2004 Annual Comprehensive Financial Report (04-001),r -i � � N}�r;�:• • — ... yeti' � � r-•,�
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City of Federal Way History —
The earliest recorded accounts of the Federal Way area tell of Native American families who resided in the area of
the Muckleshoot Reservation on the east side of the Green River Valley and traveled west to the shores of Puget
Sound for the plentiful fisheries resources. Generations of Muckleshoot Indians wore a westward trail across the
heavily forested plateau to the area which is now Saltwater State Park. The arrival of the white man in the nineteenth
century resulted in a steady decline in the Indian population and by 1890, nearly the entire population had
disappeared from the area. Isolated on a triangular shaped plateau rising steeply from Puget Sound, the Federal Way
area had little waterfront access or roadways and accordingly, was sparingly developed compared to Tacoma and
Seattle. As late as the turn of the century, the original settlers at Dash Point and Dumas Bay had to row to Tacoma
for supplies and mail. Old Military Road, constructed around 1856 and extending north from Fort Steilacoom, past
Star Lake to Seattle and Fort Lawton, was the first road through the area.
Over time, narrow dirt roads were added to provide east/west access and by 1900, a road was constructed between
Star Lake and Redondo. The second crossroad, the "Seattle Road," connected old Military Road and Kent. The
Seattle -Tacoma Interurban Line, completed in 1901, provided a fast and easy way to reach these urban cities.
Improved access brought many visitors to the area and Star Lake became a popular summer recreation site.
By the 1920s, Federal Highway 99, the interstate that linked the western states from north to south, was complete.
At this time, Federal Way was still primarily forest and farmland. Fred Hoyt had a cabin on Dumas Bay and started
a road to Tacoma (still called Hoyt Road). The timber companies, which had a major logging operation going, built
an early railroad line and were instrumental in getting Marine View Highway (now Dash Point Road) built in the
early 1920s. This roadway spurred development along the coastline. Soon thereafter, Peasley Canyon Road was
built to connect Military Road with the Auburn Valley. This road later became known as South -320th In
these early days, roadways set the stage for development in the area and they still play an important role in the City
today.
By the start of World War II, a number of small, thriving communities made up the area that is now Federal Way.
Some communities were clustered around lakes, such as Steel Lake, Star Lake, and Lake Geneva. Others were sited
to take advantage of the view of Puget Sound, like Adelaide and Buenna. As each of these communities grew,
residents built small schoolhouses: for their children. By the late 1940s, King County consolidated the many
individual red schoolhouses into the Federal Way School District, from which the City gets its name. During this
same period, a library was built along the edge of Highway 99, and between 308'h Street and 320th Street, a small
"downtown" developed with a general store, lumber yard, realty office, beauty parlor, feed store, and gas station. By
the end of the 1950s, the ten blocks between 308th and 320th Streets became the first roadside commercial district.
One of the more unique developments was Santa Faire, a family oriented theme park. New shopping areas were
added around the park, helping to create a "community focus" for the residents of the area.
As this commercial area developed, the rest of Federal Way was changing as well. The Boeing Company expanded
their operations in Renton and the Kent Valley and began advertising nationally for engineers. Those engineers in
turn began roaming the wooded acreage in Federal Way in search of housing. One of the earliest residential
developments was Marine Hills, built in 1958 overlooking Puget Sound. Weyerhaeuser, one of the early timber
companies, had large land holdings in the area and began to develop their land into high quality housing with
amenities like golf courses.
Weyerhaeuser's development company also began developing commercial property, creating the West Campus
business park. The plan was to integrate offices and businesses with lush landscaping. Though initially the corporate
office market was not strong, West Campus has grown almost to capacity, providing space for many civic buildings
such as City Hall, the police station, the area's major health care centers, and higher density housing.
Another major landmark in the area is SeaTac Mall, built in the mid-1970s on what was farmland south of 320th
Street. The Mall is one of the largest in South King County and is the anchor for retail development in the area. The
Mall was a result of population growth in the region and its location was determined by the 320th Street intersection
with Interstate 5. The Interstate supplanted Highway 99 as the main artery for commuter traffic in the County.
By the mid 1980s, South King County was growing quickly. Retail growth occurred along Highway 99, especially
at the 320th Street intersection. Roads and office space were developed to accommodate the increased growth.
Residential growth was also prominent, following plans developed by King County, with a large number of
apartment homes. The changes to the community, with increased housing and traffic, created a movement for greater
self-determination. In 1989, the citizens of this area voted for incorporation and the City of Federal Way was born,
incorporating on February 28, 1990.
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Year Ended December 31, 2004
Table of Contents
INTRODUCTORY SECTION
Letterof Transmittal...................................................................................................................................
City Officials and Administrative Officers...............................................................................................
City Functional Organization Chart ............................................................................................................
GFOA Certificate of Achievement..............................................................................................................
FINANCIAL SECTION
IndependentAuditor's Report ....................................................................................................................
Management's Discussion and Analysis.....................................................................................................
Basic Financial Statements:
Government -wide Financial Statements:
Statementof Net Assets..........................................................................................................
Statementof Activities...........................................................................................................
Fund Financial Statements:
Balance Sheet — Governmental Funds....................................................................................
Statement of Revenues, Expenditures, and Changes in Fund Balances —
GovernmentalFunds.........................................................................................................
Reconciliation of the Statement of Revenues, Expenditures, and Change
In Fund Balances of Governmental Funds to the Statement of Activities ........................
Statement of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual
GeneralFund....................................................................................... . ............................
StreetFund.......................................................................................................................
UtilityTax Fund..............................................................................................................
Statement of Net Assets — Proprietary Funds..........................................................................
Statement of Revenues, Expenses and Changes in Fund Net Assets — Proprietary Funds......
Statement of Cash Flows — Proprietary Funds........................................................................
Notes to the Financial Statements....................................................................................................
Combining and Individual Fund Statements and Schedules — Nonmajor Governmental Funds:
CombiningBalance Sheet................................................................................................................
Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........................
Combining and Individual Fund Statements and Schedules — Internal Service Funds:
Combining Statement of Net Assets.................................................................................................
Combining Statement of Revenues,'Expenditures and Changes in Fund Net Assets .......................
Combining Statement of Cash Flows................................................................................................
Capital Assets Used in the Operation of Governmental Funds:
Comparative Schedules by Source...............................................................:...................................
Schedule by Function and Activity..................................................................................................
Schedule of Changes by Function and Activity..............................................................................
STATISTICAL SECTION
Government -wide Information:
Government -wide Revenues by Source and Expense/Expenditures by Function ..................................
Fund Information:
General Governmental Expenditures by Function -
General, Special Revenue and Debt Service Funds........................................................................
i
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1
2
3
19
20.
21
22
23
24
25
26
27
28
29
30
61
64
68
69
70
72
73
74
77
78
General Governmental Revenues by Source -
General, Special Revenue and Debt Service Funds........................................................................
79
General Governmental Tax Revenue by Source - General, Special Revenue and Debt Service Funds.
80
Property Tax Levies and Collections.....................................................................................................
81
Assessed and Estimated Actual Value of Taxable Property...................................................................
82
Property Tax Rates and Levies - Direct and Overlapping Governments ................................................
83
Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt per Capita .....................
84
Computation of Limitation of Indebtedness..........................................................................................
85
Computation of Direct and Overlapping Debt.......................................................................................
86
Ratio of Annual Debt Service Expenditures for General Obligation Bonded Debt to Total
General Governmental Expenditures.........................................................................................:.......
87
DemographicStatistics .................................... :.....................................................................................
88
Property Value, Construction, and Bank Deposits................................................................................
89
Principal Taxpayers and Principal Employers.......................................................................................
90
Schedule of Insurance in Force..............................................................................................................
91
Salaries and Surety Bonds of Principal Officials...................................................................................
92
Miscellaneous Statistical Information..............................................................................................:.....
93
ii
CITY a4A
Federal Way
June 30, 2005
People of the City of Federal Way
Honorable Mayor and City Council
THE COMPREHENSIVE ANNUAL FINANCIAL REPORT
OF THE
CITY OF FEDERAL WAY
The Comprehensive Annual Financial Report (CAFR) of the City of Federal Way for the year ended
December 31, 2004 is hereby submitted. Responsibility for both the accuracy of the data, and the
completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of
our knowledge and belief, the enclosed data are accurate in all material respects and are reported in a
manner designed to present fairly the financial position and results of operations of the various funds of the
City. All disclosures necessary to enable the reader to gain an understanding of the City's financial
activities have been included.
FINANCIAL REPORTING STANDARDS AND FORMAT
This CAFR is presented for the second time in conformity with Governmental Accounting Standards Board
(GASB) Statement 34. This statement dramatically modified the presentation of financial information for
the City of Federal Way effective with financial statements ending December 31, 2004. The format and
purpose of these changes are addressed in more detail in the Management's Discussion and Analysis
(MD&A). Additionally, the notes to the financial statements are designed to discuss the change and
explain the effects and results of these changes. We believe this new presentation will provide better
information to the users of the CAFR.
The comprehensive annual financial report is presented in three sections: introductory, financial, and
statistical. The, introductory section includes this transmittal letter, the City's organizational chart and a list
of officials. The financial section includes the basic financial statements, and the combining statements of
nonmajor funds, internal service funds, and schedules of capital assets of governmental funds, as well as
the State Auditor's report on the basic financial statements. The statistical section includes selected
financial and demographic information, generally presented on a multi -year basis.
As an aid to the reader, the major sections of this report have been segregated by divider pages which
provide introductions to the sections. In the same manner, divider pages have been used to separate the
various components of the financial section. Generally Accepted Accounting Principles (GAAP) require
that management provide narrative introduction, overview, and analysis to accompany the basic financial
statements in the form of MD&A.. This transmittal letter is designed to compliment the MD&A and should
be read in conjunction with it. The City's MD&A- can -be found immediately following the Independent
Auditor's Report.
iii
REPORTING ENTITY
The City is a noncharter Optional Code City with a Council -Manager form of government. The City
Council consists of seven council members, all of whom are elected at large by citizens of Federal Way to
serve four-year terms. The City Manager, who serves as the chief executive officer, is responsible for day-
to-day administration of personnel, policies and programs. He is appointed by, reports directly to, and
serves at the pleasure of the City Council.
City services provided include: police protection, construction and maintenance of streets, building
inspection, municipal court services, jail services, planning and zoning, park services, surface water
management and general administration, including finance. Services for a land use hearing examiner are
contracted. The City continues to have seven major departments consisting of City Manager; Law;
Management Services; Parks, Recreation, and Cultural Services; Public Safety; Public Works; and
Community Development. Fire protection and emergency medical services are provided by Fire District
No. 39. The Lakehaven Utility District delivers water and sewer services. Metro provides public
transportation services. Public housing services are the primary focus of the King County Housing
Authority. The King County Library System engages City residents through its library and reference
services. School District No. 210 offers educational programs for kindergarten through high school
students, in addition to vocational training.
FACTORS AFFECTING FINANCIAL CONDITION
The Puget,Sound Region which was hit particularly hard by the high tech downturn and cutbacks at Boeing
caused by the plunge in air travel following the September 11 terrorist attacks, has endured a much deeper
and longer recession than most of the country. However, the region has finally begun to recover in 2004, in
part due to a turnaround at Boeing. Boeing, which reduced its Washington employment by 27,200 between
September 2001 and June 2004, has added 2,400 jobs between June 2004 and December 2004.
The region lost 96,600 jobs or 6.8% of its employment, during the downturn, of that manufacturing sector
accounted for 41,900 (43.4%) of the lost jobs. Since September 2003, employment has rebounded in
construction, wholesale trade, and service industries, the region has added 32,500 jobs, recouping one-third
of its loss.
Local economists are generally upbeat about the prospects for the region's economy now that the national
expansion has strengthened and Boeing has begun to hire. In addition, the state's software sector is
expected to expand its employment by 5% per year according to the Washington Office of the Forecast
Council, and the weaker of U.S. dollar will boost exports and help to attract foreign tourists.
The Puget Sound Economic Forecaster expects the region's employment to increase by 2.6% in 2005,
personal income is forecasted to grow at a healthy pace, and inflation is expected to accelerate but remain
under control. One component of the economy that is expected to slow is the housing market, which will
face rising mortgage rates in the coming years.
ECONOMIC TRENDS
Federal Way is the seventh largest city in Washington State with a population of 85,800 as of January 14,
2005, including 2,700 added from newly annexed area of Redondo East, North Lake, and Parkway. The
City is located on a plateau adjacent to Puget Sound in King County, eight miles north of downtown
Tacoma and 25 miles south of downtown Seattle. The City occupies approximately 22.5 square miles,
including the annexed area, and is served by Interstate 5 and state highways 99 and 509.
In 2004 there were 34,559 housing units in Federal Way. Of these units, 55% were single family, 41%
multi -family units and 4% mobile homes and trailers. These statistics for housing units show an increase of
approximately .01 % over 2004.
iv
The community is residential and commercial, with the populace employed locally and in the neighboring
cities such as SeaTac, Kent, Tacoma, Bellevue, and Seattle. Employment in Federal Way is highly
concentrated in retail and services sectors which respond primarily to the needs of the local market area
population. The employment figure for 2004 is estimated at 29,600. Major employers are The Commons
Mall, Federal Way School District, Weyerhaeuser, St. Francis Community Hospital, Enchanted Parks, U.S.
Postal Bulk Mail Center and World Vision.
Sales tax collected in 2004 total $10.54 million, slightly above 2003. The retail sector of the local economy
is anchored by The Commons regional mall including Target, Best Buys, Wal-Mart, Costco, Fred Meyer,
Lowe's Home Improvement Center, and many other small businesses adjacent to the City center.
According to a listing of businesses registered with the City of Federal Way and sorted by the Standard
Industrial Classification, the business economy appears to be configured as follows: retail trade 64.7%;
services 12.9%; contracting 9.9%; wholesale trade 4.8%; transportation and public utilities 4.1%;
manufacturing 1.0%; government 0.3%; finance, insurance and real estate 1.5%, and other .8%.
In 2004, new improvements to real estate totaled $147.2 million or approximately 2.3% of the City's
assessed valuation. The total assessed value of taxable property in Federal Way was $6.5 billion which is
approximately 3.2% higher than the 2003 assessed valuation of $6.3 billion. Real Estate sales increased
7% to approximately $611.5 million in 2004 as compared to $570.3 million in 2003. A total of 624
building permits and 1,958 other building related permits were issued in 2004. Estimated valuation was
$64.5 million and $2.5 million, respectively. Significant building permits include: Federal Way Transit
Center. Target at the Commons, Maplewood II Development, Walgreen Drug Store, and the Christian Faith
Center.
MAJOR INITIATIVES AND ACCOMPLISHMENTS
Council approved the redesign of the community center to stay within the $20 million budget. This facility
will provide recreational opportunities for everyone: lap and leisure pools, a three -bay gym with elevated
jogging track, sub -dividable community rooms, classroom, fitness area, senior area, and other amenities.
City staff moved into the recently purchased and extensively renovated Paragon building. Public Safety
and the Municipal Court moved in early in the year with the rest of the City staff following in late August
of 2004.
A number of capital improvements were made to our main streets and highways, making them a more
attractive place to do business. In 2004, Phase 11 from South 324th to 340th is winding down. While, Phase
.III of Pacific Highway South improvements from South 284th Street to State Route 509 is well under way.
Finished the Weyerhaeuser round -about. Banners, baskets, and holiday lights were also hung from
lampposts along Pacific Highway and South 320th during the holiday season.
A major component of the comprehensive plan is the creation of a vibrant downtown area. The city is
currently working the master environment review of the area, which when completed will save developer's
time and cost. A consultant was hired to review preliminary traffic impacts, and a new system was created
to market the community to potential developers. A new economic development website was launched,
containing a database of available properties in the city.
During 2004 the eligible City voters decided whether or not to annex three areas known as; Redondo East,
North Lake, and The Parkway to be include in the City limits. The bid was successful and took effect on
January 1" 2005. This has increased the population by 2,730 bringing the total to 85,800 for the City of
Federal Way.
The City's Lodging Tax Advisory Committee worked with an event consultant to explore ways of growing
tourism. So far a new brochure on Federal Way attractions was created, and the Reebok Women's
Triathlon took place in the fall of 2004 and was very well received. In addition the I" annual Korean sports
and cultural event called the Han Woo-Ri festival is planned to take place in late spring 2005.
v
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, 2004 indicated that there were no material weaknesses in the internal control
structure.
Budgetary Control
The City maintains budgetary controls in accordance with the Revised Code of Washington (RCW
35A.33). The objectives of these budgetary controls are to ensure compliance with legal provisions
embodied in the annual appropriated budget approved by the City Council. Activities of the General Fund,
some Special Revenue Funds, and Debt Service Fund are included in the annual appropriated budget. The
level of budgetary control at which expenditures cannot legally exceed the appropriated amount is
established at the individual fund level. The project -length based Special Revenue Funds, and the Capital
Projects, Enterprise and Internal Service funds are management budgets only and therefore these budgets
are not represented in the CAFR. The City also maintains an encumbrance accounting system as one
technique of accomplishing budgetary control. All appropriations lapse at year-end.
Basis of Accounting
All governmental funds are accounted for using the modified accrual basis of accounting. Under the
modified accrual basis, revenues are recorded when received in cash, except for revenues susceptible to
accrual. Revenues considered susceptible to accrual are those that are measurable and available to finance
the government operation during the current period. Expenditures, other than accrued interest on general
long-term debt, are recorded at the time liabilities are incurred.
All proprietary funds use the accrual basis of accounting. Under the accrual basis, revenues are recorded
when they are earned and expenses are recorded as soon as they result in liabilities for benefits received.
Cash Management
The City began investing outside the State Investment Pool in November 1994. Based on an adopted
investment policy the City operates a conservative cash management program, investing surplus cash as
determined by anticipated cash flow needs. Investment decisions are based on established investment
policies in compliance with Washington State statutes, with consideration given first to' safety, secondly to
liquidity, and lastly to yield. The City's portfolio at December 31, 2004 consisted of investments in U.S.
V1
Government Agency securities, Washington State Investment Pool, and Municipal Investment Account,
with maturities ranging from one day to 2 and % 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 counter party's trust department or agent in the City's name; and
category 3 includes uninsured and unregistered investments held in the counter party's trust department or
agent, but not in the City's name. This categorization is included in note 4 of the basic 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 3'/z basis points (.035%). At December
31, 2004, the City had $31,699,452 invested in the State Investment Pool. In 2004, the average monthly
earnings rate for the entire portfolio was approximately 2.16% as compared to the average monthly
earnings rate for the State Investment Pool of 2.07%.
Risk Management
The City maintains insurance against most normal hazards except for unemployment insurance, for which it
has elected to become fully self -insured. Related premiums received by the Risk Management Fund are
used to reimburse the State Employment Security Department for unemployment benefits paid to eligible
individuals, and to establish reserves for the payment of estimated future unemployment claims liability.
Through its Risk Management Fund, the City is also recovering insurance premium costs for general
liability coverage and building reserves for a future general liability self-insurance program. During 2004,
the City purchased commercial insurance policies from commercial insurers. It is the opinion of the City's
legal staff that at year-end there were no outstanding claims that met expenditure accrual or loss disclosure
criteria.
The City's industrial insurance is provided by Washington State and is administered by the Department of
Labor and Industries. The following are benefits provided by industrial insurance: medical services,
damaged clothing, travel expenses, time -loss payments, vocational rehabilitation, partial disability awards,
pension awards, and survivor benefits.
Independent Audit
State law requires an annual audit of all City books of account, financial records, and transactions by the
State Auditor, an independently elected state official. In addition to meeting the requirements set forth
under state law, the audit was also designed to meet the requirements of the federal Single Audit Act of
1984 and related OMB Circular A-133. The 2004 audit of the City has been completed in conformance
with generally accepted auditing standards. The financial statements of all City funds have been included
in this audit. The City has been given an unqualified opinion for 2004. The State Auditor's report on the
basic financial statements is included in the financial section of this report.
AWARDS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to the City of Federal Way for its
comprehensive annual financial report (CAFR) for the year ended December 31, 2003. The Certificate of
Vll
Achievement is a prestigious national award recognizing conformance with the highest standards for
preparation of state and local government financial reports. The City of Federal Way has received a
Certificate of Achievement for the last fourteen years (fiscal years ended 1990 — 2003). 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, 2003 and 2004 and has
submitted for its 2005/06 biennial budget. In order to receive this award, a governmental unit must publish
a budget document that meets program criteria as a policy document, a financial plan, an operations guide,
and a communications medium.
ACKNOWLEDGEMENTS
The preparation of this report would not have been possible without the efficient and dedicated services of
the entire staff of the finance department. Very special thanks are due to Mark Turley, Senior Financial
Analyst, Minh Truong, Financial Analyst, and Jeri-lynn Clark, Accounting Technician. In addition, staff in
all City departments should be recognized for responding so positively to the requests for detailed
information which accompany each audit. The role of the State Auditor's Office should also be
acknowledged as a significant contribution to a fine product. Finally, we wish to express our appreciation
to the Mayor and City Council for their ongoing support and for providing the firm foundation for the
pursuit of excellence in all realms of professional endeavors.
Respectfully submitte
Iwen Wang
Management Services Director
Tho Kraus
Finance Manager
viii
City of Federal Way / 1
DEAN MCCOLGAN
Mayor
CITY OFFICIALS
5
5
LINDA KOCHMAR
Deputy Mayor
JACK DOVEY ERIC FAISON
Councilmember Councilmember
JIM FERRELL
Councilmember
DAVID MOSELEY
City Manager
OTHER ADMINISTRATIVE OFFICERS
JEANNE BURBIDGE
Councilmember
MICHAEL PARK
Councilmember
CityAttorney...................................................................... .....Patricia Richardson
CityClerk...........................................................................................................................................................Chris Green
Community Development Director............................................................................................................. Kathy McClung
Management Services Director...........................................................................................................................Iwen Wang
Parks, Recreation and Cultural Services Director.............................................._...,....,................................. Donna Hanson
PublicSafety Director........................................................................................................ .................... Anne Kirkpatrick
Public Works Director ............................. ..................... .............................................................................. Cary Roe
City of Federal Way / 2
Municipal Court
David Tracy.
*Adjudicates Cases
*Probation Services
*Indigent Defense Screening
Total FTE: 13.55
Community
Development.
KathyMcClung
*Current Planning
*Land Use
*Building Permits/
Inspections
*Code Compliance
People of Federal Way
I Mayor and City Council
Dean McColgan, Mayor
Linda Kochinar, Deputy Mayor
Jeanne Burbidge, Jack Dovey,
Eric Faison, Jim Ferrell,
Michael Park
City Manager
Total FTE:
Parks, Recreation
& Cultural Services
*Recreation Programs
*Ground Maintenance
*Park Operations
•Community/Sr Center
*Facility Maintenance
*Dumas Bay Centre
*Civic Theatre
FTE:
City Attorney
Patricia Richardson
*Civil Legal Services/
Litigation
•Prosecution
•Advise Council
Boards, Commissions
& staff
•Advice/Drafting
Ordinances
Total FTE: 10.4
5
*Drug Awareness
Resistance Education
*Crime Analysis/
Prevention
*Traffic Enforcement
*investigation
*Jail Services
•Arts Commission
*Diversity Commission
*Ethics Board
*Human Services Commission
•Parks & Recreation Commission
*Planning Commission
*Youth Commission
*Civil Service Commission
*Development Services
•Street Maintenance
*Traffic Operation
*Surface Water Mgmt
*Solid Waste/
Recycling
*Neighborhood
Safety
*Transportation
*System Planning
155 Total FTE: 41.5
Iwen Wang
eCity Clerk
*Finance
*Human Resources
•Risk Management/
Purchasing/Fleet
•Systems
Total FTE: 25
Of Federal Way / 3
Certificate of
Achievement
for Excellence
in Financial
pep orting
Presented to
City of Federal Way,
Washington
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
December 31, 2003
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United',States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting,
C MA o
z President
y`%XT o�ti
Executive Director
The Government Finance Officers
Association of the United Sates and
Canada (GFOA) awarded a
Certificate of Achievement for
Excellence in Financial Reporting
to the City of Federal Way for its
comprehensive annual financial
report (CAFR) for the fiscal year
ended December 31, 2003. This
was the fourteenth consecutive year
that the government has achieved
this prestigious award. In order, to
be awarded a Certificate of
Achievement, a government must
publish an easily readable and
efficiently organized
comprehensive annual financial
report. This report must satisfy
both generally accepted accounting
principles and applicable legal
requirements.
A Certificate of Achievement is
valid for a period of one year only.
We believe that our current
comprehensive annual financial
report continues to meet the
Certificate of Achievement
Program's requirements and we are
submitting it to GFOA to determine
its eligibility for another certificate.
Federal Way / 4
CITIOF
Federal Way
Swiset Building
PO Box 40021
Olympia, Washington 98504-0021
INDEPENDENT AUDITOR'S REPORT
June 23, 2005
Council
City of Federal Way
Federal Way, Washington
Washington State Auditor
Brian Sonntag
(360) 902-0370
FAX (360) 753-0646
TDD Relay 1-800-833-6388
http://www.sao.wa.gov
We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major
fund, and the aggregate remaining fund information of the City of Federal Way, King County, Washington, as of and for the year
ended December 31, 2004, as listed in the table of contents. These financial statements are the responsibility of the City's
management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatements.. 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.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position
of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the
City of Federal Way, as of December 31, 2004 and the respective changes in financial position and cash flows, where
applicable, thereof and the respective budgetary comparison for the General and Major Special Revenue Funds for the years
then ended, in conformity with accounting principles generally accepted in the United States of America.
The management's discussion and analysis on pages 7 through 18 is not a required part of the basic financial statements but is
supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited
procedures, which consisted principally of inquires of management regarding the methods of measurement and presentation of
the required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was performed for the purpose of forming opinions on the financial statements that collectively comprise the City's
basic financial statements. The accompanying information listed as combining financial statements and supplemental
information on pages 61 through 74 is presented for purposes of additional analysis and is not a required part of the basic
financial statements. The combining financial statements and supplemental information has been subjected to auditing
procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in
relation to the basic financial statements taken as a whole.
The information identified in the table of contents as the introductory and Statistical Sections have not been subjected to the
auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on it.
Sincerely,
BRIAN SONNTAG, CGFM
STATE AUDITOR
City of Federal Way / 4
CM OF k
Federal Way
City of Federal Way /7
MANAGEMENT'S DISCUSSION AND ANALYSIS
This section of the City of Federal Way's annual financial report provides a narrative overview of the
City's financial activities for the fiscal year ended December 31, 2004. This information should be read in
conjunction with the preceding letter of transmittal and the financial statements and notes to the financial
statements that follow.
