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FEDRAC MINUTES 07-26-2016CITY OF „ Federal Way City Council Finance /Economic Development /Regional Affairs Committee Tuesday, July 26, 2016 4:30 p.m. SUMMARY MINUTES Federal Way City Hall Hylebos Conference Room CALL TO ORDER: Committee Chair Duclos called the meeting to order at 4:30 p.m. COMMITTEE MEMBERS IN ATTENDANCE: Councilmember Honda and Councilmember Moore COMMITTEE MEMBER EXCUSED: COUNCILMEMBERS IN ATTENDANCE: Deputy Mayor Burbidge, Councilmember Maloney STAFF MEMBERS IN ATTENDANCE: Finance Director, Ade Ariwoola; Assistant City Attorney, Ryan Call; Economic Development Director, Tim Johnson; Public Works Director, Marwan Salloum; Deputy Public Works /Street Systems Manager, Desiree Winkler; IT Manager, Thomas Fichtner; Accounting Supervisor, Chase Donnelly; Administrative Assistant, Robyn Buck OTHERS PRESENT: Diana Noble - Guillford, Gerald Knutzen PUBLIC COMMENT: None APPROVAL OF SUMMARY MINUTES: Motion to approve the June 28, 2016 minutes as presented; motion seconded and carried 3 -0. Councilmember Honda made a motion to amend the agenda by adding item F1, Historical Society Funding as well as move items F1 and F respectively to the beginning of the agenda. There was a consensus among Committee Members to amend the agenda. Tuesday, July 26, 2016 Page 1 CITY OF Federal Way HISTORICAL SOCIETY FUNDING: Presented by Councilmember Maloney. Councilmember Maloney would like to know if it would be advisable to bring to the entire Council a proposal to add in to the budget an on- going, multi -year contract that would fund the Historical Society for five, maybe ten years at $20,000 per year. This would make it more efficient for the City because we would not have to annually review the requests. Councilmember Maloney would like this included in the next budget cycle. Committee Chair Duclos is in favor of bringing this to the Council. Mr. Ariwoola said that Council has several community based organizations that we fund. He advises that the Historical Society go through the same process as the other service providers. Revenue flow fluctuates and with this type of commitment (multi -year contract), other entities would suffer cuts. Mr. Ariwoola cautions the Committee to not promise funds that may not be there the next year. Committee Chair Duclos states that the Historical Society should be treated differently than human services nonprofits. Councilmember Honda asked about the process that would be necessary for the historical society to go through to be funded. Mr. Ariwoola recommends that the Historical Society submit a request and that would be added to the budget discussion calendar. The City funded work to make sure the building the Historical Society uses was up to code, City owned items stored in that building were removed and are now stored elsewhere at a cost to the City. The Historical Society is supported by the City with IT, building and landscape maintenance, and other financial support. Mr. Ariwoola advised that Council include those items when they discuss the amount of financial support for the Historical Society. Councilmember Moore thinks the City can be more supportive and would like to see a more permanent structure (in regards to funding) while being fiscally responsible. Councilmember Maloney would like a more sustainable budget path for the Historical Society. Mr. Ariwoola suggested that a formal funding agreement between the City and the Historical Society in exchange for the service the Historical Society provides is an option. Mr. Call will speak with Chief of Staff Wilson and Mayor Ferrell for direction. There is time to do this before the next budget cycle. Motion to add an item for discussion regarding on going funding of the Federal Way Historical Society to the August 9, 2016 City Council agenda; motion seconded and carried 3 -0. POLICE FTES AND PROP 1: Presented by Finance Director, Ade Ariwoola. Mr. Ariwoola referenced page 81 of the June MFR under Utility Taxes where it shows a breakdown of funds specifically created to pay police FTEs. We are not expecting enough Tuesday, July 26, 2016 Page 2 CITY OF Federal Way funds for Prop 1 in 2016 to fund these positions. It was anticipated that a transfer of $641,000 from the General Utility Tax into Prop 1 would be needed. As of the end of June, we have moved $621,000 into Prop 1. Councilmember Maloney was concerned about language in the 2006 voters' pamphlet that there would be an additional eighteen officers funded and paid for out of the Utility Tax. Both Councilmember Honda and Maloney are concerned that what was promised to the citizens that is not being fulfilled, regardless of a recession. Councilmember Maloney would like a plan to identify where the funds will come from before we get too far into the budget cycle. Councilmember Honda would like more information on Prop 1; what it means, how many positions there are, how we will get there. Mr. Ariwoola reminded those present that if we increase the amount of funding for Police FTEs, that money will have to come from another group that receives Prop 1 funding. Committee Chair Duclos would like a study session and would also like a 5 year plan. Mr. Ariwoola suggested that a pre and post Prop 1 position break down would make it easier for Council to see the difference. Councilmember Maloney is concerned that there may be a legal aspect to this because we are not fulfilling our requirements and if we have an obligation to still meet the promise. Mr. Call replied that there is a difference between a ballot measure and what Council actually took action on. A Proposition is not an authority for Council to do something. We need to follow what Council actually took action on. It is a policy issue, not a legal issue. Councilmember Maloney has requested the dollar amounts spent on all police position FTEs since 2006. The information should consist of the same components as when the FTEs were being paid out of the General Fund, including salary and benefits. Deputy Mayor Burbidge acknowledged that there seemed to be confusion over the issue and thought that perhaps this topic should be included in a budget study ORDINANCE: LEVEL 3 COMMUNICATIONS, LLC FRANCHISE: Presented by Deputy Public Works /Street