: Paths and trails - - - Unreserved: Designated snow & ice removal 100,000 - - Undesignated 175,926 719,952 6,170,755 199,344 123,881 TOTAL FUND BALANCES 275,926 719,952 6,170,755 199,344 123,881 TOTAL LIABILITIES AND FUND BALANCE $ 1,596,645 $ 719,952 $ 6,170,755 $ 209,998 $ 123,881 Page 1 of 2 City of Federal Way / 57 Community Paths and Airport Snow and Hotel/Motel 2% for the Development Trails Strategic Strategic Ice Removal Lodging Tax Arts Block Grant Reserve Reserve Reserve Totals 2001 2000 $ $ 179,829 $ 28,114 $ 11,245 $ 41,848 $ $ $ 8,268,714 $ 7,760,322 _ _ _ - 75,295 _ 692,425 638,981 - 1,643 - 13,868 23,901 58 - 15 2,590 91,356 7,374 - 30,103 - 143,863 334,457 187,261 28,114 42,991 41,863 9,121,460 8,924,312 36,712 15,613 - 13,238 10,000 36,712 38,851 204,834 225,448 13,238 20,725 - 77,664 52,794 - 1,094,802 1,040,760 10,000 10,000 31,268 23,373 - 1,406,936 1,397,970 41,863 41,863 32,414 100,000 100,000 150,549 28,114 4,140 7,572,661 7,393,928 150,549 28,114 4,140 41,863 - 7,714,524 7,526,342 $ $ 187,261 $ 28,114 $ 42,991 $ 41,863 $ $ $ 9,121,460 $ 8,924,312 Page 2 of 2 City of Federal Way / 58 SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES For the Year Ended December 31, 2001 With Comparative Totals for December 31, 2000 Solid Special Arterial Utility Waste/ Contracts/ Street Street Tax Recycling ' Studies REVENUES Taxes $ - $ - $ 6,098,360 $ $ Licenses and permits 74,754 - - 20,000 Intergovernmental 1,922,646 556,619 123,165 - Service charges and fees 322,991 - - 148,718 - Miscellaneous: Interest 29,289 42,865 117,909 5,807 4,699 Other 27,071 - - - - TOTAL REVENUES 2,376,751 599,484 6,216,269 277,690 24,699 EXPENDITURES: Current: General government 50,000 - 11,866 Physical environment - - - 353,623 - Transportation 3,199,898 1,354,285 - - Economic environment - - Culture and recreation - Capital outlay - - - - - TOTAL EXPENDITURES 3,199,898 1,354,285 50,000 353,623 11,866 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (823,147) (754,801) 6,166,269 (75,933) 12,833 OTHER FINANCING SOURCES (USES): Proceeds of long-term debt - - - Operating transfers in 1,101,827 987,259 Operating transfers out - - (4,402,950) TOTAL OTHER FINANCING SOURCES (USES) 1,101,827 987,259 (4,402,950) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES 278,680 232,458 1,763,319 (75,933) 12,833 FUND BALANCES AT BEGINNING OF YEAR - 487,494 4,407,436 275,459 111,048 Residual equity transfers out (2,754) - (182) - FUND BALANCES AT END OF YEAR $ 275,926 $ 719,952 $ 6,170,755 $ 199,344 $ 123,881 Page 1 of 2 City of Federal Way / 59 Snow Hotel/Motel Community Paths and Airport and Ice Lodging 2% for the Development Trails Strategic Strategic Totals Removal Tax Arts Block Grant Reserve Reserve Reserve 2001 2000 $ $ 136,046 $ $ $ $ $ $ 6,234,406 $ 5,722,285 94,754 195,020 242,322 8,072 2,852,824 3,056,114 _ 471,709 391,343 4,035 1,377 32,424 238,405 499,297 _ _ 27,071 1,631 140,081 242,322 9,449 32,424 9,919,169 9,865,690 - 47,359 - 109,225 67,849 _ 353,623 294,375 _ _ 4,554,183 4,661,867 48,016 60,904 - 108,920 139,103 _ _ _ - 94,000 - 126,760 126,760 317,871 48,016 235,023 - 5,252,711 5,575,065 92,065 7,299 9,449 32,424 - 4,666,458 4,290,625 8,840 13,148 - - - 2,111,074 1,709,277 (100,000) (22,746) - (1,760,718) (300,000) (6,586,414) (4,412,391) (100,000) 8,840 (9,598) (1,760,718) (300,000) (4,475,340) (2,703,114) (100,000) 92,065 8,840 (2,299) 9,449 (1,728,294) (300,000) 191,118 1,587,511 100,000 58,484 19,274 6,439 32,414 1,728,294 300,000 7,526,342 5,947,267 _ _ (2,936) (8,436) $ $ 150,549 $ 28,114 $ 4,140 $ 41,863 $ $ $ 7,714,524 $ 7,526,342 Page 2 of 2 City of Federal Way / 60 SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2001 With Comparative Totals for December 31, 2000 Street Fund Variance Favorable 2000 Budget Actual (Unfavorable) Actual REVENUES: Taxes $ $ - $ - $ 5,048 Licenses and permits 101,236 74,754 (26,482) 95,020 Intergovernmental 1,919,712 1,922,646 2,934 1,936,059 Service charges and fees 158,347 322,991 164,644 216,878 Miscellaneous: Interest 35,274 29,289 (5,985) 62,601 Other - 27,071 27,071 1,631 TOTAL REVENUES 2,214,569 2,376,751 162,182 2,317,237 EXPENDITURES: Current: General governmental - - - - Physical environment - - - - Transportation 3,672,903 3,199,898 473,005 3,194,102 Economic environment - - - - TOTAL EXPENDITURES 3,672,903 3,199,898 473,005 3,194,102 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (1,458,334) (823,147) 635,187 (876,865) OTHER FINANCING SOURCES (USES): Proceeds of long-term debt Operating transfers in 1,579,677 1,101,827 (477,850) 737,455 Operating transfers out - TOTAL OTHER FINANCING SOURCES (USES) 1,579,677 1,101,827 (477,850) 737,455 EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES 121,343 278,680 157,337 (139,410) FUND BALANCES AT BEGINNING OF YEAR - 147,681 Residual equity transfers out (3,343) (2,754) 589 (8,271) FUND BALANCES AT END OF YEAR $ 118,000 $ 275,926 $ 157,926 $ Page 1 of 7 City of Federal Way / 61 SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2001 With Comparative Totals for December 31, 2000 Arterial Street Fund Utility Tax Fund Variance Variance Favorable 2000 Favorable 2000 Budget Actual (Unfavorable) Actual Budget Actual (Unfavorable) Actual $ $ $ $ $ 6,016,400 $ 6,098,360 $ 81,960 $ 5,590,470 542,275 556,619 14,344 550,460 - - - 20,100 - 30,000 42,865 12,865 57,656 250,000 117,909 (132,091) 232,123 572,275 599,484 27,209 628,216 6,266,400 6,216,269 (50,131) 5,822,593 50,000 50,000 - 2,005,169 1,354,285 650,884 1,458,054 - 2,005,169 1,354,285 650,884 1,458,054 50,000 50,000 - (1,432,894) (754,801) 678,093 (829,838) 6,216,400 6,166,269 (50,131) 5,822,593 987,259 987,259 967,901 - - - - (4,402,949) (4,402,950) (1) (4,245,306) 987,259 987,259 967,901 (4,402,949) (4,402,950) (4,245,306) (445,635) 232,458 678,093 138,063 1,813,451 1,763,319 (50,132) 1,577,287 487,494 487,494 - 349,431 4,407,436 4,407,436 - 2,830,149 $ 41,859 $ 719,952 $ 678,093 $ 487,494 $ 6,220,887 $ 6,170,755 $ (50,132) $ 4,407,436 Page 2 of 7 City of Federal Way / 62 SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2001 With Comparative Totals for December 31, 2000 REVENUES: Taxes Licenses and permits Intergovernmental Service charges and fees Miscellaneous: Interest Other TOTAL REVENUES EXPENDITURES: Current: General governmental Physical environment Transportation Economic environment TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds of long-term debt Operating transfers in Operating transfers out TOTAL OTHER FINANCING SOURCES (USES) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES FUND BALANCES AT BEGINNING OF YEAR Residual equity transfers out FUND BALANCES AT END OF YEAR Solid Waste/Recycling Fund Variance Favorable 2000 Budget Actual (Unfavorable) Actual 228,301 123,165 (105,136) 101,913 153,013 148,718 (4,295) 154,365 8,381 5,807 (2,574) 13,880 389,695 277,690 (112,005) 270,158 406,730 353,623 53,107 294,375 406,730 353,623 53,107 294,375 (17,035) (75,933) (58,898) (24,217) (17,035) (75,933) (58,898) (24,217) 275,459 275,459 - 299,841 (304) (182) 122 (165) $ 258,120 $ 199,344 $ (58,776) $ 275,459 Page 3 of 7 City of Federal Way / 63 SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2001 With Comparative Totals for December 31, 2000 Snow and Ice Removal Fund Variance Favorable 2000 Budget Actual (Unfavorable) Actual 5,790 Hotel/Motel Lodging Tax Variance Favorable 2000 Budget Actual (Unfavorable) Actual $ 121,500 $ 136,046 $ 14,546 $ 126,767 4,035 4,035 1,050 121,500 140,081 18,581 127,817 9,711 - - - - - 139,202 48,016 91,186 72,298 9,711 139,202 48,016 91,186 72,298 (3,921) (17,702) 92,065 109,767 55,519 3,921 (100,000) (100,000) - - (25,000) (100,000) (100,000) - 3,921 - - (25,000) (100,000) (100,000) - (17,702) 92,065 109,767 30,519 100,000 100,000 100,000 58,484 58,484 - 27,965 $ $ $ $ 100,000 $ 40,782 $ 150,549 $ 109,767 $ 58,484 Page 4 of 7 City of Federal Way / 64 SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2001 With Comparative Totals for December 31, 2000 Paths and Trails Reserve Fund