2008 Annual Comprehensive Financial Report (08-003)City of Federal Way,
WAS H I N GTO N
2008
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
FOR YEAR ENDED DECEMBER31v 2008
Prepared By:
The Finance Department
Property of City Clerk's Office
PERMANENT RECORD
DO NOT DESTROY
GS50-03D-02, Rev. 1 (CAFR)
—City of Federal Way History —
The earliest recorded accounts of the Federal Way area tell of Native American families who resided in the area of
the Muckleshoot Reservation on the east side of the Green River Valley and traveled west to the shores of Puget
Sound for the plentiful fisheries resources. Generations of Muckleshoot Indians wore a westward trail across the
heavily forested plateau to the area which is now Saltwater State Park. The arrival of the white man in the nineteenth
century resulted in a steady decline in the Indian population and by 1890, nearly the entire population had
disappeared from the area. Isolated on a triangular shaped plateau rising steeply from Puget Sound, the Federal Way
area had little waterfront access or roadways and accordingly, was sparingly developed compared to Tacoma and
Seattle. As late as the turn of the century, the original settlers at Dash Point and Dumas Bay had to row to Tacoma
for supplies and mail. Old Military Road, constructed around 1856 and extending north from Fort Steilacoom, past
Star Lake to Seattle and Fort Lawton, was the first road through the area.
Over time, narrow dirt roads were added to provide east/west access and by 1900, a road was constructed between
Star Lake and Redondo. The second crossroad, the "Seattle Road," connected old Military Road and Kent. The
Seattle -Tacoma Interurban Line, completed in 1901, provided a fast and easy way to reach these urban cities.
Improved access brought many visitors to the area and Star Lake became a popular summer recreation site.
By the 1920s, Federal Highway 99, the interstate that linked the western states from north to south, was complete.
At this time, Federal Way was still primarily forest and farmland. Fred Hoyt had a cabin on Dumas Bay and started
a road to Tacoma (still called Hoyt Road). The timber companies, which had a major logging operation going, built
an early railroad line and were instrumental in getting Marine View Highway (now Dash Point Road) built in the
early 1920s. This roadway spurred development along the coastline. Soon thereafter, Peasley Canyon Road was
built to connect Military Road with the Auburn Valley. This road later became known as South 320th Street. In
these early days, roadways set the stage for development in the area and they still play an important role in the City
today.
By the start of World War 11, a number of small, thriving communities made up the area that is now Federal Way.
Some communities were clustered around lakes, such as Steel Lake, Star Lake, and Lake Geneva. Others were sited
to take advantage of the view of Puget Sound, like Adelaide and Buenna. As each of these communities grew,
residents built small schoolhouses for their children. By the late 1940s, King County consolidated the many
individual red schoolhouses into the Federal Way School District, from which the City gets its name. During this
same period, a library was built along the edge of Highway 99, and between 308'1' Street and 320th Street, a small
"downtown" developed with a general store, lumber yard, realty office, beauty parlor, feed store, and gas station. By
the end of the 1950s, the ten blocks between 308th and 320th Streets became the first roadside commercial district.
One of the more unique developments was Santa Faire, a family oriented theme park. New shopping areas were
added around the park, helping to create a "community focus" for the residents of the area.
As this commercial area developed, the rest of Federal Way was changing as well. The Boeing Company expanded
their operations in Renton and the Kent Valley and began advertising nationally for engineers. Those engineers in
turn began roaming the wooded acreage in Federal Way in search of housing. One of the earliest residential
developments was Marine Hills, built in 1958 overlooking Puget Sound. Weyerhaeuser, one of the early timber
companies, had large land holdings in the area and began to develop their land into high quality housing with
amenities like golf courses.
Weyerhaeuser's development company also began developing commercial property, creating the West Campus
business park. The plan was to integrate offices and businesses with lush landscaping. Though initially the corporate
office market was not strong, West Campus has grown almost to capacity, providing space for many civic buildings
such as City Hall, the police station, the area's major health care centers, and higher density housing.
Another major landmark in the area is SeaTac Mall, built in the mid-1970s on what was farmland south of 320th
Street. The Mall is one of the largest in South King County and is the anchor for retail development in the area. The
Mall was a result of population growth in the region and its location was determined by the 320th Street intersection
with Interstate 5. The Interstate supplanted Highway 99 as the main artery for commuter traffic in the County.
By the mid 1980s, South King County was growing quickly. Retail growth occurred along Highway 99, especially
at the 320th Street intersection. Roads and office space were developed to accommodate the increased growth.
Residential growth was also prominent, following plans developed by King County, with a large number of
apartment homes. The changes to the community, with increased housing and traffic, created a movement for greater
self-determination. In 1989, the citizens of this area voted for incorporation and the City of Federal Way was born,
incorporating on February 28, 1990.
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Year Ended December 31, 2008
Table of Contents
INTRODUCTORY SECTION
Page
Letter of Transmittal ..................
City Officials and Administrative Officers......................:..............................................................I......... 1
City Functional Organization Chart ............................................................................................................ 2
GFOA Certificate of Achievement............................................................................................................. 3
FINANCIAL SECTION
IndependentAuditor's Report....................................................................................................................
Management's Discussion and Analysis.....................................................................................................
Basic Financial Statements:
Government -wide Financial Statements:
Statement of Net Assets................................................................._...__.................:..:......._..... 18
Statement of Activities .... :.::.............. :........................................................................... :....:.. 19
Fund Financial Statements:
Balance Sheet — Governmental Funds....................................................................................
20
Statement of Revenues, Expenditures, and Changes in Fund Balances —
GovernmentalFunds.........................................................................................................
22
Reconciliation of the Statement of Revenues, Expenditures, and Change
In Fund Balances of Governmental Funds to the Statement of Activities .......................
24
Statement of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual
GeneralFund...................................................................................................................
25
StreetFund......................................................................................................................
26
UtilityTax Fund..............................................................................................................
27
Statement of Net Assets — Proprietary Funds...................................................................................
28
Statement of Revenues, Expenses and Changes in Fund Net Assets — Proprietary Funds .....
29
Statement of Cash Flows — Proprietary Funds........................................................................
30
Notes to the Financial Statements.................................................................................................... 31
Combining and Individual Fund Statements and Schedules — Nonmajor Governmental Funds:
FundDescription............................................................................................................................. 60
CombiningBalance Sheet............................................................................................................... 61
Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........................ 66
Statement of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual
ArterialStreet Fund......................................................................................................... 69
Solid Waste & Recycling Fund....................................................................................... 70
Hotel/Motel Lodging Tax Fund....................................................................................... 71
Federal Way Community Center Fund............................................................................ 72
Paths& Trails Fund......................................................................................................... 73
Individual Fund Statements and Schedules — Debt Service Fund:
FundDescription.............................................................................................................................. 75
BalanceSheet.................................................................................................................................. 76
Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual ............ 77
Combining and Individual Fund Statements and Schedules — Internal Service Funds:
FundDescription.............................................................................................................................. 79
Combining Statement of Net Assets.............................................................................:................... 80
Combining Statement of Revenues, Expenditures and Changes in Fund Net Assets ... :... ............... 81
Combining Statement of Cash Flows.........................................................................................
Capital Assets Used in the Operation of Governmental Funds:
Comparative Schedules by Source................................................................................................... 84
Schedule by Function and Activity.................................................................................................. 85
Schedule of Changes by Function and Activity.............................................................................. 86
STATISTICAL SECTION
NetAssets by Component ..................... :....:........... :..............................................................................
88
Changesin Net Assets...........................................................................................................................
89
Government -wide Revenues by Source and Expenditures by Function ................................................
90
Fund Balances, Governmental Funds....................................................................................................
91
Changes in Fund Balances, Governmental Funds......................................................... ........................
92
TaxableSales by Category.....................................................................................................................
93
Assessed and Estimated Actual Value of Taxable Property..................................................................
94
Property Rates and Levies, Direct and Overlapping Governments........................................................
95
PrincipalTaxpayers............................................................................. .......... ..............................
96
Property Tax Levies and Collections.....................................................................................................
97
Ratio of Outstanding Debt by Type.......................................................................................................
98
Ratio of General Obligation Bonded Debt to Assessed Value and
Net General Obligation Bonded Debt Per Capita.............................................................
99
Computation of Direct and Overlapping Debt.......................................................................................
100
Computation of Limitation of Indebtedness..........................................................................................
101
Ratio of Annual Debt Service Expenditures for General Obligation Bonded Debt to
Total General Governmental Expenditures Net of Debt Service Expense ........................
102
DemographicStatistics..........................................................................................................................
103
PrincipalEmployers..............................................................................................................................
104
Property Value, Construction and Bank Deposits ........................... ....... ......... .... :........................ .........
105
CapitalAssets by Function....................................................................................................................
106
Operating Indicators by Function..........................................................................................................
107
City Government Employees Full -Time Equivalent - History...............................................................
108
Salaries & Surety Bonds of Principal Officials.....................................................................................
109
Miscellaneous Statistical Information....................................................................................................
110
ii
OF �
Federal Way
June 26, 2009
People of the City of Federal Way
Honorable Mayor and City Council
THE COMPREHENSIVE ANNUAL FINANCIAL REPORT
OF THE
CITY OF FEDERAL WAY
The Comprehensive Annual Financial Report (CAFR) of the City of Federal Way for the year ended December 31,
2008 is hereby submitted. Responsibility for both the accuracy of the data, and the completeness and fairness of the
presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data
are accurate in all material respects and are reported in a manner designed to present fairly the financial position and
results of operations of the various funds of the City. All disclosures necessary to enable the reader to gain an
understanding of the City's financial activities have been included.
FINANCIAL REPORTING STANDARDS AND FORMAT
The comprehensive annual financial report is presented in three sections: introductory, financial, and statistical. The
introductory section includes this transmittal letter, the City's organizational chart and a list of officials. The financial
section includes the basic financial statements, and the combining statements of nonmajor funds, internal service funds,
and schedules of capital assets of governmental funds, as well as the State Auditor's report on the basic financial
statements. The statistical section includes selected financial and demographic information, generally presented on a
multi -year basis.
As an aid to the reader, the major sections of this report have been segregated by divider pages which provide
introductions to the sections. In the same manner, divider pages have been used to separate the various components of
the financial section. Generally Accepted Accounting Principles (GAAP) require that management provide narrative
introduction, overview, and analysis to accompany the basic financial statements in the form of MD&A. This
transmittal letter is designed to compliment the MD&A and should be read in conjunction with it. The City's MD&A
can be found immediately following the Independent Auditor's Report.
REPORTING ENTITY
The City is a noncharter Optional Code City with a Council -Manager form of government. It was incorporated on
February 28, 1990, and is governed under the provisions of the Optional Municipal Code of the Revised Code of
Washington. Optional Code City status increases the City's operating authority by extending it to the powers of all four
city classifications which exist in Washington Law.
The City Council consists of seven council members, all of whom are elected at large by citizens of Federal Way to
serve four-year terms. The City Manager, who serves as the chief executive officer, is responsible for day-to-day
administration of personnel, policies and programs. He is appointed by, reports directly to, and serves at the pleasure of
the City Council.
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City services provided include: police protection, construction and maintenance of streets, building inspection,
municipal court services, jail services, planning and zoning, park services, emergency management services, surface
water management and general administration, including finance. Services for a land use hearing examiner are
contracted. The City continues to have nine major departments consisting of City Manager; Law; Finance; Human
Resources; Information Technology; Parks, Recreation, and Cultural Services; Police; Public Works; and Community
Development Fire protection and emergency medical services are provided by South King Fire & Rescue. The
Lakehaven Utility District delivers water and sewer services. Metro provides public transportation services. Public
housing services are the primary focus of the King County Housing Authority. The King County Library System
engages City residents through its library and reference services. School District No. 210 offers educational programs
for kindergarten through high school students, in addition to vocational training.
ECONOMIC FACTORS AFFECTING FINANCIAL CONDITION
Domestic and global financial markets are in turmoil, threatening economic growth at all levels. Demand wanes as
consumers experience declining real estate and asset equity, more restrictive access to credit, and a rise in
unemployment. King County has endured 2008 better than many areas in terms of employment, income, and home
values, but the county is not immune from the downturn and has already experienced some slowing.
The ongoing housing market crisis continues to muddle valuations of mortgage -backed securities and the solvency of
firms that own them. Wary investors have fled risky securities, causing stocks to tumble and credit markets to disappear.
New businesses and businesses without liquid assets have few options but to close or to seek takeovers. Seattle -based
Washington Mutual is one such example and is the largest bank to have ever collapsed.
Since mid-2000, the Puget Sound region has weathered a series of setbacks, punctuated by the dramatic collapse in
equity markets, the September 11, 2001 terrorist attacks, a myriad of accounting scandals, two Boeing strikes (one still
ongoing), and the buildup and continued aftermath of war in Afghanistan and Iraq. Steady growth in 2004-2007, a
period in which many economic indicators finally surpassed pre-2001 levels, is now derailed by financial turmoil.
On an individual level, King County real per capita personal income experienced declines in 2001-2003, followed by
growth between 2003-2006; 2006 real per capita income was 3.6 percent above the 2000 peak. Between 2002 and 2005,
bankruptcy filings in Western Washington increased by 60 percent, although the surge at the end of 2005 is explained
largely by bankruptcy law changes enacted by Congress. King County experienced a 49 percent increase in bankruptcy
filings during the first quarter of 2008 in comparison with the same period in 2006. More broadly, the most recent data
indicate that Washington's Real Per Capita Gross State Product fell 2.1 percent in 2001 and 0.7 percent in 2002. Growth
during 2003-2007 averaged 1.7 percent.
The increase in local employment has been unevenly distributed across sectors. After declining by 25 percent from 2000
to An., a ,m....a.n..n..f...r..t..n..r.i.n..ba am...nlnima..ant in '7nn'7. ..v.a...c, nnI.,up 10 percent sincee en, 1- 2-4. 1., 2-1M t1.7nnn 'M-'MI)l 711l1
decline occurred mainly in non -aerospace manufacturing, while the bulk of the 2003-2004 decline was in aerospace and
parts manufacturing. Growth in 2005 and 2006 was fueled by a turnaround in aerospace and parts, currently up 27.0
percent from 2004. Large payroll growth has also occurred in construction — 2007 was up 15 percent over 2006 after
growing 17 percent the year before. Finance and insurance employment experienced declines while retail trade
employment experienced no growth from the previous year, an improvement from the negative growth experienced the
prior year
Remarkable strength in residential real estate through 2006 has finally run its course. By virtually every measure — time
on market, inventory, and number of competing offers — the market has plummeted. Sales have dropped by 45 percent
from a year ago, with current conditions, accounting for reporting lag, likely to be still lower. This dramatic fall in sales
is expected to continue over the next 12 months as the lending market reorganizes, before stabilizing
After rising by over 3.6 percent in both 2000 and 2001, growth in the Puget Sound region Consumer Price Index was
just 1.9 percent and 1.7 percent in 2002 and 2003, respectively, driven by unchanged housing costs. In the first half of
2005, however, the CPI was up more than 2.4 percent, before rising another 2.6 percent in the third quarter alone due to
the aftermath of Hurricanes Katrina and Rita. Even so, the CPI spike resulting from these hurricanes falls short of the
2.9 percent growth experienced in the second quarter of 2008, following a run up in energy and food prices. For the first
six months of 2008, the CPI grew at the fastest rate experienced since 1982. Surges in energy prices have begun to
iv
impact broader prices, although subsequent price movements reinforce the sector's volatility. Local prices remain
dependent on global energy prices, as well as movement in agricultural goods, but core inflation — excluding energy and
food — in the Puget Sound region should return to relatively low levels for the next two to three years, in part as a result
of temporarily ebbing pressure from housing costs
ECONOMIC TRENDS
Federal Way is the eighth largest city in Washington State with a population of 88,040 as of April 1, 2008. The City is
located on a plateau adjacent to Puget Sound in King County, eight miles north of downtown Tacoma and 25 miles
south of downtown Seattle. The City occupies approximately 22.5 square miles and is served by Interstate 5 and state
highways 99 and 509.
In 2007 there were 35,162 housing units in Federal Way, an increase of approximately 0.47% over 2007. Of these
units, 56.06% were single family homes, 40.14% multi -family units, and 3.8% mobile homes and trailers.
The community is residential and commercial, with the populace employed locally and in the neighboring cities such as
SeaTac, Kent, Tacoma, Bellevue, and Seattle. Employment in Federal Way is highly concentrated in retail and services
sectors which respond primarily to the needs of the local market area population. The employment figure for 2008 is
estimated at 30,607. Major employers are; Weyerhaeuser, World Vision, St. Francis Community Hospital, U.S. Postal
Bulk Mail Center, Wild Waves Theme Park, and Wal-Mart Supercenter.
Sales tax collected in 2008 total $14.2 million, and is below 2007 by $998 thousand. The retail sector of the local
economy is anchored by two areas; the first is South 348h and Pacific Highway 99 including Wal-Mart Super Center,
Sportman's Warehouse, Costco, Lowe's Home Improvement Center, and Home Depot. The second is The Commons
regional mall including Target, TJ Max, Best Buy, and many other small businesses adjacent to the area. According to
a listing of businesses registered with the City of Federal Way and sorted by the Standard Industrial Classification, the
business economy appears to be configured as follows: retail trade 60%; services 20%; construction 7%; wholesale
trade 4%; information 2%, manufacturing 2%, and other 6%.
In 2008, new improvements to real estate totaled $96.4 million or approximately 0.1% of the City's 2008 assessed
valuation. The total assessed value of taxable property in Federal Way was $9.8 billion, which is approximately 9.04%
higher than the 2007 assessed valuation of $9.0 billion. Real Estate sales decreased 44.3% to approximately $536
million in 2008 as compared to $963 million in 2007. A total of 605 building permits and 2,370 other building related
permits were issued in 2008. Estimated valuation was $89.4 million and $7.0 million respectively. Significant building
permits include: Panther Lake Elementary School rebuild, Korean Women's Association Senior City, Fred Meyer,
Celebration Square -Building 1, Devey University, Christian Faith Center-admin area, Cottages West Housing, and Wild
Waves -Disc "O" Ride.
LONG-TERM PLANNING
The City's fiscal policy requires the City to prepare long-range projections for six years beyond the current budget
period. The projection extends current operations to the future to see if the services are sustainable and the magnitude
of, if any, future financing gaps. This glimpse into the future allows the City to proactively plan and implement
corrective measures over time to avoid sudden drastic changes in service levels or in revenue/tax policies. In addition,
the City's fiscal policy requires the City to balance its ongoing services with ongoing revenues.
MAJOR INITIATIVES AND ACCOMPLISHMENTS
In 2008, the City of Federal Way became the first city in the Northwest Region to implement the SafeCities program.
This program makes use of twenty-seven wireless cameras set in strategic locations which is assessable by Federal Way
police officers. The cameras enable officers to either catch a crime in progress or review events that may have lead up
to the crime, as these recordings are kept in archives for up to a week.
Shortly after the implementation of SafeCities, the City started the Redlight Photo Program in late 2008. Cameras were
placed at the intersections of South 320'h Street and Pacific Highway South, and at South 348`s Street and State Route
161/Enchanged Parkway.
v
During 2008, the City received $500 thousand from the 2008 legislative session to be used toward the performance arts
center. The City also received an additional $5 million during the 2009 legislative session to put towards the center.
The City acquired Laurelwood Park for less than $8,500. This 18.29 acre park was in danger of foreclosure. The
Homeowners association asked the City to take ownership of the park and saved the property from being put up for
public sale. This purchase also helped the city meet requirements associated with its City Center Access Project. In
addition to the purchase of this park, the City completed its construction of the parking lot and facilities at Historical
Cabins Park. Historical Cabins is the location of Denny Cabin which was built to house David Denny's real estate
office in the mid 1800's. In 1966, the Cabin was moved to the City of Federal Way and was moved to it's current
location in 1992 near the entrance of Hylebos State Park. The City also constructed a new boardwalk at West Hylebos
Wetlands.
The Federal Way Community Center celebrated it's 1" birthday in 2008. The Community center opened in early 2007
and have had over 300,000 participated in activities during the Center's 15` year.
A number of Public Works capital improvement projects were added to our main streets and highways, making them a
more attractive place to do business. The most important projects completed in 2008 include: State Route 99 Phase II
completion and added turning lanes at South 348"' Street and I" Ave South.
OUTLOOK FOR THE FUTURE
At the January 2009 planning retreat, Council identified the following set of goals for the City.
1) Expand economic development downtown using innovative approaches.
2) Develop fiscal management methods to save money for city.
3) Explore and develop a small business development center.
4) Implement an economic development project downtown by year-end.
5) Take the next steps in the pre -development process for a combined performing arts center and conference
center.
FINANCIAL INFORMATION
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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.
Budgetary Control
The City maintains budgetary controls in accordance with the Revised Code of Washington (RCW 35A.33). The
objectives of these budgetary controls are to ensure compliance with legal provisions embodied in the annual
appropriated budget approved by the City Council. Activities of the General Fund, some Special Revenue Funds, and
Debt Service Fund are included in the annual appropriated budget. The level of budgetary control at which
expenditures cannot legally exceed the appropriated amount is established at the individual fund level. The project -
length based Special Revenue Funds, and the Capital Projects, Enterprise and Internal Service funds are management
budgets only and therefore these budgets are not represented in the CAFR. The City also maintains an encumbrance
accounting system as one technique of accomplishing budgetary control. All appropriations lapse at year-end.
V
Basis of Accounting
All governmental funds are accounted for using the modified accrual basis of accounting. Under the modified accrual
basis, revenues are recorded when received in cash, except for revenues susceptible to accrual. Revenues considered
susceptible to accrual are those that are measurable and available to finance the government operation during the current
period. Expenditures, other than accrued interest on general long-term debt, are recorded at the time liabilities are
incurred.
All proprietary funds use the accrual basis of accounting. Under the accrual basis, revenues are recorded when they are
earned and expenses are recorded as soon as they result in liabilities for benefits received.
Cash Management
The City began investing outside the State Investment Pool in November 1994. Based on an adopted investment policy
the City operates a conservative cash management program, investing surplus cash as determined by anticipated cash
flow needs. Investment decisions are based on established investment policies in compliance with Washington State
statutes, with consideration given first to safety, secondly to liquidity, and lastly to yield. The City's portfolio at
December 31, 2008 consisted of investments in U.S. Government Agency securities, and Local Government Investment
Pool, with maturities ranging from one day to under one year.
The Washington State Treasurer manages a State Investment Pool for use by any city, county, town, municipal
corporation, or special taxing district within the state. Municipalities determine the amount and length of investment in
the pool based on individual cash flow needs. Interest is earned on the pool's actual experience for the month, less an
administrative fee equivalent to 3'/z basis points (.035%). At December 31, 2008, the City had $58.4 million invested in
the State Investment Pool. In 2008, the average monthly earnings rate for the entire portfolio was approximately 2.72%
as compared to the average monthly earnings rate for the State Investment Pool of 2.68%.
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 2008, 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
2008 audit of the City has been completed in conformance with generally accepted auditing standards. The financial
statements of all City funds have been included in this audit. The City has been given an unqualified opinion for 2008.
The State Auditor's report on the basic financial statements is included in the financial section of this report.
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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, 2007. The City of Federal Way has received a Certificate of
Achievement for the last eighteen years (fiscal years ended 1990 — 2007). In order to be awarded a Certificate of
Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial
report. This report must satisfy both generally accepted accounting principals and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual
financial report continues to meet Certificate of Achievement Program's requirements, and we are submitting it to the
GFOA to determine its eligibility for another certificate.
The City of Federal Way also received the Government Finance Officers Association Distinguished Budget
Presentation Award for its biennial budget for the years beginning January 1, 2007 and 2008. In order to receive this
award, a governmental unit must publish a budget document that meets program criteria as a policy document, a
financial plan, an operations guide, and a communications medium.
ACKNOWLEDGEMENTS
The preparation of this report would not have been possible without the efficient and dedicated services of the entire
staff of the finance division, in particular Heidi Hudson (Financial Analyst) and Phung Huynh (Financial Analyst). In
addition, staff in all City departments should be recognized for responding so positively to the requests for detailed
information which accompany each audit. The role of the State Auditor's Office should also be acknowledged as a
significant contribution to a fine product. Finally, we wish to express our appreciation to the Mayor and City Council
for their ongoing support and for providing the firm foundation for the pursuit of excellence in all realms of professional
endeavors.
Respectfully submitted,
'rho Kraus
Finance Director
City of Federal Way / 1
CITY OFFICIALS
JACK DOVEY ERIC FAISON
Mayor Deputy Mayor
DINI DUCLOS
Council member
JIM FERRELL
Council member
JEANNE BURBIDGE
Council member
LINDA KOCHMAR
Council member
NEAL BEETS
City Manager
OTHER ADMINISTRATIVE OFFICERS
MICHAEL PARK
Council member
Assistant City Manager/Chief Financial Officer .................... .... .......
..................... ::............................... .:.:........ Bryant Enge
Assistant City Manager/Chief Operating Officer...................................................................................................Cary Roe
CityAttorney......................................................................................................................................... Patricia Richardson
Community Development Director.................................................................................................................. Greg Fewins
Economic Development Director ....................... ........ . Patrick Doherty
.... ........... ........................ .
FinanceDirector...................................................................................................................................................Tho Kraus
Human Resources Director......................................................................................................................... Mary McDougal
Information Technology Director...................................................................................................................... Mehdi Sadri
Parks, Recreation and Cultural Services Director................................................................................. Steve Ikerd, Interim
PoliceChief..................................................................................................................................................... Brian Wilson
Public Works Director............................................................................................................................... Marwan Salloum
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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, 2007
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.
t
act arx,�
Mo
J „ 1, President
AT-
'�s SE
auc�
Executive Director
City of Federal Way /4
CITY OF
Federal Way
It's all within reach
THIS PAGE IS LEFT INTENTIONALLY BLANK
Washington State Auditor
Brian Sonntag
INDEPENDENT AUDITOR'S REPORT
June 26, 2009
Mayor and City Council
City of Federal Way
Federal Way, Washington
We have audited the accompanying financial statements of the governmental activities, the
business -type activities, each major fund, and the aggregate remaining fund information of the
City of Federal Way, King County, Washington, as of and for the year ended December 31,
2008, which collectively comprise the City's basic financial statements as listed in the table of
contents. These financial statements are the responsibility of the City's management. Our
responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business -type activities, each
major fund, and the aggregate remaining fund information of the City of Federal Way, King
County, Washington, as of December 31, 2008, and the respective changes in financial position
and, where applicable, cash flows thereof, and the respective budgetary comparison for the
General, Street, and Utility Tax funds, for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we will also issue our report dated June
26, 2009, on our consideration of the City's internal control over financial reporting and on our
tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements and other matters. That report will be issued under separate cover in the City's
Single Audit Report. The purpose of that report is to describe the scope of our testing of internal
control over financial reporting and compliance and the results of that testing, and not to provide
JnSu MICC 13u11dm . 110 Bov 400' 1 • olvnip;a, nn 9S�O_?_I)U' I • (,()0) 9U1_-U_;70 • TDD Rehm (SOO) S3 ,-6 8S,
I.A.\ (360) ? 3-00-10 • hiIn wN\�� �:wn Nva.�m
an opinion on the internal control over financial reporting or on compliance. That report is an
integral part of an audit performed in accordance with Government Auditing Standards and
should be considered in assessing the results of our audit.
The management's discussion and analysis on pages 7 through 16 is not a required part of the
basic financial statements but is supplementary information required by the Governmental
Accounting Standards Board. We have applied certain limited procedures, which consisted
principally of inquiries of management regarding the methods of measurement and presentation
of the required supplementary information. However, we did not audit the information and
express no opinion on it.
Our audit was performed for the purpose of forming opinions on the financial statements that
collectively comprise the City's basic financial statements. The accompanying information listed
as combining and individual fund statements and schedules, and capital assets used in the
operation of governmental funds on pages 60 through 86 is presented for purposes of additional
analysis and is not a required part of the basic financial statements. This information has been
subjected to auditing procedures applied in the audit of the basic financial statements and, in
our opinion, is fairly stated, in all material respects, in relation to the basic financial statements
taken as a whole.
The information identified in the table of contents as the Introductory Section and the Statistical
Section is presented for purposes of additional analysis and is not a required part of the basic
financial statements of the City. Such information has not been subjected to the auditing
procedures applied in the audit of the basic financial statements and, accordingly, we express
no opinion on it.
Sincerely,
BRIAN SONNTAG, CGFM
STATE AUDITOR
City of Federal Way /7
MANAGEMENT'S DISCUSSION AND ANALYSIS
This section of the City of Federal Way's annual financial report provides a narrative overview of the
City's financial activities for the fiscal year ended December 31, 2008. This information should be read in
conjunction with the preceding letter of transmittal and the financial statements and notes to the financial
statements that follow.
FINANCIAL HIGHLIGHTS
• The total assets of the City of Federal Way exceeded its liabilities at December 31, 2008 by $565.4
million. Capital Assets (net of depreciation and related debt) account for 90% of this amount with a
value of $507.1 million. Of the remaining net assets, $29.8 million or 5% may be used to meet the
government's ongoing obligations to citizens and creditors, without legal restriction.
• The City's total net assets increased by $18.5 million, or 3% in 2008. Governmental activities
provided $14.8 million or 80% with the remainder being provided by the business -type activities.
• Governmental fund balances at year-end were $41.5 million, a 7% decrease over the prior year. Of
this amount, a total of $39.3 million, or 95% of the governmental fund balance is unreserved and
available to fund ongoing activities. The remaining $2.2 million is earmarked for debt service, paths &
trails reserve, hotel/motel lodging tax, police special funds, petty cash/change funds, and advance
travel.
• Unreserved fund balance in the general fund was $5.5 million, a decrease of $2.3 million or 29% from
the prior year.
• The City debt decreased by $734 thousand during the current fiscal year. General obligation debt
decreased by $547 thousand while public works trust fund loan decreased by $187 thousand. The
decreases reflect the annual debt service payments and compensated absences.
OVERVIEW OF FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the City of Federal Way's basic
financial statements. The basic financial statements are comprised of three components:
1) government -wide financial statements,
2) fund financial statements, and
3) notes to the financial statements.
In addition to the required components, the City's annual report also includes other supplementary
information. The first set of supplementary information is the Combining Statements. These provide
Balance Sheets, Statement of Revenues, Expenditures, and Changes in Fund Balances with Budget to
Actual Comparisons, Statement of Net Assets, and Cash Flows for all Non -Major Funds. The other set of
supplementary information is the Statistical Section. This section provides a four to ten-year view of the
City's revenues, expenditures, debt obligations and capacity, the City's largest taxpayers, and those entities
with the largest employment within the City of Federal Way. This section provides a long-term perspective
on the City's economy.
