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FEDRAC MIN 02-22-2011 � CITY Oi Federal Way City Council Finance/Economic Develo ment/Re ional Affairs Committee .. -. . � -.- . . . � . :• ••� SUMMARY ' 1 CALL TO ORDER Chair Mike Park called the meeting to order at 5:32 PM Committee Members in Attendance: Committee Chair Park, Committee Members Burbidge and Dovey. Councilmembers in Attendance: Councilmember Kochmar Staff Members in Attendance: ASD Bryant Enge, Finance Director Tho Kraus, City Attorney Pat Richardson, Chief Brian Wilson, Community 8� Economic Development Director Patrick Doherty, IT Manager Thomas Fichtner, and Executive Assistant Brook Lindquist 2. PUBLIC COMMENT: None. 3. COMMITTEE BUSINESS Topic T'rtle/Description Council Placement A. Approval of Minutes: January 25, 2011 N/A Discussion Only Committee Member povey moved to approve as presented. Committee Member Burbidge second. Motion Carried 3- 0. __ _.._.. _. _... _.... B. Legislative Report for febrvary 2011 N/A � Discussion Only State Lobbyist Levy reported on the current legislative items that affect the City Of Federal Way. Councilmember Burbidge testified on HB 1997, which provides funding for 4 Culture, affordable housing, and Community Development Preservation authorities. The current bill does not have language about performing arts centers but there will be an amendment to include that language. There was a discussion on flood control funding, REET funds being used for M& O, Triangle Project funding, salt water algae removal, delay of impact fees, water/sewer assumption bill, and the Brian Walsh bill. The precious metals bill is still active and is close to being on the house floor. ASD Enge passed around letters that were sent to the Federal Legislators and President Obama in regards to CDBG Funding. The City is concerned about the cuts for our low- income residents. ___ . . _ . _ _. � . N/A _ .. . _ . . -- — . . — _ . ._. ._ _ — C. ��� South Sound Regional Business Incubator Quarterly Update Discussion Only F�cecutive Director Cosette Gibson-Pfaff and CEO Tom Pierson updated the Committee with details of the SSRBI. There are 13 active businesses at the incubator that employ 34 employees. They have now collaborated with 42 community business leaders who help support the center with training and coaching, including a CFO that will be working with all clients to get them trained on Quicken. SSRBI is sponsoring a"Career for a Day" event aimed at older workers. Executive Director Gibson-Pfaff stated she is working on sponsorships for the "Lunch and Learn" training series. The King County Library System is sponsoring a"Lunch and Learn" event as well as various other businesses in the community. There are at least two classes per week. A banking summit for the center is in the works. The SSRBI is working on setting up A/V equipment for video conferencing and should be up and running in April/May. All training will now be recorded for clients to watch when it best fits their schedule. SSRBI is working with Highline Community College on expansion on clients served through CDBG funds. They need more small businesses involved with the incubator. All small businesses can be involved, especially those that need trainin� or _ _. _... _. FEDRAC SUMMARY Februar�22, 2011 — __. . ___ _._. _ _.. _ . .... __._�_ . _ __..— _.__.._ _. _...__._. _. _ __ _._ _ _. _._. _ _._.._..... __ _.... are struggling. CEO Pierson agreed with Executive Director Gibson-Pfaff about the need for more businesses to get inVolved. He wo�id like to help all FW businesses that are struggling. CEO Pierson thanked the City for its continued partnership. He stated he is pleased SSRBI has created 54 jobs. Committee Members inquired about the financial status of the incubator. CEO Pierson stated they will be seeking additional funding in Washington D.C. Committee Members wanted to know how many more clients are needed. CEO Pierson would like to see 10 more in-house businesses. _ _ _ Consent D. GreenCity Pederal Way 03/Ol/2011 This program will continue to provide assistance to our small businesses. This is a unique partnership with PSE to provide energy efficiencies to small businesses including incentives and rebates. This proposal also includes a"GreenCity" website, which will provide outreach for energy efficiency programs. This tool will provide effective communication with new information and updates on an ongoing basis. This will be funded by ARRA money. Committee Members inquired on PSE's role. Ms. Farra Vargas, from PSE's Energy Efficiency Department, is responsible for helping cities who received ARRA funds with energy efficiency programs. She can do walkthroughs with small businesses and suggest energy saving programs (ex. lighting). The funding would come from both PSE and the City. Committee Members inquired on what marketing would be purchased for $IOK. ASD Enge stated this is for the website to attract businesses that may need assistance. There will not be advertising in the newspaper. A Committee Member asked how people would find this site. ASD Enge stated there might be some house ads in the Mirror. ASD Enge promised more information at the next City Council meeting. The Mirror will manage the website. Committee Members asked about the funding details. ASD Enge