FEDRAC MINUTES 01-22-2019 4§llI Clay{}4
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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.
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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.
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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.
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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.
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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
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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