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FEDRAC MINUTES 03-26-2019 CITY 6F Federal Way City Council Finance/Economic Development/Regional Affairs Committee Tuesday, March 26, 2019 Federal Way City Hall 4:30 p.m. SUMMARY MINUTES Hylebos Conference Room CALL TO ORDER: Committee Chair Dini Duclos called the meeting to order at 4:33 p.m. COMMITTEE MEMBERS IN ATTENDANCE: Chair Duclos, Councilmember Lydia Assefa-Dawson, and Councilmember Hoang Tran COUNCILMEMBERS IN ATTENDANCE: Deputy Mayor Susan Honda appeared telephonically, Councilmember Martin Moore arrived at 4:40, and Councilmember Mark Koppang arrived at 5:04 p.m. STAFF MEMBERS IN ATTENDANCE: Finance Director Ade Ariwoola, City Attorney Ryan Call, Assistant City Attorney Eric Rhoades, Public Works Director E.J. Walsh, Economic Development Director Tim Johnson, Deputy Parks Director Steve Ikerd, Community Relations Liaison/Contract Administrator Autumn Gressett, Accounting Manager Chase Donnelly, and Administrative Assistant Renee Cameron OTHERS PRESENT: Brian Hoffman, Spectra; Dana Hollaway, Federal Way citizen; Karen Brugato, Bob Dockstader, Federal Way Arts Commissioner; Cindy Pinet, Federal Way Performing Arts Foundation; and Derek Purton PUBLIC COMMENT: • Karen Brugato, Federal Way Arts Commissioner, regarding proposed Admissions Tax ordinance • Bob Dockstader, Centerstage and Kiwanis, regarding proposed Admissions Tax ordinance • Cindy Pinet, Federal Way Performing Arts Foundation, regarding the proposed Admissions Tax Ordinance A. APPROVAL OF SUMMARY MINUTES— FEBRUARY 26, 2019 Motion made by Counciimember Assefa-Dawson to approve the minutes from February 26, 2019 as written;motion seconded by Counciimember Tran and carried 3-0. Note: Counciimember Assefa-Dawson asked staff to refrain from using the term "advised"in the summary minutes, unless it was regarding comments from the Law Department. B. ORDINANCE:AMENDING ADMISSION TAX ORDINANCE TO EXEMPT FUND-RAISING ACTIVITIES FOR NON-PROFITS: Presented by Assistant City Attorney Eric Rhoades. Assistant City Attorney Eric Rhoades presented the Ordinance Amending the Tax Admission Order to Exempt Fund-Raising Activities for Non-Profits. He stated there was no explicit language regarding fund-raising activities and that the proposed ordinance provides for such language and charitable organizations. Councilmember Assefa-Dawson said her understanding of the proposed ordinance exempted 501(c)(3) organizations and Chair Duclos sought clarification as to what qualifies for the exemption. City Attorney Call stated Council instructed staff to amend the City's Tuesday, March 26, 2019 Page 1 CITY or Federal Way Code to clarify the type of fund-raising activities that are exempted, and that all ticketed shows that are done as part of the non-profit business operations do not qualify as fund-raising activities. Assistant City Attorney Rhoades stated that as long as a non-profit business does not conduct it as an ongoing event or as their main business it may qualify for the exemption. Councilmember Moore asked for clarification as to what "ignited" this proposed code amendment and Finance Director Ariwoola responded it was not intended to exempt businesses that are doing their regular business, it is intended for non-profits, not for businesses that do it as their main business. He discussed the authority to collect an admission tax. Councilmember Tran asked about the exemption for non-profits conducting over 5 fund raising events, and Director Ariwoola stated this proposed amendment provides the City the authority to exempt the non-profits from collecting admission tax for fund-raising events, and if a non-profit is in the business of conducting this type of event then it is not exempted. Councilmember Moore said he has more questions to staff to understand the purpose of the ordinance and would like further discussion and clarification. Chair Duclos stated she would like the Committee to have further discussion on the item. Deputy Mayor Honda (who appeared telephonically) and Councilmember Assefa-Dawson inquired how the admission tax has affected performance groups and asked Karen Bugato to explain the affects it will have on Centerstage, who stated it has affected ticket sales in comparison from 2017 and 2018. Councilmember Tran asked how many fund raising events are held at the PAEC. Brian Hoffman, from Spectra stated he will get back with the Committee on the number. Councilmember Tran discussed calculations of admission tax revenue and the amounts to be raised. Councilmember Koppang spoke regarding equality of the law and the idea that the admissions tax was a way for the City to generate revenue. He stated that the purpose of the ordinance referred to the supporting code. Assistant City Attorney Rhoades summarized the code and how it applies to the admission tax exemptions and the six exemptions under FWRC 3.60.020 were stated. Councilmember Moore asked how staff determined the limit of 5 fund-raising events, and Councilmember Koppang stated that they figured that most non-profits cannot do more than five fund-raisers, as each one is a lot of work. Councilmember Moore said he is concerned for Centerstage as a stakeholder, and stated he will fight for non-profits within the City. City Attorney Call said this ordinance is the direction staff were given from Council, and that the City will not negotiated the tax with Centerstage, or with any business. Deputy Mayor Honda said the City needs to be cautious of how the City proceeds with admissions tax, and addressed why Council enacted an admission tax in the first place. Councilmember Moore and Chair Duclos stated that there needs to be more discussion. City Attorney Call suggested meeting individually with Council to understand their positions regarding admission tax. Councilmember Koppang said it appears Councilmembers have a difference of opinion as to what