FEDRAC PKT 04-12-2005
'" .
(~ity of Fed~ral Way
, City COli nc,iI ,
Financc/l¡~c()nomic DeveJopmcntfReghJna,1 ^ ffnirs Committec".' .
," ,,: ", "" '
;"~cs(h'y, April 12, 200S""
", ;,'
'5:30 I).m. "";::.:" "
",,'.'/ """,/. "
'"
, ".,' City Half
.lIylcbos Conference Rod,m
AGENDA
I, CALL TO ORDER
2, PUBLIC COMMENT
3, COMMITTEE BUSINESS
A. Approval of the March 8,2005 Minutes
B. Federal Justice Assistance Grant Application (for PS WiFi Coverage
Expansion) (Wang)
C. Surplus ofKlahanee Lake Community Center (Wang)
D. Leland Study Update (Doherty)
E. Discussion on Sound Transit West TOD (Doherty)
Action
Action
Action
Information
Information
4, OTHER
5. FUTURE AGENDA ITEMS
A.
B.
6. NEXT MEETING:
FEDRAC - Economic Development: May 10, 2005
FEDRAC: April 26, 2005
Committee Members:
Eric Faison, Chair
Jeanne Burbidge
Jim Ferrell
City Slaff:
Patrick Doherty, Economic Development Director
Jordan Wheeler, Management Intern
(253) 835-2403
\\Cfw\.CFWMA/N_VOLl.CFWldataIMsIFEDRAC\2005\O4/2\O41 205 Agenda.doc"
"
City of Fcderal Way
, City CounCil ~
Fin3ncc/EconoÎIiic .ncvclop~)cllt/RegjOlial ',,'A.'ffairs Committee
" ':"'::: '"," -.' " : "," ..,
" "..~y,.:J"larch 8,2005, "~,"I: ,i,.o:.;'
:;:5,~ . ,,~'j.~~,~', '.;,;::::,::;':¡i;'~',,::':'
':~,,;;:,"':4':: d',,';" Cily'Hall
':'~ ';':':':"",:':,"....1 Ichos Confc.~rcncc Rcio.Q1'
MINUTES
Conmúttee Members in Attendance: Chair Eric Faison, Member Jeanne Burbidge. Absent: Member Jim Ferrell
City Council Members in Attendance: Deputy Mayor Linda Kochmar
Staff Members in Attendance: David Moseley, City Manager; Pat Richardson, City Attorney; Patrick Doherty,
Director of Economic Development; Lillian Yeh, Economic Development Assistant; Jordan Wheeler, Management
Intern.
Others in Attendance: Tom Mwphy, Federal Way Public Schools Superintendent; School Board President Charles
Hoff; Diane Turner; Mike Halliday; H, David Kaplan.
1.
2.
3.
CALL TO ORDER
Chair Eric Faison called the meeting to order at 5:33 p.m. Council Member Jim Ferrell had an excused
absence.
PUBLIC COMMENT
Mr. Kaplan read a statement (attached) regarding his thoughts on Economic Development in Federal Way.
Mr. Kaplan said that the City has made every effort to make businesses feel welcomed, however he
perceives a commu.rlication problem on economic development issues between the city and the residents of
Federal Way. He stated that the communication problem exists within the business community as well,
Another problem Mr. Kaplan identified in the business decline is the lack of advertising and promotion.
He hopes the Leland Project will respond to some of these issues,
COMMITTEE BUSINESS
a)
Approval of the February 8. 2005 meeting minutes
Motion to approve the February 8, 1005 meeting minutes. Motion seconded and carried.
b)
Presentation on Federal Way School District Bond Proposal
Presented by Tom Murphy
Mr. Murphy gave an overview of the construction bond the Federal Way School Board is
considering. . The bond is in response to a study that examined the current conditions, needs, and
future of the district's schools. The study looked at the school buildings' structural condition and
needs and how the buildings perfonned in their enhancement of the students' educational program.
The study identified schools that need immediate attention, schools that will need attention in 10
years and schools that will have to be looked at further down the road. The bond that the School
Board is considering would fund the construction of new maintenance facilities and district offices
and the reconstruction of Federal Way High School. Also included in the proposed bond package
would be the relocation of Federal Way Memorial Stadium to a site near Celebration Park and the
A-I
construction of a Perfonning Arts Center at the Federal Way High School location. An artist's
rendition of the proposed facilities and the new Federal Way High School was shown to the
committee.