FINANCIAL HIGHLIGHTS
+ The total assets of the City of Federal Way exceeded its liabilities at December 31, 2004 by $158.0
million. Capital Assets (net of depreciation and related debt) account for 65% of this amount with a
value of $102.4 million. Of the remaining net assets $18.1 million or 12% may be used to meet the
government's ongoing obligations to citizens and creditors, without legal restriction.
• The City's total net assets increased by $13.8 million, or 10% in 2004. Governmental activities
provided $12.3 million or 90% with the remainder being provided by the business -type activities.
• Governmental fund balances at year-end were $40.1 million, a 12% decrease over the prior year. Of
this amount, a total of $36.9 million, or 92% of the governmental fund balance is unreserved and
available to fund ongoing activities. The remaining $3.2 million is earmarked for debt service, paths &
trails reserve, hotel/motel lodging tax, police special funds, petty cash/change funds, and advance
travel.
• Unreserved fund balance in the general fund was $2.6 million, a decrease of $4.9 million or 65% from
the prior year.
• The City debt decreased by $4.1 million during the current fiscal year. General obligation debt
decreased by $3.9 million while public works trust fund loan decreased by $200 thousand. The
decreases reflect the annual debt service payments.
OVERVIEW OF FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the City of Federal Way's basic
financial statements. The basic financial statements are comprised of three components: 1) government -
wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. Other
supplementary information in addition to the basic financial statements is also contained in this report.
Government -wide Financial Statements
The government -wide financial statements are designed to provide readers with a broad overview of the
City of Federal Way's finances, in a manner similar to a private -sector business.
The statement of net assets presents information on all of the City of Federal Way's assets and liabilities,
with the difference between the two reported as net assets. This statement serves a purpose similar to that
of a balance sheet in private business. Over time, increases or decreases in net assets may serve as a useful
indicator of whether the financial position of the City is improving or deteriorating
The statement of activities presents information showing how the City's net assets changed during the most
recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the
change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported
in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected
taxes and earned but unused vacation leave).
Both of the government -wide financial statements distinguish functions of the City of Federal Way that are
principally supported by taxes and intergovernmental revenues (governmental activities) from other
City of Federal Way / 8
functions that are intended to recover all or a significant portion of their costs through user fees and
charges (business -type activities). The governmental activities of the City of Federal Way include law
enforcement and public safety, construction and maintenance of streets, building inspection, municipal
court services, jail services, community planning and development services, parks and recreation facilities,
other community services and general administration. The business -type activities of the City include
surface water management and the control and operation of Dumas Bay Centre, a multi -use facility that
offers business and retreat accommodations, recreation and cultural arts classes and a performing arts
facility.
The City has no separately identified component units included in the government -wide financial
statements. The City has reported its investment in one governmental joint venture; Valley
Communications Center. A description of this joint venture is found in note 14 of the notes to the financial
statements.
The government -wide financial statements can be found immediately following this MD&A.
Fund Financial Statements
The annual financial report includes fund financial statements in addition to the government -wide financial
statements. While the government -wide statements present the City's finances based on the type of
activity, general government versus business -type, the fund financial statements are presented by fund type
such as the general funds, special revenue funds, and proprietary funds. A fund is a specific fiscal and
accounting entity with.a self -balancing set of accounts used to account for specific activities or meet certain
objectives. Funds are often set up in accordance with special regulations, restriction or limitations. The
City of Federal Way uses funds accounting to ensure and show compliance with finance -related legal
requirements. The City's funds are divided into two categories: governmental funds and proprietary funds.
Governmental Funds
Governmental funds are used to account for essentially the same functions as are reported in governmental
activities in the government -wide financial statements. However, unlike the government -wide financial
statements, governmental fund financial statements focus on near -term inflows and outflows of spendable
resources as well as on balances of spendable resources available at the end of the fiscal year. Such
information may be useful in evaluating a government's near -term financing requirements.
Because the focus of ,governmental funds is narrower than that of the government -wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for government -wide financial statements. By doing so, readers may better
understand the long-term impact of the government's near -term financing decisions. Both the
expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between
governmental funds and governmental activities.
The City of Federal Way maintains fifteen individual governmental funds. The City's six major
governmental funds, the general fund, street fund, utility tax fund, debt service fund, city facilities fund,
and the transportation fund, are presented separately in the governmental fund balance sheet and the
governmental fund statement of revenues; expenditures, and changes in fund balances. The remaining
governmental funds are combined into a single column labeled nonmajor governmental funds. Individual
fund data for each of the nonmajor governmental funds can be found in combining statements later on in
this report.
The City maintains control over its operating funds through the adoption of the biennial budget. Budgets
are adopted at the fund level and according to'state law. A budgetary comparison statement is presented for
the General, Street and Utility Tax Fund as a basic financial statement.
The basic governmental fund financial statements can be found on pages after the government -wide
statements of this report.
City of Federal Way / 9
Proprietary Funds
The City of Federal Way maintains two types of proprietary funds. Enterprise funds are used to report the
same functions presented as business -type activities in the government -wide statements. The City uses
enterprise funds to account for its surface water management and control and the Dumas Bay Centre.
Internal service funds are an accounting device used to accumulate and allocate costs internally among the
City's various functions. The City uses internal service funds to account for its risk management and self-
insurance program, information systems, mail and duplication services, fleet of vehicles and motorized
equipment, and facilities management.
Proprietary funds provide the same type of information as the government -wide financial statements, only
in more detail. The proprietary fund financial statements provide separate information for the Surface
Water Management fund and for the Dumas Bay Centre. The internal service funds are combined into a
single, aggregated presentation in the proprietary fund financial statements. Individual fund data is
provided in the form of combining statements elsewhere in this report.
The basic proprietary fund financial statements can be found following the governmental fund statements
of this report.
Notes to the Financial Statements
The notes provide additional information that is essential to the full understanding of the data provided in
the government -wide and fund financial statements. The notes to the financial statements can be found
immediately following the basic financial statements.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents the
combining statements for nonmajor governmental funds, internal service funds, and capital assets of
governmental funds.
GOVERNMENT -WIDE FINANCIAL ANALYSIS
Statement of Net Assets
The statement of net assets can serve as a useful indicator of the City's financial position. The City of
Federal Way's net assets at December 31, 2004 total $144.0 million, excluding existing transportation
infrastructure assets which are not reported in this financial report. The following is a condensed version of
the government -wide statement of net assets.
Current and other assets
Capital assets and CIP,
net of accumulated depreciation
Total assets
Long-term liabilities
Other liabilities
Total liabilities
Net assets:
Invested in capital assets,
net or related debt
Restricted
Unrestricted
Total net assets
CONDENSED STATEMENT OF NET ASSETS
Governmental Activities
Business -Type
Activities
Total
2004
2003
2004
2003
2004
2003
$ 56,193,460
$60,909,297
$ 7,619,913
$ 8,301,667
$ 63,813,373 $
69,210,964
89,459,264
75,360,095
44,039,690
42,046,043
133,498,954
117,406,138
145,652,724
136,269,392
51,659,603
50,347,710
197,312,327
186,617,102
30,802,892
34,730,517
2,304,190
2,486,549
33,107,082
37,217,066
5,855,245
4,884,188
566,820
492,790
6,422,065
5,376,978
36,658,137
39,614,705
2,871,010
2,979,339
39,529,147
42,594,044
60,679,663
43,162,298
41,735,500
39,559,494
102,415,163
82,721,792
37,262,541
37,806,176
20,289
14,148
37,282,830
37,820,324
11,052,383
15,686,213
7,032,804
7,794,729
18,085,187
23,4809942
$108,994,587
$96,654,687
$48,788,593
$47,368,371
$ 157,783,180 $
144,023,058
The largest component of the City's net assets, 65% or $102.4 million, in its investment in capital assets net
any related outstanding debt issued to acquire those assets. These capital assets such as streets, trails,
City of Federal Way / 10
parks, police vehicles, and parks equipment are used to provide services to the citizens. Consequently,
these assets are not available to sell and convert to cash for future spending. The City has not elected the
GASB 34 reporting option to include all general infrastructure of the City acquired or substantially
renovated since 1990. Only general infrastructure acquired since 2003 is reported. An analysis and
valuation of general infrastructure acquired or substantially renovated since 1990 is underway.
Approximately 21% or $32.5 million of the total net assets of the city are earmarked for construction
projects such as a community centre, new City Hall, improvements to SR99, acquisition of additional city
parks, renovation and. improvements to Historical Cabins park, neighborhood parks, and Sacajawea
sportsfield. The City attempts to fund capital construction projects on a pay-as-you-go basis, aggressively
pursuing transportation grant funding and cost sharing with developers wishing to construct large projects
in the City that impact the transportation system.
The remaining balance of restricted net assets is divided among restrictions for: debt service prefunding
$2.8 million; $431K for police special funds, petty cash/change funds and advance travel; $175 thousand
hotel/motel lodging tax; $5 thousand for paths and trails; and $1.4 million customer deposits.. The
business -type activities portion of $8.9 million may only be spent on surface water management activities
and the remaining $232 thousand on improvements to Dumas Bay Centre and Knutzen Family Theatre.
Maintenance of catch basins, pump stations, storm drain flushing, and other capital construction projects
such as West Branch Lakota Creek Restoration are examples of utility activities. Other functions of the
City may access the remaining $29.0 million to meet ongoing obligation to citizens and creditors.
Examples of other City obligations which these net assets may be used for are public safety, parks
maintenance, and ongoing street maintenance.
At the end of the fiscal year, the City of Federal Way reported positive balances in all three categories of
net assets, for the government as a whole, as well as for the separate governmental and business -type
activities.
Changes in Net Assets
The changes in net assets table illustrates the increases or decreases in net assets of the City resulting from
its operating activities. The City's net assets increased approximately $13.8 million in 2004. The increase
was split between the governmental activities ($12.3 million or 90%) and business -type activities ($1.4
million or 10%).
The following is a condensed version of the City's changes in net assets. The table shows the revenues,
expenses, and related changes in net assets in tabular form for the governmental activities separate from the
business -type activities. The graphs that follow compare program revenues to program expenses and
illustrate the revenues by source separately for the governmental and business -type activities.
City of Federal Way / 11
CHANGES IN NET ASSETS RESULTING FROM CHANGES IN REVENUES AND EXPENSES
Revenues:
Program revenues:
Charges for services
Operating grants & contributions
Capital grants and contributions
General revenues:
Property tax
Sales tax
Other taxes
Other
Total Revenue
Expenses:
General government
Security of Persons & Property
Transportation
Physical environment
Economic environment
Health and human services
Culture and recreation
Interest on long-term debt
Surface Water Management
Dumas Bay Center
Total Expenses
Increase in net assets before transfers
Transfers
Increase in net assets
Net assets - beginning
Net assets - ending
Governmental Activities Business -Type Activities Total
2004 2003 2004 2003 2004 2003
$ 9,413,965
$ 8,418,528
$ 4,249,020-
$ 4,041,063
$ 13,662,985
$ 12,459,591
32,415
360,000
535,645
168,555
568,060
528,555
7,214,776
10,069,756
478,030
757,578
7,692,806
10,827,334
8,121,088
8,200,955
-
-
8,121,088
8,200,955
10,546,218
10,547,534
-
10,546,218
10,547,534
13,842,322
13,522,836
-
-
13,842,322
13,522,836
1,761,036
2,119,120
116,634
141,980
1,877,670
2,261,100
50,931,820
53,238,729
5,379,329
5,109,176
56,311,149
58,347,905
6,304,256
5,601,311 - -
6,304,256
5,601,311
17,374,845
15,597,612
17,374,845
15,597,612
4,098,790
5,389,975 - -
4,098,790
5,389,975
295,537
351,023 - -
295,537
351,023
2,953,073
2,923,756 - -
2,953,073
2,923,756
683,804
607,199 - -
683,804
607,199
4,914,348
4,455,865 - -
4,914,348
4,455,865
1,764,077
1,683,028 - -
1,764,077
1,683,028
-
- 3,282,427 3,380,690
3,282,427
3,380,690
879,870 935,422
879,870
935,422
38,388,730
36,609,769 4,162,297 4,316,112
42,551,027
40,925,881
12,543,090 16,628,960 1,217,032 793,064 13,760,122 17,422,024
(203,190) (116,813) 203,190 116,813
12,339,900 16,512,147 1,420,222 909,877 13,760,122 17,422,024
96,654,687 80,142,540 47,368,371 46,458,494 144,023,058 126,601,034
$ 108,994,587 $96,654,687 $48,788,593 $47,368,371 $ 157,783,180 $ 144,023,058
Governmental activities contributed $12.3 million or 90% of the total change in net assets of $13.8
million. Key elements of this increase are in utility tax ($7.6 million total) and real estate tax ($3.1 million
total) collections in 2004. Both of these taxes are reserved for debt service payments and transfers to
various capital projects as approved by Council. In 2004, General government capital improvement
projects expended $12.6 million in 2004. Approximately $6.4 million of theses expenditures were from
grants and $3.1 million were from development fees. A portion of utility tax also provides ongoing
subsidies to various operating activities, including Celebration Park maintenance, Knutzen Family Theatre,
and Kenneth Jones Pool Permit revenues exceeded operating budget estimates by $465 thousand and
department expenditures of $1.4 million also contributed to the increase in net assets.
City of Federal Way / 12
Business -type activities of the City's surface water management system and Dumas Bay Centre increased
the City's net assets by $1.4 million accounting 10% of the total growth in the government's net assets.
The Surface Water Management Fund accounts for $1.5 million with key elements of the increase in grants
($500 thousand) expenditure decreases ($1 million). Dumas Bay Centre Fund net assets decreased by $60
thousand.
FINANCIAL ANALYSIS OF THE CITY'S FUNDS
As noted earlier, the City of Federal Way uses fund accounting to ensure and demonstrate compliance with finance -
related legal requirements.
Governmental funds
The focus of the City of Federal Way's governmental funds is to provide information on near -term inflows,
outflows, and balances of spendable resources. Such information is useful in assessing the City's financing
requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources
available for spending at the end of the fiscal year.
As of the end of 2004, the City's governmental funds reported combined ending balances of $40.1 million, a
decrease of $5.6 million in comparison to the prior year. Approximately 7% or $2.7 million of this amount
constitutes unreserved general fund balance, which is available for spending at the City's discretion. The remainder
of the fund balance is reserved to indicate that it is not available for new spending because it has already been
committed for debt service payments, capital projects, police special funds and petty cash/change fimd/advance
travel.
The General Fund is the chief operating fund of the City. At the end of 2004 unreserved fund balance of the general
fund was $2.6 million, while total fund balance was $2.8 million. General Fund unreserved fund balance represents
8% of total general fund expenditures.
The City's general fund decreased by $5.2 million during 2004 as a result of transferring $5.2 million to partially
fund various capital improvement projects and provide subsidy to street fund operations.
The Debt Service Fund has a total fund balance of $2.8 million, all of which is reserved for the payment of debt
service.
Proprietary funds
The City of Federal Way's proprietary funds provide the same type of information found in the government -wide,
but in more detail. Unrestricted net assets of the Surface Water Management Fund at the end of the year amounted
to $9.0 million, and those for Dumas Bay Centre amounted to $231 thousand. The total change in net assets for
both funds was $1.5 million increase and $60 thousand decrease, respectively. Other factors concerning the finances
of these two funds have already been addressed in the discussion of the City of Federal Way's business -type
activities.
City of Federal Way / 13
BUDGETARY HIGHLIGHTS
The City of Federal Way budgets on a biennial basis with each budget beginning in an odd numbered year.
Appropriations for operating funds are authorized for two years, but must be reviewed and reauthorized by the City
Council in the middle of the biennial period. The following discussion is reflective only of the current year of the
biennium.
The supplementary expenditure budget increase of $8.2 million between the original budget for the fiscal year 2004
and the final budget are explained as follows:
Adjustments to revenues and other sources budget include: increases in property tax ($175 thousand), state shared
revenues ($174 thousand), interfund transfers ($2.3 million), grants and contributions ($338 thousand), probation
contract revenue ($242 thousand), and 2003 ending fund balance carryforward ($4.3 million); decreases in sales tax
($494 thousand) and utility tax ($750 thousand); and elimination of motor vehicle excise tax ($764 thousand).
Adjustments to expenditure and other uses budget include:
• The $338 thousand in grants and contributions funded the increase in public safety, homeland security, and
solid waste & recycling grant programs.
• $2.4 million increase debt service payments for community center, new city hall, and early retirement of
the 1993 Saghalie Park bond.
• $3.5 million in ending fund balance was used to provide transfers to various capital improvement projects,
including the community/senior center facility and new City Hall, general fund subsidy to streets fund,
transfers to debt service fund for community center debt payments, and transfers to internal service funds
for management information systems and fleet and equipment.
• The remaining $1.9 million increase in general governmental services was also funded by ending fund
balance carry forward.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
The City of Federal Way's investment in capital assets for its governmental and business -type activities as of
December 31, 2004 amounts to $133.3 million (net of accumulated depreciation). This investment in capital assets
includes land, buildings, improvements, machinery and equipment, infrastructure, park facilities and construction in
progress. The City has elected to exclude roads acquired or constructed prior to 2003. The City is currently
inventorying and valuing these assets and will include them at a later date.
CAPITAL ASSETS AT YEAR-END, NET OF DEPRECIATION
Governmental
Business -Type
Total
Activities
Activities
2004
2003
Land
$ 37,105,200
$ 5,861,695 $
42,966,895 $
42,801,280
Building & Improvements
13,579,980
33,961,149
47,541,129
49,074,555
Machinery and equipment
3,421,609
38,844
3,460,453
3,734,665
Infrastructure
675,945
-
675,945
711,522
Construction in progress
34,676,530
4,178,002
38,854,532
21,084,116
Total Capital Assets
$ 89,459,264
$ 44,039,690 $
133,498,954 $
117,406,138
Major capital asset events during the current fiscal year included the following: City hall tenant improvements
totaling $6.7 million; general capital improvement and expansion of city streets and traffic corridors totaling $7.0
City of Federal Way / 14
million; and parks improvements totaling $500 thousand. Additional information on the City of Federal Way's
capital assets can be found in Note 8 of the Notes to the Financial Statements.
Long-term debt
At the end of 2004, the City of Federal Way had total bonded debt outstanding of $30.9 million which is backed by
the full faith and credit of the government. The remainder of the City's debt represents Public Works Trust Fund
Loans.
LONG-TERM DEBT (FUTURE PRINCIPLE AND INTEREST PAYMENTS)
Governmental Business -Type
Activities Activities Total
General obligation bonds $ 45,926,792 $ - $ 45,926,792
Public works trust fund loan - 2,466,965 2,466,965
Total $ 45,926,792 $ 2,466,965 $ 48,393,757
The City's total debt decreased by $4.1 million during 2004. The decrease represents annual debt service payments.
The City of Federal Way maintains an AA- rating from Fitch Investors for its general obligation bonds.
Washington State statutes limit the amount of debt a government entity may issue to 7.5% of its total assessed
valuation, subject to 60% majority vote of qualified electors. Of the 7.5% limit, 2.5% is for general purposes, 2.5%
for open space/park facilities, and 2.5% for utilities. Non -voted general purpose indebtedness is limited to 1.5% of
assessed valuation and combination of voted and non -voted general purpose indebtedness cannot exceed 2.5% of
assessed valuation.
The City's assessed valuation for 2004 was $6.29 million and the total amount of debt the City may issue is $445.0
million. Remaining legal debt capacities as of December 31, 2004 are:
General Government (no vote requirement) $ 67,504,069
General Government (3/5 majority vote required) $ 62,923,436
Parks & Open Space (3/5 majority vote required) $157,308,591
Utilities (3/5 majority vote required) $157,308,591
Total Capacity 445.044.686
Additional information on the City of Federal Way's long-term debt can be found in Note 11 and in the Statistical
Section of this report.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
The City's biennium 2005/2006 budget was developed under challenging economic conditions. Voter approved
initiatives have reduced City annual revenues by a magnitude of $3 million. Sales tax, the City's largest revenue
source, has been declined 2.3% over the last two-year, period (2001-2003). In addition, gambling tax and other tax
revenues also have been declined significantly.
On the expenditure side, the substantial increase in employee benefit costs pushed the cost of city operations much
higher. These costs include medical insurance premiums, state pension, and workers compensation. Medical
benefits alone have risen over 88% in the past four years.
These factors have resulted in an operating budget gap of $2.2 million in 2005 and $2.6 million in 2006. Also, there
are modest expenditure increases required to reflect anticipated increases in energy costs and public safety expenses.
To balance the budget, City Council has decided to fill half of the gap by adjusting fees and temporary ship
unrestricted capital revenues for operations. The remaining half is through programs and line item cuts. About 6.5
general government full-time equivalent positions were eliminated in 2005/2006 budget.
City of Federal 'Way / 15
REQUEST FOR INFORMATION
This financial report is designed to provide a general overview of the City of Federal Way's finances for all those
with an interest in the government's finances. Questions concerning any of the information provided in this report
or requests for additional financial information should be addressed to Tho Kraus, Finance Manager, City of Federal
Way, P.O. Box 9718, Federal Way, WA 98063-9718, telephone 253-835-2520, or visit the City's website at
www.ciiyoffederalwU.com.
City of Federal Way / 16
CITY OF A
Federal Way
City of Federal Way / 17
Basic Financial Statements
City of Federal Way / 18
CITY OF -
Federal Way
City of Federal Way / 19
STATEMENT OF NET ASSETS
December 31, 2004
Governmental
Business -type
Total
Activities
Activities
2004
2003
ASSETS
Cash & cash equivalents and investments
$ 48,555,230
$ 7,307,646
$ 55,862,876 $
58,676,850
Receivables (net)
1,965,643
127,912
2,093,555
2,367,791
Due from other governments
2,150,883
61,514
2,212,397
4,326,676
Prepaid items
63,463
-
63,463
10,928
Restricted assets:
Cash with escrow agent
10,451
111,064
121,515
109,069
Customer deposits
1,424,499
11,777
1,436,276
1,186,930
Investment in joint venture
2,023,291
-
2,023,291
2,532,720
Capital Assets (net of accumulated depreciation)
Land
37,105,200
5,861,695
42,966,895
42,801,280
Depreciable assets
17,001,589
33,999,993
51,001,582
52,809,220
Infrastructure
675,945
-
675,945
711,522
Construction in progress
34,676,530
4,178,002
38,854,532
21,084,116
Total Assets
145,652,724
51,659,603
197,312,327
186,617,102
LIABILITIES
Accounts payable and accruals
2,645,905
149,679
2,795,584
2,126,229
Unearned revenue
613,430
167,365
780,795
873,613
Retainage payable
110,081
53,940
164,021
47,099
Retainage payable - with escrow agent
-
111,064
111,064
109,069
Due to other governments
73,980
-
73,980
19,565
Compensated absences
1,052,586
72,995
1,125,581
1,014,473
Customer deposits
1,359,263
11,777
1,371,040
1,186,930
Noncurrent Li abilities:
Due within one year
3,094,088
182,359
3,276,447
3,283,526
Due in more than one year
27,708,804
2,121,831
29,830,635
33,933,540
Total Liabilities
36,658,137
2,871,010
39,529,147
42,594,044
NET ASSETS
Invested in capital assets, net of related debt
60,679,663
41,735,500
102,415,163
82,721,792
Restricted for:
Customer deposit
1,424,499
11,777
1,436,276
1,186,930
Debt service prefunding
2,826,228
-
2,826,228
2,599,653
Capital projects
32,542,775
-
32,542,775
33,324,511
Steel Lake Management District
-
8,202
8,202
-
Other
4699039
310
469,349
7099230
Unrestricted
11,052,383
7,032,804
18,085,187
23,480,942
Total Net Assets
$ 108,994,587
$ 48,788,593
$ 157,783,180 $
144,023,058
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 20
STATEMENT OF ACTIVITIES
For
the Year ended December 31, 2004
Program Revenues
Net (Expense) Revenue & Changes in Net Assets
Operating
Capital Grants
Charges for
Grants and
and
Governmental Business -type
Comparative Totals
Expenses
Services
Contributions
Contributions
Activities Activities
2004 Restated 2003
Functions/Programs
Governmental Activities:
General Government
$ 6,304,256
$ 1,509,973
$
$ -
$ (4,794,283) $
$ (4,794,283) $
(4,251,003)
Security of Persons & Property
17,374,845
4,203,315
-
(13,171,530)
(13,171,530)
(11,838,757)
Transportation
4,098,790
1,453,002
7,214,776
4,568,988
4,568,988
5,979,142
Physical Environment
295,537
94,627
-
(200,910)
(200,910)
(266,402)
Economic Environment
2,953,073
788,171
(2,164,902)
(2,164,902)
(2,219,926)
Health
683,804
163,686
32,415
(487,703)
(487,703)
(100,821)
Culture & Recreation
4,914,348
1,201,189
-
(3,713,159)
(3,713,159)
(3,381,690)
Interest on long-term debt
1,764,077
(1,764,077)
(1,764,077)
(1,693,028)
Total governmental activities
38,388,730
9,413,965
32,415
7,214,776
(21,727,574)
(21,727,574)
(19,433,710)
Business -type Activities:
a
Surface Water Management
3,282,427 3,678,169 531,045 465,660
1,392,447
1,392,447
892,734
Dumas Bay Centre
879,870 570,851 4,600 12,370
(292,04.9)
(292,049)
(241,650)
Total business -type activities
4,162,297 4,249,020 535,645 478,030
1,100,398
1,100,398
651,084
Total
$ 42,551,027 $ 13,662,985 $ 568,060 $ 7,692,806
(21,727,574)
1,100,398
(20,627,176)
(18,782,626)
General revenues:
Property tax
8,121,088
-
8,121,088
8,200,955
Sales tax
10,546,218
10,546,218
10,547,534
Other taxes
13,842,322
13,842,322
13,522,836
Other revenue
751,620
751,020
1,077,039
Unrestricted Grants & Contributions
176,928
176,928
212,576
Investment Earnings
837,453
116,913
954,366
937,225
Disposition of capital assets
(4,365)
(279)
(4,644)
34,260
Transfers
(203,190)
203,190
-
-
Total general revenues and transfers
34,067,474
319,824
34,387,298
36,204,650
Change in net assets
12,339,900
1,420,222
13,760,122
17,422,024
Net assets at beginning ofyear
96,654,687
47,368,371
144,023,058
126,601,034
Net assets at end of year
$ 108,994,597
$ 48,788,593
$ 157,783,180
$ 144,023,058
The notes to the financial statements are an integral part of this statement
City of Federal Way / 21
BALANCESHEET
GOVERNMENTAL FUNDS
DECEMBER 31, 2004
- Debt City
Nonmajor
Comparative Totals
General Street Utility Tax Service Facilities Transportation
Governmental
2004
2003
ASSETS
Equity in pooled cash & investments
$ 3,427,689 $ 1,185,505 $ 250,448 $ 2,880,857 $20,350,191 $10,858,957
$ 1,879,353
$ 40,833,000
$ 43,325,167
Prepaid insurance/debt service
10,033. - - 48,430 - -
-
58,463
5,928
Retainage in escrow
- - 10,451
10,451
-
Receivables (net):
Taxes
524,120 - 844,908 - - -
-
1,369,028
1,296,280
Accounts and contracts
150,844 - 202,345 9,398 173,930
-
536,517
845,451
Interest
3,992 725 198 2,966 14,661 6,611
1,204
30,357
49,003
Due from other governments
1,144,699 117,723 - - - 589,508
298,953
2,150,883
4,299,055
Interfund loans receivable
10,000 -
10,000
10,000
TOTAL ASSETS
5,271,377 i,303,953 1,095,554 3,134,598 20,384,701 11,629,006
2,179,510
44,998,699
49,829,884
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
904,539 62,359 (24) - 381,399 176,961
231,619
1,756,853
-1,504,209
Accounts/payrollpayable
646,758 82,320 -
6,099
735,177
371,499
Accrued interest payable
- - - - - -
-
-
-16,079
Retainage payable
- 4,961 104,656
464
110,081
37,687
Due to other governments
73,980 - - - - -
-
73,980
19,565
Due to other funds
-
Performance bonds
Deposits payable
388,039 1,035,959
-
1,423,998
1,172,992
`Interfund loans payable
-
40,000
10,000
10,000
Deferred revenue
413,019 18,354 - 308,370
13,769
753,512
907,129
TOTAL LIABILITIES
2,426,335 1,203,953 (24) 308,370 486,055 176,961
261,951
4,863,601
4,039,160
Fund balance:
Reserved:
Debt service pretending
- 2,826,228
-
2,826,228
2,599,653
Other
187,011 -
180,825
367,836
709,020
Unreserved:
General fund
2,658,031
2,658,031
7,578,723
Special revenue funds
- 100,000 1,095,578 - -
544,650
1,740,228
1,578,817
Capital projects funds
- 19,898,646 11,452,045
1,192,084
32,542,775
33,324,511
TOTAL FUND BALANCES
2,845,042 100,000 1,095,578 2,826,228 19,898,646 11,452,045
1,917,559
40,135,098
45,790,724
TOTAL LIABILITIES AND
FUND BALANCE
$ 5,271,377 $ 1,303,953 $ 1,095,554 $ 3,134,598 $2Q384,701 $ 11,629,006
$ 2,179,510
Amounts reported for governmental activities in the statement ofnet assets are different because:
Capital assets are used in governmental activities are not financial resources and, therefore,
are not reported in the funds.
