FEDRAC MINUTES 02-26-2019 ACITY OF
tNlk Federal Way
City Council
Finance/Economic Development/Regional Affairs Committee
Tuesday, February 26, 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 4:32 p.m.
COMMITTEE MEMBERS IN ATTENDANCE: Chair Duclos, Councilmember Assefa-Dawson, and
Councilmember Tran
COUNCILMEMBERS IN ATTENDANCE: Deputy Mayor Honda, and Councilmember Moore arrived at
4:59 p.m.
STAFF MEMBERS IN ATTENDANCE: Finance Director Ade Ariwoola; City Attorney Ryan Call;
Community Services Manager Jeff Watson; Public Works Director E.J. Walsh; Surface Water Manager
Theresa Thurlow, Accounting Manager Chase Donnelly, and Administrative Assistant Renee Cameron
OTHERS PRESENT: Dana Hollaway, Federal Way citizen; Katie Astruon, Deputy Mayor Honda's Mentee,
and Paras Singh, Taft High School-Highline College student
PUBLIC COMMENT: No public comment
A. APPROVAL OF SUMMARY MINUTES—JANUARY 22, 2019
Motion made by Councilmember Assefa-Dawson to approve the minutes from January 22, 2019
as written;motion seconded by Councilmember Tran and carried 3-0.
B. Status Report On The SWM Comp Plan/CIP Update and Rate Study: Presented by Public Works
Surface Water Manager Theresa Thurlow.
Surface Water Manager Thurlow made a PowerPoint Presentation regarding Stormwater
Maintenance and NPDES Phase II permit requirements, and she summarized the status report on
the Storm Water Management Comp Plan/CIP Update and Rate Study, the requirements to protect
and improve the City's water ways, conservation and restoration projects, and what the Surface
Water Management (SWM) Fund pays for. She stated the 2019 Rate Structure provides the
breakdown of the rates on impervious surfaces and rate structures that are Equivalent Service Unit
(ESU) based on measured impervious surface. She discussed the Finalized Capital Improvement
Plan to execute the capital improvement projects.
Deputy Mayor Honda inquired about the monitoring requirements, the beneficial use of
waterways, the ESU's charges by other jurisdictions, and what rates other cities and counties are
charging. Manager Thurlow responded to her questions, and discussed the high level of sediment
as a result of temperature, and the difference in temperature depends upon tree canopy coverage.
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Public Works Director Walsh spoke about the ESU charges and methodology that effectively has
very large rounding areas, but these rates would be more focused on commercial uses. SWM
Manager Thurlow stated that the ESU amounts are increased every year according to the June CIP.
She advised most other jurisdictions have increases, but comparisons are difficult to established, as
rates are different across the board. She advised that Pierce County was approved for a 23% rate
increase.
Councilmember Assefa-Dawson inquired about the impervious square footage and SWM Manager
advised it is impervious service, not actual property square footage. Finance Director Ariwoola and
Public Works Director Walsh advised that City collects the utility tax on SWM revenues.
Councilmember Tran inquired about single family parcels and the flat rate charged and Manager
Thurlow advised that statistically single family residences are all comparable in size regarding
impervious surfaces.
This item was for information/discussion purposes only. No action was taken.
C. Section 108 Loan Conversion From Interim To Permanent: Presented by Community Services
Manager Jeff Watson.
Community Services Manager Jeff Watson summarized the Section 108 Loan Conversion From
Interim To Permanent and requested approval of the resolution authorizing the City to participate
in HUD's public offering to convert the Section 108 interim variable rate loan to long-term fixed
rate status. He stated the City was given approval by HUD in June 2016 for $3,000,030 to be used
in support of the development of the Performing Arts and Events Center. He stated that the City
was contacted by HUD in November 2018 to encourage the City to convert the loan to a permanent
fixed rate which will make budgeting for the principal and interest payments much easier.
Manager Watson stated that the our Section 108 loans are bundled together with others and are
sold on the public market to investors, and overall during the first 10 years of the note the City
would be able to defease the note, but not permitted to pay it off. After 10 years the City would be
able to pay off the note. Director Ariwoola advised the Committee that the City has already
borrowed the money, and provided a financial explanation of the conversion, and the purpose of
temporary financing and permanent long term bonding rates.
Councilmember Assefa-Dawson inquired about the Cityjust paying the bond and Finance Director
Ariwoola and Manager Watson responded advising that the interest rates would be determined on
March 28, 2019. They advised that currently interest is paid quarterly, and principal once per year.
After the conversion the interest will be paid twice per year (February and August) and the
principal will be once per year in August. Councilmember Tran asked what the rate will be between
today and March 28th, and Director Ariwoola advised that the rate would be locked in for the next
ten years and the rate will be set at the bond sale. Manager Watson confirmed that current rate
being paid.
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Deputy Mayor Honda and Manager Watson discussed the City's compliance with creating jobs and
HUD's job requirements, and advised that CDBG Funds will be used to pay the loan. The City will
need to demonstrate that the City will be able to provide and maintain the jobs to prevent HUD
from calling the loan. There was discussion regarding development of a new hotel and the jobs
that would be created and associated with the new hotel.
