FEDRAC MINS 07-24-2012 41k. CITY OF
Federal Way
City Council
FINANCE/ECONOMIC DEVELOPMENT/REGIONAL AFFAIRS COMMITTEE
[FEDRAC]
Tuesday,July 24,2012 Federal Way City Hall
5:30 p.m. Hylebos Room
Meeting Summary
(Preliminary until approved)
1. CALL TO ORDER
2. PUBLIC COMMENT
3. COMMITTEE BUSINESS
Action
Topic Title/Description Presenter Page* or Discussion
A. APPROVAL OF MINUTES: JUNE 26,2012 S.CAIN 2 Action
Committee approval
B. SCORE UPDATE S.PRIEST 10 Information
T.KRAUS Discussion only
C. ANIMAL SERVICES UPDATE B.WILSON 14 Information
Discussion only
D. INTERLOCAL AGREEMENT TRANSFERRING CDBG FUNDS FROM KING J.BENNETT 17 Action
COUNTY TO THE CITY OF FEDERAL WAY'S CDBG PROGRAM 08/07 Council Consent
E. JUNE 2012 MONTHLY FINANCIAL REPORT T.KRAUS 22 Action
08/07 Council Consent
F. VOUCHERS T.KRAUS 39 Action
08/07 Council Consent
*Additional materials may also be distributed for review/action during the meeting
4. OTHER:
5. FUTURE AGENDA ITEMS:
2013/2014 BUDGET UPDATE (T.KRAUS—INFORMATION)
TACOMA PUBLIC UTILITIES(TPU)WATER FRANCHISE AGREEMENT
6. NEXT MEETING: Tuesday,August 28, 2012
Committee Members: City Staff:
Dini Duclos,Chair Tho Kraus, Finance Director
Roger Freeman Steve Cain, Executive Assistant
Bob Celski 253 835-2402
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FEDRAC July 24, 2012 �-- Federal Way Page 2 of 8
1. CALL TO ORDER
By: Councilmember Duclos
Time: 5:31 p.m.
Committee Members in attendance:
Dini Duclos_x_ Roger Freeman _0_ Bob Celski _x_
0 - excused
Other Council Members and/or elected officials in attendance:
Jeanne Burbidge, Linda Kochmar, Susan Honda, Mayor Priest
Staff in attendance:
Tho Kraus, Finance Director 253 835-2520
Steve Cain, Executive Assistant 253 835-2402
Pat Richardson, City Attorney 253 835-2570
Brian Wilson,Chief of Police 253 835-6711
Thomas Fichtner, IT Manager 253 835-2547
J. Bennett,Community Services Manager 253 835-2650
P. Doherty,Community&Economic Development Director 253 835-2612
C. Roe, Director-PW, Parks, Recreation and Culture 253 835-2710
J.Stanley, Human Resources Manager 253 835-2532
2. PUBLIC COMMENT
None
3. COMMITTEE BUSINESS
A. APPROVAL OF MINUTES: JUNE 26,2012 S.CAIN 2 Action
0:18 Committee approval
Discussion/Changes: Steve Cain, Executive Assistant 253 835-2402
Motion: Councilmember Celski moves to accept the minutes as presented,second, passed.
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FEDRAC July 24, 2012 Page 3 of 8
B. SCORE UPDATE S.PRIEST 10 Information
T.KRAUS 0:30 Discussion only
Discussion/Changes: Skip Priest, Mayor
Tho Kraus, Finance Director 253 835-2520
Mayor Priest and Tho Kraus prepared an update on SCORE, as requested by the Chair. The Mayor explains that FW is a
minority partner in SCORE and not always able to dictate policy. Mentions the work of the Chief[Wilson] and Tho,who
is our spokesperson to SCORE; the Mayor is on Board. The Mayor recounts SCORE's short history,challenges, budget
effects on the City of Federal Way and outlook for the future, including obligations and various options for both the
venture and the city.