Another illustration depicted an environmental education center that could be funded by the
proposed bond. The center is proposed for the undeveloped wetland that is located near Five-Mile
Lake and the new middle school. The environmental center could serve as a retreat center and a
nice attraction for the city.
Mr. Murphy named five other Federal Way schools that have been identified as being in need of
being rebtÜIt. Those schools are Lakeland, Lakota, Sunny Crest, Valhalla, and Panther Lake. The
schools would also be reconstructed on their existing sites.
The connnittee would like Mr. MUlphy to make a presentation to the full council.
c)
Discussion of Sound Transit West TaD
Chair Eric Faison asked the item to be placed on the AprillZth agenda,
4.
OTHER
Patrick Doherty was pleased to introduce Lillian Yeh, our new Economic Development Assistant.
5.
FUTURE AGENDA ITEMS
6.
NEXT SCHEDULED MEETING
AprillZ, ZO05 at 5:30 p.m. in the Hylebos Conference Room.
7.
ADJOURN
Chair Eric Faison adjourned the meeting at 6:19pm,
Recorded by Jordan Wheeler
IICfwl,CfWMAfN- VOLI CFW\,¡..,,\M,\FEDRAC\2005\O308\O30805 Minutes,do<: A-2
Statement by H. David Kaplan at FEDRAC Meeting, March 8, 2005
I have been thinking about Economic Development in Federal Way for several months. My
thoughts coalesced in the last few days. The impetus was reading the minutes from the City
Council Retreat, the Management team meeting, and from receiving the Marlene's advertising
flyer with my newspaper.
Economic Development has three elements: the city, the business community and the
citizen/customer. All three must feel their interests, aptitudes and needs are being met.
The city has made every effort to make businesses feel welcome. The sign code revisions, the
Downtown SEP A action, the absence ora B&O tax, streamlining the permit process and other
administrative procedures all have generated a cooperative atmosphere. But has the city gone out
and sold potential businesses on these and other assets (location, population, work force) to
potential businesses? If it has, or if the Chamber has made this effort, I am unaware of it. Therein
lies the problem. Communication. How has the city let its residents know, in a tangible way, that
we are making the effort to attract and retain business?
The business community has not communicated well, either. What happened to the Economic
Development Response Team that was supposed to be created about three years ago? What about
the brainstonning session on downtown that was supposed to come out of an article for CEO
Magazine?
With nearly 3,000 business license in the city and only a small proportion of them Chamber of
Commerce members, there is obviously a disconnect. The business community hasn't made
itself a presence, either internally or externally. When I received the Marlene's flyer, I realized
that the lack of advertising and promotion is a major factor in business decline. Where are the
merchandising promotions, street fairs, sidewalk sales, special product weeks etc. etc. that
businesses in major cities put on to attract customers and establish their presence?
The citizen/customer can only react to what is available, Rarely can they institute the arrival ofa
new business, unless it is a sole proprietorship. Just as an example, I have been asking for a
decent French or Gennan restaurant in Federal Way for years. I asked the people who built
PaviUions Center, I asked the people who dressed up Seatac Village. I asked Gary Martindale at
the Mall. I even asked John Hatcher to bring back Café Pacific.
The citizen/customer cannot be duped for long. Ifa business has merchandise that is of
questionable value, the business will not be patronized. If the business is too similar to others
nearby, they may all suffer....unless they are ina place like auto row in Auburn or Puyallup.
Customers like to be excited, intrigued and made to feel a need for acquiring what a business has
to offer. There is not enough marketing in Federal Way to accomplish this goaL..by the city, the
~ business community, or by citizens speaking out for a service or product. Our citizens must
realize that shopping in Federal Way helps every aspect of our community's well being.
Perhaps the Leland "Lifestyle" project will respond to ,some of these points. I hope so.
1\-3
CITY OF FEDERAL WAY
MEMORANDUM
Date:
To:
Via:
From:
Su~ject:
April 8, 2005
Finance, Econom' c Dev opment and Regional AΆrs Committee
David H. Mos ey, , ager
Iwen Wang, Directo of Management services ~
Federal Justice Assistance Grant Application (fvr PS WiFi coverage expansion)
BACKGROUND:
The Justice Assistance Grant (JAG) is a replacement of the LLEBG and Edward Byrne Memorial grant that the City
previously received and used for various police equipment and bulletproof vest replacements, Under the new grant
formula, the City is eligible for $51,269, which can be used for a broad range of public safety purposes, Tn
discussions with the Chiet~ wireless access capability is one ofthe department's top technology priorities; the
increase in the planned WiFi coverage would be highly desirable.