Government -wide Financial Statements
The government -wide financial statements are designed to provide readers with a broad overview of the
City of Federal Way's finances, in a manner similar to a private -sector business.
The statement of net assets presents information on all of the City of Federal Way's assets and liabilities,
with the difference between the two reported as net assets. This statement serves a purpose similar to that
City of Federal Way / 8
of a balance sheet in private business. Over time, increases or decreases in net assets may serve as a useful
indicator of whether the financial position of the City is improving or deteriorating
The statement of activities presents information showing how the City's net assets changed during the most
recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the
change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported
in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected
taxes and earned but unused vacation leave).
Both of the government -wide financial statements distinguish functions of the City of Federal Way that are
principally supported by taxes and intergovernmental revenues (governmental activities) from other
functions that are intended to recover all or a significant portion of their costs through user fees and
charges (business -type activities). The governmental activities of the City of Federal Way include law
enforcement and public safety, construction and maintenance of streets, building inspection, municipal
court services, jail services, community planning and development services, parks and recreation facilities,
other community services and general administration. The business -type activities of the City include
surface water management and the control and operation of Dumas Bay Centre, a multi -use facility that
offers business and retreat accommodations, recreation and cultural arts classes and a performing arts
facility.
The City has no separately identified component units included in the government -wide financial
statements. The City has reported its investment in one governmental joint venture; Valley
Communications Center. A description of this joint venture is found in note 14 of the notes to the financial
statements.
The government -wide financial statements can be found immediately following this MD&A.
Fund Financial Statements
The annual financial report includes fund financial statements in addition to the government -wide financial
statements. While the government -wide statements present the City's finances based on the type of
activity, general government versus business -type, the fund financial statements are presented by fund type
such as the general funds, special revenue funds, and proprietary funds. A fund is a specific fiscal and
accounting entity with a self -balancing set of accounts used to account for specific activities or meet certain
objectives. Funds are often set up in accordance with special regulations, restriction or limitations. The
City of Federal Way uses funds accounting to ensure and show compliance with finance -related legal
requirements. The City's funds are divided into two categories: governmental funds and proprietary funds.
Governmental Funds
Governmental funds are used to account for essentially the same functions as are reported in governmental
activities in the government -wide financial statements. However, unlike the government -wide financial
statements, governmental fund financial statements focus on near -term inflows and outflows of spendable
resources as well as on balances of spendable resources available at the end of the fiscal year. Such
information may be useful in evaluating a government's near -term financing requirements.
Because the focus of governmental funds is narrower than that of the government -wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for government -wide financial statements. By doing so, readers may better
understand the long-term impact of the government's near -term financing decisions. Both the expenditures
and changes in fund balances provide a reconciliation to facilitate this comparison between governmental
funds and governmental activities.
The City of Federal Way maintains seventeen individual governmental funds. The City's six major
governmental funds, the general fund, street fund, utility tax fund, debt service fund, downtown
redevelopment fund, and the transportation fund, are presented separately in the governmental fund
balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund
City of Federal Way / 9
balances. The remaining governmental funds are combined into a single column labeled nonmajor
governmental funds. Individual fund data for each of the nonmajor governmental funds can be found in
combining statements later on in this report.
The City maintains control over its operating funds through the adoption of the biennial budget. Budgets
are adopted at the fund level and according to state law. A budgetary comparison statement is presented for
the General, Street, and Utility Tax Fund as a basic financial statement.
The basic governmental fund financial statements can be found on pages after the government -wide
statements of this report.
Proprietary Funds
The City of Federal Way maintains two types of proprietary funds. Enterprise funds are used to report the
same functions presented as business -type activities in the government -wide statements. The City uses
enterprise funds to account for its surface water management and control and the Dumas Bay Centre.
Internal service funds are an accounting device used to accumulate and allocate costs internally among the
City's various functions. The City uses internal service funds to account for its risk management and self-
insurance program, information systems, mail and duplication services, fleet of vehicles and motorized
equipment, and facilities management.
Proprietary funds provide the same type of information as the government -wide financial statements, only
in more detail. The proprietary fund financial statements provide separate information for the Surface
Water Management fund and for the Dumas Bay Centre. The internal service funds are combined into a
single, aggregated presentation in the proprietary fund financial statements. Individual fund data is
provided in the form of combining statements elsewhere in this report.
The basic proprietary fund financial statements can be found following the governmental fund statements
of this report.
Notes to the Financial Statements
The notes provide additional information that is essential to the full understanding of the data provided in
the government -wide and fund financial statements. The notes to the financial statements can be found
immediately following the basic financial statements.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents the
combining statements for nonmajor governmental funds, internal service funds, and capital assets of
governmental funds.
GOVERNMENT -WIDE FINANCIAL ANALYSIS
Statement of Net Assets
The statement of net assets can serve as a useful indicator of the City's financial position. The City of
Federal Way's net assets at December 31, 2008 total $565.4 million. The following is a condensed version
of the government -wide statement of net assets.
City of Federal Way / 10
Current and other assets
Capital assets and CEP,
net of accumulated depreciation
Total assets
Long-term liabilities
Other liabilities
Total liabilities
Net assets:
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total net assets
CONDENSED STATEMENT OF NET ASSETS
Governmental Activities Business -Type Activities Total
2008 2007 2008 2007 2008 2007
$ 61,519,862 $ 65,356,436 $ 5,504,817 $ 7,045,761 $ 67,024,679 $ 72,402,197
473,048,373 456,460,224 52,069,343 47,021,217 525,117,716 503,481,441
534,568,235 521,816,660 57,574,160 54,066,978 592,142,395 575,883,638
20,657,450 20,892,943 1,638,335 1,812,907 22,295,785 22,705,850
4,102,776 5,875,409 327,060 424,010 4,429,836 6,299,419
24,760,226 26,768,352 1,965,395 2,236,917 26,725,621 29,005,269
456,600,030 439,127,122 50,494,590 45,264,105 507,094,620 484,391,227
28,434,066 32,269,512 42,558 15,777 28,476,624 32,285,289
24,773,913 23,651,674 5,071,617 6,550,179 29,845,530 30,201,853
$ 509,808,009 $ 495,048,308 $ 55,608,765 $ 51,830,061 $ 565,416,774 $ 546,878,369
The largest component of the City's net assets, 90% or $507.1 million, in its investment in capital assets net
any related outstanding debt issued to acquire those assets. These capital assets such as streets, trails,
parks, police vehicles, and parks equipment are used to provide services to the citizens. Consequently,
these assets are not available to sell and convert to cash for future spending.
Approximately 4.6% or $26.3 million of the total net assets of the city are earmarked for construction
improvement projects, including the I-5 City Center Access Study, SR99 Phase III, South 352nd Street
Extension from SR99 to SR161, SR HOV lanes Phase IV, and South 320`h Street utility undergrounding.
The City funded renovation and improvement of neighborhood parks and open space parks such as
Celebration Park, Trail and pedestrian access improvements, and the balance for Camp Kilworth. The City
attempts to fund capital construction projects on a pay-as-you-go basis, aggressively pursuing
transportation grant funding and cost sharing with developers wishing to construct large projects in the City
that impact the transportation system.
The remaining balance of restricted net assets is divided among restrictions for: debt service prefunding
$1.7 million; $30.9 thousand for police special funds, petty cash/change funds and advance travel, $194.1
thousand for Hotel/Motel lodging tax, $193.2 thousand for Path and Trails Reserve, and $26.3 million for
Capital Projects. The business -type activities portion of $4.8 million may only be spent on surface water
management activities and the remaining $204.3 thousand on improvements to Dumas Bay Centre and
Knutzen Family Theatre. Maintenance of catch basins, pump stations, storm drain flushing, and other
capitai construction projects such as West Branch Lakota Creek Restoration are examples of utility
activities. Other functions of the City may access the remaining $24.9 million to meet ongoing obligation
to citizens and creditors. Examples of other City obligations which these net assets may be used for are
public safety, parks maintenance, and ongoing street maintenance.
At the end of the fiscal year, the City of Federal Way reported positive balances in all three categories of
net assets, for the government as a whole, as well as for the separate governmental and business -type
activities.
Changes in Net Assets
The changes in net assets table illustrates the increases or decreases in net assets of the City resulting from
its operating activities. The City's net assets increased approximately $18.5 million in 2008. The increase
was split between the governmental activities ($14.8 million or 79.6%) and business -type activities ($3.8
million or 20.4%).
The following is a condensed version of the City's changes in net assets. The table shows the revenues,
expenses, and related changes in net assets in tabular form for the governmental activities separate from the
City of Federal Way / 11
business -type activities. The graphs that follow compare program revenues to program expenses and
illustrate the revenues by source separately for the governmental and business -type activities.
CHANGES IN NET ASSETS RESULTING FROM CHANGES IN REVENUES AND EXPENSES
Revenues:
Program revenues:
Charges for services
Operating grants & contributions
Capital grants and contributions
General revenues:
Property tax
Sales tax
Utility tax
Real estate excise tax
Other taxes
Other
Total Revenue
Expenses:
General government
Security of Persons & Property
Transportation
Physical environment
Economic environment
Health and human services
Culture and recreation
Interest on long-term debt
Surface Water Management
Dumas Bay Center
Total Expenses
Change in net assets before transfers
Transfers
Governmental Activities _Business-Tr:pc Ae irities Total
2008 2007 2008 2007 2003 2007
$ 9,923,841 $
10,280,888 $
4,473,453 $ 4,299,353
$ 14,397,294 $
14,580,241
1,538,476
22,858
- 222,474
1,538,476
245,332
8,933,154
11,457,030
973
8,933,154
11,458,003
9,397,456
9,059,734
- -
9,397,456
9,059,734
14,195,800
15,194,007
-
14,195,800
15,194,007
13,469,136
12,796,461
- —
13,469,136
12,796,461
2,590,310
4,898,537
- -
2,590,310
4,898,537
1,454,328
1,688,897
- -
1,454,328
1,688,897
6,502,869
6,971,413
3,447,458 366.031
9,950,327
7,337,444
68,005,370
72,369,825
7,920,911 4,888,831
75,926,281
77,258756
5,606,797
4,506,800
-
5,606,797
4,506,800
24,745,284
23,107,683
-
24,745,284
23,107,683
7,891,298
9,986,067
-
7,891,298
9,986,067
370,718
336,588
-
=
370,718
336,588
3,382,572
3,319,955
-
-
3,382,572
3,319,955
705,976
684,984
-
705,976
684,984
6,955,442
6,506,137
-
-
6,955,442
6,506,137
901,161
1,122,358
-
901,161
1,122,358
_
4,060,440
3,455,166
4,060,440
3,455,166
-
1,045,250
980,588
1,045,250
980,588
50,559,248
49,570,572
5,105,690
4,435,754
55,664,938
54,006,326
17,446,122
22,799,253
2,815,221
453,077
20,261,343
23,252,330
123,518
(185,495)
(123,518)
185A95
-
Change in net assets
17,569,640 22,613,758
2,691,703 638,572
20,261,343 23,252,330
Net assets - beginning
495,048,308 472,434,550
51,830,061 51,191,499
546,878,369 523,626,039
Adjustment for retroactive capitalization of infrastructure
under GASB 34 and other adjustments
2,809,940) -
1,087,001 -
(1,722.939) -
Net Assets at beginning of the year, restated
492,238,368 -
52,917,062 -
545,155,430 -
Net assets - ending
$ 509,808,009 $ 495,048,308
$ 55,608,765 $ 51,830,061
$ 565,416,774 $ 546,878,369
Governmental activities contributed $14.8 million or 79.6% of the total change in net assets of $18.5
million. Key elements of this increase are as follows:
Total revenues decrease of $4.4 million or 6% from 2007. Attributing factors to the decrease in revenues
are as follows:
■ Charges for services decreased $357 thousand or 3.5%. The major contributing factor to this
decrease is the decrease in building permits/fees and right-of-way permits & development
services fees. This directly correlates to the slumping housing market in 2008 compared to
the end of the housing boom in 2007. Without the housing development and major
constructions, plans and permits fees are not being sought thus decreasing the City's overall
charges for services revenues.
■ Sales tax decreased $998 thousand or 6.6%. Construction and contracting activity for the City
of Federal Way had decreased significantly from 2007; approximately $607 thousand or 34%.
This is attributable to the decrease in building activity starting in early in 2008 and continues
into 2009. Another contributing factor is the decrease in retail sales which accounted for
$305 thousand or 4% decrease from 2007.
City of Federal Way / 12
* Real estate excise tax decreased $2.3 million or 47%. In 2007, there were a total of 1,835 real
estate transactions within the City of Federal Way which consisted of great number of
commercial property and apartment complexes and in 2008 this number decreased 894 or
48%. Total real estate transactions totaled $536 million which is $427 million or 44%
decrease from 2007.
Operating/Capital Grants & contributions decreased $1.0 million or 8.8%. The decrease is
mainly due to the decrease in capital grants the City received in 2007 compared to 2008 for
construction related projects.
■ Utility tax increase of $673 thousand or 5.3% is primarily due to implementation of
Proposition 1 (utility tax increase from 6% to 7.75%) for a full year in 2008 compared to 9
months in 2007.
Total expenditures increase of $989 thousand or 2.0% from 2007. Attributing factors to the increase in
expenditures are as follows:
■ Security of Persons & Property increase of $1.6 million or 7.1 % due to the Guild Settlement
Contract agreement for 2007 and 2008. Total salaries/benefits increase of $1.2 million
included the guild settlement and COLA increase for 2008.
Governmental Activities - Revenues
Charges for
services, l9 196 Operating grants
Other, 12.5 Ro & contributions,
3.0%
Other taxes, 2.8% -
Sales tax, 27.3% Property lax Capital grants and
18.1% contributions,
17.2%
Governmental Activities - Expenditures
Economic Culture and
environment recreation
13.1 % 26.9%
Transpor_____
30.6% Health and human
services
2.7%
Security of
Persons &
Property
_9.1 %
Interest on long-
term debt
General
overnment
21.7%
sical
--- �ei4YifI1M5C11F
1.4%
Business -type activities of the City's Surface Water Management system and Dumas Bay Centre increased
the City's net assets by $3.8 million, accounting for 20.3% of the total growth in the government's net
assets. Surface Water Management Fund increased by $4.0 million which was offset by a decrease in
Dumas Bay Centre Fund net assets by $350 thousand. Key elements of the increase are as follows:
Total revenues increase of $3.1 million or 62.0% from 2007. Attributing factors to the increase in revenues
are as follows:
■ Other revenue increase of $3.1 million is mainly due to capital contributions for the
recognition of infrastructure for developer contributions for the current year and prior year
inclusion of $1.1 million.
• Net transfer out of $124 thousand which consists of $1.2 million transfer in for Surface Water
Management and $129 thousand for Dumas Bay Centre. Transfer out totaled $1.4 million for
Surface Water Management and $40 thousand for Dumas Bay Centre.
■ Internal service funds consolidation make up the remaining $101 thousand increase.
City of Federal Way / 13
Business -Types Activities - Revenues
Other ,1435%
/
Charges for
screices, 56.4'%
Business -Type Activities - Expenditures
Dumas Bay
Center -
21'%
Surface Water
Management
79%
FINANCIAL ANALYSIS OF THE CITY'S FUNDS
As noted earlier, the City of Federal Way uses fund accounting to ensure and demonstrate compliance with finance -
related legal requirements.
Governmental funds
The focus of the City of Federal Way's governmental funds is to provide information on near -term inflows,
outflows, and balances of spendable resources. Such information is useful in assessing the City's financing
requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources
available for spending at the end of the fiscal year.
As of the end of 2008, the City's governmental funds reported combined ending balances of $41.5 million, a
decrease of $3.2 million in comparison to the prior year. Approximately 13.3% or $5.5 million of this amount
constitutes unreserved general fund balance, which is available for spending at the City Council's discretion. The
remainder of the fund balance is reserved to indicate that it is not available for new spending because it has already
been committed for debt service payments, capital projects, police special funds and petty cash/change fund/advance
travel.
The General Fund is the chief operating fund of the City. At the end of 2008 unreserved fund balance of the general
fund was $5.5 million. General Fund unreserved fund balance represents 14.4% of total general fund expenditures.
The Utility Tax fund was established to account for the utility tax receipts which include 6% collected for capital,
debt, and other maintenance & operations as determined by Council and the remaining 1.75% is for Proposition 1.
Total fund balance increased $2.9 million or 82.1% from 2007 mainly due to increase in utility receipts and decrease
in transfer out.
The Debt Service Fund has a total fund balance of $1.8 million, all of which is reserved for the payment of debt
service.
The Downtown Redevelopment fund was established to accumulate resources and set aside funding for downtown
projects. Overall increase in ending fund balance of $1.5 million or 28.7% is mainly due to increasing the Real
Estate Excise Tax transfer of $1.0 million for the Redevelopment Match requirement budgeted during the 2007/2008
mid -biennium.
The Transportation Fund is used to improve existing traffic signals, new signalization, major roadways and arterials
involving the design and construction of new sections of streets, the widening of roadways to provide additional
vehicle lanes, the installation of sidewalks and landscaping. The major source of revenue for this fund is grants
from other agencies and contributions from other funds. Total ending fund balance decrease of $4.4 million or
24.4% mainly due to decrease in intergovernmental revenues with an increase in capital outlay compared to 2007.
City of Federal Way / 14
Proprietary funds
The City of Federal Way's proprietary funds provide the same type of information found in the government -wide,
but in more detail. Unrestricted net assets of the Surface Water Management Fund at the end of the year amounted
to $4.8 million, and those for Dumas Bay Centre amounted to $204 thousand. The total change in net assets for
both funds was $4.0 million increase and $350 thousand decrease, respectively. Other factors concerning the
finances of these two funds have already been addressed in the discussion of the City of Federal Way's business -
type activities.
BUDGETARY HIGHLIGHTS
The City of Federal Way budgets on a biennial basis with each budget beginning in an odd numbered year.
Appropriations for operating funds are authorized for two years, but must be reviewed and reauthorized by the City
Council in the middle of the biennial period. The following discussion is reflective only of the current year of the
biennium.
The supplementary expenditure budget increase of $11.2 million between the original budget for the fiscal year 2008
and the final budget are explained as follows:
Major adjustments to expenditure and other uses budget include:
General fund increase of $8.6 million consisted of the following:
o Establishing a rainy day fund of $2.0 million
o Added $1.0 million to the City Management Contingency
o Increase paylbenefits due to guild contract settlement of $844 thousand
o Increase for police department related vehicle purchase/maintenance/operations of $330 thousand
o Dispatch and Jail increases of $310 thousand
o Increase in City-wide salary/benefits of $268 thousand
o Increase in maintenance and operation cost of $250 thousand
o Increase for emergency equipment of $203 thousand
o Added graffiti temp help, design review service, and nuisance abatement funding of $120
thousand
o Increase for Wire theft/accidents of $100 thousand
o Added Green City Strategic Plan of $80 thousand
o Added field lighting for FWNLL of $75 thousand
o Increase for Impact Fee analysis of $70 thousand
o Added ongoing maintenance/operations for SafeCity of $38 thousand
o Carryforward $2.3 million from 2007 to 2008 consists of carryforward monies for Police related
items such as a new SRT vehicle, seizure fund balance, safecity capital/maintenance & operations
which totaled $565 thousand. Community Development carryforward of $537 thousand consist of
prior year budgeted expenditures that were not all expended in 2007 which carried forward in
2008 such as the City Center Plan Review, Shoreline Master Plan, Permit System Improvement,
Human Services contracts, and temporary help. Other large carryforward were for Class and
Compensation Study ($100 thousand) and Special Election Cost ($110 thousand).
Street Fund increase of $849 thousand consisted of the following:
o Added funding for Public Works Director due to conversion from the previous director to the
Chief Operating Officer of $175 thousand
o Added $203 thousand for emergency equipment purchase and maintenance/operations
o Added Impact Fee Analysis of $70 thousand
o Added wire theft/accidents of $50 thousand
o Carryforward $491 thousand from 2007 to 2008 which consisted of the installation of the
Countdown Pedestrian Signal ($111 thousand) and for the Joint EOC fund ($215 thousand).
o Eliminated surface water management fee on ROW of $159K
Arterial Street increase of $389 thousand consisted of the following:
o Carryforward $389 thousand from 2007 to 2008
Special Contracts/Studies increase of $282 thousand consisted of the following:
o Carryforward $282 thousand from 2007 to 2008 for computer and hardware equipment.
City of Federal Way / 15
Hotel/Motel Lodging Tax increase of $198 thousand consisted of the following:
o Carryforward $198 thousand from 2007 to 2008 of which $169 thousand is earmarked for specific
proj ects.
Federal Way Community Center increase of increase of $160 thousand consisted of the following:
o Year end adjustment of $160 thousand due to increase utility cost not anticipated
Debt Service increase of $570 thousand consisted of the following:
o Increase transfer of $1.0 million for Redevelopment Match funded by real estate excise tax.
o Decrease 1997 bond balance of $430 thousand in which the transfer was not needed since the bond
was paid off in 2007.
Adjustments to revenues and other sources budget include: 2007 ending fund balance carry forward of $42.6
million, increase in taxes of $1.9 million, increase in franchise fees of $200 thousand, increase in permit and plan
check fees of $260 thousand, increase in intergovernmental revenues of $11.7 million, increase in charges for
services revenues of $650 thousand, increase in fines and forfeits of $130 thousand, increase in interest earnings of
$407 thousand, increase in recreational revenues of $241 thousand, increase in internal service revenues of $306
thousand, and increase in interfund transfers of $2.2 million.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
The City of Federal Way's investment in capital assets for its governmental and business -type activities as of
December 31, 2008 amounts to $525.1 million (net of accumulated depreciation). This investment in capital assets
includes land, buildings, improvements, machinery and equipment, infrastructure, park facilities and construction in
progress. For more details, please see Note 8.
CAPITAL ASSETS AT YEAR-END, NET OF DEPRECIATION
Governmental
Business -Type
Total
Activities
Activities
2008
2007
Land
$ 292,669,494 $
10,069,780 $
302,739,274 $
294,906,556
Building & Improvements
48,225,620
38,641,201
86,866,821
61,229,656
Machinery and equipment
5,266,802
27,064
5,293,866
4,897,219
Infrastructure
96,564,092
1,873,501
98,437,593
91,007,940
Construction in progress
30,322,365
1,457 798
31,780,163
51,440,070
Total Capital Assets
$ 473,048,375 $
52,069,344 $
525,117,717 $
503,481,441
Major capital asset events during the current fiscal year included the following: expanding the city streets and
traffic corridors for a total of $9.3 million and general capital and various park improvements for $1.8 million.
Additional information on the City of Federal Way's capital assets can be found in Note 8 of the Notes to the
Financial Statements.
Long-term debt
At the end of 2008, the City of Federal Way had total bonded debt outstanding of $20.7 million which is backed by
the full faith and credit of the government. The remainder of the City's debt represents Public Works Trust Fund
Loans.
LONG-TERM DEBT (FUTURE PRINCIPLE AND INTEREST PAYMENTS)
Governmental Business -Type
Activities Activities Total
General obligation bonds $ 29,163,764 $ - $ 29,163,764
Public works trust fund loan - 1,656.302 1,656,302
Total $ 29,163,764 $ 1,656,302 $ 30,820 066
The City's total debt decreased by $1.5 million during 2008. The decrease represents annual debt service payments.
City of Federal Way / 16
The City of Federal Way maintains an AA3 rating from Moody's as of October 2003 for its general obligation
bonds.
Washington State statutes limit the amount of debt a government entity may issue to 7.5% of its total assessed
valuation, subject to 60% majority vote of qualified electors. Of the 7.5% limit, 2.5% is for general purposes, 2.5%
for open space/park facilities, and 2.5% for utilities. Non -voted general purpose indebtedness is limited to 1.5% of
assessed valuation and combination of voted and non -voted general purpose indebtedness cannot exceed 2.5% of
assessed valuation.
The City's assessed valuation for 2008 was $9.825 billion and the total amount of debt the City may issue is $725.3
million. Remaining legal debt capacities as of December 31, 2008 are:
General Government (no vote requirement) $ 135,762,730
General Government (3/5 majority vote required) 98,251,890
Parks & Open Space (3/5 majority vote required) 245,629,725
Utilities (3/5 majority vote required) 245.629.725
Total Capacity S 725,274.070
Additional information on the City of Federal Way's long-term debt can be found in Note 11 and in the Statistical
Section of this report.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
The 2009/2010 Adopted Budget was developed under challenging and uncertain economic conditions. Revenue
forecasts for both years were based on the first half of 2008 in which the housing market was slowly softening but
did not plummet until the second half of 2008. With the mortgage crisis, large declines in revenues, and increasing
fixed costs, the City is currently reevaluating the 2009/2010 Adopted Budget to make adjustments as necessary.
Out of the City's nearly $43M General Fund operating budget, sales tax accounts for 29% of the revenues, utility
taxes 21%, and property taxes 22%. Over the last several years, Federal Way's annual reoccurring revenue growth
has averaged nearly 8%. However, in 2008, those same reoccurring revenues were down over 3%. Aggregate tax
revenue growth is expected be flat through the end of 2011. Beginning in 2012, growth is expected to be over 5%,
when revenues are expected to reach nearly $45M.
Even with the projected revenue recovery after 2011, overall city revenue growth is not expected to keep pace with
inflation. Two of the city's main revenue generators, sales tax receipts and utility taxes, are expected to remain flat
through 2011. Projected revenues for the forecast period are expected to grow at lower overall levels than have been
experienced recently. It is this conclusion which leads to the expectation that during the plan years, revenue growth
will not cover a moderate growth in operating expenditures in which the city is relying more on utility tax transfer to
maintain general operations.
REQUEST FOR INFORMATION
This financial report is designed to provide a general overview of the City of Federal Way's finances for all those
with an interest in the government's finances. Questions concerning any of the information provided in this report
or requests for additional financial information should be addressed to Tho Kraus, Finance Director, City of Federal
Way, P.O. Box 9718, Federal Way, WA 98063-9718, telephone 253-835-2520, or visit the City's website at
www.cit offederalwa .corn.
City of Federal Way / 17
BASIC FINANCIAL STATEMENTS
City of Federal Way / 18
STATEMENT OF NET ASSETS
December 31, 2008
ASSETS
Cash & cash equivalents and investments
Receivables (net)
Due from other governments
Prepaid items
Restricted assets:
Cash with escrow agent
Restricted cash
Customer deposits
Investment in joint venture
Capital Assets (net of accumulated depreciation)
Land
Depreciable assets
Infrastructure
Construction in progress
Total Assets
LIABILITIES
Accounts payable and accruals
Unearned revenue
Retainage payable
Retainage payable - with escrow agent
Due to other governments
Customer deposits
Noncurrent Liabilities:
Due within one year
Due in more than one year
Total Liabilities
NET ASSETS
Invested in capital assets, net of related debt
Restricted for:
Customer deposit
Debt service prefunding
Capital projects
Steel Lake Management District
Other
Unrestricted
Total Net Assets
Governmental
Activities
Business -type
Activities Total
$ 51,558,108 $ 4,927,420 $ 59,485,528
2,117,794 521,119 2,638,913
1,979,741 30,509 2,010,250
23,791 - 23,791
119,904
30,867
2,689,657
292,669,494
53,492,422
96,564,092
30,322,365
534,568,235
2,040,355
427,966
23,170
51,589
1,559,696
4,696,785
15,960,665
24,760,226
456,600,030
1,763,667
26,252,192
418,207
24,773,913
25,769
10,069,780
38,668,264
1,873,501
1,457,798
57,574,160
13,679
278,375
25,769
9,237
183,593
1,454,742
1,965,395
50,494,590
20,543
22,015
5,071,617
$ 509,808,009 $ 55,608,765
The notes to the financial statements are an integral part of this statement.
145,673
30,867
2,689,657
302,739,274
92,160,686
98,437,593
31,780,163
592,142,395
2,054,034
706,341
23,170
25,769
51,589
1,568,933
4,880,378
17,415,407
26,725,621
507,094,620
20,543
1,763,667
26,252,192
22,015
418,207
29,845,530
$ 565,416,774
City of Federal Way / 19
Functions/Programs
Governmental Activities:
General Government
Security of Persons & Property
Transportation
Physical Environment
Economic Environment
Health
Culture & Recreation
Interest on long-term debt
Total governmental activities
Business -type Activities:
Surface Water Management
Dumas Bay Centre
Total business -type activities
Total
STATEMENT OF ACTIVITIES
For the Year ended December 31, 2008
Program Revenues
Net (Expense) Revenue & Changes in Net Assets
Operating Capital Grants
Charges for Grants and and Governmental Business -type
Expenses Services Contributions Contributions Activities Activities Total
$ 5,606,797
$ 2,313,939 $ - $ -
$ (3,292,858) $
- $ (3,292,858)
24,745,284
2,309,406 1,538,476 -
(20,897,402)
- (20,897,402)
7,891,298
513,340 - 8,933,154
1,555,196
- 1,555,196
370,718
262,847 -
(107,871)
- (107,871)
3,382,572
1,962,624 -
(1,419,948)
- (1,419,948)
705,976
- -
(705,976)
(705,976)
6,955,442
2,561,685 -
(4,393,757)
- (4,393,757)
901,161
- - -
(901,161)
- (901,161)
50,559,248
9,923,841 1,538,476 8,933,154
(30,163,777)
- (30,163,777)
4,060,440
3,876,184 - -
(184,256)
(184,256)
1,045,250
597,269 - - -
(447,981)
(447,981)
5,105,690
4,473,453 -
(632,237)
(632,237)
$ 55,664,938
$ 14,397,294 $ 1,538,476 $ 8,933,154 (30,163,777)
(632,237)
(30,796,014)
General revenues:
Sales tax
Utility tax
Property tax
Real Estate Excise Tax
Gambling Tax
Hotel/Motel Tax
Leashold tax
Other revenue
Unrestricted Grants & Contributions
Investment Earnings
Disposition of capital assets
Transfers
Total general revenues and transfers
Change in net assets
Net Assets at beginning of year
Prior period adjustment
Adjusted beginning net assets
Net assets at end of year
The notes to the financial statements are an integral part of this statement.
