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1997 Annual Comprehensive Financial Report (97-005)City of Federal Way, Washington COMPREHENSIVE ANNUAL FINANCIAL REPORT Year Ended December 31, 1997 Prepared by Management Services Department COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended December 31, 1997 Table of Contents Statement INTRODUCTORY SECTION Reference Rly Letter of Transmittal ............................ .......... City Officials and Administrative Officers ................. . ............ . .......... 1 City Functional Organization Chart .............................................. 2 GFOA Certificate of Achievement .............................................. 3 FINANCIAL SECTION Auditor's Opinion ........... ........................................... Combined Financial Statements - Overview ("Liftable" General Purpose Finance Statements) ...................................... 7 Combined Balance Sheet - All Fund Types and Account Groups ...................... 1 8 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - AII Governmental Fund Types and Expendable Trust Funds ......................... 2 11 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General, Special Revenue and Debt Service Fund Types 3 12 Combined Statement of Revenues, Expenses, and Changes in Fund Equity - AIIProprietary Fund Types ................................................... 4 14 Combined Statement of Cash Flows - All Proprietary Fund Types ..................... 5 15 Notes to the Financial Statements .............................................. 17 Combinina. Individual Fund and Account Grou Statements and Schedules General Fund............................................................. 45 Comparative Balance Sheet ................................................ 46 Comparative Statement of Revenues, Expenditures, and Changes in Fund Balance 47 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual ....................................................... 48 Schedule of Expenditures Compared to Budget ................................. 49 Special Revenue Funds ..................................................... 55 Combining Balance Sheet .................................................. 56 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 60 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual ....................................................... 64 Debt Service Fund ......................................................... 71 Comparative Balance Sheet ................................................ 72 Comparative Statement of Revenues, Expenditures, and Changes in Fund Balance ..... 73 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual ........................................... ....... .. 74 Capital Project Funds ...................................................... 75 Combining Balance Sheet .................................................. 76 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance ...... 77 Table of Contents (Cont'd) Combining, Individual Fund and Account Group Statements and Schedules (continued) Table Page Enterprise Fund...................................................... 79 Comparative Balance Sheet ................................................ 80 Comparative Statement of Revenues, Expenses and Changes in Fund Equity .. ..... 81 Comparative Statement of Cash Flows ................................... 82 Internal Service Funds .................................................. 83 Combining Balance Sheet ................................................. 84 Combining Statement of Revenues, Expenses, and Changes in Fund Equity .......... 85 Combining Statement of Cash Flows ...................................... , ... 86 Trust and Agency (Fiduciary) Funds ........................................... 87 Combining Balance Sheet .................................................... 88 Federal Way Retirement System Expendable Trust Fund Comparative Statement of Revenues, Expenditures, and Changes in Fund Balance ....... 89 General Fixed Assets Account Group ......................................... 91 Schedule of General Fixed Assets - By Source .................................. 92 Schedule of General Fixed Assets - By Function and Activity ....................... 93 Schedule of Changes in General Fixed Assets - By Function and Activity ............. 94 STATISTICAL SECTION General Governmental Expenditures and Other Uses by Function - General, Special Revenue and Debt Service Funds .............................. 1 96 Schedule of Major Revenues and Other Financing Sources by Source - General, Special Revenue and Debt Service Funds .............................. 2 97 Tax Revenue by Source - General, Special Revenue and Debt Service Funds ........... 3 98 Property Tax Levies and Collections ............................................ 4 99 Assessed and Estimated Actual Value of Taxable Property .......................... 5 100 Property Tax Levies - Direct and Overlapping Governments .......................... 6 101 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt per Capita 7 102 Computation of Limitation of Indebtedness ....................................... 8 103 Computation of Direct and Overlapping Debt ..................................... 9 104 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Governmental Expenditures .......................................... 10 105 Demographic Statistics...................................................... 11 106 Property Value, Construction, and Bank Deposits .................................. 12 107 Principal Taxpayers......................................................... 13 108 Schedule of Insurance in Force ................................................ 14 109 Salaries and Surety Bonds of Principal Officials ................................... 15 111 Miscellaneous Statistical Data ................................................. 16 112 CITY OF 0 FIN", June 19, 1998 People of the City of Federal Way Honorable Mayor and City Council THE COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF FEDERAL WAY The comprehensive annual financial report of the City of Federal Way for the year ended December 31, 1997 is hereby submitted. Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data are accurate in all material respects and are reported in a manner designed to present fairly the financial position and results of operations of the various funds and account groups of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. FINANCIAL REPORTING STANDARDS AND FORMAT The comprehensive annual financial report is presented in three sections: introductory, financial, and statistical. The introductory section includes this transmittal letter, the City's organizational chart and a list of principal officials. The financial section includes the general purpose financial statements and the combining and individual fund and account group financial statements and schedules, as well as the State Auditor's report on the general purpose financial statements. The statistical section includes selected financial and demographic information, generally presented on a multi -year basis. This report includes all funds and account groups of the City. There were no other governmental organizations and activities for which the City was financially accountable during the reporting period. As an aid to the reader, the major sections of this report have been segregated by divider pages which provide introductions to the sections. In the same manner, fund categories are segregated within the Combining/Individual Financial Statements section of this report. The fund types are presented in the combined general purpose statements in the same sequence in which they appear in the combining section. REPORTING ENTITY The City is a noncharter Optional Code City with a Council -Manager form of government. The City Council consists of seven councilmembers, all of whom are elected at large by the 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. In response to direction given by the City Council, the number of staff members has been kept low and many services are contracted through private entities. The services provided include: police protection, construction and maintenance of streets, building inspection, jail services, planning and zoning, park maintenance, recreation programs, public health services, surface water management, municipal court services, and general administration, including finance. Services for a land use hearing examiner are contracted. During 1995, the City Council directed staff to form it's own Police Department, effective November 16, 1996. This decision lead to a reorganization in order to keep the number of departments to a minimal level. The City continues to have seven major departments consisting of City Manager; Law; Management Services; Parks, Recreation, and Cultural Services (PARCS); Public Safety; Public Works; and Community Development. Fire protection and emergency medical services are provided by Fire District No. 39. The Lakehaven Utility District delivers water and sewer services. Metro provides public transportation services. Public housing services are the primary focus of the King County Housing Authority. The King County Library System engages City residents through its library and reference services. School District No. 210 offers educational programs for kindergarten through high school students, in addition to vocational training. The City of Federal Way incorporated on February 28, 1990. It is the seventh largest city in Washington State with a population of 75,960 as of April 1, 1997. Federal Way is located on a plateau adjacent to the Puget Sound in King County, eight miles north of downtown Tacoma and 25 miles south of downtown Seattle. The City occupies approximately 19 square miles, and is served by Interstate 5 and state highways 99 and 509. ECONOMIC TRENDS CITY OF FEDERAL WAY Population Trends - 1970 to 2000 80,000 - 76,820 78 620 75,320 73,Si30 74,413 75,521 76,86>7 ` MAN72,asa 70,000 - 6704 60,000 - ti 50,000 - ,1 40,000 - c - 34,788 a 1.29,124 30,000 - _ I � I •�' .1 � � 11 i�ty I. y 20,000 - 10,000 - r"". 0- 1970 1980 1990 1991 1992 1993 1994 1995 1996 1997 1998 2000 The population in the area now known as the City of Federal Way has grown at a moderate pace over the past few years, with the population as of April 1, 1998 estimated to be 76,820. The 1997 population figure of 75,960 is an increase of .6% from the 1996 figure of 75,521, provided by the State Office of Financial Management. Extending similar assumptions, the City is projected to reach a population base of 78,520 by the year 2000. iv In 1997, there were 31,269 housing units in Federal Way. Of these units, 56% were single family and 44% were multi -family units. These statistics for housing units show an increase of approximately 1.25% over 1996, with projections for the year 2000 reaching the 33,000 level. CITY OF FEDERAL WAY Housing Units - 1970 to 2000 35,000 33 000 30,264 3a 471 30,b29 30,883 91 280 30,000 29 406 29 892 27906 25,000 — 20,000 15,000 - - — 10,000 7773 - 1- L 1970 1980 1990 1991 1992 1993 1994 1995 1996 1997 2000 The community is residential and commercial, with the populace employed locally and in neighboring cities such as SeaTac, Kent, Tacoma, Bellevue, and Seattle. Employment in Federal Way is highly concentrated (83%) in the retail and service sectors which respond primarily to the needs of the local market area population. Employment was estimated at 10,349 in 1988, 21,884 in 1991, and is projected to grow to 27,859 by the year 2000 - a 266% increase over 12 years. Major employers are the SeaTac Mall, Weyerhaeuser, the School District, St. Francis Community Hospital, World Vision, U.S. Postal Bulk Mail Center and Virginia Mason Clinic. The City's 1997 taxable retail sales were $978.9 million, a 2.3% increase over the 1996 sales of $956.8 million. The retail sector of the local economy is anchored by the SeaTac regional mall, Costco, Fred Meyer, Eagle Hardware, and many other businesses adjacent to the City center. In addition, during 1996 the Pavillon Centre, a 200,000 square foot mall, was developed, with major stores including Pet Smart, Barnes & Noble and QFC. According to a listing of businesses registered with the City of Federal Way and sorted by Standard Industrial Classification, the business economy appears to be configured as follows: retail trade 64.9%; services 9.3%; contracting 6.3%; wholesale trade 7.5%; transportation and public utilities 4.0%; manufacturing 5.0% and other 3.0%. In 1997, new improvements to real estate totaled $38.0 million or approximately 1 % of the City's assessed valuation. The total assessed value of taxable property in Federal Way was $4.19 billion which is slightly higher than the 1996 assessed valuation of $3.96 billion. Real estate sales were approximately $375 million in 1997 as compared to $305 million in 1996. A total of 2,779 building related permits were issued in 1997 with a total valuation of $71.8 million. By mid-1997, the Puget Sound was the fastest growing large metropolitan area in the nation, with employment rising in the 5 to 6 percent range. The aerospace rebound was dramatic as Boeing tried to ramp up production to 40 planes per month by year end, with a target of 43 planes per month by the second quarter of 1998. New orders continue to exceed production rates with orders to the end of October totaling 480 aircraft. The total unfilled orders at the end of October, 1997 was 1,736 aircraft. The Boeing -McDonnell Douglas merger united the world's premier commercial aircraft builder with a huge defense contractor and a distant third in the world's airliner industry. Washington's decade and one-half expansion has been reinvigorated by the aerospace boom. This occurred in an environment already marked by growth in other sectors such as software, computer and electronic equipment, and telecommunications. The Puget Sound Region is the home to three major companies that fuel the economy: Boeing, Intel Corporation and Microsoft Corporation. As the national ecomony decelerates, and Boeing pares down employment, the regional economy will slow. In addition, the Southeast Asia crisis, an antitrust suit against Microsoft and the overheated stock market are all areas to watch closely and can impact on our economy. Employment growth has already dropped from an annualized rate of 6.0 percent in the last quarter of 1997 to 3.9 percent in the first quarter of 1998. According to forecast, employment is expected to increase 4.2 percent in 1998 and 2.4 percent in 1999, down from 5.1 percent in 1997. Although the regional economy is projected to slow, the numbers for 1999 will continue to look good. With a 2.4 percent employment growth rate, the region will still be expanding nearly twice as fast as the nation. Per capita income will exceed the national average by 18.8 percent, even greater than the current margin. SIGNIFICANT EVENTS AND ACCOMPLISHMENTS Since the City officially incorporated on February 28, 1990, 1997 was the seventh full year of service to the community. Specific events or accomplishments in this year include the following: • Continued development of effective interactive community policing model for the City's newly formed Police Department, including the installation of mobile data terminals in patrol cars, installation connection to WACIC and Valley Communication Dispatch computers • Implemented the City's Domestic Violence Program, including prosecution, victim assistance and advocacy • Implemented a neighborhood speed watch program that was recognized by the State Traffic Safety Commission • Continued reduction of jail costs due to the implementation of additional arraignment calendars Completed a $16.15 million bond for various projects including the Civic Theatre, Celebration Park Improvements, Police Facility, Downtown Revitalization project and received an upgraded bond rating from Fitch Investors Service • Substantial completion of four transportation bond projects that were the result of the 1995/1996 transportation bond issue • Completed five code amendments that covered the areas of regulatory reform, downtown parking, essential public facilities, telecommunications, affordable housing, nonconforming code and subdivision code • Awarded the Celebration Park Improvement bid and received a $162,000 grant for Celebration Park Improvements • Continued the implementation of neighborhood development program, including Dumas Bay adopt-a- park/beach project and neighborhood matching fund program vi • Implemented a first time home buyer program • Managed downtown image/revitalization process resulting in streetscape improvements, an economic development program, sign code mitigation, economic development and regional transit authority coordination • Obtained grant funding totaling $6.3 million for five transportation related projects • Completed implementation of multi -family recycling program • Renovated Klahanee Lake Community/Senior Center • Successfully defended the City's adult entertainment ordinance in Superior Court OUTLOOK FOR THE FUTURE Long Term The blueprint for Federal Way's future is found in its adopted Comprehensive Plan. Key economic development goals in the plan include: Housing and Population • Preserve the predominantly single-family character and appearance of the community by establishing population densities consistent with neighborhood and citywide objectives. • Create a diverse population by encouraging residential development with a mix of housing types at affordable costs, particularly for senior citizens and lower income families. • Assure the high quality of new and existing housing by consistent enforcement of reasonable housing and building standards that do not unnecessarily increase housing costs. • Maintain safe, economically stable and attractive neighborhoods by providing a high level of public services, including utilities, streets, sidewalks, parks and recreation facilities. • Produce new housing that is planned and developed to protect natural systems and meet community design and landscaping standards. Commercial/Industrial • Provide employment opportunities within the community by attracting new industries and professional offices. • Establish well-defined and limited neighborhood business centers to provide convenience services to adjacent neighborhoods without adversely impacting neighborhood quality. • Control strip development on major arterials while maintaining existing vital businesses. • Define and implement a development and design concept for the City Center that establishes a vibrant focal point and identity for the community. vii Build a transportation system that adequately serves commercial areas, encourages use of alternative modes of transportation for work trips, and allows commercial and industrial growth without creating additional congestion. Establish design standards for commercial areas that are closely related to their functions but encourage attractive appearance and protection of the environment. Protect industrial areas from encroachment by other uses and upgrade the quality of existing industrial areas. Open Space Identify and preserve open spaces to maintain the natural beauty of the community and to provide views, protection of sensitive areas, recreation and other benefits. Protect as open space natural systems and natural features recognized for their sensitivity to urban development when development occurs. Transportation Develop a transportation system that provides mobility, and emphasizes safety and aesthetics as well as capacity concerns. Plan and design transportation improvements in a regional context that integrate land use and circulation systems. Natural Environment Preserve the natural character of sensitive areas, habitats, wetlands, stream corridors, lakes and aquifer recharge areas in order to protect public health, safety and welfare, and maintain the beauty of the community. Protect the quality of surface and groundwater, and maintain an adequate public water supply. Short Term The City's immediate objectives continue to be: 1) maintain its relative fiscal strength; 2) facilitate the maturation of its municipal corporation; 3) make City government easier to access, understand, and participate in; 4) realize the community's values and preferences; and 5) improve the quality of life for its people as well as the climate for business activities. The 1997-1998 biennial budget was founded around four key functions that are basic to municipal government and specifically the City of Federal Way, which are: • Protection of public investment, such as infrastructure, rights of way, buildings, park lands, etc.; • Enforcement of laws, codes and ordinances so as to ensure public safety and maintain an orderly environment in which people can live, work and play; • Inspection of buildings, structures, areas of grounds to ensure conformance to the laws enacted by the legislative body or dictated by higher authority, which laws promote safety and the common good; • Mandates which are new requirements levied on municipalities by higher levels of government often without accompanying funding. These four functions form' the structure of the delivery of basic municipal service which incorporated the following: viii • The inclusion of a domestic violence enforcement program & implementation of neighborhood development program • Continue implementation 1997 bond projects, which includes Celebration Park improvements, Knutsen Family Theatre Construction and operation, Downtown Revitalization program, Street Overlay funding increase, and a Policy Facility • Continue Implementation of the 1995/96 bond issue projects • Continued operation of the City's newly developed police department and contain contracting costs, including jail and court • Continue to develop sports fields and to include provisions for the ongoing maintenance and operations of those fields • Implementation of the comprehensive plan, the economic development plan and the affordable housing policy FINANCIAL INFORMATION The City of Federal Way is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft, or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: 1) the cost of a control should not exceed the benefits likely to be derived, and 2) the evaluation of relative costs and benefits of the control system requires estimates and judgments by management. Single Audit As a recipient of federal, state and county financial assistance, the City is responsible for maintaining an adequate internal control structure to ensure compliance with applicable laws and regulations related to those programs. This internal control structure is subject to periodic evaluation by management and the State Auditor's Office. As part of the City's single audit, tests are made to determine the adequacy of the internal control structure, including that portion related to federal financial assistance programs, as well as to determine that the government has complied with applicable laws and regulations. The results of the City's single audit for the year ended December 31, 1997 indicated that there were no material weaknesses in the internal control structure. Budgetary Controls The City maintains budgetary controls in accordance with the Revised Code of Washington (RCW 35A.33). The objectives of these budgetary controls is 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, Capital Projects, Enterprise and Internal Service funds are management budgets only and therefore these budgets are not represented in the CAFR. The ix City also maintains an encumbrance accounting system as one technique of accomplishing budgetary control. All appropriations lapse at year end. As demonstrated by the statements and schedules included in the financial section of this report, the City continues to meet its responsibility for sound financial management. Basis of Accounting All governmental funds, the expendable trust fund and agency 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, non -expendable trust funds and pension trust 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. GENERAL GOVERNMENT FUNCTIONS Overview The general governmental analysis will include the General Fund, all Special Revenue Funds and the Debt Service Fund. The City added one special revenue fund during 1997, the Utility Tax Fund. This fund was established to account for the utility taxes implemented to pay debt service on the 1995, 1996 and 1997 bond issues Overall financial performance in the General Fund, Special Revenue Funds and Debt Service Fund was very positive in 1997 vs 1996 FINANCIAL PERFORMANCE General, Special Revenue and Debt Service Funds 50.0 ao.s 40.0 �I/y 32.3 32.2 y 30.0 E2 14.4 20.0 i� F 11.2 _ 11.1 11.2 10.0 0.0 Revenues Ending Fund Balance Beginning Fund Balance Expenditures 1997 0 1996 1997. Revenues and other sources of funds totaled $40.9 million as compared to $32.3 million for 1996. This results in an increase of $8.6 million or 21%. Expenditures and other uses of funds totaled $37.7 million as compared to $32.2 million for 1996, an increase of $5.5 million or 17%. Aggregate fund balances for these funds ended the year totaling $14.4 million, which is approximately a $3.2 million increase. However, excluding the interfund transfers, the revenues increased by $5.3 million or 17% and expenditures decrease by $.2 million or .7%. The revenue increase is largely attributable to the increase in utility taxes of approximately $3 million. 