REVENUES: Taxes Licenses and permits Intergovernmental Service charges and fees Miscellaneous: Interest Other TOTAL REVENUES EXPENDITURES: Current: General government Physical environment Transportation Economic environment TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds of long-term debt Operating transfers in Operating transfers out TOTAL OTHER FINANCING SOURCES (USES) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES FUND BALANCES AT BEGINNING OF YEAR Residual equity transfers out FUND BALANCES AT END OF YEAR Variance Favorable 2000 Budget Actual (Unfavorable) Actual 8,500 8,072 (428) 8,434 500 1,377 877 1,627 9,000 9,449 449 10,061 9,000 9,449 449 10,061 9,000 9,449 449 10,061 32,414 32,414 - 22,353 $ 41,414 $ 41,863 $ 449 $ 32,414 Page 5 of 7 City of Federal Way / 65 SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2001 With Comparative Totals for December 31, 2000 Strategic Reserve Fund Airport Strategic Reserve Fund Variance Variance Favorable 2000 Favorable 2000 Budget Actual (Unfavorable) Actual Budget Actual (Unfavorable) Actual 132,500 32,424 (100,076) 121,985 132,500 32,424 (100,076) 121,985 132,500 32,424 (100,076) 121,985 (1,860,794) (1,760,718) 100,076 (121,895) (300,000) (300,000) (1,860,794) (1,760,718) - (121,895) (300,000) (300,000) (1,728,294) (1,728,294) 90 (300,000) (300,000) - 1,728,294 1,728,294 1,728,204 300,000 300,000 300,000 $ $ $ $ 1,728,294 $ $ $ $ 300,000 Page 6 of 7 City of Federal Way / 66 SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 2001 With Comparative Totals for December 31, 2000 Variance Favorable 2000 Budget Actual (Unfavorable) Actual REVENUES Taxes $ 6,137,900 $ 6,234,406 $ 96,506 $ 5,722,285 Licenses and permits 101,236 74,754 (26,482) 95,020 Intergovernmental 2,698,788 2,610,502 (88,286) 2,596,866 Service charges and fees 311,360 471,709 160,349 391,343 Miscellaneous: Interest 456,655 233,706 (222,949) 496,712 Other - 27,071 27,071 1,631 TOTAL REVENUES 9,705,939 9,652,148 (53,791) 9,303,857 EXPENDITURES Current: General governmental 50,000 50,000 - - Physical environment 406,730 353,623 53,107 294,375 Transportation 5,678,072 4,554,183 1,123,889 4,661,867 Economic environment 139,202 48,016 91,186 72,298 TOTAL EXPENDITURES 6,274,004 5,005,822 1,268,182 5,028,540 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 3,431,935 4,646,326 1,214,391 4,275,317 OTHER FINANCING SOURCES (USES): Proceeds of long-term debt - - - Operating transfers in 2,566,936 2,089,086 (477,850) 1,709,277 Operating transfers out (6,663,743) (6,563,668) 100,075 (4,392,201) TOTAL OTHER FINANCING SOURCES (USES) (4,096,807) (4,474,582) (377,775) (2,682,924) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES (664,872) 171,744 836,616 1,592,393 FUND BALANCES AT BEGINNING OF YEAR 7,389,581 7,389,581 - 51805,624 Residual equity transfers out (3,647) (2,936) 711 (8,436) FUND BALANCES AT END OF YEAR $ 6,721,062 $ 7,558,389 $ 837,327 7,389,581 Page 7 of 7 Debt Service Fund 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. A description of the individual Debt Service Fund included in the Comprehensive Annual Financial Report is provided below: The Debt Service Fund accounts for the debt service on City Council -approved general obligation bonds. Revenues for this Fund consist of allocations of the City's general property tax levy, operating transfers from the Utility Tax Project Fund, or other revenues designated by the City Council. City of Federal Way / 68 DEBT SERVICE FUND COMPARATIVE BALANCE SHEET December 31, 2001 and 2000 2001 2000 ASSETS Equity in pooled cash and investments $ 6,491,454 $ 5,708,872 Receivables (net): Interest 2,243 78,752 Due from other governments 382,740 - TOTAL ASSETS 6,876,437 5,787,624 LIABILITIES AND FUND BALANCE Liabilities: Vouchers payable 63 102 Deferred revenue 368,250 - TOTAL LIABILITIES 368,313 102 Fund balance: Reserved for debt service 6,508,124 5,787,522 TOTAL FUND BALANCE 6,508,124 5,787,522 TOTAL LIABILITIES AND FUND BALANCE $ 6,876,437 $ 5,787,624 City of Federal Way / 69 DEBT SERVICE FUND COMPARATIVE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE For the Years Ended December 31, 2001 and 2000 2001 2000 REVENUES: Taxes $ 1,997,537 $ 2,149,691 Miscellaneous: Interest 271,008 284,391 Other - - TOTAL REVENUES 2,268,545 2.434.082 EXPENDITURES: Debt service: Principal 2,700,478 2,498,853 Interest, fiscal charges and cash management fees 1,797,614 1,729,858 TOTAL EXPENDITURES 4,498,092 4,228,711 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (2,229,547) (1,794,629) OTHER FINANCING SOURCES (USES): Operating transfers in 2,950,149 2,918,205 Operating transfers out - (1,000,000) TOTAL OTHER FINANCING SOURCES (USES) 2,950,149 1,918,205 EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES 720,602 123,576 FUND BALANCE AT BEGINNING OF YEAR 5,787-522 5,663,946 FUND BALANCE AT END OF YEAR $ 6,508,124 $ 5,787,522 City of Federal Way / 70 DEBT SERVICE FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL For the Years Ended December 31, 2001 and 2000 Budget REVENUES: Taxes $ 1,750,000 Miscollaneow: Interest 308,882 TOTAL REVENUES 2,058,882 EXPENDITURES: Debt service: Principal 2,870,623 Interest, fiscal charges and cash management fees 1,657,918 TOTAL EXPENDITURES 4,528,541 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (2,469,659) OTHER FINANCING SOURCES (USES): Operating transfers in 2,950,149 Operating transfers out (250,863) TOTAL OTHER FINANCING SOURCES (USES) 2,699,286 EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES 229,627 FUND BALANCE AT BEGINNING OF YEAR 6,038,386 FUND BALANCE AT END OF YEAR $ 6,268,013 2001 Actual Variance Favorable 2000 (Unfavorable) Actual $ 1,997,537 $ 247,537 $ 2,149,691 271,008 (37,874) 284,391 2,268,545 209,663 2,434,082 2,700,478 170,145 2,498,853 1,797,614 (139,696) 1,729,858 4,498,092 30,449 4,228,711 (2,229,547) 240,112 (1,794,629) 2,950,149 - 2,918,205 250,863 (1,000,000) 2,950,149 250,863 1,918,205 720,602 490,975 123,576 5,787,522 (250,864) 5,663,946 $ 6,508,124 $ 240,111 $ 5,787,522 Capital Project 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. A description of each individual Capital Project Fund included in the Comprehensive Financial Report is provided below: The Capital Project - City Facilities Fund was established to account for receipts and disbursements related to acquisition, design, construction and any other related Downtown Revitalization and Public Safety Facility capital project expenditures. The Capital Project - Parks Fund was established to account for receipts and disbursements related to acquisition, design, construction and any other related parks capital project expenditures. The Capital Project - Traffic Fund was established to account for receipts and disbursements related to acquisition, design, construction and any other related traffic project expenditures. The Capital Project - Transportation Fund was established to account for receipts and disbursements related to acquisition, design, construction and any other related street project expenditures. City of Federal Way / 72 CAPITAL PROJECT FUNDS COMBINING BALANCE SHEET December 31, 2001 With Comparative Totals for December 31, 2000 City Totals Facilities Parks Traffic Transportation 2001 2000 ASSETS Equity in pooled cash and investments S 7,899,884 S 500,054 S 300,886 $ 8,037,647 $ 16,738,471 S 17,291,698 Retainage in escrow - 24,393 - 124,033 148,426 63,273 Receivables (net): Accounts and contracts - - - 35,924 35,924 200,007 Interest 2,760 178 105 2,945 5,988 209,960 Due from other governments - 328,513 568,635 897,148 974,588 TOTAL ASSETS 7,902,644 853,138 300,991 8,769,184 17,825,957 18,739,526 LIABILITIES AND FUND BALANCE Liabilities: Vouchers payable 26,054 113,120 1,986 262,256 403,416 48,062 Retainage payable 11,299 - 11,299 21,015 Retainage payable - with escrow agent - 24,393 124,033 148,426 63,273 TOTAL LIABILITIES 26,054 148,812 1,986 386,289 563,141 132,350 Fund Balance: Unreserved-undesignated 7,876,590 704,326 299,005 8,382,895 17,262,816 18,607,176 TOTAL