14,195,800 -
52 137
14,195,800
13,469,136 -
13,469,136
9,397,456 -
9,397,456
2,590,310 -
2,590,310
1,259,783 -
1,259,783
188,833 -
188,833
5,712 -
5,712
875,389 -
875,389
4,159,890 3,288,893
7,448,783
1,519,727 158,565
1,678,292
52 137
( , )
-
( , )
123,518
(123,518)
47,733,417
3,323,940
51,057,357
17,569,640
2,691,703
20,261,343
495,048,308
51,830,061
546,878,369
(2,809,940)
1,087,001
(1,722,939)
492,238,368
52,917,062
545,155,430
$ 509,808,009
$ 55,608,765
$ 565,416,774
City of Federal Way / 20
BALANCESHEET
GOVERNMENTAL FUNDS
DECEMBER 31, 2008
Debt
General Street Utility Tax Service
ASSETS
Equity in pooled cash & investments $
5,208,161 $ 1,268,545 $ 4,800,412 $ 1,882,041
Prepaid insurance/debt service
18,791 - - -
Retainage in escrow
- -
Receivables (net):
Taxes
449,764 - - 100,146
Accounts and contracts
26,808 - 1,539,776 -
Restricted cash
30,867 - - -
Due from other governments
1,288,002 84,941 -
Interfund loans receivable
87,000 - - -
TOTAL ASSETS
7,109,393 1,353,486 6,340,188 1,982,187
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
Accounts/payroll payable
Retainage payable
Due to other governments
Deposits payable
Interfund loans payable
Deferred revenue
TOTAL LIABILITIES
Fund balance:
Reserved:
Debt service
Other
Unreserved:
General fund
Special revenue funds
Capital projects funds
699,175
207,095 - 4,050
10,169
- - -
-
2,071 -
51,589
- -
465,455
994,241 - -
340,698
50,079 - 214,470
1,567,086
1,253,486 - 218,520
- - - 1,763,667
30,867 - -
5,511,440 - - -
100,000 6,340,188 -
TOTAL FUND BALANCES 5,542,307 100,000 6,340,188 1,763,667
TOTAL LIABILITIES AND
FUND BALANCE $ 7,109,393 $ 1,353,486 $ 6,340,188 $ 1,982,187
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 21
BALANCESHEET
GOVERNMENTAL FUNDS
DECEMBER 31, 2008
(continued)
Downtown Nonmajor
Redevelopment Transportation Governmental Total
ASSETS
Equity in pooled cash & investments $
6,614,125 $ 13,714,019 $ 7,643,467 $ 41,130,770
Prepaid insurance/debt service
- - - 18,791
Retainage in escrow
100,000 19,904 119,904
Receivables (net):
Taxes
- - 549,910
Accounts and contracts
1,300 - 1,567,884
Restricted cash
- - 30,867
Due from other governments
231,620 375,178 1,979,741
Interfund loans receivable
- - 87,000
TOTAL ASSETS 6,715,425 13,945,639 8.038,549 45,484,867
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
Accounts/payroll payable
Retainage payable
Due to other governments
Deposits payable
Interfund loans payable
Deferred revenue
TOTAL LIABILITIES
Fund balance:
Reserved:
Debt service
Other
Unreserved:
General fund
Special revenue funds
Capital projects funds
432,958 267,091
1,610,369
-
10,169
- 21,099
23,170
- - -
51,589
100,000 - -
1,559,696
- - 87,000
87,000
- 86.322
69 L569
100,000 432,958 461.512 4,033.562
1,763,667
387,340 418,207
- - 5,511,440
- 1,065,611 7,505,799
6,615,425 13.512.681 6,124,086 26,252,192
TOTAL FUND BALANCES 6,615,425 13,512,681 7,577,037 41,451,305
TOTAL LIABILITIES AND
FUND BALANCE 6,715,425 $ 13.945.639 $ 8,038,549
Amounts reported for governmental activities in the statement of net assets are different because:
Capital assets are used in governmental activities are not financial resources and, therefore,
are not reported in the funds. 454,378,859
Investment in joint venture is not a financial resource and, therefore, not reported in the funds 2,689,657
Other long-term assets are not available to pay for current -period expenditures and, therefore,
are deferred in the funds 289,703
Internal service funds are used by management to charge the costs of insurance, information systems,
mail and duplication, fleet, and building management to individual funds. The assets and liabilities
of the internal service funds are included in governmental activities in the statement of net assets. 31,682,035
Long-term liabilities, including bonds payable, are not due and payable in the current period
and, therefore, are not reported in the funds. (20,683,550)
Net assets of governmental activities $509,808,009
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 22
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended December 31, 2008
Debt
General
Street
Utility Tax
Service
REVENUES
Taxes
$ 24,674,606 $
- $
13,469,136 $
2,590,310
Licenses and permits
2,057,.566
137,502
-
-
Intergovemmental
1,538,476
1,143,931
-
Service charges and fees
2,970,364
324,150
-
-
Development fees
-
-
-
-
Fines and forfeitures
1,292,454
-
-
-
Interest
312,341
24,151
64,004
209,499
Other
456,631
38,277
-
-
TOTAL REVENUES
33,302,438
1,668,011
13,533,140
2.799,809
EXPENDITURES
Current:
General government
4,964,012 - 59,748 -
Security of persons and property
25,470,722 - - -
Transportation
4,622,906 - -
Physical environment
- - -
Economic environment
3,148,084 - - -
Health
700,876 - - -
Culture and recreation
3,858,766 - -
Debt service:
Principal
- - - 440,900
Interest/fiscal charges/admin fees
- - - 754,233
Capital outlay
335,245 26,876 - -
TOTAL EXPENDITURES 38,477,705 4,649,782 59,748 1,195,133
EXCESS (DEFICIENCY) OF REVENUES
OVEP iTMJmUnN EXPENDITURES (5 i7c 267) (2 98 771) 13,473,392 1,604,676
mow..,-.,�.y .. ��,., ,i ��.,.v.,, �
OTHER FINANCING SOURCES
(USES)
Transfers in
5,402,686 2,981,771
-
913,333
Transfers out
(2,594,165) -
(10,614,077)
(2,844,000)
TOTAL OTHER FINANCING
SOURCES (USES)
2,808,521 2,981,771
(10,614,077)
(1,930,667)
NET CHANGE IN FUND BALANCES
(2,366,746) -
2,859,315
(325,991)
FUND BALANCES - BEGINNING
7,909,053 100,000
3,480,873
2,089,658
FUND BALANCES - ENDING $ 5,542,307 $ 100,000 $ 6,340,188 $ 1,763,667
The notes to the financial statements are an integral part of this statement
City of Federal Way / 23
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended December 31, 2008
(continued)
Downtown
Nonmajor
Redevelopment
Transportation
Governmental
Total
REVENUES
Taxes $
- $
$
337,729 $
41,071,781
Licenses and permits
-
-
-
2,195,068
Intergovernmental
6,508,422
1,329,741
10,520,570
Service charges and fees
-
1,022,458
1,929,235
6,246,207
Fines and forfeitures
-
-
141,174
1,433,628
Interest
127,729
356,808
180,423
1,274,955
Other
-
9,097
371,384
875,389
TOTAL REVENUES
127,729
7,896,785
4,289,686
63,617,598
EXPENDITURES
Current:
General government
- 173,272
5,197,032
Security of persons and property
- -
25,470,722
Transportation
- - 2,011,642
6,634,548
Physical environment
- 370,718
370,718
Economic environment
- 196,903
3,344,987
Health
- -
700,876
Culture and recreation
- - 2,012,522
5,871,288
Debt service:
Principal
- -
440,900
Interest/fiscal charges/admin fees
146,928 - -
901,161
Capital outlay
7,230 15,321,775 2,345,983
18,037,109
TOTAL EXPENDITURES 154,158 15,321,775 7,111,040 66,969,341
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (26,429) (7,424,990) (2,821,354) (3,351,743)
OTHER FINANCING SOURCES
(USES)
Transfers in
1,500,000
3,112,778
2,322,348
16,232,916
Transfers out
-
(57,156)
-
(16,109,398)
TOTAL OTHER FINANCING
SOURCES (USES)
1,500,000
3,055,622
2,322,348
123,518
NET CHANGE IN FUND BALANCES
1,473,571
(4,369,368)
(499,006)
(3,228,225)
FUND BALANCES - BEGINNING
5,141,854
17,882,049
8,076,043
44,679,530
FUND BALANCES - ENDING $ 6,615,425 $ 13,512,681 $ 7,577,037 $ 41,451,305
The notes to the financial statements are an integral part of this statement
City of Federal Way / 24
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
For the Year Ended December 31, 2008
Amounts reported for governmental activities in the statement of activities (page 42) are 2008
different because:
Net change in fund balances --total governmental funds $ (3,228,225)
Governmental funds report capital outlays as expenditures. However, in the
statement of activities the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense. This is the amount by which
capital outlays exceeded depreciation in the current period. 19,932,930
Revenues in the statement of activities that do not provide current financial resources
are not reported as revenues in the funds. 35,248
The issuance of long-term debt provides current financial resources to governmental
funds, while the repayment of the principal of long-term debt consumes the
current financial resources of governmental funds. Neither transaction, however,
has any effect on net assets. Also, governmental funds report the issuance
proceeds of new debt as current financial resources and payment as the use
of current resources, whereas these amounts reduce the net assets. 440,900
Internal service funds are used by management to charge costs of risk management,
information systems, mail & duplication, fleet, and building systems to the funds. 570,836
Some expenses reported in the statement of activities do not require the use of current
financial resources and, therefore, are not reported as expenditures in the funds. 182,048)
Change in net assets of governmental activities $ 17,569,641
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 25
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2008
REVENUES
Taxes
Licenses and permits
Intergovernmental
Service charges and fees
Fines and forfeitures
Interest
Other
TOTAL REVENUES
EXPENDITURES
Current:
General government
Security of persons and property
Economic environment
Health
Culture and recreation
Capital outlay
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Variance with
Budgeted Amounts Final Budget -
µ Positive
Original Final Actual Amounts (Negative)
$ 24,560,499 $
25,903,499 $
24,674,606 $
(1,228,893)
2,265,787
2,725,787
2,057,566
(668,221)
1,073,026
1,350,946
1,538,476
187,530
2,893,893
2,853,893
2,970,364
116,471
748,325
828,325
1,292,454
464,129
309,023
716,023
312,341
(403,682)
542,851
633,401
456,631
(176,770)
32,393,404 35,011,874 33,302,438 (1,709,436)
4,199,409
8,027,822
4,964,012
3,063,810
24,273,549
26,785,303
25,470,722
1,314,581
2,991,368
3,862,575
3,148,084
714,491
658,206
759,295
700,876
58,419
3,812,035
4,105,782
3,858,766
247,016
-
142,000
335,245
(193,245)
35,934,568 43,682,777 38,477,705 5,205,072
(3,541,164) (8,670,903) (5,175,267) 3,495,636
5,653,946 5,742,241 5,402,686 (339,555)
(2,295,813) (3,195,309) (2,594,165) 601,144
TOTAL OTHER FINANCING SOURCES (USES)
3,358,133
2,546,932
2,808.521
261,589
NET CHANGE IN FUND BALANCES
(183,031)
(6,123,971)
(2,366,746)
3,757,225
FUND BALANCES - BEGINNING
266,669
7,909,058
7,909,053
(5)
FUND BALANCES - ENDING
$ 83,638 $ 1,785,087 $ 5,542,307 $ 3,757,220
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 26
STREET FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2008
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
REVENUES
Licenses and permits
$ 233,399 $
233,399 $
137,502 $
(95,897)
Intergovernmental
1,195,000
1,195,000
1,143,931
(51,069)
Service charges and fees
250,000
250,000
324,150
74,150
Interest
40,000
40,000
24,151
(15,849)
Other
26,000
26,000
38,277
12,277
TOTAL REVENUES
1,744,399
1,744,399
1,668,010
(76,389)
EXPENDITURES
Current:
Capital outlay
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
4,477,819 5,327,315 4,649,782 677,533
4,477,819 5,327,315 4,649,782 677,533
(2,733,420) (3,582,916) (2,981,771) 601,145
2,733,419 3,582,915 2,981,771 (601,144)
TOTAL OTHER FINANCING SOURCES (USES) 2,733,419 3,582,915 2,981,771 (601,144)
NET CHANGE IN FUND BALANCES (1) (1) - 1
FUND BALANCES - BEGINNING 100,000 100,000 100.000 -
FUND BALANCES - ENDING
$ 100,000 $ 100,000 $ 100,000 $ 1
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 27
UTILITY TAX FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2008
REVENUES
Taxes
Interest
TOTAL REVENUES
EXPENDITURES
Current:
General government
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers out
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
$ 11,745,069 $ 11,782,569 $ 13,469,136 $ 1,686,567
50,000 50,000 64,004 14.004
11,795,069 11,832,569 13.533.140 1,700,571
59,747 59,747 59,747 -
59347 59.747 59,747
11,735,322 11,772,822 13,473,393 1,700,571
11,322,793 (11,360,293) (10,614,077) 746.216
TOTAL OTHER FINANCING SOURCES (USES)
(11,322,793)
(11,360,293)
(10,614,077) 746.216
NET CHANGE IN FUND BALANCES
412,529
412,529
2,859,316 2,446,787
FUND BALANCES - BEGINNING
1,241,145
3,480,872
3.480,872 -
FUND BALANCES - ENDING
$ 1.653,674 $ 3,893,401 $ 6,340,188 $ 2,446,787
The notes to the financial statements are an integral part of this statement.
City of Federal Way/28
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
December 31, 2008
Governmental
Business-tvpe Activities - Enterprise
Funds
Activities
Surface Water
Dumas Bay
Internal
Management
Centre
Total
Service
ASSETS
Current Assets
Equity in pooled cash and investments
$ 4,576,643
$ 350,777
$ 4,927,420
$ 13,427,338
Cash with escrow agent
25,769
-
25,769
-
Prepaid items
-
-
5,000
Receivables (net):
Taxes
144,600
-
144,600
-
Accounts and contracts
304,685
71,834
376,519
Interest
-
-
-
Due from other governments
22,509
8,000
30,509
TOTAL CURRENT ASSETS
5,074,206
430,611
5,504,817
13,432,338
Property, plant and equipment:
Land
7,960,140
2,109,640
10,069,780
Building/structures
19,849
3,576,592
3,596,441
16,103,691
Machinery/furniture/equipment
48,007,862
106,643
48,114,505
13,124,473
Infrastructure
1,916,644
1,916,644
Construction in progress
1,074,567
383,231
1,457,798
Less accumulated depreciation
(10,932,639)
(2,153,186)
(13,085,825)
(10,558,728)
TOTAL NONCURRENT ASSETS
48,046,423
4,022,920
52,069,343
18,669,436
TOTAL ASSETS
53,120,629
4,453,531
57,574,160
32,101,774
LIABILITIES AND FUND EQUITY
Current liabilities:
Vouchers/payroll payable
87,988
33,964
121,952
311,660
Retainage payable - with escrow agent
25,769
-
25,769
Deposits payable
-
9,237
9,237
Deferred revenue
138,398
139,977
278,375
Public works trust fund loan payable
182,359
-
182,359
Compensated absences payable
1,234
1,234
-
TOTAL CURRENT LIABILITIES
435,748
183,178
618,926
311,660
Long-term liabilities:
Public works trust fund loan payable
1,392,394
-
1,392,394
-
Compensated absences payable
39,747
22,601
62,348
72,668
TOTAL LONG-TERM LIABILTIES
1,432,141
22,601
1,454,742
72,668
TOTAL LIABILITIES
1,867,889
205,779
2,073,668
384,328
Invested in capital assets, net of related debt
46,471,670
4,022,920
50,494,590
18,669,436
Restricted for:
Customer deposits
-
20,543
20,543
-
Steel Lake Management District
21,015
-
21,015
-
Unrestricted
4,760,055
204,289
4,964,344
13,048,010
TOTAL NET ASSETS
$ 51,252,740
$ 4,247,752
55,500,492
$ 31,717,446
Adjustment to reflect the consolidation of internal service fund activities
related
to enterprise funds
108,273
NET ASSETS OF BUSINESS -TYPE ACTIVITIES
$ 55,608,765
The notes to the financial statements are an integral part of this statement
City of Federal Way / 29
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
For the Year Ended December 31, 2008
OPERATING REVENUES:
Service charges and fees
Intergovernmental
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)
Governmental
Business -fie Activities - Enterprise Funds Activities
Surface Water Dumas Bay Internal
Management Centre Total Service
$ 3,339,408 $ 591,269 $ 3,930,677 $ 5,363,033
522,625 6,000 528,625 -
14,151 - 14,151 189,534
3,876,184 597,269 4,473,453 5,552,567
1,585,772
457,580
2,043,352
1,075,092
53,815
113,870
167,685
606,588
1,002,550
236,519
1,239,069
1,904,319
320,864
373
321,237
115,632
457,180
181,776
638,956
1,864,286
629,355
59,103
688,458
-
4,049,536 1,049,221 5,098,757 5,565,917
(173,352) (451,952) (625,304) (13,350)
Gain (Loss) from disposal of capital assets
-
- -
(52,137)
Interest income
130,507
12,434 142,941
260,396
Interest expense
(17,571)
- (17,571)
-
TOTAL NON -OPERATING REVENUES (EXPENSES)
112,936
12,434 125,370
208,259
INCOME (LOSS) BEFORE OPERATING TRANSFERS
(60,416)
(439,518) (499,934)
194,909
Capital contributions
Operating transfers in
Operating transfers out
CHANGE IN NET ASSETS
TOTAL NET ASSETS - BEGINNING
Prior Period Adjustment
BEGINNING NET ASSETS ADJUSTED
3,213,880 - 3,213,880 484,200
1,190,000 129,260 1,319,260 62,327
(1,402,778) (40,000) (1,442,778) (62,327)
2,940,686 (350,258) 2,590,428 679,109
47,225,053 4,598,010
1,087,001 -
48,312,054 4,598,010
TOTAL NET ASSETS - ENDING $ 51,252,740 $ 4,247,752
Adjustment to reflect the consolidation of internal service fund
activities related to enterprise funds 101,275
CHANGE IN NET ASSETS OF BUSINESS -TYPE ACTIVITIES $ 2,691,703
The notes to the financial statements are an integral part of this statement.
31,380,749
(342,412)
31,038,337
$ 31,717,446
City of Federal Way / 30
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended December 31, 2008
Governmental
Business -type Activities - Enterprise Funds Activities
Surface Water Dumas Bay Internal
Management Centre Total Service
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from users $
3,034,723 $
603,597 $
3,638,320
$ 5,363,033
Cash received from other governments
462,114
462,114
-
Cash payments to claimants
-
-
-
(359,540)
Cash payments to suppliers for goods/services
(1,114,965)
(331,732)
(1,446,697)
(1,940,486)
Cash payments to employees
(1,586,123)
(450,144)
(2,036,267)
(1,057,343)
Cash payments to other funds for goods and services
(642,829)
(59,103)
(701,932)
-
Cash payments for other services/charges
-
-
(191,746)
Cash payments to other governments for goods and services
(304,920)
(373)
(305,293)
(115,633)
Cash payments for damage deposits
-
900
900
-
Other operating receipts
14.151
14,151
189,534
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
(137,849)
(236,855)
(374,704)
1,887,819
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Subsidy from interlocal grant
-
-
-
Operating transfers in
1,190,000
129,260
1,319,260
62,327
Operating transfers out
(1,402,778)
(40,000)
(1,442,778)
(62,327)
NET CASH PROVIDED BY NONCAPITAL FINANCING
(212,778)
89,760
(123,518)
CASH FLOWS FROM CAPITAL AND CAPITAL -
RELATED FINANCING ACTIVITIES:
Principal paid on debt service
(182,359)
-
(182,359)
-
Interest paid on debt service
(17,571)
-
(17,571)
-
Acquisition of capital asset/construction work in progress
(1,381,781)
(4,423)
(1,386,204)
(1,331,951)
Proceeds from the sale of capital assets
-
-
16,801
NET CASH USED FOR CAPITAL
AND CAPITAL -RELATED FINANCING ACTIVITIES
(1,581,711)
(4,423)
(1,586,134)
(1,315,150)
CASH FLOWS FROM INVESTING ACTIVITIES:
Receipts of interest
130,507
12,434
142,941
260,396
NET CASH PROVIDED BY INVESTING ACTIVITES
130,507
12,434
142,941
260396
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(1,801,831)
(139,584)
(1,941,415)
833,065
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
6,404,243
490.361
6,894,604
12,594,273
CASH AND CASH EQUIVALENTS AT END OF YEAR
4,602,412
350,777
4,953,189
13,427,338
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Operating income (loss)
Adjustments to reconcile operating income to
net cash provided (used) by operating activities:
Depreciation expense
(Increase)/decrease in accounts receivable
(Increase)/decrease in taxes receivable
(Increase)/decrease in due from other governments
Increase/(decrease)in vouchers/accounts payable
Increase/(decrease)in retainage payable
Increase/(decrease)in deposits payable
Increase/(decrease)in taxes payable
Increasel(decrease)in deferred revenue
Increase/(decrease)in accrued payroll/compensated absences payable
TOTAL ADJUSTMENTS
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Non -cash investing, capital, and financing activities:
Other contributions of capital assets
The notes to the financial statements are an integral part of this statement.
(173,352)
(451,952)
(625,304)
(13,351)
457,180
181,776
638,956
1,864,286
(304,685)
(29,275)
(333,960)
-
(45,655)
(45,655)
-
(15,944)
(6,000)
(21,944)
-
(24,234)
18,657
(5,577)
19,135
(71,838)
.1
(71,838)
-
-
900
900
-
40,328
41,603
81,931
-
351
7,436
7,787
17,749
35,503
215,097
250.600
1,90I.170
$ (137,849) $
(236,855) $
(374,704)
$ 1,887,819
$ 4.324.856
$ 484,200
City of Federal Way / 31
NOTES TO THE BASIC FINANCIAL STATEMENTS
December 31, 2008
INDEX
Note Page
1
Summary of Significant Accounting Policies..............................................................................
32
ReportingEntity...................................................................................................................
32
Government -wide and Fund Financial Statements...............................................................
32
Measurement Focus, Basis of Accounting, and Financial Statement Presentation ...............
33
BudgetaryInformation.........................................................................................................
36
Assets, Liabilities and Equities ........ .......................................................... .......... :....:...........
38
Cashand Investments. ............ ............. . ............... __ ...................................................
38
Receivables..................................................................................................................
38
Amounts Due to and from Other Funds; Interfund Loans ...........................................
38
Inventories....................................................................................................................
39
CapitalAssets...............................................................................................................
39
Compensated Absences Payable .............................................. :............. ................. .....
40
Long -Term Liabilities.................................................... :..:..:......... ................ :.:..........
40
DeferredRevenue........................................................................................................
40
Fund Equity -Reserves and Designation.......................................................................
40
InterfundTransactions..................................................................................................
41
2
Reconciliation of Government -wide & Fund Financial Statements ..............................................
41
3
Stewardship, Compliance and Accountability:........................................................................ ......
42
4
Supplemental Appropriations ............. ............ .......................... .....................................................
42
5
Deposits and Investments..............................................................................................................
42
6
Receivables and Due from Other Governments.............................................................................
44
7
Due To Other Governments..........................................................................................................
45
8
Capital Assets...................................................._....._...._....................._........................._.................
46
9
Pension Plans................................................................................................................................
47
10
Risk Management..........................................................................................................................
51
11
Long -Term Liabilities......................................................... ....... ..................... . ............. :.................
52
12
Interfund Transactions..................................................................................................................
55
13
Contingencies and Litigation........................................................................................................
56
14
Joint Ventures...............................................................................................................................
56
15
Prior Period Restatement...............................................................................................................
57
16
Subsequent Events........................................................................................................................
58
City of Federal Way / 32
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Year Ended December 31, 2008
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the City of Federal Way have been prepared in conformity with generally accepted accounting
principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted
standard setting body for establishing governmental accounting and financial reporting principles. The significant accounting
policies are described below.
REPORTING ENTITIES
The City's Comprehensive Annual Financial Report (CAFR) includes the funds, agencies and boards controlled by or
dependent on the City. In conformance with Governmental Accounting Standards Board (GASB) Statement 14, "The
Financial Reporting Entity", the primary basis of determining whether outside agencies and organizations should be
considered component units of the City is Financial Accountability. Financial Accountability is dependence on the City's
obligation to redeem the organization's debts, to finance the organization's deficits, and the extent to which subsidies from the
City constitute a major portion of the organization's total resources. Applying these criteria, as outlined in GASB Statement
14, the City has no relationships that qualify as component units.
Financial Accountability
Financial accountability is defined as appointment of a voting majority of an agency's or organization's board, and either the
City's ability to impose will on the agency or organization or the possibility that the agency or organization will provide a
financial benefit to or impose a financial burden on the City.
Joint Ventures
A joint venture is a legal entity or organization which results from a contractual arrangement that is owned, operated, or
governed by two or more participants as a separate activity subject to joint control, in which participants retain an ongoing
financial interest or an ongoing financial responsibility. The City participates in one joint venture, Valley Communications
Center. See Note 14, Joint Venture, which more fully describes this organization.
ACCOUNTING STANDARDS
The City implemented GASB Statement 34 ("Basic Financial Statements and Management's Discussion and Analysis for
QtntP nnrl T oral ("rn P--a W'1 (IAQR Z7 OT—ir Finn ;al St—monts _ and T�—magement's Discussion an Analysis- for
...... �..,...... .�.. ................ „ .�...,�. ..,,.., I inn........ .,. ate........ ........�.....b.......... � ,..,�..,.u�..,., �..,.........y �.u- .v.
State and Local Governments: Omnibus"), and GASB 38 ("Certain Financial Statement Note Disclosures"). These new
standards substantially change the financial reporting basis and format. Some of these changes are:
• Management's Discussion and Analysis (MD&A) section providing analysis of the City's overall position and results
of operations
• Financial statements prepared using full accrual accounting for all government -wide City activities, including current
year infrastructure. Pursuant to GASB Statement 34, the City included capitalized retroactive infrastructure assets
owned prior to 2003.
• Change in the individual fund financial statements focusing on the major funds
GOVERNMENTAL -WIDE AND FUND FINANCIAL STATEMENTS
The government -wide financial statements (i.e. the statement of net assets and the statement of activities) report information
on all activities of the primary government. For the most part, the effect of interfund activity has been removed from these
statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported
separately from business -type activities, which rely to a significant extent on fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by
program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Our policy is to
allocate indirect costs to specific function or segment. Program revenues include 1) charges to customers or applicants who
purchase, use or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grant and
City of Federal Way / 33
contributions that are restricted to meeting the operational or capital requirements or a particular function or segment. Taxes
and other items not properly included among program revenues are reported instead as general revenues.
Separate fund financial statements are provided for governmental funds and proprietary funds. Major individual governmental
funds and major individual enterprise funds are reported as separate columns in the fund financial statements.
MEASUREMENT FOCUS, BASIS OF ACCOUNTING, FINANCIAL STATEMENT PRESENTATION
The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis
of accounting, as are the proprietary fund statements. Revenues are recorded when earned and expenses are recorded when a
liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for
which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by
the provider have been met.
Governmental Funds
Governmental fund financial statements are reported using the current financial resources measurement focus and the
modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues
are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of
the current period. For this purpose, the City of Federal Way considers revenues to be available if they are collected within 30
days of the end of the current fiscal period with an exception to Utility Taxes in which we extend this period to 60 days.
Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service
expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when
payment is due.
Property taxes, licenses, and interest associated within the current period are all considered to be susceptible to accrual and so
have been recognized as revenues of the current fiscal period. Only the portion of special assessment receivable due within
the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are
considered to be measurable and available only when cash is received by the City.
The City reports the following major governmental funds:
General Fund
This is the City's general operating fund. It accounts for all financial resources of the general government, except
those required to be accounted for in another fund.
Street Fund
This fund accounts for receipt and disbursement of State -levied "unrestricted" motor vehicle fuel taxes which must
be accounted for in a separate fund and expended for street -oriented engineering, construction and maintenance
purposes only.
Utility Tax Fund
This fund was established to account for all utility tax receipts. These receipts will subsequently be distributed to
various funds (Debt Service, Capital Improvement Projects, etc.) for project expenditure as determined by the City
Council.
Debt Service Fund
This fund accounts for the accumulation of resources for the payment of general obligation and assessment bond
principal, interest and related costs.
Downtown Redevelopment CIP Fund
This fund was established to accumulate resources to set aside for downtown projects.
Transportation. CIP Fund
This fund accounts for receipts and disbursements related to acquisition, design, construction and any other related
street project expenditures.
City of Federal Way / 34
The City reports the following fund groups as non -major funds:
Special Revenue Funds
These funds are to be used to account for the proceeds of revenues and sources (other than special assessments,
expendable trust or major capital projects) that are legally restricted to expenditures for specified purposes.
Capital Project Funds
These funds account for the acquisition or construction of major capital facilities with the exception of those facilities
financed by the proprietary and trust funds. The major sources of revenues for this fund are general obligation bond
proceeds, grants from other agencies, local taxes and contributions from other funds.
Proprietary Funds
Proprietary funds are used to account for activities similar to those found in the private sector where the intent of the
governing body is to finance the full cost of providing services, including depreciation, primarily through user charges. The
measurement focus for these funds is based on the commercial model, which uses a flow of economic resources approach.
Under this approach, the operating statements for the proprietary funds focus on a measurement of net income (revenues and
expenses) and both current and non -current assets and liabilities are reported on the related balance sheets.
Private sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both
the government -wide and proprietary fund financial statements to the extent that those standards to not conflict with or
contradict guidance of the Governmental Accounting Standards board. Governments also have the option of following
subsequent private -sector guidance for their business -type activities and enterprise funds, subject to the same limitation. The
City of Federal Way has elected not to follow subsequent private -sector guidance.
As a general rule the effect of the interfund activity has been eliminated for the government -wide financial statements.
Amounts reported as program revenue include 1) charges to customers, 2) operating grants and contributions, and 3) capital
grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather
than program revenues. General revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from non -operating items. Operating revenues and expenses
generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal
ongoing operations. The principal operating revenues of the enterprise and internal service funds are primarily user charges,
the cost of providing goods or services to the general public on a continuing basis. Operating expenses for enterprise funds
and internal service funds includes the cost of sales and services, administrative expenses, and depreciation on capital assets.
All revenues and expenses not meeting this definition are reported as non -operating revenues and expenses.
The City reports the following major proprietary funds:
Enterprise Funds
The City uses enterprise funds to account for government activities that are financed and operated in a manner similar to
private business. Costs of providing services to the general public are primarily financed by user fees.
Surface Water Management Fund
This fund was established to administer and account for all receipts and expenditures related to the City's surface and
storm water management system.
Dumas Bay Centre Fund
This fund was established to account for the revenues and expenses related to the acquisition, capital improvements
maintenance and operations of the City -owned Dumas Bay Centre and Knutzen Family Theatre.
City of Federal Way / 35
Internal Service Funds
The City uses Internal Service Funds to account for the financing of goods or services provided by one department or agency
to other departments or agencies of a government, or to other governments, on a cost -reimbursement basis.