As the project progressed, it became apparent that projections and participation were not as anticipated. Projected
users, such as Seattle, did not materialize. Lower usage and the resultant higher costs to the owner cities has prompted
the cities to market the facility.That marketing is reaching out to judges,the state and the federal government(i.e. ICE
and "VIP" inmates)who could use the space. The Mayor,Tho,the Chief and judges (mostly FW folks) have taken the
lead with the marketing and innovative ideas. However, we face competition from places, like Yakima,that offer lower
daily rates plus pickup and delivery service.
While we want to fill the jail,we do not want to do it ourselves—we are charged by the number of beds used (inmates).
Not only are we using more beds(ADP or average daily population)than originally projected but cost per bed is higher.
Chair Duclos—questions the participation of the other cities; Mayor explains that Auburn biggest user,followed
by FW. Renton is next, however, it has gone down, real reason is unknown but the need to travel to SCORE,
rather than keep them in their city jail could contribute. Chief weighs in on Renton "self-managing"their
prisoners.
In terms of ownership,Auburn and Renton together constitute over 60%ownership.
We are taking steps to reduce our ADP, i.e.electric home lockdown vs. home monitoring. Whatever we do will impact
the 2013-14 budget. Federal Way does have a financial commitment to SCORE but we don't want to go bankrupt. May
require a change of leadership at SCORE and we will advocate for that, if needed. Mayor Law sent an email regarding
marketing that indicates his concern and understanding of his [Mayor Priest's] comments at the last SCORE meeting—
Mayor Priest can send those comments to the committee.
Annual cost is the problem.
Chair questions what are our options? Mayor responds that there are relatively zero options for 2013 but,for
2014,we are not required to use SCORE. Start up costs, if SCORE were shutdown for a year or two,are
substantial. Mayor and Chair discuss the marketing and efforts of other cities to curb costs,just as FW is. SCORE
is a misdemeanor facility,which is pretty fancy compared to converting an old Lowes or a skating rink to a jail.
SCORE is sophisticated enough to be a prison for felons.
Councilmember Celski questions if all cities can discontinue use of SCORE in 2014. Mayor confirms that any
and/or all can withdraw. Councilmember weighs in with discussion of debt and capital costs. Mayor says$900K
per year for FW. If FW just walks away,we can pay that obligation and use other facilities and save money.
Conversation ensues regarding management and operating costs. Would getting their act together reduce costs?
Mayor suggests that issue should be discussed by the board. Is management capable of running and marketing the
facility effectively? Are management expenses acceptable? FW is more capable in joint ventures and often gets into
trouble because others do not perform as well.
Councilmember Celski delves further into the financials—Income statement, some accrued expense for future;
Tho says that there was some one time funding and discusses the budgeting and actual expenses but knows of
no outstanding accruals. She says that their reports are improving in quality,with greater preparation and the
members are all on the same page now.
Additional discussion of management(director and financial) and areas of expertise needed. Mayor suggests that
marketing is more of a challenge than finance/accounting. First is competition from Snohomish Co.who is aggressive in
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FEDRAC July 24, 2012 Page 4 of 8
its marketing with some non-jail related,with work release and other areas. However,SCORE is more convenient than
Snohomish for Seattle work release programs. Then,Yakima, Fife and Chelan,while perhaps not as sophisticated and
cheaper and will pickup and deliver. They apparently have a marketing plan with brochures, letters, rates and etc. We
have pods at SCORE that would lend themselves to niche markets like the tribes who are concerned with particular
sociological responsibilities. What other marketing ideas,VIP prisoners, ICE and others. However, by agreement we
cannot house felons(stupid idea)- like our misdemeanor inmates have never been felons! Also,we are aggressively
marketing in Pierce County.
Mayor invites the committee to tour the facility.
Chair thanks Mayor,Tho,Chief for efforts. Comments on the need to make it work and recognizes that it will
take time.
Information only—required no committee action
C. ANIMAL SERVICES UPDATE B.WILSON 14 Information
36:55 Discussion only
Discussion/Changes: Brian Wilson, Chief of Police
Update and recommendations for 2013—2014 budget; the committee offers comments as the Chief presents the staff
report on the Animal Services Unit(ASU).
Because of current economy and difficult times, pet licensing is not a priority for most families or individuals.
Chair comments that even in good times, it is not priority,for families with lower income levels,with pets.
