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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 Street. In these early days, roadways set the stage for development in the
area and they still play an important role in the City today.
By the start of World War II, a number of small, thriving communities made up the area that is now Federal Way. Some
communities were clustered around lakes, such as Steel Lake, Star Lake, and Lake Geneva. Others were sited to take advantage of
the view of Puget Sound, like Adelaide and Buenna. As each of these communities grew, residents built small schoolhouses for
their children. By the late 1940s, King County consolidated the many individual red schoolhouses into the Federal Way School
District, from which the City gets its name. During this same period, a library was built along the edge of Highway 99, and
between 308th 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 (now The Commons), 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, 2011
Table of Contents
INTRODUCTORY SECTION
Page
Letterof Transmittal................................................................................................................................... iii
City Officials and Administrative Officers............................................................................................... 1
City Functional Organization Chart ............................................................................................................ 2
GFOA Certificate of Achievement............................................................................................................. 3
FINANCIAL SECTION
IndependentAuditor's Report ....................................................................................................................
Management's Discussion and Analysis....................................................................................................
Basic Financial Statements:
Government -wide Financial Statements:
Statementof Net Assets.......................................................................................................... 18
Statement of Activities........................................................................................................... 19
Fund Financial Statements:
Balance Sheet — Governmental Funds.................................................................................... 20
Statement of Revenues, Expenditures, and Changes in Fund Balances —
Governmental Funds......................................................................................................... 22
Reconciliation of the Statement of Revenues, Expenditures, and Change
In Fund Balances of Governmental Funds to the Statement of Activities ........................ 24
Statement of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual
GeneralFund................................................................................................................... 25
StreetFund....................................................................................................................... 26
UtilityTax Fund............................................................................................................... 27
Statement of Net Assets — Proprietary Funds................................................................................... 28
Statement of Revenues, Expenses and Changes in Fund Net Assets — Proprietary Funds...... 29
Statement of Cash Flows — Proprietary Funds........................................................................ 30
Notes to the Financial Statements.................................................................................................... 31
Combining and Individual Fund Statements and Schedules — Nonmajor Governmental Funds:
FundDescription.............................................................................................................................. 65
CombiningBalance Sheet................................................................................................................ 67
Combining Statement of Revenues, Expenditures and Changes in Fund Balances ......................... 71
Statement of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual
ArterialStreet Fund.......................................................................................................... 75
Solid Waste & Recycling Fund........................................................................................ 76
Hotel/Motel Lodging Tax Fund....................................................................................... 77
Federal Way Community Center Fund............................................................................ 78
TrafficSafety Fund.......................................................................................................... 79
Paths& Trails Fund......................................................................................................... 80
Individual Fund Statements and Schedules — Debt Service Fund:
FundDescription.............................................................................................................................. 81
BalanceSheet.................................................................................................................................. 83
Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual ............. 84
Combining and Individual Fund Statements and Schedules — Internal Service Funds:
FundDescription.............................................................................................................................. 85
Combining Statement of Net Assets................................................................................................. 86
Combining Statement of Revenues, Expenditures and Changes in Fund Net Assets ....................... 87
Combining Statement of Cash Flows................................................................................................ 88
Capital Assets Used in the Operation of Governmental Funds:
Comparative Schedules by Source................................................................................................... 92
Schedule by Function and Activity .................................................................................................. 93
Schedule of Changes by Function and Activity .............................................................................. 94
STATISTICAL SECTION
NetAssets by Component.....................................................................................................................
97
Changesin Net Assets...........................................................................................................................
98
Government -wide Revenues by Source and Expenditures by Function ................................................
99
Fund Balances, Governmental Funds....................................................................................................
100
Changes in Fund Balances, Governmental Funds..................................................................................
101
TaxableSales by Category ....................................................................................................................
102
Assessed and Estimated Actual Value of Taxable Property ..................................................................
103
Property Rates and Levies, Direct and Overlapping Governments........................................................
104
PrincipalTaxpayers...............................................................................................................................
105
Property Tax Levies and Collections.....................................................................................................
106
Ratio of Outstanding Debt by Type.......................................................................................................
107
Ratio of General Obligation Bonded Debt to Assessed Value and
Net General Obligation Bonded Debt Per Capita..............................................................
108
Computation of Direct and Overlapping Debt.......................................................................................
109
Computation of Limitation of Indebtedness...........................................................................................
110
Ratio of Annual Debt Service Expenditures for General Obligation Bonded Debt to
Total General Governmental Expenditures Net of Debt Service Expense ........................
III
DemographicStatistics..........................................................................................................................
112
PrincipalEmployers..............................................................................................................................
113
Property Value, Construction and Bank Deposits..................................................................................
114
CapitalAssets by Function....................................................................................................................
115
Operating Indicators by Function..........................................................................................................
116
City Government Employees Full -Time Equivalent - History ...............................................................
117
Salaries & Surety Bonds of Principal Officials......................................................................................
118
Miscellaneous Statistical Information....................................................................................................
119
ii
CITY OF A
Federal Way
May 25, 2012
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,
2011 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.
This transmittal letter is designed to compliment the MD&A and should be read in conjunction with it. The City's
MD&A can be found immediately following the Independent Auditor's Report.
REPORTING ENTITY
The City is a noncharter Optional Code City with a Mayor -Council form of government. It was incorporated on
February 28, 1990, and is governed under the provisions of the Optional Municipal Code of the Revised Code of
Washington. Optional Code City status increases the City's operating authority by extending it to the powers of all four
city classifications which exist in Washington Law.
The City Council consists of seven council members, all of whom are elected at large by citizens of Federal Way to
serve four-year terms. In November 2009, the citizens of Federal Way approved Proposition 1 to change the form of
government from a City Manager -Council run government to an elected Mayor -Council government. Federal Way
voters elected former state representative Skip Priest as mayor on November 2, 2010.
City services provided include: police protection, construction and maintenance of streets, building inspection,
municipal court services, jail services, planning and zoning, park services, emergency management services, surface
water management and general administration, including finance. Services for a land use hearing examiner are
contracted. The City continues to have ten major departments consisting of the City Council, Mayor's Office; Law;
Finance; Human Resources; Information Technology; Municipal Court, Parks & Public Works; Police; and Community
Development. Fire protection and emergency medical services are provided by South King Fire & Rescue. 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.
iii
ECONOMIC FACTORS AFFECTING FINANCIAL CONDITION
The Great Recession is remarkably similar to the Great Depression, although not as severe. The bursting of the housing
bubble followed by a freeze in the credit markets, falling home prices, and 50% dip in the stock market and rising
unemployment has made it difficult for the economy to quickly recover. Consumer spending slowed, housing
construction came to an abrupt halt, and state and local governments began to experience shortfalls in tax revenue.
During 2011, matters got worse with bad winter weather, cut in defense spending, increase in gasoline prices and the
Japan earthquake combined with less government spending slowed the economy down to a crawl. In addition, due to a
deadlock in Congress over raising the debt ceiling took the United States to the brick of default and led Standard &
Poor's to downgrade the national long-term credit rating from the highest rating of AAA to AA+ - the first ever
downgrade in history. Stock prices plunged, while consumer confidence plummeted back to its recession low.
However, the economic conditions started to shift towards the end of 2011. Nationally, the U.S. Bureau of Economic
Analysis (BEA) indicates Gross Domestic Product (GDP) advanced at a better-than-expected 2.4% rate in the third
quarter of 2011 mainly in part by stronger consumer spending. In addition, home prices have slowly begun to stabilize.
Unemployment in the Puget Sound region has been hit harder during this recession compared to the last recession.
Unemployment remains at approximately 8% down from the peak of 9%. During the 2001 recession, it took six years
to return to the same number of jobs that had existed before the recession began. The Puget Sound region was most
affected by the 2001 recession which was a combined effort of the "dot.com" collapse and the 9/11 terror attacks on
commercial airplane industry both of which are prominent for the Pacific Northwest. Projections indicate that the Puget
Sound jobs will not return to their prerecession level until the fourth quarter of 2014.
A key difference between the Great Recession of 2007 and the previous recessions is the sharp decline in the housing
market. Housing development and prices grew steadily through the 2000s, fed by low interest rates and the widespread
availability of mortgages to marginally -qualified buyers. Homes in King County tripled its value between 1994 and
2006. However, 2011 proved to be the best year for home sales in King County since 2007. Prices however have
decreased approximately 33% compared to 2007. Statistics indicates that many of these sales are for foreclosed homes.
In King County, the number of bank -repossessed homes sold in 2011 was up 73% from 2010. These homes are selling
for significantly less than other homes which in turns erodes home values causing more homeowners owing more on
their homes than it's worth.
ECONOMIC TRENDS
Federal Way is the eleventh largest city, in Washington State with a population of 89,370 as of April 1, 2011. The City
is located on a plateau adjacent to Puget Sound in King County, eight miles north of downtown Tacoma and 25 miles
south of downtown Seattle. The City occupies approximately 22.5 square miles and is served by Interstate 5 and state
highways 99 and 509.
In 2011 there were 35,464 housing units in Federal Way, an increase of approximately less than 1% over 2010. Of
these units, 56% were single family homes, 40% multi -family units, and 4% mobile homes and trailers.
The community is residential and commercial, with the populace employed locally and in the neighboring cities such as
SeaTac, Kent, Tacoma, Bellevue, and Seattle. Employment in Federal Way is highly concentrated in retail and services
sectors which respond primarily to the needs of the local market area population. The employment figure for 2010 is
estimated at 28,939. Major employers are; Federal Way Public Schools, Weyerhaeuser, Lifebridge Incorporated, St.
Francis Community Hospital, World Vision, and Wild Waves Theme Park.
Sales tax collected in 2011 total $10.9 million, and is above 2010 by $149 thousand. The retail sector of the local
economy is anchored by two areas; the first is South 348`h and Pacific Highway 99 including Wal-Mart Super Center,
Wholesale Sports, Costco, Lowe's Home Improvement Center, and Home Depot. The second is The Commons
regional mall including Target, TJ Max, Best Buy, and many other small businesses adjacent to the area. According to
a listing of businesses registered with the City of Federal Way and sorted by the Standard Industrial Classification, the
business economy appears to be configured as follows: retail trade 51%; services 22%; construction 11%; wholesale
trade 4%; information 5%, manufacturing 1%, and other 6%.
IMA
In 2011, new improvements to real estate totaled $39.3 million or approximately 0.1% of the City's 2011 assessed
valuation. The total assessed value of taxable property in Federal Way was $7.7 billion, which is approximately 6.6%
lower than the 2010 assessed valuation of $8.3 billion. Real Estate sales increased 32% to approximately $314 million
in 2011 as compared to $238 million in 2010. A total of 482 building permits and 2,385 other building related permits
were issued in 2011. Estimated valuation was $33.0 million and $6.2 million respectively. Significant building permits
include: Federal Way Public Schools Service Center Facilities and New Kitchen Building, DOW Jones addition,
Rockwell Collins Addition, Safeway Fuel New Convenience Store, Fuel Canopy and Vending Kiosk, Wild Waves
Zooma Falls Conveyer addition, Wild Waves Tantrum Ride addition, Bigfoot Java New Building, and Mirror Lake
Elementary New Portable.
LONG-TERM PLANNING
The City's fiscal policy requires the City to prepare long-range projections for six years beyond the current budget
period. The projection extends current operations to the future to see if the services are sustainable and the magnitude
of, if any, future financing gaps. This glimpse into the future allows the City to proactively plan and implement
corrective measures over time to avoid sudden drastic changes in service levels or in revenue/tax policies. In addition,
the City's fiscal policy requires the City to balance its ongoing services with ongoing revenues.
MAJOR INITIATIVES AND ACCOMPLISHMENTS
In October 2011, Federal Way City Council voted to move forward with a purchase/sale agreement with ARCAAD Inc.
to build an ambitious Crystal Palace design on the former AMC Theatres site in downtown Federal Way. The Crystal
Palace design would include approximately 500 residential units, 12,000 square feet of office and retail space, 50,000
square of creation/cinema/restaurant/entertaining space and 75,000 square feet of the "crystal palace" space. Earlier in
the year, Federal Way City Council had dissolved a contract with Twin Development to build a high-rise mixed use
proj ect.
In addition to the Crystal Palace design, the City has made steps towards the proposed Performing Arts and Civic
Center project for downtown Federal Way. This project will be built on the former Toys "R" Us property located at
31510 20`h Avenue South. The components of the center have not been established but a performance hall, conference
center and a hotel are part of the planning phase of the center. In mid-2011, Federal Way City Council selected LMN
Architects of Seattle to design the first step to revitalizing downtown Federal Way.
The City has also taken steps not only to revamp the downtown core, but also within the City's neighborhoods. The
increase in foreclosed homes have provided a dumping ground for junk, furniture, and appliances in these vacant or
abandoned homes. The City set to amend its "unfit building" code to include unfit premises. "Unfit premises" would
include accumulation of junk, garbage and trash, unsecured abandoned vehicles and trucks, and/or other equipment on
the property deemed to be inoperable, sinkholes, exposed wires or trenches, dilapidated sheds, carports of fences, and
noxious weeds or plants. This change would save the city time and money. Funding for the expanded sphere of
enforcement will come from abatement funding. In addition, funding can also come from tax liens against property
owners if needed.
Despite reductions in Police staffing, Federal Way Police Department reports improved levels of service that led to
some of the lowest crime rates in the city's history. Index crimes, which include homicide, rape robbery, burglary,
aggravated assault, larceny, motor vehicle theft and arson, decreased in the third quarter of 2011 by 12% compared to
2010. 3,427 index crimes were recorded in 2011 and is the lowest crime rate since the inception of the Police
Department. A contributing factor to the decrease in the crime rate is the creation of the Special Operations Unit back
in 2009. This unit is a group of officers that focus on the transit center, city parks and the downtown core. The unit was
able to reduce crime in downtown reporting district by 50 percent in 2011.
OUTLOOK FOR THE FUTURE
Council identified the following set of goals for the City which was adopted on March 7, 2006.
►v
1. Integrate the public safety strategy in all facets of City operations, building on a strong community -based
approach.
2. Create a multi -use urban city center that is pedestrian friendly, linked to neighborhoods and parks, and services
as the social and economic hub of the City.
3. Establish Federal Way as an economic leader and job center in South King County by attracting regional
market for high quality office and retail businesses.
4. Maintain the capital facilities plan and provide financing options for transportation and surface water
improvements, parks, recreation, and cultural arts and public facilities.
5. Ensure a responsive service culture within the City organization where employees listen carefully, treat citizens
and each other respectfully and solve programs creatively, efficiently, and proactively.
6. Position Federal Way as a regional leader by working collaboratively with other local and regional
jurisdictions in order to leverage resources.
FINANCIAL INFORMATION
The City of Federal Way is responsible for establishing and maintaining an internal control structure designed to ensure
that the assets of the City are protected from loss, theft, or misuse and to ensure that adequate accounting data are
compiled to allow for the preparation of financial statements in conformity with generally accepted accounting
principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these
objectives are met. The concept of reasonable assurance recognizes that: 1) the cost of a control should not exceed the
benefits likely to be derived, and 2) the evaluation of relative costs and benefits of the control system requires estimates
and judgments by management.
Budgetary Control
The City maintains budgetary controls in accordance with the Revised Code of Washington (RCW 35A.33). The
objectives of these budgetary controls are to ensure compliance with legal provisions embodied in the annual
appropriated budget approved by the City Council. Activities of the General Fund, some Special Revenue Funds, and
Debt Service Fund are included in the annual appropriated budget. The level of budgetary control at which
expenditures cannot legally exceed the appropriated amount is established at the individual fund level. The project -
length based Special Revenue Funds, and the Capital Projects, Enterprise and Internal Service funds are management
budgets only and therefore these budgets are not represented in the CAFR. The City also maintains an encumbrance
accounting system as one technique of accomplishing budgetary control. All appropriations lapse at year-end.
Basis of Accounting
All governmental funds are accounted for using the modified accrual basis of accounting. Under the modified accrual
basis, revenues are recorded when received in cash, except for revenues susceptible to accrual. Revenues considered
susceptible to accrual are those that are measurable and available to finance the government operation during the current
period. Expenditures, other than accrued interest on general long-term debt, are recorded at the time liabilities are
incurred.
All proprietary funds use the accrual basis of accounting. Under the accrual basis, revenues are recorded when they are
earned and expenses are recorded as soon as they result in liabilities for benefits received.
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
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2011 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 2011;
which is the 18th consecutive year receiving a clean audit. 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, 2010. The City of Federal Way has received a Certificate of
Achievement for the last twenty-one years (fiscal years ended 1990 — 2010). 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 Certificate of Achievement Program's requirements, and we are submitting it to the
GFOA to determine its eligibility for another certificate.
The City of Federal Way also received the Government Finance Officers Association Distinguished Budget
Presentation Award for its biennial budget for the years beginning January 1, 2011 and 2012. In order to receive this
award, a governmental unit must publish a budget document that meets program criteria as a policy document, a
financial plan, an operations guide, and a communications medium.
ACKNOWLEDGEMENTS
The preparation of this report would not have been possible without the efficient and dedicated services of the entire
staff of the finance division, in particular Phung Huynh (Financial Analyst II), Chase Donnelly (Financial Analyst 1) and
Heidi Horton (Accounting Supervisor). In addition, staff in all City departments should be recognized for responding so
positively to the requests for detailed information which accompany each audit. The role of the State Auditor's Office
should also be acknowledged as a significant contribution to a fine product. Finally, we wish to express our
appreciation to the Mayor and City Council for their ongoing support and for providing the firm foundation for the
pursuit of excellence in all realms of professional endeavors.
Respectfully submitted,
(n�kU4_�)
Tho Kraus
Finance Director
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CITY OFFICIALS
SKIP PRIEST JIM FERREL
Mayor Councilmember
JEANNE BURBIDGE JACK DOVEY
Councilmember Councilmember
LINDA KOCHMAR MIKE PARK
Councilmember Councilmember
ROGER FREEMAN DINI DUCLOS
Councilmember Councilmember
OTHER ADMINISTRATIVE OFFICERS
CityAttorney.........................................................................................................................................
Patricia Richardson
CityClerk.....................................................................................................................................................Carol
McNeilly
Community and Economic Development Director.....................................................................................
Patrick Doherty
FinanceDirector...................................................................................................................................................Tho
Kraus
Administrative Services Director......................................................................................................................Bryant
Enge
Parks and Public Works Director.....................................................................................................................
Cary M. Roe
PoliceChief..................................................................................................................................................Brian
J. Wilson
Municipal Court
David Larson
* Civil Impounds
* Misdemeanors & Gross
Misdemeanors
* Traffic & Non -traffic
Infractions
* Probation Services
Finance
Tho Kraus
* Payroll
* Accounts Payable
* Purchasing
* Accounts Receivable
* Business License
* General Accounting
* Budget
* Banking and Investments
* Monthly Financial Report
* Audit Coordination
* hitemal Controls
* Financial Planninv/Analy!
CITY OF FEDERAL WAY ORGANIZATION CHART AND OPERATION SUMMARY
Human Resources
Jean Stanley
* Records Management
* Hearing Examiner Coord..
* Codification Coordination
* Licensing Enforcement
* Commission & Board
appointment process
* Recruiting/Training
* Benefits Administration
* Employee/Labor Relations
* Wellness
* Retirement System
* Civil Service
CITIZENS OF FEDERAL WAY
City Council
* Represents the People of Federal A
Mayor's Office
Mayor Skip Priest Adopt Ordinances and Resolutions
Administer City-wide Operations and Budget * Grant Franchises
Coordinate Regional Affairs * Levy Taxes and Appropriate Funds
Human Services/Community Development Block Grant *Establish Policy Guidelines
Law
Patricia Richardson
Civil Legal Services
and Litigation
Legislative support
Prosecution
Provide Legal Counsel
Draft Contracts
and Ordinances
Negotiate Contracts
and Real Estate
Transactions
Risk Management
Police Department
Brian J. Wilson
* Crime Analysis/Prevention
* Traffic Safety Education &
Enforcement
* Investigation
* Patrol
* Emergency Communication
* Community Safety and
Education Programs
* Fleet Management
* Animal Services
Information Technology
Thomas Fichtner
* Data Processing/ GIS
* Mail & Copier
* Systems Support
Technology Infrastructure
Network appliances
* Customer Support
Online, Remote Helpdesk
Staff training
* Applications Support
Business Systems Setup/Support
Database Administration
Community & Economic
Development
Patrick Doherty
* Economic Development
* Land Use Management
--Permit process
--Legislative
* Bldg Permits & Inspections
* Code Compliance
* Neighborhood Develop
Public Works/Parks
Cary M. Roe
* Development Services
--Permitting
--Inspection
--Legislation
* Maintenance, Operating, &
Development of
--Public Right -of -Way
--Traffic Systems
--Surface Water Mgmt
* Solid Waste/Recycling
* Emergency Management
* Fleet Management
* Community Center
* Recreation & Athletic Progs
* Park maintenance/operation
& Development
* Community Events & Arts
* Public Facility Management
& Development
* Dumas Bay Centre Operations
* Knutzen Family Theatre
Federal Wav / 3
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Federal Way
Washington
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
December 31, 2010
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.
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Washington State Auditor
Brian Sonntag
INDEPENDENT AUDITOR'S REPORT
May 25, 2012
Mayor and City Council
City of Federal Way
Federal Way, Washington
We have audited the accompanying financial statements of the governmental activities, the
business -type activities, each major fund and the aggregate remaining fund information of the
City of Federal Way, King County, Washington, as of and for the year ended December 31,
2011, which collectively comprise the City's basic financial statements as listed in the table of
contents. These financial statements are the responsibility of the City's management. Our
responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business -type activities, each
major fund and the aggregate remaining fund information of the City of Federal Way, King
County, Washington, as of December 31, 2011, and the respective changes in financial position
and, where applicable, cash flows thereof, and the respective budgetary comparison for the
General, Street and Utility Tax funds for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
As described in Note 1, during the year ended December 31, 2011, the City has implemented
the Governmental Accounting Standards Board Statement No. 54 — Fund Balance Reporting
and Governmental Fund Type Definitions.
In accordance with Government Auditing Standards, we will also issue our report dated May 25,
2012, on our consideration of the City's internal control over financial reporting and on our tests
of its compliance with certain provisions of laws, regulations, contracts and grant agreements
and other matters. That report will be issued under separate cover in the City's Single Audit
Report. The purpose of that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion
on the internal control over financial reporting or on compliance. That report is an integral part
of an audit performed in accordance with Government Auditing Standards and should be
considered in assessing the results of our audit.
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis on pages 7 through 16, to be presented to supplement
the basic financial statements. Such information, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board who considers it to
be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic or historical context. We have applied certain limited
procedures to the required supplementary information in accordance with auditing standards
generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency
with management's responses to our inquiries, the basic financial statements, and other
knowledge we obtained during the audit of the basic financial statements. We do not express
an opinion or provide any assurance on the information because the limited procedures do not
provide us with sufficient evidence to express an opinion or provide any assurance.
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 supplementary information on pages 65 through 119 is
presented for purposes of additional analysis and is not a required part of the basic financial
statements. Such information is the responsibility of management and was derived from and
relates directly to the underlying accounting and other records used to prepare the financial
statements. This information has been subjected to auditing procedures applied in the audit of
the basic financial statements and certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other records used to
prepare the financial statements or to the financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the information 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 is
presented for purposes of additional analysis and is not a required part of the basic financial
statements of the City. Such information has not been subjected to the auditing procedures
applied in the audit of the basic financial statements and, accordingly, we do not express an
opinion or provide any assurance on it.
Sincerely,
BRIAN SONNTAG, CGFM
STATE AUDITOR
Federal Wav / 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, 2011. This information should be read in conjunction with the preceding
letter of transmittal, 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, 2011 by $588.1 million. Capital
Assets (net of depreciation and related debt) account for 88% of this amount with a value of $520.1 million. Of the
remaining net assets of $68 million or 12%, $44 million 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 $4.8 million, or 1% compared to 2010. Governmental activities increased by
$4.9 million while business -type activities decreased by $117 thousand.
• Invested in capital assets, net of related debt and unrestricted net assets for governmental activities increased by $4.4
million and decreased by $6 million respectively compared to 2010.
• Restricted Net Assets increased by $6.5 million or 37% is mainly for funding of capital projects.
• Governmental fund balances at year-end were $43.6 million, $1.3 million or 3% decreased over the prior year. Of this
amount, a total of $12.4 million, or 28% of the governmental fund balance is unrestricted and available to fund ongoing
activities. The remaining $31.2 million is earmarked for debt service, paths & trails reserve, hotel/motel lodging tax,
police special funds, petty cash/change funds, court trust fund, advance travel, and capital projects.
• Unrestricted fund balance in the general fund was $12.4 million, which increased by $4.2 million or 5 1 % from the prior
year.
• The City debt decreased by $780 thousand during the current fiscal year. General obligation debt decreased by $597
thousand while public works trust fund loan decreased by $182 thousand. The decreases reflect the annual debt service
payments and compensated absences.
OVERVIEW OF FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City of Federal Way's basic financial statements.
The basic financial statements are comprised of three components:
1) government -wide financial statements,
2) fund financial statements, and
3) notes to the financial statements.
In addition to the required components, the City's annual report also includes other supplementary information. The first set
of supplementary information is the Combining Statements. These provide Balance Sheets, Statement of Revenues,
Expenditures, and Changes in Fund Balances with Budget to Actual Comparisons, Statement of Net Assets, and Cash Flows
for all Non -Major Funds. The other set of supplementary information is the Statistical Section. This section provides a four
to ten-year view of the City's revenues, expenditures, debt obligations and capacity, the City's largest taxpayers, and those
entities with the largest employment within the City of Federal Way. This section provides a long-term perspective on the
City's economy.
Government -wide Financial Statements
The government -wide financial statements are designed to provide readers with a broad overview of the City of Federal
Way's finances, in a manner similar to a private -sector business.
The statement of net assets presents information on all of the City of Federal Way's assets and liabilities, with the difference
between the two reported as net assets. This statement serves a purpose similar to that 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
Federal Wav / 8
timing of the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only
result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).
Both of the government -wide financial statements distinguish functions of the City of Federal Way that are principally
supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to
recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental
activities of the City of Federal Way include law enforcement and public safety, construction and maintenance of streets,
building inspection, municipal court services, jail services, community planning and development services, parks and
recreation facilities, other community services and general administration. The business -type activities of the City include
surface water management and the control and operation of Dumas Bay Centre, a multi -use facility that offers business and
retreat accommodations, recreation and cultural arts classes and a performing arts facility.
The City has no separately identified component units included in the government -wide financial statements. The City has
reported its investment in two governmental joint ventures: Valley Communications Center and South Correctional Entity
(SCORE). Descriptions of these joint ventures are 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 fund accounting to ensure and show compliance with finance -related legal
requirements. The City's funds are divided into two categories: governmental funds and proprietary funds.
Governmental Funds
Governmental funds are used to account for essentially the same functions as are reported in governmental activities in the
government -wide financial statements. However, unlike the government -wide financial statements, governmental fund
financial statements focus on near -term inflows and outflows of spendable resources as well as on balances of spendable
resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near -term
financing requirements.
Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to
compare the information presented for governmental funds with similar information presented for government -wide financial
statements. By doing so, readers may better understand the long-term impact of the government's near -term financing
decisions. Both the expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between
governmental funds and governmental activities.
The City of Federal Way maintains seventeen individual governmental funds. The City's six major governmental funds, the
general fund, street fund, utility tax fund, debt service fund, downtown redevelopment fund, and the transportation fund, are
presented separately in the governmental fund balance sheet and the governmental fund statement of revenues, expenditures,
and changes in fund balances. The remaining governmental funds are combined into a single column labeled nonmajor
governmental funds. Individual fund data for each of the nonmajor governmental funds can be found in combining
statements later on in this report.
The City maintains control over its operating funds through the adoption of the biennial budget. Budgets are adopted at the
fund level and according to state law. A budgetary comparison statement is presented for the General, Street, and Utility Tax
Fund as a basic financial statement.
The basic governmental fund financial statements can be found on pages after the government -wide statements of this report.
Proprietary Funds
The City of Federal Way maintains two types of proprietary funds. Enterprise funds are used to report the same functions
presented as business -type activities in the government -wide statements. The City uses enterprise funds to account for its
surface water management and control and the Dumas Bay Centre. Internal service funds are an accounting device used to
accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account
for its risk management and self-insurance program, information systems, mail and duplication services, fleet of vehicles and
motorized equipment, and facilities management.
Federal Wav / 9
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, 2011 total $588.1 million. The following is a condensed version of the government -wide statement of
net assets.
The largest component of the City's net assets, 88% or $520.1 million, in its investment in capital assets net any related
outstanding debt issued to acquire those assets. These capital assets such as land, streets, trails, parks, police vehicles, and
parks equipment are used to provide services to the citizens. Consequently, these assets are not available to sell and convert
to cash for future spending.
CONDENSED STATEMENT OF NET ASSETS
Governmental Activities Business -Type Activities Total
2011 2010 2011 2010 2011 2010
Current and other assets $ 83,596,160 $ 83,706,625 $ 6,033,543 $ 5,627,082 $ 89,629,703 $ 89,333,707
Capital assets and CIP,
net of accumulated depreciation
Total assets
Long-term liabilities
Other liabilities
Total liabilities
Net assets:
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total net assets
482,724,905
478,651,345
51,080,562
51,773,132
533,805,467
530,424,477
566,321,065
562,357,970
57,114,105
57,400214
623,435,170
619,758,184
29,731230
30,216,587
1,106,377
1273,197
30,837,607
31,489,784
3,970,884
4,414,309
537,224
539,142
4,508,108
4,953,451
33,702,114
34,630,896
1,643,601
1,812,339
35,345,715
36,443,235
470,074,905 465,671,345 50,052,887 50,563,097 520,127,792 516,234,442
23,941,601 17,442,323 18,831 9,411 23,960,432 17,451,734
38,602,445 44,613,406 5,398,786 5,015,367 44,001,231 49,628,773
$ 532,618,951 S 527,727,074 $ 55,470,504 $ 55,587,875 $ 588,089,455 $ 583,314,949
Approximately 3% or $19.7 million of the total net assets of the city are earmarked for construction improvement
projects. $14.5 million of the $19.7 million earmarked for construction improvement projects are restricted and the
remainder is committed to construction improvement projects. Some of the major projects include the Annual Transportation
System Safety Improvements, S 348th St at 1st Ave S, S 320th St at 20th Ave S, SW 312th St at SR509, SW Camp Dr - 21st
Ave SW, S 352nd St Ext from SR99-SR161, S 320th St at I-5 S Ramp, SR99 HOV Lanes PH IV, 21st Ave SW at SW 336th
St, and S 344th Way at Weyerhaeuser Way S. During the year, the City funded renovation and improvement of neighborhood
parks and open space parks such as Lakota Park, Panther Lake, and various playground improvements. 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 to construct large projects in the City that impact the transportation system.