A description of each individual Internal Service Fund included in the Comprehensive Annual Financial Report is provided
below:
Risk Management Fund
This fund accounts for the City's risk financing activities established to minimize adverse effects of losses associated
with property and casualty, medical and dental, unemployment and worker's compensation claims. Both risk control
(to minimize the losses that strike and organization) and risk financing (to obtain finances to provide for or restore
the economic damages of those losses) are involved. The City is currently self -insuring only State Unemployment
Compensation. Related premiums received by the fund are used to reimburse the unemployment benefits paid to
eligible individuals and to establish reserves for the payment of estimated future unemployment claims liability. The
City is also currently recovering costs and building reserves for general liability including property, casualty, errors
and omissions and fidelity coverage.
Information Systems Fund
This fund was established to account for all costs associated with data processing, telecommunications and the
Geographical Information System (GIS). This fund will own and depreciate all non-proprietary fund assets related to
these functions, and will charge equipment/software users for both maintenance and operating costs and equipment
replacement charges based on depreciation schedules.
Support Services Fund
This fund accounts for duplication, graphics and other general support services provided to departments and funds
throughout the City.
Fleet and Equipment Fund
This fund accounts for the cost of maintaining City vehicles and other motorized equipment. Rates charged to user
departments are based on the full cost of maintaining equipment items, including the recovery of related depreciation
expense.
Buildings and Furnishings Fund
This fund accounts for all costs associated with the operation and maintenance of specified City buildings. City
building facilities and furnishings will be owned by this Fund, and both maintenance/operating costs and depreciation
recovery will be charged City departments and funds.
Basis of Accounting
Basis of accounting refers to when revenues and expenditures or expenses are recognized and reported in the financial
statements.
The accrual basis of accounting is used by proprietary funds. Under this method, revenues are recognized when earned, and
expenses are recognized when incurred.
The modified accrual basis of accounting is used by governmental funds. Revenues and other financial resources are
recognized when they become susceptible to accrual, i.e., when the related funds become both measurable and available to
finance expenditures of the current period. To be considered "available", revenue must be collected during the current period
or soon enough thereafter to pay current liabilities. The City uses thirty days when evaluating the available criteria.
Expenditures are recognized when the related fund liability is incurred. Since the recognition of depreciation does not reduce
net financial resources, it is not considered as expenditure. Other exceptions include (1) inventories of materials and prepaid
items are reported as expenditures when purchased, (2) interest on long-term debt is not accrued but is recorded as an
expenditure when due, (3) accumulated unpaid vacation and sick pay are considered expenditures when paid.
Major revenues recorded on the modified accrual basis are:
City of Federal Way / 36
Property Taxes - King County acts as the City's collection agent for these taxes. Each day, the County electronically
transmits to the City the taxes which it has collected on the City's behalf in the prior day. On this basis, property taxes
received in January are considered both measurable and available and are therefore recognized as revenue in the current year.
Other Locally Levied Taxes - King County also acts as the City's collection agent for the 1/a% and optional'/a% real estate
excise taxes. Although a time lag occurs in payment of these taxes to the City, since the taxes are actually collected by King
County in December and receipted to the City within 10 days after the end of the year, they are considered to be both
measurable and available, and are, therefore, accrued as revenue at year end. The State of Washington acts as the City's
collection agency for the locally levied sales tax. The sales tax is distributed monthly and remitted to the City in the following
month. The Sales Tax remittance in January is considered both measurable and available and is therefore accrued as revenue
at year-end.
Grant Revenues - Under Section G60.109 of the Codification of Governmental Accounting and Financial Reporting
Standards, revenues for cost reimbursement grants are determined to be earned and, therefore, available at the time related
expenditures are incurred. For this reason, grant revenues to be received as reimbursement for expenditures incurred in the
current year are also recognized as revenue in that year.
Shared Revenues - Revenues that have been collected, but not remitted by an intermediary collection agency to the City, are
considered measurable and available.
Other Revenue Sources - Other items recognized as revenue in the current year on the modified accrual basis include
investment interest earned but not received at year end; interfund, and intergovernmental service billings related to services
provided in the current year which are outstanding at year end; and any other material revenue amounts determined to be both
measurable and available under current modified accrual accounting practices.
Revenues not considered to meet the criteria for recognition on the modified accrual basis include licenses and permits, fines
and forfeitures, and other miscellaneous revenues which are generally not measurable until received.
FINANCIAL STATEMENT PRESENTATION
Comparative data for each individual fund for the prior year has not been presented in the basic financial statements for year
end of 2008 as it was previously presented in the prior years' financials. In order to obtain an understanding of changes in the
City's position and the results of the City's operations, the financial statements for year end of 2008 should be read in
conjunction with the government's financial statements for the year ended December 31, 2007.
BUDGETARY INFORMATION
e _ cID -1 a
Scope va LuugeL
Annual appropriated budgets are adopted for the general, some special revenue, and debt service funds on the modified
accrual basis of accounting. For governmental funds, there are no differences between the budgetary basis and generally
accepted accounting principles. Budgets for project and grant related special revenue funds and capital project funds are
adopted at the level of the individual project and for fiscal periods that correspond to the lives of projects. Since these funds
are not budgeted on an annual basis, budgetary comparisons are not presented. NCGA Statement 1 does not require, and the
financial statements do not present, budgetary comparisons for proprietary fund types.
Legal budgetary control is established at the fund level, i.e., expenditures for a fund may not exceed the total appropriation
amount. Any unexpended appropriation balances for annually budgeted funds lapse at the end of the year. Appropriations for
other special purpose funds that are non -operating in nature are adopted on a "project -length" basis and, therefore, are carried
forward from year to year without reappropriation until authorized amounts are fully expended or the designated purpose of
the fund has been accomplished.
The individual funds within each fund type which are included in the City's annual operating budget (funds budgeted on an
annual basis) are:
City of Federal Way / 37
General Fund
Special Revenue Funds
Street Fund
Arterial Street
Utility Tax
Solid Waste & Recycling
Federal Way Community Center
Traffic Safety
Hotel/Motel Lodging Tax
Paths & Trails
Debt Service Fund
Procedures for Adopting the Annual Budget
The City's budget process and the time limits under which the budget must be prepared are defined by the Revised Code of
Washington (RCW) 35A.33. The procedures followed in establishing the annual budget are described below:
By late May the official budget call is made by the Chief Financial Officer for current level service budgets and a
preliminary financial forecast.
By late June, departments submit their preliminary expenditure estimates and the Finance 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 Chief Financial Officer.
• City Council conducts workshops and public hearings on the proposed budget between mid -September and mid -
December.
No later than the third Monday in November, the City Council must adopt an ordinance to establish the amount of
property taxes to be levied in the coming year.
By October 31, the City Manager files a preliminary budget with the City Clerk. Copies of the preliminary budget are
provided to staff and the City Council and made available to the public.
• During the first two weeks of November, the City Clerk publishes a notice of the filing of the preliminary budget and
notices of public hearings to be held during preliminary budget deliberations.
Two public hearings on the proposed budget are also held during November and December. Final hearings on the budget
must begin on or before the first Monday of December, and may continue until the 25th day prior to beginning of the next
fiscal year.
By December 31, the City Council makes its adjustments to the proposed budget and adopts a final budget by ordinance.
The final operating budget, as adopted, is published and distributed within the first three months of the following year.
Copies of the adopted budget are made available to the public.
Amending the Budget
The City Manager is authorized to transfer budgeted amounts between departments within any fund; however, any revisions
that alter the total expenditures of a fund must be approved by the City Council.
When the City Council determines that it is in the best interest of the City to increase or decrease the appropriation for a
particular fund, it may do so by ordinance approved by a simple majority. During 2008, the budget was amended two times.
The budget amounts shown in the financial statements are the final authorized amounts as revised during the year.
City of Federal Way / 38
The financial statements contain the original and final budget information. The original budget is the first complete
appropriated budget. The final budget is the original budget adjusted by all reserves, transfers, allocations, supplemental
appropriations, and other legally authorized changes applicable for the fiscal year.
Encumbrances
An encumbrance system is used for budgetary control purposes to record commitments resulting from approved purchase
orders. During the year, encumbrances are recorded in the accounting system at the time purchase orders are issued for goods
and services. Upon payment, the encumbrance is reversed and the actual cost of the related item is recorded as a fund
expenditure. Outstanding encumbrances lapse at year end, are canceled and rolled over to the next fiscal year. Therefore,
these amounts have not been recorded as current year expenditures unless considered to be susceptible to accrual at the end of
the year. The total encumbrances at year-end for the City were $7,544,903.
ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY
Cash and Investments
The City follows the practice of pooling cash and investments of all funds for investment purposes, except for cash held in
escrow, which is disclosed separately on the balance sheet. Each fund's portion of total cash and investments is summarized
by fund type in the combined balance sheet as equity in pooled cash and investments.
It is the City's policy to invest all cash not immediately required for disbursement. At December 31, 2008, the State Treasurer
was holding $58,412,051 in the State Investment Pool. 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, 2008, the total cash and cash equivalents were $58,503,671.
The City's deposits are entirely covered by federal depository insurance (FDIC) or by collateral held in a multiple financial
institution collateral pool administered by the Washington Public Deposit Protection Commission (PDPC).
The City is authorized by State law to purchase certificates of deposit issued by Washington State depositories that participate
in a state insurance pool managed by the Washington Public Deposit Protection Commission; securities purchased by the
Washington State Investment Pool; U.S. Treasury and Agency securities, banker's acceptances trading in the secondary
market; and repurchase agreements with dealers that use authorized securities as collateral.
In accordance with GASB 31, investments in money market investments and participating interest -earning investment
contracts with a remaining maturity of one year or less at the time of purchase are stated at amortized cost. All other
investments are stated at fair value. There was no material deviation from fair value quoted at year-end.
Receivables
Taxes receivable consists of property taxes and related interest and penalties (see Property Tax Note 6). Accrued interest
receivable consists of amounts earned on investments, notes, and contracts at the end of the year.
Due From Other Governments reflects measurable and available intergovernmental grants, entitlements, or State shared
revenues (taxes/charges levied and collected by an intermediary collecting government and distributed on some basis); loans;
and charges for services rendered by the City for another government unit. A separate schedule of Due From Other
Governments is disclosed in Note 6.
Amounts Due to and from Other Funds; Interfund Loans
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are
referred to as either "interfund loans receivable/payable" or "advances to/from other funds." All other outstanding balances
between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental
activities and business -type activities are reported in the government -wide financial statements as "internal balances."
City of Federal Way / 39
Loans between funds must be authorized by the City Manager. In the governmental funds, loans to other funds are offset by a
corresponding reservation of fund balance to indicate that the outstanding loan amounts do not constitute "available spendable
resources" and are, therefore, not available for appropriation. A separate schedule of interfund loans receivable and payable is
furnished in Note 12.
Inventories
Inventories in the governmental funds are recorded as expenditures at the time of purchase. Amounts remaining at year-end
are immaterial and, therefore, are not reflected on the balance sheets of those funds. There were no material inventories at
year-end in the Internal Service or Enterprise Funds.
Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure, are reported in the applicable governmental or
business -type activities columns in the government -wide financial statements.
Pursuant to GASB Statement 34, the City included capitalized retroactive infrastructure assets owned prior to 2003, such as
roads, bridges, curbs and gutters, streets and sidewalks, bridges, and lighting systems, in the year end 2007 financial
statement. The City compiled an inventory of the retroactive infrastructure and recorded these capital assets for year end
2007. The City inventoried current infrastructure assets; performed a condition assessment on the infrastructure assets and
summarized the results using a measurement scale. To arrive at the retroactive infrastructure assets value, the City used a
deflationary factor of the change from the City's assessed value during 1990 through 2006 and multiplied this factor to the
infrastructure to determine the historical cost. The City elected to capitalize all infrastructure assets including pre- 1990 assets
when the City incorporated from unincorporated King County. The City has determined that this method would accurately
reflect capital assets. Infrastructure is the largest asset class of the City and has historically not been reflected nor a measure
of its consumption been charged.
Major expenditures for capital assets, including capital leases and major repairs that increase useful lives are capitalized.
Maintenance, repairs, and minor renewals are accounted for as expenditures or expenses when incurred. The City has adopted
a general capital asset capitalization policy where an item's cost must equal or exceed $1,000. All capital assets are valued at
historical cost (or estimated cost, where historical cost is not known/or estimated market value for donated assets).
Depreciation on all capital assets is recorded as an allocated expense in the government -wide Statement of Activities and in
the proprietary fund statements. Capital assets are reported net of depreciation. The City uses a combination of group
depreciation and straight-line depreciation over the life of the assets.
The following summarizes the average service lives used to calculate depreciation for specific categories of assets in the City's
Assets:
Asset Class Life in Years
Computers..................................................................................... 5-6
Printers & Faxes .............. .................................................................. 7
Telecommunications Equipment.......................................................7
Police Radio Equipment.........................................—........I............11
Other Office Equipment.............................................................. 4-10
Office Furniture and Fixtures..........................................................10
Recreation Equipment.....................................................................10
ParksEquipment......................................................................... 6-10
PoliceEquipment........................................................................ 9-11
Shop/Miscellaneous Equipment ................................................ 10-12
Heavy Work Equipment............................................................ 10-16
Non -Police Vehicles.........................................................................7
Police Patrol Vehicles.......................................................................5
Police Non -Patrol Vehicles......................................................... 7-10
HeavyTrucks.............................................................................. 8-10
Land Improvements.............................•••........................._..............20
Buildings..............................................••••••••.....•.............................20
Storm Drainage Systems.................................................................20
Infrastructure.................................................................................100
City of Federal Way / 40
Compensated Absences
The City records a liability for all outstanding vacation pay and accrued compensatory time. In governmental funds, vacation
pay and compensatory time is recorded as expenditures when paid which occurs when used or upon termination. In the entity -
wide statements and the proprietary fund statements, vacation pay and compensatory time is recorded as a liability and
expense in the year earned.
Employee vacation leave is accumulated monthly at rates ranging from 12 to 18.5 days per year depending on term of
employment. Employees may accumulate up to a maximum of 240 hours of vacation leave, except the Police Guild, who can
accrue up to a maximum of 296 hours. All outstanding vacation leave is payable upon termination of employment.
The differences between the governmental fund statements and the entity -wide statements represent reconciling items between
the fund level and government -wide financial statements. The reconciliations are included as part of the financial statements.
A non-exempt employee may request compensatory time off in lieu of overtime payment. Compensatory time is accrued at a
rate of one and one-half hours for each hour of overtime worked, to a maximum of eighty hours, or forty hours for Police
Guild members.
Sick leave may be accumulated up to a maximum of 720 hours for regular City employees per City policy and 1,040 hours for
the Police Guild, per their contract. The monthly accrual rate for City employees is 8 hours per month. Accumulated sick
leave is not payable upon termination of employment. Outstanding sick leave at year-end is not accrued due to the difficulty
in estimating the portion of existing balances likely to result in expenditures in future periods.
Long-term Liabilities
In the government -wide financial statements and the proprietary fund financial statements, long-term debt and other long-term
obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund
statement of net assets. Long-term debt outstanding at year-end is outlined in Note 11.
Deferred Revenues
The deferred revenue account is used to offset receivables established in the governmental funds for certain revenues that are
measurable but not considered available to finance payment of current obligations and, therefore, are not susceptible to accrual
on the modified accrual basis. When the receivable amounts are collected in future periods, this liability account is reduced
and corresponding revenue is recorded. The portions of Property Taxes that do not meet the available criteria are recorded as
deferred revenue.
Fund Eauitv-Reserves and Designations
Reserves represent portions of fund equity that are legally restricted for a specific future purpose or not available for
appropriation because they do not represent a current expendable resource. Designations of fund balance identify amounts set
aside by management for tentative future purposes or administrative convenience.
In governmental funds, fund balance that is legally restricted for future purposes include reserves for: a) future employee
retirement payments and b) future debt service. The City of Federal Way does not have fiduciary funds. Fund balance not
available for expenditure in the governmental funds consists of the outstanding balances of current interfund loans. On
December 31,1991, $10,000 in a non -interest bearing loan from the General Fund to the City's CDBG grant fund was
authorized by the City Manager as interim financing. On December 31, 2008, an additional $12,000 was added to the loan to
increase the interim financing to CDBG for a total of $22,000. The City Manager also authorized a $65,000 non -interest
bearing loan to the Federal Way Community Center on December 31, 2008. In addition, the General Fund had reserves for
Petty Cash, prepaid insurance, police special funds and Travel Advance purposes. The Special Revenue Path and Trails
Reserve fund balance is legally restricted for construction and maintenance of paths and trails within City right-of-way. The
Special Revenue Hotel/Motel Lodging Tax fund balance is also legally restricted for solely paying for tourism promotion and
for the acquisition and/or operation of tourism -related facilities.
City of Federal Way / 41
Interfund Transactions
There are four types of transactions between funds - interfund loans, interfund services provided and used, interfund
reimbursements, and interfund transfers. Interfund loans are temporary borrowings of cash which do not affect operating
statements, but which may incur interest expense or expenditure to the borrowing fund. Interfund services provided and used
are equivalent to buying goods or services from an outside vendor, they are accounted for by the related funds as revenues,
expenditures or expenses. Interfund reimbursements are repayments to a fund for expenditures or expenses that belong to
another fund. They involve only expenditure or expense accounts.
Except for the Enterprise Fund, transfers are accounted for as "other financing sources and uses" and are therefore included in
the operating statements.
NOTE 2 — RECONCILIATION OF GOVERNMENT -WIDE & FUND FINANCIAL STATEMENTS
Explanation of Certain Differences Between the Governmental Funds Balance Sheet and the Government -Wide
Statement of Net Assets
The governmental funds' balance sheet includes reconciliation between fund balance — total governmental funds and net
assets — governmental activities as reported in the government -wide statement of net assets. One element of that
reconciliation explains that "long-term liabilities, including bonds payable, are not due and payable in the current period, and,
therefore, are not reported in the funds." The details of this $20,683,550 difference are as follows:
Bonds Payable at beginning of year $19,605,000
Plus: Inclusion of compensated absences 1,519,450
Less: Current year reduction of principal portion of debt 44f 0,900)
Net adjustment to reducefund balance -total governmental
funds to arrive at net assets — governmental activities $20�63.550
Explanation of Certain Differences Between the Governmental Funds Statement of Revenues, Expenditures, and
Changes in Fund Balances and the Government -Wide Statement of Activities
The governmental funds' statement of revenues, expenditure, and changes in fund balances includes reconciliation between
net changes in fund balances — total governmental funds and changes in net assets of governmental activities as reported in
the government -wide statement of activities. One element of that reconciliation explains that "Governmental funds report
capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their
estimated useful lives and reported as depreciation expense." The details of this $19,932,930 difference are as follows:
Capital outlay
$18,037,109
Plus: Developer/Private contributions
3,750,703
Less: Governmental depreciation expense
(2,272,649)
Plus: Investment in Joint Venture
417,767
Net adjustment to increase net changes in fund balances —
Total governmental funds to arrive at changes in net assets
of governmental activities
$19932.930
Another element of the reconciliation states that "Revenues in the statement of activities that do not provide current financial
resources are not reported as revenues in the funds." This item presents:
Property taxes earned reported as deferred in the fund statements
Another element of the reconciliation states that "Some expenses reported in the statement of activities do not require the use
of current financial resources and, therefore, are not reported as expenditures in the funds." This item represents:
Compensated absences $ 1 UMA8
City of Federal Way /42
NOTE 3 — STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
There have been no material violations of finance -related legal or contractual provisions, and there have been no expenditures
exceeding legal appropriations in any of the funds of the City.
NOTE 4 — SUPPLEMENTAL APPROPRIATIONS
Operating Budget Funds
Appropriations established during 2008 for the City's operating budget funds are provided below. As explained in Note 1,
both original and supplemental appropriations are adopted by the City Council by ordinance. Both original and final budget
appropriations are shown on the accompanying financial statements. The final budget values include all adopted adjustments
to original budget amounts.
2008
ORIGINAL SUPPLEMENTAL FINAL
FUND BUDGET APPROPRIATIONS BUDGET
General Fund
Special Revenue Funds:
Street Fund
Arterial Street Fund
Utility Tax Fund
Solid Waste/Recycling Fund
Special Contracts/Studies
Hotel/Motel Lodging Tax
2% for the Arts
Federal Way Community Center
Traffic Safety
CDBG
Subtotal Special Revenue Funds
38,230,381 $ 8,647,705 $ 46,878,086
4,477,819
849,495
5,327,314
2,023,894
388,955
2,412,849
11,382,540
37,500
11,420,040
370,060
5,000
375,060
-
282,245
282,245
187,353
198,157
385,510
-
293
293
1,901,761
160,000
2,061,761
-
50,000
50,000
555,470
-
555,470
20,898,897
1,971,645
22,870,542
Debt Service Fund 3,476,130 569.700 4,045,830
Total $ 62,605.408 S 1.1,189,050 $ 73,794,458
NOTE 5 — DEPOSITS AND INVESTMENTS
As required by state law, all deposits and investments of the City's funds are obligations of the U.S. Government, the State
TrPasnrP.r's TnvPstmPnt Pnol hankers' nrr.P.ntanres or dennsits with Washington State hanks and savings and loan institutions-
--- •----------- --------- o- -- - -
In 2008 the City utilized all the above with the exception of bankers' acceptances as legal authorized investment instruments.
The City's investment policies are described in Note 1.
Cash and Deposits
The City follows the practice of pooling cash and investments of all funds, except restricted funds and funds held with a
trustee or in escrow, for investment purposes as disclosed in Note 1. At December 31, 2008, the equity in pooled cash and
investments was $59,662,067.
At year-end, the City had $58,503,671 in cash and cash equivalents which consisted of investments with the State Pool of
$58,412,051; the City's checking account bank balance prior to outstanding checks was $42,061; and petty cash and change
funds, advance travel fund and investigative fund totaling $49,560. 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. Investments are
carried at cost or book value because the City holds all investments until maturity. The fair value of the positions in the State
Investment Pool is the same as the value of the pool shares. The State Investment Pool is managed by the Treasurer of the
State of Washington.
City of Federal Way / 43
As of December 31, 2008 the City had the following investments and maturities:
SCHEDULE OF INVESTMENTS BY MATURITIES
AS OF DECEMBER 31, 2008
Investment maturities
Book Less than 1 to 2 Greater than
Investment Type Value 1 year years 3 years
State Investment Pool $ 58,412,051 $ 58,412,051 $ - $
US Agencies 1,012,723 1,012,723 - -
$ 59,424,773 $ 59,424.774 $
Reconciliation to Governmental -Wide Statement of Net Assets:
BofA, checking account per books $ 42,061
Petty cash/change fund/Advance travel/Investigative fund 49,560
State Investment Pool 58,412,051
Subtotal Cash and Cash Equivalents 58,503,671
US Agencies 1,012,723
Cash with escrow agent 145,673
Total cash and investments, Governmental -Wide
Statement of Net Assets $ 59,662,067
Investments
Interest Rate Risk
As a means of limiting its exposure to fair value losses arising from rising interest rate, the City's investments policy states
that "no more than 20% of the portfolio may be invested beyond 12 months, and average maturity of the portfolio may not
exceed 2 years."
Credit Risk
Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. This is measured by
the assignment of a rating by a nationally recognized statistical rating organization.
State law and the City's investment policy limits the instruments in which the City may invest. The following are categories
of investments authorized under the City's policy, in general order of safety and liquidity: State Investment Pool; repurchase
agreements; U.S. treasury obligations; U.S. government agencies; U.S. government -sponsored corporations/instrumentalities;
bankers' acceptances (secondary market domestic and foreign); commercial paper (secondary market); insured certificates of
deposit (banks and savings & loans); and uninsured/collateralized certificates of deposit (banks and savings & loans).
The credit risk of the State Investment Pool is limited to obligations of the US Government, government sponsored
enterprises, or insured demand deposit accounts and certificates of deposit.
As of December 31, 2008, the City had investments in a limited number of investment instruments as follows: U.S Agencies
and State Investment Pool.
With the exception of the State Local Government Investment Pool, which is not rated, all of the investments listed above
carried a rating of AAA by Standard & Poor's rating service at December 31, 2008.
City of Federal Way /44
Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of an investment in a single issuer. The City
diversifies its investments by security type and institution. The investment policy states: "no more than 5% of the portfolio
may be invested in the securities of a single issuer, except for the U.S. Treasury, to which no limits apply, and commercial
paper, which is limited to 3% of the portfolio. No more than 30% of the portfolio may be invested in Bankers' Acceptances
and Certificates of Deposit."
Other Information
Below is a schedule of investments by fund type:
SCHEDULE OF INVESTMENTS BY FUND CATEGORY AND INVESTMENT TYPE
AS OF DECEMBER 31, 2008
State Municipal
Investment Investors
Fund Type
Pool Account
US Agencies
Total
General Fund
$ 5,112,439 $ -
$ 88,637
$. 5,201,076
Special Revenue Funds
9,345,123 -
162,022
9,507,144
Capital Projects Funds
30,292,427 -
525,197
30,817,624
Enterprise Funds
490,230 -
8,499
498,729
Internal Service Funds
13,171,832 -
228,368
13,400,199
Total
$ 58,412,051 $ -
$ 1,012,723
$ 59,424,773
NOTE 6 — RECEIVABLES AND DUE FROM OTHER GOVERNMENTS
Property Taxes
The King County Treasurer is responsible for collecting property taxes levied in the County by all taxing districts. Amounts
collected by the County on the City's behalf are remitted daily.
As described in Note 1, taxes sue 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, 2008, the total balance of
property taxes receivable recorded by the City was $314,782. Of this, $289,703 is recorded as deferred revenue, since it was
not collected within the first 30 days of 2008. The property tax levy calendar in 2008 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
$1.65. The remaining $1.95 is for the fire district ($1.50) and library district ($0.45).
1. Chapter 84.55 of the State RCW was amended most recently by Initiative No. 747 (which was passed by voters on
November 6, 2001), limits the total dollar amount of regular property taxes levied by the City to the amount of such
taxes levied in the three most recent years multiplied by a limit factor, plus an adjustment to account for taxes on new
City of Federal Way /45
construction, improvements and state -assessed property at the previous year's rate. As amended by Initiative No.
747, the limit factor is the lesser of 101% or 100% plus the percent change in the Implicit Price Deflator, unless a
greater amount is approved by a simple majority of the voters; and
2. The Washington State Constitution limits the total regular property taxes to 1% of assessed valuation or $10 per
$1,000 of value. If the taxes of all districts exceed this amount, each is proportionately reduced until the total is at or
below the 1% limit.
The City's regular levy for 2008 was $1.04 per $1,000 on an assessed valuation of $9,010,356,378 for a total regular levy of
$9,300,030.
Deferred Revenue
Deferred revenue reported on the governmental funds balance sheet is in the schedule below. Grant reimbursements and
refuse collection fees are receivable within one year of the end of the fiscal period.
Federal Way
Debt
General
Street Community Center
Service Proprietpry
Total
Property Tax
$ 289,703
$ - $ -
$ - $ -
$ 289,703
SWM Fees
-
- -
- 278,375
278,375
Commute Trip Reduction Grant
-
50,079 -
- -
50,079
Federal Way Community Center Use Fees
-
- 86,322
- -
86,322
Federal Way Fire Department Buy -In of ValleyCom
-
- -
214,470 -
214,470
Recreation Programs/Facility Rentals
50,995
- -
- -
50.995
Total by Fund
$ 340,698
S 50.079 $ 86,322
$ 214,470 $ 278,375
$ 969,943
Receivables & Due from Other Governments
The receivables for the fiscal year ended December 31, 2008 on the government -wide statement of net assets are detailed in
the following schedule.
Downtown Nonmajor
General Street Utility Tax Debt Service Redevelopment Transportation Govt'l Proprietary Total
Property Tax $ 313,201 $ $ $ - $ - $ $ $ $ 313,201
Real Estate Excise Tax - 100,146 r - 100,146
Utility Tax - 1,539,776 - - - 1,539,776
Gambling Tax 136,563 - - - 136,563
Recreation Programs/
Facilities 967 - - - - - 967
Grants & Contributions 101,933 - - 206,283 323,273 30,509 661,998
Other Reimbursement 25,840 - - 1,300 - - 304,685 331,825
Recreation/Facility Registration - - - - 71,834 71,834
State Shared Revenue 1,186,070 84,941 - 25,336 51,905 - 1,348,251
Surface Water Management Fees - - - - - - 144,600 144,600
Total by Fund $ 1,764,574 $ 84,941 $ 1,539,776 $ 100,146 $ 1,300 $ 231,619 $ 375,178 $ 551,627 $ 4,649,161
NOTE 7 - DUE TO OTHER GOVERNMENTS
At December 31, 2008, the City recorded $67,904 as due to other governmental units as follows:
General Fund
King County - Jail Services 51,589
King County - Drainage Utility Collection Fee 16,315
$ 67,904
City of Federal Way /46
NOTE 8 — CAPITAL ASSETS
Capital assets activity for the year ended December 31, 2008 was as follows:
Beginning Balance
Ending Balance
Governmental Activity
1/1/2008
Additions
Deletions
12/31/2008
Capital assets, not being depreciated:
Land
$ 287,967,761 $
4,701,733 $
-
$ 292,669,494
Construction in progress
46,339,879
16,967,783
(32,985,297)
30,322,365
Total capital assets, not being depreciated:
334,307,640
21,669,516
(32,985,297)
322,991,859
Capital assets, being depreciated
Buildings
16,607,908
90,487
-
16,698,395
Improvements other than buildings
19,295,927
23,699,956
-
42,995,883
Infrastructure
107,345,862
9,285,341
-
116,631,203
Machinery and equipment
12,194,919
15843,960
(691,978)
13,336,900
Total capital assets, being depreciated:
155,434,616
34,919,744
(691,978)
189,662,381
Less accumulated depreciation for:
Buildings
(2,146,150)
(877,460)
-
(3,023,610)
Improvements other than buildings
(7,480,251)
(964,796)
-
(8,445,048)
Infrastructure
(18,805,530)
(1,261,581)
-
(20,067,111)
Machinery and equipment
(7,660,040)
(1,033,098)
623,040
(8,070,098)
Total accumulated depreciation:
(36,091,971)
(4,136,935)
623,040
(39,605,866)
Total assets being depreciated, net
119,342,644
30,782,809
(68,938)
150,056,515
Governmental activities capital assets, net
$ 453,650,284 $
52,452,326 $
(33,054,235) $
473,048,375
Beginning Balance
1/1/2008
Ending Balance
Business -Type Activities
(as restated)
Additions
Deletions 12/31/2008
Capital assets, not being depreciated:
Land
$ 6,938,795 $
3,130,985 $
- $ 10,069,780
Construction in progress
5,100,191
_663,430
(4,305,823) 1,457,798
Total capital assets, not being depreciated:
12,038,986
3,794,4I5
(4,305,823) 11,527,578
Capital assets, being depreciated
Buildings
3,596,441
-
- 3,596,441
Improvements other than buildings
43,702,039
4,305,823
- 48,007,862
Infrastructure
1,110,979
805,665
- 1,916,645
Machinery and equipment
106,643
-
- 106,643
Total capital assets, being depreciated:
48,516,102
5,111,488
- 53,627,590
Less accumulated depreciation for :
Buildings
(1,900,025)
(179,824)
- (2,079,849)
Improvements other than buildings
(10,446,233)
(437,020)
- (10,883,253)
Infrastructure
(23,978)
(19,166)
- (43,144)
Machinery and equipment
(76,634)
(2,945)
- (79,579)
Total accumulated depreciation:
(12,446,869)
(639,956)
- (13,085,825)
Total assets being depreciated, net
36,069,231
4,472,532
40,541,765
Business Type activities capital assets, net
$ 48,108,219 $
8,266,947 $
(4,305,823) $ 52,069,343
City of Federal Way /47
Depreciation expense was charged to functions/programs of the primary government as follows:
Government Activities
General Government
$ 257,735
Security of Persons & Property
996,717
Transportation
1,512,086
Physical Environment
6,229
Economic Environment
148,196
Health
11,038
Culture & Recreation
1,204,935
Total Depreciation - Governmental Activities
1 $ 4,136,935
Business -Type Activities
Utilities - Surface Water Management
Culture & Recreation - Dumas Bay Centre
$ 457,180
181,776
Total Depreciation - Business -Type Activities
$ 638,956
NOTE 9 — PENSION PLANS
Washington State Department of Retirement Systems
Substantially all City full-time and qualifying part-time employees participate in one of the following statewide retirement
systems administered by the Washington State Department of Retirement Systems, under cost -sharing multiple -employer
public employee defined benefit and defined contribution retirement plans. The Department of Retirement Systems (DRS), a
department within the primary government of the State of Washington, issues a publicly available comprehensive annual
financial report (CAFR) that includes financial statements and required supplementary information for each plan. The DRS
CAFR may be obtained by writing to: Department of Retirement Systems, Communications Unit, P.O. Box 48380, Olympia,
WA 98504-8380
The following disclosures are made pursuant to GASB Statement 27, Accounting for Pensions by State and Local Government
Employers.