84,970,324
70,559,787
Investment in joint venture is not a financial resource and, therefore, not reported in the funds
2,023,291
2,532,720
Other long-term assets are not available to pay for current -period expenditures and, therefore,
are deferred in the funds
205,317
248,991
Internal service funds are used by management to charge the costs of insurance, information systems,
mail and duplication, fleet, and building management to individual funds. The assets and liabilities
ofthe internal service funds are included in governmental activities in the statement ofnet assets.
13,435,470
13,160,832
Long-term liabilities, including bonds payable, are not due and payable in the current period
and, therefore, are not reported in the funds.
(31,774,913)
(35,638,367)
Net assets of governmental activities
$108,994,587
$ 96,654,687
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 22
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTALFUNDS
For the Year Ended December 31, 2004
Debt
City
Nonmajor
Comparative Totals
General
street
UtilityTax
Service
Facilities
Transportation
Governmental
2004
2003
REVENUES
Taxes
$ 21,777,794
$ -
S 7,554,580 $
- 3,078,898
$ -
$ -
$ 142,030 $
32,553,302 S
32,022,334
Licenses and permits
1,144,737
90,302
-
-
-
-
-
1,235,039
1,000,250.
Intergovernmental
1,258,344
1,231,097
-
-
-
6,399,629
1,222,467 -
10,111,537
12,313,459
Service charges and fees
3,696,425
249,064
-
-
-
-
255,039
4,200,528
3,965,992
Development fees
-
-
-
- - -
-
3,074,159
93,446
3,167,605
2,565,215
Fines and forfeitures
810,793
-
-
-
-
-
-
810,793
887,071
Interest
137,675
13,632
6,833
56,972
371,200
132,410
25,813
744,435
701,311
Other
667,393
5,462
78,147
23
751,025
1,093,109
TOTALREVENUES
29,493,161
1,589,557
7,561,413
3,135,770
449,347
9,606,198
1,738,818
53,574,264 -
54,548,741
EXPENDITURES
-
-
-
CumenC
General government
5,740,632
-
53,561
-
-
313,371
6,107,564
5,492,123
Security ofpersons and property
16,982,135
-
-
-
-
-
-
16,982,135
15,463,833
Transportation
-
3,604,189
-
- -
-
-
1,184,765
4,789,954
5,358,543
Physical environment
-
-
-
-
-
-
289,921
289,921
351,456
Economic environment
2,757,959
-
- -
-
-
-
186,625
2,944,584
2,883,079
Health -
679,655 -
-
-
-
-
-
-
679,655
603,184
Culture and recreation
3,731,306
-
-
-
- -
-
196,627
3,927,933
3,507,392
Debt service:
-
Principal
-
-
-
3,768,044
-
-
3,768,044
14,159,881
InteresUGscal chargestadmin fees
-
-
-
1,764,077
-
-
-
1,764,077
1,703,165
Capital outlay
51,847
59,336
7,560,649
9,412,458
524,790
17,609,080
22,779,620
TOTAL EXPENDITURES
29,943,534
3,663,525
53,561
5,532,121
-7,560,649
9,412,458
2,696,099
59,861,947
72,302,275
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
(450,373)
(2,073,968)
7,507,852
(2,396,351)
(7,111,302)
193,740
(957,281)
(5,287,683)
(17,753,534)
OTHER FINANCING SOURCES
(USES)
Transfersin
530.468
2,098,378
-
4,247,926
3,448,370
3,047,625
2,242,872
15,615,639
21,037,023
Transfers out
(5,244,666)
(24,410)
(7,215,336)
-(1,625,000)
(449,068)
(2,770)
(1,422,332)
(15,983,582)
(20,390,141)
GObondproceeds
-
-
-
-
-
-
-
-
21,168,599
Sale of capital assets
209,527
TOTAL OTHER FINANCING
SOURCES (USES)
- (4,714,198)
290735968
(7,215,336)
2,622,926
2,999,302
3,044,855
820,540
(367,943)
22,025,008
NET CHANGE IN FUND BALANCES
(5,164,571)
-
292,516
226,575
(4,112,000)
3,238,595
(136,741)
(5,655,626)
4,271,474
FUND BALANCES -BEGINNING.
8,009,613
100,000
803,062
2,599,653
24,010,646
8,213,450
2,054,300
45,790,724
41,519,250
FUND BALANCES -ENDING
$ 2,945,042
$ 100,000
$ 1,095,578 $
2,826,228
$ 19,898,646
$ 11,452,045
$ 1,917,559 $
40,135,098 $
45,790,724
The notes to the financial statements we an integral part of this statement
City of Federal Way / 23
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
For the Year Ended December 31, 2004
Amounts reported for governmental activities in the statement of activities (page 20) are
different because:
Net change in fund balances --total governmental funds
Governmental funds report capital outlays as expenditures. However, in the
statement of activities the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense. This is the amount by which
capital outlays exceeded depreciation in the current period.
Revenues in the statement of activities that do not provide current financial resources
are not reported as revenues in the funds.
The issuance of long-term debt provides current financial resources to governmental
funds, while the repayment of the principal of long-term debt consumes the
current financial resources of governmental funds. Neither transaction, however,
has any effect on net assets. Also, governmental funds report the issuance
proceeds of new debt as current financial resources and payment as the use
of current resources, whereas these amounts reduce the net assets.
Internal service funds are used by management to charge costs of risk management,
information systems, mail & duplication, fleet, and building systems to the funds.
Some expenses reported in the statement of activities do not require the use of current
financial resources and, therefore, are not reported as expenditures in the funds.
Change in net assets of governmental activities
The notes to the financial statements are an integral part of this statement.
2004 2003
$ (5,655,626) $ 4,271,474
13,796,462 19,750,037
205,317 248,991
3,788,624 (6,988,581)
269,297 (645,175)
(64,170) (124,599)
$ 12,339,904 $ 16,512,147
City of Federal Way / 24
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2004
Variance with
Budgeted Amounts
Final Budget -
Positive
Original
Final
Actual Amounts
(Negative)
REVENUES
Taxes
$ 24,140,448
$ 23,821,448
$ 21,777,794
$ (2,043,654)
Licenses and permits
831,896
831,896
1,144,737
312,841
Intergovernmental
77,267
550,862
1,258,344
707,482
Service charges and fees
3,287,779
3,379,779
3,696,425
316,646
Fines and forfeitures
1,092,724
1,242,724
810,793
(431,931)
Interest
277,517
277,514
137,675
(139,839)
Other
103,903
103,903
667,393
563,490
TOTAL REVENUES
29,811,534
30,208,126
29,493,161
(714,965)
1*1149ali:1_00 11) W1
Current:
General government
Security of persons and property
Economic environment
Health
Culture and recreation
Capital outlay
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
4,751,404
4,848,701
5,740,632
(891,931)
17,294,057
17,796,979
17,033,982
762,997
3,307,608
3,887,059
2,757,959
1,129,100
750,685
750,685
679,655
71,030
4,002,936
4,042,760
3,731,306
311,454
-
290,577
-
290,577
30,106,690
31,616,761
29,943,534
1,673,227
(295,156) (1,408,635) (450,373) 958,262
4,591 530,468 525,877
(3,277,754) (5,107,740) (5,244,666) (136,926)
TOTAL OTHER FINANCING SOURCES (USES) (3,277,754)
(5,103,149)
(4,714,198)
388,951
NET CHANGE IN FUND BALANCES (3,572,910)
(6,511,784)
(5,164,571)
1,347,213
FUND BALANCES -BEGINNING 3,882,910
8,009,614
8,009,613
(1)
FUND BALANCES - ENDING $ 310,000
$ 1,497,830
$ 2,845,042
$ 1,347,212
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 25
STREET FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2004
Variance with
Budgeted Amounts
Final Budget -
Positive
Original
Final
Actual Amounts
(Negative)
REVENUES
Licenses and permits
$ 187,694
$ 187,694
$ 90,302
$ (97,392)
Intergovernmental
1,211,228
1,478,242
1,231,097
(247,145)
Service charges and fees
953,614
212,123
249,064
36,941
Interest
10,656
10,656
13,632
2,976
Other
4,946
4,946
5,462
516
TOTALREVENUES
2,368,138
1,893,661
1,589,557
(304,104)
EXPENDITURES
Current:
Transportation
3,872,635
4,031,640
3,663,525
368,115
Capital outlay
14,410
-
14,410
TOTAL EXPENDITURES
3,872,635
4,046,050
3,663,525
382,525
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
(1,504,497)
(2,152,389)
(2,073,968)
78,421
OTHER FINANCING SOURCES (USES)
Transfers in
1,504,497
2,152,389
2,098,378
(54,011) ,
Transfers out
(24,410)
(24,410)
TOTAL OTHER FINANCING SOURCES (USES)
1,504,497
2,152,389
2,073,968
(78,421)
NET CIiANGE IN FUND BALANCES
-
-
-
FUND BALANCES - BEGINNING
100,000
100,000
100,000
FUND BALANCES - ENDING
$ 100,000 $ 100,000 $ 100,000 $ -
-
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 26
UTILITY TAX FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For the Year Ended December 31, 2004
Variance with
Budgeted Amounts
Final Budget -
Positive
Original
Final
Actual Amounts
(Negative)
REVENUES
Taxes
$ 8,003,021
$ 7,253,021
$ 7,554,580
$ 301,559
Interest
50,000
50,000
6,834
(43,166)
TOTAL REVENUES
8,053,021
7,303,021
7,561,413
258,392
EXPENDITURES
Current:
General government
539561
53,561
53,561
-
TOTAL EXPENDITURES
53,561
53,561
53,561
-
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
7,999,460
7,249,460
7,507,852
258,392
OTHER FINANCING SOURCES (USES)
Transfers out
(5,941,336)
(7,215,336)
(7,215,336)
-
TOTAL OTHER FINANCING SOURCES (USES) (59941,336)
(7,215,336)
(7,215,336)
-
NET CHANGE IN FUND BALANCES
2,058,124
34,124
292,516
258,392
FUND BALANCES - BEGINNING
107,994
803,062
803,062
-
FUND BALANCES - ENDING
$ 2,166,118
$ 837,186
$ 1,095,578
$ 258,392
The notes to the financial statements are an integral part of this statement.
City of Federal Way / 27
ASSETS
Current assets
Equity in pooled cash and investments
Cash with escrow agent
Prepaid items
Receivables (net):
Taxes
Accounts and contracts
Interest
Due from other governments
TOTAL CURRENT ASSETS
Noncurrent assets
Capital assets:
Land
Building/structures
Machinery/fumiture/equipment
Construction in progress
Less accumulated depreciation
TOTAL NONCURRENT ASSETS
TOTAL ASSETS
LIABILITIES
Current liabilities:
Vouchers payable
Taxes payable
Retainage payable
Retainage payable - with escrow agent
Deposits payable
Deferred revenue
Public works trust fund loan payable
Compensated absences payable
TOTAL CURRENT LIABILITIES
Noncurrent liabilities:
Public works trust fund loan payable
TOTAL NONCURRENT LIABILITIES
TOTAL LIABILITIES
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
December 31, 2004
Business -type Activities -Enterprise Funds Governmental Activities -
Internal Service Funds
Surface Water
Dumas Bay
Comparative Totals
Management
Centre
2004
2003
2004
2003
$ 6,808,579
$ 510,844
$ 7,319,423
$ 7,993,571
$ 9,146,730
$ 8,545,042
111,064
111,064
109,069
-
-
-
-
-
5,000
5,000
25,000
-
87,354
-
87,354
114,356
-
-
35,527
35,527
48,321
-
_
4,645
386
5,031
7,729
4,744
6,652
58,414
3,100
61,514
28,621
7,070,056
549,857
7,619,913
8,301,667
9,181,474
8,556,694
3,752,055
2,109,640
5,861,695
5,818,294
-
-
40,948,184
3,571,152
44,519,336
44,483,561
-
3,394,269
-
106,643
106,643
106,643
12,798,021
9,110,417
3,853,833
324,169
4,178,002
1,672,109
-
_
(9,199,633)
(1,426,353)
(10,625,986)
(10,034,564)
(8,309,082)
(7,704,378)
39,354,439
4,685,251
44,039,690
42,046,043
4,488,939
4,800,308
46,424,495
5,235,108
51,659,603
50,347,710
13,670,413
13,357,002
146,218
11,803
158,021
140,706
153,875
129,149
-
-
(1,136)
50,281
3,659
53,940
9,412
111,064
-
111,064
109,069
-
-
11,777
11,777
13,938
500
71,429
95,936
167,365
215,475
-
182,359
-
182,359
182,359
-
_
58,710
14,285
72,995
36,601
80,566
70,022
620,061
137,460
757,521
706,424
234,941
199,171
2,121,831
2,121,831
2,304,190
2,121,831
2,121,831
2,304,190
2,741,892
137,460
2,879,352
3,010,614
234,941
109,171
NET ASSETS
Invested in capital assets, net ofrelated debt
37,050,249
4,685,251
41,735,500
39,559,494 4,488,938 4,800,308
Reserved for:
Petty cash/changefund
-
310
310
210 - -
Customer deposits
-
11,777
11,777
13,938
Steel Lake Management District
:8,202
-
8,202
- - _
Unrestricted
6,624,152
400,310
7,024,462
7,763,454 8,946,534 8,357,523
TOTAL NET ASSETS $
43,682,603
$ 5,097,648
$ 48,780,251
$ 47,337,096 $ 13,435,472 $ 13,157,831
Adjustment to reflect the consolidation of internal service fund activities
related
to enterprise funds
8,342
31,275
NET ASSETS OF BUSINESS -TYPE ACTIVITIES
$ 48,788,593
$ 47,368,371
The notes to the financial statements are an integral part of this statement.
City of Federa l Way / 28
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
For the Year Ended December 31, 2004
OPERATING REVENUES:
Service charges and fees
Miscellaneous
TOTAL OPERATING REVENUES
OPERATING EXPENSES:
Personal services
Materials and supplies
Services and charges
Intergovernmental
Depreciation
Interfund charges
TOTAL OPERATING EXPENSES
OPERATING INCOME (LOSS)
NON -OPERATING REVENUES (EXPENSES)
Business -type Activities - Enterprise Funds Governmental Activities -
Internal ServiceFunds
Surface Water Dumas Bay Comparative Totals
Management Centre 2004 2003 2004 2003
$ 3,667,168
$ 558,046
$4,225,214
$4,028,491
$ 4,352,773
$ 4,083,407
11,000
12,804
23,804
12,572
25,373
9,257
3,678,168
570,850
4,249,018
4,041,063
4,378,146
4,092,664
1,217,538
249,563
1,467,101
1,361,632
696,519
683,031
51,725
13,543
65,268
75,894
361,331
307,639
712,133
373,834
1,085,967
1,349,238
2,023,152
2,092,232
310,029
8,754
318,783
320,148
95,435
65,767
409,918
181,504
591,422
593,599
1,175,079
1,132,164
554,273
51,578
605,851
580,509
-
3,255,616
878,776
4,134,392
4,281,020
4,351,516
4,280,833
422,552
(307,926)
114,626
(239,957)
26,630
(188,169)
Subsidy from interlocal grants
531,045
4,600
535,645
168,555
-
-
Gain / loss from disposal of fixed assets
-
-
-
-
(5,829)
18,190
Interest income
109,412
7,501
116,913
134,824
93,019
101,090
Interest expense
(24,865)
-
(24,865)
(26,689)
-
TOTAL NON -OPERATING REVENUES (EXPENSES)
615,592
12,101
627,693
276,690
87,190
119,280
INCOME (LOSS) BEFORE CONTRIBUTIONS AND
TRANSFERS
1,038,144
(295,825)
742,319
36,733
113,820
(68,889)
Capital contributions
465,660
12,370
478,030
757,578
176,928
465,404
Transfers in
-
225,310
225,310
244,588
-
-
Transfers out
(638)
(1,866)
(2,504)
(160,297)
(13,107)
(984,000)
CHANGE IN NET ASSETS
1,503,166
(60,011)
1,443,154
878,602
277,641
(587,485)
TOTAL NET ASSETS - BEGINNING
42,179,437 5,157,659 13,157,831 13,745,316
TOTAL NET ASSETS - ENDING $43,682,603 $ 5,097,648 $13,435,472 $13,157,831
Adjustment to reflect the consolidation of internal service fund activities
related to enterprise funds
CHANGE IN NET ASSETS OF BUSINESS -TYPE ACTIVITIES
The notes to the financial statements are an integral part of this statement.
(22,933) 31,275
$1,420,221 $ 909,877
City of Federal Way / 29
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended December 31, 2004
Business -type Activities - Enterprise Funds
Governmental Activities -
Intemal ServiceFunds
Surface Water
Dumas Bay
Comparative Totals
Management
Centre
2004
2003
2004
2003
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from users
$ 3,661,629
$ 555,292
$ 4,216,921
$ 4,028,804
. $ 4,327,773
$ 4,083,907
Cash received from other governments for goods & services
(44,043)
11,150
(32,893)
13,869
-
Cash payments for taxes
1,136
1,136
(1,136)
Cash payments to claimants
-
-
-
(141,615)
(166,522)
Cash payments to suppliers for goods/services
551
(19,296)
(18,745)
(75,895)
(2,313,077)
(2,238,307)
Cash payments to employees
(1,186,462)
(244,245)
(1,430,707)
(1,362,876)
(685,975)
(675,693)
Cash payments to other funds for goods and services
(554,273)
(51,578)
(605,851)
(580,509)
-
(80,748)
Cash payments for other services/charges
(672,909)
(395,743)
(1,068,652)
(1,499,597)
-
-
Cash payments to other governments for goods & services
(310,029)
(8,754)
(318,783)
(320,148)
-
Cash payments for damage deposits
-
(2,161)
(2,161)
2,937
-
-
Other operating receipts
11,000
12,804
23,804
12,572
25,373
9,257
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
905,464
$ (141,395)
764,069
218,031
1,212,479
931,894
CASH FLOWS FROM NONCAPITAL FINANCING
Subsidy from interlocal grant
715,045 4,600
729,645
178,824
Operating transfers in
- 225,310
225,310
244,588
Operating transfers out
(638) (1,866)
(2,504)
(127,776) (13,107) (984,000)
NET CASH PROVIDED (USED) BY NONCAPITAL
FINANCING ACTIVITIES
724,407 228,044
952,451
295,636 (13,107) (984,000)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Principal paid on debt service
Interest paid on debt service
Acquisition of capital asset/construction work in progress
Proceeds from sale of fixed assets
Cash contributions for capital acquisition
NET CASH PROVIDED (USED) FOR CAPITAL AND
RELATED FINANCING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Receipts ofinterest
(182,359)
- (182,359)
(182,359)
(24,965)
- (24,865)
(26,689)
(2,572,703)
(169,135) (2,741,838)
(138,636) (877,426) (1,065,183)
-
- -
- 158,244 18,190
271,663
169,135 440,798
(32,521) 26,572 252,829
(2,508,264) (2,508,264) (380,205) . (692,610) (794,164)
112,090 71501 119,591 133,626 94,926 102,218
NET CASH PROVIDED (USED) BY INVESTING ACTIVITES
112,090
7,501
119,591
133,626
94,926
102,218
NET INCREASE (DECREASE) IN CASH & CASH
(766,303)
94,150
(672,153)
267,098
601,688
(744,052)
CASH AND CASH EQUIVALENTS, JANUARY 1
7,685,946
416,694
8,102,640
7,835,552
8,545,042
9,289,094
CASH AND CASH EQUIVALENTS, DECEMBER 31
6,919,643
510,844
7,430,487
81102,640
9,146,730
8,545,042
RECONCILIATION OF OPERATING INCOME TO NET CASH
PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating income (loss)
Adjustments to reconcile operating income to net cash provided (used)
by operating activities:
Depreciation expense
(Increase)/decrease in accounts receivable
(Increase)/decrease in taxes receivable
(Increase)/decrease in due from other governments
Increase/(decrease)in vouchers/accounts payable
Increase/(decrease)in retainage payable
Increase/(decrease) in deposits payable
Increase/(decrease) in taxes payable
Increasel(decrease)in deferred revenue
Increase/(decrease) in accrued payroll/comp absences payable
Total Adjustments
422,552 (307,926) 114,626 (239,957) 26,630 (188,169)
409,918
181,504
591,422
593,599
1,175,079
1,132,164
-
12,815
12,815
(15,712)
(25,000)
27,002
-
27,002
(17,953)
(44,043)
11,150
(32,893)
13,871
-
39,224
(21,909)
17,315
(159,752)
25,226
(19,439)
52,276
(5,753)
46,523
5,978
-
-
(2,161)
(2,161)
2,937
-
1,136
1,136
(1,136)
-
(32,541)
(15,569)
(48,110)
37,400
-
-
31,076
5,318
36,394
(1,244)
10,544
7,338
482,912
166,531
649,443
457,988
1,185,849
1,120,063
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ 905,464 $ (141,395) $ 764,069 $ 218,031 $ 1,212,479 $ 931,894
Noneash investing, capital, and financing activities:
Other contributions of capital assets
The notes to the financial statements are an integral part of this statement.
$ 111,055 $ 264 023
City of Federal Way / 30
NOTES TO THE BASIC FINANCIAL STATEMENTS
December 31, 2004
INDEX
Note
Page
1 Summary of Significant Accounting Policies................................................................................
ReportingEntity...................................:...............................................................................
Government -wide and Fund Financial Statements................................................................
Measurement Focus, Basis of Accounting, and Financial Statement Presentation ...............
Budgetary Information..........................................................................................................
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....................................................................................................................
CapitalAssets...............................................................................................................
Compensated Absences Payable..................................................................................
Short -Term Debt..........................................................................................................
Long -Term Debt...........................................................................................................
DeferredRevenue........................................................................................................
Fund Equity -Reserves and Designation.......................................................................
Interfumd Transactions.................................................................................................
2 Reconciliation of Government -wide & Fund Financial Statements ..............................................
3 Stewardship, Compliance and Accountability...............................................................................
4 Supplemental Appropriations........................................................................................................
5 Deposits and Investments..............................................................................................................
6 Receivables and Due from Other Governments............................................................................
7 Due To Other Governments..........................................................................................................
8 Capital Assets................................................................................................................................
9 Pension Plans................................................................................................................................
10 Risk Management.......:.........................................................:........................................................
11 Long -Term Debt............................................................................................................................
12 Interfund Transactions...................................................................................................................
13 Contingencies and Litigation.........................................................................................................
14 Joint Ventures...............................................................................................................................
15 Subsequent Events.........................................................................................................................
31
31
31
32
35
37
37
37
37
37
38
38
38
39
39
39
39
39
40
40
41
41
41
42
44
44
45
49
51
54
55
56
58
City of Federal Way / 31
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Year Ended December 31, 2004
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of the City of Federal Way conform to generally accepted accounting
principles for governments as prescribed by the Governmental Accounting Standards Board (GASB), and are
regulated by the Washington State Auditor's Office. The City's significant accounting policies are described below.
REPORTING ENTITIES
The City's Comprehensive Annual Financial Report (CAFR) includes the funds, agencies and boards controlled by
or dependent on the City. In conformance with Governmental Accounting Standards Board (GASB) Statement 14,
"The Financial Reporting .Entity", the primary basis of determining whether outside agencies and organizations
should be considered component units of the City is Financial Accountability.
Financial Accountability
Financial accountability is defined as appointment of a voting majority of an agency's or organization's board, and
either the City's ability to impose will on the agency or organization or the possibility that the agency or
organization will provide a financial benefit to or impose a financial burden on the City.
Joint Ventures
A joint venture is a legal entity or organization which results from a contractual arrangement that is owned,
operated, or governed by two or more participants as a separate activity subject to joint control, in which
participants retain an ongoing financial interest or an ongoing financial responsibility. The City participates in one
joint venture, Valley Communications Center. See Note 14, Joint Venture, which more fully describes this
organization.
ACCOUNTING STANDARDS
The City implemented GASB Statement 34 ("Basic Financial Statements and Management's Discussion and
Analysis for State and Local Governments"), GASB 37 ("Basic Financial Statements — and Management's
Discussion and Analysis- for State and Local Governments: Omnibus"), and GASB 38 ("Certain Financial
Statement Note Disclosures"). These new standards substantially change the financial reporting basis and format.
Some of these changes are:
• Management's Discussion and Analysis (MD&A) section providing analysis of the City's overall position
and results of operations .