Director Ariwoola stated the advantage of using this conversion is the current interest changes
from day to day. City Attorney Call, Director Ariwoola and Manager Watson discussed the risk
should the City not comply with HUD's requirements, and advised that staff would bring a plan to
Council if the City chooses to put the property on the market. Chair Duclos and Deputy Mayor
Honda stated they would like to see more of a plan and have the item come to the full Council for
review and discussion. Chair Duclos stated confirmed she would like to move this item to full
Council for further discussion,
Director Ariwoola and City Attorney Call addressed Deputy Mayor Honda's concerns regarding the
City's development of the property, and advised the Committee that it does not have to be
developed or used for an hotel, as HUD requirements are intended to see that jobs are created on
the property. Director Ariwoola advised that Council needs to be aware of the requirements and
City Attorney Call said that an appraisal is necessary before any property transactions can be
considered. Councilmember Moore inquired regarding potential interest to purchase the property
and City Attorney Call advised that the City would need to plan for it if the City chooses to sell it.
Motion made by Councilmember Tran to forward the proposed Resolution to the March 5, 2019
City Council Business for discussion;motion seconded by Councilmember Assefa-Dawson and
carried 3-0.
D. SCORE UPDATE: Presented by Finance Director Ade Ariwoola
Director Ariwoola stated that SCORE update is to advise the Committee that the City is leaving
SCORE. He highlighted the daily population at SCORE and the City's average daily population.
Deputy Mayor Honda asked about refinancing the bond. City Attorney Call said the City would
likely rebond on its own as to not have a future financial working relationship with SCORE.
Councilmember Assefa-Dawson asked about recontracting with SCORE in the future for jail use and
City Attorney Call advised that SCORE is a possible future housing inmate option, however Yakima's
rates are less. Councilmember Assefa-Dawson inquired regarding the graph indicating the number
of inmates housed that were actually Federal Way residents, versus others arrested in Federal Way
and were not members of SCORE and Director Ariwoola responded.
This item was for discussion purposes only, no action was taken.
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E. VOUCHERS 01/16/2019 --02/15/2019: Presented by Finance Director, Ade Ariwoola.
Director Ariwoola summarized the January 16, 2019— February 15, 2019 Vouchers, and stated that
Deputy Mayor Honda had questions and Finance Director advised that he responded to all Council
regarding Deputy Mayor Honda's questions. Director Ariwoola advised that the banners purchased
were purchased from the Lodging Tax Fund by the Lodging Tax Advisory Committee for the
Northwest Conference Swimming Championships and PAC12 Conference Championship events; the
tree plantings and brackets were purchased from Washington State Department of Corrections
from jail industries; and the Washington State Treasurer drug forfeiture property. Deputy Mayor
Honda inquired regarding the Knutson Family Theater and Director Ariwoola advised the City took
over managing the Theater in September (though Center Stage has had some performances in the
theatre), and advised that the $6,000 in the Dumas Bay fund balance for advertising was utilized,
but new advertising will be established in 2019, and updates will be coming to the Committee
regarding the Theater and its usage and efforts being made. Director Ariwoola advised that the
lawsuit with Lakehaven, the Court ordered a bank account be established to hold funds that may
be paid out at the conclusion of the lawsuit. City Attorney Call advised staff will find out how much
money is in the account, though he does not believe it is likely at a correct rate, so that Lakehaven
has a substantial funds set aside for payment at the conclusion of the lawsuit.
Motion made by Councilmember Assefa-Dawson to forward the Vouchers to the March 5, 2019
consent agenda for approval;motion seconded by Councilmember Tran and carried 3-0.
F. MONTHLY FINANCIAL REPORT— FINAL DECEMBER 2018: Presented by Finance Director, Ade
Ariwoola.
Director Ariwoola summarized the Final December 2018 Monthly Financial Report stating the year
end is still not final; however, staff is working on finalizing it. Notable areas included:
• Admissions Tax
• CD Permits and Fees
• Parks Fees
• Property Tax
• Sales Tax
Director Ariwoola discussed sales tax, criminal justice sales tax, State's share revenue, and the
reduction of Court and probation revenues due to the new law that courts cannot collect fines and
penalties from low income defendants. He advised that all cities are facing the same reduced
revenue due to the new low income law. Councilmember Tran inquired regarding business license
renewals and the number of businesses within the City. Director Ariwoola advised that the
projected estimate may have been higher, however it was better than 2017. He reviewed the
expenditures of the departments, savings, and projected that the City will do better next year, but
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cautioned the Committee regarding the required fund balance, ending fund balance, and the
beginning fund balance. Chair Duclos inquired about the Human Services expenditures, and
Director Ariwoola advised that remaining funds from grant funds will have to be re-appropriated,
and rolled over into 2019. He advised that grant funds must be spent, and advised that General
Fund budget balances do not roll over. He advised the Committee that he will bring Budget
Amendments to the Committee at the March 26th meeting.
Motion made by Councilmember Tran to forward approval of the December 2018 Monthly
Financial Report to the March 5, 2018 consent agenda for approval;motion seconded by
Councilmember Assefa-Dawson and carried 3-0.
OTHER
• Budget Update Discussed. As discussed above, Budget Amendments will be brought to the
Committee at the March 26th meeting.
• Future Economic Development Meeting Dates. Deputy Mayor Honda advised that she spoke
with Economic Development Manager Tim Johnson and he has tentatively proposed to hold
future Economic Development Meetings for 2019 on May 15th, July 17th, and October 161h.
Items presented at the February 26, 2019 Meeting
• Surface Water Management Manager Theresa Thurlow—SWM Comp Plan/CIP Update and Rate
Study PowerPoint Presentation
NEXT MEETING: Tuesday, March 26, 2019 @ 4:30 p.m.
MEETING ADJOURNED: 5:55 p.m.
Tuesday, February 26, 2019 Page 5