Public Employees' Retirement System (PERS) Plan I, 2 and 3
Plan Description
PERS is a cost -sharing multiple -employer retirement system comprised of three separate plans for membership purposes:
Plans 1 and 2 are defined benefit plans and Plan 3 is a combination defined benefit/defined contribution plan. Membership is
mandatory for all City employees working 70 hours per month for 5 months out of the twelve month period. Membership in
the system includes elected officials; state employees; employees of the Supreme, Appeals, and Superior courts (other than
judges in judicial retirement system); employees of legislative committees; community and technical colleges, college and
university employees (not in national higher education retirement programs); judges of district and municipal courts; and
employees of local government. The PERS system includes three plans. Participants who joined the system by September 30,
1977 are Plan 1 members. Those who joined on or after October 1, 1977 and by either, February 28, 2002 for state and higher
education employees, or August 31, 2002 for local government employees, are Plan 2 members unless they exercise an option
to transfer their membership to Plan 3. PERS participants joining the system on or after March 1, 2002 for state and higher
education employees, or September 1, 2002 for local government employees have the option of choosing membership in
either PERS Plan 2 or PERS Plan 3. The option must be exercised within 90 days of employment. An employee is reported in
Plan 2 until a choice is made. Employees who fail to choose within 90 days default to PERS Plan 3. PERS defined benefit
retirement benefits are financed from a combination of investment earnings and employer and employee contributions. PERS
retirement benefit provisions are established in state statute and may be amended only by the State Legislature.
Plan 1 retirement benefits are vested after an employee completes five years of eligible service. Plan 1 members are eligible
for retirement at any age after 30 years of service, or at age 60 with five years of service, or at age 55 with 25 years of service.
The annual pension is 2 percent of the average final compensation per year of service, capped at 60 percent. The average final
City of Federal Way /48
compensation is based on the greatest compensation during any 24 eligible consecutive compensation months. If qualified,
after reaching age 66 a cost -of -living allowance is granted based on years of service credit and is capped at three percent
annually.
Plan 2 retirement benefits are vested after an employee completes five years of eligible service. Plan 2 members may retire at
age 65 with five years of service, or at age 55 with 20 years of service, with an allowance of 2 percent per year of service of
the average final compensation per year of service. The average final compensation is based on the greatest compensation
during any eligible consecutive 60-month period. Plan 2 retirements prior to 65 receive reduced benefits. If retirement is at
age 55 or older with at least 30 years of service, a 3 percent per year reduction applies; otherwise an actuarial reduction will
apply. There is no cap on years of service credit; and a cost -of -living allowance is granted (indexed to the Seattle Consumer
Price Index), capped at 3 percent annually.
Plan 3 has a dual benefit structure. Employer contributions finance a defined benefit component, and member contributions
finance a defined contribution component. The defined benefit portion provides a benefit calculated at 1 percent of the average
final compensation per year of service. The average final compensation is based on the greatest compensation during any
eligible consecutive 60-month period. Plan 3 members become eligible for retirement if they have: at least ten years of
service; or five years including twelve months that were earned after age 54; or five service credit years earned in PERS Plan
2 prior to June 1, 2003. Plan 3 retirements prior to the age of 65 receive reduced benefits. If retirement is at age 55 or older
with at least 30 years of service, a 3 percent per year reduction applies; otherwise an actuarial reduction will apply. There is no
cap on years of service credit; and Plan 3 provides the same cost -of -living allowance as Plan 2. The defined contribution
portion can be distributed in accordance with an option selected by the member, either as a lump sum or pursuant to other
options authorized by the Employee Retirement Benefits Board.
There are 1,190 participating employers in PERS. Membership in PERS consisted of the following as of the latest actuarial
valuation date for the plans of June 30, 2007:
Retirees and Beneficiaries Receiving Benefits
71,244
Terminated Plan Members Entitled to But Not Yet Receiving Benefits
26,583
Active Plan Members Vest
105,447
Active Plan Members Nonvested
52,575
Total
255,849
Funding Policy
Each biennium, the state Pension Funding Council adopts Plan 1 employer contribution rates and Plan 2 employer and
employee contribution rates and Plan 3 employer contribution rates. Employee contribution rates for Plan 1 are established by
statute at six percent and do not vary from year to year. The employer and employee contribution rates for Plan 2 and the
n._ ♦ _ _ r__n__ r__._U rrn_._ n ._U
employer COIltrlblltlon rate IOr Plan 3 are deVelVped by lile V1f1G8 Ul Llle JLdte tilaual`y tV lWHY 1LL11LL 1'1QU G Q11U Llle VC1111GLL
benefit portion of Plan 3. All employers are required to contribute at the level established by the Legislature. PERS Plan 3
defined contribution is a non-contributing plan for employers. Employees who participate in the defined contribution portion
of PERS Plan 3 do not contribute to the defined benefit portion of PERS Plan 3. The Employee Retirement Benefits Board
sets Plan 3 employee contribution rates. Six rate options are available ranging from 5 to 15 percent; two of the options are
graduated rates dependent on the employee's age. The methods used to determine the contribution requirements are
established under state statute in accordance with Chapters 41.40 and 41.45 RCW.
The required contribution rates expressed as a percentage of current year covered payroll, as of December 31, 2008, were:
PERS Plan 1 PERS Plan 2 PERS Plan 3
Employer* 8.31 %* 8.31 % 8.31 %**
Employee 6.00% 5.45% ***
* The employer rates include the employer administrative expense fee currently set at 0.16%.
** Plan 3 defined benefit portion only.
*** Variable from 5.0% to 15.0% maximum based on rate selected by the PERS 3 member.
City of Federal Way /49
Both the City and employees made the required contributions, The City's required contributions for the years ended
December 31 were:
PERS Plan I PERS Plan II PERS Plan III
2008 $11,410 $764,933 $152,238
2007 $10,251 $573,471 $109,776
2006 $13,269 $295,665 $49,762
Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) Plans 1 and 2
Plan Dm i lion
LEOFF is a cost -sharing multiple -employer retirement system comprised of two separate defined benefit plans. Membership
in the system includes all full time, fully compensated, local law enforcement officers and fire fighters. LEOFF is comprised
primarily of non -state employees, with the Department of Fish and Wildlife enforcement officers, who were first included
prospectively effective July 27, 2003 being an exception. LEOFF participants who joined the system by September 30, 1977
are Plan 1 members. Those who joined on or after October 1, 1977 are Plan 2 members. LEOFF retirement benefits are
financed from a combination of investment earnings, employee and employer contributions, and a special funding situation in
which the state pays the remainder through state legislative appropriations. LEOFF retirement benefit provisions are
established in state statute and may be amended only by the State Legislature.
Plan 1 retirement benefits are vested after an employee completes five years of eligible service. Plan 1 members are eligible
for retirement with five years of service at the age of 50. The benefit per year of service calculated as a percent of final
average salary is as follows:
Term of Service Percent of Final Average
20 or more years 2.0%
10 but less than 20 years 1.5%
5 but less than 10 years 1.0%
The final average salary is the basic monthly salary received at the time of retirement, provided a member has held the same
position or rank for 12 months preceding the date of retirement. Otherwise, it is the average of the highest consecutive 24
months' salary within the last 10 years of service. If membership was established in LEOFF after February 18, 1974, the
service retirement benefit is capped at 60 percent of final average salary. A cost -of -living allowance is granted (indexed to the
Seattle Consumer Price Index).
Plan 2 retirement benefits are vested after an employee completes five years of eligible service. Plan 2 members may retire at
age 50 with 20 years of service, or at age 53 with five years of service, with an allowance of 2 percent of the final average
salary per year of service. The final average salary is based on the highest consecutive 60 months. Plan 2 retirements prior to
the age of 53 are reduced 3 percent for each year that the benefit commences prior to age 53. The benefit is two percent of
average salary per year of service. There is no cap on years of service credit and a cost -of -living allowance is granted
(indexed to the Seattle Consumer Price Index), capped at three percent annually.
There are 374 participating employers in LEOFF. Membership in LEOFF consisted of the following as of the latest actuarial
valuation date for the plans of June 30, 2007:
Retirees and Beneficiaries Receiving Benefits
9,085
Terminated Plan Members Entitled to But Not Yet Receivina Benefits
633
Active Plan Members Vest
12,904
Active Plan Members Nonvested
3,708
Total
26,330
Funding Policy
Starting on July 1, 2000, Plan 1 employers and employees will contribute zero percent as long as the plan remains fully
funded. Employer and employee contribution rates are developed by the Office of the State Actuary to fully fund the plan.
City of Federal Way / 50
Plan 2 employers and employees are required to pay at the level adopted by the Department of Retirement Systems in
accordance with 41.45 RCW.
All employers are required to contribute at the level required by state law. The Legislature, by means of a special funding
arrangement, appropriated money from the state General Fund to supplement the current service liability and fund the prior
service costs of Plan 1 in accordance with the requirements of the Pension Funding Council. However, this special funding
situation is not mandated by the state constitution and this funding requirement could be returned to the employers by a
change of statute. The methods used to determine the contribution rates are established under state statute in accordance with
Chapters 41.26 and 41.45 RCW.
The required contribution rates expressed as a percentage of current year covered payroll, as of December 31, 2008 were:
LEOFF Plan I LEOFF Plan II
Employer 0.16% * 5.46% **
Employee 0.00% 8.83%
State N/A 3.45%
* The employer rates do not include the employer administrative expense fee currently set at 0.19%.
** The employer rate for ports and universities is 7.18%.
Both the City and employees made the required contributions. The City's required contributions for the years ended December
31 were:
LEOFF Plan I LEOFF Plan II
2008 $0 $586,236
2007 $0 $520,625
2006 $0 $417,371
Other Local Government Pension Systems - City of Federal Way
Employees' Retirement System
Effective June 1, 1990, the Federal Way City Council established the Federal Way Employees' Retirement System, per City
Ordinance 90-74 and as authorized by the Federal Social Security Act (42 USCA, Section 418 (g)). The Retirement System is
a defined contribution pension plan established as an alternative to the Federal Social Security System.
During 2008, there were a total of 357 individuals covered by this system. As of the end of the year, 324 remained as active
employees of the City and two were drawing retirement benefits. The 33 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 tha nlan if thv halanra xx�ac 0,1 nno nr orPatar
in —. t..»...a
All regular employees of the City of Federal Way are required to participate in the system, with the City matching the
employee's required contribution. The employee pays 6.2% and this is matched by the composite of a cash match
(approximately 5.2%) and insurance payments (1%) for disability, survivor, accidental death and dismemberment, and lump
sum death benefit coverage. Contributions into the plan are tax deferred.
Employees are entitled to make voluntary contributions to the plan, assuming that highly compensated and non -highly
compensated employees are treated equally. Each payroll period, employees may make a voluntary contribution equal to a
minimum of 1 % of the participant's compensation, not to exceed 10% of the participant's compensation.
Covered payroll for 2008 was $23,278,592 and total City payroll was $25,238,507. Actual City contributions for the year
were $1,161,848. Actual employee contributions were $1,467,011. All contributions were invested in instruments arranged
through independent investment advisors selected by the Municipal Employers Benefit Trust (MEBT) committee comprised
of the cities of Bellevue, Kirkland, Redmond, Edmonds, Mill Creek, Woodinville, and Federal Way but administered by
Trautmann Maher & Associates. Retirement System assets are not the property of the City and are not subject to the claims of
the City's general creditors. The Federal Way Retirement System assets are with Security Trust Company, N.A. who invests
Plan assets.
City of Federal Way / 51
In July 1995, the City implemented the hardship withdrawal and loan provision program. Loans receivable as of December
31, 2008 were $1,051,683.
The consulting actuary firm of Trautmann, Maher & Associates has been contracted to provide record keeping, administrative
and consulting services related to the Plan Actuarial determinations are not required because accidental death and
dismemberment insurance, long-term disability, survivor income insurance and the lump sum death benefit are provided by a
group insurance policy with Standard Insurance Company; and benefits paid to participants upon retirement are limited to: (a)
a nonforfeitable, nontransferable annuity contract purchased by the plan's trustee, (b) retirement benefits payable from the
employee's account to which no contributions by the City or the participant can be added after retirement, or a single lump -
sum payment equal to the accumulated balance in the employee's account as of his retirement date.
NOTE 10 — RISK MANAGEMENT
The City uses the Risk Management Internal Service Fund to account for its risk financing activities. The City maintains
insurance against most normal hazards except for unemployment insurance where it has elected to become fully self -insured.
Related premiums received by the Risk Management Fund are used to reimburse the State Employment Security Department
for unemployment benefits paid to eligible individuals, and to establish reserves for the payment of estimated future
unemployment claims liability. The City faces most of the risks faced by similar sized cities.
Through its Risk Management Fund, the City is also recovering insurance premium costs for general liability coverage and
building reserves for a future general liability self-insurance program. The City's insurance coverage in 2008 remained
relatively similar to the coverage for 2007. Effective September 1", the City moved from the Cities Insurance Association of
Washington to the Washington Cities Insurance Authority for premium savings in the next year. There were no settlements in
excess of insurance for commercially insured activities for 1996 through 2008.
The following is a summary of coverage in force in 2008.
COMPANY
POLICY PERIOD
DETAILS OF COVERAGE
LIABILITY LIMITS
CIAW
9/l/07-8/31/08
General Liability (Auto & Police)
$2,000,000 Exess limits. Employment Practices, E&O $10,000,000. Deductible $25,000
CIAW
9/l/07-8/31/08
Crime / Fidelity
$1,000,000 with sub -limiter ranging from $10,000 - $250,000. Deductible $1,000
Property Coverage (All Coverage excluding;
$100,000,000. Sub -limits $25,000,000 Flood; $25,000,000 Earthquake. Deductible: Earthquake 2% of
CIAW
9/I/07-8/31/08
Earthquake, Flood & Equip. Breakdown)
values $50,000 min. Flood $25,000,000
CIAW
9/1/07-8/31/08
Auto Physical Damage
Actual Cash Value. Deductible varied per occurrence for scheduled automobiles
CIAW
9/I/07-8/31/08
Boiler/ Machinery
$100,000,000. Deductible $2,500
General Liability (Auto, General, Police E
WCIA
9/1/08-12/31/08
& O, Employment Practices, & Stop Gap)
$20,000 per Occurrence subject to Annual Aggregates and Sub]imits. Deductible: $100,000
Crime/Fidelity (Employee Dishonesty,
Faithful Performance of Duty, Forgery or
Alternation, Theft, Disappareance and
Destruction, Robbery and Safe Burglary,
WCIA
9/1/08-12/31/08
and Computer Fraud)
$2,500,000. Deductible $10,000.
Limit $250,000,000 per occurence. Sub -limits: $150,000,000 Earthquake per Occurrence;
$100,000,000 Flood per Occurrence. Deductible: Earthquake 2% of the values involved, subject to
WCIA
9/l/08-12/31/08
Property Coverage
$100,000 min per occurence. Flood $250,0000 per occurrence. All other perils $25,000
Automobile Physical Damage for
WCIA
9/1108-12/31/08
Scheduled Automobiles
Actual Cash Value. Deductible $25,000 per occurrence for scheduled automobiles
$100,000,000 Maximum Limit; Sub -limits: $10,000,000 Business Interruption; $1,000,000 Extra
Expense; $500,000 Hazardous Waste. Deductilbe $10,000 Combined All Coverge Expect. Turbine
Gnerator Unites, KP Motors, Pumps, and Deep Water Wells, KVA Transformers, HP A/C and
WCIA
9/l/08-12/31/08
1 Equipment Breakdown Coverage
Refrigeration Systems adn HP ICE'S and Gemerators >=500 PH
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.
City of Federal Way / 52
The City is self -insured for unemployment compensation. At December 31, 2008 the City had $1,275,903 in reserve.
2007
2008
Unemployment Reserve, Jan. 1st
$ 879,447 $
1,077,366
Unemployment compensation benefits
221,726
237,575
Claim payments during the year
(23,806)
(39,038)
Unemployment Reserve, Dec. 31st
$ 1,077,366 $
1,275,903
NOTE 11- LONG-TERM LIABILITIES
The various categories of long-term debt reflected on the City's financial statements are briefly described in the following
paragraphs.
General obligation bonds are backed by the City's full faith and credit. Proceeds are typically used for the acquisition or
construction of major capital facilities or equipment. "Councilmanic Bonds" are general obligation bonds issued by City
Council without voter approval. Under State law, repayment of these bonds must be financed from general City revenues
since no additional property taxes can be levied to support related debt service payments. General Obligation bonds approved
by the voters are typically repaid through an annual "excess" property tax levy authorized for this purpose by State statute. At
year-end 2008 the City had no voter -approved bonds outstanding. With the exception of the 2006 GO Bond, all principal and
interest payments on general obligation debts are recorded as expenditures by the City's Debt Service Fund. The compensated
absences liability will be liquidated approximately 90 percent by the General Fund, and 10 percent by the Street fund.
Extension of Debt Obligation in 2008
In December of 2008, the city extended the 2006 General Obligation Bond to be paid off in December of 2009 with a lower
interest rate of 3.35%. The original bond was issued on December 28, 2006. The City borrowed $4,100,000 on a two-year tax-
exempt bond for the purchase of the AMC Theatre site. The interest rate on the bonds was 3.53% and maturity was December
28, 2008. Interest payments on the bond are funded by interest earned from the $6 million Downtown Redevelopment set
aside funds.
The following schedules detail the long-term debt activity and balances of the City,
OLfrSTANDING GENERAL OBLIGATION DEBT AND LONG-TERM LIABILITIES - BY TYPE
December 31, 2008
Amount
Beginning
Ending
Bond Rating
Issue
Maturity
Interest
Originally
Outstanding
Amount
Amount
Outstanding
Dcscri tian
at Issuance
Date
Date
Rate
Issued
Debt
Issued
Redeemed
Debt
Gvremm_"tl Activivn
Griteml Obligation Bonds:
20M LunitedNalley Comm. PDA
Al
12-Sep-00
1-Dec-15
5.31
2,551,600
1,595,000
167,000
1,428,000
2003 Limited/Community Center
AAA -insured
15-Nov-03
1-Dec-33
4.676
15,000,000
13,910,000
300,000
13,610,000
2OD6 GO Bonds/AMC Theatre Site
Nonrated
28-Dac 06
28-Dec-09
3.53
4, lUOM
4jDa,0d6
-
4.100,000
Subtotal GO Bonds
21,651,600
19,605,000
467,000
19,138,000
Compensated Absences
1,287,943
311,492
79,985
1,519,450
Subtotal GO Bonds plus Compensated Absences
21,651,600
20,892,943
311,492
546,985
20,657,450
Business -Type Activities:
Public Works Trust Fund Loan:
PWTL - Kitts Comer Drain Imp
31-Aug-94
1-Jul-14
1.00
233,316
79,311
-
12,936
66,375
PWTL- Kitts Comer Drain imp
24-Jul-96
1-Jul-14
1.00
1,166,580
456,233
-
64,680
391,553
PWTL- KittsComerDrainImp
4-Sep-97
1-Jul-14
1.00
155,544
68,133
-
8,624
59,509
PWTL - SeaTac Mall Drain Imp
31-May-00
I-Jul-19
1.00
412,500
192,240
-
16,020
176,220
PWTL - SeaTac Mall Drain Imp
14-Au -00
1-Jul-19
1.00
2,062,500
961,195
80,099
881,096
Subtotal PWTFL
4,030,440
1,757,112
-
182,359
1,574,753
Compensated Absences
55.795
12,280
4,493
63,582
Subtotal PWTFL plus Compensated Absences
4,030,440
1,812,907
12,280
186,852
1.638,335
Grand Total All Long -Tenn Debt
$ 25,682,040
$ 22,705,850 $
323,772 $
733,837 $
22,295,785
City of Federal Way / 53
OUTSTANDING GENERAL OBLIGATION DEBT AND LONG-TERM LIABILITIES - BY FUND
December 31, 2008
Amount
Beginning
Ending
Originally
Outstanding
Amount
Amount
Outstanding
Due within
Description
Issued
Debt
Issued
Redeemed *
Debt
one year
Governmental Long -Term Debt:
2000 Limited/Valley Comm. PDA
2,551,600
1,595,000
-
167,000
1,428,000
175,000
2003 Limited/Community Center
15,000,000
13,910,000
-
300,000
13,610,000
310,000
2006 GO Bonds/AMC Theatre Site
4,100,000
4,100,000
-
-
4,100,000
4,100,000
Sub -total Governmental Long -Term Debt
21,651,600
19,605,000
-
467,000
19,138,000
4,585,000
Compensated Absences
1,287,943
311,492
79,985
1,519,450
111,786
Total Gov Long -Term Debt plus Comp Abs
21,651,600
20,892,943
311,492
546,985
20,657,450
4,696,786
Business -Type Long -Term Debt:
Enterprise Funds:
Public Works Trust Fund Loan
4,030,440
1,757,112
-
182,359
1,574,753 1
182,359
Sub -total Bus -Type Long -Term Debt
4,030,440
1,757,112
182,359
1,574,753
182,359
Compensated Absences
55,795
12,280
4,493
63,582
1,234
Total Bus -Type plus Comp Abs LTD
4,030,440
1,812,907
12,280
186,852
1,638,335
183,593
Grand Total All Long -Term Debt
$ 25,682,040
$ 22,705,850 $
323,772
$ 733,837
$ 22,295,785
$ 4,880,379
* Debt service principal payments in Debt Service Fund include credits of $26,100 from Interlocal agreement with Federal Way Fire District to participate
in capital cost obligations with Valley Communications joint venture with the City of Federal Way.
SCHEDULE OF CHANGES IN LONG-TERM LIABILITIES
Period Ended December 31, 2008
Beginning
Ending
Outstanding Debt
Additions
Reductions
Outstanding Debt
Governmental Activities:
General Obligation Bonds
$ 19,605,000
$ -
$ (467,000)
$ 19,138,000
Compensated Absences
1,287,943
311,492
(79,985)
1,519,450
Total Governmental Activities
20,892,943
311,492
(546,985)
20,657,450
Business -Type Activities:
Enterprise Funds
Public Works Trust Fund Loan
1,757,112
-
(182,359)
1,574,753
Com ensated Absences
55,795
12,280
(4,493)
63,582
Total Business -Type Activities
1,812,907
12,280
(186,852)
1,638,335
Total All Funds
$ 22,705,850
$ 323,772
$ (733,837)
$ 22,295,785
SCHEDULE OF DEBT SERVICE REQUIREMENTS TO MATURITY
As of December 31, 2008
Governmental Activities
Business -Type Activities
G. O. Bonds
PW Trust Fund
Grand Total
Year
Principal
Interest
Principal
Interest
Principal
Interest
P&I
2009
4,585,000
679,963
182,359
15,748
4,767,359
695,710
5,463,069
2010
504,000
661,913
182,359
13,924
686,359
675,836
1,362,196
2011
523,000
642,793
182,359
12,100
705,359
654,893
1,360,252
2012
542,000
621,923
182,359
10,277
724,359
632,199
1,356,558
2013
575,000
599,583
182,359
8,453
757,359
608,036
1,365,395
2014-2018
2,474,000
2,626,230
566,838
20,086
3,040,838
2,646,316
5,687,154
2019-2023
2,530,000
2,113,629
96,120
961
2,626,120
2,114,590
4,740,710
2024-2028
3,240,000
1,466,033
-
-
3,240,000
1,466,033
4,706,033
2029-2033
1 4,165,000
613,700
-
-
4,165,000
613,700
4,778,700
Total
1 $ 19,138,000
$ 10,025,764
$ 1,574,753
$ 81,549
$ 20,712,753
$ 10,107,313
$ 30,820,066
City of Federal Way / 54
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 21/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 71/2 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, 2008 are:
General Government (no vote required) $ 135,762,730
General Government (3/5 majority vote required) 98,251,890
Parks and Open space (3/5 majority vote required) 245,629,725
Utilities (3/5 majority vote required) 245,629,725
Total Capacity 725,2_74.070
Compensated Absences
The City's liability for accrued vacation and compensatory time balances is recorded in the schedule below. Accrued
compensated absences for proprietary fund employees are recorded as liabilities in those funds expected to incur the related
future expense.
Governmental Activities:
Current portion $ 111,785
Noncurrent portion 1,407,665
Business -Type Activities:
Current portion 1,234
Noncurrent portion 62,348
Total Compensated Absences $ 1,583,032
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
_l_ al_ a I-- ...1— aL_ TT Q T.. F:. 'Pl... /�:t�.�.. .+1 A
arbitrage rebate aIIiuunLs due uuUJUF ulbse MgUIULIU116 111usL uc 1ilauc tG uio v.J. iicaSUty c'vciy iivv, years. iix. a_ ILL D Cstiii,awu
rebatable arbitrage amount as of December 31, 2008 is $-0- for its tax-exempt general obligation bond issues subject to the
Tax Reform Act issued through that date.
Leases
The City of Federal Way leases office buildings and land which are accounted for as operating leases. Operating leases do not
give rise to property rights or lease obligations, and therefore the results of the lease agreements are not reflected in the City's
capital assets. Total Cost for the leases was $2,525 for the year ended December 31, 2008. The current year lease payments
included the site lease for the City's WiFi Project. Federal Way WiFi project is to provide free broadband Internet service to
Federal Way citizens, businesses and visitors in the downtown business corridor, City parks, Community Center, Dumas Bay
Centre and City Hall. The site lease will expire in July of 2010 and the City currently does not have an extension of the
contract as of year end 2008. The future minimum lease payments for the WiFi Project are as follows:
2009 $ 3,720
2010 1,860
5,580
City of Federal Way / 55
NOTE 12 — INTERFUND TRANSACTIONS
Interfund transfers for the year ended December 31, 2008 were as follows:
Interfund Transfers In Out
Governmental Funds:
General Fund
Street Fund
Utility Tax Fund
Debt Service
Downtown Redevelopment
Transportation
Nonmajor Governmental Funds
$ 5,402,686 $ 2,594,165
2,981,771 -
913,333
1,500,000
3,112,778
2,322,348
10,614,077
2,844,000
57,156
Proprietary Funds:
Surface Water Management 1,190,000 1,402,778
Dumas Bay Centre 129,260 40,000
$ 17,552,176 $ 17,552,176
The following describes the amounts transferred out during 2008:
General Fund:
• $2,544,165 to Street Fund to subsidize street maintenance and operations.
• $50,000 to Parks CIP from Contingency.
Utility Tax Fund:
• $2,269,584 to General Fund for Proposition 1 Funding
• $913,333 to Community Center Debt Service
• $1,400,000 to Arterial Street Fund overlay program
• $1,400,000 to Transportation CIP for various capital projects
• $728,000 to General Fund for Public Safety Positions
• $500,000 to Downtown Redevelopment CIP Fund for RDA Lift Match.
• $266,000 to General Fund for Celebration Park maintenance & operations
• $321,592 to Street Fund for maintenance and operations on bond projects
• $129,260 to Dumas Bay Centre Fund for Knutzen Family Theatre subsidy
• $116,014 to Street Fund for new street lights maintenance and operations.
• $82,500 to General Fund for Arts Commission
• $110,000 to General Fund for Camp Kilworth Park maintenance & operations
• $25,500 to General Fund for Red, Whites & Blues Festival
• $62,000 to General Fund for new Parks maintenance and operations
• $528,348 to Community Center for maintenance/operations and capital reserves
• $1,761,946 to General Fund for ongoing support of operations
Debt Service Fund:
• $344,000 of Real Estate Excise Tax to Parks CIP for various projects.
• $1,000,000 of Real Estate Excise Tax to Downtown Redevelopment CIP fund for RDA Lift Match.
$1,500,000 of Real Estate Excise Tax to Transportation CIP for various projects.
Transportation CIP Fund:
• $57,156 to General Fund for Federal Lobbyist
Proprietary Funds:
■ $1,190,000 from Surface Water Management Operations to Surface Water Management CIP
• Surface Water Management transfer of $212,778 for their contribution to Transportation CIP for Pacific Highway
Phase 3 Project and SR99 Phase 4 Project.
• $30,000 from Dumas Bay CIP to General Fund for PAC (Performing Arts Center) Feasibility Study.