• Financial statements prepared using full accrual accounting for all government -wide City activities, including
current year infrastructure
• Change in the individual fund financial statements focusing on the major funds
GOVERNMENTAL -WIDE AND FUND FINANCIAL STATEMENTS
The government -wide financial statements (i.e. the statement of net assets and the statement of activities) report
information on all of the nonfiduciary activities of the primary government. For the most part, the effect of
interf nid activity has been removed from these statements. Governmental activities, which normally are supported
by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a
significant extent on fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is
offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or
segment. Our policy is to allocate indirect costs to specific function or segment. Program revenues include 1)
of Federal Way / 32
charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges
provided by a given function or segment, and 2) grant and contributions that are restricted to meeting the
operational or capital requirements or a particular function or segment. Taxes and other items not properly included
among program revenues are reported instead as general revenues.
Separate fund financial statements are provided for governmental funds and proprietary funds. Major individual
governmental funds and major individual enterprise funds are reported as separate columns in the fund financial
statements.
MEASUREMENT FOCUS AND BASIS OF ACCOUNTING
The government -wide financial statements are reported using the economic resources measurement focus and the
accrual basis of accounting, as are the proprietary fund statements. Revenues are recorded when earned and
expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are
recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as
soon as all eligibility requirements imposed by the provider have been met.
Governmental Funds
Governmental fund financial statements are reported using the current financial resources measurement focus and
the modified accrual. basis of accounting. Revenues are recognized as soon as they are both measurable and
available. Revenues are considered to be available when they are collectible within the current period or soon
enough thereafter to pay liabilities of the current period. For this purpose, the City of Federal Way considers
revenues to be available if they are collected within 30 days of the end of the current fiscal period. Expenditures
generally are recorded when a liability is incurred, as under accrual accounting. However, debt service
expenditures, as well as expenditures related to compensated absences and claims and judgements, are recorded
only when payment is due.
Property taxes, licenses, and interest associated within the current period are all considered to be susceptible to
accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessment
receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current
period. All other revenue items are considered to be measurable and available only when cash is received by the
City.
The City reports the following major governmental funds:
General Fund
This is the City's general operating fund. It accounts for all financial resources of the general government,
except those required to be accounted for in another fund.
Street Fund
This fund accounts for receipt and disbursement of State -levied "unrestricted" motor vehicle fuel taxes
which must be accounted for in a separate fund and expended for street -oriented engineering, construction
and maintenance purposes only.
Utility Tax Fund
This fund was established to account for all utility tax receipts. These receipts will subsequently be
distributed to various :funds (Debt Service, Capital Improvement Projects, etc.) for project expenditure as
determined by the City Council.
Debt Service Fund
This fund accounts for the accumulation of resources for the payment of general obligation and assessment
bond principal, interest and related costs.
City of Federal Way / 33
City Facilities CIP Fund
This fund accounts for receipts and disbursements related to acquisition, design, construction and any other
related municipal facility and community/senior capital project expenditures.
Transportation CIP Fund
This fund accounts for receipts and disbursements related to acquisition, design, construction and any other
related street project expenditures.
The City reports the following fund groups as non -major funds:
Special Revenue Funds
These funds are to be used to account for the :proceeds of revenues and sources (other than special
assessments, expendable trust or major capital projects) that are legally restricted to expenditures for
specified purposes.
Capital Project Funds
These funds account for the acquisition or construction of major capital facilities with the exception of
those facilities financed by the proprietary and trust funds. The major sources of revenues for this fund are
general obligation bond proceeds, grants from other agencies, local taxes and contributions from other
funds.
Proprietary Funds
Proprietary funds are used to account for activities similar to those found in the private sector where the intent of the
governing body is to finance the full cost of providing services, including depreciation, primarily through user
charges. The measurement focus for these funds is based on the commercial model, which uses a flow of economic
resources approach. Under this approach, the operating statements for the proprietary funds focus on a
measurement of net income (revenues and expenses) and both current and non -current assets and liabilities are
reported on the related balance sheets.
Private sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are
followed in both the government -wide and proprietary fund financial statements to the extent that those standards to
not conflict with or contradict guidance of the Governmental Accounting Standards board. Governments also have
the option of following subsequent private -sector guidance for their business -type activities and enterprise funds,
subject to the same limitation. The City of Federal Way has elected not to follow subsequent private -sector
guidance.
As a general rule the effect of the interfund activity has been eliminated for the government -wide financial
statements.
Amounts reported as program revenue include 1) charges to customers, 2) operating grants and contributions, and
3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as
general revenues rather than program revenues. General revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and
expenses generally result from providing services and producing and delivering goods in connection with a
proprietary fund's principal ongoing operations. The principal operating revenues of the enterprise and internal
service funds are primarily user charges, the cost of providing goods or services to the general public on a
continuing basis. Operating expenses for enterprise funds and internal service funds includes the cost of sales and
services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this
definition are reported as nonoperating revenues and expenses.
The City reports the following major proprietary funds:
Federal Wav / 34
Enterprise Funds
The City uses enterprise funds to account for government activities that are financed and operated in a manner
similar to private business. Costs of providing services to the general public are primarily financed by user fees.
Surface Water Management Fund
This fund was established to administer and account for all receipts and expenditures related to the City's
surface and storm water management system.
Dumas Bay Centre Fund
This fund was established to account for the revenues and expenses related to the acquisition, capital
improvements maintenance and operations of the City -owned Dumas Bay Centre and Knutzen Family
Theatre.
Internal Service Funds
The City uses Internal Service Funds to account for the financing of goods or services provided by one department
or agency to other departments or agencies of a government, or to other governments, on a cost -reimbursement
basis.
A description of each individual Internal Service Fund included in the Comprehensive Annual Financial Report is
provided below:
Risk Management Fund
This fund accounts for the City's risk financing activities established to minimize adverse effects of losses
associatedwith property and casualty, medical and dental, unemployment and worker's compensation
claims. Both risk control (to minimize the losses that strike and organization) and risk financing (to obtain
finances to provide for or restore the economic damages of those losses) are involved. The City is
currently self -insuring only State Unemployment Compensation. Related premiums received by the fund
are used to reimburse the unemployment benefits paid to eligible individuals and to establish reserves for
the payment of estimated future unemployment claims liability. The City is also currently recovering costs
and building reserves for general liability including property, casualty, errors and omissions and fidelity
coverage.
Information Systems Fund
This fund was established to account for all costs associated with data processing, telecommunications and
the Geographical Information System (GIS). This fund will own and depreciate all non-proprietary fund
assets related to these functions, and will charge equipment/software users for both maintenance and
operating costs and equipment replacement charges based on depreciation schedules.
Support Services Fund
This fund accounts for duplication, graphics and other general support services provided to departments
and funds throughout the City.
Fleet and Equipment Fund
This fund accounts for the cost of maintaining City vehicles and other motorized equipment. Rates
charged to user departments are based on the full cost of maintaining equipment items, including the
recovery of related depreciation expense.
Buildings and Furnishings Fund
This fund accounts for all costs associated with the operation and maintenance of specified City buildings.
City building facilities and furnishings will be owned by this Fund, and both maintenance/operating costs
and depreciation recovery will be charged City departments and funds.
City of Federal Way / 35
Basis of Accounting
Basis of accounting refers to when revenues and expenditures or expenses are recognized and reported in the
financial statements.
The accrual basis of accounting is used by proprietary funds. Under this method, revenues are recognized when
earned, and expenses are recognized when incurred.
The modified accrual basis of accounting is used by governmental funds. Revenues and other financial resources
are recognized when they become susceptible to accrual, i.e., when the related funds become both measurable and
available to finance expenditures of the current :period. To be considered "available", revenue must be collected
during the current period or soon enough thereafter to pay current liabilities. The City uses thirty days when
evaluating the available criteria.
Expenditures are recognized when the related fund liability is incurred. Since the recognition of depreciation does
not reduce net financial resources, it is not considered an expenditure. Other exceptions include (1) inventories of
materials and prepaid items are reported as expenditures when purchased, (2) interest on long-term debt is not
accrued but is recorded as an expenditure when due, (3) accumulated unpaid vacation and sick pay are considered
expenditures when paid.
Major revenues recorded on the modified accrual basis are:
Property Taxes - King County acts as the City's collection agent for these taxes. Each day, the County
electronically transmits to the City the taxes which it has collected on the City's behalf in the prior day. On this
basis, property taxes received in January are considered both measurable and available and are therefore recognized
as revenue in the current year.
Other Locally Levied Taxes - King County also acts as the City's collection agent for the '/4% and optional'/4% real
estate excise taxes. Although a time lag occurs in payment of these taxes to the City, since the taxes are actually
collected by King County in December and receipted to the City within 10 days after the end of the year, they are
,considered to be both measurable and available, and are, therefore, accrued as revenue at. year end. The State of
Washington acts as the City's collection agency for the locally levied sales tax. The sales tax is distributed monthly
and remitted to the City in the following month. The Sales Tax remittance in January is considered both measurable
and available and is therefore accrued as revenue at year-end.
Grant Revenues - Under Section G60.109 of the Codification of Governmental Accounting and Financial
Reporting Standards, revenues for cost reimbursement grants are determined to be earned and, therefore, available
at the time related expenditures are incurred. For this reason, grant revenues to be received as reimbursement for
expenditures incurred in the current year are also recognized as revenue in that year.
Shared Revenues - Revenues that have been collected, but not remitted by an intermediary collection agency to the
City, are considered measurable and available.
Other Revenue Sources - Other items recognized as revenue in the current year on the modified accrual basis
include investment interest earned but not received at year end; interfund, and intergovernmental service billings
related to services provided in the current year which are outstanding at year end; and any other material revenue
amounts determined to be both measurable and available under current modified accrual accounting practices.
Revenues not considered to meet the criteria for recognition on the modified accrual basis include licenses and
permits, fines and forfeitures, and other miscellaneous revenues which are generally not measurable until received.
City of Federal Way 136
BUDGETARY INFORMATION
Scope of Budget
Annual appropriated budgets are adopted for the general, some special revenue, and debt service funds on the
modified accrual basis of accounting. For governmental funds, there are no differences between the budgetary basis
and generally accepted accounting principles. Budgets for project and grant related special revenue funds and
capital project funds are adopted at the level of the individual project and for fiscal periods that correspond to the
lives of projects. Since these funds are not budgeted on an annual basis, budgetary comparisons are not presented.
NCGA Statement 1 does not require, and .the financial statements do not present, budgetary comparisons for
proprietary fund types.
Legal budgetary control is established at the fund level, i.e., expenditures for a fund may not exceed the total
appropriation amount. Any unexpended appropriation balances for annually budgeted funds lapse at the end of the
year. Appropriations for other special purpose funds that are non -operating in nature are adopted on a "project -
length" basis and, therefore, are carried forward from year to year without reappropriation until authorized amounts
are fully expended or the designated purpose of the fund has been accomplished.
The individual funds within each fund type which are included in the City's annual operating budget (funds
budgeted on an annual basis) are:
General Fund
Special Revenue Funds
Street
Solid Waste & Recycling
Arterial Street
Hotel/Motel Lodging Tax Fund
Utility Tax
Paths and Trails Fund
Debt Service Fund
Procedures for Adopting the Annual Budget
The City's budget process and the time limits under which the budget must be prepared are defined by the Revised
Code of Washington (RCW) 35A.33. The procedures followed in establishing the annual budget are described
below:
By late May the official budget call is made by the Management Services Director for current level service
budgets and a preliminary financial forecast.
By late June, departments submit their preliminary expenditure estimates and the Management Services
department updates the preliminary revenue estimates to define resources available to finance coming year
expenditure programs.
Prior to the first Tuesday in September, the City Manager submits a proposed budget to the City Council. This
budget is based on priorities established by the Council and estimates provided by City departments during the
preceding months, and balanced with revenue estimates made by the Management Services Director.
City Council conducts workshops and public hearings on the proposed budget between mid -September and
mid -December.
No later than the third Monday in November, the City Council must adopt an ordinance to establish the amount
of property taxes to be levied in the coming year.
By October 31, the City Manager files a preliminary budget with the City Clerk. Copies of the preliminary
budget are provided to staff and the City Council and made available to the public.
City of Federal Way / 37
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 2004, the budget was
amended four times.
The budget amounts shown in the financial statements are the final authorized amounts as revised during the year.
The financial statements contain the original and final budget information. The original budget is the first complete
appropriated budget. The final budget is the original budget adjusted by all reserves, transfers, allocations,
supplemental appropriations, and other legally authorized changes applicable for the fiscal year.
Encumbrances
An encumbrance system is used for budgetary control purposes to record commitments resulting from approved
purchase orders. During the year, encumbrances are recorded in the accounting system at the time purchase orders
are issued for goods and services. Upon payment, the encumbrance is reversed and the actual cost of the related
item is recorded as a fund expenditure. Outstanding encumbrances lapse at year end, are canceled and 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 $7,379,249.
ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY
Cash and Investments
The City follows the practice of pooling cash and investments of all funds for investment purposes, except for cash
held in escrow, which is disclosed separately on the balance sheet. Each fund's portion of total cash and
investments is summarized by fund type in the combined balance sheet as equity in pooled cash and investments.
It is the City's policy to invest all cash not immediately required for disbursement. At December 31, 2004, the State
Treasurer was holding $31,699,451 in the State Investment Pool and US Bank was holding $19,879,153 in a
Municipal Investor Account (MIA) for short-term investments of cash. The State Investment ;Pool and the
Municipal Investor Account is considered a cash equivalent. The interest earnings on these investments are
allocated to all funds based on the average monthly balance for each fund.
'Federal Way / 38
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, 2004, the total cash and cash
equivalents were $51,616,365.
The City's deposits are entirely covered by federal depository insurance (FDIC) or by collateral held in a multiple
financial institution collateral pool administered by the Washington Public Deposit Protection Commission (PDPC).
The City is authorized by State law to purchase certificates of deposit issued by Washington State depositories that
participate in a state insurance pool managed by the Washington Public Deposit Protection Commission; securities
purchased by the Washington State Investment Pool; U.S. Treasury and Agency securities, banker's acceptances
trading in the secondary market; and repurchase agreements with dealers that use authorized securities as collateral.
In accordance with GASB 31, investments in money market investments and participating interest -earning
investment contracts with a remaining maturity of one year or less at the time of purchase are stated at amortized
cost. All other investments are stated at fair value. There was no material deviation from fair value quoted at year-
end.
Receivables
Taxes receivable consists of property taxes and related interest and penalties (see Property Tax Note 6). Accrued
interest receivable consists of amounts earned on investments, notes, and contracts at the end of the year.
Due From Other Governments reflects measurable and available intergovernmental grants, entitlements, or State
shared revenues (taxes/charges levied and collected by an intermediary collecting government and distributed on
some basis); loans; and charges for services rendered by the City for another government unit. A separate schedule
of Due From Other Governments is disclosed in Note 6.
Amounts Due to and from Other Funds; Interfund Loans
Activity between funds that are representative of lendingiborrowing arrangements outstanding at the end of the
fiscal year are referred to as either "interfund loans receivable/payable" or "advances to/from other funds." All
other outstanding balances between funds are reported as "due to/from other funds." Any residual balances
outstanding between the governmental activities and business -type activities are reported in the government -wide
financial statements as "internal balances."
Loans between funds must be authorized by the City Manager. In the governmental funds, loans to other funds are
offset by a corresponding reservation of fund balance to indicate that the outstanding loan amounts do not constitute
"available spendable resources" and are, therefore, not available for appropriation.
A separate schedule of interfund loans receivable and payable is furnished in Note 12.
Inventories
Inventories in the governmental funds are recorded as expenditures at the time of purchase. Amounts remaining at
year-end are immaterial and, therefore, are not reflected on the balance sheets of those funds. There were no
material inventories at year-end in the Internal Service or Enterprise Funds.
Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure (e.g. roads, bridges, sidewalks, lighting
systems, etc), are reported in the applicable governmental or business -type activities columns in the government -
wide financial statements. The City included governmental infrastructure constructed in 2004. Under the
requirements of GASB 34, the City has until 2007 to record the remainder of its infrastructure assets.
City of Federal Way / 39
Major expenditures for fixed assets, including capital leases and major repairs that increase useful lives are
capitalized. Maintenance, repairs, and minor renewals are accounted for as expenditures or expenses when
incurred. The City has adopted a general fixed asset capitalization policy where an item's cost must equal or exceed
$1,000. All fixed assets are valued at historical cost (or estimated cost, where historical cost is not known/or
estimated market value for donated assets).
Depreciation on all capital assets is recorded as an allocated expense in the government -wide Statement of
Activities and in the proprietary fund statements. Capital assets are reported net of depreciation. The City uses a
combination of group depreciation and straight-line depreciation over the life of the assets.
The following tables summarizes the average service lives used to calculate depreciation for specific categories of
assets in the City's Proprietary Funds.
Asset Class
Estimated Life in Years
Office 'Furniture & Fixtures
10
Computer/Data Handling Equipment
4
Communications Equipment
10
Recreation Equipment
10
Parks equipment
5 — 12
Automobiles
5
Police Vehicles
4-6
Police Equipment
5
Light Trucks
5
Heavy Trucks
8
Heavy Work Equipment
10
Shop/Miscellaneous Equipment
10
Land Improvements
20
Buildings
20
Storm Drainage Systems
100
Compensated Absences
The City records a liability for all outstanding vacation pay and accrued compensatory time. In governmental
funds, vacation pay and compensatory time is recorded as expenditures when paid which occurs when used or upon
termination. In the entity -wide statements and the proprietary fund statements, vacation pay and compensatory time
is recorded as a liability and expense in the year earned.
Employee vacation leave is accumulated monthly at rates ranging from 12 to 15 days per year depending on term of
employment. Employees may accumulate up to a maximum of 240 hours of vacation leave, except the Police
Guild, who can accrue up to a maximum of 256 hours. All outstanding vacation leave is payable upon termination
of employment.
The differences between the governmental fund statements and the entity -wide statements represent reconciling
items between the fund level and government -wide financial statements. The reconciliations are included as part of
the financial statements.
A non-exempt employee may request compensatory time off in lieu of overtime payment. Compensatory time is
accrued at a rate of one and one-half hours for each hour of overtime worked, to a maximum of eighty hours, or
forty hours for Police Guild members.
Sick leave may be. accumulated up to a maximum of 720 hours, per City policy. The monthly accrual rate for City
employees is 8 hours per month. Accumulated sick leave is not payable upon termination of employment.
Outstanding sick leave at year-end is not accrued due to the difficulty in estimating the portion of existing balances
likely to result in expenditures in future periods.
City of Federal Way / 40
Short-term Debt
As of December 31, 2004, the City of Federal Way did not incur any short-term debt.
Long-term Debt
In the government -wide financial statements and the proprietary fund financial statements, long-term debt and other
long-term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or
proprietary fund statement of net assets. Long-term debt outstanding at year-end is outlined in Note 11.
Deferred Revenues
The deferred revenue account is used to offset receivables established in the governmental funds for certain
revenues that are measurable but not considered available to finance payment of current obligations and, therefore,
are not susceptible to accrual on the modified accrual basis. When the receivable amounts are collected in future
periods, this liability account is reduced and corresponding revenue is recorded. The portions of Property Taxes
that do not meet the available criteria are recorded as deferred revenue.
Fund Equity -Reserves and Designations
Reserves represent portions of fund equity that are legally restricted for a specific future purpose or not available for
appropriation because they do not represent a current expendable resource. Designations of fund balance identify
amounts set aside by management for tentative future purposes or administrative convenience.
In governmental funds, fund balance that is legally restricted for future purposes include reserves for: a) future
employee retirement payments and b) future debt service. The City of Federal Way does not have fiduciary funds.
Fund balance not available for expenditure in the governmental funds consists of the outstanding balances of current
interfund loans. On December 31, 1991, $10,000 in a non -interest bearing loan from the General Fund to the City's
CDBG grant fund was authorized by the City Manager as interim financing. In addition, the General Fund had
reserves for Petty Cash, prepaid insurance, police special funds and Travel Advance purposes. The Special
Revenue Path and Trails Reserve fund balance is legally restricted for construction and maintenance of ,paths and
trails within City right-of-way. The Special Revenue Hotel/Motel Lodging Tax fund balance is also legally
restricted for solely paying for tourism promotion and for the acquisition and/or operation of tourism -related
facilities.
Interfund Transactions
There are four types of transactions between funds - interfund loans, interfund services provided and used, interfund
reimbursements, and interfund transfers. Interfund loans are temporary borrowings of cash which do not affect
operating statements, but which may incur interest expense or expenditure to the borrowing fund. Interfund services
provided and used are equivalent to buying goods or services from an outside vendor, they are accounted for by the
related funds as revenues, expenditures or expenses. Interfund reimbursements are repayments to a fund for
expenditures or expenses that belong to another fund. They involve only expenditure or expense accounts.
Operating transfers are the equivalent of operating subsidies.
Except for the Enterprise Fund, operating transfers are accounted for as "other financing sources and uses" and are
therefore included in the operating statements.
NOTE 2 — RECONCILIATION OF GOVERNMENT -WIDE & FUND FINANCIAL STATEMENTS
Explanation of Certain Differences Between the Governmental Funds Balance Sheet and the Government -
Wide Statement of Net Assets
The governmental funds' balance sheet includes a reconciliation between fund balance — total governmental funds
and net assets — governmental activities as reported in the government -wide statement of net assets. One element of
City of Federal Way / 41
that reconciliation explains that "long-term liabilities, including bonds payable, are not due and payable in the
current period, and, therefore, are not reported in the funds." The details of this $31,781,369 difference are as
follows:
Bonds Payable at beginning of year $34,730,516
Plus: Inclusion of compensated absences 972,020
Less: Current year reduction of principal portion of debt (3,927,624)
Net adjustment to reducefund balance -total governmental
funds to arrive at net assets — governmental activities 31.774.913
Explanation of Certain Differences Between the Governmental Funds Statement of Revenues, Expenditures,
and Changes in Fund Balances and the Government -Wide Statement of Activities
The governmental funds' statement of revenues, expenditure, and changes in fund balances includes a reconciliation
between net changes in fund balances — total governmental funds and
changes in net assets of governmental activities as reported in the government -wide statement of activities. One
element of :that reconciliation explains that "Governmental funds report capital outlays as expenditures. However,
in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as
depreciation expense." The details of this $13,877,028 difference are as follows:
Net Capital outlay $14,772,662
Governmental depreciation expense (976,200)
Net adjustment to increase net changes in fund balances —
Total governmental funds to arrive at changes in net assets
of governmental activities $13,796,462
Another element of the reconciliation states that "Revenues in the statement of activities that do not provide current
financial resources are not reported as revenues in the funds." This item presents:
Property taxes earned reported as deferred in the fund statements $ 205.317
Another element of the reconciliation states that "Some expenses reported in the statement of activities do not
require the use of current financial resources and, therefore, are not reported as expenditures in the funds." This
item represents:
Compensated absences 64,170
NOTE 3 — STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
There have been no material violations of finance -related legal or contractual provisions, and there have been no
expenditures exceeding legal appropriations in any of the funds of the City.
NOTE 4 — SUPPLEMENTAL APPROPRIATIONS
Operating Budget Funds
Appropriations established during 2004 for the City's operating budget funds are provided below. As explained in
Note 1, both original and supplemental appropriations are adopted by the City Council by ordinance. Both original
and final budget appropriations are shown on the accompanying financial statements. The final budget values
include all adopted adjustments to original budget amounts.
City of Federal Way / 42
2004
ORIGINAL SUPPLEMENTAL FINAL
FUND BUDGET APPROPRIATIONS BUDGET
General Fund
Special Revenue Funds:
Street Fund
Arterial Street Fund
Utility'rax Fund
Solid Waste/Recycling Fund
Hoiel/Motel Lodging Tax
Paths and Trails Reserve Fund
Subtotal Special Revenue Funds
33,384,445 3,340,048 $ 36,724,493
3,872,635
173,414
4,046,049
1,786,882
483,750
2,270,632
5,994,897
1,274,000
7,268,897
365,935
1,726
367,661
134,000
216,999
350,999
65,000
65,000
12,154,349
2,214,889
14,369,238
Debt Service Fund 4,868,850 2,645,781 7,514,631
$ 50,407,644 $ 8,200,718 $ 58,608,362
NOTE 5 — DEPOSITS AND INVESTMENTS
As required by state law, all deposits and investments of the City's funds are obligations of the U.S. Government,
the State Treasurer's Investment Pool, bankers' acceptances, or deposits with Washington State banks and savings
and loan institutions. In 2004 the City utilized all the above with the exception of bankers' acceptances as legal
authorized investment instruments. The City's investment policies are described in Note 1.
Cash and Deposits
The City follows the practice of pooling cash and investments of all funds, except restricted funds and funds held
with a trustee or in escrow, for investment purposes as disclosed in Note 1. At December 31, 2004, the equity in
pooled cash and investments was $57,299,151.
At year-end, the City had $51,616,365 in cash and cash equivalents which consisted of'investments with the State
Pool of $31,699,452; the Municipal Investor account with US Bank of $19,879,153; the City's checking account
bank balance prior to outstanding checks was $1,202,077; and petty cash and change funds, advance travel fund and
investigative fund totaling $39,820. 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-fmancial institution
collateral pool, may be assessed on a prorated basis if the pool's collateral is insufficient to cover a loss. The
Municipal Investor account with US Bank is protected under WPDPC.
At December 31, 2004, the City's total deposits and investments consisted of the following:
US Bank, Checking Account per Books
$ (2,060)
Petty Cash/Change Fund/Advance Travel/Investigative Fund
39,820
Cash Equivalents with US Bank Municipal Investor Account
19,879,153
Cash Equivalents with State Treasurer's Investment Pool
31,699,452
Subtotal Cash and Cash Equivalents
51,616,365
Investments in US Government Agency
5,682,786
Equity in Pooled Cash and Investments
57,299,151
Cash with Escrow Agent
121,515
Total Cash and Investments
$ 57,420,666
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 that are held by the counterparty's trust department or agent in the City's name. Category 3
City of Federal Way / 43
includes uninsured and unregistered investments for which the securities are held by the counterparty, or its trust
department or agent, but not in the City's name. At the end of the year, the City had no investments in category 2 or
3. All investments are stated at fair value. The fair value of the positions in the State Investment Pool is the same
as the value of the pool shares. The State Investment Pool is managed by the Treasurer of the Sate of Washington.
An additional Municipal Investor Account (MIA) was established in July 2003 with a deposit of $5 million as a
Tenant Improvement Guarantee Account when the new City Hall building was purchased. These funds will remain
in the account until the City receives the Certificate of Occupancy for the tenant improvement work. This account is
directly competitive with short-term CD's Repo's and the funds are totally liquid as well as protected by both FDIC
and WPDPC.