FUND BALANCES 7,876,590 704,326 299,005 8,382,895 17,262,816 18,607,176 TOTAL LIABILITIES AND FUND BALANCES $ 7,902,644 S 853,138 S 300,991 $ 8,769,184 17,825,957 S 18,739,526 City of Federal Way / 73 CAPITAL PROJECT FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE For the Year Ended December 31, 2001 With Comparative Totals for December 31, 2000 City Totals Facilities Parks Traffic Transportation 2001 2000 REVENUES: Intergovernmental $ $ 573,351 $ $ 3,770,851 $ 4,344,202 $ 2,255,725 Development Contribution/Donation 18,550 871,612 890,162 1,310,326 Miscellaneous: Interest 254,119 35,297 10,572 330,630 630,617 1,018,918 Other - - - - 250,010 TOTAL REVENUES 254,11 S 627,198 10,572 4,973,093 5,864,981 4,834,979 EXPENDITURES: Capital outlay 69,297 1,IS8,692 33,099 6,436,574 7,697,663 3,914,148 TOTAL EXPENDITURES 69,297 1,158,692 33,099 6,436,574 7,697,663 3,914,148 EXCESS (DEFICIENCY) OF REVENUES 184,821 (531,494) (22,527) (1,463,481) (1,832,681) 920,831 OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds from sale of fixed assets - - 325,000 325,000 - Operating transfers in - 198,308 55,738 254,046 4,439,336 Operating transfers out (13,148) (3,840) (55,737) (18,000) (90,725) (2,027,669) TOTAL OTHER FINANCING SOURCES (USES) (13,148) 194,468 (55,737) 362,738 488,321 2,411,667 EXCESS (DEFICIENCY) OF REVENUES AND OTHER AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES 171,673 (337,026) (78,264) (1,100,743) (1,344,360) 3,332,498 FUND BALANCES AT BEGINNING OF YEAR 7,704,917 1,041,352 377,269 9,483,638 18,607,176 15,274,678 FUND BALANCES AT END OF YEAR $ 7,876,590 S 704,326 b 299,005 $ 8,382,895 $ 17,262,816 $ 18,607,176 CITY •F r � 0 --_ Enterprise Fund Enterprise Funds are used 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. The Surface Water Management Fund was established to The Dumas Bay Centre Fund was established to account administer and account for all receipts and expenditures for the revenues and expenses related to the acquisition, related to the City s surface and storm water management capital improvements maintenance and operations of the system. City -owned Dumas Bay Centre and Knutzen Family Theatre. City of Federal Way / 76 ENTERPRISE FUND COMBINING BALANCE SHEET December 31, 2001 With Comparative Totals for December 31, 2000 Surface Water Dumas Bay Total Management Centre 2001 2000 ASSETS Current Assets Equity in pooled cash and investments $ 7,319,739 $ 569,271 $ 7,889,010 $ 6,244,654 Cash with escrow agent 109,069 - 109,069 148,798 Receivables (net): Taxes 101,954 - 101,954 94,541 Accounts and contracts - 9,633 9,633 487,312 Interest 2,632 194 2,826 72,053 Due from other governments - - - TOTAL CURRENT ASSETS 7,533,394 579,098 8,112,492 7,047,358 Property, plant and equipment: Land 3,708,654 2,109,640 5,818,294 5,818,294 Building/structures 35,233,201 3,542,489 38,775,690 38,788,883 Office fumiture/equipment 656,342 105,033 761,375 668,190 39,598,197 5,757,162 45,355,359 45,275,367 Less accumulated depreciation (8,511,491) (875,162) (9,386,653) (8,796,719) Net property, plant and equipment 31,086,706 4,882,000 35,968,706 36,478,648 Construction work in progress 5,569,244 28,663 5,597,907 5.145,562 TOTAL ASSETS $ 44,189.344 5 5A89,761 $ 49,679,105 $ 48,671,568 LIABILITIES AND FUND EQUITY Current liabilities: Vouchers payable $ 106,398 $ 61,994 $ 168,392 $ 213,908 Retainage payable - - - 3,730 Retainage payable - with escrow agent 109,069 - 109,069 148,798 Deposits payable - 9,275 9,275 11,048 Deferred revenue 126,876 121,585 248,461 230,447 Public works trust fund loan payable 216,503 - 216,503 216,503 Compensated absences payable 21,183 9,100 30,283 27,581 TOTAL CURRENT LIABILITIES 580,029 201,954 781,983 852,015 Long-term liabilities: Public works trust fund loan payable 3,249,347 - 3,249 347 3,465,849 TOTAL LONG-TERM LIABILTIES 3,249,347 - 3,249,347 3,465,849 TOTAL LIABILITIES 3,829,376 201,954 4,031,330 4,317,864 Fund equity: Contributed capital 32,637,520 1,823,998 34,461,518 34,965,532 Retained Earnings: Unreserved 7,722,448 3.463,809 11,186,257 9,388,172 Retained earnings 7,722,448 3,463,809 11,186,257 9,388,172 FUND EQUITY 40,359,968 5,287,807 45,647,775 44,353,704 TOTAL LIABILITIES AND FUND EQUITY $ 44,189,344 $ 5,489,761 $ 49.679,105 $ 43,671,568 City of Federal Way / 77 ENTERPRISE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND EQUITY For the Year Ended December 31, 2001 With Comparative Totals for December 31, 2000 Surface Water Dumas Bay Totals Management Centre 2001 2000 OPERATING REVENUES: Intergovernmental 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 Interest income Interest expense Donations/contributions TOTAL NON -OPERATING REVENUES (EXPENSES) INCOME (LOSS) BEFORE OPERATING TRANSFERS Operating transfers in Operating transfers out NET INCOME (LOSS) Depreciation reducing contributed capital Increase in retained earnings RETAINED EARNINGS, January 1 RETAINED EARNINGS, December 31 CONTRIBUTED CAPITAL, January 1 Increases to contributed capital Less amortization CONTRIBUTED CAPITAL, December 31 FUND EQUITY AT END OF YEAR $ - $ $ 23,791 2,993,554 663,023 3,656,577 4,187,292 175 11,134 11,309 29,750 2,993,729 674,157 3,667,886 4,240,833 872,379 212957 1,085,336 982,041 69,873 29,703 99,576 151,973 283,858 434,120 717,978 727,385 125,460 2,118 127,578 121,203 405,092 184,844 589,936 587,437 459,819 46,835 506,654 360,851 2,216,481 910,577 3,127,058 2,930,890 777,248 (236,420) 540,828 1,309,943 - - - 1,600 275,840 17,841 293,681 405,567 (34,360) - (34,360) (13,291) - - - 3,137 241,480 17,841 259,321 397,013 1,018,728 (218,579) 800,149 1,706,956 - 408,000 408,000 100,000 - - - (415,626) 1,018,728 189,421 1,208,149 1,391,330 405,092 184,844 589,936 587,437 1,423,820 374,265 1,798,085 1,978,767 6,298,628 3,089,544 9,388,172 7,409,405 7,722,448 3,463,809 11,186,257 9,388,172 32,956,690 2,008,842 34,965,532 33,013,191 85,922 - 85,922 2,539,778 (405,092) (184,844) (589,936) (587,437.) 32,637,520 1,823,998 34,461,518 34,965,532 $ 40,359,968 $ 5,287,807 $ 45,647,775 $ 44,353,704 City of Federal Way / 78 ENTERPRISE FUND COMBINING STATEMENT OF CASH FLOWS For the Year Ended December 31, 2001 With Comparative Totals for December 31, 2000 Surface Water Dumas Bay Totals Management Centre 2001 2000 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from users Cash received from other funds for goods and services Cash received from other governments for goods and services Cash payments to suppliers for goods/services Cash payments to employees Cash payments to other funds for goods and services Cash payments for other services/charges Cash payments to other governments for goods and services Cash payments for damage deposits Other operating receipts NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Subsidy from interlocal grant Operating transfers in Operating transfers out NET CASH PROVIDED (USED) BYNONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL AND CAPITAL - RELATED FINANCING ACTIVITIES: Public works trust fund loan proceeds Principal paid on debt service Interest paid on debt service Donations/contributions Acquisition of capital asset/construction work in progress NET CASH PROVIDED (USED) FOR CAPITAL AND CAPITAL -RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Receipts of interest NET CASH PROVIDED (USED) IN INVESTING ACTIVITES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating income (loss) Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation expense (Increase)tdecreasein accounts receivable (Incr¢ a)/decrease in taxes receivable (Inc rease)ldecrease in due from other funds (Increase)Idecrease, in due from other governments Increasel(decrease)in vouchers/aceounts payable InereawJ(decrease)in retainage payable Increase/(decrease) in due to other funds Increasel(decrease) in deposits payable Increasel(decrease)in taxes payable Increasel(decrease)in deferred revenue Increase/(decrewe) in accrued payroll/compensated absences payable TOTAL ADJUSTMENTS NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES S 