0 $10,000 from Dumas Bay to General Fund
City of Federal Way / 56
Interfund loans for the year ended December 31, 2008 were as follows;
Interfund Loans Receivable Pa able
General Fund 5 87,000 $ -
Special Revenue Funds:
Community Development Block Grant - 22,000
Federal Way Community Center - 65,000
Total Interfund Loans $ 87,000 $ 87,000
NOTE 13 — CONTINGENCIES AND LITIGATION
As of December 31, 2008 there were a small number of claims for damages and lawsuits pending against the City. In the
opinion of the City Attorney, however, neither the potential liability for any single claim or lawsuit, nor the aggregate
potential liability arising from all actions currently pending would materially affect the financial condition of the City. Due to
both their uncertainty and immateriality, no liabilities or estimated liabilities have been included in the City's financial
statements.
NOTE 14 — JOINT VENTURE
The "Valley Communications Center" was established August 20, 1976, when an Interlocal Agreement was entered into by
the four original participating municipal corporations, including the cities of Renton, Kent, Auburn, and Tukwila, and Federal
Way which was formally admitted during 2000. The agreement is sanctioned by the provisions and terms of the Interlocal
Cooperation Act pursuant to RCW 39.34. The initial duration of the agreement was five years, and thereafter is automatically
extended for consecutive five year -periods.
The purpose of the joint operation, hereafter referred to as Valley Corn, is to provide improved consolidated emergency
communications (dispatch) services for police, fire, and medical aid, to the five participating cities and to several subscribing
agencies, which include King County Fire Districts 2, 20, 26, 40, 43, 44, and 47; City of Pacific Police and Fire Departments,
City of Algona Police Department, City of Des Moines Police Department, City of Black Diamond Police and Fire
Department; SeaTac Fire Department; North Highline Fire Department; King County EMS Units; and Vashon Island Fire
Department. Separate agreements between Valley Corn and the subscribing agencies have been executed, which set forth
conditions of services and rates charged.
The allocation of prorated financial participation among the five member cities is the percentage of dispatched calls attributed
to each jurisdiction compared to the total estimated dispatched calls, for the current twelve month period ending December 31.
The percentages are applied to the current approved budget, less revenue from all other sources. Distribution of the current
year net income is based on the same percentages. The 2008 cost distributions for the five member cities are as follows:
Dispatchable
Percent
City
Calls
of Total
Kent
101,281
27.23 %
Renton
67,075
18.03 %
Auburn
79,591
21.40%
Tukwila
38,934
10.47%
Federal Way
85,075
22.87%
Total
37 L956
100.00%
Valley Corn is governed by an Administration Board, composed of the Mayors or designated representatives from the five
participating cities of Renton, Kent, Auburn, Tukwila, and Federal Way. The Administration Board is authorized to establish
bylaws that govern procedures of the Board and Valley Com's general operations for the following functions: 1) Budget
review and recommendations to the legislative bodies of the member cities, and budget adoption after each legislative body
has approved the required financial participation for the ensuing year; 2) Approve appointment and/or discharge of the
Director; 3) Approve personnel policy and make final decisions on all major policy changes; and 4) Review and approves all
contracts.
City of Federal Way / 57
In addition, an Operating Board was established and consists of two members of each participating City's Public Safety
Departments, including the heads of such departments or their designees. The Operating Board performs the following
functions: 1) Oversees the general operation of Valley Com, and advises and makes recommendations to the Administration
Board; 2) Make recommendations on Director selection; 3) Presents proposed policies and budgets to the Administration
Board; and 4) Reviews disbursements of funds by the Director.
The Director presents a proposed budget to the Operating Board on or before August 15 of each year. Said budget is then
presented to the Administrative Board by September 1 of each year. The Administration Board can make changes to the
proposed Valley Com budget as it finds necessary, but final approval falls to the legislative body of each member city, in
accordance with the provisions of the interlocal agreement.
In May 1993 Valley Com entered into an agreement with King County to provide joint project management for the acquisition
and installation of 800-MHz emergency radio communications system approved by the voters of King County in conjunction
with a $57 million levy. In August 1993 Valley Com also entered into an Interlocal Cooperation Agreement with the sub-
regions of King County, Seattle, and Eastside Public Safety Communications, which governs the development and installation
of the new 800-MHz emergency radio system. Valley Com now provides emergency communication dispatch services to a
population of approximately 570,000.
Valley Com operates as an enterprise fund and is totally self supporting through the implementation of user fees and the
primary source of revenue is provided by charges for calls for service. The 800-MHz emergency radio communications
system operated by the agreement with King County is operated as a separate enterprise fund, and the Member Cities have no
equity interest in the contributed capital from this system.
The share of equity belonging to the five participating cities is shown below. Liabilities are the responsibility of the five
participating cities in direct proportion to their equity position.
BALANCES IN 2008
Kent Renton Auburn Tukwila Federal Way Total
Equity @ January 1, 2008 $ 5,857,547 $ 4,144,201 $ 3,849,684 $ 2,428,951 $ 2,271,890 $ 18,552,273
Current Year Decrease 514,816 309,976 384.927 141.455 417.767 1,768,941
Fquitl rn December 31, 2008 $ 6,372,363 5 4,454.177 5 4,234,611 $ 2,570.406 $ 2,689.657 $ 20,321,214
Percent of Equity 31.36% 21.92% 20.84% 12.65% 13.24% 100.00%
Percent of 2007 Distribution 31.57% 22.34% 20.75% 13.09% 12.25% 100.00%
During 2000, the Valley Communications Center Development Authority was created to issued $12,758,000 in General
Obligation Bonds to finance construction, equipment, and land for a new facility completed in 2002. Each of the five
participating cities is responsible for one -fifth of the debt obligation, which is $2,551,600. The basic agreement shall not be
terminated until all bonds issued by Valley Communications Center Development Authority have been paid and retired. The
City of Federal Way includes its one -fifth share of the bond issue with its general long-term debt. The balance of the City of
Federal Way's obligation was $1,428,000 at 12/31/2008.
A complete set of financial statements is available from: Valley Communications Center, 27519 108`' Avenue SE, Kent, WA
98030.
NOTE 15 — PRIOR PERIOD RESTATEMENT
The following governmental and business -type activities have been restated to reflect the retroactive reporting of
infrastructure per GASB Statement No. 34, Basic Financial Statements — and Management's Discussion and Analysis — for
State and Local Government. Other prior period adjustments include depreciation and write-off of assets:
City of Federal Way / 58
Beginning Prior
Adjusted
Ending
Balance Period
Beginning
Transfers &
Balance
Governmental Activitv
1/1/2008 Adjustment
Balance
Additions
Deletions
12/31/2008
Capital assets, not being depreciated:
Land
$ 287,967,761 $
$ 287,967,761
$ 4,701,733
$ -
$ 292,669,494
Construction in progress
46,339,879
46.339.879
16.967.783
(32.985.297)
30,322,365
Total capital assets, not being depreciated:
334,307fiO -
334.307,640
21,669.516
(32,985.297)
322.991,859
Capital assets, being depreciated
Buildings
16,607,908
16,607,908
90,487
16,698,395
Improvements other than buildings
19,295,927
19,295,927
23,699,956
42,995,883
Infrastructure
110,031,274
(2,685,412)
107,345,862
9,285,341
116,631,203
Machinery and equipment
12,366.913
(191.894)
12.184,919
1,843.960
(691.978)
13,336,901
Total capital assets, being depreciated:
158,301,922
(2,867,306)
155,434,616
34,919,744
(691,978)
189,662,382
Less accumulated depreciation for :
Buildings
(2,146,150)
-
(2,146,150)
(877,460)
(3,023,610)
Improvements other than buildings
(7,480,251)
(7,480,251)
(964,796)
-
(8,445,048)
Infrastructure
(19,023,334)
217,804
(18,805,530)
(1,261,581)
-
(20,067,111)
Machinery and equipment
(7,499,602)
(16D.438)
(7.660,040)
(1,033,0.98)
623.00
(8,070,698)
Total accumulated depreciation:
(36,149,337)
57,366
(36,091,971)
(4,136,935)
623,040
(39,605,866)
Total assets being depreciated, net
122,152584
(2,809,940)
119.342,644
30.782,909
(68,938)
150,056,515
Governmental activities capital assets, net
5 456.460,22-1 $
(2,809,940) $ 453,650.284 5
52452,326
fi (33,054.235) $ 473,048,375
Beginning Prior
Adjusted
Ending
Balance Period
Beginning
Transfers &
Balance
Business -Type Activities
1/1/2008 Adjustment
Balance
Additions
Deletions
12/31/2008
Capital assets, not being depreciated:
Land
$ 6,938,795 $
$ 6,938,795
$ 3,130,985
$ -
$ 10,069,780
Construction in progress
51100,191
5,100,191
663.430
(4.,305,8«3)
1.457.798
Total capital assets, not being depreciated:
12,038,986
12,038,986
3,794,415
(4,305,823)
11,527.578
Capital assets, being depreciated
Buildings
3,596,441
3,596,441
-
3,596,441
Improvements other than buildings
43,702,039
43,702,039
4,305,823
48,007,862
Infrastructure
-
1,110,979
1,110,979
805,665
1,916,645
Machinery and equipment
IK64-3
-
106A43
-
106,643
Total capital assets, being depreciated:
47,405,123
1,110,979
48,516,102
5,111,488
53,627,590
Less accumulated depreciation for :
Buildings
(1,900,025)
-
(1,900,025)
(179,824)
- (2,079,849)
Improvements other than buildings
(10,446,233)
-
(10,446,233)
(437,020)
- (10,883,253)
Infrastructure
-
(23,978)
(23,978)
(19,166)
- (43,144)
Machinery and equipment
(76,614)
(76,634)
(2,945)
(79,579)
Total accumulated depreciation:
(12,422,892)
(23,978)
(12,446,870)
(638,956)
(13,085,825)
Total assets being depreciated, net
34.982,231
1.087.001
36,069.232
4,472,532
40.541,765
Business Type activities capital assets, net
$ 47,021,217 $
1,087,001
$ 48,108,218 $
8,266,947 $
(4,305,823) $ 52,069,343
NOTE 16 — SUBSEQUENT EVENTS
On January 6, 2009, the City Council approved an interlocal agreement with the Cities of Renton, Auburn, Des Moines,
Tukwila, Burien, and SeaTac for the creation of a governmental administrative agency to be known as the South Correctional
Entity ("SCORE"). The City approved the creation of a public corporation by the City of Renton to be designated as the
South Correctional Entity Public Development Authority. The Authority is issuing bonds to pay a portion of the costs of
acquiring, constructing and equipping a correctional facility to be located in Des Moines. It is anticipated the Authority will
issue the bonds in the fall of 2009, with occupancy of the new jail in late 2011. Payment for the bonds, estimated to be $100
million, would be secured by the full faith and credit of "member" cities under the interlocal agreement.
City of Federal Way /59
Combining Statement — Nonmajor Governmental Funds' Description
For the Year Ended December 31, 2008
Special Revenue Funds
Special Revenue funds are used to account for the proceeds of revenue sources (other than special assessments, expendable
trusts or major capital projects) that are legally restricted to expenditures for specified purposes.
The Arterial Street Fund accounts for the receipt and expenditure of the State -levied motor vehicle fuel tax distributed to the
City in accordance with State R.C.W. 82.36.020. These revenues are to be used for the construction, improvement, chip
sealing, seal -coating, and repair of arterial highways and city streets, or for the payment of related municipal indebtedness.
The Solid Waste/Recycling Fund was established to account for special refuse collection fees used to manage the Solid Waste
and Recycling program.
The Special Contracts/Studies Fund accounts for receipts and disbursements related to special contracts and special projects
where completion will extend beyond the calendar year.
The Hotel/Motel Lodging Tax Fund was established to account for all lodging tax receipts and disbursements related to
tourism promotion and acquisition and/or operation of tourism -related facilities.
The 2% Percent for Arts Fund was established for the purpose of providing funding for arts projects. The funds are to be
used to create a variety of cultural opportunities for citizens and to enhance the cultural environment in the community by
encouraging and promoting the creation and placement of art in public places and the incorporation of art into project design.
The Federal Way Community Center Fund was established to account for the operation of the community center. The fund
is supported by user fees and designated utility tax transfers.
The Traffic Safety Fund was established to account for the penalties and fines collected in criminal traffic violations and
those related to the operation of the Red Light Photo Enforcement Program. Funds collected for traffic safety shall be used
for, but not limited to prevention, education, and enforcement effectors related to traffic safety and compliance with traffic
control devices within the city, including maintenance and operation costs.
The Community Development Block Grant Fund accounts for the receipt and disbursement of federal grant revenue received
through the Department of Housing and Urban Development's Community Development Block Grant Program. Separate
subsidiary records are maintained to administer the individual projects accounted for in this fund.
The Path and Trails Reserve Fund was established in accordance with State law to accumulate unexpended proceeds of the
City's'/2% motor vehicle fuel tax receipts which are restricted in use to the construction and maintenance of paths and trails
within City right-of-way. In August 2007, King County voters approved a new $0.05, six -year, inflation adjusted property tax
lid lift to expand park and recreation opportunities. One cent of the five -cent acquisition levy proceeds will be distributed to
cities for acquisition and development of open space and natural lands and city trail projects that support connections to the
regional trail system.
Capital Projects Feinds
The Capital Project Funds account for the acquisition or construction of major capital facilities with the exception of those
facilities financed by proprietary and trust funds. The major sources of revenue for this fund are general obligation bond
proceeds, grants from other agencies, local taxes and contributions from other funds.
The Parks CIP Fund was established to account for receipts and disbursements related to acquisition, design, construction
and any other related parks capital project expenditures.
The City Facilities CIP Fund accounts for receipts and disbursements related to acquisition, design, construction and any
other related municipal facility and community/senior capital project expenditures.
City of Federal Way / 60
CITY OF
Federal Way
It's all within reach
THIS PAGE IS LEFT' INTENTIONALLY BLANK
City of Federal Way / 61
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2008
ASSETS
Equity in pooled cash and investments
Retainage in escrow
Due from other governments
TOTAL ASSETS
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
Retainage payable
Interfund loans payable
Unearned revenue
TOTAL LIABILITIES
Fund balance:
Reserved:
Hotel/motel lodging tax
Paths & Trails
Unreserved:
Special revenue funds
Capital projects funds
TOTAL FUND BALANCES
Special Capital
Revenue Projects TOTAL
$ 1,561,308 $ 6,082,159 $ 7,643,467
- 19,904 19,904
176,819 198,359 375,178
1,738,127 6,300,422 8,038,549
111,854 155,237 267,091
- 21,099 21,099
87,000 - 87,000
86,322 86,322
285,176 176,336 461,512
194,145 - 194,145
193,195 - 193,195
1,065,611 - 1,065,611
- 6,124,086 6,124,086
1,452,951 6,124,086 7,577,037
TOTAL LIABILITIES AND FUND BALANCE $ 1,738,127 $ 6,300,422 $ 8,038,549
City of Federal Way / 62
COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
DECEMBER 31, 2008
Special
Arterial Solid Waste Contracts/ Hotel/motel 2% for the
Street Recycling Studies Lodging Tax Arts
ASSETS
Equity in pooled cash & investments
$442,712
$ 101,040
$272,788 $ 185,901 $ 293
Due from other governments
39,713
80,861
- 11,565 -
TOTAL ASSETS
482,425
181,901
272,788 197,466 293
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
17
8,582
3,321
Interfund loans payable
-
- -
Unearned revenue
-
-
- - -
TOTAL LIABILITIES
17
8,582
3-12 ] -
Fund balance:
Reserved:
Hotel/motel lodging tax
-
-
- 194,145 -
Paths & Trails
-
-
- -
Unreserved:
Special revenue funds
482,408
173,319
272,788 - 293
TOTAL FUND BALANCES
482,408
173,319
272,788 194,145 293
TOTAL LIABILITIES & FUND
BALANCE
$482,425
$ 181,901
$272,788 $ 197,466 $ 293
City of Federal Way / 63
COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
DECEMBER 31, 2008
(continued)
Federal Way
Community
Paths and
Community
Traffic Development
Trails
Center
Safety Block Grant
Reserve Total
ASSETS
Equity in pooled cash & investments $ 209,497 $ 155,507 $ 1,001 $192,569 $ 1,561,308
Due from other governments - - 44,054 626 176,819
TOTAL ASSETS 209,497 155,507 45,055 193,195 1,738,127
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable 57,191 19,688 23,055 111,854
Interfund loans payable 65,000 - 22,000 - 87,000
Unearned revenue 86,322 - - - 86,322
TOTAL LIABILITIES 208,513 19,688 45,055 - 285,176
Fund balance:
Reserved:
Hotel/motel lodging tax - - - 194,145
Paths & Trails - - - 193,195 193,195
Unreserved:
Special revenue funds 984 135,819 - 1,065,611
TOTAL FUND BALANCES 984 135,819 193,195 1,452,951
TOTAL LIABILITIES & FUND
BALANCE $ 209,497 $ 155,507 $ 45,055 $ 193,195 $ 1,738,127
City of Federal Way / 64
COMBINING BALANCE SHEET
NONMAJOR CAPITAL PROJECTS FUNDS
DECEMBER 31, 2008
ASSETS
Equity in pooled cash and investments
Retainage in escrow
Due from other governments
TOTAL ASSETS
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
Retainage payable
TOTAL LIABILITIES
Fund balance:
Reserved:
Capital projects
TOTAL FUND BALANCES
TOTAL LIABILITIES AND FUND BALANCE
City
Parks Facilities TOTAL
$ 4,440,845 $ 1,641,314 $ 6,082,159
- 19,904 19,904
198,359 - 198,359
4,639,204 1,661,218 6,300,422
67,908 87,329
155,237
- 21,099
21,099
67,908 108,428
176,336
4,571,296 1,552,790 6,124,086
4,571,296 1,552,790 6,124,086
$ 4,639,204 $ 1,661,218 $ 6,300,422
City of Federal Way / 65
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2008
Special Capital
Revenue Projects TOTAL
REVENUES
Taxes
$ 337,729 $
- $
337,729
Intergovernmental
864,542
465,199
1,329,741
Service charges and fees
1,589,391
339,844
1,929,235
Fines
141,174
-
141,174
Interest
31,587
148,836
180,423
Other
295,993
75,391
371,384
TOTAL REVENUES
3,260,416
1,029,270
4,289,686
EXPENDITURES
Current:
General government
Physical environment
Transportation
Economic environment
Culture and recreation
Capital outlay
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
173,272 -
173,272
370,718
370,718
2,011,642
2,011,642
196,903
196,903
2,012,522 -
2,012,522
16,032 2,329,951
2,345,983
4,781,089 2,329,951 7,111,040
(1,520,673) (1,300,681) (2,821,354)
1,928,348 394,000 2,322,348
TOTAL OTHER FINANCING SOURCES (USES
1,928,348
394,000
2,322,348
NET CHANGE IN FUND BALANCES
407,675
(906,681)
(499,006)
FUND BALANCES - BEGINNING
1,045,276
7,030,767
8,076,043
FUND BALANCES - ENDING $ 1,452,951 $ 6,124,086 $ 7,577,037
City of Federal Way/66
REVENUES
Taxes
Intergovernmental
Service charges and fees
Fines
Miscellaneous:
Interest
Other
TOTAL REVENUES
EXPENDITURES
Current:
General government
Physical environment
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
For the Year Ended December 31, 2008
Solid
Arterial Waste/
Street Recycling.
523,465
158,075
139,902
262,848
Special Hotel/Motel
Contracts/ Lodging
Studies Tax
2% for the
Arts
$ 188,833 $
14,656 2,778 6,575 4,058
3,336 - - -
699,532 405,528 6,575 192,891
- 370,718
Transportation 2,006,079 - -
Economic environment - - - 196,903
Culture and recreation - - - - -
Capital outlay - - 16,032 -
TOTAL EXPENDITURES 2,006,079 370,718 16,032 196,903
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (1,306,547) 34,810 (9,457) (4,012) -
OTHER FINANCING SOURCES (USES)
Transfers in 1,400,000 - - - -
TOTAL OTHER FINANCING SOURCES
(USES) 1,400,000 - - - NET CHANGE IN FUND BALANCES 93,453 34,810 (9,457) (4,012) -
FUND BALANCES - BEGINNING 388,955 138,509 282,245 198,157 293
FUND BALANCES - ENDING $ 482,408 $173,319 $ 272,788 $ 194,145 $ 293
City of Federal Way / 67
REVENUES
Taxes
Intergovernmental
Service charges and fees
Fines
Miscellaneous:
Interest
Other
TOTAL REVENUES
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
For the Year Ended December 31, 2008
(continued)
Federal Way
Community
Paths and
Community Traffic
Development
Trails
Center Safety
Block Grant
Reserve
$ - $ $ - $ 148,896
192,918 8,257
1,168,468 - - -
- 141,174 -
Total
$ 337,729
864,542
1,589,391
141,174
2,639 208 - 673 31,587
292,657 - 295,993
1,463,764 141.382 192,918 157,826 3,260,416
EXPENDITURES
Current:
General government
-
173,272 173,272
Physical environment
- -
- - 370,718
Transportation
5,563
- - 2,011,642
Economic environment
- -
- - 196,903
Culture and recreation
2,012,522 -
- _ 2,012,522
Capital outlay
- -
- - 16,032
TOTAL EXPENDITURES
2,012,522 5,563
173,272 - 4,781,089
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
(548,758) 135,819
19,646 157,826 (1,520,673)
OTHER FINANCING SOURCES (USES)
Transfers in
528,348 -
- - 1,928,348
TOTAL OTHER FINANCING SOURCES
(USES) 528,348 - - - 1,928,348
NET CHANGE IN FUND BALANCES (20,410) 135,819 19,646 157,826 407,675
FUND BALANCES - BEGINNING 21,394 - (19,646) 35,369 1,045,276
FUND BALANCES - ENDING $ 984 $ 135,819 $ - $ 193,195 $ 1,452,951
City of Federal Way / 68
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR CAPITAL PROJECTS FUNDS
For the Year Ended December 31, 2008
REVENUES
Intergovernmental
Service charges and fees
Miscellaneous:
Interest
Other
TOTAL REVENUES
EXPENDITURES
Capital Outlay
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
City
Parks Facilities Total
$ 465,199 $ $ 465,199
339,844 - 339,844
98,134 50,702 148,836
75,391 75,391
903,177 126,093 1,029,270
1,328,128 1,001,823 2,329,951
1,328,128 1,001,823 2,329,951
(424,951) (875,730) (1,300,681)
Transfers in 394,000 - 394.000
TOTAL OTHER FINANCING SOURCES (USES 394,000 - 394,000
NET CHANGE IN FUND BALANCES (30,951) (875,730) (906,681)
FUND BALANCES - BEGINNING 4,602,247 2,428,520 7.030.767
FUND BALANCES -'PNTDTNC; 4 571,296 ON 1 552 790 $ 6 124 086
City of Federal Way / 69
ARTERIAL STREET FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2008
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
REVENUES
Intergovernmental
$ 550,000 $
550,000 $
523,465 $
(26,535)
Service charges and fees
84,000
84,000
158,075
74,075
Interest
5,000
5,000
14,656
9,656
Other
-
-
3,336
3.336
TOTAL REVENUES
639,000
639,000
699,532
60,532
EXPENDITURES
Transportation 2,023,894 2,412,849 2,006,079 406,770
TOTAL EXPENDITURES 2,023,894 2.412.849 2.006,079 406.770
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (1,384,894) 1,773,849) (1,306,547) 467,302
OTHER FINANCING SOURCES (USES)
Transfers in 1,400,000 1,400,000 1,400,000
TOTAL OTHER FINANCING SOURCES (USES)
1,400,000
1.400,000
1,400,000 -
NET CHANGE IN FUND BALANCES
15,106
(373,849)
93,453 467,302
FUND BALANCES - BEGINNING
15,106
388,955
388,955 -
FUND BALANCES - ENDING $ 30,212 $ 15,106 $ 482,408 $ 467,302
City of Federal Way /70
SOLID WASTE AND RECYCLING FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2008
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
REVENUES
Intergovernmental $ 138,000 $ 138,000 $ 139,902 $ 1,902
Service charges and fees 242,850 242,850 262,847 19,997
Interest - 2,778 2,778
TOTAL REVENUES 380,850 380,850 405,527 24,677
EXPENDITURES
Utilities and Environment 370,060 375,060 370,718 4,342
TOTAL EXPENDITURES
370,060
375,060
370,718 4,342
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
10,790
5,790
34,809 29,019
NET CHANGE IN FUND BALANCES
10,790
5,790
34,809 29,019
FUND BALANCES - BEGINNING
91,183
138,508
138,508 -
FUND BALANCES - ENDING $ 101,973 $ 144,298 $ 173,317 $ 29,019
City of Federal Way /71
HOTEL/MOTEL LODGING TAX FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2008
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
REVENUES
Taxes $ 180,353 $ 180,353 $ 188,833 $ 8,480
Interest 3,000 3,000 4,058 1,058
Other 4,000 4,000 - (4,000)
TOTAL REVENUES 187,353 187,353 192,891 5,538
EXPENDITURES
Utilities and Environment 187,353 385,510 196,904 188,606
TOTAL EXPENDITURES 187,353 385,510 196,904 188,606
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES - (198,157) (4,013) 194,144
NET CHANGE IN FUND BALANCES (198,157) (4,013) 194,144
FUND BALANCES - BEGINNING - 198,157 198,157 -
FUND BALANCES - ENDING $ $ - $ 194,144 $ 194,144
City of Federal Way /72
FEDERAL WAY COMMUNITY CENTER
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2008
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
REVENUES
Service charges and fees $ 1,474,532 $ 1,387,407 $ 1,168,468 $ (218,939)
Interest - - 2,639 2,639
Other 188,875 276,000 292,656 16,656
TOTAL REVENUES 1,663,407 1,663,407 1,463,763 (199,644)
EXPENDITURES
Culture and recreation
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
1,901,761 2,061,761 2,012,522 49,239
1,901,761 2,061,761 2,012,522 49,239
(238,354) (398,354) (548,759) (150,405)
528,348 528,348 528,348
TOTAL OTHER FINANCING SOURCES (USES) 528,348 528,348 528,348
NET CHANGE IN FUND BALANCES 289,994 129,994 (20,411) (150,405)
nnn +n+ ni nnn ni
I nnc i
UND BALANCES - BEGINNING LJ7,1V1 b1,JT+ G1,J7J 1
FUND BALANCES - ENDING $ 529,095 $ 151,388 $ 984 $ (150,404)
City of Federal Way / 73
PATHS AND TRAILS FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2008
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
REVENUES
Taxes $ $ - $ 148,896 $ 148,896
Intergovernmental 9,023 9,023 8,257 (766)
Interest 500 500 673 173
TOTAL REVENUES
EXPENDITURES
General government
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
NET CHANGE IN FUND BALANCES
FUND BALANCES - BEGINNING
9,523 9,523 157,826 148,303
9,523
9,523
157,826 148,303
9,523
9,523
157,826 148,303
34,319
35,369
35,369
FUND BALANCES - ENDING $ 43,842 $ 44,892 $ 193,195 $ 148,303
City of Federal Way /74
CITY OF
Federal way
It"s all within reach
THIS PAGE IS LEFT INTENTIONALLY BLANK
City of Federal Way /75
Budget and Actual — Debt Service Fund Description
For the Year Ended December 31, 2008
The Debt Service Fund accounts for the accumulation of resources for the payment of general obligation and special
assessment bond principal, interest and related costs. Revenues for this fund consist of the City's real estate excise tax,
transfers from the Utility Tax Fund, and/or other revenues designated by the City Council.
City of Federal Way/76
BALANCESHEET
DEBT SERVICE FUND
DECEMBER 31, 2008
Debt
Service
ASSETS
Equity in pooled cash & investments $ 1,882,041
Receivables (net):
Taxes 100,146
TOTAL ASSETS 1,982,187
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable 4,050
Deferred revenue 214,470
TOTAL LIABILITIES 218,520
Fund balance:
Reserved:
Debt service 1,763,667
TOTAL FUND BALANCES 1,763,667
TOTAL LIABILITIES AND
FUND BALANCE $ 1,982,187
City of Federal Way /77
DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2008
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
REVENUES
Taxes $ 2,800,000 $ 3,300,000 $ 2,590,310 $ (709,690)
Interest 90,000 90,000 209,499 119,499
TOTAL REVENUES 2,890,000 3,390,000 2,799,809 (590,191)
EXPENDITURES
Debt Service:
Principal 781,950 441,950 440,900 1,050
Interest 850,180 759,880 754.233 5,647
TOTAL EXPENDITURES 1,632,130 1,201,830 1,195,133 6,697
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 1,257,870 2,188,170 1,604,676 (583,494)
OTHER FINANCING SOURCES (USES)
Transfers in 1,343,633 1,343,633 913,333 (430,300)
Transfers out (1,844,000) (2,844,000) (2,844,000)
TOTAL OTHER FINANCING SOURCES (USES)
(500,367)
(.1,500,367)
(1,930,667) 430,300)
NET CHANGE IN FUND BALANCES
757,503
687,803
(325,991) (1,013,794)
FUND BALANCES - BEGINNING
1.568,653
2,089,658
2,089,658 -
FUND BALANCES - ENDING $ 2,326,156 $ 2,777,461 $ 1,763,666 $ (1,013,794)
City of Federal Way /78
41k
CITY OF
Federal Way
It's all within reach
THIS PAGE IS LEFT INTENTIONALLY BLANK
City of Federal Way /79
Combining Statement — Internal Service Fund's Description
For the Year Ended December 31, 2008
Internal Service Funds
Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to
other departments or agencies of a government, or to other governments, on a cost -reimbursement
basis.
The Risk Management Fund accounts for the City's risk financing activities established to minimize adverse effects of losses
associated with property and casualty, medical and dental, unemployment and worker's compensation claims. Both risk
control (to minimize the losses that strike and organization) and risk financing (to obtain finances to provide for or restore the
economic damages of those losses) are involved. The City is currently self -insuring only State Unemployment Compensation.
Related premiums received by the fund are used to reimburse the unemployment benefits paid to eligible individuals and to
establish reserves for the payment of estimated future unemployment claims liability. The City is also currently recovering
costs and building reserves for general liability including property, casualty, errors and omissions and fidelity coverage.
The Information Systems Fund was established to account for all costs associated with data processing, telecommunications
and the Geographical Information System (GIS). This fund will own and depreciate all non-proprietary fund assets related to
these functions, and will charge equipment/software users for both maintenance/operating costs and equipment replacement
charges based on depreciation schedules.
The Support Services Fund will account for duplication, graphics and other general support services provided to departments
and funds throughout the City.
The Fleet and Equipment Fund accounts for the cost of maintaining City vehicles and other motorized equipment. Rates
charged to user departments are based on the full cost of maintaining equipment items, including the recovery of related
depreciation expense.
The Buildings and Furnishings Fund accounts for all costs associated with the operation and maintenance of specified City
buildings. City building facilities and furnishings will be owned by this Fund, and both maintenance/operating costs and
depreciation recovery will be charged City departments and funds.