stated there is $98K dedicated to improve energy efficiency in small businesses and there is $lOK for the website. Committee Members asked about kilowatts. PSE is looking to target businesses that fall into cerfain energy usage. PSE can get those numbers and customer names. Small businesses including medical, restaurant, churches, and office locations can be eligible for this grant. Committee Members asked about the 60-70% rebate amount and upfront money costs. PSE stated there can be significant cost savings for businesses. ASD Enge stated rebates will be given back at the completion of the project. There was a discussion on whether small businesses can afford the upfront costs. Pre-approval will be required by PSE, which could include a pre-walkthrough. PSE hopes that this rebate will stimulate businesses to act on energy improvements. Committee Members asked what happens if sponsorship dollars are not raised for the website and how long it would be running. The Mirror has agreed to a 1-year term. PSE will be providing content on energy efficiency programs. This website will contain information for both businesses and residents. PSE will give a list of contractors to the business and they can pick the contractor. Committee Members inquired on how Federal Way contractors can do some of this work, as they would like to employ Federal Way businesses. PSE would like the contractors to be trained through PSE on the rebate process. Rebates will fund everything but the labor. There are steps where local contractors can become PSE vendors. PSE stated there are numerous requirements for ARRA funding (hazardous waste, paperwork, etc.). Interested contractors should contact PSE. Committee Burbidge moved to forward the Mayor's recommendation to the March 1 consent agenda. Committee Member povey second. Motion carried 3-0. FEDRAC SUMMARY February 22. 2011 _ __.. . — _ .. -- ____ .. . _ _ _ ___ . . _ _ _.. __ Consent E. Purchase of Police Vehicle Radios 03/O1/2011 IT Manager Fichtner returned to FEDRAC with additional information in regards to the purchase of PD radios. He presented a chart that showed the current radios for the PD cars and motorcycles. One model the City currently uses has been discontinued. The recommendation is to purchase 5 radios as spares. Committee Members inquired about the total number of spares. IT Manager Fichtner stated there will be 10 spares total. Committee Member povey moved to approve as presented. Committee Member Burbidge second. Motion Carried 3- 0. . __ � _ ___ W — �.... .� � F. Final� LTAC Budget Recommendations � Consent 03/O1/2011 CED Director poherty is back from the last FEDRAC meeting with recommendations for the final LTAC budget. The Committee recommended $7,500 in Buds and Blooms Festival for planning for next year's event. With the cut in staff, the organizers will be working on donations and sponsorships for the 2012 event. There has been $SK added to the TEG grant funding for non-event activities. The 2010 revenue was $149K, which was up from the previous estimate. Committee Members inquired about proposed Buds and Blooms budget for next year (approximately $67K) recommended at the LTAC retreat. CED Director poherty stated they would be coming back next year with more details. Luna Park will hire a professional to sell sponsorships as part of their management package. The contingency budget is larger than normal but this could be used for other costs or festivals that may need additional funds. This could also be used for parade funding. CED Director poherty will be meeting with Luna Park next week. Committee Member Burbidge moved approval of the recommendation. Committee Member povey second. Motion carried 3-0. __ __ _.__ .... .... _,_ � . __ _ __ _....�___._ __ ____ _ �/� -_.._... G. Employee Bene�t Consultation Services Discussion Only ASD Enge presented the benchmark health care report summary that was produced for the Health Care Task Force. The City spent $3.75 million on health care last year. Costs have grown 10% per year while revenues have increased by 3.3%. We currently have the AWC Regence Plan B, which does not include any contribution for the employees themselves. We compared our costs to 9 other cities and we have 2 � d highest monthly costs for employee-only plan. Four cities (including FW) do not require employees to pay. There have been more options identified including other plans to help contain costs. Another report will be available next month that will identify other options and cost saving strategies. Committee members inquired about cost. There will be $12,000 spent on this research. This small investment may help us contain costs. Committee Members inquired about comparable health care plans. Numerous cities are self-insured with Kirkland and South King Fire & Rescue being two examples. Both Auburn and Lakewood have AWC plans. Many cities are or will be leaving AWC. The cities have been mitigating self-insured risks (ex. cost policies). There can be hybrid plans as well and the Committee discussed these options. Committee Members inquired about the 201 1/2012 allocation for health care costs. Finance Director Kraus stated the budget was $3.8 MIL but has changed slightly due to staff reductions. A 10% allocation increase has been built into the budget for health care costs. _... __ N/A H• SCORE A�1Q�y515 oiscussion only ASD Enge brought back information on SCORE financing for 2011-2012 and what happens if not all beds are rented. ASD Enge met with Director Bartley and in the event they are not able to rent the beds, they will quickly adjust their staffing to reduce costs. Our contribution would still be the same amount. If revenues are higher than expected, the money will not be given back to cities in that budget cycle. The SCORE Administrative Board will determine when and where these extra funds will be used. The ___ ___ FEDRAC SUMMARY February 22. 