3,445,629 $ 695,497 S 4,141,126 $ 3,752,755 73,138 (69,873) (29,703) (99,576) (151,973) (869,468) (213,166) (1,082,634) (963,175) (459,819) (46,835) (506,654) (360,850) (370,081) (393,414) (763,495) (656,835) (125,460) (2,118) (127,578) (121,203) • (1,772) (1,772) 1,206 175 11,134 11,309 29,640 1,551,103 19 6623 1,570,726 1,602,703 1,600 408,000 408,000 100,000 (415,626) 408,000 408,000 (314,026) - - - 2,475,000 (216,503) - (216,503) (86,239) (34,360) - (34,360) (13,291) - 3,137 (457,481) (28,663) (486,144) (3,181,326) (708,344) (28,663) (737,007) (802,719) 343,652 _ 19,255 362,907 412,972 343,652 19,255 362,907 412,972 1,186,412 418,215 1,604,627 898,930 6,242,396 151,056 6,393,452 5,494,522 7.428.808 569,271 7,998,079 6,393,452 777,248 (236,420) 540,828 1,309,943 405,092 184,844 589,936 587,437 455,778 21,901 477,679 (451,086) (7,413) - (7,413) (13,898) 49,347 (86,223) 40,706 (45,517) 70,551 (3,730) - (3,730) (12,629) (1,772) (1,772) 1,206 7,441 10,573 18,014 42,966 2,911 (209) 2,702 t8,966 773,855 256,043 1,029,B95 292.760 S 1,551,103 $ 19,623 $ 1,570,726 $ 1,602,703 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. A description of each individual Internal Service Fund included in the Comprehensive Annual Financial Report is provided below: 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%perating 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%perating costs and depreciation recovery will be charged City departments and funds. Debt service payments on specified facility acquisitions are included in this fund along with revenues dedicated to these payments. City of Federal Way / 80 INTERNAL SERVICE FUNDS COMBINING BALANCE SHEET December 31, 2001 With Comparative Totals for December 31, 2000 Risk Information Support Fleet and Buildings and Totals Manigcmcni Systems Services F.quipmrnt 2001 2000 ASSETS Current Assets: Equity in pooled cash and investments $ 3,871,595 $ 1,787,268 $ 192,823 $ 1.866,923 $ 1,067,322 $ 8.785,931 $ 6,040,535 Prepaid postage - - 5,000 - - 5,000 5,000 Receivables (net): Accounts and contracts - - - - - - - Inlerest 1,382 630 72 633 385 3,102 66,521 Due from other governments 15,511 - - 15,511 - TOTAL CURRENT ASSETS 3,888,488 1,787,898 197,895 1,867,556 1,067,707 8,809,544 6,112,056 Property, plant and equipment: Data processing/ Telecommunication equipment - 3,872,960 - - - 3,872,960 3,520,828 Transportation equipment - - 1,982,592 1,982,592 1,956,672 Heavy equipment - - 435,030 - 435,030 435,030 Buildings & furnishings - - - - 3,377,773 3,377,773 3,362,860 Other equipment 112,920 385,286 498,206 415,988 - 358722960 112,920 2.802,908 3,377,773 ]0,166,561 9,691,378 Less accumulated depreciation - (2,313,397) (109,517) (1,447,600) (1,788.029) (5,658,543) (45999,391) Net property, plant and equipment 1,559,563 3,403 1,355,308 1,589,744 4,508,018 4,691,987 TOTAL ASSETS 3,888,488 3,347,461 201,298 3,222,864 2,657,451 13,317,562 10,804,043 LIABILITIES AND FUND EQUITY Current liabilities: Vouchers payable 18,761 47,644 15,778 25,908 30,199 138,290 95,801 Certificates of participation payable - - - - 285,000 285,000 270,000 Compensated absences payable - 57,495 - - - 57,495 47,223 TOTAL CURRENT LIABILITIES 18,761 105,139 15,778 255908 315,199 480,785 413,024 Long-term liabilities: Certificates of participation payable - - _285,000 TOTAL LONG-TERM LIABILITIES - - - - - 285,000 TOTAL LIABILITIES 18,761 105,139 15,778 25,908 315,199 4805785 698,024 Fund Equity: Contributed capital 883,554 7,433 382,103 312,743 1,5855833 2,290,885 Retained Earnings: Unreserved 3,869,727 2,358,768 178,087 2,814,853 2,029,509 11,250,944 7,815,134 Retained Earnings 3,869,727 2,358,768 178,087 2,814,853 2,029,509 11,250,944 7,815,134 TOTAL FUND EQUITY 3,869,727 3,242.322 185,520 3.196 956 2,342,252 12,836,777 10,106,019 TOTAL LIABILITIES AND FUND EQUITY $ 3,888,488 $ 3,347,461 $ 201,298 $ 3,222,864 $ 2,657,451 $ 13,317,562 $ 10,804,043 City of Federal Way / 81 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND EQUITY For the Year Ended December 31, 2001 With Comparative Totals for December 31, 2000 Risk Information Support Fleet and Buildings and Totals Management Systems Services Equipment Furnishings 2001 2000 OPERATING REVENUES: Service charges and fees $ 678,307 $ 1,346,167 $ 174,542 $ 873,808 $ 625,869 $ 3,698,693 $ 3,338,317 Miscellaneous 537 - 537 2,357 TOTAL OPERATING REVENUES 678,307 1.346.704 174,542 873,908 625,869 3,699,230 3,340,674 OPERATING EXPENSES: Personal services - 535,554 - 26,639 23,788 585,981 534,791 Materials and supplies 1,762 49,832 19,487 188,799 14,306 274,186 278,833 Services and charges 246,971 311,745 132,992 198,852 256,684 1,147,244 1.074,720 Intergovernmental - 57,048 - 427 1,236 58,711 9,670 Insurance 232,131 66,847 - 298,978 270,785 Claims 67,700 - - - - 67,700 62,193 Depreciation - 471,886 4,271 387,254 197,436 1,060,847 1,111,091 TOTAL OPERATING EXPENSES 548.564 1,426,065 156,750 368.F18 493,450 3,493,647 3,342,083 OPERATING INCOME (LOSS) 129,743 (79,361) 17,792 4,990 132,419 205,583 (1,409) NON -OPERATING REVENUES (EXPENSES) Interest income 86,787 56,258 6,482 59,701 41,848 251,076 318,472 Interest expense - - - - (29,978) (29,978) (43,498) Gains/losses from disposal of fixed assets - 150 36,338 36,488 16,658 TOTAL NON -OPERATING REVENUES NET OF EXPENSES 86,787 56,408 6,482 96,039 11,870 257,586 291,632 INCOME (LOSS) BEFORE OPERATING TRANSFERS 216,530 (22,953) 24,274 101,029 144,289 463,169 290,223 Operating transfers in 2.023.294 - 2,028,294 121,895 NET INCOME (LOSS) 2,244,824 (22,953) 24,274 101,029 144,289 2,491,463 412,118 Add depreciation reducing contributed capital - 471,886 4,271 387,254 80,936 944,347 987,425 Increase in Retained Earnings 2,244,824 448,933 28,545 488,283 225,225 3,435,810 1,399,543 RETAINED EARNINGS, January 1 1,624,903 1,909,835 149,542 2,326,570 1,804,284 7,815,134 6,415,591 RETAINED EARNINGS, December 31 3,869,727 2,358,768 178,087 2,814,853 2,029,509 11,250,944 7,815,134 CONTRIBUTED CAPITAL, January 1 - 1,169,608 11,704 730,807 378,766 2,290,885 2,782,168 Increases to contributed capital 185,832 - 46,597 14,913 247,342 513,258 Decreases to contributed capital - (8,047) - (8,047) (9,950) Less amortization (471,886) (4,271) (387,254) (80,936) (944,347) (994,591) CONTRIBUTED CAPITAL, December 31 993,554 7,433 382,103 312,743 1,585,833 2,290,885 FUND EQUITY AT END OF YEAR $ 3,86%727 S 3.242,322 $ 185,520 g 3,196,956 $ 2,342,252 $ 12,836,777 $ 10,106,019 City of Federal Way / 82 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS For the Year Ended December 31, 2001 With Comparative Totals for December 31, 2000 Risk Information Support Fleet and Buildings and Totals Management Systems Services E4uipme:n F::r::i:7ririF: 2001 2000 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from users S 662.796 S 1,346,167 $ 174,542 $ 873,808 $ 625,869 $ 3,683,182 S 3,355,638 Cash payments to suppliers for goods and services (483,286) (413,272) (144,602) (380,494) (248,129 (1,669,783) 1669783 ( ) (1,748,642) Cash payments to employees - (525,282) - (26.639) (23,788 575,709 ( ) (537,409) Cash payments to claimants (67,700) - (67,700) (62,193) Cash payments to other funds for goods and services - - (66,847) - (66,847) (51,230) Other operating receipts 537 537 2,357 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 111,810 40B,150 29,940 399•a2.1 353,952 1.303.660 958,521 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Operating transfers in 2,028,294 - - - 2,028.294 121,895 NET CASH PROVIDED (USED) BY NON - CAPITAL FINANCING ACTIVITIES 2.028,294 - - - 2,028,294 121,895 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition of capital assets - (321,793) - (549,189) (14,913) (895,895) (633,011 Cash contributions for capital acquisitions - 155,493 77,907 14,913 248,313 312,962 Proceeds from sale of fixed assets - 150 - 36,338 - 36,488 16,658 Principal paid on debt service - - - (270,000) (270,000) (260,000 Interest and fiscal charges paid on debt service - (29.978) { J,9.9'7S7 (43.d98) NET CASH PROVIDED (USED) FOR