City of Federal Way / 80
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF NET ASSETS
December 31, 2008
Risk
Information
Support
Fleet and
Buildings and
Management
Systems
Services
Equipment
Furnishings
TOTAL
ASSETS
Current assets:
Equity in pooled cash & investments
$ 5,397,869
$ 3,169,265 $
265,581
$ 3,394,135
$ 1,200,488
$ 13,427,338
Prepaid postage
-
-
5,000
-
-
5,000
TOTAL CURRENT ASSETS
5,397,869
3,169,265
270,581
3,394,135
1,200,488
13,432,338
Noncurrent assets
Capital assets:
Buildings / Structures
- - - - 16,103,691
16,103,691
Machinery/furniture/equipment
- 5,833,458 264,064 6,928,590 98,361
13,124,473
Less accumulated depreciation
- (4,180,358) (179,673) (3,514,317) (2,684,380)
(10,558,728)
TOTAL NONCURRENT ASSETS
1,653,100 84,391 3,414,273 13,517,672
18,669,436
TOTAL ASSETS
5,397,869 4,822,365
354,972 6,808,408
14,718,160
32,101,774
LIABILITIES
Current liabilities:
Vouchers/payroll payable
42,999 130,555
9,785 99,210
29,111
311,660
TOTAL CURRENT LIABILITIES
42,999 130,555
9,785 99,210
29,111
311,660
Long-term liabilities:
Compensated absences payable
- 68,462
- 3,115
1,091
72,668
TOTAL LONG TERM LIABILITIES
- 68,462
-
3,115
1,091
72,668
TOTAL LIABILITIES
42,999 199,017
9,785
102,325
30,202
384,328
NET ASSETS
Invested in capital assets
- 1,653,100
84,391
3,414,273
13,517,672
18,669,436
Unrestricted
5,354,870 2,970,248
260,796
3,291,810
1,170,286
13,048,010
TOTAL NET ASSETS
$ 5,354,870 $ 4,623,348 $
345,187 $
6,706,083 $
14,687,958
$ 31,717,446
City of Federal Way / 81
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES
IN FUND NET ASSETS
For the Year Ended December 31, 2008
OPERATING REVENUES:
Service charges and fees
Miscellaneous
TOTAL OPERATING REVENUES
OPERATING EXPENSES
Personal services
Materials and supplies
Services and charges
Intergovernmental
Insurance
Claims
Depreciation
TOTAL OPERATING EXPENSES
OPERATING INCOME (LOSS)
NON -OPERATING REVENUES (EXPENSES)
Risk Information Support Fleet and Buildings and
Management Systems Services Equipment Furnishings TOTAL
$ 754,068 $
83,967
1,974,935 $
33,117
180,365 $ 1,909,881 $
4,224 -
543,784 $
68.226
5,363,033
189,534
838,035
2,008,052
184,589 1,909,881
612,010
5,552,567
949,330
- 40,935
84,827
1,075,092
45,426
26,223 501,719
33,220
606,588
133,370 474,260
121,998 273,074
350,331
1,353,033
115,205
- 427
-
115,632
191,746 -
191,746
359,540
- -
359,540
387,367
27,665 597,036
852.218
1,864,286
684,656 1,971,588 175,886 1,413,191 1.320,596 5,565,917
153,379 36,464 8,703 496,690 (708,586) (13,350)
Interest income 90,644 69,195 6,142 68,736 25,679 260,396
Gains (losses) from disposal of capital assets - - - (52,269) 132 (52,137)
TOTAL NON -OPERATING
REVENUES NET OF EXPENSES 90,644 69,195 6,142 16,467 25,811 208,259
INCOME (LOSS) BEFORE
CONTRIBUTIONS &TRANSFERS 244,023 105,659 14,845 513,157 (682,775) 194,909
Transfers in - - 62,327 62,327
Transfers out (62,327) - - (62,327)
Capital contributions - 235,321 - 248,879 484,200
CHANGE IN NET ASSETS 181,696 340,980 14,845 824,363 (682,775) 679,109
TOTAL NET ASSETS, BEGINNING 5,173,174 4,630,807 314,227 5,891,808 15,370,733 31,380,749
Beginning Balance Adjustment - (348,439) 16,115 (10.088) - (342,412)
TOTAL NET ASSETS, ENDING $ 5,354,870 $ 4,623,348 $ 345,187 $ 6,706,083 $ 14,687,958 $ 31,717,446
City of Federal Way / 82
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from users
Cash payments to claimants
Cash payments to suppliers for goods/services
Cash payments to employees
Cash payments for other services/charges
Cash payments to other governments for goods and services
Other operating receipts
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Operating transfers in
Operating transfers out
Risk Information Support Fleet and Buildings and
413nogemcn1 Sysicats Scmaea I'Awri cm F13m»JIMP3 T("
$ 754,068
$ 1,974,935
$ 180,365 $ 1,909,881 $
543,784
$ 5,363,033
(359.540)
-
- -
-
(359,540)
(114,087)
(578,555)
(157,068) (709,216)
(381,560)
(1,940,486)
-
(933,308)
- (39,386)
(84,649)
(1,057,343)
(191,746)
-
(191,746)
-
(115,206)
- (427)
(115,633)
83,967
33,117
4,224 -
68,226
189,534
172,662 380.983 27.521 1,160,852 145.801 1,887,819
(62,327)
62,327
NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES (62,327) - 62327
CASH FLOWS FROM CAPITAL AND CAPITAL -
RELATED FINANCING ACTIVITIES:
Acquisition of capital asset/construction work in progress
Proceeds from the sale of capital assets
NET CASH USED FOR CAPITAL
AND CAPITAL RELATED FINANCING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES:
Receipts of interest
NET CASH PROVIDED BY 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
RECONCILIA ION OF OPERA TING 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
Increasel(decrease) in vouchers/accounts payable
Increase/(decrease)in accrued payroll/compensated absences payable
TOTAL ADJUSTMENTS
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Non -cash investing, capital, and financing activities:
Other contributions of capital assets
62,327
(62,327)
(336,224) (17,642) (879,106) (98,979) (1,331,951)
16,669 132 16,801
(336.224) (17,642) (862.437) (98,847) (1,315,1501
90,644 69,195 6,142 68,736 25,679 260,396
90,644 69,195 4'__ 68,736 25,679 260.396
200,979 113,954 16,021 429,478 72,633 833,065
5.196,090 3,055,311 249560 2.964.657 1,127,855 12594,273
5,397,869 3,169,265 265,581 3,394,135 1,200,488 13,427,338
153,379 36,463 8,703 496,690 (708,586) (13,351)
- 387,367
27,665 597,036
852,218
1,864,286
19,283 (58,869)
(8,847) 65,577
1,991
19,135
- 16,022
1,549
178
17,749
19.283 344.520
18.818 664,162
854-187
1,901,170
$ 172,662 $ 380,983 $ 27,521 $ 1,160,852 $ 145,801 $ 1,887,819
$ 235,321 $ 248,879 - $ 484,200
City of Federal Way / 83
CAPITAL ASSETS USED IN THE
OPERATION
OF GOVERNMENTAL FUNDS
City of Federal Way / 84
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
COMPARATIVE SCHEDULE BY SOURCE
December 31, 2008
2008
GOVERNMENTAL FUNDS CAPITAL ASSETS
Land $ 292,669,494
Buildings 504,835
Improvements other than buildings d2,995,883
Machinery and equipment 302,296
Infrastructure 104,660,450
Construction in progress 30,322,365
TOTAL GOVERNMENTAL FUNDS CAPITAL ASSETS 471,455,323
INVESTMENTS IN GOVERNMENTAL FUNDS CAPITAL ASSETS BY SOURCE:
General Fund
125,244,871
Special Revenue Funds
252,375,395
Capital Project Funds
80,364,552
Donations
13,470,505
TOTAL GOVERNMENTAL FUNDS CAPITAL ASSETS
$ 471,455,323
This schedule presents only the historical cost of capital asset balances (no depreciation expenses) related to
governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the
above amounts. Generally, the capital assets of the internal service funds are included as governmental
activities in the statement of net assets.
City of Federal Way / 85
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE BY FUNCTION AND ACTIVITY
December 31, 2008
Improvements Machinery Construction
Other than and in Total
Function and Activity Land Buildings Buildings Equipment Infrastructure Progress 2008
GENERAL GOVERNMENT
Miscellaneous genera] government $
15,614,978 $
$ 19,973 $
302,296 $ 5,959,317 $
777,251
$ 22,673,815
TOTAL GENERAL GOVERNME]
15,614,978
19,973
302,296 5,959,317
777,251
22,673,815
CULTURE AND RECREATION
115,626,390 $
504,835 42,975,910
- 94,474,128
2,309,554
255,890,817
TOTAL CULTURE & RECREATION
115,626,390
504,835 42,975,910
94,474,128
2,309,554
255,890,817
TRANSPORTATION
Streets and traffic
161,428,126
- -
$ 4,227,005
27,235,560
192,890,691
TOTAL TRANSPORTATION
161,428,126
- -
4,227,005
27,235,560
192,890,691
TOTAL GENERAL FIXED
ASSETS BY FUNCTION $ 292,669,494 $ 504,835 $ 42,995,883 $ 302,296 $ 104,660,450 $ 30,322,365 $ 471,455,323
This schedule presents only the historical cost of capital asset balances (no depreciation expenses) related to
governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the
above amounts. Generally, the capital assets of the internal service funds are included as governmental
activities in the statement of net assets.
City of Federal Way / 86
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITY
For the Year Ended December 31, 2008
Governmental
Funds
Governmental
Funds
Capital Assets Capital Assets
1/1/2008 Additions Deductions 12/31/2008
GENERAL GOVERNMENT
Miscellaneous general government
$ 21,508,839 $
1,164,976
$ -
$ 22,673,815
TOTAL GENERAL GOVERNMENT
21,508,839
1,164,976
22,673,815
CULTURE AND RECREATION
254,200,945
25,389,828
(23,699,956)
255,890,817
TOTAL CULTURE AND RECREATION
254,200,945
25,389,828
(23,699,956)
255,890,817
TRANSPORTATION
Streets and traffic
185,928,480
21,582,349
(14,620,138)
192,890,692
TOTAL TRANSPORTATION
185,928,480
21,582,349
(14,620,138)
192,890,692
TOTAL GENERAL FIXED ASSETS $ 461,638,264 $ 48,137,153 $ (38,320,094) $ 471,455,324
This schedule presents only the historical cost of capital asset balances (no depreciation expenses) related to
governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the
above amounts. Generally, the capital assets of the internal service funds are included as governmental
activities in the statement of net assets.
City of Federal Way/ 87
Statistical Section
The statistical section presents detailed information as a context for understanding what the information in the financial
statements and note disclosures say about the City's overall financial health. The following are the five categories of
information presented in this section.
Financial Trends — These schedules contain trend information to help the reader understand how the City's financial
performance and well-being have changed over time.
Revenue Capacity — These schedules contain information to help the reader assess the City's most significant local revenue
sources, property tax and sales tax.
Debt Capacity — These schedules present information to help the reader assess the affordability of the City's current levels of
outstanding debt and the City's ability to issue additional debt in the future.
Demographic and Economic Information — These schedules offer demographic and economic indicators to help the reader
understand the environment within which the City's financial activities take place.
Operating Information — These schedules contain service and infrastructure data to help the reader understand how the
information in the City's financial report relates to the services the city provides and the activities it performs.
Ciq of Federal Wa 188
Governmental activities
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total governmental activities net assets
Business -type activities
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total business -type activities net assets
Primary government
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total primary government net assets
NET
ASSETS BY COMPONENT
Last Six Fiscal Years
2003
2004
2005
2006
2007
2008
$ 43,162,298
$ 60,746,134 $
70,138,350 $
93,835,163 $
439,127,122 $
456,600,030
37,806,176
37,262,541
45,017,742
38,359,454
32,269,512
28,434,066
15,686,213
11,052,383
13,292,837
15,051,966
23,651,674
24,773,913
96,654,687
109,061,058
128,448,929
147,246,583
495,048,308
509,808,009
39,559,494
41,735,500
42,294,741
43,697,633
45,264,105
50,494,590
14,148
20,289
18,880
26,439
15,777
42,558
7,794,729
7,032,804
7,206,807
7,467,417
6,550,179
5,071,617
47,368,371
48,788,593
49,520,428
51,191,489
51,830,061
55,608,765
82,721,792
102,481,634
112,433,091
137,532,796
484,391,227
507,094,620
37,820,324
37,282,830
45,036,622
38,385,893
32,285,289
28,476,624
23,480,942
18,085,187
20,499,644
22,519,383
30,201,853
29,845,530
$ 144,023,058
$ 157,849,651 $
177,969,357 $
198,438,072 $
546,878,369 $
565,416,774
Source: City of Federal Way Finance
Note: All amounts are reported on the accrual basis.
Amounts presented from year of implementation of GASB-34 (2003) forward.
City of Federal Way /89
CHANGES IN NET ASSETS
Last Six Fiscal Years
2003
2004
2005
2006
2007
2M
Expenses
Governmental activities:
General government
$ 5,601,311 S
6,304,256 S
5,539,682 S
4,364,710 $
4,506,800
$5,606,797
Security of persons and property
15,597,612
17,374,845
16,825,123
19,906,722
23,107,683
24,745,284
Transportation
5,389,975
4,098,790
5,451,324
5,628,100
9,986,067
7,891,298
Physical environment
351,023
295,537
322,151
313,388
336,588
370,718
Economic environment
2,923,756
2,953,073
3,095,391
3,162,089
3,319,955
3,382,572
Health and human svcs
607,199
683,804
631,133
622,761
684,984
705,976
Culture and recreation
4,455,865
4,914,348
4,789,920
5,172,663
6,506,137
6,955,442
Interest on long-term debt
1,683,028
1,764.077
1,541,930
1.420.691
1,122,358
901 161
Total governmental activities expenses
36.609,769
38,388,730
38,196,654
4Q 591,124
49,570.572
50,559,248
Business -type activities:
Surface Water Mgmt
3,380,690
3,282,427
2,995,074
3,142,613
3,454,193
4,060,440
Dumas Bay Center
935.422
879,870
819,515
925.825
980,588
1,045,250
Total business -type activities expenses
4,316.112
4,162,297
3,814,589
4,068,438
4,434.781
5,105.6110
Total primary govemment expenses
5 40,925,8SI 5
42.551,027
42,011243
44,659,562
54.905.353
55,664.938
Program Revenues
Governmental activities:
Charges for services
General Government
1,082,088
1,509,973
1,372,270
1,052,641
3,510,339
$2,313,939
Security of Persons & Property
3,012,210
4,203,315
4,780,082
4,800,920
2,110,164
2,309,406
Transportation
1,041,261
1,453,002
1,351,596
1,357,333
3,119,637
513,340
Physical Environment
67,812
94,627
88,222
75,580
-
262,847
Economic Environment
564,825
788,171
847,686
762,603
1,009,707
1,962,624
Health
117,302
163,686
172,838
150,192
-
-
Culture &Recreation
860,805
1,201,189
1,322,962
1,247,495
531,041
2,561,685
Operating grants and contributions
360,000
32,415
1,228,979
1,512,394
22,858
1,538,476
Capital grants and contributions
10,069,756
7,214,776
4,250,635
5,973,071
11.457,030
8,933.154
Total governmental activities program revenues
17,176,059
16.661,154
15,415,270
16,932,229
21.760.776
20395.471
Business -type activities:
Charges for services
$4,041,063 $
4,249,020
4,100,623
4,130,179
3,667,168
4,473,453
Operating grants and contributions
168,555
535,645
-
1,113,010
632,185
Capital grants and contributions
757,578
478,030
-
222,474
Total business -type activities program revenues
4,967.196
5,262,695
4,1001623
5;343,189
4 521,827
4.473A53
$
22,143.25.1 5
21,92.1,849
19,515,993
22,175,419
26,292,503
24.868.924
Net(Expense)/Revenue
Governmental activities
(19,433,710)
(21,727,576)
(22,781,384)
(23,658,895)
(27,809,796)
(30,163,777)
Business -type activities
651,084
1,100,398
286,034
1,174,751
87,046
(632,237)
General Revenues and Other Changes in Net Assets
Governmental activities:
Taxes
Sales tax
12,148,779
12,194,264
13,123,518
14,363,541
15,194,007
14,195,800
Utility tax
7,072,758
7,554,580
8,292,520
9,043,449
12,796,461
13,469,136
Property tax
8,200,955
8,121,088
8,442,172
8,892,558
9,059,734
9,397,456
Real estate excise tax
2,851,866
3,078,898
4,695,984
5,499,911
4,898,537
2,590,310
Gambling Tax
1,767,545
1,443,150
1,501,065
1,363,468
1,489,952
1,259,783
Hotel/Motel Tax
138,975
142,030
158,117
175,219
191,691
188,933
Leasehold Tax
1,929
19,292
2,026
4,592
7,254
5,712
Other
3,879,863
1,717,362
6,080,222
3,221,392
6,971,413
6,502,869
Transfers
-
(203,190)
(126,369)
(107581)
(185,495)
123.518
Total governmental activities
36,062,670
34,067,474
42,169,255
42,456,549
50,423,554
47,733,417
Business -type activities:
Other
141,980
116,634
319,432
388,729
366,031
3,447,458
Transfers
203.190
126,369
107,581
185,495
(123.518)
Total business -type activities
1.11,90
319,K 4
445,801
496.310
551,526
3,323,940
Total primary government
$
361_04,650 $
34,387 2f98 S
42,615.056 5
42,952.859 S
50,975,080 S
51,0577,97
Change in Net Assets
Governmental activities
$
16,628,960 $
12,339,898
19,387,871
18,797,654
22,613,758
17,569,640
Business -type activities
$
793,064 $
1,420,222
731,835
1,671,061
638,572
2,691,703
Prior Period Adjustment
$
(1) $
-
-
-
-
(1,722,939)
Total primary government
$
17,422,023 $
13,760,120 $
20,119,706 $
20,468,715 $
23,252,330 $
18,538,404
Source: City of Federal Way Finance
Note: All amounts are reported on the accrual basis.
Amounts presented from year of implementation of GASB-34
(2003) forward,
Citv of Federal Way / 90
GOVERNMENT -WIDE REVENUES BY SOURCE AND EXPENDITURES BY FUNCTION
Last Six Fiscal Years
2003
2004
2005
2006
2007
2008
Program Revenues
Charges for Services
$ 12,459,591 $
13,662,985 $
14,036,279 $
4,130,179 $
14,580,241
14,397,294
Operating Grants and Contributions
528,555
568,060
1,228,979
2,625,404
246,305
1,538,476
Capital Grants and Contributions
10,827,334
7,692,806
4,250,635
5,973,071
11,457,030
8,933,154
General revenues
Sales tax
12,148,779
12,194,264
13,123,518
14,363,541
15,194,007
14,195,800
Utility tax
7,072,758
7,554,580
8,292,520
9,043,449
12,796,461
13,469,136
Property tax
8,200,955
8,121,088
8,442,172
8,892,558
9,059,734
9,397,456
Real estate excise tax
2,851,866
3,078,898
4,695,984
5,499,911
4,898,537
2,590,310
Gambling Tax
1,767,545
1,443,150
1,501,065
1,363,468
1,489,952
1,259,783
Hotel/Motel Tax
138,975
142,030
158,117
175,219
191,691
188,833
Leasehold Tax
1,929
19,292
2,026
4,592
7,254
5,712
Other revenue
1,165,557
707,346
1,188,598
1,299,548
4,194,183
875,389
Unrestricted Grants & Contributions
212,576
176,928
146,000
-
-
7,448,783
Investment Earnings
937,225
954,366
2,025,243
3,194,690
3,223,005
1,678,292
Disposition of capital assets
34,260
(4,644)
3,039,813
(884,117)
(79,744)
(52,137)
Total Revenues
$ 58,347,905 $
56,311,149
62,130,949
55,681,513
77,258,656
75,926,281
Expenses/Expenditures
General Government
$ 5,601,311 $
6,304,256
5,539,682
4,364,710
4,506,800
$5,606,797
Security of Persons & Property
15,597,612
17,374,845
16,825,123
19,906,722
23,107,683
24,745,284
Transportation
5,389,975
4,098,790
5,451,324
5,628,100
9,986,067
7,891,298
Physical Environment
351,023
295,537
322,151
313,388
336,588
370,718
Economic Environment
2,923,756
2,953,073
3,095,391
3,162,089
3,319,955
3,382,572
Health
607,199
683,804
631,133
622,761
684,984
705,976
Culture & Recreation
4,455,865
4,914,348
4,789,920
5,172,663
6,506,137
6,955,442
Interest on long-term debt
1,683,028
1,764,077
1,541,930
1,420,691
1,122,358
901,161
Surface Water Management
3,380,690
3,282,428
2,995,074
3,142,613
3,455,166
4,060,440
Dumas Bay Centre
935,422
879,870
819,515
925,825
980,588
1.045.250
Total Expenses/Expenditures
$ 40,925,881 $
42,551,028 $
42,011,243 $
44,659,562 $
54,006,326 $
55,664,938
Source: City of Federal Way Finance
Note: Amounts presented from year of implementation of GASB-34 (2003) forward.
Citv of Federal Wav/91
General fund
Reserved
Unreserved
Total general fund
All Other Governmental Funds
Reserved
Unreserved, reported in:
Special revenue funds
Capital projects funds
Debt service funds
Total all other governmental funds
Source: City of Federal Way Finance
FUND BALANCES OF GOVERNMENTAL FUNDS
Last Six Fiscal Years
2003 2004 2005 2006 2007 2008
$ 430,890 $ 187,011 $ 14,510 $ 278,779 $ 125,184 $ 418,207
7 57R 723 2.658.031 4,522.705 6.492.057 7,783A68 5511,440
$ 8,009,613 $ 2,845,042 4,537,215 6,770.835 7,909,052 5,929,647
$ 278,130 $ 180,825 147,901 194,463 2,323,184 1,763,667
1,578,817
1,740,228
1,652,622
2,772,153 4,392,623 7,505,799
33,324,511
32,542,775
39,805,812
31,863,330 30,054,670 26,252,192
2,599,653
2,826,228
3,195,705
6,217,346
$ 37,781,111 $
37,290,056 $
44,802,040 $
41,047,292 $ 36,770,477 $ 35,521,658
Note: Amounts presented from year of implementation of GASB-34 (2003) forward.
City of Federal Way /92
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
Last Six Fiscal Years
2003
2004
2005
2006
2007
2008
Revenues
Taxes
$32,022,334 $
32,553,302 $
36,310,754 $
39,334,751 S
43,584,824 $
41,071,781
Licenses, fees and permits
1,000,250
1,235,039
2,247,651
2,089,844
2,939,328
2,195,068
Intergovernmental
12,313,459
10,111,537
5,479,614
8,047,243
15,494,887
10,520,570
Charges for services
3,965,992
4,200,528
4,927,163
6,355,262
6,327,552
6,246,207
Development Fees
2,565,215
3,167,605
2,040,378
196,060
-
-
Fines and Forfeitures
887,071
810,793
720,464
805,598
1,005,293
1,433,628
Investment earnings
701,311
744,435
1,557,935
2,447,996
2,463,670
1,274,955
Otherrevenues
1,093,109
751,025
1,065,664
717,922
630,966
875,389
Total revenues
54,548,741
53,574,264
54,349,623
59.994,676
72,446,520
63.617.598
Expenditures
General government
5,492,123
6,107,564
5,462,633
3,944,288
4,364,750
5,197,032
Security of persons and property
15,463,833
16,982,135
16,988,412
19,909,858
24,183,913
25,470,722
Transportation
5,358,543
4,788,954
5,080,577
5,373,983
6,631,030
6,634,548
Physical Environment
351,456
289,921
322,151
313,388
336,588
370,718
Economic Environment
2,883,079
2,944,584
3,119,831
3,055,426
3,326,986
3,344,987
Health
603,184
679,655
634,061
613,800
677,536
700,876
Culture and Recreation
3,507,392
3,927,933
3,859,465
4,108,813
5,300,455
5,871,288
Debt Service
Principal
14,159,881
3,768,044
2,933,231
2,197,357
9,953,505
440,900
Interestifiscal charges/admin fees
1,703,165
1,764,077
1,518,384
1,420,691
1,122,358
901,161
Capital Outlay
22,779,620
17,609,080
8,228,486
24.412303
19,162.067
18,037,109
Total expenditures
72,302,276
58,861,947
48,147,231
65,349,907
75,059,188
66,969,341
Excess of revenues over
(under) expenditures
(17,753,535)
(5,287,683)
6,202,392
(5,355,231)
(2,612,668)
(3,351,743)
Other Financing Sources (Uses)
GO bond proceeds
21,168,599
-
-
4,100,000
-
-
Sale of capital assets
209,527
-
3,618,512
20,000
(23,786)
-
Transfers in
21,037,023
15,615,639
15,650,064
13,231,785
22,688,136
16,232,916
Transfers out
(20,390,141)
(15,983,582)
(16,266,811)
(13,517,681)
(23,190,280)
(16,109,398)
Total other financing sources (uses)
22,025,008
(367,943)
3,001,765
3,834,104
(525,930)
123,518
Net change in fund balances
$ 4,271,473 $
(5,655,626) $
9,204,157 $
(1,521,127) $
(3,138,598) $
(3,228,225)
Debt service as a percentage of
noncapital expenditures
47.1%
15.5%
12.6%
9.7%
24.7%
2.8%
Source: City of Federal Way Finance
Note: Amounts presented from year of implementation of GASB-34 (2003) forward.
City of Federal Way/ 93
TAXABLE SALES BY CATEGORY
Last Six Fiscal Years
2003
2004
2005
2006
2007
2008
Accommodation and Food Svcs
125,245,622
131,057,207
139,256,190
147,464,635
170,754,055
172,336,596
Admin, Supp, Remed Svcs
32,591,113
31,855,764
32,521,639
23,796,653
25,202,780
23,285,051
Agriculture, Forestry, Fishing
132,936
186,395
279,688
196,678
563,627
174,571
Arts, Entertain, Recreation
29,031,924
28,601,771
33,416,416
19,364,073
15,898,253
17,769,325
Company Management
34,334
4,451
35,853
221,233
501,671
127,477
Construction
116,345,070
132,186,499
191,476,403
256,655,702
213,216,740
147,652,627
Educational Services
2,260,655
2,232,256
2,081,425
2,170,754
2,516,022
2,487,015
Finance and Insurance
21,357,842
13,943,553
12,855,387
13,752,698
12,795,964
10,426,093
Health Care Social Assistance
6,758,702
4,796,427
4,080,451
6,250,812
6,193,370
5,342,504
Information
64,930,982
69,861,905
71,936,131
63,746,061
63,218,235
70,578,046
Manufacturing
14,157,257
12,333,001
18,549,951
19,845,265
32,336,606
25,872,050
Mining
1,736,743
1,520,579
2,098,237
1,963,909
1,994,597
1,699,300
Other Services
31,430,253
32,464,044
32,453,303
34,861,423
38,713,357
38,169,579
Prof, Sci, Technical Svcs
23,187,489
23,593,203
34,278,076
38,463,408
45,110,196
36,310,677
Public Administration
18,052,898
16,067,380
17,388,331
18,520,714
19,370,515
14,858,844
Real Estate, Rental, Leasing
22,327,707
23,194,989
28,846,250
29,046,116
30,541,290
26,728,671
Retail Trade
672,655,442
667,413,427
684,657,717
734,665,452
799,193,903
753,483,183
Transportation and Warehousing
3,429,852
1,308,585
1,281,763
1,253,647
1,183,415
1,251,568
Unknown
812,357
1,618,555
1,633,108
1,032,221
1,249,062
860,373
Utilities
945,172
470,300
419,820
349,874
-115,973
1,349,464
Wholesale Trade
56,029,428
60,505,731
55,771,629
56,900,436
66.306,761
67,553,891
Total $
1,243,453,779 S
1,255,216,019 rh
1,365,317.769 5
1,470,521,763 S
1.546744,447
1,418,316.906
City direct sale tax rate 0.085%
City of Federal Way/94
ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY*
Last Ten Fiscal Years
Total City Percent
Fiscal Personal State Public Direct Increase
Year Real Propertv Property Service Property Total Tax Rate (Decrease)
1999 $
4,490,661,284 $
171,187,056 $
90,322,059 $
4,752,170,399 $
1.53
8.3%
2000
4,932,362,526
187,812,046
93,021,743
5,213,196,315
1.49
9.7%
2001
5,322,237,420
226,854,474
101,339,376
5,650,431,270
1.41
8.4%
2002
5,604,164,978
227,961,155
107,761,209
5,939,887,342
1.38
5.1%
2003
5,992,899,727
193,519,990
105,924,009
6,292,343,626
1.34
5.9%
2004
6,218,643,830
181,366,723
102,350,559
6,502,361,112
1.30
3.3%
2005
6,937,653,592
225,118,781
89,220,328
7,251,992,701
1.27
11.5%
2006
7,689,395,358
235,157,554
87,062,687
8,011,615,599
1.22
10.5%
2007
8,644,609,276
262,048,562
103,698,540
9,010,356,378
1.14
12.5%
2008
9,527,060,585
257,152,954
97,434,092
9,881,647,631
1.04
9.7%
* Real, personal, and state public service property has been assessed at 100% of the estimated value.
Source: King County Assessors Office.
Note: These figures includes all final tax adjustments, omits and senior citizen exempted property. This total assessed
value was reduced by senior citizen exemptions (no tax amounts) of $54,611,727 and prior year omits of
$1,716,000 yielding a regular levy value of $9,825,319,904. These assessed valuations are the basis for the
following years tax levy.