Chief says they are considering warning letters.
Asking for committee thoughts sparks considerable discussion: particularly regarding death of pets; how to
handle that citizen loss, record keeping and notification to ASU. Chief also suggests random renewal
enforcement and verification of pets but has limited resources for that. There was a mention of a Dori Monson
radio program where he stated that he told his daughters, if animal control officers come to the house and ask
about pets,to tell them it's none of their business,go away.This is clearly an issue for King County.
Level of service is an issue and Chief intends to do a Customer Satisfaction Survey to assess public perception.
Chair suggests ASU write about services provided, number of rescues, neutering services,adoptions;with other
comments on chips, pictures,dog park and etc. Information on website and facebook. Provide and/or post
information in pet stores, libraries and other places.
Possible French Lake Park Fee for non-residents,as the majority of users are not FW residents.
Councilmember Honda
With retirement of Commander McAllester,Cathy Schrock will take leadership of the ASU. Chief will work with Cathy
over the next two years to enhance the performance of the ASU.
Councilmember Celski comments on experience with neighbor,who had three unlicensed petss,was cited for
barking dogs and required to license them.
ASU responds to the issues of barking dogs and tries to be proactive on aggressive dogs.
Information only—required no committee action
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D. INTERLOCAL AGREEMENT TRANSFERRING CDBG FUNDS FROM KING J.BENNETT 17 Action
COUNTY TO THE CITY OF FEDERAL WAY'S CDBG PROGRAM 52:30 08/07 Council Consent
Discussion/Changes: J. Bennett,Community Services Manager 253 835-2650
Jay discusses the agreement—see page 19
The process follows the same framework as Kent,who also withdrew from the consortium.
Chair comments on the$349,420,Jay states$300K is budgeted for Economic Development projects in 2012.
Motion: Councilmember Celski moves to forward approval of the agreement to the 8/7 consent agenda,
second and passed.
E. JUNE 2012 MONTHLY FINANCIAL REPORT T.KRAUS 22 Action
55:20 08/07 Council Consent
Discussion/Changes: Tho Kraus, Finance Director 253 835-2520
Tho provided a Handout,which follows:
JUNE 2012 MONTHLY FINANCIAL REPORT-HIGHLIGHTS
General&Street Fund Summary—Page 23
• Revenues are above budget by$411K or 2.1%with major variances in:
Above Budget:
$163K property tax;$28K criminal justice sales tax;$170K Intergovernmental;$245K building permits&fees;$14K right-of-
way permits&development fees;
Below Budget:
$145K sales tax; $13K gambling tax; $32K court revenue; $43K general recreation (delayed revenue due to inclement
weather)
• Expenditures are below budget$1.66M or 8%(timing of payments, 1-time not spent,some true savings)
Property Tax
• Above YTD budget by$163K or 3.2%
• Above YTD 2011 by$222K or 4.4%
Sales Tax—Pages 25&26
YTD 2012 revenue of$5.14M
o Below YTD budget by$145K or 2.7%
o Below YTD 2011 by$183K or 3.4%
• (short discussion of the$86K amnesty and$66K audit return in 2011 that contributed to difference)
o Projected 2012 annual sales tax is$10.6M ($272K or 2.5%below 2011 actual)
• (Councilmember Celski questions taxes from dive trials event—Tho explains 2 month lag--should show up in August