CAPITAL AND RELATED FINANCING ACTIVITIES (166,1511) (434,944) (299,978) (901,072) _ (606 9, 69) CASH FLOWS FROM INVESTING ACTIVITIES: Receipts of interest 105,004 72.038 7,723 78,940 50,789 314,494 326,970 NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES 105.004 72,038 7,723 78.940 50,789 114,494 326,970 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,245,108 314,038 37,663 43,824 104,763 2,745,396 800,497 CASH AND CASH EQUIVALENTS AT BEGIN. OF YEAR 1,626,487 1,473,230 155,160 1,823,099 962,559 6,040.535 5,240.038 CASH AND CASH EQUIVALENTS AT END OF YEAR 3,871,595 1,787,266 192,823 1.866.923 1,067,322 8,785.931 6,040,535 RECONCILIATION OF OPERATING INCOME TO NET CASH FROV1DED (USED)BY OPERATING ACTIVITIES Operating income 129,743 (79,361) 17,792 4,990 132,419 205,563 (1,409) Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation expense - 471,886 4,271 387,254 197,436 1,060,847 1,111,091 (Increase)decrease in accounts receivable - - - - - 17,321 (Increase)decrease in prepaid insurancelpostage - - - - - 3,150 (Increase)decrease in due from other funds - - - - _ _ - (Increase)decrewe in due from other govts (15,511) - - - - (15.511) - Increase(decrease) in vouchers/accounts payable (2,422) 5,353 7,877 7,584 24,097 42,489 (169,014) Increase(decrease) in due to other funds - - - - _ Increase(decrease) in due to other governments - - Inerease(decrease) in accrued payroll/ compensated absences payable 10,272 101272 (2,618) TOTAL ADJUSTMENTS (17,933) 487,511 12.148 394,838 221,533 1,098,097 959,530 NET CASH FRCiV €DFD (USED) BY OPERATING ACTIVITIES $ 111,810 $ 408,150 $ 29,940 $ 399,828 $ 353.952 $ 1,303,680 5 958,521 SCHEDULE OF NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES: Contributions of capital assets $ 33,359 $ - S 94.518 $ - $ 127,877 $ 220,012 General Fixed Assets The General Fixed Assets Account Group accounts for all fixed assets of the City other than Account Group those recorded in the Internal Service and Enterprise funds. General fixed assets are reported in this account group since they do not represent financial resources available for appropriation in the governmental funds which acquire them. City of Federal Way / 84 COMPARATIVE SCHEDULE OF GENERAL FIXED ASSETS BY SOURCE December 31, 2001 and 2000 GENERAL FIXED ASSETS Investment in joint venture Land Building Other improvements Assets under capital lease Construction in progress TOTAL GENERAL FIXED ASSETS INVESTMENTS IN GENERAL FIXED ASSETS FROM: Capital Project Funds: General revenues General obligation bonds Grants General Fund: General revenues Donations Capital lease Special Revenue Funds: General revenues Grants Capital lease TOTAL INVESTMENT IN GENERAL FIXED ASSETS $ 1,971,762 $ 569,630 30,628,680 29,673,623 1,724,241 1,724,241 15,121,584 15,054,676 1,634,000 1,634,000 2,747,211 1,696,292 53,827,478 50,352,462 2,638,071 2,652,982 28,461,806 28,460,294 4,540,390 2,526,690 3,870,234 3,797,651 9,719,802 9,719,802 1,450,000 1,450,000 2,299,637 897,505 663,538 663,538 184,000 184,000 $ 53,827,478 $ 50,352,462 Note: Excludes all non -enterprise public domain assets such as streets, sidewalks, gutters, bridges, and lighting systems. City of Federal Way / 85 Function/Activity GENERAL GOVERNMENT Miscellaneous general government TOTAL GENERAL GOVERNMENT SECURITY OF PERSONS & PROPERTY CULTURE AND RECREATION TOTAL GENERAL FIXED ASSETS BY FUNCTION CONSTRUCTION IN PROGRESS TOTAL GENERAL FIXED ASSETS SCHEDULE OF GENERAL FIXED ASSETS BY FUNCTION AND ACTIVITY December 31, 2001 Joint Other Machinery Total Venture Land Buildings Improvements & Equipment $ 2,396,217 $ - $ 2,192,244 $ $ 19,973 $ 184,000 2,396,217 2,192,244 19,973 184,000 1,971,762 1,971,762 - - - 46,712,288 - 29,886,436 1,724,241 15,101,611 51,080,267 1,971,762 32,078,680 1,724,241 15,121,584 184,000 $ 53,827,478 Note: Excludes all non -enterprise public domain assets such as streets, sidewalks, gutters, bridges, and lighting systems. City of Federal Way / 86 SCHEDULE OF CHANGES IN GENERAL FIXED ASSETS BY FUNCTION AND ACTIVITY For the Year Ended December 31, 2001 General General Fixed Assets Fixed Assets O1/01/2001 Additions Deductions 12/31/2001 GENERAL GOVERNMENT Miscellaneous general government $ 1,441,160 $ 1,280,057 $ 325,000 $ 2,396,217 TOTAL GENERAL GOVERNMENT 1,441,160 1,280,057 325,000 2,396,217 SECURITY OF PERSONS & PROPERTY 569,630 1,402,132 - 1,971,762 CULTURE AND RECREATION 46,645,380 66,908 46,712,288 CONSTRUCTION IN PROGRESS 1,696,292 1,050,919 - 2,747,211 TOTAL GENERAL FIXED ASSETS $ 50,352,462 $ 3,800,016 $ 325,000 $ 53,827,478 Note: Excludes all non -enterprise public domain assets such as streets, sidewalks, gutters, bridges, and lighting systems. Statistical Section The Statistical Section provides information for the "Last Ten Fiscal Years ". The Tables for "Special Assessment Collections" and "Schedule of Revenue Bond Coverage" are not included since the City currently has neither special assessments outstanding nor any revenue debt in the City's Enterprise Fund. Table 1 GENERAL GOVERNMENTAL EXPENDITURES AND OTHER USES BY FUNCTION (A) GENERAL, SPECIAL REVENUE, AND DEBT SERVICE FUNDS 1 (B) CULTURE OTHER FISCAL GENERAL PUBLIC PHYSICAL TRANS- ECONOMIC (B) AND CAPITAL DEBT FINANCING TOTAL YEAR GOVERNMENT SAFETY ENVIRONMENT PORTATION 1 ENVIRONMENT HEALTH RECREATION OUTLAY SERVICE USES (C) EXPENDITURES 1992 $ 2,459,407 $ 6,602,857 $ 121,866 $ 7,924,118 $ 2,000,847 $ 1,069,470 $ 2,406,184 $ 401,998 S 2,101,319 $ 3,384,980 $ 28,473,046 1993 2,654,175 8,207,434 260,086 4,222,759 2,763,257 1,144,579 3,184,338 1,119,746 1,590,917 8,218,847 33,366,138 1994 2,842,741 8,864,249 196,621 4,266,560 2,309,212 1,339,925 2,737,432 11,967 1,639,837 7,810,973 32,019,517 1995 3,093,147 8,805,874 234,624 4,589,709 2,646,293 1,337,711 3,259,672 10,374 1,771,439 6,486,546 32,235,389 1996 3,831,238 10,269,193 304,196 5,309,948 2,298,040 488,604 2,944,815 1,677,848 1,717,048 3,161,572 32,002,502 1997 3,415,715 10,282,388 528,784 6141,223 2,258,033 457,211 2,521,085 319,120 2,982,786 8,695,717 37,602,062 1998 3,823,872 11,851,585 310,482 6:407,351 2,395,851 529,790 2,606,626 141,262 4,414,037 7,182,747 39,663,603 1999 4,464,896 13,430,529 257,483 4,737,307 2,536,058 557.610 3,006,660 143,886 5,209,547 7,795,429 42,139,405 2000 4,237,852 14,046,638 318,709 4,661,867 2,634,011 546,191 3,034,818 508,919 4,228,711 7,032,608 41,250,324 2001 4,724,252 14,264,309 378,066 41554,183 2,679,174 535,589 2,951,607 176,551 4,498,092 7,928,949 42,690,772 (A) All expenditures are reported on the modified accrual basis. They aiIso exclude residual equity transfers. (B) During 1992, the human service contracts were reclassified from Economic Environment to Health. Beginning 1996, a portion of MVET moneys were diverted from Cities to Counties to provide health service. Cities will no longer need to pay for health service. (C) Other financing uses in 1993 excludes $11,867,177 in amount remitted to refunding trustee NOTE: Prior to 1999, expenditures reported include Surface Water Management (SWM) as a Special Revenue Fund 1999 figures were revised to exclude SWM as the fund was converted to an enterprise fund. Table 2 SCHEDULE OF MAJOR REVENUES AND OTHER FINANCING SOURCES BY SOURCE (A) GENERAL, SPECIAL REVENUE, AND DEBT SERVICE FUNDS LICENSES INTER- CHARGES OTHER FISCAL AND GOVERNMENTAL FOR FINES AND MISCELLANEOUS FINANCING TOTAL YEAR TAXES(B) PERMITS REVENUE SERVICES FORFEITURES REVENUE SOURCES(C) REVENUE 1992 $ 14,351,929 $ 771,568 $ 9,349,850 $ 3,936,975 $ 414,178 $ 857,660 $ 2,957,298 $ 32,639,458 1993 15,414,561 877,369 7,132,007 3,679,367 504,580 673,704 3,186,012 31,467,600 1994 15,895,472 889,724 6,203,784 .4,061,229 553,579 834,792 3,766,908 32,205,488 1995 16,351,547 961,807 6,303,245 4,277,815 572,446 1,084,007 2,056,467 31,607,334 1996 18,080,794 917,219 5,667,480 4,195,678 520,670 929,396 2,029,230 32,340,467 1997 21,861,900 1,112,135 6,609,989 4,235,379 576,054 1,151,330 5,333,403 40,880,190 1998 24,024,928 1,192,610 6,311,889 4,797,634 791,113 1,511,601 4,718,447 43,348,222 