Citv of Federal Way/ 95
PROPERTY TAX RATES AND LEVIES, DIRECT AND OVERLAPPING GOVERNMENTS
For the Last Ten Fiscal Years
City
Direct
Rates Overlapping Rates
City of Federal Way Emergency
Fiscal Federal School King Washington Green River Port of Fire District Medical
Year Way District #210 County State Flood Zone Seattle #39 Library Services Total
TAX RATES PER $1,000 OF ASSESSED VALUATION
1999
1.53
4.56
1.77
3.36
0.05
0.24
1.50
0.59
0.29
13.89
2000
1.49
4.42
1.69
3.30
0.05
0.22
1.50
0.59
0.27
13.53
2001
1.41
4.44
1.55
3.15
0.05
0.19
1.45
0.56
0.25
13.04
2002
1.38
4.16
1.45
2.99
0.05
0,19
1.50
0.53
0.25
12.50
2003
1.34
4.28
1.35
2.90
0.05
0.26
1.50
0.54
0.24
12.46
2004
1.30
4.20
1.43
2.76
0.05
0.25
1.50
0.53
0.24
12.26
2005
1.27
4.30
1.38
2.69
0.05
0.25
1.50
0.53
0.23
12.21
2006
1.22
4.26
1.33
2.50
0.04
0.23
1.50
0.53
0.22
11.84
2007
1.14
4.19
1.29
2.33
0.04
0.23
1.50
0.50
0.21
11.42
2008
1.04
4.15
1.26
2.13
0.10
0.22
1.50
0.45
0.30
11.16
DETAIL OF TAX RATES FOR 2008
Basic
Rate 1.14 - 0.99 2.33 0.04 0.23 1.50 0.43 - 6.67
Voted
Rate - 4.19 0.30 - - - - 0.07 0.21 4.76
TAX LEVIES
1999 6,667,028 $ 28,468,974 $ 264,133,712 $ 500,994,725 $ 714,606 $ 35,647,362 $ 8,596,565 $ 51,173,675 $ 43,212,202 $ 939,608,849
2000
7,030,723
29,878,996
278,515,900
545,390,795
748,642
35,647,430
8,596,565
54,618,346
45,070,501
1,005,497,898
2001
7,305,894
32,859,841
290,369,516
589,103,721
786,904
35,646,678
9,906,591
59,634,503
46,122,721
1,071,736,369
2002
7,764,913
33,552,460
304,062,327
627,772,703
799,554
39,806,235
11,061,131
64,373,926
52,497,313
1,141,690,562
2003
7,941,900
36,639,878
302,100,182
648,995,138
849,988
58,003,521
11,774,814
72,580,170
54,088,854
1,192,974,445
2004
8,117,874
38,051,680
335,853,716
647,490,235
873,826
59,657,092
12,467,237
74,860,405
55,704,127
1,233,076,192
2005
8,248,919
40,744,820
342,395,871
666,827,056
901,356
62,779,505
13,062,586
78,374,467
57,476,670
1,270,811,250
2006
8,800,989
43,672,564
357,240,140
672,185,668
922,666
62,785,749
14,108,124
85,715,008
59,154,623
1,304,585,531
2007
9,098,370
47,315,366
383,039,569
691,250,598
956,482
68,841,070
19,882,637
88,486,309
61,300,276
1,370,170,677
2008
9,300,030
52,730,549
428,433,792
723,908,902
33,945,830
75,908,664
22,288,360
91,371,026
101,861,635
1,539,748,788
Source: King County Assessors Office and King County Department of Finance.
Citv of Federal Wav /96
PRINCIPAL TAXPAYERS
Current Year and Ten Years Ago
2008
1999
% of Total
% of Total
Assessed
Assessed
Assessed
Assessed
Taxpayer
Type of Business
Valuation
Rank
Valuation (A)
Valuation
Rank
Valuation (A)
Weyerhauser
Real Estate
$ 191,132,662
1
1.9530
$ 163,305,046
1
3.80%
Steadfast Commons LLC
Shopping Center
76,592,009
2
0.78%
51,503,700
2
1.09%
LBA Realty
Real Estate Management
66,919,700
3
0.68%
-
-
Puget Sound Energy-Elec/Gas
Electric/Gas
55,868,813
4
0.57%
48,359,168
3
1.03%
Harsch Investment Properties
Shopping Center
55,637,300
5
0.57%
13,328,000
8
0.28%
KNL Vision WA LLC (formerly BRE Properties)
Real Estate Management
28,112,000
6
0.29%
14,424,400
6
0.31%
Forest Cove LLC
Real Estate Management
27,812,000
7
0.28%
-
-
Fred Meyer
Retailer / Wholesaler
21,989,306
8
0.22%
-
IA Orchard Hotels Federal Way (formerly Apple Hospitality Five Inc.)
Hospitality
17,551,200
9
0.18%
-
Costco
Retailer / Wholesaler
16,001,428
10
0.16%
11,047,624
9
0.23%
Virginia Mason
Medical Services
15,110,535
11
0.15%
9,097,555
11
0.19%
ANS LLC
Retailer
13,059,200
12
0.13%
10,996,147
7
0.25%
Campus Business Parks LLC
Real Estate Invest/Holding
12,863,000
13
0.13%
-
-
Qwest Corporation Inc.
Communications/Telephone
12,142,034
14
0.12%
-
$ 610,791,187
6.22%
$ 322,061,640
7.18%
Source: City of Federal Way Business License & Community Development Department
Citv of Federal Wav /97
PROPERTY TAX LEVIES AND COLLECTIONS
For the Last Ten Fiscal Years
Ratio of
Total
Ratio of
Percent of Delinquent Total Tax
Outstanding
Delinquent
Fiscal Total Current Tax Current Tax Tax Total Tax Collections to
Delinquent
Taxes to
Year Tax Levy Collections Collected Collections Collections Total Tax Levy
Taxes
Total Tax Levy
1999
$ 6,667,028
$ 6,510,516
97.7%
$ 135,953
$ 6,646,469
99.7%
$ 197,059
3.0%
2000
7,030,723
6,858,636
97.6%
131,554
6,990,190
99.4%
249,607
3.6%
2001
7,305,894
7,107,918
97.3%
145,498
7,253,416
99.3%
302,374
4.1%
2002
7,700,412
7,471,822
97.0%
163,181
7,635,003
99.2%
342,855
4.5%
2003
7,912,598
7,740,741
97.8%
243,165
7,983,906
100.9%
269,323
3.4%
2004
8,119,460
7,945,659
97.9%
184,756
8,130,415
100.1%
225,762
2.8%
2005
8,248,919
8,082,340
98.0%
160,685
8,243,025
99.9%
230,839
2.8%
2006
8,933,515
8,584,565
96.1%
345,379
8,929,944
100.0%
231,743
2.6%
2007
9,068,740
8,868,895
97.8%
163,121
9,032,016
99.6%
270,171
3.0%
2008
9,265,234
9,037,601
97.5%
183,022
9,220,623
99.5%
314,782
3.4%
Source: Most of data has been derived from the "Annual Tax Receivable Summary" prepared by the King County Finance.
Citv of Federal Wav/98
Governmental Activities
RATIO OF OUTSTANDING DEBT BY TYPE
For the Last Ten Fiscal Years
Business Type Activities
Percentage
Fiscal
General Obligation
Certificates of
Public Works
Total Primary
of Personal
Year
Bonds
Participation
Trust Fund Loan
Government
Income (b)
Per Capita (b)
1999
$ 33,110,000
$ 981,898 $
7293,585
$ 35,385,483
0.081%
$ 460
2000
33,196,600
688,046
3,682,352
37,566,998
0.078%
451
2001
30,515,000
382,423
3,465,849
34,363,272
0.065%
410
2002
27,682,000
59,936
2,668,907
30,410,843
0.074%
363
2003
34,710,026
20,490
2,486,548
37,217,064
0.060%
446
2004
30,802,892
-
2,304,189
33,107,081
0.068%
386
2005
27,701,761
2,121,830
29,823,591
0.075%
348
2006
29,581,454
1,939,471
31,520,925
0.071%
364
2007
19,605,000
1,757,112
21,362,112
0.122%
244
2008
19,138,000
1,574,753
20,712,753
0.134%
235
Source: City of Federal Way Finance Division
Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements.
See Demographic Statistics schedule for personal income and population data. These ratios are calculated using
personal income for the prior calendar year.
(b) Per capita income information for the years 2001 to 2007 are based on 2000 U.S. Census report
since these information is available for individual cities only every ten years when the census is done.
2008 info for Federal Way is based on US Census Bureau, 2005-2007 American Community Survey Three-year Estimates.
City of Federal Way / 99
RATIO OF NET GENERAL OBLIGATION BONDED DEBT TO ASSESSED VALUE
AND NET GENERAL OBLIGATION BONDED DEBT PER CAPITA
For the Last Ten Fiscal Years
Ratio of Net
(B) (C) Bonded Debt Net Bonded
Fiscal (A) Assessed Gross Less Debt Net To Assessed Debt Per
Year Population Value Bonded Debt Service Fund Bonded Debt Value Capita
1999
76,910 4,717,399,199 35,385,483
6,052,008
29,333,475
0.0062
2000
83,259 5,178,119,377 37,566,992
6,172,926
31,394,066
0.0061
2001
83,890 5,620,635,267 34,363,272
6,808,657
27,554,615
0.0049
2002
83,850 5,912,362,755 30,410,844
5,579,129
24,831,715
0.0042
2003
83,500 6,292,343,626 20,712,753
2,599,653
18,113,100
0.0029
2004
83,590 6,418,941,601 33,113,539
2,880,857
30,232,682
0.0047
2005
85,800 7,251,992,701 29,823,591
2,886,785
26,936,806
0.0037
2006
86,530 8,011,615,599 31,520,925
6,001,415
25,519,510
0.0032
2007
87,390 9,010,356,378 21,362,112
2,147,282
19,214,830
0.0021
2008
88,040 9,825,319,904 20,712,753
1,882,041
18,830,712
0.0019
(A)
Sources: U.S. Census Bureau; State of Washington Office of Program Planning and
Fiscal Management,
Population Study Division; and the City of Federal Way Community Development Department.
(B)
The final certified Regular Levy assessed value of taxable property which was used by the King County
Assessor's Office for use
in calculating levy rates for the following years tax roll. The total assessed valuation
of $9,881,647,631
has been reduced by
senior citizen exemptions of $54,611,727 and prior year omits
of $1,716,000 to arrive at taxable assessed valuation.
(C)
Includes Public Works Trust Fund Loans issued in 1994, 1996,
1997, and 2000;
general obligation bonds issued in 2000, 2003 and 2006.
381.40
377.07
328.46
296.14
216.92
361.68
313.95
294.92
219.87
213.89
Citv of Federal Wav / I00
COMPUTATION OF DIRECT AND OVERLAPPING DEBT
December 31, 2008
Jurisdiction
King County
Port of Seattle
Federal Way School District #210
Library
Total Overlapping Debt
CITY OF FEDERAL WAY
Total Direct and Overlapping Debt
(A)
(B)
Gross General
Percentage
Obligation Debt
Applicable to
Outstanding
Federal Way
$ 1,048,574,000
2.64%
378,065,000
2.64%
171,986,060
69.99%
66,359,355
4.33%
1,664,984,415
20,712,753 (C)
$ 1,685,697,168
(A) Total general obligation bonds outstanding at the year end, exclusive of refunded bonds.
Source is King County Department of Finance.
Amount
Applicable to
Federal Wav
$ 27,707,190
9,989,871
120,370,062
2,870,143
160,937,265
100.00% 20,712,753
$ 181,650,018
(B) Determined by ratio of assessed valuation of property subject to taxation in overlapping unit to
valuation of property subject to taxation in reporting unit.
(C) Includes Public Works Trust Fund Loans issued in 1994, 1996, 1997, and 2000;
general obligation bonds issued in 2000, 2003 and 2006.
Source is City of Federal Way Finance
City of Federal Way / 101
COMPUTATION OF LDETATION OF INDEBTEDNESS
December 31, 2008
General Debt Capacity
Excess Levy
Excess Levy
(Limited) (Unlimited)
Open Space
Utility Total Debt
DESCRIPTION
Councilmanic Excess Levy
and Park
Purposes Capacity
Statutory debt limit:
(2008 AV=$9,825,319,904) (A)
1.50% AV @ 100%
$ 147,377,835 $ (147,377,835)
2.50%AV @ 100%
245,629,725
245,629,725
245,629,725 736,889,175
Add: Cash on hand for
debt redemption (B)
Less: Bonds and COPS outstanding
Remaining Debt Capacity
Total Remaining
"General" Capacity
7,522,895
7,522,895
(19,138,000) - (19,138,000)
135,762,730 $ 98,251,890 $ 245,629,725 $ 245,629,725 $ 725,274,070
14.620
(A) This figure represents the City's final total taxable assessed valuation (AV) for 2008 which was used to determine the 2009 property tax levy_
(B) Reflects ending fund balance in the Debt Service Fund and Utility Tax Fund as of December 31, 2008.
(C) Combined total for Councilmanic, Financing Lease, and Excess Levy capacities.
Total net debt
Total net debt
applicable to
applicable
Legal debt
the limit as a
Fiscal Year
Debt limit
to limit
margin
°/a of debt b1nit
1999 $
353,852,494
$ (28,124,453) $
325,728,041
7.95%
2000
421,547,646
(17,918,011)
403,629,635
4.25%
2001
353,852,494
(28,124,453)
325,728,041
7.95%
2002
443,427,207
(14,289,859)
429,137,348
3.22%
2003
469,715,580
(31,327,803)
438,387,777
6.67%
2004
471,925,773
(26,881,086)
445,044,687
5.70%
2005
487,677,084
(23,478,555)
464,198,529
4.81%
2006
543,899,454
(21,459,145)
522,440,309
4.32%
2007
600,871,170
(12,012,597)
588,858,573
3.91%
2008
736,889,175
(11,615,105)
725,274,070
1.58%
Source: City of Federal Way Finance
(A) King County Department of Finance
Note: Under state finance law, the city's outstanding general obligation debt should not exceed 15 percent of total assessor's property value.
By law, the general obligation debt subject to the limitation may be offset by amounts set aside for repaying general obligation bonds.
City of Federal Way / 102
RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL OBLIGATION
BONDED DEBT TO TOTAL GENERAL GOVERNMENTAL EXPENDITURES NET OF DEBT SERVICE EXPENSE
Ratio of
Debt Service
Total General
to General
Fiscal
Total Debt
Governmental
Governmental
Year
l'rmcipal
Interest'
Service
Expenditures
Expcnditurex
_
1999
$ 3,302,102 $
1,907,445 $
5,209,547
$ 34,343,976
15.2%
2000
2,498,853
1,729,858
4,228,711
34,217,716
12.4%
2001
2,700,478
1,797,614
4,498,092
34,761,823
12.9%
2002
2,834,084
1,651,197
4,485,281
36,819,618
12.2%
2003
14,159,881
1,703,165
15,863,046
50,550,741
31.4%
2004
3,080,677
1,796,791
4,877,468
40,610,863
12.0%
2005
3,100,546
1,531,364
4,631,910
40,108,790
11.5%
2006
2,219,676
1,418,843
3,638,519
41,086,555
8.9%
2007
9,976,455
1,153,300
11,129,755
56,186,140
19.8%
2008
467,000
841,542
1,308,542
51,278,215
2.6%
Source: City of Federal Way Finance
Note: * Interest excludes bond issuance and debt registration costs.
City of Federal Way / 103
DEMOGRAPHIC STATISTICS
Education
Personal Level in Years
Fiscal Income Per Capita Median of Formal School Unemployment
Year Population Sea-Tac-Bel [D] Income [Cl Age [Cl Schooling Enrollment (A) Rate (B)
1999
76,910
$ 108,144,686,000 $
28,494
33.4
13.0
22,407
3.0%
2000
83,259
115,202,918,000
29,210
32.5
13.0
22,289
3.1%
2001
83,890
117,000,769,000
22,451
32.5
13.0
21,916
5.2%
2002
83,850
119,343,435,000
22,451
32.5
13.0
22,194
6.6%
2003
83,500
121,624,885,000
22,451
32.5
13.0
22,265
6.7%
2004
83,590
133,156,997,000
22,451
32.5
13.0
22,395
6.5%
2005
85,800
136,859,162,000
22,451
32.5
13.0
22,383
5.0%
2006
86,530
149,858,462,000
22,451
32.5
13.0
22,184
4.3%
2007
87,390
162,934,794,000
26,137
37.2
13.0
21,775
3.9%
2008
88,040
N/A
27,730
37
13.0
21,622
4.7%
(A) Includes public school enrollment. Kindergarten is included though not State mandated.
(B) The unemployment rates for 1994 through 1998 reflect the annual average for the City of Federal Way, which
is based on census share methodology. The rates for the years 2002 and 2003 are the annual average for
Seattle -Tacoma -Bellevue. The 2005-2008 rates came from the US Department of Labor, Bureau of Labor Statistics
for Federal Way.
(C) Per capita income and Median age information for the years 2001 to 2006 are based on 2000 U.S.
Census report since this information is available for individual cities only every ten years when the census is done.
2007 info for Federal Way is based on 2006 US Census American Community Survey.
2008 info for Federal Way is based on 2005-2007 American Community Survey Three-year Estimates.
(D) Personal income information is for Seattle -Tacoma -Bellevue area provided by the Bureau of Economic Analysis, information
is not available for Federal Way. 2008 data for Personal Income was not available at the time of publication.
Sources: Data was obtained from U. S. Census Bureau
US Department of Labor, Bureau of Labor Statistics
US Department of Commerce, Bureau of Economic Analysis
School data was provided by the Federal Way School District.
City of Federal Way / 104
PRINCIPAL EMPLOYERS
Current Year and Ten Years Ago
2008
Number of
% of Total City
Taxpayer
Type of Business
Employees
Rank
Employment
Weyerhaeuser Company
Lumber Products
3,316
1
10.83%
World Vision Inc
Christian Relief Agency -Nonprofit
809
2
2.64%
St Francis Hospital
Medical Services
744
3
2.43%
Us Postal Service - Bulk Mail
Postal Service
655
4
2.14%
Wild Waves Theme Park
Amusement Center
639
5
2.09%
Wal-Mart Supercenter #3794
Retail
500
6
1.63%
City Of Federal Way
Government Services
440
7
1.44%
Costco Wholesale Corporation
Wholesale
272
8
0.89%
Virginia Mason Federal Way
Medical Services
235
9
0.77%
Wal-Mart Store #2571
Retail
225
10
0.74%
Sears Roebuck & Company
Retail
205
11
0.67%
Prudential Nw Realty Assoc. Inc.
Real Estate
200
12
0.65 %
Fred Meyer
Retail
190
13
0.62%
Home Depot
Retail
180
14
0.59%
Target Store #1947
Retail
178
15
0.58%
Source: City of Federal Way Business License
1999
Number of
% of Total City
Employees
Rank
Employment
1.275
2
5.00%
530
5
2.08%
608
4
2.38%
625
3
2.45%
-
-
0.00%
175
13
0.69%
249
9
0.98%
149
17
0.58%
112
26
0.44%
-
-
0.00%
200
11
0.78%
200
12
0.78%
250
8
0.98%
128
19
0.50%
130
18
0.51%
City of Federal Way / 105
PROPERTY VALUE AND CONSTRUCTION
Commercial Construction (A)
Value
Year
Permits
(In Thousands)
1999
180
$ 43,359
2000
250
38,554
2001
291
59,384
2002
393
59,075
2003
240
25,695
2004
335
64,522
2005
289
124,985
2006
332
78,194
2007
370
59,666
2008
256
45,810
Residential Construction (A)
Value
Permits
(In Thousands)
374
$ 26,229
185
11,462
166
7,914
318
38,176
290
37,775
289
82,658
591
111,504
455
70,862
388
55,321
258
17,554
Multi -Family Construction (A)
Value
Permits
(In Thousands)
5
$ 16,167
12
3,816
6
1,790
1
1
1,042
0
0
1
2,027
33
11,487
91
26,025
Sources & Notes:
(A) Federal Way Community Development Department. Commercial construction includes alterations.
Other building -related permits (plumbing, mechanical, fire alarm, etc.) numbering 2,370
and valued at $7,016,123 have been excluded.
City of Federal Way / 106
CAPITAL ASSETS BY FUNCTION
Last Ten Fiscal Years
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Transportation
Street (Center Line Miles)
224.48
224.48
224.48
224.48
224.48
224.48
230.84
233.84
233.84
234.72
Signals WSDOT-owned and maintained
-
-
4
4
4
4
4
5
5
5
Signals City -owned & County -maintained
55
58
65
67
70
71
71
74
74
76
Street lights City -owned and maintained
224
260
668
810
1,038
1,050
1,050
1,214
1,214
1,463
Street lights City -owned and PSE-maintained
-
-
-
-
644
644
644
644
644
644
Street lights PSE-owned and maintained
635
648
2,835
2.850
1,975
1,975
1,975
1,975
1,975
1,975
Culture & Recreation
Developed Parks - Acreage
471
471
493.5
493.5
500.25
500.25
522.9
522.9
524.49
524.49
Developed Parks - # of Parks
26
26
28
28
31
32
32
32
32
32
Undeveloped Parks - Acreage
355
355
352
352
356.24
35624
543.5
543.5
543.46
551.12
Undeveloped Parks - # of Parks
20
20
20
20
21
21
21
21
21
22
Tennis Courts City -Owned
5
5
9
9
9
9
11
11
11
11
Tennis Courts - Public
20
20
10
10
10
16
22
22
22
22
Swimming Pools City -Owned
0
0
0
0
1
1
1
1
1
1
Swimming Pools County -Owned
2
2
2
2
1
1
1
1
1
1
Trails - Miles
3
3
4
4
4
4
6
6
6
6
Trails -# of Trails
2
2
2
2
2
2
2
2
2
3
Community Centers/Recreation Facilities
2
2
2
2
2
2
2
2
2
1
Source: City of Federal Way Public Works Department
City of Federal Way / 107
OPERATING INDICATORS BY FUNCTION
Last Ten Fiscal Years
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
SECURITY OF PERSONS & PROPERTY
Police Information
Offenses:
Forcible Rape (including attempts)
53
43
49
34
50
50
55
64
48
30
Robbery
115
128
124
108
125
121
153
146
129
170
Criminal Homicide
4
7
4
4
2
7
1
3
10
Aggravated Assault
167
158
141
120
120
109
101
120
107
115
Vehicle Theft
808
849
1,179
1,206
1,204
1,118
1,573
1,199
939
816
Burglary (commercial & residential)
573
533
521
677
672
759
800
753
739
800
Larceny
3,097
3,072
3,516
3,347
3,145
3,257
3,786
3,230
3,159
2,933
Arson
38
36
17
29
14
23
25
26
18
13
Citations:
Traffic
10,890
13,340
12,767
13,439
18,411
13,219
11,402
11,931
14,043
19,339
ECONOMIC ENVIRONMENT
Building Related Permits & Values
Building Permits
573
447
463
712
531
624
880
788
791
605
Estimated Value (In Millions $)
$85.8
$53.8
$69.1
$94.8
$64.5
$105.4
$236.5
$151.1
$126.5
$89.4
Other Building Related Permits
1007
1546
1693
2024
1779
1958
2705
2550
2690
2370
Estimated Value (In Millions $)
$11.0
$1.5
$2.3
$2.5 $
2.4 $
2.5 $
3.9 $
4.2 $
5.5 $
7.0
Source: City of Federal Way Police Department and Community Development Department
City of Federal Way / 108
CITY GOVERNMENT EMPLOYEES FULL-TIME EQUIVALENT - HISTORY
Deoartment 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
City Manager
6.0
6.0
5.0
6.0
6.0
6.0
6.0
6.0
10.0
9.75
Administration
6.0
6.0
5.0
5.0
5.0
5.0
5.0
5.0
5.5
5.25
Economic Development
-
-
1.0
1.0
1.0
1.0
1.0
1.5
1.50
Government Affairs
-
-
-
-
-
-
-
3.0
3.00
Municipal Court
4.0
11.6
13.6
13.6
13.6
12.6
12.6
12.6
14.0
14.00
Management Services
26.0
26.0
24.0
24.5
25.0
25.0
22.0
22.0
25.1
23.85
Administration
2.0
2.0
1.5
1.5
1.5
1.5
1.5
1.5
1.5
-
Finance
9.0
8.0
7.0
7.0
8.0
8.0
7.0
7.0
8.0
8.00
City Clerk
2.5
2.5
2.5
2.5
2.0
2.0
1.5
1.5
1.5
1.75
Human Resources
4.0
5.0
4.0
4.5
4.5
4.5
3.5
3.5
3.5
3.50
Information System
8.5
8.5
9.0
9.0
9.0
9.0
8.5
8.5
10.6
10.60
Law
9.0
10.0
11.0
11.0
10.4
10.6
10.6
10.6
13.0
13.00
Civil Legal Services
4.3
4.1
5.1
5.1
5.8
5.8
5.8
5.8
5.8
5.80
Criminal Prosecution Services
4.7
6.0
6.0
6.0
4.6
4.8
4.8
4.8
7.2
7.20
Community Development
28.0
30.1
29.1
28.6
29.6
29.6
28.7
28.7
30.5
32.00
Administration
4.5
4.5
4.5
4.5
4.5
4.5
4.5
4.5
4.5
4.50
Planning
8.2
8.8
8.8
8.8
8.8
8.8
8.8
8.8
8.8
8.75
Building
11.8
13.3
12.3
11.3
12.3
12.3
12.3
12.3
13.3
14.25
Human Services
2.5
2.5
2.5
3.0
3.0
3.0
2.5
2.5
3.0
3.50
Neighborhood Development
1.0
1.0
1.0
1.0
1.0
1.0
0.7
0.7
1.0
1.00
Police
134.0
138.5
141.5
151.0
155.0
155.0
152.0
155.0
169.0
169.00
Administration
2.0
2.0
2.0
2.0
2.0
3.0
3.0
3.0
3.0
3.00
Support Services
52.0
56.5
58.5
59.0
55.0
54.0
53.0
55.0
61.0
61.00
Field Operations
80.0
80.0
81.0
90.0
98.0
98.0
96.0
97.0
105.0
105.00
Parks, Rec. & Cultural Svcs.
25.7
26.9
27.0
27.0
30.4
30.4
30.2
31.2
44.3
44.25
Administration
2.0
2.0
2.0
2.0
1.8
1.8
1.8
1.8
1.8
1.80
Planning
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.00
Kenneth Jones Pool
-
-
-
-
3.0
3.0
3.0
3.0
General Recreation
7.5
7.5
6.5
6.5
6.6
6.6
6.6
6.6
7.1
7.10
Community Center
-
-
-
-
-
-
12.4
12.35
Dumas Bay Centre
2.0
2.0
2.0
2.0
2.0
2.0
2.0
3.0
3.0
2.75
Knutzen Family Theatre
1.0
1.0
1.0
1.0
1.5
1.5
1.5
1.5
1.5
1.75
Parks Maintenance
11.8
13.0
14.0
14.0
14.0
14.0
13.8
13.8
17.0
17.00
Building
0.4
0.4
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.50
Public Works
36.5
37.5
38.5
38.5
41.5
41.5
41.5
42.5
43.9
44.50
Administration
2.5
2.5
2.1
2.1
2.1
2.1
2.1
1.9
1.9
1.85
Development Services
5.5
6.5
6.5
6.5
6.5
5.8
5.8
6.5
6.5
6.45
Traffic Services
4.0
4.0
4.1
4.1
5.1
5.1
5.1
5.1
6.1
6.10
Street Services
9.7
9.7
10.0
10.0
11.0
11.7
11.7
11.0
11.5
12.00
Emergency Management
-
-
-
-
-
-
-
1.0
1.0
1.00
Solid Waste & Recycling
1.6
1.6
1.6
1.6
1.6
1.6
1.6
1.7
1.7
1.70
Surface Water Management
13.3
13.3
14.3
L4.3
15.3
15.3
15.3
15.4
15.4
15.40
Total
269.2
286 5
289.6
300.1
311.4
310.7
303.6
308.6
349.7
350.35
Source: City of Federal Way Finance Division
City of Federal Way / 109
SALARIES AND SURETY BONDS OF PRINCIPAL OFFICIALS
DECEMBER 31, 2008
LEGISLATIVE BODY
POSITION EMPLOYEE
MAYOR
DEPUTY MAYOR
COUNCIL MEMBERS
POSITION
CITY MANAGER
DIRECTOR - CITY ATTORNEY
CITY CLERK
ASSISTANT CITY MANAGER / CFO
ASSISTANT CITY MANAGER / COO
COMMUNITY DEVELOPMENT DIRECTOR
ECONOMIC DEVELOPMENT DIRECTOR
FINANCE DIRECTOR
HUMAN RESOURCES DIRECTOR
INFORMATION TECHNOLOGY DIRECTOR
PARKS, RECREATION AND CULTURAL
SERVICES DIRECTOR
POLICE CHIEF
PUBLIC WORKS DIRECTOR
Source: City of Federal Way Finance Division
ANNUAL SALARY
JACK DOVEY
$17,850
ERIC FAISON
$13,650
JIM FERRELL
$13,650
LINDA KOCHMAR
$13,650
MICHAEL PARK
$13,650
JEANNE BURBIDGE
$13,650
DINI DUCLOS
$13,650
ADMINISTRATIVE STAFF
EMPLOYEE ANNUALSALARY
NEAL BEETS
$144,012
PAT RICHARDSON
$128,196
CAROL MCNEILLY
$62,652
BRYANT ENGE
$132,792
CARY ROE
$132,792
GREG FEWINS
$117,732
PATRICK DOHERTY
$111,768
THO KRAUS
$117,732
MARY MCDOUGAL
$117,732
MEHDI SADRI
$117,732
STEVE IKERD, INTERIM
$101,592
BRIAN WILSON $130,800
MARWAN SALLOUM $120,000
NOTE: In accordance with State of Washington legal statues, individual fidelity coverage of not less than $100,000
exists for the City Manager, Information Technology Director, Human Resources Director, and Finance Director.
City of Federal Way / 110
MISCELLANEOUS STATISTICAL INFORMATION
LOCAL TAXES ON BUSINESSES
Franchise Tax - Cable TV .........................
5.00%
Gambling Taxes:
Bingo/Raffles..................................
5.00%
Amusement/Games ...........................
2.00%
Punchboard/Pull Tabs : ........... :...........
5.00%
Cardrooms.....................................
20.00 %
Local Sales Tax (Collected by the State) ........
9.00%
FIRE AND EMERGENCY MEDICAL RESPONSE INFORMATION
Fire and Emergency Medical Response information reflects the greater Federal Way area, which is served by South King Fire & Rescue.
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Fire and Other Responses 2,009 2,278 1,920 3,055 3,117 2,896 3,210 865 639 1,083
Emergency Medical 6,870 7,193 7,240 7,422 8,042 8,263 8,636 11,164 11,350 12,058
PUBLIC EDUCATION
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
23
Elementary Schools
12,258
12,242
11,498
11,990
9,854
9,916
9,806
9,733
9,612
9,594
9
Middle Schools (incl. Public Academy)
4,994
5,013
5,331
5,509
5,458
5,476
5,271
5,183
5,139
5,234
5
High Schools
4,529
4,557
4,415
4,316
6,625
6,650
7,004
6,954
6,720
6,531
1
Internet Academy (K-12)
626
477
672
379
328
353
302
314
304
263
22,407
22,289
21,916
22,194
22,265
22,395
22,383
22,184
21,775
21,622
2,701
Staff members
TAXABLE
SALES (in millions)
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Retail Sales
$1,137.0
$1,212.1
$1,220
$1,298
$1,237
$1,239
$1,331
$1,471
$1,540
$1,458
Real Estate Sales
$487.6
$429.9
$400
$503
$570
$616
$939
$988
$963
$536