should be exempted and what should be charged and asked staff for a chart of what tax is currently being charged, and what is not being charged so Council can understand the tax, and the exemptions it provides for. Director Ariwoola stated staff followed council direction to bring the proposed ordinance to the Council. Tuesday, March 26, 2019 Page 2 CITY or Federal Way Councilmember Moore stated the proposed ordinance is a no fix, and a chart would hopefully bring an opportunity to work it out and provide clarity. Deputy Mayor Honda stated that she has spoken with a number of arts groups that are experiencing financial difficulties now that they are performing at the PAEC and that art groups have a very low margin of income with the expensing of performing. Chair Duclos and Councilmember Tran want to bring this item back for further discussion, and Councilmember Tran stated he is in favor of giving a 501(c)(3) organization a blanket exemption up to a certain number per year, two or three. Councilmember Assefa-Dawson said this chart and review will affect all 501(c)(3) organizations, and not just Centerstage. This item will be tabled again at future Committee meeting. C. ORDINANCE:2019/20 BUDGET AMENDMENTS: Presented by Finance Director Ade Ariwoola. Director Ade Ariwoola presented the Ordinance amending the 2019/2020 Budget Amendments. He advised that public hearings were conducted and the 2019/2020 Budget was adopted on December 4, 2018. He stated that the amendments will increase and decrease the beginning fund balance, revenue and expenditures. He stated the cost of appraisal I of the Target property will come in much low than anticipated, so there may be another budget amendment before presentation to the Council on April 2nd. He spoke regarding the salary and work study for the non- represented employees for 2019 and how the savings from SCORE can be used to pay for the study and the implementation of the study. He spoke regarding the supplies used and cost incurred during the winter storm snow removal, and funding for IT staff. He summarized the $854,043 to be paid out of the General Fund as outlined in the agenda packet, and also summarized the $2,016,897 out of the Non-General Funds, as outlined in the agenda packet, all of which will be paid out of the carry forward reserve. Councilmember Tran inquired regarding the replacement cars for police and how many vehicles are included. City Attorney Call responded and advised that the SUVs are the preferable vehicles for safety and their needs. Deputy Mayor Honda asked if the appraisal for the Target property includes the hotel property, and City Attorney Call confirmed it did. There was also clarification regarding the prisoner transportation vehicle. Councilmembers Moore and Assefa-Dawson sought clarification regarding IT staff funding, and Director Ariwoola responded. Motion made by Councilmember Tran to forward the proposed ordinance to First Reading to the April 2, 2019 Council meeting;motion seconded by Councilmember Assefa-Dawson and carried 3- 0. D. VOUCHERS 02/16/2019 - -03/15/2019: Presented by Finance Director, Ade Ariwoola. Director Ariwoola summarized the February 16, 2019— March 15, 2019 Vouchers, Deputy Mayor Honda asked about the Twin Lakes Country Club. Finance Director responded that they are a non-profit organization, so their $1,500 business license payment was refunded. Tuesday, March 26, 2019 Page 3 CITY or Federal Way Motion made by Councilmember Assefa-Dawson to forward the Vouchers to the April 2, 2019 consent agenda for approval;motion seconded by Councilmember Tran and carried 3-0. E. MONTHLY FINANCIAL REPORT— FEBRUARY 2019: Presented by Finance Director, Ade Ariwoola. Accounting Manager Chase Donnelly summarized the February 2019 Monthly Financial Report. Notable areas included: • Admissions Tax • REET • Utility Tax • General and Street Fund Revenue • Parks Fees • Property Tax • Sales Tax Councilmember Assefa-Dawson asked whether the City will be able to recoup litigation fees from the Lakehaven lawsuit. Economic Development Manager Tim Johnson commented regarding the utility tax during the February snowstorm, and the Xerox and Tesoro properties. He stated he believes economic development will start to drive utility tax for the City. Motion made by Councilmember Tran to forward approval of the February 2019 Month Financial Report to the April 2, 2019 consent agenda for approval;motion seconded by Councilmember Assefa-Dawson and carried 3-0. F. NEW REVENUE OPTIONS: Presented by Chair Dini Duclos Chair Duclos presented a handout titled October 8, 2018 Revenue Generating Ideas per the Ad Hoc Committee. City Attorney Call advised that some of the items listed are not legal revenue generating ideas, such as the sales tax rate, and nuisance tax. Economic Development Director Tim Johnson discussed lodging tax and Air B&B business licensing. Derek Purton, Federal Way Citizen, spoke regarding his concerns with the Revenue Generating Ad Hoc Committee, its' formation and intent. Councilmember Moore responded to Mr. Purton's inquiries regarding the intent of the Ad Hoc committee. This item was for information/discussion purposes only. No action was taken. G. BUSINESS LICENSE UPDATE: Presented by Finance Director Ade Ariwoola. Director Ariwoola presented an update to the Committee regarding business licensing within the City, and discussed the upcoming partnering with the State of Washington Business Licensing Services. Tuesday, March 26, 2019 Page 4 CITY or Federal Way This item was for information/discussion purposes only. No action was taken. OTHER Items presented at the March 26, 2019 Meeting • Karen Brugato, Arts Commissioner, City of Federal Way Ordinance No. 02-432 • Chair Duclos, Ad Hoc Committee's October 8, 2018 Revenue Generating Ideas NEXT MEETING: Tuesday, April 23, 2019 @ 4:30 p.m. MEETING ADJOURNED: 6:26 p.m. Tuesday, March 26, 2019 Page 5