1999 27,059,338 1,548,220 5,789,602 1,705,785 825,404 1,216,865 5,783,457 43,928,671 2000 28,495,459 1,434,027 5,251,899 2,219,948 902,762 1,920,328 4,814,672 45,039,095 2001 29,721,513 1,396,694 4,365,098 2,525,488 830,668 1,290,992 5,329,334 45,459,787 (A) Revenues are recorded on the modified accrual basis. (B) See Table 3 for further detail. (C) Other Financing Sources does not include capital leases of $12,000,332 in refunding bond proceeds in 1993. NOTE: Prior to 1999, expenditures reported include Surface Water Management (SWM) as a Special Revenue Fund. 1999 figures were revised to exclude SWM as the fund was converted to an enterprise fund. n A 00 �0 Table 3 TAX REVENUE BY SOURCE GENERAL, SPECIAL REVENUE AND DEBT SERVICE FUNDS MISCELLANEOUS GENERAL BUSINESS AND OTHER FISCAL PROPERTY GENERAL UTILITY OCCUPATION TAXES AND YEAR TAXES SALES TAX TAXES TAXES ASSESSMENTS (*) TOTAL TAXES 1992 $ 4,908,731 $ 6,824, 153 $ - $ - $ 2,618,245 $ 14,351,929 1993 5,400,350 7,366,796 - - 2,647,415 15,414,561 1994 5,654,655 7,606,672 - - 2,634,145 15,895,472 1995 5,911,017 7,916,114 - - 2,524,416 16,351,547 1996 6,022,066 8,037,143 935,497 3,086,088 18,080,794 1997 6,163,988 8,320,209 3,859,545 3,518,158 21,861,900 1998 6,447,999 8,854,740 4,553,650 4,168,539 24,024,928 1999 6,5882903 9,717,585 5,235,168 5,517,682 27,059,338 2000 6,976,972 10,332,439 5,590,293 5,595,755 28,495,459 2001 7,215,272 10,368,153 6,098,264 6,039,824 29,721,513 (') Includes real estate excise, local criminal justice, gambling excise, and other taxes and related assessments. (B) FISCAL TOTAL TAX CURRENT TAX YEAR LEVY COLLECTIONS 1992 $5,031,533 $ 4,758,677 1993 5,374,597 5,130,550 1994 5,598,786 5,443,726 1995 5,976,531 5,829,648 1996 6,075,765 5,918,549 1997 6,180,735 6,041,927 1998 6,474,762 6,339,081 1999 6,667,028 6,510,516 2000 7,030,723 6,858,636 2001 7,305,894 7,107,918 PROPERTY TAX LEVIES AND COLLECTIONS (A) Table 4 TOTAL TOTAL PERCENT DELINQUENT COLLECTIONS OUTSTANDING OUTSTANDING OF LEVY TAX TOTAL TAX AS % OF DELINQUENT TAXES AS % OF COLLECTED COLLECTIONS COLLECTIONS CURRENT LEVY TAXES CURRENT LEVY 94.6% $ 151,681 $ 4,910,358 97.6% $ 394,906 7.8% 95.5% 224,849 5,355,399 99.6% 368,405 6.9% 97.2% 274,559 5,718,285 102.1% 213,611 3.8% 97.5% 131,665 5,961,313 99.7% 209,953 3.5% 97.4% 129,237 6,047,786 99.5% 197,005 3.2% 97.8% 125,222 6,167,149 99.8% 198,240 3.2% 97.9% 138,180 6,477,262 100.0% 187,806 2.9% 97.7% 135,953 6,646,469 99.7% 197,059 3.0% 97.6% 131,554 6,990,190 99.4% 249,607 3.6% 97.3% 145,498 7,253,416 99.3% 302,374 4.1% Sources: (A) Most of data has been derived from the "Annual Tax Receivable Summary" prepared by the King County Finance Department. (B) Department of Assessments Annual Report by King County Assessor ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY" FISCAL PERSONAL STATE PUBLIC YEAR REAL PROPERTY PROPERTY SERVICE PROPERTY 1992 $ 3,448,013,318 $ 120,842,393 $ 75,109,073 $ 1993 3,454,234,214 118,895,184 76,270,795 1994 3,523,883,690 112,067,438 83,521,024 1995 3,670,820,831 148,316,510 76,028,872 1996 3,750,745,563 141,394,338 86,053,600 1997 3,961,545,010 155,884,327 79,303,838 1998 4,152,466,303 158,019,169 76,348,173 1999 4,490,661,284 171,187,056 90,322,059 2000 4,932,362,526 187,812,046 93,021,743 2001 5,322,237,420 226,854,474 101,339,376 Real, personal, and state public service property has been assessed at 100% of the estimated value. NOTE: These figures includes all final tax adjustments, omits and senior citizen exempted property. This total assessed value was reduced by senior citizen exemptions (no tax amounts) of $27,409,244 and prior year omits of $2,386,759 yielding a regular levy value of $5,620,635,267. These assessed valuations are the basis for the following year's tax levy. Source: King County Assessors Office. TOTAL 3,643,964,784 3,649,400,193 3,719,472,152 3,895,166,213 3,978,193,501 4,196,733,175 4,386,833,645 4,752,170,399 5,213,196,315 5,650,431,270 Table 5 PERCENT INCREASE (DECREASE) 13.4% 0.1% 1.9% 4.7% 2.1% 5.5% 4.5% 8.3% 9.7% 8.4% Table 6 PROPERTY TAX LEVIES -DIRECT AND OVERLAPPING GOVERNMENTS FEDERAL WAY EMERGENCY FISCAL CITY OF SCHOOL KING WASHINGTON GREEN RIVER PORT OF FIRE DISTRICT MEDICAL YEAR FEDERAL WAY DISTRICT #210 COUNTY STATE FLOOD ZONE SEATTLE #39 LIBRARY SERVICES TOTAL TAX RATES PER $1,000 OF ASSESSED VALUATION 1992 1.57 4.41 1.80 3.54 0.04 0.34 1.59 0.54 0.25 14.08 1993 1.48 4.44 2.14 3.30 0.04 0.31 1.50 0.56 0.24 14.01 1994 1.54 5.06 2.21 3.40 0.05 0.30 1.58 0.58 0.25 14.97 1995 1.57 5.18 2.25 3.42 0.05 0.29 1.63 0.62 0.25 15.26 1996 1.56 5.26 2.21 3.50 0.05 0.29 1.67 0.62 0.25 15.41 1997 1.56 5.06 2.13 3.52 0.05 0.28 1.58 0.62 0.25 15.05 1998 1.55 4.65 1.85 3.51 0.05 0.26 1.50 0.60 - 13.97 1999 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 0.19 145 0.56 0.25 13.04 DETAIL OF TAX RATES FOR 2001 Basic Rate 1.41 - 1.34 3.15 0.05 0.19 1.45 0.48 - 8.08 Voted Rate - 4.44 0.21 - - 0.07 0.25 4.96 TAX LEVIES 1992 S 5,031,533 $ 20,813,253 $ 187,697,900 S 369,890,459 $ 430,547 S 35,898,437 $ 7,272,423 S 23,199,099 $ 26,073,064 S 676,306,715 1993 5,374.597 23,484,195 249,007,068 386,120,736 474,606 35,646,913 7,770,737 32,182,594 27,960,911 768,022,357 1994 5,598,786 26,891,328 259,088,827 399,086,354 502,979 35,646,867 8,257,614 35,252,354 29,312,268 799,637,377 1995 5,976,531 28,263,797 271,408,531 413,378,092 533,178 35,646,159 8,805,938 41,126,042 30,214,063 835,352,331 1996 6,075,765 28,940,230 268,662,181 427,109,738 565,205 35,647,165 9,118,681 41,040,476 30,492,034 847,651,475 1997 6,180,735 28,476,471 268,141,201 444,672,037 599,125 35,647,528 8,843,258 43,661,239 31,533,777 867,755,371 1998 6,474,762 27,530,445 248,678,961 472,459,927 635,052 35,646,835 8,378,714 46,603,642 26,137 846,434,475 1999 6,667,028 28,468,974 264,133,712 500,994,725 714,606 35,647,362 8,596,565 51,173,675 43,212,202 939,608,849 2000 7,030,723 29,878,996 278,515,900 545,390,795 748,642 35,647,430 8,596,565 54,618,346 45,070,501 1,005,497,898 2001 7,305,894 32,859,841 290,369,516 589,103,721 786,904 35,646,678 9,906,591 59,634,503 46,122,721 1,071,736,369 Source: King County Assessor's Office and King County Department of Finance Table 7 RATIO OF NET GENERAL BONDED DEBT TO ASSESSED VALUE AND NET BONDED DEBT PER CAPITA RATIO OF NET (B) (C) BONDED DEBT NET BONDED FISCAL (A) ASSESSED GROSS LESS DEBT NET TO ASSESSED DEBT PER YEAR POPULATION VALUE BONDED DEBT SERVICE FUNDS BONDED DEBT VALUE CAPITA 1992 72,350 $ 3,623,964,550 $ 17,325,000 $ 1,434,785 $ 15,890,215 0.0044 $ 219.63 1993 75,320 3,630,313,901 20,095,000 1,948,291 18,146,709 0.0050 240.93 1994 73,500 3,699,163,886 19,305,000 2,090,674 17,214,326 0.0047 234.21 1995 74,290 3,875,091,033 23,335,000 1,661,823 21,673,177 0.0056 291.74 1996 75,240 3,958,913,902 26,587,000 1,917,779 24,669,221 0.0062 327.87 1997 75,960 4,177,359,264 41,446,063 5,047,726 36,398,337 0.0087 479.18 1998 76,820 4,348,600,049 38,834,824 5,528,984 33,305,840 0.0077 433.56 1999 76,910 4,717,399,199 35,385,483 6,052,008 29,333,475 0.0062 381.40 2000 83,259 5,178,119,377 37,566,992 6,172,926 31,394,066 0.0061 377.07 2001 83,890 5,620,635,267 34,363,272 6,808,657 27,554,615 0.0049 328.46 (A) Sources: U.S. Census Bureau; State of Washington Office of Program Planning and Fiscal Management, Population Study Division; and the City's Community Development Department. (B) The final certified Regular Levy assessed value of taxable property which was used by the King County Assessor's Office for use in calculating levy rates for the following year's tax roll. The total assessed valuation of $5,620,635,267 has been reduced by senior citizen exemptions of $27,409,244 and prior year omits of $2,386,759 to arrive at taxable assessed valuation. (C) Includes certificates of participation issued in 1992 and 1999 and Public Works Trust Fund Loan issued in 1994, 1996, 1997 and 2000, and general obligation bonds issued in 1995, 1996 and 1997. DESCRIPTION Statutory debt limit: (2000 AV=$5,620,635,267) (A) 1.50% AV Q 100% 2.50%AV ® 100% Add: Cash on hand for debt