FEDRAC PKT 06-24-2014 City Council
FINANCE/ECONOMIC DEVELOPMENT/REGIONAL AFFAIRS COMMITTEE
[FEDRAC]
Tuesday – June 24 Federal Way City Hall
5:30 p.m. 2014 Hylebos Room
AGENDA
1. CALL TO ORDER
2. PUBLIC COMMENT
3. COMMITTEE BUSINESS
Topic Title/Description Presenter Page*
Action
or Discussion
A. APPROVAL OF MINUTES/SUMMARY: MAY 27, 2014 K. ARNDT 2 ACTION
6/24 Committee
B. HOME INVESTMENT PARTNERSHIPS PROGRAM INTER-LOCAL AGREEMENT J. WATSON 5 ACTION
7/1 Council Consent
C. TOYS R US DEMOLITION PROJECT, CHANGE ORDER #1, DEMOLISH THE
BUILDING CONCRETE SLAB AND HAUL AWAY
K. MILLER 24 ACTION
7/1 Council Consent
D. ORDINANCE: AMENDING FWRC 12.45 TAXICABS A. PEARSALL 26 ACTION
7/1 Council (First Reading)
E. RESOLUTION: INTER-FUND LOAN FOR PERFORMING ARTS AND CONFERENCE
CENTER
A. ARIWOOLA 30 ACTION
7/1 Council Consent
F. ORDINANCE: 2014 BUDGET ADJUSTMENT A. ARIWOOLA 35 ACTION
7/1 Council (First Reading)
G. WASHINGTON STATE AUDITOR’S OFFICE (SAO) ENTRANCE CONFERENCE A. ARIWOOLA 44 DISCUSSION
H. HOW TO INFORM THE CITIZENS ON THE CITY’S CURRENT TAX STRUCTURE A. ARIWOOLA 50 DISCUSSION
I. SCORE REPORT A. ARIWOOLA 51 DISCUSSION
J. MAY 2014 MONTHLY FINANCIAL REPORT A. ARIWOOLA 116 ACTION
7/1 Council Consent
K. VOUCHERS A. ARIWOOLA 131 ACTION
7/1 Council Consent
Note: Additional materials may also be distributed for review/action during the meeting
4. OTHER:
5. FUTURE AGENDA ITEMS:
6. NEXT MEETING: Tuesday – JULY 22, 2014
Committee Members: City Staff:
Dini Duclos, Chair Ade Ariwoola, Finance Director
Bob Celski Trudy Crozier, Finance Support Staff
Martin Moore 253-835-2527
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THE FOLLOWING MEMO WAS
DISTRIBUTED AT THE
06/24/74 FEDRAC MEETING
TO SUPPORT AGENDA LINE
ITEM H.
CITY OF FEDERAL WAY MY or A
Finance Department Federal Way
MEMORANDUM
To: Mayor Jim Ferrell
From: Ade' Ariwoola, Finance Director 2V
Subject: Evaluating City's Taxes
Date: June 12, 2014
The following issues are for discussion, analysis, and policy as we move forward as a City:
1. Address the long term interests of the City by balancing our current obligations with
our needs to lay a better foundation for the future of our community.
2. Identify the reasons for our current financial position.
3. Identify the risks that have enabled us to be in our current financial position.
4. Identify the market forces at play that potentially impact quality of staff and level of
service capability.
5. Establish plan to address current challenges.
Reducing staff and holding salaries in place were major sacrifices that were necessary to reduce
expenses during the downturn in the economy. These difficult decisions by elected officials and
leadership staff enabled the City to weather the great recession and at the same time, service
levels within the community.
Unfortunately, we face different challenges today that will have to be dealt with differently. We
need to fulfill the vision, mission, and goals of the City's leaders; hold on to good employees,
resuscitate the economy, and continue to grow with the economic growth of the I -5 corridor.
These are the challenges of today and we cannot cut our way through this. We will have to make
investments in staff and in the community. We will have to stay here for others to come here.
We will have to feel worthy before we expect others to find us worthy.
The City Council developed the vision, mission, and goals for the City several years ago. Now
is the time to deliver on the vision, mission, and goals that were set, and so painfully saved for in
the past few years.
As a reminder to me and others, the following are the Vision, Mission, and Goals that were set:
VISION: Federal Way is a community known for its cultural diversity, attractive parks,
safe neighborhoods, and vibrant business centers.
MISSION. The City of Federal Way is responsive, innovative, and fiscally responsible in
delivering quality services, promoting economic development, improving infrastructure,
and managing growth.
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GOALS:
• Integrate the public safety strategy into all facets of City operations, building on a strong
community -based approach.
• 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.
• Establish Federal Way as an economic leader and job center in South King County by
attracting a regional market for high quality office and retail businesses.
• Maintain the capital facilities plan and provide financing options for transportation and
surface water improvements, parks, recreation, cultural arts and public facilities.
• Ensure a responsive service culture within the city organization where employees listen
carefully, treat citizens and each other respectfully and solve problems creatively,
efficiently, and proactively.
• Position Federal Way as a regional leader by working collaboratively with other local
and regional jurisdictions in order to leverage resources.
We have pinched and saved in the past few years so that we could place the City in a better
financial position to accomplish the above mentioned goals. Now is the time to deliver on them.
We saved money by holding salaries when the market for comparable positions is increasing.
Without steps to address these market forces, we stand to lose good employees to neighboring
jurisdictions who are willing to pay at a market rate for the performance, experience, and talent
of valuable employees. To avoid this, we need to determine how far off we are and make it right.