reports—suggest public report to emphasize positive impact)
• YTD 2012 Compared to YTD 2011 by Category:
o Retail up$3K or 0.1%
• Up $65K - building/garden, furniture/home furnishings, motor vehicle/parts dealers, non-store retailers,
health&personal care stores
• Down $62K — clothing/accessories, electronics/appliances, food/beverage stores, general merchandise
stores,sporting goods/hobby/books
o Services down$48K or 4.0%
• Up$63K—accommodation,food services/drinking places, personal/laundry, repair/maint
• Down$110K—admin/support services, health care/hospital,amusement,hospitals,technology,
o Construction down$59K or 12.5%
• Up$1OK—building construction,specialty trade contractors
• Down$69K—heavy&civil construction
o Information down$10K or 4.0%
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FEDRAC July 24, 2012 Federal Way Page 6 of 8
g
• Up$2K-Publishing
• Down$13K-telecommunications,internet programs
o Government down$96K or 64.9%($86K is due to no amnesty payments)
o Manufacturing up$12K or 15.5%(wood product manufacturing)
• Sales Tax Comparison by Area-YTD 2012 Compared to YTD 2011 by Area:
o S 348th Retail Block up$2K(building materials&garden up,electronic&wholesale down) •
o The Commons down$33K(clothing&accessories, book store closure,general merchandise stores down)
o S 312th to S 316th down$8K(discount retailer down)
o Pavilion Center down$18K(electronics&appliance down,video rental closed,book store increase)
Utility Tax-Pages 26&27
• YTD 2012 revenues total$7.08 M
o Below YTD 2011 by$205K or 2.8%
o Above YTD budget by$122K or 1.8%
• YTD 2012 compared to YTD 2011 as shown on monthly financial report:
o Electricity down$64K or 2.3%
o Gas down$92K or 6.8%
o Solid Waste up$14K or 3.5%
o Cable down less than$1K or 0.0%
o Phone down$25K or 4.5%
o Cellular down$51K or 3.7%
o Storm Drainage up$12K or 8.9%
• Projected 2012 revenues to come in$648K or 5.0%below 2011,with projected changes from 2011 as follows:
o Electricity down$183K or 3.7%
o Gas down$95K or 4.9%
o Solid Waste up$29K or 3.7%
o Cable down$7K or 0.5%
o Phone down$229K or 21.5%
o Cellular down$170K or 6.3%
o Storm Drainage up$8K or 3.0%
REET-Page 28
• YTD 2012 revenues of$599K is:
o Below YTD 2011 by$440K or 42.3%
o Below YTD Budget by$245K or 29.1%
• 2012 annual budget estimate of$1.4M is consistent with 2009,2010&2011 revenues$1.4M to$1.5M.
o Absent any significant transactions remainder of year,revenues could fall short of estimates
• June 2012 significant transaction-Weyerhaeuser IT Center sold for$17M,generating$84K tax and vacant retail store sold for
$2M,generating$10K tax.
• YTD Significant Transactions:
YTD 2012: YTD 2011:
Centerpoint Management Inc(sold for$2.9M/$14K tax) Palisades Apartment(sold for$67.5M/$334K tax)
Lowe's Home Improvement(sold for$5M/$25K tax) Woodmark Retirement(sold for$9.2M/$45K tax)
The View at Redondo Apartments(sold for$5.1M/$25K tax) Vacant Business Building(sold for$4.4M/$22K tax)
Office Building So 333rd(sold for$1.4M/$7K tax) Vacant Lot(sold for$2.0M/$10K tax)
Garden Depot(sold for$1.5M/$7K tax) The Lodge Apartments(sold for$52M/$256K tax)
Weyerhaeuser IT Center(sold for$17M/$84K tax)
Vacant Retail store(sold for$2M/$10K tax)
Animal Services-Page 31
• 2012 Budget is comprised of$153K revenue and$332K expenditure for a net cost of$179K
o Budgeted net cost is lower than the$400K-$500K estimated cost had City stayed w/King Co.