redemption (B) Less: Bonds and COPs outstanding REMAINING DEBT CAPACITY Table 8 COMPUTATION OF LIMITATION OF INDEBTEDNESS December 31, 2001 GENERAL DEBT CAPACITY EXCESSLEVY EXCESS LEVY TOTAL (Limited) (Unlimited) OPEN SPACE UTILITY DEBT COUNCILMANIC EXCESS LEVY AND PARK PURPOSES CAPACITY $ 84,309,529 $ (84,309,529) 140,515,882 140,515,882 140,515,882 421,547,646 12,979,412 12,979,412 (30,897,423) (30,897,423) $ 66,391,518 $ 56,206,353 $ 140,515,882 $ 140,515,882 $ 403,629,635 TOTAL REMAINING "GENERAL" CAPACITY (C) $122,597,871 (A) This figure represents the City's final total taxable assessed valuation (AV) for 1999 which was used to determine the 2000 property tax levy (B) Reflects balance available in the Debt Service Fund, Utility Tax Fund and Building & Furnishings Fund as of December 31, 2000. (C) Combined total for Councilmanic, Financing Lease, and Excess Levy capacities. Table 9 COMPUTATION OF DIRECT AND OVERLAPPING DEBT December 31, 2001 (A) (B) GROSS GENERAL PERCENTAGE AMOUNT OBLIGATION DEBT APPLICABLE TO APPLICABLE TO JURISDICTION OUTSTANDING FEDERAL WAY FEDERAL WAY KING COUNTY $ 661,798,584 2.77% $ 18,331,821 PORT OF SEATTLE 240,125,000 2.77% 6,651,463 SCHOOL DISTRICT #210 95,655,000 69.18% 66,174,129 LIBRARY 51,460,000 6.43% 3,308,878 TOTAL OVERLAPPING DEBT 1,049,038,584 94,466,290 CITY OF FEDERAL WAY 34,363,272 (C) 100.00% 34,363,272 TOTAL DIRECT AND OVERLAPPING DEBT $ 1,083,401,856 $ 128,829,562 (A) Total general obligation bonds outstanding on December 31, 2001, exclusive of refunded bonds. Source is King County Department of Finance. (B) Determined by ratio of 2001 assessed valuation of property subject to taxation in overlapping unit to valuation of property subject to taxation in reporting unit. (C) Includes certificates of participation issued in 1992 and 1999, Public Works Trust Fund Loan issued in 1996, 1997 and 200C, and general obligation bonds issued in 1995, 1996, 1997 and 2000. RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL BONDED DEBT TO TOTAL GENERAL GOVERNMENTAL EXPENDITURES FISCAL (A) YEAR PRINCIPAL INTEREST (B) TOTAL GENERAL TOTAL DEBT GOVERNMENTAL SERVICE EXPENDITURES Table 10 RATIO OF DEBT SERVICE TO GENERAL GOVERNMENTAL EXPENDITURES 1992 $ 365,000 $ 1,725,325 $ 2,090,325 $ 28,473,046 7.3% 1993 410,000 1,041,471 1,451,471 33,366,138 4.4% 1994 590,000 1,046,468 1,636,468 32,019,517 5.1% 1995 765,000 1,001,427 1,766,427 32,235,389 5.5% 1996 432,280 1,278,552 1,710,832 32,002,502 5.3% 1997 1,222,090 1,755,354 2,977,444 37,602,062 7.9% 1998 2,376,239 2,037,798 4,414,037 39,663,603 11.1% 1999 3,302,102 1,907,445 5,209,547 42,139,405 12.4% 2000 2,498,853 1,729,858 4,228,711 41,250,324 10.3% 2001 2,700,478 1,797,614 4,498,092 42,690,772 10.5% (A) Excludes bond issuance and debt registration costs. (B) Includes other financing uses for general, special revenue, and debt service funds in 1993, but excludes residual equity transfers and the amount remitted to refunding trustee of $11,867,177. See Table 1 for detail. Table 11 DEMOGRAPHIC STATISTICS EDUCATION LEVEL IN YEARS FISCAL PER CAPITA MEDIAN OF FORMAL SCHOOL UNEMPLOYMENT YEAR POPULATION INCOME AGE SCHOOLING ENROLLMENT (A) RATE (B) 1992 72,350 $ 15,155 30.6 13.0 19,488 5.7% 1993 75,320 16,607 30.6 13.0 19,856 6.0% 1994 74,413 16,206 30.6 13.0 20,043 5.2% 1995 74,290 17,126 30.6 13.0 20,331 4.9% 1996 75,521 17,401 30.6 13.0 20,733 4.6% 1997 75,960 25,569 32.5 I3.0 21,478 3.1% 1998 76,820 22,874 33.3 13.0 21,865 2.9% 1999 76,910 29,494 33.4 13.0 22,407 3.0% 2000 83,259 29,210 32.5 13.0 22,289 3.1% 2001 83,890 22,45I 32.5 13.0 22,911 5.2% (A) Includes public school enrollrhent. Kindergarten is included though not State mandated. (B) The unemployment rates for 1992 through 1998 reflect the annual average for the City of Federal Way, which is based on. census share methodology. Sources: Data was obtained from U. S. Census Bureau School data was provided by the Federal Way School District. 00 00 Year 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Commercial Construction (A) Value Permits (In Thousands) 175 $ 16,790 238 25,986 187 33,530 211 33,071 149 18,177 169 9,704 188 50,863 180 43,359 250 38,554 291 59,384 (A) Source: (B) Source: (C)] Source: PROPERTY VALUE, CONSTRUCTION AND BANK DEPOSITS Residential Construction (A) Value Permits (In Thousands) 400 $ 36,101 358 34,430 359 34,846 322 27,165 257 21,276 367 27,952 364 23,301 374 26,229 185 11,462 166 7,914 Multi -Family Construction (A) Value Permits (In Thousands) 2 523 3 215 3 11,793 10 12,749 11 7,594 5 16,167 12 3,816 6 1,790 Bank Deposits (B King County (In Millions) 5 19,347 18,855 18,763 19,034 16,344 17,125 19,650 18,337 18,678 20,334 Table 12 Property Assessed Valuation (C) Total Taxable Exemptions Non -Taxable On Thousands) (In Thousands) (In Thousands) $ 3,643,965 $ 38,500 S 15,694 3,649,400 43,735 16,497 3,719,472 51,116 17,983 3,895,166 53,384 18,126 3,958,914 56,383 17,116 4,177,359 57,686 16,362 4,348,600 44,629 32,685 4.717.399 48,282 31,824 5,178,119 46,551 29,984 5,620,635 44,646 27,409 Federal Way Community Development Department Commercial construction includes alterations. Other building -related permits (plumbing, mechanical, fire alarm, etc.) numbering 1,693 and valued at $2,280,405 have been excluded Federal Reserve Bank of San Francisco. The deposits disclosed are for June 30 of the prior year The FDIC does not publish its annual update until late June King County Assessors Office. See Table 5 for further assessed value information Table 13 PRINCIPAL TAXPAYERS December 31, 2001 Percentage 2001 of Toml Assessed Assessed Taxravcr Typc of Business V.Iuatlan Valnation(A) Wcyerh.c—Real Estate Co. Real Estate $ 193,4]8,714 3.44% Pulci Sound Energy Electric/Gas 48,947,972 0 87% Newman Properties (So Tec Maly Shopping Center 43,915,800 0.78X U.S. Wm Communieations/relephone 37'972,692 0.68% G t—y Center Retail Shopping Center 27,243,600 0 48% Harsch Investment Properties /Ross Places Shopping Center 24,529,000 0.44% BRE Properties Real Estate Managemcm 16,141,000 0.29% Cop- Retailer/ Wholesaler 14,692,265 0.26% Campus Business Parks LLC Rol Estate Invesun-I/Holding 14,610,000 0.26% Quadrant Corporation Real Estate Management 14,276,400 025% Virginia Mason Clinic Medical Services I1,245, 100 0.20% S 447,002,543 7.95% PRINCIPAL EMPLOYERS December 31. 2001 Numheror TasE!Zcr Typc oI Basin— Empinyerss FEDERAL WAY SCHOOL DIST FA-ottan R t N85 WEYERHAEUSER COMPANY Lumber Produce 1.4645 WORLD VISION Chrisdan Relief Agency 663 US POST OFFICE/FEDERAL WAY Postal Service 632 ENCHANTED PARKS Amusement Center 537 ST FRANCIS HOSPITAL Medical Services 518 CITY OF FEDERAL WAY, Mis-Ilan-us Services 440 LAXHA FEDERAL WAY PROPERTIES Real Estate 391 SAFEWAY R:II Grocery 282 COSTCO WHOLESAL-E CORPORATION Wiwlualc 251 FRED MEYER Retail 250 THE BON MARCHE Retail 240 VIRGINIA MASON FEOERAL.WAY Mcdlal Smices 235 WAL-MART Recall 225 ALBERTSONS Retail Grocery 220 BEVERLY HEALTHCARE R REHAB, FEDERAL WAY Medical Smlces 220 PARAMETRIX INC Miscellaneom Smlces 200 PRUDENTIAL NW REALTY ASSOC Rol &taro 200 WINCO FOODS Retail Grocery 200 Spherimt Miscellaneous Services 199 SEARS, ROEBUCK & CO. Retail 186 THE HOME DEPOT Retail ISO UNICCO SERVICE COMPANY Mlscellanous Services 161 LIFE CARE CENTER OF F�DERAL WAY Nursing Fecility 160 CAPITAL ONE SERVICES INC Financial Institution 150 PI POCKETS CASINO Casio 133 HALLMARK MANOR Retail 130 TARGET Retail Do FEDERAL WAY FIRE DEPARTMENT Social Service 129 LOWE'S HOME MiFROVBffiWr WAREHOUSE Retail 129 BROOM AM C0N201UNFry CHURCH Miscellaneous Services 122 PLAYERS CASINO SPORTS BAR/GRILL Caalo 120 ALASKA AIRLINES I Travel Agencies 112 BEROEIIIABAM ENGINEHRS MiscWlwmw Sm 1= 110 LSI LOGIC CORPORATION Miaceilanarn Sen•Iss 110 TOP FOODS k DRUG Retail Grocery 109 RED ROBIN Restaurant 105 BEST BUY Retail 100 NORTHWEST CASCADE 114C Miscellaneous Sml= 100 SALMOLUX INC Food Store 100 (A) 2001 assessed valuations for taxes collected In 2002. Total 2101 assessed valuation for the City is 55,620,635,267 Source: King County AssrsWr- Principal Tsxpaym. City