Paying our employees fair wages is a self - serving goal.
Additionally, our level of staffing is an issue to be addressed. Many of our departments are two
to ten employees short of where they should be. While we as a City have taken steps to bring on
additional staff, there are additional needs. It is important to continue our measured and
thoughtful approach to evaluate staff needs within departments and get us to where we need to
be.
In 2013, the average property owner in the City of Federal Way paid property tax of $16.134 per
$1,000 of property value. Some may actually say the tax they paid to the City was too high. This
should be reviewed and facts analyzed. The following is the breakdown of the $16.134 property
tax paid in 2013: Out of the $16.134,
• City of Federal Way received $1.420, which is 8.8% of the total tax.
• School district received $7.55, which was 46.8 %,
• Washington State received $2.57, which was 15.9 %,
• Fire District received $1.82, which was 11.3 %,
• King County received $1.54, which was 9.5 %.
• The remainder, $1.234 or 7.7 %, was shared by the Library District, EMS, County Ferry
District, and County Flood Zone.
The citizens voted for more than 51% or $8.310 of the 2013 levy.
Some may also say that the property tax paid to the City of Federal is the highest in the area.
This should also be reviewed and analyzed.
In 2012, the City of Federal Way received the lowest property tax rate, the following is the list of
property tax rate among comparable entities.
N
GOALS:
• Integrate the public safety strategy into all facets of City operations, building on a strong
community -based approach.
• 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.
• Establish Federal Way as an economic leader and job center in South King County by
attracting a regional market for high quality office and retail businesses.
• Maintain the capital facilities plan and provide financing options for transportation and
surface water improvements, parks, recreation, cultural arts and public facilities.
• Ensure a responsive service culture within the city organization where employees listen
carefully, treat citizens and each other respectfully and solve problems creatively,
efficiently, and proactively.
• Position Federal Way as a regional leader by working collaboratively with other local
and regional jurisdictions in order to leverage resources.
We have pinched and saved in the past few years so that we could place the City in a better
financial position to accomplish the above mentioned goals. Now is the time to deliver on them.
We saved money by holding salaries when the market for comparable positions is increasing.
Without steps to address these market forces, we stand to lose good employees to neighboring
jurisdictions who are willing to pay at a market rate for the performance, experience, and talent
of valuable employees. To avoid this, we need to determine how far off we are and make it right.
Paying our employees fair wages is a self - serving goal.
Additionally, our level of staffing is an issue to be addressed. Many of our departments are two
to ten employees short of where they should be. While we as a City have taken steps to bring on
additional staff, there are additional needs. It is important to continue our measured and
thoughtful approach to evaluate staff needs within departments and get us to where we need to
be.
In 2013, the average property owner in the City of Federal Way paid property tax of $16.134 per
$1,000 of property value. Some may actually say the tax they paid to the City was too high. This
should be reviewed and facts analyzed. The following is the breakdown of the $16.134 property
tax paid in 2013: Out of the $16.134,
• City of Federal Way received $1.420, which is 8.8% of the total tax.
• School district received $7.55, which was 46.8 %,
• Washington State received $2.57, which was 15.9 %,
• Fire District received $1.82, which was 11.3 %,
• King County received $1.54, which was 9.5 %.
• The remainder, $1.234 or 7.7 %, was shared by the Library District, EMS, County Ferry
District, and County Flood Zone.
The citizens voted for more than 51% or $8.310 of the 2013 levy.
Some may also say that the property tax paid to the City of Federal is the highest in the area.
This should also be reviewed and analyzed.
In 2012, the City of Federal Way received the lowest property tax rate, the following is the list of
property tax rate among comparable entities.
N
• The City of Seattle received
• The City of Renton received
• The City of SeaTac received
• The City of Auburn received
• The City of Kent received
• The City of Federal Way received
$3.577
$3.100
$2.880
$2.080
$1.568
$1.300 per $1,000 of property value
The City of Federal Way collected the lowest property tax in 2012. We are not the only taxing
district in the City of Federal Way. In order to reduce the tax burden of the citizens, all the other
taxing districts must attempt to do it, and not put the burden on just one; especially the one
currently receiving one of the lowest among its group and within the city's taxing districts.
On Utility Tax, the citizens of the City of Federal Way already enjoy a tax break from the City.
Currently the City does not charge utility tax on Water, and Sewer services where the City of
Kent charges 13% for Water, Sewer and drainage services (surface water). The 1.75% voter
approved rate for community safety improvement initiatives is used to, maintain part of the
current staff and the city is spending more than the extra rate can support on the community
safety related staff.
The City's Sales Tax rate is currently at 9.5 %. It is the same as the incorporated areas of Kent,
Renton, Auburn, Seatac, and Seattle. Out of the 9.5% sales tax charged on the sales within the
City of Federal Way, for every dollar of Sales tax 68.4 cents of the tax goes to State (6.5 %),
King County Metro receives 9.5 cents (0.9 %), King County Mental Health gets 1 cent (0.10 %),
King County Government gets 1.60 cents (0.15 0/6), Criminal Justice receives 1.05 cents (0.1%),
Sound Transit receives 4.2 cents (0.4 %), Regional Transit gets 5.2 cents (0.5 %), and City of
Federal Way gets 9 cents (0.85 %)
Based on the above analyses, we will recommend to the Council, during the budget process, to
maintain the current tax practices, and approve the regular allowable I% rate increase for cost of
living and inflation. This will enable the City to keep its promises to the citizens, and the City's
employees.
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