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FEDRAC MINUTES 01-22-2019 4§llI Clay{}4 on Federal Wray City Council Finance/Economic Development/Regional Affairs Committee Tuesday,January 22, 2019 Federal Way City Hall 4:30 p.m. SUMMARY MINUTES Hylebos Conference Room CALL TO ORDER: Committee Chair Duclos called the meeting to order at 4:30 p.m. COMMITTEE MEMBERS IN ATTENDANCE: Chair Duclos and Councilmember Assefa-Dawson COMMITTEE MEMBER EXCUSED: Councilmember Tran COUNCILMEMBERS IN ATTENDANCE: Deputy Mayor Honda, Councilmember Johnson, Councilmember Koppang, and Councilmember Martin STAFF MEMBERS IN ATTENDANCE: Finance Director Ade Ariwoola; City Attorney Ryan Call; Parks and Recreation Director John Hutton; Chief of Police Andy Hwang, Community Relations Liaison/Contract Administrator Autumn Gressett; Information Technology Manager Thomas Fichtner, Accounting Manager Chase Donnelly, and Administrative Assistant Renee Cameron OTHERS PRESENT: Dana Hollaway, Federal Way citizen PUBLIC COMMENT: No public comment A. APPROVAL OF SUMMARY MINUTES— NOVEMBER 27, 2018 Motion made by Counciimember Assefa-Dawson to approve the minutes from November 27, 2018 as written;motion seconded by Committee Chair Ducios and carried 2-0. Chair Ducios moved to amend the Agenda to move Item F, Tourism Enhancement Grant Recommendation for January-June 2019 to Item L, motion seconded by Counciimember Assefa- Dawson and carried 2-0. Chair Ducios advised that the Committee was adding an item to the Agenda, Bond Rating to Other. B. COMMUNITY CENTER AV SYSTEM — PROJECT ACCEPTANCE: Presented by Information Technology Manager Thomas Fichtner. Information Technology Manager Fichtner summarized the Community Center AV System Project which was installed by Morgan Sound by December 31, 2018, and stated the project is complete and is seeking final acceptance and costs of the project in the amount of$89,749.07. Motion made by Counciimember Assefa-Dawson to forward Option 1 to the February 5, 2019 City Council consent agenda for approval;motion seconded by Chair Ducios and carried 2-0. Tuesday,January 22, 2019 Page 1 CITY 4F Federal Way C. APS UPS REPLACEMENT— PROJECT Presented by Information Technology Manager Thomas Fichtner. Information Technology Manager Fichtner summarized the APS UPS (Uninterruptible Power Supply) Replacement Project which provides for the backup battery system generator was installed and inspected by December 31, 2018, and he stated the project is complete and is seeking final acceptance and costs of the project in the amount of$35,657.54. He advised there was no retainage on this project, and that it has been paid. Motion made by Councilmember Assefa-Dawson to forward Option 1 to the February 5, 2019 consent agenda for approval;motion seconded by Chair Duclos and carried 2-0. D. SCORE UPDATE: Presented by Chief of Police Andy Hwang Chief of Police Hwang provided a two page staff report regarding the Jail Services Update, dated January 22, 2019 proposing withdrawal from the SCORE Inter-local Agreement. Chief Hwang stated on September 4, 2018, the City Council unanimously passed the Resolution authorizing the City to withdraw from the SCORE Inter-local Agreement. He stated that in 2012 the SCORE jail budget was $2.3 Million, by 2018 the City's jail budget $6.4 Million by operating out of SCORE. He advised that staff have done research and estimated that the City could incarcerate inmates at $4.3 Million, saving the City$2 Million. Upon the City's notice to SCORE about its departure, the SCORE Admin Board Chair formed a Finance Advisory Board to discuss financial alternatives regarding operations, which including participating jurisdictions' City Managers, Finance Directors, and Police Chiefs. The overall goal of the subcommittee is to reduce costs, increase revenue, and restructure the allocation funding obligations among the participating agencies. Chief Hwang stated there are five funding formula options proposed to address the Member Residual Bill, starting 2020, and will be making a recommendation/determination on February 1, 2019. He advised that the City's 2019 Prorated share was $5.8 Million. He discussed the five funding formula options as provided for in the report, and stated the most likely to be recommended to the Admin Board will be Option 1, 2, or 3. He stated those options still exceed our $4.3 Million the City is budgeting for jail services in 2020, and Options 4 and 5 are not likely recommendation, as the administrative feasibility are not efficient. Chief Hwang stated the City is in discussions with Yakima, Kent City Jail, King County Jail, Issaquah Jail, and will be talking with Nisqually Jail; however, he advised that no contracts have been signed pending the subcommittee's study and report Chair Duclos stated that in all likelihood the City will be leaving SCORE, and Chief Hwang advised that the City has notified SCORE that the City is leaving, unless the policy group advises that they are reversing direction. Deputy Mayor Honda asked if the funding formulas include the debit service and Chief Hwang confirmed