City Securities
Agencies
Subtotal Categorized City Investments
Total: Categorized Investments
Compensating Time Deposit with US Bank
Municipal Investor Account with US Bank
Investments in State Treasurers Investment Pool
Total Investments
Risk Category Carrying Fair
1 Amount Value
$ 5,682,786 $ 5,682,786 $ 5,605,738
5,682,786 5,682,786 5,605,738
$ 5,682,786 $ 5,682,786 $, 5,605,738
19,879,153 19,879,153
31,699,452 31,699,452
$ 57,261,391 $ 57,184,343
NOTE 6 — RECIEVABLES AND DUE FROM OTHER GOVERNMENTS
Property Taxes
The King County Treasurer is responsible for collecting property taxes levied in the County by all taxing districts.
Amounts collected by the County on the City's behalf are remitted daily.
As described in Note 1, taxes are levied and become an enforceable lien against properties as of January 1. Annual
tax billings may be paid in two equal installments, due April 30 and October 31. At December 31, 2004, the total
balance of property taxes receivable recorded by the City was $524,120.Of this, $205,317 is recorded as a deferred
revenue, since it was not collected within the first 30 days of 2005. The property tax levy calendar in 2004 was:
PROPERTY TAX CALENDAR
January 1 Taxes are levied and become an enforceable lien against properties.
February 14 Tax bills are mailed.
April 30 First of two equal installment payments is due.
May 31 Assessed value of property established for next year's levy at 100% of market value.
October 31 Second installment is due.
Property taxes are recorded as a receivable when levied, offset by deferred revenue. During the year, property tax
revenues are recognized when cash is collected. At year-end, property tax revenues are recognized for collections
expected to occur within 30 days. No allowance for uncollectible taxes is established because delinquent taxes are
considered fully collectible.
Under State law, the maximum levy (for general governmental services) is up to $3.60 per $1,000 of assessed
valuation, subject to two limitations, set forth below. Since the City of Federal Way is not a full service city, the
City is only allowed $1.60. The remaining $2.00 is for the fire district ($1.50) and library district ($.50).
Chapter 84.55 of the State RCW was amended most recently by Initiative No. 747 (which was passed by
voters on November 6, 2001), limits the total dollar amount of regular property taxes levied by the City to
City of Federal Way / 44
the amount of such taxes levied in the three most recent years multiplied by a limit factor, plus an
adjustment to account for taxes on new construction, improvements and state -assessed property at the
previous year's rate. As amended by Initiative No. 747, the limit factor is the lesser of 101 % or 100% plus
the percent change in the Implicit Price Deflator, unless a greater amount is approved by a simple majority
of the voters; and
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 2004 was $1.29 per $1,000 on an assessed valuation of $6,292,343,626 for a total
regular levy of $8,117,874
Deferred Revenue
Deferred revenue reported on the governmental funds balance sheet is in the schedule below. Contracted police
overtime, grant reimbursements and refuse collection fees are receivable within one year of the end of the fiscal
period.
Contracted Police Overtime
Property Tax
Public Safety Grants
Refuse Collection Fees
Federal Way Fire Department Buy -In of ValleyCom
Recreation Programs/Facility Rentals
Solid Waste
Debt
General
Street & Recycling
Service
Total
$ 190,057
$ - $ -
$ -
$ 190,057
205,317
- -
-
205,317
10,794
18,354 -
-
29,148
-
- 13,769
-
13,769
-
- -
308,370
308,370
6,851
- -
-
6,851
$ 413,019
$ 18,354 $ 13,769
$ 308,370
$ 753,512
Receivables & Due from Other Governments
The receivables for the fiscal year ended December 31, 2004 on the government -wide statement of net assets are
detailed in the following schedule. Of the property taxes receivable amount, $248,991 is delinquent.
Debt
City
Trans-
Nonmajor
General
Street Utility Tax
Service
Facilities
portation
Govt'1
Proprietary
Total
Property Tax
$ 524,120
$ - $ -
$ -
$ -
$ -
$ -
$ -
$ 524,120
Utility Tax
-
- 844,908
-
-
-
-
-
844,908
Gambling Tax
155,912
- -
-
-
-
-
-
155,912
Recreation
Programs/Facilities
(5,718)
- -
-
-
-
-
35,527
29,809
Grants &
Contributions
17,106
- -
-
-
589,508
243,454
61,514
911,582
Construction
Contract/Reimburse
-
- -
-
-
226,182
-
-
226,182
Deferred
Maintenance
Deposit
-
- -
202,345
-
202,345
Investment Interest
3,992
725 198
2,966
14,661
6,611
1,204
9,773
40,130
State Shared
Revenue
1,102,728
117,723 -
-
-
-
55,499
-
1,275,950
King County District
Court
1,395
- -
-
-
-
-
-
1,395
WA State Criminal
Justice Training Ctr
24,121
- -
-
-
-
-
-
24,121
Surface Water
Management Fees
-
- -
-
-
-
-
87,354
87,354
$ 1,823,655
$118,448 $845,106
$205,311
$ 14,661
$ 822,301
$ 300,157
$ 194,168
$ 4,323,807
City of Federal Way / 45
NOTE 7 — DUE TO OTHER GOVERNMENTS
At December 31, 2004, the City recorded $73,980 as due to other governmental units as follows:
Description Amount
General Fund:
King County - Nov 2004 Election Costs $ 73,980
Subtotal General Fund 73,980
Total Due To Other Governments 73,980
NOTE 8 — CAPITAL ASSETS
Cauital assets activity for the vear ended December 31.2004 was as follows:
Beginning
Accumulated
Ending
Balance
Depreciation
Depreciation
Asset
Asset
Balance
Governmental Activities
1/1/2004
Expense
Adjustments
Increases
Decreases
I2/31/2004
Capital assets, not being depreciated:
Land
$ 36,982,986
$
$
$ 122,214
$
$ 37,105,200
Construction in progress
19,412,007
15,264,523
34,676,530
Total capital assets not bein depreciated
56,394,993
15,386,737
71,781,730
Capital assets, being depreciated:
Buildings
2,207,265
(264,524)
10,669
35,746
1,989,156
Improvements other than buildings
12,418,294
(827,470)
-
11,590,824
Machinery and Equipment
3,628,022
(1,023,709)
559,705
871,035
(613,444)
3,421,609
Infrastructure
711.522
(35 576)
_
-
-
r71 oar
Beginning
Accumulated
Ending
Balance '
Depreciation
Depreciatiou`
Asset
Asset'
Balance
Business Type;Activities y; -
1/1/2004
Expense
Adjustments
Increases
Decreases —
12/31h004';
Capital assets, not being depreciated:
Land
$ 5,818,294
$
$ -
$ 43,401
$
$ 5,861,695
Construction in progress
1,672,109
-
2,505,893
4,178,002
Total capital assets nofbein d " teciatdd
7,00;4Q3
-
2,549,294
1Q'019,607
Capital assets, being depreciated,,
Buildings
2409:729
(179,552)
-
-
2230177
Improvements other than buildings
32:104122
(408,925)
-
35,775
31:730:972
Machinery and Eauipment
41.789
(2.945)
-
3R R44
Depreciation expense was charged to functions/programs of the primary
government as follows:
Government Activities
General Government
$ 552,287
Security of Persons & Property
117,508
Transportation
70,505
Physical Environment
58,754
Economic Environment
188,013
Health
11,751
Culture & Recreation
1,152 462
Total Depreciation - Governmental Activities
$ 2,151,279
Busines-Type Activites .
Utilities - Surface Water Management
Culture & Recreation - Dumas Bay Centre
$ 409,918
181,504
Total Depreciation - Business -Type Activities'1
$ 591,422
City of Federal Way / 46
NOTE 9 — PENSION PLANS
Substantially all City full-time and qualifying part-time employees participate in one of the following statewide
retirement systems administered by the Washington State Department of Retirement Systems, under cost -sharing
multiple -employer public employee defined benefit and defined contribution retirement plans. The Department of
Retirement Systems (DRS), a department within the primary government of the State of Washington, issues a
publicly available comprehensive annual financial report (CAFR) that includes financial statements and required
supplementary information for each plan. The DRS CAFR may be obtained by writing to: Department of
Retirement Systems, Communications Unit, P.O. Box 48380, Olympia, WA 98504-8380. The following
disclosures are made pursuant to GASB Statement 27, Accounting for Pensions by State and Local Government
Employers.
Public Employees' Retirement System (PERS) Plan I and 2
Plan Description
PERS is a cost -sharing multiple -employer retirement system comprised of three separate plans for membership
purposes: Plans 1 and 2 are defined benefit plans and Plan 3 is a combination defined benefit/defined contribution
plan. Membership is mandatory for all City employees working 70 hours per month for 5 months out of the twelve
month period. Membership in the system includes elected officials; state employees; employees of the Supreme,
Appeals, and Superior courts (other than judges in judicial retirement system); employees of legislative committees;
community and technical colleges, college and university employees (not in national higher education retirement
programs); judges of district and municipal courts; and employees of local government. The PERS system includes
three plans. Participants who joined the system by September 30, 1977 are Plan 1 members. Those who joined on
or after October 1, 1977 and by either, February 28, 2002 for state and higher education employees, or August 31,
2002 for local government employees, are Plan 2 members unless they exercise an option to transfer their
membership to Plan 3. PERS participants joining the system on or after March 1, 2002 for state and higher
education employees, or September 1, 2002 for local government employees have the option of choosing
membership in either PERS Plan 2 or PERS Plan 3. The option must be exercised within 90 days of employment.
An employee is reported in Plan 2 until a choice is made. Employees who fail to choose within 90 days default to
PERS Plan 3. PERS defined benefit retirement benefits are financed from a combination of investment earnings
and employer and employee contributions. PERS retirement benefit provisions are established in state statute and
may be amended only by the State Legislature.
Plan 1 retirement benefits are vested after an employee completes five years of eligible service. Plan 1 members are
eligible for retirement at any age after 30 years of service, or at age 60 with five years of service, or at age 55 with
25 years of service. The annual pension is 2 percent of the average final compensation per year of service, capped
at 60 percent. The average final compensation is based on the greatest compensation during any 24 eligible
consecutive compensation months. If qualified, after reaching age 66 a cost -of -living allowance is granted based on
years of service credit and is capped at three percent annually.
Plan 2 retirement benefits are vested after an employee completes five years of eligible service. Plan 2 members
may retire at age 65 with five years of service, or at age 55 with 20 years of service, with an allowance of 2 percent
per year of service of the average final compensation per year of service. The average final compensation is based
on the greatest compensation during any eligible consecutive 60-month period. Plan 2 retirements prior to 65
receive reduced benefits. If retirement is at age 55 or older with at least 30 years of service, a 3 percent per year
reduction applies; otherwise an actuarial reduction will apply. There is no cap on years of service credit; and a cost -
of -living allowance is granted (indexed to the Seattle Consumer Price Index), capped at 3 percent annually.
Plan 3 has a dual benefit structure. Employer contributions finance a defined benefit component, and member
contributions finance a defined contribution component. The defined benefit portion provides a benefit calculated at
1 percent of the average final compensation per year of service. The average final compensation is based on the
greatest compensation during any eligible consecutive 60-month period. Plan 3 members become eligible for
retirement if they have: at least ten years of service; or five years including twelve months that were earned after age
54; or five service credit years earned in PERS Plan 2 prior to June 1, 2003. Plan 3 retirements prior to the age of
City of Federal Way / 47
65 receive reduced benefits. If retirement is at age 55 or older with at least 30 years of service, a 3 percent per year
reduction applies; otherwise an actuarial reduction will apply. There is no cap on years of service credit; and Plan 3
provides the same cost -of -living allowance as Plan 2. The defined contribution portion can be distributed in
accordance with an option selected by the member, either as a lump sum or pursuant to other options authorized by
the Employee Retirement Benefits Board.
There are 1,168 participating employers in PERS. Membership in PERS consisted of the following as of the latest
actuarial valuation date for the plans of September 30, 2004:
Retirees and Beneficiaries Receiving Benefits
65,362
Terminated Plan Members Entitled to But Not Yet Receiving Benefits
20,001
Active Plan Members Vest
100,469
Active Plan Members Nonvested
54,081
ftn 'loot
�� ,_
9 913'==.
Funding PolicX
Each biennium, the state Pension Funding Council adopts Plan 1 employer contribution rates and Plan 2 employer
and employee contribution rates and Plan 3 employer contribution rates.
Employee contribution rates for Plan 1 are established by statute at six percent and do not vary from year to year.
The employer and employee contribution rates for Plan 2 and the employer contribution rate for Plan 3 are
developed by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. All
employers are required to contribute at the level established by the Legislature. "PERS Plan 3 defined contribution is
a non-contributing plan for employers. Employees who participate in the defined contribution portion of PERS Plan
3 do not contribute to the defined benefit portion of PERS Plan 3. The Employee Retirement Benefits Board sets
Plan 3 employee contribution rates. Six rate options are available ranging from 5 to 15 percent; two of the options
are graduated rates dependent on the employee's age. The methods used to determine the contribution requirements
;are established under state statute in accordance with Chapters 41.40 and 41.45 RCW.
The required contribution rates expressed as a percentage of current year covered payroll, as of December 31, 2003,
were:
PERS Plan 1 PERS Plan 2 PERS Plan 3
Employer* 1.38%* 1.38% 1.38%**
Employee 6.00% 1.18% ***
* The employer rates include the employer administrative expense fee currently set at 0.22%.
** Plan 3 defined benefit portion only.
*** Variable from 5.0% to 15.0% maximum based on rate selected by the PERS 3 member.
Both the City and employees made the required contributions. The City's required contributions for the years ended
December 31 were:
PERS Plan I
PERS Plan II
PERS Plan III
2004 $ 5,834
$ 120,335
$19,113
2003 $ 6,239
$ 118,973
$10,900
2002 $8,094
$ 131,750
$ 125
City of Federal Way / 48
Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) Plans 1 and 2
Plan Description
LEOFF is a cost -sharing multiple -employer retirement system comprised of two separate defined benefit plans.
Membership in the system includes all full time, fully compensated, local law enforcement officers and fire fighters.
LEOFF is comprised primarily of non -state employees.
LEOFF participants who joined the system by September 30, 1977 are Plan l members. Those who joined on or
after October 1, 1977 are Plan 2 members. LEOFF retirement benefits are financed from a combination of
investment earnings, employee and employer contributions, and a special funding situation in which the state pays
the remainder through state legislative appropriations. LEOFF retirement benefit provisions are established in state
statute and may be amended only by the State Legislature.
Plan 1 retirement benefits are vested after an employee completes five years of eligible service. Plan 1 members are
eligible for retirement with five years of service at the age of 50. The benefit per year of service calculated as a
percent of final average salary is as follows:
Term of Service Percent of Final Average
20 or more years 2.0%
10 but less than 20 years 1.5%
5 but less than 10 years 1.0%
The final average salary is the basic monthly, salary received at the time of retirement, provided a member has held
the same position or rank for 12 months preceding the date of retirement. Otherwise, it is the average of the highest
consecutive 24 months'. salary within the last 10 years of service. If membership was established in LEOFF after
February 18, 1974, the service retirement benefit is capped at 60 percent of final average salary. A cost -of -living
allowance is granted (indexed to the Seattle .Consumer Price Index).
Plan 2 retirement benefits are vested after an employee completes five years of eligible service. Plan 2 members
may retire at age 50 with 20 years of service, or at age 53 with five years of service, with an allowance of 2 percent
of the final average salary per year of service. The final average salary is based on the highest consecutive 60
months. Plan 2 retirements prior to the age of 53 are reduced 3 percent for each year that the benefit commences
prior to age 53. The benefit is two percent of average salary per year of service. There is no cap on years of service
credit and a cost -of -living allowance is granted (indexed to the Seattle Consumer Price Index), capped at three
percent annually.
There are 368 participating employers in LEOFF. Membership in LEOFF consisted of the following as of the latest
actuarial valuation date for the plans of September 30, 2003:
Retirees and Beneficiaries Receiving Benefits
8,370
Terminated Plan Members Entitled to But Not Yet Receiving Benefits
453
Active Plan Members Vest
11,548
Active Plan Members Nonvested
4,003
.. LL Total,a.n,
d'x,,
Funding Policy
Starting on July 1, 2000, Plan I employers and employees will contribute zero percent as long as the plan remains
fully funded. Employer and employee contribution rates are developed by the Office of the State Actuary to fully
fund the plan. Plan 2 employers and employees are required to pay at the level adopted by the Department of
Retirement Systems in accordance with 41.45 RCW. All employers are required to contribute at the level required
by state law. The Legislature, by means of a special funding arrangement, appropriated money from the state
General Fund to supplement the current service liability and fund the prior service costs of Plan 1 in accordance
City ofFederaI Way /49
with the requirements of the Pension Funding Council. However, this special funding situation is not mandated by
the state constitution and this funding requirement could be returned to the employers by a change of statute. The
methods used to determine the contribution rates are established under state statute in accordance with Chapters
41.26 and 41.45 RCW.
The required contribution rates expressed as a percentage of current year covered payroll, as of December 31, 2004
were:
LEOFF Plan I
LEOFF Plan II
Employer
0.22% *
3.25% **
Employee
0.00.%
5.09%
State
N/A
2.03%
* The employer rates do not include the employer administrative expense fee currently set at
0.22%.
** The employer rate for ports and universities is 5.27%.
Both the City and employees made the required contributions. The City's required contributions for the years ended
December 31 were:
LEOFF Plan I LEOFF Plan II
2004 $0 $256,308
2003 $0 $226,308
2002 $0 $2053913
Other Local Government Pension Systems - City of Federal Way
Employees' Retirement System
Effective June 1, 1990, the Federal Way City Council established the Federal Way Employees' Retirement System,
per City Ordinance 90-74 and. as authorized by the Federal Social Security Act (42 USCA, Section 418 (g)). The
Retirement System is a defined contribution pension plan established as an alternative to the Federal Social Security
System.
During 2004, there were a total of 330 individuals covered by this system. As of the end of the year, 304 remained
as active employees of the City and none were drawing retirement benefits. The 26 inactive had left the City's
employment and either had been reimbursed their contributions, or the reimbursement was pending, or they elected
to have their contributions remain in the plan if the balance was $5,000 or greater.
All regular employees of the City of Federal Way are required to participate in the system, with the City matching
the employee's required contribution. The employee pays 6.2% and this is matched by the composite of a cash
match (approximately 5.2%) and insurance payments (1%) for disability, survivor, accidental death and
dismemberment, and lump sum death benefit coverage. Contributions into the plan are tax deferred.
Employees are entitled _to_ -make voluntary contributions to the plan, assuming that highly compensated and non -
highly compensated employees are treated equally. Each payroll period, employees may make a voluntary
contribution equal to a minimum of 1 % of the participant's compensation, not to exceed 10% of the participant's
compensation.
Covered payroll for 2004 was $15,713,804 and total City payroll was $17,968,583. Actual City contributions for
the year were $934,369. Actual employee contributions were $1,114,056. All contributions were invested in
instruments arranged through independent investment advisors selected by the Municipal Employers Benefit Trust
(MEBT) committee comprised of the cities of Bellevue, Kirkland, Redmond, Edmonds, Mill Creek, Woodinville,
and Federal Way but administered by Trautmann Maher & Associates. Retirement System assets are not the
property of the City and are not subject to the claims of the City's general creditors. The Federal Way Retirement
System assets are with Security Trust Company, N.A. who invests Plan assets.
City of Federal Way / 50
In July 1995, the City implemented the hardship withdrawal and loan provision program. Loans receivable as of
December 31, 2004 were $923,680.
The consulting actuary firm of Trautmann, Maher & Associates has been contracted to provide record keeping,
administrative and consulting services related to the Plan.
Actuarial determinations are not required because accidental death and dismemberment insurance, long-term
disability, survivor income insurance and the lump sum death benefit are provided by a group insurance policy with
Standard Insurance Company; and benefits paid to participants upon retirement are limited to: (a) a nonforfeitable,
nontransferable annuity contract purchased by the plan's trustee, (b) retirement benefits payable from the employee's
account to which no contributions by the City or the participant can be added after retirement, or a single lump -sum
payment equal to the accumulated balance in the employee's account as of his retirement date.
NOTE 10 —RISK MANAGEMENT
The City uses the Risk Management Internal Service Fund to account for its risk financing activities. The City
maintains insurance against most normal hazards except for unemployment insurance where it has elected to
become fully self -insured. Related premiums received by the Risk Management Fund are used to reimburse the
State Employment Security Department for unemployment benefits paid to eligible individuals, and to establish
reserves for the payment of estimated future unemployment claims liability.
Through its Risk Management Fund, the City is also recovering insurance premium costs for general liability
coverage and building reserves for a future general liability self-insurance program. The City's insurance coverage
in 2004 remained relatively similar to the coverage for 2003. There were no settlements in excess of insurance for
commercially insured activities for 1996 through 2004.
During 2004 the City purchased commercial insurance policies from commercial insurers. The following is a
summary of coverage in force in 2004.
Federal Way / 51
NAME OF COMPANY
DETAILS OF COVERAGE
LIABILITY LIMITS
St. Paul Fire and Marine
Pubic Entity Management Liability
Insurance Company
Protection
$10,000,000 Each Claim & Aggregate Annually. Deductible $5,000
St. Paul Fire and Marine
Public Official Bond Management
Included in Crime/Fidelity Coverage, $500,000 Employee Dishonesty,
Insurance Company
Service Director
$100,000 Forgery/Alteration, Deductible $5,000
St. Paul Fire and Marine
Public Official Bond
Included in Crime/Fidelity Coverage, $500,000 Employee Dishonesty,
Insurance Company
City Manager
$100,000 Forgery/Alteration. Deductible $5,000
$10,000,000 Occurrence, $20,000,000 Aggregate, $1,000,000
General Liability, Auto Liability,
Underinsured Motorists Coverage, $1,000,000 Garagekeepers Legal
St. Paul Fire and Marine
Underinsured Motorists Liability and
Liability. All Limits are Per Occurrence/Aggregate Annually.
Insurance Company
Law Enforcement Liability Coverage .
Deductible $5,000
Statement of Values Limit $24,514,943, Business Income / Extra
Expense $1,000,000, Valuable Papers / Accounts Receivable
St. Paul Fire and Marine
$1,000,000, Rental Income $1,000,000, Electronic Data Processing
Insurance Company
Property Coverage
$1,000,000, Fine Arts $1,000,000.
Included in General Liability, Auto Liability and Law Enforcement
Liability Above. Auto Physical Damage -Deductible $1,000 Trucks /
St. Paul Fire and Marine
Auto Liability and Physical Damage
Fire Trucks / Ambulances, $500 Pickups / Vans, $250 Private
Insurance Company
Coverage
Passenger
Faithful Performance /
St. Paul Fire and Marine
Fidelity/Employee Dishonesty and
Included in Crime/Fidelity Coverage, $500,000 Employee Dishonesty,
Insurance Company
ERISA Coverage
$100,000 Forgery/Alteration. Deductible $5,000
St. Paul Fire and Marine
Insurance Company
Inland Marine
Limit of $108,000. Deductible $5,000
St. Paul Mercury Ins. Co.
Excess Liability Coverage
Included In General Liability Premium
$10,000,000 Per Accident, $50,000 Perishable Goods, $1,000,000
Hazardous Substances, $100,000 CFC Refrigerants, Deductible
St. Paul Fire and Marine
$2,500 Each Accident, Extended Business Income 30 Days, Newly
Insurance Company
Boiler & Machinery Coverage
Acquired Locations 365 Days, Service hiterrup
St. Paul Fire and Marine
Employer/Stop Gap Liability
Included in General, Auto and Law Enforcement Liability Limits
Insurance Company
Coverage
Referenced Above
St. Paul Fire and Marine
Included in Crime/Fidelity Coverage, $500,000 Employee Dishonesty,
Insurance Company
Public Officials Bond - City Clerk
$100,000 Forgery/Alteration. Deductible $5,000
St. Paul Fire and Marine -
Included in Crime/FidelityCoverage, $500,000. Employee
Insurance Company
Public Officials Bond - Chief of Police
Dishonesty, $100,000 Forgery/Alteration. Deductible $5,000
St. Paul Fire and Marine
Included in General, Auto and Law Enforcement Liability Limits
Insurance Company
Law Enforcement Liability Coverage
Referenced Above
St. Paul Fire and Marine
Included in General, Auto and Law Enforcement Liability Limits
Insurance Company
Above Ground Pollution Coverage
Referenced Above
The City's industrial insurance is provided by Washington State and is administered by the Department of Labor and
Industries. Coverage is purchased by means of standard rates per working hour and is computed by the total
number of hours worked by employees multiplied by the basic premium rate assigned to the business risk
classification. The following are benefits provided by industrial insurance: medical services, damaged clothing,
travel expenses, time -loss payments, vocational rehabilitation, partial disability awards, pension awards and
survivor benefits.
The City is self -insured for unemployment compensation. At December 31, 2004 the City had $603,140 in.reserve.
Unemployment Reserve, Jan. 1st
Unemployment compensation benefits
Claim payments during the year
Unemployment Reserve, Dec. 31st
2000 2001 2002 2003 2004
$ 240,688 $ 325,079 $ 454,823 $ 567,171 $ 496,306
146,035 154,354 166,983- 69,871 182,422
(61,644) (24,610) (54,635) (140,736) (75,588)
325,079 $ 454,823 $ 567,171 $ 496,306 $ 603,140
City of Federal Way / 52
NOTE 11- LONG-TERM DEBT
The various categories of long-term debt reflected on the City's fmancial 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 fmanced
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 2004 the City had no voter -approved
bonds outstanding. All principal and interest payments. on general obligation debts are recorded as expenditures by
the City's Debt Service Fund.
Refunded Debt
At the beginning of the year, the balance of the 1993 limited general obligation bond for Saghalie Park was
$1,000,000. On December 1, 2004 the bond was retired early using real estate excise tax collections and
temporarily underfunding reserves.
The following schedules detail the long-term debt activity and balances of the City.
OUTSTANDING GENERAL OBLIGATION DEBT - BY TYPE
December 31, 2004
Amount
Beginning
Ending
-
Bond Rating.