The remaining balance of restricted net assets is divided among restrictions for: $146 thousand for police special funds, petty
cash/change funds and advance travel, $86 thousand for municipal court trust fund, $18 thousand for prepaid
insurance/debt, $3.9 million for debt service prefunding, $557 thousand Special Contracts/Studies, $213 thousand for
Federal Wav / 10
Hotel/Motel lodging tax, $152 thousand for Path & Trails Reserve, and $49 thousand for Community Development Block
Grant. The business -type activities portion of $5.3 million, $5.2 million can only be spent on surface water management and
the remaining $96 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 $18.8 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 $4.8 million in 2011. The increase is mainly due to general
governmental activities which contributed 102% or $4.9 million of the increase.
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.
Governmental activities contributed $4.9 million or 102% of the total change in net assets of $4.8 million. The increase is
mainly due to the overall increase in capital assets of which $2.4 million was contributed from developers and $1.1 million
increase in joint venture. Information in regards the joint venture is found in Note 14 starting on page 60.
Compared to 2010, total governmental revenues decrease by $6.5 million or 11%. The decrease is mainly due to less funding
received from federal and state assistance which decreased $6.5 million from 2010. In 2010, the City received $5 million in
state funding for the purchase of the old Toys "R" Us site for the future site of the Performing Arts and Civic Center.
Total governmental expenses decrease by $767 thousand or 1% which is mainly due to decrease in capital outlay which is
offset by increase in City's jail services. The increase in jail services is for the start-up cost of the South Correctional Entity
(SCORE) which opened in the fall of 2011. Information in regards the joint venture is found in Note 14 starting on page 60.
Governmental Activities - Revenues
Other, 1.7%
Charges for
services, 16.5
Operating grants
& contributions,
7.2
Other taxes,
26.9%
Sales tax, 17.0%
Capital grants
and contribution,
15.2%
Property tax,
15.5%
Governmental Activities - Expenses
Interest on long- General
term debt, 1.1 % govemme
7.7%
Health and Culture an
human services, recreation,
1.2% 14.0%
Economic
environment,
4.8
Security of
Transportation, persons &
23.4% property,47.1%
Physical
environment,
0.7% I
'Federal Wav / 11
CHANGES IN NET ASSETS RESULTING FROM CHANGES IN REVENUES AND EXPENSES
Governmental Activities
Business -Type
Activities
Total
2011
2010
2011
2010
2011
2010
Revenues:
Programs revenues:
Charges for services
$ 10,487,684
$ 10,817,501
$ 4,020,144
$ 4,246,235 $
14,507,828
$ 15,063,736
Operating grants & contributions
4,597,981
9,718,920
265,660
-
4,863,641
9,718,920
Capital grants & contributions
9,716,551
9,044,477
-
9,716,551
9,044,477
Programs revenues:
Property taxes
9,867,614
9,609,740
9,867,614
9,609,740
Sales tax
10,858,381
10,708,951
10,858,381
10,708,951
Local criminal justice sales tax
1,795,971
1,701,120
1,795,971
1,701,120
Utility tax
13,068,510
12,890,310
13,068,510
12,890,310
Real estate excise tax
1,560,395
1,403,361
1,560,395
1,403,361
Othertaxes
702,553
813,034
-
-
702,553
813,034
Other
1,061,026
1,045,608
12,405
17,646
1,073,431
1,063,254
Total Revenue
63,716,666
67,753,022
4,298,209
4,263,881
68,014,875
72,016,903
Expenses:
General government
4,448,449
4,865,827
4,448,449
4,865,827
Security of persons & property
27,222,584
26,842,240
27,222,584
26,842,240
Transportation
13,539,598
9,781,800
13,539,598
9,781,800
Physical environment
424,466
451,470
424,466
451,470
Economic environment
2,782,435
3,175,005
2,782,435
3,175,005
Health and human services
690,643
767,108
690,643
767,108
Culture and recreation
8,105,578
8,073,804
8,105,578
8,073,804
Interest on long-term debt
614,571
685,214 - -
614,571
685,214
Surface Water Management
-
- 3,527,590 3,384,352
3,527,590
3,384,352
Dumas Bay Centre
-
- 890,738 849,176
890,738
849,176
Total Expenses
57,828,324
54,642,468 4,418,328 4,233,528
62,246,652
58,875,996
Change in net assets before transfers
5,888,342
13,110,554
(120,119)
30,353
5,768,223
13,140,907
Transfers
(113,000)
-
113,000
-
-
-
Change in net assets
5,775,342
13,110,554
(7,119)
30,353
5,768,223
13,140,907
Netassets- beginning
527,727,074
514,463,753
55,587,875
55,710,290
583,314,949
570,174,043
Prior period adjustment
(883,465)
-
(110,252)
-
(993,717)
-
Adjusted Netassets - beginning
526,843,609
514,463,753
55,477,623
55,710,290
582,321,232
570,174,043
Netassets- ending
532,618,951
527,574,307
55,470,504
55,740,643
588,089,455
583,314,950
Business -type activities of the City's Surface Water Management system and Dumas Bay Centre decreased the City's net
assets by $117 thousand. Surface Water Management Fund increase by $99 thousand which was offset by a decreased in
Dumas Bay Centre Fund net assets by $99 thousand.
Surface Water Management increase in fund balance is due to a prior period adjustment in Surface Water Management for a
settlement that was capitalized incorrectly in project 251 Joe's Creek Regional Stormwater Facility and Salmon Habitat.
The decrease in Dumas Bay Centre is due to awarding the managing and operations of the Knutzen Family Theatre to
Centerstage starting July 1st, 2010. The City continues to pay for repair and maintenance for the Knutzen Family Theatre
without offsetting revenues.
Federal Wav / 12
Business -Type Activities - Revenues
Operating grants
Other, 0.3%
& contributions,
6.2%
Charges for
services, 93.5%
FINANCIAL ANALYSIS OF THE CITY'S FUNDS
Business -Type Activities - Expenses
Dumas Bay
Centre, 20.2%
6n
Surface Water
Management,
79.8%
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 2011, the City's governmental funds had a combined ending fund balance of $43.6 million which decreased
by $1.3 million from the prior year. Approximately 28% or $12.4 million of this amount constitutes unrestricted General Fund
balance, which is available for spending at the City Council's discretion. The remainder of the fund balance is restricted to
indicate that it is not available for new spending because it has already been committed for debt service payments, capital
projects, police special funds and petty cash/change fund/advance travel.
The General Fund is the chief operating fund of the City. Total fund balance increased $4.2 million or 50%. The increase in
fund balance is mainly due to capital project funds returning $3.8 million of unspent and/or savings to the General Fund and a
one-time transfer of $375 thousand from the Traffic Safety Fund which is funded by Red Light Photo citations to support
Police operations in the General Fund.
In addition, there was an increase of $370 thousand or 1% in revenues while expenses only increased $117 thousand.
The Utility Tax fund was established to account for the utility tax receipts which include 6% collected for capital, debt, and
other maintenance & operations as determined by Council and the remaining 1.75% is for Voter Approved enhanced Police
and Community Safety in 2007. Total fund balance increased $791 thousand or 23% from 2010.
The Debt Service Fund has a total fund balance of $3.9 million which increased by $487 thousand from 2010. The overall
decrease is mainly due to the overall increase in real estate excise tax available for transfer for construction in progress projects
along with debt payments.
The Downtown Redevelopment fund was established to accumulate resources and set aside funding for downtown projects.
Overall, ending fund balance decreased by $799 thousand or 27%.
The Transportation Fund is used to improve existing traffic signals, new signalization, major roadways and arterials involving
the design and construction of new sections of streets, the widening of roadways to provide additional vehicle lanes, the
installation of sidewalks and landscaping. The major source of revenue for this fund is grants from other agencies and
contributions from other funds. Total ending fund balance decreased by $6.3 million or 31%.
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 $5.2 million, and
'Federal Wav / 13
those for Dumas Bay Centre amounted to $96 thousand. The total change in net assets for both funds was $427 thousand
increase and $46 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.
GENERAL FUND BUDGETARY AND ACTUAL 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. In 2011, the City made two budget adjustments. The following discussion is reflective only of the current
year of the biennium.
The General Fund operating budget increased by $429 thousand between the original adopted budget for and the adjusted
adopted budget for 2011 fiscal year. The following is the major changes for the 2011 budget:
o Added $666 thousand for grant/contribution items;
o Added $475 thousand for pending/future deductibles;
o Added $420 thousand for PERS (Public Employees' Retirement System) reserves;
o Added $150 thousand for gas increase;
o Added $106 thousand for increase in election costs;
o Added $100 thousand for unemployment claim increase;
o Added $12 thousand for contribution to Mental Health from Liquor excise taxes;
o Added $10 thousand one-time increase for labor negotiations;
o Added $83 thousand for 1.0 FTE Communication and Grant Writer;
o Added $12 thousand for 0.25 FTE increase for Human Resource Assistant;
o Added $25 thousand for 0.49 FTE Administrative Service Analyst;
o Eliminate $144 thousand for elimination of 1.0 FTE Human Resources Manager and convert Senior Human
Resource Analyst to Human Resource Manager;
o Eliminate $33 thousand for elimination of 1.0 FTE Human Services Manager and 1.0 CDBG Coordinator
and add 0.50 FTE to Human Services Technician;
o Eliminate $241 thousand for 3.0 FTE frozen Police Officer;
o Eliminate $195 thousand for 1.0 FTE unfilled Chief Administrative Officer;
o Eliminate $163 thousand for Community Development and Economic Development reorganization which
eliminated 1.0 FTE Community Development Director;
o Eliminated $99 thousand 1.0 FTE Information Technology Technician;
o Eliminated $7 thousand for National League of Cities association dues;
o Eliminated $5 thousand for council retreat facilitator;
o Eliminated $70 thousand for Federal Lobbyist;
o Eliminated $98 thousand for unspent termination pay and outplacement cost;
o Reduced courier/postage by $10 thousand due to switching vendors;
o Reduced sponsorship policy by $10 thousand;
o Reduced travel and training by $25 thousand;
o Reduced dispatch services by $199 thousand;
o Added $98 thousand for various internal service programs;
o Added $663 thousand for program balances continuing into 2011 from 2010 such as federal/state seizure
balance, downtown redevelopment, family medical leave, abatement funding, graffiti program, permit system
upgrade, public defender open cases, wire theft, shoreline master plan, and outside counsel; and
o Rolled forward $1.1 million for contingency reserve funds.
Adjustments to revenues and other sources budget include: Adjustments to beginning balance of $3.1 million, increase of $640
thousand for grant/contribution revenues, increase in liquor profits of $312 thousand, increase in gambling tax of $250
thousand for the reopening of a card room establishment, increase of $190 thousand for criminal justice high crime distribution
from the state, increase of $120 thousand for property taxes, increase of $74 thousand for criminal justice sales tax, increase in
franchise fees of $36 thousand, increase of $22 thousand in park revenues, increase of $10 thousand for business licenses,
increase of $2 thousand for leasehold excise tax, decrease of $162 thousand for animal license, decrease in building and
electrical permits of $150 thousand, decrease of $40 thousand for interest, decrease of $60 thousand for court revenues. Other
sources changes include increase for transfer in for fleet excess reserves of $56 thousand, increase for secure our school grant
contribution for $9 thousand and a decrease in transfer in of $70 thousand for elimination of the federal lobbyist.
Federal Wav / 14
The General Fund ending fund balance of $12.6 million is $3.8 million over the above the projected $8.8 million for 2011 year-
end. The $1.8 million of the $3.8 million excess is being earmarked for carry forward into 2012. The remaining $2.0 million
increase is considered one-time funds.
The $3.8 million increase in ending fund balance is made up of $211 thousand in additional revenues/other sources and $3.6
million in unspent expenses/other sources.
The $211 thousand increase in revenues is attributed to increases in sales tax of $175 thousand; criminal justice sales tax of $86
thousand; parks & fees of $48 thousand; franchise fees of $8 thousand; and $2 thousand for business licenses; offset by
decreases in: state shared revenues of $26 thousand; property tax of $24 thousand, and court revenue of $18 thousand;
transfer -in from utility tax of $164 thousand due to lower cost than anticipated; and grants & contributions of $146 thousand.
The $3.6 million unspent expenses are attributable to savings found in: Police & Jail services of $747 thousand; Community &
Economic Development of $529 thousand; Pension Reserves of $420 thousand; Risk Management Deductible Claims of $155
thousand; Mayor's Office/Human Services of $348 thousand; Parks & Recreation of $241 thousand, Law of $196 thousand;
Human Resources/City Clerk of $192 thousand, Municipal Court of $123 thousand; Finance of $46 thousand, and City Council
of $28 thousand.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
The City of Federal Way's investment in capital assets for its governmental and business -type activities as of December 31,
2011 amounts to $533.8 million (net of accumulated depreciation). This investment in capital assets includes land, buildings,
improvements, machinery and equipment, infrastructure, park facilities and construction in progress. For more details, please
see Note 8.
CAPITAL ASSETS AT YEAR-END, NET OF DEPRECIATION
Land
Building and improvements
Machinery and equipment
Infrastructure
Construction in progress
Total Capital Assets
Governmental Business -Type
Activities Activities
302,168217 $ 10,310,215 $
40,471,948 36,470,917
5,068,341 29,956
113,858,340 1,816,003
Total
2011 2010
312,478,433 $ 311,577,872
76,942,864 80,241,357
5,098,298 5,098,553
115,674,344 115,546,565
21,158,058 2,453,470 23,611,529 17,960,130
$ 482,724,904 $ 51,080,559 $ 533,805,463 $ 530,424,476
Major capital asset events during the current fiscal year included the following: expanding and improving the city streets
and traffic corridors for a total of $11.0 million and general capital and various park improvements for $225 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 2011, the City of Federal Way had total bonded debt outstanding of $47.3 million for future principal and interest
payments which are backed by the full faith and credit of the government. The remainder of the City's debt represents Public
Works Trust Fund Loans.
LONGTERM DEBT (FUTURE PRINCIPAL AND INTEREST PAYMENTS)
Governmental Business -Type
Activities Activities Total
General obligation bonds $ 46,230,633 $ $ 46,230,633
Public works trust fund loan - 1,067,453 1,067,453
Total $ 46,230,633 $ 1,067,453 $ 47,298,086
The City's total debt decreased by $1.3 million due to annual debt service payments.
The City of Federal Way maintains an Aal rating from Moody's as of July 2011 for its general obligation bonds.
'Federal Wav / 15
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 2011 was $7.773 billion and the total amount of debt the City may issue is $558.3 million.
Remaining legal debt capacities as of December 31, 2011 are:
General government (no vote required) $ 94,879,813
General government (3/5 majority vote required) 77,229,838
Parks and open space (3/5 majority vote required) 193,074,595
Utilities (3/5 majority vote required) 193,074,595
Total Capacity $ 558,258,841
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 economy was growing entering into 2011, but for many Americans life was not getting better. Unemployment remained
high, home values are depressed, and state budgets were in deep trouble signifying more layouts, services cuts and potential tax
increases.
Rising oil and gasoline prices are once again threatening the U.S. economic recovery. The root of the cause is geopolitical
turmoil in the Middle East. The threat of removing Iranian oil supplies is pushing gas prices higher. However it's uncertain
how this will affect the U.S. economic growth because it depends on if the increase is transitory or longer lasting. As oil prices
increases, consumers will be forced to shift discretionary spending away from big -ticket purchases of autos, furniture,
appliances, and purchase of nondurables. Higher oil prices act as a tax on consumers and most of these dollars move out of
the United States.
Like the rest of the nation, Washington state economy is still dealing with a severely damaged economy. How quickly the
region emerges from this disastrous downturn largely depends on how fast the nation recovers.
The Puget Sound region, however, is doing better than the rest of the country, employment growing 1.6% over the year
compared to 1% for the nation. That's largely thanks to Boeing, which hired 7,000 more workers during the period and
probably indirectly created another 7,000 jobs. Without those 14,000 jobs, regional employment would have increased at the
same rate as the nation.
Despite the lift from Boeing, the regional economy remains in fragile state. Foreclosures are still holding down the housing
market, while weak tax collections are forcing state and local governments to cut programs and eliminate jobs.
In addition, the State is currently trying to fix a gap of more than $1 billion in the state's main budget. The House and the
Senate both have different strategies to balance the budget. Some proposed reductions includes eliminating Basic Health Plan,
Disability Lifeline, permanently reduce certain state distributions to local governments which includes support for criminal
justice programs, and K-12 & higher education reductions. The State's current proposed budget could cost the City of Federal
Way approximately $450 thousand per year. With the uncertainty of the State's budget and economic recovery, maintaining
City services at the current levels can be challenging.
With the uncertainty with the State's budget crisis, rising fuel costs, and unexpected increase in contracted costs; the City
approaches the 2013/14 budget with heightened caution. The City is proceeding with caution and restraint, so that it is not
overly susceptible to and minimizes the local economy slump without huge fluctuations in services to our citizens. Staff will
closely monitor and assess economic impacts experienced around our state and within our local economy to anticipate any
negative impact on critical City revenues.
Federal Wav / 16
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 Finance Department, City of Federal Way, 33325 8"' Avenue South,
Federal Way, Washington 98003, telephone 253-835-2523, or visit the City's website at www.cityoffederalwao.
'Federal Wav / 17
BASIC FINANCIAL STATEMENTS
Federal Wav / 18
STATEMENT OF NET ASSETS
December 31, 2011
ASSETS
Cash & cash equivalents and investments
Receivables (net)
Due from other governments
Prepaid items
Restricted assets:
Cash with escrow agent
Seizure funds/Petty cash/Advance travel/Retainage
Investment in joint venture
Capital assets not being depreciated:
Land
Construction in progress
Capital assets net of accumulated depreciation:
Buildings/structures
Improvements other than buildings
Machinery and equipment
Infrastructure
Total Assets
LIABILITIES
Accounts payable and accruals
Unearned revenue
Retainage payable
Retainage payable - with escrow agent
Due to other governments
Customer deposits
Noncurrent Liabilities:
Due within one year
Due in more than one year
Due to other governments
Total Liabilities
NET ASSETS
Invested in capital assets, net of related debt
Restricted for:
Customer deposit
Debt service prefunding
Capital projects
Steel Lake & North Lake Mgmt District
Other
Unrestricted
Total Net Assets
Governmental
Business -type
Activities
Activities
Total
$ 57,643,479
$ 5,544,437
$ 63,187,916
2,548,940
388,086
2,937,026
3,239,799
101,018
3,340,817
22,609
-
22,609
6,922
-
6,922
364,190
-
364,190
19,770,221
-
19,770,221
302,168,217
10,310,215
312,478,433
21,158,058
2,453,470
23,611,529
11,536,144
980,884
12,517,029
28,935,803
35,490,032
64,425,836
5,068,341
29,956
5,098,298
113,858,340
1,816,003
115, 674, 344
566,321,065
57,114,105
623,435,170
2,336,862
347,312
221,165
123,247
942,298
646,264
13,778,016
15,306,950
33,702,114
59,927
449,310
5,660
16,990
5,337
184,893
921,484
1,643,601
2,396,789
796,622
221,165
5,660
140,237
947,635
831,157
14,699,500
15,306,950
35,345,715
470,074,905
50,052,887
520,127,792
16,206
5,337
21,543
3,866,184
-
3,866,184
19,711,227
-
19,711,227
-
13,494
13,494
364,190
-
364,190
38,586,239
5,398,786
43,985,025
$ 532,618,951 $ 55,470,504 $ 588,089,455
The notes to the financial statements are an integral part of this statement.
'Federal Wav / 19
Functions/Programs
Governmental Activities:
General government
Security of persons & property
Transportation
Physical environment
Economic nnvironment
Health
Culture & recreation
Interest on long-term debt
Total governmental activities
Business -type Activities:
Surface Water Management
Dumas Bay Centre
Total business -type activities
Total
STATEMENT OF ACTIVITIES
For the Year ended December 31, 2011
Program Revenues
Operating Capital
Charges for Grants and Grants and
Expenses Services Contributions Contributions
Net (Expense) Revenue & Changes in Net Assets
Governmental Business -type
Activities Activities Total
$ 4,448,449
$ 815,432
$ 1,851,768
$ -
$ (1,781,249) $
$ (1,781,249)
27,222,584
4,990,091
720,245
-
(21,512,248)
(21,512,248)
13,539,598
2,481,904
1,721,893
9,625,608
289,807
289,807
424,466
77,808
146,460
-
(200,198)
(200,198)
2,782,435
510,040
129,628
25,943
(2,116,824)
(2,116,824)
690,643
126,600
2,583
-
(561,460)
(561,460)
8,105,578
1,485,810
25,404
65,000
(6,529,364)
(6,529,364)
614,571
-
-
-
(614,571)
(614,571)
57,828,324
10,487,684
4,597,981
9,716,551
(33,026,108)
(33,026,108)
3,527,590
3,458,435 265,660
196,505
196,505
890,738
561,709 -
(329,029)
(329,029)
4,418,328
4,020,144 265,660
(132,524)
(132,524)
$ 62,246,652
$ 14,507,828 $ 4,863,641 $ 9,716,551
(33,026,108) (132,524)
(33,158,632)
Property tax
Sales tax
Local criminal justice sales tax
Utility tax
Real estate excise tax
Gambling tax
Hotel/Motel tax
Leasehold excise tax
Other revenue
Investment earnings
Transfers
Total general revenues and transfers
Change in net assets
Net assets at beginning of year
Prior period adjustment (See Note 15)
Adjusted beginning net assets
Net assets at end of year
9,867,614
9,867,614
10,858,381
10,858,381
1,795,971
1,795,971
13,068,510
13,068,510
1,560,395
1,560,395
511,005
511,005
185,289
185,289
6,259
6,259
960,012
960,012
101,014
12,405
113,419
(113,000)
113,000
-
38,801,450
125,405
38,926,855
5,775,342
(7,119)
5,768,223
527,727,074
55,587,875
583,314,949
(883,465)
(110,252)
(993,717)
526,843,609
55,477,623
582,321,232
$532,618,951
$55,470,504
$ 588,089,455
The notes to the financial statements are an integral part of this statement.
Federal Wav / 20
BALANCESHEET
GOVERNMENTAL FUNDS
December 31, 2011
Debt
General
Street
Utility Tax
Service
ASSETS
Equity in pooled cash & investments $
12,434,843
$ 749,137
$ 2,701,206
$ 3,908,649
Prepaid insurance/debt service
17,609
-
-
-
Retainage in escrow
-
-
-
-
Receivables (net):
Taxes
566,113
-
1,466,988
84,735
Accounts and contracts
(14,025)
7,000
-
-
Restricted cash
253,527
3,695
-
-
Due from other governments
1,665,653
87,244
2,674
-
Interfund loans receivable
10,000
-
-
TOTAL ASSETS
14,933,720
847,076
4,170,868
3,993,384
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
1,387,107
84,506
-
-
Accounts/payroll payable
22
-
-
-
Retainage payable
-
3,695
-
Due to other governments
123,247
-
-
Deposits payable
332,283
593,809
-
Interfund loans payable
-
-
-
-
Deferred revenue
446,913
65,066
-
127,200
TOTAL LIABILITIES
2,289,572
747,076
-
127,200
Fund Balance:
Nonspendable
104,012
-
-
-
Restricted
145,524
-
-
3,866,184
Committed
21,893
100,000
4,170,868
-
Unassigned
12,372,719
-
-
-
TOTAL FUND BALANCES
12,644,148
100,000
4,170,868
3,866,184
TOTAL LIABILITIES AND
FUND BALANCE $
14,933,720
$ 847,076
$ 4,170,868
$ 3,993,384
The notes to the financial statements are an integral part of this statement.
'Federal Wav / 21
BALANCESHEET
GOVERNMENTAL FUNDS
December 31, 2011
Downtown
Redevelopment Transportation
ASSETS
Equity in pooled cash & investments $
Prepaid insurance/debt service
Retainage in escrow
Receivables (net):
Taxes
Accounts and contracts
Restricted Cash
Due from other governments
Interfund loans receivable
Nonmajor
2,215,333 $ 12,440,381 $ 7,069,386 $ 41,518,934
- - - 17,609
- 6,922 6,922
268 - - 2,118,104
- 307,620 89,666 390,261
106,969 - 364,190
1,310,374 124,794 3,190,739
- - - 10,000
TOTAL ASSETS 2,215,601 14,165,343 7,290,768 47,616,761
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable 8,334
Accounts/payroll payable -
Retainage payable
Due to other governments
Deposits payable
Interfund loans payable -
Deferred revenue 216
248,697 229,988
1,958,632
- -
22
106,969 110,502
221,165
- -
123,247
- 16,206
942,298
- 10,000
10,000
- 110,116
749,512
TOTAL LIABILITIES
8,550
355,666
476,812
4,004,876
Fund Balance:
Nonspendable
-
-
-
104,012
Restricted
2,023,299
9,573,357
3,862,649
19,471,013
Committed
183,752
4,236,320
2,951,308
11,664,141
Unassigned
-
-
-
12,372,719
TOTAL FUND BALANCES
2,207,051
13,809,677
6,813,957
43,611,884
TOTAL LIABILITIES AND
FUND BALANCE $ 2,215,601 $ 14,165,343 $ 7,290,769
Amounts reported for governmental activities in the statement of net assets are different because:
Capital assets are used in governmental activities are not financial resources and, therefore,
are not reported in the funds. 466,356,928
Investment in joint venture is not a financial resource and, therefore, not reported in the funds 19,770,221
Other long-term assets are not available to pay for current -period expenditures and, therefore,
are deferred in the funds 448,562
Internal service funds are used by management to charge the costs of insurance, information systems,
mail and duplication, fleet, and building management to individual funds. The assets and liabilities
of the internal service funds are included in governmental activities in the statement of net as: 32,162,587
Long-term liabilities, including bonds payable, are not due and payable in the current period
and, therefore, are not reported in the funds. (29,731,230)
Net assets of governmental activities $ 532,618,951
The notes to the financial statements are an integral part of this statement.
Federal Wav / 22
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For Year Ended December 31, 2011
REVENUES
Taxes
Licenses and permits
Intergovernmental
Service charges and fees
Fines and forfeitures
Interest
Other
TOTAL REVENUES
EXPENDITURES
Current:
General government
Security of persons and property
Transportation
Physical environment
Economic environment
Health
Culture and recreation
Debt service:
Principal
Interest/fiscal charges/admin fees
Capital outlay
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
Debt
General Street Utility Tax Service
$ 22,844,503
$ - $ 13,068,510 $ 1,560,395
2,089,924
119,949 - -
2,220,929
1,233,570 - -
2,868,359
255,614 - -
1,200,997
- - -
85,701
603 3,726 3,454
528,363
55,407 - -
31,838,777
1,665,144 13,072,237 1,563,848
3,973,098 - 48,000 -
28,314,187 - - -
- 4,110,014 -
2,400,051 -
690,824 -
3,589,643 - -
- - 457,520
- - - 614,571
68,720 - - -
39,036,523 4,110,014 48,000 1,072,091
OVER (UNDER) EXPENDITURES
(7,197,746)
(2,444,870) 13,024,237 491,757
OTHER FINANCING SOURCES (USES)
Sale of capital assets
-
- - -
Transfers in
13,222,353
2,444,870 - 915,000
Transfers out
(1,818,870)
- (12,563,553) (920,000)
TOTAL OTHER FINANCING
SOURCES (USES)
11,403,483
2,444,870 (12,563,553) (5,000)
NET CHANGE IN FUND BALANCES
FUND BALANCES - BEGINNING
Adjustment for GASB 54 - Beginning
fund balance
ADJUSTED FUND BALANCES -
BEGINNING
FUND BALANCES - ENDING
4,205,737 (0) 460,684 486,757
8,438,118 100,000 3,710,184 3,379,427
293 - - -
8,438,411 100,000 3,710,184 3,379,427
$ 12,644,148 $ 100,000 $ 4,170,868 $ 3,866,184
The notes to the financial statements are an integral part of this statement.
'Federal Wav / 23
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For Year Ended December 31, 2011
REVENUES
Taxes
Licenses and permits
Intergovernmental
Service charges and fees
Fines and forfeitures
Interest
Other
TOTAL REVENUES
EXPENDITURES
Current:
General government
Security of persons and property
Transportation
Physical environment
Economic environment
Health
Culture and recreation
Debt service:
Principal
Interest/fiscal charges/admin fees
Capital outlay
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
Downtown
Nonmajor
Redevelopment
Transportation
Governmental
Total
$ 13,333
$ -
$ 344,304
$ 37,831,045
-
-
-
2,209,873
25,943
7,316,587
916,218
11,713,248
-
977,685
2,029,629
6,131,287
-
-
945,527
2,146,524
2,339
(13,159)
6,673
89,338
104,431
9,246
262,564
960,012
146,046
8,290,360
4,504,916
61,081,327
- - 213,229
4,234,327
- - 18,050
28,332,237
- 1,081,166 2,236,228
7,427,408
- - 427,315
427,315
194,800 - 187,686
2,782,537
- - -
690,824
- - 2,231,517
5,821,160
- - -
457,520
- - -
614,571
- 11,020,921 470,564
11,560,205
194,800 12,102,087 5,784,589
62,348,104
OVER (UNDER) EXPENDITURES (48,754)
(3,811,727)
(1,279,673)
(1,266,777)
OTHER FINANCING SOURCES (USES)
Sale of capital assets -
9,162
-
9,162
Transfers in -
1,611,000
3,260,000
21,453,223
Transfers out (750,000)
(4,100,000)
(1,358,000)
(21,510,423)
TOTAL OTHER FINANCING
SOURCES (USES) (750,000)
(2,479,838)
1,902,000
(48,038)
NET CHANGE IN FUND BALANCES
FUND BALANCES - BEGINNING
Adjustment for GASB 54 - Beginning
fund balance
ADJUSTED FUND BALANCES -
BEGINNING
(798,754) (6,291,565) 622,327 (1,314,815)
3,005,805 20,101,242 6,191,923 44,926,699
(293)
3,005,805 20,101,242 6,191,630 44,926,699
FUND BALANCES - ENDING $ 2,207,051 $ 13,809,677 $ 6,813,957 $ 43,611,884
The notes to the financial statements are an integral part of this statement.
Federal Wav / 24
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
For the Year Ended December 31, 2011
Amounts reported for governmental activities in the statement of activities (page 19) are 2011
different because:
Net change in fund balances --total governmental funds $ (1,314,815)
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 6,553,575
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. 22,379
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. 526,000
Internal service funds are used by management to charge costs of risk management,
information systems, mail & duplication, fleet, and building systems to the funds. 31,600
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. (43,396)
Change in net assets of governmental activities $ 5,775,342
The notes to the financial statements are an integral part of this statement.