they did, and that SCORE is looking to rebond. Deputy Mayor Honda asked regarding the bonds. Finance Director Ariwoola provided clarification of the bond debt, which will require the City's consent, through an ordinance, should SCORE seek to refinance. Finance Director Ariwoola advised that the City will have the Law Department review any refinancing proposal they may seek. This item was for discussion purposes only, no action was taken. Tuesday,January 22, 2019 Page 2 CITY 4F Federal Way E. PAEC EXTERIOR SIGNATURE CONTRACT: Presented by Community Relations Liaison/Contract Administrator Autumn Gressett. Ms. Gessett presented a PowerPoint presentation "Building for Culture" Grant—Signage Proposal Award. She discussed the Request for Proposal ("RFP") process, which brought one timely RFP and advised the Mayor's recommendation was Option 1. Council questioned why just one bid and Ms. Gressett advised that 6 weeks were provided to submit a request for proposal. Ms. Gressett answered questions about Naming Rights Logos and the signs lighting and she stated that the goal is to have the sign in place by.lune 30tH Councilmember Koppang asked whether the sign conforms to the City's sign code, and City Attorney Call advised staff will look into modifying the Code. Motion made by Councilmember Assefa-Dawson to forward the PAEC Exterior Signage Contract to the February 5, 2019 consent agenda for approval;motion seconded by Chair Duclos and carried 2-0. F. HISTORICAL SOCIETY FUNDING: Presented by Finance Director Ade Ariwoola. Finance Director Ariwoola advised that the Historical Society Funding is extending the contract, which is similar to the contract that the City has with the Historical Society for 2017-2018, and that funding is the 2019-2020 budget. Motion made by Councilmember Assefa-Dawson to forward the proposed contract with the Historical Society of Federal Way to the February 5, 2019 consent agenda for approval;motion seconded by Councilmember Duclos and carried 2-0. G. UTILITY TAX REBATE PROGRAM: Presented by Finance Director Ade Ariwoola. Finance Director Ariwoola provided the Committee with an update regarding the 2018 Utility Tax Rebate Program, and provided the Committee with a copy of the flyer that was posted within the City. He discussed the application deadline, which is April 30th, and the idea to extend the deadline to file, due to IRS tax filings. Councilmember Assefa-Dawson and Deputy Mayor Honda asked about the utility tax that Lakehaven does not pay to the City and whether the City could request Lakehaven to pay the tax to the City. City Attorney Call responded that Lakehaven and all utility tax payments do not keep the utility tax payments received; they deposit those taxes into a court registry. Retroactive utility tax payments were discussed, as well as a flat fee rebate option. There was discussion about eligibility and payment of utilities, and whether low-income families could be eligible in future years. Any future changes would be brought forward to the Committee/Council for their review and consideration. This item was for discussion purposes only, no action taken. Tuesday,January 22, 2019 Page 3 CITY 4F Federal Way H. VOUCHERS— NOVEMBER 2018: Presented by Finance Director, Ade Ariwoola. Director Ariwoola summarized the November 2018 Vouchers, and there were no questions from the Committee. Motion made by Councilmember Assefa-Dawson to forward the November 2018 Vouchers to the February 5, 2019 consent agenda for approval;motion seconded by Councilmember Duclos and carried 2-0. I. VOUCHERS— DECEMBER 2018: Presented by Finance Director, Ade Ariwoola. Director Ariwoola summarized the December 2018 Vouchers, and there were no questions from the Committee. Motion made by Councilmember Assefa-Dawson to forward the December 2018 Vouchers to the February 5, 2019 consent agenda for approval;motion seconded by Councilmember Duclos and carried 2-0. J. MONTHLY FINANCIAL REPORT— NOVEMBER 2018: Presented by Finance Director, Ade Ariwoola. Director Ariwoola summarized the Monthly Financial Report. Notable areas included: • Admissions Tax • CD Permits and Fees • Utility Tax • Sales Tax • Lakehaven Franchise Fee • Performing & Events Center Deputy Mayor Honda asked about the Admissions Tax concern referencing the RCWs and Finance Director Ariwoola and City Attorney Call advised the Committee that RCW concern was actually relating to a business and occupation tax (B&O) and not an Admission Tax RCW. City Attorney Call said if the City wants to broaden the type of events that are exempted that staff could take a look at it and refine it. Finance Director Ariwoola stated the 2018General Fund balance is budgeted for in 2019/2020, and no Council rules regarding the fund balance minimum have been violated. Finance Director Ariwoola stated that the report for the Performing Arts & Events Center (PAEC) shows how much the City is spending on the PAEC. Deputy Mayor Honda inquired about the usage of the PAEC for conferences, or upcoming conferences. Staff advised that staff will follow up with a report to the Committee of the