Issue
Maturity
Interest
Originally
Outstanding Amount
Amount
Outstanding
Description
at Issuance
Date
Date
Rate
Issued
Debt Issued
Redeemed
Debt
Governmental Activities:
-
General Obligation Bonds:
1993 Limited
Al
14-Jun-93
1-Dec-08
2.70-5.70
$ 2,390,000
$ 1,000,000 $
$ 1,000,000 $
1993 Refunding
Al
13-May-93
I-Dec-21
2.70 - 5.85
12,105,000
-
-
1995 Limited
Al
28-Dec-95
I-Dec-05
3.90 - 4.75
5,000,000
1,280,000
625,000
655,000
1996 Limited
Al
29-Feb-96
I-Dec-05
3.50-4.50
2,500,000
635,000
310,000
325,000
1997Limited
AAA -insured
22-Apr-97
1-Dec-12
5.00-5.30
16,150,000
8,465,000
1,520,000
6,945,000
2000 Limited
Al
12-Sep-00
1-Dec-15
5.31
2,551,600
2,193,000
139,000
2,054,000
2003 Loan Assumption
Nonrated
1-Jul-03
1-Nov-07
7.58
6,168,599
6,137,026
88,134
6,048,892
2003 Limited
AAA -insured
15-Nov-03
1-Dec-33
4.676
15,000,000
15,000,000
225,000
14,775,000
Subtotal GO Bonds
61,865,199
34,710,026
3,907,134
30,802,892
Governmental Activities:
Certificates of Participation:
1999Issue
AAA
1-Aug-99
1-Jun-04
5.16
184,000
20,490
20,490
Subtotal COP's
184,000
20,490
20,490
Business -Type Activities:
-
Public Works Trust Fund Loan:
PWTL- Kitts Comer Drain Imp
31-Aug-94
1-Jul-14
1.00
233,316
131,055
12,936
118,119
PWTL - Kitts Comer Drain Imp
24-Jul-96
1-Jul-14
1.00
1,166,580
714,950
64,679
650,271
PWTL- Kitts Corner Drain Imp
4-Sep-97
1-Jul-14
1.00
155,544
102,629
8,624
94,005
PWTL- SeaTac Mall Drain Imp
31-May-00
1-Jul-19
1.00
412,500
256,320
16,020
240,300
PWTL - SeaTac Mall Drain Imp
14-Au -00
1-Jul-19
1.00
2,062,500
1,281,594
80,100
1,201,494
Subtotal PWTFL
4,030,440
2,486,548
182,359
2,304,189
Grand Total All Long -Tema Debt
$ 66,079,639
$ 37,217,064 $
$ 4,109,983 $
33,107,081
City of Federal Way / 53
OUTSTANDING GENERAL OBLIGATION DEBT - BY FUND
December 31, 2004
Amount
Beginning
Ending
Originally
Outstanding Amount
Amount
Oustanding
Due within
Description
Issued
Debt Issued
Redeemed *
Debt
one year
Governmental Long -Tenn Debt:
1999 COP Issue
184,000
20,490
20,490
$
1993 Limited
2,390,000
1,000,000
1,000,000
1993 Refunding
12,105,000
-
-
1995 Limited
5,000,000
1,280,000
625,000
655,000
655,000
1996 Limited
2,500,000
635,000
310,000
325,000
325,000
1997Limited
16,150,000
8,465,000
1,520,000
6,945,000
1,600,000
2000Limited
2,551,600
2,193,000
139,000
2,054,000
146,000
2003 Loan Assumption
6,168,599
6,137,026
88,134
6,048,892
83,088
2003 Limited
15,000,000
15,000,000
225,000
14,775,000
285,000
Total Governmental Long -Tenn Debt
62,049,199
34,730,516
3,927,624
30,802,892
3,094,088
Business -Type Long -Term Debt:
Enterprise Funds:
Public Works Trust Fund Loan
4,030,440
2,486,548
182,359
2,304,189
182,359
Grand Total All Long -Term Debt
$ 66,079,639 $
37,217,064 $
$ 4,109,983 $
33,107,081
$ 3,276,447
*Principal payments in the Debt Service Fund does not include payment on the 2000 limited general obligation bond. Valley Com paid the
debt service using excess reserves, therefore participating cities were not required to pay. In addition, the City recognized credits of $20,580
based an interlocal agreement with Federal Way Fire District to participate with the City in capital cost obligations with Valley
Communications joint venture.
SCHEDULE OF CHANGES IN LONG-TERM DEBT
Period Ended December 31, 2004
Beginning
Ending
Outstanding Debt
Additions
Reductions
Oustanding Debt
Governmental Activities:
General Obligation Bonds
$ 34,710,026
-$ - $
(3,907,134)
$ 30,802,892
Certificates of Participation
20,490
-
(20,490)
-
Employee Leave Benefits
977,872
74,714
-
1,052,586
Total Governmental Activities
35,708,388
74,714
3,927,624
31,855,478
Business -Type Activities:
Enterprise Funds
Public Works Trust Fund Loan
2,486,548
-
(182,359)
2,304,189
Employee Leave Benefits
36,601
36,394
-
72,995
Total Business -Type Activities
2,523,149
36,394
182,359
2,377,184
Total All Funds
$ 38,231,537
$ 111,108 $
(4,109,983)
$ 34.232.662
SCHEDULE OF DEBT SERVICE REQUIREMENTS TO MATURITY
As of December 31, 2004
Governmental Activities
Business -Type Activities
G. O. Bonds
PW trust Fund
Grand Total
Year
Principal
Interest
Principal
Interest
Principal
Interest
P&I
2005
3,094,088
1,491,839_
182,359
23,042
3,276,447
1,514,881
4,791,328
2006
2,219,676
1,418,843
182,359
21,218
2,402,035
1,440,062
3,842,096
2007
8,094,128
1,232,342
182,3591,
19,395
8,276,487
1,251,736
9,528,224
2008
807,000
787,112
182,359
17,571
989,359
804,683
1,794,042
2009 - 2013
4,179,000
3,374,173
911,796
60,502
5,090,796
3,434,674
8,525,470
2014 - 2018
2,474,000
2,626,230
566,838
20,086
3,040,838
2,646,316
5,687,154
2019-2013
2,530,000
2,113,629
96,120
961
2,626,120
2,114,590
4,740,710
2024-2028
3,240,000
1,466,033
-
-
3,240,000
1,466,033
4,706,033
2029-2033
4,165,000
613,700
4,165,000
613,700
4,771:700
Total
$ 30,802,892
$ 15,123,900
$ 2,304,190
$ 162,775
$ 33,107,081
$ 15,286,675
$ 48,39375;
City of Federal Way / 54
Computation of Legal Debt Margin
Under Washington State law (RCW 39.36.020), a City may incur general obligation debt for general city purposes
in an amount not to exceed 2'/Z percent of the value of all taxable property within the City. State law requires all
property to be assessed at 100 percent of its true and fair value. Unlimited tax general obligation debt requires an
approving vote of the people, and any election to validate such general obligation debt must have a voter turnout of
at least 40 percent of those who voted in the last State general election and of those voting, 60 percent must be in
the affirmative. The City Council may, by ordinance, authorize the issuance of limited tax general obligation debt
in an amount up to 1.5% of the valuation within the City without a vote of the people. No combination of limited or
unlimited tax debt may exceed 7'/z 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, 2004 are
General Government (no vote required) $ 67,504,069
General Government (3/5 majority vote required) 62,923,436
Parks and Open space (3/5 majority vote required) 157,308,591
Utilities (3/5 majority vote required) 157,308,591
Total Capcity 445,044,686
Compensated Absences
The City's liability for accrued vacation and compensatory time balances is recorded in the schedule below.
Accrued compensated absences for proprietary fund employees are recorded as liabilities in those funds expected to
incur the related future expense.
Governmental Activities $ 1,052,586
Business -Type Activities 72,995
$ 1,125,581
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, 2004 is $-0- for its tax-exempt general
obligation bond issues subject to the Tax Reform Act issued through that date.
Leases
The City of Federal Way leases office buildings and ,land which are accounted for as operating leases. Operating
leases do not give rise to property rights or lease obligations, and therefore the results of the lease agreements are
not reflected in the City's capital assets. Total Cost for the leases was $252,785 for the year ended December 31,
2004. The future lease payments have significantly decreased because the City is no longer paying rental/lease fees
for The Police and Fire departments. The City purchased and renovated the Paragon Building which is now the
New City Hall. The future minimum lease payments for these leases are as follows:
2005 $6,000
2006 6,000
12 000
City of Federal Way / 55
NOTE 12 — INTERFUND TRANSACTIONS
Interfund transfers for the year ended December 31, 2004 were as follows:
Interfund Transfers
In
Out
Governmental Funds:
General Fund
$ 530,468
$ 5,244,666
Street Fund
2,098,378
24,409
Utility Tax Fund
-
7,215,336
Debt Service
4,247,926
1,625,000
City Facilities
3,448,370
449,068
Transportation
3,047,625
2,770
Nonmajor Governmental Funds
2,242,872
1,422,332
Proprietary Funds:
Surface Water Management - 638
Dumas Bay Centre 225,310 1,866
Internal Service Funds 158,243 13,107
15,999,192 $ 15,999,192
Note: Amounts shown as transfers in the internal service funds represent capital
contributions and are shown as such in the operating statements.
The following describes the significant amounts transferred during 2004:
General Fund Transfers Out:
• $663,370 to new City Hall Capital Project
• $2,075,000 to Transportation Capital Projects
• $160,000 to City Facilities Capital Project Fund - Community Center
• $1,912,755 to Street Fund to subsidize street maintenance
• $118,106 to Internal Service Funds for capital purchases
• $200,000 to City Facilities Capital Project Fund - Evidence Building
Utility Tax Fund:
• $4,247,925 to Debt Service Fund for prefanding 1995, 1996 & 1997 GO bond debt service payments
• $231,843 to General Fund for Celebration Park maintenance & operations
• $1,193,804 to Arterial Street Fund overlay program
• $182,852 to Street Fund for maintenance on bond projects
• $100,000 to Dumas Bay Centre Fund for Knutzen Family Theatre subsidy
• $283,910 to General Fund to subsidize Kenneth Jones Pool Operations
+ $975,000 to Community Center Capital Project
Debt Service Fund:
• $535,000 of excess Real Estate Excise Tax to fund various Parks Capital Projects, including Thompson
and Armstrong neighborhood parks, historical cabins, parks major maintenance, downtown park, and
bike facility
• $100,000 of excess Real Estate Excise Tax to Community Center Capital Project
• $620,000 to various Transportation Capital Projects
• $120,000 to Dumas Bay Centre/Knutzen Family Theatre Rehabilitation CIP
• $250,000 to new City Hall Capital Project
City Facilities CIP Fund:
• $499,068 to the 2% for the Arts Fund for various arts programs
Nonmajor Governmental Funds:
0 $1,00,000 from Arterial Street Fund to New City Hall Capital Project for road improvements
City of Federal Way / 56
• $155,322 from Capital Projects — Traffic to Capital Projects Streets
• $65,000 from Paths and Trails to Armstrong Capital Project —Parks
• $59,000 from Arterial Street fund to Transportation Capital Project Fund
• $138,303 from CDBG Fund to Transportation Capital Project Fund
Interfund loans for the year ended December 31, 2004 were as follows:
Interfund Loans Receivable Payable
General Fund $ 10,000 $ -
Special Revenue Funds:
Community Development Block Grant - 10,000
Total Interfund Loans $ 10,000 $ 10,000
NOTE 13 — CONTINGENCIES AND LITIGATION
As of December 31, 2004 there were a small number of claims for damages and lawsuits pending against the City.
In the opinion of the City Attorney, however, neither the potential liability for any single claim or lawsuit; nor the
aggregate potential liability arising from all actions currently pending would materially affect the financial condition
of the City. Due to both their uncertainty and immateriality, no liabilities or estimated liabilities have been included
in the City's financial statements.
NOTE 14 — JOINT VENTURE
The "Valley Communications Center" was established August 20, 1976, when an Interlocal Agreement was entered
into by the four original participating municipal corporations, including the cities of Renton, Kent, Auburn, and
Tukwila, and Federal Way which was formally admitted during 2000. The agreement is sanctioned by the
provisions and terms of the Interlocal Cooperation Act pursuant to RCW .39.34. The initial duration of the
agreement was five years, and thereafter is automatically extended for consecutive five year -periods.
In addition to serving the emergency communications needs of the five member cities, Valley Corn serves several
other subscribing agencies, which include King County Fire Districts #2, #20, #26, #40, #43, #44, #47; City of
Pacific Police and Fire Departments, City of Algona Police Department, City of Des Moines Police Department,
City of Black Diamond Police and Fire Department; SeaTac Fire Department; North Highline Fire Department;
King County EMS Units; and Vashon Island Fire Department. Separate agreements between Valley Corn and the
subscribing agencies have been executed, which set forth conditions of services and rates charged.
The allocation of prorated financial participation among the five member cities is the percentage of dispatched calls
attributed to each jurisdiction compared to the total estimated dispatched calls, for the current twelve month period
ending December 31. The percentages are applied to the current approved budget, less revenue from all other
sources. Distribution of the current year net income is based on the same percentages. The 2004 cost distributions
for the five member cities are as follows:
Dispatchable
Percent
City
Calls
of Total
Kent
94,658
27.82%
Renton
63,950
18.80%
Auburn
68,074
20.01 %
Tukwila
37,015
10.88%
Federal Way
76,524
22.49%
Total
340,221
100.00%
Valley Corn is governed by an Administration Board, composed of the Mayors or designated representatives from
the five participating cities of Federal Way, Renton, Kent, Auburn, and Tukwila. The, Administration Board is
authorized to establish bylaws that govern procedures of the Board and Valley Com's general operations for the
City of Federal Way / 57
following functions: 1) Budget review and recommendations to the legislative bodies of the member cities, and
budget adoption after each legislative body has approved the required financial participation for the ensuing year; 2)
Approve appointment and/or discharge of the Director; 3) Approve personnel policy and make final decisions on all
major policy changes; and 4) Review and approves all contracts.
In addition, an Operations Board provides administration, and consists of a member from each participating city's
police and fire departments, including the directors of such departments or their designees. Also on the Operations
Board is an appointed representative of the Police and Fire contract agencies. The Operations Board performs the
following functions: 1) Oversees the general operation of Valley Com, and advises and makes recommendations to
the Administration Board; 2) Make recommendations on Director selection; 3) Presents proposed policies and
budgets to the Administration Board; and 4) Reviews disbursements of funds by the Director.
The Director presents a proposed budget to the Operating Board on or before August 15 of each year. Said budget
is then presented to the Administrative Board by September 1 of each year. The Administration Board can make
changes to the proposed Valley Corn budget as it finds necessary, but final approval falls to the legislative body of
each member city, in accordance with the provisions of the interlocal agreement.
The following condensed financial information is from Valley Communications Center comprehensive annual
financial report for the fiscal year ended December 31, 2003. Audited 2003 financial statements are available from
Valley Communications Center, 27519 108t' Avenue SE, Kent, WA 98030, or telephone (253) 372-1300.
Valley Communications Center
Balance Sheet
As of December 31, 2004
Assets
Current Assets
11,438,376
Plant, Property, and Equipment
12,614,982
Total Assets
24,053,358
Liabilities & Fund Equity
Current Liabilities
393,810
Total Liabilities
393,810
Retained Earnings
-
Reserved for:
Equipment Replacement
2,886,852
Contingency
747,154
Building Project
1,194,924
800 MHZ
5,596,874
Unreserved
13,233,744
Total Fund Equity
23,659,548
Total Liabilities & Fund Equity S
24,053,358
Valley Communications Center
Statement of Revenue, Expenses, and Changes in Fund Equity
For the Year Ending December 31, 2004
Operating Revenues
Charges for Intergovernmental Services $
8,738,391
Total Operating Revenue
8,738,391
Operating Expenses
Salaries & Benefits
5,784,209
Other Operation & Maintenance
1,511,529
Payroll Taxes
178,812
Depreciation
1,998,100
Total Operating Expenses
9,462,650
Income (Loss) from Operations
(724,259)
Non -Operating Revenues (Expenses)
Interest Revenue
165,420
Leasehold Revenue
23,447
Construction Funds
53,055
Gain (Loss) from Sale of Fixed Assets
(89,442)
Other Non -Operating Revenue
(1,053,959)
Total Non -Operating Revenue
(901,479)
Capital Contributions
Return of original investment to
principals on old bldg
(455,013)
Payment of debt service on behalf of principals
(1,250,345)
Net Income (loss)
(3,331,096)
Retained Earnings at Beginning of Year
26,990,644
Retained Earnings at End of Year
23,659,548
Total Fund Equity at End of Year $
23,659,548
City of Federal Way / 58
The share of equity belonging to the five participating cities is shown below. Liabilities are the responsibility of
the five participating cities in direct proportion to their equity position.
Kent Renton Auburn Tukwila Federal Way Total
Equity @ January 1,2004 $ 6,181,790 $ 4,583,805 $ 4,312,119 $ 2,990,245 $ 2,532,720 $ 20,600,679
Current Year Decrease (512,594) (464,331) (470,813) (421,998) (509,429) (2,379,165)
Eauitv Q. December 31. 2004 $ 5.669.196 $ 4.119.474 R 3.841.306 R 2.568247 R 2.021291 R 19771 514
Percent of Equity 31.11% 22.61% 21.08% 14.09% 11.10% 100.00%
Percent of 2004 Distribution 27.82% 18.80% 20.01 % 10.88% 22.49% 100.00%
In May 1993 Valley Com entered into an agreement with King County to provide joint project management for
the acquisition and installation of 800-MHz emergency radio communications system approved by the voters of
King County in conjunction with a $57 million levy. In August 1993 Valley Com also entered into an Interlocal
Cooperation Agreement with the subregions of King County, Seattle, and Eastside Public Safety
Communications, which governs the development and installation of the new 800-MHz emergency radio system.
Valley Com now provides emergency communication dispatch services to a population of approximately
570,000.
Valley Com operates as an enterprise fund and is totally self supporting through the implementation of user fees
and the primary source of revenue is.provided by charges for calls for service. The 800-MHz emergency radio
communications system operated by the agreement with King County is operated as a separate enterprise fund,
and the Member Cities have no equity interest in the contributed capital from this system.
NOTE 15 — SUBSEQUENT EVENTS
On November 2, 2004 voters approved the North Lake, Redondo East and Parkway annexations. The cities
officially joined the City January 1, 2005 adding an additional 2,730 residents to the City's population.
City of Federal Way / 59
Combining Statement — Nonmajor Governmental Funds's Description
For the Year Ended December 31, 2004
Special Revenue Funds
Special Revenue funds are used to account for the proceeds of revenue sources (other than special assessments,
expendable trusts or major capital projects) that are legally restricted to expenditures for specified purposes.
The Arterial Street Fund ,accounts for the receipt and expenditure of the State -levied motor vehicle fuel tax
distributed to the City in accordance with State R.C.W. 82.36.020. These revenues are to be used for the
construction, improvement, chip sealing, seal -coating, and repair of arterial highways and city streets, or for the
payment of related municipal indebtedness.
The Solid Waste/Recycling Fund was established to account for special refuse collection fees used to manage
the Solid Waste and Recycling program.
The Special Contracts/Studies Fund accounts for receipts and disbursements related to special contracts and
special projects where completion will extend beyond the calendar year.
The Hotel/Motel Lodging Tax Fund was established to account for all lodging tax receipts and disbursements
related to tourism promotion and acquisition and/or operation of tourism -related facilities.
The 2% Percent for Arts Fund was established for the purpose of providing funding for arts projects. The funds
are to be used to create a variety of cultural opportunities for citizens and to enhance the cultural environment in
the community by encouraging and promoting the creation and placement of art in public places and the
incorporation of art into project design.
The 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 '/z% motor vehicle fuel tax receipts which are restricted in use to the construction and
maintenance of paths and trails within City right-of-way.
Capital Proiects Funds
The Capital Project Funds account for the acquisition or construction of major capital facilities with the
exception of those facilities financed by proprietary and trust funds. The major sources of revenue for this fund
are general obligation bond proceeds, grants from other agencies, local taxes and contributions from other funds.
The Parks CIP Fund was established to account for receipts and disbursements related to acquisition, design,
construction and any other related parks capital project expenditures.
The Traffic CIP Fund was established to account for receipts and disbursements related to acquisition, design,
construction and any other related traffic project expenditures.
City of Federal Way / 60
CITY Of 'A
Federal Way
City of Federal Way / 61
ASSETS
Equity in pooled cash and investments
Receivables (net):
Accounts and contracts
Interest
Due from other governments
TOTAL ASSETS
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
Accounts/payroll payable
Retainage payable
Interfund loans payable
Deferred revenue
TOTAL LIABILITIES
Fund balance:
Reserved:
Hotel/motel lodging tax
Paths & Trails
Unreserved:
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2004
Special Capital
Revenue Projects
Comparative Totals
2004 2003
$ 664,067 $ 1,215,286 $ 1,879,353 $ 1,633,791
- - - 100,000
312 892 1,204 1,548
238,410 60,543 298,953 567,006
902,789 1,276,721 2,179,510 2,302,345
147,446
84,173 231,619
150,117
6,099
- 6,099
26,944
-
464 464
33,711
10,000
- 10,000
10,000
13,769
- 13,769
27,273
177,314
84,637 261,951
248,045
175,196
- 175,196
216,999
5,629
- 5,629
61,131
Capital projects funds - 1,192,084 1,192,084 675,755
Special revenue funds 544,650 - 544,650 1,100,415
TOTAL FUND BALANCES 725,475 1,192,084 1,917,559 2,054,300
TOTAL LIABILITIES AND FUND BALANCE $ 902,789 $ 1,276,721 $ 2,179,510 $ 2,302,345
City of Federal Way / 62
COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
DECEMBER 31, 2004
Special Community Paths and
Arterial Solid Waste Contracts/ Hotel/Motel 2% for the Development Trails . Comparative Totals
Street Recycling Studies Lodging Tax Arts Block Grant Reserve 2004 2003
ASSETS
Equity in pooled cash & investments
$ 20,870
$ 79,849
$ 35,132
$ 165,421
$ 348,143
$ 9,781
$ 4,871
$ 664,067
$ 904,451
Receivables (net):
-
-
Interest
44
72
21
129
-
-
46
312
848
Due from other governments
45,118
53,175
9,669
129,736
712
238,410
207,006
TOTAL ASSETS
66,032
133,096
35,153
175,219
348,143
139,517
5,629
902,789
1,112,305
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
8,086
23
85,992
53,345
147,446
94,203
Accounts/payroll payable
6,099
-
-
-
6,099
26,944
Interfund loans payable
-
10,000
-
10,000
10,000
Deferred revenue
13,769
13,769
27,273
TOTAL LIABILITIES
27,954
23
85,992
63,345
177,314
158,420
Fund balance:
Reserved:
Hotel/motel lodging tax
-
175,196
175,196
216,999
Paths & Trails
-
-
-
5,629
5,629
61,131
Unreserved:
Special revenue funds
66,032
105,142
35,153
262,151
76,172
544,650
675,755
TOTAL FUND BALANCES
66,032
105,142
35,153
175,196
262,151
76,172
5,629
725,475
953,885
TOTAL LIABILITIES & FUND
BALANCE
$ 66,032
$ 133,096
$ 35,153
$ 175,219
$ 348,143
$ 139,517
$ 5,629
$ 902,789
$ 1,112,305
City of Federal Way / 63
COMBINING BALANCE SHEET
NONMAJOR CAPITAL PROJECTS FUNDS
DECEMBER 31, 2004
ASSETS
Equity in pooled cash and investments
Receivables (net):
Accounts and contracts
Interest
Due from other governments
TOTAL ASSETS
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
Retainage payable
TOTAL LIABILITIES
Parks Traffic
Comparative Totals
2004 2003
$ 1,215,286 $ $ 1,215,286 $ 729,340
- - 100,000
892 - 892 700
60,543 60,543 360,000
1,276,721 1,276,721 1,190,040
84,173 - 84,173 55,914
464 - 464 33,711
84,637 84,637 89,625
Fund balance:
Reserved:
Capital projects 1,192,084 1,192,084 1,100,415
TOTAL FUND BALANCES 1,192,084 - 1,192,084 1,100,415
TOTAL LIABILITIES AND FUND BALANCE $ 1,276,721 $ $ 1,276,721 $ 1,190,040
City of Federal Way / 64
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2004
Special
Capital
Comparative Totals
Revenue
Projects
2004
2003
REVENUES
Taxes
$ 142,030
$ - $
142,030 $
138,975
Intergovernmental
1,161,924
60,543
1,222,467
1,957,930
Service charges and fees
255,039
-
255,039
288,828
Development fees
-
93,446
93,446
201,225
Interest
8,021
17,792
25,813
40,940
Other
23
-
23
55
TOTAL REVENUES
1,567,037
171,781
1,738,818
2,627,953
EXPENDITURES
Current:
General government
313,371
-
313,371
158,042
Physical environment
289,921
-
289,921
320,679
Transportation
1,184,765
-
1,184,765
1,982,519
Economic environment
186,625
-
186,625
107,538
Culture and recreation
196,627
-
196,627
27,689
Capital outlay
-
524,790
524,790
1,983,559
TOTAL EXPENDITURES
2,171,309
524,790
2,696,099
4,580,026
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
(604,272)
(353,009)
(957,281)
(1,952,073)
OTHER FINANCING SOURCES (USES)
Transfers in
1,642,872
600,000
2,242,872
2,056,289
Transfers out
(1,267,010)
(155,322)
(1,422,332)
(116,306)
TOTAL OTHER FINANCING SOURCES (USES 375,862
444,678
820,540
1,939,983
NET CHANGE IN FUND BALANCES
(228,410)
91,669
(136,741)
(12,090)
FUND BALANCES - BEGINNING
953,885
1,100,415
2,054,300
2,066,390
FUND BALANCES -ENDING
$ 725,475
$ 1,192,084 $
1,917,559 $
2,054,300
City of Federal 'Way / 65
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
For the Year Ended December 31, 2004
Solid
Special
Hotel/Motel
Community
Paths and
Arterial
Waste/
Contracts/
Lodging
2 % for the
Development
Trails
Comparative Totals
Street
Recycling
Studies
Tax
Arts
Block Grant
Reserve
2004
2003
REVENUES
Taxes
$ -
$ -
$
$ 142,030
$
$ -
$ -
$ 142,030
$ 138,975
Intergovernmental
545,039
85,625
-
522,663
8,597
1,161,924
1,597,930
Service charges and fees
84,750
165,289
5,000
-
-
-
255,039
288,828
Miscellaneous:
Interest
2,454
1,490
407
2,769
901
8,021
23,123
Other
23
23
55
TOTALREVENUES
632,243
252,404
5,407
144,822
522,663
9,498
1,567,037
2,048211
EXPENDITURES
Current:
General government
-
(22)
313,393
313,371
158,042
Physical environment
-
289,921
-
-
289,921
320,679
Transportation
1,184,765
-
-
1,184,765
1,982,519
Economic environment
-
186,625
186,625
107,538
Culture and recreation
-
196,627
196,627
27,689
Capital outlay
-
723,807
TOTAL EXPENDITURES
1,184,765
289,921
(22)
186,625
196,627
313,393
2,171,309
3,320,274
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (552,522)
. (37,517)
5,429 (41,803)
196,627
209,270
9,498
(604,272)
(1,271,363)
OTHER FINANCING SOURCES (USES)
Transfers in
1,193,804
-
449,068
1,642,872
1,108,807
Transfers out (1,059,000)
(116)
(142,894)
65,000
(1,267,010)
(116,306)
TOTAL OTHER FINANCING SOURCES
(USES)
134,804
(116)
449,068
(142,994)
65,000
375,862
992,501
NET CHANGE IN FUND BALANCE!