1997 vs 1996 FINANCIAL PERFORMANCE General Fund 22.5 25 21.1 zz.7 20 2f.3 N 015— =10- O 2.3 R.2 � 5 ' 2.e U .. Revenues Ending Fund Balance Bu4lnnlnp Fund Balance Expenditures 1997 1996 Revenue Summary The General Fund ended 1997 with a $4,281,088 fund balance. This was a $1,468,649 increase over the fund balance at the end of 1996, which represents a 52.2% increase. General Fund revenues increased by $1,226,054 or approximately 5.7% over 1996. The expenditures decreased by $1,655,380. This increase is approximately 7.3% and is attributable mainly to the additional expenditures associated with the start-up and transition costs of our new Police Department during 1996. The following charts present a summary of General, Special Revenue, and Debt Service Fund revenues, including other financing sources and residual equity transfers, for the 1996 calendar year. GENERAL, SPECIAL REVENUE, AND DEBT SERVICE FUNDS Revenues and Other Financing Sources Revenues 1997 1996 Change Amount Percent Taxes $ 21.861.900 $ 18,080,794 $ 3,781,106 20.9% Licenses/Permits 1.112.135 917.219 194,916 21.3% Intergovernmental 6,609,989 5,667,480 942.509 16.6% Services/Charges 4.235,379 4,195,678 39,701 .9% Fines/Forfeitures 576.054 520,670 55,384 10.6% Interest Earnings 904.814 786,856 117,958 15.0% Miscellaneous 246,516 142,540 103,976 72.9% Other inancing Sources 5.333.403 2,029,230 3,304,173 162.8% Total Revenues $ 40,880 190 $ 32 340,467 $ 8,539,723 26.4% The most significant dollar increase was in taxes and other financing sources in the amounts of $3,781,106 and $3,304,173 respectively. These increases are due to the additional utility taxes implemented for the repayment of debt service on the 1997 bond issue. All utility taxes are receipted into a special revenue fund, and are transferred to the debt service fund as needed, causing the increase in operating transfers. The increase of $942,509 in intergovernmental revenues is due to a $1.5 million COPS Universal Hiring program grant received over a three year period, which funds the hiring of an additional 20 police officers. xi 1997 •REVENUES AND OTHER SOURCES Gan®ra/, Spac/a/ Ravanua and Oabt S49rvic.9 Funds Expenditure Summary The following charts present a summary of the General, Special Revenue, and Debt Service Fund expenditures, other financing uses and residual equity transfers out for the year ending December 31, 1997. GENERAL, SPECIAL REVENUE, AND DEBT SERVICE FUNDS Expenditures By Function Function 1996 Change Amount Percent General Government $ 3,415,715 $ 3,831,238 $ (415,523) -10.8% Security of Persons & Property 10,282,388 10,269,193 13,195 .1% Physical Environment 528,784 304,196 224,588 73.8% Transportation 6,141,223 5,309,948 831,275 15.7% Economic Environment 2,258,033 2,298,040 (40,007) -1.7% Health 457,211 488,604 (31,393) -6.4% Culture & Recreation 2,521,085 2,944,815 (423,730) -21.8% Capital.Outlay 319,120 1,677,848 (1,358,728) -81.0% Debt Service -Principal 1,222,090 432,280 789,810 182.7% Debt Service -Interest 1,760,696 1,284,768 475,928 37.0% Other Financing Uses 8,695,717 3,161,572 5,534,145 175.0% Residual Equity Transfer Out 158,620 199,156 (40,536) -20.4% Total Expenditures $ 37 760.682 $ 31201,658 658 5,559,024 1.7.3%n XII GENERAL, SPECIAL REVENUE, AND DEBT SERVICE FUNDS Ex enditures By Ot sect DG ecr 1997 1996 Change Amount Percent Personal Services $ 13,983,091 $ 9,432,926 $ 4,550,165 48.2% Supplies 555,903 840,821 (284,918) -33.9% Other Services and Charges 4,139,964 4,146,967 7,003 .2% Intergovernmental 11,713,177 11,594,778 118,399 1.0% Capital Outlay 1,951,355 2,522,788 (571,433) -22.7% Debt Service Principal 1,222,090 432,280 789,810 182.7% Debt Service Interest 1,760,695 1,284,768 475,927 37.0% Interfund Services 2,434,407 1,946,330 488,077 25.1% Total Expenditures $ 37,760,682 $ 32,201,658 $ 5,559,024 17.3010 The increase in interfund transfers is related to the transfer of utility taxes from a special revenue fund to the debt service fund to pay for the debt service on the 1995-1997 bond issues. In addition, the Surface Water Management Fund transferred over $2 million during 1997 to the Surface Water Management Capital Project Fund for various capital projects. The decrease of 81 % in capital outlay is due to start-up costs during the implementation of our new Police Department in 1996. Debt Service Principal increased in 1997 due to the 1995 and 1996 bond issues not requiring principal payment until 1997. Similarly, the debt service interest increased for the 1996 bond issue that did not pay interest for a full year until 1997. The increase in transportation is the result of allocating an additional $800,000 during 1997 to the Arterial Street overlay program. Physical Environment increased due to additional grant funding received in 1997 for the City's Solid Waste and Recycling program. The large increase in salaries and benefits is the result of the City's Police department having its first full year of service in 1997. 1997 EXPENE)ITURES BY FUNCTION General, Spacial Revenue and Debt Service Funds 1997 EXPENE:)ITUF,ES BY OBJECT Ganarai, Spacial Ravanua and Oabt Sarvica Funds Pe al Sarvlcae 37.0 Suppllros 7.0'M. Cap[trf Putlny �,096 *l;nf" arvlaalC ftargoebe Servlca9.0% d 9arvlaes �.045 Intergovern-t 39.0 % Fund Balance Overall fund balances in the General, Special Revenue, and Debt Service Funds totaled $14.4 million in 1997 compared to $11.2 million in 1996, an increase of 27.8%. This increase is, in part attributable to the receipt of a COPS Universal Hiring program grant, and other police department grants, that will be used to fund police personnel in future years. In addition, the debt service fund balance increased by approximately $2.1 million due to the addition of the bond issues in 1995, 1996 and 1997, which are being prefunded as funding becomes available. GENERAL, SPECIAL REVENUE, AND DEBT SERVICE FUNDS Analysis of Fund Balance Change Amount Percent Fund Balance 1997 1996 General $ 4,281,088 $ 2,812,439 $ 1,468,649 52.2% Special Revenue Street 101,137 157,916 (56,779) -36.0% Arterial Street 551,665 432,019 119,646 27.7% Utility Tax 506,872 --- 506,872 100.0% Solid Waste/Recycling 286,281 309,239 (22,958) -7.4% Special Contracts/Studies 132,125 124,257 7,868 6.3% Snow and Ice Removal 128,837 80,066 48,771 60.9% Two Percent for the Arts 8,792 8,792 --- n/a% Community Development Block Grant --- -- 0.0% Paths and Trails Reserve 3,544 5,476 (1,932) -35.3% Surface Water Management 1,071,023 1,630,097 (559,074) -34.3% Donations -- 2,046 (2,046) -100.0% Impact Fee 318,786 833,858 (515,072) -61.8% Strategic Reserve 1,731,588 1,721,781 9,807 .6% Ai ort Strategic Reserve 300,000 300.000 --- 0.0% Subtotal Special Revenue 5,140,650 5,605,547 (464,897) -8.3% Debt Service 4,965,893 2,850,138 2,115,755 74.2% Total Fund Balance $ 14,387,631 $ 11,268,124 $ 3,119,507 27.8% Xlv PROPRIETARY OPERATIONS In 1997, the City utilized six internal service funds to account for activities related to risk management, management information systems, mail and duplication, fleet and equipment, buildings and furnishings, and payroll benefits. Operation and depreciation related replacement charges to use s are based on office staff counts, equipment used, and specific depreciation schedules. Residual equity transfers are recorded from other City funds to finance first time asset acquisition. The City established an enterprise fund during 1993 to account for the acquisition and operations of the Dumas Bay Centre, a retreat facility, which was purchased with King County open space and conservation futures funding. This Fund required a subsidy from the General Fund in 1997, since it was not fully operational as an Enterprise Fund. This subsidy is recorded as an operating transfer. In addition, the bond proceeds and other funding for the Civic Theatre are accounted for in this fund, which increased the operating transfers needed in 1997. PENSION TRUST FUND OPERATIONS The City of Federal Way exercised its option as a newly incorporated municipality to create a substitute retirement plan in lieu of participating in the Social Security program. Under the City's defined contribution retirement plan, the City matches employee contributions equivalent to 6.2% of gross taxable earnings up to Social Security earning limits. As a part of its matching contribution, the City pays insurance premiums for survivors, accidental death and dismemberment, disability, and lump sum death benefits. The remaining portion of the City's contribution (approximately 5.2% of gross taxable earnings) constitutes cash payments to the expendable trust fund. The plan design uses the institutional method for investments. During 1994, the City's Federal Way Retirement System Fund joined the Municipal Employees Benefit Trust Fund (MEBT) for purposes of investing the fund assets. The MEBT consists of the cities of Bellevue, Redmond, Kirkland, Edmonds, Mill Creek, Woodinville, and Federal Way. The Trust Fund assets are invested through Wells Fargo Bank, Trustee under the direction of the MEBT Trust and Investment Advisory Committee. DEBT ADMINISTRATION During 1997 the City issued $16,150,000 in limited tax general obligation bonds for the funding of various community investment projects, including sports fields and other improvements at Celebration Park, Civic Theatre and related improvements at Dumas Bay Center, a public safety facility and a community revitalization project that includes street lights, beautification and safety improvements in the downtown area.. A utility tax of 3.63% has been established to pay the debt service on these bonds. The City's outstanding debt is approximately 1 % of its taxable assessed valuation. As of December 31, 1997, the City's remaining debt capacities are summarized below: Use • General Government Use Non -voted: Voted: Subtotal General • Park and Open Space Use • Voted: • Utility System Use • Voted: Total Capacity Capacity $ 27,625,531 41,774,402 $ 69,399,933 104,436,006 104,436,006 $278.271.946 xv Non -voted (councilmanic) general obligation bonds and certificates of participation are reductions in the general government debt capacity. To the extent that such debt is issued, the City's voted debt capacity is reduced. CASH MANAGEMENT The City began investing outside the State Investment Pool in November 1994. Based on an adopted investment policy and oversight from an investment committee, 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, 1997 consisted of U.S. Government treasury and agency securities, prime bankers acceptances, and investments in the Washington State Investment Pool, with maturities ranging from one day to two years. Safeguarding assets is of primary concern for the City. Pursuant to the Governmental Accounting Standards Board (GASB) statement #3, the City provides detailed disclosure regarding the risk associated with deposits and investments held by the City. GASB statement #3 established a categorization of investments and deposits based on risk. Category 1 includes investments that are either insured, registered, or held by the City or its agent in the City of Federal Way's name; category 2 includes uninsured and unregistered investments held by the counterparty's trust department or agent in the City's name; and category 3 includes uninsured and unregistered investments held in the counterparty's trust department or agent, but not in the City's name. This categorization is included in note 4 of the general purpose financial statements. In order to assure the highest degree of safety on all City investments, a safekeeping agreement was established for all securities purchased by the City prior to implementing our in-house investment program during 1994. The Washington State Treasurer manages a State Investment Pool for use by any city, county, town, municipal corporation, or special taxing district within the state. Municipalities determine the amount and length of investment in the pool based on individual cash flow needs. Interest is earned on the pool's actual experience for the month, less an administrative fee equivalent to five basis points (.05%). At December 31, 1997, the City had $21,250,165 invested in the State Investment Pool. In 1997, the average monthly earnings rate for the entire portfolio was approximately 5.96% as compared to the average monthly earnings rate for the State Investment Pool of 5.57%. 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. As of February 1, 1994, the City elected to self -insure its dental program as well as unemployment compensation. The City utilized the payroll benefits internal service fund to account for the dental self- insurance program. Subsequently, on February 1, 1995, the City elected to return to an insured dental program through Washington Dental Service. Therefore, as of this date, the City is no longer self -insuring its dental plan. 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 1997, 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. xvi 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-128. The 1997 audit of the City has been completed in conformance with generally accepted auditing standards. The financial statements of all City funds and account groups have been included in this audit. The City has been given an unqualified opinion for 1997. The State Auditor's report on the general purpose financial statements is included in the financial section of this report. AWARDS The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Federal Way for its comprehensive annual financial report (CAFR) for the year ended December 31, 1996. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, a governmental entity must publish an easily readable and efficiently organized CAFR, the contents of which conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The City of Federal Way has received a Certificate of Achievement for the last six years (fiscal years ended 1991- 1996). We believe that our current report continues to conform to the Certificate of Achievement Program requirements, and we are submitting it to the GFOA. The City of Federal Way also received the Government Finance Officers Association Distinguished Budget Presentation Award for its biennial budget for the years beginning January 1, 1997 and 1998. 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. ACKNOWLEDGMENTS The preparation of this comprehensive annual financial report represents the culmination of months of concerted teamwork by the entire staff of the Management Services Department. Many members of the department demonstrated unswerving personal determination and dedicated many long days of focused attention to produce this unique and exemplary. document. Very special thanks are due to Tho Kraus, Mari Doring, Betty Nielsen, Tam Swett, Cathy Rafanelli, and Marj Currie -Hicks. In addition, staff in all City departments should be recognized for responding so positively to the requests for detailed information which accompany each annual audit. The role of the State Auditor's Office should also be acknowledged as a significant contribution to a fine product. xvii 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, Kenneth Ny g City Manager Marie Mosley Deputy Director of Management Services City of Federal way / 1 CITY OFFICIALS rf MAHLON "SKIP" PRIEST HOPE ELDER MARY GATES Mayor Deputy Mayor Councilmember r MICHAEL PARK Councilmember RON GINTZ Councilmember PHIL WATKINS Councilmember KENNETH E. NYBERG City Manager OTHER ADMINISTRATIVE OFFICERS JACK DOVEY Councilmember DeputyCity Manager—., . .......... ........................................... ................... ................................. Philip Keightley CityAttorney...............................................................................................................................Londi Lindell CityClerk.................................................................................................................................... Chris Green Community Development Director...............................................................................................Greg Moore ManagementServices Director.....................................................................................................Iwen Wang Parks, Recreation and Cultural Services Director................................................................Jennifer Schroder PublicSafety Director...................................................................................................................Ron Wood PublicWorks Director......................................................................................................................Cary Roe 2 / City of Federal Way Peo le of Federal Way Mayor and Cit : Council Mahlon "Skip" Priest, Mayor Hope Elder, Deputy Mayor Mary Gates Michael Park Ron Gintz Phil Watkins Jack Dovey City Manager Kenneth Nyberg Staff: 6 Community Parks, Rr creatiart> Development & Cultural Services: Gre : Ma.ore Jennifer Schrader .Current Planning -Recreation Programs .Land Use .Ground Maintenance .Building Permits/ .Park Operations Inspections .Community/Sr Center -Code Compliance .Facility Maintenance -Dumas Bay Centre .Civic Theatre Staff. 27 Staff: 23.5 City Attorn.ey:: -Civil Legal Svcs/ Litigation -Prosecution .Advise Council Boards, Commissions & staff .Advice/Drafting Ordinances Staff: 9 $yards and Commissions -Arts Commission .Diversity Commission -Ethics Board .Human Services Commission -Parks & Recreation Commission .Planning Commission -Youth Commission .Civil Service Commission Public Safety Ron: W.40d: Public Works Gary Roe. .Drug Awareness .Development Svcs Resistance Education .Street Maintenance .Crime Analysis/ .Traffic Operation Prevention .Surface Water Mgmt -Traffic Enforcement .Solid Waste/ .Investigation Recycling .Jail Services .Neighborhood Safety .Transportation .System Planning Staff: 127 Staff: 29.5 Management Serul.Ces lwerr ilita n.g .City Clerk .Finance -Human Resources -Risk Management/ Purchasing/Fleet .Systems Staff: 25 City of Federal Way/3 Certif icate of The Government Finance Officers Association of the Achievement United Sates and Canada (GFOA) awarded a Certificate of Achievement for Excellence for Excellence in Financial Reporting to the City of in Financial Federal Way for its comprehensive annual financial report for the fiscal year ended December 31, Reporting 1996. The Certificate of Achievement is a prestigious national award recognizing Presented to conformance with the highest standards for preparation of state and local government City of Federal Way, financial reports. Washington C order to be awarded a Certificate of Achievement, a government unit must publish For its Comprehensive Annual an easily readable and efficiently organized Financial Report comprehensive annual for the Fiscal Year Ended financial report, whose contents conform to program December 31, 1996 standards. Such CAFR must A Certificate of Achievement for Excellence in financial satisfy both generally Reporting is presented by the Government Finance Officers accepted accounting Association of the United States and Canada to principles and applicable government units and public employee retirement legal requirements. systems whose comprehensive annual financial reports (CAFRs) achieve the highest A Certificate of Achievement standards in government accounting year only. The City of valid for a period of one and financial reporting. y Federal Way has received a Certificate of Achievement for the last seven consecutive years. We believe our r current report continues to U TECS AM conform to the Certificate of ANO N Achievement ro ram a, CNPORAATION s President p g y, 5 requirements, and we are rH,,sa 110,C.psubmitting it to GFOA. Executive Director CITY •F Legislative Building Washington State Auditor PO Box 40021 Olympia, Washington 98504-0021 Brian Sonntag INDEPENDENT AUDITOR'S REPORT June 5, 1998 The Honorable Mayor and City Council City of Federal Way Federal Way, Washington (360) 902-0370 FAX (360) 753-0646 TDD Relay 1-800-833-6388 http://www.wa.gov/sao/ We have audited the general-purpose financial statements of the City of Federal Way, King County, Washington, as of and for the year ended December 31, 1997, as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Our audit was performed pursuant to the Revised Code of Washington 43.09.260, under which a full report on the results of this audit will be issued. This report may include findings and recommendations on compliance matters, internal control procedures, and questionable costs or contingencies that would not be material in relation to the general-purpose financial statements taken as a whole. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the City of Federal Way, King County, Washington, at December 31, 1997, and the results of its operations and cash flows of its proprietary fund types for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the general-purpose financial statements taken as a whole. The combining, individual fund, and account group financial statements and schedules listed in the table of contents are presented for purposes of additional analysis, and are not a required part of the general-purpose financial statements of the City of Federal Way, King County, Washington. The information has been subjected to the procedures applied in the audit of the general-purpose financial statements and, in our opinion, is fairly stated in all material respects in relation to the general-purpose financial statements taken as a whole. The other data included in this report, designated as the statistical section in the table of contents, has not been audited by us and, accordingly, we express no opinion on such data. Sincerely, BRIAN SONNTAG, CGFM STATE AUDITOR General Purpose Financial Statements of Federal Wa v / 8 COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS December 31 1997 ASSETS Equity in pooled cash and investments (note 4) Cash with escrow agent (note 4) Cash - deferred compensation (note 9) Investments with plan administrator (note 4) Prepaid Insurance Receivables (net) Taxes (note 5) Accounts and contracts Interest Employee Loans Due from other funds/interfund loans receivable (note 13) Due from other governments (note 5) Property/equipment/improvements (net) (note 7) Construction work in progress (note 7) Amount available in debt service funds (note 12) Amount to be provided for retirement of long-term debt (note 12) TOTAL ASSETS LIABILITIES AND FUND EQUITY Liabilities: Vouchers payable Accounts/payroll payable Retainage payable Retainage payable - with escrow agent Due to other governments (note 6) Due to other funds/interfund loans payable (note 13) Deferred compensation payable (note 9) Deposits payable General obligation bonds (note 12) Long-term loan payable (note 12) Certificates of participation payable (note 12) Deferred revenues Compensated absences payable (note 12) TOTAL LIABILITIES Fund equity and other credits: Contributed capital (note 14) Investment in general fixed assets (note 7) Retained earnings - unreserved Fund balance: Reserved for. Interfund loans Employee retirement Debt service Paths and trails Petty cash/change fundladvance travel Police special funds Unreserved: Designated for COPS grants Designated for snow & ice removal Undesignated TOTAL FUND EQUITY AND OTHER CREDITS TOTAL LIABILITIES & FUND EQUITY & OTHER CREDITS See accompanying notes to financial statements Statement 1 Governmental Fund Types Special Debt Capital General Revenue Service Projects S 3,825,514 $ 5,033.525 $ 4,745.498 $ 24,538.138 - - 179 025 198,240 98,124 165,331 - 61,232 455,964 174,265 45,329 59,083 55.566 225,867 96,516 26,480 - 69,307 1,258,440 402,162 482,662 5,485,271 6. 775, 338 4, 666, 395 25. 669, 264 256,184 175,473 502 640,233 78,924 44,680 16,026 11,787 6,074 38.606 - - 179,025 276,792 21,872 - 136, 550 107,218 - 10,551 216.469 443,332 227,477 136,039 1,204,183 934,688 502 886,443 10,000 - 4,965,893 - 3,544 20,009 - 92,016 674, 778 - 128,837 3,484,285 5,008,269 24,782,821 4,281,088 5,140.650 4,965,893 24,782,821 $ 5,485,271 S 6. 775.338 $ 4, 666.395 $ 25, 669,264 Page 1 of 2 City of Federal Way / 9 Statement 1 (continued) Proprietary Fiduciary Account Groups Totals ^.ternal Expendable General General Long- (Memorandum Only) Enterprise Service Trust Fixed Assets term Debt 1997 1996 $ 1 205.588 $ 3 392,181 $ $ $ $ 42, 740, 444 $ 28 870 943 32.533 - 211,558 237,648 _ 1 225,577 5,491.556 5,491,556 3,460.570 3,565 - 3,565 721 - - 461,695 197005 56,860 424 - 748,745 259 061 9,565 39,492 16.968 451.870 308.513 166,711 166,711 144.757 32,144 161.777 - 386.224 189,212 159 6 - 2,143,429 1,685416 2,740,156 4,796,964 37,138.000 44, 675,120 39.865, 093 915,307 - - 1,774,071 - 2.689,378 3.012.288 - - - 4,965,893 4,965,893 2,850,138 - - 35, 783, 583 35, 783, 583 22, 683,174 4,9 22,312 8.3 44,409 5. 775.235 38,912.071 40,749,476 140,919,771 104,990,116 25,560 45,214 - 1,143,166 2,357,265 3,692 - - 145,322 1,318 - 56,469 58,409 32,533 211,558 209,300 3,041 301,705 3.409 206 131,699 386,224 189,212 - - 1,225,577 10,855 6,034 676,690 584,769 37,665,000 37,665.000 22.575 000 1,466,063 1,466,063 1,387,616 1,295,t700 1,020,000 2,315,000 2,625,000 60,937 424,453 249,550 2,648 25.031 598,413 626,142 491,604 136,431 1,506.069 40,749,476 45,417,792 31,958,029 2,555,267 2,897,838 5,453,105 5,625,721 - 38, 912, 071 38, 912, 071 35, 236, 897 2,300,504 3,990,502 6,291,006 3,200,177 - 10,000 10,000 5,675,235 5,675,235 3,620,700 - 4,965,893 2,850,138 3,544 5,476 110 20.119 18,146 92,016 - 674,778 - 128, 837 80,066 - - 33,275.375 22,384,766 4855,861 6.889.340 5.675,235 38,912,071 95,501,979 73,032,087 4.992,312 $5.3 44,409 $ 5,B75_235 $ 38.912,071 $ 40,749,476 $ 140,919,771 $ 104,990, 116 Page 2 of 2 CITY OF City of Federal Way / 11 Statement 2 COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES ALL GOVENMENTAL FUND TYPES AND EXPENDABLE TRUST FUNDS For the Year Ended December 31 1997 Fiduciary Governmental Fund Types Fund Type Totals Special Debt Captal Expendable (Memorandum only) General Revenue Service Projects Trust 1997 1996 REVENUES: Taxes S 16,123,086 $ 3,859,645 $ 1,879,269 $ - $ - S 21,861.900 $ 18 080 794 Licenses and permits 1,048,918 63,217 - - 1.112,135 917 219 Intergovernmental 3,352,255 3,257,734 - 697,496 - 7.307,485 6879987 Service charges and fees 846,065 3,389,314 - 47,420 - 4.282799 4,195 678 Fines and forfeitures 576,054 .- - - - 576,054 520 670 Miscellaneous: Interest 242,383 428,120 234,311 1,124,949 1,271,576 3,301,339 1, 758.740 Employeelemployer contributions - - - - 1,229,625 1,229,625 1.041 298 Other 226,375 19,846 294 60.400 306,915 403 992 TOTAL REVENUES 22,415.136 11,017.776 2.113,674 1,930,265 2,501,201 39,978,252 33,798 378 EXPENDITURES: Current: General government 3,366,715 50,000 - - 446,666 3,862,381 4,004,964 Security of persons and property 10,282,388 - - - - 10,282,388 10.269,193 Physical environment 20,869 507,915 - - - 528.784 304,196 Transportation 75,584 6,065,639 - 6,141,223 5.309,948 Economic environment 2,213,059 44,974- - 2,258,033 2.298.040 Health 457,211 - - 457,211 488,604 Culture and recreation 2,521,085 - 2,521,085 2,944,815 Capital outlay 319,120- 8,925,205 - 9,244,325 7,663,943 Debt service: Principal 1,222,090 - - 1,222,090 432.280 Interest, fiscal chg and debt issue cosh 1,760,696 179,995 1,9409691 14318 600 TOTAL EXPENDITURES 19,255,031 6,668,528 2,982,786 9,105,200 446,666 38,468,211 35 034.583 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 3,160,105 4,349,248 (868,912) (7,174,935) 21054,535 1,520,041 (1.236,205) OTHER FINANCING SOURCES (USES): Bond proceeds - - - 14.912,850 14.912,850 2,627,833 Grants - - 398.024 398,024 - Public works trust fund ban proceeds - - - - 1.166,580 Operating transfers in (note 13) 122,005 2,226,731 2,984,667 3.781,652 9,115,055 3,144,730 Operating transfers out (note 13) (1,705,301) (6,990,416) (1,180,057) (9,875,774) (3,404,214) TOTAL OTHER FINANCING SOURCES (USES) (1,583,296) (4,763,685) 2,9841667 17,912,469 14,550,155 3,534 929 EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES 1,576,809 (414,437) 2,115,755 10,737,534 2,054,535 16,070,196 2,298,724 FUND BALANCES AT BEGINNING OF YEAR 2,812,439 5,605,547 2,850,138 14,080,468 3,620,700 28,969,292 26,886,443 Residual equity transfers out (note 13) (108,160) (50,460) - (35,181) (193,801) (215.875) FUND BALANCES AT END OF YEAR $ 4,281,088 $ 5,140,650 S 4,965,893 $ 24,782,821 $ 5,675,235 $ 44,845,687 $ 28,969.292 See accompanying notes to financial statements. City of Federal Way / 12 Statement 3 COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL, SPECIAL REVENUE, AND DEBT SERVICE FUND TYPES FOR WHICH ANNUAL BUDGETS HAVE BEEN LEGALLY ADOPTED For the Year Ended December 31. 