'Federal Wav / 25
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For Year Ended December 31, 2011
REVENUES
Taxes
Licenses and permits
Intergovernmental
Service charges and fees
Fines and forfeitures
Interest
Other
TOTAL REVENUES
EXPENDITURES
Current:
General government
Security of persons and property
Economic environment
Health
Culture and recreation
Capital outlay
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
$ 22,113,000
$ 22,559,000
$ 22,844,503
$ 285,503
2,326,000
2,060,000
2,089,924
29,924
1,333,600
2,389,469
2,220,929
(168,540)
2,609,943
2,650,421
2,868,359
217,938
1,255,150
1,252,235
1,200,997
(51,238)
112,000
72,000
85,701
13,701
392,150
405,205
528,363
123,158
30,141,843 31,388,330 31,838,777 450,447
5,274,824
5,123,307
3,973,098
1,150,209
29,102,817
29,296,190
28,314,187
982,003
2,819,371
2,920,672
2,400,051
520,621
724,559
730,669
690,824
39,845
3,703,289
3,830,551
3,589,643
240,908
8,638
161,472
68,720
92,752
41,633,498 42,062,860 39,036,523 3,026,337
OVER (UNDER) EXPENDITURES
(11,491,655)
(10,674,530)
(7,197,746)
3,476,784
OTHER FINANCING SOURCES (USES)
Transfers in
13,400,509
13,395,674
13,222,353
(173,321)
Transfers out
(2,119,306)
(2,352,386)
(1,818,870)
533,516
TOTAL OTHER FINANCING
SOURCES (USES)
11,281,203
11,043,288
11,403,483
360,195
NET CHANGE IN FUND BALANCES
FUND BALANCES - BEGINNING
Adjustment for GASB 54 - Beginning
fund balance
ADJUSTED FUND BALANCES -
BEGINNING
(210,452) 368,758 4,205,737 3,836,979
5,292,275 8,438,116 8,438,118 2
293 293 -
5,292,275 8,438,409 8,438,411 2
FUND BALANCES - ENDING $ 5,081,823 $ 8,807,167 $ 12,644,148 $ 3,836,981
The notes to the financial statements are an integral part of this statement.
Federal Wav / 26
STREET FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For Year Ended December 31, 2011
Variance with
Budgeted
Amounts
Final Budget -
Positive
Original
Final
Actual Amounts
(Negative)
REVENUES
Licenses and permits
$ 114,130
$ 124,131
$ 119,949
$ (4,182)
Intergovernmental
1,254,361
1,378,463
1,233,570
(144,892)
Service charges and fees
219,100
199,300
255,614
56,314
Interest
2,000
2,000
603
(1,397)
Other
47,260
27,060
55,407
28,347
TOTAL REVENUES
1,636,851
1,730,954
1,665,144
(65,809)
EXPENDITURES
Current:
Transportation 4,420,613 4,699,977 4,110,014 589,962
Capital outlay - - - -
TOTAL EXPENDITURES 4,420,613 4,699,977 4,110,014 589,962
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (2,783,762) (2,969,023) (2,444,870) 524,153
OTHER FINANCING SOURCES (USES)
Transfers in 2,783,762 2,978,388 2,444,870 (533,518)
Transfers out - (9,365) - 9,365
TOTAL OTHER FINANCING
SOURCES (USES) 2,783,762 2,969,023 2,444,870 (524,153)
NET CHANGE IN FUND BALANCES
(0)
(0)
(0) 0
FUND BALANCES - BEGINNING
100,000
100,000
100,000 -
FUND BALANCES - ENDING $
100,000 $
100,000 $
100,000 $ 0
The notes to the financial statements are an integral part of this statement.
'Federal Wav / 27
UTILITY TAX FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For Year Ended December 31, 2011
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
REVENUES
Taxes $ 12,466,000 $ 12,816,000 $ 13,068,510 $ 252,510
Interest 30,000 6,000 3,726 (2,274)
TOTAL REVENUES 12,496,000 12,822,000 13,072,237 250,237
EXPENDITURES
Current:
General government 48,000 48,000 48,000 -
TOTAL EXPENDITURES 48,000 48,000 48,000 -
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 12,448,000 12,774,000 13,024,237 250,237
OTHER FINANCING SOURCES (USES)
Transfers out (12,727,509) (12,727,509) (12,563,553) 163,956
TOTAL OTHER FINANCING
SOURCES (USES) (12,727,509) (12,727,509) (12,563,553) 163,956
NET CHANGE IN FUND BALANCES
(279,509)
46,491
460,684
414,193
FUND BALANCES - BEGINNING
3,199,666
3,710,180
3,710,184
4
FUND BALANCES - ENDING
$ 2,920,157
$ 3,756,671
$ 4,170,868
$ 414,196
The notes to the financial statements are an integral part of this statement.
Federal Wav / 28
ASSETS
Current Assets
Equity in pooled cash & investments
Prepaid items
Receivables (net):
Accounts and contracts
Due from other governments
TOTAL CURRENT ASSETS
Property, plant and equipment
Land
Building/structures
Machinery/furniture/equipment
Infrastructure
Construction in progress
Less accumulated depreciation
TOTAL NONCURRENT ASSETS
TOTAL ASSETS
LIABILITIES AND FUND EQUITY
Current Liabilities:
Vouchers/payroll payable
Retainage payable - with escrow agent
Due to other governments
Deposits payable
Deferred revenue
Public Works Trust Fund loan payable
Compensated absences payable
TOTAL CURRENT LIABILITIES
Long-term liabilities:
Public Works Trust Fund loan payable
Compensated absences payable
TOTAL LONG-TERM LIABILITIES
TOTAL LIABILITIES
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
December 31, 2011
Business -type Activities - Enterprise Funds
Surface Water Dumas Bay
Management Centre TOTAL
Governmental
Service
$ 5,226,459 $ 253,571 $ 5,480,030 $ 16,188,952
- - - 5,000
367,252
20,834
388,086
40,571
101,018
-
101,018
49,060
5,694,729
274,406
5,969,134
16,283,583
8,200,575
2,109,640
10,310,215
-
19,849
3,581,015
3,600,864
16,497,555
47,818,768
118,374
47,937,142
15,035,018
1,916,645
-
1,916,645
-
2,074,662
378,808
2,453,470
(12,438,596)
(2,699,180)
(15,137,776)
(15,164,592)
47,591,903
3,488,657
51,080,560
16,367,981
53,286,632
3,763,063
57,049,694
32,651,564
42,841
17,086
59,927
378,208
5,660
-
5,660
-
16,990
-
16,990
-
5,337
5,337
-
317,011
132,299
449,310
-
182,359
-
182,359
-
2,534
-
2,534
-
567,395
154,721
722,116
378,208
845,317
-
845,317
-
57,814
18,353
76,167
46,362
903,131
18,353
921,484
46,362
1,470,526
173,074
1,643,600
424,570
Invested in capital assets, net of related debt
46,564,227
3,488,657
50,052,884 16,367,981
Restricted for:
Customer deposits
-
5,337
5,337 -
Steel Lake & North Lake Mgmt District
13,494
-
13,494 -
Unrestricted
5,238,385
95,994
5,334,380 15,859,013
TOTAL NET ASSETS $
51,816,106
$ 3,589,988
55,406,095 $ 32,226,994
Adjustment to reflect the consolidation of internal service fund activities related to
enterprise funds
64,407
NET ASSETS OF BUSINESS -TYPE ACTIVITIES
$ 55,470,504
The notes to the financial statements are an integral part of this statement.
'Federal Wav / 29
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
For Year Ended December 31, 2011
OPERATING REVENUES:
Service charges and fees
Intergovernmental
Miscellaneous
TOTAL OPERATING REVENUES
OPERATING EXPENSES:
Personal services
Materials and supplies
Services and charges
Intergovernmental
Depreciation
Interfund charges
TOTAL OPERATING EXPENSES
OPERATING INCOME (LOSS)
NON -OPERATING REVENUES (EXPENSES):
Business -type Activities - Enterprise Funds
Surface Water Dumas Bay
Management Centre TOTAL
Governmental
Service
$ 3,441,705 $ 561,709 $ 4,003,414 $ 5,618,163
265,660 - 265,660 467,216
16,730 - 16,730 255,590
3,724,095 561,709 4,285,804 6,340,969
1,724,163
312,261
2,036,422
815,231
117,242
118,985
236,227
599,218
695,710
230,202
925,912
2,677,920
184,328
11,473
195,801
105,774
507,029
181,997
689,026
2,102,287
289,202
36,021
325,223
-
3,517,674
890,939
4,408,611
6,300,430
206,421
(329,230)
(122,807)
40,538
Gain (Loss) from disposal of capital assets - - - (186,217)
Interest income 11,362 314 11,676 12,405
Interest expense (12,100) - (12,100) -
TOTAL NON -OPERATING REVENUES (EXPENSES) (738) 314 (424) (173,812)
INCOME (LOSS) BEFORE TRANSFERS 205,683 (328,916) (123,231) (133,274)
Capital contributions - - - 223,786
Transfers in 846,865 113,000 959,865 13,500
Transfers out (846,865) - (846,865) (69,300)
CHANGE IN NET ASSETS 205,683 (215,916) (10,231) 34,712
NET ASSETS - BEGINNING 51,720,675 3,805,905 32,192,281
Prior period adjustment (110,252) - -
ADJUSTED NET ASSETS - BEGINNING 51,610,423 3,805,905 32,192,281
NET ASSETS - ENDING $ 51,816,106 $ 3,589,988 $ 32,226,994
Adjustment to reflect the consolidation of internal service fund activities related to enterprise 3,112
CHANGES IN NET ASSETS OF BUSINESS -TYPE ACTIVITIES $ (7,119)
The notes to the financial statements are an integral part of this statement.
Federal Wav / 30
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For Year Ended December 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from users
Cash payments to claimants
Cash payments to suppliers for goods/services
Cash payments to employees
Cash payments to other funds for goods and services
Cash payments to other governments for goods and services
Other operating receipts
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers in
Transfers out
NET CASH PROVIDED BY NONCAPITAL FINANCINC
CASH FLOWS FROM CAPITAL AND CAPITAL -
RELATED FINANCING ACTIVITIES,
Principal paid on debt service
Interest paid on debt service
Acquisition of capital asset/construction work in progress
Proceeds from the sale of capital assets
NET CASH USED FOR CAPITAL AND CAPITAL -
RELATED FINANCING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES:
Receipts of interest
NET CASH PROVIDED BY INVESTING ACTIVITIES
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Operating Income/(loss)
Adjustments to reconcile operating income to net cash
provided/(used) by operating activities:
Depreciation expenses
(Increases)/decrease in accounts receivable
(Increases)/decrease in due from other governments
Increases/(decrease)in vouchers/accounts payable
Increases/(decrease)in retainage payable
Increases/(decrease) in due to other government
Increases/(decrease)in deposits payable
Increases/(decrease)in deferred revenue
Increases/(decrease) in accrued payroll/compensated absences payable
TOTAL ADJUSTMENTS
NET CASH PROVIDEWUSED BY OPERATING ACTIVITIES
Non -cash investing, capital, and financing activities:
Other contributions of capital assets
Governmental
Business -type Activities - Enterprise Funds
Activities
Surface Water
Dumas Bay
Internal
Management
Centre
TOTAL
Service
$ 3,417,789 $
548,380
$ 3,966,169
$ 5,966,164
-
-
-
(820,386)
(843,660)
(365,840)
(1,209,500)
(1,815,080)
(1,709,407)
(311,478)
(2,020,885)
(817,984)
(289,202)
(36,021)
(325,223)
(184,710)
(11,473)
(196,183)
(551,589)
326,206
326,206
255,589
717,016
(176,432)
540,584
2,216,714
846,865
113,000
959,865
13,500
(846,865)
-
(846,865)
(69,300)
113,000
113,000
(55,800)
(182,359)
-
(182,359)
(12,100)
(12,100)
(94,975)
(11,731)
(106,706)
(1,598,313)
40,473
(289,434)
(11,731)
(301,165)
(1,557,840)
11,362
314
11,676
12,405
11,362
314
11,676
12,405
438,944
(74,849)
364,095
615,479
4,787,512
328,422
5,115,934
15,573,475
5,226,459
253,571
5,480,030
16,188,952
206,418
(329,230)
(122,812)
40,539
507,029
181,997
689,026
2,102,287
(82,261)
(806)
(83,067)
(29,741)
43,816
-
43,816
(21,554)
(31,413)
(17,403)
(48,816)
195,856
708
708
-
(382)
-
(382)
-
750
750
58,345
(12,523)
45,822
(67,920)
14,756
783
15,539
(2,753)
510,598
152,798
663,396
2,176,175
$ 717,016 $
(176,432)
$ 540,584
$ 2,216,714
$ 223,786
The notes to the financial statements are an integral part of this statement.
'Federal Wav / 31
NOTES TO THE BASIC FINANCIAL STATEMENTS
December 31, 2011
INDEX
Note
Page
1
Summary of Significant Accounting Policies...............................................................................
32
ReportingEntity...................................................................................................................
32
Government -wide and Fund Financial Statements...............................................................
32
Measurement Focus, Basis of Accounting, and Financial Statement Presentation ..............
32
Budgetary Information.........................................................................................................
36
Assets, Liabilities and Equities.............................................................................................
37
Cash and Investments..................................................................................................
37
Receivables..................................................................................................................
38
Amounts Due to and from Other Funds; Interfund Loans ...........................................
38
Inventories...................................................................................................................
38
CapitalAssets..............................................................................................................
38
Compensated Absences Payable..................................................................................
39
Long -Term Liabilities..................................................................................................
39
DeferredRevenue........................................................................................................
40
Fund Balance Classification........................................................................................
40
Interfund Transactions.................................................................................................
41
2
Reconciliation of Government -wide & Fund Financial Statements ..............................................
41
3
Stewardship, Compliance and Accountability..............................................................................
41
4
Supplemental Appropriations.......................................................................................................
42
5
Deposits and Investments..............................................................................................................
42
6
Receivables and Due from Other Governments............................................................................
44
7
Due To Other Governments..........................................................................................................
45
8
Capital Assets...............................................................................................................................
46
9
Pension Plans................................................................................................................................
48
10
Risk Management.........................................................................................................................
54
11
Long -Term Liabilities...................................................................................................................
56
12
Interfund Transactions..................................................................................................................
59
13
Contingencies and Litigation........................................................................................................
60
14
Joint Ventures...............................................................................................................................
60
15
Prior Period Adjustment................................................................................................................
63
16
Subsequent Event..........................................................................................................................
63
Federal Wav / 32
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Year Ended December 31, 2011
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the City of Federal Way have been prepared in conformity with generally accepted accounting
principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the
accepted standard setting body for establishing governmental accounting and financial reporting principles. The significant
accounting policies are described below.
1;701Z�7:71Y1�[ei�1�MYMYIx.�
The City's Comprehensive Annual Financial Report (CAFR) includes the funds, agencies and boards controlled by or
dependent on the City. In conformance with Governmental Accounting Standards Board (GASB) Statement 14, "The
Financial Reporting Entity", the primary basis of determining whether outside agencies and organizations should be
considered component units of the City is Financial Accountability. Financial Accountability is dependence on the City's
obligation to redeem the organization's debts, to finance the organization's deficits, and the extent to which subsidies from
the City constitute a major portion of the organization's total resources. Applying these criteria, as outlined in GASB
Statement 14, the City has no relationships that qualify as component units.
Financial Accountability
Financial accountability is defined as appointment of a voting majority of an agency's or organization's board, and either the
City's ability to impose will on the agency or organization or the possibility that the agency or organization will provide a
financial benefit to or impose a financial burden on the City.
Joint Ventures
A joint venture is a legal entity or organization which results from a contractual arrangement that is owned, operated, or
governed by two or more participants as a separate activity subject to joint control, in which participants retain an ongoing
financial interest or an ongoing financial responsibility. The City participates in two joint ventures: Valley Communications
Center and South Correctional Entity (SCORE). See Note 14, Joint Venture, which more fully describes these organizations.
GOVERNMENTAL -WIDE AND FUND FINANCIAL STATEMENTS
The government -wide financial statements (i.e. the statement of net assets and the statement of activities) report information
on all activities of the primary government. For the most part, the effect of interfund activity has been removed from these
statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported
separately from business -type activities, which rely to a significant extent on fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by
program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Our policy is
to allocate indirect costs to specific function or segment. Program revenues include 1) charges to customers or applicants
who purchase, use or directly benefit from goods, services, or privileges provided by a given function or segment, and 2)
grant and contributions that are restricted to meeting the operational or capital requirements or a particular function or
segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.
Separate fund financial statements are provided for governmental funds and proprietary funds. Major individual
governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.
MEASUREMENT FOCUS, BASIS OF ACCOUNTING, FINANCIAL STATEMENT PRESENTATION
The government -wide financial statements are reported using the economic resources measurement focus and the accrual
basis of accounting, as are the proprietary fund statements. Revenues are recorded when earned and expenses are recorded
when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the
year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements
imposed by the provider have been met.
'Federal Wav / 33
Governmental Funds
Governmental fund financial statements are reported using the current financial resources measurement focus and the
modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.
Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay
liabilities of the current period. For this purpose, the City of Federal Way considers revenues to be available if they are
collected within 30 days of the end of the current fiscal period with an exception to utility and gambling taxes in which is
extended to 60 days. Expenditures generally are recorded when a liability is incurred, as under accrual accounting.
However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are
recorded only when payment is due.
Property taxes, licenses, and interest associated within the current period are all considered to be susceptible to accrual and so
have been recognized as revenues of the current fiscal period. Only the portion of special assessment receivable due within
the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items
are considered to be measurable and available only when cash is received by the City.
The City reports the following major governmental funds:
General Fund
This is the City's general operating fund. It accounts for all financial resources of the general government, except
those required to be accounted for in another fund.
Street Fund
This fund accounts for receipt and disbursement of State -levied motor vehicle fuel taxes which must be accounted
for in a separate fund and expended for street -oriented engineering, maintenance and operations.
Utility Tax Fund
This fund was established to account for all utility tax receipts. These receipts will subsequently be distributed to
various funds (Debt Service, Capital Improvement Projects, etc.) for project expenditure as determined by the City
Council.
Debt Service Fund
This fund accounts for the accumulation of resources for the payment of general obligation and assessment bond
principal, interest and related costs.
Downtown Redevelopment CIP Fund
This fund was established to accumulate resources to set aside for downtown projects.
Transportation CIP Fund
This fund accounts for receipts and disbursements related to acquisition, design, construction and any other related
street project expenditures.
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 committed or 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.
Federal Wav / 34
Private sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in
both the government -wide and proprietary fund financial statements to the extent that those standards to not conflict with or
contradict guidance of the Governmental Accounting Standards board. Governments also have the option of following
subsequent private -sector guidance for their business -type activities and enterprise funds, subject to the same limitation. The
City of Federal Way has elected not to follow subsequent private -sector guidance.
As a general rule the effect of the interfund activity has been eliminated for the government -wide financial statements.
Amounts reported as program revenue include 1) charges to customers, 2) operating grants and contributions, and 3) capital
grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues
rather than program revenues. General revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from non -operating items. Operating revenues and expenses
generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal
ongoing operations. The principal operating revenues of the enterprise and internal service funds are primarily user charges,
the cost of providing goods or services to the general public on a continuing basis. Operating expenses for enterprise funds
and internal service funds includes the cost of sales and services, administrative expenses, and depreciation on capital assets.
All revenues and expenses not meeting this definition are reported as non -operating revenues and expenses.
The City reports the following major proprietary funds:
Enterprise Funds
The City uses enterprise funds to account for government activities that are financed and operated in a manner similar to
private business. Costs of providing services to the general public are primarily financed by user fees.
Surface Water Management Fund
This fund was established to administer and account for all receipts and expenditures related to the City's surface
and storm water management system.
Dumas Bay Centre Fund
This fund was established to account for the revenues and expenses related to the acquisition, capital improvements
maintenance and operations of the City -owned Dumas Bay Centre and Knutzen Family Theatre.
Internal Service Funds
The City uses Internal Service Funds to account for the financing of goods or services provided by one department or agency
to other departments or agencies of a government, or to other governments, on a cost -reimbursement basis.
A description of each individual Internal Service Fund included in the Comprehensive Annual Financial Report is provided
below:
Risk Management Fund
This fund accounts for the City's risk financing activities established to minimize adverse effects of losses
associated with property and casualty, medical and dental, unemployment and worker's compensation claims. Both
risk control (to minimize the losses that strike and organization) and risk financing (to obtain finances to provide for
or restore the economic damages of those losses) are involved. The City is currently self -insuring only State
Unemployment Compensation. Related premiums received by the fund are used to reimburse the unemployment
benefits paid to eligible individuals and to establish reserves for the payment of estimated future unemployment
claims liability. The City is also currently recovering costs and building reserves for general liability including
property, casualty, errors and omissions and fidelity coverage.
Information Systems Fund
This fund was established to account for all costs associated with data processing, telecommunications and the
Geographical Information System (GIS). This fund will own and depreciate all non-proprietary fund assets related
to these functions, and will charge equipment/software users for both maintenance and operating costs and
equipment replacement charges based on depreciation schedules.
Support Services Fund
This fund accounts for duplication, graphics and other general support services provided to departments and funds
throughout the City.
'Federal Wav / 35
Fleet and Equipment Fund
This fund accounts for the cost of maintaining City vehicles and other motorized equipment. Rates charged to user
departments are based on the full cost of maintaining equipment items, including the recovery of related
depreciation expense.
Buildings and Furnishings Fund
This fund accounts for all costs associated with the operation and maintenance of specified City buildings. City
building facilities and furnishings will be owned by this Fund, and both maintenance/operating costs and
depreciation recovery will be charged City departments and funds.
Basis of Accounting
Basis of accounting refers to when revenues and expenditures or expenses are recognized and reported in the financial
statements.
The accrual basis of accounting is used by proprietary funds. Under this method, revenues are recognized when earned, and
expenses are recognized when incurred.
The modified accrual basis of accounting is used by governmental funds. Revenues and other financial resources are
recognized when they become susceptible to accrual, i.e., when the related funds become both measurable and available to
finance expenditures of the current period. To be considered "available", revenue must be collected during the current period
or soon enough thereafter to pay current liabilities. The City uses thirty days when evaluating the available criteria.
Expenditures are recognized when the related fund liability is incurred. Since the recognition of depreciation does not reduce
net financial resources, it is not considered as expenditure. Other exceptions include (1) inventories of materials and prepaid
items are reported as expenditures when purchased, (2) interest on long-term debt is not accrued but is recorded as an
expenditure when due, (3) accumulated unpaid vacation and sick pay are considered expenditures when paid.
Major revenues recorded on the modified accrual basis are:
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 Tares - King County also acts as the City's collection agent for the 1/4% and optional 1/4% 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.
ofFederal Wav / 36
FINANCIAL STATEMENT PRESENTATION
In order to obtain an understanding of changes in the City's position and the results of the City's operations, the financial
statements for year end of 2011 should be read in conjunction with the government's financial statements for the year ended
December 31, 2010.
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 Fund
Arterial Street
Utility Tax
Solid Waste & Recycling
Federal Way Community Center
Traffic Safety
Hotel/Motel Lodging Tax
Paths & Trails
Debt Service Fund
Procedures for Adopting the Biennial 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 Finance Director for current level service budgets and a preliminary
financial forecast.
By late June, departments submit their preliminary expenditure estimates and the Finance department updates the
preliminary revenue estimates to define resources available to finance coming year expenditure programs.
Prior to the first Tuesday in September, the Mayor 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 Finance 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 Mayor 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.
'Federal Wav / 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 Mayor 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 2011, the budget was amended two times.
The budget amounts shown in the financial statements are the final authorized amounts as revised during the year.
The financial statements contain the original and final budget information. The original budget is the first complete
appropriated budget. The final budget is the original budget adjusted by all reserves, transfers, allocations, supplemental
appropriations, and other legally authorized changes applicable for the fiscal year.
Encumbrances
An encumbrance system is used for budgetary control purposes to record commitments resulting from approved purchase
orders. During the year, encumbrances are recorded in the accounting system at the time purchase orders are issued for
goods and services. Upon payment, the encumbrance is reversed and the actual cost of the related item is recorded as a fund
expenditure. Outstanding encumbrances lapse at year end, are canceled and rolled over to the next fiscal year. Therefore,
these amounts have not been recorded as current year expenditures unless considered to be susceptible to accrual at the end of
the year. The total encumbrances at year-end for the City were $9,658,769.
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, 2011, the State
Treasurer was holding $40,290,229 in the State Investment Pool. The State Investment Pool is considered a cash equivalent.
The interest earnings on these investments are allocated to all funds based on the average monthly balance for each fund.
For purposes of the Statement of Cash Flows, the City considers all highly liquid investments with a maturity of three months
or less when purchased, to be cash equivalents. At December 31, 2011, the total cash and cash equivalents were
$63,559,028.
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.
ofFederal Wav / 38
In accordance with GASB 31, investments in money market investments and participating interest -earning investment
contracts with a remaining maturity of one year or less at the time of purchase are stated at amortized cost. All other
investments are stated at fair value. There was no material deviation from fair value quoted at year-end.
Receivables
Taxes receivable consists of property taxes and related interest and penalties (see Property Tax Note 6). Accrued interest
receivable consists of amounts earned on investments, notes, and contracts at the end of the year.
Due From Other Governments reflects measurable and available intergovernmental grants, entitlements, or State shared
revenues (taxes/charges levied and collected by an intermediary collecting government and distributed on some basis); loans;
and charges for services rendered by the City for another government unit. A separate schedule of Due From Other
Governments is disclosed in Note 6.
Amounts Due to and from Other Funds; Interfund Loans
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are
referred to as either "interfund loans receivable/payable" or "advances to/from other funds." All other outstanding balances
between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental
activities and business -type activities are reported in the government -wide financial statements as "internal balances."
Loans between funds must be authorized by the Mayor. In the governmental funds, loans to other funds are offset by a
corresponding reservation of fund balance to indicate that the outstanding loan amounts do not constitute "available
spendable resources" and are, therefore, not available for appropriation. A separate schedule of interfund loans receivable and
payable is furnished in Note 12.
Inventories
Inventories in the governmental funds are recorded as expenditures at the time of purchase. Amounts remaining at year-end
are immaterial and, therefore, are not reflected on the balance sheets of those funds. There were no material inventories at
year-end in the Internal Service or Enterprise Funds.
Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure, are reported in the applicable governmental or
business -type activities columns in the government -wide financial statements.
Pursuant to GASB Statement 34, the City included capitalized retroactive infrastructure assets owned prior to 2003, such as
roads, bridges, curbs and gutters, streets and sidewalks, bridges, and lighting systems, in the year end 2007 financial
statement. The City compiled an inventory of the retroactive infrastructure and recorded these capital assets for yearend
2007. The City inventoried current infrastructure assets; performed a condition assessment on the infrastructure assets and
summarized the results using a measurement scale. To arrive at the retroactive infrastructure assets value, the City used a
deflationary factor of the change from the City's assessed value during 1990 through 2006 and multiplied this factor to the
infrastructure to determine the historical cost. The City elected to capitalize all infrastructure assets including pre- 1990
assets when the City incorporated from unincorporated King County. The City has determined that this method would
accurately reflect capital assets. Infrastructure is the largest asset class of the City and has historically not been reflected nor
a measure of its consumption been charged.
Major expenditures for capital assets, including capital leases and major repairs that increase useful lives are capitalized.
Maintenance, repairs, and minor renewals are accounted for as expenditures or expenses when incurred. The City has
adopted a general capital asset capitalization policy where an item's cost must equal or exceed $1,000. All capital assets are
valued at historical cost (or estimated cost, where historical cost is not known/or estimated market value for donated assets).
Depreciation on all capital assets is recorded as an allocated expense in the government -wide Statement of Activities and in
the proprietary fund statements. Capital assets are reported net of depreciation. The City uses a combination of group
depreciation and straight-line depreciation over the life of the assets.
'Federal Wav / 39
The following summarizes the average service lives used to calculate depreciation for specific categories of assets in the
City's Assets:
Asset Class Life in Years
Computers...............................................................5-6
Printers& Faxes...........................................................7
Telecommunications Equipment........................................7
Police Radio Equipment................................................11
Other Office Equipment..............................................4-10
Office Furniture and Fixtures..........................................10
Recreation Equipment..................................................10
Parks Equipment ..........................................
............ 6-10
Police Equipment.....................................................9-11
Shop/Miscellaneous Equipment...................................10-12
Heavy Work Equipment .................................
........... 10-16
Non -Police Vehicles......................................................7
Police Patrol Vehicles ....................................
. ...............5
Police Non -Patrol Vehicles..........................................7-10
Heavy Trucks..........................................................8-10
Land Improvements.....................................................20
Buildings..................................................................20
Storm Drainage Systems .................................
. ..............20
Infrastructure........................................................15
-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 22.5 days per year depending on term of
employment. Employees may accumulate up to a maximum of 240 hours of vacation leave, except the Police Guild, who can
accrue up to a maximum of 360 hours. Outstanding vacation leave is payable upon termination of employment at the
following rate: City Employees up to 240 hours and Police Guild members is at two years of their accrued rate at the time of
termination.
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 for both City employees and
Police Guild members.
Sick leave may be accumulated up to a maximum of 720 hours for regular City employees per City policy and 1,040 hours
for the Police Guild, per their contract. The monthly accrual rate for City employees is 8 hours per month. Accumulated sick
leave is not payable upon termination of employment. Outstanding sick leave at year-end is not accrued due to the difficulty
in estimating the portion of existing balances likely to result in expenditures in future periods.
Long-term Liabilities
In the government -wide financial statements and the proprietary fund financial statements, long-term debt and other long-
term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary
fund statement of net assets. Long-term debt outstanding at year-end is outlined in Note 11.
Federal Wav / 40
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 Balance Classification
2011 Fund Balance Classification
Fund Balance
General
Utility Debt
Street
Downtown
Transport- Nonmajor
Total
Fund
Tax Service
Redevelop.
ation Gov't
Nonspendabie:
Court trust
$ 86,403
$ $ $
$
$ $
$ 86,403
Prepaid insurance/debt service
17,609
17,609
Restricted for:
Police covert/seizure
145,524
145,524
Future debt payments
-
3,866,184
3,866,184
Special Contracts/Studies
-
556,753
556,753
Hotel/Motel Lodging Tax
213,484
213,484
Path & Trails Reserves
151,807
151,807
Community Development Block Grant
48,712
48,712
Downtown Redevelopment - REET
2,023,299
-
2,023,299
City Facilities CIP - REET
-
848,727
848,727
Parks CIP - REET/Mitigation/Donation/Path & Trails
2,043,166
2,043,166
Transportation CIP - REET/Mitigation/Gas Tax
9,573,357 -
9,573,357
Committed to:
Capital, debt, and other maintenance/operations
-
3,326,822
-
3,326,822
Petty cash/advance travel
21,600
-
21,600
Proposition 1
-
844,045
-
844,045
Transportation CIP
-
-
4,236,320
4,236,320
Downtown Redevelopment
183,752
-
183,752
City Facilities CIP
-
436,882
436,882
Arterial Street
469,704
469,704
Solid Waste/Recycling
-
153,980
153,980
2% for the Arts
293
-
293
Federal Way Community Center
-
967,943
967,943
Traffic Safety
557,077
557,077
Snow/ice removal
100,000
-
100,000
Parks CIP
-
365,723
365,723
Unassigned*
General Fund
12,372,719
- -
-
-
12,372,719
Total Fund Balance: $ 12,644,148
$ 100,000 $ 4,170,868 $ 3,866,184
$ 2,207,051
$ 13,809,677 $ 6,813,957
$ 43,611,884
Fund balance is a measurement of available financial resources and is the difference between total assets and total liabilities
in each fund.
Beginning with the most restrictive constraints, fund balance amounts will be reported in the following categories:
Nonspendable - amounts that are not in a spendable form or are legally or contractually required to be maintained.
Restricted - amounts that can be spent only for the specific purposes stipulated by external parties either
constitutionally or through enabling legislation.