(417,718)
(37,633)
5,429
(41,803)
252,441
66,376
(55,502)
(228,410)
(278,862)
FUND BALANCES - BEGINNING
483,750
142,775
29,724
216,999
9,710
9,796
61,131
953,885
1,232,747
FUND BALANCES -ENDING
$ 66,032
$ 105,142
$ 35,153
$ 175,196
$262,151
$ 76,172
$ 5,629
$ 725,475
$ 953,885
City of Federal Way % 66
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR CAPITAL PROJECTS FUNDS
For the Year Ended December 31, 2004
REVENUES
Intergovernmental
Development Contribution/Donation
Miscellaneous:
Interest
TOTAL REVENUES
EXPENDITURES
Capital Outlay
TOTAL EXPENDITURES
Parks Traffic
$ 60,543 $
93,446
17,792
171,781
Comparative Totals
2004 2003
$ 60,543 $ 360,000
93,446 201,225
17,792 17,817
171,781 579,042
524,555 235 524,790 1,259,752
524,555 235 524,790 1,259,752
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
(352,774)
(235)
(353,009)
(680,710)
OTHER FINANCING SOURCES (USES)
Transfers in
600,000
-
600,000
947,482
Transfers out
-
(155,322)
(155,322)
-
TOTAL OTHER FINANCING SOURCES (USES 600,000
(155,322)
444,678
947,482
NET CHANGE IN FUND BALANCES
247,226
(155,557)
91,669
266,772
FUND BALANCES -BEGINNING
944,858
155,557
1,100,415
833,643
FUND BALANCES - ENDING
$ 1,192,084
$ -
$ 1,192,084 $
1,100,415
'Federal Way / 67
Combining Statement — Internal Service Funds's Description
For the Year Ended December 31, 2004
Internal Service Funds
Internal Service Funds are used to account for the financing of goods or services provided by one department or
agency to other departments or agencies of a government, or to other governments, on a cost -reimbursement
basis.
The Risk Management Fund accounts for the City's risk financing activities established to minimize adverse
effects of losses associated with property and casualty, medical and dental, unemployment and worker's
compensation claims. Both risk control (to minimize the losses that strike and organization) and risk financing
(to obtain finances to provide for or restore the economic damages of those losses) are involved. The City is
currently self -insuring only State Unemployment Compensation. Related premiums received by the fund are
used to reimburse the unemployment benefits paid to eligible individuals and to establish reserves for the
payment of estimated future unemployment claims liability. The City is also currently recovering costs and
building reserves for general liability including property, casualty, errors and omissions and fidelity coverage.
The Information Systems Fund was established to account for all costs associated with data processing,
telecommunications and the Geographical Information System (GIS). This fund will own and depreciate all non-
proprietary fund assets related to these functions, and will charge equipment/software users for both
maintenance/operating costs and equipment replacement charges based on depreciation schedules.
The Support Services Fund will account for duplication, graphics and other general support services provided to
departments and funds throughout the City.
The Fleet and Equipment Fund accounts for the cost of maintaining City vehicles and other motorized
equipment. Rates charged to user departments are based on the full cost of maintaining equipment items,
including the recovery of related depreciation expense.
The Buildings and Furnishings Fund accounts for all costs associated with the operation and maintenance of
specified City buildings. City building facilities and furnishings will be owned by this Fund, and both
maintenance/operating costs and depreciation recovery will be charged City departments and funds.
City of Federal Way / 68
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF NET ASSETS
December 31, 2004
Risk
Information
Support
Fleet and
Buildings and
Comparative Totals
Management
Systems
Services
Equipment
Furnishings
2004
2003
ASSETS
Current assets:
Equity in pooled cash & investments
$ 4,172,494
$ 2,175,574
$ 186,058
$ 2,468,468
$ 144,136
$ 9,146,730
$8,545,042
Prepaid postage
-
-
5,000
-
-
5,000
5,000
Receivables (net):
25,000
-
-
-
-
25,000
-
Interest
1,483
1,429
130
1,617
85
4,744
6,652
TOTAL CURRENT ASSETS
4,198,977
2,177,003
191,188
2,470,085
144,221
9,181,474
8,556,694
Noncurrent assets
Capital assets:
Machinery/furniture/equipment
4,702,796
186,898
4,478,313
3,430,014
12,798,021
12,504,686
Less accumulated depreciation
(3,279,312)
(100,989)
(2,609,159)
(2,319,622)
(8,309,082)
(7,704,378)
TOTAL NONCURRENT ASSETS
1,423,484
85,909
1,869,154
1,110,392
4,488,939
4,800,308
TOTAL ASSETS
4,198,977 3,600,487
277,097
4,339,239
1,254,613
13,670,413
13,357,002
LIABILITIES
Current liabilities:
Vouchers payable
48,232
42,027
12,210
16,950
34,456
153,875
129,149
Deposits Payable
-
-
-
-
500
500
Compensated absences payable
77,380
-
3,186
-
80,566
70,022
TOTAL CURRENT LIABILITIES
48,232
119,407
12,210
20,136
34,956
234,941
199,171
TOTAL LIABILITIES
48,232
119,407
12,210
20,136
34,956
234,941
199,171
NET ASSETS
Invested in capital assets
-
1,423,483
85,908
1,869,155
1,110,392
4,488,938
4,800,308
Unrestricted
4,150,745
2,057,597
178,979
2,449,948
109,265
8,946,534
8,357,523
TOTAL NET ASSETS
$ 4,150,745
$ 3,481,080 $
264,887
$ 4,319,103
$ 1,219,657
$ 13,435,472 $
13,157,831
City of Federal Way / 69
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES
IN FUND NET ASSETS
For the Year Ended December 31, 2004
OPERATING REVENUES:
Service charges and fees
Miscellaneous
TOTAL OPERATING REVENUES
OPERATING EXPENSES:
Personal services
Materials and supplies
Services and charges
Intergovernmental
Insurance
Claims
Depreciation
TOTAL OPERATING EXPENSES
OPERATING INCOME (LOSS)
NON -OPERATING REVENUES (EXPENSES)
Interest income
Gains/losses from disposal of fixed assets
TOTAL NON -OPERATING
REVENUES NET OF EXPENSES
INCOME (LOSS) BEFORE
CONTRIBUTIONS & TRANSFERS
Transfers out
Capital contributions
CHANGE IN NET ASSETS
TOTAL NET ASSETS, BEGINNING
Risk
Information
Support
Fleet and
Buildings and
Comparative Totals
Management
Systems
Services
Equipment
Furnishings
2004
2003
S 1,036,145
$ 1,497,753
$ 178,770
$ 1,243,568
$ 396,537 $
4,352,773 $
4,083,407
16,746
387
8,240
25,373
9,257
1,036,145
1,514,499
179,157
1,243,568
404,777
4,378,146
4,092,664
-
644,821
-
38,311
13,387
696,519
683,031
98
51,433
20,206
266,462
23,132
361,331
307,639
430,360
336,555
118,820
327,262
311,303
1,524,300
1,370,706
-
89,345
-
310
5,780
95,435
65,767
357,237
-
-
-
357,237
555,004
141,615
-
-
-
-
141,615
166,522
-
459,232
25,373
520,704
169,770
1,175,079
1,132,164
929,310
1,581,386
164,399
1,153,049
523,372
4,351,516
4,290,833
106,835
(66,887)
14,759
90,519
(118,595)
26,630
(188,169)
29,352
27,652
2,561
31,798
1,656
93,019
101,090
-
(6,269)
440
(5,829)
18,190
29,352
27,652
2,561
25,529
2,096
87,190
119,280
136,187
(39,235)
17,319
116,048
(116,499)
113,820
(68,889)
-
-
-
(13,107)
-
(13,107)
(984,000)
110,375
40,999
25,554
176,928
465,404
136,187
71,140
17,319
143,940
(90,945)
277,641
(587,485)
4,014,558
3,409,940
247,568
4,175,163
1,310,602
13,157,831
13,745,316
TOTAL NET ASSETS, ENDING $ 4,150,745 $ 3,481,080 $ 264,887 $ 4,319,103 $ 1,219,657 $ 13,435,472 $ 13,157,831
City of Federal Way / 70
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2004
Risk
Information
Support
Fleet and
Buildings and
Comparative Totals
Management
Systems
Services
Equipment
Furnishings
2004
2003
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from users
$ 1,011,145
$ 1,497,753
$ 178,770
$ 1,243,568
$ 396,537
$ 4,327,773 $
4,083,907
Cash payments to suppliers for goods and services
(798,128)
(457,640)
(144,124)
(593,800)
(319,385)
(2,313,077)
(2,238,307)
Cash payments to employees
-
(636,339)
(36,249)
(13,387)
(685,975)
(675,693)
Cash payments to claimants
(141,615)
(141,615)
(166,522)
Cash payments to other funds for goods and services
-
(80,748)
Other operating receipts
16,746
387
8,240
25,373
9,257
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES
71,402
420,520
35,033
613,519
72,005
1,212,479
931,894
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers out
(13,107)
(13,107)
(984,000)
NET CASH PROVIDED (USED) BY
NONCAPITAL FINANCING ACTIVITIES
(13,107)
(13,107)
(984,000)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition ofcapital assets
(357,998) (26,591) (480,208)
(12,629)
(877,426)
(1,065,183)
Cash contributions for capital acquisitions
119,122 26,015
13,107
158,244
252,929
Proceeds from sale of fixed assets
26,132
440
26,572
18,190
NET CASH PROVIDED (USED) FOR CAPITAL
AND RELATED FINANCING ACTIVITIES
(238,876) (26,591) (428,061)
918
(692,610)
(794,164)
CASH FLOWS FROM INVESTING ACTIVITIES
Receipts of interest 29,639 28,191 2,623 32,390 2,083 94,926 102,218
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES 29,639 28,191 2,623 32,390 2,083 94,926 102,218
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS
101,041
209,835
11,065
204,741
75,006
601,688
(744,052)
CASH & CASH EQUIVALENTS, JANUARY 1
4,071,453
1,965,739
174,993
2,263,727
69,130
8,545,042
9,289,094
CASH & CASH EQUIVALENTS, DECEMBER 31
4,172,494
2,175,574
186,058
2,468,468
144,136
9,146,730
8,545,042
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Operating income
106,835
(66,887)
14,758
90,519
(118,595)
26,630
(188,169)
Adjustments to reconcile operating income to
net cash provided (used) by operating activities:
Depreciation expense
-
459,232
25,373
520,704
169,770
I,I75,079
1,132,164
(hicrease)decrease in accounts receivable
- (25,000)
-
-
-
-
(25,000)
-
Increase(decrease) in vouchers/accounts payable
(10,433)
19,693
(5,098)
234
20,830
25,226
(19,439)
Increase(decrease) compensated absences payable
8,482
2,062
10,544
7,338
Total Adjustments
(35,433)
487,407
20,275
523,000
190,600
1,185,849
1,120,063
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES $ 71,402 $ 420,520 $ 35,033 $ 613,519 $ 72,005 $ 1,212,479 $ 931,894
Noncash investing, capital, and financing activities:
Other Contributions of capital assets - $ 21,970 $ - $ 76,638 $ 12,447 $ 111,055 $ N4,023
Federal Way / 71
Capital Assets Used in the Operation
of Governmental Funds
City of Federal Way /72
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
COMPARATIVE SCHEDULE BY SOURCE
December 31, 2004 and 2003
GOVERNMENTAL FUNDS CAPITAL ASSETS
Land
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Construction in progress
TOTAL GOVERNMENTAL FUNDS CAPITAL ASSETS
2004 2003
$ 37,105,200
1,895,076
16,549,392
184,000
711,522
34,676,530
INVESTMENTS IN GOVERNMENTAL FUNDS CAPITAL ASSETS BY SOURCE:
General Fund
Special Revenue Funds
Capital Project Funds
Donations
TOTAL GOVERNMENTAL FUNDS CAPITAL ASSETS
$ 36,982,986
1,895,076
16,549,392
184,000
711,522
19,412,007
91,121,720 75,734,983
6,909,448
2,528,770
71,963,700
9,719,802
6,909,448
2,528,770
56,576,963
9,719,802
$ 91,121,720 $ 75,734,983
This schedule presents only the capital asset balances related to governmental funds before depreciation.
Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally,
the capital assets of the internal service funds are included as governmental activities in the statement of net assets.
City of Federal Way / 73
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE BY FUNCTION AND ACTIVITY
December 31, 2004
Function and Activity
Land
Buildings
Improvements
Other than
Buildings
Machinery
and
Equipment
Infrastructure
Construction
in
Progress
Comparative
2004
Totals
2003
GENERAL GOVERNMENT
Miscellaneous general government $
6,395,094
S 19,973
S 184,000
$ 14,886,107 S
21,485,174 S
14,839,715
TOTAL GENERAL GOVERNMENT
6,395,094
19,973
184,000
14,886,107
21,485,174
14,839,715
CULTURE AND RECREATION
30,710,106
S 1,895,076
16,529,419
4,794,891
53,929,492
52,166,268
TOTAL CULTURE & RECREATION
30,710,106
1,895,076
16,529,419
4,794,891
53,929,492
52,166,269
TRANSPORTATION
Streets and traffic
$ 711,522
.14,995,532
15,707,054
8,729,000
TOTAL TRANSPORTATION
711,522
14,995,532
15,707,054
8,729,000
TOTAL GENERAL FIXED
ASSETS BY FUNCTION $
37,105,200
$ 1,895,076
S 16,549,392
$ 184,000
$ 711,522
S 34,676,530 S
91,121,720 S
75,734,983
This schedule presents only the capital asset balances related to governmental funds before depreciation.
Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally,
the capital assets of the internal service funds are included as governmental activities in the statement of net assets.
City of Federal Way /74
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITTY
For the Year Ended December 31, 2004
Governmental
Funds
Capital Assets
1/1/2004
Additions Deductions
Governmental
Funds
Capital Assets
12/31/2004
GENERAL GOVERNMENT
Miscellaneous general government
$ 14,839,715
$ 6,645,459 $
- $ 21,485,174
TOTAL GENERAL GOVERNMENT
14,839,715
6,645,459
- 21,485,174
CULTURE AND RECREATION
52,166,268
1,763,224
- 53,929,492
TOTAL CULTURE AND RECREATION
52,166,268
1,763,224
- 53,929,492
TRANSPORTATION
Streets and traffic
8,729,000
6,978,054
- 15,707,054
TOTAL TRANSPORTATION
8,729,000
6,978,054
- 15,707,054
TOTAL GENERAL FIXED ASSETS
$ 75,734,983
$ 15,386,737 $
- $ 91,121,720
This schedule presents only the capital asset balances related to governmental funds before depreciation.
Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally,
the capital assets of the internal service funds are included as governmental activities in the statement of net assets.
City of Federal Way / 75
Statistical Section
The Statistical Section provides information for the "Last Ten Fiscal Years". The Tables for "Special
Assessment Collections" and "Schedule of Revenue Bond Coverage" are not included since the City currently
has neither special assessments outstanding nor any revenue debt in the City's Enterprise Funds.
City of Federal Way / 7 6
CITY OF A
Federal Way
City of Federal Way / 77
GOVERNMENT -WIDE REVENUES BY SOURCE AND EXPENDITURES BY FUNCTION
For the Year ended December 31, 2004
Program Revenues
Charges for Services
$ 13,662,985
Operating Grants and Contributions
568,060
Capital Grants and Contributions
7,692,806
General revenues
Property tax
8,121,088
Sales tax
10,546,218
Other taxes
13,842,322
Other revenue
751,020
Unrestricted Grants & Contributions
176,928
Investment Earnings
954,366
Disposition of capital assets
(4,644)
Total Revenues
$ 56,311,149
Expenses/Expenditures
General Government
$ 6,304,256
Security of Persons & Property
17,374,845
Transportation
4,098,790
Physical Environment
295,537
Economic Environment
2,953,073
Health
683,804
Culture & Recreation
4,914,348
Interest on long-term debt
1,764,077
Surface Water Management
3,282,428
Dumas Bay Centre
879,870
Total Expenses/Expenditures
$ 42,551,028
City of Federal Way / 7 8
GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTION
GENERAL, SPECIAL REVENUE, AND DEBT SERVICE FUNDS
Fiscal General Public Physical Economic Culture and Capital Debt Total
Year Government Safety Environment Transportation Environment Health * Recreation Outlay Service Expenditures
1994 $2,842,741 $ 8,864,249 $ 196,621 $ 4,266,560 $ 2,309,212 $1.339,925 $2,737,432 $ 11,967 $ 1,639,837 $ 24,208,544
1995 3,093,147 8,805,874 234,624 4,689,709 2,646,293 1,337,711 3,259,672 10,374 1,771,439 25,748,843
1996 3,831,238 10,269,193 304,196 5,309,948 2,298,04.0 488,604 2,944,815 1,677,848 1,717,048 28,840,930
1997 3,415,715 10,282,388 528,784 6,141,223 2,258,033 457,211 2,521,085 319,120 2,982,786 28,906,345
1998 3,823,872 11,851,585 310,482 6,407,351 2,395,851 529,790 2,606,626 141,262 4,414,037 32,480,856
1999 4,464,896 13,430,529 257,483 4,737,307 2,536,058 557,610 3,006,660 143,886 5,209,547 34,343,976
2000 4,237,852 14,046,638 318,709 4,661,867 2,634,011 546,191 3,034,818 508,919 4,228,711 34,217,716
2001 4,724,252 14,264,309 378,066 4,554,183 2,679,174 535,589 2,951,607 176,551 4,498,092 34,761.823
2002 5,049,813 14,991,404 329,064 5,203,702 2,779,401 627,232 3,141,129 212,592 4,485,281 36,819,618
2003 5,492,123 15,463,833 351,456 5,358,543 2,883,079 603,184 3,507,392 1,028,085 15,863,046 50,550,741
2004 6,107,563 16,982,135 289,921 4,035,769 2,944,583 679,655 3,927,933 111,183 5,532,121 40,610,863
Beginning 1996, a portion of MVET moneys were diverted from Cities to Counties to provide health service. Cities will no longer need to pay
for health service.
NOTE: Prior to 1999, expenditures reported include Surface Water Management (SWM) as a Special Revenue Fund. 1999 figures were revised
to exclude SWM as the fund was converted to an enterprise fund.
City of Federal Way/79
GENERAL GOVERNMENTAL REVENUES BY SOURCE
GENERAL, SPECIAL REVENUE, AND DEBT SERVICE FUNDS
Fiscal
Licenses &
Year
Taxes
Permits
1994
$ 15,895,472
$ 889,724 $
1995
16,351,547
961,807
1996
18,080,794
917,219
1997
21,861,900
1,112,135
1998
24,024,928
1,192,610
1999
27,059,338
1,548,220
2000
28,495,459
1,434,027
2001
29,721, 513
1,396,694
2002
30,694,856
1,829,620
2003
32,022,334
1,000,250
2004
32,553,302
1,235,039
Intergovt'I
Charges for
Fines and
Miscellaneous
Total
Revenue
Services
Forfeitures
Revenue
Revenue
6,203,784
$ 4,061,229
$ 553,579
$ 834,792
$28,438,580
6,303,245
4,277,815
572,446
1.084,007
29,550,867
5,667,480
4,195,678
520,670
929,396
30,311,237
6,609,989
4,235,379
576,054
1,151,330
35,546,787
6,311,889
4,797,634
791,113
1,511,601
38,629,775
5,789,602
1,705,785
825,404
1,216,865
38,145,214
5,251,899
2,219,948
902,762
1,920,328
40,224,423
4,365,098
2,525,488
830,668
1,290,992
40,130,453
4,165,673
2,864,937
785,997
989,710
41,330,793
4,090,210
3,965,992
887,071
1,474,950
43,440,807
3,651,365
4,200,528
810,793
1,495,455
43,946,482
NOTE: Prior to 1999, revenues reported include Surface Water Management (SWM) as a Special Revenue Fund.
1999 figures were revised to exclude SWM as the fund was converted to an enterprise fund.
City of Federal Way / 80
GENERAL GOVERNMENTAL TAX REVENUE BY SOURCE
GENERAL, SPECIAL REVENUE AND DEBT SERVICE FUNDS
Miscellaneous
General
Business and Other
Fiscal
Property
General
Utility
Occupation Taxes and
Year
Taxes
Sales Tax
Taxes
Taxes Assessments*
Total Taxes
1994
$ 5,654,655
$ 7,606,672
$ -
$ - $ 2,634,145
$ 15,895,472
1995
5,911,017
7,916,114
-
- 2,524,416
16,351,547
1996
6,022,066
8,037,143
935,497
- 3,086,088
18,080,794
1997
6,163,988
8,320,209
3,859,545
- 3,518,158
21,861,900
1998
6,447,999
8,854,740
4,553,650
- 4,168,539
24,024,928
1999
6,588,903
9,717,585
5,235,168
- 5,517,682
27,059,338
2000
6,976,972
10,332,439
5,590,293
- 5,595,755
28,495,459
2001
7,215,272
10,368,153
6,098,264
- 6,039,824
29,721,513
2002
.7,644,130
10,736,090
6,104,507
- 6,210,131
30,694,858
2003
8,200,955
10,518,230
7,147,878
- 6,155,271
32,022,334
2004
8,121,088
10,546,218
7,554,580
- 6,331,416
32,553,302
Includes real estate excise, local criminal justice, gambling excise, and other taxes and related assessments.
City of Federal Way / 81
PROPERTY TAX LEVIES AND COLLECTIONS
Ratio of
Total
Ratio of
Percent of Delinquent Total Tax
Outstanding
Delinquent
Fiscal Total Current Tax Current Tax Tax Total Tax Collections to
Delinquent
Taxes to
Year Tax Levy Collections Collected Collections Collections Total Tax Levy
Taxes
Total Tax Levy
1994
$5,598,786
$ 5,443,726
97.2%
$ 274,559
$ 5,718,285
102.1 %
$ 213,611
3.8%
1995
5,976,531
5,829,648
97.5%
131,665
5,961,313
99.7%
209,953
3.5%
1996
6,075,765
5,918,549
97.4%
129,237
6,047,786
99.5%
197,005
3.2%
1997
6,180,735
6,041,927
97.8%
125,222
6,167,149
99.8%
198,240
3.2%
1998
6,474,762
6,339,081
97.9%
138,180
6,477,262
100.0%
187,806
2.9%
1999
6,667,028
6,510,516
97.7%
135,953
6,646,469
99.7%
197,059
3.0%
2000
7,030,723
6,858,636
97.6%
131,554
6,990,190
99.4%
249,607
3.6%
2001
7,305,894
7,107,918
97.3%
145,498
7,253,416
99.3%
302,374
4.1%
2002
7,700,412
7,471,822
97.0%
163,181
7,635,003
99.2%
342,855
4.5%
2003
7,912,598
7,740,741
97.8%
243,165
7,983,906
100.9%
269,323
3.4%
2004
8,119,460
7,945,659
97.9%
184,756
7,983,906
98.3%
225,762
2.8%
Sources: Most of data has been derived from the "Annual Tax Receivable Summary' prepared by the King County
Finance Department.
City of Federal Way / 82
ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY*
Fiscal Personal State Public
Year Real Property Property Service Property
Total
Percent
Increase
(Decrease)
1994
$ 3,523,883,690 $
112,067,438 $
83,521,024 $
3,719,472,152
1.9%
1995
3,670,820,831
148,316,510
76,028,872
3,895,166,213
4.7%
1996
3,750,745,563
141,394,338
86,053,600
3,978,193,501
2.1%
1997
3,961,545,010
155,884,327
79,303,838
4,196,733,175
5.5%
1998
4,152,466,303
158,019,169
76,348,173
4,386,833,645
4.5%
1999
4,490,661,284
171,187,056
90,322,059
4,752,170,399
8.3%
2000
4,932,362,526
187,812,046
93,021,743
5,213,196,315
9.7%
2001
5,322,237,420
226,854,474
101,339,376
5,650,431,270
8.4%
2002
5,604,164,978
227,961,155
107,761,209
5,939,887,342
5.1%
2003
5,992,899,727
193,519,890
105,924,009
6,292,343,626
5.9%
2004
6,218,643,830
181,366,723
102,350,559
6,502,361,112
3.3%
Real, personal, and state public service property has been assessed at 100% of the estimated value.
NOTE: These figures includes all final tax adjustments, omits and senior citizen exempted property. This total assessed
value was reduced by senior citizen exemptions (no tax amounts) of $29,883,105 and prior year omits of
$920,289 yielding a regular levy value of $6,471,557,718. These assessed valuations are the basis for the
following year's tax levy.
Source: King County Assessor's Office.
City of Federal Way / 83
PROPERTY TAX RATES AND LEVIES, DIRECT AND OVERLAPPING GOVERNMENTS
Federal Way
Emergency
9 Y
Fiscal
City of
School
King
Washington
Green River
Port of
Medical
Year Federal Way
District #210
County
State
Flood Zone
Seattle
Fire District #39 Library
Services
Total
TAX RATES PER $1,000 OF ASSESSED
VALUATION
1994
1.54
5.06
2.21
3.40
0.05
0.30
1.58
0.58
0.25
14.97
1995
1.57
5.18
2.25
3.42
0.05
0.29
1.63
0.62
0.25
15.26
1996
1.56
5.26
2.21
3.50
0.05
0.29
1.67
0.62
0.25
15.41
1997
1.56
5.06
2.13
3.52
0.05
0.28
1.58
0.62
0.25
15.05
1998
1.55
4.65
1.85
3.51
0.05
0.26
1.50
0.60
-
13.97
1999
1.53
4.56
1.77
3.36
0.05
0.24
1.50
0.59
0.29
13.89
2000
1.49
4.42
1.69
3.30
0.05
0.22
1.50
0.59
0.27
13.53
2001
1.41
4.44
1.55
3.15
0.05
0.19
1.45
0.56
0.25
13.04
2002
1.38
4.16
1.45
2.99
0.05
0.19
1.50
0.53
0.25
12.50
2003
1.34
4.28
1.35
2.90
0.05
0.26
1.50
0.54
0.24
12.46
2004
1.30
4.20
1.43
2.76
0.05
0.25
1.50
0.53
0.24
12.26
DETAIL OF TAX RATES FOR 2004
Basic
Rate 1.30 - 1.14 2.76 0.05 0.25 1.50 0.49 0.24 7.73
Voted
Rate - 4.20 0.29 - - - 0.04 4.53
TAX LEVIES
1994 $ 5,598,786 $ 26,891,328 $ 259,088,827 $ 399,086,354 $ 502,979 $ 35,646,867 $ 8,257,614 . $ 35,252,354 $ 29,312,268 $ 799,637,377
1995
5,976,531
28,263,797
271,408,531
413,378,092
533,178
35,646,159
8,805,938
41,126,042
30,214,063
835,352,331
1996
6,075,765
28,940,230
268,662,181
427,109,738
565,205
35,647,165
9,118,681
41,040,476
30,492,034
847,651,475
1997
6,180,735
28,476,471
268,141,201
444,672,037
599,125
35,647,528
8,843,258
43,661,239
31,533,777
867,755,371
1998
6,474,762
27,530,445
248,678,961
472,459,927
635,052
35,646,835
8,378,714
46,603,642
26,137,500
872,545,838
1999
6,667,028
28,468,974
264,133,712
500,994,725
714,606
35,647,362
8,596,565
51,173,675
43,212,202
939,608,849
2000
7.030,723
29,878,996
278,515,900
545,390,795
748,642
35,647,430
8,596,565
54,618,346
45,070,501
1,005,497.898
2001
7,305,894
32,859,841
290,369,516
589,103.721
786,904
35,646,678
9,906,591
59,634,503
46,122.721
1,071,736,369
2002
7,764,913
33,552,460
304,062,327
627,772,703
799,554
39,806,235
11,061,131
64,373,926
52,497,313
1,141,690,562
2003
7,941,900
36,639,878
302,100,182
648,995,138
849,988
58,003,521
11,774,814
72,580,170
54,088,854
1,192,974,445
2004
8,117,874
38,051.680
335,853,716
647,490,236
873,826
59,657,092
12,467,237
74,860,405
55,704,127
1,233,076,192
Source: King County Assessor's Office and King County Department of Finance
City of Federal Way / 84
RATIO OF NET GENERAL OBLIGATION BONDED DEBT TO ASSESSED VALUE
AND NET GENERAL OBLIGATION BONDED DEBT PER CAPITA
Ratio of
(B)
(C)
Bonded Debt
Net Bonded
Fiscal
(A)
Assessed
Gross
Less Debt
Net
To Assessed
Debt Per
Year
Population
Value
Bonded Debt
Service Fund
Bonded Debt
Value
Capita
1994
73,500
$ 3,699,163,886
$ 19,305,000
$ 2,090,674
$ 17,214,326
0.0047 $
234.21
1995
74,290
3,875,091,033
23,335,000
1,661,823
21,673,177
0.0056
291.74
1996
75,240
3,958,913,902
26,587,000
1,917,779
24,669,221
0.0062
327.87
1997
75,960
4,177,359,264
41,446,063
5,047,726
36,398,337
0.0087
479.18
1998
76,820
4,348,600,049
38,834,824
5,528,984
33,305,840
0.0077
433.56
1999
76,910
4,717,399,199
35,385,483
6,052,008
29,333,475
0.0062
381.40
2000
83,259
5,178,119,377.