1997 General Fund Special Revenue Fund Types Variance Variance Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) REVENUES: Taxes $ 15,831.062 $16.123,086 $ 292,024 $ 3.468,705 $ 3,659,545 $ 390.840 Licenses and permits 1,073,055 1,048,916 (24,137) 80,473 63.217 (17 256) Intergovernmental 3,220.249 3,352,255 132,006 2.842.980 2.818,422 (24,558) Service charges and fees 873,216 846,065 (27,151) 3.200,246 3,171,731 (28.515) Fines and forfeitures 639,830 576,054 (63,776) Miscellaneous: Interest 344.527 242,383 (102,144) 280,289 390,297 110008 Other 107,634 226,375 118,741 19,846 19,846 TOTAL REVENUES 22,089.573 22.415,136 325,563 9,872,693 10,323.058 450,365 EXPENDITURES: Current: General Government 4,201,209 3,365,715 835,494 - _ Security of persons and property 11,179,159 10,282,388 896,771 - Physical environment 21,500 20,869 631 586,757 507.915 78.842 Transportation 1 75,584 (75,584) 6.761,115 6,065.639 695,476 Economic environment 2.430.133 2,213,059 217,074 - - Health 486,832 457,211 29,621 _ Culture and recreation 2,649,091 2,521,085 128,006 Capital outlay 20,000 319,120 (299.120) Debt service: Principal - _ Interest and other debt issue costs - TOTAL EXPENDITURES 20,987,924 19,255.031 1,732,893 7,347.872 6,573,554 774,318 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 1,101,649 3,160,105 2,058,456 2,524,821 3,749,504 1,224,683 OTHER FINANCING SOURCES (USES) Operating transfers in (note 13) 122,005 122,005 2,226,731 2,226,731 - Operating transfers out (note 13) (1,554,745) (1,705,301) (150,556) (5,969,833) (5,881,422) 88,411 TOTAL OTHER FINANCING SOURCES (USE (1,432,740) (1,583.296) (150,556) (3,743.102) (3,654,691) 88,411 EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES (331,091) 1,576,809 1,907,900 (1,218.281) 94.813 1,313,094 FUND BALANCE AT BEGINNING OF YEAR 2,812,439 2,812,439 4.8W.594 4,636,594 Residual equity transfers out (note 13) (260.608) (108,160) 152,448 (50,176) (50,460) (284) FUND BALANCE AT END OF YEAR $ 2,220,740 $ 4,281,088 $ 2.060,348 $ 3,368,137 $ 4,680,947 S 13112.8110 See accompanying notes to financial statements. Page 1 of 2 City of Federal Way / 13 Statement a (continued) Totals Debt Service Fund Type (Memorandum Only) Variance Variance Favorable 1997 Favorable 1996 Budget Actual (Unfavorable) Budget Actual (Unfavorable) Actual $ 1.100.000 $ 1,879,269 $ 779,269 $ 20.399,767 $ 21.861,900 $ 1,462,133 $ 18,080794 - 1.153,528 1,112,135 (41,393) 917219 6,063,229 6,170,677 107,448 5,467160 4.073,462 4,017,796 (55,666) 4,012,884 - - 639,830 576,054 (63,776) 520,670 132,739 234,311 101,572 757,555 866,991 109,436 732,630 - 294 294 107,634 246,515 138,881 142,540 1,232,739 2,113, 874 881.135 33,195, 005 34, 852, 068 1,657,063 29, 873- 897 4,201,209 3,365,715 835.494 3,666,681 11,179,159 10.282, 388 896,771 10. 269,193 608,257 528,784 79,473 304.196 6,761,115 6,141,223 619,892 5,309,948 2,430,133 2,213,059 217,074 2.253,424 - - 486,832 457,211 29,621 488.604 2,649,091 2,521,085 128,006 2,944,815 - - - 20,000 319,120 (299,120) 1,549,146 1,226,866 1,222.090 4,776 1,226,866 1,222,090 4,776 432,280 1,783,439 1,760,696 22,743 1,783,439 1,760,696 22,743 1,284.768 3,010,305 2.982,786 27,519 31,346,101 28,811.371 2,534,730 28,503,255 (1,777,566) �868.912) 908,654 1,848,904 6,040,697 4,191,793 1,370,642 2,959,516 2,984,667 25,151 5,308,252 5,333,403 25,151 1,929.230 - - (7,524,578) (7,586,723) (62,145) (3,014,652) 2,959,516 2,984,667 25,151 (2,216,326) (2,253,320) (36,994) (1,085,422) 1,181,950 2,115.755 933.805 (367,422) 3.787,377 4,154,799 285.220 2, 850,138 2,850,138 - 10, 299,171 10.299,171 - 10, 213,107 (310,784) (156.620) 152,164 (199,156) $ 4, 032, 088 $ 4, 965. 893 $ 933,805 $ 9,620,965 $ 13, 927, 928 $ 4,306,963 $ 10, 299,171 Page 2 of 2 City of Federal Way / 14 COMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND EQUITY - ALL PROPRIETARY FUND TYPES For the Year Ended December 31, 1997 OPERATING REVENUES: Service charges and fees Miscellaneous TOTAL OPERATING REVENUES OPERATING EXPENSES: Personal services Materials and supplies Services and charges Intergovernmental Insurance Claims Depreciation Interfund Charges TOTAL OPERATING EXPENSES OPERATING INCOME (LOSS) NON -OPERATING REVENUES (EXPENSES): Subsidy from interlocal grant Interest income Interest expense Donations/contributions GO bond proceeds Debt issue cost State grants Gain/loss on sale of fixed assets TOTAL NON -OPERATING REVENUES(EXPENSES) INCOME(LOSS) BEFORE OPERATING TRANSFERS Operating transfers in (note 13) Operating tranfers out (note 13) NET INCOME (LOSS) Add depreciation reducing contributed capital Increase (decrease) in retained earnings RETAINED EARNINGS, January 1 RETAINED EARNINGS, December 31 CONTRIBUTED CAPITAL, January 1 (Note 14) Increases to contributed capital (note 14) Less amortization CONTRIBUTED CAPITAL, December 31 FUND EQUITY AT END OF YEAR See accompanying notes to financial statements. Statement 4 Totals Enterprise Internal Service (Memorandum only) $ 346,465 $ 2.516,139 $ 2,862,604 $ 2,172,074 2,795 131,243 134,038 121,048 349,260 2,647,382 2,996,642 2,293,122 117,161 401,517 52,196 184,540 290,548 856,451 - 8,641 293,513 - 73,782 41,188 839,692 16,232 - 517,325 2,658,136 (168,065) (10,754) 518,678 530.344 236,736 156,465 1,146,999 850,875 8,641 4,774 293,513 113,183 73,782 119,327 880,880 602,522 16,232 18,093 3,175,461 2,395,583 (178,819) (102,461) 42.000 6 42,006 50.500 199,091 249,591 160,158 - (77,378) (77,378) (86,622) 200 200 _ 1,550,000 1,550,000 (19,109) (19,109) 159 - 159 5,506 1,445 1,445 - 1,623,750 123.164 1,746,914 79,042 1,455,685 112.410 1,568,095 (23,419) 643,000 121,781 764,781 259,484 (4,062) - (4,062) - 2,094,623 234,191 2,328,814 236,065 41,188 720,937 762,125 446,159 2,135,811 955,128 3,090,939 682,224 164,803 3,035,374 3,200,177 2,510,575 2,300,614 3,990,502 6,291,116 3,200,177 2,596,455 3,029,266 5,625,721 4,326,684 591,764 591,764 1,785,059 (41,188) (723,192) (764,380) (486,022) 2,555,267 2,897,838 5,453,105 5,625,721 4,855,881 6,888,340 $ 11,744,221 $ 8,825,898 City of Federal Way / 15 Statement 5 COMBINED STATEMENT OF CASH FLOWS ALL PROPRIETARY FUND TYPES For the Year Ended December 31 1997 Totals Enterprise Internal Service (Memorandum only) Fund Funds 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from users 35: 366 146 S 2632070 $ 2 998 216 S 2 230 741 Cash received from other funds for goods and services (31,506) (31 506) 4 987 Cash received from other governments for goads and servic 6,241 - 6 241 Cash payments to suppliers for goods and services (44.913) (1 352.761) (1 397 674) (908 502) Cash payments to employees (116380) (400.479) (516859) (519680) Cash payments to claimants - (35.732) (35 732) (45 509) Cash payments to other funds for services (18 244) (9 201) (27 445) (57 570) Cash payments for other services and charges (290,548) (290 548) (258 862) Cash payments for taxes 4,330 4 330 (834) Cash payments for damage deposits 3.966 3.966 (64) Other operating receipts 36.836 36.836 16 363 NET CASH PROVIDED (USED) BY OPERATING ACTMTIES (120.908) 870,733 749 825 461 070 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Subsidy from slate grant 159 6 165 - Subsidy from interlocal grant 42 000 - 42.000 5 682 Operating transfers in (note 13) 643,000 121 781 764,781 259 484 Operating transfers out (note 13) (4,062) NET CASH PROVIDED (USED) BY NON. CAPITAL FINANCING ACTIVITIES 681,097 121,787 806.946 259 484 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Bond proceeds 1,550.000 1,550,000 Debt issue costs (19.109) - (19.109) - Donations/contributions 200 200 Acquisition of capital assets/construction work in progress (1.032.412) (266.958) (1.299,370) (326.121) Cash contributions for capital acquisitions (note 14) - 193 801 193,801 215 875 Proceeds from sale of fixed assets - 3 700 3.700 5,753 Principal paid on debt service (225 000) (225,000) (215 000) Interest and fiscal charges on debt service (77,378) (77.378) (86 623) NET CASH PROVIDED (USED) FOR CAPITAL AND RELATED FINANCING ACTIVITIES 498.679 (371,835) 126,844 (406 116) CASH FLOWS FROM INVESTING ACTMTIES: Receipts of interest 42.073 188,002 230,075 161 499 NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES 42,073 188.002 230,075 161499 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1.100941 808.687 1,913,690 475,937 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 104.647 2.583.494 2,688.141 2206,522 CASH AND CASH EQUIVALENTS AT END OF YEAR 1,205,588 3,392.181 4 601.831 2682.459 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income (168,065) (10,754) (178,819) (102.461) Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation expense 41.188 839.692 880,880 602.522 (Increase)decrease in accounts receivable (44,050) (424) (44,474) - (Increase)decreass iri prepaid insurance - (2.844) (2.844) 1,824 (Increase)decrease in due from other funds (31..506) (3.797) (35.303) 127,494 (Increase)decrease in due from other governments 6.241 (6) 6.236 12,090 Increase(decrease) in voucherstaccounts payable 7 283 (26.580) (19.297) (4,865) Increase(decrease) in due to other funds (2.012) 74,654 72,642 (187.413) Increase(decrease) in due to other governments - (248) (248) (62) Increase(decrease) in deposits payable 8.296 - 8,296 1 277 Increase(decrease) in deferred revenues 60 936 - 60,936 - Increase(decrease) in accrued payroll/ compensated absences payable 781 1 040 1.821 10,664 TOTAL ADJUSTMENTS 47,157 881487 928,644 563.531 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (120.908) 870.733 749.825 461.070 SCHEDULE OF NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES: Contributions of capital assets (note 14) 5 i 397.963 $ 397,963 $ 1.564136 See accompanying notes to financial statements CITY •F �V, City of Federal Way / 17 NOTES TO THE FINANCIAL STATEMENTS December 31, 1997 INDEX Note 1 Summary of Significant Accounting Policies................................................................. ReportingEntity.................................................................................................... Basis of Presentation --Fund Accounting ...................................:. .,......................... . Basisof Accounting............................................................................................. Budgets and Budgetary Accounting...................................................................... Assets, Liabilities and Equities............................................................................. Equity in Pooled Cash and Investments........................................................ Cash and Cash Equivalents..........................................................,...,............ Investments.................................................................................................. Receivables.................................................................................................. Amounts Due to and from Other Funds; Interfund Loans .............................. Inventories...................................................................................:................ FixedAssets...........................................................:... ......................I........ Depreciation................................................................................................. Compensated Absences Payable................................................................. Long -Term Debt........................................................................................... Deferred Revenues ...................................... ..........,.......... Fund Equity -Reserves and Designation.................................................... Interfund Transactions......................................................................................... Comparative Data............................................................ ..... ...... .............. Total Columns on Combined Statements - Overview.........:..... ............................... 2 Stewardship, Compliance and Accountability............................................................... 3 Supplemental Appropriations........................................................................................ 4 Cash and Investments.................................................................................................. 5 Receivables and Due From Other Governments.......................................................... 6 Due To Other Governments .................................... .......................... ............................ 7 Fixed Assets and Depreciation.................................................................................... 8 Pension Plans............................................................................................................. 9 Other Employee Benefits............................................................................................. 10 Risk Management................................................................................................ 11 Estimated Arbitrage Rebate................................................................................... .... 12 Long -Term Debt........................................................................................................... 13 Interfund Transactions................................................................................................. 14 Contributed Capital........................................................................................................ 15 Contractual Obligations, Contingencies and Litigation .................................................. 16 Fund Additions and Deletions...................................................................................... 17 Subsequent Events..................................................................................................... Page 18 18 18 20 21 23 23 23 23 23 24 24 24 24 25 25 25 25 26 26 26 26 27 27 29 30 31 32 35 36 37 37 41 42 42 43 43 18 / City of Federal Wa For the Year Ended December 31, 1997 NOTE 1: Summary of Significant Accounting Policies The City of Federal Way, King County, Washington was incorporated on February 28, 1990 and operates under the laws of the State of Washington applicable to an Optional Municipal Code City (RCW 35A) with a Council -Manager form of government. Under the Council -Manager form of government, the voters elect, at large, a seven -member City Council, and the Council elects one of its members to serve as Mayor. The council serves for a period of four years allowing for council member consistency and staggered elections. The City Manager is appointed by the Council to act as the chief executive officer of the City and is responsible to the Council for proper administration of all City affairs. The City of Federal Way is a general purpose government with its fiscal year ending December 31. The City provides a broad range of general government services. 1997 marks its seventh full year of existence as a municipality. Its services are in transition and are expanding to meet both the public's needs and those related to infrastructure. During its transition period, the City's management has continued to contract with King County, the local Fire District and other agencies to provide specific services, such as fire protection, storm and surface water utility billings, court services, garbage collection and various public works services. 1997 is the City's Public Safety Department's first year of being fully operational. The accounting and reporting policies of the City conform to generally accepted accounting principles for governments, and are regulated by the Washington State Auditor's Office, Division of Municipal Corporations. The City's significant accounting policies are described below. Reporting Entity The City's Comprehensive Annual Financial Report (CAFR) includes all funds, account groups, agencies and boards controlled by or dependent on the City. In conformance with Governmental Accounting Standards Board (GASB) Statement 14, "The Financial Reporting Entity", the primary basis of determining whether outside agencies and organizations should be considered component units of the City is Financial Accountability. Financial accountability is defined as appointment of a voting majority of an agency's or organization's board, and either the City's ability to impose will on the agency or organization or the possibility that the agency or organization will provide a financial benefit to or impose a financial burden on the City. A joint venture is a legal entity or organization which results from a contractual arrangement that is owned, operated, or governed by two or more participants as a separate activity subject to joint control, in which participants retain an ongoing financial interest or an ongoing financial responsibility. Based on application of the above criteria for a component unit, and the criteria for defining joint ventures, none of the privately -owned and government entities operating within the City of Federal Way boundaries meet the criteria for inclusion as component units or joint ventures and, therefore, are not reported in the accompanying financial statements. Basis of Presentation - Fund Accounting The accounts of the City are organized on the basis of funds and account groups. Each fund is a separate accounting entity with a self -balancing set of accounts. The account groups are financial reporting devices used to provide accounting control for certain assets and liabilities not recorded in the funds because they do not directly affect net expendable available financial resources. Under the current governmental accounting model, there are three broad fund categories, seven generic fund types within those categories and two account groups. A description of the three fund categories and the generic fund types included in each category is provided below. City of Federal Way/ 19 G,,;vernmentLil Funds Tvpes Governmental funds are used to account for activities typically associated with state and local government operations. All governmental fund types are accounted for on a spending or "financial flows" measurement focus, which means that typically only current assets and current liabilities are included on related balance sheets. The operating statements for governmental funds measure changes in financial position, rather than net income. They present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. The four generic fund types in this category are described in the following paragraphs. The General Fund is the general operating fund of the City and accounts for all activities not required to be accounted for in some other fund. Special Revenue Funds account for the proceeds of specific revenue sources, other than expendable trusts or revenues designated for major capital projects, that are legally restricted to expenditures for specific purposes. Debt Service Funds account for the accumulation of resources for, and the payment of general long-term debt, principal, interest and related costs. Capital Projects Funds account for the acquisition or construction of major capital facilities except those financed by proprietary funds and trust funds. Proorietary Funds Proprietary funds are used to account for activities similar to those found in the private sector where the intent of the governing body is to finance the full cost of providing services, including depreciation, primarily through user charges. The measurement focus for these funds is based on the commercial model which uses a flow of economic resources approach. Under this approach, the operating statements for the proprietary funds focus on a measurement of net income (revenues and expenses) and both current and non -current assets and liabilities are reported on related balance sheets. Their reported fund equity (net total assets) is segregated into contributed capital and retained earnings components. As described below, there are two generic fund types in this category. Enterprise Funds account for operations that are financed and operated in a manner similar to private business enterprises - where the intent of the City is to finance or recover, primarily through user charges, the costs of providing goods or services to the general public on a continuing basis. Internal Service Funds account for business -like activities where related goods or services are primarily provided to other departments or funds of the City on a cost -reimbursement basis. Standards for Proprietary Funds Proprietary Funds have the option of consistently following or not following FASB pronouncements issued subsequent to November 30, 1989. The option selected by the City for all of its Proprietary Fund activities, as policy, is to apply all applicable GASB pronouncements and all FASB Statements and Interpretations, Accounting Principles Board (APB) Opinions and Accounting Research Bulletins (ARB) issued on or before November 30, 1989, unless they conflict with or contradict GASB pronouncements. Fiduciary Funds Fiduciary funds are used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, other governments or other funds. These funds share characteristics with both the governmental and proprietary funds and therefore, as described below, use the measurement focus and basis of accounting most appropriate to their specific operations. This fund category includes expendable trust, nonexpendable trust, pension trust, and agency funds. The City uses funds in only one of these subclassifications to account for its current financial activities: an expendable trust fund, where both the principal and revenues earned on that principal may be expended for purposes designated by the trust agreement. (say something about fund deletion) Expendable trust funds are accounted for in essentially the same manner as governmental funds, having a flow of current financial resources measurement focus and using the modified accrual basis of accounting. Agency funds are custodial in nature (assets equal liabilities) and do not measure the results of operations. 