201 1 _...... .__ _ __ __ _ _. _ . _.. __ _.�__. — . _ . � ... _. .___. _ _ _ ... _ �.__ Committee Members stated there will be a demand for this facility since other facilities have closed. The City of Seattle has the SCORE bed agreement in their legislative process. There was a discussion on ADP. _...._..._ _ �• Travel and Training Policy N/A Discussion Only Finance Director Kraus presented the travel and training policy. This was discussed at the City Council Retreat. As part of frugal innovation, the travel and training area was reviewed. We are reducing the travel and training budget by $28K each year. The total citywide travel and training budget is $257K, which $243K is in the general fund. This policy is not trying to set a recommended funding level but is trying to distinguish mandatory vs. non-mandatory training. Finance Director Kraus reviewed the training matrix. Committee Members inquired about costs. Finance Director Kraus stated the Police Department is Y2 of the travel and training budget. _ — � � _... � . __ __....�...__ __ __ .__ ____ . __.___._ � _ ._ _ __ —_. � _ ..� �• Vehicle and Equipment Policy � N/A Discussion Only Finance Director Kraus presented the vehicle and equipment policy. This was also discussed at the City Council Retreat as part as frugal innovation. Although there are monies sitting in the internal service funds, they are general governmental funds. The City will apply the same frugal innovation to these. This policy addresses the process and approval for new program requests of new equipment and vehicles purchases. We are not going to replace equipment just because there have been enough reserves collected and the purchase must have a justification. Staff will be reviewing the mileage, wear, cost of repairs, and other items before making a purchase. This policy establishes lifecycles for annual collection of reserves. As part of the mid- biennium budget adjustment, we will be looking at how much money we have in those funds, particularly the fleet and equipment fund and information technology fund. There are a number of assets that have been replaced that may not have cost as much as the amount that was collected. We will be evaluating if those monies can go back into the general fund. Finance Director noted the disadvantage of shifting excess balances out of these funds as these excess funds have been used to make up for equipment replacement costs that exceed accumulated reserves. Committee Members inquired about whether or not the asset class has been reviewed recently. Finance Director Kraus stated this is just a general range but lifecycles for assets have been reviewed and our assets fall within that range. All purchases will look at the lifecycle, industry standards, and quality of equipment. Committee Members inquired about the lifecycles of information technology equipment, specifically computers and laptops. Laptops and computers are set up on "automatic" replacement. Each year Council allocates $60K for replacement purchases. New computers are given to heavier users. The older computers trickle down throughout the organization and are given to lighter users. Committee Members inquired about non-PD vehicles and if the lifecycle covers the usage. There will be some flexibility in the lifecycles. If there is light usage, there is no need to replace. Committee Members inquired about collecting funds after the completed lifecycle. There is recognition that the cost of vehicles continue to increase so we have added 3% inflationary factor to the collection of reserves. Reserves continue to accumulate until the vehicle has been replaced. Any reserve overages are kept in that fund. During the mid- biennium budget process, these savings will be reviewed to see if they can be moved to general funds. The downside to moving the savings is that sometimes vehicles do cost more and the excess balances may be tapped to cover additional costs. IT equipment collections do stop after the item has met its lifecycle as these items generally cost less to replace. For big-ticket IT items, Finance reviews and has flexibility to continue collecting reserves until replaced, otherwise there may be material fluctuations in annual reserve _�collections and in years where the reserves fall off, it may be have_a large financial FEDRAC SUMMARY February 22. 