PAEC usage. Motion made by Councilmember Assefa-Dawson to forward approval of the Monthly Financial Report—November 2018 to the February 5, 2018 consent agenda for approval;motion seconded by Chair Duclos and carried 2-0. Tuesday,January 22, 2019 Page 4 CITY 4F Federal Way K. 2017 POPULAR ANNUAL FINANCIAL REPORT: Presented by Finance Director, Ade Ariwoola. Finance Director Ariwoola summarized the 2017 Popular Annual Financial Report and comparing the population with other jurisdictions and how the City ranks in comparison. He stated Federal Way is ranked the 9th most populated city in the State. Finance Director Ariwoola stated that on Page 17, the City is ranked 30 in regards to per capital for sales and property tax revenues. He also highlighted the portion regarding levies that were voted on by the voters, and stated that the City has the lowest median property tax value, and also has the lowest property tax rate; which calculates to the lower property tax revenues. He discussed the debt rating as well, and stated that the City does not have the resources to do all the work the citizens would like the City to provide. Councilmember Assefa-Dawson inquired about the number of Wild Waves employees. This item was for discussion purposes only, no action taken. L. MOODY-CITY'S BOND RATING: Presented by Finance Director, Ade Ariwoola. Agenda Item M, Moody-City's Bond Rating, was added to the Agenda at the beginning of the Meeting. Economic Development Director Johnson was not in attendance of the Meeting yet, so Item M was moved up to Item L. Finance Director Ariwoola summarized the Moody's Investors Services-City's Credit Rating, and advised that the City of Federal Way maintains its Aa2 rating, which is a good reflection of the City's financial strength. He advised that the City needs to take steps to maintain this rating in the future and staff are taking steps to maintain the rating. He advised that increases in revenue will include expected future funds from Lakehaven, and savings from SCORE which will generate over $2 Million in revenue. Councilmember Koppang asked how the City's borrowing costs would be increased if the City went from Aa2 to an Aa3, and Director Ariwoola advised it could be a difference of 1%to 2% increase. He advised it is possible for the City to attain Aa1 ranking, with sustainable revenue, building upon our fund balance policy, and good key staff. This item was for discussion purposes only, no action taken. M. TOURISM ENHANCEMENT GRANT RECOMMENDATION FOR JANUARY—JUNE 2019: Presented by Economic Development Director Tim Johnson. Economic Development Director Johnson summarized the Tourism Enhancement Grant Recommendation of the Lodging Tax Advisory Committee from January to June to approve a $2,500 grant to the Harmony Kings, $1,000 of which is to be used to improve marketing, increase awareness and increase attendance. He advised that there was a second applicant, the Women's Northwest Golf Tournament, who are still trying to identify opportunities to increase heads in beds, so further information may be coming forward for them. Deputy Mayor Honda asked how many heads in beds Women's Northwest Golf Tournament provide, and Director Johnson advised 64, and he said they are aware that they need to step it up to get the number of beds up with advertising and marketing so that they are eligible for the funding next year. Deputy Mayor Honda asked about the application process and the lack of applications, and Director Johnson responded that Tuesday,January 22, 2019 Page 5 CITY 4F Federal Way there are more sophisticated projects coming through the City, including PAC 12, and the Northwest Conference, which puts significant heads in bed throughout February and March, and will continue to rise significantly. He stated that the Washington Open (Aquatics Center) was huge this past weekend and hotel rooms were booked. He said the summer time events are full, with high hotel occupancies. He advised the focus now will be on the off season and getting heads in beds during November and December. Deputy Mayor Honda asked about the disruption from the upcoming Sound Transit project and disruption to the hotels in that area. Director Johnson advised he anticipates that the Request for Proposal of the project will answer those questions and responded that the professionals overseeing the project will have the answers to the City's questions. Motion made by Councilmember Assefa-Dawson to forward the Tourism Enhancement Grant Recommendation For January—June 2019 to the February 5, 2019 consent agenda for approval; motion seconded by Chair Duclos and carried 2-0. Items presented at the January 22, 2019 Meeting • Chief of Police Hwang—Jail Services Update, January 22, 2019 • Autumn Gressett—"Building for Culture" Grant—Signage Proposal Award • Finance Director Ariwoola—2017 Popular Annual Financial Report • Finance Director Ariwoola - Moody's Investor Service — City of Federal Way Bond Rating, January 18, 2019 NEXT MEETING: Tuesday, February 26, 2019 @ 4:30 p.m. MEETING ADJOURNED: 5:47 p.m. Tuesday,January 22, 2019 Page 6