20 / City of Federal Way Account GrouDS To facilitate the measurement of the sources and uses of current financial resources in the governmental funds, separate account groups are used to account for related non -current or non -financial resources, such as general fixed assets and unmatured general long-term debt. On this basis, the City uses the following account groups to establish accounting control over related assets and liabilities not recorded in the governmental funds. The General Fixed Assets Account Group accounts for all fixed assets of the City other than those assets accounted for in the proprietary funds. The General Long-term Debt Account Group accounts for all long-term debt of the City other than debt accounted for in the proprietary funds. Basis of Accounting Basis of accounting refers to when revenues and expenditures or expenses are recognized and reported in the financial statements. The accrual basis of accounting is used by proprietary fund types. Under this method, revenues are recognized when earned, and expenses are recognized when incurred. The modified accrual basis of accounting is used by governmental, expendable trust and agency funds. Revenues and other financial resources are recognized when they become susceptible to accrual, i.e., when the related funds become both measurable and available to finance expenditures of the current period. To be considered "available", revenue must be collected during the current period or soon enough thereafter to pay current liabilities. The City uses thirty days when evaluating the available criteria. Expenditures are recognized when the related fund liability is incurred. Since the recognition of depreciation does not reduce net financial resources, it is not considered an expenditure. Other exceptions include (1) inventories of materials and prepaid items are reported as expenditures when purchased, (2) interest on long-term debt is not accrued but is recorded as an expenditure when due, (3) accumulated unpaid vacation and sick pay are considered expenditures when paid. Major revenues recorded on the modified accrual basis are: Property Taxes - King County acts as the City's collection agent for these taxes. Each day, the County electronically transmits to the City the taxes which it has collected on the City's behalf in the prior day. On this basis, property taxes received in January are considered both measurable and available and are therefore recognized as revenue in the current year. Other Locally Levied Taxes - King County also acts as the City's collection agent for the Y4% and optional '/4% real estate excise taxes. Although a time lag occurs in payment of these taxes to the City, since the taxes are actually collected by King County in December and receipted to the City within 10 days after the end of the year, they are considered to be both measurable and available, and are, therefore, accrued as revenue at year end. The State of Washington acts as the City's collection agency for the locally levied sales tax. The sales tax is distributed monthly and remitted to the City in the following month. The Sales Tax remittance in January is considered both measurable and available and is therefore accrued as revenue at year end. Grant Revenues - Under Section G60.109 of the Codification of Governmental Accounting and Financial Reporting Standards, revenues for cost reimbursement grants are determined to be earned and, therefore, available at the time related expenditures are incurred. For this reason, grant revenues to be received as reimbursement for expenditures incurred in the current year are also recognized as revenue in that year. Shared Revenues - Revenues that have been collected but not remitted by an intermediary collection agency to the City are considered measurable and available. City of Federal Way / 21 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; operating transfers, 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 the business and occupation tax, licenses and permits, fines and forfeitures, and other miscellaneous revenues which are generally not measurable until received. Budgets and Budgetary Accounting Scope of Budget - Annual appropriated budgets are adopted for the general, some special revenue, and debt service 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/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 are listed below. Funds Budgeted on an Annual Basis: General Fund Special Revenue Funds: Street Fund Arterial Street Fund Utility Tax Solid Waste/Recycling Fund Snow and Ice Removal Fund Debt Service Fund Paths and Trails Reserve Fund Surface Water Management Fund Strategic Reserve Fund Airport Strategic Reserve Fund Procedures for Adopting the Annual Budget - The City's budget process and the time limits under which the budget must be prepared are defined by the Revised Code of Washington (RCW) 35A.33. The procedures followed in establishing the annual budget are described below: • By late May the official budget call is made by the Management Services Director for current level service budgets and a preliminary financial forecast. • By late July, departments submit their preliminary expenditure estimates and the Management Services department updates the preliminary revenue estimates to define resources available to finance coming year expenditure programs. • Prior to the first Tuesday in September, the City Manager submits a proposed budget to the City Council. This budget is based on priorities established by the Council and estimates provided by City departments during the preceding months, and balanced with revenue estimates made by the Management Services Director. • City Council conducts workshops and public hearings on the proposed budget between mid - September and mid -December. • No later than the first Monday in October, the City Council must adopt an ordinance to establish the amount of property taxes to be levied in the coming year. 22 / City of Federal Way • 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 1996, the budget was amended two times. The adjusted budget is detailed in Note 3. The budget amounts shown in the financial statements are the final authorized amounts as revised during the year. The non -annually budgeted special revenue funds are not included in the Combined Statement of Revenues, Expenditures and Changes in Fund Balance - Budget to Actual comparison, since they are not operating budgets and are for management purposes only. These non -annually budgeted funds are Special Contracts/Studies, 2% For Arts, Miscellaneous Grants, Community Development Block Grant, Donations and Impact Fee funds. The reconciliation from Statement 2 to Statement 3 is as follows: REVENUES: Taxes Licenses 8 permits Intergovernmental Services charges and fees Miscellaneous: Interest Other TOTALREVENUES EXPENDITURES Current: General governmental Physical environment Transportation Economic environment Capital TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES) Operating transfers in Operating transfers out TOTAL OTHER FINANCING SOURCES(USES) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES FUND BALANCES AT BEGIN OF YEAR Residual equity transfers out All Special Budgeted Special Rev Funds Non -budgeted Spocial Revenue Funds Rev Funds Per Special 2% for :•mpaci per Statament 2 Contract Arts CDBG DvnatiDns Fees Statement 3 $ 3,859.545 $ 5 $ - S $ S 3 859 545 63.217 - - 63.217 3.257,734 - 439,312 - - 2818.422 3.389.314 - - 217.583 3.171,731 428,120 7.868 - - 29.955 390,297 19,846 19.846 11.017.776 7,868 439,312 247.538 10.323.058 50.000 - 50.000 507,915 - - - - - 507,915 6,065.639 - - - 6.065.639 44.974 - 44,974 - - - 6,668.528 94,974 6.573,554 4,349.248 7-868 344.338 247 538 3 749 504 2.226, 731 - - - 2,226,731 (6,990,4161_ 1344.335) (2,046) 1762.610) (5.881.422) 147636861 {3443381 (2-046) (762 610) (3.654691) (414,437) 7 866 5.605.547 124.257 8,792 (50.460) - - (2,046) (515,072) 94,813 2,046 833.858 4,636.594 (50.460 FUND BALANCES AT END OF YEAR 5,140,660 $ 132.125 $ 8.792 $ - $ - $ — 786 1 a,sa0,947 of Federal Way 123 Encumbrances An encumbrance system is used for budgetary control purposes to record commitments resulting from approved purchase orders. During the year, encumbrances are recorded in the accounting system at the time purchase orders are issued for goods and services. Upon payment, the encumbrance is reversed and the actual cost of related item is recorded as a fund expenditure. Outstanding encumbrances lapse at year end, are canceled and must be re-established in the following year upon approval of the City Council through a budget adjustment ordinance. Therefore, these amounts have not been recorded as current year expenditures unless considered to be susceptible to accrual at the end of the year. The total encumbrances at year-end for the City were $4,400,215. Assets, Liabilities and Equities Equity in Pooled Cash and Investments The City follows the practice of pooling cash and investments of all funds for investment purposes, except for restricted funds in Enterprise funds (which the City currently does not have), investments of the Employees' Retirement Fund held by trustees and cash held in escrow, which are all disclosed separately on the balance sheet. Each fund's portion of total cash and investments is summarized by fund type in the combined balance sheet as equity in pooled cash and investments. Cash and Cash Equivalents It is the City's policy to invest all cash not immediately required for disbursement. At December 31, 1997, the State Treasurer was holding $21,250,165 in the State Investment Pool for short-term investments of cash. The State Investment Pool is considered a cash equivalent. The interest earnings on these investments are allocated to all funds based on the average monthly balance for each fund. For purposes of the Statement of Cash Flows, the City considers all highly liquid investments with a maturity of three months or less when purchased, to be cash equivalents. At December 31, 1997, the total cash and cash equivalents were $22,781,421, The City's deposits are entirely covered by federal depository insurance (FDIC) or by collateral held in a multiple financial institution collateral pool administered by the Washington Public Deposit Protection Commission (PDPC). Investments The City is authorized by State law to purchase certificates of deposit issued by Washington State depositories that participate in a state insurance pool managed by the Washington Public Deposit Protection Commission; securities purchased by the Washington State Investment Pool; U.S. Treasury and Agency securities, banker's acceptances trading in the secondary market; and repurchase agreements with dealers that use authorized securities as collateral. All investments are recorded on an amortized cost basis, unless there is a significant and permanent decrease in market value, in which case, market value should be used. Receivables Taxes receivable consist of measurable and available locally levied taxes and related interest and penalties. Property taxes receivable are included in taxes receivable. Due From Other Governments reflects measurable and available intergovernmental grants, entitlements, or State shared revenues (taxes/charges levied and collected by an intermediary collecting government and distributed on some basis); loans; and charges for services rendered by the City for another government unit. A separate schedule of Due From Other Governments is disclosed in Note 5. 24 / City of Federal Way Amounts Due to and from Other Funds; Interfund Loans These accounts include all interfund receivables and payables. A separate schedule of interfund loans receivable and payable is furnished in Note 13. Loans between funds must be authorized by the City Manager. In the governmental funds, loans to other funds are offset by a corresponding reservation of fund balance to indicate that the outstanding loan amounts do not constitute "available spendable resources" and are, therefore, not available for appropriation. Inventories Inventories in the governmental funds are recorded as expenditures at the time of purchase. Amounts remaining at year end are immaterial and, therefore, are not reflected on the balance sheets of those funds. There were no material inventories at year end in the Internal Service or Enterprise Funds. Fixed Assets The accounting and reporting treatment of fixed assets is determined by the measurement focus used by the fund which acquires them. Fixed assets purchased or constructed by a governmental fund are recorded as expenditures in that fund at the time related purchases are made; however, the associated fixed asset is recorded in the General Fixed Assets Account Group. All purchased fixed assets are valued at cost. Donated fixed assets are valued at their estimated fair market value on the date received. The City does not capitalize "infrastructure" assets such as roads, bridges, curbs and gutters, streets and sidewalks, and lighting systems. Costs of normal maintenance and repair for general fixed assets are also not capitalized. However, any improvement that increases an asset's value, or materially extends its life or potential uses is added to that asset's capitalized cost. Equipment items and real property acquired through capital lease agreements or conditional sales contracts are recorded in the General Fixed Assets Account Group or proprietary fund, as appropriate, at the inception of the agreement and in accordance with criteria established in section L20 of the Codification of Govemmental Accounting and Financial Reporting Standards. Fixed assets acquired or constructed by the proprietary funds are capitalized in those funds at historical cost. Contributed assets are recorded at their estimated market values as of the date they are acquired. The estimated fair market value of donated assets is recorded as contributed capital by the fund which receives them. Depreciation No depreciation is recorded on the fixed assets in the General Fixed Assets Account Group. Annual depreciation for the proprietary fixed assets is shown as an expense in the proprietary fund. Related depreciation is computed on a straight-line basis, using varying estimated service lives for individual assets and asset classifications depending on particular characteristics of an asset and factors surrounding its anticipated use. Depreciation is charged commencing in the year after acquisition. City of Federal Way / 25 The average service lives used to calculate depreciation for specific categories of assets in the City's proprietary funds are summarized below. Asset Class Office Furniture & Fixture Computer/Data Handling Equipment Communications Equipment Recreation Equipment Parks Equipment Automobiles Police Vehicles Police Equipment Light Trucks Heavy Trucks Heavy Work Equipment Shop/Mlscellaneous Equipment Land Improvements Buildings Compensated Absences Payable Estimated Service Life in Years 10 4 10 10 12 5 5 5 8 10 10 20 20 The City records a liability for all outstanding vacation pay and accrued compensatory time. Accrued vacation pay for governmental fund employees is recorded in the General Long -Term Debt Account Group, since it is not considered due and payable at year end from expendable available financial resources. Accrued vacation pay for proprietary fund employees is recorded as an expense and liability in the appropriate proprietary fund. Employee vacation leave is accumulated monthly at rates ranging from 12 to 15 days per year depending on term of employment. Employees may accumulate up to a maximum of 240 hours of vacation leave. All outstanding vacation leave is payable upon termination of employment. A non-exempt employee may request compensatory time off in lieu of overtime payment. Compensatory time is accrued at a rate of one and one-half hours for each hour of overtime worked, to a maximum of eighty hours. Sick leave may be accumulated up to a maximum of 720 hours, per City policy. The monthly accrual rate for City employees is 8 hours per month. Accumulated sick leave is not payable upon termination of employment. Outstanding sick leave at year end is not accrued by the governmental funds due to the difficulty in estimating the portion of existing balances likely to result in expenditures in future periods. Long-term Debt Long-term liabilities expected to be paid by the governmental funds are recorded in the General Long-term Debt Account Group. Long-term debt for proprietary funds are recorded as a liability by the fund responsible for the related debt repayment. Long-term debt outstanding at year end is outlined in Note 12. Deferred Revenues The deferred revenues 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 portion of Property Taxes that do not meet the available criteria are recorded as deferred revenue. See Note 5 for further details. Fund Equity -Reserves and Designations Reserves represent portions of fund equity that are legally restricted for a specific future purpose or not available for appropriation because they do not represent a current expendable resource. Designations of fund balance identify amounts set aside by management for tentative future purposes or administrative convenience. 26 / City of Federal Way In governmental and fiduciary funds, fund balance that is legally restricted for future purposes include reserves for: a) future employee retirement payments and b) future debt service. Fund balance not available for expenditure in the governmental funds consists of the outstanding balances of current interfund loans. On December 31, 1991, $10,000 in non -interest bearing loans from the General Fund to the City's CDBG grant funds were authorized by the City Council as interim financing. In addition, the General Fund had reserves for Petty Cash and Travel Advance purposes. The Special Revenue Path and Trails Reserve fund balance is also legally restricted for construction and maintenance of paths and trails within City right-of-way. Interfund Transactions There are four types of transactions between funds - interfund loans, quasi -external transactions, interfund reimbursements, and interfund transfers. Interfund loans are temporary borrowings of cash which do not affect operating statements, but which may incur interest expense or expenditure to the borrowing fund. Quasi -external transactions are equivalent to buying goods or services from an outside vendor. They are accounted for by the related funds as revenues, expenditures or expenses. Interfund reimbursements are repayments to a fund for expenditures or expenses which belong to another fund. They involve only expenditure or expense accounts. Interfund transfers are either residual equity in nature or operating transfers. Operating transfers are the equivalent of operating subsidies. Except for the Enterprise Fund, operating transfers are accounted for as "other financing sources and uses" and are therefore included in the operating statements. Residual equity transfers are used to close out a discontinued fund or make one-time contributions to a new fund, to record the interfund equivalent of a capital grant or its repayment (involving a proprietary fund), or to make contributions to an internal service fund to establish or increase its working capital or make repayments of such contributions. In 1996 the City recorded a number of such transfers to internal service funds to fund the acquisition of new assets. A schedule of interfund transfers is furnished in Note 13, Interfund Transactions. Comparative Data Comparative totals for the prior year have been presented in the accompanying financial statements in order to provide an understanding of changes in the City's financial position and operations. However, comparative data has not been presented by fund type in each of the statements since their inclusion would make the statements unduly complex and difficult to read. Total Columns on Combined Statements - Overview Total columns on the general purpose financial statements are provided to facilitate financial analysis. This data, however, is captioned "Memorandum Only" to indicate that it does not present financial position, results or operations or reporting of cash flows for the governmental unit as a whole in accordance with generally accepted accounting principles. Data contained in these columns is not comparable to a consolidation, and interfund eliminations have not been made in aggregating reported values. NOTE 2: Stewardship, Compliance and Accountability Legal Budgetary Compliance There have been no material violations of finance -related legal or contractual provisions, and there have been no expenditures exceeding legal appropriations in any of the funds of the City. of Federal Way / 27 NOTE 3: Supplemental Appropriations Operating Budget Funds Appropriations established during 1997 for the City's operating budget funds are provided below. As explained in Note 1, both original and supplemental appropriations are adopted by the City Council by ordinance. Appropriation amounts shown on the accompanying financial statements reflect final budget values, including all adopted adjustments to original budget amounts. FUND ORIGINAL BUDGET 1997 SUPPLEMENTAL APPROPRIATIONS FINAL BUDGET General Fund $ 21,408,775 $ 1,394,502 $ 22.803,277 Special Revenue Funds: Street Fund 2,997,832 306,813 3,304,645 Arterial Street Fund 1,013,566 1,078,095 2,091,661 Utility Tax Fund - 3,468,705 3,468,705 Solid Waste/Recycling Fund 217,573 369,714 587,287 Snow and Ice Removal Fund 54,738 30,000 84,738 Paths and Trails Reserve Fund - 11,000 11,000 Surface Water Management Fund 3,268,347 429,715 3,698,062 Strategic Reserve Fund 100,000 21,781 121,781 Subtotal Special Revenue Funds 7,652,056 5,715,823 13,367,879 Debt Service Fund 2,521,972 488,333 3,010,305 $ 31,582,803 $ 7,598,658 $ 39,181.461 Funds Budgeted on a Project -Length Basis During 1997, the City Council adopted appropriations for some special revenue funds and the Capital Project funds budgeted on a "project -length" basis. As explained in Note 1, appropriations for these funds are continuing in nature and do not lapse at the end of the year. The special revenue funds budgeted on a "project length" basis are Special Contracts/Studies, 2% for the Arts, Community Development Block Grant, Donations, and Impact Fee. These funds are therefore not included in the Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget to Actual. NOTE 4: Cash and Investments As required by state law, all deposits and investments of the City's funds are obligations of the U.S. Government, the State Treasurer's Investment Pool, bankers' acceptances, or deposits with Washington State banks and savings and loan institutions. In 1997 the City utilized all the above 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, 1997, the equity in pooled cash and investments was $42,740,444. 28 / City of Federal Way At year-end, the City had $22,784,833 in cash and cash equivalents which consisted of investments with the State Pool of $21,250,165; Certificates of Deposits of $3,000,000; the City's checking account bank balance of $49,464 (outstanding checks were $1,534,915 at December 31); and petty cash and change funds, advance travel fund and investigative fund totaling $20,119. No deposits were uninsured or uncollateralized. Insurance coverage up to $100,000 is through federal depository insurance and the Washington Public Deposit Protection Commission (WPDPC) for amounts over $100,000. Under State statute, members of WPDPC, a multiple -financial institution collateral pool, may be assessed on a prorated basis if the pool's collateral is insufficient to cover a loss. At December 31, 1997, the City's total deposits and investments consisted of the following: Key Bank, Checking Account per Books $ (1,485,451) Petry Cash/Change Fund/Advance Travel/Investigative Fund 20.119 Cash Equivalents with State Treasurer's Investment Pool 21,250.165 Certificates of Deposit 3,000.000 Subtotal Cash and Cash Equivalents 22,784,833 Investments in US Government Treasury, Agency and Bankers Acceptances 19,955,611 Equity in Pooled Cash and Investments 42,740,444 Cash with Escrow Agent 211,588 Assets with FWRS Plan Administrator 5,491,556 Total Cash and Investments $ 48,443,588 Investments The City's investments are categorized to give an indication of the risk assumed at year-end. The following summary shows the City's investments at year-end categorized by risk. Category 1 includes investments that are either insured, registered or held by the City or its agent in the City's name. Category 2 includes uninsured and unregistered investments which are held by the counterparty's trust department or agent in the City's name. Category 3 includes uninsured and unregistered investments for which the securities are held by the counterparty, or its trust department or agent, but not in the City's name. Risk CaMory Carrying Market 1 2 3 Amount Value City Securities US Government Treasury $ 9,984,063 $ $ $ 9,984,063 $ 10,140,682 Bankers' Acceptances 2.921,135 2.921,135 2.957,890 Agencies 7,050,413 7.050.413 7,177,027 Subtotal Categorized City Investments 19,955,611 19.955,611 20,275,599 Pension Investments Fixed Income US Governmental Obligations Fixed Income Corporate Obligations Fixed Income Foreign Securities Equity Securities Subtotal Categorized Pension Investments Total Categorized Investments Money Market Funds in Federal Way Retirement System Guaranteed Insurance Contracts Investments in State Treasurers Investment Pool 382,889 382,889 382,889 - 834,986 834,986 834,986 28,217 - 28,217 28,217 3,267,171 3.267,171 3.149, 306 4,513.263 4,513,263 4.395,398 $ 19.955,611 $ 4,513.263 $ $ 24,468,874 $ 24,670,997 190,258 190,258 788,035 788,035 21,250,165 21,250,165 Total Investments $ 46,697,332 $ 46.899,455 City of Federal Way / 29 NOTE 5: Receivables and Due From Other Governments Property Taxes The King County Treasurer is responsible for collecting all property taxes levied in the County by taxing districts. Amounts collected by the County on the City's behalf are remitted daily. As described in Note 1, taxes are levied and become an enforceable lien against properties as of January 1. Annual tax billings may be paid in two equal installments, due April 30 and October 31. At December 31, 1997, the total balance of property taxes receivable recorded by the City was $198,240. Of this, $170,669 is recorded as a deferred revenue, since it was not collected within the first 30 days of 1998. The property tax levy calendar in 1997 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 percent of market value. October 31 Second installment is due. Property taxes are recorded as a receivable when levied, offset by a 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. cities may levy up to $3.60 per $1,000 of assessed valuation for general governmental services, subject to two limitations: 1. RCW 84.55.010 limits the growth of regular property taxes to 6 percent per year, after adjustments for new construction. If the assessed valuation increases by more than 6 percent due to revaluation, the levy rate will be decreased. 2. The Washington State Constitution limits the total regular property taxes to 1% of assessed valuation or $10 per $1,000 of value. If the taxes of all districts exceed this amount, each is proportionately reduced until the total is at or below the 1% limit. The City's regular levy for 1997 was $1.56 per $1,000 on an assessed valuation of $3,958,913,902 for a total regular levy of $6,180,735. 30 / City of Federal Way Due From Other Governments At December 31, 1997 the City recorded the following receivables from other governmental units Descnphon Amount eneral Fund. FEMA $ 94 WA State Taxes & Fees 1.225,925 Department of Justice 19,964 King County Senior Services Program 12.457 Subtotal General Fund 1.958,440 Special Revenue Fund., WA State Taxes & Fees 183,682 King County Commute Trip Reduction 17,194 FEMA 64,300 King County Hazardous Waste Grant 22,097 King County City Optional Grant 8,136 King County Waste Management Grant 35,269 King County CPG 4,243 King County CDBG 66,059 King County SW M Fees 1,182 Subtotal Special Revenue Fund 402,162 Capital Projects Fund. - King County - Open Space 81,744 WA State - TIB Grant 292,936 State of WA Department of Transportation 106,388 FEMA 1,594 Subtotal Capital Proects Fund 482,662 Enterprise Fund: FEMA 159 Subtotal Enter Ase Fund 159 Internal Service Fund..., FEMA 6 Subtotal Internal Service Fund 6 Total Due From Other Governments $ 2,143,429 General Fund. - King County Property Taxes 198,240 Utility Tax Fund Utility Taxes 98,124 Debt Service Fund: King County Real Estate Excise Tax 165,331 Total Taxes Receivable $ 461,695 Total $ 2.605,124 NOTE 6: Due To Other Governments At December 31, 1997, $301,705 was due to other governmental units as follows: Descrptlon ,Amount [general Fund: King County - Valley Communications 77,589 King County - Jail Services 180,226 King County - Election Costs 17,055 King County - Property Tax $ 1,922 Subtotal General Fund 276,792 Special Revenue Fund. - King County - Signal Cabinets 8,000 King County - 2nd Half SWM Fees 13,872 Subtotal Special Revenue Fund 21,872 lntemal Service Fund: WA State Leasehold Tax 3,041 Subtotal Internal Service Fund 3,041 Total Due To Other Governments $ 301,705 City of Federal Way / 31 NOTE 7: Fixed Assets and Depreciation General Policies Major expenditures for fixed assets, including capital leases and major repairs that increase useful lives, are capitalized. Maintenance, repairs, and minor renewals are accounted for as expenditures or expenses when incurred. The City has adopted a general fixed asset capitalization policy where an item's cost must equal or exceed $1,000. All fixed assets are valued at historical cost (or estimated cost, where historical cost is not known/or estimated market value for donated assets). General Fixed Assets General fixed assets are long-lived assets of the City as a whole. When purchased, leased, or constructed, such assets are recorded as expenditures in the governmental funds and capitalized in the General Fixed Assets Account Group. No depreciation has been provided on general fixed assets, nor has interest been capitalized. General fixed assets that are infrastructure assets (such as roads, bridges, curbs, and sidewalks) are considered public property and are not accounted for in the General Fixed Assets Account Group. A summary of changes in general fixed assets follows: Balance Balance January 1, 1997 Additions Deletions December 31. 