Committed - amounts that can be used only for the specific purposes determined by formal action of the City
Council. Commitments may be changed or lifted by referring to the formal action that imposed the constraint
originally.
Assigned - amounts intended to be used by the government for specific purposes. Intent can be expressed by the
City Council or the Mayor. In governmental funds other than the general fund, assigned fund balance represents the
amount that is not restricted or committed. This indicates that resources in other government funds, at a minimum,
are intended to be used for the purpose of that fund.
Unassigned - includes all amounts not contained in other classifications and is the residual classification of the
general fund only. Unassigned amounts are available for any legal purpose.
'Federal Wav / 41
The responsibility for designating funds to specific classifications shall be as follows:
Committed Fund Balance — The City Council is the highest level of decision -making authority, and the formal
action that is required to be taken to establish, modify, or rescind a fund balance commitment is established by
ordinance approved by the Council.
When multiple categories of fund balance are available for expenditure, the City will start with the most restricted category
and spend those funds first before moving down to the next category with available funds.
Interfund Transactions
There are four types of transactions between funds - interfund loans, interfund services provided and used, interfund
reimbursements, and interfund transfers. Interfund loans are temporary borrowings of cash which do not affect operating
statements, but which may incur interest expense or expenditure to the borrowing fund. Interfund services provided and used
are equivalent to buying goods or services from an outside vendor, they are accounted for by the related funds as revenues,
expenditures or expenses. Interfund reimbursements are repayments to a fund for expenditures or expenses that belong to
another fund. They involve only expenditure or expense accounts.
Except for the Enterprise Fund, transfers are accounted for as 'other financing sources and uses" and are therefore included in
the operating statements.
NOTE 2 — RECONCILIATION OF GOVERNMENT -WIDE & FUND FINANCIAL STATEMENTS
Explanation of Certain Differences Between the Governmental Funds Balance Sheet and the Government -Wide
Statement of Net Assets
The governmental funds' balance sheet includes reconciliation between fund balance — total governmental funds and net
assets — governmental activities as reported in the government -wide statement of net assets. One element of that
reconciliation explains that "long-term liabilities, including bonds payable, are not due and payable in the current period, and,
therefore, are not reported in the funds." The details of this $29,731,230 difference are as follows:
Bonds Payable at beginning of year $28,683,950
Plus: Inclusion of compensated absences 1,573,280
Less: Current year reduction of principal portion of debt (526,000)
Net Adjustment to reduce fund balance -total governmental
funds to arrive at net assets - governmental activities $29,731,230
Explanation of Certain Differences Between the Governmental Funds Statement of Revenues, Expenditures, and
Changes in Fund Balances and the Government -Wide Statement of Activities
The governmental funds' statement of revenues, expenditure, and changes in fund balances includes reconciliation between
net changes in fund balances — total governmental funds and changes in net assets of governmental activities as reported in
the government -wide statement of activities. One element of that reconciliation explains that "Governmental funds report
capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their
estimated useful lives and reported as depreciation expense." The details of this $6,553,575 difference are as follows:
Capital outlay $11,481,732
Less: Governmental depreciation expense (6,017,826)
Plus: Increase investment in joint venture 1,089,669
Net adjustment o increase net changes in fund balances -
Total governmental funds to arrive at changes in net assets
ofgovernmental activities $ 6,553,575
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 $ 22,379
Federal Wav / 42
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 $ (43,396)
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 2011 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.
FUND
ORIGINAL
BUDGET
2011
SUPPLEMENTAL
APPROPRIATIONS
FINAL BUDGET
General Fund $
43,752,800 $
662,442
$ 44,415,242
Special Revenue Funds:
Street Fund
4,420,612
288,728
4,709,340
Arterial Street Fund
1,513,500
881,374
2,394,874
Utility Tax Fund
12,775,508
-
12,775,508
Solid Waste/Recycling Fund
415,118
15,000
430,118
Hotel/Motel Lodging Tax
160,300
212,200
372,500
Federal Way Community Center
2,142,839
8,883
2,151,722
Traffic Safety
1,205,000
50,000
1,255,000
Subtotal Special Revenue Funds:
22,632,877
1,456,185
24,089,062
Debt Service Fund
2,082,726
-
2,082,726
Total:
68,468,403
2,118,627
70,587,030
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 2011 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, 2011, the equity in pooled cash and
investments was $63,559,028.
At year-end, the City had $63,552,106 in cash and cash equivalents which consisted of investments with the State Pool of
$40,290,229 the City's checking account bank balance prior to outstanding checks was $23,126,764; and petty cash and
change funds, advance travel fund and investigative fund totaling $48,710, and Court Trust of $86,403. No deposits were
uninsured or uncollateralized. Insurance coverage up to $250,000 is through federal depository insurance and the
'Federal Wav / 43
Washington Public Deposit Protection Commission (WPDPC) for amounts over $250,000. Under State statute, members of
WPDPC, a multiple -financial institution collateral pool, may be assessed on a prorated basis if the pool's collateral is
insufficient to cover a loss. Investments are carried at cost or book value because the City holds all investments until
maturity. The fair value of the positions in the State Investment Pool is the same as the value of the pool shares. The State
Investment Pool is managed by the Treasurer of the State of Washington.
As of December 31, 2011 the City had the following investments and maturities:
Investment maturities
Less than 1 to 2 Greater than
Investment Type Book Value 1 year years 3 years
State Investment Pool $ 40,290,229 $ 40,290,229-
$ 40,290,229 $ 40,290,229 $ - $ -
Reconciliation of Government -Wide Statement of Net Assets:
Bank of America checking account per books $ 23,126,764
Petty cash/change fund/advance travel/investigative fund 48,710
State Investment Pool 40,290,229
Municipal Court Trust on books 86,403
Subtotal cash and cash equivalents 63,552,106
Cash with escrow agent 6,922
Total cash and investments, Government -Wide
Statement of Net Assets $ 63,559,028
Investments
Interest Rate Risk
As a means of limiting its exposure to fair value losses arising from rising interest rate, the City's investments policy states
that "no more than 20% of the portfolio may be invested beyond 12 months, and average maturity of the portfolio may not
exceed 2 years."
Credit Risk
Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. This is measured by
the assignment of a rating by a nationally recognized statistical rating organization.
State law and the City's investment policy limits the instruments in which the City may invest. The following are categories
of investments authorized under the City's policy, in general order of safety and liquidity: State Investment Pool; repurchase
agreements; U.S. treasury obligations; U.S. government agencies; U.S. government -sponsored corporations/instrumentalities;
bankers' acceptances (secondary market domestic and foreign); commercial paper (secondary market); insured certificates of
deposit (banks and savings & loans); and uninsured/collateralized certificates of deposit (banks and savings & loans).
The credit risk of the State Investment Pool is limited to obligations of the US Government, government sponsored
enterprises, or insured demand deposit accounts and certificates of deposit.
As of December 31, 2011, all City investments were in the State Local Government Investment Pool. The State Investment
Pool ratings for Long Term Bonds are as follows: Fitch Investors Service, Inc. AA+, Moody's Investors Services Aal, and
Standard & Poor's Ratings AA+.
Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of an investment in a single issuer. The City
diversifies its investments by security type and institution. The investment policy states: "no more than 5% of the portfolio
may be invested in the securities of a single issuer, except for the U.S. Treasury, to which no limits apply, and commercial
paper, which is limited to 3% of the portfolio. No more than 30% of the portfolio may be invested in Bankers' Acceptances
and Certificates of Deposit."
Federal Wav / 44
Other Information
Below is a schedule of investments by fund type:
SCHEDULE OF INVESTMENTS BYFUND CATEGORYAND INVESTMENT TYPE
AS OF DECEMBER 31, 2011
State Investment
Fund Type
Pool
Total
General Fund
$ 8,020,483 $
8,020,483
Special Revenue Funds
6,773,955
6,773,955
Capital Projects Funds
13,611,255
13,611,255
Enterprise Funds
1,613,328
1,613,328
Internal Services Funds
10,271,208
10,271,208
Total: $ 40,290,229 $
40,290,229
NOTE 6 — RECEIVABLES AND DUE FROM OTHER GOVERNMENTS
Property Taxes
The King County Treasurer is responsible for collecting property taxes levied in the County by all taxing districts. Amounts
collected by the County on the City's behalf are remitted daily.
As described in Note 1, taxes are levied and become an enforceable lien against properties as of January 1. Annual tax
billings may be paid in two equal installments, due April 30 and October 31. At December 31, 2011, the total balance of
property taxes receivable recorded by the City was $468,600. Of this, $402,200 is recorded as deferred revenue, since it was
not collected within the first 30 days of 2012. The property tax levy calendar in 2011 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
$1.64. The remaining $1.96 is for the fire district ($1.39) and library district ($0.57).
1. Chapter 84.55 of the State RCW was amended most recently by Initiative No. 747 (which was passed by voters on
November 6, 2001), limits the total dollar amount of regular property taxes levied by the City to the amount of such
taxes levied in the three most recent years multiplied by a limit factor, plus an adjustment to account for taxes on
new 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 2011 was $1.19750 per $1,000 on an assessed valuation of $8,268,335,786 for a total regular levy
of $9,827,398.
'Federal Wav / 45
Deferred Revenue
Deferred revenue reported on the governmental funds balance sheet is in the schedule below. Grant reimbursements and
refuse collection fees are receivable within one year of the end of the fiscal period.
DEFERRED REVENUE
AS OF DECEMBER 31, 2011
Deferred
Revenue
General
Downtown Debt
Street Redevelopment Service
Nonmajor
Gov't
Proprietary
Total
Property tax
$401,984
$ - $ 216 $ -
$ -
$ -
$ 402,200
SWM fees
-
- - -
-
317,011
317,011
King County New Solution Grant
3,821
- - -
-
-
3,821
Commute Trip Reduction Grant
-
65,066 - -
-
-
65,066
Federal Way Fire Department Buy-
In of ValleyCom
-
_ _ 127,200
-
-
127,200
Recreation programs/facilityrentals
41,109
- - -
110,116
132,299
283,524
Total by Fund:
446,913
65,066 216 127,200
110,116
449,310
1,198,822
Receivables & Due from Other Governments
The receivables for the fiscal year ended December 31, 2011 on the government -wide statement of net assets are detailed in
the following schedule.
RECEIVABLES & DUE FROM OTHER GOVERNMENTS
AS OF DECEMBER 31, 2011
Receivable
General
Street
Debt Downtown
Utility Tax Service Redevelopment
Transport-
ation
Nonmajor
Gov't
Proprietary
Total
Property tax
$ 468,332
$
$ $ - $ 268
$
$
$
$ 468,600
Real Estate Excise tax
-
84,734 -
84,734
Utility tax
-
1,466,984 -
1,466,984
Gambling tax
97,781
-
97,781
Recreation programs/
facilities
(14,025)
89,669
20,834
96,478
Grants & contributions
450,081
13,182
1,595,885
77,265
190,649
2,327,062
Other receivable
-
7,000
-
-
-
-
7,000
State Shared revenue
1,215,572
74,062
2,674
22,114
47,530
-
1,361,953
Surface Water
Management fees
-
_
-
-
-
367,252
367,252
Total bi Fund:
$ 2,217,741
$ 94,244
$ 1,469,658 $ 84,734 $ 268
$ 1,617,999
$ 214,464
$ 578,735
$ 6,277,844
NOTE 7 - DUE TO OTHER GOVERNMENTS
At December 31, 2011, the City recorded $140,237 as due to other governmental units as follows:
DUE TO OTHER GOVERNMENT
AS OF DECEMBER 31, 2011
General Fund
King County - December 2011 jail services
$
10,747
King County - 2011 primary/general election cost
$
112,500
Total Governmental Activities
$
123,247
Surface Water Mgmt.
King County - SWM collection fee
$
16,990
Total Business -Type Activities
$
16,990
Federal Wav / 46
NOTE 8 — CAPITAL ASSETS
Governmental Activity deletion of $5,586,182 includes $2,387,494 for impairment loss due to construction stoppage for
Downtown Park, Camp Kilworth, Planning Fee Study, South 320th Street @ 15t Avenue South, and I-5City Center Access
Study. Capital assets activity for the year ended December 31, 2011 was as follows:
CAPITAL ASSETS
AS OF DECEMBER 31, 2011
Governmental Activity Beginning Balance Additions Deletions Ending Balance
1/1/2011 12/31/2011
Capital Assets, not being depreciated:
Land $ 301,270,211 $ 898,006 $ - $ 302,168,217
Construction in progress 15,298,641 11,445,599 (5,586,182) 21,158,058
Total capital assets, not being depreciated: 316,568,852 12,343,605 (5,586,182) 323,326,275
Capital assets, being depreciated:
Buildings
Improvements other than buildings
Infrastructure
Machinery & equipment
Total capital assets, being depreciated:
Less accumulated depreciation for:
Buildings
Improvements other than buildings
Infrastructure
Machinery & equipment
Total accumulated depreciation:
Total assets being depreciated, net
16,698,395
648,316 (197,692)
17,149,019
43,264,217
601,363 -
43,865,580
143,187,237
3,976,317 -
147,163,554
14,713,673
1,328,904 (823,559)
15,219,018
217,863,522
6,554,900 (1,021,251)
223,397,171
(4,797,631)
(884,127)
68,883 (5,612,875)
(12,766,566)
(2,163,211)
- (14,929,777)
(29,475,841)
(3,829,373)
- (33,305,214)
(9,624,461)
(1,243,402)
717,186 (10,150,677)
(56,664,499)
(8,120,113)
786,069 (63,998,543)
161,199,023 (1,565,213) (235,182) 159,398,628
Governmental activities capital assets, net $ 477,767,876 $ 10,778,392 $ (5,821,364) $ 482,724,904
Beginning Balance Ending Balance
Business -Type Activities 1/1/2011 Additions Deletions 12/31/2011
Capital Assets, not being depreciated:
Land $
10,307,661 $
2,554 $
- $ 10,310,215
Construction in progress
2,365,472
92,421
(4,423) 2,453,470
Total capital assets, not being depreciated:
12,673,133
94,975
(4,423) 12,763,685
Capital assets, being depreciated:
Buildings
3,596,441
4,423
- 3,600,864
Improvements other than buildings
47,818,768
-
- 47,818,768
Infrastructure
1,916,645
-
- 1,916,645
Machinery & equipment
106,643
11,731
- 118,374
Total capital assets, being depreciated:
53,438,497
16,154
- 53,454,651
Less accumulated depreciation for:
Buildings
(2,438,349)
(181,631)
- (2,619,980)
Improvements other than buildings
(11,843,453)
(485,283)
- (12,328,736)
Infrastructure
(81,476)
(19,166)
- (100,642)
Machinery & equipment
(85,472)
(2,946)
- (88,418)
Total accumulated depreciation:
(14,448,750)
(689,026)
- (15,137,776)
Total assets being depreciated, net
38,989,747
(672,872)
- 38,316,875
Business -Type activities capital assets, net
$ 51,662,879 $
(577,897) $
(4,423) $ 51,080,559
'Federal Wav / 47
At the end of 2011, 40 projects comprise the Construction in Progress for Governmental Activities. Upon completion, the
projects will be capitalized in the Government -wide statements in their appropriate categories. Construction commitments
for Governmental Activities as of December 31, 2011, are as follows:
CAPITAL COMMITMENTS
AS OF DECEMBER 31, 2011
Governmental Activities Projects
Construction
Remaining
in progress
Commitment
Downtown Redevelopment
$ 279,919
$ -
Community Center
-
478,549
Major Facility Rehabilitation
231,109
56,702
Performing Arts Center
90,253
750,068
Regional Park Development
300,666
-
Down Town Park
-
96,050
Parks - Playgrounds
-
292,232
Lakota Park
161,498
5,414
Hylebos Boardwalk Replacement
1,361,310
28,201
Sacajawea Park Masterplan
47,382
701,120
Trail and pedestrian access improvements
3,255
825,679
Planning Fee Study/Open space Mgmt plan
-
2,315
Laurelwood
35,344
167,100
Celebration Park Maintenance Building
-
71,583
Annual Transportation System Safety Improvements
-
1,290,875
So 348th St @ 1st Ave South Turn Lanes
2,361,367
835,333
S 320th St @ 20th Ave South
48,711
598,819
SW 312th ST @ SR509
46,769
339,106
S 320th St-8th Ave S-SR99
-
97,665
1Oth Avenue SW / SW 344th St: SW Campus Drive - 21st Ave SW
183,112
135,258
1st Ave South & South 28th Intersection
-
30,761
S 352nd Street Extension From SR-99 to SR-161
452,008
5,218,076
S 320th St SW at 21 st Ave SW
-
24,526
S 320th St: 1st Ave to 8th Ave S
-
38,871
S 304th St @ 28th Ave S
-
16,991
South 320th st @ 1-5 southbound ramp
2,679,511
2,568,956
South 356th St: SR99 - SR161
145
97,161
SR99 HOV Lanes Phase 4
12,166,650
2,833,436
South 312th St @ 28th Ave South
-
7,937
Military Rd S: S Star Lake Rd - S 288th St
-
10,563
SW 320th St @ 47th Ave SW
-
1,111
SW 336th Way / SW 340th St: 26th PI SW - Hoyt Rd
40,316
41,575
21 ST AVE SW @ SW 336TH ST
326,694
4,556,929
Citywide Flashing Yellow Lights Installation
100,095
42,804
SR 99 @ S 312th St
-
63,061
SW 344th St: 12th Ave SW - 21st Ave SW
-
1,753
Citywide Pedestrian Crossing Improvements
-
42,094
S 344th Way @ Weyerhaeuser Way S
201,524
830,901
Mrk Twain Elementary Safe Route to School Impr
14,939
371,118
SW 312th St & 14th Ave SW Lakota Safe Rt to School Imp
25,477
832,125
Total governmental activities
$ 21,158,058
$ 24,402,818
Federal Wav / 48
Depreciation expense was charged to functions/programs of the primary government as follows:
Governmental and Internal Service Activities
General government
$
354,672
Security of persons & property
1,226,115
Transportation
4,018,168
Physical environment
26,449
Economic environment
118,143
Health
31,338
Culture & recreation
2,345,229
Total Depreciation - Governmental Activities
$
8,120,113
Business -Type Activities
Utilities - Surface Water Management
$
507,029
Culture & recreation - Dumas Bay Centre
181,997
Total Depreciation - Business -Type Activities
$
689,026
NOTE 9 — PENSION PLANS
Washington State Department of Retirement Systems
Substantially all City full-time and qualifying part-time employees participate in one of the following statewide retirement
systems administered by the Washington State Department of Retirement Systems, under cost -sharing multiple -employer
public employee defined benefit 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; or it
may be downloaded from the DRS website at www.drs.wa.gov.
The following disclosures are made pursuant to GASB Statements No. 27, Accounting for Pensions by State and Local
Government Employers and No. 50, Pension Disclosures, an Amendment of GASB Statements No. 25 and No. 27.
Public Employees' Retirement System (PERS) Plan I, 2 and 3
Plan Description
The Legislature established PERS (Public Employees' Retirement System) in 1947. Membership in the system includes:
elected officials; state employees; employees of the Supreme, Appeals, and Superior courts (other than judges currently in the
Judicial Retirement System); employees of legislative committees; community and technical colleges, college and university
employees not participating in higher education retirement programs; judges of district and municipal courts; and employees
of local governments. PERS retirement benefit provisions are established in Chapters 41.34 and 41.40 RCW and may be
amended only by the State Legislature.
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 defined benefit plan with a defined contribution component.
PERS members 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 exercised an option to transfer their membership to Plan 3. PERS members
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 irrevocable 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. Notwithstanding, PERS Plan 2 and Plan 3 members
may opt out of plan membership if terminally ill, with less than five years to live.
PERS Plan 1 and Plan 2 defined benefit retirement benefits are financed from a combination of investment earnings and
employer and employee contributions.
'Federal Wav / 49
PERS Plan 1 members are vested after the completion of five years of eligible service. Plan 1 members are eligible for
retirement after 30 years of service, or at the age of 60 with five years of service, or at the age of 55 with 25 years of service.
The monthly benefit is 2 percent of the average final compensation (AFC) per year of service. (AFC is the monthly average
of the 24 consecutive highest -paid service credit months.) The retirement benefit may not exceed 60 percent of AFC. The
monthly benefit is subject to a minimum for PERS Plan 1 retirees who have 25 years of service and have been retired 20
years, or who have 20 years of service and have been retired 25 years. Plan 1 members retiring from inactive status prior to
the age of 65 may receive actuarially reduced benefits. If a survivor option is chosen, the benefit is further reduced. A cost -
of -living allowance (COLA) was granted at age 66 based upon years of service times the COLA amount. This benefit was
eliminated by the Legislature, effective July 1, 2011. Plan 1 members may elect to receive an optional COLA that provides
an automatic annual adjustment based on the Consumer Price Index. The adjustment is capped at 3 percent annually. To
offset the cost of this annual adjustment, the benefit is reduced.
PERS Plan 1 provides duty and non -duty disability benefits. Duty disability retirement benefits for disablement prior to the
age of 60 consist of a temporary life annuity payable to the age of 60. The allowance amount is $350 a month, or two-thirds
of the monthly AFC, whichever is less. The benefit is reduced by any workers' compensation benefit and is payable as long
as the member remains disabled or until the member attains the age of 60. A member with five years of covered employment
is eligible for non -duty disability retirement. Prior to the age of 55, the allowance amount is 2 percent of the AFC for each
year of service reduced by 2 percent for each year that the member's age is less than 55. The total benefit is limited to 60
percent of the AFC and is actuarially reduced to reflect the choice of a survivor option. A cost -of -living allowance was
granted at age 66 based upon years of service times the COLA amount. This benefit was eliminated by the Legislature,
effective July 1, 2011. Plan 1 members may elect to receive an optional COLA that provides an automatic annual adjustment
based on the Consumer Price Index. The adjustment is capped at 3 percent annually. To offset the cost of this annual
adjustment, the benefit is reduced.
PERS Plan 1 members can receive credit for military service. Members can also purchase up to 24 months of service credit
lost because of an on-the-job injury.
PERS Plan 2 members are vested after the completion of five years of eligible service. Plan 2 members are eligible for
normal retirement at the age of 65 with five years of service. The monthly benefit is 2 percent of the AFC per year of service.
(AFC is the monthly average of the 60 consecutive highest -paid service months.)
PERS Plan 2 members who have at least 20 years of service credit and are 55 years of age or older are eligible for early
retirement with a reduced benefit. The benefit is reduced by an early retirement factor (ERF) that varies according to age, for
each year before age 65.
PERS Plan 2 members who have 30 or more years of service credit and are at least 55 years old can retire under one of two
provisions:
• With a benefit that is reduced by 3 percent for each year before age 65.
• With a benefit that has a smaller (or no) reduction (depending on age) that imposes stricter return -to -work rules.
PERS Plan 2 retirement benefits are also actuarially reduced to reflect the choice, if made, of a survivor option. There is no
cap on years of service credit; and a cost -of -living allowance is granted (based on the Consumer Price Index), capped at 3
percent annually.
The surviving spouse or eligible child or children of a PERS Plan 2 member who dies after leaving eligible employment
having earned ten years of service credit may request a refund of the member's accumulated contributions.
PERS 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 monthly benefit that is 1
percent of the AFC per year of service. (AFC is the monthly average of the 60 consecutive highest -paid service months.)
Effective June 7, 2006, PERS Plan 3 members are vested in the defined benefit portion of their plan after ten years of service;
or after five years of service, if twelve months of that service are earned after age 44; or after five service credit years earned
in PERS Plan 2 prior to June 1, 2003. Plan 3 members are immediately vested in the defined contribution portion of their
plan.
Vested Plan 3 members are eligible for normal retirement at age 65, or they may retire early with the following conditions
and benefits:
y of Federal Way / 50
• If they have at least ten service credit years and are 55 years old, the benefit is reduced by an ERF that varies with
age, for each year before age 65.
• If they have 30 service credit years and are at least 55 years old, they have the choice of a benefit that is reduced by
3 percent for each year before age 65; or a benefit with a smaller (or no) reduction factor (depending on age) that imposes
stricter return -to -work rules.
PERS Plan 3 defined benefit retirement benefits are also actuarially reduced to reflect the choice, if made, of a survivor
option. There is no cap on years of service credit and Plan 3 provides the same cost -of -living allowance as Plan 2.
PERS Plan 3 defined contribution retirement benefits are solely dependent upon contributions and the results of investment
activities.
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 Director of the Department of Retirement Systems.
PERS Plan 2 and Plan 3 provide disability benefits. There is no minimum amount of service credit required for eligibility.
The Plan 2 monthly benefit amount is 2 percent of the AFC per year of service. For Plan 3, the monthly benefit amount is 1
percent of the AFC per year of service.
These disability benefit amounts are actuarially reduced for each year that the member's age is less than 65, and to reflect the
choice of a survivor option. There is no cap on years of service credit, and a cost -of -living allowance is granted (based on the
Consumer Price Index) capped at 3 percent annually.
PERS Plan 2 and Plan 3 members may have up to ten years of interruptive military service credit; five years at no cost and
five years that may be purchased by paying the required contributions. Effective July 24, 2005, a member who becomes
totally incapacitated for continued employment while serving the uniformed services, or a surviving spouse or eligible
children, may apply for interruptive military service credit. Additionally, PERS Plan 2 and Plan 3 members can also
purchase up to 24 months of service credit lost because of an on-the-job injury.
PERS members may also purchase up to five years of additional service credit once eligible for retirement. This credit can
only be purchased at the time of retirement and can be used only to provide the member with a monthly annuity that is paid in
addition to the member's retirement benefit.
Beneficiaries of a PERS Plan 2 or Plan 3 member with ten years of service who is killed in the course of employment receive
retirement benefits without actuarial reduction, if the member was not at normal retirement age at death. This provision
applies to any member killed in the course of employment, on or after June 10, 2004, if found eligible by the Department of
Labor and Industries.
A one-time duty -related death benefit is provided to the estate (or duly designated nominee) of a PERS member who dies in
the line of service as a result of injuries sustained in the course of employment, or if the death resulted from an occupational
disease or infection that arose naturally and proximately out of said member's covered employment, if found eligible by the
Department of Labor and Industries.
Judicial Benefit Multiplier
During January 1, 2007 through December 31, 2007, judicial members of PERS were given the choice to participate in the
Judicial Benefit Multiplier Program (JBM) enacted in 2006. Justices and judges in PERS Plan 1 and Plan 2 were able to
make a one-time irrevocable election to pay increased contributions that would fund a retirement benefit with a 3.5 percent
multiplier. The benefit would be capped at 75 percent of AFC. Judges in PERS, Plan 3 could elect a 1.6 percent of pay per
year of service benefit, capped at 37.5 percent of AFC.
Members who chose to participate in JBM would: accrue service credit at the higher multiplier beginning with the date of
their election; be subject to the benefit cap of 75 percent of AFC, pay higher contributions; stop contributing to the Judicial
Retirement Account (JRA); and be given the option to increase the multiplier on past judicial service. Members who did not
choose to participate would: continue to accrue service credit at the regular multiplier; continue to participate in JRA, if
applicable; never be a participant in the JBM Program; and continue to pay contributions at the regular PERS rate.
Newly elected or appointed justices and judges who chose to become PERS members on or after January 1, 2007, or who had
not previously opted into PERS membership, were required to participate in the JBM Program. Members required into the
JBM program would: return to prior PERS Plan if membership had previously been established; be mandated into Plan 2 and
not have a Plan 3 transfer choice, if a new PERS member; accrue the higher multiplier for all judicial service; not contribute
to JRA; and not have the option to increase the multiplier for past judicial service.
'Federal Wav / 51
There are 1,197 participating employers in PERS. Membership in PERS consisted of the following as of the latest actuarial
valuation date for the plans of June 30, 2011:
Retirees and beneficiaries receiving benefits
76,899
Terminated plan members entitled to but not yet receiving benefits
28,860
Active plan members vest
105,521
Active plan members nonvested
51,005
Total
262,285
Funding Policy
Each biennium, the state Pension Funding Council adopts PERS Plan 1 employer contribution rates, PERS Plan 2 employer
and employee contribution rates, and PERS Plan 3 employer contribution rates. Employee contribution rates for Plan 1 are
established by statute at 6 percent for state agencies and local government unit employees, and at 7.5 percent for state
government elected officials. 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. Under PERS Plan 3, employer contributions
finance the defined benefit portion of the plan and member contributions finance the defined contribution portion. The Plan 3
employee contribution rates range from 5 percent to 15 percent, based on member choice. Two of the options are graduated
rates dependent on the employee's age. As a result of the implementation of the Judicial Benefit Multiplier Program in
January 2007, a second tier of employer and employee rates was developed to fund, along with investment earnings, the
increased retirement benefits of those justices and judges that participate in the program. 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, 2011, are as
follows:
Members not participating in JBM:
PERS Plan 1
Employer* 7.25%*
Employee 6.00%
PERS Plan 2
PERS Plan 3
7.25%
7.25%**
4.59%
***
* The employer rates include the employer administrative expense fee currently set at 0.16%.
** Plan 3 defined benefit portion only.
*** Variable from 5.0% to 15.0% maximum based on rate selected by the PERS 3 member.
Members participating in JBM:
PERS Plan 1 _ PERS Plan 2 _ PERS Plan 3
Employer* 7.25%* 7.25% 7.25%**
Employee 12.26% 11.60% 7.50***
* The employer rates include the employer administrative expense fee currently set at 0.16%.
** Plan 3 defined benefit portion only.
* * * Minimum Rate
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
2011 $ 2,872 $ 623,807 $ 111,278
2010 $ 7,826 $ 571,406 $ 104,390
2009 $ 13,646 $ 745,549 $ 137,774
Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) Plans 1 and 2
Plan Description
The Legislature established LEOFF in 1970. Membership in the system includes all full-time, fully compensated, local law
enforcement commissioned officers, firefighters and, as of July 24, 2005, emergency medical technicians. LEOFF
membership is comprised primarily of non -state employees, with Department of Fish and Wildlife enforcement officers, who
were first included prospectively effective July 27, 2003, being an exception. LEOFF retirement benefit provisions are
established in Chapter 41.26 RCW and may be amended only by the State Legislature.
Federal Wav / 52
LEOFF is a cost -sharing multiple -employer retirement system comprised of two separate defined benefit plans. LEOFF
members who joined the system by September 30, 1977 are Plan 1 members. Those who joined on or after October 1, 1977
are Plan 2 members.
LEOFF defined benefit retirement benefits are financed from a combination of investment earnings, employer and employee
contributions, and a special funding situation in which the state pays through state legislative appropriations.
Effective July 1, 2003, the LEOFF Plan 2 Retirement Board was established by Initiative 790 to provide governance of
LEOFF Plan 2. The Board's duties include adopting contribution rates and recommending policy changes to the Legislature
for the LEOFF Plan 2 retirement plan.
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. A cost -of -living allowance is granted (based on the Consumer Price
Index).
LEOFF Plan 1 provides death and disability benefits. Death benefits for survivors of Plan 1 members on active duty consist
of the following: (1) If eligible spouse, 50 percent of the FAS, plus 5 percent of FAS for each eligible surviving child, with a
limitation on the combined allowances of 60 percent of the FAS; or (2) If no eligible spouse, eligible children receive 30
percent of FAS for the first child plus 10 percent for each additional child, subject to a 60 percent limitation of FAS, divided
equally.