Systems Manager, Desiree Winkler. This is a renewal of an existing franchise agreement. Level 3 Communications purchased WilTel Communications earlier this year and assumed all of WilTel's facilities. The term is for ten years and they will pay us up $1,000 to recover some of our administrative expenses. Motion to forward this Ordinance to the August 9, 2016 City Council agenda for the First Reading; motion seconded and carried 3 -0. Tuesday, July 26, 2016 Page 3 CITY OF Federal Warr SELECTRON IVR UPGRADE AGREEMENT: Presented by IT Manager, Thomas Fichtner. This is our current system for contractors to call in to schedule inspections and get information on said inspections. The current system is on a Windows 2000 server with hardware from 2006. That is well beyond our typical seven year replacement cycle. The system is in need of a hardware refresh and software upgrade. The plan is to get rid of the hardware, virtualize it and put it on our cluster. This will eliminate the upgrade of an actual server. The system is already integrated with and tied to the Amanda system. This agreement is for professional services and a software upgrade. There is no additional functionality with this upgrade. Motion to approve and forward the proposed SELECTRON IVR UPGRADE to the August 9, 2016 City Council consent agenda for approval; motion seconded and carried 3 -0. MONTHLY FINANCIAL REPORT - JUNE 2016: Presented by Finance Director, Ade Ariwoola. Mr. Ariwoola summarized the Monthly Financial Report for June 2016. Notable areas include: • Park and General Recreation - Is doing reasonably well because of some of the Senior Citizen trips. • UTax — Revenue has gone down due to weather. • REET — Is doing well. Clarion hotel was sold for $8.9 m. • Sales Tax- Modest growth, 15% is coming from construction. • Dumas Bay — Doing really well. Revenue has exceeded 2015 actual revenue by $102,000 spending has exceeded 2015 actual by $50k. • Probation Revenue — Council brought the probation service in- house. That is part of why the revenue has gone up, but we have also added staff. • Court Revenue — Additional revenue from traffic infractions (does not include red light), these are the infractions that go to court. Councilmember Honda would like to know if we are still paying overtime to officers because of the homicides. Mr. Call said those officers are not working as many overtime hours. Some of the officers were moved from traffic to help and have since moved back. Committee Chair Duclos would like to know if the red light and school zone cameras are reducing accidents. Mr. Call commented that the cameras are dramatically reducing accidents. Committee Chair Duclos would like that information reported to the public. Tuesday, July 26, 2016 Page 4 CITY OF Federal Way Motion to approve and forward the June 2016 Monthly Financial Report to the August 9, 2016 consent agenda for approval; motion seconded and carried 3 -0. VOUCHERS —JUNE 2016: Presented by Finance Director, Ade Ariwoola. There were no questions or comments on the vouchers. Motion to approve and forward the June 2016 Vouchers to the August 9, 2016 consent agenda for approval; motion seconded and carried 3 -0. SCORE QUARTERLY REPORT: Presented by Finance Director, Ade Ariwoola. Mr. Ariwoola reported that our ADP is down. There were no other questions or comments. No further action taken. PAEC QUARTERLY REPORT: Presented by Finance Director, Ade Ariwoola. We had $14.7m in cash and have spent $9.7m of that leaving a balance of about $5m. The entire $2m from the 4 Culture Grant amount has been collected. Since the end of June, we have collected $1.29m out of the $4m grant from the State. Mr. Ariwoola is putting together a report to bill the State another $1.2m. Mr. Ariwoola is using the grant money first before using the Inter Fund Loan. Councilmember Honda would like to know how short we are. If we do not get the New Market Tax Credit, we will need to draw on the Inter Fund Loan or possibly need a bond. Mr. Johnson said we are waiting for a Nov /Dec announcement for NMTC. We are looking for syndicated award of $20m, which would net us around $7.9m. The naming rights amount estimate, approximately $3.5m, left in the Capital Stack. There may be a possibility in August that we may need to request what we can justify out of the $3.030m CDBG loan. Once we do that, re- payment would need to begin one year from the draw. There will be less requirements on the project if we do not need to use CDBG. No further action taken. ECONOMIC DEVELOPMENT REPORT: Presented by Economic Development Director, Tim Johnson. New companies in Federal Way include Jazzercise, Humana Clinic, I Love Kick Boxing, DOL is moving their office into the City Center Plaza. Mod pizza is still working on their permit Tuesday, July 26, 2016 Page 5 CITY OF Federal Way application. There are construction blackout dates in October through part of January at that center. There will not be any new construction there until 2017. At the Pavilion Center, CityMD is taking over the old Arby's. This should be finished sometime this Fall. Cafe Rio opened up. Clarion sold for $8.9m. Mr. Johnson was working on luring Linkedln into FW. However, Microsoft purchased Linkedln and the assumption is that they will not come to Federal Way. Most likely, they are going to Redmond, Kirkland, Bellevue area. A storage facility is going in to the old Albertsons building. The Metro Market still has ten years left on their lease. They are looking for a big box store to fill the building. Federal Way has sixteen storage facilities which do not bring in any jobs or much tax money into Federal Way. There is no contract at this time for the Hagen site. OTHER • Parking Garage: The PAEC has 700 seats, the LIFT money can be used for infrastructure downtown. If we do not use it, we lose it. There will be a huge need for a parking garage in downtown and we may be able to tap into LIFT to finance it. The revenue for leasing the space for the hotel will be used to match the LIFT funds. The proceeds from LIFT can be used to service the debt if we have to use it. Councilmember Honda would like an economic forecast for 5 years. NEXT MEETING: Tuesday, August 23, 2016 @ 4:30 p.m. MEETING ADJOURNED: 6:25 p.m. Tuesday, July 26, 2016 Page 6