of FWeml Way Businm Lloensn - Principal Employers - includes both full-time and part-time employees. NAME OF COMPANY St. Paul Fire and Marine The Fidelity and Deposit St. Paul Fire and Marine The Fidelity and Deposit St. Paul Fire and Marine St. Paul Fire and Marine St. Paul Fire and Marine St. Paul Fire and Marine The Fidelity and Deposit Company of Maryland St. Paul Fire and Marine SCHEDULE OF INSURANCE IN FORCE Table 14 December 31, 2001 ANNUAL POLICY NUMBER POLICY PERIOD DETAILS OF COVERAGE LIABILITY LIMITS PREMIUM GP09303975 01/31/2001 Public Officials Per claim & General aggregate - $ 34,011 to Liability Coverage $5,000,000 01/31/2002 Deductible - $5,000 GP09303975 04/04/2001 Public Official Bond Coverage Limit - $50,000 $ 250 to Management Services Director 04/04/2002 GP09303975 10/01/2001 Public Official Bond Coverage Limit - $50,000 $ 250 to City Manager 10/01/2002 GP09303975 01/31/2001 General Liability Per claim - $2,000,000 $ 40,227 to Coverage General aggregate - $2,000,000 01/31/2002 Deductible - $5,000 GP09303975 01/31/2001 Property Buildings/contents - $11,168,125 $ 15,914 to Coverage Extra expense - $1,308,048 01/31/2002 Valuable papers - $460,000 Deductible - $5,000 Fine Arts - $25,000 Deductible - $1,000 GP09303975 01/31/2001 Auto Liability & Coverage Limit - $2,000,000 $ 58,894 to Physical damage Collision Deductible - $1,000 01/31/2002 Comprehensive deductible -$100 Liability - $5,000 30268610 & 01/01/2001 to 01/01/2002 Faithful Performance, Coverage Limit - $250,000/bond $ 578 CCP126861008 01/01/2002 to 01/01/2003 Fidelity/Emp. Dishonesty Deductible - $2,500 & Erisa Bond Deductible (Erisa) - 0 GP09303975 01/31/2001 Inland Marine Coverage Limit- $187,500 $ 5,652 to Deductible - $1,000 01/31/2002 Coinsurance - 90% page 1 of 2 City of Federal Way / 102 7 C y 'DOIL F o z v z C C a 0 -n O r o o 0 o o to o to o to E E o ° o v c ^� _ eo C p C a va a a A U 0 L N O U a N 0 bo O •C C P. us ss C7 va 0 0 0 d 0 0 ss o 0 0 � � O O O 0 0C> m O O 6N9 11 N p y p fA N p 69lo N p E E bo a U a3 too mw U U u 0 a A U E mo $ E o G A a .aUEn x Via° o E C a3 ;, h O Y C.7 o o �- - c7 O ' U (j U w {.j E1 x o CL 'a W LC W 3 M P. U C7. U a Q PD• N �; N E; N N N N N O CDO CDO O O O O O O O O O O O O O O O O O O O O O O O N N N rn m 0 rn 0 01 m rn 0 a a 0 0 a 01 C, 0 01 01 a a a w C7 C7 C7 C7 C7 C7 C7 �5 A A C F C C C bp C G C V � W ctl td cd N ttl N � 0 m�a a m F 00 City of Federal Way / 103 aa o�000 00 o� o 0 0 0 0 v� �000000 rp 6A 6 fsfio5 bg64 Q O O O O O O O fro% qq rs6s rs z z kn �n , �, w) oo d ��V)6sos 6s� 9 C F O a, O a� �D 0 Vw. 0 zWw¢cQ7.�w O O a UU � �O .Ut" Q�� W Z 0 0 pUQR"UU P4 A A w U W O F- zow�w�au�3 �UU�z�Wa � UAUOU a in., 69 City of Federal Way / 104 Table 16 TYPE OF GOVERNMENT Council - City Manager ORGANIZATION STRUCTURE Legislative Executive Mayor 1 City Manager 6 Councilmembers 2 Assistant City Managers MISCELLANEOUS STATISTICAL INFORMATION DECEMBER 31, 2001 Administrative 6 Department Directors CORPORATE INFORMATION The City of Federal Way is a noncharter optional code City. It was incorporated as an optional code City on February 28, 1990, and is governed under the provisions of the Optional Municpal Code of the Revised Code of Washington. Optional Code City status increases the City's operating authority by extending it to the powers of all four city classifications which exist in Washington law. LOCATION AND AREA Federal Way, the seventh largest city in the State of Washington, encompasses an area of 21.5 square miles. It is located in South King county approximately 25 miles south of Downtown Seattle and 8 miles north of Downtown Tacoma. The community is residential commercial, with the populace employed locally in neighboring cities such as SeaTac, Kent, Tacoma, Bellevue and Seattle. The City has approximately 32,855 housing units. It is 6 miles from the Port of Tacoma and 9 miles south of SeaTac International Airport. The City is served by Interstate 5 and state highways 99 and 509. Frequent Metro public bus service is available to both Seattle and Tacoma throughout Federal Way. Three express park -and -ride lots are provided. POPULATION, REGISTERED VOTERS AND EMPLOYMENT WITHIN CITY LIMITS The population of Federal Way is presently 83,890, of which 43,682 are registered voters. A total of 29,6*st.) people are employed within the City limits. NUMBER OF CITY EMPLOYEES During the year 2001, the City employed 295 full-time salaried, 20 part-time hourly, and 163 temporary employees. There were 109 commissioned police officers and no uniformed firefighters. The Teamsters Union #763 represented 15 employees (Public Works Maintenance and Parks Maintenance), 34 employees were represented by the PSSA (Police Support Services Association), and the Police Guild represented 82 Police Officers during 2001. RECREATIONAL FACILITIES 28 Developed park sites covering 493.5 acres 20 Undeveloped park sites covering 352 acres (including open space) 19 Public tennis courts 9 which are owned -by -the City__ 2 Public swimming pools, both which are owned by King County 2 Trails covering 4 miles OTHER CITY OWNED FACILITIES 1 City Hall 1 Parks Maintenance Facility 1 Dumas Bay Centre 1 Klahanee Community/Senior Center PUBLIC EDUCATION ENROLLMENT COUNT 1995 1996 1997 1998 1999 2000 2001 23 Elementary Schools 11,524 11,689 11,930 12,248 12,258 12,242 12,493 7 Jr. High Schools (incl Public Academy) 4,701 4,838 4,979 4,956 4,994 5,013 5,331 4 High Schools 3,730 3,904 4,103 4,116 4,529 4,557 4,415 2 Alternative Schools (incl. Internet Academy) 376 302 466 545 626 477 672 Total Enrollment 20,331 20,733 21,478 21,865 22,407 22,289 22,911 1,420 Certified full-time equivalency teachers and administrative staff. City of Federal Way / 105 Table 16 MISCELLANEOUS STATISTICAL INFORMATION DECEMBER 31, 2001 (Continued) MILES OF STREET Streets (Center Line Miles). ..------- -------- ..........256.86 miles SIGNALS/STREET LIGHTS City -owned traffic signals maintained by: Department of Transportation ................ ............. ..._ 4 KingCounty .................................... .................. 65 Street lights owned by City of Federal Way .................... 668 Street lights owned by Puget Power ........... ._._....:_..... :..... 2835 LOCAL TAXES ON BUSINESSES Franchise Tax - Cable TV ...................... Gambling Taxes: Bingo/Raffles....... ................................... 5.00% Amusement/Games .......... ° Punchboar/Pull Tabs ................................. 5 00% Cardrooms............................................. 20.00% Local Sales Tax (Collected by the State) ........................ 8 80% POLICE INFORMATION 19955 19996 1997 1998 1999 2000 2�1 Offenses: Forcible Rape (including attempts) 71 73 37 58 53 43 49 Robbery 173 188 154 153 115 128 124 Criminal Homicide 3 3 2 2 4 7 4 Aggravated Assault 167 171 121 159 167 158 141 Vehicle Theft 843 807 746 761 808 849 1179 Burglary (commercial & residential) 881 965 643 648 573 533 521 Larceny 4300 4086 3901 3393 3097 3072 3516 Arson 38 35 24 39 38 36 17 Citations: Traffic 14,258 8,660 11,196 13,382 10,890 13,340 12,767 Jail Facility: King County Jail used at $70.90 per day per person, plus $139.39 booking fee per person. FIRE AND EMERGENCY MEDICAL RESPONSE INFORMATION Fire and Emergency Medical Response information reflects the greater Federal Way area, which is served by Fire District #39. im im 1m 12" 1222 2M 2.QU Fire and Other Responses 1,902 2,018 1,985 2,357 2,009 2,278 1,920 Emergency Medical 5,653 6,007 5,853 6,589 6,870 7,193 7,240 BUILDING RELATED PERMITS AND VALUES im 1996 im M 1222 2M 2M Building Permits 560 422 576 582 573 447 463 Estimated Value (In Millions $) $60.7 $51.3 $53.3 $81.9 $85.8 $53 8 $69.1 Other Building Related Permits 625 656 864 821 1007 1546 1693 Estimated Value (In Millions $) $2.8 $37.6 $18.5 $27.0 $11.0 $1.5 $2.3 TAXABLE SALES (in millions) 1995 12966 1997 19988 1999 2000 2001 Retail Sales $942.4 $956.8 $978.9 $1,049.3 $1,137.0 $1,212.1 $1,220 Real Estate Sales $219.0 $305.0 $375.4 $438.8 $487.6 $429.9 $400 CITY OF