A one-time duty -related death benefit is provided to the estate (or duly designated nominee) of a LEOFF Plan 1 member who
dies as a result of injuries or illness sustained in the course of employment, if found eligible by the Department of Labor and
Industries.
The LEOFF Plan 1 disability allowance is 50 percent of the FAS plus 5 percent for each child up to a maximum of 60
percent. Upon recovery from disability before the age of 50, a member is restored to service with full credit for service while
disabled. Upon recovery after the age of 50, the benefit continues as the greater of the member's disability allowance or
service retirement allowance.
LEOFF Plan 1 members may purchase up to five years of additional service credit once eligible for retirement. This credit
can only be purchased at the time of retirement and can be used only to provide the member with a monthly annuity that is
paid in addition to the member's allowance.
LEOFF Plan 2 members are vested after the completion of five years of eligible service. Plan 2 members may retire at the
age of 50 with 20 years of service, or at the age of 53 with five years of service, with an allowance of 2 percent of the FAS
per year of service. (FAS is based on the highest consecutive 60 months). Plan 2 members who retire prior to the age of 53
receive reduced benefits. Benefits are actuarially reduced for each year that the benefit commences prior to age 53 and to
reflect the choice of a survivor option. If the member has at least 20 years of service and is age 50, the reduction is 3 percent
for each year prior to age 53. A cost -of -living allowance is granted (based on the Consumer Price Index), capped at 3 percent
annually.
LEOFF Plan 2 provides disability benefits. There is no minimum amount of service credit required for eligibility. The Plan
2 allowance amount is 2 percent of the FAS for each year of service. Benefits are actuarially reduced for each year that the
member's age is less than 53, unless the disability is duty -related, and to reflect the choice of a survivor option. If the
member has at least 20 years of service and is age 50, the reduction is 3 percent for each year prior to age 53. A catastrophic
disability benefit equal to 70 percent of their FAS, subject to offsets for workers' compensation and Social Security disability
benefits received, is also available to those LEOFF Plan 2 members who are severely disabled in the line of duty and
incapable of future substantial gainful employment in any capacity.
'Federal Wav / 53
Effective June 2010, benefits to LEOFF Plan 2 members who are catastrophically disabled include payment of eligible health
care insurance premiums.
Members of LEOFF Plan 2 who leave service because of a line of duty disability are allowed to withdraw 150 percent of
accumulated member contributions. This withdrawal benefit is not subject to federal income tax. Alternatively, members of
LEOFF Plan 2 who leave service because of a line of duty disability may be eligible to receive a retirement allowance of at
least 10 percent of FAS and 2 percent per year of service beyond five years. The first 10 percent of the FAS is not subject to
federal income tax.
LEOFF Plan 2 retirees may return to work in an eligible position covered by another retirement system, choose membership
in that system and suspend their pension benefits, or not choose membership and continue receiving pension benefits without
interruption.
LEOFF Plan 2 members who apply for retirement may purchase up to five years of additional service credit. The cost of this
credit is the actuarial equivalent of the resulting increase in the member's benefit.
LEOFF Plan 2 members can receive service credit for military service that interrupts employment. Additionally, LEOFF
Plan 2 members who become totally incapacitated for continued employment while servicing in the uniformed services may
apply for interruptive military service credit. Should any such member die during this active duty, the member's surviving
spouse or eligible child (ren) may request service credit on behalf of the deceased member.
LEOFF Plan 2 members may also purchase up to 24 consecutive months of service credit for each period of temporary duty
disability.
Beneficiaries of a LEOFF Plan 2 member who is killed in the course of employment receive retirement benefits without
actuarial reduction, if found eligible by the Director of the Department of Labor and Industries.
Benefits to eligible surviving spouses and dependent children of LEOFF Plan 2 members killed in the course of employment
include the payment of on -going health care insurance premiums paid to the Washington state Health Care Authority.
A one-time duty -related death benefit is provided to the estate (or duly designated nominee) of a LEOFF Plan 2 member who
dies as a result of injuries or illness sustained in the course of employment, if found eligible by the Department of Labor and
Industries.
There are 374 participating employers in LEOFF. Membership in LEOFF consisted of the following as of the latest actuarial
valuation date for the plans of June 30, 2011:
Retirees and beneficiaries receiving benefits
9,647
Terminated plan members entitled to but not yet receiving benefits
782
Active plan members vest
13,420
Active plan members nonvested
3,656
Total
27,505
Funding Policy
Starting on July 1, 2000, LEOFF Plan 1 employers and employees 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.
LEOFF Plan 2 employers and employees are required to pay at the level adopted by the LEOFF Plan 2 Retirement Board.
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 LEOFF Plan 2 in accordance with the requirements of the
Pension Funding Council and the LEOFF Plan 2 Retirement Board. 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 required contribution rates expressed as a percentage of current year covered payroll, as of December 31, 2011 were:
LEOFF Plan I LEOFF Plan H
Employer 0.16%* 5.24%**
Employee 0.00% 8.46%
State N/A 3.45%
* The employer rates include the employer administrative expense fee currently set at 0.16%.
** The employer rate for ports and universities is 7.18%.
Federal Wav / 54
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
2011 $ - $ 577,434
2010 $ - $ 589,769
2009 $ - $ 598,194
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 2011, there were a total of 306 individuals covered by this system. As of the end of the year, 295 remained as active
employees of the City and six were drawing retirement benefits. The 16 inactive had left the City's employment and either
had been reimbursed their contributions, or the reimbursement was pending, or they elected to have their contributions
remain in the plan if the balance was $1,000 or greater.
All regular employees of the City of Federal Way are required to participate in the system, with the City matching the
employee's required contribution. The employee pays 6.2% and this is matched by the composite of a cash match
(approximately 5.2%) and 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 2011 was $20,593,167 and total City payroll was $24,253,038. Actual City contributions for the year
were $1,157,950. Actual employee contributions were $1,401,516. All contributions were invested in instruments arranged
through independent investment advisors selected by the Municipal Employers Benefit Trust (MEBT) committee comprised
of the entities of Bellevue, Kirkland, Redmond, Edmonds, Mill Creek, Woodinville, Federal Way, and North East King
Conty Regional Public Safety Communication Agency (NORCOM) but administered by Northwest Plan Services (NWPS).
Retirement System assets are not the property of the City and are not subject to the claims of the City's general creditors. The
Federal Way Retirement System assets are with Security Trust Company, N.A. who invests Plan assets.
In July 1995, the City implemented the hardship withdrawal and loan provision program that allow participants to have
limited access to their contributions while still employed by the City. Hardship withdrawals are available in the event of
financial necessity resulting from uninsured medical expenses, tuition expenses, purchasing one's primary residence, or to
prevent foreclosure on one's primary residence. Loans receivable as of December 31, 2011 were $1,375,678.
The consulting actuary firm of Northwest Plan Services (NWPS) has been contracted to provide record keeping,
administrative and consulting services related to the Plan Actuarial determinations are not required because accidental death
and dismemberment insurance, long-term disability, survivor income insurance and the lump sum death benefit are provided
by a group insurance policy with Standard Insurance Company; and benefits paid to participants upon retirement are limited
to: (a) a nonforfeitable, nontransferable annuity contract purchased by the plan's trustee, (b) retirement benefits payable from
the employee's account to which no contributions by the City or the participant can be added after retirement, or a single
lump -sum payment equal to the accumulated balance in the employee's account as of his retirement date.
NOTE 10 — RISK MANAGEMENT
The City uses the Risk Management Internal Service Fund to account for its risk financing activities. The City maintains
insurance against most normal hazards except for unemployment insurance where it has elected to become fully self -insured.
Related premiums received by the Risk Management Fund are used to reimburse the State Employment Security Department
for unemployment benefits paid to eligible individuals, and to establish reserves for the payment of estimated future
unemployment claims liability. The City faces most of the risks faced by similar sized cities.
Through its Risk Management Fund, the City is also recovering insurance premium costs for general liability coverage and
building reserves for a future general liability self-insurance program. The City's insurance coverage in 2011 remained
relatively similar to the coverage for 2010.
'Federal Wav / SS
The City of Federal Way is a member of the Washington Cities Insurance Authority (WCIA).
Utilizing Chapter 48.62 RCW (self-insurance regulation) and Chapter 39.34 RCW (Interlocal Cooperation Act), nine cities
originally formed WCIA on January 1, 1981. WCIA was created for the purpose of providing a pooling mechanism for
jointly purchasing insurance, jointly self -insuring, and / or jointly contracting for risk management services. WCIA has a
total of 145 Members.
New members initially contract for a three-year term, and thereafter automatically renew on an annual basis. A one-year
withdrawal notice is required before membership can be terminated. Termination does not relieve a former member from its
unresolved loss history incurred during membership.
Liability coverage is written on an occurrence basis, without deductibles. Coverage includes general, automobile, police,
public officials' errors or omissions, stop gap, and employee benefits liability. Limits are $4 million per occurrence self -
insured layer, and $16 million per occurrence in the re -insured excess layer. The excess layer is insured by the purchase of
reinsurance and insurance and is subject to aggregate limits. Total limits are $20 million per occurrence subject to aggregate
sublimits in the excess layers. The Board of Directors determines the limits and terms of coverage annually.
Insurance coverage for property, automobile physical damage, fidelity, inland marine, and boiler and machinery are
purchased on a group basis. Various deductibles apply by type of coverage. Property insurance and auto physical damage are
self -funded from the members' deductible to $500,000, for all perils other than flood and earthquake, and insured above that
amount by the purchase of insurance.
In-house services include risk management consultation, loss control field services, claims and litigation administration, and
loss analyses. WCIA contracts for the claims investigation consultants for personnel issues and land use problems, insurance
brokerage, and lobbyist services.
WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as determined by an
outside, independent actuary. The assessment covers loss, loss adjustment, and administrative expenses. As outlined in the
interlocal, WCIA retains the right to additionally assess the membership for any funding shortfall.
An investment committee, using investment brokers, produces additional revenue by investment of WCIA's assets in
financial instruments which comply with all State guidelines. These revenues directly offset portions of the membership's
annual assessment.
A Board of Directors governs WCIA, which is comprised of one designated representative from each member. The Board
elects an Executive Committee and appoints a Treasurer to provide general policy direction for the organization. The WCIA
Executive Director reports to the Executive Committee and is responsible for conducting the day to day operations of WCIA.
There were no settlements in excess of insurance for commercially insured activities for 1996 through 2011.
The following is a summary of coverage in force in 2011.
S CUEDULE OF INS URANCE IN FORCE
AS OF DECEMBER 31, 2011
Company Policy Period Details of Coverage Liability Limits
WCIA
1/l/11-12/31/11
General liability (auto, general, police e & o,
$20,000,000 per occurrence subject to annual aggregates and
e to went practices, & stop a)
sublunits. Deductible: $100,000
Crime/fidelity (employee dishonesty, faithful
WCIA
1/l/11-12/31/11
performance ofduty, forgery or alternation,
$2,500,000. Deductible $10,000.
theft, disappearance and destruction, robbery
and safe burglary, and computer fraud
Limit $300,000,OOOper occurrence. Sub-limits:$150,000,000
Earthquake per occurrence; $100,000,000 Flood per occurrence.
WCIA
1/l/11-12/31/11
Property coverage
Deductible: earthquake 2% ofthe values involved, subject to
$100,000 min per occurrence. Flood $250,0000 per occurrence.
All other perils $25,000
WCIA
1/l/11-12/31/11
Automobile physical damage for scheduled
Actual cash value. Deductible $1,000 per occurrence for
automobiles
scheduled automobiles
$100,000,000 Maximumlimit; Sub -limits: $10,000,000 business
interruption; $1,000,000 extra expense; $500,000 hazardous
WCIA
1/l/11-12/31/11
Equipment breakdown coverage
waste. Deductible $10,000 combined all coverage expect.
Turbine generator units, KP motors, pumps, and deep water
wells, KVA transformers, HP A/C and refrigeration systems
and HP ICE's and generators —500 HP
Federal Wav / 56
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 31st, 2011 the City had $1,407,110 in reserve.
2010 2011
Unemployment reserve, Jan. 1st $ 1,318,338 $ 1,407,110
Unemployment compensation benefits 241,683 248,718
Claim payments during the year (152,911) (248,718)
Unemployment reserve, Dec. 31st $1,407,110 $1,407,110
NOTE 11- LONG-TERM LIABILITIES
The various categories of long-term debt reflected on the City's financial statements are briefly described in the following
paragraphs.
General obligation bonds are backed by the City's full faith and credit. Proceeds are typically used for the acquisition or
construction of major capital facilities or equipment. "Councilmanic Bonds" are general obligation bonds issued by City
Council without voter approval. Under State law, repayment of these bonds must be financed from general City revenues
since no additional property taxes can be levied to support related debt service payments. General Obligation bonds
approved by the voters are typically repaid through an annual "excess" property tax levy authorized for this purpose by State
statute. At year-end 2011 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. The compensated absences liability will be
liquidated approximately 91 % by the General Fund and 9% by the Street Fund.
The following schedules detail the long-term debt activity and balances of the City.
OUTSTANDING GENERAL OBLIGATION DEBT AND LONG-TERM LIABILITIES - BY TYPE
DECEMBER 31,
2011
Bond Rating Issue
Maturity
Interest
Amount
Beginning
Amount
Amount
Ending
Description
at Issuance Date
Date
Rate
Originally
Outstanding
Issued
Redeemed
Outstanding
Issued
Debt
Debt
Governmental Activities:
General Obligation Bonds:
2003 Limited/Community Center
AAA -Insured Nov 15, 03
Dec 01, 33
4.676
$ 15,000,000
$ 12,980,000
$
$ 330,000
$ 12,650,000
Subtotal GO Bonds:
-
-
-
15,000,000
12,980,000
330,000
12,650,000
Other Miscellaneous Debt -Intergovernmental:
2000 Limited/Valley Comm. PDA
Al Sep 12, 00
Dec 01, 15
5.31
2,551,600
1,044,000
196,000
848,000
2009 SCORE/Special Obligation Bond
Al/AA Nov 04, 09
Jan 01, 39
3.00-6.62
14,659,950
14,659,950
-
14,659,950
Subtotal miscellaneous:
-
-
17,211,550
15,703,950
196,000
15,507,950
Subtotal GO Bonds plus Misc.
32,211,550
28,683,950
526,000
28,157,950
Compensated absences
1,532,637
111,968
71,325
1,573,280
Subtotal GO bonds, misc. & compensated absences:
-
-
32,211,550
30,216,587
111,968
597,325
29,731,230
Business -Type Activities:
Public Works Trust Fund Loan:
PWTL - Kitts Comer Drain Imp
Aug 31, 94
Jul 01, 14
1.00
233,316
40,503
-
12,936
27,567
PWTL - Kitts Comer Drain Imp
Ju124, 96
Jul 01, 14
1.00
1,166,580
262,193
64,680
197,513
PWTL - Kitts Comer Drain Imp
Sep 04, 97
Jul 01, 14
1.00
155,544
42,261
8,624
33,637
PWTL - SeaTac Mall Drain Imp
May 31, 00
Jul 01, 19
1.00
412,500
144,180
16,020
128,160
PWTL - SeaTac Mall Drain Imp
Aug 14, 00
Jul 01, 19
1.00
2,062,500
720,898
80,099
640,799
Subtotal PWTFL
-
-
4,030,440
1,210,035
182,359
1,027,676
Compensated absences
-
63,162
15,539
-
78,701
Subtotal PWTFL plus compensated absences:
4,030,440
1,273,197
15,539
182,359
1,106,377
Grand Total All Long -Term Debt:
$ 36,241,990
$ 31,489,784
$ 127,507
$ 779,684
$ 30,837,607
'Federal Wav / 57
OUTSTANDING GENERAL OBLIGATION DEBT AND LONGTERM LIABILITIES - BY FUND
DECEMBER 31, 2011
Amount
Beginning
Ending
Description
Originally
Outstanding
Amount
Amount
Outstanding
Due within
Issued
Debt
Issued
Redeemed
Debt
one year
Governmental Long -Term Debt:
General Obligation Bonds:
2003 Limited/Comnmnity Center
$ 15,000,000
$ 12,980,000
$
$ 330,000
$ 12,650,000
$ 340.000
Subtotal GO Bonds:
15,000,000
12,980,000
330,000
12,650,000
340,000
Other Mis cellaneous Debt -Intergovernmental:
2000 Limited/Valley Conan. PDA
2,551,600
1,044,000
196,000
848,000
201,000
2009 SCORE/Special Obligation Bond
14,659,950
14,659,950
-
14,659,950
-
Subtotal miscellaneous:
17,211,550
15,703,950
196,000
15,507,950
201.000
Subtotal GO Bonds plus Misc.
32,211,550
28,683,950
526,000
28,157,950
541,000
Compensated absences
-
1,532,637
111,968
71,325
1,573,280
105,264
Subtotal GO bonds, misc. & compensated absences:
32,211,550
30,216,587
111,968
597,325
29,731,230
646,264
Business -Type Activities:
Enterprise Funds:
Public Works Trust Fund Loan
4,030,440
1,210,035
-
182,359
1,027,676
182,359
Subtotal Bus -Type Long -Term Debt
4,030,440
1,210,035
-
182,359
1,027,676
182,359
Compensated absences
-
63,162
15,539
-
78,701
2,534
Total Bus -Type plus comp. absences LTD:
4,030,440
1,273,197
15,539
182,359
1,106,377
184,893
�GrantTotalAll Long -Term Debt:
$ 36,241,990
$ 31,489,784
$ 127,507
$ 779,684
$ 30,837,607
$ 831,157
* Debt service principal payments in Debt Service Fund include credits of $30,270 from Interlocal agreement with Federal Way Fire District to participate
in capital cost obligations with Valley Communications joint venture with the City ofFederal Way.
SCHEDULE OF CHANGES IN LONGTERM LIABILITIES
PERIOD ENDED DECEMBER 31, 2011
Beginning
Ending
Outstanding
Additions
Reductions
Outstanding
Debt
Debt
Governmental Activities:
General Obligation Bonds
$ 12,980,000
$ -
$ (330,000)
$ 12,650,000
Other -intergovernmental debt
15,703,950
-
(196,000)
15,507,950
Compensated absences
1,532,637
111,968
(71,325)
1,573,280
Total Governmental Activities
30,216,587
111,968
(597,325)
29,731,230
Business -Type Activities:
Enterprise Funds
Public Works Trust Fund Loan
1,210,035
-
(182,359)
1,027,676
Compensated absences
63,162
15,539
-
78,701
Total Business -Type Activities
1,273,197
15,539
(182,359)
1,106,377
Total All Funds
$ 31,489,784
$ 127,507
$ (779,684)
$ 30,837,607
SCHEDULE OF DEBT SERVICE REQUIREMENTS TO MATURITY
AS OF DECEMBER 31, 2011
Government Activities
Business -Type Activities
General Governmental Debt
Public Work Trust Fund
Grand Total
Year
Principal
Interest
Principal
Interest
Principal
Interest
P&I
2012
541,000
901,657
182,359
10,277
723,359
911,934
1,635,293
2013
895,550
1,176,067
182,359
8,453
1,077,909
1,184,520
2,262,429
2014
913,500
1,147,476
182,359
6,630
1,095,859
1,154,106
2,249,965
2015
943,300
1,114,298
96,120
4,806
1,039,420
1,119,104
2,158,524
2016
756,050
1,076,875
96,120
3,845
852,170
1,080,720
1,932,889
2017-2021
4,267,650
4,901,226
288,359
5,767
4,556,009
4,906,993
9,463,002
2022-2026
5,300,650
3,913,438
-
-
5,300,650
3,913,438
9,214,088
2027-2031
6,656,700
2,607,581
-
-
6,656,700
2,607,581
9,264,281
2032-2036
5,357,350
1,068,039
-
-
5,357,350
1,068,039
6,425,389
2037-2041
2,526,200
166,026
-
-
2,526,200
166,026
2,692,226
Totall
$ 28,157,950
$ 18,072,683
$ 1,027,676
$ 39,777
$ 29,185,626
$ 18,112,460
$ 47,298,086
Federal Wav / 58
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'h 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, 2011 are:
General government (no vote required) $ 94,879,813
General government (3/5 majority vote required) 77,229,838
Parks and open space (3/5 majority vote required) 193,074,595
Utilities (3/5 majority vote required) 193,074,595
Total Capacity $ 558,258,841
Compensated Absences
The City's liability for accrued vacation and compensatory time balances is recorded in the schedule below. Accrued
compensated absences for proprietary fund employees are recorded as liabilities in those funds expected to incur the related
future expense.
Governmental Activities:
Current portion
$ 105,264
Noncurrent portion
1,468,016
Business -Type Activities:
Current portion
2,534
Noncurrent portion
76,167
Total Compensated absences $ 1,651,981
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, 2011 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 $3,720 for the year ended December 31, 2011. The current year lease
payments included the site lease for the City's WiFi Project. Federal Way WiFi project is to provide free broadband Internet
service to Federal Way citizens, businesses and visitors in the downtown business corridor, City parks, Community Center,
Dumas Bay Centre and City Hall. The site lease was extended in July of 2010 for an additional 5 years terminating in July
2015. The future minimum lease payments for the WiFi Project are as follows:
2011 $ 3,000
2012 3,000
2013 3,000
2014 3,000
2015 1,500
Total: $ 13,500
'Federal Wav / 59
NOTE 12 — INTERFUND TRANSACTIONS
Interfund transfers for the year ended December 31, 2011 were as follows:
Interfund Transfers
Governmental Funds:
General Fund
Street Fund
Utility Tax Fund
Debt Service
Downtown Redevelopment
Transportation
Nonmajor Governmental Funds
Proprietary Funds:
Surface Water Management
Dumas Bay Centre
Internal Service Funds
In Out
$ 13,222,353 $ 1,818,870
2,444,870
-
-
12,563,553
915,000
920,000
-
750,000
1,611,000
4,100,000
3,260,000
1,358,000
846,865 846,865
113,000 -
13,500 69,300
Total: $22,426,588 $22,426,588
The following describes the amounts transferred out during 2011:
General Fund:
• $1,743,870 to Street Fund to subsidize street maintenance and operations
• $50,000 to CDBG Neighborhood Stabilization Program support
• $25,000 to Federal Way Community Center for use of facilities by General Parks and Recreation
Utility Tax Fund:
• $2,769,553 to General Fund for Proposition 1 for Public Safety and Community Programs Funding
• $915,000 to Federal Way Community Center Debt Service
• $1,011,000 to Arterial Street Fund overlay program
• $1,432,000 to General Fund for Public Safety Positions
• $226,000 to General Fund for Celebration Park maintenance & operations
• $371,000 to Street Fund for maintenance and operations on bond projects
• $113,000 to Dumas Bay Centre Fund for Knutzen Family Theatre subsidy
• $74,100 to General Fund for Arts Commission
• $22,900 to General Fund for Red, Whites & Blues Festival
• $48,000 to General Fund for new Parks maintenance and operations
• $696,000 to Federal Way Community Center for maintenance/operations and capital reserves
• $3,919,000 to General Fund for ongoing support of operations
• $500,000 to Transportation CIP project South 320th St at 201b Ave South
• $291,000 to Transportation CIP project 215t Ave Southwest at Southwest 336th St.
• $50,000 to Parks CIP Major Maintenance -Parks Facilities
• $125,000 to Parks CIP for Sacajawea Park Masterplan
Debt Service Fund:
• $820,000 of Real Estate Excise Tax to Transportation CIP project 20 Ave Southwest at Southwest 336"' St.
• $100,000 of Real Estate Excise Tax to Parks CIP for Playgrounds
Downtown Redevelopment:
• $750,000 to City Facilities for PACC
Transportation CIP Fund:
• $3,800,000 to General Fund for unspent project savings
• $300,000 to Arterial Street Fund overlay program
Proprietary Funds:
• $144,798 from Surface Water Management CIP to Surface Water Management Operations
• $222,000 from Surface Water Management Operations to Surface Water Management CIP for Small Projects
• $480,067 from Surface Water Management Operations to Surface Water Management CIP for Department of
Ecology Grant.
Federal Wav / 60
Internal Service:
• $13,500 from Risk management to Fleet/Equipment for insurance proceeds
• $55,800 from Fleet/Equipment to General Fund for fleet excess reserves
Nonmajor Fund:
• $50,000 from Traffic Safety Fund to General Fund for support of Municipal Court
• $825,000 from Traffic Safety Fund to General Fund for support of Police Department
• $330,000 from Traffic Safety Fund to Street Fund for support of Traffic Services
Interfund loans for the year ended December 31, 2011 were as follows:
Interf ind Loans Receivable Payable
General Fund $ 10,000 $ -
Special Revenue Funds:
Community Development Block Grant - 10,000
Total lnterfundLoans $ 10,000 $ 10,000
NOTE 13 — CONTINGENCIES AND LITIGATION
As of December 31, 2011 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
Valley Communication Center
The "Valley Communications Center" was established August 20, 1976, when an Interlocal Agreement was entered into by
the four original participating municipal corporations, including the cities of Renton, Kent, Auburn, and Tukwila, and Federal
Way which was formally admitted during 2000. The agreement is sanctioned by the provisions and terms of the Interlocal
Cooperation Act pursuant to RCW 39.34. The initial duration of the agreement was five years, and thereafter is
automatically extended for consecutive five year -periods.
The purpose of the joint operation, hereafter referred to as Valley Com, is to provide improved consolidated emergency
communications (dispatch) services for police, fire, and medical aid, to the five participating cities and to several subscribing
agencies, which include King County Fire Districts 2, 20, 26, 40, 43, 44, and 47; City of Pacific Police and Fire Departments,
City of Algona Police Department, City of Des Moines Police Department, City of Black Diamond Police and Fire
Department; SeaTac Fire Department; North Highline Fire Department; King County EMS Units; and Vashon Island Fire
Department. Separate agreements between Valley Com and the subscribing agencies have been executed, which set forth
conditions of services and rates charged.
The allocation of prorated financial participation among the five member cities is the percentage of dispatched calls attributed
to each jurisdiction compared to the total estimated dispatched calls, for the current twelve month period ending December
31. The percentages are applied to the current approved budget, less revenue from all other sources. Distribution of the
current year net income is based on the same percentages. The 2011 cost distributions for the five member cities are as
follows:
Dispatchable Percent
City Calls of Total
Kent 94,760 27.57%
Renton 73,519 21.39%
Auburn 66,805 19.43%
Tukwila 33,025 9.61%
Federal Way 75,628 22.00%
Total 343,737 100.00%
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Valley Com is governed by an Administration Board, composed of the Mayors or designated representatives from the five
participating cities of Renton, Kent, Auburn, Tukwila, and Federal Way. The Administration Board is authorized to establish
bylaws that govern procedures of the Board and Valley Com's general operations for the following functions: 1) Budget
review and recommendations to the legislative bodies of the member cities, and budget adoption after each legislative body
has approved the required financial participation for the ensuing year; 2) Approve appointment and/or discharge of the
Director; 3) Approve personnel policy and make final decisions on all major policy changes; and 4) Review and approves all
contracts.
In addition, an Operating Board was established and consists of two members of each participating City's Public Safety
Departments, including the heads of such departments or their designees. The Operating Board performs the following
functions: 1) Oversees the general operation of Valley Com, and advises and makes recommendations to the Administration
Board; 2) Make recommendations on Director selection; 3) Presents proposed policies and budgets to the Administration
Board; and 4) Reviews disbursements of funds by the Director.
The Director presents a proposed budget to the Operating Board on or before August 15 of each year. Said budget is then
presented to the Administrative Board by September 1 of each year. The Administration Board can make changes to the
proposed Valley Com budget as it finds necessary, but final approval falls to the legislative body of each member city, in
accordance with the provisions of the interlocal agreement.
In May 1993 Valley Com entered into an agreement with King County to provide joint project management for the
acquisition and installation of 800-MHz emergency radio communications system approved by the voters of King County in
conjunction with a $57 million levy. In August 1993 Valley Com also entered into an Interlocal Cooperation Agreement
with the sub -regions of King County, Seattle, and Eastside Public Safety Communications, which governs the development
and installation of the new 800-MHz emergency radio system. Valley Com now provides emergency communication
dispatch services to a population of approximately 570,000.
Valley Com operates as an enterprise fund and is totally self supporting through the implementation of user fees and the
primary source of revenue is provided by charges for calls for service. The 800-MHz emergency radio communications
system operated by the agreement with King County is operated as a separate enterprise fund, and the Member Cities have no
equity interest in the contributed capital from this system.
The share of equity belonging to the five participating cities is shown below. Liabilities are the responsibility of the five
participating cities in direct proportion to their equity position.
Balances in 2011
Kent
Renton
Auburn
Tukwila
Federal Way
Total
Equity @ January 1, 2011
$ 6,841,893 $
4,833,671
$ 4,575,538
$ 2,739,460
$ 3,090,648
$ 22,081,210
Current year increase
210,199
163,082
148,189
73,257
167,760
762,487
Equity @ December 31, 2011
$ 7,052,092 $
4,996,753
$ 4,723,727
$ 2,812,717
$ 3,258,408
$ 22,843,697
Percent of equity
30.87%
21.87%
20.68%
12.31%
14.26%
100.00%
Percent of 2010 distribution
30.99%
21.89%
20.72%
12.41%
14.00%
100.00%
A complete set of financial statements is available from: Valley Communications Center, 27519 108"' Avenue SE, Kent, WA
98030.
South Correction Entity (SCORE)
The South Correctional Entity (SCORE) consolidated correctional facility was established February 25, 2009, when an
Interlocal Agreement (the "Original Interlocal Agreement") was entered into by seven participating municipal governments,
the "Member Cities" of Auburn, Burien, Des Moines, Federal Way, Renton, SeaTac and Tukwila, under the authority of the
"Interlocal Cooperation Act" (RCW 39.34). This "Original Interlocal Agreement" was amended and restated October 1,
2009 and named the City of Des Moines as the "Host City" and the remaining Member Cities as "Owner Cities". This
interlocal agreement is known as the "Formation Interlocal Agreement". Pursuant to a separate "Host City Agreement" dated
October 1, 2009, the Host City will not enjoy the same equity position as the Owner Cities until all debts issued are paid and
the Host City fulfills all of its obligations as outlined in the Agreement.
SCORE, a governmental administrative agency pursuant to RCW 39.34.030 (3), has the power to acquire, construct, own,
operate, maintain, equip, and improve a correctional facility known as the "SCORE Facility" and to provide correctional
services and functions incidental thereto, for the purpose of detaining arrestees and sentenced offenders in the furtherance of
Federal Wav / 62
public safety and emergencies within the jurisdiction of the Member Cities. The SCORE Facility may serve the Member
Cities and Subscribing Agencies which are in need of correctional facilities. Any agreement with a Subscribing Agency shall
be in writing and approved by SCORE as provided within the SCORE Formation Interlocal Agreement.