1997 Land $ 26,765,375 1,600,766 $ $ 28,366,141 Other improvements 2,284,993 3,312,625 5.597.618 Buildings 1,724,241 - 1,724,241 Construction in progress 3,012,288 1,520,670 2,758,887 1,774,071 Assets under capital lease - land 1,450,000 - 1,450,000 Total 35,236,897 6.434.067 2.758.887 $ 38.912,071 Proprietary Fund Fixed Assets Proprietary fund fixed assets are long-lived assets acquired by the City's Enterprise and Internal Service Funds. The City depreciates these assets at the straight-line rate. The following is a summary of the City's proprietary fund fixed assets at December 31, 1997: Internal Service Funds Subtotal Total Enterprise Information Support Fleet 8 Buildings 8-Internal Service Proprietary Fund Systems Services Equipment Furnishings Funds Funds Land $ 2,109,640 $ - $ $ $ $ - $ 2.109,640 Data Process/telecomm/GIS equip 2,097,868 2,097,868 2,097,868 Heavy equipment 614,246 614,246 614,246 Transportation equipment 1,478,009 1,478,009 1,478,009 Buildings 8 furnishings 774,409 3,237,385 3,237,385 4,011,794 Other equipment - 99,671 203,145 - 302,816 302,816 Subtotal fixed assets 2,684,049 2,097.868 99,671 2.295.400 3.237.385 7,730,324 10,614,373 Less accumulated depreciation (143,893) (926,287) (44,584) (991,453) (971,036) (2,933,360) (3,077,253) Net fixed assets $ 2.740.156 S 1,171.581 S 55,087 $ 1,303,947 S 2,266,349 $ 4,796,964 S 7,537,120 Construction in progress 915,307 - - - 915,307 Total fixed assets $ 3,655,463 $ 1.171,581 $ 55,087 $ 1,303,947 $ 2,266,349 $ 4,796,964 $ 8.452,427 32 / City of Federal Wa Construction Work in Progress Included in the General Fixed Asset account group is Construction Work in Progress which represents projects that were in process at year end. The City had four projects which were in progress at the end of 1997 and are anticipated to be completed during 1998. The projects were: School Site $ 485,352 Celebration Park 1.104,383 Neighborhood Parks 54,583 Klahanee Lake 129.753 Total y 1 774 `!7 1 The Proprietary Funds had two projects that were in progress at the end of 1997 which are anticipated to be completed during 1998. These projects were: Parking Lot $ 121,899 Civic Theatre 793,408 Total $ 915,307 NOTE 8: Pension Plans Substantially all City full-time and qualifying part-time employees participate in the Public Employees Retirement System (PERS) administered by the Department of Retirement Systems, under cost -sharing multiple -employer public employee retirement systems. SUMMARY OF SYSTEMS' ACTUARIAL DATA (In Millions of Dollars) As of December 31, 1995 PERS LEOFF Total Pension Benefit Obligation $ 12,936 $ 4,723 Less Net Assets Available for Benefits 12,349 4,360 Unfunded (Surplus) Actuarial Present Value of Accumulated Plan Benefits $ 12,936 $ 12,936 The amount shown as total pension benefit obligation is the actuarial present value of credited projected benefits, adjusted for the effects of projected salary increases and any step -rate benefits (LEOFF only) estimated to be payable in the future as a result of employee service to date. Use of the standardized measure enable readers of Washington's financial statements to: (a) assess on an ongoing basis the funding status of each system; (b) assess progress made in accumulating sufficient assets to pay benefits when due; and make comparisons among other states or other retirement systems. The standardized disclosure method is independent of the actuarial funding method used to determine contributions to the retirement system. Historical trend and other information regarding each plan is presented in the State Department of Retirements Systems 1997 annual financial report. Public Employees' Retirement System (PERS) The state legislature established PERS in 1947 under Chapter 41.40 RCW. PERS is a cost -sharing multiple -employer system. Membership is mandatory for all City employees working 70 hours per month for five months out of any twelve month period. Membership in the system includes: elected officials; state employees; employees of the Supreme, Appeals, and Superior courts (other than judges); employees of legislative committees; college and university employees not in national higher education retirement programs; judges of district and municipal courts; noncertificated employees of school districts; and employees of local government. Approximately 51 percent of PERS I salaries and 44 percent of PERS II salaries are paid to state employees. City of Federal Way / 33 PERS contains two "plans". (As used in this context, the term "plans" refers to tiers within PERS. The actual plan is PERS) Participants who joined the system by September 30, 1977, are Plan I members. Those joining thereafter are enrolled in Plan ll. Retirement benefits are financed from employee and employer contributions and investment earnings. Retirement benefits in both Plan I and Plan II are vested after completion of 5 years of eligible service. Plan I members are eligible for retirement after 30 years of service, or at the age of 60 with 5 years of service, or at the age of 55 with 25 years of service. The annual pension is 2 percent of the final average salary per year of service, capped at 60 percent. Plan II members may retire at the age of 65 with 5 years of service, or at 55 with 20 years of service, with an allowance of 2 percent per year of service of the final average salary. Plan II retirements prior to 65 are actuarially reduced. There is no cap on years of service credit and a cost -of -living allowance is granted, capped at 3 percent annually. During the 1997 Washington State Legislative Session, the Washington State Legislature did approve a change in retirement law that will not become effective until after the close of fiscal year 1997. Chapter 122, Laws of 1997, authorizes portability for LEOFF I. As a result of this change the state's contribution rate will increase .01 percent. The material changes made during the 1996 Legislative Session that became effective during the 1997 fiscal year were disclosed in last year's annual report. None of the other bills that passed affected contribution rates. The City's covered payroll for year ending December 31, 1997 was $6,429,455. The City's total current - year payroll for all employees was $11,774,101. Each biennium the legislature establishes Plan I employer contribution rates and Plan II employer and employee contribution rates. Employee contribution rates for Plan I are established by legislative statute and do not vary from year to year. Employer rates for Plan I are not necessarily adequate to fully fund the system. The employer and employee contribution rates for Plan II are developed by the Office of State Actuary to fully fund the system. All employers are required to contribute at the level established by the legislature. The methods used to determine the contribution requirements were established under state statute. The City's contribution rates expressed as a percentage of covered payroll, as of December 31, 1997 were: PERS Plan I PERS Plan II Employer 7.00% 4.20% Employee 6.00% 4.20% The City's actuarially -determined contribution requirement and actual contribution for the year ending December 31, 1997 were: PERS Plan I PERS Plan II 1997 $ 83,886 $ 485,871 1996 $ 90,709 $ 646,853 1995 $ 81,940 $ 601,784 The City's actuarially determined employer contribution requirement represents approximately .1101 percent of the total for all employers covered by PERS. Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) LEOFF was established in 1970 by the legislature under Chapter 41.26 RCW. LEOFF is a cost -sharing multiple -employer retirement system. Membership includes all full-time, fully compensated, local law enforcement officers and fire fighters. Retirement benefits are financed by employee and employer contributions, investment earnings and legislative appropriation. LEOFF is comprised solely of non -State employees. LEOFF system contains 2 plans. Participants who joined the system by September 30, 1977, are Plan I members. Those who joined thereafter are enrolled in Plan II. Retirement benefits are vested after completion of 5 years of eligible service. 34 / City of Federal Way Plan I participants are eligible to retire with 5 years of service at age 50. The benefit per year of service is as follows: TERM OF SERVICE PERCENT OF FINAL AVERAGE 20+ 2.0% 10-20 1.5 5-10 1.0 The final average salary is based on salary received during the last 2 years of service. Substantial disability and death benefits are provided by the plan. Retirement benefits are indexed to the Seattle area consumer price index. Plan II participants are eligible to retire at the age of 50 with 20 years of service or at 55 with 5 years of service. Retirement benefits prior to age 55 are actuarially reduced. The benefit is 2 percent of average salary per year of service. The average salary is based on the highest 5-year period. Retirement benefits are indexed to the consumer price index with a cap of 3 percent annually. Death and disability benefits are also provided. These benefit provisions were established under the authority of legislative statute. Employer and employee contribution rates for Plan II are developed by the Office of State Actuary to fully fund the system. Plan II employers and employees are required to pay at the level established by the legislature. Plan I employers and employees are required to contribute at a rate of 6 percent and the state is responsible for the balance of the funding. The methods used to determine the contribution requirements were established under the authority of legislative statute. During the 1997 legislative session, a portability benefit was provided for members of LEOFF I who later established membership in another system. The portability benefit will increase state contribution rates .01 percent of salary. The City's contribution rates expressed as a percentage of covered payroll, as of December 31, 1997 were: Employer Employee LEOFF Plan 1 6.00% 6.00% LEOFF Plan II 5.06% 8.43% The City's actuarially determined contribution requirement and actual contribution for the year ended December 31, 1997 were: LEOFF Plan I LEOFF Plan II 1997 $ - $ 620,835 1996 $ - $ 200,511 1995 $ $ The City's actuarially determined employer contribution requirement represents approximately .2324 percent of the total for all employers covered by LEOFF. Other Local Government Pension Systems - City of Federal Way Employees' Retirement System The City is also administrator of a defined contribution pension retirement system called the Federal Way Retirement System. The system has been classified as an expendable trust fund in the financial reports of the City. It is classified as such because 1) it is a defined contribution plan, not a defined benefit plan; and 2) the plan does not call for any predetermined funds to be available for benefits at a particular time (no actuarial requirements regarding benefits or city requirements exist). 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 which was established as an alternative to the Federal Social Security System. During 1997, there were a total of 267 individuals covered by this system. As of the end of the year, 243 remained as active employees of the City and none were drawing retirement benefits. The 24 inactive had left the City's employment and either had been reimbursed their contributions, or the reimbursement was pending, or they elected to have their contributions remain in the plan if the balance was $3,500 or greater. City of Federal Way / 35 All regular employees of the City of Federal Way are required to participate in the system, with the City matching the employee's required contribution. The employee pays 6.2% and this is matched by the composite of a cash match (approximately 5.2%) and insurance payments (1%) for disability, survivor, accidental death and dismemberment, and lump sum death benefit coverages. Contributions into the plan are tax deferred. Employees are entitled to make voluntary contributions to the plan, assuming that highly compensated and non -highly compensated employees are treated equally. Each payroll period, employees may make a voluntary contribution equal to a minimum of 1% of the participant's compensation, not to exceed 10% of the participant's compensation. Covered payroll for 1997 was $10,751,664 and total City payroll was $11,774,101. Actual City contributions for the year were $559,087. Actual employee contributions were $666,605. All contributions were invested in instruments arranged through independent investment advisors selected by the municipal employers benefit Trust (MEBT) committee comprised of the cities of Bellevue, Kirkland, Redmond, Edmonds, Mill Creek, Woodinville, and Federal Way but administered through Wells Fargo Bank. Retirement System assets are not the property of the City and are not subject to the claims of the City's general creditors. The Federal Way Retirement System assets are with Wells Fargo Bank who invests Plan assets. At year end these assets amounted to $5,491,556 and were comprised of U.S. government obligations ($382,889) corporate obligations ($834,986), guaranteed insurance contracts ($788,035), equity securities ($3,267,171), money market securities ($190,258), and foreign securities ($28,217). In July 1995, the City implemented the hardship withdrawal and loan provision program. Loans receivable for 1997 total $166,711. The consulting actuary firm of Howard Johnson & Co. has been contracted to provide record -keeping, administrative and consulting services related to the Plan. Actuarial determinations are not required because accidental death and dismemberment insurance, long- term disability, survivor income insurance and the lump sum death benefit are provided by a group insurance policy with Standard Insurance Company; and benefits paid to participants upon retirement are limited to (a) a nonforfeitable, nontransferable annuity contract purchased by the plan's trustee, (b) retirement benefits payable from the employee's account to which no contributions by the City or the participant can be added after retirement, or a single lump -sum payment equal to the accumulated balance in the employee's account as of his retirement date. NOTE 9: Other Employee Benefits Deferred Compensation The City offers its employees a deferred compensation plan in accordance with Internal Revenue Code Section 457. This multi -jurisdictional plan administered by the ICMA Retirement Corporation permits employees to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, or unforeseeable emergency; or upon death, to their beneficiaries. On August 20, 1996, the provisions of IRC Section 457 were amended. Under the new requirement, the City no longer owns the amounts deferred by employees or related income on those amounts, therefore, beginning January 1, 1997, the City of Federal Way no longer records deferred compensation on the books. 36 / City of Federal Way NOTE 10: Risk Management The City maintains insurance against most normal hazards except for unemployment insurance where it has elected to become fully self -insured. Related premiums received by the Risk Management Fund are used to reimburse the State Employment Security Department for unemployment benefits paid to eligible individuals, and to establish reserves for the payment of estimated future unemployment claims liability. Through its Risk Management Fund, the City is also recovering insurance premium costs for general liability coverage and building reserves for a future general liability self-insurance program. The City's insurance coverage in 1997 remained relatively similar to the coverage for 1996. During 1997 the City purchased commercial insurance policies from commercial insurers. A summary of coverages in force during 1997 is presented below: Name of Company Coverage Liability Limits St. Paul Fire & Marine Public Officials Claim - $5,000,000 Liability Coverage Aggregate - $5,000,000 Deductible - $10,000 General Liability Claim - $1,000,000 Aggregate - $2,000,000 Deductible - $5,000 Property Coverage Buildings - $10,222,500 Extra Expense - $1,263,500 Valuable Papers - $310,000 Deductible - $5,000 Find Arts - $25,000 Deductible - $1,000 Auto Liability & Physical Damage Coverage Limit - $1,000,000 Collision Deductible - $1,000 Comprehensive Deductible - $250 Liability - $5,000 Inland Marine Coverage Limit - $119,500 Deductible - $1,000 Coinsurance - 90% Excess Policy Per Claim/Aggregate - $10,000,000 Retention - $10,000 Employer Liability Coverage Limit - $1,000,000 Workers' Compensation Stop -Gap Statute by Limit Law Enforcement Liability Coverage Limit - $1,000,000 General Aggregate - $2,000,000 Deductible - $10,000 Above Ground Pollution Per Claim/Aggregate - $1,000,000 Deductible - $1,000 Boiler & Machinery Per Incident - $1,000,000 Deductible - $1,000 The Fidelity and Deposit Public Official Bond St. Paul Fire and Marine City Manager Coverage Limit - $50,000 Management Services Director Coverage Limit - $50,000 City Clerk Coverage Limit - $50,000 Chief of Police Coverage Limit - $50,000 Faithful Performance, Coverage Limit - $250,000/bond Fidelity/Emp. Dishonest Deductible - $2,500 & Erisa Bond Deductible (Erisa) - $0 City of Federal Way 137 The City uses the Risk Management Internal Service Fund to account for its risk financing activities. The City's industrial insurance is provided by Washington State and is administered by the Department of Labor and Industries. Coverage is purchased by means of standard rates per working hour and is computed by the total number of hours worked by employees multiplied by the basic premium rate assigned to the business risk classification. The following are benefits provided by industrial insurance: medical services, damaged clothing, travel expenses, time -loss payments, vocational rehabilitation, partial disability awards, pension awards and survivor benefits. NOTE 11: Estimated Arbitrage Rebate The Federal Tax Reform Act of 1986 requires issuers of tax-exempt debt of over $5 million to make payments to the United States Treasury of investment interest received at yields that exceed the issuer's tax-exempt borrowing rates. Payments of arbitrage rebate amounts due under these regulations must be made to the U.S. Treasury every five years. The City's estimated rebatable arbitrage amount as of December 31, 1997 is $-0- for its tax-exempt general obligation bond issues subject to the Tax Reform Act issued through that date. NOTE 12: Long -Term Debt The various categories of long-term debt reflected on the City's financial statements are briefly described in the following paragraphs. General Obligation bonds are backed by the City's full faith and credit. Proceeds are typically used for the acquisition or construction of major capital facilities or equipment. "Councilmanic Bonds" are general obligation bonds issued by City Council without voter approval. Under State law, repayment of these bonds must be financed from general City revenues since no additional property taxes can be levied to support related debt service payments. General Obligation bonds approved by the voters are typically repaid through an annual "excess" property tax levy authorized for this purpose by State statute. At year end 1997 the City had no voter approved bonds outstanding. The City issued Certificates of Participation in 1992 for the purchase of City Hall. They are accounted for in the Internal Service Fund established for buildings and furnishings. All other general obligation debt is recorded in the General Long-term Debt Account Group and annual principal and interest payments are recorded as expenditures by the City's Debt Service Fund. Debt Issued During 1997 1997 Limited Tax G.O. Bond On May 1, 1997, the City issued $16,150,000 in limited general obligation bonds. These bonds were issued for funding various community investment projects, including sports fields and other improvements at Celebration Park, Civic Theatre and related improvements at Dumas Bay Centre, a public safety facility and a community revitalization project that includes street lights, beautification and safety improvements and other projects in the City's downtown area. The bonds will mature beginning June 1, 1998 through June 1, 2012. The bonds carry an interest rate of 5% to 5.25%. The debt service on these bonds will be paid by the implementation of an additional 3.63% utility tax, bringing the total utility tax rate to 5% effective March 1, 1997. 38 / City of Federal Way The following is a schedule of outstanding general obligation debt as of December 31, 1997: OUTSTANDING GEN.ERAL OBUGA ION DENT December 31, 1997 Amount Beginning Ending Originally Outstanding Amount Amount Ouslanding Descri lion Date of Issue MaturIty Dale Interest Rate Issued Delal Issued Redeemed Debt CxOnera)ga ion s: 1991 Limited 1-Feb-91 1-Dec-21 6,00.6.85 $ 12,500,000 S 1,055,000 $ $ 185,000 S 870,000 1994 Limited 14-Jun-93 1-Dec-08 2-70-5.70 2,390,000 2,030,000 125,000 1,905,000 1994 Refunding 13-May-93 1-Dec-21 2.70-5,85 12,106,000 11,990,000 40,000 11,950,000 1995 Limited 28-Dec-95 1-Dec-05 3.90 • 4J5 5,000,000 5,000,000 470,000 4,530,000 1996 Limited 29-Feb-96 1-Dec-05 3.50 L 4.50 2,500,000 2.500,000 240,000 2,260,000 1997 Limited •SutAQt.-Al 22-A r-97 1-Dec-12 5M - 5.30 16,150,000 t6,_150,000 GO Bonds 34,49 ,000 22,515,0006,? ,060 07=77.007 Certificates of Participation: 1991 Issue 25-Sep-91 1-Dec-06 4.75.6.80 1,450,000 1,105,000 85,000 1,020,000 1992 Issue • Senes A 26-Au -92 1-Dec-02 3.00 - 5.45 2,i50,000 1,520 2 225.000 1,295.0W u ota s 3,600.000 s� ,21 310,000 2,3 Public Works Trust Fund Loan: PWTL 31-Aug-94 1-Jul-14 1,00 233,316 221.028 15,418 205.610 P W TL 24-Jul-96 1-Jul-14 1.00 1,166, 580 1,166, 680 61,671 1,104,909 PW TL -'uSubtotalPWT 4.Sep-97 1 •Jul- t 4 1.00 155.544 155,544 1,399.696 1,307,608 156,5447 ,1 1466003 Grand Total All Long -Term Debt $ 39.494,896 $ 26.587.608 $ 16.305,544 $ 1,447,089 S 41.446,063 OU STAN iNG GENERAL OSLIGATION DEBT December 31, 1997 Amount Beginning Ending Originally Outstanding Amount Amount Oustanding Description Issued Debt Issued Redeemed Debt GenerarLong- I erm aIt uroup: ' s 1991 Limited $ 12,500,000 $ 1,055,000 $ $ 185,000 870,000 1991 COP Issue 1,450,000 1,105,000 85,000 1,020,000 1994 Limited 2,390,000 2,030,000 125,000 1,905,000 1994 Refunding 12.105,000 11,990.000 40,000 11,950,000 1995 Limited 5,000,000 5,000,000 470,000 4,530,000 1996 Limited 2,500,000 2,500,000 240,000 2,260,000 1997Limiled - 1B,150,000 - T8,150,000 6t ena ❑ erm e l .000 1,T Internal Service Funds 1992 Issue - Series A 2,150,000 1,520,000 225,000 1,295,000 Public Works Trust Fund Loan 1,399.896 1,387,608 155,544 77,089 1,466,063 Grand Total All Long -Term Debt $ 39.494.896 $ 26,587,608 $ 16,305,544 $ 1,447,089 $ 41,446,063 The following statement of long-term debt provides the City's outstanding debt for 1997 and 1996: SCHEDULE OF GENERAL LONG-TERM DEBT December 31, 1997 With Comparative Totals for December 31, 1996 Amounts Available and Amounts to be Provided for the Payment of General Long Term Debt Amount to be Provided for the Retirement of: 1997 1996 General Obligation Bonds 32,699,107 19,724,862 Public Work Trust Fund Loan 1,466,063 1,387,616 Compensated Absences 598,413 465,696 Certificates of Participation 1,020,000 1,105,000 Amount Available in Debt Service Funds 4,965,893 2,850,138 Total Amount Available and to be Provided $ 40,749,476 $ 25,533,312 General Long -Term Debt Payable General Obligation Bonds 37,665,000 22,575,000 Public Work Trust Fund Loan 1,466,063 1,387,616 Certificates of Participation 1,020,000 1,105,000 Compensated Absences - Vacation 598,413 465,696 Total General Long -Term Debt $ 40,749,476 $ 25,533,312 City of Federal Way / 39 SCHEDULE OF CHANGES IN LONG-TERM DEBT Period Ended December 31, 1997 General Pubic Works Obligation Trust Fund Certificates of Accrued Vacation, Claims Bonds Loan Participation and Judgements Total General General General General : Long -Term Long -Term Long -Term Internal Long -Term Internal Debt Debt Debt Service Debt Enterprise Service $ 22.575.000 $ 1,387,608 $ 1,105.000 $ 1.520.000 $ 465,698 $ 1,867 $ 24,041 $ 27.079,212 Outstanding at December 31, 19% .Additions: New Debt Issued or Aquired Increase in Accrued Vacation 16,150,000 155,544 - 132,717 781 1,940 16,305,544 134,538 Total Additions 16,150,000 54 155,4 132,717 781 1,040 16,440,082 Reductions: General Obligation Bonds (1,060,000) (77,089) - (1,137,0891 Capitalized Lease Obligations (85,Q001 1225,000)1310 000) Total Reductions (1,060,000) (77,0891 (85,000) (225.000) (1,447,089) '-Outstanding at December 31 1997 1 $ 37 665 000 $ 1,466,063 $ I. 020 000 $ 1 295,000 $ 598 41a $ 26,18 $ 25,081 $ 42.072 205 Presented below is a summary of the City's debt service requirements to maturity by year for all outstanding debt other than compensated absences: ANNUAL DEBT SERVICE PAYMENTS TO MATURITY General Obligation Certificates Public Works 801fided Debt of Participation Trust Fund Loan Total Debt 1998 $ 4,149,355 $ 458,080 $ 100.650 $ 4,708.085 1999 4,192,790 456,400 100,038 4,749,228 2000 4,183,173 458,308 99,175 4,740,656 2001 4,176,503 453,538 98,313 4,728,354 2002 4,168,753 452,425 97,451 4,718,629 Thereafter 35,659,266 609,208 1.102,140 37,270,614 $ 56,429.840 $ 2,887,959 $ 1.597.767 $ 60 915,5615 SCHEDULE OF DEBT SERVICE REQUIREMENTS TO MATURITY Year Principal Interest Total 1998 $ 2,611,239 $ 2,096,845 $ 4,708,084 1999 2,781,239 1,967,988 4,749,227 2000 2,911,239 1,829,414 4,740,653 2001 3,046,239 1,682,114 4,728,353 2002 3,186,239 1,532,389 4,718,628 2003 3,051,239 1,376,889 4,428,128 2004 3,201,239 1,227,216 4,428,455 2005 3,366,239 1,066,557 4,432,796 2006 2,506,239 894,503 3,400,742 2007 2,486,239 760,524 3,246,763 2008 1,091,239 668,447 1,759,686 2009 921,239 611,527 1,532,766 2010 971,239 564,296 1,535,535 2011 1,021,239 514,151 1,535,390 2012 1,076,239 461,115 1,537,354 2013 696,239 415,598 1,111,837 2014 736,239 378,745 1,114,984 2015 695,000 339,533 1,034,533 2016 740,000 298,528 1,038,528 2017 785,000 254,868 1,039,868 2018 835,000 208,553 1,043,553 2019 890,000 159,705 1,049,705 2020 945,000 107,640 1,052,640 2021 895.000 52,358 947,358 Total $ 41,446,063 $ 19,469,503 $ 60.915.566 40 / City of Federal Way 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 21/2 percent of the value of all taxable property within the City. State law requires all property to be assessed at 100 percent of its true and fair value. Unlimited tax general obligation debt requires an approving vote of the people, and any election to validate such general obligation debt must have a voter turnout of at least 40 percent of those who voted in the last State general election and of those voting, 60 percent