This $51,000 will be added to the existing $100,000 COPS grant fund, substantially increasing the currently planed
Public Safety WiFi coverage,
Grant Budget:
To receive this grant, the City's grant application must be available for public and Council review prior to submitting
the application. Details of the grant request are as follows:
Project Administration (limited to 10% of grant amount)
One WiFi Access panel antenna, mounting and cable
Four Mobile Access point radios, antennas, mounting and cable
Four Edge equipment (Printers, E.ticketing PDAs)
Associated software license and services
Total
$ 5,100
20,000
18,000
5,000
3.169
$51,269
COMMITTEE ACTION: .
Forward the grant application to full Council approval at April 19 regular Council meeting,
APPROV AL BY COMMITTEE:
Conunittee Member
Committee Member
-~
Committee Chair
B
K:\FFDRAC\2005\O412VAGO5.doc
CITY OF FEDERAL WAY
MEMORANDUM
Date:
To:
Via:
From:
April 8, 2005
Finance, Economic
lopment and Regional Affairs Committee
Subject:
David H, Mos anager
Iwen Wang, Mana ement Services Director ~
Surplus of Klahanee Lake Community and Senior Center (KLCC)
Policy Question:
1. Should the City surplus KLCC?
ß. Should the City market the building now, or wait until the new community center is completed?
Background:
The City purchased KLCC in 1993 for $700,000 to use as an interim community center. It subsequently
invested $780,000 to convert the warehouse facility into a functional community center for a total
investment of$1.48 miUion. Of this $1.48 million, $400,000 is funded by a Community Development
Block Grant.
t. Should the City Surplus KLCC?
Although the Council has not taken any official surplus action it the past, it has previously decided to
replace KLCC with a new community center once it is completed. We have also included $800,000
of the sales proceeds from KLCC to be used for development of the new center.
Since funding is needed to complete the new community center, staff recommends that the Council
move forward and take official action declaring KLCC surplus fÏ'om City needs in the foreseeable
future. Attached is a draft resolution for such a declaration; the City will publicize and conduct a
public hearing of this intent as required by state law.
II. Timing of Marketing:
With the intent of continuing current recreation programs at KLCC until the new center is completed,
there is a potential timing issue in which the cash flow fÏ'om its sale is available. At the same time,
investors have a sense of urgency to lock in today's favorable interest rates and snatch up good
investment properties. Because of these considerations, staff believes the City should consider the
timing options in marketing KLCc.
1. Qualitative Comparison:
Option 1: Actively market the building.
Pros:
a. Favorable market conditions: We have had a number of inquiries, consistent with
local brokers' recommendations.
b. The "sale and lease back" is a favorable consideration for investors and can boost the
sales price.
c. Better timing of providing cash flow for the new community center.
Cons:
a. Cost of leasing back.
b. Uncertainty of lease period,
If there is a delay in construction or other unexpected startup issues, it may increase
the required lease terms and cost.
k:\fedrac\2005\O412\klcc,doc
C - J
c. Potential programming impact.
Owner/occupant buyers, which this building is most likely to attract, would likely
want to use the facility as soon as possible after purchase - which may make leasing
back difficult or may require the City to reduce or move its programs to other
temporary facilities.
d. More complex transaction. Sale and lease back is very common in the commercial
real estate market, particularly for investment properties. The complexity would
increase for the purchaser, who will also use the building.
Option 2: Market the building after the new community center is complete and the KLCC is
vacated.
Pros:
a. Will not incur leasing cost.
Assuming the City will lease the building back from July 1, 2005 through March 31,
2007, the leasing cost could be between $150,000 - $200,000.
b. Will not affect programming, .
Marketing the building near or after completion of the new community center will
allow a smooth transition of programming between facilities,
c. Simple transaction.
The transaction can be a straightforward "as is" sale of the building.
Cons:
a, Uncertain future market conditions.
We know that current market conditions are very favorable in the office market
history. We don't know how the market will be in two years. As a special use
facility, KLCC will be harder to sell in a slow market.
b. Delay in cash flow for the new community center.
While this is an issue, it is not a critical one as the City has the capacity and
authority to make short-tenn interfund loans in order to bridge the timing difference
in cash flow.