37,566,992
6,172,926
31,394,066
0.0061
377.07
2001
83,890
5,620,635,267
34,363,272
6,808,657
27,554,615
0.0049
328.46
2002
83,850
5,912,362,755
30,410,844
5,579,129
24,831,715
0.0042
296.14
2003
83,500
6,292,343,626
37,217,065
2,599,653
34,617,412
0.0055
414.58
2004
86,320
6,418,941,601
33,113,539
2,880,857
30,232,682
0.0047
350.24
(A) Sources: U.S. Census Bureau; State of Washington Office of Program Planning and Fiscal Management, Population Study Division:
and the City's Community Development Department.
(B) The final certified Regular Levy assessed value of taxable property which was used by the King County Assessor's Office for use
in calculating levy rates for the following year's tax roll. The total assessed valuation of $6,471,557,718 has been reduced by
senior citizen exemptions of $29,883,105 and prior year omits of $920,289 to arrive at taxable assessed valuation.
(C) Includes certificates of participation issued in 1999, Public Works Trust Fund Loans issued in 1994, 1996, 1997
and 2000; general obligation bonds issued in 1993, 1995, 1996, 1997, 2000 and 2003; and loan assumption in 2003.
City of Federal Way / 85
COMPUTATION OF LIMITATION OF INDEBTEDNESS
December 31, 2004
GENERAL DEBT CAPACITY
EXCESS LEVY
EXCESS LEVY
TOTAL
(Limited)
(Unlimited)
OPEN SPACE
UTILITY
DEBT
DESCRIPTION
COUNCILMANIC
EXCESS LEVY
AND PARK
PURPOSES
CAPACITY
Statutory debt limit:
(2003 AV=$6,292,343,626) (A)
1.50% AV @ 100%
$ 94,385,154
$ (94,385,154)
2.50% AV @ 100%
157,308,591
157,308,591
157,308,591
471,925,773
Add:
Cash on hand for
debt redemption (B)
3,921,806
-
-
-
3,921,806
Less:
Bonds and COPS outstanding
(30,802,892)
-
-
-
(30,802,892)
REMAINING DEBT CAPACITY
$ 67,504,068
$ 62,923,437
$ 157,308,591
$ 157,308,591
$ 445,044,687
TOTAL REMAINING
"GENERAL" CAPACITY (C) $130,427,505
(A) This figure represents the City's final total taxable assessed valuation (AV) for 2003 which was used
to determine the 2004 property tax levy.
(B) Reflects ending fund. balance in the Debt Service Fund and Utility Tax Fund as of December 31, 2004.
(C) Combined total for Councilmanic, Financing Lease, and Excess Levy capacities.
A
City of Federal 'Way / 86
COMPUTATION OF DIRECT AND OVERLAPPING DEBT
Jurisdiction
King County
Port of Seattle
Federal Way School District#210
Library
Total Overlapping Debt
December 31, 2004
(A)
(B)
Gross General
Percentage
Obligation Debt
Applicable to
Outstanding
Federal Way
$ 731,930,523
2.64%
217,285,000
2.64%
117,135,000
68.35%
30,985,000
6.22%
1,097,335,523
Amount
Applicable to
Federal Way
$ 19,322,966
5,736,324
80,061,773
1,927,267
107,048,329
CITY OF FEDERAL WAY 37,217,065 (C) 100.00%, 37,217,065
Total Direct and Overlapping Debt $ 1,134,552,588 $ 144,265,394
(A) Total general obligation bonds outstanding at the year end, exclusive of refunded bonds.
Source is King County Department of Finance.
(B) Determined by ratio of assessed valuation of property subject to taxation in overlapping unit to
valuation of property subject to taxation in reporting unit.
(C) Includes certificates of participation issued in 1999, Public Works Trust Fund Loans issued in 1994, 1996, 1997
and 2000; general obligation bonds issued in 1993, 1995, 1996, 1997, 2000 and 2003; and loan assumption in 2003
Federal Way / 87
RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL OBLIGATION
BONDED DEBT TO TOTAL GENERAL GOVERNMENTAL EXPENDITURES NET OF DEBT SERVICE EXPENSE
Ratio of
Debt Service
Total General
to General
Fiscal
Total Debt
Governmental
Governmental
Year
Principal
Interest *
Service
Expenditures
Expenditures
1994
$ 590,000
$ 1,046,468
$ 1,636,468
$ 24,208,544
6.8%
1995
765,000
1,001,427
1,766,427
25,748,843
6.9%
1996
432,280
1,278,552
1,710,832
28,840,930
5.9%
1997
1,222,090
1,755,354
2,977,444
28,906,345
10.3%
1998
2,376,239
2,037,798
4,414,037
32,480,856
13.6%
1999
3,302,102
1,907,445
5,209,547
34,343,976
15.2%
2000
2,498,853
1,729,858
4,228,711
34,217,716
12.4%
2001
2,700,478
1,797,614
4,498,092
34,761,823
12.9%
2002
2,834,084
1,651,197
4,485,281
36,819,618
12.2%
2003
14,159,881
1,703,165
15,863,046
50,550,741
31.4%
2004
3,080,677
1,796,791
4,877,468
40,610,863
12.0%
Excludes bond issuance and debt registration costs.
City of Federal Way / 88
DEMOGRAPHIC STATISTICS
Education
Level in Years
Fiscal Per Capita Median of Formal School Unemployment
Year Population Income [C] Age [C] Schooling Enrollment (A) Rate (B)
1994
74,413
16,206
30.6
13.0
20,043
5.2%
1995
74,290
17,126
30.6
13.0
20,331
4.9%
1996
75,521
17,401
30.6
13.0
20,733
4.6%
1997
75,960
25,569
32.5
13.0
21,478
3.1%
1998
76,820
22,874
33.3
13.0
21,865
2.9%
1999
76,910
28,494
33.4
13.0
22,407
3.0%
2000
83,259
29,210
32.5
13.0
22,289
3.1 %
2001
83,890
22,451
32.5
13.0 _
21,916
5.2%
2002
83,850
22,451
32.5
13.0
22,194
6.6%
2003
83,500
22,451
32.5
13.0
22,265
6.7%
2004
85,800
22,451
32.5
13.0
22,395
6.5%
(A) Includes public school enrollment. Kindergarten is included though not State mandated.
(B) The unemployment rates for 1994 through 1998 reflect the annual average for the City of Federal Way, which
is based on census share methodology. The rates for the years 2002 and 2003 are the annual average for
Seattle -Bellevue -Everett PMSA. The 2004 rate came from the State of Washington Employment Security Departmen
[C] Per capita income and Median age information for the years 2001, 2002 and 2003 are based on 2000 U.S.
Census report since these infomation is available for individual cities only every ten years when the census is done.
Sources: Data was obtained from U. S. Census Bureau
School data was provided by the Federal Way School District.
of Federal Way / 89
PROPERTY VALUE, CONSTRUCTION AND BANK DEPOSITS
Commercial Construction (A) Residential Construction (A)
Value Value
Year Permits _ (In Thousands) Permits (In Thousands)
1994 187 $ 33,530 359 $ 34,846
1995 211 33,071 322 27,165
1996 149 18,177 257 21,276
1997 169 9,704 367 27,952.
1998 188 50,863 364 23,301
1999 180 43,359 374 26,229
2000 250 38,554 185 11,462
2001 291 59,384 166 7,914
2002 393 59,075 318 38,176
2003 240 25,695 290 37,775
2004 335 64,522 289 82,658
Multi -Family Construction (A)Bank Deposits (B)
Property Assessed Valuation (C)
Value
King County
Total Taxable
Exemptions
Non -Taxable
Permits
(In Thousands)
(In Millions)
(In Thousands)
(In Thousands)
(In Thousands)
2
$ 523
$ 18,763
$ 3,719,472
$ 51,116
$ 17,983
3
215
19,034
3,895,166
53,384
18,126
3
11,793
16.344
3,958,914
56,383
17,116
10
12,749
17,125
4,177,359
57,686
16,362
11
7,594
19,650
4,348,600
44,629
32,685
5
16,167
18,337
4,717,399
48,282
31,824
12
3,816
18,678
5,178,119
46,551
29,984
6
1,790
20,334
5,620,635
44,646
27,409
1
-
22,262
5,912,363
46,489
26,561
1
1,042
26,750
6,262,874
50,672
28,809
0
-
28,839
6,471,942
52,616
29,883
(A) Source: Federal Way Community Development Department. Commercial construction includes alterations. Other building -related permits (plumbing,
mechanical, fire alarm, etc.) numbering 1,958 and valued at $2,504,128 have been excluded.
(B) Source: Federal Reserve Bank of San Francisco. The deposits disclosed are for June 30 of the prior year. The FDIC does not publish its annual update
until late June.
City of Federal Way / 90
PRINCIPAL TAXPAYERS
December 31, 2004
Percentage
2004
of Total
Assessed
Assessed
Taxpayer
Type of Business
Valuation
Valuation (A)
Weyerhaeuser Real Estate Co.
Real Estate
$ 145,049,370
2.31%
Puget Sound Energy
Electric/Gas
53,539,212
0.85%
Steadfast SeaTac Mall (formerly Newman Properties)
Shopping Center
39,423,163
0.63%
Qwest Corporation Inc.
Communications/Telephone
38,781,784
0.62%
Harsch Investment Properties (Ross Plaza)
Shopping Center
22,228,300
0.35%
Quadrant Corporation
Real Estate Management
21,819,600
0.35%
Fred Meyer
Retailer / Wholesaler
20,563,138
0.33%
Red Mortgage Capital Inc
Finance
18,741,000
0.30%
BRE Properties
Real Estate Management
17,454,000
0.28%
Virginia Mason Clinic
Medical Services
16,674,141
0.26%
Wells Fargo
15,818,949
0.25%
Costco
Retailer/ Wholesaler
15,503,875
0.25%
Campus Business Parks LLC
Real Estate Investment/Holding
15,176,700
0.24%
Apple Hospitality Five Inc
9,264,800
0.15%
$ 450,038,032
7.15%
PRINCIPAL EMPLOYERS
December 31. 2004
Number of
Taxpayer
Type of Business
Employees
FEDERAL WAY SCHOOL DIST #210
Education
3,150
W EYERHAEUSER COMPANY
Lumber Products
3,029
ST FRANCIS HOSPITAL
Medical Services
744
ENCHANTED PARKS INC
Amusement Center
687
US POSTAL SERVICE
Postal Service
626
WORLD VISION INC
Christian Relief Agency
596
CITY OF FEDERAL WAY
Government Services
440
LAKEHAVEN UTILITY DISTRICT
Utility
420
COSTCO WHOLESALE CORPORATION
Wholesale
303
VIRGINIA MASON FEDERAL WAY
Medical Services
235
WAL-MART STORE #2571
Retail
225
BON-MACY'S
Retail
220
ALBERTSONS FOOD CENTER
Retail Grocery
220
FRED MEYER
Retail
214
SEARS, ROEBUCK & CO.
Retail
205
HOME DEPOT #4703, THE
Retail
202
SPHERION
Miscellaneous Services
200
PRUDENTIAL NW REALTY ASSOCIATES LLC
Real Estate
200
WINCO FOODS #43
Retail Grocery
178
DEVRY UNIVERSITY
Education
167
UNICCO SERVICE COMPANY
Miscellaneous Services
161
LIFE CARE CENTER OF FEDERAL WAY
Nursing Facility
160
HALLMARK MANOR
Retail
160
CAPITAL ONE SERVICES INC
Financial Institution
150
AAA RESIDENTIAL SERVICES INC
Assisted living facility
150
LOWE'S HIW INC
Retail
140
GARDEN TERRACE ALZEIMER'S CENTER
Assisted living facility
135
AVALON CARE CENTER - FEDERAL WAY LLC
Miscellaneous Services
135
PJ POCKETS CASINO
Casino
133
FEDERAL WAY FIRE DEPARTMENT
Social Service
133
SAFEWAY STORES
Retail Grocery
131
TARGET STORE #340
Retail
130
BROOKLAKE COMMUNITY CHURCH
Social Service
122
GROUP HEALTH -FW MEDICAL CENTER
Medical Services
120
BERGER/ABAM ENGINEERS
Miscellaneous Services
116
FOUNDATION HOUSE AT FEDERAL WAY
Assisted living facility
105
METROPOLITAN MARKET #155
Retail Grocery
99
(A) 2003 assessed valuations for taxes collected in 2004. Total 2004 assessed valuation for the City is $6,292,343,626
Source: King County Assessor - Principal Taxpayers.
City of Federal Way Business Licenses - Principal Employers - includes both full-time and part-time employees.
City of Federal Way / 91
SCHEDULE OF INSURANCE IN FORCE
December 31, 2004
POLICY
POLICY
ANNUAL
NAME OF COMPANY
NUMBER
PERIOD
DETAILS OF COVERAGE
LIABILITY LIMITS
PREMIUM
Included In
St. Paul Fire and Marine
09/01/2004 -
Pubic Entity Management
$10,000,000 Each Claim & Aggregate
General Liability
Insurance Company
GP06301432
08/31/2005
Liability Protection
Annually. Deductible $5,000
Premium
Included in Crime/Fidelity Coverage,
Included In
St. Paul Fire and Marine
09/01/2004 -
Public Official Bond -
$500,000 Employee Dishonesty, $100,000
Fidelity / Crime
Insurance Company
GP06301432
08/31/2005
Management Service Director
Forgery/Alteration. Deductible $5,000
Coverage
Included in Crime/Fidelity Coverage,
Included In
St. Paul Fire and Marine
09/01/2004 -
Public Official Bond - City
$500,000 Employee Dishonesty, $100,000
Fidelity / Crime
Insurance Company
GP06301432
08/31/2005
Manager
Forgery/Alteration. Deductible $5,000
Coverage
$10,000,000 Occurrence, $20,000,000
Aggregate, $1,000,000 Underinsured
General Liability, Auto Liability,
Motorists Coverage, $1,000,000
Underinsured Motorists Liability
Garagekeepers Legal Liability. All Limits are
St. Paul Fire and Marine
09/01/2004 -
and Law Enforcement Liability
Per Occurrence/Aggregate Annually.
Insurance Company
GP06301432
08/31/2005
Coverage
Deductible $5,000
$ 203,400
Statement of Values Limit $24,514,943,
Business Income / Extra Expense
$1,000,000, Valuable Papers / Accounts
Receivable $1,000,000, Rental Income
St. Paul Fire and Marine
09/01/2004 -
$1,000,000, Electronic Data Processing
Insurance Company
GP06301432
08/31/2005
Property Coverage
$1,000,000, Fine Arts $1,000,000.
$ 35,521
Included in General Liability, Auto Liability
and Law Enforcement Liability Above. Auto
Physical Damage - Deductible $1,000
St. Paul Fire and Marine
09/01/2004 -
Auto Liability and Physical
Trucks / Fire Trucks / Ambulances, $500
Insurance Company
GP06301432
08/31/2005
Damage Coverage
Pickups / Vans, $250 Private Passenger
$ 63,913
Faithful Performance /
Included in Crime/Fidelity Coverage,
St. Paul Fire and Marine
09/01/2004 -
Fidelity/Employee Dishonesty
$500,000 Employee Dishonesty, $100,000
Insurance Company
GP06301432
08/31/2005
and ERISA Coverage
Forgery/Alteration. Deductible $5,000
$ 2,540
St. Paul Fire and Marine
09/01/2004 -
Insurance Company
GP06301432
08/31/2005
Inland Marine
Limit of $108,000. Deductible $5,000 '
$ 389
Included In
St. Paul Mercury Ins.
09/01/2004 -
General Liability
Co.
GP06301432
08/31/2005
Excess Liability Coverage
Included In General Liability Premium
Premium
$10,000,000 Per Accident, $50,000
Perishable Goads, $1,000,000 Hazardous
Substances, $100,000 CFC Refrigerants,
Deductible $2,500 Each Accident, Extended
St. Paul Fire and Marine
09/01/2004 -
Business Income 30 Days, Newly Acquired
Insurance Company
GPO6301432
08/31/2005
Boiler & Machinery Coverage
Locations 365 Days, Service Interrup
$ 12,671
Included in General, Auto and Law
Included In
St, Paul Fire and Marine
09/01/2004 -
Employer/Stop Gap Liability
Enforcement Liability Limits Referenced
General Liability
Insurance Company
GP06301432
08/31/2005
Coverage
Above
Premium
Included in Crime/Fidelity Coverage,
Included In
St. Paul Fire and Marine
09/01/2004 -
$500,000 Employee Dishonesty, $100,000
Fidelity / Crime
Insurance Company
GP06301432
08/31/2005
Public Officials Bond - City Clerk
Forgery/Alteration. Deductible $5,000
Coverage
Included in Crime/Fidelity Coverage,
Included In
St. Paul Fire and Marine
09/01/2004 - .
Public Officials Bond - Chief of
$500,000 Employee Dishonesty, $100,000
Fidelity / Crime
Insurance Company
GP06301432
08/31/2005 '
Police
Forgery/Alteration. Deductible $5,000
Coverage
Included in General, Auto and Law
Included In
St. Paul Fire and Marine
09/01/2004 - `
Law Enforcement Liability
Enforcement Liability Limits Referenced
General Liability
Insurance Company
GP06301432
08/31/2005
Coverage
Above
Premium
Included in General, Auto and Law
Included In
St. Paul Fire and Marine
09/01/2004 -
Above Ground Pollution
Enforcement Liability Limits Referenced
General Liability
Insurance Company
GP06301432
08/31/2005
Coverage
Above
Premium
TOTAL PREMIUMS
$ 318,434
City of Federal Way / 92
SALARIES AND SURETY BONDS OF PRINCIPAL OFFICIALS
DECEMBER 31, 2004
LEGISLATIVE BODY
POSITION EMPLOYEE
ANNUAL SALARY
MAYOR DEAN MCCOLGAN
$16,500
COUNCILMEMBERS JEANNE BURBIDGE
$12,900
JACK DOVEY
$12,900
ERIC FAISON
$12,900
JIM FERRELL
$12,900
LINDA KOCHMAR
$12,900
MICHAEL PARK
$12,900
ADMINISTRATIVE STAFF
POSITION
EMPLOYEE
ANNUAL SALARY
CITY MANAGER
DAVID MOSELEY
Negotiated
DIRECTOR - CITY ATTORNEY
PAT RICHARDSON
$88,260 - $111,648
CITY CLERK
CHRISTINE GREEN
$60,948 - $77,100
COMMUNITY DEVELOPMENT DIRECTOR
KATHY MCCLUNG
$88,260 - $111,648
MANAGEMENT SERVICES DIRECTOR
IWEN WANG
$88,260 - $111,648
PARKS, RECREATION AND CULTURAL
DONNA HANSON
$88,260 - $111,648
SERVICES DIRECTOR
PUBLIC SAFETY DIRECTOR
ANNE KIRKPATRICK
$88,260 - $111,648
PUBLIC WORKS DIRECTOR
CARY ROE
$88,260 - $111,648
NOTE: In accordance with State of Washington legal statues, individual fidelity coverage of not less than $100,000
exists for both the City Manager and Management Services Director.
Federal Way / 93
MISCELLANEOUS STATISTICAL INFORMATION
DECEMBER 31, 2004
TYPE OF GOVERNMENT
Council - City Manager
ORGANIZATION STRUCTURE
Legislative Executive Administrative
Mayor 1 City Manager 6 Department Directors
6 Councilmembers 1 Assistant City Managers
CORPORATE INFORMATION
The City of Federal Way is a noncharter optional code City. It was incorporated as an optional code City on February 28 1990,
and is governed under the provisions of the Optional Municpal Code of the Revised Code of Washington. Optional Code City
status increases the City's operating authority by extending it to the powers of all four city classifications which exist in
Washington law.
LOCATION AND AREA
Federal Way, the seventh largest city in the State of Washington, encompasses an area of 22.5 square miles including annexation.
It is located in South King county approximately 25 miles south of Downtown Seattle and 8 miles north of Downtown Tacoma.
The community is residential commercial, with the populace employed locally in neighboring cities such as SeaTac, Kent, Tacoma,
Bellevue and Seattle. The City has approximately 34,559 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 85,800, of which 41,724 are registered voters. A total of 29,612 (est.) people are
employed within the City limits.
NUMBER OF CITY EMPLOYEES
During the year 2004, the City employed 286 full-time salaried, 21 part-time hourly, and 149 temporary employees. There were
118 commissioned police officers and 12 union lieutenants, and no uniformed firefighters. The Teamsters Union #763 represented
20 employees of Public Works Maintenance and Parks Maintenance and 9 employees of the Municipal Court, 33 employees were
represented by the PSSA (Police Support Services Association), and the Police Guild represented 97 Police Officers during 2004.
RECREATIONAL FACILITIES
32 Developed park sites covering 500.25 acres
21 Undeveloped park sites covering 356.24 acres (including open space)
25 Public tennis courts, 9 of which are owned by the City
2 Public swimming pools, one owned by the City and one owned by King County
2 Trails covering 4 miles
OTHER CITY OWNED FACILITIES
1 New City Hall
1 Parks Maintenance Facility
1 Dumas Bay Centre
1 Klahanee Community/Senior Center
PUBLIC EDUCATION
ENROLLMENT COUNT
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
23
Elementary Schools
11,524
11,689
11,930
12,248
12,258
12,242
11,498
11,990
9,854
9,916
7
Middle Schools (incl. Public Academy)
4,701
4,838
4,979
4,956
4,994
5,013
5,331
5,509
5,458
5,476
5
High Schools
3,730
3,904
4,103
4,116
4,529
4,557
4,415
4,316
6,625
6,650
1
Internet Academy (K-12)
376
.302
466
645
626
477
672
379
328
353
20,331
20,733
21,478
21,865
22,407
22,289
21,916
22,194
22,265
22,395
3,766 Staff members (including substitutes).
City of Federal Way / 94
MISCELLANEOUS STATISTICAL INFORMATION
DECEMBER 31, 2004
(Continued)
MILES OF STREET
Streets (Center Line Miles)..............................................248.12 miles
SIGNALS/STREET LIGHTS
Signals WSDOT-owned and maintained ................
4
Signals City -owned and King County -maintained...
71
Street lights City -owned and maintained......
1050
Street lights City -owned and PSE-maintained...
644
Street lights PSE-owned and maintained..........
1975
LOCAL TAXES ON BUSINESSES
Franchise Tax - Cable TV ...................................
5.00%
Gambling Taxes:
Bingo/Raffles ...............................................
5.00%
AmusemenUGames....................................
2.00%
Punchboard/Pull Tabs ..................................
5.00%
Ca rdrooms.................................................
20.00%
Local Sales Tax (Collected by the State) ...............
8.80%
POLICE INFORMATION
Offenses:
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Forcible Rape (including attempts)
71
73
37
58
53
43
49
34
50
50
Robbery
173
188
154
153
115
128
124
108
125
121
Criminal Homicide
3
3
2
2
4
7
4
4
2
0
Aggravated Assault
167
171
121
159
167
158
141
120
120
109
Vehicle Theft
843
807
746
761
808
849
1179
1206
1204
1118
Burglary (commercial & residential)
881
965
643
648
573
533
521
677
672
759
Larceny
4300
4086
3901
3393
3097
3072
3516
3347
3145
3257
Arson
38
35
24
39
38
36
17
29
14
23
Citations:
Traffic
14,258
8,660
11,196
13,382
10,890
13.340
12,767
13,439
18,411
13219
FIRE AND EMERGENCY MEDICAL RESPONSE INFORMATION
Fire and Emergency Medical Response information reflects the greater
Federal
Way area,
which is served by Fire District #39.
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Fire and Other Responses
1,902
2,018
1,985
2,357
2,009
2,278
1,920
3,055
3,117
2896
Emergency Medical
5,653
6,007
5,853
6,589
6,870
7,193
7,240
7,422
8,042
8263
BUILDING RELATED PERMITS & VALUES
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Building Permits
560
422
576
582
573
447
463
712
531
624
Estimated Value (In Millions $)
$60.7
$51.3
$53.3
$81.9
$85.8
$53.8
$69.1
$94.8
$64.5
105.4
Other Building Related Permits
625
656
864
821
1007
1546
1693
2024
1779
1958
Estimated Value (In Millions $)
$2.8
$37.6
$18.5
$27.0
$11.0
$1.5
$2.3
$2.5
$2.4 $
2.5
TAXABLE SALES (in millions)
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Retail Sales
$942.4
$956.8
$978.9
$1,049.3
$1,137.0
$1,212.1
$1,220
$1,298
$1,237
$1,239
Real Estate Sales
$219.0
$305.0
$375.4
$438.8
$487.6
$429.9
$400
$503
$570
$611