must be in the affirmative. The City Council may, by ordinance, authorize the issuance of limited tax general obligation debt in an amount up to 1.5% of the valuation within the City without a vote of the people. No combination of limited or unlimited tax debt may exceed 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, 1997 are: General Government (no vote required) $ 27,625,531 General Government (3/5 majority vote required) $ 41,774,402 Parks and Open Space (3/5 majority vote required) $104,436,006 Utilities (3/5 majority vote required) $104,436,006 Compensated Absences As explained in Note 1, the City's liability for accrued employee vacation balances from governmental fund employees is recorded in the General Long-term Debt Account Group. Balances for proprietary funds are recorded as liabilities in the specific fund expected to incur the related future expense. The total liability by fund type for accrued employee vacation as of December 31, 1997, is provided below: Governmental Funds (recorded in the General Long-term Debt Account Group) $598,413 Enterprise Funds 2,648 Internal Service Funds 25,081 Total Compensated Absences $626,142 Refunded Debt In 1993, the City refunded one general obligation bond issue by placing the proceeds for new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. As a result, the refunded bonds are considered defeased and the liability has been removed from the City's financial statements. At December 31, 1997, the cash held with refunding Trustee (First Trust National Association) was $64 and investments held with the Trustee were $8,759,612. Refunded bonds payable were $11,950,000 at year-end. NOTE 13: Interfund Transactions Interfund transactions represent reductions in the expendable financial resources of the transferring fund, but the transaction may or may not be accounted for as an expenditure of the transferring fund. Transactions between funds may be classified as (1) quasi -external transactions, (2) loans and advances, (3) reimbursements, (4) residual equity transfers, and (5) operating transfers. During 1997, the City recorded all of the above with the exception of reimbursements. Quasi -external Transactions Quasi -external transactions reflect the existence of a more -or -less normal buyer/seller relationship between City funds. During 1997, these involved transactions between internal service funds and other funds for the purpose of recovering operating and maintenance costs and to build replacement reserves. City of Federal Way / 41 Intertund Receivables/Payables The following schedule presents interfund loans and due to/due from other funds outstanding at December 31, 1997: Interfund Loans Intertund Loans inferruna Loans Receivable Payable 3.!neralFund Z 1g000 Special Revenue Funds: Communil DeWN mans &lock Ciranl - 10,000 oral +nte luny Loans § f .009 S 11,000 Due TWDue From Other Funds Due From Other Funds Due To Other Funds General Fund 86.516 136,560 Special Revenue Funds: Street 15.941 23.159 Utility Tax Projects - 8,080 Solid Waste/Recycling 1,018 292 Community Development Block Grant - 69.493 Surface Water Management 9,521 6,194 Subtotal Special Revenue Funds 26,460 97,218 Capital Projects Funds: City Facilities Parks Traffic Street Subtotal Capital Projects Funds Enterprise Fund Dumas Bay Centre 6.288 64,577 64 3,526 673 1.204 3,526 69,307 10,551 32,144 206 Internal Service Funds Risk Management 46,390 12,613 Information Systems 68.636 72,058 Support Services 20,032 10,958 Fleet & Equipment 26,519 33,204 Buildings & Furnishings 200 2.866 Subwal Internal Setvzo Funds 181,777 131,599 rorai Due 7o/Fro7 Other Funds 376224 375.22A Totallnterfund ReceivableslPayables $ 386.224 S 386,224 Residual Equity Transfers Residual equity transfers are nonrecurring or non -routine transfers of equity between funds. They do not represent expenditures of the transferring fund but a change in a fund balance. In governmental funds, they are reported as an increase or decrease in the beginning fund balance. For a proprietary fund, they are presented as an increase or decrease in the fund's contributed capital or retained earnings. The following residual equity transfers were recorded in 1997: Fund Category Transfers In Transfers Out General Fund $ $ 108,160 Special Revenue Funds 50,460 Capital Project Funds 35,181 Internal Service Funds 193,801 $ 193,801 $ 193,801 The above amount of $193,801 was transferred from, governmental funds to the internal service funds, which record related transactions as additions to contributed capital. Operating Transfers Operating transfers are legally authorized contributions of resources from one fund to another to subsidize designated activities or expenditures. Except for the Enterprise Fund, operating transfers are accounted for as "Other Financing Sources and Uses". The following operating transfers were recorded during 1997: Fund Category Transfers In Translers Out General Fund $ 122,005 $ 1,705,301 Special Revenue Funds 2,226,731 6,990,416 Debt Service Fund 2,984,667 Capital Project Funds 3,781.652 1,180,057 Enterprise Fund 643,000 4,062 Internal Service Funds 121,781 - 3 9.879.836 $ 9,879.836 42 / City of Federal Way NOTE 14: Contributed Capital Contributed capital in internal service funds records the amounts of working capital and fixed assets received from other funds. Contributed capital forms one of two classifications of equity found on the balance sheet of a proprietary fund. Contributed capital is created when a residual equity transfer is received by a proprietary fund, when a general fixed asset is "transferred" to a proprietary fund or when a grant is received that is externally restricted to capital acquisition or construction. Contributions restricted to capital acquisition and construction and fixed assets received from developers and customers, as well as amounts of tap fees in excess of related costs, also would be reported in this category. During 1997 various transactions impacted the contributed capital of proprietary funds. These transactions have been identified in the following presentation: Beginning Contributed Capital Additions: Residual Equity Transfers Land/Equipment/ Furniture Donations Total Additions Deductions: Amortization Total Deductions Ending Contributed Capital Internal Service Funds Subtotal Total Enterprise Information Support Fleet & Buildings & Internal Service Proprietary Fund Systems Services Equipment Furnishings Funds Funds $2,596,455 $ 953,346 $ 88,995 $1,424,249 $ 562,676 $ 3,029,266 $ 5,625,721 98,380 - 63,736 31,685 193,801 193,801 204,111 178,253 15,599 397,963 397,963 302,491 241,989 47,284 591,764 591,764 (41,188) (259,913) (29,878) (345,289) (88,112) (723,192) (764.380) (41,188) (259,913) (29,878) (345,289) (88,112) (723,192) (764,380) $2,565.267 $ 995,924 $ 59,117 $1,320,949 $ 521,848 $ 2,897,838 $ 5,453.105 The following is a reconciliation of depreciation expense to depreciation reducing contributed capital: Internal Service Funds Subtotal Total Enterprise Information Support Fleet & Buildings & Internal Service Proprietary Fund Systems Services Equipment Furnishings Funds Funds Depreciation Expense $ 41,188 $ 259,913 $ 29,878 $ 345,289 $ 204,612 $ 839,692 $ 880,880 Less: Write-off of Accumulated Depreciation (755) (1,500) (2,265) (2,255) Depreciation on Building (116,500) (116,500) (116,500) Depreciation Reducing Contributed Capital 5 41,188 $ 259,913 S 29.878 $ 344.534 5 86,612 5 720,937 $ 762,125 NOTE 15: Contractual Obligations, Contingencies and Litigation As of December 31, 1997, 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. City of Federal 143 At December 31, 1997, the City had the following unpaid contractual obligations: $ 25,966 Lake Killarney $ 117,294 Campus Drive Project $ 72,140 Celebration Park $ 29,073 Steel Lake Improvements $ 145,958 SeaTac Mall Detention $ 371,933 South 356th Regional Storage Facility $ 28,776 21st Ave ® SW 325th Signal $ 30,113 Dash Point Road ® 8th Ave SW/4th $ 28,797 Dash Point Road ® 21st Ave SW $ 21,590 South 336th ® SR99-Construction RHTL $ 1,152.587 SW 336th ® 21 st to 27th Ave SW $ 124,909 South 312th - SR99 to 23rd Ave S NOTE 16: Fund Additions and Deletions During 1997, the City added one Special Revenue Fund and one Capital Project Fund. The Utility Tax Project Fund, a special revenue fund type, was added to account for utility tax. The City Facilities Fund, a capital project fund type, was added to account for some capital improvement projects funded with the 1997 Limited General Obligation Bond. The City also deleted the Deferred Compensation Fund, an agency fund. This fund was established to account for the City's employee tax deferred compensation program. Since the City does not record deferred compensation on it's books beginning January 1, 1997, the fund is no longer needed. NOTE 17: Subsequent Events On March 3, 1997, the City Council passed an ordinance to annex Enchanted Park, a 71.56 acres amusement park located between SR 161 (Enchanted Parkway), Interstate 5, Milton Road South, South 369th Street, and 19th Way South. The annexation is effective April 20, 1998. During 1997, the City's Police Department voted to form a union. The bargaining unit, the Federal Way Police Guild, was certified on March 18, 1997 and consisted of all sworn police officers, excluding supervisors. The City is currently working with the union to negotiate a contract. On April 21, 1998 the City Council postponed indefinitely the actions associated with withdrawing the notice of intent to assume the Lakehaven Utility filed with the Pierce County Boundary Review Board and the dismissal of open public meetings act lawsuit filed against Lakehaven Utility District. CITY OF 0- ... u• General Fund The General Fund is used to account for all receipt and disbursement transactions associated with ordinary City operations that are not required to be accounted for in another fund, This fund is both tax and general revenue supported. Major revenue sources for the General Fund include property, sales, excise and other taxes, and miscellaneous permits and fees, City of Federal Way / 46 GENERALFUND COMPARATIVE BALANCE SHEET December 31, 1997 and 1996 1997 1996 ASSETS Equity in pooled cash and investments $ 3,825,514 $ 2,783,337 Receivables (net): Taxes 198,240 197,005 Accounts and contracts 61,232 61,259 Interest 45,329 30,124 Due from other funds 86,516 29,954 Due from other governments 1,258,440 1,251,767 Interfund loans receivable 10,000 10,000 TOTAL ASSETS 5,485,271 4,363,446 LIABILITIES AND FUND BALANCE Liabilities: Vouchers payable 256,184 1,064,511 Accounts/payroll payable 78,924 1,018 Retainage payable 11,787 11,787 Due to other governments 276,792 119 Due to other funds 136,550 97,727 Deposits payable 216,469 191,479 Deferred revenues 227.477 184,366 TOTAL LIABILITIES 1,204,183 1,551,007 Fund balances: Reserved for: Interfund loans 10,000 10,000 Petty cash/change funds 15,009 3,500 Police Special Funds 92,016 9,646 Advance travel 5,000 5,000 Unreserved: Designated for COPS grants 674,778 Undesignated 3,484,285 2,784,293 TOTAL FUND BALANCE 4,281,088 2,812,439 TOTAL LIABILITIES AND FUND BALANCE $ 5,485,271 $ 4,363,446 City of Federal Way / 47 GENERALFUND COMPARATIVE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE For the Years Ended December 31, 1997 and 1996 1997 1996 REVENUES Taxes $ 16,123,086 $ 15,620,138 Licenses and permits 1,048,918 836,182 Intergovernmental 3,352,255 2,709,228 Service charges and fees 846,065 755,924 Fines and forfeitures 576,054 520,670 Miscellaneous: Interest 242,383 289,029 Other 226,375 128,238 TOTAL REVENUES 22,415,136 20,859,409 EXPENDITURES Current: General government 3,365,715 3,666,881 Security of persons and property 10,282,388 10,269,193 Physical environment 20,869 20,394 Transportation 75,584 69,146 Economic environment 2,213,059 2,253,424 Health 457,211 488,604 Culture and recreation 2,521,085 2,944,815 Capital outlay 319,120 1,549,146 TOTAL EXPENDITURES 19,255,031 21,261,603 EXCESS OF REVENUES OVER EXPENDITURES 3,160,105 (402,194) OTHER FINANCING SOURCES (USES): Operating transfer in 122,005 451,678 Operating transfers out (1,705,301) (1,335,623) TOTAL OTHER FINANCING SOURCES (USES) (1,583,296) (883,945) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES 1,576,809 (1,286,139) FUND BALANCE AT BEGINNING OF YEAR 2,812,439 4,225,224 Residual equity transfers out (108,160) (126,646) FUND BALANCE AT END OF YEAR $ 4,281,088 $ 2,812,439 City of Federal Way / 48 GENERALFUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL For the Years Ended December 31, 1997 and 1996 REVENUES Taxes Licenses and permits Intergovernmental Service charges and fees Fines and forfeitures Miscellaneous: Interest Other TOTALREVENUES EXPENDITURES: Current: General government Security of persons and property Physical environment Transportation Economic environment Health Culture and recreation Capital outlay TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Operating transfers in Operating transfers out TOTAL OTHER FINANCING SOURCES (USES) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES FUND BALANCE AT BEGINNING OF YEAR Residual equity transfers out FUND BALANCE AT END OF YEAR Budget $ 15,831,062 1,073,055 3,220,249 873,216 639,830 344,527 22,089,573 $ 16,123,086 1,048,918 3,352,255 846,065 576,054 242,383 226,375 4,201,209 3,365,715 11,179,159 10,282,388 21,500 20,869 - 75,584 2,430,133 2,213,059 486,832 457,211 2,649,091 2,521,085 20,000 319,120 20, 987, 924 19, 255, 031 1,101,649 3,160,105 Variance Favorable (Unfavorable) $ 292,024 (24,137) 132,006 (27,151) (63,776) (102,144) 118.741 325.563 1996 $ 15,620,138 836,182 2,709,228 755,924 520,670 289,029 128,238 20, 859, 409 835,494 3,666,881 896,771 10,269,193 631 20,394 (75,584) 69,146 217,074 2,253,424 29,621 488,604 128,006 2,944,815 (299,120) 1,549,146 2,058,456 (402,194) 122,005 122,005 451.678 (1,554,745) (1,705,301) (150,556) (1,335,623) (1,432,740) (1,583,296) (150,556) (883,945) (331,091) 1,576,809 1,907,900 (1,286,139) 2,812,439 2,812,439 - 4,225,224 (260,608) (108,160) 152,448 (126,646) $ 2,220,740 $ 4,281,088 $ 2,060,348 $ 2,812,439 City of Federal Way / 49 GENERALFUND SCHEDULE OF EXPENDITURES COMPARED TO BUDGET For the Year Ended December 31, 1997 Variance Favorable Budget Actual (Unfavorable) GENERALGOVERNMENT LEGISLATIVE: Personal services $ 71,837 $ 71,636 $ 201 Supplies 2,060 2,208 (148) Service charges and fees 90,176 88,947 1,229 Intergovermental services 70,000 78,561 (8,561) Interfund services 25.481 22.162 3,319 TOTAL LEGISLATIVE 259,554 263,514 (3,960) JUDICIAL: Service charges and fees 16,188 9,744 6,444 Intergovermental services 398,488 337,798 60,690 TOTAL JUDICIAL 414,676 347,542 67,134 EXECUTIVE: Personal services 348,841 374,281 (25,440) Supplies 6,547 3,762 2.785 Service charges and fees 28,903 21,408 7,495 Interfund services 737,953 46,614 691,339 TOTAL EXECUTIVE 1,122,244 446,065 676,179 FINANCIAL AND RECORD SERVICES: Personal services 635,537 640,036 (4,499) Supplies 10,675 10,589 86 Service charges and fees 74.022 85,095 (11,073) Intergovermental services 26,000 29,573 (3,573) Interfund services 184,530 147,370 37,160 TOTAL FINANCIAL AND RECORD SERVICES 930,764 912,663 18,101 LEGAL: Personal services 530,962 559,327 (28.365) Supplies 8,636 12,171 (3,535) Service charges and fees 372,711 309,348 63,363 Intergovermental services 1.000 315 685 Interfund services 84.515 71,115 13,400 TOTAL LEGAL 997,824 952,276 45,548 PERSONNEL: Personal services 208,119 208,699 (580) Supplies 10,453 7,685 2,768 Service charges and fees 99,284 71,901 27,383 Interfund services 50,737 41.780 8.957 TOTAL PERSONNEL 368,593 330,065 38,528 CENTRAL SERVICES: Personal services 73,800 66,631 7,169 Supplies 650 11,096 (10,446) Service charges and fees 19,016 24,782 (5,766) Interfund services 14,088 11,081 3.007 TOTAL CENTRAL SERVICES 107,554 113,590 (6,036) TOTAL GENERAL GOVERNMENT 4,201,209 3,365,715 835,494 Page 1 of 4 City of Federal Way / 50 GENERALFUND SCHEDULE OF EXPENDITURES COMPARED TO BUDGET For the Year Ended December 31. 1997 (Continued) SECURITY OF PERSONS AND PROPERTY LAW ENFORCEMENT: Personal services Supplies Service charges and fees Intergovermental services Interfund services TOTAL LAW ENFORCEMENT DETENTION AND/OR CORRECTION: Intergovermental services TOTAL DETENTION AND/OR CORRECTION COMMUNICATION, ALARM & DISPATCH: Personal services Supplies Service charges and fees Intergovermental services Interfund services TOTAL COMMUNICATION, ALARM & DISPATCH TOTAL SECURITY OF PERSONS AND PROPERTY PHYSICAL ENVIRONMENT NATURAL RESOURCES: Intergovermental services TOTAL NATURAL RESOURCES TOTAL PHYSICAL ENVIRONMENT Variance Favorable Budget Actual (Unfavorable) 6,679,085 6,475,081 204,004 97,300 244,856 (147,556) 1,029.132 516,552 512,580 137.175 19,866 117,309 1,038.955 763.321 275,634 8,981,647 8.019,676 961,971 782,000 844,343 (62,343) 782,000 844,343 (62.343) 338,681 422,785 (84,104) 2,500 2,837 (337) 9,279 11,175 (1,896) 983,666 981.572 2,094 81,386 - 81,386 1,415,512 1,418,369 (2,857) 11,179,159 10.282,388 896,771 21,500 20,869 631 MUNICIPAL VEHICLES & PUBLIC WORKS EQUIPMENT: Supplies 965 (965) Service charges and fees 459 (459) Capital 74,160 (74,160) TOTAL MUNICIPAL VEHICLES & PUBLIC WORKS EQUIPMENT 75,584 (75,584) TOTAL TRANSPORTATION 75,584 (75,584) ECONOMIC ENVIRONMENT AGING: Personal services 50,494 50,687 (193) Supplies 7,750 6,341 1,409 Service charges and fees 3,190 2,253 937 TOTAL AGING 61,434 59,281 2,153 COMMUNITY SERVICES: Personal services 114,666 105,977 8,689 Supplies 4,394 6,185 (1,791) Service charges and fees 52,427 22,716 29,711 Interfund services 16,399 7,291 9 108 TOTAL COMMUNITY SERVICES 187,886 142,169 45,717 Page 2 of 4 City of Federal Way / 51 GENERALFUND SCHEDULE OF EXPENDITURES COMPARED TO BUDGET For the Year Ended December 31. 1997 (Continued) Variance Favorable Budget Actual (Unfavorable) PLANNING AND COMMUNITY DEVELOPMENT: Personal services 921,139 915.904 5,235 Supplies 10,655 8.927 1,728 Service charges and fees 329,382 232.195 97,187 Intergovermental services 50 50 Interfund services 249,463 213.313 36,150 TOTAL PLANNING AND COMMUNITY DEVELOPMENT 1,510,689 1,370,339 140,350 HOUSING AND COMMUNITY DEVELOPMENT: Personal services 487.220 479,241 7,979 Supplies 5.844 7,056 (1,212) Service charges and fees 43,437 30,092 13,345 Interfund services 133,623 124.881 8,742 TOTAL HOUSING AND COMMUNITY DEVELOPMENT 670.124 641.270 28,854 TOTAL ECONOMIC ENVIRONMENT 2,430,133 2,213,059 217,074 MENTAL & PHYSICAL HEALTH PUBLIC HEALTH: Personal services 77,969 79,885 (1,916) Supplies 1,214 942 272 Service charges and fees 357.144 338,023 19,121 Intergovermental services 14,500 15,722 (1,222) Interfund services 36,005 22,639 13,366 TOTAL PUBLIC HEALTH 486,832 457,2 11 29,621 TOTAL MENTAL & PHYSICAL HEALTH 486,832 457,211 29,621 CULTURE AND RECREATION EDUCATION: Personal services 223,577 215,110 8,467 Supplies 1,950 2,546 (596) Service charges and fees 66,226 49,029 17,197 Interfund services 118,852 85,321 33,531 TOTAL EDUCATION 410,605 352,006 58,599 SPECTATOR AND COMMUNITY EVENTS: Personal services 279,792 281,730 (1,938) Supplies 30.965 34,982 (4,017) Service charges and fees 199,555 169,296 30,259 Intergovermental services 4,300 4.300 Interfund services 23,214 21,669 1,545 TOTAL SPECTATOR AND COMMUNITY EVENTS 537,826 507,677 30,149 PARTICIPANT RECREATION: Personal services 224,409 201,593 22,816 Supplies 20,945 11,046 9,899 Service charges and fees 14,038 14,135 (97) Intergovermental services 8,330 575 7,755 TOTAL PARTICIPANT RECREATION 267,722 227,349 40,373 Page 3 of 4 City of Federal Way / 52 GENERALFUND SCHEDULE OF EXPENDITURES COMPARED TO BUDGET For the Year Ended December 31, 1997 (Continued) CULTURAL AND RECREATION FACILITIES: Personal services Supplies Service charges and fees Intergovermental services TOTAL CULTURAL AND RECREATION ACTIVITIES PARK FACILITIES: Personal services Supplies Service charges and fees Intergovermental services Interfund services TOTAL PARK FACILITIES TOTAL CULTURE AND RECREATION CAPITAL OUTLAY OTHER FINANCING USES Residual equity transfers out Operating transfers out TOTAL OTHER FINANCING USES TOTAL GENERAL FUND Variance Favorable Budget Actual (Unfavorable) 18,928 31,655 (12,727) 7,180 4,072 3,108 50,546 38,505 12,041 11775 - 1,775 76,429 74,232 4,197 712,121 795,322 (83,201) 120,737 82,427 38,310 372,940 319,867 53,073 12,500 5,530 6,970 136,211 156,675 (20,464) 1,354,509 1.359,821 (5,312) 2,649,091 2,521.085 128.006 20,000 319,120 (299,120) 260,608 108,160 152,448 1,554,745 1,705,301 (150,556) 1,815,353 1,813,461 1,892 $ 22.803.277 $ 21,068,492 $ 1.734,785 Page 4 of 4 Special Revenue Funds Special revenue funds are used to account for the proceeds of revenue sources (other than special assessments, expendable trusts or major capital projects) that are legally restricted to expenditures for specified purposes. A description of each individual Special Revenue Fund included in the Comprehensive Annual Financial Report is provided below: The Street Fund accounts for receipt and disbursement of State -levied "unrestricted" motor vehicle fuel taxes which must be accounted for in a separate fund and expended for street -oriented engineering, construction and maintenance purposes only. The Arterial Street Fund accounts for the receipt and expenditure of the State -levied motor vehicle fuel tax distributed to the City in accordance with State R.C. W. 82.36, 020. These revenues are to be used for the construction, improvement, chip sealing, seal -coating, and repair of arterial highways and city streets, or for the payment of related municipal indebtedness. The Utility Tax Fund was established to account for all utility tax receipts. These receipts will subsequently be distributed to various funds (Debt Service, Capital Improvement Projects, etc.) for project expenditure as determined by the City Council. The Solid Waste/Recycling Fund was established to account for special refuse collection fees used to manage the Solid Waste and Recycling program. The Special Contracts/Studies Fund accounts for receipts and disbursements related to special contracts and special projects where completion will extend beyond the calendar year. The Snow and Ice Removal Fund was created to account for the snow and ice removal funding and carryover from year to year. The Two Percent for Arts Fund was established for the purpose of providing funding for arts projects. The funds are to be used to create a variety of cultural opportunities for citizens and to enhance the cultural environment in the community by encouraging and promoting the creation and placement of art in public places and the incorporation of art into project design. The Community Development Block Grant Fund accounts for the receipt and disbursement of federal grant revenue received through the Department of Housing and Urban Development's Community Development Block Grant Program. Separate subsidiary records are maintained to administer the individual projects accounted for in this fund. The Path and Trails Reserve Fund was established in accordance with State law to accumulate unexpended proceeds of the City's % % motor vehicle fuel tax receipts which are restricted in use to the construction and maintenance of paths and trails within City right-of-way. The Surface Water Management Fund was established to administer and account for all receipts and expenditures related to the City's surface and storm water management system. The Donations Fund was established to receive donations designated for specific purposes identified by the donor. The Impact Fee Fund was established to account for revenue from development impact fees, authorized by State law and designated for transportation, park and other improvements. These fees provide funding to partially finance improvements mitigating the cumulative impacts of growth and development within the City. The Strategic Reserve Fund was established to set aside financial resources to be used to mitigate adverse situations occurring as the result of severe short-term revenue shortfalls or expenditures resulting from emergencies, or as otherwise designated by the City The Airport Strategic Reserve Fund was established to set aside financial resources to contest expansion of the Sea Tac International Airport. City of Federal Way / 56 SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET December31, 1997 With Comparative Totals for December 31, 1996 Special Arterial Utility Tax Solid Waste/ Contracts/ Street Street Projects Recycling Studies ASSETS Equity in pooled cash and investments $ 502,569 $ 500,689 $ 81,697 $ 210,223 $ 130,596 Retainage in escrow - Receivables (net): Taxes - Accounts and contracts - 432,298 23,666 - Interest 5,885 5,862 957 2,461 1,529 Due from other funds 15,941 - - 1,018 _ Due from other governments 217,962 45,114 - 69,872 _ TOTAL ASSETS 742,357 551,665 514,952 307.240 132,125 LIABILITIES AND FUND BALANCES Liabilities: Vouchers payable 129,954 14,920 Accounts/payroll payable 2,033 5,747 Retainage payable 6,074 - Due to other governments 8,000 - - Due to other funds 23,159 8,080 292 Performance bonds Deposits payable 419,612 - - - Interfund loans payable - - - Deferred revenues 52,388 TOTAL LIABILITIES 641,220 - 8,080 20,959 - Fund balance: Reserved for: Paths and trails - _ - - Unreserved: Designated snow 8 ice removal - - _. - Undesignated 101,137 551,665 506,872 286,281 132,125 TOTAL FUND BALANCES 101.137 551,665 506,872 286,281 132,125 TOTAL LIABILITIES AND FUND BALANCE $ 742,357 $ 551,665 $ 514,952 $ 307,240 $ 132,125 Page 1 of 3 of Federal Wav / 57 Community Paths and Snow and 2% for the Development Trails Surface Water Impact Ice Removal Arts Block Grant Reserve Management Fee $ 127,383 $ 8,792 $ 8,963 $ 2,778 $ 1,113,218 $ 338,542 - 98,124 - 1,492 54 13,366 3,964 - - 9,521 - - - 66,059 712 2,443 128,875 8,792 75,022 3,544 1,236,672 342,506 38 5,529 25,032 - - 36,900 13,872 - 59,493 6,194 - - 23,720 10,000 - - 83,651 38 75,022 165,649 23,720 - 3,544 - 128,837 - - - - 8,792 - 1,071,023 318,786 11tl,t1J/ t6,/yL - J,044 1,U/1,UZJ J1ts,/tl6 $ 128,875 $ 8,792 $ 75,022 $ 3,544 $ 1,236,672 $ 342,506 Page 2 of 3 City of Federal Way / 58 SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET December 31, 1997 With Comparative Totals for December 31, 1996 Airport Strategic Strategic Totals Totals Reserve Reserve 1997 1996 ASSETS Equity in pooled cash and investments $ 1,708,075 $ 300,000 $ 5,033,525 $ 6,052,610 Retainage in escrow - - - 28,348 Receivables (net): Taxes 98,124 - Accounts and contracts 455,964 29,358 Interest 23,513 - 59,083 65,610 Due from other funds - 26,480 10,054 Due from other governments - - 402,162 262,226 TOTAL ASSETS 1,731,588 300,000 6,075,338 6,448,206 LIABILITIES AND FUND BALANCES Liabilities: Vouchers payable - 175,473 311,131 AccounWpayroll payable - 44,680 300 Retainage payable - 6,074 32,326 Due to other governments 21,872 - Due to other funds - 97,218 39,121 Performance bonds - - 341,690 Deposits payable - 443,332 42,907 Interfund loans payable - 10,000 10,000 Deferred revenues - 136,039 65,184 TOTAL LIABILITIES 934,688 842,659 Fund balance: Reserved for: Paths and trails 3,544 5,476 Unreserved: Designated snow & ice removal - - 128,837 80,066 Undesignated 1,731,588 300,000 5,008,269 5,520,005 TOTAL FUND BALANCES 1,731,588 300,000 5,140,650 5,605,547 TOTAL LIABILITIES AND FUND BALANCE $ 1,731,588 $ 300,000 $ 6,075,338 $ 6,448,206 Page 3 of 3 CITY OF - - --- --- --- -- 'JA iW •'n{ M .. City of Federal Way / 60 SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES For the Year Ended December 31, 1997 With Comparative Totals for December 31, 1996 Solid Special Arterial Utility Waste/ Contracts/ Street Street Tax Recycling Studies REVENUES: Taxes $ $ $ 3,859,545 $ $ Licenses and permits 63,217 - - Intergovernmental 1,917,478 571,987 309,716 Service charges and fees 125,341 - 142,995 Miscellaneous: Interest 24,729 20,974 73,412 14,612 7,868 Other 1,637 - 18,068 - TOTAL REVENUES 2,132,402 592,961 3,932,957 485.391 7,868 EXPENDITURES: Current: General government - - - - Physical environment - - 507,915 Transportation 2,953,865 1,606,804 - Economic environment _ Capital outlay TOTAL EXPENDITURES 2,953,865 1,606,804 - 507,915 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (821,463) (1,013,843) 3,932,957 (22,524) 7,868 OTHER FINANCING SOURCES (USES): Operating transfers in 991,168 1,133,489 Operating transfers out (216,634) - (3,426,085) TOTAL OTHER FINANCING SOURCES (USES 774,534 1,133,489 (3,426,085) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES (46,929) 119,646 506,872 (22,524) 7,868 FUND BALANCES AT BEGINNING OF YEAR 157,916 432,019 - 309,239 124,257 Residual equity transfers out (9,850) - - (434) - FUND BALANCES AT END OF YEAR $ 101,137 $ 551,665 $ 506,872 $ 286,281 $ 132,125 Page 1 of 3 City of Federal Way / 61 Snow Community Paths and and Ice 2% for the Development Trails Surface Water Donations Impact Removal Arts Block Grant Reserve Management Fund Fee 9,414 439,312 8,526 1,301 - - 2,903,395 217,583 5,601 542 118,839 29,955 141 15.015 439,312 9,068 3,023,676 247,538 50,000 - - 56,503 1,448,467 - 44,974 - - 56,503 94,974 1,448,467 (41,488) 344,338 9,068 1,575,209 247,538 90,259 - - 11,815 (344.330) (11,000) (2,105,922) (2,046) (762,610) 90,259 (344,338) (11,000) (2,094,107) (2,046) (762,610) 48,771 (1,932) (518,898) (2,046) (515,072) 80,066 8,792 5,476 1,630,097 2,046 833,858 - (40,176) $ 128,837 $ 8,792 $ $ 3,544 $ 1,071,023 $ $ 318,786 Page 2 of 3 City of Federal Way / 62 SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES For the Year Ended December 31, 1997 With Comparative Totals for December 31, 1996 Airport Strategic Strategic Reserve Reserve REVENUES: Taxes $ $ Licenses and permits Intergovernmental Service charges and fees - Miscellaneous: Interest 131,588 Other TOTAL REVENUES 131,588 EXPENDITURES: Current: General government - Physical environment Transportation Economic environment Capital outlay TOTAL EXPENDITURES - EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 131,588 OTHER FINANCING SOURCES (USES): Operating transfers in - Operating transfers out (121,781) TOTAL OTHER FINANCING SOURCES (USES (121,781) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER Totals 1997 1996 $ 3,859,545 $ 63,217 81,037 3,257,734 2.958,252 3,389,314 3,439,754 428,120 354,317 19,846 14,130 11,017,776 6.847.490 50,000 164,357 507,915 283,802 6,065,639 5,240,802 44,974 44,616 128,702 6,668,528 5,862,279 4,349,248 985,211 2,226,731 1,203,867 (6,990,416) (1,825,949) (4,763,685) (622,082) EXPENDITURES AND OTHER USES 9,807 (414,437) 363,129 FUND BALANCES AT BEGINNING OF YEAR 1,721,781 300,000 5,605,547 5,314,928 Residual equity transfers out - (50,460) (72,510) FUND BALANCES AT END OF YEAR $ 1,731,588 $ 300,000 $ 5,140,650 $ 5,605,547 Page 3 of 3 CITY •F N: L�rz I - City of Federal Way / 64 SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 1997 With Comparative Totals for December 31, 1996 REVENUES: Taxes Licenses and permits Intergovernmental Service charges and fees Miscellaneous: Interest Other TOTALREVENUES EXPENDITURES: Current: Physical environment Transportation TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Operating transfers in Operating transfers out TOTAL OTHER FINANCING SOURCES (USES EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES FUND BALANCES AT BEGINNING OF YEAR Residual equity transfers out FUND BALANCES AT END OF YEAR Street Fund Variance Favorable 1996 Piidq :t Actual (Unfavorable) Actual 80,473 63,217 (17.256) 81,037 1,900,788 1,917,478 16,690 1.855,015 141,663 125,341 (16,322) 117,978 32,638 24,729 (7,909) 35,392 1,637 1,637 11,315 2,155,562 2.132,402 (23,160) 2,100,737 3,079,359 2,953,865 125,494 2,851,215 3,079,359 2,953,865 125,494 2,851,215 (923,797) (821,463) 102,334 (750.478) 991,168 991,168 - 850,000 (216,634) (216,634) (298,471) 774,534 774,534 551,529 (149,263) (46,929) 102,334 (198,949) 157,916 157,916 - 378,483 (8,653) (9,850) (1,197) (21,618) $ $ 101.137 $ 101,137 $ 157,916 Page 1 of 7 City of Federal Way / 65 SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 1997 With Comparative Totals for December 31, 1996 Arterial Street Fund Utility Tax Fund Variance Variance Favorable 1996 Favorable 1996 Budget Actual (Unfavorahiel Actual Budget Actual (Unfavorable) Actual $ $ $ $ $ 3,468,705 $ 3,859,545 $ 390,840 $ 563,850 571,987 8,137 698,951 32,134 20,974 (11,160) 22,730 73,412 73,412 . 21 - 595,984 592,961 (3,023) 721,702 3,468,705 3,932,957 •464.252 2,091,662 1,606,804 484,858 863,333 2,091,662 1,606,804 484,858 863,333 - (1,495,678) (1,013,843) 481,835 (141,631) 3,468,705 3,932,957 464,252 1,133, 489 1,133,489 209,390 - - - - (3,468,705) (3,426,085) 42,620 1,133,489 1,133,489 209,390 (3,468,705) (3,426,085) (362,189) 119,646 481,835 61,759 506,872 506,872 432,019 432,019 - 370,260 $ 69,830 $ 551,665 $ 481,835 $ 432,019 $ $ 506,872 $ 506,872 $ Page 2 of 7 City of Federal Way / 66 SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 1997 With Comparative Totals for December 31, 1996 Solid WastelRecycfing Fund Variance Favorable 1996 Budget Actual (Unfavorable) Actual =W1►III:K Taxes $ $ $ _ $ Licenses and permits _ _ Intergovernmental 360.401 309,716 (50,685) 152,401 Service charges and fees 144.024 142,995 (1,029) 143,425 Miscellaneous: Interest 10,738 14,612 3.874 15,110 Other - 18,068 18,068 194 TOTAL REVENUES 515,163 485,391 (29,772) 311,130 EXPENDITURES: Current: Physical environment Transportation TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Operating transfers in Operating transfers out TOTAL OTHER FINANCING SOURCES (USES EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES FUND BALANCES AT BEGINNING OF YEAR Residual equity transfers out FUND BALANCES AT END OF YEAR 586,757 507,915 586,757 507,915 (71,594) (22,524) 78.842 283,802 78,842 283.802 49,070 27,328 (71,594) (22,524) 49,070 27,328 309,239 309,239 - 282,457 (530) (434) 96 (546) $ 237,115 $ 286,281 $ 49,166 $ 309,239 Page 3 of 7 City of Federal Way / 67 SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 1997 With Comparative Totals for December 31, 1996 Snow and Ice Removal Fund Paths and Trails Reserve Fund Variance Variance Favorable 1996 Favorable 1996 Budget Actual (Unfavorable) Actual Budget Actual (Unfavorable) Actual 9,413 9,414 1 8,528 8,526 (2) 8,358 5,000 5,601 601 5,984 306 542 236 2,139 - - - 22 - 14,413 15,015 602 6,006 8,834 9,068 234 10,497 84,738 56,503 28,235 76,270 84,738 56,503 28,235 76,270 (70,325) (41.488) 28,837 (70,264) 8,834 9,068 234 10,497 90,259 90,259 50,330 - - (4,476) (11,000) (11,000) 90,259 90,259 - 45,854 (11.000) (11,000) 19,934 48,771 28,837 (24,410) (2,166) (1,932) (55,000) - (55,000) 234 (44.503) Page 4 of 7 of Federal Wa v / 68 SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 1997 With Comparative Totals for December 31, 1996 Surface Water Management Fund Variance Favorable 1996 Budget Actual (Unfavorable) Actual REVENUES: Taxes $ $ $ $ Licenses and permits - - Intergovernmental 1,301 1,301 43,207 Service charges and fees 2.914,559 2,903,395 (11,164) 2,995,557 Miscellaneous: Interest 99,473 118,839 19,366 96,955 Other 141 141 2,578 TOTAL REVENUES 3.014,032 3,023,676 9,644 3,138,297 EXPENDITURES: Current: Physical environment - - Transportation 1,505.356 1,448,467 56,889 1,449,984 TOTAL EXPENDITURES 1,505,356 1.448,467 56,889 1,449,984 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 1,508,676 1,575,209 66,533 1,588,313 OTHER FINANCING SOURCES (USES): Operating transfers in 11.815 11,815 - 147 Operating transfers out (2,151,713) (2,105,922) 45,791 1,153,501 TOTAL OTHER FINANCING SOURCES (USES (2,139,898) (2,094,107) 45,791 1,153,648 EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES (631,222) (518,898) 112,324 534,959 FUND BALANCES AT BEGINNING OF YEAR 1,630,097 1,630,097 1,145,484 Residual equity transfers out (40,993) (40,176) 817 (50,346) FUND BALANCES AT END OF YEAR $ 957,882 $ 1,071,023 $ 113,141 $ 1,630,097 Page 5 of 7 City of Federal Way / 69 SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 1997 With Comparative Totals for December 31, 1996 Strategic Reserve Fund Airport Strategic Reserve Fund Variance Variance Favorable 1996 Favorable 1996 Budget Actual (Unfavorable) Actual Budget Actual (Unfavorable) Actual 100,000 131,588 31,588 121,781 100,000 131.588 31,588 121,781 100,000 131,588 31,588 121,781 (121,781) (121,781) - (167,581) - (121,781) (121,781) - (167,581) (21,781) 9,807 31,588 (45,800) - 1,721,701 1,721,781 1,767,581 300,000 300,000 300,000 $ 1,700.000 $ 1,731,588 $ 31,588 $ 1,721,781 $ 300,000 $ 300,000 $ $ 300,000 Page 6 of 7 City of Federal Way / 70 SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Year Ended December 31, 1997 With Comparative Totals for December 31, 1996 Budget Actual REVENUES: Taxes $ 3,468,705 $ 3,859,545 Licenses and permits 80,473 63,217 Intergovernmental 2,842,980 2,818,422 Service charges and fees 3,200,246 3,171,731 Miscellaneous: Interest 280.289 390,297 Other - 19,846 TOTAL REVENUES 9,872,693 10,323,058 EXPENDITURES: Current: Physical environment 586,757 507.915 Transportation 6,761,115 6,065,639 TOTAL EXPENDITURES 7,347,872 6,573,554 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 2,524,821 3,749,504 OTHER FINANCING SOURCES (USES): Operating transfers in 2,226,731 2,226.731 Operating transfers out (5,969,833) (5,881,422) TOTAL OTHER FINANCING SOURCES (USES (3,743,102) (3,654,691) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES (1,218,281) 94,813 FUND -BALANCES AT BEGINNING OF YEAR Residual equity transfers out FUND BALANCES AT END OF YEAR Favorable (Unfavorable) $ 390,840 (17.256) (24,558) (28,515) 110,008 19,846 450,365 1996 Actual 81,037 2,757,932 3,256,960 300,091 14,130 6,410,150 78,842 695,476 283,802 5,240,802 774,318 5,524,604 1,224,683 885,546 1,103,867 88,411 (1,679,029) 88,411 (575,162) 1,313,094 310,384 4.636,594 4,636,594 - 4,398,720 (50,176) (50,460) (284) (72,510) $ 3,368,137 $ 4,680,947 $ 1,312,810 $ 4,636,594 Page 7 of 7 Debt Service Fund The Debt Service Fund accounts for the accumulation of resources for and the payment of general obligation and special assessment bond principal, interest and related costs. A description of the individual Debt Service Fund included in the Comprehensive Annual Financial Report is provided below: The Debt Service Fund accounts for the debt service on City Council -approved general obligation bonds. Revenues for this Fund consist of allocations of the City's general property tax levy, operating transfers from the Utility Tax Project Fund, or othe revenues designated by the City Council. City of Federal Way / 72 DEBT SERVICE FUND COMPARATIVE BALANCE SHEET December 31, 1997 and 1996 ASSETS Equity in pooled cash and investments Accounts receivable Receivables (net): Taxes Interest Due from other governments TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Vouchers payable TOTAL LIABILITIES Fund balance: Reserved for debt service TOTAL FUND BALANCE TOTAL LIABILITIES AND FUND BALANCE 1997 1996 $ 4,745,498 $ 2,525,142 153,316 165,331 55,566 25,355 146,325 4,966,395 2,850,138 502 4,965,893 2,850,138 4,965,893 2,850,138 $ 4,966,395 $ 2,850,138 City of Federal Way / 73 DEBT SERVICE FUND COMPARATIVE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE For the Years Ended December 31, 1997 and 1996 REVENUES Taxes Miscellaneous: Interest Other TOTALREVENUES EXPENDITURES: Debt service: Principal Interest and fiscal charges TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Operating transfers in TOTAL OTHER FINANCING SOURCES (USES) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES FUND BALANCE AT BEGINNING OF YEAR FUND BALANCE AT END OF YEAR 1997 $ 1.879.269 234,311 $ 2.460.656 143,510 2,113,874 2,604.338 1,222,090 432,280 1,760.696 1.284,768 2.982,786 1,717,048 (868,912) 887,290 2,984,667 373,685 2,115,755 1,260,975 2,850,138 1,589,163 $ 4,965,893 $ 2,850,138 of Federal Way! 74 DEBT SERVICE FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL For the Years Ended December 31, 1997 and 1996 199 REVENUES: Taxes $ 1,100.000 Miscellaneous: Interest 132,739 Other - TOTAL REVENUES 1,232,739 EXPENDITURES: Debt service: Variance 7 Favorable Actual (Unfavorable) $ 1,879,269 $ 779,269 234,311 101,572 2,113,874 1996 $ 2.460,656 143,510 881,135 2,604,338 Principal 1,226,866 1,222,090 4,776 432.280 Interest and fiscal charges 1,783,439 1.760,696 22,743 1.284,768 TOTAL EXPENDITURES 3.010.305 2,982,786 27,519 1.717,048 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (1,777,566) (868,912) 908,654 887.290 OTHER FINANCING SOURCES (USES): Operating transfers in 2,959,516 2,984,667 25.151 373.685 TOTAL OTHER FINANCING SOURCES (USES) 2,959,516 2,984,667 25,151 373,685 EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES 1,181,950 2,115,755 933,805 1.260,975 FUND BALANCE AT BEGINNING OF YEAR 2.850.138 2,850,138 - 1,589.163 FUND BALANCE AT END OF YEAR $ 4,032,088 $ 4.965.893 $ 933,805 $ 2,850,138 Capital Project Funds The Capital Project Funds account for the acquisition or construction of major capital facilities with the exception of those facilities financed by proprietary and trust funds. The major sources of revenue for this fund are general obligation bond proceeds, grants from other agencies, local taxes and contributions from other funds. A description of each individual Capital Project Fund included in the Comprehensive Financial Report is provided below: The Capital Project - City Facilities Fund was established to account for receipts and disbursements related to acquisition, design, construction and any other related Downtown Revitalization and Public Safety Facility capital project expenditures. The Capital Project - Parks Fund was established to account for receipts and disbursements related to acquisition, design, construction and any other related parks capital project expenditures. The Capital Project - Surface Water Management Fund was established to account for receipts and disbursements related to acquisition, design, construction and any other related surface water management project expenditures. The Capital Project - Traffic Fund was established to account for receipts and disbursements related to acquisition, design, construction and any other related traffic project expenditures. The Capital Project - Street Fund was established to account for receipts and disbursements related to acquisition, design, construction and any other related street project expenditures. City of Federal Way / 76 CAPITAL PROJECT FUNDS COMBINING BALANCE SHEET December31, 1997 With Comparative Totals for December 31, 1996 City Surface Water Totals Facilities Parks Management Traffic Streets 1997 1996 ASSETS Equity in pooled cash and investments $ 6,896,542 $ 7,034.784 $ 4.075.811 $ 1,270.478 $ 5.260,523 $ 24.538,138 $ 14,821,713 Relainage in escrow 16,208 52,413 43,625 66,779 179,025 209,300 Receivables (net): Accounts and contracts - - 5.445 47,420 121,400 174,265 2,318 Interest 50,028 51,642 47,725 14,959 61,513 225,867 143.233 Due from other funds - 64,577 - 3,526 1,204 69,307 6.189 Due from other governments - 361,792 1,594 119,276 482.662 18,693 TOTAL ASSETS 6,946,570 7,529,003 4,182,988 1,380,008 5,630,695 25,669.264 15,201,451 LIABILITIES AND FUND BALANCE Liabilities: Vouchers payable 193,154 89,066 110,659 247,354 640,233 897.287 Accounts payable - 2,685 15,341 18,026 Retainage payable 33,915 4,693 - - 38,608 14,296 Retainage in escrow 16,208 52,413 43,625 66,779 179,025 209,300 Due to other funds 6,288 64 - 673 3,526 10.551 - Deposits payable - - - 100 TOTAL LIABILITIES 6,288 246,026 161.513 154.957 317,659 886,443 1,120,983 Fund Balance: Unreserved- undesignated 6,940,282 7,282,977 4,021,475 1,225,051 5,313,036 24,782,821 14,080,468 TOTAL FUND BALANCE 6.940,282 7,282,977 4,021,475 1,225.051 5,313,036 24,782.821 14.080.468 TOTAL LIABILITIES AND FUND BALANCES $ 6,946,570 $ 7.529.003 $ 4,182,988 $ 1,380.008 $ 5,630,695 25,669,264 $ 15.201,451 of Federal Way/77 CAPITAL PROJECT FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE For the Year Ended December 31, 1997 With Comparative Totals for December 31, 1996 city Surface Water Totals Facilities Parks Management Traffic Streets 1997 1996 REVENUES: Intergovernmental $ - i - $ 67,428 $ 547 $ 629,521 $ 697,496 $ 1,212,507 Service charges and fees - - 47,420 - 47,420 - Miscellaneous: - Interest 204,326 228,593 233,478 107,407 351,145 1,124,949 846,139 Other 50,826 9,574 60,400 161,275 TOTAL REVENUES 204,326 279,419 310,480 155,374 980,666 1,930,265 2,219,921 EXPENDITURES: Capital outlay 1,204 2,292,031 2,712,829 1,437,216 2,481,925 8,926,205 5,986,095 Debt service: Debt Issue cost 87,840 92,155 179,996 33,832 TOTAL EXPENDITURES 89,044 2,384,186 2,712,829 1,437,216 2,481,925 9,105,200 6,019,927 EXCESS (DEFICIENCY) OF REVENUES 115,282 (2,104,767) (2,402,349) (1,281,842) (1,501,259) (7,174,935) (3,800,006) OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Bond proceeds (open space) - 43,370 1Y � .�°� y. - - 43,370 123,233 .W ggOA piac_eods 7 126000 155,544 - - 14,869,480 2,504,600 . Grants - - 396,024 - - - 398,024 - laan proceeds - - ^----- -- - - - - 1,166.580 Operating transfers in - 578,205 2,170,086 435,264 598,097 3,781,652 1,115.500 Operating transfers out (300,000) (109,494) (148,800) (249,616) (372,147) (1,180,057) (242,642) TOTAL OTHER FINANCING SOURCES (USES) g91 6.825,000 8,499,041 2,176,830 185,648 225,950 17,912,469 4,667,271 EXCESS (DEFICIENCY) OF REVENUES AND OTHER AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES 6,940,282 6,394,274 (225,519) (1,096,194) (1,275,309) 10,737,534 867,265 FUND BALANCE AT BEGINNING OF YEAR - 923,884 4,246,994 2,321,245 6,568,345 14,080,468 13,229,922 Residual equity transfers out - (35,181) a (35,181) (16,719) FUND BALANCE AT END OF YEAR $ 6,940,282 $ 7,282, 977 $ 4, 221, 475 $ 1, 225,051 $ 5, 113,036 $ 24, 882, 821 $ 14, 880,468 Enterprise Fund Enterprise Funds are used to account for government activities that are financed and operated in a manner similar to private business, Costs of providing services to the general public are primarily financed by user fees. The Dumas Bay Centre 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 Facility. of Federal Way/80 ENTERPRISE FUND DUMAS BAY CENTRE COMPARATIVE BALANCE SHEET December 31, 1997 and 1996 ASSETS Current Assets Equity in pooled cash and investments Cash with escrow agent Accounts receivable Interest receivable Due from other funds Due from other governments TOTAL CURRENT ASSETS Property, plant and equipment: Land Building/structures Office furniture/equipment Less accumulated depreciation Net property, plant and equipment Construction work in progress TOTAL ASSETS LIABILITIES AND FUND EQUITY Current liabilities: Accounts payable Vouchers payable Retainage payable - with escrow agent Due to other funds Deposits payable Deferred revenue Compensated absences payable TOTAL CURRENT LIABILITIES Fund equity: Contributed capital Retained Earnings: Reserved for: Petty cash/change fund Unreserved Retained Earnings FUND EQUITY TOTAL LIABILITIES AND FUND EQUITY 1997 1996 $ 1,205,588 $ 104,647 32,533 - 56,860 12,810 9,565 1,138 32,144 637 159 6.400 1,336,849 125.632 2.109,640 2,109,640 725,070 607.965 49,339 49,339 2,884,049 2,766,944 (143,893) 102,705 2,740.156 2.664,239 915,307 $ 4,992,312 $ 2,789,871 $ 3,692 $ - 25,560 21,969 32,533 - 206 2,218 10,855 2.559 60,937 - 2,648 1,867 136.431 28,613 2,555,267 2.596,455 110 - 2.300,504 164,803 2,300.614 164,803 4,855,881 2,761,258 $ 4,992.312 $ 2,789,871 City of Federal Way / 81 ENTERPRISE FUND DUMAS BAY CENTRE COMPARATIVE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND EQUITY For the Years Ended December 31, 1997 and 1996 OPERATING REVENUES: Service charges and fees Miscellaneous TOTAL OPERATING REVENUES OPERATING EXPENSES: Personal services Materials and supplies Services and charges Taxes Depreciation Interfund charges TOTAL OPERATING EXPENSES OPERATING INCOME (LOSS) NON -OPERATING REVENUES (EXPENSES) $ 346,465 $ 2,795 349,260 290,332 291,291 117,161 109,322 52,196 12,123 290,548 258,862 - 2,176 41,188 34,235 16,232 18,093 517,325 434,811 (168,065) (143,520) Investment income 50,500 6,017 Debt issue costs (19,109) State grants 159 5,506 Interlocal grants 42,000 6,400 GO bond proceeds 1,550,000 Donations/contributions 200 - TOTAL NON -OPERATING REVENUES (EXPENSES) 1,623,750 17,923 INCOME (LOSS) BEFORE OPERATING TRANSFERS 1,455,685 (125,597) Operating transfer in 643,000 91,903 Operating transfer out (4,062) - NET INCOME (LOSS) 2,094,623 (33,694) Depreciation reducing contributed capital 41,188 34,235 Increase in retained earnings 2,135,811 541 RETAINED EARNINGS, January 1 164,803 164,262 RETAINED EARNINGS, December 31 2,300,614 164,803 CONTRIBUTED CAPITAL, January 1 2,596,455 2,630,690 Less amortization (41,188) (34,235) CONTRIBUTED CAPITAL, December 31 2,555,267 2,596,455 FUND EQUITY AT END OF YEAR $ 4,855,881 $ 2,761,258 City of Federal Way / 82 ENTERPRISE FUND DUMAS BAY CENTRE COMPARATIVE STATEMENT OF CASH FLOWS For the Years Ended December 31, 1997 and 1996 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from users $ 366,146 $ 277,459 Cash received from other funds for goods and services (31,506) 4,987 Cash received from other governments for goods and services 6,241 Cash payments to suppliers for goods/services (44,913) (5,612) Cash payments to employees (116,380) (108,153) Cash payments to other funds for goods and services (18,244) (18,000) Cash payments for other services/charges (290,548) (258,862) Cash payments for taxes 4,330 (834) Cash payments for damage deposits 3,966 (64) Other operating receipts 1,022 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (120,908) (101957) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Subsidy from state grant 159 - Subsidy from interlocal grant 42,000 5,506 Operating transfers in 643,000 91,903 Operating transfers out (4,062) NET CASH PROVIDED (USED) BY NONCAPITAL FINANCING ACTIVITIES 681,097 97,409 CASH FLOWS FROM CAPITAL AND CAPITAL - RELATED FINANCING ACTIVITIES: Bond proceeds 1,550,000 Debt issue costs (19,109) Donations/contributions 200 Acquisition of capital asset/construction work in progress (1,032,412) (21,954) NET CASH PROVIDED (USED) FOR CAPITAL AND CAPITAL -RELATED FINANCING ACTIVITIES 498.679 (21,954) CASH FLOWS FROM INVESTING ACTIVITIES. Receipts of interest 42,073 6,681 NET CASH PROVIDED (USED) IN INVESTING ACTIVITES 42,073 6,681 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,100,941 (25.921) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 104,647 130,568 CASH AND CASH EQUIVALENTS AT END OF YEAR 1,205,588 104.647 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED (U$ED) BY OPERATING ACTIVITIES Operating income (168,065) (143,520) Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation expense 41,188 34,235 (Increase)decrease in accounts receivable (44,050) (12,810) (Increase)decrease in due from other funds (31,506) 4,987 (Increase)decrease in due from other governments 6,241 Increase(decrease) in vouchers/accounts payable 7,283 6,511 Increase/(decrease) in due to other funds (2,012) 94 Increase(decrease) in deposits payable 8,296 1,277 Increase(decreass) in deferred revenue 60,936 Increase(decrease) in accrued payrolU compensated absences payable 781 1,169 TOTAL ADJUSTMENTS 47,157 35,463 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ (120,908) $ (1 O 057) Internal Service Funds Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of a government, or to other governments, on a cost -reimbursement basis. A description of each individual Internal Service Fund included in the Comprehensive Annual Financial Report is provided below: The Risk Management Fund accounts for the City's risk financing activities established to minimize adverse effects of losses associated with property and casualty, medical and dental, unemployment and worker's compensation claims. Both risk control (to minimize the losses that strike and organization) and risk financing (to obtain finances to provide for or restore the economic damages of those losses) are involved. The City is currently self -insuring only State Unemployment Compensation. Related premiums received by the fund are used to reimburse the unemployment benefits paid to eligible individuals and to establish reserves for the payment of estimated future unemployment claims liability. The City is also currently recovering costs and building reserves for general liability including property, casualty, errors and omissions and fidelity coverage. The Information Systems Fund was established to account for all costs associated with data processing, telecommunications and the Geographical Information System (GIS). This fund will own and depreciate all non-proprietary fund assets related to these functions, and will charge equipmenbsoffware users for both maintenance%perating costs and equipment replacement charges based on depreciation schedules. The Support Services Fund will account for duplication, graphics and other general support services provided to departments and funds throughout the City. The Fleet and Equipment Fund accounts for the cost of maintaining City vehicles and other motorized equipment. Rates charged to user departments are based on the full cost of maintaining equipment items, including the recovery of related depreciation expense. The Buildings and Furnishings Fund accounts for all costs associated with the operation and maintenance of specified City buildings. City building facilities and furnishings will be owned by this Fund, and both maintenance%perating costs and depreciation recovery will be charged City departments and funds. Debt service payments on specified facility acquisitions are included in this fund along with revenues dedicated to these payments. The Payroll Benefits Fund was established to track all employee benefit programs. Benefit programs included in this fund are the Flexible Spending Programs for health and dependent care. Benefit programs excluded from this fund are the Federal Way Retirement System, Workers Compensation and Unemployment Compensation, which are administered through the Federal Way Retirement System Trust Fund and the Risk Management Fund. City of Federal Way / 84 INTERNAL SERVICE FUNDS COMBINING BALANCE SHEET December 31 1997 Wrth Comparative Totals for December 31 1996 Payroll Risk Information Support Fleet and Buildings and Benefits Totals Management Systems Services Equipment Furnishings Fund 199-F 1996 ASSETS Current Assets Equity in pooled cash and Investments S 877.550 S 789 486 $ 48.613 S 960.179 S 696, 764 S 19 589 S 3 392 181 S 2 583 494 Prepaid Insurance - - - - 3 565 3 565 721 Accounts Receivable - 424 - - 424 - Interest Receivable 10,276 9 245 569 11 243 8,159 39 492 27 630 Due from other funds 46,390 68, 636 20 032 26.519 200 161 777 132 373 Due from other governments 6 6 TOTAL CURRENT ASSETS 934 222 867,791 69 214 997 941 705.123 23, 154 3 597 445 2 744 273 Property, plant and equipment: Data processing/ Telecommunication equipment 2097,868 _ 2,097 868 1 772.794 Transportation equipment - - - 1 478,009 - 1.478.009 1 360 654 Heavy equipment - - - 614,246 - 614 246 570 389 Buildings 8 furnishings - - - 3,237.385 - 3.237 385 3 192.601 Other equipment 99 671 203 145 302 816 207 131 - 2097,868 99.671 2,295,400 3.237,385 - 7.730 324 7 103 569 Less accumulated depreciation - 926,287 44.584 991 453 971,036 - 2,933,360 2 127 324 Net property plant and equipment 1 171 581 55,087 1,303.947 2.266,349 4 796 964 4 976 245 TOTAL ASSETS 934 222 2039 372 124 301 2,301 888 2 971 472 23 154 8 394 409 7 720 518 LIABILITIES AND FUND EQUITY Current liabilities: Vouchers payable 12,940 12 778 9,644 4,558 5,294 - 45 214 62 367 Due to other governments - - - - 3 041 - 3 041 3 290 Due to other funds 12.613 72.058 10,958 33.204 2.866 - 131 699 40 146 Deposits payable - - - 6 034 - '6 034 6 034 Certificates of participation payable _ 235,000 - 235,000 225 000 Compensated absences payable 25.081 25 081 24 041 TOTAL CURRENT LIABILITIES 25,553 109,917 20,602 37 762 252.235 - 446 069 360 878 Long Long-term liabilities: Certificates of participation payable 1 0600000 1 0600000 1 295 000 TOTAL LONG-TERM LIABILITIES 1 060,000 1 0600000 1 295 000 TOTAL LIABILITIES 25,553 109,917 20602 37, 762 1,312,235 1506069 1 655 878 Fund Equity Contributed capital 995,924 59.117 1.320,949 521,848 2,897,838 3 029 266 Retained Earnings: Unreserved 908,669 933 531 44 582 943.177 1, 137.389 23.154 3.990 502 3.035 374 Retained Earnings 908,669 933, 531 44 582 443,177 1.137,389 23. 