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FEDRAC MINS 08-07-2007 City of Federal Way City Council Finance/Economic Development/Regional Affairs Committee Tuesday, August 7,2007 5:00 p.m. City Hall Hylebos Conference Room MINUTES Committee Members in Attendance: Chair Faison and Member McColgan; Member Burbidge excused. Council Members in Attendance: Kochmar and Dovey. Staff Members in Attendance: City Manager Neal Beets, Assistant City Manager Iwen Wang, City Attorney Pat Richardson, Information Services Director. Mehdi Sadri, Finance Manager Tho Kraus, and Deputy City Clerk Krystal Roe. 1. CALL TO ORDER - Chair Faison called the meeting to order at 5:00 p.m. 2. PUBLIC COMMENT - NANCY COMBS expressed her opposition to the Symphony project and further stated she doesn't think redevelopment (similar to Bellevue) would be successful in Federal Way until the City is cleaned up. Mrs. Combs went on to relay her dissatisfaction with a recent request for police services which went unanswered and that she feels the need to arm herself with a firearm for self protection. Last, Mrs. Combs stated the decision for redevelopment should not be left to the Council, but should be placed on a ballot for voter approval. Chair Faison addressed her concerns and thanked her for expressing her opinions. He further encouraged Ms. Combs to continue bringing her comments forward so that Council may take her perspective into consideration. He also commented that with such a large population many differing, often opposing, opinions exist regarding the downtown redevelopment project; Council makes their best effort at considering all opinions and making the best decision for the City. Councilmember McColgan asked City Manager Beets to follow up with the Police Department regarding the unanswered 911 call for service Mrs. Combs described; Mr. Beets committed to speaking with them. 3. COMMITTEE BUSINESS A. Approval of Minutes: May 22, 2007 FEDRAC Meeting The Committee m/s/c to approve the minutes as presented. B. Approval of Minutes: April 17, 2007 EDC Meeting The Committee m/s/c to approve the minutes as presented. C. Proposed Modification to City Council Rules of Procedure, Section 16 .. 17 - Ms. Richardson presented the staff report and noted that the proposed changes were housekeeping in nature only. The Committee m/s/c to approve the proposed modifications to Sections 16 and 17 of the City Council Rules (option 1) and forward to the full City Council D. Authorization for Video Production Coordinator Position - Mr. Sadri presented the staff report, reviewed the history of the video production program, and noted the expanded services that have been added since the program's inception. Mr. Sadri further reported the expanded video production services the City would be able to offer with additional staff resources. The Committee inquired about using the additional position to provide outsourced services to other municipalities which may create a revenue source for Federal Way. Mr. Sadri responded that under this proposal, with the current need for internal services/programs, the coordinator would not have the resources to take on additional work for other agencies. The Committee requested that staff continue to consider opportunities to create a revenue-generating operation. Councilmember Kochmar noted that this program seems to be an indirect revenue source because the video programs advertise amenities the City offers including the Dumas Bay Center, the Symphony, Centerstage Theatre and the Federal Way Community Center. The Committee asked that continued contracting come before Council for funding approval at the end of this initial contract period. Mr. Sadri committed to return to Council for contract renewal and will return if Rainier Cable Commission (RCC) funding is lost at any time during the 17-month initial contract. The Committee wondered about the higher than anticipated cable franchise fee revenues; Ms. Wang replied that the additional revenue is from higher cable rates, a trend that should continue. Staff clarified that the production coordinator would be working from the City's editing room and in the field for the hours he worked for the City; he would work from RCC offices the remainder of the time. Chair Faison expressed a strong interest in expanding the programming to include high school sporting events. Councilmember Kochmar suggested also including high school theatrical productions. Chair Faison asked staff to speak with the City of University Place to discuss their high school programming services. The Committee m/s/c to approve 1.0 FTE position for City Video Production services with .5 position to be contracted to RCC and forward the recommendation to the full Council E. Vouchers - Ms. Kraus presented the staff report. Council member Dovey noted that the expenses paid for vehicle maintenance and repairs do not seem to be equally split between Sparks Car Care and Eagle Tire. He asked about the status and requested that staff report back with their findings. The Committee m/s/c to approve the vouchers as presented. F. Monthly Financial Report - Ms. Kraus presented the staff report and highlighted key figures. Councilmember McColgan asked why the REET (Real Estate Excise Tax) revenue is much higher than anticipated. Ms. Wang answered several high-valued commercial properties have been sold and residential REET revenue is still high but appears to be slowing. The Committee inquired about the timing for the mid-biennium budget adjustment. Staff replied the adjustment would likely come before Council in November. The Committee asked about the high sales tax reported for the 31ih Wal-Mart store. Ms. Kraus answered that the two Federal Way Wal-Mart stores use the same UBI number and therefore their sales tax reporting is combined; it is not possible to differentiate between the stores. Next, the Committee inquired about the status of the Proposition 1 funding and expenditures. It appears more revenue has been generated compared to lower expenditures. Ms. Wang answered that Propositionl staffing levels have not yet been realized and it is not yet known if a true surplus exists. However, Ms. Wang committed to report any surplus to Council for an allocation decision in the next budget cycle. Councilmember Dovey recommended setting an allocation/spending policy now for Proposition 1 funds to prevent a negotiating dispute later. Chair Faison recommended going back to look at the decision to approve Proposition 1 to see if the policy has been already set. Ms. Wang agreed to bring the original agreement back to the Committee for review. The Committee discussed the financial outlook for the Community Center and noted the Center may need to be better advertised to bring its wedding and birthday party amenities into focus for the community. Next, the Committee discussed using potential excess REET funds to payoff a 1997 bond at $1.89 million which would free up more than $400,000 per year for operating expenses. The Committee m/s/c to approve the Monthly Financial Report as presented. G. Utility Tax Calculation - Ms. Wang presented the staff report and noted there is a discrepancy between Federal Way utility providers as to how they apply the tax and the state law which governs how the taxes can be collected. Ms. Wang reported under current state law, utility companies base their tax collection on gross receipts which does not create an exemption for taxes. Essentially this results in a "tax the tax" scenario. Council must decide whether utility providers should continue collecting the tax under current state law parameters, or if the City should create a deduction for the utility tax. Whichever method for calculation is used, staff will ensure all utility providers apply the collection consistently. Ms. Wang further reported that Qwest continues to collect the tax based on the prior 6% rate rather than the 7.75% approved by voters in November. Staff will calculate the back taxes owed and assess penalties as allowed by law. The Committee asked staff to come back to the Committee with additional information and to proVide further details. Action was not taken. 4. OTHER - None. 5. FUTURE AGENDA ITEMS - None. 6. ADJOURNMENT - Chair Faison adjourned the meeting at 6:04 PM. Attest: ~7;iRDVt / Eric Faison Committee Chair cQJLoJUd, Dean CColgan Committee Member