2011 _. _.._... — . __. ___. . . . __. __ — _..._ . � ._. _,._. ____ impact to add back to collection cycle. Police vehicles have had their lifecycles reviewed. __.. _ _ _. _. _._� _ _ _ ._. _ __� K. Year End Financial Report Consent 03/O1/2011 Finance Director Kraus provided a detailed update on year-end 2010 results. General 8� Street Fund revenues were $68K below budget and expenditures were $2,701 K below budget. Property tax, sales tax, high crime, court fines and forfeitures, building permits, business license, parks 8� recreation fees, miscellaneous and other exceeded budget estimates while criminal justice sales tax, gambling tax, right-of-way permits and development fees, franchise fees, passport fees, police services and interest came in below budget. All departments' expenditures were within budget. General 8� Street Fund ending fund balance of $8,538K exceeded budget by $4,282K. However, some of this ending fund balance will be needed for the proposed carryforward budget adjustment. General Recreation, Dumas Bay Retreat Centre and Federal Way Community Center all performed well. Federal Way Community Center required less utility tax operating contribution than expected. Both DBC and FWCC revenues were higher and expenditures lower than 2009. Police overtime exceeded 2009 levels, however were still below the 2010 budget. Increases in overfime compared to 2009 was the result of red light photo activity, additional court transport needs due to the addition of the run to Buckley jail, and need of additional officer to provide the appropriate inmate to officer ratio. Jail costs exceeded budget and prior year due to increased rates, usage and medical costs. Although utility tax revenues came in lower than budgeted, revenues actually came in better than the year-end estimate. 2010 utility tax revenues was expected to come in $946K less than 2009 but in actuality came in at $659K below. Finance Director Kraus the following two adjustments to the report: 1 � the FWCC debt service callable amount should be $1 1,955,000; and 2) an adjustment was made to Fund 302 Municipal Facilities CIP after the reporf was prepqred resulting in an increased ending fund balance. This increase in ending fund balance will also change the Carry-Forward Budget Adjustment ordinance, however, no impact to expenditure budget requests. Committee Member povey moved adoption. Committee Member Burbidge second. Motion carried 3-0. _ — __._. __ . ____ ___ _ � _. . _ — — __.... � _�. _ L. ORDINANCE: Carryforward Budget Adjustments Action l sf Intro Ord. Finance Director Kraus reviewed the proposed CarryForward Budget Adjustment focusing osio�i�o>> mainly on the General and Street Fund. 2010 ending fund balance of $8,538K is $3,146K over and above the $5,392K projected for 2010 year-end. Of this amount, $1,219K is needed to implement the proposed budget adjustment. The ending fund balance after the proposed carryforward budget adjustment is an increase of $1,927K res�lting in a revised budgeted ending fund balance of $4,828K in 2012. The $3,146K increase in ending fund balance before the proposed budget adjustment is made up of $214K additional revenues/other sources and $2,914K unspent expenditures other/uses. Finance Director Kraus noted the $1,927K is considered one-time increase and reminded the Committee there are a number of one-time funded positions currently in the budget, Also, the proposed budget adjustment does not include revenue adjustments to property tax, gambling tax or liquor profits as these will be reviewed during the preliminary mid- biennium budget adjustment which will be presented to FEDRAC in June. The budget adjustment does, however, include reductions due to management changes and other frugal innovation such as reduction in travel & training, elimination of National League of Cities dues and Council retreat facilitator. General 8� Street Fund new programs include $425K for future deductibles and pending claims for damages; $26K for Parks for Lakehaven Utility District LID assessment on open space parcel; $20K for Parks energy retrofit service maintenance agreement; and $380K earmarked specifically for potential gasoline cost increases. If increased gasoline prices do not materialize, these funds will not be spent elsewhere. The total budget adjustment is $14.4M of which $9.4M is due to continuation of capital projects. Committee Member povey moved adoption. Committee Member Burbidge second. __ _....... _ __ _ __._ _._ FEDRAC SUMMARY Februarv 22. 2011 Motio _.. _. _ ___.. .. __ __._ — _ ._._. _ . .. .._. __...�. . _ __ .. _ — _�_. _.._... .. ._,__�. . __._. n carried 3-0. _ . _. _.._ ....... . .. .. . . _ _ . M• RESOLUTION: Procedures for Surplus Property Disposal Consent 03/O1/2011 City Attorney Richardson presented a housekeeping resolution. We have not replaced "City Manager" with "Mayor" and had three separate resolutions dealing with surplus property. The proposal is to repeal the old resolutions so that it is clear that this resolution gives the Mayor the authority to execute the documents. This does not change any critiera or dollar amount. Committee Member povey moved adoption. Committee Member Burbidge second. Motion carried 3-0. _. __ . . N. Vouchers Consent 03/Ol/2011 Committee Member povey moved adoption. Committee Member Burbidge second. Motion carried 3-0. 4. OTHER: None. 5. FUTURE AGENDA ITEMS: None. 6. NEXT MEETING: Tuesday, March 22, 2011 Meeting adjourned at 7:25 p.m. Attest: Brook Lindquist, Executive Assistant COMMIITEE APPROVAL: � � � / '�-�-�-,' � u �- Mi ark Jeanne Burbidge � Ja ovey Com ittee Chair Committee Member Co mittee ember i