Financing for the acquisition, construction, equipping, and improvement of the SCORE Facility will be provided by bonds
issued by the South Correctional Entity Facility Public Development Authority (the "SCORE PDA"), a public development
authority chartered by the City of Renton pursuant to RCW 35.21.730 through 35.21.755 and secured by the full faith and
credit of the Cities of Auburn, Burien Federal Way, Renton, SeaTac, and Tukwila (the "Owner Cities"). The SCORE PDA
issued $86 million in special obligation bonds in 2009 to carry out the facility development project. The following is a
summary of the debt service requirements for the bond issue:
Summary of Debt Service Requirements
Debt Service Schedule
Debt Service Allocation to Owner Cities
35% BABs
Auburn
Burien
Federal Way
Renton
SeaTac
Tukwila
Year
Principal
Interest
Subsidy
Total
31%
4%
18%
36%
3%
8%
2012
$ -
$ 5,155,732
$ (1,675,089) $
3,480,643
$ 1,078,999
$ 139,226
$ 626,516
$ 1,253,031
$ 104,419
$ 278,451
2013
1,915,000
5,126,998
(1,675,089)
5,366,909
1,663,742
214,676
966,044
1,932,087
161,007
429,353
2014
1,950,000
5,066,566
(1,654,975)
5,361,591
1,662,093
214,464
965,086
1,930,173
160,848
428,927
2015
1,990,000
4,995,069
(1,632,787)
5,352,282
1,659,207
214,091
963,411
1,926,822
160,568
428,183
2016
2,065,000
4,911,886
(1,632,787)
5,344,099
1,656,671
213,764
961,938
1,923,876
160,323
427,528
2017-2021
11,545,000
22,986,907
(7,869,713)
26,662,194
8,265,280
1,066,488
4,799,195
9,598,390
799,866
2,132,976
2022-2026
13,945,000
19,586,127
(6,994,733)
26,536,394
8,226,282
1,061,456
4,776,551
9,553,102
796,092
2,122,912
2027-2031
17,010,000
14,723,464
(5,346,730)
26,386,734
8,179,888
1,055,469
4,749,612
9,499,224
791,602
2,110,939
2032-2036
20,955,000
8,498,417
(3,217,063)
26,236,354
8,133,270
1,049,454
4,722,544
9,445,087
787,091
2,098,908
2035-2039
14,860,000
1,502,494
(697,922)
15,664,572
4,856,017
626,583
2,819,623
5,639,246
469,937
1,253,166
Total
$ 86,235 000
$ 92 553,660
$ 32 396,888 $
146 391,772
$ 45,381449
$ 5,855,671
$ 26,350 520
$ 52,701,038
$ 4,391753
$ 11,711,343
Note: Interest is to be paid from bond proceeds during the construction period (2010-2011).
*Of the $26,350,520 allocation to Federal Way, $15,522,298 is for the principal portion and the remainder is for interest.
The City of Federal Way reports its share of equity interest in the Governmental Activities column within the Government -
wide financial statements under non -current assets. The following is condensed (unaudited) financial information as of
December 31, 2011 related to SCORE:
South Correction Entity (SCORE)
2011 Owner Cities Equity Allocation
Member
Percent of
2010
2011
city
i
i Balance
Distribution Equity Balance
Auburn
31.00%
$ 1,601,588
$ 1,587,732 $ 3,189,320
Burien
4.00%
206,656
204,869 411,525
Federal Way
18.00%
929,954
921,909 1,851,863
Renton
36.00%
1,859,910
1,843,818 3,703,728
SeaTac
3.00%
154,992
153,651 308,643
Tukwila
8.000/0
413,313
409,737 823,050
Total
1 100.00%1
$ 5,166,413
1 $ 5,121,716 $ 10,288,129
A complete set of financial statements is available from: SCORE, 20817 17th Avenue South, Des Moines, WA 98198.
'Federal Wav / 63
NOTE 15 - PRIOR PERIOD ADJUSTMENT
Beginning Balance Prior Period Adjusted Beginning
Ending Balance
Governmental Activity
1/1/2011
Adjustment
Balance
Additions
Deletions
12/31/2011
Capital assets, not being depreciated:
Land
$ 301,270,211
$ - $
301,270,211
$ 898,006
$
$ 302,168,217
Construction in progress
16,193,940
(895,299)
15,298,641
11,445,599
(5,586,182)
21,158,058
Total capital assets, not being depreciated:
317,464,151
(895,299)
316,568,852
12,343,605
(5,586,182)
323,326,275
Capital assets, being depreciated
Buildings
16,698,395
16,698,395
648,316
(197,692)
17,149,019
Improvements other than buildings
43,264,217
43,264,217
601,363
43,865,580
Infrastructure
143,187,237
143,187,237
3,976,317
147,163,554
Machinery and equipment
14,713,673
14,713,673
1,328,904
(823,559)
15,219,018
Total capital assets, being depreciated:
217,863,522
217,863,522
6,554,900
(1,021,251)
223,397,171
Less accumulated depreciation for:
Buildings
(4,797,631)
(4,797,631)
(884,127)
68,883
(5,612,875)
Improvements other than buildings
(12,766,566)
(12,766,566)
(2,163,211)
-
(14,929,777)
Infrastructure
(29,475,841)
-
(29,475,841)
(3,829,373)
-
(33,305,214)
Machinery and equipment
(9,636,291)
11,830
(9,624,461)
(1,243,402)
717,186
(10,150,677)
Total accumulated depreciation:
(56,676,328)
11,830
(56,664,498)
(8,120,113)
786,069
(63,998,542)
Total assets being depreciated, net 161,187,194 11,830 161,199,024 (1,565,213) (235,182) 159,398,629
Governmental activities capital assets, net $ 478,651,345 $ (883,469) $ 477,767,876 $ 10,778,392 $ (5,821,364) $ 482,724,904
Business -Type Activities
Beginning Balance Prior Period Adjusted Beginning
1/1/2011 Adjustment Balance
Additions
Deletions
Ending Balance
12/31/2011
Capital assets, not being depreciated:
Land
$ 10,307,661
$ - $
10,307,661
$ 2,554 $
-
$ 10,310,215
Construction in progress
1,766,190
599,282
2,365,472
92,421
(4,423)
2,453,470
Total capital assets, not being depreciated:
12,073,851
599,282
12,673,133
94,975
(4,423)
12,763,685
Capital assets, being depreciated
Buildings
3,596,441
-
3,596,441
4,423
3,600,864
Improvements other than buildings
48,528,302
(709,534)
47,818,768
-
47,818,768
Infrastructure
1,916,645
1,916,645
-
1,916,645
Machinery and equipment
106,643
106,643
11,731
118,374
Total capital assets, being depreciated:
54,148,030
(709,534)
53,438,496
16,154
53,454,650
Less accumulated depreciation for:
Buildings
(2,438,349)
(2,438,349)
(181,631)
-
(2,619,980)
Improvements other than buildings
(11,843,453)
(11,843,453)
(485,283)
-
(12,328,736)
Infrastructure
(81,476)
(81,476)
(19,166)
-
(100,642)
Machinery and equipment
(85,472)
(85,472)
(2,946)
-
(88,418)
Total accumulated depreciation:
(14,448,750)
(14,448,750)
(689,026)
-
(15,137,776)
Total assets being depreciated, net
39,699,280
(709,534)
38,989,746
(672,872)
-
38,316,874
Business Type activities capital assets, net
$ 51,773,131
$ (110,252) $
51,662,879
$ (577,897) $
(4,423)
$ 51,080,559
Governmental -type activity prior period adjustments of $883,469 are required for construction in progress and include
adjustments of $568,022 for equipment that were previously capitalized in the internal service funds in 2009 and was not
deleted from construction in progress, $324,986 for private work done between 2006-2009 that should have not been reported
as construction in progress, $2,291 for technical adjustments to be deleted from construction in progress, and a ($11,830)
adjustment to accumulated depreciation for a reporting error in 2010.
Business -type activity prior period adjustments of ($110,252) include adjustments for construction in progress corrections
from previous years of $599,282, and ($709,534) in adjustments to Improvements Other Than Buildings for legal services
related to a settlement that should not have been capitalized as part of the project cost.
NOTE 16 - SUBSEQUENT EVENT
On March 6, 2012 Council approved a bond ordinance for the purpose of refunding the 2003 Federal Way Community
Center bonds. The $15M bond was issued in 2003 and has the option to call $11,955,000 on or after 12/1/2013. The current
average interest rates on the bonds are 4.66%. The interest rates on the refunding bonds would average between 3.0% to
3.25%. The timing of the bond sale is to be determined, based on market conditions.
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Combining Statement — Nonmajor Governmental Funds' Description
For the Year Ended December 31, 2011
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 HotellMotel 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 Federal Way Community Center Fund was established to account for the operation of the community center. The fund
is supported by user fees and designated utility tax transfers.
The Traffic Safety Fund was established to account for the penalties and fines collected in criminal traffic violations and
those related to the operation of the Red Light Photo Enforcement Program. Funds collected for traffic safety shall be used
for, but not limited to prevention, education, and enforcement effectors related to traffic safety and compliance with traffic
control devices within the city, including maintenance and operation costs.
The Community Development Block Grant Fund accounts for the receipt and disbursement of federal grant revenue
received through the Department of Housing and Urban Development's Community Development Block Grant Program.
Separate subsidiary records are maintained to administer the individual projects accounted for in this fund.
The Path and Trails Reserve Fund was established in accordance with State law to accumulate unexpended proceeds of the
City's '/2% motor vehicle fuel tax receipts which are restricted in use to the construction and maintenance of paths and trails
within City right-of-way. In August 2007, King County voters approved a new $0.05, six -year, inflation adjusted property
tax lid lift to expand park and recreation opportunities. One cent of the five -cent acquisition levy proceeds will be distributed
to cities for acquisition and development of open space and natural lands and city trail projects that support connections to the
regional trail system.
Capital 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 City Facilities CIP Fund accounts for receipts and disbursements related to acquisition, design, construction and any
other related municipal facility and community/senior capital project expenditures.
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COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
December 31, 2011
Special Capital
Revenue Projects Total
ASSETS
Equity in pooled cash & investments $ 3,315,681 $ 3,753,705 $ 7,069,386
Retainage in escrow - 6,922 6,922
Receivables (net):
Accounts and contracts 89,666 - 89,666
Due from other governments 124,794 - 124,794
TOTAL ASSETS 3,530,141 3,760,628 7,290,768
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
Retainage payable
Deposits payable
Interfund loans payable
Deferred revenue
TOTAL LIABILITIES
170,782
59,206 229,988
103,579
6,922 110,502
16,206
- 16,206
10,000
- 10,000
110,116
- 110,116
410,684
66,128 476,812
Fund Balance:
Restricted 970,756 2,891,893 3,862,649
Committed 2,148,702 802,606 2,951,308
TOTAL FUND BALANCES 3,119,457 3,694,499 6,813,957
TOTAL LIABILITIES AND
FUND BALANCE $ 3,530,141 $ 3,760,627 $ 7,290,768
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COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
December 31, 2011
Special
Arterial
Solid Waste
Contracts/
Hotel/Motel
Street
Recycling
Studies
Lodging Tax
ASSETS
Equity in pooled cash & investments $
541,911
$ 160,516
$ 556,753
$ 201,488
Receivables (net):
Accounts and contracts
-
-
-
-
Due from other governments
34,625
-
-
12,247
TOTAL ASSETS
576,536
160,516
556,753
213,734
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
3,254
6,536
-
250
Retainage payable
103,579
-
-
Deposits payable
-
-
Interfund loans payable
-
-
-
-
Deferred revenue
-
-
-
-
TOTAL LIABILITIES
106,834
6,536
-
250
Fund Balance:
Restricted
-
-
556,753
213,484
Committed
469,703
153,980
-
-
TOTAL FUND BALANCES
469,703
153,980
556,753
213,484
TOTAL LIABILITIES AND
FUND BALANCE $
576,536
$ 160,516
$ 556,753
$ 213,734
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COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
December 31, 2011
Federal way
Community
Paths and
Community
Traffic
Development
Trails
Center
Safety
Block Grant
Reserve
Total
ASSETS
Equity in pooled cash & investments
$ 1,085,299
$ 613,396
$ 5,168
$ 151,150
$ 3,315,681
Receivables (net):
Accounts and contracts
89,666
-
-
-
89,666
Due from other governments
-
-
77,265
657
124,794
TOTAL ASSETS
1,174,965
613,396
82,433
151,807
3,530,141
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
80,701
56,319
23,722
-
170,781
Retainage payable
-
-
-
103,579
Deposits payable
16,206
-
-
-
16,206
Interfund loans payable
-
-
10,000
-
10,000
Deferred revenue
110,116
-
-
-
110,116
TOTAL LIABILITIES
207,023
56,319
33,722
-
410,683
Fund Balance:
Restricted
-
-
48,712
151,807
970,756
Committed
967,942
557,077
-
-
2,148,702
TOTAL FUND BALANCES
967,942
557,077
48,712
151,807
3,119,457
TOTAL LIABILITIES AND
FUND BALANCE
$ 1,174,965
$ 613,396
$ 82,433
$ 151,807
$ 3,530,141
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COMBINING BALANCE SHEET
NONMAJOR CAPITAL PROJECTS FUNDS
December 31, 2011
City
Facilities Parks Total
ASSETS
Equity in pooled cash & investments $ 1,299,687 $ 2,454,018 $ 3,753,705
Retainage in escrow 6,922 - 6,922
TOTAL ASSETS 1,306,610 2,454,018 3,760,628
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable
Retainage payable
TOTAL LIABILITIES
Fund Balance:
Restricted
Committed
14,077 45,129
59,206
6,922 -
6,922
20,999 45,129
66,128
848,727 2,043,166 2,891,893
436,883 365,723 802,606
TOTAL FUND BALANCES 1,285,610 2,408,889 3,694,499
TOTAL LIABILITIES AND
FUND BALANCE $ 1,306,610 $ 2,454,018 $ 3,760,628
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COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For Year Ended December 31, 2011
REVENUES
Taxes
Intergovernmental
Service charges and fees
Fines and forfeitures
Interest
Other
TOTAL REVENUES
EXPENDITURES
Current:
General government
Security of persons and property
Transportation
Physical environment
Economic environment
Culture and recreation
Capital outlay
TOTAL EXPENDITURES
Special
Capital
Revenue
Projects
Total
$ 344,304
$ -
$ 344,304
851,218
65,000
916,218
2,029,629
-
2,029,629
945,527
-
945,527
3,366
3,307
6,673
216,969
45,596
262,564
4,391,013
113,903
4,504,916
209,568
3,661
213,229
18,050
-
18,050
2,236,228
-
2,236,228
427,315
-
427,315
187,686
-
187,686
2,136,945
94,572
2,231,517
-
470,564
470,564
5,215,792
568,797
5,784,589
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (824,779) (454,895) (1,279,673)
OTHER FINANCING SOURCES (USES;
Transfers in
Transfers out
TOTAL OTHER FINANCING
SOURCES (USES)
NET CHANGE IN FUND BALANCES
FUND BALANCES - BEGINNING
Adjustment for GASB 54 - Beginning
fund balance
ADJUSTED FUND BALANCES -
BEGINNING
2,082,000
1,178,000
3,260,000
(1,358,000)
-
(1,358,000)
724,000
1,178,000
1,902,000
(100,779)
723,105
622,327
3,220,529
2,971,394
6,191,923
(293) - (293)
3,220,236 2,971,394 6,191,630
FUND BALANCES - ENDING $ 3,119,457 $ 3,694,499 $ 6,813,957
Federal Wav / 72
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
For Year Ended December 31, 2011
Special
Arterial
Solid Waste
Contracts/
Hotel/Motel
Street
Recycling
Studies
Lodging Tax
REVENUES
Taxes $
$ -
$ -
$ 185,289
Intergovernmental
488,322
146,460
-
-
Service charges and fees
344,750
297,130
-
-
Fines and forfeitures
-
-
-
-
Interest
486
112
526
223
Other
-
2,495
-
-
TOTAL REVENUES
833,558
446,197
526
185,512
EXPENDITURES
Current:
General government
-
-
1,247
-
Security of persons and property
-
-
-
-
Transportation
2,236,228
-
-
-
Physical environment
-
427,315
-
-
Economic environment
-
-
-
187,686
Culture and recreation
-
-
-
-
TOTAL EXPENDITURES
2,236,228
427,315
1,247
187,686
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (1,402,670)
18,882
(721)
(2,174)
OTHER FINANCING SOURCES (USES)
Transfers in
1,311,000
-
-
-
Transfers out
-
-
-
-
TOTAL OTHER FINANCING
SOURCES (USES)
1,311,000
-
-
-
NET CHANGE IN FUND BALANCES
(91,670)
18,882
(721)
(2,174)
FUND BALANCES - BEGINNING
561,373
135,098
557,474
215,658
FUND BALANCES - ENDING $
469,703
$ 153,980
$ 556,753
$ 213,484
'Federal Wav / 73
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
For Year Ended December 31, 2011
Federal way
Community
Paths and
Community
Traffic
Development
Trails
Center
Safety
Block Grant
Reserve
Total
REVENUES
Taxes
$ -
$ -
$ - $
159,015
$ 344,304
Intergovernmental
-
-
207,032
9,404
851,218
Service charges and fees
1,387,750
-
-
-
2,029,629
Fines and forfeitures
-
945,527
-
945,527
Interest
912
1,080
27
3,366
Other
214,474
-
-
-
216,969
TOTAL REVENUES
1,603,135
946,607
207,032
168,446
4,391,013
EXPENDITURES
Current:
General government
-
-
208,321
-
209,568
Security of persons and property
-
18,050
-
-
18,050
Transportation
-
-
-
2,236,228
Physical environment
-
-
-
427,315
Economic environment
-
-
-
187,686
Culture and recreation
2,136,945
-
-
-
2,136,945
TOTAL EXPENDITURES
2,136,945
18,050
208,321
-
5,215,792
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
(533,810)
928,557
(1,288)
168,446
(824,779)
OTHER FINANCING SOURCES (USES)
Transfers in
721,000
-
50,000
-
2,082,000
Transfers out
-
(1,205,000)
-
(153,000)
(1,358,000)
TOTAL OTHER FINANCING
SOURCES (USES)
721,000
(1,205,000)
50,000
(153,000)
724,000
NET CHANGE IN FUND BALANCES
187,190
(276,444)
48,712
15,446
(100,779)
FUND BALANCES - BEGINNING
780,752
833,520
-
136,361
3,220,236
FUND BALANCES - ENDING $
967,942
$ 557,077 $
48,712
$ 151,807
$ 3,119,457
Federal Wav / 74
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR CAPITAL PROJECTS FUNDS
For Year Ended December 31, 2011
City
Facilities Parks Total
REVENUES
Intergovernmental $
65,000
$ -
$ 65,000
Interest
1,040
2,267
3,307
Other
41,516
4,080
45,596
TOTAL REVENUES
107,556
6,347
113,903
EXPENDITURES
Current:
General government
3,661
-
3,661
Culture and recreation
-
94,572
94,572
Capital outlay
245,868
224,696
470,564
TOTAL EXPENDITURES
249,529
319,268
568,797
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
(141,974)
(312,921)
(454,895)
OTHER FINANCING SOURCES (USES)
Transfers in
750,000
428,000
1,178,000
Transfers out
-
-
-
TOTAL OTHER FINANCING
SOURCES (USES)
750,000
428,000
1,178,000
NET CHANGE IN FUND BALANCES
608,026
115,079
723,105
FUND BALANCES - BEGINNING
677,584
2,293,810
2,971,394
FUND BALANCES - ENDING $
1,285,610
$ 2,408,889
$ 3,694,499
'Federal Wav / 75
ARTERIAL STREET
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For Year Ended December 31, 2011
Variance with
Budgeted Amounts
Final Budget -
Positive
Original
Final
Actual Amounts
(Negative)
REVENUES
Intergovernmental
S 500,000
$ 500,000
$ 488,322
$ (11,678)
Service charges and fees
-
320,000
344,750
24,750
Interest
2,500
2,500
486
(2,014)
TOTAL REVENUES
502,500
822,500
833,558
11,058
EXPENDITURES
Current:
Transportation
1,513,500
2,394,874
2,236,228
158,646
TOTAL EXPENDITURES
1,513,500
2,394,874
2,236,228
158,646
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (1,011,000) (1,572,374) (1,402,670) 169,704
OTHER FINANCING SOURCES (USES)
Transfers in 1,011,000 1,311,000 1,311,000 -
TOTAL OTHER FINANCING
SOURCES (USES) 1,011,000 1,311,000 1,311,000 -
NET CHANGE IN FUND BALANCES - (261,374) (91,670) 169,704
FUND BALANCES - BEGINNING - 561.375 561.373 (2
FUND BALANCES - ENDING $ - $ 300,001 $ 469,703 $ 169,702
Federal Wav / 76
SOLID WASTE & RECYCLING
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For Year Ended December 31, 2011
Variance with
Budgeted Amounts
Final Budget -
Positive
Original
Final
Actual Amounts
(Negative)
REVENUES
Intergovernmental
$ 137,877
$ 146,458
$ 146,460
$ 2
Service charges and fees
275,366
275,366
297,130
21,764
Interest
-
-
112
112
Other
-
-
2,495
2,495
TOTAL REVENUES
413,243
421,824
446,197
24,373
EXPENDITURES
Current:
Physical environment
415,118
430,118
427,315
2,803
TOTAL EXPENDITURES
415,118
430,118
427,315
2,803
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
(1,875)
(8,294)
18,882
27,176
NET CHANGE IN FUND BALANCES
(1,875)
(8,294)
18,882
27,176
FUND BALANCES - BEGINNING
136,968
135,098
135,098
(0)
FUND BALANCES - ENDING
$ 135,093
$ 126,804
$ 153,980
$ 27,176
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HOTEL/MOTEL LODGING TAX
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For Year Ended December 31, 2011
Variance with
Budgeted Amounts
Final Budget -
Positive
Original Final
Actual Amounts
(Negative)
REVENUES
Taxes
$ 155,000 $ 155,000
$ 185,289
$ 30,289
Interest
300 500
223
(277)
Other
5,000 3,500
-
(3,500)
TOTAL REVENUES
160,300 159,000
185,512
26,512
EXPENDITURES
Current:
Economic environment 160,300 372,500 187,686 184,814
TOTAL EXPENDITURES 160,300 372,500 187,686 184,814
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES - (213,500) (2,174) 211,326
NET CHANGE IN FUND BALANCES - (213,500) (2,174) 211,326
FUND BALANCES - BEGINNING - 215.657 215.658 1
FUND BALANCES - ENDING $ - $ 2,157 $ 213,484 $ 211,327
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FEDERAL WAY COMMUNITY CENTER
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For Year Ended December 31, 2011
Variance with
Budgeted Amounts
Final Budget -
Positive
Original
Final
Actual Amounts
(Negative)
REVENUES
Service charges and fees
$ 1,281,122
$ 1,281,122
$ 1,387,750
$ 106,628
Interest
-
-
912
912
Other
249,300
249,300
214,474
(34,826)
TOTAL REVENUES
1,530,422
1,530,422
1,603,135
72,713
EXPENDITURES
Current:
Culture and recreation
2,142,839
2,151,722
2,136,945
14,777
TOTAL EXPENDITURES
2,142,839
2,151,722
2,136,945
14,777
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (612,417) (621,300) (533,810) 87,490
OTHER FINANCING SOURCES (USES)
Transfers in - - 721,000 721,000
TOTAL OTHER FINANCING
SOURCES (USES) - - 721,000 721,000
NET CHANGE IN FUND BALANCES (612,417) (621,300) 187,190 808,490
FUND BALANCES - BEGINNING 670.377 780.754 780.752 (2
FUND BALANCES - ENDING $ 57,960 $ 159,454 $ 967,942 $ 808,488
'Federal Wav / 79
TRAFFIC SAFETY
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For Year Ended December 31, 2011
Variance with
Budgeted Amounts
Final Budget -
Positive
Original Final
Actual Amounts
(Negative)
REVENUES
Fines and forfeitures
$ 830,000 $ 830,000
$ 945,527
$ 115,527
Interest
- -
1,080
1,080
TOTAL REVENUES
830,000 830,000
946,607
116,607
EXPENDITURES
Current:
Security of persons and property - 50,000 18,050 31,950
TOTAL EXPENDITURES - 50,000 18,050 31,950
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 830,000 780,000 928,557 148,557
OTHER FINANCING SOURCES (USES)
Transfers out (1,205,000) (1,205,000) (1,205,000) -
TOTAL OTHER FINANCING
SOURCES (USES) (1,205,000) (1,205,000) (1,205,000) -
NET CHANGE IN FUND BALANCES
(375,000)
(425,000)
(276,444)
148,557
FUND BALANCES - BEGINNING
480,288
833,520
833,520
(0)
FUND BALANCES - ENDING
$ 105,288
$ 408,520 $
557,077 $
148,556
Federal Wav / 80
PATH & TRAILS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For Year Ended December 31, 2011
Variance with
Budgeted Amounts
Final Budget -
Positive
Original
Final
Actual Amounts
(Negative)
REVENUES
Taxes $
153,000
$ 153,000
$ 159,015
$ 6,015
Intergovernmental
8,000
8,000
9,404
1,404
Interest
-
-
27
27
TOTAL REVENUES
161,000
161,000
168,446
7,446
EXPENDITURES
Current:
General government
-
-
-
-
TOTAL EXPENDITURES
-
-
-
-
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
161,000
161,000
168,446
7,446
OTHER FINANCING SOURCES (USES)
Transfers out
(153,000)
(153,000)
(153,000)
-
TOTAL OTHER FINANCING
SOURCES (USES)
(153,000)
(153,000)
(153,000)
-
NET CHANGE IN FUND BALANCES
8,000
8,000
15,446
7,446
FUND BALANCES - BEGINNING
132,768
136,362
136,361
(1)
FUND BALANCES - ENDING $
140,768
$ 144,362
$ 151,807
$ 7,445
'Federal Wav / 81
Budget and Actual — Debt Service Fund Description
For the Year Ended December 31, 2011
The Debt Service Fund accounts for the accumulation of resources for the payment of general obligation and special
assessment bond principal, interest and related costs. Revenues for this fund consist of the City's real estate excise tax,
transfers from the Utility Tax Fund, and/or other revenues designated by the City Council.
ofFederal Wav/82
40k
CI
TY OF
Federal Way
It"s all within reach
THIS PAGE IS LEFT INTENTIONALLY BLANK
'Federal Wav / 83
BALANCESHEET
GOVERNMENTAL FUNDS
December 31, 2011
Debt
Service
ASSETS
Equity in pooled cash & investments $ 3,908,649
Receivables (net):
Taxes 84,735
TOTAL ASSETS 3,993,384
LIABILITIES AND FUND BALANCES
Liabilities:
Deferred revenue 127,200
TOTAL LIABILITIES 127,200
Fund Balance:
Restricted 3,866,184
TOTAL FUND BALANCES 3,866,184
TOTAL LIABILITIES AND
FUND BALANCE $ 3,993,384
Federal Wav / 84
DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
For Year Ended December 31, 2011
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual Amounts (Negative)
REVENUES
Taxes $ 900,000 $ 1,400,000 $ 1,560,395 $ 160,395
Interest 15,000 15,000 3,454 (11,546)
TOTAL REVENUES 915,000 1,415,000 1,563,848 148,848
EXPENDITURES
Debt service: - -
Principal 496,600 496,600 457,520 39,080
Interest/fiscal charges/admin. fees 666,126 666,126 614,571 51,555
TOTAL EXPENDITURES 1,162,726 1,162,726 1,072,091 90,635
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
(247,726)
252,274
491,757 239,483
OTHER FINANCING SOURCES (USES)
Transfers in
915,000
915,000
915,000 -
Transfers out
(920,000)
(920,000)
(920,000) -
TOTAL OTHER FINANCING
SOURCES (USES)
(5,000)
(5,000)
(5,000) -
NET CHANGE IN FUND BALANCES
FUND BALANCES - BEGINNING
(252,726) 247,274 486,757 239,483
2,915,604 3,379,425 3,379,427 2
FUND BALANCES - ENDING $ 2,662,878 $ 3,626,699 $ 3,866,184 $ 239,485
'Federal Wav / 85
Combining Statement — Internal Service Fund's Description
For the Year Ended December 31, 2011
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.