154 3.990 502 3 035 374 TOTAL FUND EQUITY 908,669 1 929 455 103.699 2,264 126 1.659,237 23,154 6 888 340 6 064 640 TOTAL LIABILITIES AND FUND EQUITY $ 934.222 $ 2,039 372 $ 124,301 $ 2,301.888 $ 2 971 472 $ 23,154 $ 8 394 409 S 7,720 518 City of Federal Way / 85 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND EQUITY For the Year Ended December 31 1997 With Comparative Totals for December 31 1996 Risk Information Support Fleet and Buildings and Benefits Totals Management Systems Services Equipment Furnishings Fund 1997 1996 OPERATING REVENUES Service charges and fees S 523.984 S 866 259 S 128 685 $ 574 640 S 381 677 S 40 894 S 2 516 139 S 1 881 742 Miscellaneous 28 239 8 597 94 286 121 131 243 120 089 TOTAL OPERATING REVENUES 552, 223 874 856 128 685 574 640 475 963 41.015 2 647 382 2 001 831 OPERATING EXPENSES Personal services 19.002 374 459 - 8 056 - 401 517 421 022 Materials and supplies 540 47 348 4 554 121 530 10, 568 - 184 540 144 342 Services and charges 277 051 249 876 97.163 106. 168 126,193 - 856 451 592.013 Intergovernmental - 8.270 - 371 - - 8 641 2.598 Insurance 238,495 - - 55 018 - - 293 513 113.183 Clairns 35,732 - - 38 050 73 782 119 327 Depredation 259,913 29 878 345 289 204 612 839 692 568 287 TOTAL OPERATING EXPENSES 570 820 939 866 131 595 636.432 341 373 38 050 2 658 136 1 960.772 OPERATING INCOME (LOSS) (18.597) (65,010) (2.910) (61,792) 134 590 2,965 (10,754) 41 059 NON -OPERATING REVENUES (EXPENSES) Subsidy from interlocal grant 6 - - - - 6 176 Interest income 49,710 43.492 2,910 54.017 48 962 199,091 154, 141 Interest expense - - - (77 378) - (77 378) (86 622) Gain/loss on sale of fixed assets - - 2,745 (1.300) 1.445 802 TOTAL NON -OPERATING REVENUES NET OF EXPENSES 49,716 43 492 2.910 56,762 (29,716) - 123,164 68.497 INCOME (LOSS) BEFORE OPERATING TRANSFERS 31,119 (21.518) - (5030) 104874 2,965 112,410 109,556 Operating transfers in 121 781 - 121. 711 167 581 NET INCOME (LOSS) 152,900 (21,518) - (5,030) 104,874 2.965 234.191 277 137 Add Depreciation reducing contributed capita - 259,913 29,878 344,534 86.612 - 7200937 411 924 Increase In Retained Earnings 152,900 238,395 29,878 339,504 191.486 2,965 955 128 689.061 RETAINED EARNINGS- January 1 755,769 695,136 14 704 603 673 945 903 20.189 3.035 374 2346.313 Residual equity transfers out - - RETAINED EARNINGS, December 31 908,669 933,531 44582 943,177 1,137.389 23,154 3,990,502 3035.374 CONTRIBUTED CAPITAL, January 1 - 953,346 88,995 1,424 249 562,676 - 3029266 1 695 994 Increases to contributed capital - 302,491 - 241.989 47.284 - 591 764 1 785 059 Less Amortization - (259,9q) (29,878) (345,289) (88.112) - (723.192) (451,787) CONTRIBUTED CAPITAL, December 31 995,924 59.117 1.320.949 521,848 218970838 3 029.?66 FUND EQUITY AT END OF YEAR S 908,669 $1,929 455 $ 103 699 $2,264,126 $1,659.237 $ 23,154 $ 6.888.340 S 6 064 640 01 City of Federal Way / 86 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from users Cash payments to suppliers for goods and services Cash payments to employees Cash payments to claimants Cash payments to other funds for services Other operating receipts NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Subsidy from Interlocal grant Interfund transfers NET CASH PROVIDED (USED) BY NON. CAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition of capital assets Cash contributions for capital acquisitions Proceeds from sale of fixed assets Principal paid on debt service Interest paid on debt service NET CASH PROVIDED (USED) FOR CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Receipts of interest NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUVALENTS AT BEGIN. OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating income Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation expense (Increase)decrease in accounts receivable (Increase)decrease In prepaid insurance (Increase(decreass In due from other funds (Increase)decrease In due from other govts Increase(decrease) in vouchers/accounts payabl Increase(decrease) in due to other funds Increase(decrease) In due to other governments Increase(decrease) in accrued payroll/ compensated absences payable TOTAL ADJUSTMENTS NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES SCHEDULE OF NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES: Contributions of capital assets INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS For the Year Ended December 31 1997 With Comparative Totals for December 31 1996 Payroll Risk Information Support Fleet and Buildings and Benefits TOTALS Management Systems Services Equipment Furnishings Fund 1997 1996 5 535 215 S 900 047 S 130 195 S 551 215 S 477 226 S 38 172 S 2 632. 070 S 1 953 232 (516.695) (324-002) (103.593) (233 167) (137 253) (38 051) 11 352.761) 1902 390) (21.088) (370,989) (8-402) - - (400479) (4115271 (35 732) - 05 732) 145 5091 12613 (21-814) - - (9201) (395701 28 239 8 597 36 836 15 341 2 552 213 653 26 602 287 832 339.973 121 870 733 569 127 6 ' - 6 176 121 781 - - - - 121 781 167 581 121.787 - - - - - 121 787 1 7 T - (153608) (81665) (31685) - (266958) (304.167) - 98 380 63 736 31.685 - 193.801 215 875 - - 3 500 200 3 700 5 753 - - - (225 000) (225.000) (215 000) (77378) 1773781 (16623) (55228) - (14429) (302.178) /3118351 (384162) 47 101 40,499 3 276 49,683 47.443 - 188 002 154 818 47.101 40.499 3.276 49.683 47.443 188 002 •' 4 171 440 198.924 29.878 323.086 85 238 121 808 687 507 540 706 110 590 562 18.735 637 093 611 526 19.468 2 583 494 2 075 954 877 550 789 486 i 48 613 960,179 696 764 19.589 3392181 2 583 494 (18,597) (65 010) (2.910) (61 792) 134 590 2 965 (10 754) 41 059 - 259 913 29,878 345,289 204 612 - 839 692 568 287 (424) - - (424) " (2-844) (2.844) 1824 11,236 (4 208) 12.801 (23.426) (200) - (3.797) 122 507 (6) _ 16) 12 090 (609) (18,506) (1876) (5.098) (491) (26.580) 1434 12.613 38.418 (11 291) 33 204 1 710 74.654 (187 507 ) ' - (248) - (248) (62) (2,085) 3.470 - (345) 1 040 9 495 21.149 278.663 29.5 22 349.624 205.383 (2844) 881487 528.068 $ 2.552 $ 213,653 S 26.602 S 287,832 $ 339 973 $ 121 S 870 733 S 569 127 $ 204 111 $ 178,253 $ 15 599 $ 397 963 S 1 564 236 Trust and Agency Funds Trust Funds are used to account for assets held by the government in a trustee capacity. Agency Funds are used to account for assets held by the government as an agent for individuals, private organizations, other governments or other funds. Since agency funds are custodial in nature (assets equal liabilities) related results of operations are not measured or reported. At this time the City does not have any angency funds. A description of the Trust Fund included in the Comprehensive Annual Financial Report is provided below: Expendable Trust Fund: The Federal Way Retirement System Fund is an Expendable Trust Fund established to account for all transactions related to this defined contribution pension plan. The Federal Way Employees' Retirement System was established as a replacement for Social Security as authorized by the Federal Social Security Act. City of Federal! Way / 88 EXPENDABLE TRUST FUND FEDERAL WAY RETIREMENT SYSTEM COMBINING BALANCE SHEET December 31, 1997 and 1996 ASSETS Cash - deferred compensation Investments with plan administrator Receivables (net): Interest Employee loans TOTALASSETS LIABILITIES AND FUND BALANCES Liabilities: Deferred compensation payable TOTAL LIABILITIES FUND BALANCE Reserved for employee retirement TOTAL FUND BALANCE TOTAL LIABILITIES AND FUND BALANCE 1997 1996 $ - $ 1,225.577 5,491,556 3,460,570 16,968 15,373 166,711 144,757 5,675,235 4,846,277 1,225,577 1,225,577 5,675,235 3,620,700 5,675,235 3,620,700 $ 5,675.235 $ 4,846,277 of Federal Way/89 EXPENDABLE TRUST FUND FEDERAL WAY RETIREMENT SYSTEM COMPARATIVE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE For the Years Ended December 31, 1997 and 1996 REVENUES: Miscellaneous: Employer contributions Employee contributions Investment income Gains and losses in investments TOTALREVENUES EXPENDITURES; Employee contributions refunded Consultant services TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES FUND BALANCE AT BEGINNING OF YEAR FUND BALANCE AT END OF YEAR 1997 1996 $ 559,087 $ 370,900 670,538 670,398 1,031,384 125,745 240,192 100,177 2,501,201 1,267,220 408,076 141,511 38,590 32,215 446,666 173,726 2,054,535 1,093,494 3,620,700 2,527,206 $ 5,675.235 $ 3,620,700 General Fixed Assets Account Group The General Fixed Assets Account Group accounts for all fixed assets of the City other than those recorded in the Internal Service and Enterprise funds. General fixed assets are reported in this account group since they do not represent financial resources available for appropriation in the governmental funds which acquire them. of Federal Way / 92 COMPARATIVE SCHEDULE OF GENERAL FIXED ASSETS BYSOURCE December 31. 1997 and 1996 GENERAL FIXED ASSETS Land Building Other Improvements Assets under capital lease Construction in progress TOTAL GENERAL FIXED ASSETS INVESTMENTS IN GENERAL FIXED ASSETS FROM: Capital Project Funds: General revenues General obligation bonds Grants General Fund: General revenues Donations Capital lease Special Revenue Funds: General revenues Grants TOTAL INVESTMENT IN GENERAL FIXED ASSETS 1997 1996 $ 28.366,141 $ 26,765.375 1,724,241 1,724.241 5,597.618 2,284,993 1,450.000 1,450,000 1,774,071 3,012,288 38.912 , 071 35,236,897 1,280.080 24,273 21,512,090 20.454,479 998,398 557,004 3,065.677 2,508,924 9,624,413 9,624,413 1,450,000 1.450,000 317,875 298,604 663,538 319.200 $ 38,912,071 $ 35,236,897 Note: Excludes all public domain assets such as streets, sidewalks, gutters, bridges, drainage facilities, and lighting systems. City of Federal Way / 93 SCHEDULE OF GENERAL FIXED ASSETS BY FUNCTION AND ACTIVITY December 31. 1997 Function/Activity GENERAL GOVERNMENT Miscellaneous general government TOTAL GENERAL GOVERNMENT CULTURE AND RECREATION TOTAL GENERAL FIXED ASSETS BY FUNCTION CONSTRUCTION IN PROGRESS TOTAL GENERAL FIXED ASSETS Total Land Other Buildings Improvements $ 528,465 $ 508,492 $ - $ 19.973 JLO,YOV JVO,VJL I�,J/J 37,138,000 29,816,141 1,724,241 5.597,618 y JO,.71L,V/ 1 Note: Excludes all public domain assets such as streets, sidewalks, gutters, bridges, drainage facilities, and lighting systems. City of Federal Way / 94 SCHEDULE OF CHANGES IN GENERAL FIXED ASSETS BY FUNCTION AND ACTIVITY For the Year Ended December 31. 1997 GENERAL GOVERNMENT Miscellaneous general government TOTAL GENERAL GOVERNMENT CULTURE AND RECREATION CONSTRUCTION IN PROGRESS TOTAL GENERAL FIXED ASSETS General General Fixed Assets Fixed Assets 1/1/97 Additions Deductions 12/31/97 $ 528,465 $ - $ 528,465 528,465 - - 528,465 31,696,144 4,913,391 - 36,609,535 3.012,288 1,520,670 2,758,887 1,774,071 $ 35,236,897 $ 6,434,061 $ 2.758,887 $ 38.912,071 Note: Excludes all public domain assets such as streets, sidewalks, gutters, bridges, drainage facilities, and lighting systems. Statistical Section The Statistical Section generally provides information for the "Last Ten Fiscal Years". However, due to a February 28, 1990 incorporation date, the City of Federal Way cannot provide statistical history beyond eight years. Future Comprehensive Annual Financial Reports will build the required ten year history, one year at a time. In addition, the Tables for "Special Assessment Collections" and "Schedule of Revenue Bond Coverage" are not included since the City currently has neither special assessments outstanding nor any revenue debt in the City's Enterprise Fund. 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W< > o 2 rp o°)i m o rn c) to c) c) c) m c7 M Q O g () f° M M IA N N 0) d O a J � O 0)rn a) rn rn rn rn o�i U.r M c ti E a) C Q v CL m rn o Q m U City of Federal Way / 103 co O) a� rn N 0 ~ J ~ O coU W O a.ch a O cl 00 M n rn IT U m >co J LO U > LU o (n to O cn > w a N W Z m J cn w W a u) LLZl O ¢ a Z 0 o � `* r- rn CD M Gl N W w E N a U x 111 z O_ F- CL U U L1J 0 G M Q O Q o (0 O Q O a) 0 N 0) 00 N w f0 0 ec') Q O 0 v_ Q 0 (n 0 v Q n c w LQ 01 (0 ND (07 N w F- U cf Q Q a Q ;a U 'o N c o m W 0 0 0 0 o o O O O EtiUgU a U z - QQ u E z_ O O II o o Z> O O a N W C O Q (n (n m N O co cV U v CO m rn v w f� Q J U } F- za Z Q U W J �Q J a' W Q Z O W 0 rn m U City of Federal Way / 104 m m M d a v u d O J Q m 2' W Z C Z z Q y O Fy- O J CO O O � o rn `O o co IA oI IA c0 IO 0 0 0 0 0 O O IA f0 IA O N - O U O N N N N 1 4 4 a 4 Ico IT DA ILA IOA ILA n] 0 a N rj 7t J J H Q U W o w U) Z <L 0 OU LL 0 U Q 0`0 F Z 0 U m U 2 a U) N 01 L C f0 O L L c O O C D 7 � 7 N c O 0 c C J 7 al p lL _ c N O c 2 ar o H X Y 7 v o U r U a� 7 IL Ta) r M 0 0) 0) a o c c c E d m m 0) 0) O c r 0 o O v rn m 7 S Iri OI c m .5 v � c > -0o J N O fA m .S N 7 y c (/ 7 N LO p G ,a) c n rn In O ^� aa) c 0 c a a O C y .- U _ Ca m .m p U o c a a c Ac c N u rn w E ° w 7 7 O O F- fn .p W 0 > U c m Q m U City of Federal Way Zfo5 § § m § k m 2 § u § E § @ 0 W E Z a/ ° 0 w w ) ° § 0 a � \ § k k rz % -Jz � $ p $ � m ~ R * « \ 0 \ \ m k§ Q CO A R R R% — o § w f ° w _ mUJ , n K Ln k o f r.- 7\ a r - 0 \ \ } / N w~ « ^ o ® , n LO CO t- a # / k f \ \ _k _7 co w / 0- CD-k \ \ z K\ ) m § ~ 9 q z / / ■ 2 k k 2& 2§ k k ] A : j \ k ) f m § U) ui \ § \ k k tm # � § % k / k W / m @ f § ] f k ) E ; 0 e 2 § 0 w ] § 7 R City of Federal Way Zfoe z � § / LU | §Cc ƒz � - \ ) § # § / \ \ \ \ \ \ ) N } \ 7 M - c c ; § - { ® - \ ' ) ( - - ; / 3 ) ± : a ` kk 0LL « o - ) 2 o- 2 z u - o o « - - - - - � � � _ } § 0 k ! \ } \ LL } - « g \o§ § m / \ \ } _ _ 2 k )) C) 3\) ] k { O > { _ = 2 « - 3., ` ) ' \ )_ L. } ) / \ \ 2 w ° ' k ® 3 - » ` o e a - = m 0) 2 Z 2 _ / - 2 { c In ! f _ \ - - E i $ / § § \ / z o � 2 ; ` 2 \ / \ } ƒ / / a) E \ w w w w - - \ f j§ \\{ (k ± _ / 2 4 ( / 5 12 2 § ƒ § } } ) } § \ 0 ± £ E 0 City of Federal Way / 107 N c 0 m J m 1 Ul N N Q Ol m d) O m N m m m10�21 m�(o x a J - O C L O ~ Z c ' N N O in m Q cn m C C Ot O ifl n � M (h m o AmQmr��mmn ('1 Q Ui V) lC7 l(i E t x H L c ffl a M U-)0N(0 M 0) 0 (0O n m N � m rn rn Q Q rn M x N O c v 0)10 H J N (O m n CO M � L l•1 M (7 (7 (7 f7 f7 Q O ~ � C 69 m Q O n ui (7 Q Q ul (0 f0'1 m r- C C Ol R1 m 4) f0 O J O cl c � c Y c 0 m fp Q V p N ID Q) Q C n N N n n O J A � > H pC C EA U T E C'4 M M N N N pp m U7 m N Q C O n 0 (h Q m n U7 ��pp m Q m N p1 C j ViMrnmQQn n p� t O Q N O m Ql N n n Q44JJ N CC U7 � (�) (�) cR N If] (p d Y Q Q f7 N M a Q ? �cp �onO1 (noon V j 7 m m m L ('7 cn co 0) O U (7 U % L m ~ c yi Qy V tV U N E N � � N to� E `m N c� 8 }ooio°�i�io°'i�i U U U m �j City of Federal Way / 108 m 9 a C O b q Ol 1p � m m V1 Y� O m m a C C O N O) O O N O O m Yl ap O) O Y'S m 0 0 Y'1 O O pp n n N 0 N 1 N u�'S LL�'1 C N N m� T 1R f2 �D l2 "^'^ O OI I j0 O �D Y1 a0 OI M1 N Ol � m LLS O L O ^ E— ^fX Zw w� W u W d N F F d U U m Z d ai U a; u U aZi U d �' u Q LL u .St a t m°y Z u u u m �- u U 2 Z. ca w FE w y� an w v = O T aZi u� c u ° '^ w u u) m a m 4 w= d ppppn o N a N C Y N O O Ul a'UX d V O G N 01 EO N 0�1 N= N N C N O N N O N m Y 01 01 D 41 Ui�ul a'd W W f X 5 d'd'S'Se �2SKUo'D_'U C W o:' v v wa.�A o u A u E E'�E — N N O U 6F `m A i m2rn N d .0 Q: y` m oF A U�'U °'u° A U mg n o S 3 U. m a U U u o £_ y S o c e W F- y `w a 4 3 o` ac U U O y N a0 J Rp U O ry N C O 0 T' m O Z A y W C O R j N YI V T 13 O E E 0 _ y N C T C u VVdll W C Q 1� _' C O LL ~ C m O u d N J J J O N '� Q N y 01 m Fg8.S d a s N N pp W N VI N Ol = G O OI aJ .S4 L O� O O V R .S g �n�OUJ>5 ROOU VQl W?i75tn W Ua%n>0. �4 r :cxrw(720X Q v w m g u c aa` v H � g0 u 15 c g� a � NU � m 2� `m U S U City of Federal Way / 109 J I� O O LO O 61 Q a N N O O m ~ Z QLU a' co m m a w w w w w w w w o 0 0 0 0 CZ w o 00 L v F m N 0 0 67 N c MO O O O O O N IO O O O O O O O N Y m 0� O N O O m 0O cc O O Ln 0 OS N (h r 8 Q 8O O �7O r 7 O _ m c US c, u► w oU v E wm J J tm mwN w JN n W °WJ C-a m � c N u 0 c o � aE E m > > c- am 3 v d v O >— E > -a v v a >v c a o m 0 m a.0c) mw>0ia L mmm� moomom w C7 u N ° ZI N W W w v .� c g v c c o t 0 N m °o m m 4' as E O LL o> �a m `w E _0a c Z 0 p V p O J rn a W m aEi LU U ~ 7 m 7 m 7 N O 2 O 7 L -a 72 w m a J a i a U U U a U Q a LL LL e6 C 6L Z O LL N in O N w a O w ° > J U n 00 m 06 rn 00 m r cu rn rn n cc rn m n ao rn a� n co m rn rn rn rn U w w m f Z G o M M e6OD �o� c}i 8 8 $ g g Ws cn o a a. a. a. a. a- a. C4i " U 0 00 Y Z dc m ro o ,c o o ,c ar c m c m c m c O m 2 i ° O 13 O m 13 LL m m m m m m A O m w 2 IL LL m_ lL d LL lL lL C v m LL Q Z m LL m L72 L m m m m LL E 0 m a v o_ m o_ o_ o_ a o 0_ City of Federal Way / 110 O O1 C Ln- Ql c L m N v a 0 o c n U J � o a s ^' O N .c c Z w N 7_ � L J cu F- OV.. Z Q� a C N _— C c m. m a 64 w U w w w U w 0 0 0 0 0 0 rn o o w v O O N J O O O $ O N w cm Y 01 O O O O O m N H. 9 O pp O. O O O � O m O Mf , , , , O Q Q M Of O cmw E _ Ol E 01 a+ c c7 w J J J J IM O) 0) o v o rn rn rn rn 0 a E a u Ot C u N N N d N 7 u 7 Y N O N W W o' 'o O '0 0cl N y N ausc a0 U U U UU0 a 0 w CQ9 W w O O LL LL O Z w Z rn w a, o Z a o O LL w a:O a�i w a iu a > J U J iL a U m w m z U J O a z a 2 O U U. O w i z T c E C — u 10 v Z c a Sm m w w u R A E '.g J V m m .� o E u a `m !EY O v �a o c O CD o U� U w Z y ,a 'o x .0 E o c LLJ a �;, ; a 2 '¢a° LU m° W aU a.0 -j-i r, ro n ro n ro n 00 r- O n co n ro OI 01 c� T 02 O Ql T T T T Ln (`7 52 M M Q Q N N N N Q � cc�n c5�� Q� QM cn O O G O cn to a. a.cal O O a. O cal cal � c c c a m C .c ;4 c G • c c m c m m m A c F- w m v m m v o NO a iL iL lL L-L iL iL U a a a m a a a a W iq y H U) rn u) U9 of Federal Way Zff! 2 � � § w 0 B < � } CO E N -4 = § 4 - c) CL ) §EGGBd= $L)ILX z < < 0 < 0 I City of Federal Way / 112 MISCELLANEOUS STATISTICAL INFORMATION TYPE OF GOVERNMENT Council - City Manager ORGANIZATION STRUCTURE Legislative Mayor 6 Councilmembers CORPORATE INFORMATION December 31, 1997 Executive Administrative 1 City Manager 6 Department Directors 1 Assistant City Manager Table 16 The City of Federal Way is a noncharter optional code City. It was incorporated as an optional code City on February 28, 1990, and is governed under the provisions of the Optional Municipal Code of the Revised Code of Washington. Optional Code City status increases the City's operating authority by extending to it the powers of all four city classifications which exist in Washington law. LOCATION AND AREA Federal Way, the seventh largest city in the State of Washington, encompasses an area of 21.3 square miles. It is located in south King County approximately 25 miles south of downtown Seattle and 8 miles north of downtown Tacoma. The community is residential commercial, with the populace employed locally and in neighboring cities such as SeaTac, Kent, Tacoma, Bellevue and Seattle. The City has approximately 31,269 housing units. It is 6 miles from the Port of Tacoma and 9 miles south of SeaTac International Airport. The City is served by Interstate 5 and state highways 99 and 509. Frequent Metro public bus service is available to both Seattle and Tacoma throughout Federal Way. Three express park -and -ride lots are provided. POPULATION, REGISTERED VOTERS AND EMPLOYMENT WITHIN CITY LIMITS The population of Federal Way is presently 75,960, of which 39,723 are registered voters. A total of 26,345 (est.) People are employed within the City limits. NUMBER OF CITY EMPLOYEES During the year 1997, the City employed 237 full-time salaries, 9 part-time hourly, and 57 temporary employees. There were 91 commissioned police officers and no uniformed firefighters. The Teamsters Union #763 represented 11 City employees (Public Works Maintenance and Parks Maintenance) and the Police Guild represented 76 Police Officers during 1997. City of Federal Way / 113 MISCELLANEOUS STATISTICAL INFORMATION December 31, 1997 (Continued) RECREATIONAL FACILITIES 23 Developed park sites covering 390.12 acres. 23 Undeveloped park sites covering 426.47 acres (including open space). 25 Public tennis courts, 5 which are owned by the City. 2 Public swimming p000ls, both which are owned by King County. 2 Trails covering 2.5 miles. OTHER CITY -OWNED FACILITIES 1 City Hall 1 Park maintenance facility. i Dumas Bay Centre. 1 Klahanee Community/Senior Center. PUBLIC EDUCATION 1994 1995 1996 1997 23 Elementary schools with enrollment of..................11,328 11,524 11,689 11,930 6 Jr. High schools with enrollment of ........................ 4,642 4,701 4,838 4,979 3 High schools with enrollment of ............................. 3,739 3,730 3,904 4,103 2 Alternative schools with enrollment of ................... 334 376 302 466 (Includes Running Start & Marketing Academy) Total Enrollment... ........... ............... __ ................ 20,043 20,331 20,733 21,478 1,236 Certified full-time equivalency teachers and administrative staff. MILES OF STREETS, ETC. Streets (Center Line Miles)....................................................209.82 miles SIGNALS/STREET LIGHTS City owned traffic signals maintained by: Department of Transportation.......................................................................... 0 City owned traffic signals maintained by King County .................................... 47 Street lights owned by City of Federal Way .................................................... 262 Street lights owned by Puget Power............................................................... 589 City of Federal Way / 114 MISCELLANEOUS STATISTICAL INFORMATION December 31, 1997 (Continued) LOCAL TAXES ON BUSINESS Franchise Tax - Cable TV .......................................... ..... 5.00% Gambling Taxes: Bingo/Raffles......................................................... 10% Amusement Games .............................................. 2% Punchboard/Pull Tabs ............................................ 5% Cardrooms............................................................. 11 % Local Sales Tax (Collected by the State) ........................... 0.85% POLICE INFORMATION Offenses: Citations: Jail Facility: Forcible Rape (including attempts)......... Robbery.................................................... Criminal Homicide .................................... Aggravated Assault ................................................ Vehicle Theft.......................................................... Burglary (commercial & residential)...................... Larceny................................................................... Arson...................................................................... 1994 1995 1996 1997 90 71 73 37 141 173 188 154 3 3 3 2 162 167 171 121 722 843 807 746 857 881 965 643 3,793 4,300 4,086 3,901 32 38 35 24 Traffic........................................................................12,241 14,258 8,660 11,196 King County Jail used at $67.93 per day per person, plus $108.91 booking fee per person. FIRE AND EMERGENCY MEDICAL REPONSE INFORMATION Fire and Emergency Medical Response information reflects the greater Federal Way area, which is served by Fire District #39. 1994 1995 1996 1997 Fire and Other Than Emergency Medical Reponses........ 1,763 1,902 2,018 1,985 Emergency Medical............................................................. 5,088 5,653 6,007 5,853 City of Federal Way / 115 MISCELLANEOUS STATISTICAL INFORMATION December 31, 1997 (Continued) BUILDING RELATED PERMITS AND VALUES 1994 1995 1996 1997 Building Permits.................................................................... 579 560 422 576 Estimated Value (In Millions $) ............................................. $69.3 $60.7 $51.3 $53.3 Other Building Related Permits ..... —...................................... 627 625 656 864 Estimated Value (In Millions $)...............:.,.. ...: ............... ....... $ 2.7 $ 2.8 $37.6 $18.5 TAXABLE SALES (In Millions $) 1994 1995 1996 1997 Retail Sales........................................................................... $905.6 $942.4 $956.8 $978.9 Real Estate Sales................................................................ $243.0 $219.0 $305.0 $375.4