• YTD 2012 license revenues total$33K or 22%of annual license revenue estimate
o Below YTD 2011 by$24K or 41.8%
o Below YTD budget by$58K or 63.7%
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FEDRAC July 24, 2012 �-- Federal Way Page 7 of 8
• YTD 2012 expenditures total$117K
o Below YTD 2011 by$1K or 1.1%
o Below YTD budget by$26K or 18.4%
• YTD 2012 net cost is$78K
o Above YTD 2011 by$21K or 36.3%
o Above YTD budget by$26K or 50.9%
Red Light Photo—Page 32
• YTD 2012 net revenues total$1.2M
o Above YTD 2011 by$552K or 91.0%,increase is due to improving safety in the school zones
Court Revenue—Page 33
• Annual revenue estimate$1.5M
• YTD 2012 net revenues total$754K
o Below YTD 2011 by$27K or 3.4%
o Below YTD budget by$32K or 4.0%
• YTD 2012 vs YTD 2011 highlights:
o Traffic&non-parking down$38K or 8.2%
o Criminal costs down$13K or 19.0%
o Criminal Conviction Fees up$9K or 32.9%
o DUI& Misdemeanors up$17K or 51.1%
❖ (Chair Duclos, Chief Wilson comment on DU1's and effect on SCORE)
Federal Way Community Center—Page 35
• YTD 2012 Revenues total$892K
o Above YTD budget by$88K or 11.0%
o Above YTD 2011 by$55K or 6.5%
❖ (Chair Duclos,Councilmembers Celski,Burbidge commend staff for great work containing costs)
o Shift from daily drop in to membership passes
• Net increase of$64K compared to YTD budget
• Net increase of$31K compared to YTD 2011
o Fitness classes/fitness training
(Silver Sneakers enrollment,specialty fitness training classes, personal training programs)
• Increase of$12K compared to YTD budget
• Increase of$1K compared to YTD 2011
o Youth Athletic Programs(Passholder P.E., Kidz Love Soccer, Basketball Life)
• Increase of$12K compared to YTD budget
• Increase of$8K compared to YTD 2011
o Aquatic Programs(Lessons)
• Increase of$6K compared to YTD budget
• Decrease of$2K compared to YTD 2011
o Rentals(Return of long-term meeting group and church rental clients,special event bookings)
• Increase of$1K compared to YTD budget
• Increase of$16K compared to YTD 2011
• YTD 2012 Expenditures total$1.OM
o Above YTD budget by$29K or 2.9%
o Above YTD 2011 by$36K or 3.7%
o Increased instructor and program costs for various programs offset by increased revenue,
• Utility Tax Contribution
o Reserves=Annual Budget$87K/YTD Actual$0K(Transfer from Utility Tax by year-end)
o Operations=Annual Budget$619K/YTD Actual$169K or 27%of budget
• Ending Fund Balance(Reserved for capital maintenance&replacement)
o End of Year Budget$992K/YTD Actual$932K
❖ (Comments on marketing plans,staff control vs.SCORE)
Dumas Bay Centre—Page 36
• YTD 2012 Revenues of$316K
o Above YTD Budget by$26K or 8.9%
o Above YTD 2011 by$38K or 13.8%
o Increase in number of larger retreats and use of in-house food service
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FEDRAC July 24, 2012 Page 8 of 8
• YTD 2012 Expenditures of $307K
o Below YTD Budget by$25K or 7.6%
o Below YTD 2011 by$7K or 2.1%
• YTD Operating Income is$9K
o YTD budget anticipated$42K operating loss
o YTD 2011 actual was$36K operating loss
• Ending Fund Balance
o End of year Budget$OK/YTD Actual$228K
o Roof repair and capital maintenance not all spent,any balances will roll over to 2013
❖ (Councilmember Celski comments on the ending fund balances,they look healthier than last year and Tho feels good
about them.)
Motion: Councilmember Celski moves to forward approval of the June financial report to the 8/7 consent
agenda for approval,second and passed.
F. VOUCHERS T.KRAUS 39 Action
08/07 Council Consent
Discussion/Changes: Tho Kraus, Finance Director 253 835-2520
Tho presents vouchers, points out that there was nothing out of the ordinary.
❖ (Chair calls for questions—there are none)
Motion: Councilmember Celski moves approval of the vouchers and forward to the 8/7 council for approval,
second and passed.
4. OTHER:
• Tho Kraus mentions Town Hall meetings on Budget, budget milestones and sharing budget information with
Council Members throughout the process.
• Chair verifies member attendance at August FEDRAC.
5. FUTURE AGENDA ITEMS:
2013/2014 BUDGET UPDATE (T.KRAUS—INFORMATION)
TACOMA PUBLIC UTILITIES(TPU)WATER FRANCHISE AGREEMENT
6. NEXT MEETING: Tuesday—August 28, 2012
Meeting adjourned 6:41 p.m.
Attest:
Steve Cain, Executive Assistant
COMMITTEE APPROVAL:
Dini Duclos Roger Freeman Bob Celski
Committee Chair Committee Member Committee Member