Federal Wav / 86
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF NET ASSETS
December 31, 2011
Risk
Information
Support
Fleet and
Buildings and
Management
Systems
Services
Equipment
Furnishings
TOTAL
ASSETS
Current Assets
Equity in pooled cash & investments
$ 5,524,276
$ 3,608,917
$ 279,884
$ 5,294,581
$ 1,481,294
$ 16,188,952
Prepaid items
-
-
5,000
-
-
5,000
Receivables (net):
Accounts and contracts
-
40,571
40,571
Due from other governments
-
-
-
-
49,060
49,060
TOTAL CURRENT ASSETS
5,524,276
3,608,917
284,884
5,294,581
1,570,925
16,283,583
Noncurrent assets
Capital assets:
Building/structures
-
-
-
-
16,497,555
16,497,555
Machinery/furniture/equipment
6,766,364
257,936
8,010,718
-
15,035,018
Less accumulated depreciation
-
(5,183,970)
(147,532)
(4,635,171)
(5,197,919)
(15,164,592)
TOTAL NONCURRENT ASSETS
-
1,582,394
110,404
3,375,547
11,299,636
16,367,981
TOTAL CURRENT ASSETS
5,524,276
5,191,311
395,288
8,670,128
12,870,561
32,651,564
LIABILITIES
Current Liabilities:
Vouchers/payroll payable
92,494
147,970
5,811
23,498
108,435
378,208
TOTAL CURRENT LIABILITIES
92,494
147,970
5,811
23,498
108,435
378,208
Long-term liabilities:
Compensated absences payable
43,086
3,276
46,362
TOTAL LONG-TERM LIABILITIES
- 43,086
3,276
-
46,362
TOTAL LIABILITIES
92,494 191,056
5,811
26,774
108,435
424,570
NET ASSETS
Invested in capital assets
- 1,582,394
110404
3,375,547
11,299,636
16,367,981
Unrestricted
5,431,782 3,417,861
279:073
5,267,807
1,462,490
15,859,013
TOTAL NET ASSETS
$ 5,431,782 $ 5,000,255
$ 389,477
$ 8,643,354
$ 12,762,126
$ 32,226,994
'Federal Wav / 87
INTERNAL SERVICE FUNDS
COMBINING
STATEMENT OF REVENUES, EXPENSES AND CHANGES
IN FUND
NET ASSETS
For Year Ended December 31, 2011
Risk
Information Support
Fleet and
Buildings and
Management
Systems Services
Equipment
Furnishings
TOTAL
OPERATING REVENUES:
Service charges and fees
$ 1,151,971
$ 1,778,631 $
152,918
$ 2,089,277
$ 445,366
$ 5,618,163
Intergovernmental
-
-
-
12,336
454,880
467,216
Miscellaneous
148,626
29,415
2,152
75,396
255,590
TOTAL OPERATING REVENUES
1,300,598
1,808,046
155,070
2,101,613
975,642
6,340,969
OPERATING EXPENSES:
Personal services
-
691,247
-
37,791
86,193
815,231
Materials and supplies
-
19,490
16,466
532,752
30,509
599,218
Services and charges
23,858
549,502
96,969
372,888
368,502
1,411,720
Intergovernmental
-
105,774
-
-
-
105,774
Insurance
445,815
-
445,815
Claims
820,386
-
-
-
-
820,386
Depreciation
-
398,530
22,947
821,925
858,885
2,102,287
Interfund charges
TOTAL OPERATING EXPENSES
1,290,059
1,764,543
136,383
1,765,356
1,344,090
6,300,430
OPERATING INCOME (LOSS)
10,539
43,503
18,687
336,257
(368,447)
40,538
NON -OPERATING REVENUES (EXPENSES):
Gain (Loss) from disposal of capital assets
-
-
-
(57,408)
(128,809)
(186,217)
Interest income
2,962
3,224
311
4,631
1,277
12,405
Interest expense
TOTAL NON -OPERATING REVENUES (EXPENSES)
2,962
3,224
311
(52,777)
(127,532)
(173,812)
INCOME (LOSS) BEFORE TRANSFERS
13,500
46,726
18,998
283,480
(495,979)
(133,274)
Capital contributions
-
136,177
-
87,609
223,786
Transfers in
-
13,500
13,500
Transfers out
(13,500)
(55,800)
(69,300)
CHANGE IN NET ASSETS
0
182,903
18,998
328,789
(495,979)
34,712
NET ASSETS - BEGINNING
5,431,782
4,817,352
370,478
8,314,564
13,258,105
32,192,281
NET ASSETS - ENDING
$ 5,431,782
$ 5,000,255 $
389,477
$ 8,643,354
$ 12,762,126
$ 32,226,994
Federal Wav / 88
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF CASH FLOWS
For Year Ended December 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from users
Cash payments to claimants
Cash payments to suppliers for goods/services
Cash payments to employees
Cash payments to other governments for goods and services
Other operating receipts
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers in
Transfers out
NET CASH PROVIDED BY NONCAPITAL FINANCING
CASH FLOWS FROM CAPITAL AND CAPITAL -
RELATED FINANCING ACTIVITIES:
Acquisition of capital asset/construction work in progress
Proceeds from the sale of capital assets
NET CASH USED FOR CAPITAL AND CAPITAL -
RELATED FINANCING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES:
Receipts of interest
NET CASH PROVIDED BY INVESTING ACTIVITIES
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Operating Income/(loss)
Adjustments to reconcile operating income to net cash
provided/(used) by operating activities:
Depreciation expenses
(Increases)/decrease in accounts receivable
(Increases)/decrease in due from other governments
Increases/(decrease)in vouchers/accounts payable
Increases/(decrease)in deferred revenue
Increases/(decrease) in accrued payroll/compensated absences payable
TOTAL ADJUSTMENTS
NET CASH PROVIDED/USED BY OPERATING ACTIVITIES
Non -cash investing, capital, and financing activities:
Other contributions of capital assets
Fleet and Buildings and
Equipment Furnishings TOTAL
$ 2,101,613 $ 770,201 $ 5,966,164
- - (820,386)
(917,012) (332,124) (1,815,080)
(37,516) (88,466) (817,984)
- (551,589)
- 75,396 255,589
1, 1'+/,V6J '+LJ,VV/ /-,/-10,/1'+
13,500 13,500
(55,800) - (69,300)
(42,300) - (55,800)
(759,902) (493,195) (1,598,313)
39,742 - 40,473
(720,160) (493,195) (1,557,840)
4,631 1,277 12,405
4,OJ1 1,L// 1L,'+VJ
389,256 (66,911) 615,479
4,905,325 1,548,205 15,573,475
5,294,5 81 1,481,294 16,188,952
336,257
(368,447)
40,539
821,925
858,885
2,102,287
-
(40,571)
(29,741)
-
(21,554)
(21,554)
(11,372)
66,887
195,856
-
(67,920)
(67,920)
275
(2,273)
(2,753)
810,828
793,454
2,176,175
$ 1,147,085 $
425,007 $
2,216,714
$ 87,609 $
- $
223,786
'Federal Wav / 89
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF CASH FLOWS
For Year Ended December 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from users
Cash payments to claimants
Cash payments to suppliers for goods/services
Cash payments to employees
Cash payments to other governments for goods and services
Other operating receipts
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers in
Transfers out
NET CASH PROVIDED BY NONCAPITAL FINANCING
CASH FLOWS FROM CAPITAL AND CAPITAL -
RELATED FINANCING ACTIVITIES:
Acquisition of capital asset/construction work in progress
Proceeds from the sale of capital assets
NET CASH USED FOR CAPITAL AND CAPITAL -
RELATED FINANCING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES:
Receipts of interest
NET CASH PROVIDED BY INVESTING ACTIVITIES
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Operating Income/(loss)
Adjustments to reconcile operating income to net cash
provided/(used) by operating activities:
Depreciation expenses
(Increases)/decrease in accounts receivable
(Increases)/decrease in due from other governments
Increases/(decrease) in vouchers/accounts payable
Increases/(decrease)in deferred revenue
Increases/(decrease) in accrued payroll/compensated absences payable
TOTAL ADJUSTMENTS
NET CASH PROVIDED/USED BY OPERATING ACTIVITIES
Non -cash investing, capital, and financing activities:
Other contributions of capital assets
Risk
Information
Support
Management
Systems
Services
$ 1,162,801
$ 1,778,631
$ 152,918
(820,386)
-
-
23,794
(451,991)
(137,747)
-
(692,002)
-
(445,815)
(105,774)
-
148,626
29,415
2,152
69,020
558,279
17,323
(13,500)
-
(13,500)
-
-
- (269,936) (75,280)
731 -
- (269,205) (75,280)
2962 3224 311
G,7VG J,GG'Y J 1 1
58,482 292,298 (57,646)
5,465,794 3,316,620 337,531
5,524,276 3,608,917 279,884
10,538 43,503 18,688
- 398,530 22,947
10,830 - -
47,652 117,001 (24,312)
- (755) -
58,482 514,776 (1,365)
$ 69,020 $ 558,279 $ 17,323
$ - $ 136,177 $ -
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CAPITAL ASSETS USED IN THE
OPERATION
OF GOVERNMENTAL FUNDS
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CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
COMPARATIVE SCHEDULE BY SOURCE
December 31, 2011
GOVERNMENTAL FUNDS CAPITAL ASSETS
Land
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Construction in progress
TOTAL GOVERNMENTAL FUNDS CAPITAL ASSETS
INVESTMENTS IN GOVERNMENTAL FUNDS CAPITAL ASSETS BY SOURCE:
General Fund
Special Revenue Funds
Capital Project Funds
Donations
TOTAL GOVERNMENTAL FUNDS CAPITAL ASSETS
2011 2010
$ 302,168,217
$ 301,270,212
651,464
504,835
43,865,580
43,264,217
184,000
184,000
147,163,554
143,187,237
21,158,058
16,193,940
515,190,873 504,604,441
125,244, 871
125,244, 871
252,375,395
252,375,395
121,141, 891
112,933 ,199
16,428,716
14,050, 976
$ 515,190,873 $ 504,604,441
This schedule presents only the historical cost of capital asset balances (no depreciation expenses) related to
governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the
above amounts. Generally, the capital assets of the internal service funds are included as governmental
activities in the statement of net assets.
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE BY FUNCTION AND ACTIVITY
December 31, 2011
Improvements Machinery Construction
Other than and in Total Total
Function and Activity Land Buildings Buildings Equipment Infrastructure Progress 2011 2010
GENERAL GOVERNMENT
Miscellaneous general government $ 16,775,446 $ - $ 19,973 $184,000 $ 6,139,001 $ 275,001 $ 23,393,421 $ 23,005,458
Total General Government: 16,775,446 - 19,973 184,000 6,139,001 275,001 23,393,421 23,005,458
CULTURE AND RECREATION
Culture and Recreation 121,007,794 651,464 43,845,607 - 94,474,128 2,100,637 262,079,630 262,177,736
Total Culture and Recreation: 121,007,794 651,464 43,845,607 - 94,474,128 2,100,637 262,079,630 262,177,736
TRANSPORTATION
Streets and Traffic 164,384,977 - - - 46,550,425 18,782,420 229,717,822 219,421,246
Total Transportation: 164,384,977 - - - 46,550,425 18,782,420 229,717,822 219,421,246
Total General Fixed Asset by Function: $302,168,217 $ 651,464 $ 43,865,580 $184,000 $147,163,554 $ 21,158,058 $515,190,873 $504,604,441
This schedule presents only the historical cost of capital asset balances (no depreciation expenses) related to governmental funds. Accordingly, the capital assets
reported in internal service funds are excluded from the above amounts. Generally, the capital assets of the internal service funds are included as governmental
activities in the statement of net assets.
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CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITY
For the Year Ended December 31, 2011
GENERAL GOVERNMENT
Miscellaneous general government
TOTAL GENERAL GOVERNMENT
CULTURE AND RECREATION
TOTAL CULTURE AND RECREATION
TRANSPORTATION
Streets and traffic
TOTAL TRANSPORTATION
TOTAL GENERAL FIXED ASSETS
Governmental
Funds
Capital Assets
1/1/2011 Additions Deductions
Governmental
Funds
Capital Assets
12/31 /2011
$ 23,005,458 $ 387,962 $ - $ 23,393,421
23,005,458 387,962 - 23,393,421
262,177,736 (98,106) - 262,079,630
262,177,736 (98,106) - 262,079,630
219,421,246 10,296,576 - 229,717,822
219,421,246 10,296,576 - 229,717,822
$ 504,604,441 $ 10,586,432 $ - $ 515,190,873
This schedule presents only the historical cost of capital asset balances (no depreciation expenses) related to
governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the
above amounts. Generally, the capital assets of the internal service funds are included as governmental
activities in the statement of net assets.
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Statistical Section
The statistical section presents detailed information as a context for understanding what the information in the financial
statements and note disclosures say about the City's overall financial health. The following are the five categories of
information presented in this section.
Financial Trends — These schedules contain trend information to help the reader understand how the City's financial
performance and well-being have changed over time.
Revenue Capacity — These schedules contain information to help the reader assess the City's most significant local revenue
sources, property tax and sales tax.
Debt Capacity — These schedules present information to help the reader assess the affordability of the City's current levels
of outstanding debt and the City's ability to issue additional debt in the future.
Demographic and Economic Information — These schedules offer demographic and economic indicators to help the reader
understand the environment within which the City's financial activities take place.
Operating Information — These schedules contain service and infrastructure data to help the reader understand how the
information in the City's financial report relates to the services the city provides and the activities it performs.
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NET ASSETS BY COMPONENT
Last Seven Fiscal Years
2005 2006 2007 2008 2009 2010 2011
Governmental activities
Invested in capital assets, net of related debt $ 70,138,350 $ 93,835,163 $ 439,127,122 $ 456,600,030 $ 442,704,401 465,671,345 470,074,905
Restricted 45,017,742 38,359,454 32,269,512 28,434,066 27,476,530 17,442,323 23,941,601
Unrestricted 13,292,837 15,051,966 23,651,674 24,773,913 44,282,822 44,613,406 38,602,445
Total governmental activities net assets 128,448,929 147,246,583 495,048,308 509,808,009 514,463,753 527,727,074 532,618,951
Business -type activities
Invested in capital assets, net of related debt
425294,741
43,697,633
45,264,105
50,494,590
50,578,649
50,563,097
50,052,887
Restricted
18,880
26,439
15,777
42,558
16,366
9,411
18,831
Unrestricted
75206,807
7,467,417
6,550,179
5,071,617
5,1155275
5,015,367
5,398,786
Total business -type activities net assets
49,520,428
51,191,489
51,830,061
55,608,765
55,710,290
55,587,875
55,470,504
Primary government
Invested in capital assets, net of related debt
112,433,091
137,532,796
484,391,227
507,094,620
493,283,050
516,234,442
520,127,792
Restricted
45,036,622
38,385,893
32,285,289
28,476,624
27,492,896
17,451,734
23,960,432
Unrestricted
20,499,644
22,519,383
30,201,853
29,845,530
49,398,097
49,628,773
44,001,231
Total primary government net assets
$ 177,969,357
$ 198,438,072
$ 546,878,369
$ 565,416,774
$ 570,174,043
$583,314,949
$588,089,455
Source: City of Federal Way Finance
Note: All amounts are reported on the accrual basis.
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CHANGES IN NET ASSETS
Last Seven Fiscal Years
2005
2006
2007
2008
2009
2010
2011
Expenses
Governmental activities,
General government
$ 5,539,682
$ 4,364,710
$ 4,506,800
$5,606,797
$4,566,457
$ 4,865,827
$ 4,448,449
Security of persons and property
16,825,123
19,906,722
23,107,683
24,745,284
26,341,614
26,842,240
27,222,584
Transportation
5,451,324
5,628,100
9,986,067
7,891,298
9,448,397
9,781,800
13,539,598
Physical environment
322,151
313,388
336,588
370,718
450,914
451,470
424,466
Economic environment
3,095,391
3,162,089
3,319,955
3,382,572
3,560,620
3,175,005
2,782,435
Health and human svcs
631,133
622,761
684,984
705,976
776,854
767,108
690,643
Culture and recreation
4,789,920
5,172,663
6,506,137
6,955,442
8,089,242
8,073,804
8,105,578
Interest on long-term debt
1,541,930
1,420,691
1,122,358
901,161
811,124
685,214
614,571
Total governmental activities expenses
38,196,654
40,591,124
49,570,572
50,559,248
54,045,222
54,642,468
57,828,324
Business -type activities:
Surface Water Mgmt
2,995,074
3,142,613
3,454,193
4,060,440
3,345,027
3,384,352
3,527,590
Dumas Bay Center
819,515
925,825
980,588
1,045,250
984,103
849,176
890,738
Total business -type activities expenses
3,814,589
4,068,438
4,434,781
5,105,690
4,329,130
4,233,528
4,418,328
Total primary government expense:
42,011,243
44,659,562
54,005,353
55,664,938
58,374,352
58,875,996
62,246,652
Program Revenues
Governmental activities:
Charges for services
General Government
1,372,270
1,052,641
3,510,339
$2,313,939
$873,258
975,515
816,140
Security of Persons & Property
4,780,082
4,800,920
2,110,164
2,309,406
5,037,388
5,381,407
4,985,320
Transportation
1,351,596
1,357,333
3,119,637
513,340
1,806,846
1,961,083
2,484,058
Physical Environment
88,222
75,580
-
262,847
86,230
90,512
77,875
Economic Environment
847,686
762,603
1,009,707
1,962,624
680,908
636,534
510,483
Health
172,838
150,192
-
-
148,579
153,792
126,710
Culture & Recreation
1,322,962
1,247,495
531,041
2,561,685
1,546,931
1,618,659
1,487,099
Operating grants and contributions
1,228,979
1,512,394
22,858
1,538,476
2,172,168
9,718,920
4,597,981
Capital grants and contributions
4,250,635
5,973,071
11,457,030
8,933,154
8,452,149
9,044,477
9,716,551
Total governmental activities program revenues
15,415,270
16,932,229
21,760,776
20,395,471
20,804,457
29,580,898
24,802,216
Business -type activities:
Charges for services
4,100,623
4,130,179
3,667,168
4,473,453
4,183,012
4,246,235
4,020,144
Operating grants and contributions
-
1,113,010
632,185
-
-
-
265,660
Capital grants and contributions
-
-
222,474
-
-
-
-
Total business -type activities program revenues
4,100,623
5,243,189
4,521,827
4,473,453
4,183,012
4,246,235
4,285,804
19,515,893
22,175,418
26,282,603
24,868,924
24,987,469
33,827,133
29,088,020
Net (Expense)/Revenue
Governmental activities
(22,781,384)
(23,658,895)
(27,809,796)
(30,163,777)
(33,240,765)
(25,061,570)
(33,026,108)
Business -type activities
286,034
1,174,751
87,046
(632,237)
(146,118)
12,707
(132,524)
General Revenues and Other Changes in Net Assets
Governmental activities,
Taxes
Sales tax
11,305,537
12,409,719
13,048,624
12,144,276
10,583,298
10,708,951
10,858,381
Local Criminal Justice Sales Tax
1,817,981
1,953,822
2,145,383
2,051,524
1,743,893
1,701,120
1,795,971
Utility tax
8,292,520
9,043,449
12,796,461
13,469,136
13,549,472
12,890,310
13,068,510
Property tax
8,442,172
8,892,558
9,059,734
9,397,456
9,653,537
9,609,740
9,867,614
Real estate excise tax
4,695,984
5,499,911
4,898,537
2,590,310
1,428,985
1,403,361
1,560,395
Gambling Tax
1,501,065
1,363,468
1,489,952
1,259,783
1,127,203
493,486
511,005
Hotel/Motel Tax
158,117
175,219
191,691
188,833
154,148
149,058
185,289
Leasehold tax
2,026
4,592
7,254
5,712
4,999
5,757
6,259
Other
6,080,222
3,221,392
6,971,413
6,502,869
2,020,751
1,210,341
1,061,026
Transfers
(126,369)
(107,581)
(185,495)
123,518
(200,907)
152,768
(113,000)
Total governmental activities
42,169,255
42,456,549
50,423,554
47,733,417
40,065,379
38,324,892
38,801,450
Business -type activities
Other
319,432
388,729
366,031
3,447,458
46,736
17,646
12,405
Transfers
126,369
107,581
185,495
(123,518)
200,907
(152,768)
113,000
Total business -type activities
445,801
496,310
551,526
3,323,940
247,643
(135,122)
125,405
Total primary government
$ 42,615,056
$ 42,952,859
$ 50,975,080
$ 51,057,357
$ 40,313,022
$ 38,189,770
$ 38,926,855
Change in Net Assets
Governmental activities
$ 19,387,871
$ 18,797,654
$ 22,613,758
$ 17,569,640
$ 6,824,613
$ 13,263,321
$ 5,775,342
Business -type activities
731,835
1,671,061
638,572
2,691,703
101,525
(122,415)
(7,119)
Prior Period Adjustment
-
-
-
(1,722,939)
(2,168,769)
-
-
Total primary government
$ 20,119,706
$ 20,468,715
$ 23,252,330
$ 18,538,404
$ 4,757,370
$ 13,140,907
$ 5,768,223
Source: City of Federal Way Finance
Note: All amounts are reported on the accrual basis
GOVERNMENT -WIDE REVENUES BY SOURCE AND EXPENDITURES BY FUNCTION
Last Seven Fiscal Years
2005
2006
2007
2008
2009
2010
2011
Program Revenues
Charges for Services
$14,036,279
$ 4,130,179
$14,580,241
$14,397,294
$14,363,151
15,063,736
14,507,828
Operating Grants and Contributions
1,228,979
2,625,404
246,305
1,538,476
2,172,168
9,718,920
4,863,641
Capital Grants and Contributions
4,250,635
5,973,071
11,457,030
8,933,154
8,452,149
9,044,477
9,716,551
General revenues
Sales tax
11,305,537
12,409,719
13,048,624
12,144,276
10,583,298
10,708,951
10,858,381
Local Criminal Justice Sales Tax
1,817,981
1,953,822
2,145,383
2,051,524
1,743,893
1,701,120
1,795,971
Utility tax
8,292,520
9,043,449
12,796,461
13,469,136
13,549,472
12,890,310
13,068,510
Property tax
8,442,172
8,892,558
9,059,734
9,397,456
9,653,537
9,609,740
9,867,614
Real estate excise tax
4,695,984
5,499,911
4,898,537
2,590,310
1,428,985
1,403,361
1,560,395
Gambling Tax
1,501,065
1,363,468
1,489,952
1,259,783
1,127,203
493,486
511,005
Hotel/Motel Tax
158,117
175,219
191,691
188,833
154,148
149,058
185,289
Leasehold tax
2,026
4,592
7,254
5,712
4,999
5,757
6,259
Otherrevenue
1,188,598
1,299,548
4,194,183
875,389
1,421,791
1,063,825
960,012
Unrestricted Grants & Contribution
146,000
-
-
7,448,783
284,350
-
-
Investment Earnings
2,025,243
3,194,690
3,223,005
1,678,292
385,976
179,373
113,419
Disposition of capital assets
3,039,813
(884,117)
(79,744)
(52,137)
(24,630)
(15,211)
-
Total Revenues
62,130,949
55,681,513
77,258,656
75,926,281
65,300,490
72,016,903
68,014,875
Expenses/Expenditures
General Government
5,539,682
4,364,710
4,506,800
5,606,797
4,566,457
4,865,827
4,448,449
Security of Persons & Property
16,825,123
19,906,722
23,107,683
24,745,284
26,341,614
26,842,240
27,222,584
Transportation
5,451,324
5,628,100
9,986,067
7,891,298
9,448,397
9,781,800
13,539,598
Physical Environment
322,151
313,388
336,588
370,718
450,914
451,470
424,466
Economic Environment
3,095,391
3,162,089
3,319,955
3,382,572
3,560,620
3,175,005
2,782,435
Health
631,133
622,761
684,984
705,976
776,954
767,108
690,643
Culture & Recreation
4,789,920
5,172,663
6,506,137
6,955,442
8,089,242
8,073,804
8,105,578
Interest on long-term debt
1,541,930
1,420,691
1,122,358
901,161
811,124
685,214
614,571
Surface Water Management
2,995,074
3,142,613
3,455,166
4,060,440
3,345,027
3,384,352
3,527,590
Dumas Bay Centre
819,515
925,825
980,588
1,045,250
984,103
849,176
890,738
Total Expenses/Expenditures
$42,011,243
$44,659,562
$54,006,326
$55,664,938
$58,374,452
$58,875,996
$ 62,246,652
Source: City of Federal Way Finance
General fund
Reserved
Unreserved
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total general fund
All Other Governmental Funds
Reserved
Unreserved, reported in:
Special revenue funds
Capital projects funds
Debt service funds
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total all other governmental funds
FUND BALANCES OF GOVERNMENTAL FUNDS
Last Seven Fiscal Years
2005 2006 2007 2008 2009 2010 2011
14,510 278,778 125,184 418,207 106,728 -
-
4,522,705 6,492,057 7,783,868 5,511,440 8,138,468 -
-
- - - - - 81,146
104,012
- - - - - 168,398
145,524
- - - - - -
21,893
- - - - - 8,188,575
12,372,719
4,537,215 6,770,835 7,909,052 5,929,647 8,245,196 8,438,119
12,644,148
147,901 194,463 2,323,184 1,763,667 4,770,399 - -
1,652,622 2,772,153 4,392,623 7,505,799 4,311,238 - -
39,805,812 31,863,330 30,054,670 26,252,192 22,934,356 - -
3,195,705 6,217,346 - - - - -
- - - - 17,776,967 19,325,489
- - - 18,611,612 11,642,248
- - - - - 100,000 -
$ 44,802,040 $ 41,047,292 $ 36,770,477 $ 35,521,658 $ 32,015,993 $ 36,488,580 $30,967,736
Source: City of Federal Way Finance
Note: Fund Balance reclassification implementation of GASB 54 for year's 2010 and forward.
Federal Wav / 101
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
Last Seven Fiscal Years
Revenues
Taxes
Licenses, fees and permits
Intergovernmental
Charges for services
Development Fees
Fines and Forfeitures
Investment earnings
Otherrevenues
Total revenues
Expenditures
General government
Security of persons and property
Transportation
Physical Environment
Economic Environment
Health
Culture and Recreation
Debt Service
Principal
Interest/fiscal charges/admin fe
Capital Outlay
Total expenditures
Excess of revenues over
(under) expenditures
Other Financing Sources (Uses)
GO bond proceeds
Sale of capital assets
Transfers in
Transfers out
2005 2006 2007 2008 2009 2010 2011
$ 36,310,754 $ 39,334,751 $ 43,584,824 $ 41,071,781 $ 38,192,852 $ 37,122,069 $ 37,831,045
2,247,651
2,089,844
2,939,328
2,195,068
2,163,984
2,547,655
2,209,873
5,479,614
8,047,243
15,494,887
10,520,570
11,127,718
18,648,749
11,713,248
4,927,163
6,355,262
6,327,552
6,246,207
5,573,647
5,486,632
6,131,287
2,040,378
196,060
-
-
-
-
-
720,464
805,598
1,005,293
1,433,628
2,200,092
2,783,214
2,146,524
1,557,935
2,447,996
2,463,670
1,274,955
271,600
139,698
89,338
1,065,664
717,922
630,966
875,389
1,599,207
899,092
960,012
54,349,623
59,994,676
72,446,520
63,617,598
61,129,100
67,627,109
61,081,327
5,462,633
3,944,288
4,364,750
5,197,032
4,518,821
4,857,177
4,234,327
16,988,412
19,909,858
24,183,913
25,470,722
27,051,814
26,892,207
28,332,237
5,080,577
5,373,983
6,631,030
6,634,548
6,165,540
5,700,274
7,427,408
322,151
313,388
336,588
370,718
448,873
450,971
427,315
3,119,831
3,055,426
3,326,986
3,344,987
3,504,767
3,161,820
2,782,537
634,061
613,800
677,536
700,876
772,151
765,963
690,824
3,859,465
4,108,813
5,300,455
5,871,288
5,845,676
5,857,621
5,821,160
2,933,231
2,197,357
9,953,505
440,900
4,558,750
494,250
457,520
1,518,384
1,420,691
1,122,358
901,161
811,124
685,214
614,571
8,228,486
24,412,303
19,162,067
18,037,109
8,443,523
14,249,501
11,560,205
48,147,231
65,349,907
75,059,188
66,969,341
62,121,039
63,114,998
62,348,104
6,202,392 (5,355,231) (2,612,668) (3,351,743) (991,939) 4,512,111 (1,266,777)
- 4,100,000 - - - - -
3,618,512 20,000 (23,786) - - - 9,162
15,650,064 13,231,785 22,688,136 16,232,916 25,619,678 22,473,128 21,453,223
(16,266,811) (13,517,681) (23,190,280) (16,109,398) (25,817,857) (22,319,725) (21,510,423)
Total other financing sources (uses) 3,001,765 3,834,104 (525,930) 123,518 (198,179) 153,403 (48,038)
Net change in fund balances $ 9,204,157 $ (1,521,127) $ (3,138,598) $ (3,228,225) $ (1,190,118) $ 4,665,514 $ (1,314,815)
Debt service as a percentage of
noncapital expenditures 12.6% 9.7% 24.7% 2.8% 11.1% 2.4% 2.1%
Source: City of Federal Way Finance
TAXABLE SALES BY CATEGORY
Last Ten Fiscal Years
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Accommodation and Food Svcs
123,542,545
125,236,574
131,057,207
139,256,190
147,464,635
170,754,055
172,336,596
161,656,544
162,080,293
172,173,126
Admin, Supp, Remed Svcs
31,635,709
32,292,668
31,855,764
32,521,639
23,796,653
25,202,780
23,285,051
23,989,198
20,998,848
21,110,205
Agriculture, Forestry, Fishing
235,350
116,481
186,395
279,688
196,678
563,627
174,571
99,907
320,095
203,977
Arts, Entertain, Recreation
34,817,467
29,441,915
28,601,771
33,416,416
19,364,073
15,898,253
17,769,325
16,244,594
28,716,747
16,978,760
Company Management
32,028
34,334
4,451
35,853
221,233
501,671
127,477
28,870
9,928
2,128
Construction
143,569,453
116,671,439
132,186,499
191,476,403
256,655,702
213,216,740
147,652,627
105,372,864
107,492,060
142,973,397
Educational Services
2,312,275
2,329,638
2,232,256
2,081,425
2,170,754
2,516,022
2,487,015
3,054,167
2,972,699
3,102,022
Finance and Insurance
14,314,466
21,334,384
13,943,553
12,855,387
13,752,698
12,795,964
10,426,093
7,921,100
8,663,227
8,248,881
Health Care Social Assistance
5,131,421
5,425,838
4,796,427
4,080,451
6,250,812
6,193,370
5,342,504
5,612,490
15,803,384
7,322,602
Information
65,713,358
64,966,268
69,861,905
71,936,131
63,746,061
63,218,235
70,578,046
62,112,491
69,603,652
61,156,569
Manufacturing
18,560,838
13,779,409
12,333,001
18,549,951
19,845,265
32,336,606
25,872,050
24,193,672
17,801,791
17,271,646
Mining
2,213,631
1,736,743
1,520,579
2,098,237
1,963,909
1,994,597
1,699,300
1,341,478
3,268,934
1,463,342
Other Services
31,603,126
31,432,796
32,464,044
32,453,303
34,861,423
38,713,357
38,169,579
37,317,191
35,702,088
36,377,900
Prof, Sci, Technical Svcs
24,132,269
23,276,337
23,593,203
34,278,076
38,463,408
45,110,196
36,310,677
27,410,760
29,049,698
27,671,872
Public Administration
16,850,457
18,052,898
16,067,380
17,388,331
18,520,714
19,370,515
14,858,844
11,456,288
11,279,171
11,531,505
Real Estate, Rental, Leasing
21,067,387
22,350,732
23,194,989
28,846,250
29,046,116
30,541,290
26,728,671
24,648,187
18,840,542
28,989,345
Retail Trade
670,932,962
673,820,056
667,413,427
684,657,717
734,665,452
799,193,903
753,483,183
692,296,559
675,521,056
661,569,656
Transportation and Warehousing
1,204,127
3,473,820
1,308,585
1,281,763
1,253,647
1,183,415
1,251,568
1,246,300
1,036,483
1,246,547
Unknown
1,738,761
812,357
1,618,555
1,633,108
1,032,221
1,249,062
860,373
318,381
491,888
621,705
Utilities
587,892
945,172
470,300
419,820
349,874
-115,973
1,349,464
541,307
347,929
410,315
Wholesale Trade
53,992,471
55,923,920
60,505,731
55,771,629
56,900,436
66,306,761
67,553,891
45,478,266
51,243,480
51,315,756
Total $1,264,187,991
$ 1,243,453,779
$1,255,216,019
$1,365,317,769
$1,470,521,763
$ 1,546,744,447
$1,418,316,906
$1,252,340,615
1,261,243,993
1,271,741,256
City direct sale tax rate 0.085%
Source: City of Federal Way Finance
ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY*
Last Ten Fiscal Years
Total City Percent
Fiscal Personal State Public Direct Increase
Year Real Property Property Service Property Total Tax Rate (Decrease)
2001
5,322,237,420
226,854,474
101,339,376
5,650,431,270
1.41
8.4%
2002
5,604,164,978
227,961,155
107,761,209
5,939,887,342
1.38
5.1%
2003
5,992,899,727
193,519,890
105,924,009
6,292,343,626
1.34
5.9%
2004
6,218,643,830
181,366,723
102,350,559
6,502,361,112
1.30
3.3%
2005
6,937,653,592
225,118,781
89,220,328
7,251,992,701
1.27
11.5%
2006
7,689,395,358
235,157,554
87,062,687
8,011,615,599
1.22
10.5%
2007
8,644,609,276
262,048,562
103,698,540
9,010,356,378
1.14
12.5%
2008
9,527,060,585
257,152,954
97,434,092
9,881,647,631
1.04
9.7%
2009
8,294,282,076
236,445,351
92,287,195
8,623,014,622
0.97
-12.7%
2010
7,948,924,766
228,247,721
91,163,299
8,268,335,786
1.13
-4.1%
2011
7,410,324,237
219,890,581
92,768,984
7,722,983,802
1.20
-6.6%
* Real, personal, and state public service property has been assessed at 100% of the estimated value.
Source: King County Assessor's Office.