2. Financial Comparison:
Hypothetical Comparison of Financial impact on timing of the sales
Option 1
Option 2
Interest Rate Effect:
Annual Mortgage Payment
Amount can be financed over 15 years at 5% and 7,5%
$ 85,000
$ 882,271
$ 85,000
$ 750,305
Projected Proceeds:
Assumed price difference due to interest rates
Higher price from "lease back" «(à?1O% oflease value)
Proceeds from Sale of Building
Potential Costs:
Interest Cost for Cash Flow Loan @ 1.75%, 1.75 year
Leasing expense, 10,000 sq ft @ 9/s[, 1.75 year
Net Realized Value
$ 882,271 $ 750,305
15,750
$ 898,021 $ 750,305
(22,978)
(157,500)
$ 740,521 $ 727,327
3. Conclusion:
With the above assumptions, the financial considerations for either market timing are not
significantly different. However, the analysis does not consider the length of time it may take to
sell the building, which could be extended if market conditions change dramatically from today.
The leasing expenses used in the financial analysis may be used to lease the KLCC back from the
new buyer; it may also be used as a funding source to obtain other temporary facilities in order to
k:\fedrac\2005\O412\klcc.doc
(,-2
continue existing programs. However, this would require more flexibility and coordination from
recreational operations and could still have an impact on programming.
Staff believes it would be advisable to market the KLCC now instead of deferring it until after
the completion of the new community center, because:
1) The programming impact potentially depends on the buyer
2) The City has more control over programming and use of the facility, but no control over the
market.
3) The value of real property is very sensitive to interest rates.
Recommendation:
Staff recommends that Council declare the KLCC surplus and begin marketing the building now,
Attachment: KLCC Surplus Resolution,
COMMITTEE ACTION:
Forward staff recommendation to full Council, conduct a public hearing to declare the KLCC surplus at
the May 3rd regular council meeting, and being marketing the building now,
":i*,,:~\¥;Cø~,'-~,,,¡';".:4~:j::íl,:~E: .,.":,' '"",
':,'.', ';.bY:
"'..," :
"',..,"" :,", '" .."
":,({.::""','
:,,:;;>/)::~;,<;,C, ConnÏ1iitë~Member
,',
, ..,:'Co,""-'
",':'~, ",':':':,:'.,~;¡::i>~{':,:;f:':'::, ,"':"",:
cðì11tilitt~€~Mefilbër ' '
k:\fcdrac\2005\O4 I 2\klcc.doc
(-3
~ ,.
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
FEDERAL WAY, WASHINGTON, DECLARING PROPERTY
LOCATED AT 33901 9TH AVENUE SOUTH AS SURPLUS AND
AUTHORIZING ITS DISPOSAL.
WHEREAS, the City of Federal Way owns the property located at 33901 9th Avenue
South legally described as:
LOT 16-A OF SHORT PLAT NO, 876019, ACCORDING TO
THE SHORT PLAT RECORDED UNDER KING COUNTY
RECORDING NO. 7608310626.
WHEREAS, the property is surplus to the needs of the City of Federal Way;
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF FEDERAL WAY
HEREBY RESOLVES AS FOLLOWS:
Section 1. Property Declared Surplus. The property described above is declared
surplus to the needs of the City of Federal Way.
Section 2, Disposition of Surplus Property. Staff, under direction of the City
Manager's designee, is instructed to negotiate a sale of the property for the best available price or
transfer to another governmental agency in accordance with RCW 39,33.010 subject to final
approval by the City Council.
Section 3. Severability. If any section, sentence, clause or phrase ofthis resolution
should be held to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity
or unconstitutionality shall not affect the validity or constitutionality of any other section, sentence,
clause or phrase of this resolution.
Res. #~, Page I
[-4
.
'. ..
Section 4. Ratification. Any act consistent with the authority and prior to the
effective date of the resolution is hereby ratified and affirmed,
Section 5, Effective Date. This resolution shall be effective immediately upon
passage by the Federal Way City CounciL
RESOLVED BY THE CITY COUNCIL OF THE CITY OF FEDERAL WAY,
WASHINGTON, this day of , 2005,
CITY OF FEDERAL WAY
MAYOR, DEAN McCOLGAN
ATTEST:
CITY CLERK, N, CHRISTINE GREEN, CMC
APPROVED AS TO FORM:
CITY ATTORNEY, PATRICIA A. RICHARDSON
FILED WITH THE CITY CLERK:
PASSED BY THE CITY COUNCIL:
RESOLUTION NO.
k:\reso\surplus Klahanee
Res. #~, Page 2
c- (;