Note: These figures includes all final tax adjustments, omits and senior citizen exempted property. This total assessed
value was reduced by senior citizen exemptions (no tax amounts) of $62,083,163 and prior year omits of
$1,330,795 yielding a regular levy value of $7,659,569,844. These assessed valuations are the basis for the
following year's tax levy.
PROPERTY TAX RATES AND LEVIES, DIRECT AND OVERLAPPING GOVERNMENTS
For the Last Ten Fiscal Years
City
Direct
Rates* Overlapping Rates
City of Federal Way Emergency
Fiscal Federal School King Washington Green River Port of Fire District Medical
Year Way District #210 County State Flood Zone Seattle #39 Library Services Total
TAX RATES PER $1,000 OF ASSESSED VALUATION
2002
1.38
4.16
1.45
2.99
0.05
0.19
1.50
0.53
0.25
12.50
2003
1.34
4.28
1.35
2.90
0.05
0.26
1.50
0.54
0.24
12.46
2004
1.30
4.20
1.43
2.76
0.05
0.25
1.50
0.53
0.24
12.26
2005
1.27
4.30
1.38
2.69
0.05
0.25
1.50
0.53
0.23
12.21
2006
1.22
4.26
1.33
2.50
0.04
0.23
1.50
0.53
0.22
11.84
2007
1.14
4.19
1.29
2.33
0.04
0.23
1.50
0.50
0.21
11.42
2008
1.04
4.15
1.26
2.13
0.10
0.22
1.50
0.45
0.30
11.16
2009
0.97
4.20
1.15
1.96
0.09
0.20
1.50
0.42
0.27
10.76
2010
1.13
5.11
1.29
2.22
0.11
0.22
1.50
0.49
0.30
12.36
2011
1.20
5.36
1.34
2.28
0.11
0.22
1.39
0.57
0.30
12.77
DETAIL OF TAX RATES FOR 2011
Basic Rate
1.20
-
1.27
2.28
0.11
0.22
1.39
0.50
-
6.97
Voted Rate
-
5.36
0.07
-
-
-
-
0.07
0.30
5.80
TAX LEVIES
2002
7,764,913
33,552,460
304,062,327
627,772,703
799,554
39,806,235
11,061,131
64,373,926
52,497,313
1,141,690,562
2003
7,941,900
36,639,878
302,100,182
648,995,138
849,988
58,003,521
11,774,814
72,580,170
54,088,854
1,192,974,445
2004
8,117,874
38,051,680
335,853,716
647,490,235
873,826
59,657,092
12,467,237
74,860,405
55,704,127
1,233,076,192
2005
8,248,919
40,744,820
342,395,871
666,827,056
901,356
62,779,505
13,062,586
78,374,467
57,476,670
1,270,811,250
2006
8,800,989
43,672,564
357,240,140
672,185,668
922,666
62,785,749
14,108,124
85,715,008
59,154,623
1,304,585,531
2007
9,098,370
47,315,366
383,039,569
691,250,598
956,482
68,841,070
19,882,637
88,486,309
61,300,276
1,370,170,677
2008
9,300,030
52,730,549
428,433,792
723,908,902
33,945,830
75,908,664
22,288,360
91,371,026
101,861,635
1,539,748,788
2009
9,551,027
58,588,636
442,092,857
756,272,108
35,151,944
75,911,308
23,715,724
95,398,383
105,611,047
1,602,293,034
2010
9,690,241
61,404,973
438,349,236
756,411,197
35,783,324
73,504,599
20,409,747
97,015,693
102,103,088
1,594,672,098
2011
9,827,398
61,622,347
440,820,019
749,341,420
36,076,405
73,512,887
18,234,001
115,495,462
98,604,471
1,603,534,410
Source: King
County Assessor's
Office and King
County Department of Finance.
*The City of Federal Way's Direct Rate has only one component which is the expense levy
PRINCIPAL TAXPAYERS
Current Year and Ten Years Ago
2011
2002
% of Total
% of Total
Assessed
Assessed
Assessed
Assessed
Taxpayer
Type of Business
Valuation
Rank
Valuation
Valuation
Rank
Valuation (A)
Weyerhaeuser
Lumber Products
$120,022,792
1
1.57%
$ 178,382,643
1
3.02%
Puget Sound Energy-Elec/Gas
Electric/Gas
52,071,616
2
0.68%
52,504,721
2
0.89%
Steadfast Commons LLC
Real Estate Management
51,489,701
3
0.67%
40,778,400
4
0.69%
Harsch Investment Properties
Real Estate Management
50,846,527
4
0.66%
30,403,100
5
0.51%
LBA Realty
Real Estate Management
33,305,500
5
0.43%
-
-
-
Qwest Corporation Inc.
Communications/Telephone
27,597,020
6
0.36%
-
-
-
Forest Cove LLC
Real Estate Management
25,876,000
7
0.34%
-
-
-
KNL Vision WA LLC (formerly BRE Properties)
Real Estate Management
24,285,000
8
0.32%
16,141,000
10
0.27%
Virginia Mason
Medical Services
17,414,137
9
0.23%
14,399,353
12
0.24%
Fred Meyer
Retailer
16,963,100
10
0.22%
17,118,763
8
0.29%
IA Orchard Hotels Federal Way (formerly Apple
Hospitality Five Inc.)
Hospitality
14,641,900
11
o
0.19 /o
-
-
-
Campus Business Parks LLC
Real Estate Invest/Holding
12,474,100
12
0.16%
13,282,300
13
0.22%
Costco
Retailer / Wholesaler
12,191,200
13
0.16%
15,340,924
11
0.26%
ANS LLC
Retailer
12,002,700
14
0.16%
-
-
-
$471,181,293
6.15%
$ 378,351,204
6.40%
Source: King County Assessor's Office and King County Department of Finance.
(A) 2002 assessed valuation for the City of Federal Way was $5,912,362,755
PROPERTY TAX LEVIES AND COLLECTIONS
For the Last Ten Fiscal Years
Collected within the
Total
Ratio of
Taxes Levied Fiscal Year of the Levy Collections
Total Collections to Date Outstanding
Delinquent
Fiscal for the Current Tax Percentage in Subsequent
Total Tax Percentage Delinquent
Taxes to
Year Fiscal Year Amount of Levy Years
Amount of Levy Taxes
Total Tax Levy
2002
7,700,412
7,471,822
97.0%
228,470
7,700,292
100.0%
120
0.0%
2003
7,912,598
7,740,741
97.8%
171,565
7,912,306
100.0%
292
0.0%
2004
8,119,460
7,945,659
97.9%
173,435
8,119,094
100.0%
366
0.0%
2005
8,248,919
8,082,340
98.0%
162,202
8,244,542
99.9%
4,377
0.1%
2006
8,933,515
8,584,565
96.1%
347,410
8,931,975
100.0%
1,540
0.0%
2007
9,068,740
8,868,895
97.8%
196,962
9,065,857
100.0%
2,883
0.0%
2008
9,265,234
9,037,601
97.5%
185,130
9,222,731
99.5%
42,502
0.5%
2009
9,511,404
9,277,004
97.5%
172,687
9,449,691
99.4%
61,713
0.6%
2010
9,680,047
9,433,214
97.5%
139,340
9,572,554
98.9%
107,493
1.1%
2011
9,755,022
9,506,527
97.5%
-
9,506,527
97.5%
248,494
2.5%
Source: Most of data has been derived from the "Annual Tax Receivable Summary" prepared by the King County Finance
RATIO OF OUTSTANDING DEBT BY TYPE
For the Last Ten Fiscal Years
Governmental Activities
Fiscal General Obligation Certificates of
Year
Bonds Participation
2002
27,682,000 59,936
2003
34,710,026 20,490
2004
30,802,892 -
2005
27,701,761 -
2006
29,581,454 -
2007
19,605,000 -
2008
19,138,000 -
2009
29,212,950 -
2010
28,683,950 -
2011
28,157,950 -
Business Type Activities
Public Works
Trust Fund Loan
2,668,907
2,486,548
2,304,189
2,121,830
1,939,471
1,757,112
1,574,753
1,392,394
1,210,035
1,027,676
Percentage
Total Primary
of Personal
Government
Income (b)
Per Capita (b)
30,410,843
0.074%
363
37,217,064
0.060%
446
33,107,081
0.068%
386
29,823,591
0.075%
348
31,520,925
0.071%
364
21,362,112
0.122%
244
20,712,753
0.134%
235
30,605,344
0.090%
346
29,893,985
0.091%
337
29,185,626
0.091%
327
Source: City of Federal Way Finance Division
Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements.
See Demographic Statistics schedule for personal income and population data. These ratios are calculated using
personal income for the prior calendar year.
(b) Per capita income information for the years 2002 to 2007 are based on 2000 U.S. Census report since this
information is available for individual cities only every ten years when the census is done. 2008-2010
info for Federal Way is based on US Census Bureau, 2005-2009 American Community Survey five-year Estimates.
RATIO OF NET GENERAL OBLIGATION BONDED DEBT TO ASSESSED VALUE
AND NET GENERAL OBLIGATION BONDED DEBT PER CAPITA
For the Last Ten Fiscal Years
Ratio of Net
(B) (C) Bonded Debt Net Bonded
Fiscal (A) Assessed Gross Less Debt Net To Assessed Debt Per
Year Population Value Bonded Debt Service Fund Bonded Debt Value Capita
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
28,157,950
2,599,653
25,558,297
0.0041
306.09
2004
83,590
6,418,941,601
33,113,539
2,880,857
30,232,682
0.0047
361.68
2005
85,800
7,251,992,701
29,823,591
2,886,785
26,936,806
0.0037
313.95
2006
86,530
8,011,615,599
31,520,925
6,001,415
25,519,510
0.0032
294.92
2007
87,390
9,010,356,378
21,362,112
2,147,282
19,214,830
0.0021
219.87
2008
88,040
9,825,319,904
20,712,753
1,882,041
18,830,712
0.0019
213.89
2009
88,578
8,563,964,852
30,605,344
4,225,463
26,379,881
0.0031
297.82
2010
88,760
8,206,354,959
29,893,985
3,379,427
26,514,558
0.0032
298.72
2011
89,370
7,659,569,844
29,185,626
3,866,184
25,319,442
0.0033
283.31
(A) Sources: U.S. Census Bureau; State of Washington Office of Program Planning and Fiscal Management,
Population Study Division; and the City of Federal Way Community Development Department.
(B) The final certified Regular Levy assessed value of taxable property which was used by the King County
Assessor's Office for use in calculating levy rates for the following year's tax roll. The total assessed valuation
of $7,722,983,802 has been reduced by senior citizen exemptions of $62,083,163 and prior year omits of $1,330,
to arrive at taxable assessed valuation.
(C) Includes Public Works Trust Fund Loans issued in 1994, 1996, 1997, and 2000;
general obligation bonds issued in 2000, 2003 and 2009.
Federal Wav / 109
COMPUTATION OF DIRECT AND OVERLAPPING DEBT
December 31, 2011
Jurisdiction
King County
Port of Seattle
Federal Way School District #210
Library
Total Overlapping Debt
CITY OF FEDERAL WAY
(A)
(B)
Gross General
Percentage
Amount
Obligation Debt
Applicable to
Applicable to
Outstanding
Federal Way
Federal Way
$ 1,189,992,489
2.42%
$ 28,768,127
336,120,000
2.42%
8,125,717
191,672,024
70.96%
136,009,147
123,620,000
3.71%
4,592,117
1,841,404,513
177,495,109
28,157,950
(C; 100.00%
28,157,950
Total Direct and Overlapping Debt $ 1,869,5629463
$ 205,653,059
(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 general obligation bonds issued in 2000, 2003 and 2009.
Source is City of Federal Way Finance
Federal Wav / 110
COMPUTATION OF LIMITATION OF INDEBTEDNESS
December 31, 2011
General Debt Capacity
Excess Levy
Excess Levy
(Limited) (Unlimited)
Open Space
Utility Total Debt
DESCRIPTION
Councilmanic Excess Levy
and Park
Purposes Capacity
Statutory debt limit:
(2011 AV47,722,983,802) (A)
1.50%AV @ 100%
$ 115,844,757 $ (115,844,757)
$ --
2.50% AV @ 100%
- 193,074,595
193,074,595
193,074,595 579,223,785
Add: Cash on hand for
debt redemption (B) 7,193,006 - - - 7,193,006
Less: Bonds and COPS outstanding (28,157,950) - - - (28,157,950)
Remaining Debt Capacity $ 94,879,813 $ 77,229,838 $ 193,074,595 $ 193,074,595 $ 558,258,841
Total Remaining
"General" Capacity $172,109,651
(A) This figure represents the City's final total taxable assessed valuation (AV) for 2011 which was used to determine the
2012 property tax levy.
(B) Reflects ending fund balance in the Debt Service Fund and Utility Tax Fund as of December 31, 2011.
(C) Combined total for Councilmanic, Financing Lease, and Excess Levy capacities.
Total net debt
Total net debt
applicable to
applicable
Legal debt
the limit as a
Fiscal Year
Debt limit
to limit
margin
% of debt limit
2002
443,427,207
(14,289,859)
429,137,348
3.22%
2003
469,715,580
(31,327,803)
438,387,777
6.67%
2004
471,925,773
(26,881,086)
445,044,687
5.70%
2005
487,677,084
(23,478,555)
464,198,529
4.81%
2006
543,899,454
(21,459,145)
522,440,309
4.32%
2007
600,871,170
(12,012,597)
588,858,573
3.91%
2008
736,889,175
(11,615,105)
725,274,070
1.58%
2009
741,123,572
(22,913,431)
718,210,141
3.09%
2010
615,476,622
(22,291,874)
593,184,748
3.62%
2011
579,223,785
(20,964,944)
558,258,841
3.62%
Source: City of Federal Way Finance
(A) King County Department of Finance
Note: Under state finance law, the city's outstanding general obligation debt should not exceed 15 percent of total assessor's
property value.
By law, the general obligation debt subject to the limitation may be offset by amounts set aside for repaying general
obligation bonds.
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
2002
2,834,084
1,651,197
4,485,281
36,819,618
12.2%
2003
14,159,881
1,703,165
15,863,046
50,550,741
31.4%
2004
3,080,677
1,796,791
4,877,468
40,610,863
12.0%
2005
3,100,546
1,531,364
4,631,910
40,108,790
11.5%
2006
2,219,676
1,418,843
3,638,519
41,086,555
8.9%
2007
9,976,455
1,153,300
11,129,755
56,186,140
19.8%
2008
467,000
841,542
1,308,542
51,278,215
2.6%
2009
4,585,000
824,693
5,409,693
54,585,436
9.9%
2010
525,000
629,419
1,154,419
50,093,838
2.3%
2011
526,000
622,903
1,148,903
49,482,421
2.3%
Source: City of Federal Way Finance
Note: * Interest excludes bond issuance and debt registration costs.
DEMOGRAPHIC STATISTICS
Education
Personal Level in Years
Fiscal Income Per Capita Median of Formal School Unemployment
Year Population Sea-Tac-Bel [D] Income [C] Age [C] Schooling Enrollment (A) Rate (B)
2002
83,850 119,343,435,000 22,451 32.5 13.0
22,194
7.3%
2003
83,500 121,624,885,000 22,451 32.5 13.0
22,265
7.4%
2004
83,590 133,156,997,000 22,451 32.5 13.0
22,395
6.2%
2005
85,800 136,859,162,000 22,451 32.5 13.0
22,383
5.0%
2006
86,530 149,858,462,000 22,451 32.5 13.0
22,184
4.5%
2007
87,390 162,934,794,000 26,137 37.2 13.0
21,775
4.1%
2008
88,040 169,798,086,000 27,730 37.0 13.0
21,622
5.1%
2009
88,578 171,680,771,000 27,638 36.6 13.0
21,700
8.9%
2010
88,760 176,084,963,000 27,307 35.1 13.0
21,630
9.7%
2011
89,370 N/A 26,668 35.2 13.0
21,608
8.2%*
(A)
Includes public school enrollment. Kindergarten is included though not State mandated.
(B)
Unemployment rates came from the US Department of Labor, Bureau of Labor Statistics.
*Rate is preliminary as of April 16, 2012.
(C)
Per capita income and Median age information for the years 2002 to 2006 are based on 2000 U.S.
Census report since this information is available for individual cities only every ten years when the census is done.
2007 info for Federal Way is based on 2006 US Census American Community Survey.
2008-2010 info for Federal Way is based on 2005-2009 American Community Survey five-year Estimates.
2011 info for Federal Way is based on 2006-2010 American Community Survey five-year Estimates.
(D)
Personal income information is for Seattle -Tacoma -Bellevue area provided by the Bureau of Economic Analysis, information
is not available for Federal Way. 2011 data for Personal Income was not available at the time of publication.
Sources:
Data was obtained from U. S. Census Bureau
US Department of Labor, Bureau of Labor Statistics
US Department of Commerce, Bureau of Economic Analysis
School data was provided by the Federal Way School District.
PRINCIPAL EMPLOYERS
Current Year and Ten Years Ago
2011
2002
Number of
% of Total City
Number of
% of Total City
Taxpayer
Type of Business
Employees
Rank
Employment
Employees
Rank
Employment
Federal Way Public Schools
Educational Services
1,951
1
6.74%
2,885
1
9.90%
Weyerhaeuser Company
Lumber Products
1,263
2
4.36%
1,258
2
4.32%
Lifebridge Inc
Business Services
1210
3
4.18%
-
-
-
St Francis Hospital
Medical Services
875
4
3.02%
744
3
2.55%
World Vision Inc
Christian Relief Agency-Nonprofi
852
5
2.94%
663
5
2.28%
Wild Waves Theme Park
Amusement Center
632
6
2.18%
734
4
2.52%
Us Postal Service - Bulk Mail
Postal Service
616
7
2.13%
572
6
1.96%
City Of Federal Way
Government Services
476
8
1.64%
440
7
1.51%
Wal-Mart Supercenter #3794
Retail
386
9
1.33%
225
11
0.77%
Virginia Mason Federal Way
Medical Services
235
10
0.81%
235
10
0.81%
Fred Meyer
Retail
220
11
0.76%
214
14
0.73%
Costco Wholesale Corporation
Wholesale
214
12
0.74%
251
8
0.86%
Wal-Mart Store #2571
Retail
183
13
0.63%
-
-
-
Target Store #1947
Retail
178
14
0.62%
130
29
0.45%
Devry University
Educational Services
167
15
0.58%
-
-
-
Source: City of Federal Way Business License
Note: Principal Employers - includes both full-time and part-time employees.
PROPERTY VALUE AND CONSTRUCTION
Commercial Construction (A)
Residential Construction (A)
Multi -Family Construction (A)
Value
Value
Value
Year
Permits
(In Thousands)
Permits
(In Thousands)
Permits
(In Thousands)
2002
393
59,075
318
38,176
1
-
2003
240
25,695
290
37,775
1
1,042
2004
335
64,522
289
82,658
0
-
2005
289
124,985
591
111,504
0
-
2006
332
78,194
455
70,862
1
2,027
2007
370
59,666
388
55,321
33
11,487
2008
256
45,810
258
17,554
91
26,025
2009
132
45,343
275
13,057
76
20,802
2010
149
31,043
321
19,676
75
2,686
2011
134
12,744
301
19,454
47
846
Sources & Notes:
(A) Federal Way Community Development Department. Commercial construction includes alterations.
Other building -related permits (plumbing, mechanical, fire alarm, etc.) numbering 2,385
and valued at $6,229,017 have been excluded.
Transportation
Street (Center Line Miles)
Signals WSDOT-owned and maintained
Signals City -owned & County -maintained
Street lights City -owned and maintained
Street lights City -owned and PSE-maintains
Street lights PSE-owned and maintained
Culture & Recreation
Developed Parks - Acreage
Developed Parks - # of Parks
Undeveloped Parks - Acreage
Undeveloped Parks - # of Parks
Tennis Courts City -Owned
Tennis Courts - Public
Swimming Pools City -Owned
Swimming Pools County -Owned
Trails - Miles
Trails - # of Trails
Community Centers/Recreation Facilities
CAPITAL ASSETS BY FUNCTION
Last Ten Fiscal Years
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
224.48
224.48
224.48
230.84
233.84
233.84
234.72
234.72
242.90
248.23
4
4
4
4
5
5
5
5
5
5
67
70
71
71
74
74
76
76
76
76
810
1,038
1,050
1,050
1,214
1,214
1,463
1,467
1,509
1,554
-
644
644
644
644
644
644
644
644
644
2,850
1,975
1,975
1,975
1,975
1,975
1,975
1,975
1,975
1,975
493.5
500.25
500.25
522.9
522.9
524.49
524.49
524.49
524.49
524.49
28
31
32
32
32
32
32
32
32
32
352
356.24
356.24
543.5
543.5
543.46
551.12
551.12
551.12
551.12
20
21
21
21
21
21
22
22
22
22
9
9
9
11
11
11
11
11
11
11
10
10
16
22
22
22
22
22
22
22
0
1
1
1
1
1
1
1
1
1
2
1
1
1
1
1
1
1
1
1
4
4
4
6
6
6
6
6
6
6
2
2
2
2
2
2
3
3
3
3
2
2
2
2
2
2
1
1
1
1
Source: City of Federal Way Public Works and Parks Department
OPERATING INDICATORS BY FUNCTION
Last Ten Fiscal Years
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
SECURITY OF PERSONS & PROPERTY
Police Information
Offenses:
Forcible Rape (including attempts)
34
50
50
55
64
48
30
51
50
38
Robbery
108
125
121
153
146
129
170
198
152
119
Criminal Homicide
4
2
-
7
1
3
10
5
5
4
Aggravated Assault
120
120
109
101
120
107
115
115
118
99
Vehicle Theft
1,206
1,204
1,118
1,573
1,199
939
816
561
741
694
Burglary (commercial & residential)
677
672
759
800
753
739
800
741
828
752
Larceny
3,347
3,145
3,257
3,786
3,230
3,159
2,933
3,231
3,141
3,067
Arson
29
14
23
25
26
18
13
13
11
11
Citations:
Traffic
13,439
18,411
13,219
11,402
11,931
14,043
19,339
20,678
18,094
17,226
Red Light Photo
-
-
-
-
-
-
3,813
13,002
25,691
15,340
ECONOMIC ENVIRONMENT
Building Related Permits & Values
Building Permits
712
531
624
880
788
791
605
483
545
482
Estimated Value (In Millions $)
97.3
S64.5
147.2
$236.5
$151.1
$126.5
$89.4
$79.2
$53.4
$33.0
Other Building Related Permits
2024
1779
1958
2705
2550
2690
2370
2209
2423
2385
Estimated Value (In Millions $)
$2.5
$ 2.4
$ 2.5
$ 3.9 $
4.2
$ 5.5
$ 7.0
$ 5.6
$ 5.9
$ 6.2
Source: City of Federal Way Police Department and Community Development Department
Note: 2009 Police Information has been updated from 2009 report due to new/further information.
Federal Wav / 117
CITY GOVERNMENT EMPLOYEES FULL-TIME EQUIVALENT - HISTORY
Department
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Mayor's Office
6.00
6.00
6.00
6.00
6.00
10.00
9.75
7.63
7.63
5.00
Administration
5.00
5.00
5.00
5.00
5.00
5.50
5.25
3.13
3.13
4.00
Economic Development
1.00
1.00
1.00
1.00
1.00
1.50
1.50
1.50
1.50
-
Government Affairs
-
-
-
-
-
3.00
3.00
3.00
3.00
-
Human Services
-
-
-
-
-
-
-
-
-
1.00
City Council
3.50
3.50
3.50
3.50
3.50
3.50
3.50
3.50
4.50
4.50
Municipal Court
13.55
13.55
12.55
12.55
12.55
14.00
14.00
13.00
13.00
13.00
Human Resources
7.00
6.50
6.50
5.00
5.00
5.00
5.25
5.25
5.25
4.50
City Clerk
2.50
2.00
2.00
1.50
1.50
1.50
1.75
1.75
1.75
1.75
Human Resources
4.50
4.50
4.50
3.50
3.50
3.50
3.50
3.50
3.50
2.75
Finance
8.50
9.50
9.50
8.50
8.50
9.50
8.00
7.60
7.60
7.00
Administration
1.50
1.50
1.50
1.50
1.50
1.50
-
-
-
-
Finance
7.00
8.00
8.00
7.00
7.00
8.00
8.00
7.60
7.60
7.00
Information System
9.00
9.00
9.00
8.50
8.50
10.60
10.60
10.00
9.60
7.00
Law
11.00
10.38
10.60
10.60
10.60
13.00
13.00
12.00
12.00
11.00
Civil Legal Services
5.05
5.80
5.80
5.80
5.80
5.80
5.80
4.80
4.80
4.80
Criminal Prosecution Services
5.95
4.58
4.80
4.80
4.80
7.20
7.20
7.20
7.20
6.20
Community & Econ Developmeu
28.55
29.60
29.60
28.70
28.70
30.49
32.00
30.00
28.90
19.00
Administration
4.50
4.50
4.50
4.50
4.50
4.50
4.50
5.00
5.00
3.50
Planning
8.80
8.80
8.80
8.80
8.80
8.75
8.75
8.00
7.00
6.00
Building
11.25
12.30
12.30
12.30
12.30
13.25
14.25
13.00
13.00
9.00
Human Services
3.00
3.00
3.00
2.50
2.50
3.00
3.50
3.00
3.00
-
Neighborhood Development
1.00
1.00
1.00
0.70
0.70
1.00
1.00
1.00
0.90
-
Economic Development
-
-
-
-
-
-
-
-
-
0.50
Police
151.00
155.00
155.00
152.00
155.00
169.00
169.00
164.00
161.00
135.00
Administration
2.00
2.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
Support Services
59.00
55.00
54.00
53.00
55.00
61.00
61.00
61.00
58.00
51.00
Field Operations
90.00
98.00
98.00
96.00
97.00
105.00
105.00
100.00
100.00
81.00
Parks, Rec. & Cultural Svcs.
27.00
30.40
30.40
30.20
31.20
44.25
44.25
39.75
39.75
36.45
Administration
2.00
1.80
1.80
1.80
1.80
1.80
2.80
1.35
1.35
1.35
Planning
1.00
1.00
1.00
1.00
1.00
1.00
-
-
-
-
Kenneth Jones Pool
-
3.00
3.00
3.00
3.00
-
-
-
-
-
General Recreation
6.50
6.60
6.60
6.60
6.60
7.10
7.10
4.80
4.80
5.50
Community Center
-
-
-
-
-
12.35
12.35
13.35
13.35
13.35
Dumas Bay Centre
2.00
2.00
2.00
2.00
3.00
3.00
2.75
2.75
2.75
2.75
Knutzen Family Theatre
1.00
1.50
1.50
1.50
1.50
1.50
1.75
-
-
-
Parks Maintenance
14.00
14.00
14.00
13.80
13.80
17.00
17.00
17.00
17.00
13.00
Building
0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.50
Public Works
38.50
41.50
41.60
41.60
42.60
44.00
44.00
42.95
41.95
38.95
Administration
2.10
2.10
2.10
2.10
1.90
1.85
1.85
2.35
2.35
2.25
Development Services
6.45
6.45
5.80
5.80
6.50
6.45
6.45
4.45
4.45
4.20
Traffic Services
4.10
5.10
5.10
5.10
5.10
6.10
6.10
6.10
5.10
2.35
Street Services
10.00
11.00
11.70
11.70
11.00
11.50
11.00
10.50
10.50
10.60
Emergency Management
-
-
-
-
1.00
1.00
1.00
1.00
1.00
1.00
Solid Waste & Recycling
1.60
1.60
1.60
1.60
1.70
1.70
1.70
1.70
1.70
1.70
Surface Water Management
14.25
15.25
15.30
15.30
15.40
15.40
15.40
16.35
16.35
16.35
Fleet & Equipment
-
-
-
-
-
-
0.50
0.50
0.50
0.50
Total
303.60
314.93
314.25
307.15
312.15
353.34
353.35
335.68
331.18
281.40
Source: City of Federal Way Finance Division
Federal Wav / 118
MAYOR
DEPUTY MAYOR
COUNCIL MEMBERS
SALARIES AND SURETY BONDS OF PRINCIPAL OFFICIALS
DECEMBER 31, 2011
POSITION
POSITION
CITY ATTORNEY
CITY CLERK
COMMUNITY & ECONOMIC DEVELOPMENT DIRECTOR
FINANCE DIRECTOR
ADMINISTRATIVE SERVICES DIRECTOR
PARKS AND PUBLIC WORKS DIRECTOR
POLICE CHIEF
Source: City of Federal Way Finance Division
LEGISLATIVE BODY
EMPLOYEE ANNUAL SALARY
SKIP PRIEST
$112,800
DINI DUCLOS
$13,800
JIM FERRELL
$13,800
LINDA KOCHMAR
$13,800
MICHAEL PARK
$13,800
JEANNE BURBIDGE
$13,800
JACK DOVEY
$13,800
ROGER FREEMAN
$13,800
ADMINISTRATIVE STAFF
EMPLOYEE ANNUAL SALARY
PAT RICHARDSON
$134,484
CAROL MCNEILLY
$77,664
PATRICK DOHERTY
$115,680
THO KRAUS
$121,848
BRYANT ENGE
$141,036
CARY M. ROE
$141,036
BRIAN J. WILSON
$135,384
NOTE: In accordance with State of Washington legal statues, individual fidelity coverage of not less than $100,000
exists for the Mayor, City Attorney, Community & Economic Development Director, Finance Director, Administrative Services
Director, Parks and Public Works Director, and Police Chief.
MISCELLANEOUS STATISTICAL INFORMATION
LOCAL TAXES ON BUSINESSES
Franchise Tax - Cable TV ............................. 5.00%
Gambling Taxes:
Bingo/Raffles.................................... 5.00%
Amusement/Game s ............................. 2.00%
Punchboard/Pull Tabs .......................... 3.00%
Cardrooms....................................... 10.00%
Local Sales Tax (Collected by the State)............ 9.50%
Food & Beverage Tax (Collected by the State).... 0.50%
FIRE AND EMERGENCY MEDICAL RESPONSE INFORMATION
Fire and Emergency Medical Response information reflects the greater Federal Way area, which is served by South King Fire & Rescue.
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Fire and Other Responses
3,055
3,117
2,896
3,210
865
639
1,083
1,147
1,041
934
Emergency Medical
7,422
8,042
8,263
8,636
11,164
11,350
12,058
11,077
11,460
11,914
PUBLIC EDUCATION
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
23
Elementary Schools
11,990
9,854
9,916
9,806
9,733
9,612
9,594
9,594
9,560
9,673
9
Middle Schools (incl. Public Academy)
5,509
5,458
5,476
5,271
5,183
5,139
5,234
5,203
5,235
5,205
5
High Schools
4,316
6,625
6,650
7,004
6,954
6,720
6,531
6,637
6,547
6,409
1
Internet Academy (K-12)
379
328
353
302
314
304
263
266
288
321
22,194
22,265
22,395
22,383
22,184
21,775
21,622
21,700
21,630
21,608
2,700
Staff members
TAXABLE
SALES (in millions)
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Retail Sales
$1,298
$1,237
$1,239
$1,331
$1,471
$1,540
$1,458
$1,257
$1,261
$1,277
Real Estate Sales
$503
$570
$616
$939
$988
$963
$536
$208
$238
$315